The grand design of the UHCA begins with universal coverage which addresses accessibility. This is a feat already accomplished under the NHIP. The crux of the matter now lies on the subject of affordability and sustainability—two significant components addressed by Sections 11 and 37 of the UHCA; and two vital components of the right to health that were breached by Special Provision 1(d) as implemented by DOF Circular No. 003-2024.

Section 11 explicitly mandates a two-pronged mission, one, apportion adequate “reserve funds” to preserve the viability and sustainability of PhilHealth’s operations, and two, any excess in PhilHealth’s “reserve funds” must be allocated for the twin healthcare-related purposes intended to decrease the out-of-pocket medical expenses of Filipinos. The vision is to advance the goals of universal health care.

When Special Provision 1(d), as implemented by DOF Circular No. 003-2024, placed a portion of PhilHealth’s “reserve funds” under the guise of unrestricted “fund balance” to circumvent the clear prohibition of Section 11, it caused PhilHealth to stray from its mission and to betray the vision of the UHCA. Whatever meager progress set out in the cards were further derailed and delayed when PHP 89.9 billion—a significant amount which could have contributed to breaching the ceiling and triggering the twin purposes under Section 11—was swept away to fund projects that were, it turn out, neither urgent nor unfunded.

As it was, any improvements in the benefits offered under the NHIP, or additional benefits that could have been offered at the soonest possible time, merely touched our fingers, as if but a dream, and ultimately slipped from our grasp. More than retarded improvements in our healthcare, this ingenious move came, too, with the chilling threat to the very security and viability of the continued operations of the NHIP, as it completely overlooked systematic safeguards, e.g., the setting of actuarially estimated ceilings and consideration of the Provision for ICL, put in place specifically for special industries like the insurance business. Not only did this realignment of funds snatch aspirations for health care advancement, it threatens to destroy, too, the existing program which Filipinos currently have to live with.

This financial misalignment is not merely a budgeting error—it is a breach of our constitutionally guaranteed right to health. The diversion of PhilHealth resources undermines the UHCA’s legal architecture and violates the constitutional obligation to strive toward equitable, affordable, and sustainable health services for all.

As eloquently put by Justice Singh, the transfer of funds from PhilHealth is “fundamentally disruptive to the UHCA’s framework,” undermining the mechanism by which the State meets its healthcare obligations and threatening the universal healthcare system.³⁵⁶ SAJ Leonen properly characterizes the effect of this system on the greater constitutional rights of the people as “[destroying] the very nature of PhilHealth funds as pooled funds for social health insurance, [retarding] the attainment of UHCA goals of providing comprehensive and universal health care and infringes on the people’s right to health.”³⁵⁷ On the other hand, Chief Justice Gesmundo clarifies that the problem lies not in the State’s desire to improve our economy, but in its attempt to achieve this through means which directly contravenes what our Constitution itself has promised—that it will continuously endeavor to provide affordable healthcare to all Filipinos, especially the underprivileged in our society, and in turn, promote our people’s right to health.³⁵⁸

This is a consequence that cannot be assuaged by simplistically yet erroneously reasoning that the projects to be funded under the Unprogrammed Appropriations are health care-related anyway.

Neither Special Provision 1(d) nor DOF Circular No. 003-2024 specifically provides that the “fund balance” of PhilHealth shall only be utilized for health-related unprogrammed appropriations. As admitted by the OSG,³⁵⁹ portions of the “fund balance” remitted to the National Treasury have already been obligated or disbursed for purposes and programs classified as Unprogrammed Appropriations of the 2024 GAA,³⁶⁰ most of which have little or no connection to the right to health.

During the oral arguments, the DOF secretary himself admitted that PhilHealth funds have been partly utilized for infrastructure projects. He theorized that PhilHealth funds may be used to fund construction of roads and bridges, if it meant enabling Filipinos to access health care facilities. Notably though, the DOF secretary’s theory was refuted by Associate Justice Mario V. Lopez who emphasized that the primary purpose of the funds should be health.³⁶¹ In other words, the funds cannot be considered as allocated to health merely because of a remote incidental “health” benefit such as easier access to hospitals because of construction of roads and bridges.

Surely, the health and well-being of the population are intrinsically linked to broader goals of economic and social development. However, this interconnection cannot justify the use of funds for another purpose different from the purpose for which the funds are specifically earmarked, that is, to provide affordable and accessible health care. This redirection or repurposing comes at the expense of the very services that safeguard public health. It runs counter to the intent of the Constitution, which explicitly fortifies the right to health by mandating the State to ensure the availability and affordability of healthcare and other social services.

This violation is exacerbated by PhilHealth’s continuing failure to meet its mandated milestones, as discussed above. These deficiencies not only contravene the spirit of the UHCA but also erode public trust and delay the full realization of universal health care for all Filipinos, infringing the right to health and its essential derivatives, the right to affordable, sustainable, and accessible health care, including public health care insurance for individual-based health services.

Petitioners need not establish that a Filipino receives zero benefits from PhilHealth to prove a violation of the right to health and its related entitlements. Rather, it is sufficient to demonstrate that a government action—specifically, the diversion of PhilHealth’s “reserve funds” through Special Provision 1(d) and DOF Circular No. 003-2024—has materially undermined the core legal and ethical obligations enshrined in the UHCA, particularly Section 11. This section delineated the proper use of “reserve funds,” and any deviation from it constitutes an infringement of the statutory and constitutional commitment to affordable and accessible health care for all Filipinos.

Verily, it is clear that the people’s right to health was not merely deprioritized—it has been, with respect, brazenly disregarded. The right to health and its cognates, the right to an affordable, sustainable, and accessible public healthcare through the NHIP, are fundamental and inalienable entitlements that must be safeguarded with the government’s highest degree of commitment. These rights cannot be treated as a negotiable commodity, subject to fiscal trade-offs or policy realignments.

The government does not have the prerogative to rank national projects at the cost of undermining a constitutionally guaranteed right, especially when the prioritization of these other projects rests on false invocations of “urgency” and lack of funding. In this context, Special Provision 1(d) and DOF Circular No. 003-2024, insofar as they mandated the transfer of PhilHealth’s “reserve funds” to the National Treasury, constitute a direct and indefensible breach of the right to health.

The grand design of the UHCA begins with universal coverage which addresses accessibility. This is a feat already accomplished under the NHIP. The crux of the matter now lies on the subject of affordability and sustainability—two significant components addressed by Sections 11 and 37 of the UHCA; and two vital components of the right to health that were breached by Special Provision 1(d) as implemented by DOF Circular No. 003-2024.

Section 11 explicitly mandates a two-pronged mission, one, apportion adequate “reserve funds” to preserve the viability and sustainability of PhilHealth’s operations, and two, any excess in PhilHealth’s “reserve funds” must be allocated for the twin healthcare-related purposes intended to decrease the out-of-pocket medical expenses of Filipinos. The vision is to advance the goals of universal health care.

When Special Provision 1(d), as implemented by DOF Circular No. 003-2024, placed a portion of PhilHealth’s “reserve funds” under the guise of unrestricted “fund balance” to circumvent the clear prohibition of Section 11, it caused PhilHealth to stray from its mission and to betray the vision of the UHCA. Whatever meager progress set out in the cards were further derailed and delayed when PHP 89.9 billion—a significant amount which could have contributed to breaching the ceiling and triggering the twin purposes under Section 11—was swept away to fund projects that were, it turn out, neither urgent nor unfunded.

As it was, any improvements in the benefits offered under the NHIP, or additional benefits that could have been offered at the soonest possible time, merely touched our fingers, as if but a dream, and ultimately slipped from our grasp. More than retarded improvements in our healthcare, this ingenious move came, too, with the chilling threat to the very security and viability of the continued operations of the NHIP, as it completely overlooked systematic safeguards, e.g., the setting of actuarially estimated ceilings and consideration of the Provision for ICL, put in place specifically for special industries like the insurance business. Not only did this realignment of funds snatch aspirations for health care advancement, it threatens to destroy, too, the existing program which Filipinos currently have to live with.

This financial misalignment is not merely a budgeting error—it is a breach of our constitutionally guaranteed right to health. The diversion of PhilHealth resources undermines the UHCA’s legal architecture and violates the constitutional obligation to strive toward equitable, affordable, and sustainable health services for all.

As eloquently put by Justice Singh, the transfer of funds from PhilHealth is “fundamentally disruptive to the UHCA’s framework,”

undermining the mechanism by which the State meets its healthcare obligations and threatening the universal healthcare system.³⁵⁶ SAJ Leonen properly characterizes the effect of this system on the greater constitutional rights of the people as “[destroying] the very nature of PhilHealth funds as pooled funds for social health insurance, [retarding] the attainment of UHCA goals of providing comprehensive and universal health care and infringes on the people’s right to health.”³⁵⁷ On the other hand, Chief Justice Gesmundo clarifies that the problem lies not in the State’s desire to improve our economy, but in its attempt to achieve this through means which directly contravenes what our Constitution itself has promised—that it will continuously endeavor to provide affordable healthcare to all Filipinos, especially the underprivileged in our society, and in turn, promote our people’s right to health.³⁵⁸

This is a consequence that cannot be assuaged by simplistically yet erroneously reasoning that the projects to be funded under the Unprogrammed Appropriations are health care-related anyway.

Neither Special Provision 1(d) nor DOF Circular No. 003-2024 specifically provides that the “fund balance” of PhilHealth shall only be utilized for health-related unprogrammed appropriations. As admitted by the OSG,³⁵⁹ portions of the “fund balance” remitted to the National Treasury have already been obligated or disbursed for purposes and programs classified as Unprogrammed Appropriations of the 2024 GAA,³⁶⁰ most of which have little or no connection to the right to health.

During the oral arguments, the DOF secretary himself admitted that PhilHealth funds have been partly utilized for infrastructure projects. He theorized that PhilHealth funds may be used to fund construction of roads and bridges, if it meant enabling Filipinos to access health care facilities. Notably though, the DOF secretary’s theory was refuted by Associate Justice Mario V. Lopez who emphasized that the primary purpose of the funds should be health.³⁶¹ In other words, the funds cannot be considered as allocated to health merely because of a remote incidental “health” benefit such as easier access to hospitals because of construction of roads and bridges.

Surely, the health and well-being of the population are intrinsically linked to broader goals of economic and social development. However, this interconnection cannot justify the use of funds for another purpose different from the purpose for which the funds are specifically earmarked, that is, to

provide affordable and accessible health care. This redirection or repurposing comes at the expense of the very services that safeguard public health. It runs counter to the intent of the Constitution, which explicitly fortifies the right to health by mandating the State to ensure the availability and affordability of healthcare and other social services.

This violation is exacerbated by PhilHealth’s continuing failure to meet its mandated milestones, as discussed above. These deficiencies not only contravene the spirit of the UHCA but also erode public trust and delay the full realization of universal health care for all Filipinos, infringing the right to health and its essential derivatives, the right to affordable, sustainable, and accessible health care, including public health care insurance for individual-based health services.

Petitioners need not establish that a Filipino receives zero benefits from PhilHealth to prove a violation of the right to health and its related entitlements. Rather, it is sufficient to demonstrate that a government action—specifically, the diversion of PhilHealth’s “reserve funds” through Special Provision 1(d) and DOF Circular No. 003-2024—has materially undermined the core legal and ethical obligations enshrined in the UHCA, particularly Section 11. This section delineated the proper use of “reserve funds,” and any deviation from it constitutes an infringement of the statutory and constitutional commitment to affordable and accessible health care for all Filipinos.

Verily, it is clear that the people’s right to health was not merely deprioritized—it has been, with respect, brazenly disregarded. The right to health and its cognates, the right to an affordable, sustainable, and accessible public healthcare through the NHIP, are fundamental and inalienable entitlements that must be safeguarded with the government’s highest degree of commitment. These rights cannot be treated as a negotiable commodity, subject to fiscal trade-offs or policy realignments.

The government does not have the prerogative to rank national projects at the cost of undermining a constitutionally guaranteed right, especially when the prioritization of these other projects rests on false invocations of “urgency” and lack of funding. In this context, Special Provision 1(d) and DOF Circular No. 003-2024, insofar as they mandated the transfer of PhilHealth’s “reserve funds” to the National Treasury, constitute a direct and indefensible breach of the right to health.

Special Provision 1(d) and DOF Circular No. 003-2024 violated Article VI,
Section 25 (5) of the Constitution when the Secretary of Finance exercised
the power of augmentation exclusively belonging to the President

Article VI, Section 25(5) of the Constitution defines the power of augmentation:

No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations. (Emphasis supplied)

To be valid, the transfer of appropriated funds must be achieved by the concurrence of the following requisites: (1) there is a law authorizing the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to transfer funds within their respective offices; (2) the funds to be transferred are savings generated from the appropriations for their respective offices; and (3) the purpose of the transfer is to augment an item in the general appropriations law for their respective offices.362

None of these requisites was complied with.

First. The power to transfer savings under Article VI, Section 25(5) of the Constitution pertains to the president, the president of the senate, the speaker of the House of Representatives, the chief justice of the Supreme Court, and the heads of Constitutional Commissions—the list is exclusive and signifies no other.363

The doctrine of qualified political agency recognizes the necessity of delegating powers by reason of the multifarious responsibilities demanding the president’s attention.364 Nonetheless, there are powers vested in the president by the Constitution which must not be delegated to or exercised by an agent or alter ego of the president.365 The power of augmentation is one of them. It is an act specifically vested in the president alone. Hence, delegation is proscribed.

As held in Philippine Constitution Association v. Enriquez,³⁶⁶ while Article VI, Section 25(5) of the Constitution allows as an exception to the realignment of savings to augment items in the general appropriations law for the executive branch, this power must and can be exercised only by the President alone, pursuant to a specific law.

In fine, the secretary of finance cannot, in any capacity whether as alter ego of the president or as head of department, exercise the power of augmentation under the Constitution.

Second. The funds transferred were not “savings” generated from the appropriations for the Office of the President. In Araullo v. Aquino,³⁶⁷ the Court stressed that “savings” must come from the appropriations of the augmenting office itself. But “fund balance” transferred to the National Treasury cannot by any stretch be classified as “savings,” being part of the “reserve funds” which are kept for specific purposes—to meet unexpected contingencies and to improve the benefits under the NHIP. Neither is the “fund balance” from the appropriations of the Office of the President, having been derived from the “reserve funds” of PhilHealth.

Third. The transfer here was not made to augment an item in the general appropriations law for the Office of the President. The funds were not also intended for PhilHealth to augment its own appropriations. This is a clear infringement of the principle embodied in Article VI, Section 25(5) of the Constitution that the augmentation must benefit the same office as the office that is the source of the savings.

The power of augmentation is tightly regulated: it may only be exercised by specific officials and strictly within the bounds of existing appropriations. Neither Special Provision 1(d) nor DOF Circular No. 003-2024 conforms to these requirements, and thus, must be struck down.

Remarkably, the OSG itself concedes that the requisites set forth in Article VI, Section 25(5) of the Constitution were not met. Yet rather than acknowledging the legal implications of these omissions, the OSG uses this very infirmity as a defense, insisting that augmentation was never at play.

This reasoning is self-defeating. The absence of constitutional requisites does not absolve the measure—it invalidates the measure. The transfer of funds, whether acknowledged as augmentation or not, resulted in a realignment of resources without adherence to constitutional safeguards. Therefore, this action must be viewed for what it substantively is: an unauthorized exercise of the power of augmentation, and a violation of the constitutional order.

While the OSG categorically denies invoking the power of augmentation to justify Special Provision 1(d) and DOF Circular No. 003-2024, the undeniable consequence of these measures was the transfer of funds, and effectively, an augmentation as funds were drawn to Unappropriated Appropriations which lacked specific budgetary allocations, thereby assigning resources to purposes that previously had none.

Regardless of the OSG’s disavowal, this argument fails to satisfy the constitutional and legal prerequisites of augmentation and thus, any claim that augmentation was not invoked is belied by the very nature and effect of these fund transfers.

Another. What cannot be done directly cannot be done indirectly. While the form may differ from direct augmentation under Article VI, Section 25(5) of the Constitution, the result is the same: funds appropriated to PhilHealth are redirected and repurposed for the use of other budget items, here, Unprogrammed Appropriations. This set-up attempts to side-step but brazenly infringes the prohibition against the cross-border transfer of funds—that is, moving funds across institutional boundaries—and violates the proscription on the realignment of funds that have already been specifically appropriated.

The Constitution expressly prohibits cross-border transfers and reallocation of funds already appropriated for a particular purpose. To allow these assailed measures to take their course under the guise of congressional power would be to render this constitutional safeguard meaningless.

In Demetria v. Alba,³⁶⁸ the Court ruled that paragraph 1, Section 44 of Presidential Decree No. 1177, which granted the President authority “to transfer any fund, appropriated for the different departments, bureaus, offices and agencies of the Executive Department, which are included in the GAA, to any program, project or activity of any department, bureau, or office included in the GAA or approved after its enactment,” violated Article VI, Section 25(5) of the Constitution as it was then Article VIII, Section 16(5) of the previous 1973 Constitution.

In Alba, we thoroughly explained how Article VI, Section 25(5) of the Constitution, together with other constitutional provisions involving the use of public funds, was meticulously crafted as a safeguard against misappropriation and embezzlement of public funds:

The prohibition to transfer an appropriation for one item to another was explicit and categorical under the 1973 Constitution. However, to afford the heads of the different branches of the government and those of the constitutional commissions considerable flexibility in the use of public funds and resources, the constitution allowed the enactment of a law authorizing the transfer of funds for the purpose of augmenting an item from savings in another item in the appropriation of the government branch or constitutional body concerned. The leeway granted was thus limited. The purpose and conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if there are savings from another item in the appropriation of the government branch or constitutional body.

 

………..

 

“For the love of money is the root of all evil: . . .” and money belonging to no one in particular, i.e. public funds, provide an even greater temptation for misappropriation and embezzlement. This, evidently, was foremost in the minds of the framers of the constitution in meticulously prescribing the rules regarding the appropriation and disposition of public funds as embodied in Sections 16 and 18 of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money from the treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)]; the prohibition to transfer an appropriation for an item to another [Sec. 16(5) and the requirement of specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as correctly observed by petitioners, in view of the unlimited authority bestowed upon the President, “. . . Pres. Decree No. 1177 opens the floodgates for the enactment of unfounded appropriations, results in uncontrolled executive expenditures, diffuses accountability for budgetary performance and entrenches the pork barrel system as the ruling party may well expand [sic] public money not on the basis of development priorities but on political and personal expediency.”³⁶⁹ (Emphasis supplied).

The method by which appropriated funds are realigned—whether through a DOF Circular or a special provision in the GAA—is immaterial. What matters is the substance and effect of the government’s action; if the outcome constitutes the reallocation of funds, then Article VI, Section 25(5), of the Constitution must apply. Constitutional limitations are triggered not by labels but by outcomes.

Measures that result in fund transfers absent proper authority cannot escape scrutiny simply by being clothed in a different procedural form. It is, in essence, the same violation, and though with a different name, it is still the same affront to the rule of law. Ultimately, the Constitution does not bend for convenience nor yield to creative accounting or bookkeeping. The mechanisms employed—whether as special provisions or administrative circulars—cannot mask what is, in essence, a breach of constitutional order.

The unfortunate effect of Special Provision 1(d) is not only to disrupt the integrity of the appropriations process, but also to erode the principle of fiscal accountability enshrined in our Constitution. The diversion of PhilHealth’s “reserve funds” disregarded the legal safeguards of Article VI, Section 25(5); violated the express mandate of the UHCA; eroded the right to health and its cognates including the right to an affordable, sustainable and accessible public health care insurance; and subverted the State’s duty to ensure accessible, affordable, and sustainable health and health care for all. The choice to reallocate health care resources under arbitrary circumstances was not simply a fiscal misstep—it was a moral, and above all, a constitutional failure.

Aside from Article VI, Section 25(5) of the Constitution—which sets forth strict conditions for the exercise of the power of augmentation—We have not been referred to any other legal authority that empowers public officers to reallocate funds appropriated in a GAA. Specifically, no provision has been cited that would allow the transfer of appropriated funds from one program, project, or activity of an office within the Executive Department to another, whether within the same office or across different offices, whether in the same general appropriations act or post-enactment.

The OSG keeps referring to Special Provision 1 (d) and DOF Circular No. 003-2024 as the very basis for the authority to validate the implementation of these measures—despite these measures being the same exact provisions under constitutional scrutiny. This line of reasoning begs the question: one cannot justify legally contested measures by circularly invoking their own text as the source of authority.

The cash budgeting system is not applicable
to the funds of PhilHealth

Section 70 of the 2023 GAA provides for the application of the cash budgeting system, viz.:

Section 70. Cash Budgeting System. All appropriations authorized in this Act, including budgetary support to GOCCs and financial assistance to LGUs shall be available for release and obligation for the purpose specified, and under the same general and special provisions applicable thereto, until December 31, 2024, except for personnel services which shall be available for release, obligation and disbursement until December 31, 2023. On the other hand, appropriations for the statutory shares of LGUs shall be available for obligation and disbursement until fully expended.

 

The construction of infrastructure projects, delivery of goods and services, inspection, and payment of infrastructure capital outlays, MOOE and other capital outlays, including those subsidy releases to GOCCs for MOOE and capital outlays, shall be made not later than December 31, 2024.

 

After the end of validity period, all unreleased appropriations and unobligated allotment shall lapse, while unexpended or undisbursed funds shall revert to the unappropriated surplus of the General Fund in accordance with Section 28, Chapter 4, Book VI of E.O. No. 292 and shall not thereafter be available for expenditure except by subsequent legislative enactment. Departments, bureaus and offices of the National Government, including Constitutional Offices enjoying fiscal autonomy, SUCs, and GOCCs, shall strictly observe the validity of appropriations and the reversion of funds.

 

All funds transferred between national government agencies, or by national government agencies to GOCCs and vice versa, or by national government agencies to LGUs shall not be considered disbursed under this Section until the transferred amounts have been actually utilized to pay for completed construction, goods delivered and services rendered, inspected and accepted, within the validity period. It is understood that transfer of funds shall strictly be in accordance with pertinent budgeting, accounting, auditing, and procurement laws, rules, and regulations.

 

The DBM is authorized to issue the necessary guidelines for the effective implementation of the cash budgeting system. (Emphasis supplied)

On September 9, 2019, then President Duterte signed Executive Order No. 91, entitled “Adopting the Cash Budgeting System Beginning Fiscal Year 2019, and for Other Purposes.”

Cash budgeting system refers to a budgeting system where the annual appropriations limit the incurrence of obligations and payments for goods, services, and civil works delivered/rendered, inspected, and accepted, all within the current fiscal year or the transition period approved by the president as recommended by the Department of Budget and Management.³⁷⁰

Prior to the cash-budgeting system, the Philippines adopted the obligation-based budgeting which allows the delivery of contracts awarded, inspection, verification, and payment even after the end of the fiscal year. Under this system, contracts awarded within the fiscal year can be delivered even after the end of the fiscal year.

On the other hand, under the cash budgeting system, contracts of up to 12 months should be fully delivered by the end of the fiscal year.³⁷¹ This system promotes discipline, focus, and better operational planning among agencies as it funds only the programs and projects that can be implemented and completed within the fiscal year, and provides for a fixed implementation and payment period that must be strictly observed.³⁷²

The focus of the cash-budgeting system is on the delivery of goods or services and implementation of the projects funded by the GAA within the fiscal year. It has two key principles: (1) The budget or appropriations is valid only within the fiscal year and the extension period that will be determined by the DBM and the president; and (2) The disbursement of money under the GAA for the fiscal year is allowed only for goods and services delivered, inspected, and accepted within that same fiscal year, with certain exceptions.

In their petition, Pimentel III et al. argue that the appropriation for PhilHealth should have stayed in its coffers as PhilHealth should have been given the opportunity to utilize it until the end of the validity period or until December 31, 2024. We agree, not because of the violation of the cash budgeting system; but rather, it is because the funds of PhilHealth are special funds.

While the remittance of excess funds may have been in line with the cash budgeting system that discourages accumulation of unused obligations or idle funds for efficient cash management, the nature of the funds of PhilHealth precludes the application of the cash budgeting system.

As exhaustively discussed, the funds of PhilHealth are special funds created for a special purpose contemplated under Article VI, Section 29(3) of the Constitution. Hence, the cash budgeting system finds no application to the remittance of PhilHealth funds as there can be no instance that its funds will remain unobligated. While its funds may be unspent at a given time, there will still be no unobligated funds to speak of, as they are exclusively appropriated for the people’s right to health.

Petitioners erroneously raise as issues in the present cases
the alleged culpability of the DOF Secretary for technical
malversation and/or plunder; and the issuance of
guidelines on the president’s exercise of his or her
privilege to certify to the immediate enactment
of a bill under Article VI, Section 26(2),
of the Constitution

Penultimately, we decline the prayer of petitioners to: (a) determine the alleged liability of the DOF secretary for technical malversation and/or plunder; and (b) issue guidelines for the president’s exercise of his power to certify a bill as urgent under Article VI, Section 26(2) of the Constitution.

First. A petition for certiorari and prohibition—a special civil action limited to a determination of grave abuse of discretion³⁷³—is not the proper remedy to adjudge criminal liability or innocence for technical malversation or plunder. Rule 1, Section 3 of the 2019 Amendments to the 1997 Rules of Civil Procedure defines a civil action, either ordinary or special, as one by which a party sues another for the enforcement or protection of a right, or the prevention or redress of a wrong. A criminal action, on the other hand, is one by which the State prosecutes a person for an act or omission punishable by law.

Clearly, the references to alleged criminal liability for malversation or plunder to challenge the acts of the DOF secretary are improper. To reiterate, the only issue to be adjudicated here is the constitutionality of the assailed issuances and whether they were tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Second. The Court declines to heed the prayer of Atty. Colmenares et al. to issue guidelines on the president’s exercise of his or her privilege to certify to the immediate enactment of a bill under Article VI, Section 26(2) of the Constitution. The desired guidelines are superfluous, if not inappropriate. The Constitution is clear on when and why this certification is issued by the president. Too, the Congress is the sole judge of the sufficiency and propriety of the urgency certification by the president.

The Court also cannot grant the request of Atty. Colmenares et al. to issue parameters for the creation, practice, and process of a BCC. To reiterate, the Court defers to another time its ruling on the creation, powers, and actions of a BCC relative to the passage of a general appropriations law.

The remitted funds must be returned to PhilHealth;
the doctrine of operative fact is inapplicable

As a consequence of the unconstitutional transfer of the subject PhilHealth funds to the National Treasury pursuant to Special Provision 1(d) of the 2024 GAA and DOF Circular 003-2024, the remitted funds amounting to PHP 60 billion to PhilHealth must be returned to the coffers of PhilHealth.

As a general rule, a statute declared unconstitutional confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.³⁷⁴ As an exception, the doctrine of operative fact is applied in circumstances where the nullification of the effects of what used to be a valid law would result in inequity and injustice.³⁷⁵

In Chavez v. Public Estates Authority,³⁷⁶ citing the language of an American Supreme Court decision: “[t]he actual existence of a statute, prior to such a determination of unconstitutionality, is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official.”³⁷⁷

The operative fact doctrine is a rule of equity. As such, it must be applied as an exception to the general rule that an unconstitutional law produces no effects. It can never be invoked to validate as constitutional an unconstitutional act. Under the operative fact doctrine, the unconstitutional law remains unconstitutional, but the effects of the unconstitutional law, prior to its judicial declaration of nullity, may be left undisturbed as a matter of equity and fair play. In short, the operative fact doctrine affects or modifies only the effects of the unconstitutional law, not the unconstitutional law itself.³⁷⁸

In Municipality of Tupi v. Faustino,³⁷⁹ the Speed Limit Ordinance was declared void ab initio for failing to comply with the publication requirement under the Local Government Code and for being contrary to Section 36 of Republic Act No. 4136, which prohibited any local government unit from

enacting or enforcing any ordinance prescribing speed limits different from those provided in the law itself. Hence, we ordered the refund of the fine imposed pursuant to the Speed Limit Ordinance.

In Municipality of Tupi, the doctrine of operative fact was not applied on two grounds. For one, the application of the doctrine was not raised by any party before the courts. For another, there was no reliance by the public in good faith upon the Municipal Ordinance declared unconstitutional. The public challenged the validity of the Municipal Ordinance from the start. More importantly, we held that “it cannot be said that the assailed effect of the Municipal Ordinance, i.e., collection of fines, cannot be undone. The fines can in fact be restored to the respondent. No one has come forward to argue that the fines can no longer be refunded because, for example, the Municipality has become bankrupt.

In Saint Wealth Ltd. v. Bureau of Internal Revenue,³⁸⁰ the Court also mandated the return of the taxes collected pursuant to Sections 11(f) and (g) Republic Act No. 11590. This measure which introduced new tax impositions on POGO licensees was declared unconstitutional for being a rider. In ruling that the doctrine of operative fact was inapplicable, we held:

… [I]t is clear that a void or unconstitutional law generally produces no legal effect. The doctrine of operative fact serves as an exception to the general rule and is applied only in situations where the nullification of the effects of a law prior to its declaration of invalidity will result in inequity and injustice. When no injustice and inequity will ensue, “the general rule that an unconstitutional law is totally ineffective should apply.”

 

In this case, the Court finds that the operative fact doctrine is inapplicable because there is no inequity or injustice that will ensue despite the declaration of unconstitutionality of Section 11 (f) and (g) of the Bayanihan 2 Law and the Assailed Tax Issuances. The taxes collected from POGO licensees pursuant to the implementation of the Bayanihan 2 Law and the Assailed Tax Issuances must be returned. In fact, a contrary view –that the taxes should not be refunded –will result in inequity or injustice on the part of the POGO licensees … . . .

 

[I]t is evident that not to order a refund will result in injustice and inequity on the part of the POGO licensees. Thus, any amotmt that was collected from the POGO licensees based on the implementation of the Bayanihan 2 Law, and prior to the passage of R.A. No. 11590 should be returned. (Emphasis supplied)

In Yap v. Thenamaris Ship’s Management,³⁸¹ petitioner, an overseas Filipino worker, was illegally dismissed and was awarded only an amount equivalent to three months’ salary by the National Labor Relations Commission (NLRC) pursuant to Section 10 of Republic Act No. 8042. While the case was pending before the Court, Republic Act No. 8042 was declared unconstitutional in the case of Serrano v. Gallant Maritime Services, Inc.³⁸² Respondents argued that Serrano should not be applied retroactively as Section 10 of Republic Act No. 8042 is a substantive law that deals with rights and obligations of the parties in an illegal dismissal case. Relying on this law, the NLRC correctly held that petitioner is only entitled to an amount equivalent to his salary for three months. In rejecting this view, we held:

As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. …

 

The doctrine of operative fact serves as an exception to the aforementioned general rule.

 

…

 

Following Serrano, we hold that this case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law.³⁸³ (Emphasis supplied).

Here, the nature of the funds taken from PhilHealth warrants the application of the general rule.

What is at stake is the cost of protecting the lives and health of the people. It diminished the resources that were exclusively reserved for the implementation of the UHCA—crippling the State’s capability to deliver preventive, promotive, curative, rehabilitative, and palliative care for medical, dental, mental and emergency health services. Worse, by redirecting the funds to unprogrammed appropriations, programs that were neither prioritized nor provided with sources of funding, the State degraded and demoted the status of the people’s right to health.

As held in Municipality of Tupi, the State has not asserted that it is incapable of returning the amounts remitted. On the contrary, the State is presumed to be always solvent³⁸⁴ and thus, it is more than capable of complying with the directive of returning the amounts to PhilHealth. In fact, when asked by Justice Rosario whether the government can comply with the directive to return to PhilHealth and the other GOCCs their respective remittances, the DOF Secretary categorically answered in affirmative, subject to the inclusion of the said amounts in the 2026 NEP.³⁸⁵

To rule otherwise would have far more detrimental and far-reaching consequences. It cannot be emphasized enough that this involves no less than the right to health of the people. Depriving the people of these funds when the implementation of the universal healthcare is still in its critical early stages is tantamount to the abandonment by the State of its duty to uphold this inviolable right.

To reiterate, the doctrine of operative fact is rooted in the principles of equity and fair play. It would be anathema to its very purpose and nature if it will be used to perpetuate inequity and injustice. Allowing the State to retain these funds would set a dangerous precedent where unconstitutional measures that continuously infringe fundamental rights are tolerated and allowed to stand. As underscored by Justice Dimaampao, “the biggest ‘inequity and injustice’ in this case would be to deprive the Filipino people of an actual redress in the face of a violation of their right to health.”³⁸⁶ In other words, the retention of the special fund constitutes a continuing violation of the people’s right to health.

Mr. Africa advances the view that the funds must be retained by PhilHealth because of the increasing cost of healthcare in the Philippines which must be viewed together with the worsening poverty in the country. The resources of PhilHealth have been dramatically depleted not only by the transfer of the PHP 89.9 billion, but also by the allocation of only PHP 61.5 billion under the 2024 GAA. Too, the proposed subsidy of PHP 74.4 billion for PhilHealth in the 2025 GAA was deleted by the BCC. These budget cuts impeded the progress for the implementation of the UHCA. More importantly, the decision to restrict PhilHealth’s financial resources did not address the real issue, i.e. PhilHealth’s issue on lack of absorptive capacity. It points to a systemic issue in how public health institutions are managed and supported.

Thus, the return of the PHP 60 billion funds to PhilHealth is proper. On this score, we extend our utmost commendation to the DOF Secretary who, when asked by Justice Rosario whether the government can comply with the directive to return to PhilHealth and the other GOCCs their respective remittances, categorically answered in affirmative, subject to the inclusion of the said amounts in the 2026 NEP.³⁸⁷

More notable and commendable still is the recent pronouncement of President Marcos, Jr. himself avowing to restore to the PhilHealth the PHP 60 billion funds transmitted to the National Treasury as contained in the Motion for Leave to File and Admit Manifestation and Motion dated October 28, 2025 of the OSG.³⁸⁸

Final Note

As a final note, since the filing of the present Petitions, PhilHealth has introduced programs aimed at improving its services. In relation to its preventive care and outpatient services, for example, PhilHealth expanded and integrated the coverage of its outpatient benefit package, Konsulta,³⁸⁹ to include “Sustainable Development Goals or SDG-related packages.” This includes packages for tuberculosis, outpatient HIV/AIDS, malaria, and animal bites.³⁹⁰

In 2024, PhilHealth also rationalized its inpatient case rates, or the fixed predetermined rate or amount that it shall reimburse for a specific illness or case,³⁹¹ thus: (1) a 30% increase to select case rates was first applied;³⁹² and (2) a 50% percent increase to another set of select case rates was then implemented.³⁹³

PhilHealth likewise introduced, expanded or enhanced the benefit packages for the following: (1) hemodialysis;³⁹⁴ (2) severe dengue hemorrhagic fever;³⁹⁵ (3) inpatient benefit package for COVID-19,³⁹⁶ (4) ischemic heart disease with myocardial infraction;³⁹⁷ (5) outpatient emergency care benefit;³⁹⁸ (6) preventive oral health services in primary care;³⁹⁹ (7) z benefits package for kidney transplantation;⁴⁰⁰ (8) z benefits package for peritoneal dialysis;⁴⁰¹ (9) cataract extraction;⁴⁰² (10) optometric services for children;⁴⁰³ (11) physical medicine, rehabilitation services and assistive mobile devices;⁴⁰⁴ (12) z benefits package for open heart surgeries;⁴⁰⁵ (13) z benefits package for heart valve repair and/or replacement of valvular heart disease;⁴⁰⁶ and (14) z benefits package for post-kidney transplantation services in children⁴⁰⁷ and in adults,⁴⁰⁸ among others.

To borrow the words of our AI-less generations, kung hindi ngayon, kailan pa? Kung hindi tayo kikibo, sinong kikibo? Kung di tayo kikilos, sinong kikilos? Kung kaya palang gawin, bakit…ngayon ka lang dumating?

Despite the headlines of PhilHealth’s renewed efforts, the truth is unavoidable: this new vigor is not enough. What we are seeing are flashes of what is possible—shadows of what the UHCA truly envisions. The resurgence of PhilHealth is welcome. But this spotlights a deeper gap—the issue was never about “idle” funds; it was about funds deliberately made idle at PhilHealth, turned into a pliable “fund balance” ripe for exploitation, wittingly or unwittingly.

Let us be clear—the renewed vigor in PhilHealth proves two things. First, that systemic misalignment lurked behind technical jargon and bureaucratic fog—this should not happen again. Second, that our current public health insurance system is still leagues away from offering the reliability and dignity our citizens deserve—the funds should stay where they ought to be, not where they should be conveniently at. For this, we need more than reform. We need resolve. The kind that builds infrastructure, invests in access, empowers communities, and holds institutions accountable.

These are steps, but steps alone do not win marathons. The path to genuine universal healthcare is long, uphill, and non-negotiable. And, it is certainly not about political negotiations. We cannot let PhilHealth’s initial progress be mistaken for victory. Not while millions remain underserved, costs continue to soar, and public trust hangs by a thin thread. This moment demands audacity and not applause. The prologue is written. Now, we must finish the story.

Dr. Ho prefaced her Memorandum⁴⁰⁹ with this rather poignant encapsulation, perhaps shared by most, if not all, Filipinos:

“[T]he UHCA [is a] dream [which] simply means:

 

No Filipino will be impoverished due to healthcare spending.

 

No Filipino will be denied appropriate healthcare because of their capacity to pay.

 

No Filipino will die because they could not access health care providers on time.

 

No Filipino will need to beg for healthcare.”

Universal healthcare: a dream to Filipinos, still, after decades of implementation. Despite clear as day legislations. Despite elaborate designs for its realization. It, sadly, remains a dream. Why must Filipinos languish and beg for a right—an equally shared right that other nations have long enjoyed as a matter of course? Why must Filipinos have to ask, when illness haplessly arrives at their doorstep, whether they can afford to choose to live? When to live is an inalienable and sacred right enjoyed by all, regardless of capacity to pay. Why must Filipinos be forced to lie content with a dream when the law, nay, the Constitution itself commands this dream to reality?

No more. Enough is enough.

Filipinos deserve better. We deserve to dream, not of the day when we and our families can finally walk into the hospital without fearing financial ruin, but of the beautiful life that can still be led after healing. Children deserve to dream of spending many more years with their aging parents, untroubled by the threat of increasing expenses for their health and medical care. Parents deserve to dream that they can protect and save their babes from any pain and hurt and that they can do so no matter how much or how little they earn.

Filipinos demand better because they are owed better—much more, and far better than what has been delivered than what we had to make do, than what we had to endure for years.

Yes, universal healthcare may be a dream to most Filipinos for now. But to us—to the government, the leaders, the legislators, and most especially, to PhilHealth—it is a mandate. It is a duty. It is a mission. One that leaves no room for discretion. One that cannot be easily trifled with. One that cannot be relegated, or switched, or exchanged for a different project under the guise of “urgency,” under the ruse that these projects redound, too, to the health of the people. What use are the roads and the bridges, the infrastructure and the social programs, and any other project for that matter, when the people meant to enjoy them are sick and dying?

No, our people have waited long enough, suffered long enough, and hoped long enough. No more excuses. No more misdirection of funds and of priorities.

The Court will not sit idly by, not when the people look and cry to us for help, not when the Constitution charges us to be the singular indomitable bastion of our people’s rights. This Court will not be deaf to the pleas of our people. We will not be blind to their plight. And we certainly will not be callous to their agony.

We stand not merely to endure—but to flourish. In every heartbeat, we summon resilience. But we do not romanticize resilience while ignoring the problems that compel us to be resilient.

In every breath, we inhale possibility. We reject stagnation. We embrace momentum. With health in our bodies and clarity in our minds, we rise undaunted and unbroken.

Now is the time to act. Not later. Not in the next 10 years. NOW.

ACCORDINGLY, the Consolidated Petitions and Petition-in-Intervention are PARTLY GRANTED.

The Letter dated September 20, 2023 of President Ferdinand R. Marcos, Jr. addressed to Speaker Ferdinand Martin G. Romualdez certifying the urgency of House Bill No. 8980 or the 2024 General Appropriations Bill is declared NOT UNCONSTITUTIONAL.

Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act, DOF Circular No. 003-2024, and the transfer of the PHP 60 billion fund balance of the Philippine Health Insurance Corporation to the National Treasury are declared VOID for having been issued and implemented with grave abuse of discretion amounting to lack or excess of jurisdiction in violation of Article VI, Sections 25(2), 25(5), and 29(3) as well as Article II, Section 15 and Article XIII, Section 11 of the Constitution.

Respondents House of Representatives, Senate of the Philippines, Department of Finance, Office of the Executive Secretary, and the Philippine Health Insurance Corporation are PERMANENTLY PROHIBITED from implementing the transfer of the remaining PHP 29.9 billion fund balance of the Philippine Health Insurance Corporation and from further enforcing Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act and DOF Circular No. 003-2024.

Respondents House of Representatives, Senate of the Philippines, Department of Finance, and Office of the Executive Secretary are ORDERED to INCLUDE as a specific item in the 2026 General Appropriations Act the amount of PHP 60 billion to be returned to the Philippine Health Insurance Corporation, in addition to the regular budgetary appropriation for the agency, consistent with Section 8 of Republic Act No. 10351, as amended by Section 14 of Republic Act No. 11346 and Section 9 of Republic Act No. 11467 and in accordance with this Decision.

Respondent Philippine Health Insurance Corporation is DIRECTED to strictly comply with Section 11 in relation to Sections 5, 6, and 7 of Republic Act No. 11223 or the Universal Health Care Act in managing its funds and handling its operations in order to improve the National Health Insurance Program and achieve Universal Health Care in the country at the soonest possible time, as set forth in this Decision.

The Temporary Restraining Order against the transfer to the National Treasury of the remaining PHP 29.9 billion fund balance of the Philippine Health Insurance Corporation and the further implementation of Special Provision 1(d) and DOF Circular No. 003-2024 issued under Resolution dated October 29, 2024 is MADE PERMANENT.

The Motion for Leave to File and Admit Manifestation and Motion dated October 28, 2025 of the Office of the Solicitor General, as well as the public pronouncement of President Ferdinand R. Marcos, Jr. that he will order the return of the PHP 60 billion funds to the Philippine Health Insurance Corporation is NOTED.

SO ORDERED.