ES owes public reckoning

A December 2025 decision of the Supreme Court voided a key provision in the 2024 General Appropriations Act (GAA) that should have prompted soul-searching for Executive Secretary Ralph Recto.

Recto continues to defend, up to this point, his central role in a fiscal maneuver widely criticized as budget manipulation. He must heed a growing call, and it is time for him to resign.

As House deputy speaker and a member of the Bicameral Conference Committee in late 2023, Recto helped insert and expand Special Provision 1(d) in the Unprogrammed Appropriations (UA) section of the 2024 budget.

This rider authorized the Department of Finance (DoF) to sweep “excess” or “fund balance” reserves from government-owned and controlled corporations (GOCCs), including the Philippine Health Insurance Corp. (PhilHealth) and the Philippine Deposit Insurance Corp. (PDIC).

Days after taking office as finance secretary in January 2024, Recto issued the circular that put the mechanism into motion, directing the transfer of nearly P90 billion from PhilHealth alone.

The 2024 UA had ballooned from the executive’s original proposal of roughly P282 billion to P731 billion after bicameral deliberations, an expansion that included hundreds of billions in congressional insertions.

The GOCC sweep was engineered, supposedly, as a funding trigger for this enlarged pool, allowing releases for health, infrastructure, and social programs without new taxes or borrowing.

The UA then was a mix of displaced urgent projects and late insertions of the Bicameral Conference Committee (Bicam). Funding for the UA, thus, needed to be triggered since counterpart financing for flagship projects such as the Metro Manila subway would be delayed.

Pet projects, in effect, received priority in the programmed funds rather than crucial infrastructure. It was a workaround that undermined the integrity of the budget process.

The Supreme Court ultimately struck down the provision as an unconstitutional rider because of its ambiguity, as it was not germane to the appropriations bill, and in conflict with the Universal Health Care Act’s reserve requirements.

It ordered the return of transferred funds.

Recto maintained he acted in good faith and was merely implementing a law passed by Congress.

The tribunal freed him of criminal liability, citing that defense.

But good faith does not erase Recto’s role in helping write the rule in the legislature, then executing it from the executive branch.

This was seamless insider maneuvering that erodes public trust in Philippine institutions. When billions in PhilHealth members’ contributions, intended for health coverage, were redirected, the manipulation was too obvious.

Budget “perversion” is a strong term, but it fits a pattern in recent years of inflated UA, last-minute insertions, and flexible reallocations that blur the line between prudent fiscal management and opportunistic reallocations. Recto was present at the creation.

His continued prominence in the administration, even after the Court’s rebuke, signals tolerance for such practices at the highest levels.

Resignation would be an acknowledgment of political responsibility. The budget is the most basic covenant between citizens and government, a contract that Recto helped damage.