THE Commission on Audit has charged the Philippine Health Insurance Corp. with violation of its charter by investing P1 billion from its reserve funds in common stocks in a local bank in 2015.
Based on a June 30 audit report, the PhilHealth board approved the June 24, 2015 Resolution No. 1957 appointing a local bank as an external local fund manager via an investment management agreement (IMA).
Due to violation of Republic Act 10606 or the National Health Insurance Act of 2013, PhilHealth incurred losses of close to P40 million in the last five months of 2015, the state auditors said.
On July 7, 2015, PhilHealth made an initial investment of P1 billion.
“It was noted that the investment activities of the [local fund manager] for the period July 7 to December 31, 2015, Philhealth incurred losses for trading the listed common stocks investment of 19 companies in the amount of P39.267 million [net of interest income from special savings deposit and time deposit],” the audit report read.
It, however, did not identify the bank.
Citing Section 27(d) of RA 10606, CoA said the law was not allowing any investment of PhilHealth funds in common stocks.
“The investment therefore made in common stocks was not in accordance with the Corporation’s Charter. Section 2.2 of the IMA that does not guarantee the principal to a fixed interest or return of investment is contrary to Paragraph 2 of Section 27 of RA 10606 which expressly provides that Investment Reserve Fund shall be placed in investments to earn an average annual income at prevailing rates of interest,” the commission said.
“Thus we maintain our audit finding that investment in common stocks ranging from P576.051 million to P745.945 million of the total equity managed by the local fund manager is contrary to …RA 10606,” the CoA said.
On the other hand, PhilHealth invoked the equal protection clause under the 1987 Constitution, saying “those similarly situated must be treated equally both in privileges conferred and liabilities imposed,” citing its equal footing with the Social Security System and Government Service Insurance System.
Its official defended the common stocks investments, saying these were easier to sell in the stock market than preferred stocks, and that its investment value had recovered and shown profit at P1.03 billion as of May 18, 2016.