The Supreme Court of the Philippines has delivered a landmark ruling, ordering the National Government to return billions of pesos taken from the Philippine Health Insurance Corporation (PhilHealth). The high court declared illegal the transfer of nearly P90 billion from the state insurer's coffers to the National Treasury.
Court Finds Transfer Violated Health Care Law
In a decision that underscores the sanctity of dedicated health funds, the Supreme Court voided a provision in the 2024 national budget and a related Department of Finance (DOF) circular. These measures had authorized the transfer of P89.9 billion from PhilHealth. The core of the legal conflict was whether the government could legally use PhilHealth's accumulated reserves for non-health related programs.
The tribunal ruled that the transfer was a direct violation of the Universal Health Care Act (UHCA). The court emphasized that Section 11 of the UHCA mandates PhilHealth to maintain a reserve fund equivalent to two years of projected expenses. Crucially, the law explicitly prohibits transferring any part of this reserve or its income to the National Government or any other agency.
"If the reserve funds exceed the ceiling, the excess must be used to increase benefits under the National Health Insurance Program (NHIP) and reduce members’ contributions," the Supreme Court stated. The ruling clarifies that surplus funds are meant solely to enhance healthcare coverage for Filipinos, not to finance other government appropriations.
Government Defense and Judicial Rebuke
Executive Secretary Ralph Recto defended the administration's actions, stating it was following a mandate from Congress embedded in the 2024 General Appropriations Act. The government's rationale was to utilize idle or "sleeping" funds from government corporations to support public programs without needing to impose new taxes or acquire more debt. Recto asserted that PhilHealth's services were never hampered and pointed to the agency's recent expansion of benefit packages.
However, the Supreme Court was unmoved by this justification. It found that the Department of Finance and the legislative provisions committed "grave abuse of discretion." The court argued that by stripping PhilHealth of its legally mandated reserves, the government made it impossible for the agency to comply with the UHCA.
"These measures undermine the very nature of PhilHealth funds as pooled resources for social health insurance, hinder the UHCA’s goal of delivering comprehensive and universal healthcare and ultimately violate the people’s right to health," the ruling added.
Implications and Next Steps for PhilHealth Funds
The ruling is a powerful affirmation of PhilHealth's financial independence and the protected status of health insurance funds. Malacañang has stated it will respect the decision and has pledged to abide by the directive to return the P60 billion that had already been transferred out of the total P89.9 billion.
Recto noted that President Ferdinand Marcos Jr. had already initiated steps in September to restore funds to PhilHealth in light of its improved financial performance. The legal process may not be fully concluded, as the Office of the Solicitor General is reviewing the ruling for a possible motion for reconsideration.
Meanwhile, both the House of Representatives and the Senate are taking steps to incorporate the required repayment into the national budget. The administration reaffirmed its commitment to maximizing resources for public health, with Recto stating, "Our goal remains the same: to make every hard-earned peso of the Filipino taxpayer count — for our people, for their families and for their health."
