MANILA—The controversial fund transfer from the Department of Health to the Department of Budget and Management's procurement service for the purchase of "common supplies and equipment" did not violate the law, the country's health chief said Tuesday.
In a taped public briefing, Health Secretary Francisco Duque III argued that his department's transfer of P42 billion worth of funds to the PS-DBM to procure personal protective equipment in response to the COVID-19 pandemic last year was supported by the Government Procurement Policy Board's Resolution No. 03-2020.
Duque said that under the resolution, government agencies are allowed to adopt "efficient, effective and expedient procurement procedures during a state of public health emergency."
Duque said that under Administrative Order No. 7 Series of 2011 in relation to Sec. 53 of Republic Act No. 9184, or the Government Procurement Reform Act, "government agencies are required to procure common supplies and equipment directly from PS-DBM."
The fund transfer, which the Commission of Audit flagged, did not require a formal agreement due to the health crisis.
"The execution of a memorandum of agreement or MOA was not required, as is a finding in the consolidated annual audit report submitted by COA to the Department of Health," Duque said.
"They're saying na kailangan ng MOA, but it is the position of the DOH that this is not required relative to the fund transfer transaction with PS-DBM since it covers common use supplies as stated on the aforesaid GPPB resolution."
He said that the DOH was required to deposit cash funds to PS-DBM for its CSE requirement without a MOA, citing GPPB Resolution No. 20-2019.
Duque also argued that under the 2020 General Appropriations Act, the DOH was allowed to procure the required supplies through the PS-DBM.
"In good faith . . . funds were transferred to PS-DBM as it was deemed necessary that supplies be procured immediately for the protection of the Filipino people," he said.
But a former head of DBM earlier said the fund transfer from the DOH to the PS-DBM was a violation of the Constitution due to the lack of MOA between the two agencies.
Former Budget Secretary Rolando Andaya, who held the post from February 2006 to February 2010, refuted claims by former PS-DBM head undersecretary Lloyd Christopher Lao—who led the service during the time of the transactions flagged by the COA—that no agreement was needed.
Andaya pointed out that Section 25, Paragraph 5, Article 6 of the 1987 Constitution states that, “no law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.”
He said the COA has already raised the alarm on this since 2018.
Senate Minority Leader Franklin Drilon earlier said the DOH's decision to transfer funds was to "mask its unobligation rate and inefficiency."
The department failed to spend P24 billion or 31.17 percent of COVID-19 funds granted to the agency, Drilon said during the Senate Blue Ribbon Committee's investigation on the COA's preliminary report about deficiencies in the DOH's spending of its funds.
The Senate Blue Ribbon Committee will hold another hearing on Wednesday to grill Lao over the fund transfer and procurement of supposedly overpriced face masks and face shields for the DOH.
President Rodrigo Duterte has defended Duque against the COA's preliminary findings against the DOH, saying funds for pandemic-related programs were not stolen.