In a landmark decision safeguarding public healthcare funds, the Supreme Court of the Philippines has issued a forceful order for the return of tens of billions of pesos taken from the Philippine Health Insurance Corporation (PhilHealth). The ruling also establishes a permanent barrier against similar future transfers, reinforcing the legal protection of the nation's health insurance reserves.
Court Mandates Refund and Issues Permanent Ban
The High Court, in an order written by Associate Justice Amy Lazaro-Javier, has commanded the National Treasury to give back P60 billion in excess PhilHealth funds that were previously transferred. Furthermore, the Court has permanently prohibited the transfer of the remaining P29.9-billion fund balance from PhilHealth's coffers to the National Treasury.
SC spokesperson Camille Ting stated that these substantial funds must be returned to PhilHealth through the mechanism of the 2026 General Appropriations Act (GAA). This decision stems from the Court's finding that the original transfer was executed with grave abuse of discretion.
Legal Provisions Voided for Undermining Healthcare Law
The Supreme Court's ruling struck down two key instruments that authorized the fund transfer. It declared void Special Provision 1(d), Chapter XLIII of the 2024 GAA, which had allowed the return of excess reserve funds from government corporations like PhilHealth to the National Treasury. These funds were intended to finance unprogrammed appropriations.
Similarly, the Court invalidated Department of Finance (DOF) Circular No. 003-2024. This circular had directed the transfer of a total of P89.9 billion, representing PhilHealth's fund balance, to the National Treasury. The Court found both actions violated the law by exceeding their jurisdiction.
Protecting the Pillars of Universal Healthcare
The core of the Supreme Court's decision rests on the Universal Health Care Act (UHCA). The Court emphasized that under Section 11 of the UHCA, PhilHealth is legally required to maintain reserve funds up to a ceiling equivalent to two years of projected program expenses. Annual net income must contribute to these reserves, and any unused funds are to be invested, with earnings funneled back.
"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 Court reiterated. It firmly pointed out that the law expressly forbids transferring any portion of this reserve fund or its income to the National Government or its agencies.
The Court concluded that the challenged provisions made compliance with the UHCA impossible. It ruled that reallocating these "excess reserve funds" undermined the nature of PhilHealth funds as pooled resources for social health insurance. This move, the Court stated, hindered the goal of delivering universal healthcare and ultimately violated the people's constitutional right to health.
