… Congress has no authority to effect such transfer despite the honest intent to serve the public needs…
The Supreme Court brought clarity to the transfer of Philippine Health Insurance Corp.’s (PhilHealth) excess funds to the national treasury.
The transfer violated the Constitution and the laws governing special health funds. And Congress has no authority to effect such transfer despite the honest intent to serve public needs in an imperfect universal healthcare (UHC) system.
The 2024 General Appropriations Act (GAA) explicitly authorized the use of “excess” funds from government-owned and -controlled corporations (GOCCs), including PhilHealth.
Budget drafters and executors understood that the excess funds of PhilHealth could be tapped to support other urgent national priorities and still keep PhilHealth solvent and able to pay projected claims.
The transfer, though, drew some irresponsible accusations. Claims that withdrawing P89.9 billion from PhilHealth were “tantamount to canceling the premium payment of the informal sector” are absurd.
PhilHealth’s legal obligation to its members is defined by law and benefit packages. Even with a reduced reserve, PhilHealth remains bound to honor valid claims and provide benefits as mandated.
The High Court may have ignored the intent to provide wider healthcare services to Filipinos. When money is moved from PhilHealth’s fund reserves to severely underfunded frontline programs, such as hospitals, health workers and medical assistance, Filipino families still benefit.
The fund transfer was never meant to weaken UHC. On the contrary, it was designed to shore it up where it was actually failing—on the ground, in real hospitals serving real patients.
The UHC is falling short of its objectives not because a portion of PhilHealth’s excess reserves was redirected in 2024. The healthcare system has long been impaired, understaffed and hospital poor to credibly sustain UHC.
Redirecting idle reserves into concrete, immediate health and social interventions was a corrective attempt. But the SC has ruled that the state went beyond legal boundaries although the move clearly aimed to address real and urgent gaps.
Republic Act 11223 (the UHC Law) stipulates that any reallocation of PhilHealth funds is automatically suspect. The Supreme Court, thus, ruled that under RA 11223 and the Constitution, PhilHealth’s special funds cannot be tapped as was done in 2024.
The ruling should guide all future budgeting and close any ambiguity that economic managers and legislators may have previously relied on.
Critics of the administration, however, will surmise that the controversial fund transfer was a diversion to pocket the money. But neither former Finance Secretary Ralph Recto nor the PhilHealth board personally benefited from the remittances.
There was no diversion to ghost projects, no kickback scheme and no personal enrichment. No evidence has been found that the officials involved stole public money or acted with criminal intent.
The funds in question were not siphoned to pork barrel projects, political patronage or private gain. They were channeled through the budget, audited, and spent on programs that directly advance health, social protection and development.
As of December 2024, P60 billion had already been remitted and used. The spending record, among others, shows that P27.45 billion went to public health emergency benefits and allowances for healthcare workers during COVID-19 and P10 billion in medical assistance to indigent and financially incapacitated patients.
Another P4.10 billion went to medical equipment for the Department of Health (DOH) and local government unit hospitals and primary care facilities, while P13 billion were allocated as government counterpart for infrastructure and social development projects, including those improving health service delivery in remote areas and enhancing food security.
The Justices who submitted their respective separate opinions noted that no criminal liability can attach to the finance secretary, whom they found to have acted in good faith in implementing th fund transfer.
Neither technical malversation nor plunder was established by the High Court here as Congress ordered the Department of Finance (DOF) to sweep idle funds.
The DOF did not arbitrarily act on its own in sweeping excess and idle funds of GOCCs, like PhilHealth, that enabled the executive department to raise extra money to finance certain priority programs and projects (PAPs).
It did so as ordered by the 19th Congress, which has the constitutional power of the purse—or the authority to control the actions of the executive department by controlling funding and budgets of government agencies.
At that time, the national government was under pressure to raise a lot more funds because of the yawning deficit as a result of the urgent and obligatory diversion of PAP funds to badly-needed Covid-19 response to save lives and provide aid to hard-hit sectors.
The previous government also incurred heavy borrowings to cover emergency expenses, including the acquisition of expensive vaccines from abroad to give multiple vax shots to most Filipinos to protect them from the killer virus during the three-year pandemic.
As part of the DOF’s mandate and the government agency in charge of revenue generation, debt and deficit management and over-all cash management, it is its job to order the return the idle funds of GOCCs to the national treasury.
A number of GOCCs have surplus or excess money just lying around because of low absorptive capacity.
The DOF’s directive to order the transfer was nothing more than a faithful obedience to a compulsory Congressional directive.
E-mail: rayenano@yahoo.com or extrastory2000@gmail.com
