During recent oral arguments, the Supreme Court (SC) scrutinized the transfer of P60 billion in reserve funds from the Philippine Health Insurance Corp. (PhilHealth) to cover unprogrammed appropriations (UA) in the budget. The magistrates suspected a cover-up.
An official from the supposedly independent Commission on Audit (CoA), whom the Tribunal engaged to provide an expert opinion on the PhilHealth issue, was found defending the Department of Finance (DoF).
The seeming connivance began with a provision inserted into the budget through the bicameral conference committee, granting Finance Secretary Ralph Recto authority in the 2024 national budget to sweep government-owned and controlled corporations (GOCCs) of excess funds.
The UA consisted of key items in the budgets of various agencies, such as the subway project, the funding for which was set aside to make way for legislators’ pet projects.
In a directive to implement the budget provision, the DoF ordered the state insurer to remit P89.9 billion in four tranches, with P60 billion transmitted before the High Court issued a temporary restraining order (TRO).
Various groups, primarily advocates of the Universal Health Care (UHC) Act and budget watchdogs, petitioned the Supreme Court to compel the government to return the transferred funds to PhilHealth.
During the Tribunal’s proceedings, the SC reprimanded and later dismissed CoA Commissioner Douglas Michael Mallillin for defending the DoF. Mallillin was shown the door after the justices found his answers during the interpellation to be defensive of the DoF and PhilHealth.
The magistrates referenced the law, primarily the UHC, to establish the sanctity of PhilHealth funds, which can only be used for health programs that serve the interests of PhilHealth and its members.
Associate Justice Amy Lazaro-Javier asked Mallillin whether the state insurer had settled all claims before it sent P60 billion back to the National Treasury in 2024.
The CoA official was immediately exposed in the presence of the justices, who recognized an attempt to deceive.
“Is that correct? You’re a sitting CoA commissioner,” Associate Justice Alfredo Benjamin Caguioa needled Mallillin.
Caguioa expressed concern about a conflict of interest in Mallillin’s views, saying: “The way I’m listening to your arguments, you are defending the position of the DoF.”
Mallillin tried to worm his way out of the magistrates’ incisive questioning, claiming he was not speaking in his capacity as a CoA representative but as a resource person invited to the hearing.
“You’re espousing views, the contending views are to be decided by this court, and now a sitting CoA commissioner stands before the Court? I don’t get it, I really don’t get it,” Caguioa stated.
Lazaro-Javier later dismissed the auditor, saying he “might be charged with partiality or bias.”
Under the 2024 General Appropriations Act (GAA), a special provision directed GOCCs to remit their remaining fund balance “resulting from the review and reduction of their reserve funds to reasonable levels, taking into account disbursements from prior years.” The DoF issued a circular on 24 February instructing the transfer of funds.
Mallillin presented to the justices that the excess funds of P89.9 billion were derived from the review of PhilHealth’s financial state from 2021.
He also differentiated between accumulated revenues and reserve funds, a position identical to the DoF’s.
The difference in definition allowed PhilHealth to still have excess resources even after allocating reserve funds, which the justices refuted.
“To say that a portion of accumulated revenues may be considered a free portion or a surplus is possible only if all the programs mandated to be fulfilled have been set up,” Javier said.
Under Section 11 of the UHC law, excess funds should be used to increase PhilHealth members’ benefits and lower premium contributions for paying members. It also prohibits the transfer of funds back to the national government.
What emerged from the exchange at the SC was a possible conspiracy that might involve the entire machinery of government to whitewash the brazen theft of PhilHealth funds through the collaboration of Recto and his former peers in Congress.