Plunder raps filed vs Recto over diverted state funds

Update @ 7:33 p.m., May 25, 2026

MANILA, Philippines — A plunder, graft, and malversation complaint was filed on Monday in the Office of the Ombudsman against Executive Secretary Ralph Recto for ordering the diversion of reserve funds of state-run companies to the national treasury, which the complainant alleged to be unlawful.

In response, Recto called the complaint “harassment” as he noted that the move was lawful, while calling Leachon’s remarks “libelous.”

When he was the Department of Finance (DOF) chief, Recto ordered the diversion of unused funds of the Philippine Health Insurance (PhilHealth) amounting to P60 billion, and the Philippine Deposit Insurance Corporation (PDIC) worth P107 billion, to the state’s coffers, in line with the special provision of the 2024 budget.

Aside from Recto, the following are also subjects of the complaint affidavit filed by Dr. Tony Leachon, former special adviser of the defunct COVID-19 task force:

• Health SecretaryTeodoro Herbosa, who is also the chairman of Philhealth’s board of directors
• acting Finance Secretary Frederick Go
• former acting Budget Secretary Rolando Toledo
• PhilHealth President and CEO Edwin Mercado
• former PhilHealth CEO Emmanuel Ledesma Jr
• PDIC CEO Roberto Tan
• other John and Jane Does who are PDIC directors and officials

“Considering the magnitude of public funds involved, the nationwide implications upon healthcare financing and public welfare, and the Supreme Court’s findings regarding the invalidity of the questioned transfer, Complainant respectfully invokes the constitutional mandate of the Office of the Ombudsman to investigate and determine the corresponding criminal, civil, and administrative liabilities of the responsible public officers,” Leachon said in his 19-page complaint-affidavit which was marked as received by the Office of the Ombudsman.

In his complaint, Leachon and other officials were named as respondents because of their role in the move.

Leachon said Go was named respondent since this move overlapped with his tenure, Toledo for being supposedly responsible for the budget execution including the remittance of funds to the National Treasury, Mercado for supposedly being the chief implementer in remitting funds in compliance with the DOF and DBM directives, Ledesma for overseeing PhilHealth during much of the period when remittances occurred, Herbosa for allegedly failing to prevent or oppose the fund transfer, and Tan for allegedly approving in the transfer or remittance of PDIC fund balances to the National Treasury.

Inquirer is still trying to get statements from other respondents for comment. We will publish their responses once available.

READ: PDIC weighing options to get P107B back from treasury

Leachon argued that the respondents are liable for technical malversation, which he said is consummated once public funds earmarked by law are applied to a different public purpose, “regardless of motive, good faith, or absence of personal gain.”

The Special Provision 1(d) permitted the return of fund balances or excess reserve funds from government-owned or -controlled corporations to the National Treasury to fund unprogrammed appropriations under the 2024 General Appropriations Act (GAA).

READ: SC orders return of P60-B excess funds to PhilHealth

However, Leachon maintained that the respondents’ move to divert the funds to the national treasury is not authorized by the law since PhilHealth funds are earmarked by Republic Act 11223 or the Universal Health Care Act.

As another basis for the graft complaint, Leachon further alleged that respondents “acted with gross inexcusable negligence and evident bad faith by ignoring an express statutory prohibition and issuing and implementing circulars contrary to law.” 

Leachon’s complaint-affidavit did not delve into the possibility that the elements of plunder were present in their move, but it likewise prayed for the filing of the said criminal charge.

In an ambush interview, Leachon said “it is up to the Ombudsman if the plunder is not considered.”

In ordering the transfer of P60 billion funds, Leachon said Recto allegedly “violated the Constitution and betrayed the people’s right to health.”

“The P60 billion could have saved lives, kept hospitals afloat, and brought dignity to families in despair,” Leachon said in a statement. “Instead, it was stolen from the sick and the poor.”

“Filing these charges is a duty to the Filipino people — to restore integrity, deter future abuses, and reclaim the promise of universal health care,” he added.

As for the PDIC diversion, Leachon said it allegedly weakened safeguards meant to protect depositors and eroded public trust in financial institutions.

“These were not isolated missteps but a deliberate pattern of unconstitutional reallocation that endangered both health and financial security,” Leachon said of the fund diversions.

The Supreme Court (SC) has since ordered the return of P60 billion to Philhealth. 

But Leachon’s complaint stated that said “public statements and reported governmental actions indicate that the alleged restoration may have been undertaken through subsequent appropriations, fiscal reallocations, or other taxpayer-funded financing mechanisms rather than through the actual reversal or recovery of the original transfer.”

“Complainant respectfully submits that the alleged ‘return’ of the funds neither extinguishes nor cures the illegality of the original diversion,” the complaint further said. “On the contrary, these supervening events further underscore the continuing constitutional, fiscal, and administrative consequences of Respondents’ acts, including the possibility that public funds were again utilized to replenish amounts previously transferred in violation of law.”

However, four SC justices said Recto has no criminal liability, and the executive secretary pointed this out.

READ: SC justices: Recto has no criminal liability in PhilHealth fund transfer

“The Supreme Court justices themselves said that I have no criminal liability because I simply followed the law and implemented it in good faith,” Recto said in a statement.

Among those Recto cited was the opinion of Associate Justice Ricardo Rosario, who said that the former DOF chief has no liability for technical malversation as he was “duty-bound” to comply with the 2024 budget’s special provision.

As for the PDIC, its chair, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr., said it was studying options to recover the P107.23 billion it remitted to the national treasury. /jpv /atm