“Recto acted within the system. And the system, though corrected now, was the one Congress designed”
Amid the controversy over the transfer of P60 billion funds of the Philippine Health Insurance corporation or PhilHealth to the national treasury, critics had filed petitions before the Supreme Court to strike down the transfer.
Petitioners argued the funds were “special funds,” not generic savings, and that under the Universal Health Care Act (UHCA), reserve funds and excess funds of PhilHealth must be used to enhance benefits or reduce member contributions, not to be diverted to general government spending.
The petitioners also said the transfer could constitute “technical malversation” or even “plunder” under the criminal code, because the funds were diverted from their mandated purpose (health insurance) to other uses.
They also claimed the transfer was done via a “special provision” in the budget rather than a stand-alone law specifically authorizing the diversion, raising constitutional concerns about invalid delegation of power.
How did Recto himself explain and defend the move of the Department of Finance at the time?
One, he described the transfer as a “common-sense approach” to fiscal management. The idea: if the funds are idle, it makes sense to use them for urgent health and social needs rather than leave them unused.
Two, he argued that this was never about touching PhilHealth members’ contributions or benefit entitlements—the funds transferred were from government subsidies, especially those given for indirect contributors, not from member contributions.
Three, he said using these funds allowed the government to address pandemic-related liabilities, social welfare needs, health-worker allowances, and other budgetary demands — all without new taxes or borrowing.
Four, he maintained that DOF consulted relevant governance and auditing offices before implementing the transfer, implying due diligence and legality.
Five, he claimed that as long as services were not crippled and benefits were expanded, the transfer was in practice aligned with the spirit of helping Filipinos, not undermining their health coverage.
In other words, during Recto’s term as Finance Secretary, he operated within a meticulously structured framework.
Moreover, the PhilHealth sweep was not a backroom shortcut but a documented, multi-agency process anchored on congressional instruction and legal review.
Worth noting here is that Associate Justice Rodil V. Zalameda underscored procedural rigor: “The DOF Secretary’s actions were strictly ministerial… characterized by institutional good faith and due diligence, as they relied on formal clearances from agencies like the OGCC, the COA, and the GCG.”
Every safeguard was observed. Every clearance obtained. This is not the profile of misconduct—it is the profile of responsible bureaucracy.
Associate Justice Ricardo R. Rosario explained the legal theory behind this: “The officials carried out the statutory commands in good faith, pursuant to a law then presumed valid… [The provision being void] does not render criminal those who were duty-bound to follow it.”
In other words, Recto did not innovate. He complied.
Before the transfer, the DOF secured not just legal clearances but a Board-approved resolution from PhilHealth itself. The chain of accountability was transparent and documented.
Associate Justice Raul B. Villanueva highlighted why the prosecution of Recto was not just wrong—it bordered on illogical: “If he did not comply… he may possibly become culpable of violating the law, which would have made his situation even worse.”
This is the irony: Recto is accused of wrongdoing for doing precisely what the law required.
Associate Justice Samuel H. Gaerlan’s reminder reinforces a basic doctrine often forgotten in political storms: “That the Court now declares [the provision] void does not negate Secretary Recto’s good faith, nor does it automatically create liability.”
In short, Recto acted within the system. And the system, though corrected now, was the one Congress designed.
(Email: ernhil@yahoo.com)
