Good faith implementation

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A lot has been said about the recent decision of the Supreme Court declaring as unconstitutional a provision in the 2024 General Appropriations Act (GAA) which mandated the transfer of P89.9 billion in funds of the Philippine Health Insurance Corp. (PhilHealth) to the Treasury.

The SC ordered the government to return to PhilHealth P60 billion in funds already transferred to the Treasury and prohibited the transfer of the remaining P29.9 billion.

There are those who blame then finance secretary and now Executive Secretary Ralph Recto for the transfer.

What they fail to mention is that Special Provision 1(d), Chapter XIII of the 2024 GAA, a creation of Congress under House Bill 8980 which was signed into law by the President as Republic Act 11975, directed the Department of Finance (DOF) to issue the guidelines to implement the said provision. 

Special Provision 1(d) specifically authorized the return of the “fund balance” or excess “reserve funds” of government-owned and -controlled corporations to the National Treasury to fund unprogrammed appropriations under the 2024 GOCC. 

By virtue of this provision, the DOF issued DOF Circular 003-2024 on Feb. 27, 2024 requiring GOCCs such as PhilHealth to remit their fund balance to the Treasury. 

Former finance secretary Gary Teves, acting as amicus curiae or friend of the court, said in a memorandum submitted to the SC that Recto and the DOF complied with Special Provision 1(d) in issuing the said DOF circular since it was done in close coordination with the relevant GOCCs to determine a reasonable amount called the “fund balance” that can be remitted to the Treasury.

He also said that the remittance followed proper procedure as the P89.9 billion was only remitted by PhiHealth after securing a favorable opinion from the Office of the Government Corporate Counsel (OGCC), Governance Commission for GOCCs (GCG) and the Commission on Audit (COA). 

In its ruling, the Supreme Court said that the President did not commit grave abuse of discretion when he certified as urgent House Bill 8980.

It struck down Special Provision 1(d) for being a rider or an inappropriate provision due to its ambiguity and amendatory effect on the Universal Health Care Act and the Sin Tax Law and for being violative of the Constitution when it diverted the reserve funds of PhilHealth for a different purpose.

The SC in its decision also said that it extends its utmost commendation to the DOF Secretary “who, when asked by Justice Rosario whether the government can comply with the directive to return to PhilHealth and the other GOCCs their respective remittances, categorically answered in the affirmative, subject to the inclusion of the said amounts in the 2026 NEP.”

“More notable and commendable still is the recent pronouncement of President Marcos Jr. himself avowing to restore to the PhilHealth the P60 billion funds transmitted to the National Treasury,” it added.

The Court, in a press statement, also said that “the Justices who submitted their respective separate opinions also noted that no criminal liability can attach to the Finance Secretary, who they found to have acted in good faith in implementing Special Provision 1(d).”

It said that Associate Justice Samuel Gaerlan held that declaring the issuances invalid does not negate the good faith of the finance secretary in implementing Special Provision 1(d) through DOF Circular 003-2024 nor does it automatically create a basis for his liability. “A public officer shall not be civilly liable for acts done in the performance of official duties, unless there is a clear showing of bad faith, malice or gross negligence,” he noted.

Associate Justice Ricardo Rosario, for his part, emphasize that a finding of grave abuse of discretion by a public official does not equate to criminal liability. Meanwhile, Associate Justice Rodil Zalameda said that while he agreed that the transfer was unconstitutional, government may nonetheless be considered to have acted in good faith. “The DOF Secretary’s actions were strictly ministerial and were executed pursuant to the explicit and mandatory language of the provision of the 2024 GAA. As discussed above, they were characterized by institutional good faith and due diligence, as they relied on formal clearances from agencies like the OGCC, the COA and the GCG,” he said.

These raise an uncomfortable question for some lawmakers: If the provision was overbroad or constitutionally infirm, why was the implementer, not the authors, placed at the center of public outrage?

Justice Raul Villanueva himself said that “to hold Secretary Recto liable in any way whatsoever is like punishing him for simply doing his job. If he did not comply with the valid dictates of Special Provision 1 (d), then he may possibly become culpable of violating the law, which would have made his situation even worse.”

The DOF’s issuance of Department Circular 003-2024, which implemented the said provision, was therefore nothing more than a faithful obedience to a compulsory congressional directive.

Recto even decided to limit the fund transfer to the P89.9-billion excess funds of PhilHealth arising from unspent subsidies from such sources as sin tax laws, excluding PhilHealth’s excess funds from member contributions so that the medical benefits for insured Filipinos will not be impaired.

And according to PhilHealth, the benefits enjoyed by its members not only remained but were even expanded. For breast cancer patients, the benefit was increased from P100,000 to P1.4 million to cover all stages of the illness while for dialysis patients: sessions and medications are now free for an entire year. For peritoneal dialysis patients, benefits increased from P270,000 to P1.269 million.

Here are the other expanded benefits now enjoyed by PhilHealth members: 156 hemodialysis sessions a year at P6,350 per session from P4,000 per session; open heart surgeries, ventricular septal defect went up to P614,000 (from P250,000) while total correction of tetralogy of Fallot went up to P614,000 from P320,000 and that for coronary artery bypass graft surgery to P960,000 from P550,000; heart valve repair and/or replacement for valvular heart diseases for pedia cases and adults increased to P816,500 and P825,000; for kidney transplants, from P600,000 to P2.1 million, with PhilHealth now covering the post-operation services and medicines; post-kidney transplant services for pediatrics increased to up to P1,765 million for the first year and up to P810,732 for the succeeding year while for adults, coverage increased to up to P671,800 for the first year and P621,800 for the next year; for cataract patients, coverage increased from P20,200 to P187,100; for persons with disability, PhilHealth now covers their therapy and rehabilitation needs for up to P40,000 and outpatient and emergency care services are now covered by PhilHealth.

The SC justices said it loud and clear: the transfer of funds was directed by Congress and the executive branch was merely acting in accordance with the law, that is RA 11975 or the 2024 GAA. So maybe, the accusing fingers should be pointing at somewhere or someone else.

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