SUPREME Court Associate Justice Alfredo Benjamin Caguiao yesterday said the government should have spent unused, excess or idle funds of the Philippine Health Insurance Corporation (PhilHealth) to provide more benefits to its members instead of reverting it to the national treasury to be used for other purposes.
“Since it has yet reach the ceiling at this time, legally and if we follow the language of Section 11 of the Universal Health Care Act, more portion of its reserve funds can be used to increase benefits and lessen the member’s contribution,” Caguiao asked
government lawyers during yesterday’s oral arguments on the petition challenging the validity of the government’s move to transfer P89.9 billion in excess PhilHealth funds to the national treasury.
Caguioa directed his statement at
Government Corporate Counsel Solomon Hermosura, Solicitor General Menardo Guevarra and Nerissa Santiago, the acting senior vice president of the Office of the Senior Vice President for Actuarial Services and Risk Management Sector of PhilHealth.
“In other words, using the figures of DOF (Department of Finance), the excess of reserve fund amounting to P183.1 billion should, by Section 11, be used to increase benefits and to decrease the amount of member’s contributions. That’s the language of Section 11. Can we agree on that?” he added.
Guevarra said he agreed with Caguiao’s position but said there were policy considerations to be made.
“There are policy considerations, your Honor,’ Guevarra said, to which Caguioa said he is talking not about policy considerations but only the law.
The magistrate also pointed out that reserve funds cannot be considered as idle funds since they are earning income from investments, to which Santiago agreed.
In the previous oral arguments on the issue, Associate Justice Amy Lazaro-Javier repeatedly emphasized that the PhilHealth funds should be “used exclusively” for its programs and not diverted to unrelated programs or purposes.
“Reserve funds, as it is named, are reserved and cannot be subject to the discretion of PhilHealth to be used for another purpose,” Lazaro-Javier said.
Associate Justice Antonio Kho Jr. has also previously said that PhilHealth’s reserve fund and its transfer is “precisely the meat of this case.”
“You are telling us the problem is the absorptive capacity of PhilHealth? You are just providing excuses to take the money from PhilHealth so people will not understand absorptive capacity,” Kho said.
He added that PhilHealth funds should be used for the benefits of its members and not for other purposes.
“Kasalanan ito ng Philhealth Board, the money is there,” he said.
‘ECONOMIC RECOVERY’
Finance Secretary Ralph Recto reiterated the transfer of the P89.9 billion excess PhilHealth was a “temporary and common sense” approach to fund critical programs of the government.
Recto joined Guevarra, Hermosura and other government officials during the oral arguments, which the SC en banc held in Baguio City.
“As the Solicitor General has accurately pointed out early in this oral argument, this move is a temporary and common sense approach within legal bounds to fund critical government programs for Filipinos,” Recto said, as he detailed the dire financial situation that confronted the Marcos administration due in part to the COVID-19 pandemic and the debt left behind by the previous administration.
“By 2022, when President Marcos Jr. took office, our national debt soared by P7.47 trillion. This surpasses the combined debt of all previous administrations, bringing our debt-to-GDP ratio from its lowest level of 39.6 percent in 2019 to a high of 60. 9 percent in 2022,” he said.
He said the debt became the responsibility of the Marcos administration, which made funding for critical government programs a huge challenge.
“Thus, Congress mandated in the 2024 General Appropriations Act to sweep the unused, idle and excess funds of government-owned and controlled corporations to raise more resources to support the President’s priority programs to enhance economic recovery efforts,” he said.
He said it would be a disservice to the people if the government would not use unused or idle funds.
“That would be a disservice to the very people we have pledged to serve. Sleeping funds serve no one. Every idle peso is a disservice to every Filipino,” he stressed.
The finance chief said the 2024 General Appropriations Act (GAA) had an appropriation of P5.768 trillion, of which only P4.273 are supportable by government revenues.
On a daily basis, he said government expenditures amounted to P15. 8 billion in cash, of which P11.71 were funded by revenue collection and the rest by loans.
‘Thus, this move to sweep the unused, excess, idle funds of GOCCs is in line with the principles of our Medium-Term Fiscal Framework to ensure the country’s macro-fiscal stability,” he said.
“This Framework ensures that we reduce our fiscal deficit from a high of 8.6 percent to GDP in 2021 to only 3.7 percent in 2028. Last year, we already hit our target of reducing this to 5.7 percent. This will allow us to sustainably reduce our national government debt to 56.3 percent in 2028,” he added.
Recto said the fund transfer was akin to Bayanihan 1 and 2, a financing strategy that he added, was not funded by new taxes, but by funds already in the possession of the government.
WHY PHILHEALTH?
Recto said the government did an extensive review on all GOCCs, which showed that PhilHealth accumulated a “very substantial excess, unused, and idle funds” over the years.
“After carefully and cautiously computing the reserve funds of PhilHealth, its excess, unused and idle money actually amounted to a staggering P183.1 billion, which are unrestricted,” he said.
Hermosura told the magistrates that PhilHealth was not disadvantaged by the fund transfer and that the state health insurer had received more funds through subsidies under the GAA that it would have received from sin tax revenues.
“PhilHealth has actually been receiving subsidies from the GAA more than what it would have received under its allocation attribute from sin taxes,” Hermosura said.
He said data showed PhilHealth received P635.36 billion in subsidies from the GAA from 2014 to 2024, surpassing the P534.33 billion it got from sin taxes.
Hermosura said records also showed that PhilHealth never sought additional fund releases during the said period.
Guevarra echoed Hermosura’s statement and said that the law mandates all sources of the Universal Health Care funding, including those collected from sin tax products, to go to the general fund before being appropriated by Congress.
“Your Honor, it seems to be that all of the sources of funding, including those arising from the sin taxes, will have to go to the general fund and be eventually appropriated by Congress under the national subsidies from the Department of Health and the national government to PhilHealth,” he said.
