Drug war, POGOs, PhilHealth fund issues reach SC

Yearender

MANILA, Philippines — Controversial issues plagued the nation throughout the year – from investigations into alleged human rights violations during the previous administration’s drug war which reached the International Criminal Court, the uncovering of illegal activities in Philippine offshore gaming operator (POGO) hubs that led to the downfall of the industry, and inquiries into the use of public funds by the country’s second-highest ranking official in the country.

Some of these issues landed in the Supreme Court (SC), which has the duty to settle actual controversies involving rights that are legally demandable and enforceable and to determine if any branch or instrumentality of government has acted with grave abuse of discretion amounting to lack of excess of jurisdiction.

PhilHealth funds

Among the contentious issues that shook the nation is the diversion of P89.9-billion unused funds from the Philippine Health Insurance Corporation (PhilHealth) to the national treasury in a bid to augment unprogrammed appropriations in the 2024 budget.

The issue has sparked debate among lawmakers, health care professionals and the public, raising concerns about the legality and ethical implications of diverting funds earmarked for health care to other budgetary needs.

It all started when the Department of Finance (DOF) issued Circular No. 003-2024, which directed the transfer of unused subsidies from government-owned and controlled corporations (GOCCs), specifically PhilHealth, to the national treasury to bolster the government’s unprogrammed appropriations.

Unprogrammed funds are those included in a government’s budget that serve as a financial reserve for projects, programs or expenses that are not specifically itemized or detailed in the budget.

These funds serve as a contingency fund, which allows the government to address unforeseen or emergency expenditures that arise during the fiscal year.

This directive sparked concerns on the legality of the circular, prompting several groups to file a petition for certiorari before the SC.

Three petitions – which have been consolidated – have been filed before the SC.

Petitioners include Sen. Aquilino Pimentel III, former Department of Finance (DOF) undersecretary Cielo Magno, Bayan Muna party-list and 1Sambayan Coalition led by former Supreme Court Associate Justice Antonio Carpio.

Named respondents were Finance Secretary Ralph 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.

All petitions claimed as unconstitutional Chapter XLIII of the 2024 General Appropriations Act (GAA), which contains this year’s national budget, which allowed excess reserve funds of government-owned and -controlled corporations (GOCCs), like PhilHealth, to be returned to the national treasury to augment unprogrammed appropriations.

They also challenged the legality of DOF Circular 003-2024, which was based on the said GAA provision, requiring GOCCs to remit their fund balance to the national coffers.

Petitioners argued that the transfer is unconstitutional and threatens the implementation of the Universal Health Care Act and other health care initiatives.

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

PhilHealth funds, they said, are considered as 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.

Petitioners also asked the SC to issue a temporary restraining order (TRO) to block the implementation of the assailed DOF circular and the provision in the GAA 2024. One of the petitions also asked for a status quo ante order, which would order the return of the funds already transmitted to the national treasury.

The Office of the Solicitor General (OSG), which represents the government in the case, earlier asked the SC to dismiss the petitions challenging the constitutionality of the PhilHealth fund transfer which, it said, “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.”

In October, the SC issued a TRO against the further transfer of PhilHealth funds to state coffers.

PhilHealth has so far remitted to the national treasury the first tranche of P20 billion in May and another P10 billion in August. The state insurer then remitted the third tranche of diversion amounting to P30 billion in October.

The remaining P29.9 billion was supposed to be transferred in November.

According to the SC, it is still possible for the SC to issue a status quo ante order.

The SC has set oral arguments on the petitions on Feb. 5, 2025.

2025 elections

Another public interest case lodged before the SC is the issue on the contract between the Commission on Elections (Comelec) and South Korean firm Miru Systems for the conduct of the upcoming 2025 national elections.

Comelec has replaced Smartmatic after Miru won the big-budget deal to deploy voting machines to the Philippines for next year’s polls, with a P17.9-billion budget.

The polling body will replace Smartmatic’s decade-old vote-counting machines that Filipinos have used since the 2016 elections.

Former lawmaker Edgar Erice filed a petition for certiorari before the SC in April 2024, which asked the high tribunal to declare null and void the contract between Comelec and Miru for allegedly violating the law on automated elections.

Erice asked the SC to issue a restraining order or a writ of preliminary injunction to stop Comelec from implementing the polling body’s resolution awarding the project to Miru.

The former lawmaker argued the contract between Miru and Comelec violated Republic Act 7369 or the Automated Election Law.

Erice also noted that the government will spend P17.99 billion for an automated election, which is the first time as the government only spent about P6 billion in the past five elections.

Smartmatic was earlier disqualified by Comelec from participating in all of its procurements, but this was later reversed by the SC.

The SC had ruled that the Comelec committed grave abuse of discretion when it disqualified Smartmatic before it could submit any bids.

In its ruling, the SC did not nullify the public bidding or award of the contract granted to Miru Systems, which won the public bidding.

The High Court cited considerations of equity, justice and practicality, as well as the doctrine of operative fact, to hold that its findings will not affect the 2025 polls.

The high tribunal has so far ordered Comelec and Miru to comment on Erice’s petition.

Disbarment vs VP

While disbarment complaints, in themselves, are not controversial, it becomes public interest when the second-highest ranking official of the country is facing one.

Vice President Sara Duterte, a lawyer, is facing a disbarment complaint filed by anti-poverty czar Larry Gadon, a disbarred lawyer himself.

The reason for the complaint? Duterte’s expletive-filled remarks and her alleged assassination threat against President Marcos Jr. and some of his family members aired in a midnight press conference in November.

Gadon said the SC should initiate a “motu proprio proceeding of disbarment” against Duterte, whose statements are “undoubtedly illegal, immoral and condemnable.”

He noted that Duterte’s remarks had been seen by millions of Filipinos, reported on television, radio and newspapers and now has become general public knowledge that “the Court may take judicial notice.”

“Such statements coming from the second highest official of the land, seen and heard by millions of Filipinos, are undoubtedly illegal, immoral and condemnable. As a lawyer herself, she should be disbarred,” Gadon said.

Gadon said disbarment proceedings against Duterte will test the SC’s fairness, noting that the high tribunal did not disbar nor suspend the Vice President when as then the Davao City mayor, she punched a sheriff who was enforcing a court order to dismantle an informal settlers’ community.

Under the law, “proceedings for the disbarment, suspension or discipline of attorneys may be taken by the Supreme Court motu proprio, or upon the filing of a verified complaint of any person before the Supreme Court or the Integrated Bar of the Philippines (IBP).”

According to the SC, it has received an “anonymous” disbarment complaint against Duterte over her remarks of exhuming the remains of former President Marcos Sr. and throwing them to the West Philippine Sea.

The high tribunal has yet to act on this.

There is likewise a pending disbarment case against Sara which was filed when she was still Davao City mayor.

Another possible ground for Duterte’s disbarment is when Duterte acted as counsel for her chief-of-staff Zuleika Lopez, according to NBI director Jaime Santiago.

This, he explained, is prohibited under the Constitution as public officials are barred from practicing their profession while holding office.

According to former Integrated Bar of the Philippines (IBP) president Domingo Cayosa, there are lawyers who have been disciplined by the IBP and the Supreme Court over saying expletives. They either received warnings or suspensions and even disbarment.

Cayosa also said Duterte’s assassination remark violates Canon 1 of the Code of Professional Responsibility and Accountability (CPRA), which states that a lawyer shall uphold the Constitution and obey the laws of the land and promote respect for law and for legal processes.

He said Duterte’s remarks of contracting a hitman to kill individuals either preemptively or out of revenge is “not respect for law and legal processes.”

OVP confidential funds

A public interest case that the SC has yet to decide on are the petitions challenging the legality of the transfer of P125 million of confidential funds to the Office of the Vice President in December 2022 and those questioning the constitutionality of the government public utility vehicle modernization program.

The SC has consolidated petitions, filed in 2023, that are challenging the constitutionality of the so-called confidential funds given to the OVP in 2022.

Two petitions have been filed before the SC that challenges the legality of the Office of the President (OP)’s move to allow the budget department to release P125 million in confidential funds to the Office of the OVP in December last year, which was reportedly spent in just 11 days.

Petitioners argued that there was no line item in the OVP for confidential funds under the 2022 national budget.

Also in November, retired SC senior associate justice Antonio Carpio led the filing of a petition for certiorari and mandamus, with urgent prayer for the issuance of a temporary restraining order, against the use of general funds in general.

The petitioners asked the SC to declare null and void Joint Circular No. 2015-01, which guides the use and auditing of confidential funds.

Vice President Duterte has asked the high tribunal to junk the petitions, saying there is no actual case or controversy to resolve.

Duterte argued that the petitions, which sought to have the transfer of funds declared as unconstitutional, do not show an actual case or controversy nor alleged a legally demandable and enforceable right, which calls for the exercise of judicial power.

“The petitions are mere apprehension and speculation about contingent funds or confidential funds, which does not constitute a justiciable controversy,” the 19-page consolidated comment filed in May 10 read.

Duterte said the SC should not decide on “mere academic questions to satisfy scholarly interest,” pointing out that the petitions do not even accuse her of committing grave abuse of discretion.

She also pointed out that the petitions for certiorari did not show that she is a tribunal, board or officer exercising judicial or quasi-judicial function nor alleged that she exercised grave abuse of discretion.

“The petitioners said they will suffer or have suffered any concrete injury resulting from the act supposedly committed by VP Sara ‘with grave abuse of discretion.’ The petitioners simply made a blanket allegation that they are taxpayers or concerned citizens but without the constitutional requirement of justiciability,” she said.

The Vice President also argued that even if the SC is vested with judicial power, it does not follow that it should resolve every question that it may have the authority to answer.

“To conclude, it is important to state that courts do not sit to adjudicate mere academic questions to satisfy scholarly interest therein, however intellectually solid the problem may be,” Duterte said.

In her comment, Duterte said her office endeavored to bring services closer to the public through satellite offices in the country.

The Department of Budget and Management (DBM) then gave a favorable recommendation to the OP and identified the funds to be released to the OVP would come from the Contingent Funds of the General Appropriations Act, which contains the national budget.

Upon the recommendation of the DBM, President Marcos granted the release of funds to the OVP.

Aside from Duterte, Bersamin and Pangandaman, the Senate led by then president Juan Miguel Zubiri, the House of Representatives led by Speaker Martin Romualdez and some officials of the Departments of Education, of Budget and Management and of the Interior and Local Government were named respondents.

Concerns over the use of confidential funds were prompted due to the Commission on Audit (COA) report which found that the OVP spent P125 million in just 11 days. Issues raised include how confidential and intelligence funds are much more difficult to audit as they are exempted from COA’s standard procedures.