Metro Manila, Philippines – In a unanimous decision, the Supreme Court on Friday, Dec. 5, ordered the return of ₱60 billion from the National Treasury to state insurance provider PhilHealth.
“The SC ordered that the remitted funds amounting to ₱60 billion be returned to PhilHealth through the 2026 GAA (General Appropriations Act),” the court decided.
Penned by Associate Justice Amy Lazaro-Javier, the SC also permanently prohibited the transfer of the remaining ₱29.9 billion fund balance that was supposed to be remitted last November but halted by the high court.
SC said it declared void the Special Provision under the 2024 GAA and a Department of Finance (DOF) circular, deciding that it was “issued and implemented with grave abuse of discretion amounting to lack or excess of jurisdiction.”
This provision authorized the return of the excess reserve funds of government-owned or controlled corporations to the National Treasury to fund unprogrammed appropriations under the 2024 GAA.
SC on Recto’s liability
On petitions to determine if the respondents, including then-Secretary Ralph Recto, are liable for technical malversation and/or plunder for allowing the transfer, the SC said this is an “improper resolution” for a certiorari case.
“Such matters are improper for resolution in this case. The only issue properly before it is the validity of the issuances and whether they were issued with grave abuse of discretion amounting to a lack or excess of jurisdiction,” it said.
The justices, however, ruled that a finance secretary cannot augment any item in the GAA because this power belongs to the president.
In 2024, a DOF circular signed by Recto ordered the state insurance company to transfer ₱89.9 billion in reserve funds, citing a special provision in the budget law that permits the use of the “fund balance” from government-owned or government-controlled corporations to finance unprogrammed projects.
This move faced backlash as lawmakers pointed out that billions in excess funds should not have existed in PhilHealth while many of its members still had pending hospital bills.
Recto, who now serves as executive secretary, said he respects the SC’s decision but still believes that the move was a “common-sense approach.”
“We believed then, and still believe, that the directive was a common-sense approach to optimize government coffers without resorting to additional borrowing or new taxes,” he said in a statement.
“We also stress that PhilHealth’s ability to deliver services was never impaired by the fund transfer and no member contributions were taken,” Recto added.
In compliance to DOF’s circular and the 2024 GAA Special Provision, PhilHealth remitted ₱60 billion to the National Treasury in three tranches from May to October.
The SC issued a temporary restraining order against the remaining ₱29.9 billion transfer before November.
“The SC also ruled that Special Provision (1)d is void because it impliedly repeals Section 11 of the Universal Health Care Act (UHCA) and the Sin Tax Laws,” the court said.
Despite this, Recto assured that the administration “remains fully committed to maximizing government resources,” especially in the healthcare sector.
Meanwhile, the Solicitor General said it will review the ruling and decide on the appropriate course of action to take including the filing of a motion for reconsideration.
