The practice of reallocating idle government funds is no longer new since it has been done in the past to respond to national emergencies.
This was what former finance secretary Margarito B. Teves told the justices of the Supreme Court (SC) during the April 2 oral arguments on the transfer of the P89.9 billion idle funds of the Philippine Health Insurance Corporation (PhilHealth) to the national treasury.
Before the SC issued a temporary restraining order (TRO) on the transfer, a total of P60 billion had been transferred.
Teves was one of the amici curiae (friends of the court) invited by the SC to help in the resolution of the three petitions filed against the transfer of the PhilHealth funds.
When asked by Associate Justice Ricardo R. Rosario if the transfer of idle funds has been done in the past, Teves replied: “Yes, Your Honor. These situations took place under very difficult circumstances.”
“In the case of President Ramos, it was done during the time when the Philippines and Asia were actually confronted with the Asian financial crisis. I recall he said ‘let’s try to get all the balances from different institutions that are now in the different banks and utilize this to address the crisis,’” Teves said.
Teves, who served as finance secretary under then president Gloria Macapagal Arroyo, told the justices that the Ramos administration was able to address the fiscal challenge and even recorded a surplus following the reallocation of idle funds.
He also said that the then Arroyo administration used the same approach in dealing with emergencies as it recognized that “special funds tend to have a tendency to increase” and that “there probably should be a way of making use of these funds if they're not utilized.”
Under the presidency of Rodrigo R. Duterte, Teves said that government balances were again reallocated as part of the Covid-19 response.
“These circumstances, in fact, were already there,” Teves explained as he pointed out that even in 2024, the lingering effects of the pandemic necessitated the expansion of unprogrammed appropriations.
Teves’ historical narration on the use of idle funds, in effect, sustained the stand of Finance Secretary Ralph G. Recto on the constitutionality and economic wisdom of transferring idle, unused, and excess government subsidies from PhilHealth and from other government owned and controlled corporations (GOCCs) to the national treasury.
During the oral arguments, Recto said the government is willing to return to PhilHealth its P60 billion idle funds if ordered by the SC.
However, Recto cautioned against the economic repercussions should the High Court order the return of the funds this year.
“Naturally, if the Supreme Court were to tell the Executive to return the money, we will include that in the national expenditure program for 2026,” Recto said.
“But having said that, assuming if the ruling were for 2025, that will add a fiscal pressure to our deficit and that would entail as not hitting our deficit target this year and if we miss that we may not attain our coveted credit rating upgrade that we foresee in the next 18 months,” he pointed out.
At the same time, Recto said the 2024 General Appropriations Act (GAA) allowed the taking of the idle funds of GOCCs to raise more resources to support President Marcos’ priority programs as part of the government’s economic recovery efforts after the Covid-19 pandemic.
He said that when President Marcos assumed office in 2022, the national debt had already surged by P6.8 trillion.
“This surpasses the combined debt of all previous administrations, bringing our debt-to-gross domestic product ratio from its lowest level of 39.6 percent in 2019 to a high of 60.9 percent in 2022,” Recto said.
“And now, it is our responsibility to repay these large borrowings. We inherited this debt, but we do not intend to simplify this burden onto the next administration. We intend to try our best to reduce it,” he added.
At the same time, Recto – an economist and former lawmaker – said that his department, the Department of Finance, is obligated to ensure that every peso is used efficiently and in service of the Filipino people.
“It is our duty to put every peso to work for the people. Hindi po pwede na kapag may nakitang malaking pondo na natutulog at hindi nagagamit para sa kapakanan ng taumbayan, hahayaan na lang. (It is not correct that if there are huge idle funds we should not use them for the welfare of the citizens). Sleeping funds serve no one. Every idle peso is a disservice to every Filipino,” he pointed out.
He compared the use of the GOCCs idle funds to the Bayanihan strategy utilized by the government during the Covid-19 pandemic.
“Just as what we did during the pandemic through Bayanihan 1 and 2, we see this as a Bayanihan 3 -- a Bayanihan 3 not funded by new taxes, but one funded by the funds already in our possession,” Recto said.
“A Bayanihan 3 that mobilizes all our available resources -- all idle, excess, and sleeping public funds -- to help the economy recover faster, create more jobs, increase incomes, and reduce poverty in the process,” he stressed.
The petitions against the transfer of PhilHealth funds were filed by the groups of Sen. Aquilino Pimentel III and Bayan Muna Chairperson Neri Colmenares, and 1SAMBAYAN Coalition together with members of the University of the Philippines Law Class 1975, Senior for Seniors Association, Inc., Kidney Foundation of the Philippines, and other private individuals.
Named respondents in the petitions were Finance Secretary Recto, the House of Representatives represented by Speaker Ferdinand Martin Romualdez, the Senate represented by Senate President Francis Chiz Escudero; Executive Secretary Lucas P. Bersamin; and PhilHealth represented by its President Emmanuel Ledesma Jr.
The three petitions pleaded for the issuance of a temporary restraining order (TRO).
Last Oct. 29, the SC issued a TRO that stopped the transfer of the funds.
However, at the time the TRO was issued, a total of P60 billion in PhilHealth’s excess funds had been transferred to the national treasury – P20 billion last May 10, P10 billion last August 21, and P30 billion last Oct. 16.