SC: Recto Not Liable for PhilHealth Fund Transfer

Supreme Court justices have clarified that Executive Secretary Ralph Recto cannot be held criminally liable for transferring Philippine Health Insurance Corporation (PhilHealth) funds to the National Treasury, rendering efforts by some groups to file a case against him futile, according to legal experts.

Supreme Court Spokesperson Camille Ting explained that even though the Court declared the relevant provision of the 2024 General Appropriations Act (GAA) and the Department of Finance (DOF) memo on the cash sweep of excess funds from government-owned or controlled corporations (GOCCs) unconstitutional, no criminal liability can be attached to Recto, who was the Finance Secretary at the time, because he acted “in good faith.”

Recto was merely following the instructions of the provision and DOF Circular 003-2024 when he transferred ₱60 billion from PhilHealth to the National Treasury in 2024.

“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,” said Associate Justice Raul Villanueva.

“Given the foregoing, no liability for technical malversation may attach. The officials carried out the statutory commands in good faith, pursuant to a law then presumed valid, and without any intention to divert funds contrary to legislative will. The constitutional infirmity of Special Provision No. 1 (d) renders the provision void but it does not render criminal those who were duty-bound to follow it,” added Associate Justice Ricardo Rosario.

“A public officer shall not be civilly liable for acts done in the performance of his or her official duties, unless there is a clear showing of bad faith, malice or gross negligence,” said Associate Justice Samuel Gaerlan.

Former Solicitor General Menardo Guevarra noted that by transferring the excess funds in 2024, the national government avoided taking on new debt that would have increased the country’s public debt by ₱60 billion, as well as an estimated ₱3.8 billion in annual interest, based on the average 6.3% interest rate at the time.