Continuing plunder

When the Supreme Court, in a unanimous 15-0 decision, struck down on 5 December the government’s controversial transfer of P60 billion from the Philippine Health Insurance Corp. (PhilHealth) to the National Treasury, the implication was far-reaching.

The ruling struck down a provision in the 2024 budget law, or the General Appropriations Act (GAA), directing government-owned and controlled corporations (GOCCs) to remit excess funds to the National Treasury.

To implement the law, Ralph Recto, then finance secretary, issued a directive requiring GOCCs to transfer their “excess,” “idle,” or “fund balance” reserves to the National Treasury.

This circular implemented Special Provision 1(d), Chapter XLIII of the 2024 General Appropriations Act (Republic Act 11975), which authorized the utilization or return of GOCC fund balances (defined as unrestricted funds such as cash, investments in securities and excess government subsidies) to the National Treasury.

The inserted provision was necessary because the Constitution permits the President to transfer government funds within the Executive branch, but only in specific instances.

The remittance triggered a requirement to fund Unprogrammed Appropriations (UA) for key programs in health, social services, infrastructure and other priorities displaced from the national budget by pork barrel items, including flood control projects.

The High Tribunal’s declaration that the embedded provision in the 2024 General Appropriations Act was unconstitutional and the P60 billion taken from PhilHealth must be returned also applied to the Philippine Deposit Insurance Corp., which gave up P107 billion when it complied with Recto’s directive.

The PDIC funds, intended to protect ordinary Filipinos’ deposits in the event of bank failures, became the target of the raid on GOCC reserve funds.

PDIC insiders said the government recently withdrew another P10 billion from the agency, even as the Department of Finance was pushing the SC ruling as applying only to PhilHealth.

Retired SC Justice Antonio Carpio demanded that the Secretary of Finance and the National Treasurer return the funds they took from the PDIC, arguing that the money was not owned by the government but by bank depositors.

“The government was just holding that in trust for depositors,” he pointed out.

The SC ruling also made clear that the Secretary of Finance lacks the authority to transfer funds from GOCCs to the National Treasury to fund the UA.

In response to Finance Secretary Frederick Go’s argument that the SC didn’t explicitly order the PDIC to return the funds, Carpio said, “Of course, the court did not order it because PDIC was not a petitioner, but the underlying reason is the same.”

The DoF’s refusal to implement the SC decision, Carpio said, means his private group is preparing another petition to secure a specific tribunal ruling.

“It will take time, but I don’t know why they don’t want to return it when it’s very clear it should be returned,” Carpio said.

He urged bankers and stakeholders to leverage the PhilHealth decision, emphasizing that both funds were trust assets, not discretionary government funds and they could not be diverted without violating constitutional safeguards.

The logic is simple: If PhilHealth’s funds were ordered restored, how could PDIC’s escape scrutiny?

By insisting that the SC order applied only to PhilHealth, the proponent of the budget sleight of hand, primarily Recto, seeks to stonewall on other contributions from GOCCs and other agencies to fill the UA that exceeded P700 billion in 2024.

The “fund sweeps” may lead to similar diversions in raiding government coffers for legislators’ kickbacks.

The rapacious practice persists through the UA, meaning the pork barrel remains an integral part of the Marcos budget.