Perhaps at no other time in its history has the Supreme Court (SC) been embroiled in successive related cases that grip the public’s attention and that have profound implications on jurisprudence, governance, institutions, and the economy.
How the administration has debased Universal Health Care (UHC) by taking away Philippine Health Insurance Corp. (PhilHealth) funds, allocating a budget of zero for PhilHealth in the 2025 General Appropriations Act (GAA), and diverting the sin taxes earmarked for PhilHealth has become a central issue in the midterm elections. In the March 2025 Social Weather Stations (SWS) poll, 90% of the voters said they “will vote for a candidate who will advocate for… strengthening of the healthcare system.”
Post-pandemic healthcare becoming a primary issue in the elections is a result of the sustained collective action by concerned organizations and individuals. They exposed and condemned the PhilHealth fund transfer and called it an illegal act. This culminated in citizens’ petitions being filed at the SC to stop the fund transfer. The people have become more informed about the issue upon hearing the oral arguments on the petitions before the SC.
But the issue is not just about PhilHealth or the healthcare system. What caused the funds being taken away from PhilHealth, as well as from the Philippine Development Insurance Corp. (PDIC)? Recall that a special provision in the 2024 GAA gave the Department of Finance (DoF) the authority to identify government-owned and –controlled corporations (GOCCs) with “unused funds” and order these GOCCS to have the “unused funds” remitted to the National Government. The DoF then issued Memorandum Circular No. 003-2024 that directed PhilHealth and PDIC to remit P89.9 billion and P107.23 billion, respectively.
It was the act of Congress to insert a massive amount of corruption-prone, discretionary, and opaque funds for politically partisan projects — essentially pork barrel. Fattening the pork barrel meant a sharp reduction of the budget for the original National Expenditure Program (NEP). And to finance the regular expenditure programs, which became unprogrammed appropriations, the Congress and Executive cleverly but disingenuously raided the funds exclusively belonging to PhilHealth (including the earmark money from sin taxes) and the PDIC.
The SC recently concluded the oral arguments on petitions that question the constitutionality of the special provision in the 2024 GAA together with the DoF Memorandum Circular No. 003-2024 that authorized the transfer of ring-fenced PhilHealth funds to the National Government. Accordingly, the petitioners pray for a favorable SC ruling that will declare the P89.9 billion be returned to PhilHealth. An initial favorable sign was the SC’s issuance of a temporary restraining order on the further transfer of PhilHealth funds. This involved an amount of P29.9 billion, which constituted the last of three tranches.
A concise summary of the oral arguments (from the perspective of the petitioners) together with the insightful interventions of the SC Justices can be found in the BusinessWorld “Yellow Pad” column written by my colleague, Pia Rodrigo: “Concluding the PhilHealth oral arguments,” published on April 14.
But even as the SC justices will start penning the decision on the first set of petitions, the SC will likewise calendar a hearing for new petitions that question the constitutionality of the 2025 GAA. The thrust of the new set of petitions is similar to the first. One issue is the violation of the Universal Health Care Act because of the failure to provide mandatory funding for the national health insurance program. A related issue is the non-compliance with the Sin Tax Law that earmarks to PhilHealth the excise tax revenues from tobacco and sweetened beverages.
Further, the petitioning groups ask the SC to tackle other issues pertaining to the budget or GAA. To wit:
• The unlawful increase in appropriations, going beyond what the President recommended.
• The manipulation and reduction of the Education budget and reallocating funds from education to pork-barrel infrastructure. The effect: a GAA wherein infrastructure replaces education as having the highest budget priority. This undermines the constitutional provision: “The State shall assign the highest budget priority to education….”
• The submission by the Bicameral Conference Committee of a report with blank items on the General Appropriations Bill.
On top of all this, we anticipate another legal question or petition addressed to the SC. This time it will focus on the remittance of PDIC funds amounting to P107.23 billion, even bigger than what PhilHealth was ordered to transfer. PDIC, being a GOCC, is covered by the controversial special provision in the 2024 GAA and the DoF Memorandum Circular.
In fact, the legality or constitutionality of the remittance of PDIC funds to the National Treasury is already covered by the petitions on the transfer of PhilHealth funds. The special provision of the 2024 GAA and DoF’s Memorandum Circular No. 003-2024 are the basis for the sweep of both PhilHealth and PDIC funds.
A central argument of the petitions before the SC is that the GAA and, for that matter, a mere Memorandum Circular cannot amend other laws. The special provision in the 2024 GAA is a rider, which the Philippine Constitution prohibits. A rider provision is one that is not relevant or germane to the main subject of the law. In this case, the transfer of PhilHealth and PDIC funds to the Treasury is not at all germane to the General Appropriations Act. A bill must be about a single subject. The GAA thus cannot amend the laws governing PhilHealth and PDIC.
It is likewise absurd, or bizarre, to have a special provision in the GAA and a DoF Memorandum Circular order the PDIC to remit funds to the Treasury. It is, after all, clear in its Charter that “The Corporation shall declare and remit cash dividends to the National Government.” But the condition is: “For purposes of computing the amount of dividends to be declared and remitted to the National Government, the dividend base shall be the sum of all income, but excluding all assessment income. No other deductions from the dividend bases shall be allowed.” [Underscoring mine.]
In other words, the PDIC shall not remit the assessment income (income from the assessment rates levied on banks).
In this context, since PDIC is allowed to declare dividends to be remitted to the National Government so long as these exclude assessment income, we can only interpret that the special provision in the 2024 GAA and the DoF Memorandum Circular intend to amend the Charter towards expanding the dividend base and including income from assessment rates.
It is therefore important to highlight the issue of the PDIC remittance to the National Government. While the PDIC issue is tied to that of PhilHealth, the PDIC question has its distinctness.
Alex Escucha, my School of Economics classmate and fellow columnist, wrote a two-part “Introspective” column in BusinessWorld about the PDIC case (“Congress puts DoF in a bind and having to dip into PhilHealth and “GOCCs: The case of PDIC,” March 31 and April 4). I quote his key message:
“If the premiums or assessment collections that built up the DIF [Deposit Insurance Fund] were exempt from the computation of dividends to the National Government, how much more the cumulative DIF itself? Common sense dictates that the DIF itself — the accumulated total of all these premiums over the years — will be equally, if not even more, protected/exempt from any dividend computation.”
What then should have been the sound policy? In the example of PhilHealth, the law is clear that any excess of the reserve funds should be used to expand benefits and reduce premiums of direct contributors. In the same vein, any surplus from the PDIC’s DIF should primarily be used to reduce the premiums paid by banks or suspend the collections.
The collective action to challenge the transfer of PDIC funds is admittedly more difficult to undertake, in comparison to the broad movement vis-à-vis the PhilHealth issue. The shareholders and bank executives who have the legal standing to file a petition at the Supreme Court may fear possible retaliation and harassment that the administration is capable of doing. On the other hand, bank depositors are scattered and unorganized. The small depositors do not have a strong incentive to do costly advocacy on an issue that they feel has minuscule benefits for them.
Yet, the PDIC case is a public interest issue. At stake: fiscal stability and financial integrity, which, if gravely undermined, would have immeasurable costs for everyone. It is thus incumbent upon the enlightened citizens to take up the cudgels for the public interest.
Filomeno S. Sta. Ana III coordinates the Action for Economic Reforms.