The Office of the Ombudsman has dismissed the criminal and administrative complaints filed against Executive Secretary Ralph Recto and former Philippine Health Insurance Corp. (PhilHealth) president and chief executive officer Emmanuel Ledesma Jr. in relation to the transfer of P60 billion in PhilHealth funds to the National Treasury in 2024.
Ombudsman Ruling
In a consolidated resolution dated June 2, the anti-graft body found insufficient evidence to support allegations of plunder, graft, and technical malversation arising from the implementation of a provision in the 2024 national budget that authorized the transfer of excess government corporate funds to the National Treasury. The resolution stated that the complaints failed to establish the elements necessary to pursue criminal and administrative liability against the two officials.
“This office resolves to dismiss the criminal and administrative complaints against respondents for lack of prima facie evidence with reasonable certainty of conviction and insufficiency of evidence, respectively,” the Ombudsman said in its ruling.
Plunder Allegation
The Ombudsman ruled that the plunder allegation lacked a key element required under Republic Act 7080, or the Anti-Plunder Act, noting that the questioned P60 billion had already been returned to PhilHealth. It said the return of the PhilHealth funds undermines claims that the respondents amassed or acquired ill-gotten wealth amounting to at least P50 million for personal benefit. According to the resolution, the restoration of the funds contradicted accusations that Recto and Ledesma used their positions for personal enrichment, a fundamental requirement in establishing a plunder offense.
Graft Allegations
The anti-graft body also dismissed allegations under Republic Act 3019, or the Anti-Graft and Corrupt Practices Act, saying it found no proof that they acted with manifest partiality, evident bad faith, gross negligence, or corrupt intent. The resolution stressed that complainants failed to demonstrate that the officials' actions resulted in undue injury to the government or gave unwarranted benefits to any private party. Instead, prosecutors concluded that the transfer of funds was undertaken as part of the respondents’ official duties in carrying out the provisions of the 2024 General Appropriations Act (GAA).
The Ombudsman noted that Recto, then serving as secretary of Finance, issued Department of Finance Circular 003-2024 to implement the budget provision, while Ledesma, as PhilHealth chief, complied with the directive.
Technical Malversation
The complaint for technical malversation likewise failed to prosper. Under Philippine law, technical malversation involves the application of public funds to a purpose different from that authorized by law. Although criminal intent is not an essential element of the offense, prosecutors said there must still be proof that the accused deliberately committed the prohibited act. The Ombudsman found that both Recto and Ledesma acted under the belief that the P60 billion constituted part of PhilHealth’s fund balance or excess reserve funds that could legally be remitted to the National Treasury under the special provision of the 2024 budget. The ruling described this belief as having been made in good faith, even if later questioned.
The anti-graft body also took into account the government's subsequent commitment to return the funds to PhilHealth, a position that Recto communicated before the Supreme Court during legal proceedings involving the transfer. According to the Ombudsman, these circumstances weakened the basis for a technical malversation charge. “The peculiar circumstances of this case compel this Office to dismiss the criminal charge for Technical Malversation primarily on the failure of complainants to establish with moral certainty the respondents’ intent to perpetrate the offense,” the resolution stated.
Background of the Controversy
The controversy stemmed from the implementation of a special provision in the 2024 General Appropriations Act that authorized government-owned and controlled corporations (GOCCs) to remit excess reserve funds or unused balances to the National Treasury to finance unprogrammed appropriations. As finance secretary at the time, Recto issued the implementing guidelines for the transfer, while Ledesma oversaw PhilHealth’s compliance with the directive. The transfer later became the subject of legal challenges and complaints from various groups questioning the legality of using PhilHealth funds for other government expenditures. In an order December 2025, the Supreme Court ordered the return of P60 billion to PhilHealth and permanently prohibited the transfer of the remaining P29.9 billion fund balance.
