Groups ask SC: Stop transfer of PhilHealth funds

MANILA, Philippines —  Petitioners led by former Supreme Court senior associate justice Antonio Carpio are asking the SC to stop the transfer of “excess” funds of the Philippine Health Insurance Corp. (PhilHealth) to the national treasury to augment unprogrammed appropriations in the 2024 budget.

In a 46-page petition filed before the SC yesterday, Carpio and other petitioners asked the high court to issue a temporary restraining order (TRO), a writ of preliminary injunction and other injunctive remedies against the transfer of the funds.

The petition was filed as the third tranche of the funds, worth P30 billion, was transferred to the treasury as scheduled yesterday. Unprogrammed appropriations are seen as the new congressional pork barrel.

The P30 billion is part of the P89.9-billion total from PhilHealth that the Department of Finance (DOF) asked to be returned to the Bureau of the Treasury.

In particular, petitioners are asking the SC to block the implementation of DOF Circular 003-2024, which required government-owned and controlled corporations (GOCCs) to remit their fund balance to the national treasury.

They argued that the fund transfer constitutes “technical malversation” because the funds were diverted to “some public use other than that intended by law.”

They said PhilHealth funds are considered special funds because they are collected for a specific purpose, which is for health insurance, and unused or idle funds cannot be classified as government savings.

Citing Section 11 of Republic Act 11223, or the Universal Health Care Act, petitioners also said PhilHealth’s excess funds are prohibited from being transferred to the national government and instead should be used to increase the benefits of the universal health care program and to decrease the amount of members’ contributions.

“There shall be no reallocation of PhilHealth funds unless abandoned or their purpose has been accomplished. There is no abandonment nor fulfillment of its purpose, thus, it must stay and finance the purpose for which it was originally collected from the people,” the petition stated.

Petitioners also argued that plunder was “present” when the respondents, as public officers, amassed, accumulated or acquired ill-gotten wealth “through a combination or series of misappropriation, conversion, misuse or malversation of public funds or raids on the public treasury.”

They also highlighted the urgency of the issuance of a TRO, saying there is “irreparable damage” once the P89.9-billion PhilHealth funds are fully disbursed because Finance Secretary Ralph Recto “cannot return the money because the amount is so huge.”

“His assets will not be sufficient to pay for the damage. The loss of the P89.9 billion will be irreparable even if it is quantifiable,” the petition read.

Petitioners also asked the SC to declare as unconstitutional the DOF circular, as well as a provision of the 2024 General Appropriations Act (GAA), which contains the national budget.

They argued that Chapter XLIII of the 2024 GAA, which allowed excess reserve funds of GOCCs to be returned to the national treasury to augment unprogrammed appropriations, is unconstitutional due to the “invalid delegation of authority.”

They said that Article VI, Section 25 (5) of the Constitution prohibits the passage of any law that authorizes any transfer of appropriations. The President, the Senate President, the House Speaker, the Chief Justice and the heads of constitutional commissions, however, may be authorized to augment any item in the GAA for their respective officers from savings in other items of their budgets.

The secretary of finance is not among those who have authority to effect a transfer of unused or excess funds, according to petitioners.

They also challenged the constitutionality of the DOF circular, saying there was “usurpation of the constitutional power of the President” by Recto when he ordered the transfer of PhilHealth funds back to the national treasury.

So far, PhilHealth has remitted to the Treasury the first tranche of P20 billion in May and another P10 billion in August. The state insurer is scheduled to remit the third tranche of diversion amounting to P30 billion this month, while the remaining P29.9 billion is slated to be transferred in November.

Former Commission on Audit (COA) commissioner Heidi Mendoza said that should the high court side with the petitioners, it would help stop “risky and dangerous budget practices,” especially on the handling of unprogrammed funds which, she said, has a chance of being used on what it is not intended due to “lessen control.”

For former finance undersecretary Cielo Magno, the transfer of PhilHealth funds to the national treasury, especially when the state insurer has yet to address many health needs of its members, is a “betrayal of the government’s responsibility to address the public right to health.”

This is the third petition challenging the constitutionality of the PhilHealth fund diversion.

This time, the petitioners are the 1SAMBAYAN Coalition, members of the University of the Philippines Law Class 1975, Senior for Seniors Association Inc., Kidney Foundation of the Philippines and other private individuals.

Named respondents were Recto, the House of Representatives represented by Speaker Martin Romualdez, the Senate represented by Senate President Francis Escudero, Executive Secretary Lucas Bersamin and PhilHealth represented by its president Emmanuel Ledesma Jr.

The SC did not issue a TRO that was sought in the first two petitions, but it has set oral arguments on the petitions on Jan. 14, 2025.

In a separate filing before the SC, Bayan Muna, one of the first two groups of petitioners, filed a motion for the issuance of a TRO against the transfer of excess PhilHealth funds.

Bayan Muna asked the SC to stop the transfer of the remaining funds that have yet to be transferred to the national treasury, which amount to P29.9 billion.

The group also asked the high tribunal to issue a status quo ante order for the return of the diverted funds back to PhilHealth.

Former Bayan Muna representative Ferdinand Gaite said “siphoning funds from PhilHealth could negatively impact on the benefits of PhilHealth beneficiaries, while withdrawal of funds from PDIC (Philippine Deposit Insurance Corp.) could also affect depositors who rely on PDIC to insure their deposits in banks. This is the reason why Bayan Muna is filing this motion for the issuance of a TRO.”

Gaite also expressed concern on the transfer’s impact on government employees in GOCCs whose funds may be diverted to the unprogrammed funds, which he said is “full of pork barrel projects.”

The Office of the Solicitor General (OSG) earlier asked the SC to dismiss the petitions challenging the constitutionality of the PhilHealth fund transfer, which “when viewed from a broader perspective, will not necessarily hamper, much less disable, the implementation of PhilHealth’s mandate.”

The OSG pointed out that aside from its annual net income averaging more than P100 billion in the past three years, PhilHealth has a reserve fund over P480 billion as of March of this year, “highlighting its strong fiscal position.”

Sought for comment on the petition, Malacañang said it would not give one until the OSG discusses the matter with the Office of the President.

The DOF claims that tapping P200 billion in unused funds from both PhilHealth and PDIC could result in a potential 0.8-percentage-point increase in gross domestic product and contribute roughly 600,000 jobs. –  Louise Maureen Simeon, Alexis Romero