On July 29, the 10th day of the Senate Impeachment Trial, the court began hearing Article I with testimony from two former LANDBANK branch managers — Violeta Constantino and Nenita Camposano — addressing Vice President Sara Duterte's alleged misuse, irregular liquidation, and misappropriation of confidential funds. Confidential funds in the Philippine government are allocations intended for intelligence gathering and security-related activities, and they are subject to fewer liquidation requirements than regular appropriations — a flexibility that has made them a recurring focus of accountability debates across administrations.

A Rappler report raised the question: "Why didn't banks flag large check encashments by Sara Duterte staff?" The report detailed the technical procedures governing the encashment of large checks at the two LANDBANK branches that held deposit accounts for the Office of the Vice President (OVP) and the Department of Education (DepEd).

"The Anti-Money Laundering Council, based on its Guidelines on Transaction Reporting and Compliance Submissions, requires banks to submit mainly two types of reports to them: covered transaction reports (CTRs), and suspicious transaction reports (STRs)," Rappler reported.

"CTRs are submitted automatically by banks every time there is standard cash or equivalent monetary instrument transaction exceeding the P500,000 legal threshold within a single day. When AMLC's report released to the House justice committee in April revealed that the bank accounts of Duterte and her husband Mans Carpio were the subject of 630 CTRs from 2006 to 2025, these were generated without human intervention (automatically generated report by the bank to AMLC.)"

"STRs are different. AMLC guidelines, as contained in Regulatory Issuance No. 2 Series of 2024, dictate that suspicious transactions are reported by banks regardless of the amount when a 'suspicious circumstance' exists based on reasonable grounds," Rappler explained on July 30.

"These include transactions with no underlying legal or trade obligation or economic justification, clients who are not properly identified, amounts not commensurate to the client's financial capacity, structured transactions designed to avoid reporting, or links to money laundering."

Both LANDBANK officers attested to their compliance with CTR and STR requirements under AMLC rules. Whether any STRs were actually filed for these specific transactions remains an open question before the court.

Following procedural definitions at the trial (ptvnews.ph, July 29), the discussion turned to the encashments themselves. Ms. Constantino testified that she facilitated the encashment of four checks payable to OVP Special Disbursing Officer Gina Acosta, each amounting to P125 million. Acosta personally encashed the checks on Dec. 30, 2022; Feb. 6, 2023; April 25, 2023; and July 14, 2023 — totaling P500 million.

At the interjection of Senator-judge Risa Hontiveros, Ms. Constantino acknowledged that in her 32 years at LANDBANK, she had never encountered a P125-million cash withdrawal.

Describing the encashment process, Constantino said a liaison officer from the OVP cash department identified as "Queenie Masangkay" called her a day or two in advance. The cash was placed in three to four bags containing 125 packs of P1 million each and handed over to Gina Acosta and Lemuel Ortonio, one of the OVP's authorized signatories, inside the Shaw branch's back room.

Similarly, the LANDBANK DepEd Branch processed three checks worth P37.5 million each, payable to Edward Fajarda, a DepEd special disbursing officer. Ms. Camposano testified that Sonia de Leon, head of the DepEd cash division, called ahead to make a reservation before the encashment. Fajarda personally encashed the checks on Feb. 22, 2023; April 26, 2023; and July 13, 2023 — totaling P112 million.

According to Camposano, Fajarda himself loaded the cash into two bags in the branch's back room and then exited through the fire exit at the rear of the building.

Asked why De Leon needed to call ahead, Camposano explained: "Kasi po wala naman po kaming enough cash para po sa mga tseke na na-mention, kaya kailangan po niyang tumawag para ireserba po namin iyon" (Because we do not have enough cash for the checks mentioned, and we have to reserve cash for those encashments).

Senator-judge Francis Pangilinan asked: "In your 34 years (in LANDBANK) was this the first time you had to deal with P37 million cash three times in a period of three quarters?" She replied, "Ngayon lang po 'yung time na may encashment na ganoon kalaki" (This was the first time that we had an encashment that large).

Senator Hontiveros asked Camposano how she verified that the transactions were authorized by VP Duterte. "Dumaan po kasi 'yan sa DBM (Department of Budget and Management), approved ng DBM po 'yan. Na-release po ang pondo ni BTr (Bureau of the Treasury). Mayroon po 'yang advise and pirmado po ng mga authorized signatories ng DepEd" (They passed through the DBM and were approved. The funds were then released by the BTr. All these had advice signed by the authorized signatories), she said.

The testimony from both LANDBANK officers inadvertently shed light on the fact that approving authorities across multiple government agencies were aware of and permitted the extraordinary movement of funds. From the DBM to the BTr, the Central Bank, DepEd, and OVP — all authorized the encashment of P612 million by VP Sara Duterte from LANDBANK, the government's depository bank. Duterte was concurrently serving as Secretary of Education during the period the DepEd-linked checks were encashed, a dual role that the prosecution has flagged as relevant to its case.

Cash and the Economy

The cash withdrawn from LANDBANK between 2022 and 2023 had tangible effects on the economy, reducing liquidity needed for normal market operations. The OVP's 111 disbursements totaling P17 million in confidential funds on a single day — Dec. 23, 2022 — placed pressure on bank cash-in-vault reserves, requiring augmentation from the BTr.

M1 money supply, the narrowest measure of money, includes physical currency, coins in circulation, and highly liquid checkable or demand deposits. Central banks track M1 to gauge short-term economic liquidity, spending power, and potential inflationary pressures.

"The money supply measurement showed a close link with economic factors like GDP, inflation, and prices. Economists such as Milton Friedman argued in support of the theory that the money supply is intertwined with all of these variables," Investopedia notes.

"When there is an encashment of P125 million, we do not have that amount ready in our vault," LANDBANK's Constantino said, according to the Inquirer. LANDBANK had to request the BTr for cash to fund the check. Upon cash withdrawal, M1 money supply is depleted by that amount unless the cash is re-deposited. Given that the withdrawn funds were likely not re-deposited but kept in cash, money supply was depleted by approximately P612 million. The defense lawyers did not question the authenticity of the subject checks, according to PTV News' Day 10 report.

When the BTr steps in to help banks fund extraordinary encashments, it must replace reserve depletion through short-term market borrowing at lower interest rates (e.g., T-Bills), medium-term foreign borrowing, tax increases (with lagged effect), or the ambiguous option of printing more money.

Money supply and interest rates are interrelated through the law of supply and demand. High interest rates absorb excess liquidity, while low interest rates release more money into circulation. In July 2026, traditional Philippine savings deposit rates remained low at approximately 0.0625% to 0.25% per annum — the lowest in decades. That same month, the Bangko Sentral ng Pilipinas benchmark overnight borrowing (reverse repurchase) rate stood at 4.75%, with the associated overnight lending facility rate at 5.25%, according to Trading Economics.

Savings deposit rates have remained suppressed since the COVID pandemic. A savings deposit rate of 0.25% per annum minus 6.2% inflation yields a real (effective) savings deposit rate of negative 5.95% — a significant disincentive to savers, who may choose to spend rather than save, thereby releasing more money into circulation and contributing to inflationary pressure. "More borrowers will borrow at a rate below inflation, encouraging more consumer debt and spending," Investopedia notes.

The average annual inflation rate in the Philippines over the past five years (2021 to 2025) ranged from a low of 1.66% in 2025 to a peak of 5.98% in 2023, driven heavily by global commodity shifts and domestic food and energy costs, according to Megatrends. The Philippine Statistics Authority reported that headline inflation eased to 6.2% in July 2026 from 6.4% in June.

In July 2025, Cardinal Pablo Virgilio David, President of the Catholic Bishops Conference of the Philippines, sent a pastoral letter to his diocese stating that alleged government corruption had contributed to flooding in various parts of the Philippines, affecting thousands of people. He also questioned P142.7 billion in alleged "questionable insertions" in the 2025 national budget (Maryknoll magazine, July 25, 2025).

According to Greenpeace in September 2025, the total estimated value lost or tied to anomalous flood control projects and related corruption in the Philippines since 2016 reaches roughly P180 billion in potential ghost projects alone, while broader macroeconomic losses and questionable allocations span hundreds of billions — up to over P1 trillion — in climate-tagged funds.

Cardinal David called on the public, especially the youth, to speak up against corruption, stating it is the only way to protect their future.

The Senate impeachment court still has additional articles to hear beyond Article I, and the trial's timeline will determine whether a verdict is reached before the 2028 election cycle, in which Duterte has indicated interest in seeking the presidency.

Amelia H. C. Ylagan holds a Doctor of Business Administration from the University of the Philippines.