Solicitor General Menardo I. Guevarra has defended before the Supreme Court the legality and necessity of Special Provision 1(d) of the General Appropriations Act (GAA) of 2024 and the Department of Finance (DOF) Circular implementing it, describing the move as a temporary and common sense approach within legal bounds to finance critical government programs for Filipinos.

Special Provision 1(d) of the 2024 GAA authorizes the utilization of government-owned and -controlled corporations (GOCC) fund balances to finance key programs in health, social services, and infrastructure under the Unprogrammed Appropriations. It mandates the DOF to implement this provision, which led to the issuance of clear guidelines through DOF Circular No. 003-2024.

“The money needed to provide these essential services does not come easy in our side of the world. But as they say, scarcity breeds creativity––and oftentimes, creative and innovative solutions are borne out of something as common as common sense,” the SolGen said in his opening statement at the oral arguments in the Supreme Court on February 4, 2025.

The SolGen pointed out the wisdom behind the special provision and the DOF circular, emphasizing that these were the Executive and Legislative departments’ way of creating and implementing a fiscal policy to boost economic growth without bloating the government’s indebtedness or burdening the people with new tax measures. It does not violate any law, much less the Constitution in any way.

“It might have been less complicated if the national government simply borrowed money. But then, we must consider that, as of the end of February 2024, the national government debt was already recorded at PHP 15.8 trillion,” he said.

“[O]ur government will not be acting with common sense if it shelved other much-needed projects because one pocket is short on funds, while knowing fully that there is abundance in the other. Using the petitioners’ own words, there can be no greater act of “negative social justice” and “disservice to Filipinos” if that were to be the case,” the SolGen remarked.

DOF lawfully implements Congressional directive, fulfills its mandate as gov’t’s steward of sound fiscal policy

The SolGen made it clear that the DOF is simply executing a Congressional directive under the 2024 GAA, hence making Circular No. 003-2024 valid and in fulfillment of its mandate to generate and manage the financial resources of the government judiciously and in a manner supportive of development objectives.

In the said Circular, the DOF defined fund balance as the unrestricted funds of the GOCCs in the form of cash, investment in securities, and government subsidy, among others.

In the Philippine Health Insurance Corporation’s (PhilHealth) case, SolGen Guevarra explained that the fund balance was computed by totaling government subsidies for indirect contributors from 2021 to 2023, and deducting the total amount of benefit claims for the same period. This calculation resulted in excess funds amounting to PHP 89.9 billion.

“PhilHealth’s fund balance of PHP 89.9 billion was thus an accumulation of three years’ worth of government subsidies which had remained unexpended or unutilized as of the end of 2023. What, then, should we do with this unutilized surplus? The PHP 5.7 trillion budget for 2024 could only fund the programmed appropriations for specific priority projects that were intended to foster economic and social transformation and mitigate the effects of inflation on basic commodities, as well as to advance the government’s 8-point socioeconomic agenda,” he explained.

The SolGen emphasized that no part of the corpus of PhilHealth’s reserve fund, after having been reviewed and reduced to a reasonable level, reverted to the National Treasury.

In addition, only PhilHealth’s excess fund amounting to PHP 60 billion out of the PHP 89.9 billion was remitted to the National Treasury and in the process, contributed to the implementation of health-related programs under the Unprogrammed Appropriations.

Moreover, the Secretary of Finance did not usurp the President’s authority to transfer appropriations to augment any item for the simple reason that the process did not involve savings as presently defined under the GAA.

The SolGen further assured the Supreme Court and the Filipino people that, contrary to what has been portrayed by some critics, there was no dark or sinister plan behind the transfer of PhilHealth’s excess funds to the National Treasury.

He stressed that the national government is ready to expand on any or all of the petitioners’ allegations during the interpellation, which is set to continue on February 25, 2025.

The respondents on the consolidated petitions challenging the constitutionality of remitting excess funds from PhilHealth include the House of Representatives, represented by the Speaker Ferdinand Martin Romualdez; the Senate of the Philippines, represented by Senate President Francis Escudero; DOF Secretary Ralph Recto; Executive Secretary Lucas P. Bersamin; and PhilHealth, represented by its former President Emmanuel R. Ledesma, Jr.