THE Metropolitan Waterworks and Sewerage System (MWSS) could be exposing itself and the government to undue financial risks under a negotiated deal with San Miguel Corporation to build the P52-billion Laiban dam. But the state agency tasked to evaluate the soundness of large-scale infrastructure projects has been unable to come to the aid of the MWSS – which may not even welcome such in the first place.

Like the rest of the public, the National Economic and Development Authority (NEDA) has been kept in the dark regarding the details of the proposed joint-venture agreement.

MWSS has yet to comply with the NEDA’s request for a copy of the proposed deal, according to a senior economic planning official who also sits in the joint-venture selection committee organized by the MWSS to evaluate San Miguel’s proposal. A private sector observer in the committee also said he was never shown or given a copy of the joint-venture agreement.

The deadline for initiating a challenge to the San Miguel proposal passed last July 8, but MWSS has refused to respond to questions about it. Efforts by the Philippine Center for Investigative Journalism (PCIJ) to get updates on the tender have also been thwarted by the absence of key MWSS officials who could speak on the matter.

MWSS engineering division manager Lerma del Rosario said that nobody other than “upper authority” officials is authorized to say anything about the ongoing tender. But these officials were either on leave or out of their office when PCIJ tried to contact them. (See sidebar)

No rival bids

Insiders privy to the deal, though, say that MWSS received no letters of intent from other proponents.

Still, it’s one thing for the MWSS to ignore the press. It’s another for it to do the same to NEDA.

Indeed, the MWSS action – perhaps the first for a large-scale infrastructure project – underscores the diminished role for NEDA and the inter-agency Investment Coordinating Committee (ICC) in approving big projects carried out through a joint-venture deal between state units and private investors.

The government last year approved new guidelines that effectively exempted joint venture projects from the close scrutiny of NEDA and ICC.

The draft guidelines prepared by NEDA in consultation with other agencies provided for ICC’s approval of joint-venture projects, treating them no differently from foreign-assisted projects and build-operate-transfer (BOT) and related schemes.

Gloria rebuff

President Gloria Macapagal Arroyo, however, reportedly rejected the provision because the ICC approval process is said to be time-consuming. Instead, a NEDA representative was required to sit in the selection committees of government entities entering into joint- venture deals with private parties

The MWSS joint-venture selection committee, composed of water officials, representatives from NEDA and Office of Government Corporate Counsel, and observers from business or civil society groups, was tasked with evaluating the draft deal negotiated by the water agency and San Miguel, and make a recommendation to the MWSS Board of Trustees.

The committee submitted a resolution recommending approval of the negotiated joint- venture deal with San Miguel to the MWSS board in early June. But the value of that resolution is now coming under question because some members of the selection committee have not seen the agreement itself, making a thorough and intelligent evaluation of it virtually impossible.

Ruben Reinoso, NEDA Assistant Director-General for Infrastructure, Regulation and Contract Review Services and the planning body’s representative in the MWSS joint venture selection committee, said he did not sign the resolution because the water agency has not sufficiently addressed a number of questions about the soundness and fairness of the agreement. Neither was NEDA given a copy of the joint venture agreement, he added.

Confidential deal?

“We have been asking for that proposal since the start, since they convened the joint venture selection committee,” Reinoso recounted in an interview with PCIJ. “But they said it was confidential. They could not give it to us.”

A private sector observer who sits in the MWSS selection committee also said neither he nor his alternate had seen a copy of the joint-venture agreement. “We were just shown a power point presentation on the summary of the proposal but never the copy of the agreement itself,” Manolito Madrasto, executive director of the Philippine Constructors Association, told the PCIJ in a phone interview.

Reinoso, meanwhile, said that NEDA had a number of concerns and questions on sharing of risks between MWSS and San Miguel, and the role of the two private water concessionaries, Manila Water Co. and Maynilad Water Services Inc.

He said MWSS’s failure to address these issues kept him from signing the joint-venture selection committee’s resolution during a meeting on June 10.

Yet despite the absence of Reinoso’s signature on the resolution and NEDA’s pending questions, the MWSS board of trustees moved to firm up the dam deal with San Miguel.

On June 17, the trustees approved Board Resolution No. 2009-124 that pushed the process to the next stage: subjecting the negotiated joint-venture agreement with San Miguel to competitive challenge from other proponents.

NEDA’s concerns

In the meantime, having gotten unsatisfactory response from MWSS, NEDA took more explicit steps to communicate its concerns to the water agency. On June 26, Economic Planning Secretary Ralph Recto wrote to MWSS Administrator Diosdado Jose Allado to clarify NEDA’s position on a number of outstanding issues regarding the Laiban dam deal.

Foremost is a possible “take or pay” provision that could require MWSS or the two private water concessionaires to pay for raw water from the San Miguel-led joint venture regardless of whether they used it or not.

After all, similar provisions in power-purchase agreements of the National Power Corporation are blamed for the power company’s massive debts that were eventually transferred to the national government and for the country’s excessively high power rates that are the second highest in Asia.

Again, MWSS did not respond to, or address, the NEDA’s concerns. Instead, on July 2, it published a notice in a newspaper inviting proposals to challenge the agreement negotiated with San Miguel, giving potential bidders only five working days, or until July 8, to submit a letter of intent and buy bid documents for P1 million.

Recto snubbed

During meetings on July 7 and 9, the MWSS trustees – whose exceptional diligence in holding twice a week meetings is legendary perhaps because of generous per diem allowances – reportedly took up Recto’s June 26 letter but downplayed its importance, according to MWSS insiders.

NEDA officials may rightly begin to feel slighted by the MWSS snub. Some complain that the water agency provided its junior staff and consultants with copies of the San Miguel proposal but would not extend the same courtesy to more senior NEDA officials.

But the matter goes beyond bureaucratic relations and inter-agency courtesy. NEDA’s concerns about the joint venture deal negotiated by MWSS and San Miguel go right into the heart of the economic soundness and fairness of the agreement. The terms and conditions of the deal, and the manner it is being up for challenge, also have important implications for similar joint-venture agreements in the future.

Recto’s June 26 letter shows that the MWSS is acting on the basis of what NEDA believes is a misreading of the provisions of the build-operate-transfer (BOT) law on government guarantees, which are disallowed for unsolicited proposals. The bone of contention is whether a “take or pay” scheme constitutes a government guarantee or not.

Gov’t guarantee?

The Office of the Corporate Government Counsel (OGCC), which advises the MWSS, believes that “take or pay” is not tantamount to a government guarantee because it does not explicitly guarantee debts of the private-sector proponents.

NEDA insists that it is. “In our review,” Recto said in his letter to Allado, “direct government guarantee does not only pertain to debt payments but other guaranteed undertaking by government as well, including but not limited to guaranteed payments for the output which may or may not be used by the government entity. Clearly market guarantee or guaranteed payments for specific volume of water can be construed as direct government guarantee with government guaranteeing market risks by the private proponent.”

Aware of the legally contentious nature of market guarantees, MWSS and San Miguel agreed to give themselves a year from the award of the joint-venture contract to firm up a “take or pay” arrangement, as well as to sign up Manila Water and Maynilad for a proposed bulk-water sales agreement.

San Miguel favored

But NEDA also raised a number of problems with the so-called “financial investment decision (FID)” period, pointing out, in effect, that it stacks the odds in San Miguel’s favor. For one, potential bidders may be discouraged from challenging San Miguel’s proposal by the uncertainty over the eventual status of the proposed “take or pay” provision, it said.

For another, NEDA added, if San Miguel is not challenged or prevails over a rival offer, the MWSS could be constrained to guarantee the purchase of the joint venture’s raw water output or risk the brewer backing out. Recto reminded MWSS in his letter that San Miguel has stated it will withdraw its proposal without the proposed “take or pay” provision. “Should San Miguel Bulk Water Co. win the bidding, this may already dictate the decision with respect to the ‘take or pay’ scheme, rather than its merits,” the NEDA chief warned.

Recto urged MWSS to settle all the outstanding issues “prior to the competitive challenge,” rather than postpone making the hard decisions a year from the award of the contract.

The big question is why the MWSS gave potential bidders only a week to begin a challenge and a month to come up with a full-blown proposal for a P52-billion project when it is allowing itself and San Miguel a year to resolve all the contentious issues.

But based on the water agency’s past and present actions, an answer is not likely forthcoming. – PCIJ, July 2009

SAN ANDRES, Tanay, Rizal – We were wondering why Sofia de la Rosa seemed a little agitated with our presence. After all, it’s not every day that visitors bother to come to this remote barangay nestled in the foothills of the Sierra Madre range.

In the course of our conversation, the barangay captain of San Andres also kept telling us that her people will not leave this village unless they are paid proper compensation by San Miguel.

Then it hit us. Kapitana Sofia, we said, we are not from San Miguel. Media po kami.

Ay, akala ko San Miguel kayo, she apologized, and the room seemed to brighten just a little bit more.

The kapitana’s apparent hostility toward a name we normally associate with malted barley and hops and happy hour stems from the fact that San Miguel Bulk Water Company, a subsidiary of food-beverage giant San Miguel Corporation, has submitted an unsolicited bid to undertake a joint-venture project with the Metropolitan Waterworks Sewerage System (MWSS) to build the Laiban dam here in Tanay, Rizal.

The Arroyo government recently revived plans to build the 113 meter-high dam at the fork where the Limutan and Lenatin rivers merge into the Kaliwa River, which then merges with the Kanan River before roaring off to the Pacific. That means that after almost three decades of having their fates on hold, residents of San Andres and seven other barangays in Tanay and Quezon are again faced with the prospect of eviction.

The dam was conceptualized in the late ’70s to provide Metro Manila with an additional 1.9 billion liters of water a day and generate some 25 megawatts of electricity. But according to opponents of the dam project, some 10,000 residents will be displaced when the proposed dam submerges the barangays of Laiban, San Andres, Sto. Nino, Sta. Ines, Mamuyao, Tinucan, and Cayabo in Tanay, and Barangay Limutan in Quezon.

Many of these residents are members of the indigenous Dumagat and Remontado, who consider this watershed as part of their ancestral lands and have lived in these parts for centuries. In fact, the kapitana herself is half Remontado, but that may not keep her safe from eviction. According to the kapitana, village chiefs of the affected barangays have already been meeting with representatives of San Miguel Bulk Water.

Last week, the Philippine Center for Investigative Journalism revealed how unusual secrecy and haste mark the MWSS’s tender for the P52-billion project.

Rival bidders were given only five days to submit counter-offers to San Miguel Bulk Water’s bid. But San Miguel already seems so unusually far ahead in the race to win the dam bid.

It is not clear how far the talks with officials of affected barangays have progressed. At the same time, even before any potential rival in the bid could buy bid documents, San Miguel also seems to have been already dealing directly with the residents.

A staffmember of a division of San Miguel Bulk Water confirmed this to PCIJ recently. The staffer, who asked not to be named, said that representatives from the company have been engaged in talks with the affected residents this year. In fact, the staffer said, the talks may have begun as early as last year. The staffer, however, refused to reveal what was on the table for discussion or how far the talks have gone.

The MWSS, meanwhile, has taken a more low-key role. The kapitana said that MWSS representatives are afraid to come to their barangays for fear that angry residents would take things into their own hands.

And coming to these remote barangays is no easy feat – not for visitors, not even for residents. To get to the more accessible barangays like San Andres, one has to drive down steep, slippery roads that probably disappear with the first hint of rain. The community sprawls out from the barangay center, marked by a large multipurpose hall and an elementary school building. The rest of the structures in the barangay look like they just grew out of the ground.

And that’s San Andres, the barangay that’s easy to reach. The most populated barangay is Laiban, with at least 2,000 residents. To reach it, one has to ride a monster jeepney that crams people inside and on the roof, before lumbering gingerly down a slide of a mountainside and navigating through rivers and creeks like a water buffalo.

That one monster jeepney plies the route to the Tanay town proper only three times a week. The rest of the week one is stuck in or out of Laiban. It’s that kind of a barangay.

Opposition to the dam has apparently been pretty effective, at least up to this point. After almost three decades in the making, the dam project has left behind a trail of false starts. A set of massive water diversion tunnels has already been built from Barangay Laiban to nearby Barangay Daraitan. Also, some of the original residents have already been given compensation in the 1980s, according to Tanay Development Officer Adorable Sunga.

The problem, Sunga said, is that when the project was shelved, many of those who accepted the money did not leave the area, and instead grew deeper roots and created even larger families. Also, new families have settled in the watershed area in the last 30 years or so. The government expected to resettle 4,000 people in the 1980s; today, that figure has climbed to 10,000, all of whom now have to be paid and resettled.

The kapitana admitted that many residents had already been paid, some with 40 percent, others with 100 percent. No one seems to know just how much money people here were given by previous administrations. But the kapitana said this project with San Miguel will be a new deal altogether, with a new generation of claimants to consider. She didn’t say exactly how much the residents are asking in total, but said that the figure would run up to the billions.

Compensation certainly appears to be a prime concern in this barangay, at least among the local barangay officials. The kapitana said the village chiefs have already passed a resolution pegging compensation for displaced families at P3 million to P5 million each.

Village officials have also been rather loudly asking that they be given additional money by the project proponents for their troubles in reaching out and informing people about the revived dam project. Making like a walking calculator, the kapitana said that perhaps another P200,000 per barangay would do.

But then she mentioned that there are residents, especially the older ones, who would rather be buried here than be moved out. Ancestral roots are deep, and while some roots can be dug out for the right amount, other roots would rather die in place.

Curiously, part of the reason why the watershed area is so undeveloped may also have to do with the fact that the project has been perpetually in suspended animation.

Sunga noted that the dam project has hung over these eight barangays like a sword of Damocles for close to two generations. Since local businessmen and politicians know that these barangays may end up going underwater if government insists on pushing the dam project, no one is willing to pour much money into developing these areas. Schools built for children may just end up being inhabited by schools of fish.

The kapitana herself said that she was only 12 years old when residents of San Andres were told they were being moved out to make way for the dam. There was a lot of bitterness at that time among the local residents and the tribes, but it was bitterness tempered by the reality that the government would get its way in the end.

Now 42, the kapitana said that she would have no problem moving out, even though her father is a Remontado; she has another house in the upper portions of Tanay, where she can resettle.

But resettlement for the thousands of other residents may be a big headache that no one has yet factored into the equation.

When the project was conceived in the late ‘70s, the government went as far as to identify a resettlement site in San Ysiro, Antipolo. Sunga, however, pointed out that it’s been so long since the project was conceived that the resettlement site for the Laiban Dam evacuees has already been filled up with people from other communities.

In other words, the dam has a ready home, but the people it will displace do not. – PCIJ, July 2009

MWSS officials address the apparent haste in the tender of the Laiban dam project.

MWSS officials talk about ‘take or pay’, and whether the company explored all possible options to secure the best deal for consumers.

Check out the PCIJ’s coverage of the Laiban dam project:

• MWSS: Laiban deal with SMC ‘may or may not be best option’
• Video: MWSS officials address Laiban project
• Costliest dam project also biggest resettlement bill
• Laiban deal requires RP’s performance undertaking
• Ahead of contract, San Miguel starts to court Laiban residents
• Video: Sweat of the Sierra Madre
• MWSS keeps Laiban dam tender secret, even to NEDA
• Sidebar: MWSS execs: On sick leave, out of office, mum on Laiban
• New joint-venture rules allow little oversight, more abuse
• Secrecy, rush mark tender of biggest MWSS dam project

Also see:

• View the MWSS Laiban Dam Project Information Sheet
• 2008 NEDA Guidelines on Government Joint Venture Agreements
• MWSS press release (July 16, 2009)
• Chronology of Events (Laiban dam project)
• Agency Justification for the Construction and Operation of the Dam Project
• Comparative Analysis: GPRA, BOT and JV
• Diocese of Antipolo statement
• Green Convergence letter to MWSS

MORE THAN just a “take-or-pay” stricture, the P52-billion joint venture deal between the state-run Metropolitan Waterworks and Sewerage System (MWSS) and food-beverage giant San Miguel Corporation will require the Philippine government to issue a “performance undertaking,” a form of state commitment that the Arroyo administration has generally been wary of giving away.

A performance undertaking is a guarantee issued by the Republic that the state agency involved in a project will comply with all its obligations to the contractor, typically a private company.

In many past projects, such undertakings have compelled the government to either assume the multi-billion-peso debts or allot huge budget subsidies for obligations incurred by the agency.

Performance undertakings issued during the Ramos administration for at least two projects – the Metro Rail Transit system and the Casecnan multi-purpose dam have turned from contingent into actual liabilities that required direct budgetary appropriations.

The government is now in talks to buy back the MRT system from its creditors for $600 million to $1 billion, so it may avoid paying the annual subsidies. The private contractor MRT Corporation spent only $655 million to build the 17-kilometer elevated rail line.

Financial risk

Should things turn just as bad for the Laiban deal, the biggest dam project in the 131-year history of the MWSS, the required performance undertaking could expose the government to even bigger financial risks.

The Philippine Center for Investigative Journalism (PCIJ) has not seen a copy of the confidential joint venture agreement between the MWSS and San Miguel but references to some provisions are contained in a memorandum of the Office of the Government Corporate Counsel (OGCC) to the MWSS Board of Trustees.

Under the term sheet or Annex C of the Bulk Water Sales Agreement, the OGCC memorandum states that, “MWSS is obliged to submit the performance undertaking of the Republic of the Philippines to secure MWSS’ performance of its obligations (including but not limited to payment obligations and buy-out obligations under the Agreement).”

The required performance undertaking could attract extra scrutiny from economic policy-makers, particularly the Department of Finance, which issues performance undertaking instruments, for the joint venture deal.

By tradition, before issuing any performance undertaking, the DOF secures the recommendation of the inter-agency Investment Coordinating Committee (ICC) that is chaired by the Finance department with the National Economic and Development Authority (NEDA) as secretariat.

At bottom, however, performance undertaking matters are the call of the Finance secretary, official sources said.

NEDA nixes it

Already the Laiban dam project has turned contentious because of a “take or pay” provision that the NEDA, in a letter to the MWSS, says constitutes a direct government guarantee, which is prohibited for unsolicited proposals like San Miguel’s offer to build and operate Laiban dam.

The OGCC disagrees, and insists that a direct government guarantee refers only to “an agreement where the government guarantees to assume responsibility for the repayment of debt directly incurrent by the project proponent in implementing the project in case of a loan default.”

All government agencies are being assisted by the OGCC, particularly in relation to negotiation of project contracts.

Performance undertakings and take-or-pay schemes share one thing in common: a bad reputation.

During the Ramos administration, performance undertakings and “take or pay” schemes proliferated in the power sector, twin sweeteners invariably offered to independent power producers or IPPs that were tapped to ease the power supply shortfall.

Napocor bankrupt

Soon after the brownouts ended, what came to light was a dark result: the excessively high power rates drove the National Power Corporation (Napocor) to bankruptcy years later.

The state commitments, which call on the government to ensure that the state power company complied with its payments and other obligations, were blamed for unduly increasing the government’s contingent and actual liabilities.

The government later assumed P500 billion of Napocor’s debts and had to privatize the state power company’s generating plants and transmission assets to repay the assumed debt.

Lawyers say the law does not prohibit performance undertakings, pointing out that these are sometimes necessary to ensure that a government agency, corporation or unit complies with its obligations in public-private partnership contracts.

Performance undertakings are different from direct government guarantees, which require the government to assume the liabilities of a private proponent if it defaults on debts to creditors. The law does not allow direct government guarantees for unsolicited proposals, such as San Miguel’s offer to build and operate Laiban dam.

Aversion, attraction?

To be sure, the Arroyo administration has shown an aversion to issuing performance undertakings, and even more, to extending direct government guarantees.

Shortly after coming to power in 2001, it adopted a policy of generally avoiding performance undertakings to prevent a further build-up in the government’s contingent liabilities or future possible obligations.

In a statement issued on April 2, 2003 on contingent liabilities, Arroyo’s Department of Finance said: “It has been the policy of the Arroyo administration to refrain from issuing performance undertakings and similar commitments except in extra meritorious cases subject to very tight scrutiny.”

The department added that contingent liabilities generally consisted of direct guarantees to the borrowings of government corporations and “indirect guarantees primarily from
performance undertakings and other similar commitments of support that have been issued in relation to BOTs, its variants, and other private sector participation (PSP) projects such as joint-ventures.”

In those days, it was very difficult for agencies to get performance undertakings from the Finance department and Malacanang, recalls as former Trade and Industry department official tasked with attracting private investments in infrastructure projects.

“Then-Finance Secretary (Jose Isidro) Lito Camacho and Presidential Chief Legal Counsel Avelino Cruz were very careful about these things,” the official adds.

By its conduct, the Department of Finance then pursued a policy of avoidance of performance undertakings.  It tried to generally veer away from commercial or market risks, which are at the heart of “take or pay” schemes, and to just take risks that government can manage such as regulatory issues.

OGCC plays safe
Similar circumspect drives the guidelines of the NEDA and the Investment Coordinating Committee that also discourage the issuance of performance undertaking and schemes that require state agencies and corporations to provide subsidy and market guarantees, especially for unsolicited proposals.

As matter stand, the OGCC seems to want to play it safe. It has posed no objections to the joint venture agreement but wants MWSS and San Miguel to elaborate on the matter of the performance undertaking that the agreement requires.
In its memorandum, the OGCC urged the MWSS and San Miguel to “define and clarify” the performance undertaking provided for in the term sheet “in order that said provision will not be construed or taken to mean as a direct government guarantee barred under the 2008 NEDA Joint Venture Guidelines.”

It looks unlikely if MWSS and San Miguel have complied with the OGCC instruction and elaborated on the performance undertaking to avoid turning it into a direct government guarantee, however. The MWSS Board of Trustees passed the resolution calling for challenges to the deal on June 17, or just a day after the OGCC issued the memorandum, leaving the water agency no time to revise the agreement.

By all indications, the MWSS felt no rush or saw no reason to clarify the term even as it launched the challenge process on July 2, 2009. The OGCC itself said the two parties can define and clarify “within the period stated in the joint venture agreement,” which could refer to the one-year “financial investment decision” period. During the FID period, the two parties should firm up the take or pay agreement and bring the two private concessionaires on board, the OGCC advised.

OK with OGCC

There is hint of consent in the OGCC memorandum as well. It noted, for instance, that the joint venture agreement “does not per se provide for a direct government guarantee … in the event of default.”

Instead, the agreement outlines a mutual buy-out scheme where the defaulter is obliged to sell its interest in the project to the other party at only 80 percent of the appraised value. Alternately, the defaulter must buy the other party’s stake at 120 percent of the appraised value.

The OGCC thus concluded: “Nowhere does MWSS’ possible default … result in the National Government’s assumptions of responsibility for repayment. In other words, it appears that the draft JV agreement, as the parties intended and worded, does not result in a direct government guarantee in favor of MWSS.”

More than a mere disagreement over the correct definition of a government guarantee, the dispute between the OGCC and MWSS, on one hand, and the NEDA, on the other, is at heart a debate on whether the government should agree, once more, to take on commercial risks.

The trade-off is assured water supply for Metro Manila. With Laiban in place, the capital region will have a second and more secure source of water that can supply an additional 1,900 million liters per day (MLD). The entire volume, however, may or may not be needed by the time the dam is completed in 2015. The concessionaires are projecting they will need at most  4,450 MLD of water only by 2015,  instead of the 5,600 MLD that is being projected by the MWSS.

It’s not easy weighing the trade-offs. It’s just too bad that Filipino taxpayers – who may be saddled with multibillion-peso obligations on account of Laiban dam – are just starting to get into the discussion even as the MWSS is moving closer, faster to awarding the deal to San Miguel.  – PCIJ, 2009

First of Two Parts

HER HANDLERS portray her as a hardworking president, but after eight years in power, Gloria Macapagal Arroyo is looking more like being long on show and short on substance.

Indeed, while critics and observers alike acknowledge specific successes by her administration, they point out that more fundamental concerns were neglected in the pursuit of achieving these.

The emphasis on high-profile projects and ‘feel-good’ programs became even more pronounced after the ‘Hello, Garci’ scandal broke out in July 2005 and lent credence to allegations that massive cheating, vote-buying and other poll irregularities had marked the 2004 elections. Critics say this led Arroyo to become more preoccupied in proving her administration’s legitimacy.

As a result, economists Benjamin E. Diokno and Solita C. Monsod, both of whom teach at the University of the Philippines School of Economics, gave Arroyo an overall failing mark in the 10-point agenda she set out to accomplish between 2004 and 2010.

Using the University of the Philippines grading system, in which 1 is “excellent” and 5 is “fail,” Diokno gave the president an average of 3.86, rounded off to 4, for Conditional Failure. Monsod, in a 1 – 100 rating, gave Arroyo an average of 47.17 where 50 percent is the passing mark.

But Diokno and Monsod differed in grading Arroyo – who earned her PhD in economics at UP — on her goal to achieve a balanced budget. Diokno, who was the budget secretary of Arroyo’s immediate predecessor, Joseph Estrada, gave the president a failing grade of 5 for the large deficits from 2001 to 2005 and ending her term with record-high deficits of at least P250 billion by yearend and another P200 billion plus in 2010. By contrast, Monsod generously gave her administration a perfect 100 rating for being on track on its deficit projections in 2007 and 2008.

Beat odds or beaten?

One hundred days after she was sworn into office anew in 2004, Arroyo had unveiled her Medium-Term Philippine Development Program (MTPDP), the road map to realize her 10-point agenda presented in the catchphrase: “BEAT THE ODDs.”

Each letter stood for a goal, thus: B – balanced budget; E – education for all; A – automated elections; T – transportation and digital infrastructure; T – terminate hostilities with the MILF and NPA; H – heal the wounds of EDSAs I, II, and III; E – electricity and water for all; O – opportunities for livelihood and 10 million jobs; D – decongestion of Metro Manila; and DS – develop Subic and Clark.

J. Nereus Acosta, a professor at the Ateneo de Manila University School of Government and the Asian Institute of Management, says that the administration “can rightfully boast” of a few areas where it can claim moderate to large success: a balanced budget, some big-ticket infrastructure projects, and the meeting of some targets for education, such as more computers in schools and the construction of new classrooms and school buildings.

But the former three-term congressman who was on Arroyo’s side during her first three years in office also notes that the administration’s infrastructure projects have been plagued by overpricing and corruption.

Economist and Freedom from Debt Coalition Vice President Rebecca Malay meanwhile criticizes what she says is Arroyo’s “obsession” to balance the budget by reducing expenditures for basic social services like health and education and increasing the “easy” taxes, particularly the Reformed Value-Added Tax (R-VAT) that raised billions of pesos for the government since 2005.

During the Estrada administration, the per capita expenditure for health was at P201. Under the Arroyo presidency, it went down to P184. On education, annual per pupil expenditure was at P5,830 under Estrada, and down to P5,467 under Arroyo. According to Malay, the effect could be nothing less than “deleterious.”

Education is central to development and a key to attaining the Millennium Development Goals (MDGs) and the Education For All (EFA) commitments to the United Nations. It is deemed the most powerful instrument for reducing poverty and inequality.

Unfortunately for the president, even some of her allies in the House may agree with Malay’s assessment.

‘Academic crisis’

Quezon Rep. Danilo E. Suarez, who chairs the House oversight committee that monitors and reviews the president’s SONA commitments, for one says that while Arroyo may have met her targets on construction of classrooms and reducing the density between classrooms and students and the number of teachers per students, her efforts to address the “academic crisis” are far from what is desired.

This is particularly true in the area of access to information technology, says Suarez, who points out that only 20 percent of the population is computer literate. “If you have 80 percent illiteracy in this particular field,” he says, “you have an academic crisis.”

He clarifies though that the fault is not entirely Arroyo’s, since she inherited the problem from previous administrations.

Nueva Vizcaya Rep. Carlos M. Padilla, for his part, says that prioritization of limited state resources is key to meeting the country’s targets on assuring access to education to all children of school age.

“If funds are not forthcoming, you can never improve the quality of education,” says the former educator, noting that the United Nations Educational, Scientific and Cultural Organization (Unesco) sets the minimum share of education in the national government budget at six percent of the Gross Domestic Product (GDP).

In the 2009 budget, the allotment for education grew by almost P20 billion from the previous year. In terms of share of the national budget, however, the amount received by education actually shrank to just 11.87 percent, from 12.2 percent in 2008. This represented a drop to only 2.36 percent of GDP, from 2.5 percent in the previous year. On a per student basis, the investment on education has been declining in real terms.

Enrolment in public elementary and secondary schools grow at an average of 1.8 percent a year, but per student budget declines by an average of 0.3 percent, according to the 2008 – 2009 Philippine Human Development Report.

Batasan Hills Elementary School. Photo by Tita C. Valderama.

Jobs: Goal failed

A study commissioned by the National Economic and Development Authority (NEDA) says that the government needed to infuse P44.2 billion more to education this year to be able to meet the EFA goals.

To Padilla, ensuring quality education means providing sufficient funds for quality instruction, facilities, and curriculum. But he says, “The situation we have now is that we can’t even provide for higher salaries for teachers to be able to attract the best talents to the teaching profession. We can’t capture the best minds among our high school graduates to take up education course and become teachers because of the pitiful salary rates.”

The same data show that more than 4,000 newly-hired teachers have left the country, majority of whom went to the United States. Teachers began leaving the country in significant numbers in 2000. A total of 241 teachers opted to seek better employment overseas that year, according to POEA records.

While President Arroyo has repeatedly said deployment of Filipinos overseas is not her government’s policy, one of the reasons she has given for her frequent travels abroad was to help enhance the overseas market for Filipinos.

Creating at least one million jobs a year is another goal the Arroyo government has failed to achieve. If at all, what has been generated were temporary employment and in small-scale businesses under programs called OYSTER (Out-of-School Youth Serving Towards Recovery) and CLEEP (Comprehensive Livelihood and Emergency Employment Program).

According to National Statistics Office (NSO) Administrator Carmelita N. Ericta, employment rate stood at 92.5 percent in April 2009, a slight improvement from 92 percent in April last year. By comparison, unemployment decreased from eight percent last year to 7.5 percent this April. This was based on the quarterly labor force survey that placed the number of employed persons at 37.8 million out of 59.1 million in the labor force who are 15 years old and older.

But the assertion raised several eyebrows at the House, especially the data showing the highest employment rate of 98.5 percent and the lowest unemployment rate of 1.5 percent in the poorest region in the country, the Autonomous Region in Muslim Mindanao (ARMM). Metro Manila had the lowest employment rate of 86.5 percent and the highest unemployment rate of 13.5 percent.

Paranaque Rep. Roilo Golez was even moved to remark that the poorest region in the Philippines has a far higher employment rate than the whole of the United States, where the corresponding national figure is at some 10 percent amid the global economic crisis.

In truth, there seem to be several sets of “official” labor numbers floating around, all of them depending on how a particular agency defines or sets the parameters of terms like employment, unemployment, and underemployment.

Even Congressman Padilla has apparently become so confused that he is now questioning the huge disparity in the number of jobs created between 2004 and 2008 as it appears in the reports of the Presidential Management Staff (PMS) and NSO.

Discrepancies in stats

According to the PMS, 11.4 million jobs were created in the last five years. The NSO report, however, puts the figure at less than four million. Comments Padilla: “I would have let it pass if it was just a difference of, say, up to 10 percent, but the disparity is almost three-fold. It really puzzles me.”

“I am not trying to be malicious,” he says. “I don’t want to embarrass the president if she says there were 11.4 million new jobs created since 2004. I just want them to explain why they have this claim.”

Congressman Suarez, though, says that the congressional oversight committee reviewing Arroyo’s SONA commitments would use the NSO data. He says these are consistent with the figures from the labor department and the pension agencies. The PMS data, says Suarez, took into account jobs generated in the small and medium enterprises that obtained loans from government financial institutions.

The PMS may have also factored in other data, if figures given by Trade Secretary Peter Favila are to be considered. According to Favila, the government’s lending program for micro, small and medium enterprises (MSMEs) has lent some P305.57 billion to some 5.6 million beneficiaries since 2004 and in the process created 2.5 million jobs. If that figure is added to the NSO statistics, that would still mean the PMS new-job count is in excess of some five million.

To some, however, such statistical discrepancies are par for the course for an administration that has long been accused of glossing over its shortcomings and creating diversions instead of squarely facing the mounting allegations of fraud, graft, and corruption. In the process, the search for real solutions to the country’s many problems has been forgotten altogether.

Governance sacrificed

Opposition Senator Benigno C. Aquino III, who says the Arroyo administration has “sacrificed” governance “for political expediency and sheer survival,” cites one particular example.

“In the four years since renewable energy was used to smokescreen the ‘Hello, Garci’ issue, and the country’s well-being was sacrificed, it is only reasonable to expect that the government has accomplished its goal of turning renewable fuels as a sustainable source for our energy needs,” says Aquino. “However, the government opted for solutions, such as the use of the jathropa plant as a source of renewable fuel, which ended up needing further study.”

Acosta’s assessment of the Arroyo presidency is more biting: “No amount of BEAT THE ODDS variable successes can compensate for the larger ‘political economy’ sins of the present administration: far-reaching institutional damage across government and an overall, nationwide sense of malaise and social distrust.”

“The latter, I believe, is foundational,” explains Acosta. “Social trust is fundamental when we particularly speak of governance. Programs and projects can be individually celebrated, and subject to ‘spin’ for media mileage and political capital, as it were. But if the government is distrusted, institutions are instrumentalized for political gain, and and leadership labors under a persistent cloud of doubt over its legitimacy, it cannot be judged as having served the public weal.” – PCIJ, July 2009

Second of Two Parts

RAPID economic growth in recent years, perhaps one of President Gloria Macapagal Arroyo’s few and widely acknowledged achievements amid the steady slide in her popularity ratings, could turn out to be as debatable as her devotion to good governance and anti-corruption.

As Arroyo delivers her ninth and presumably last state of the nation address on Monday, she is again expected to highlight her past economic achievements – even as the economy is poised to either shrink for the first time since 1998 or grow at its slowest in at least seven years. Already, gross domestic product, a measure of economic output, dropped by 2.3 percent in the first quarter from the previous period.

Yet, as if to remind everyone of Arroyo’s solid economic record in spite of the current downturn, full-page newspaper advertisements appeared last month showing how the economy did much better under her, compared to the terms of other Philippine presidents.

According to the advertisement, economic growth under Arroyo, “the cute economist,” averaged 5.6 percent so far compared to 4.1 percent under “the actor” Joseph Estrada, 3.9 percent under “the general” Fidel Ramos, 4.1 percent under the “housewife” Corazon Aquino and 3.2 percent under the late “lawyer” Ferdinand Marcos

Vintage Gloria

This is typical Arroyo, the country’s only president with a doctorate in economics. Her spokesmen often belittle allegations of irregularities against her administration by pointing to her economic record. Her past annual addresses to Congress had been occasions to tout her government’s economic successes, including fiscal reforms in 2006 and the 30-year high gross domestic product growth of 7.1 percent in 2007.

Even independent economists have acknowledged that the economy grew faster under Arroyo though they quickly point out that people’s well-being seem to be lagging behind. There is consensus on a central point: Poverty incidence worsened between 2003 and 2006, a surprising turn of event considering that GDP has been growing faster.

Small wonder then that now, Arroyo’s touted economic successes are coming under question. Recent growth could be “overstated,” according to economists at the University of the Philippines School of Economics, where Arroyo studied for her PhD.

In the June 2009 issue of the Philippine Review of Economics, a peer-reviewed journal published by the Philippine Economic Society and the UP School of Economics, Felipe Medalla, professor at the School of Economics, and Karl Robert Jandoc, a PhD candidate, subject the country’s recent economic performance to more exacting analysis.

Inconsistent data

Beyond noting the contradiction between faster growth and worsening poverty, the two authors explore more deeply and rigorously the inconsistencies in government economic data. They ask the hard but logical question: if two sets of data are inconsistent, perhaps one of them is not as reliable as we think it is.

In contrast to many of its neighbors, the Philippines posted higher economic growth after the Asian financial crisis. From 1999 to 2007, GDP grew by an average of 4.94 percent, or 1.45 percentage points higher than growth between 1989 and 1997.

The conventional view about higher GDP growth in recent years is that it was being driven by consumption and led by the service sector, which, in turn, could be traced to rapid rise in remittances, the emergence of the call-center industry, and fiscal reforms.

“We take a different view,” Medalla and Jandoc write. “We ask why is it that if economic growth is being correctly measured, many indicators and data sets are at odds with the supposedly high economic growth. Moreover, we find that Philippine growth patterns – shrinking growth of domestic absorption, exports and imports accompanying rising output growth – do not fit the pattern in other Asian countries.”

Medalla and Jandoc note that the Philippine growth pattern is unlike other Asian countries where growth rates of household consumption, government spending, capital formation, export, and imports rose or fell in tandem with GDP growth. Here, faster GDP growth was associated with slowing growth in domestic demand, exports, and imports.

GDP vs demand

“The Philippines’ uniqueness is more a reflection of its weak national income accounting system than the resiliency of its economy,” conclude the UP economists. “Furthermore, since trends in many other indicators outside the national income accounts seem to contradict it, it is very likely that GDP growth after the Asian financial crisis (and after 2000 in particular) has been overstated.”

Medalla and Jandoc cite an important clue to the possibility that there was something wrong with the data – the contrary direction taken by growth in GDP, on one hand, and domestic demand, on the other.

In seven other Asian countries, combined growth in personal consumption, government spending, and capital formation dropped as GDP growth fell. In the Philippines, GDP growth went up in spite of the slower pace of expansion in domestic demand.

Indeed, lower imports growth mainly accounted for faster GDP growth in the Philippines. Again, this contrasts with what happened in other Asian countries. “It is also at odds with studies showing that in most countries GDP growth moves in the same direction with the growth in imports,” Medalla and Jandoc write.

Consumption vs income

Another sign of possible data problems was the inconsistency between growth trends in personal consumption expenditures, on one hand, and family income and expenditures, on the other.

Estimates of the consumption spending are made by the National Statistical Coordination Board (NSCB) each quarter and are based on production statistics. Family income and expenditures data come from surveys done by the National Statistics Office (NSO) once every three years. Economists expect the direction of growth in the two indicators to be consistent. Instead, the growth patterns diverged, especially after 2000.

Medalla and Jandoc note that consumption growth rates surged to their highest after 2000 while the rise in family income and expenditures was slowest in the same period. The two economists point out that growth in family income and expenditures was above growth in consumption spending before the Asian crisis, but fell below afterward.

Slowing growth trends in energy use, net domestic credit, and ratio of investments to GDP “also lend to the belief that the economy is not as robust as the NSCB paints it to be,” say Medalla and Jandoc. “Even some of the indicators that government trumpets to show a healthy economy (such as the fall in inflation and interest rates) may be partially due to the fact that economic growth is not as high as the NSCB says it is.”

Amid the inconsistency between the national accounts-based consumption expenditure data, and the family income and expenditure numbers, which are generated from a survey conducted once every three years, the authors lean on the side of survey-based data.

Besides, they point out many weaknesses in the gathering and estimation of production value added in agriculture, industry and services that go into the national accounts.

For example, in agriculture, they note that value added in that sector has been growing by 1-2 percentage points faster than population growth rate in the last decade compared to the previous one. This suggests that agriculture labor productivity has been increasing, which does not square with shortfalls in public investments in the sector.

In industry, Medalla and Jandoc say that while the national accounts show that the sector maintained its contribution to GDP growth after the Asian crisis, data from the monthly survey of manufacturing of selected industries “point to a weakening, not a growing, manufacturing industry.”

Even the services sector, the most important driver of GDP growth after the Asian crisis, turns up a few data problems. Two-thirds of the rise in services value added came from only two subsectors – wholesale and retail trade, and transportation, communication and storage, which seem apparent from the surge in the number of cell-phone subscribers over the last few years.

But the two economists find this “rather puzzling … given the low growth of both expenditures and income in the family income and expenditures survey after 2000.” They also note that the bulk of growth in the service sector “is accounted for by two subsectors where output is hard to measure and where a significant part of the value added in inputed.”

Very weak database

The two economists do not suggest that the possible overstatement is deliberate on the part of the NSCB or the government. Indeed, the analysis covers the post-Asian crisis period, which include the years between 1998 and 2000 when Medalla was economic planning secretary of then President Joseph Estrada.

But they complain about the NSCB’s “very weak database,” which makes it difficult for independent experts to validate imputations that affected some of the values used in the national income accounts. They also described as “ad hoc” the changes that the NSCB made in the estimation methodologies.

The PCIJ emailed NSCB Secretary-General Romulo Virola for a comment and he responded to say the NSCB is still in the process of writing a comprehensive response to Medalla and Jandoc’s paper. Virola added that his terribly undermanned staff is simply overwhelmed with other tasks, including preparing the national accounts estimates for the second quarter of 2009, which are due out next month.

In an article dated April 2009 and published on the NSCB website, Virola tried to clarify some of the issues raised by Medalla in earlier media interviews and presentations. He said that consumption expenditures in the national accounts are conceptually different from family income and expenditures. “If these terms are conceptually different, why should their growth rates be the same?” he wrote. “Simple arithmetic should be able to explain why not.”

Virola, however, also acknowledged that the terms are “conceptually close to each other,” and proceeded to show that the growth trends of the two data sets are consistent if one used current figures rather than real or inflation-adjusted numbers.

But Medalla and Jandoc also take issue with Virola’s comments. The two remark: “Given the obvious weaknesses of the national income accounts, it is quite alarming that the head of the NSCB could argue with alacrity that the divergence between the growth rates of real expenditures in the FIES and NIA is not an inconsistency just because the relationship between the nominal growth rates of FIES expenditures and personal consumption expenditures seems to show a nice fit.”

They add: “The first lesson that one is taught in any introductory undergraduate course in microeconomics and macroeconomics is that the effects of inflation should always be sorted out from real changes in economic variables; and that from the point of view of measuring welfare, expenditures, and output, it is real variables – not nominal – that matter.”

The debate is not esoteric as it sounds; the real-world implications are serious as they are plenty. Two chiefs of the Bureau of Internal Review (BIR) have already been fired for failing to meet tax collection targets based on GDP growth forecasts, point out the economists.

In recent years, Luzon was saddled with excess power generating capacity that was built to address supply shortfalls implied by rising GDP growth. “It is now fashionable to attribute the failure of electricity shortage to materialize to low elasticity or responsiveness of demand for electricity to output growth,” Medalla and Jandoc say. “But again, it could very well be that output has not grown as fast as the NSCB estimates.”

Quality of stats

The reliability of GDP data also bears on the government’s economic strategy and anti-poverty programs. If growth numbers are dependable, then the problem becomes the quality of economic expansion or translating growth into more jobs and incomes. If not, boosting economic growth in the first place is a major concern.

“It seems there is enough evidence to at least make government and analysts reexamine the quality of economic growth statistics before they try to answer these policy issues,” Medalla and Jandoc write.

It’s not just academics who are complaining about the reliability of the national income accounts. Big revisions in fourth quarter 2008 GDP growth estimates, announced by the NSCB when it reported this year’s first quarter numbers last May, triggered shock and some angry comments from international analysts who help clients make investment decisions.

The NSCB initially reported in January that quarter growth in the fourth quarter reached one percent. Four months later, in May, it revised the estimate and said growth was likely only 0.3 percent.

“Speaking frankly, this is the kind of release which makes an economist feel sick in the stomach,” wrote Nikhilesh Bhattacharyya, an associate economist at Moody’s economy.com, a unit of the U.S. credit rating agency, in a blog shortly after the NSCB announced first quarter GDP results. “The major source of discomfort is at how the National Statistics Coordination Bureau has conveyed the information that the Philippine economy is performing so poorly, having previously given the impression it was performing so well.”

He continued: “With no reliable retail sales releases or other indicators of consumer spending, one has to rely solely on GDP figures for gauging household consumption, which makes up over 75% of total GDP. Prior to today, data showed resilient household spending had led to the Philippine economy to expand 1% quarter-on-quarter in the fourth quarter, probably outpacing growth in China, India and Indonesia. Evidently, it turns out the Philippine data (were) way off the mark.”

Resilient, complacent

Bhattacharyya surmised that the NSCB’s high GDP growth estimates late last year may have convinced government planners that the economy remained resilient and lulled them into complacency.

“Policy makers took their foot off the stimulus accelerator,” he wrote. “Monetary policy rate cuts were tempered, while the government was confident about achieving growth at the higher end of its 3.1%-4.1% growth target and did not announce any new spending measures.”

NSCB’s Virola, in an emailed response to a request for comment on the complaint of the Moody’s.com economist, said, “The quality of the national accounts estimates and their revisions (are) very much a function of the data used. The data come from the data ‘providers’ – households, establishments/enterprises in the private sector, the government, etc. If these data providers do not cooperate (do not respond to surveys, delay their data submissions, do not provide accurate responses/data, etc.) the quality certainly suffers.”

The NSCB admits that the GDP estimates need improvement, and is now taking steps to address the weaknesses. In April, it got a grant from the World Bank to strengthen the agency’s ability to revise the national accounts system, and to improve its quality and usefulness.

Questions about faster GDP growth may chafe the politician in Arroyo, especially because it could undermine one of the few remaining pillars propping up her legitimacy. But perhaps the PhD economist in her would be intrigued enough to also look into the issue more deeply, and allocate more funding to help the NSCB do a proper job of measuring the real state of the economy and of the nation. – PCIJ, July 2009

TODAY President Gloria Macapagal Arroyo will deliver her valedictory State of the Nation Address (SONA). The act is the highest level of public accountability for the president that is mandated in the Philippine Constitution – for the country’s chief executive to report to Congress, the bureaucracy, and the Filipino people on the state of the nation.

The question is which Arroyo will show up to deliver the SONA: A boastful, triumphant Arroyo, who will take credit for the Philippine economy’s uninterrupted expansion during her watch or an apologetic Arroyo, who has caused so much pain and misery for a lot of Filipinos and has managed to damage, in varying degrees, existing democratic institutions?

Surely, she will try to take full credit for the performance of the economy during her decade-long reign. That strategy is both risky and inappropriate. Risky, since the economy after growing at its peak in 2007 is now heading south – 3.8 percent GDP growth in 2008, and is projected to slow to zero growth in 2009 and to 2.0 percent in 2010.

The economy therefore grew at an average of 4.09 percent during the 10-year period. That, however, is much less than Estrada’s performance of 4.7 percent (3.4 percent GDP growth in 1999 and 6.0 percent in 2000), and slightly better than Ramos’s average of 3.6 percent from 2003 to 2008 or Aquino’s average of 3.34 percent from 1986 to 1992.

But a comparison of economic performance on the basis of GDP numbers as the only criterion is inappropriate for a number of reasons. First, the terms of office of post-Marcos presidents are uneven. Arroyo would end up serving for 9.5 years or almost a decade, followed by Aquino (seven years), Ramos (six years), and Estrada (2.5 years). Second, the national income accounts system was revised twice during Arroyo’s watch, which means the GDP numbers in recent years may not be comparable with those in earlier years. Third, Professor Felipe Medalla of the U.P. School of Economics has raised several methodological and measurement questions on recent GDP numbers. To date, his questions have yet to be answered by government statisticians.

More importantly, though, the government cannot claim full credit for the country’s economic performance because there are factors that affect economic growth that are beyond its control. The government doesn’t control the weather, which affects agriculture immensely in monsoon Asia. A devastating El Nino or a La Nina could spell a big difference on whether agriculture output would be robust or weak.

The more open the economy, the more it is subject to the vicissitudes of the outside world.

While the rest of the world was on a rapid, sustained growth, the Philippine economy benefited through galloping overseas remittances, stronger exports, and higher foreign direct investments. This happened during Arroyo’s watch and she’s been trying to claim credit for it. But she has nothing to do with the sustained global expansion. And with the sudden reversal of fortune, when the financial bubbles burst, and with the world economy now in a full-blown economic crisis, the Philippine economy has significantly slowed. Unfortunately for Arroyo, this also happened during her watch.

The world economic crisis exposed the long-term reforms that any Philippine president should have addressed seriously and which Arroyo failed to do: the diversification of Philippine exports, the overdependence on overseas migrant workers, the rapid population growth rate, agricultural modernization, and fiscal sustainability.

At the very least, a meaningful way of evaluating economic performance is whether a particular administration has met its own targets. The assumption is that at the time the targets were set, government authorities have enough information to know the available resources, technology, and government capability to meet the targets.

Using this performance criterion, the economy grew much less than planned levels, except for 2004 and 2007, both election years. But the ongoing economic crisis, the gap between the planned level and projected level will be much more serious during Arroyo’s final years: 2008, 2009, and 2010.

An even more important way of evaluating economic performance is whether the people’s well-being has improved. For the common man, the impact of the economy on employment, poverty alleviation, and hunger mitigation is more important than the GDP number.

Better or worse?

An appropriate question is: are Filipinos better off now than when Arroyo took power in 2001? Do they have decent, stable jobs or are they either unemployed or underemployed? Are they poorer or richer? Do they eat regularly or do they go hungry occasionally?

In her first SONA, Arroyo spoke about her “vision of winning the war against poverty within the decade.” But after almost nine years, she is fast losing that war. Poverty worsened from 2003 to 2006 using official government statistics. And with high inflation and food prices in 2008 and rising joblessness, it is reasonable to expect poverty to worsen in 2009. At current expectations of slow recovery, it is highly unlikely that the Millennium Development Goal (MDG) of halving poverty by 2015 will be met, even as neighboring countries (Vietnam, Thailand, and Indonesia) succeed in rapidly reducing poverty.

Arroyo promised to create 10 million jobs or about 1.5 million jobs annually from 2004 to 2010. She’s way short of her target. Worse, the decent jobs in manufacturing continued to disappear while more part-time, less secure jobs were created.

On her first SONA she promised food on every table, but that also did not happen. Instead, the Philippines became the world’s number one importer of rice. And almost nine years after that first SONA, hunger incidence has reached its peak at 23.7 percent, according to a recent Social Weather Stations survey.

Unemployment, poverty, and hunger are interrelated. Survey results show that unemployment and hunger go together. This reveals the weakness of the Philippine social-protection program, which provides very little protection for those who are needy, including those who lose their jobs. The incidence of hunger is a problem that has been exacerbated by the ongoing economic crisis, and it has progressively worsened under the Arroyo administration.

Budget mismanagement

But should all these surprise us? Despite the large increases in the national budgets during the last nine years, education, health, and public infrastructure did not get the priority they deserved. From 2000 to 2009, funding for public infrastructure has been modest at less than 1.5 percent of GDP.

President Arroyo undermined existing budget institutions. The budget process should be transparent and predictable. Yet Arroyo revealed her disrespect for the constitutional process by habitually operating on reenacted budget. None of her nine regular budgets were approved on time; usually, there is a full quarter delay. In three of her nine years, she ran the government for the full year without an approved budget. She has pushed executive action to its limits by exercising the power of the purse under the shroud of secrecy.

Grading Gloria

In her earlier SONA, Arroyo tried to sum up her vision of governance using a catchy phrase, Beat the Odds (B for balanced budget; E for education for all; A for automated elections; T for transport and digital infrastructure; T for terminating NPA/MILF hostilities; H for healing the wounds of EDSA 1,2 and 3; E for electricity and water for all; O for opportunity to create 10 million jobs; D for decongest Metro Manila; and DS for develop Subic-Clark hub).

Let’s rate President Arroyo on whether she has met or likely to meet her Beat the Odds goals and objectives using the U.P. grading system: 1(Excellent), 1.25, 1.5(Very Good), 1.75, 2.0(Good), 2.25, 2.5(Satisfactory), 2.75, 3.0(Pass), 4.0(Conditional Failure), and 5.0(Fail).

Balanced budget: Arroyo incurred large national government deficits during her early years: P211 billion in 2002, P200 billion in 2003, and P147 billion in 2004. And after cutting the budget deficit to P12 billion in 2007 (aided by severe spending compression and hefty one-time privatization proceeds of P91 billion), she is expected to exit with a large deficit of P250 billion this year and another P200 plus billion deficit next year. As a result, national government public debt would more than double: from P2.2 trillion as of end 2000, it will balloon to a new high of P4.5 trillion to P4.75 trillion by end June 2010. Preliminary final grade: 5.0

Education for all: Arroyo neglected basic elementary and secondary education during her first six years. As a result, despite her catch-up plan, progress in education has been slow and uneven. Key MDG targets will surely be missed. Net enrollment ratio has worsened – from 96.8 percent in 2000 to 83.3 percent in 2006. Translation: 17 out of 100 children of school age are out school. What would these children do in the future? The Arroyo administration is in denial and confuses inputs (school buildings, textbooks, etc.) with outputs and outcomes (better test scores, higher literacy). Grade: 4.0

Automated elections: The Commission on Elections failed to do it in 2004 and 2007. There is a fair chance that the 2010 national and local elections will be automated. But the poll automation is the responsibility of a separate, independent constitutional commission. Still, it could be Arroyo’s positive contribution to the democratic process if the 2010 elections, against all odds based on her past electoral behavior, turn out to be honest, orderly, and peaceful. Grade: Incomplete. (This is work in progress.)

Transport and digital infrastructure: The government has underinvested in public infrastructure. The promised additional light rail transit systems in Metro Manila have yet to be started. The existing three systems are not even linked, though work has been started. The digital infrastructure is happening through private telecommunication firms, which suggests that there was really no need for the corruption-laden NBN-ZTE project. Grade: 3.0

Terminating NPA/MILF hostilities: Both NPA and MILF remain capable of harassing government troops. Mindanao remains to be a battleground for Muslim rebels and government armed forces, and there appears to be no end to the conflict. The probability of having peace in Mindanao is much lower now than when Arroyo assumed office in 2001. Grade: 5.0

Healing the wounds of EDSA 1, 2 and 3 forces: But the country is more divided now than in 2001. There is even a serious rift within EDSA 2 forces. Grade: 5.0

Electricity and water for all: No additional power capacity was built during Arroyo’s term. Intermittent power failures are already being experienced in parts of the Visayas and Mindanao. And a return of the power crisis is likely in 2011. It could be sooner where it not for the severe economic slowdown, which muted demand for power. Water supply in Metro Manila has improved, but that was the outcome of decisions made during the term of Ramos (no credit for Arroyo). The appointment of a politician as head of the Local Water Utilities Administration is a negative. Grade: 3.0

Opportunity to create 10 million jobs: The government’s goal is to create 1.5 million new jobs every year. But from 2005 to date, only about 600,000 jobs were created yearly, and only 430,000 jobs if unpaid family workers were excluded. Decent jobs, mostly in manufacturing, were lost. These jobs were replaced by part-time, less paying jobs in agriculture and the informal service sectors. The rising number of overseas workers is proof that all’s not well in the domestic economy, and that the government has failed to provide enough jobs for Filipinos at home. And by being the top importer of rice, we’re giving up jobs at home and creating jobs for Vietnamese and Thais. Grade: 4.0

Decongest Metro Manila: The idea is not well thought out in the light of the ongoing world economic crisis. The trend for the future is to have denser cities, where people live where they work. The growing urban centers, however, have to be connected to the lagging rural areas. Yet since the idea to relocate the Department of Agrarian Reform to Iloilo, the Department of Tourism to Cebu, and the Department of Agriculture to Davao, is senseless, the failure to implement it may not be bad after all. Grade: 3.0

Develop Subic-Clark hub: The hub was thought out by Ramos, funded under Estrada (through the Obuchi Plan), and implemented by Arroyo. It is a worthwhile project. But project implementation was delayed and financed at large cost overrun, a characteristic of many GMA projects. Grade: 2.75

Preliminary Final Grade: 3.86 or 4.0 (Conditional Failure). Arroyo’s dismal performance supports the view that the EDSA 2 political adventure was a monumental mistake. It has set back the country’s democratic process and poverty reduction programs by almost a decade. As a society and a people, we’re worse off now than when Arroyo took power in 2001 – while our Asian neighbors continue to march forward, despite the world economic crisis.

Governance scorecard

Arroyo’s failure to move the economy and the government forward on a lot of government’s goals and objective may be attributed to various aspects of governance. What was the Philippine governance rating before Arroyo took power and what is it now?

On voice and accountability, in 2000, the Philippines’ rating was 54.3-percentile rank (that is, the Philippines was better than 54.3 percent of all countries in the study). By 2008, the rating had regressed to 41.3 percent. Political assassinations, incidents of summary killings, unfavorable reports on human rights violation by UN agencies, and many attempts to muzzle the press have not helped the Arroyo administration.

On political stability, there was a sharp drop in rating: from 26.0 percentile rank in 2000 to 10.5 in 2008. The Philippines is better than only one out of 10 countries among the 212 countries and territories surveyed.

On government effectiveness, there has been an improvement from 49.3 percentile rank in 2000 to 55.0 in 2008.

On regulatory quality, there has been a regression from 56.6 percentile rank in 2000 to 51.7 in 2008.

On the rule of law, there has been a slight improvement: from a 36.7 percentile rank in 2000 to 39.7 in 2008. But, the Philippines hit rough patches during the early years of the Arroyo administration. The rule of law dipped to 36.2 percentile rank in 2002, 33.3 in 2003, and 33.8 in 2004, a reminder of the extra-constitutional way by which Arroyo was installed to power.

On control of corruption, the deterioration was quite severe: from 36.4 percentile rank in 2000 to 26.1 in 2008. The 2008 ranking was a slight improvement compared to the 22.2 ranking in 2007, when congressional investigations of high profile allegations of corruption such as the NBN-ZTE and fertilizer scams were at their peak.

During Arroyo’s watch, there has been a serious deterioration in four of six aspects of governance. The governance ratings are not just numbers, unfortunately. Better governance, according to the World Bank study, strengthens development, and not the other way around.

Poor governance has an impact on how poorly the Philippines fared in its fight against poverty and its desire to improve the living standards of Filipinos.

Lost decade

The state of economic affairs is one where people’s welfare has been set back for about a decade. More people and families are poorer now than when Arroyo assumed power in 2001. More workers are jobless and underemployed now than before. And more people are likely to go hungry now than a decade ago.

As a result, people are dissatisfied with Arroyo as shown by her negative net satisfaction rating during the second half of her decade-long term. She has the worst net satisfaction rating among all post-Marcos presidents.

Ten years after, government finances are on shakier ground. Taxes-to-GDP ratio is much lower, going back to levels seen in the Marcos years, and national public debt would have more than doubled. In 2000, every Filipino had a debt burden of P25,991. By July 1, 2010, the amount is expected to double to P50,492. Under an unchanged condition, with the huge chunk of the national budget going to debt service, Arroyo’s successor can do very little to improve the people’s welfare.

As President Arroyo exits Malacanang, she will transmit to her successor a nation that is on the brink of financial collapse, hardly able to fund any program that would feed, educate, and take care of the health needs of its people.

Dr. Benjamin E. Diokno was budget secretary during the term of President Joseph Estrada. He is currently a professor at the University of the Philippines School of Economics.

First of Two Parts

POLITICS and government, business and finance, education and culture. In all these and more, the national capital region, Metro Manila, is supposed to lead the rest of the nation. Here, bureaucrats and politicians thrive, mostly schooled and steeled in the art of governance and advisedly, the liberal ramparts of transparency and accountability.

It seems fair for citizens to expect that in Metro Manila, more than anywhere else in the Philippines, the people’s right to know and to access official information and documents would be respected. But that could well be plain wishful thinking for now.

Indeed, while President Benigno ‘Noynoy’ C. Aquino III has once more failed to reiterate a commitment to freedom of information (FOI) in his latest State of the Nation Address, the results of a recent survey by the PCIJ of access to information practices in the 16 cities and sole town of Metro Manila show that majority of the local officials and employees in these Metro Manila local government units (LGUs) continue to linger in the dark ages of closed, opaque government.

Most of the LGUs, in fact, took their sweet time in responding to requests for specific documents, unmindful of deadlines for action set in law. And if they did act at all, they disclosed only some, not all, the documents requested. The city of Caloocan even recorded net zero action, failing to take full action on any of the requests up until the end of the audit. This was even though that city’s officials had approved, orally and in writing, at least a third of the PCIJ’s requests.

Documents for citizens

Beyond simply tracking the transparency regimes obtaining in NCR, the PCIJ audit purposely zeroed in on documents with great and grave impact on the welfare of the citizens. From April to June 2011, the Center deployed seven college student interns who filed requests for six major types of documents, including the asset disclosure records of the LGU officials, as well as the budget and development plans of the LGU. The audit also focused on documents pertaining to education, health, public safety, civil registry and property, and doing business.

Surprisingly, however, the most basic documents regularly produced by LGUs proved the most difficult to get. For instance, among the 17 Metro Manila LGUs, only Makati gave complete documents on education, while a mere four – Quezon City, Parañaque, Navotas, and the San Juan Health Department Unit 1 – provided complete documents on health.

On average, only a fourth of the 17 LGUs provided their development and investment plans, and copies of the proposed and enacted budgets. The rest took no action.

Still, of all the documents requested by the PCIJ, the statements of assets, liabilities, and net worth (SALNs) were easily the most tightly guarded and thus, the hardest to obtain. In the mold and manner of national politicians, the local politicians of Metro Manila apparently hold their asset disclosure records close to their chests.

Only two cities – Marikina and Makati – willingly shared the SALNs of all their local officials. Quezon City and Navotas, meanwhile, gave the SALNs of their respective mayor and vice mayor, but came up short when it came to those of their councilors. San Juan released its vice mayor’s SALN, but not its chief executive’s; it also gave incomplete asset records of its councilors. In the rest of the LGUs, the SALNs remain sub rosa or kept under lock and key by local officials who insist on their confidentiality, in apparent indifference to, or ignorance of, the law.

Most LGUs also required requestors to secure the mayor’s approval before all the requests could be granted. This caused bureaucratic delays and most probably is a major barrier to accessing documents in the NCR.

Least opaque

In the PCIJ audit, not one of the LGUs provided all the requested information. Even Quezon City, which came out as the friendliest to access to information requests, took full action (within the 15 working days’ deadline in law for all the documents requested) on only 75 percent of all requests filed by PCIJ.

Next came Marikina, which scored 57 percent, while Pasay, Parañaque, Navotas, and Makati all granted about half of all of PCIJ’s requests. Ten other LGUs (Las Piñas, Pasig, Mandaluyong, Muntinlupa, Taguig, Valenzuela, San Juan, Malabon, Manila, and Pateros) acted only on 12.5 to 37.5 percent of all requests filed.

On average, the LGU offices that gave documents took about 10 days to do so. But the Business Permits and Licensing Office (BPLO) of Las Piñas stood out by taking only a day to respond and provide complete documents related to doing business in the city.

To do the audit, the PCIJ interns personally filed simultaneous request letters for documents with the 17 LGUs, monitored all related follow-up activities (request letters sent, phone calls and field visits made to the LGU office), and logged all activity details (name and position of responding personnel and officials, speed and nature of action or referrals made; and the type or nature of documents given or withheld).

In addition, the enrolled deadlines set in law for government agencies to act on such requests – 10 working days to act on requests for SALNs and 15 working days to act on requests for all other types of documents – were used as reference for rating the performance of the various LGUs in this audit.

The audit stretched across a two-month period – one month for fieldwork and data gathering, and another for follow-up activities and data collation. In all, the PCIJ interns filed with the 17 LGUs a combined total of 135 request letters, made 437 phone calls, and received 266 referrals for many requests were tossed around two or more offices in the same LGUs.

The requests were filed with the LGU departments and units that are the custodians of the documents, including the Office of the Mayor, the Health Department, the Public Order and Safety Department, the Business Permit and Licensing Office, and the Civil Registry Department.

Public interest

The documents requested are clearly imbued with public interest because they enroll information and data that should benefit public weal and welfare:

• For education, the PCIJ asked for two sets of data: statistics or the number of schools and teachers in each LGU, as well as on plans and projects to construct new school buildings, hire new teachers, and acquire new learning materials and copies of contracts.
• For health, the PCIJ requested information on the actual expenses the LGUs spend on medicines and the volume of medicines distributed per barangay; number of hospitals and medical personnel; and projects undertaken by the health department.
• For public safety, the PCIJ sought data on the number of police officers and other public order personnel, how the police coordinate with barangay officials, how the police or barangay respond to cases, protocols on public-order incidents, and the number and the amount LGUs spend to build and maintain lampposts.
• For civil registry and property, the PCIJ asked about the types of civil registry and property documents, how to obtain these documents, fees and timetable involved in obtaining documents.
• For doing business, the PCIJ requested details on the documentary requirements, request and application process, LGU departments in charge, number of processing days, and fees involved. In addition, the PCIJ sought information on how to locate records of a business establishment, which office tracks records of registered and non-registered businesses in the LGU, and the benefits of registering a business.
• For other basic, premise data on the LGU and its officials, the PCIJ requested five documents: the SALN and personal data sheet (PDS) of the mayor, vice mayor and councilors; local development plan; local investment plan; proposed budget; and enacted budget.

How and why the citizens must be entitled to these documents, and could benefit from them, are matters affirmed in law and validated by the contents of the documents themselves.

The Local Government Code of 1991 mandates each LGU to prepare a local development plan and a public investment program, which would outline a city or a municipality’s development and budget priorities and serve as basis of its programs and projects for the year.

Useful details

These documents would significantly help citizens to understand the local government’s plans for the city and the barangays and how it intends to spend public resources. These documents would clearly enable citizen participation in policymaking and governance.

For instance, the 2011 Annual Investment Program (AIP) provided by Quezon City states that the city’s development priorities are disaster-risk mitigation, environment management, socio-economic services to empower the poor, tourism development, and effective city management.

To achieve these plans, Quezon City’s AIP outlines its budget allocation for each program, project, and activity, as well as the office or agency assigned to implement each sector.

For 2011, Quezon City has allocated P15.75 million for maternal health care for pregnant and post-partum mothers, and routine care for newborn infants. Residents, especially mothers and expectant mothers who do not have enough funds to avail themselves of private health care services, would find this information useful.

Quezon City has also allotted P2.49 million to provide services to physically, mentally, and socially disabled persons 0 to 60 years of age in order to enhance or develop their capabilities for self-reliance and productivity. Families with a disabled member may then inquire about this program and seek assistance from Quezon City’s Social Services Development Department.

In the meantime, citizens may find information pertaining to education useful so that they themselves can assess and audit education projects of their LGUs.

Makati, which was the only LGU that provided complete documents on education services, gave copies of the contracts that the city government signed with contractors to build new school buildings and to improve or maintain existing ones.

The contracts offered details on the amount of the project, project scope and timetable, and the duties and responsibilities of the contractor. With these data on hand, parents of students in a school may actually be able to check if the project had been fully implemented.

And then there are the SALNs, which are considered to be key in monitoring the wealth of public officials and in discouraging corruption. Yet most Metro Manila LGUs found reason to keep SALNs of certain officials away from the public eye.

The officials of Malabon’s Human Resource Department, for one, insisted that SALNs are “confidential” documents. Navotas, for its part, was quick to approve the release of the SALN of the mayor, but uncertainties on the part of the councilors resulted in their failure to hand over their SALNs.

Pasay was as problematic in the release of the SALNs and personal data sheets of its senior officials supposedly because the request letter had been misplaced.

In Pateros, the head of the Municipal Personnel Office said all 14 town councilors would have to unanimously agree first before any of their SALNs could be released to the PCIJ. Some councilors agreed, while the others refused. Because the personnel officer has imposed an all-or-nothing rule, not a single SALN of Pateros’s local executives was released.

(By contrast, Marikina, which ranked second to Quezon City as the most transparent city in NCR, provided the SALNs of its local executives within just five days from receipt of the PCIJ request.)

Most opaque

The four least transparent cities (Malabon, Manila, Pateros, and Caloocan) actually shared one thing in common: Their personnel showed a common tendency to refer requestors to other LGU departments within the same city halls, needlessly prolonging the process of obtaining documents.

In quite a few cases, too, many LGU personnel seemed totally clueless about their obligations in the Constitution and in Republic Act No. 6713 (the Code of Conduct and Ethical Standards for Public Officials and Employees) to be transparent in all their actions involving use of public funds, and in handling documents vested with public interest.

In Caloocan – the least transparent among the Metro Manila LGUs — only the police department and the civil registry office responded to the requests within the 15-day deadline set in law. All the other agencies of Caloocan either ignored or denied the other requests.

Unfortunately, even the offices there that promised to release documents, including those on education and health services, and those pertaining to doing business in the city, have yet to do so as of this writing. The police department in particular said it had misplaced the PCIJ’s request letter, causing interminable delays.

In Pateros, NCR’s lone municipality, the PCIJ filed requests with eight various departments. The town’s civil servants generally had an accommodating demeanor, but this failed to compensate for the insufficient documents they eventually released. Four offices took action but only one gave a complete set of documents requested. Pateros ended up being the second least transparent LGU in NCR.

Manila, NCR’s oldest and premier city, is the third least transparent. While its officials approved action on 57 percent of the PCIJ’s requests, they actually gave complete documents on only 14 percent of all requests filed.

The PCIJ sent request letters to seven offices of Manila City Hall but only four responded within the 15-day deadline set in law – the Mayor’s Office (SALNs), the business department, the City Civil Registry, and the assessor’s department. Manila’s police and health departments have yet to respond to the PCIJ’s requests, while the mayor’s office has yet to act on a separate request for data on education services.

Malabon, the fourth least transparent city, actually approved up to 83.33 percent of the PCIJ’s requests within four to 11 days. But it released the complete documents requested for only 16.67 percent of the requests, within the lawful deadline.

Malabon and Pateros cited the “confidentiality” status of certain documents for refusing the requests.

Among those that performed better than the bottom dwellers, the need for the mayor’s go-signal before certain documents are released was revealed to be a major block for those seeking access to public data. In Parañaque City, Mayor Florencio Bernabe Jr. had even issued a memorandum that in effect gave him sole power to approve all requests for information. The memo was supposedly based on a provision in R.A. No. 6713, which states that public offices are given the discretion not to disclose any information on the grounds of public safety and “undue advantage.” Out of the 10 requests that the PCIJ filed, only five were granted within 15 working days.

Politics & revenues

The practice in Parañaque prevails as well in Taguig, Pasay, Las Piñas, Mandaluyong, and Navotas even as no written memorandum requiring the mayor’s approval has been issued.

In Pasig, basic documents and those pertaining to education services could not be released simply because during the month-long data gathering for this audit, Mayor Bobby Eusebio was often out of the office. His deputies said there was no definite schedule when he would report for work.

Political rivalry also got in the way of accessing documents in Taguig. Majority of the requests were denied there supposedly because the documents had to be kept “confidential” on account of an ongoing court case between Mayor Laarni Cayetano and her losing rival in the May 2010 elections, retired Supreme Court justice Dante Tinga.

Only the documents from Taguig’s BPLO, the Assessor’s Office, and the City Health Department were provided. Requests filed with the Mayor’s Office, the Public Safety and Order Office (POSO), and the City Budget Office were not granted within the 15-working day deadline set in law.

Documents pertaining to civil registry records and on doing business in Metro Manila were the easiest to secure across the metropolis. In fact, all 17 LGUs provided information on various civil registry and property documents, as well as the procedures, fees, and number of days it would take them to process requests.

As for doing business, 14 of the 17 LGUs gave information on the documentary requirements, the process for applying for business permits and registering business establishments, and the fees involved. In many cases, the data were enrolled in brochures and pamphlets published by the LGUs.

These two offices (Civil Registry and BPLO) conduct regular transactions with citizens every day; releasing documents thus seems almost routinary to them. In addition, these transactions are triggers of revenues (processing and permit fees) and take on the nature of business processes beneficial to the LGUs. - With research and reporting by Karol Anne M. Ilagan, Anne Jeanette O. Priela, Krystal Kay S. Jimena, David Faustino T. de Castro, Essen Mei M. Miguel, Henor G. Gotis, Eric H. Rivera, Stephanie Directo, and Jessa Mae B. Jarilla, PCIJ, July 2011.

Last of Two Parts

THE apparent inability of majority of Metro Manila local governments to respond quickly and fully to citizen requests for asset disclosure records of local officials, as well as documents on education, health, public safety and other essential services may well be a reflection of the Aquino administration’s own dithering over a Freedom of Information (FOI) law.

Yet while even President Benigno Simeon ‘Noynoy’ Aquino III himself seems unsure just how much he wants his government to be transparent, the World Bank, a solicitous donor of the Aquino administration, recently released a document that explicitly proposed that the government “put forward a Freedom of Information Act for legislative approval.”
At the same time, the latest results of a transparency and accountability drive of the Department of the Interior and Local Governments (DILG) show local governments outside of Metro Manila outperforming those in the National Capital Region.

Not one of the dozens of local governments that has so far been cited by the DILG as being “ehemplo” or good examples in planning, sound fiscal management, transparency and accountability, and valuing performance information came from Metro Manila.

A recent audit conducted by PCIJ revealed poor performance by Metro Manila local governments – more than half of which are headed by Aquino’s partymates and political allies – in fulfilling citizen requests for specific documents on the most basic services.

Most made accessing documents imbued with public interest a serious test of patience, stamina, resources, and will, with many ignoring deadlines for action imposed on them by law.

DILG honor roll

Not surprisingly, not one Metro Manila local government unit (LGU) has made it to the DILG’s latest “Good Housekeeping” honor roll that lists those from Anilao, Iloilo; Balete, Aklan; Balilihan and Catigbian in Bohol; Damulog, Bukidnon; Datu Paglas, Maguindanao; Leon B. Postigo and Tampilisan in Zamboanga del Norte; Pitogo, Quezon; Mobo, Masbate; Naawan, Misamis Oriental; San Agustin, Surigao del Sur; Santol, La Union; and Sto. Domingo, Albay.

Just last March, the DILG also cited 15 high-performing LGUs, mostly from Mindanao, “good housekeeping” such as those in Alilem in Ilocos Sur; Quezon, Isabela and Saguday in Quirino; Mataas na Kahoy in Batangas; Camaligan in Camarines Sur; Banaue and Lagawe in Ifugao; Amlan in Negros Oriental; Maribojoc in Bohol; Kawayan in Biliran; Calamba in Misamis Occidental; Dujali in Davao del Norte; Cagwait and Carrascal in Surigao del Sur, and San Jose in Dinagat Islands.

These LGUs, according to DILG Secretary Jesse Robredo, have had “no adverse” report from the Commission on Audit.

The uneven observance of transparency and accountability across LGUs – and government agencies – lingers apparently because of the absence of uniformed and clear procedures on how public officials should respond to citizen requests for documents vested with public interest that a Freedom of Information Act should have offered.

In fact, just a few weeks before President Aquino delivered his second State of the Nation Address in which FOI was among the most striking omissions, the World Bank had weighed in on the issue that civil-society organizations and some of Aquino’s allies deem of utmost importance for good governance.

The Bank last month put forth in a 349-page “Philippines Discussion Notes: Challenges and Options for 2010 and Beyond” a vigorous recommendation for Aquino to see after the passage of the FOI Act if he so wishes to achieve “inclusive growth,” as well as stamp out corruption and poverty in the land.

Big challenges

The document produced by the Philippines Country Team, World Bank and The International Finance Corporation East Asia and Pacific Department, noted that the Aquino administration “faces significant opportunities as well as considerable challenges: an opportunity for new policy directions and new coalitions to push the development agenda forward with renewed vigor, but a need to overcome the inertial forces that slow down decision making and program implementation during a transition.”

The authors said the document aims “to support the creation of a shared focus among government, civil society, business groups, and development partners on the key elements of a long-term development strategy focused on inclusive growth.”

“Deliberately selective in their coverage, the Notes offer sectoral and thematic analyses to identify key challenges, and recommend a prioritized set of actions for consideration by the new government” yet also “draws on extensive international experience and worldwide best practices, as well as past experience with what works well in the Philippines and what does not,” the authors said.

They then pointed out that in the Philippines, “breaking down the hold that vested interests have over governance requires action on multiple fronts.”

Strong signal

The authors argued: “The Administration could contribute significantly to governance reform by putting up for legislative approval a Freedom of Information (FOI) Act, as neighboring countries such as Thailand, Indonesia and India have done over the last decade. In addition to being an integral part of an open governance system, the Act would also send a strong signal that the government is committed to transparency.”

Nonetheless, even before the law is passed, the World Bank document said, “the President could immediately ensure the highest standards of public disclosure in the Executive branch of government through an Executive Order.”

Aside from stressing the need for the FOI Act to be passed, the Bank also exhorted Aquino to “select a strategic agency widely perceived to be corrupt and launch a comprehensive reform plan” to provide “a credible, though not necessarily easy, starting point for a government’s anti-corruption campaign.”

Obama project

Interestingly, despite its reticence to state clearly its position on the FOI bill, Malacañang has unfurled its efforts to promote greater transparency on the world stage.

Since mid-2010, the Aquino administration, represented by Budget and Management Secretary Florencio “Butch” Abad, has signed on to and, in fact, now sits on the steering committee of the Open Government Partnership (OGP), a multilateral, eight-country initiative launched by US President Barack Obama.

Obama’s project supposedly aims “to secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance.”

Under the OGP, the signatory states have committed to produce results along four benchmarks – disclosure of budget documents, disclosure of asset records of public officials, passage of an FOI Act, and engagement between government and civil-society groups.

By the admission of some Cabinet members themselves, the Aquino government may claim to have achieved some progress on the first two OGP benchmarks; on the last two, little or no progress at all.
This has prompted the Bantay FOI! Sulong FOI! network of 157 civil society groups and individuals to remark: “Malacañang must understand: Its desire to assume an honored place on the world stage as one of the leading lights of transparency in the world will not fly, unless it commits to the immediate passage of the FOI Act in the Philippines.”

Practical tips

In the meantime, the seven college student interns who helped conduct PCIJ’s audit of transparency regimes in Metro Manila have drawn up some practical tips for those who may want to access information from LGUs in the absence of an FOI law:

• Put your request in writing. Most local governments require requests for information be put in writing. Many also want the request to contain the name of the person or agency making the request, as well as the purpose for the request. The City of Navotas, for instance, even has a memorandum that explicitly asks for these.
• Verify beforehand which department would be handling your specific request. Otherwise, one may well be passed from office to another, and then from one personnel to another. To save time and spare one of fits of frustration, check the LGU’s website first to see which office or official would be best to handle the request, or call or visit the LGU’s information office before writing and submitting your request letter.
• Note the name and position of the staff member who received the request. Misplaced letters and sudden attack of amnesia abound in LGUs when follow-ups are made regarding requests for information. To avoid being passed around from one staff member to another, one should record right away the name of the personnel who received the request and, if possible, that person’s contact number. It may also be wise to do this in his or her presence, with other staff members as witnesses.
• Check beforehand for dress codes, as well as specific protocols and procedures. Such information is usually available on the LGU’s website. One can also call the LGU prior to submitting the letter of request. Some LGUs do have uniform procedures and processes. Parañaque, for example, requires that all letters of request be addressed to the mayor first for approval. In Marikina, guards bar those in shorts and/or slippers from entering its city hall.
• Be aware of the time limit imposed by law on LGUs to comply with requests for information. Remind LGU personnel as well of such deadlines since they may not be aware of it themselves. Under the law, LGUs are given10 working days to act on requests for Statements of Assets, Liabilities, and Net Worth (SALNs) and 15 working days to act on requests for all other types of documents.
• Do follow-up calls. This will not only alert LGU personnel of your continued interest in your request, but will also remind them constantly of the need for them to act on it. If there is some delay, ask the reason for it; it may well be that the next step requires another letter to another office. Always ask the name of the staff handling the call, so that there is a “personnel trail” established while you track the progress of your request.
• Once the documents are provided, double check if these contain all the information requested. Just because an LGU hands over a hefty volume of paper does not mean those data sets have all that you asked for. Go over the documents before leaving the city or town offices. If there is any information lacking, ask why. It could well be that another office is responsible for a particular piece of data that had been part of your request.
• An incomplete response calls for a follow-up letter. Should there be no response within the period set by law, submit a follow-up letter reminding the LGU of your request – as well as the LGU’s duty to act on it within the legal deadline. (After receiving such a follow-up letter from PCIJ interns, the Office of the Mayor of Muntinlupa called within the day to say that the information could be had from the City Planning and Development Office.)
• Be nice and keep your cool. It may be the LGU’s duty to serve the public, but any transaction is easier to accomplish when the atmosphere is kept pleasant. For sure, a smiling citizen’s request is more likely to be processed quickly while a demand that comes with a snarl is bound to be treated with contempt and left unattended as a result. – With additional research by Anne Jeanette O. Priela, Krystal Kay S. Jimena, David Faustino T. de Castro, Essen Mei M. Miguel, Henor G. Gotis, Eric H. Rivera, and Stephanie Directo, PCIJ, July 2011

PAGLANSANG KAY HESUS The nailing of Christ to the cross is re-enacted during the Kalbaryo or the Calvary of Christ in the central Negros city of La Carlota. The start of the Holy Week also signals the start of the tiempo muerto, the dead season also called the off-milling season that lasts for up to six months. Photo by Julius D. Mariveles

CUARESMA or Holy Week is the time when Filipinos reflect on the agony of Jesus Christ. It is also the time when the mamumugon — the workers in the vast haciendas or plantations of Negros Occidental — slip into a suspended state between life and death, a seeming purgatory on earth.

This is Tiempo Muerto, the dead season in the Philippines’ sugar bowl, a period between the planting and harvesting of sugarcane. It lasts from April until August, and is a season that the sugar plantation workers dread more than the typhoons that enter the country also around this period.

To both the dumaan or the regular farmhands and the sacada, the seasonal ones, Tiempo Muerto is the tigkiriwi, which literally translates to the pained expression on their faces, as work either slows down or stops in the fields. Wages then plummet to less than one U.S. dollar a day, not even enough to buy a kilo of well-milled rice.

“Mangita gid ko trabaho sa iban nga kampo (I have to look for jobs in other canefields),” says third-generation sugarworker Renato Britanico when asked what he does during tigkiriwi. At best, he may earn P130 a week for weeding the canefield or doing other minor jobs.

LESS THAN A DOLLAR A shopping list for the day amounts to only P32 or less than one US dollar. Photo by Julius D. Mariveles

Britanico and the rest of the more than 300,000 workers in Negros’s sugar industry also wait for government’s help during the dead season. Sometimes it comes, Britanico says, but the aid is never really enough.

“We buy only the bare essentials,” said Benisa Robaton, a mother of two, as she clutched a shopping list one afternoon during last year’s tigkiriwi. At the time, her husband still managed to find some work in the sugarcane fields, but Robaton seemed to be already watching the household budget like a hawk. On her list were coffee, cooking oil, onions, garlic, kerosene, and a pack of vetsin (monosodium glutamate) seasoning. It did not include rice. She estimated that she would spend at least P32 that day for the goods.

THREADBARE CLOTHES The clothes hanging outside the house of a sugarworker can tell a lot of things. Photo by Julius D. Mariveles

Cuaresma, of course, ends with the celebration of Kristo conquering death, heaven imposing its desire on earth. But Tiempo Muerto may soon last more than the usual four months in Negros Occidental with the impending implementation of the Association of Southeast Asian Nations Free Trade Agreement (AFTA) in 2015 — if some sugar industry insiders and observers are proven correct. Should that happen, though, the province and many of its sugar farmers who ignored the summons of the 1985 sugar crisis to reform, innovate, and be more competitive, would be largely to blame.

Among other things, AFTA will bring the tariff on sugar imported from the 10 ASEAN member-countries down from 10 percent this year to five percent next year. ASEAN includes Thailand, the second largest exporter of sugar in the world after Brazil.

Before AFTA, tariffs and sugar prices were much higher and the benefit to sugarplanters much bigger. To help local producers adjust to the mandated AFTA rate, however, the tariff has been lowered gradually through the years. In 2011, it was at 38 percent; this was brought down to 28 percent in 2012, and then to 18 percent in 2013.

Ebb and flow pattern

In the last 23 years, total sugar production in the country has marked an irregular ebb and flow pattern, and this, alongside a steady rise in farmgate prices until 2010. From the pits of P9.15 per kilo in 1992, farmgate price hit the roof at P32.50 per kilo in 2010, but started to dip again to P30.84 in 2011, P28.03 in 2012, and P27.09 in 2013.

The price decline in the last three years was matched by slight decreases in the Philippines’ sugarcane output — from 28.4 million metric tons in 2011 to 26.4 million MT (seven percent decrease) in 2012, and further to 24.6 million MT (another 6.9 percent decrease) in 2013.

Sugar Production, 1990 to 2012

More interesting, however, is the fact that by 2012, Negros Island’s sugarlandia grew by 50.97 percent to 183,051 hectares, from just 121,249 hectares in 1990. In 1990, Negros Occidental alone accounted for 51.15 percent of the 235,269 hectares of total land planted to sugar in the country. Twenty-two years later, 42 percent of the 433,000 hectares of land devoted to sugar-growing in the Philippines could be found in Negros Occidental.

For generations now, the economy of Negros has depended on sugar, hitherto a Philippine cash crop protected by preferential treatment in the U.S. market until 1974, when the Laurel-Langley Agreement lapsed. Indeed, the sweet reed has sustained the affluence of many hacendados or landlords particularly of Negros Occidental who, by many accounts, are mostly given to opulent consumption, gaming, and partying.

But the ties that bind sugar workers and hacendados have been constantly affirmed in a parade of Philippine elections. Members of many hacendado clans are perennial winners of local elective positions to this day. As a power circle also called “the sugar bloc,” they have propped the path to victory of candidates for president and other national positions by delivering either campaign funds or votes, or both. Indeed, aside from sugar, some scholars say packing votes for their favored politicians has become a second cash crop in Negros where “hacienda politics” rule. (See Sidebar)

Political leaders, too

For sure, the hacendados of Negros Occidental have had bitter experiences in the sugar business. During the 1980s, they saw their profits fall as sugar prices went into a precipitous decline, bottoming out to a historic low in May 1985 at three U.S. cents a pound. More than 150,000 sugar plantation workers lost their jobs as a result, and thousands of families across the province soon went hungrier than ever.

SHARING A labor organizer and neighbor of the Negre family gives several pieces of eggs to children of Gabriel Negre to be cooked for supper. The Negres are one of the poorer families in one of the haciendas in Murcia town. Photo by Julius D. Mariveles

In the past, the workers could rely on cradle-to-grave support (however minimal in many cases) from their plantation-owning masters. But with the hacendados’ once reliable source of wealth suddenly in crisis, many workers were left to fend for themselves.

In time, some hacendados shifted from growing sugar to growing other crops. But most others simply waited out the crisis and persisted in growing the reed, or leased their land for others to cultivate it.

Stuck on sugar

A land seemingly stuck in time, Negros Occidental stayed stuck on growing sugar after the crisis when the commodity’s price started to climb again. From 1990 to 2012, Negros Occidental expanded the size of its land planted to sugarcane, while other Philippine provinces either did so only slightly, reduced their sugar-growing estates, or shifted to other crops.

In 2012, sugar contributed PhP70 billion or roughly US$1.5 billion to the national economy, according to the Sugar Regulatory Administration (SRA). While this may seem impressive, sugar is no longer the country’s top agricultural export, that spot having long been taken over by coconut oil.

By the time Corazon ‘Cory’ Aquino came to power in 1986, sugar was being called a “sunset industry” due to the lack of modernization in the farms and mills. It was during this time, too, that the sugar sector saw attempts to diversify with the conversion of large tracts of sugarcane lands to prawn and fish ponds or to high-value crops, as well as ornamental flowers, including orchids.

Sugar Farmgate Price, 1990 to 2012

In 1988, Cory Aquino also signed the Comprehensive Agrarian Reform Law (CARL), which stipulated in part that original homestead owners and their heirs would be allowed to keep and till only up to 24 hectares of their farmland. The rest of such landholdings were supposed to be distributed to the tillers or workers. And yet today, by official data, some sugar plantations are as big as 50 hectares in size on Negros Island, and others even bigger at 100 hectares.

Because many of these Negros sugar plantations are also “inefficient,” according to some industry insiders themselves, they are most vulnerable to the market changes that will be brought about by AFTA’s full implementation.

Gina Martin-Bautista, a Negrense sugarplanter who heads the SRA, believes the tariff drop to five percent poses a threat to the livelihood of at least 62,000 farmers and 600,000 workers of the country’s entire sugar industry.

In a paper presented to the Asia-Pacific Sugar Conference in 2012, Martin-Bautista says cheap imported sugar would also lead to a decline in the production of local sugar. She noted that among the factors affecting the profitability of producing local sugar are the fragmentation of farms due to agrarian reform, the lack of financial capability by small farmers, and the lack of infrastructure support from the government.

Sugar Import vs. Sugar Export

Smaller share

In fact, a 2011 study by Walden Bello and Risa Bernabe for the Philippine Peasant Institute for the Active Citizenship Foundation pointed out that while AFTA went into motion in 1992, the budget allotted to agriculture has not improved significantly.

Citing Bureau of Agricultural Statistics (BAS) data, the study found out that the share of agriculture in the national budget dropped from five percent during the administration of Cory Aquino to three percent under the Ramos presidency. The figure climbed slightly to four percent under the Estrada government but went back to around three percent during the Arroyo administration.

Today, agriculture’s share of the national budget is at 5.54 percent according to the Expenditure Program by Sector of the Department of Budget and Management. The percentage represents the Department of Agriculture (DA) budget lumped with that of the Department of Agrarian Reform or DAR. In peso terms, however, the DA received P68.5 billion this year, or less than last year’s allotment of P73.6 billion.

In his budget message for 2013, President Benigno Simeon ‘Noynoy’ C. Aquino III had said that the amount set aside for agriculture would go to improving farmers’ incomes to produce 20 million metric tons of rice. The rest would go to corn, fishery, and coconut-based products.

Aquino, Corazon Aquino’s son and scion of the Cojuangco clan of sugar plantation owners in Tarlac province, did not mention how much would go to sugar.

Quick ‘fix’

Then again, the current administration does not seem to have found it necessary to make drastic reforms in the country’s agricultural sector. The most apparent “fix” it has done in agriculture so far is to change the names of programs. To be more precise, it has taken to changing the previous administration’s “Ginintuang Masaganang Ani (GMA or Golden Bountiful Harvest)” prefix to agricultural programs to “Agri-PNoy,” so that instead of, say, “GMA Rice Program,” there is now the “Agri-PNoy Rice Program.”

In any case, the Department of Trade and Industry (DTI) has cited the country’s mutual trade with Malaysia as an example of how the Philippines would benefit from AFTA. In a July 10, 2013 article posted on its website, DTI cited data from the National Statistics Office showing that the country exported a total of US$1.017 billion worth of goods to Malaysia in 2012, down slightly by 7.38 percent from 2011’s US$1.099 billion. The same report, however, says electronics remains the country’s top export product to Malaysia.

AFTA was established in 1992 with the Philippines as a signatory under then President Fidel V. Ramos. At the time, the former armed forces chief turned president was upbeat about the Philippine economy, describing it as a “tiger cub” supposedly on the verge of earning its “stripes” through a process that he called “entigerment.”

AFTA hews to the globalization framework of promoting free trade through elimination of tariffs and non-tariff barriers among the 10 ASEAN member-states. It was conceived to “serve as a catalyst for greater efficiency in production and long-term competitiveness.” Put simply, to give consumers better quality products and much lower prices.

At least 8,000 items or products in six countries — Malaysia, Indonesia, Singapore, Philippines, Brunei, Thailand — and four other less developed ASEAN members (Cambodia, Laos, Burma, and Vietnam) will no longer enjoy tariff protection for these products that will be traded, or are already being traded, freely.

With tariff barriers down or gone, AFTA promises cheaper consumer goods in the ASEAN market, higher market competition, and access for ASEAN products to a consumer market of close to half-a-billion people, according an article posted on the website of the Tariff Commission of the Philippines.

‘Primed & ready’

DTI Undersecretary Adrian S. Cristobal, chair of the Committee for the ASEAN Economic Community (AEC) is confident that, “the Philippines is primed and ready for the integration of economies among the 10-member states of the ASEAN by 2015.”

Not everyone in Negros Occidental agrees with Cristobal, however.

For instance, Negros Occidental Governor Alfredo Marañon III does not see the government having made or making sufficient preparations for 2015. In contrast, he says, sugar farmers in Thailand, the Philippines’ main Asian competitor, have been enjoying subsidies and flexible credit schemes. “There, if you fail to pay your loans there would be restructuring,” says Marañon. “Here your lands would be foreclosed by the banks.”

Locally produced sugar prices are likely to fall by 2015 but planters would still have to contend with high costs of production, says Rafael Coscolluela, national president of the Confederation of Sugarcane Producers Associations, Inc. Compounding these problems is the lack of efficiency of sugar mills in extracting sugar.

Earlier this month, Coscolluela attended a DTI-organized forum for businessmen and industry leaders. Recalling what went on at the forum, Coscolluela says, “What the (officials) essentially said is there is nothing to worry about. AFTA is already upon us and most industries have already been affected, but the effects are not as bad as the doomsayers said it would be.”

The big ‘but,’ says the former SRA administrator and Negros Occidental governor, is that the most affected sector is agriculture, especially sugar. “The industry has always been on its own for quite a long time (now),” he adds.

Wages & profit

Still, indications are sugarplanters have been making hay (in the form of sugar) while there is some sunshine left in the industry.

Computations made by SRA show that the earnings of planters increased by P10,000 per hectare over a four-year period starting in 2010, beginning at around P42,000 per hectare with a cost of production of P70,000 per hectare. The computations were based on the 65-percent share of the planters computed at a price of P1,700 per 50-kilo bag or LKG.

Considering that sugarcane is harvested only once a year, though, a sugarplanter may need at least 10 hectares to be able to support a family comfortably. But those who have less may still be better off than sugarworkers.

CHILDREN OF THE CANE With nothing much to do, these children of Gabriel Negre, a worker in one of the haciendas in Murcia town, stay inside their ramshackle hut made of used sacks and bamboo. Photo by Julius D. Mariveles

Assuming that they are being paid the minimum wage, plantation workers have been getting a maximum daily rate of P255 while those in non-plantations receive only P245, based on the latest Regional Tripartite Wages and Productivity Board VI order that took effect on November 29, 2013.

Compared to past wages, that’s already good going. In the last 10 years, wages have climbed slowly at a rate of less than P10 a year.

These rates, however, are applicable only outside of Tiempo Muerto. A prolonged period of tigkiwiri could only widen the gap between the hacendados and the sugarworkers.

Tiempo Suerte, too?

Yet what could be bitter pill for the sugar industry may actually turn into a sweet treat for most Filipinos who are all consumers of sugar and sugar-based food and other products. What may be Tiempo Muerto to Negros’ sugar producers could even spell Tiempo Suerte to most Filipinos who are sugar consumers.

This is the prognosis of Caesar B. Cororaton, a research fellow at the Global Issues Initiative (GII)/Institute for Society, Culture and Environment at Virginia Polytechnic Institute and State University. In a 56-page paper published in September 2013, Cororaton concludes that AFTA’s tariff cuts in 2015 would result only in slight production decline but that its economic impact will be offset by lower prices for sugar-using industries.

Tariff cuts, he says, may cause transitory pain for some sectors but the positive overall effect is to help the economy by lowering prices for consumers, and even cutting poverty incidence by 0.285 percentage points.

Cororaton’s study, “Economic Impact Analysis of the Reduction in Sugar Tariffs Under the ASEAN Trade in Goods Agreement: The Case of the Philippine Sugar Sector,” assumes that the decline in sugar tariff and production output will encourage a shift to other crops.

“The reduction in sugar tariffs generates several economy-wide effects,” writes Cororaton. “One of these effects is the resource reallocation from sugarcane farming activities to the rest of the agricultural sector. Thus, output of the rest of agriculture improves.” Smaller farms in the sugar sector could in fact be more productive than bigger ones, he says.

He argues that cheaper sugar as a result of reduced tariffs could benefit a whole range of sugar-using industries, notably those processing or manufacturing milk, ice cream, fruits, vegetables, bakery products, cocoa, chocolate, softdrinks, animal feeds, flavoring extracts, and other food items.

By his estimates, reduced poverty incidence could also become a windfall from cheaper sugar. “Real income improves across household income groups,” he says, although the improvement in income is “not uniform across groups.”

The good news, Cororaton says, is that “those between the fifth and the eighth decile benefit the most. As a result the poverty incidence declines from 26.34 percent to 26.27 percent.”

A boxing bout

Like a virtual boxing match, trading sugar under the AFTA framework will require the Philippines to slug it out “against the heavyweights of the sugar industry,” notably Thailand and Brazil.

SRA’s Martin-Bautista tells PCIJ in an interview this week that if the industry is to survive, the cost of production should be brought down. The landed cost of world market sugar is between P800 and P900 for every LKg or 50-kilo bag, far lower than the current cost of production in the Philippines of P1,000 to P1,200 per LKg. “It would have to be less than a thousand pesos per bag if we are to compete,” says Martin-Bautista.

The high cost of production of Philippine sugar, she says, derives from the high cost of labor and farms not fully mechanized and have been broken up into small ones on account of agrarian reform. SRA classifies about 90 percent of sugarcane farms as “small” — five hectares or less; to be viable, sugarcane farms should measure from 30 to 50 hectares.

Martin-Bautista anticipates that in a down market, landowners would be compelled to reduce their labor force to be able to cut production costs. She also says that the government’s agrarian reform program has triggered “cynicism” among planters who refuse to invest in farm mechanization because they could not put up their land as collateral in obtaining loans from banks.

“We hope to move forward when the agrarian reform program ends this year,” she says. “We hope that there would be no more new notices of coverage.”

Asked if the government and the landowners have prepared well enough to put the industry on competitive footing when AFTA finally comes into force, Martin-Bautista says, “I hate to say this but it was only when I took over the SRA (in August 2010), it was only then that a convergence program of sorts among government agencies was put into motion.” She asserts that it was only then when agencies were “made aware” of the problems of the sugar industry and told to give commitments to “support it, finally.”

Since then, she says, the government has started to roll out support services to the industry like farm-to-market roads and shallow water wells. But Martin-Bautista says these pale in comparison to the subsidies for power and water irrigation systems and loans for sugar farmers in other countries like Thailand get from their governments.

Coscolluela, for his part, says that the industry itself has long been preparing for AFTA’s implementation. It has produced, he says, several versions of a “Sugar Industry Roadmap,” the latest of which is for the 2011-2016 period that calls for an increase in areas planted to sugarcane from 400,000 to 465,000 hectares and a production target of 75 tons cane per hectare from 63 TC/hectare. It hopes to increase yield efficiency to 2.1 bags per ton of cane from the current 1.9 bags per LKg/TC.

Not on plate of pols

For some reason, though, as late as the May 2013 elections, politicians vying for local posts in Negros Occidental themselves failed to engage in substantial discussions regarding the possible effects of AFTA on agricultural products, including sugar.

But now provincial officials seem to be trying to play catch-up. At the very least, Negros Occidental’s Third District Representative Alfredo ‘Albee’ Benitez has filed House Bill No. 52 or the “Sugar Cane Industry Development Act of 2013,” which envisions the transformation of the industry “from the limited raw and refined sugar production” into a diversified one. It also calls for the establishment of special economic zones and the promotion of block and corporate farming to achieve economies of scale needed for efficient sugar production and financial and infrastructure support from the government.

Martin-Bautista also believes that despite AFTA, not all is bleak for the sugar industry.

For one, she sees good tidings in the investments of business heavyweights Lucio Tan, Manny V. Pangilinan, Ramon Ang, and the Gokongweis into sugar milling and bio-ethanol production. “Because of these big players,” she says, “I am now getting all the attention and I am being asked to make sure that the industry will survive.”

For another, she finds it encouraging that a U.S. company has asked her if the Philippines could sell sugar that would be used to extract a chemical for Spandex, a synthetic fiber. Ironically, one of the most popular uses of Spandex is for undergarments that cinch waists bloated by sugar- and fat-laden products.

Plain inquiries or deals in the bag? Only time will tell. Until then, Tiempo Muerto looms in sugarlandia. — PCIJ, April 2014

IN A SERIES recently, PCIJ conducted separate, extended interviews with senior officials of Philippine Drug Enforcement Agency (PDEA), the Philippine National Police (PNP), and the Dangerous Drugs Board (DDB).

Our goal: Get their side on specific questions about the numbers, conduct, impact, and confusing concepts and narratives of President Rodrigo R. Duterte’s war on drugs.

The on-cam interviews that lasted about six hours in all — or two hours for each interviewee — also focused on gaps in the data on the drug war that PCIJ has gathered over the last 11 months, through dozens of request letters filed with these and other state agencies. PCIJ’s files now host over 2.7 gigabytes of data on the drug menace and the drug war, with data as early as 2010 and as current as May 2017.

PCIJ commended the three agencies for finally fielding a unitary report (#RealNumbersPH) on the status of the drug war, but also raised clarificatory questions on sundry issues that the report has not settled.

Interviewed were:

• Director Derrick Arnold C. Carreon, chief of the PDEA Public Information Office. (PDEA Director General Isidro Lapeña, chair Of Inter-Agency Committee On Illegal Drugs (ICAD) under Duterte’s Executive Order No. 15, was out of town and in his stead, directed Carreon to sit down with PCIJ);

• Police Director Camilo Pancratius P. Cascolan, head of the PNP Directorate for Operations and the PNP Double Barrel Secretariat. (PCIJ had sought interviews with PNP chief, Director General Ronald ‘Bato’ de la Rosa and PSSupt.Dionardo B. Carlos, chief PIO of the PNP but both declined on account of busy schedules.); and

• Secretary Benjamin P. Reyes, until then the chairman of the DDB. Four hours after PCIJ’s interview with Reyes on May 24, 2017, Duterte issued oral orders firing him for his statements that DDB has estimated only 1.8 million total drug dependents, or less than half the four-million figure that the President usually cites in his speeches. “You do not contradict your own government… You’re just a civilian member of a board,” Duterte has said of Reyes.

What follows are the questions and topics PCIJ discussed with the three interviewees.
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For Director Derrick Arnold C. Carreon, chief of the PDEA Public Information Office, Interview conducted on May 18, 2017, at the PDEA Compound, Diliman, Quezon City:

• In your agency’s plan,what is/are the measures of success of the drug war?
• What reporting and verification mechanisms do you have to verify raw data on the drug war?
• President Duterte organized the Inter-Agency Committee on Anti-Illegal Drugs (ICAD) through Executive Order No. 15 only on March 6, 2017. It has four clusters (enforcement, advocacy, justice, and rehabilitation and reintegration). What are the tasks and activities of each cluster?
• There are two numbers of estimated drug dependents: four million (Duterte, ICAD, PDEA) and 1.8 million (DDB’s 2015 Survey). Explain how you computed four million.
• PDEA’s formula for deriving the estimated number of drug dependents seems flawed: Why did you compute for 22 million total households in the Philippines when the government says only 48 percent or only 20,160 “drug-affected barangays ” out of the 42,000 total barangays in the country? How many households are in barangays that are not drug-affected?
• Government says the Philippine drug market is a P120-billion industry. How did PDEA get this estimate? How is this P120-billion industry estimate distributed among the different kinds of illegal drugs?
• On the numbers of those killed, arrested, surrendered, operations conducted: How does PDEA keep its figures in sync with the PNP. Do you get, validate, and confirm raw reports from PNP field units?
• On the price of shabu: How did PDEA derive the estimate of P15,000 per gram? Slide 12 of #RealNumbersPH show wrong numbers: P15,000 and up price per gram x 1,645 kilos of shabu seized amounts to P24.675 billion, and not P14.49 billion worth of shabu as the report says had been seized.What is the real amount of drugs confiscated?
• Does PDEA monitor cases of those killed during police operations? Is there any investigation mechanism in place to determine if the killlings were justified and necessary? Does PDEA monitor cases filed with the PNP IAS on these cases?
• Deaths under investigation – how should these deaths be classified?
• How does PDEA dispose of confiscated drugs? What procedures are in place to prevent the revert to the market of seized drugs?’
• How much has PDEA given out as rewards to policemen and other operatives (as mandated by DDB Board Regulation No. 1, series of 2016)? Where did these funds come from?
• What happens to those arrested – were they charged? What has happened to the surrenderees? Where and which agency keeps their surrenderees’ forms?
• What is the concept behind “barangay drug affectation”? Which regions the most affected? Do you have reports on which barangay and how many had been declared cleared?
• How should one determine the success of the drug war? What is its end goal? When will it end?

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For PDir. Camilo Pancratius Cascolan, PNP Directorate for Operations and Double Barrel Secretariat, interview conducted on May 23, 2017, at the PNP National Headquarters in Quezon City:

• How should the PNP measure the success of the drug war?
• How does the PNP derive its numbers of those killed, arrested, surrendered, houses visited, operations conducted? Who are your sources? Have you made mistakes?
• What are your baseline numbers: starting figures and latest figures? How does the PNP track its drug war accomplishments in the regions? What reporting and verification mechanisms are in place?
• The 1.2 million “surrenderees”: Does PNP have disaggregated data on how many are active drug users, and how many, inactive drug users?
• The number of surrenderees and the houses visited: Is there a direct correlation, as the PDEA formula for estimating the total number of drug users seems to suggest? How many surrenderees turned up at barangay assemblies and were not visited at their homes?
• Of the “DUI” cases: How does PNP determine who are DUI victims and who had been killed in police operations? How many DUI had triggered cases filed in court? Why so few? Why so many suspects at large? Are DUIs not a matter of failure by the PNP?
• Why has the PNP stopped reporting numbers of guns seized from drug suspects and victims of DUI cases? How many guns in all had been seized by the PNP in the last 10 months? Where are these guns? What are your findings about the sources of these guns?
• Internal cleansing: How many in the PNP are subjects of investigation? Who are they by rank and assignment? What is the process and findings of the investigation conducted?
• Ten months hence,in PNP’s assessment, what is the direction of the drug war? Slowing down?Consistently moving? How many cases had been resolved? Why are there are there more unresolved than resolved cases? Why is the PNP not disclosing results of its internal cleansing investigation?
• “Operation Lawmen” assigns rewards to PNP personnel and units for drugs seized in operations. How much had been given out as rewards for which units? How much and where is this reward money enrolled in the national budget?
• Police operations: About 53,000 anti-drug operations had been conducted as of this week. What is the process for planning an operation and getting clearance from PDEA? Do Tokhang operations often turn into instant police operations? Why are there so many buy-bust operations and shootout incidents?
• How many PNP personnel had been killed and wounded in drug operations from 10 months ago? How do these numbers compare with the numbers of those killed and wounded before Double Barrel?
• Shabu/drugs haul: What reference price should be used in your report? Low-grade and high-grade shabu found in most of those killed?
• PDEA says the average drug user consumes about 0.4 grams of shabu per day. What is the PNP’s estimate? How many drug pushers in all? What is the typical/average network of a drug pusher, by the number of users they sell to?
• How many PNP personnel had been deployed in Tokhang/Double Barrel operations? Are there “quotas” (operations conducted, numbers of arrested, surrendered, houses visited) that the PNP units must deliver? What happens to units that deliver below expectation?
• PDEA says the drug war must reduce barangay affectation levels by 30 per cent per year. Does PNP have its own accomplishment targets? Does ICAD have its own, i.e. numbers of arrested, surrendered, houses visited, rehabilitation rate, and reintegration rate?
• What are the PNP’s protocols in operations leading to violent deaths? Were SOCO teams deployed in all the cases of those killed in the drug war? Where are the reports?
• Has PNP monitored what happens to the bodies of those killed? There are reports of bodies of indigent victims left unclaimed in a number of morgues. What does PNP plan to do about this? Has PNP offered assistance to the victims’ families?
• The affidavits of the surrenderees: How are these collated by which agencies? Where are these affidavits kept? What purposes do these affidavits serve the PNP? Are these affidavits in effect reference for operations in future of the PNP? Why require surrenderees to report weekly to barangay officials who often do not know what counseling services to offer?
• Women and children arrested/surrendered about 55,000 in all, or less than five percent of 1.2 million total surrenderees. Has PNP sorted the data on surrendereees by age, income status, educational attainment, profession/job, religion, and civil status?
• The estimates of total drug dependents, total drug trade, total numbers of killed, arrested, surrendered: How does PNP derive its numbers? Until December 2016, PNP Chief de la Rosa was using 1.6 million as the PNP estimate of total drug dependents, while the President has consistently used four million? Why?
• “Barangay affectation”: What is the concept about? In July 2016, before Tokhang/Double Barrel started, reports stated there were only around 32.5 to 36 percent “drug-affected barangays” in the country. The figure by April 2017 has risen to 48 percent of the 42,000 total barangays in the Philippines. Why? Do these numbers suggest that the drug war has been a failure?
• How are barangays “cleared” of drug affectation? Can “cleared” barangays return to “affected” status? How?
• The PNP organization and Tokhang/Double Barrel: What has happened to the men, funds, and resources of the PNP-Anti-Illegal Drugs Group that General Bato dissolved after the Jee Ick Joo murder? Which agencies call the shots on what barangays should be targeted for drug operations? What clearances and other requirements (from PDEA, PNP command) must ground units secure before an operation? How long is the entire process of planning to actual conduct to documentation of a police operation against illegal drugs?
• Cases filed for those arrested in police operations: Why so few compared to the numbers of those arrested? Who are the witnesses? Prosecutors? In which courts filed?
• Cases filed for DUI cases: In which courts have these cases been filed? Who are the respondents? Why so few compared to number of DUI incidents? Why are so few suspected arrested? Who are the prosecutors/defense lawyers in these cases?
• Complaints filed by families of those killed in drug operations: Does PNP monitor? How many cases in all had been filed, and where? Who are the respondent PNP personnel and units? What is the typical case disposition rate for all these cases?
• Budget for Tokhang/Double Barrel: PCIJ has requested data from PNP Directorate for Comptrollership, which tossed our request to PNP Directorate for Operations, but you tossed back our request to the PNP Comptrollership. Why? Which agency in PNP has the answers? Why is there no transparency about this matter?
• Budget for Tokhang/Double Barrel: What are the top expense items? What are your sources of funds? Which/who are the disbursing officers? What are the rules for reporting on disbursements and requesting fund support? What are the gaps in the PNP personnel’s equipage/resources needed for Tokhang/Double Barrel?
• High-Value Targets: What has happened to the wad of alleged intelligence reports on drug coddlers among generals and local/barangay officials that President Duterte shows off in public? What has happened to the generals Duterte has linked to the drug trade early on? How many barangay officials, local officials, police officers and men are alleged coddlers of drug pushers? What does PNP plan to do about them? What is the status of your investigation into each case?
• Surrenderees data files: How big is the data cache on the 1.2-million surrenderees by now? If encoded, how big is this file by gigabytes? Who or which agencies have access to this file? Should surrenderees worry that this file is a virtual dossier on them as targeted persons in the drug war?
• Tokhang/Double Barrel subjects: Why are those killed, arrested, surrendered overwhelmingly poor and from poor communities? Why are there so few rich and prominent persons arrested? Why are there just a small number of raids conducted in posh villages, and smaller volumes of non-shabu drugs seized by the police?
• Bodies: Does the PNP have a count of the bodies of those killed left unclaimed at the morgues and funeral parlors? How does PNP propose to manage this situation?
• Census of houses: PNP and local government units have started to conduct a census of households for the drug war. What is its purpose? Who or which agencies will keep the census data?
• Drug use for medical/health reasons, or as a cultural norm: Does Tokhang/Double Barrel recognize these situations to be valid?
• The Law (Comprehensive Dangerous Drugs Act of 2012, Republic Act No. 9165) does not distinguish clearly between users/abusers, pushers, possession with discernment, toxicity or purity of drugs, harm-reduction or health dimensions of drug use, and drug abuse as a co-dependency social malaise among family members. Tokhang/Double Barrel has been conducted in the last 10 months as a police operation? Should the law be amended?
• Will a punitive war on drugs not only force pushers to transfer trade elsewhere or go underground?
• Trauma counseling needed? What has been the impact of the drug war on PNP personnel seeing maimed bodies too often? What do your family members say?
• President has admitted to using, and at one point, “abusing” Fentanyl against his doctor’s prescription. Isn’t Fentanyl a prohibited drug?
• PNP’s changing concepts/narratives and shifting numbers: Why does PNP seem to inflate, deflate numbers of those killed and arrested on occasion? Are these mistakes? Why has the PNP shifted from using just a single number for those killed to separate numbers for DUI, later murder cases under investigation, then homicide cases under investigation? What made you change the label from “killed during police operations” to “died during police operations”? What is the difference between the two concepts?
• Isn’t the PNP being too sensitive or defensive? Are the changing concepts just a PR spin for the PNP?
• DUIs, illegal guns: Except for Central Luzon, all the regions of the country show bigger numbers of DUI incidents than numbers of those killed in police operations? DUI agents more productive, in a manner of speaking, than the PNP? Do these not reflect a failure on the part of the PNP?
• If PNP could redraw Tokhang/Double Barrel, where should it make improvements? What have been the certain successes, failures of the drug war?
• Due process: Human rights groups say Tokhang/Double Barrel flouts the rule of law, and the right to due process of those killed, arrested, surrendered? It seems like drug operations have flipped the rule of law to that of the suspects considered being “guilty until proven innocent”?
• Government officials have criticized media reports on the drug war but nearly all these reports have been based on data from the PNP and official sources only. Was the resort to changing concepts and shifting numbers by the PNP over the last 10 months largely to blame?
• Espinosa and Jee Ick Joo cases: What is the status of the cases? Filed in court? Where are the respondents?
• DUI incidents: How did the PNP determine whether a case is drug-related or not? How long does an average investigation take? What does PNP do with drug-related? Not drug-related? About 60. 3 percent of the DUI cases are still under investigation, why do we still have a lot of DUIs? Are some of these homicide cases under investigation, upon determination that it is premeditated, has been covered in the DIDM tally as murder? How should we avoid double counting?
• How does the PNP define neutralization? PDEA counterparts said it could also mean “to kill”and not just to stop or to arrest.
• How should we treat the number of those killed during police operations — accomplishment or collateral damage?
• For cases against PNP personnel investigated by PNP IAS (Internal Affairs Service): Please clarify the definitions of exonerated, suspended, dismissed from service, etc. Of those determined as guilty by the IAS, what are the highest ranks of those dismissed, suspended, demoted?
• PNP PIO said data from July 1 to Jan 31 should not be connected to the data from March 1 to present, but some government agencies are doing that. How should we treat the one-month drug war break?
• Given that the police have declared 53, 785 operations conducted in line with the drug war as of May 9, meaning there were around 5,300 drug operations per month for the past ten months? How did the police do that while doing other police non-drug operations and tasks?
• #RealNumbersPH is good as a unitary report on the drug war but also swamped in riddles. It presents numbers without any explanation, numbers that are hardly comparable, or wrong numbers: The drug war has supposedly led to a decline in crime incidents/crime volume but drugs are not among the eight focus crimes that these reports are monitoring? About 10,500 drug users had supposedly been rehabilitated in 48 drug facilities (Latest DDB data show that the total bed capacity of a total of 54 drug rehab facilities (21 government, 33 private) is all of 3,529 only.)
• What is your personal take on the future of the drug war? When and how will it end?
——————————————————————————————————————————————————————————————–
For Secretary Benjamin P. Reyes, chairman of the Dangerous Drugs Board (until 8 pm of May 24, 2017), interview conducted at the DDB offices, May 24, 2017, from 2 to 4:30 pm.

• What is the DDB’s perspective on the status of the drug war? Slowing down? Consistent? Constantly reinventing?
• With the new Inter-agency Committee on Anti-Illegal Drugs (ICAD), what is the role of DDB on this team-up? Which branch of the ICAD can this government work on more? On top of their game?
• In Slide 3 of #RealNumbersPH, DDB data do not match: for 2016, DDB reported data for rehab enrollees is just 6,079. Where did the 10,500 rehabilitated drug users come from? And the 48 rehab centers are not all are public entities. What is estimated cost of rehab services in private institutions?In public institutions?
• Do you agree that the Philippine Drug Market is a P120-billion industry? Why or why not?
• Based on DDB’s monitoring, was there a quantifiable 26.45 percent reduction of the estimated total drug market because of the war on drugs?
• Slide 7 of Social cards from #RealNumbersPH seem to focus more on shabu. Why is that? What other illegal drugs should the government monitor and feature?
• How much money does the government spend on the war on drugs? For Enforcement? For Advocacy? For Justice? For Rehab and Reintegration?
• Do you agree with PDEA’s 4.7 million estimate of total drug dependents in the country? What do you think about PDEA’s formula for computing this estimate? Do you agree with it? Why or why not?
• Is DDB monitoring confiscated drugs and non-drug paraphernalia? Guns? How much do we have so far?
• What is the status of new rehab facilities being built? How much donations did government receive from private and foreign partners?
• DDB Regulation No. 1, series of 2016 mandates giving out rewards for cops and other operatives based on drugs seized. How much money was given out? PDEA and PNP said they have not done this yet? How much money has been given as rewards to ordinary private citizens?
• DDB Regulation No. 3, series of 2016 detailed guidelines on surrenderees. What did the government do to the information? Where are the filled forms?
• What is the status of BADACs and Masa Masid? How many BADACs have already been organized?
• The number of drug-affected barangays rose from 32.5 to 36 percent in July 2016 to 48 percent in April 2017, reports showed. What does this mean? Should this be the guide of police on drug operations?
• How about usage of drugs for health/medical purposes and for as a cultural norm? Where does DDB draw the line?
• What is the status of “Uniform Drug Inventory and Tracking System”? (DDB Regulation 1, 2017)
• What is the status of drug testing on public officials? How many tested positive? Dismissed from service? (DDB Regulation 2, 2017)
• What were the major changes made to the National Anti-Drug Plan of Action 2015-2020 given Duterte’s campaign line on the war on drugs?
• What training and other capacity development projects have been developed for personnel in charge of rehab patients?
• How should we treat children and women surrenderees?
• Do you agree that our drug problem is so severe and should be treated as a national security issue? Why or why not?
• How should we determine success in the drug war? What is the end goal?
• When will the drug war end?

ON June 25, 1974, or exactly 43 years ago, the late strongman President Ferdinand E. Marcos issued Presidential Decree No. 491 or The Nutrition Act of the Philippines. By this edict, the National Nutrition Council was created and the month of July declared as Nutrition Month.

Prevalence of Malnutrition Among Filipino Children Zero to Five Years Old, 2003 to 2015

Yet still, malnutrition continues to stalk Filipino children five years old or younger. Since 2003, of children aged 0 to 5, two of every 10 were underweight, while three of every 10 were stunted or too short for their age.

Wasting — or thinness — has affected a growing number of Filipino children from 2003 to 2013. It decreased slightly to 7.1 percent in 2015. On the other hand, only 2 to 5 percent of children aged 0 to 5 years old were said to be “overweight”.

But who will take care of our children and the sick, and where exactly could they get appropriate care?

Total Number of Public Health Professionals in the Philippines, 2003 to 2014

The good news: In recent years, the number of health professionals (i.e., doctors, nurses, midwives) in the public sector has marked an uptrend, after hitting low in 2010. However, the number of dentists in the public sector has gradually declined over the years.

Total Number of Public and Private Hospitals in the Philippines, 1976 to 2014

The bad news: Over the last 40 years, there are far fewer government hospitals than private health facilities. The latter constitutes 60 percent of the total number of hospitals in the Philippines.

Total Bed Capacity of Public and Private Hospitals in the Philippines, 1976 to 2014

However, the number of beds at government hospitals is still comparable to those in private hospitals.

Total Bed Capacity of Hospitals in the Philippines, 1976 to 2014

In observance of Nutrition Month this July, PCIJ offers you the narrative of data on health and nutrition in the Philippines, with some dating back from the ’70s, or over 40 years ago.

Check out PCIJ’s Money Politics Online. Read on!

ONE WOULD think that the Commission on Elections (Comelec) should be happy that the number of candidates who went over the prescribed campaign spending limits in last year’s elections plunged drastically from the 2013 figure. But that doesn’t seem to be the case, with the poll body’s Campaign Finance Office (CFO), saying it is still 54 too many.

In the 2013 midterm polls, 936 out of 44,449 candidates went beyond the spending caps. That number dropped dramatically to 54 out of 44,603 total candidates in the 2016 national elections, or a whopping percentage decrease of 94.

(The Comelec website’s election statistics page lists a total of 44,872 candidates but Comelec documents obtained by PCIJ on the total number, by regional breakdown, enrolls only 44,603 candidates.)

In 2016, a total of 18,083 positions went up for grabs, compared with 18,054 in 2013 — for a similar average of two to three candidates contesting a position.

Last year’s overspenders even include two who went over their lawful spending limit by just P10 — Pata Mayor Anton J. Burahan of Sulu and Kapatagan Councilor Medalia T. Bansil of Lanao del Sur — but CFO Acting Head Efraim Bag-id says that the CFO identified the overspenders regardless how much they exceeded the allowable amount. The law, he adds, does not qualify the amounts in which cases may be prosecuted.

“The Campaign Finance (Office) — the Comelec — is really serious to prosecute violators of overspending,” says Bag-id. “Magiging precedent kasi ito eh. Regardless, kung malaki or maliit, nag-overspend ka (This would serve as a precedent, you see. Regardless if the amount is big or small, you still overspent).”

Big, small amounts

Under Section 13 of Republic Act No. 7166 or the 1991 Synchronized Election Law, local candidates may spend P3 for every voter currently registered in the constituency they filed their certificate of candidacy. A candidate running without a political party or support from any political party meanwhile may be allowed to spend P5 for every such voter.

The CFO even found two candidates in the 2013 polls who each overspent by less than a peso: mayoral candidate Nelieta Q. Noval of Tubod, Lanao del Norte who went over the limit by 50 centavos, and Edgar C. Padayao, who overspent by 70 centavos when he ran for councilor in Paoay, Ilocos Norte.

The biggest overspenders in the 2013 polls, though, went beyond the cap by millions of pesos: Mussah Mohammad Muksan and Halkin Appang Arasain who ran for mayor and councilor of Siasi, Sulu, respectively. Muksan declared spending P60 million, and Arasain P10.45 million. The expenditure limit for candidates in Siasi, a second-class municipality of less than 70,000 people, is only P60,114 each.

Muksan’s P60-million spending bill in 2013 indicates per capita spending of P886.19 per person, not necessarily all voters, in his town. Arasain’s overspending bill would come up to P154.35 poll spending per resident of Siasi.

While Muksan and Arasain both overspent the most by amount and percentage of the limit in 2013, Manuel A. Morente Jr., candidate for Oriental Mindoro provincial board member, overspent the most by amount in 2016. Morente spent P1.65 million even though the limit was at P596,193.

By percentage of the expenditure limit, independent candidate Adil Batawi Sultan, who ran for mayor in Piagapo, Lanao del Sur, was on top of the 2016 list of overspenders. Sultan spent P600,000 or seven times more the authorized amount of P71,905.

No national candidate or any local candidate from Metro Manila was among the list of overspenders in 2016 elections. Nine local candidates from the National Capital Region, however, were identified in the 2013 polls.

Subpoenas due out

Comelec is already set to file charges against the 2013 campaign overspenders, with media reports quoting Comelec Commissioner Luie Tito F. Guia as saying that the poll body is now in the process of reviewing their case files for eventual indictment.

The CFO meanwhile has submitted the list of those who overspent in the 2016 elections before the Comelec En Banc and the Law Department for action. Bag-id says that the Law Department will conduct a preliminary investigation that would involve a review of the CFO’s findings and issuance of subpoenas to respondents for them to appear on a date and submit their statements.

Tasked to audit the thousands of Statements of Election Contributions and Expenditures (SOCE) submitted to Comelec, the CFO compared two sets of information to identify overspending candidates: their declared expenditures plus receipts and the expenditure limit prescribed in law.

The penalties for overspenders include the loss of one’s right to vote and a jail term of one to six years. Those who were elected into office would also lose their post.

Comelec already unseated Laguna Governor Emilio Ramon ‘E.R.’ Ejercito III for election overspending in the 2013 polls. Ejercito spent P23.56 million even though the legal cap applicable to his position was P4.57 million. The Supreme Court affirmed his disqualification in February 2015. He ran again for Laguna governor in 2016 but lost.

Comelec lawyer Sonia Bea Wee explains that Ejercito was able to run again last year because the Commission’s decision to disqualify him on the basis of overspending was “on the administrative aspect only and can only bind him for the 2013 elections and 2013-2016 term.”

“Perpetual disqualification to hold public office, imprisonment, and losing the right to vote are penalties imposed as a result of a criminal conviction for overspending, which only the court can impose after successful prosecution of a criminal case against him,” says Wee. Ejercito’s case was not filed in court.

Elected overspenders

Aside from Ejercito, nearly half or 454 of the 936 overspenders in 2013 won their coveted posts. But the CFO was still reviewing the 2013 SOCEs when Ejercito’s political rival Edgar ‘Egay’ San Luis filed a petition for disqualification against him for overspending; Comelec granted the petition. The rest of the 2013 overspenders were able to keep their seats because the CFO — which up till now has not been assigned plantilla items to hire full-time personnel — finished drawing up its list of 2013 overspenders only early this year.

Says Wee: “When lawyers were hired for the CFO — there were only two of them — they initially focused their efforts on 2010 overspending cases, which had to be filed by 2015, or else the offenses prescribe after five years. Due to the limitations in human resources, tasks had to be prioritized. In the months prior to the May 2016 (polls), we had to shift our focus to training our field officers to properly receive the SOCEs, and right after elections, to check SOCE submission compliance.”

As for the 2016 overspenders, 21 were elected into office, with the three highest officials from Sultan Kudarat among them: Suharto T. Mangudadatu, 1st District Representative of Sultan Kudarat; Datu Pax Pakung Mangudadatu, provincial governor; and Raden Camlian Sakaluran, vice governor.

The 2016 list also has seven incumbent mayors, four vice mayors, and seven provincial board members.

Two current mayors — Burahan of Pata, Sulu and Zigfred P. Duterte of Tabogon, Cebu – as well as a candidate for councilor, Naim B. Alimosa of Bayang, Lanao del Sur, appear in both the 2016 and 2013 lists. Interestingly, while Burahan exceeded the limit by only P10 last year, he was 10 times over the cap in 2013.

(PCIJ called and sent formal letters of request for an interview or comment to 11 of the 21 incumbents on Comelec’s 2016 overspenders list. The rest could not be reached via their published office numbers, so letters were sent to them by post. PCIJ has yet to receive any reply from the incumbent overspenders.)

ARMM hosts the most

The total amount candidates overspent in the 2013 elections came up to P128.2 million. In 2016, the amount reached a more modest P4.89 million.

It’s unclear why the number of overspenders dropped dramatically between 2013 and 2016, although the development is obviously welcome. Yet while there is a good chance that Ejercito’s much publicized case may have made candidates in 2016 more cautious about their spending, it could also be that there were candidates who simply under-reported their expenses.

The 2016 overspenders are spread across 13 regions although some 40 percent come from the Autonomous Region in Muslim Mindanao (ARMM). One of its five provinces, Lanao del Sur, has the highest number of overspenders: 17, or 31 percent of the total.

Lanao del Sur also had the most number of overspenders in the 2013 midterm polls: 162, or 17 percent of the total. Similarly, ARMM had the most number of overspending candidates – nearly 30 percent of the total — in those elections.

ARMM is the poorest of the country’s 18 administrative regions. The poverty incidence rate in ARMM is 48.2 percent, or almost triple the national average of 16.5 percent. ARMM’s per capita gross regional domestic product of P27,345 is also the lowest in the country and just 19 percent of the national average of P140,259 (as of 2016). ARMM has a population of 3,781,387 and an Internal Revenue Allotment of P19.8 billion, the fifth lowest allocation among all regions in 2016.

Lanao del Sur, meanwhile, is the Philippines’ most impoverished of the 81 provinces of the Philippines. It has a population of 1,045,429, the largest in ARMM, according to the 2015 census.

Lanao del Sur’s capital Marawi, whose mayor Majul Usman Gandamra is among the 2016 campaign overspenders, has been under siege by ISIS-linked extremist groups for more than two months now. More than 500 people have been killed in the conflict so far, among them at least 45 civilians and 105 soldiers and police officers.

Many independents

Comelec’s official list of candidates show that in 2016, about 20 percent or 16 of the 54 overspending candidates ran as independents while 10 (or 18 percent) belonged to the Liberal Party (LP). Seven other overspenders were from the Nationalist People’s Coalition (NPC) and six from the United Nationalist Alliance (UNA). The rest of the overspenders came from nine other parties.

By comparison, the 936 overspenders in the 2013 polls were spread over 42 political parties, with the LP having the most: 377, or 40 percent of the total. Candidates who ran as independents, though, made up the second biggest group of overspenders at 94, or 10 percent of the total.

Also among 2013’s top overspending groups or parties were: the Nacionalista Party (NP), 79; UNA, 73; NPC, 72; National Unity Party (NUP), 52; Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-LABAN), 37; Pwersa ng Masang Pilipino (PMP), 17; and Lakas-Christian Muslim Democrats (LKS-CMD), nine. (Comelec records did not indicate the party of 42 overspending candidates.)

Bills to raise caps

For sure, critics of the campaign spending limits have long clamored for increasing the amounts that candidates may be allowed in election campaigns. Some nine bills seeking to amend R.A. No. 7166 have been filed in the House of Representatives while one other bill is in the Senate.

Senate President Aquilino ‘Koko’ Pimentel III filed Senate Bill No. 1178, arguing that candidates find it difficult to limit their spending because prices of campaign materials such as printing, political advertisements, transportation, and other operational expenses have noticeably increased in the past two decades.

Citing Bangko Sentral ng Pilipinas data, Pimentel’s bill states that there has been 259.5-percent increase in the prices of commodities from 1991 to 2015. The value of P1 in 1991 is now equivalent P3.60. The National Economic and Development Authority or NEDA, according to the bill, also projected that the P3 used in election-related spending in 1991 is actually equivalent to P9.10 in 2016.

Pimentel says that these data show that the figures used in R.A. No. 7166, which was passed in 1991, are outdated especially for local candidates who cannot take advantage of economies of scale in their purchase of campaign materials. The senator says that the best way to address the issue is to increase the amount of allowable political campaign expenditure.

Pimentel proposes the following changes:

• For candidates with a political party or with support from a political party:
– President from P10 under R.A.No. 7166*, to P20.00
– Vice President, from P10 to P15.00
– Member, House of Representatives (Legislative District, from P3.00 to P10.00
– Governor, Mayor, from P3.00 to P10.00
– Vice Governor, Vice Mayor, from P3.00 to P8.00
– Member, Sangguniang Panlalawigan, Sangguniang Panlungsod, Sangguniang Bayan, from P3.00 to P5.00

Note: Amount for every voter currently registered in the constituency where the certificate of candidacy was filed.

• For political parties, from P5.00 to P20.00; and
• For candidates without any political party or without support from any political party, from P5.00 to P10.00.

Pimentel, however, says that the spending cap for barangay elective positions should remain at P3 for every registered voter. This is because, he says, barangay elections are non­partisan and “should be less ‘bloody’ than the other elections.”

At the House of Representatives, the proposed increases vary by bill author. Quezon City Rep. Feliciano R. Belmonte Jr., for instance, seeks only to increase the spending limit for president and vice president from P10 to P50, and for political parties from P5 to P30. In House Bill No. 15, the lawmaker didn’t propose to amend the limit for other candidates such as senators and local candidates.

In the meantime, Pangasinan Rep. Marlyn L. Primicias-Agabas, in House Bill No. 3249, seeks to raise the spending cap for president and vice president from P10 to P30 and for political parties from P5 to P25. In addition, she proposes to increase the allowed expenditure for candidates running for senator and other positions to P20 instead of P3 per voter. Candidates without a party would be allowed to spend P25 per voter.

Both Belmonte and Primicias-Agabas’s bills also include a provision authorizing Comelec to adjust the amount based on the Consumer Price Index every five years. — With research and reporting by Karol Ilagan, PCIJ, August 2017

IN THEIR bid to be Iloilo City’s chief executive from 2016 to 2019, then incumbent Mayor Jed Patrick Mabilog (Liberal Party) and Dr. Marigold Gonzalez (Independent, but with support from the United Nationalist Alliance) staged a costly advertising war that later ran into a total of more than P1 million for radio spots alone.

Yet when time came to submit their respective Statement of Expenditures and Contributions (SOCE) to the Commission on Elections (Comelec), it seemed only a portion of the radio spots were accounted for in Mabilog’s documents, while no such item appeared in Gonzalez’s papers at all.

Both also did not list any expenditure for several campaign standards such as compensation of campaigners, clerks, messengers and other personnel; communication costs, including landline and mobile phone fees, internet access, and courier charges; employment of watchers at the polls; and rent and maintenance of headquarters or meeting sites.

Gonzalez declared a measly P49,402.50 in expenditures for the entire 45 days of official campaigning. Mabilog, for his part, said in his SOCE that his campaign expenditures reached P582,433.78.

Nielsen Media monitoring of political ads in Iloilo City from March to May 2016 showed, though, that based on published rate cards, radio spots paid for Gonzalez amounted to P671,040 in April and the first week of May, while radio spots paid for Mabilog amounted P688,822 during the same period.

Classified as first class in terms of income, the Western Visayan city of Iloilo has a population of 448,000 and a land area of 7,834 hectares. During the May 9, 2016 elections, it had 261,481 registered voters. At P3 per voter, this means Gonzalez and Mabilog each had a campaign spending limit of P784,443.

The daughter of the late Justice Secretary Raul Gonzalez Sr., Gonzalez was seeking a political comeback for her family. Her brother Raul Jr. lost in the congressional election in 2010, and Gonzalez was determined to give the mayoralty fight her best shot.

Mabilog, meanwhile, was as resolved to continue being mayor and have his third and last term. But he also apparently did not underestimate the capacity of his main foe to crush him, aware that his previous alliance with the Gonzalezes had been an important chapter in his political career. (There was a third candidate as well, Arnel de la Llana, who ran as an Independent, but neither Gonzalez nor Mabilog appeared to consider him a threat.)

In the end, Mabilog got to keep his seat as mayor, winning 148,658 votes over Gonzalez’s 53,371. (De la Llana got 1,609 votes.)

In his SOCE, Mabilog said that he received a P250,000 cash donation from balikbayan-businessman Joebert Evidente, as well as an in-kind donation, particularly TV ads worth P247,643.76, from another balikbayan-businessman, Leoncio ‘Guy’ Garcia. The rest of his campaign funds were from his own pocket; Mabilog did not list any contribution from his party, which considers Iloilo city and province as its political bailiwick.

Mabilog’s SOCE says that he spent P20,998.62 or 3.6 percent of his expenditures on fuel and P13,380 or 2.29 percent on tarpaulins.

But the bulk of his P548,055.16 expenditure – about 94 percent – was for radio and TV ads. According to his SOCE, these were for political ads run by ABS-CBN (P259,783.16); Bombo Radyo Philippines (P90,272); GMA Network (P50,000); MBC-Aksyon Radyo (P40,000); and Radio Mindanao Network or RMN (P108,000).

It’s unclear if the mentioned ads run by BomboRadyo and RMN in Mabilog’s SOCE cover those monitored by Nielsen during April and the first week of May. Then again, the amounts in his SOCE and those by Nielsen don’t quite match.

Nielsen monitored 12 30-seconder Mabilog radio ads in April that were aired by DYFM-AM/837 KHZ (BomboRadyo-Iloilo) amounting to P81,600. By the first week of May, Mabilog’s radio pol ads had surged to 66, which were aired in various primetime programs of BomboRadyoIloilo and DYRI-AM/774 KHZ or RMN Iloilo; these reached a total of P607,200.

Of these 78 radio pol ads, 66 were paid for by “Friends of Mayor Jed Mabilog” while 12 were paid by his spokesperson, lawyer Mark Piad.

Missing in Mabilog’s SOCE as well were expenditures for political rallies and meetings. By comparison, these were present in Gonzalez’s SOCE, in which she said she spent P25,402.50 for political meetings and rallies and the use of sound systems, lights, and decoration. She also said she spent P24,000 for stationery, printing, and distribution of campaign materials.

But Gonzalez’s SOCE lists no expenditure or donation for political ads, even though in April Nielsen had recorded a total of 60 30-seconder ads espousing her crusade to help the downtrodden. Costing a total of P498,000 and aired by Aksyon Radyo Iloilo, these radio ads were paid for by “Friends” of Gonzalez.

Days before election day, Gonzalez also had 12 30-seconder pol ads aired in Aksyon Radyo Iloilo and 18 15-seconder aired in BomboRadyo-Iloilo, according to Nielsen. Focused on the return of her family’s brand of public service and free hospitalization, and fighting corruption, all these 30 ads were paid for by “Friends of Dr. Gold Gonzalez.” Based on published rate cards, they cost a total of P173,040.

Gonzalez’s SOCE does not list any donors or contributions. This writer tried to reach her for comment, but she was then vacationing in the United States.

Meanwhile, Mayor Mabilog’s spokesperson Piad described the campaign of Mabilog as “according to the laws and rules set by the Comelec.”

“Before the start of the campaign, Mayor Mabilog was calling our attention to make sure that we don’t exceed the limits provided for the law,” Piad said. “With the radio ads, I was the one who was actually really monitoring it. I made sure that we complied with the minutes, with the spending allowed by Comelec.”

It was Piad who prepared Mabilog’s SOCE, which means he should know what ads were placed for the mayor. Still, he said that he was unaware there were ads paid for by “Friends,” although he did not seem totally surprised when told about these.

“If it passes through me, the requirements in radio are very strict, because you have to disclose who these people are,” Piad said. So if it passes through me, definitely there will be names and addresses because those are the standards set for by the Comelec. But there are other supporters whom we don’t know of, whom we have limited or no control of. As far as I know, I have no idea (about ads paid for by friends).”

Piad also said that they were able to keep campaign expenses relatively tight by tapping social media.

“One thing that we really took advantage of sa campaign ni Mayor Mabilog was social media,” he said.” We all know that almost everybody is in social media so we really took advantage of technology. If we look at it, we don’t have to really spend on that aspect. Or we don’t have to spend on Facebook – I mean you just put up a poster, you tagged people, eventually if there are other people or supporters who like and share, it becomes massive.”

“The most of our communications were made through social media, through Facebook, Messenger,” Piad continued. “It is easier to spread information or communicate that way because you know when the other party had seen it, what time they had seen it, you know that the message came across. We really took advantage of technology, the social media. Number one, it’s free, so, almost all of us have FB accounts. That’s one thing we didn’t spend on, communication, because everybody is on Facebook.”

Piad said Mabilog did not incur expenses for manpower as well because a strong group of volunteers like the Red Ladies.

“Well, most of them were volunteers,” Piad explained. “If you recall we have volunteer groups nga very supportive kay Mayor Mabilog, especially ang Red Ladies. They are very supportive of him. Most of it were efforts of volunteers coming together to show their support for Mayor Jed.”

Expenses were further kept at a minimum with the volunteers just getting posters at the campaign headquarters, he said. “There were campaign materials in the HQ, then the volunteers would just go there…(and) get how many posters they want. It was really not distributed to them. We don’t really have a group that will go to one place and put up posters. (And we don’t give them anything in return.”

Piad added that “sa headquarters, wala man kami gasto. It was lent to us for free, so walang gasto.”

As for why there were no expenditures for political rallies in Mabilog’s SOCE, Piad recalled that most of grand sorties held in the city were with the national candidates of LP.

In any event, Election Officer (EO) IV lawyer Reinier Layson of Comelec-Iloilo City expressed surprise when told that several radio ads paid for Mabilog and Gonzalez by undisclosed or unnamed persons were aired, and then later not reflected in their SOCEs.

Thinking aloud, he said that a candidate must first accept the ads paid for him or her, and that this must be ensured by media outlets before airing any political ad. Explained Layson: “When there is no acceptance by the candidate, he can deny it and say, ‘That should not be counted against me or that airtime’.”

He said that without such acceptance, political ads should not be aired.

“Dapat hindi (They shouldn’t be),” Layson said. “The media outfits must be responsible enough to know they have a duty or are duty-bound to follow strictly what is provided by the law. And if they don’t follow, it is a clear violation of the law, and an election offense.”

Layson, who was temporarily assigned in Antique during the campaign period, also commented after looking at the SOCEs of Gonzalez and Mabilog, “Practically speaking, the stated cost (for stationery, printing, and distribution of printed materials) here does not reflect the actual number of campaign material posted in the city. It raises a question: Is it really true? But we are not in the position to determine, to find out if it is true or not, because we only rely on their statements.”

He also said that election officers like him are tasked only to receive the SOCE, ensure its attachments are complete, then forward the document to the Campaign Finance Office (CFO) in Manila.

“In fact,” said Layson, “our duty here is ministerial, and we only receive this (SOCE), and we only — of course after checking, if they have complied with the procedures sa filing, including all the attachments, which should be complete – forward everything to the Campaign Finance Office. They are the ones who verify and of course scrutinize the entries of our candidates.”

But while he left to the CFO the task of going over Gonzalez and Mabilog’s SOCEs with a fine-toothed comb, Layson said that he cannot blame candidates if they do not put everything that they should in their SOCEs. Instead, he blamed what he described as an obsolete law mandating the campaign-spending cap.

“What hinders them in declaring the true cost of their candidacy is because of the limitations provided by the law on how much they can actually spend for their candidacy,” he said. “That’s really dated na, matagal na ‘yung law na ‘yun (the law is already old). We have to factor in the inflation. The cost of a candidate’s campaign in the previous election is probably cheaper compared to now. The value of our money devaluates due to inflation.”

Section 13 of Republic Act No. 7166 or the Synchronized National and Local Elections Act provides the mechanics on how to calculate the legal campaign spending limits for candidates and parties. The law was enacted on Nov. 26, 1991, when the exchange rate between Philippine peso and the U.S. dollar was about P27 to $1.

Layson thinks that it is about time Congress enacts a more responsive and more up-to-date law pertaining to campaign finance, indicating that the spending limits have simply not kept up with the times and are now unrealistic. In other words, candidates are being forced to make do with campaigns that may not really work because they are underfunded, or spend and then lie about the cost later.

“If we look at it, we cannot really find fault with the candidates because they are also scared that if they declare the true amount of their campaign expenses, that would only mean them committing an election offense,” Layson said. “That would only mean disqualification against them. So, in the first place it would defeat their purpose of running for a certain elective office, and being elected into that, only to be disqualified later on, and to be convicted later on of an election offense, having declared honestly the actual amount spent for their candidacy.”

He pointed out, “If this will not be addressed by the Congress immediately prior to the next elections, then our CF monitoring will still be a rehash of the previous (election), this is what we will also see.” — PCIJ, August 2017
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* Maricyn A. de los Santos is a reporter for the Iloilo City-based The Daily Guardian and writes for the Philippines News Agency. She had also worked as desk editor of The Daily Guardian and The News Today, and as head writer of Pinoy Parazzi.

ONE OF them was determined to keep his post while the other two wanted to wrest from him the title of Mayor of Pasay City, one of the smallest cities in Metro Manila but which is nevertheless classified as first-class in terms of income.

Yet Jose Antonio F. Roxas, Jorge C. del Rosario, and Antonino G. Calixto proved rather frugal during the campaign leading to the 2016 elections, with one spending only an average of P520 a week for travelling expenses and another apparently having no need to spend to go around the city at all. Perhaps this was partly because all three had no donors and dipped into their own pockets for their respective campaigns.

This is based on the Statements of Contributions and Expenditures (SOCE) Roxas, del Rosario, and Calixto filed with the Commission on Elections (Comelec). As a result of their self-reported thriftiness, all three were able to keep their total expenses below the legal limit, which in their case was P761,472.00 each (P3 multiplied by the number of registered voters in Pasay, which was 253,824). A scrutiny of their respective SOCEs, however, suggests that possible items that may have been overlooked or excluded in their accounting of their expenses.

Pasay has a population of 417,000 and a land area of 1,397 hectares. At the time of the 2016 elections, Calixto was already on his second term as its mayor. In his quest for a third term, Calixto said he spent a total of P437,817.25, with expenses for political meetings and rallies taking up 42 percent (P186,000) of that sum. Some 34 percent or P150,500 of the total went to the hiring of watchers while stationery printing and distribution cost him P85,000. The least costly item in Calixto’s expenditure list was for travel, which he said ran him a bill of P16,317.25.

Calixto — who eventually emerged as winner with 113,218 votes — was the Liberal Party’s bet in Pasay City. According to Calixto’s SOCE, however, he did not receive any contributions from the party – or from anyone else, for that matter. Instead, he said he used his personal funds for his campaign. His expenses were actually only the second highest among the three candidates, which may not be that surprising since in terms of name recognition he already had a leg up over the other two because he was the incumbent. In fact, his name was on streamers and posters announcing a government project all over the city, despite a prohibition on such practice by Circular 2013-004 of the Commission on Audit. (There were two other mayoral candidates for Pasay, but this writer decided to concentrate on those affiliated with political parties.)

To be sure, these streamers and posters would not be expected to be part of his expense list. But there seems to be other curious omissions in Calixto’s SOCE. For example, he included expenses pertaining to the rental of sound systems and Monobloc chairs, which can only be presumed to have been used for rallies and political meetings. Yet there is no expense or donation listed in his SOCE for the rental or use of sites or venues for these.

Calixto’s travel expenses are also composed of fuel receipts. There is no mention of the vehicle or vehicles for which the fuel was used. On March 27, 2016, Calixto even took part in a motorcade with other members of his clan who were also running for public office.

Under Section 94 of the Omnibus Elections Code, the term “contribution” includes the use of facilities voluntarily donated by other persons, the money value of which can be assessed based on prevailing rates. Meanwhile, the term “expenditures” includes the use of facilities personally owned by the candidate, the money value of which can be assessed based on prevailing rates in the area.

Rival del Rosario of the Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban) made similar omissions in his SOCE. Like Calixto, del Rosario also had fuel costs essentially making up his travel expenses, albeit far lower than that of the incumbent: P3,123.43 for the entire six-week campaign period. Del Rosario was silent about the vehicles he used as well.

And again like Calixto, del Rosario rented sound systems, but did not mention any venue where these would have been used. In all, del Rosario said he spent a total of P39,457.43, the lowest among the three candidates.

The top spender among them was Roxas, the candidate of the United Nationalist Alliance or UNA. At P740,000, his campaign-expense total was nearest the spending cap. Interestingly, his expenses did not include anything for travel, which may mean he and his team managed to campaign either from their headquarters or from their own homes. It may also mean they campaigned on foot – which may well be a feat, considering Pasay City, while relatively small, is still the size of about 33 SM Malls of Asia.
Roxas spent P187,100 for printing and distribution of campaign materials, and another P12,900 for political meetings and rallies (although like Calixto and del Rosario, he did not indicate any expense or donation for rally and meeting sites). But the bulk of his expenses went to “watchers”: a whopping P540,000.

Based on his SOCE, Roxas paid 30 watchers P400 a day each, from March 25 to May 9, 2016. Why he would need watchers weeks before election day is puzzling, but Roxas apparently called people who acted as field campaigners as “watchers” as well. According to three field personnel who Roxas identified in his SOCE, they went house to house around Pasay as soon as the campaign period began. They said they used vehicles provided by Roxas to go to predetermined areas to campaign. They also organized weekly caucuses with different barangay captains.

These field personnel also known as “watchers” said that they did not actually perform “watcher duties.” Rather, each of the 30 “watchers” engaged other people as watchers during the elections. According to the field personnel, they hired a pair of watchers for each of Pasay’s clustered precinct, paying each P800. Since Pasay has 430 clustered precincts, Roxas may have paid a total of P688,000 for these actual watchers – but no such amount appears in his SOCE.

This writer tried to interview all three candidates but did not succeed. Two visits to the residence of Roxas were both unfruitful. A letter of request addressed to Mayor Calixto was referred to a public information officer, who in turn said that the “person in charge” had yet to show up for work. A visit to the declared residence of del Rosario, meanwhile, turned out to be confusing, since a forwarding company and not a private home was at the address, No. 30 San Luis St. The security guard at the Heeny Forwarders Inc. also said he did not know del Rosario. — PCIJ, August 2017
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* Ryan Jay Roset is currently a consultant for the Legal Network for Truthful Elections (LENTE). Prior to working for LENTE, he was a public servant for six and a half years.

CANDIDATES IN Philippine elections usually complain about what many of them say are outdated, low campaign-spending caps. But the Dutertes of Davao City apparently have no problem with spending limits – at least when they’re running in their family’s political turf.

As a mayoralty candidate of Davao City in the 2016 elections, Sara Duterte-Carpio spent only P138,800 for her campaign or a mere 5.29 percent of the P2,621,010 cap per bet (with a party) for the post. Older brother Paolo Duterte meanwhile spent just P77,270.50 on his second run as vice mayor, which translates to some three percent of the maximum spending limit (calculated to be P3 multiplied by Davao’s 873,670 registered voters).

The Duterte siblings’ formula to keep well under the cap is simple: have a recognizable name that is also heavily associated with the area in which they are seeking a post. Indeed, brother and sister seemed to have been so confident of clinching the vice mayor and mayor seats respectively that they hardly campaigned for themselves. Instead, Sara, 38, joined the 30-day Visayas and Mindanao campaign caravan of their father Rodrigo, who was then running for President. Paolo, 41, took to Luzon to help Rodrigo with his campaign there.

The country’s queen of cities down south, Davao is a 244,400-hectare, first-class metropolis. It has a population of about 1.63 million people, most of whom are now used to having a Duterte at the municipio.
Rodrigo Duterte became Davao City’s acting vice mayor in May 1986. He would later become its mayor from 1988 to 1998, and then from 2001 to 2010, and finally from 2013 to 2016. He was the city’s 1st District representative from 1998 to 2001. When his daughter Sara was mayor from 2010 to 2013, Rodrigo was the vice mayor.

Sara has also had her turn as vice mayor of Davao City, from 2007 to 2010. When Rodrigo decided to run for mayor once more in 2013, though, it was Paolo who stepped up to vie for the vice mayoralty seat, running unopposed.

Paolo again had no rivals in the 2016 elections. Sara, however, was challenged by independent candidates such as Teodoro Mantilla and Kilat Tocante. She ended up winning, like her brother.

Paolo and Sara submitted their respective Statements of Contributions and Expenditures (SOCE) along with official receipts stating the particulars of their expenditures. In Paolo’s case, at least one receipt was made out not to him in particular, but to “Vice Mayor Office” (sic).

Paolo also indicated in his SOCE that he spent P45,580.50 on the printing and distribution of materials relative to his candidacy, and another P31,690 for sample ballots.

As for Sara, her SOCE indicated that the entire amount that she said she spent went to campaign materials. She would later say in an interview that her expenses were “for tarps, posters, and stickers.”

Neither she nor Paolo included in their SOCEs compensation for campaigners, clerks, stenographers, messengers, and other people they might have employed in the campaign. They also did not hire poll watchers.

Jefry Tupas, who was a Duterte campaign volunteer and now Davao City’s Information Officer, says that the Duterte siblings did not need to employ anyone because people volunteered to help them. Paolo himself said in an interview, “We did not pay for people to campaign for us. We did not even campaign for ourselves. I did not campaign for myself. We campaigned for my father. And everyone who joined us in the campaign were our friends and volunteers.”

He clarified, however, that the bulk of his expenses went to the printing of tarpaulins for his party. Both Paolo and Sara ran under Hugpong sa Tawong Lungsod, a local political party established by Rodrigo in the early 2000s.

According to its own SOCE, the party spent a total of P1,117,943.05 or about 26 percent of the maximum amount allowed it. Hugpong also said that it received contributions that reached a total of P1,150,000. Its donors were Sara’s husband, lawyer Manases R. Carpio, lawyer Elijah Manuel Pepito, engineer Rosario Rosita Pilar G. Borromeo, engineer Gerald Jun L. Borromeo, businesswoman Joanne Beverly C. Lao, lawyer Leopoldo Leuterio Jr., and lawyer Israel Torentera.

Based on its SOCE, Hugpong spent most of its campaign funds on the hiring of poll watchers (P768,000), followed by the printing of campaign materials (P132,000), employment of counsel (P105,000), communications (P40,650), and finally travel expenses (P25,848.05).

Notably, however, Hugpong’s SOCE did not include any expenditure for a political rally, even though it had at least one that was held on April 4, 2016 at 6 p.m. at the J. Cruz Elementary School Covered Court in Panacan. Paolo Duterte was apparently at that rally, along with the then councilors of the city’s 2nd District.

Lawyer Marlon Casquejo, Comelec officer for the city’s 1st Congressional District says that if Hugpong were proven to have committed a violation of election-campaign rules, its “secretary general could face imprisonment and should pay the appropriate fine.” But he says that for any investigation to take place, Comelec must first receive a complaint. He also says that the complaint must include evidence that a political rally was indeed conducted, even though nothing of the sort is in the party’s SOCE.

Political analyst Ramon Baleno meantime comments that Davao City residents may tend to accept whatever the Dutertes say in their SOCEs, regardless of whether or not these are accurate. He also says that one negative impact of a place turning into a politician or a clan’s bailiwick is that voters there tend not to mature electorally and politically and become dependent on one person or family.

But he allows, “The Dutertes have massive support because of the programs that the people love.” Thus, even though poverty incidence in Davao City has increased (the latest available statistics show it has risen from 13.2 percent in 2009 to 25 percent in 2012), Davaoeños still believe in the Dutertes because they feel secure and happy with the basic services provided by the local government.

In truth, the Duterte name is so resonant among Davaoeños that other politicians use it in their own quests for local posts. For instance, SOCEs of the candidates for councilors in the 2016 elections show that the top campaign spenders among them had used the Dutertes in their tarpaulins, sample ballots, and campaign jingles – and later received the most number of votes. These candidates for councilor – Maria Belen Acosta, Melchor Qutain, Bonifacio Militar, Danilo Dayanghirang, and Cherry Ann Bonguyan – each spent at least P400,000, far more than the campaign bills of Sara and Paolo Duterte.

But then Baleno says that in fact, the Dutertes had been spending – during the “pre-election campaign period,” which is not covered by SOCEs. The Ateneo de Davao political science department head explains that “in political science, pre-election is the period after they won and took oath.” This would be when local officials embark on populist projects like basketball courts.

“Since they (the Dutertes) are already established, they do not need to campaign extensively in the election period,” says Baleno. He adds, though, that this is worrying since it only means the matter of who will take office has already been settled even way before the polling centers open.

Says Baleno: “It is a sign that there is no choice and in elections choices are really needed.” — PCIJ, August 2017
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* Ma. Cecilia Badian is a justice reporter for the Davao City-based Mindanao Times.

ELECTIONS 2016’s 50 candidates for national office and the political parties that fielded them spent P5.8 billion across the 90-day campaign period, PCIJ has found in its review of documents submitted to the country’s poll body.

But small and big discrepancies clutter the election-spending reports that the five candidates for president, six for vice president, and 39 for senator, as well as their political parties, had submitted to the Commission on Elections (Comelec).

Fortunately, the various documents that Comelec has required the candidates and their political parties to submit in their Statement of Contributions and Expenditures (SOCEs) were precisely designed to allow for comparison and validation.

A consistent string of amounts would result only when the filers (candidates and parties), as well as their contractors (mass media, printers, etc.), had complied fully and faithfully with the poll body’s campaign finance rules.

An inconsistent string of amounts should raise red flags of two types: the candidates or parties may have spent beyond lawful limits on campaign spending for the position they have sought, or simply perjured and lied in their SOCEs.

As it is, the amounts that the 2016 national candidates said they spent on political ads, and the amounts that media agencies said they collected from the candidates, are a problematic pair.

P5.4 B in pol ads

PCIJ reviewed the amounts enrolled in the SOCEs that these candidates filed with the Comelec against related documents from the mass-media agencies that hosted their ads and monitoring reports by Nielsen Media of the ads that were actually aired and published, and paid for or by the candidates between Feb. 9 and May 7 last year.

The amounts differed by small and big values. In many cases, the candidates reported in their SOCEs bigger spending on political ads, in contrast to the amounts that media agencies had registered in their receipts and advertising contracts. In fewer cases, some candidates understated in their SOCEs their political ad spending, while media agencies reported bigger amounts.

Still, PCIJ’s review reveals that of the nearly P6 billion spent by the national candidates during the official campaign period, only P400 million or 6.9 percent went to travel expenses, compensation of campaigners, communications, stationery, printing and distribution, employment of poll watchers, rent and maintenance, and political meetings and rallies of the candidates and their parties. The bulk or P5.4 billion went to political-ad placements on various media.

Surprisingly, just four senators out of the 50 national candidates whose SOCEs were reviewed by PCIJ reported having spent for poll watchers. Among the political parties, only the Lakas-Christian Muslim Democrats (Lakas-CMD), the United Nationalist Alliance (UNA), and the Nacionalista Party reported incurring bills for the same expense.

Can’t buy love

A lot of money did not buy a lot of love from voters for many big spenders, though. The few exceptions are then Congresswoman and now Vice President Maria Leonor ‘Leni’ Robredo and seven senatorial contenders who got elected.

In their run for the presidency, Sen. Grace Poe, former senator and Local Government Secretary Manuel ‘Mar’ Roxas II, then Vice President Jejomar ‘Jojo’ Binay, and the late Sen. Miriam Defensor-Santiago reported spending P510.8 million, P487.3 million, P463.4 million, and P74.7 million, respectively.

In contrast, the victor, former Davao City Mayor Rodrigo R. Duterte, reported spending only P371.5 million to become the nation’s 16th president. Of the five candidates for president, Duterte placed No. 4 in terms of political-ad spending.

As a group, the five candidates for president reported spending a total of P1.91 billion on their campaign. In the May 2010 presidential race, eight candidates ran and spent just P1.58 billion, including their own money, or P330 million less.

In May 2016, of the 55.7 million registered voters, a significant 81.95 percent or 44.55 million actually voted. In May 2010, of the 51.32 million registered voters, a lower 74.34 percent or 38.14 million actually voted.

Big spenders lost

In the senatorial race, losing candidates Francis Tolentino, Francisco ‘Isko Moreno’ Domagoso, Teofisto Guingona III, Carlos Jericho Petilla, and Ferdinand Martin Romualdez placed ranked Nos. 1, 7, 10, 11, and 12, respectively, in terms of the amounts they binged on political ads.

Some of those who lost in the money game actually won Senate seats. Five candidates for senator won even with much less money spent on political ads: Juan Miguel Zubiri, Leila de Lima, Panfilo Lacson, Emmanuel ‘Manny’ Pacquiao, and Vicente ‘Tito’ Sotto III who placed Nos. 13, 14, 15, 18, and 19, respectively, in terms of the amounts they paid for political ads.

(PCIJ was unable to review the submitted SOCEs of five senatorial candidates. Six candidates meanwhile did not submit SOCEs at all. Of those whose SOCEs PCIJ was able to look at, seven did not report spending any amounts on political ads, while one, Rey Langit, said that he did not spend a centavo on his campaign at all.)

Without a doubt, political ads are the shortest route for candidates to make voters recall their names, faces, and taglines. A 15-second or 30-second TV or radio ad does not allow for any discussions of the candidates’ platform, however. Even a whole-page ad in a broadsheet should not be text-heavy but, so advertisers say, just offer eye candy.

In the end, volumes of political ads failed to guarantee victory for all the candidates. SOCEs and advertising contracts submitted to Comelec showed that some of the biggest pol-ad spenders also lost big in the elections.

Of the five candidates for president, Grace Poe Llamanzares spent the most on political ads, by her SOCE submission and receipted ad contracts. Hers was P159 million more than what elected President Rodrigo Duterte declared as political-ad expenses. Binay meanwhile overshot Duterte’s declared pol-ad spending by P113 million. Mar Roxas, who placed second in the presidential race, spent P63 million more than Duterte, by SOCE submission, and P32 million more by receipted ad contracts.

Vice President Leni Robredo, however, managed to win big after spending big, declaring political-ad expenses that reached P387 million, based on her SOCE declarations. Robredo bested all five other vice presidential contenders in pol-ad spending based on these documents.

Didn’t breach caps?

A caveat in this analysis is that while Comelec’s campaign-finance rules are designed to allow for sets of documents that could be validated with one another, this is possible only when all the concerned parties follow the rules truthfully.

Campaign-finance rules, after all, employ a self-reporting mechanism for candidates and political parties, and they are unlikely to declare more than what they are allowed by law to spend on their campaigns. In fact, in the May 2016 elections, all the national candidates reported spending much less than the spending limits.

Under current election rules, candidates for president and vice president may spend P10 per voter. With 55.7 million registered voters, including overseas voters, these candidates may incur maximum expenses of P557 million. Candidates for senator with political parties may spend P3 per voter or a total limit of P167 million. Those without political parties may spend P5 per voter or a total limit of P278 million.

By design, the advertising contracts submitted by media outfits should provide additional information to verify and validate the SOCEs of the candidates.

Curiously, most of the candidates reported higher amounts for political-ads spending compared with the consolidated advertising contracts submitted by the media outfits.

Among the few exceptions, however, are senatorial candidates Cresente Paez and Samuel Pagdilao, Sen. Ralph Recto, and Makabayang Koalisyon ng Mamamayan or Makabayan, the party that fielded senatorial bet Neri Colmenares, who in turn reported smaller amounts than what appeared in receipted advertising contracts.

Then there were cases in which PCIJ was unable to verify political-ad spending because the candidate did not submit a SOCE – as in the case of former Pampanga Governor Mark Lapid and veteran senator Sergio Osmeña III.

But if receipted ad contracts are considered, Osmeña would end up as having spent P78 million. Lapid, meanwhile, had all his pol ads worth P3.9 million paid for by Aksyon Demokratiko. (Both Osmeña and Lapid lost in the senatorial race, incidentally.)

The Nationalist People’s Coalition, for its part, seemed to be in another category altogether, declaring zero amounts in its party SOCE, yet providing a breakdown of expenditures in its Summary Report of Lawful Expenditures or SLE.

Party benefits

By Comelec’s campaign-finance rules, political parties may also spend for candidates they fielded, with a maximum of P5 per voter. For the 2016 elections, the spending cap for political parties was set at around P279 million each.

Among the political parties, the Liberal Party showed greatest disparity between its declared pol-ad spending and receipted ad contracts. It declared pol ads worth P210 million even as its receipted ad contracts amounted to only P90 million. This benefitted Roxas and tandem ads for Roxas and Robredo.

As for PDP-Laban, Duterte’s adoptive party, it declared P129 million worth of political ads even though its receipted ad contracts amounted to only P62 million – all benefitting Duterte.

Some candidates reported little pol-ad spending, though, by maximizing their being the head or leader of their respective political parties. This was the case at least for the late Senator Santiago with the People’s Reform Party and Ferdinand Martin Romualdez with Lakas-CMD.

Admittedly, however, confusion can arise over who should declare the expenditure for the political ads: the candidate or the party? In the case of Santiago, the party and the candidate declared the same amount in their separate SOCEs: P70 million. Receipted ad contracts, however, state only P36 million for PRP and P2 million for Santiago.

But Gordon’s case takes the cake in terms of strangeness. All the receipted ad contracts were paid for by Bagumbayan Volunteers and not a single contract reflected Gordon as payor of the ad. In his SOCE, however, Gordon declared P114 million worth of pol-ad spending.

Comelec records show Gordon as having run as an independent candidate. As for Bagumbayan Volunteers, the Comelec’s CFO says that while it is an accredited political party, it did not field a candidate in the 2016 elections.

Can’t donate but did

In the meantime, several business entities seem oblivious to the ban on companies donating to election campaigns. While moves are under way in Congress to amend the Omnibus Election Code, particularly to allow such donations, the prohibition remains in effect.

Section 36 of Batas Pambansa 68 or the Corporation Code of the Philippines prohibits corporations, domestic or foreign, from giving donations in aid of any political party or candidate for purposes of partisan political activity. It penalizes violators a fine of P1,000 to P30,000 or imprisonment of 30 days to five years or both plus dissolution proceedings before the Securities and Exchange Commission (SEC).

As well, Section 95 of the Omnibus Election Code prohibits certain types of corporations from donating to any political party or candidate such as financial institutions and corporations with government contracts, among others. Its violation constitutes an election offense and violators may face jail terms of one to six years, without probation. Violation of this rule is also a ground for disqualification of the recipient of the donation.

Despite this, Bansa Tri-Media Corporation, an SEC-registered company but whose Facebook page has only three likers/followers and no zero posts, donated some P3.2 million worth of pol ads to Duterte, based on a receipted ad contract submitted by GMA Network, Inc. The file, however, did not include a certificate of acceptance of the donation by Duterte; Duterte himself did not list Bansa Tri-Media Corporation as one of his donors.

Patriot Freedom Air, Inc. also paid for P24.3 million worth of pol ads for senatorial bet Francis Tolentino. In his SOCE, Tolentino listed three persons donating to his campaign coffers through Patriot Freedom Air, Inc. The total amount of their donations, based on Tolentino’s SOCE, amounted to only P22.4 million. Patriot Freedom Air, Inc. does not appear in the registered companies under SEC.

No more ‘Friends’

In its series of orientation forums for various stakeholders, including the candidates and their parties, the Comelec CFO staff reiterated that Section 98 of the Omnibus Election Code requires the true names of campaign contributors.

The Code states: “No person shall make any contribution in any name except his own nor shall any candidate or treasurer of a political party receive a contribution or enter or record the same in any name other than that of the person by whom it was actually made.”

“Friends,” therefore, are no longer legitimate donors.

But “Friends of Risa Hontiveros” donated P236,000 worth of pol ads to Hontiveros, who did not acknowledge any “Friends” in her SOCE.

“Friends of VP Binay” — also known as AgriPartylist, Bataan ads, Bicol ads, FILCABS, and Sorsogon ads — was written in advertising receipts as payors of P250,000 worth of pol ads of Jojo Binay. But Binay did not acknowledge these “Friends” as contributors in his SOCE.

The other pol ads donors who were not declared, or whose donations were under-declared, in the Summary of Contributions Received (SCR) submitted by their candidates are:

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— With research and reporting by Malou Mangahas, and additional research by Fern Felix, Davinci Maru, Vino Lucero, Ana Ysabel Manalang, Jil Danielle Caro, and Steffi Mari Sanchez, PCIJ, August 2017

THE EXPENDITURE totals usually don’t quite add up and tallies from different entities don’t match. But there is no question that among those who strike it big during elections are media outfits, and the 2016 polls proved no different.

As in elections past, TV emerged as the platform of choice of the candidates for national office for their political ads that ran during the three-month campaign period. Nine TV stations in particular got the majority of these ads, which – based on receipts and ad contracts submitted to the Commission on Elections — ran up to at least P3.6 billion worth or 90 centavos for every peso that the candidates spent on ads.

These lucky nine TV stations are mainstream giants ABS-CBN, GMA 7, and TV5, along with the channels and relay stations they operate outside Metro Manila; the cable TV channels 2nd Avenue, Basketball TV, ETC, Jack TV, and Solar Sports; and the Pampanga-based CLTV.

Radio came second to TV in terms of ad buys from the candidates. Again based on receipts and ad contracts submitted to Comelec, at least 163 radio networks and stations snared a total of P378 million or 9.5 percent of the entire value of the national candidates’ political ads that ran from Feb. 9, 2016 to May 7, 2016.

The balance of pol-ad monies went to online, print, and combined TV and radio, the documents received by Comelec show. Although most of the sums presumably paid for 30- and 60-second ad spots, some were used to secure supposed TV features and radio interviews.

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Comparative figures generated by Nielsen Media’s monitoring of political ads run during last year’s official campaign period yielded similar trends, with most of the ad buys also going to TV. Nielsen Media’s numbers, however, were far more than those based on documents submitted to Comelec. For instance, Nielsen said that TV’s share of the pol-ad bonanza came to P6.66 billion or nearly double the number based on Comelec documents. It also said that radio took as much as P1.7 billion in ad buys, or more than triple the figure derived from receipted ad contracts from Comelec. Nielsen said as well that the ads en toto amounted to P8.4 billion — more than double the comparative number from papers submitted to Comelec.

Then again, this is because Nielsen computes ad values based on the published rate cards of media outfits. Generous discounts are not uncommon among media firms, however; industry executives even say that these can be as much as half that of the published rate cards.

In any case, here’s what the media outfits themselves reported as having collected from pol-ad spending by the national candidates and the political parties during the official campaign period last year:

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— Research and reporting by Floreen M. Simon, and additional research by Fern Felix, Davinci Maru, Vino Lucero, Ana Isabel Manalang, Jil Danielle Caro, Steffi Mari Sanchez, and Malou Mangahas, PCIJ, August 2017

SOME CANDIDATES may have willfully mocked their lawful duty to file election-spending reports with the Commission on Elections (Comelec) but they are not the only ones who did so. Like these wayward candidates, many media agencies also failed to file reports with the poll body, in defiance of their obligation in law.

This is even though television networks, radio stations, and print-media agencies emerged as the biggest winners, money-wise, in last year’s elections: From political-ad spending by some 50 national candidates and their parties alone, these media agencies scooped a whale of a windfall — about P5.4 billion

Put another way, this means that on average, for every P100 they spent, these candidates plunked down P92 to prime, preen, and promise the moon and the stars in political ads.

And yet according to Comelec records, a significant number of media outfits did not submit a single document related to political ads that they had published or aired, and for which they received hefty sums from the candidates and the political parties.

PCIJ obtained from Comelec’s Campaign Finance Office (CFO) copies of ad contracts submitted by media agencies to the Commission from April to September last year. PCIJ then compared these contracts and Nielsen Media’s monitoring reports on ads that were actually aired and published during the 90-day campaign period for the May 2016 elections.

A review of these documents indicated that 55 media agencies — two TV stations, 15 newspapers, and 38 radio stations – may have failed to comply with their reporting duty under campaign-finance rules. The review does not yet include the agencies that placed four outdoor advertisements that Nielsen Media monitored in four different locations.

Surprisingly, the media nonfilers included the government-run People’s Television 4 or PTV 4.

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A serious matter

To Efraim Bag-id, acting head of the Comelec CFO, such acts of omission by media agencies are a serious matter.

Failure to file advertising contracts and receipts covering political-ad buys by the candidates and political parties in TV, radio, and print-media outfits constitutes an election offense under Section 13 of Republic Act No. 9006 or the Fair Elections Act. For this offense, media-agency owners and executives could be held liable and sent to jail. Comelec Resolution No. 9991 or the Campaign Finance and Disclosure Policy states that advertising contracts should be submitted to the poll body within five days after these are signed, and accompanied by a Summary Report of Advertising Contracts (SAC).

Based on Nielsen Media reports, the nonfiling of these documents by some media agencies involved in the 2016 election campaign translates to unreported political ads totaling at least P570 million in value, with radio ads having the largest share: P522 million. Next come print ads, (P26 million), then those on TV (P16 million), and last outdoor ads (P6.6 million).

In 2010, PCIJ published a report on political ads that identified almost the same set of media outfits as non-compliant with their reporting duties under campaign-finance rules.

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Inquiry letters

To verify the data it gathered, PCIJ sent inquiry letters to some of the companies that appeared to be noncompliant in 2016, in particular those that aired or ran ads worth at least P10 million.

Among these companies was the Philippine Daily Inquirer (PDI), which was very quick to reply. PDI General Counsel Rudyard Arbolado said, however, that the popular media outfit was puzzled over its inclusion in the noncompliant list.

PDI then showed PCIJ copies of ad contracts that the newspaper submitted to the Comelec’s CFO and which were marked “Received” by Comelec personnel. All of the contracts were not among Comelec’s compilation of submitted ad contracts seen and reviewed by PCIJ.

According to PDI’s records, these are the newspaper’s submissions to Comelec last year:

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CNN Philippines also replied swiftly, refuting PCIJ’s findings. CNN Marketing Manager Yna Ellorda even shared with PCIJ a copy of the document it submitted. The papers, however, showed that it was submitted to, and received by, the Education and Information Department (EID) of Comelec.

Upon a quick check of CFO records, Bag-id confirmed that the office had received documents from PDI, albeit with dates that did not match those in PDI’s records: March 17, April 7, April 27, and June 2. He also confirmed that the EID forwarded CNN’s submission and was received by the CFO on May 26 last year.

Bag-id said as well that the CFO staff has yet to review the advertising contracts submitted to the office. He conceded that it was possible that not all of the documents it received were made available to PCIJ.

The Philippine Star, for its part, recently acknowledged receipt of PCIJ’s query letters and follow-up, which were sent last July 6 and July 11 respectively. It has yet to send a formal reply to the Center’s queries, however.

Radio Mindanao Network (17 stations and three affiliated stations) and Tiger 22 Media Corporation (five stations) also acknowledged receipt of PCIJ’s inquiry letter, but have yet to send their respective responses to the questions.

Missing 15 percent?

For sure, though, the non-compliance of some media outfits with the requirement for them to submit reports on the political ads they ran can complicate attempts to calculate just how much commissions had been collected by the ad agencies that handled them for the candidates and the political parties.

Media outfits follow a formula for commissions on ad placements, depending on whether the ads were placed directly or through advertising agencies.

For ads placed through advertising agencies, it is:
Base Rate – Agency Commission + VAT – Withholding Tax = Amount payable to media outfit

For direct accounts, the formula is:
Base Rate + VAT – Withholding Tax = Amount payable to media outfit

Based on just the submitted ad contracts, the ad agencies involved would have received at least P361 million worth of commission altogether.

Then again, even the ad contracts submitted to Comelec pose problems for those trying to figure out the total commissions the ad agencies got, because of inconsistencies in reporting.

Some ad contracts, for instance, do not indicate how much commission went to the ad agency.

Some reflect the amount of the commission, but do not indicate the ad agency or there are no attached telecast or broadcast order to indicate the agency.

Some indicate that the advertisement was placed directly by the candidate but, just the same, reflect a commission amount.

Other figures do not tally as well across related documents. From advertising contracts to official receipts, to telecast or broadcast orders, values vary even for the same ads.

Comelec CFO Acting Head Efraim Bag-id says that receipts should be the basis to determine official amounts in ad-contract submissions. But then some of the ad contracts submitted by media agencies lack official receipts. There are also cases in which the same receipt was used to cover different ad contracts.

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PCIJ thus decided to write to three advertising agencies, again targeting in particular those that appeared to have received commissions worth at least P10 million, to clear some details.

Only one ad firm replied, however, and that was also only after a follow-up call was made: Media Market Lab Advertising, which had at least one vice presidential candidate and three senatoriables as clients, for whose ads it earned almost P47 million in commissions – at least according to ad-contract submissions to Comelec.

But according to Managing Director Emma Sierra, Media Market Lab received less than the computed P46.9 million in commission that the agency reportedly received from ad placements for its clients who were national candidates in May 2016.

When asked whether the firm’s profit as an ad agent in the 2016 elections was reported to the Bureau of Internal Revenue, Sierra replied, “Nag-submit naman kami sa RCF ng report. May mga resibo ‘yun (We submitted a report to RCF. That was with receipts).”

Sierra was not sure though what “RCF” meant. The RCF or the Report of Contractors and Business Firms is actually the form to be submitted by every person or firm to whom any electoral expenditure has been made. This is stated in Rule 11 of the Omnibus Rules on Campaign Finance, which also says that the RCF has to be filed within 30 days after the conduct of the election with the CFO of the nearest Comelec Field Office.

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— With research by Fern Felix, Davinci Maru, Vino Lucero, Ana Isabel Manalang, Jil Danielle Caro, Steffi Mari Sanchez, and Malou Mangahas, PCIJ, August 2017

Philippine crop production volumes, from 1993 to 2015.

AS OF the latest official census in 2015, there are now a total of 100.98 million Filipinos. One in every three lives, works, and draws sustenance from agriculture.

The agriculture sector consists of four sub-sectors: farming, fisheries, livestock, and forestry, which altogether by the year 2000 employed 39.8 percent of the labor force. Yet still, farmers and fisherfolk remain the most impoverished in the country.

In 2015, land planted to at least 21 various agricultural crops covered 13 million hectares. In order of scale, palay, coconut, and corn are the crops with the largest land coverage.

Agricultural area planted to various crops, from 1993 to 2015.

In terms of harvest volume, however, sugarcane production that ranges from 17 to 29 million metric tons per year outranked all other crops.

The yield from sugarcane plantations represents about a third of the total 84 million metric tons of crops that the agriculture sector produced in 2015. The situation derives from the intermittent but significant rise and fall in rice and corn production, as well as that of 14 other agricultural crops, over the last two decades.

Sixteen major crops produced by the agriculture sector have marked production slips and upticks, often on account of disastrous weather systems, through the years.

Philippine rice production volume, 1998 to 2016.

In 1998, palay production severely dropped by 24 percent from the previous year, while that of sugarcane and coconut, by 22 and 12 percent, respectively. The situation would repeat in 2010 when the production volumes of major crops also declined significantly. In both years, super typhoons destroyed wide swaths of agricultural lands.

Philippine corn production volume, 1998 to 2016.

But did you know that apart from rice, coconut, corn, and sugarcane, our farmers also grow smaller volumes of other crops? Filipino farmers also harvest bananas, pineapple, coffee, mango, tobacco, abaca, rubber, cassava, camote, peanut, mongo, onion, garlic, tomato, eggplant, cabbage, calamansi, and other crops.

Check out the backstory and future links in data and statistics of the Philippine agriculture sector on PCIJ’s MoneyPolitics Online!