SUPREME Court (SC) justices said that no criminal liability could be attached to Executive Secretary Ralph Recto, who, as then-Finance secretary, acted in good faith when he ordered the Philippine Health Insurance Corp. (PhilHealth) to remit its unused funds worth P60 billion to the national treasury.
“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,” Associate Justice Raul Villanueva said in his opinion.
“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,” Associate Justice Ricardo Rosario said.
“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,” Associate Justice Rodil Zalameda said.
“Lastly, that the Court now declares Special Provision 1 (d), Chapter XLIII of the 2024 GAA and DOF Circular 003-2024 as void does not negate Secretary Recto’s good faith, 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 his or her official duties, unless there is a clear showing of bad faith, malice or gross negligence,” Associate Justice Samuel Gaerlan opined.
“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),” the Supreme Court said in a press release.
The Constitution vests the power of the purse exclusively in Congress. Congress, through Special Provision 1(d) of the 2024 General Appropriations Act (GAA), mandated the Department of Finance (DOF) to sweep the unused funds of government-owned and -controlled corporations (GOCCs) to support national government programs.
“The Department of Finance shall issue the guidelines to implement this provision within fifteen (15) days from the effectivity of this Act,” Special Provision 1(d) of the 2024 GAA explicitly states.
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.
Before any transfer was made, the DOF secured clearances from the Office of the Government Corporate Counsel (OGCC), the Governance Commission for GOCCs (GCG) and the Commission on Audit (COA) — all affirming the legality of the sweep. The PhilHealth board likewise approved the remittance.
On Dec. 5, 2025, the Supreme Court unanimously ruled that Special Provision 1(d) was unconstitutional. Malacañang promptly respected the ruling and that the Office of the Solicitor General would study the decision and determine the appropriate next steps, including the possible filing of a motion for reconsideration.
