The Supreme Court has started its oral arguments on the transfer of PhilHealth funds to the National Treasury to be used for other government projects.

In Saleema Refran’s Tuesday report on “24 Oras,” the petitioners presented why the transfer of unused PhilHealth funds is unconstitutional.

The petitioners particularly expressed opposition to the circular of the Department of Finance and the provision of the General Appropriations Act, which paved the way for the return of nearly P90 billion PhilHealth funds to the National Treasury.

Last year, PhilHealth remitted P60 billion to the National Treasury while the court halted the transfer of the remaining P29.9 billion after a petition was filed.

“The questioned provision and DOF circular are inconsistent, incompatible, and irreconcilable with the Universal Health Care Act and the Sin Tax Law. UHC's objective is clear, to provide social health insurance and risk protection to all Filipinos,” said lawyer Paula Mae Tanquieng, counsel of the petitioners.

“In computing the alleged fund balance, DOF defied the clear language of the sin tax laws, stating that these funds be used exclusively for universal health care. These funds were sourced from sin taxes and cannot be used for other purposes, irrespective of how noble the purpose is,” she added.

Finance Secretary Ralph Recto, Health Secretary Teodoro Herbosa, Social Welfare Secretary Rex Gatchalian, and former PhilHealth president Emmanuel Ledesma Jr. attended the hearing.

The respondents were represented by the Office of the Solicitor General and the Office of the Government Corporate Counsel.

The respondents said the transfer of PhilHealth funds is legal and under the constitution.

“It was the executive and legislative department’s way of creating and implementing a fiscal policy to boost economic growth without bloating the government’s indebtedness or burdening the people with new tax measures. It is a common sense approach that does not violate any law much less the constitution, in any way,” Solicitior General Menardo Guevarra said.

“I assure the honorable court and the people that contrary to what has been portrayed by some critics, there was no dark nor sinister plan behind the transfer,” he added.

The solicitor general requested to remove President Ferdinand Marcos Jr. as respondent since a president has immunity from suit while in position.

The three petitions on PhilHealth funds filed in the Supreme Court were consolidated and will be heard simultaneously.

Justice Amy Lazaro Javier questioned if PhilHealth has a reserve fund.

Although he confirmed that investment is the last in the order of priorities, Deputy Treasurer Eduardo Anthony Marino said PhilHealth “generates more revenues than expenditures.”

“I will show you the report of COA (Commission on Audit), which shows that PhilHealth is bankrupt actually.  I don’t know if you're aware of that. You ought to be aware. and COA has repeatedly highlighted that in its letters to PhilHealth, and then COA said that for many years, at least 3 years, 2021, 2022, 2023, the reserve fund of PhilHealth is much much less than its actuarial fund, actuarial estimate,” Javier said.

Before the oral arguments, several groups held a protest outside the Supreme Court. —Mariel Celine Serquiña/LDF, GMA Integrated News

Fifth of a series

THIS series started with "Bankruptcy in Philippine politics," followed by "Executive and legislative disequilibrium," exposing the distortion of the balance of power, a cherished democratic tenet handed down to us by our American colonialists. This complicit manipulation by our political leadership produced an anomalous 2025 budget and precipitated some sort of citizens pretend-indignation, in a misnamed "peace rally" by a powerful sect. Last week's was a cursory discussion of an alternative form of government by way of highlighting the most advanced and successful countries in the world that adopted the principles inherent in a federal-parliamentary form of government ("Federal parliamentary and EDSA version 2.0, The Manila Times, Jan. 29, 2025).

John Raña, a political technocrat, pointed out succinctly that the bankruptcy in Philippine politics could be traced to "[c]orruption [as] the root cause of many of the Philippines' most pressing problems — poverty, poor infrastructure, inadequate healthcare and a weak justice system. No matter how ambitious a leader's economic or social programs may be, they will never succeed if corruption continues to siphon [off] public funds and weaken institutions. This is why the greatest president in Philippine history will be the one who can effectively eliminate corruption."

Two kernels of thought have been introduced. Government corruption and the need for a president who can eradicate corruption and restore trust in leadership. Raña's take was for the emergence of a Philippine version of Abraham Lincoln, embodying "integrity, moral courage, and principled leadership — qualities desperately needed in Philippine politics today," closing with a teaser: "Will we see that person in our lifetime?"

Political economy of corruption in governance

Government corruption has always intrigued people at different levels. The academia engrossed with its theory and practice may originate scholarly solutions safe within the confines of their classrooms and lecture halls, sheltered from the repercussions of their results in real life. On the other hand, the political technocrats are enthralled not so much by the practice and theory per se but by the actual impact of public policies emanating from those gifted by the electorate with the privilege to govern. These honorable people comprising our political leadership are where, collectively, in our decadeslong experience, corruption is endemic.

Briefly, the political economy of corruption in government explores the dynamics between politics and socio-economy that underwrite corrupt practices within public institutions. It seeks to understand how corruption affects governance, economic development and social equity, as well as the institutional frameworks that can either mitigate or exacerbate corrupt behavior. These involve the application of incentives and disincentives that shape corrupt behavior among public officials and private actors.

In its simplest form, corruption in governance is the abuse of power by public officials for private gain. This undermines democratic institutions and the rule of law, leaving them weak and inutile — subject to the whims of those who lead us.

Government corruption has deep historical and cultural roots in the Philippines from the 300 years of Spanish colonial legacy of patronage where datus and sultans were coopted to enforce colonial rule. The subsequent American colonials piggybacked on this relationship, introducing a Western-type bureaucracy that was alien to Filipinos, as substitutes for thriving patronage, distorting family loyalty that eventually planted the seeds of political clans anomalously favored in governance that we now label political dynasties. And these permeated our political system for decades.

Myth of a moral leader eradicating corruption

It is a given that central to good governance is the need for a strong and moral leader. He is expected to set the tone for good governance by implementing policies aimed at combating corruption. What is expected of the leader is to set the right example that may be emulated down through the length and breadth of the political leadership and the bureaucracy.

But the fallacy lies in the rise of that particular type of leadership in the Philippine context. The path to power for this leader, unfortunately, is through the systemic infirmities in governance. Our type of democracy, evolved over the decades, relies on a severely flawed electoral process that favors the choice of patrons for the highest offices, paying lip service to meritocracy.

This could be attributable to voters' preference for popular, charismatic personalities and their ability to secure votes through networks of family clans and political dynasties, irrespective of their qualifications. Socioeconomic disparities of candidates oftentimes bolster effective campaigning for the wealthier, resource-rich candidates, giving them the wherewithal for voter bribery and even threats or use of violence — the proverbial "guns, gold and goons." All these lead to an uneven playing field, marginalizing meritocratic candidates from less affluent backgrounds and the Pinoy version of the "basket of deplorables."

It is expedient to blame voters for their lack of adequate information and education to make informed choices. The system notoriously does not provide adequately for the same. This is further exacerbated by weak electoral institutions that fail to put in place mechanisms for monitoring elections that often result in massive irregularities and fraud — undermining public trust in the electoral process. And the current political superstructure, the legislature — the senators and congressmen — complicit with the sitting president, are the crucial dramatis personae authorized to propose changes in the system. They will not, as these are all against self-interest.

Thus, the process of a choice of the Lincolnesque type of leadership is impossible — a pie in the sky. The Philippine political system, inherently defective will not allow a singular moral and decent leader to assume political power. It has always been a collective political coven, a product of a wicked compromise between good and evil, right and wrong, corrupt and less corrupt. There is no deus ex machina!

Drastic changes

At this juncture, I refer to my column on the type of system that could produce the leadership our country needs to propel the Philippines to sit at the table of prosperous nations. ( "Asian models of governance," TMT, Sept. 23, 2023)

We made a case for pursuing alternatives to our kind of democracy that is not working as intended by our American colonialists. We compared democratic governments and authoritarian regimes — isolating criteria that could work for us and those we need to discard. Whether a government is democratic or authoritarian, it must, above all, serve and promote the welfare of its people by protecting their security and well-being, maintaining law and order, and providing essential public services, which are equated with universal access to health care, education, employment and dwelling (HEED). For this to be possible, governments must ensure that their economy grows and is stable — an utmost priority. Freedom of speech, choice of beliefs, freedom to dissent, and even freedom to bear arms are subordinate. The controversy and clash of ideas start with how Western and Eastern cultures define and perceive these freedoms as central to their system of governance.

I looked as exemplars our progressive Asian neighbors and the type of system that allowed them to breed their kind of leadership: Lee Kwan Yew (LKY) of Singapore, Mahathir Mohammad of Malaysia and Park Chung-hee of South Korea.

To be continued on Feb 12, 2025