Ralph faces financial abyss

The Supreme Court’s temporary restraining order (TRO) on the transfer of so-called excess funds in agency budgets to bankroll unprogrammed projects — primarily the P89.9 billion of the Philippine Health Insurance Corporation (PhilHealth) — may be a bit late.

Some P60 billion of the PhilHealth money had already been turned over to the National Treasury and the last tranche of P29.9 billion is scheduled for transfer next month.

The halt order from the High Tribunal sent the message that the complaints against the Department of Finance’s move may have substance.

Retired Supreme Court Associate Justice Antonio Carpio, in the petition questioning the legality of the PhilHealth fund transfer, pointed to the possible culpability of the Department of Finance (DoF) secretary for reallocating the funds.

The transferred PhilHealth funds will be used to pay health workers’ unpaid allowances during the pandemic; the Salary Standardization VI for government employees released this year; the revised Armed Forces of the Philippines (AFP) modernization program; the Philippine Multisectoral Nutrition Project; the Philippine Rural Development Project; the Mindanao Inclusive Agriculture Development Project; and various big-ticket infrastructure projects under the Build Better More program.

Finance Secretary Ralph Recto’s defense was the DoF move to sweep up idle, unused, and excess funds of government-owned and -controlled corporations (GOCCs) is a mandate under Republic Act 11975, or the General Appropriations Act of 2024, which was approved by Congress.

The provision authorizing the DoF head to identify idle funds was inserted during the bicameral conference committee, which was presided over by the chairpersons of the Senate and House finance committees.

“We reiterate that before proceeding with the utilization of idle GOCC funds, our agency exercised due diligence and consulted extensively with the government’s legal experts,” Recto said.

Carpio, however, indicated that the insertion of the provision conflicted with the Constitution, which allows only the President and heads of branches of government and constitutional bodies to shuffle items in the budget.

The Carpio-led petition said the Constitution does not allow laws authorizing the transfer of appropriations and funds sourced from taxes for specific purposes.

Under the law, the official responsible for moving the funds is responsible for the full amount.

“Recto may be personally liable,” according to Carpio.

The Constitution is very specific on fund transfers in the budget.

Under the Charter, “No law shall be passed authorizing any transfer of appropriations. However, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.”

“The Charter specifies who can authorize the transfer of savings and it does not include the finance secretary,” Carpio pointed out.

Another point raised in the complaint was that “funds raised through taxation for a special purpose cannot be used for any other purpose, except for that purpose specified by law.”

This is particularly true of PhilHealth which is funded through member contributions and sin tax proceeds meant for the use of the members and to provide health care for indigents.

According to the retired magistrate, even the President does not have the authority to transfer PhilHealth funds. They can only be repurposed if the agency has accomplished its projects or the projects were abandoned.

The High Court had consolidated the petitions against the fund transfer that were filed separately by the 1Sambayan Coalition on 16 October and another complaint filed last 2 August.

The petitioners were grateful for the TRO but are now asking what will happen to the amounts already remitted.

According to them, the money should be returned to PhilHealth or Recto will have to refund the full P60 billion.