High Court justice says P160-B PhilHealth, PDIC fund moves skipped accountability

THE Senior Associate Justice of the Philippine Supreme Court (SC) said on Thursday that the transfer of funds from two government-owned and -controlled corporations (GOCCs), worth over P160 billion, was a stopgap measure that did not address the systemic problem of corruption.

“When we look at P15.8 billion (government expense) a day, we can take a look at, not only corruption, outright stealing from people, the people’s money, but also inefficiencies,” Senior Associate Justice Marvic M.V.F. Leonen told Finance Secretary Ralph G. Recto, who responded “That is correct.”

The two were speaking at SC’s fifth hearing of lawsuits on the controversial transfer of P89.9-billion PhilHealth funds to national coffers in Baguio City.

“Therefore, the gap that you need to fill in can sometimes be addressed, not only by transferring funds, but also attending to accountability. And accountability includes following the rule of law,” Mr. Leonen further said.

He, however, noted that the transfer of P60 billion from PhilHealth and P104 billion from the Philippine Deposit Insurance Corp. were a stopgap measure that failed to address the systemic problem of corruption. Mr. Recto, in response, asserted that “it does.”

“It does for the moment,” Mr. Leonen said. “It does also for teaching a lesson to these government corporations from your point of view.”

For the Finance chief’s part, he agreed the move taught government corporations a lesson because if the government had not transferred the P60 billion from PhilHealth, it would not have improved their benefit packages.

“If we do not reduce the reserve requirement, then there would be less money for increasing benefit packages to reduce out of pocket expenses,” Mr. Recto countered.

‘PRUDENT AND MORAL’
In the same hearing, the Finance Secretary said the Department of Finance (DoF) exercised prudence when it transferred P89.9 billion out of P138.1 billion of the PhilHealth’s unprogrammed appropriations to the National Treasury.

Mr. Recto said under the unprogrammed appropriations of PhilHealth, it can return P138.1 billion to national coffers, but the department “exercised a prudent and moral decision to limit the return to the excess, idle, and unused government subsidies from 2021 to 2023.”

“We did not want to touch the hard-earned contributions of the PhilHealth members. This is how we ended up determining the P89.9 billion of excess, idle, and unused government subsidies sleeping in PhilHealth’s bank that we, the taxpayers, are paying P5 billion in interest while sleeping,” he told the SC in full court. “And importantly, the move is aligned with the medical principle of do no harm.”

Mr. Recto, a former lawmaker who authored the Universal Health Care Act, also said that utilizing idle funds is a temporary and common-sense approach consistent with the Medium-Term Fiscal Framework, which aimed to reduce the fiscal deficit and national debt while ensuring the efficient allocation of public resources.

“With PhilHealth’s remittance, we raised more funds without increasing taxes or resorting to additional borrowing that future generations would have to shoulder. We protected the people without punishing them,” he stated.

He likened the move to the enactment of Bayanihan 1 and 2, the government’s economic stimulus and recovery measures during the coronavirus pandemic, calling the transfer a form of “Bayanihan 3” that utilizes existing funds rather than new taxes to support economic recovery.

Addressing concerns about PhilHealth members’ contributions, Mr. Recto clarified that the transfer did not affect individual contributions as it involved excess government subsidies that had been left idle.

He added that the transfer prompted PhilHealth to enhance its services and expand benefit packages, further improving healthcare access for Filipinos.

Of the P60 billion remitted from PhilHealth’s P89.9 billion in excess funds, 78% was allocated to critical health initiatives, including P27.45 billion for Health Emergency Allowances of COVID-19 frontliners, P10 billion for medical assistance to indigent patients, P4.1 billion for the procurement of medical equipment for hospitals and primary care facilities, P3.37 billion for three new Department of Health (DoH) health facilities, and P1.69 billion for the Health Facilities Enhancement Program.

An additional P13 billion was allocated to infrastructure and social programs aimed at improving healthcare delivery in remote areas and ensuring food security.

Meanwhile, IBON Foundation Executive Director Jose Enrique A. Africa, speaking as a friend of the court, said the move to transfer funds hurt involuntary members of PhilHealth, which include indigents, senior citizens, persons with disabilities, and other marginalized sectors.

Their contributions are subsidized by the National Government and direct contributing members to ensure access to essential healthcare services.

“We did see a fall in the number of PhilHealth indirect beneficiaries because already of budget cuts, it was I think 642 million in indirect benefits in 2023 down to about 21 million in 2024,” he told Mr. Leonen. “That immediately impacts on, we believe, roughly 60-70% of poor and vulnerable Filipinos, including, according to the central bank, 75% of families who do not have any savings, whether in the bank, home, in their pockets.”

In 2024, the government initiated the transfer of P89.9 billion from PhilHealth to the national Treasury, labeling these as “excess funds.” The money was supposed to fund various projects, including infrastructure and social services.

The High Court on the same day ordered both parties and the friends of the court to submit memoranda in a non-extendible period of 30 days from April 3 as it wrapped up its 5-day hearing on the consolidated lawsuits.

The High Court last November issued a temporary restraining order to stop the last tranche of transfers worth P29.9 billion.

The transfer faced legal challenges, with the plaintiffs arguing that PhilHealth’s funds, taken from member contributions and specific taxes, should be exclusively used for health-related purposes, as mandated by the Universal Health Care Act. — Chloe Mari A. Hufana