Pinoy Solutions to Corruption by Briones, Reyes, Domingo

8/19/2019 Pinoy Solutions to Corruption by Briones, Reyes, Domingo

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PINOY SOLUTIONS TO

CORRUPTION

By: Prof. Leonor Magtolis Briones, Team Leader

Prof. Danilo R. Reyes, MemberProf. Ma. Oliva Z. Domingo, Member

(With research and administrative assistance from Ms. Ligaya P. Castor and Mr. Nonnie G. Jeruta)

Contracted under Cooperative Agreement 492-A-00-09-00032-00

The Integrity Project

DISCLAIMER

The author’s views expressed in this publication do not necessarily reflect the views of the United States Agencyfor International Development or the United States Government.


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TABLE OF CONTENTS

Page

Chapter 1 Why the F il ipino Solutions toGraft and Corr uption? 1 By: Prof. Leonor Magtolis Briones (Ret.)

2 Gararap and Corarap Pinoy Style 12By: Prof. Leonor Magtolis Briones (Ret.)

3 Chronicling Corr uption in the Phili ppines:A Bri ef H istori cal Background Up to 2004 19 By: Prof. Danilo R. Reyes

4 Chronicling Corruption in the Phili ppines,2005–M ay 2011:The Road to Perdition..? 62 By: Prof. Ma. Oliva Z. Domingo

5 Learni ng from Pinoy Successes 99 By: Prof. Leonor Magtolis Briones (Ret.)

6 Framework for a National Anti-Corr uptionProgram 110 By: Prof. Leonor Magtolis Briones (Ret.)

7 From Pinoys to P’noy: Specif ic Solutions toCorruption 124By: Prof. Leonor Magtolis Briones (Ret.)

APPENDICES

BIBLIOGRAPHY


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CHAPTER I

WHY FILIPINO SOLUTIONS TO GRAFT AND CORRUPTION?

By: Prof. Leonor Magtolis Briones

“Recorded in the history of human sufferings is a cancer of so malignant acharacter that the least touch irritates it and awakens in it the sharpest pains. Thus,how many times, when in the midst of modern civilizations I have wished to call theebefore me, now to accompany me in memories, now to compare thee with othercountries, hath thy dear image presented itself showing a social cancer like to thatother!

Desiring thy welfare,…. seeking the best treatment, I will dowith thee what the ancients did with their sick, exposing them on the steps of the

temple so that every one who came to invoke the Divinity might offer them aremedy.

…I will strive to reproduce thy condition faithfully, without discriminations; Iwill raise a part of the veil that covers the evil, sacrificing to truth everything…

--Jose P Rizal, from the dedication of “Noli Me Tangere/The Social Cancer: Charles Derbyshire English translationEurope, 1886

Graft and corruption has been considered endemic in Philippine governance since theSpanish era. National Hero Jose P. Rizal described it as a “social cancer”. A popular TV

program during ‘80s, “Sic O’clock News”, derisively referred to graft and corruption as“gararap and korarap .” In the current language of the bureaucrats it is referred to as“S.O.P.” (standard operating procedures), implying that corruption is a built-in feature ofgovernment operations. It is also described as ”for the boys” but in these days of genderequality, I prefer to refer to it as “for the boys and the girls.” Academics and students ofcorruption refer to it as “negative or deviant bureaucratic behavior”. However, cynicscounter that it is corruption which is normal and honesty which is deviant.

Graft and corruption has been so ingrained in governance and so embedded in societythat words peculiar to Philippine practice have emerged. These were compiled by in a“Corruptionary: Natatanging Diksyonaryo ng mga Salitang Korapsyon” by the Center forPeople Empowerment and Governance (CenPEG).

Is corruption as Pinoy as adobo and as endemic as dengue?


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After nearly five centuries, graft and corruption now threatens to be as Pinoy as lechon ,adobo , sinigang and paksiw . It seems to be as endemic as dengue, tuberculosis andcholera. The solution to this national blight can only come from Filipinos themselves.

HAS EVERYTHING BEEN DONE?

Considering the fact that efforts to control corruption go all the way from Spanishcolonialism to the present, can it be said that everything has been done to cure this socialcancer?

L egal and admini strative reforms; capacity bui lding, publi c events

All laws regulating government activities, whether national, agency specific, or local inapplication inevitably contain provisions penalizing corrupt acts. The Anti-Graft andCorrupt Practices Act (Republic Act 3019) and related laws, the Presidential Decreescreating the Sandiganbayan and the Tanodbayan and subsequent laws, as well as Civil

Service Commission rules and regulations are just a few of the range of laws, rules andregulations prohibiting corruption.

As for administrative reforms, the Philippine Administrative System undergoes periodiccomprehensive as well as agency reorganization. Former President Gloria MacapagalArroyo triggered a continuing program of reorganization by executive order which is ineffect until now.

When there is a surge of anti-corruption public sentiment, capacity-building activities andworkshops, conferences, public hearings and fora profusely bloom like Mato-Tse-Tung’s“hundred flowers.”

Corr uption studies

There is no lack of knowledge on why corruption occurs, where it occurs, and what can be done to keep it under control. Corruption is perhaps the most studied phenomenon inPhilippine governance- by scholars, journalists, multilaterals, bilaterals, think-tanks and

by government itself. All the studies on corruption in the Philippines can easilyconstitute a specialized library. These studies and analyses always containrecommendations and proposals for eradicating corruption.

Obviously, under the formal system of government, corruption is not tolerated. There isa rule for every public activity. Ironically, these laws, rules and regulations are

periodically bypassed, ignored and violated with impunity.

Filipinos cannot profess ignorance of corrupt activities in the Philippines. The mostsophisticated explanation and the simplest moral arguments are at their fingertips.

The donor communi ty: only F il ipinos can solve corr uption


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For decades, multilateral institutions, bilateral donors, international academic institutionsand civil society organizations have expended hundreds of millions of dollars in anti-corruption projects. Ironically, corruption has not abated even as they pour moreresources to help clean up the governance system of the country.

Perhaps the most extensive current anti-corruption project is the United States Agency forInternational Development (USAID)’s “Enhancing Anti-Corruption Efforts at the National and Local Levels,” otherwise known as the Integrity Project, or iPro. This is atwo-year project which started in December 2009 and will end by September 2011.iPro works very closely with the Office of the Ombudsman, the Commission on Audit,the DILG and related institutions. Their activities range from reengineering of

procedures, intensive capacity building, organizational analyses and extensiveconsultations. These are enhanced by foreign experts who are brought in from time totime.

After one year of focused and targeted activities, iPro ended with the following

observation:“To date, international and bilateral donors have supported almost everyconceivable activity to fight corruption, yet it has continued to expandexponentially since the time of the Marcos dictatorship…. It is unlikelythat external assistance can do any more to combat corruption in the countrythan what has already been done.

We believe that only Filipinos will be able to find a solution to the presentcorruption eruption. We believe that the present government has a uniqueheritage-based opportunity to change the path of the country from downwardinto further corruption to upward in a more wholesome form of governancethat gradually acts to diminish the degree of success of corrupt activities andindividuals.” (The Integrity Project Final Annual Work Plan for Year 2 October

1, 2010 through September 16, 2011)

So there.

The search f or F il ipino solutions: the U.P.CPA/de Guzman/Carino studies

iPro has stated that only Filipinos will be able to find a solution to corruption. Theearliest and probably the most comprehensive search was launched in 1975 by theUniversity of the Philippines College of Public Administration under the leadership ofDean Raul de Guzman, and Ledivina V. Carino.

To be sure, corruption had been studied much earlier but focus was largely on legal andadministrative aspects. This is the first comprehensive study which examines corruption


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as a multidimensional phenomenon—involving not only the legal, administrative andeconomic aspects but also historical, sociological and cultural dimensions as well.

The study was conducted by Filipino researchers from the U.P. College of PublicAdministration. The first studies were fully Filipino-funded until the project was made

part of a comparative study of corruption in Asia. The Philippine project was entitled,“Negative Bureaucratic Behavior in the Philippines—Consequences and ControlMeasures.”

Because of the multidimensional character of the project, the study was conducted by amultidisciplinary team consisting of a political scientist, two sociologists, two publicadministration experts, and a fiscal administration expert.

Pervasive corruption in the Philippine Administrative System was examined in terms of :1. a definition of graft and corruption by Ledivina V. Carino; 2. historical notes on graftand corruption by Jose N. Endriga; 3. negative bureaucratic behavior in a revenue-raising

agency—the Bureau of Internal Revenue by Leonor Magtolis Briones; 4. bureaucratic behavior in a spending agency—the Bureau of Supply Management by Raul de Guzmanet.al; and 5. negative bureaucratic behavior in a regulatory agency- the Board ofTransportation by Victoria Bautista.

Each agency study detailed how corruption happens, what has been done and what morecan be done. The project ended with a review of administrative measures againstcorruption by Maria Concepcion Alfiler and a final summary report on negative

bureaucratic behavior in the Philippines by Ledivina Carino and Raul de Guzman.

This is a project conducted by a Filipino team with minimal external financial supportand participation, based on the ground studies at the agency and national levels, leadingto successful solutions.

Yes, the Filipino can, if he wishes to.

Corruption in Phil ippine history

The study entitled “Historical Notes on Graft and Corruption” by historian Jose N.Endriga gives us our first clue that the Filipino can solve the social cancer of corruption.It is part of the U.P. CPA de Guzman/Carino studies and traces the historical roots ofcorruption in the country.

Endriga looks at three periods: the pre-conquest period by Spain; three centuries ofSpanish rule; the American colonial period; and the Commonwealth period under aFilipino president.


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The pre-conquest period

Technically, it can be said that there was no bureaucratic corruption during the pre-conquest period because the Philippines was composed of small barangays and was notyet under a national bureaucratic system. However, he pointed out to the system of

tributes and fines imposed by datus and the classification of inhabitants into maharlikas(nobles), timagwas (commoners) and the alipin (slaves) as possible sources of corruption.Unfortunately, there are no records of such incidents.

The Spanish and American regimes

According to Endriga, “the Spanish regime in the Philippines, which lasted for over threecenturies, is generally regarded as a period characterized by the prevalence of graft andcorruption. There are those who trace the current culture of corruption to the “reign ofgreed” during that period.

Among the practices which Endriga detailed was the practice of bidding out positions,especially those concerning the collection of taxes and fees. Even positions like those of judges, which were supposed to be by appointment, were also up for sale. As forcompensation, certain positions allowed holders to charge fees for their services; other

positions had very little entitlement or none at all; other positions were sought for powerand influence.

When one considers that these practices took place under conditions of subjugation andconquest, it is very easy to see that corruption was the norm and honesty the deviant

behavior.

To be sure, there were proclamations urging the Spanish officials to “protect” the Indiosfrom harm; there was also the practice of the Visita and the Residencia. In the former, ahigh official was sent to the colonies to conduct investigations of erring officials andrecommend punishment. In the latter, bureaucrats were required to render an accountingof their term of service upon retirement. These mechanisms did not work and became thesource of more corruption.

When the Americans conquered the Philippines and installed their regime, theyintroduced the civil service system—replete with examinations, regular salaries, and

penalties for the erring. Nevertheless, Endriga cited a number of cases of graft andcorruption, as well carryovers of practices from the Spanish regime.

The Philippine Commonwealth under a Filipino president

Endriga says that it was during the period of the Philippine Commonwealth, under aFilipino president where the civil service system was further strengthened with moreinnovations, some of which were embedded in the Constitution.


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He concludes, “Nor was the bureaucracy clean only on paper. Except for some instancesof graft and corruption, the image of the civil service in the Philippines, remained muchin accord with the conventional picture: clean and prestigious. It remains for another

period in Philippine history to tarnish an image it still has to recover from.”

The Commonwealth period under a Filipino president is proudly and fondly rememberedas the cleanest during the colonial period. This is the period Filipinos go back to in theirmemories, when civil servants were as clean and white as the starched white shirts and

pants they wore.

History tells us that corruption was rampant during the time of one foreign conqueror;traces of it remained under another conqueror; it took a Filipino president to bring about ashining moment, no matter how brief, when Filipinos had a clean and honest government.

Surely, history can be repeated by Filipinos!

FILIPINO CULTURE: WHAT IS MORAL IS NOT NECESSARILYLEGITIMATE

Looking back, one of the most significant findings of that study was on the impact ofcultural norms and values on corrupt behavior. Corruption has always been considered asa legal and criminal issue. The behavioral aspects of corruption were largely ignored.The assumption has always been that what is legally forbidden is likewise morallyreprehensible. It is not necessarily so. Dr. Carino pointed out that certain forms of

behavior which are acceptable in terms of cultural norms and values are not allowed bygovernment regulations.

Take nepotism. It is considered admirable for a person to take care not only of his family but also his extended family. Thus, family members expect their more successfulrelatives in government to provide jobs, extend favors, award contracts, or share the fruitsof corruption with them.

The culture of strong kinship ties can be extended to classmates, fraternity brods andsorority sisters, townmates, village mates and schoolmates. In these modern times, it caneuphemistically be called “networking.”

Nepotism is forbidden by government regulations because it is not democratic and resultsin an uneven playing field. Nonetheless, the practice is culturally acceptable and evenexpected.

Dr. Betty Ventura of the U.P. Psychology Department says that corruption is rooted ingroup-centeredness. “If something has been done, our tendency is to protect the group.”This is clear in the behavior of family members, and of fraternity brothers who cover upfor each other. “Our family-orientedness can give room for corruption…. It can benefitfamily members who don’t ask where huge amounts of money are coming from.” She is


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quick to point out that group orientation is not totally bad but contributes to perpetuatingcorruption.

Ironically, love and loyalty for family which is enshrined in our culture and values can push people in government to corruptive behavior.

Generally, love of family ranks second only to love of God in the hierarchy of Filipinovalues. One who abandons and betrays his or her family is considered as belonging tothe lowest form of humanity. A non-Filipino observed that he has seen close family tiesin many countries but none as strong and binding as that of the Filipino family.

Other cultur al norms and values

Another powerful Filipino value is “ utang-na-loob ” or debt of gratitude. This is a beautiful trait which is cherished by Filipinos. When a favor is granted and assistance is

given, gratitude lasts even for generations among families. Usually, there is no mentionof expected return of favors but this is assumed.

Utang na loob becomes complicated when the return of favor is not only expected for thegiver of the favor but also for his or her family and extended ties. Furthermore, paymentof utang na loob for public officials can involve either the breaking of rules, goingaround the law and granting of special favors or concessions.

Beautiful as it is, utang na loob can be abused to further selfish objectives. The practiceof giving away publicly-funded goods and cash during calamities, start of the school yearor just before elections can be used to accumulate goodwill which can be collected duringelection periods. An official can tweak rules or ignore them to give away jobs, publicservices, contracts and other favors to build up collectible utang na loob .

Wealth as indicator of success; ostentatious lifestyles

Sociologists have identified a whole array of norms and values which might encouragecorruption. One value which has direct monetary implications is the Filipino’s love ofostentation and the obsession with wealth as an indicator of success.

The popular belief is that we got our taste for the ostentatious from the Spaniards. Afterall, they ruled us for over three hundred years. However, social anthropologist Dr.Michael Tan says that even before the Spanish era we were already very fond of jewelryand other visible displays of wealth.

Aspirations for lifestyles way beyond the humble salaries of government functionariescan push them to corruption. Carino/de Guzman state that “since success is conceived interms of conspicuous consumption and other economic indicators, successful

practitioners of corruption find that they are not ostracized, although suspicions about thesource of their wealth may be gossipped about. Adulation may even be forthcoming


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because they now have success on two counts: in amassing wealth, and in not beingcaught in the process.” (p.363)

When does corruption become endemic? Carino/de Guzman answer, “negative bureaucratic behavior appears to be endemic in a society where the profit motive is

primary, where political leadership is weak, and where the culture honors economicsuccess more than any other.” (p.368)

WHEN CULTURE, NORMS AND VALUES PREVENT CORRUPTION

The preceding section has shown that certain aspects of our culture, norms and values canencourage corruption. James Fallows considers our culture “damaged.” So, is culture to

blame for all corruption troubles?

Tony Kwok, former head of Hongkong’s very successful Independent Commission onAnti-Corruption (ICAC) doesn’t think so. He says that Chinese and other cultures alsovalue the family. Gift-giving is common in Asia but it is strictly regulated.

Filipino social scientists who warn that culture has been damaged and abused also saythat it can be utilized and “engineered” to prevent corruption. Betty Ventura has proposed“behavioral reengineering,” as successfully implemented by former Mayor Fernando ofMarikina. Among others, Michael Tan advices making anti-corruption as a normative,and not just an organizational tool. Among others, he suggests restoring the originalmeaning of words which we have corrupted, e.g. salvaging, S.O.P., etc. and makingsimple lives as the norm and not the deviant.

In one of my columns I have proposed that the concept of “ utang na loob ” can beexpanded to mean “ utang na loob ” to the community, society and country, which should

be larger and broader than utang na loob to individuals.

Early studies of anthropologist F. Landa Jocano indicate that Filipinos can differentiatekinship, friendship and utang na loob to individuals from their duties to the government.

ATTACKING THE ETHICO CULTURAL SYSTEM

Thirty-two years ago, Carino/de Guzman emphasized the need to “disturb the ethico-cultural system as a means to attack systemic corruption.”(Carino/de Guzman p.383).They identify “the church, school, and family as major molders of the child and the adultand the source of their ethical norms and behavior. “ They focus attention on educationwhich is under the direction and control of the government. Thus, they advocated aneducational thrust towards ethics which should be manifested at all levels. Their effortsled to policy of emphasizing ethics in the entire public administration curriculum, as wellas undergraduate and graduate courses in ethics and accountability.


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LEARNING FROM EARLIER SUCCESSES

“…no hits, no runs, all expenses, no convictions!” No, these are not the remarks of anexasperated corruption-buster in 2011. These were statements made forty-nine years ago

by Cesar Climaco who headed the Presidential Anti-Graft Committee of his time.

On the other hand, a successful effort in reducing graft and corruption in the Bureau ofInternal Revenue in 1979 has been the focus of a case study and cited extensively in thelandmark book, “Controlling Corruption” by Robert Klitgaard, formerly of HarvardUniversity.

Another favorite success story is that of the 1978 DPWH plunder case which can perhaps be compared in scope and magnitude to that of the current “conversion” scandal in theArmed Forces of the Philippines. The case involved 11 of the 14 Engineering Districts ofRegion 7, 200 of its officials and employees, as well as central office personnel. Itresulted in 130 cases affirmed by the Supreme Court, the incarceration of the master

mind, and the downfall of the Minister of Public Highways.The case traces the discovery of the anomaly, the painstaking and detailed forensic audit,the close cooperation among the affected agencies: the Commission on Audit, Bureau ofthe Treasury, Tanodbayan and Sandiganbayan, and the bulldog tenacity of the entire teamwhich ended in conviction.

Unlike current cases which hardly go beyond public hearings and newspaper headlines,the DPWH case shows it can be done.

Both the BIR and the DPWH cases will be summarized in Chapter 5 as examples ofFilipino-driven anti-corruption initiatives.

While it is true that corruption is now considered “endemic and systemic” there were periods in public administration history when successes were achieved both at thenational and agency level. The secrets of these successes can be examined and replicated.

Yes, the Filipino can solve corruption.


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COVERAGE OF SUCCEEDING CHAPTERS

This study is divided into seven chapters and is written by a 3-person research teamcomposed of Prof. Leonor Magtolis Briones (Ret.) as team leader, with Prof.Danilo R.

Reyes and Prof. Ma. Oliva Domingo as team members. Prof. Briones has been studyingcorruption since the seventies and has done extensive research as well as given presentations and lectures on the subject. Professors Reyes and Domingo have publishedresearches on the subject as well.

This chapter, written by Prof. Briones introduces the study and gives the reason for thestudy: the search for Filipino solutions to the persistent problem of corruption. Chapter 2,also by Prof. Briones, focuses on the definition of corruption.

Chapter 3, written by Prof. Danilo R. Reyes, examines anti-corruption efforts up to 2004.Prof. Reyes notes that these initiatives “have been anchored on organizational and drawn-

out procedures where cases tend to be clogged up in a pattern of long investigations anddrawn-out trials marked by slow and tedious processes… He describes these“institutional or classical modes of fighting corruption.” Prof. Reyes identified twenty-three anti-corruption agencies which were created from 1950 – 2001. He also listedsixty-six anti-corruption legislation and issuances in the Philippines from 1932 – 2004.

On the other hand, Chapter 4, written by Prof. Ma. Oliva Domingo seeks to answer thequestion raised by MSI Chief of Party Jim Wesberry: “After all the resources contributed

by bilateral and multilateral partners, why there was a palpable increase in levels ofcorruption since 2005. Her chapter is aptly titled, “The Road to Perdition,” and ends withthe resignation of Ombudsman Merceditas Guttierez on May 6, 2011. Prof. Domingochronicled the travails of the Office of the Ombudsman from its creation to the present.

Chapter 5 is tackled by Prof. Briones. While Chapters 3 and 4 chronicle long decadesspent in tackling corruption, with perhaps more failures than successes, Chapter 5reminds the reader that there have been periods of success in anticorruption campaigns.This chapter is significant because there is widespread cynicism and belief that likecancer, corruption is incurable. Many Filipinos also believe that corruption is alreadycomprehensive, systemic and built into the warp and woof of Philippine society and

public administration.

In Chapter 2, three definitions of corruption were identified: market-centered or supply-demand definition; public office-centered definition and public interest definition.Chapter 5 cites successful strategies viz-a-viz these three types or levels of corruption.Actual agencies are cited for market-centered or “divisoria model” corruption. The

public may already have forgotten that we have had dramatic instances where corruptionat the agency level was controlled. Finally, we have had successful campaigns against

public interest-centered corruption, as exemplified by the case of the Public Highwayscase in 1978 where an entire region and all of its engineering districts were involved inmassive corruption. The Bureau of the Treasury of the Department of Finance would


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have been drained of resources had the corruption continued. On the other hand,cooperation and coordination between and among the Commission on Audit, the NationalBureau of Investigation, the Ministry of the Budget, the Offices of the Tanodbayan andthe Sandiganbayan. Furthermore, this case went beyond investigation and ended withconviction of the accused.

Chapter 6 builds on the successes cited by Chapter 5 and proposes a framework for anational anti-corruption campaign. This framework is based on what has worked before,did not rely on foreign funding, and utilizes existing structures of government withoutcreating new organizations.

The proposed framework is an expansion of the “Cory Model” which was usedsuccessfully. Pres. Cory Aquino utilized the cabinet system to control corruption atmarket and agency levels. The new framework proposes tight coordination with the othertwo branches of government, namely the legislature and judiciary. It also recommendsmore effective coordination with the constitutional bodies involved in corruption control.

The last chapter, written by Prof. Briones, combines suggestions culled together withProf. Reyes and Prof. Domingo in consultations, focused group discussions and dialoguesconducted all over the country. The chapter ends with a brief synthesis reiterating themessage of the research study.


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CHAPTER 2

GARARAP AND CORARAP PINOY STYLEBy: Prof. Leonor Magtolis Briones

Introduction

Because graft and corruption in the Philippines has been extensively studied for nearlyfour decades, it is assumed that everyone know what it is all about. The tendency is to godirectly to solutions.

Because this social cancer is complex and multidimensional, remedies will notnecessarily work without identifying the category of corruption targeted. As in medicine,there are medications which are broad-spectrum in nature and can attack multiplediseases; there are also medicines which will only work for specific medical conditions

under strict monitoring and regulation.KNOWING THE ENEMY: DEFINING GRAFT AND CORRUPTION

My own definition of graft and corruption would constitute any act of agovernment official which unlawfully converts public goods and services intocommercial commodities, utilizes public funds and property, violates existing laws, rulesand regulations for pecuniary and other personal benefits, to the detriment of publicinterest . This combines three best known concepts of graft and corruption.

The classic approaches to the concept of graft and corruption

As a long student of negative bureaucratic behavior or corruption, many definitions haveemerged. These have been shaped by historical experience, laws and administrativerequirements and concepts of what is ethical and moral.

For purposes of this paper, I am utilizing classic approaches to the concept of graft andcorruption as formulated by Arnold Heidenhemer and applied to Pinoy Gararapcorruption by Carino/de Guzman.*

The market-centered or supply-demand approach

This definition of corruption leans heavily on economic concepts of the market. Simplystated, corruption is a phenomenon which occur when there is an undersupply of publiclyfunded goods and services which are supposed to be for all, and a heavy demand for such

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.* Arnold J. Heidenheimer, Political Corruption: Readings in Comparative Analysis, New York, 1970, pp.4-6, in Carino, Ledivina “Definition of Graft and Corruption”, Phili ppine Journal of PublicAdministration , Special Issue on Graft and Corruption, 1979.


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services. Obviously, when demand exceeds supply, the cost of these services go up.Services which are usually given free but urgently needed can be obtained by paying forthem. This is especially true of medical services, enrolment in public schools, rooms inhospitals and so on.

Corruption is exacerbated by the fact that oftentimes, government has a monopoly ofservices and the public has nowhere else to go. This is particularly true in the case oflicenses, permits and clearances, and even copies of official documents. Only thegovernment can issue them; if they are in short supply or not readily available, then thecitizen/client willingly pays, whether it is demanded or not.

This definition can apply to specific national and local government agencies, as well as tothe public administration system in general.

When publicly funded services are in short supply, the question of legality and ethics

hardly comes to mind. The citizen/client pays for a good or service because he or sheneeds it; there is no guilt and loss of sleep, and that’s that. Public service then becomes acommodity for sale on the market with the customer paying for something that he or shehas paid for through taxes, while the financial return goes privately to the public official.

Certain government agencies and local government units have acquired notoriety forconverting their agencies into markets. The impact is worse when this type of corruption

becomes systemic.

In a country where even the most basic of services such as health, education and social justice are in such short supply, bribery and corruption are market driven. Of course this practice goes against public interest because only those who have money can pay for suchservices and the many who are impoverished wait in vain. Furthermore, double paymentcan occur because the client/customer ends up paying.

Under the market-centered definition, corruption is the sale and purchase of public goodsand services, including favors, by a public official in exchange for monetary and other

personal consideration.

A Pinoy variant of market-centered approach: the divisoria model

So what is so Pinoy about the market-centered definition? It can be argued that ithappens in all developing countries, anyway. The law of supply and demand works in alleconomies although we are applying the definition on public goods and services.

I have reflected on a variant of the market-centered definition which I describe as the“Divisoria Model.” The Divisoria is the largest market in the country, with goods rangingfrom the smallest button to food, groceries, clothing materials, gift items, animals and thelargest machines. In the Divisoria, everything is negotiated and bargained for.


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The poor Filipinos are not the only ones who go to Divisoria. All who are looking for a bargain and love to negotiate go to Divisoria. For the upper classes, it is considered theheight of “chi-chi” to shop in Divisoria which has been described as “ La Rue Div”.

How the Divisoria model works

The Philippine public administration system is like a huge flea market where publicgoods are bought and sold—from food to drugs, medical and hospital services, courtdecisions, licenses, clearances, admission to public schools, free housing, multi-billioninfrastructure and mostly likely, election returns.

Now the Filipinos are incurable bargainers. They can’t accept “fixed prices” especially penalties, fines and punishment already specified by law. The errant car driver negotiateswith the policeman; the businessman with the tax assessor; the landowner with theagrarian reform official; the accountant and budget officer with the auditor; and even the

criminal with the judge, or horror of horrors the justice himself; the voter with the politician; and the congressmen and senators with the president.

In the Divisoria model of public administration, everything has a price but it is not a fixed price and must be negotiated. In such a situation, corruption is inevitable.

Did the son of a high official run over a child? Easy, just negotiate with the policeofficials! Did the BIR assess a businessman for several millions? No problem, bring itdown to a few hundred thousands! Is an importer slapped with a huge fine? Relax, justfalsify the documents and share in the “savings”! Does a contractor need a sponsor orendorser for a huge project? No worry, get a politician or someone close to the head ofthe agency and negotiate the sharing!

In the Divisoria model, corruption is enhanced because of the drive to negotiate for lessercosts, lower penalties, bigger shares, more favors and more power. Thus, the generalmarket-driven model is exacerbated by a Pinoy bargain-driven culture.

The public office-centered definition of corruption

This definition is the most widely known and used by policy analysts and expertsformulating anti-corruption strategies. It is focused on the public office and the normswhich are binding on the official.

The constitutional provision that a “public office is a public trust,” emphasizes thisconcept. It is largely based on law, administrative procedures, rules and regulations andrequirements. When a public office is defined, the functions of the official are likewisedefined.


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Thus, a public official who misuses his power and authority for monetary and otherconsiderations is considered corrupt. In other words, corruption is defined in terms of thefunctions of a public office, and the norms attached to it. Betrayal of such functions andnorms for financial benefit is corruption.

A stricter Pinoy public-centered definition

Most of the provisions of the Anti-Graft and Corrupt Practices Act (R.A. 3019) definecorruption from this perspective. It needs to be mentioned, however, that R.A.3019 isconsidered to be even more strict than the general public office-centered definition.Section 3 (g) explicitly defines as graft “entering on behalf of the government, into anycontract or transaction manifestly and grossly disadvantageous to the same, whether ornot the public officer prohibited or will profit thereby.”

It is interesting to speculate why such a stringent definition was included in the law. It is perhaps linked to culture and favor corruption. A public official may scrupulously avoid

or refuse financial consideration to protect himself or herself if the going gets rough. Heor she may not accept money but he will be accumulating utang na loob and favors whichin the future may just be as good as money!

It must also be remembered that the author of RA 3019 was no less than Sen. Jovito R.Salonga who is widely known not only for his strict adherence to the law but also for hisstrong sense of righteousness and morality.

Most instances of public-centered corruption occur at the agency level. This is becausethe functions of the agency, as well as of the officials are stipulated in detail. Regulationsare scrupulously spelled out in manuals and rules of procedure.

Recent spectacular cases of corruption are agency-based, like the fertilizer scaminvolving the Department of Agriculture; the cash conversion scandals of the ArmedForces of the Philippines; the ZTE contract which dragged into the mud the NationalEconomic Development Authority; and the “hello, Garci” scandal exposing theCOMELEC. In all these cases, the mandates of the agencies involved were wantonlyignored and betrayed.

The public interest definition of corruption

Of the three classic definitions of corruption, the “public interest” definition of corruptionis the broadest and most comprehensive. While the market-centered and public officedefinitions focus on the actors—namely, the public official and the citizen/client, publicinterest focuses on the consequences of the corrupt act.


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During the seventies, studies of corruption usually concluded with the impacts andconsequences of corruption. When I wrote my case study on the Bureau of InternalRevenue in 1977, I pointed out that:

“It appears that the effect of corruption in the BIR on the tax burden

is to encourage the regressive tendencies of the present tax structure.Substantial tax payments that have not reached the governmentcoffers because willful avoidance and malicious evasion were supposed tohave been made by people who belong mostly to the middle and upperclasses, particularly those of the business sector. This could not have beenmade possible with their collusion with BIR agents.” (Briones, p. 277)

I also pointed out that inadequacy of revenues compels the government to turn to borrowings to finance the national budget, thus,

“Financial planners admit that the level of borrowings in the

country is increasing because locally generated revenue is not enough tofinance escalating level of governmental expenditures. Government lossesthrough corruption add to the level of these borrowings.” (Briones, p. 277)

Finally corruption impacts on the citizens’ trust in government,

“As proven in the past, corruption in the BIR, as in othergovernment agencies has bred cynicism and doubts on the sincerity of thegovernment in bringing about promised reforms. Two responses frominterviews illustrate this attitude. One respondent has stated: ‘Why shouldnot a BIR man commit graft and corruption? Anyway, much of the moneythat he collects will just be stolen later by other officials. He might as wellget his share of the booty!’ Another has commented: ‘But the corruptionin BIR is nothing compared to what goes on in high places and in otheragencies!”

“Rampant corruption has contributed to the public alienation fromthe government and government officials. Such a situation will definitelyhamper development efforts because cooperation from the citizenry would

be difficult to obtain.” (Briones, p. 278)

These observations which I made 35 years ago still hold true.

Public office and public interest definitions of corruption often flow into each other. Aswhat happened during the past administration, when cases of agency corruption explodeone after the other, when public institutions are destroyed with impunity, corruptiontramples on public interest. The ordinary citizen becomes the victim of corruption andnot just the client.


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I s there a distinction between graft and corr uption?

I was originally under the impression that graft and corruption were synonymous until Istudied the Bureau of Internal Revenue and listened to the language of “practitioners”

and fellow researchers.My understanding is that graft can be done as individual or group, without having to dealwith a citizen/client. This involves manipulation of accounting records and receipts, forexample. A clever accountant can transfer accounts, move monies and falsify documentsall by himself or herself. If done over a period of time, a grafter can accumulate asizeable fortune. Before the advent of electronic bank transfers, just by the mere ploy ofdelaying remittances and kiting, a BIR collector could accumulate millions.

Graft is akin to stealing directly from the public kitty. A contemporary term would be“pangungupit ”. It sounds like loose change but considering the enormity of the national

budget (Ph1.6 trillion for 2011), loose change can run to millions.On the other hand, corruption happens between a public official and a citizen/client,

between a politician and a constituent. In other words, there is a buyer and there is aseller; there is a corrupt official and there is a victim.

Corruption involves collusion among one or several officials, one or several offices, andone or several private persons, whether contractors or suppliers. Papers have to passthrough several desks, with payoffs along the way. Signatures are required. Sharing isinvolved.

Other defi ni tionsOther definitions of graft and corruption include individual, agency-wide, comprehensiveand systemic. These definitions are self-explanatory. Individual corruption includesdemanding bribes—the BIR inspector, the Customs collector, the traffic policeman, thewater bill collector, the security guard all the way up to the politician demanding a feefor passing a law or changing a regulation.

Agency-wide corruption combines market-centered and public office corruption withorganizational culture. Thus, certain organizations are described as “flagships ofcorruption.” A practice tolerable in the Bureau of Internal Revenue may be reprehensiblefor the University of the Philippines; sharing of bribes in another agency might beshocking in other organizations; S.O.P. can be normal in an infrastructure agency andforbidden in a hospital.


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Systemic or comprehensive corruption means that the entire public sector is alreadyinfected. There might be division of territories, as what happened during the Marcosadministration. Sectors of the public administration system were divided into “his andhers,” referring to the president and the First Lady. Government corporations wereidentified with particular “cronies” of the president.

DEVELOPING ANTI-CORRUPTION STRATEGIES

It is clear from the above array of definitions that to be effective, an anti-corruptionstrategy must be clear as to which type of corruption is addressed.

For example, if the market-centered or Divisoria-driven type of corruption is the target,the strategy should be all about increasing and making available more goods and servicesand raising the supply side. The response here is not legal and administrative as MORESERVICES made available efficiently—more schools, hospitals, and faster release oflicenses, clearances, and documents. The challenge is not only to increase the supply of

public goods but also the responsiveness of such goods to the needs of citizens.If public-office corruption is the issue, the successful initiatives which have beenundertaken in government agencies can be replicated. There are good things which arehappening in the Bureau of Internal Revenue, Bureau of Customs, the Department ofPublic Works and Highways, and other agencies.

Public interest corruption tends to be comprehensive or systemic. If the Philippines hasreached this level of corruption, then no less than the President himself has to oversee theformulation of strategies because it will not involve only Divisoria-driven and publicoffice strategies but also a massive attack on distorted and abused aspects of culture,norms and values.

Yes, definitions do matter because these will shape strategies and solutions.


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CHAPTER 3

CHRONICLING CORRUPTION IN THE PHILIPPINES:A BRIEF HISTORICAL BACKGROUND UP TO 2004

By: Prof. Danilo R. Reyes

PROFILING THE CORRUPTION CONUNDRUM

Corruption persists today as a scourge among both developed and developingsocieties. The issue is a staple challenge that has imposed a remarkable and overpoweringimpact on the credibility, viability and stability of civilizations spanning from ancienttimes to the present. Corruption and its various manifestations - bribery, extortion,influence-peddling, nepotism, fraud, smuggling, embezzlement, larceny and other forms

of flagrant misuse or abuse of power, office or authority – have exacted severe impact onthe growth and development of nations, particularly in the Third World.

To begin with, there are no reliable or conclusive data on the scale and magnitudeof corruption across nations in the world today, especially those that can be reasonablyquantified in monetary terms. The World Bank Institute maintains however that informedestimates can be made, which it calculate roughly to around US$ 1 trillion in bribesalone; it does not say however how this figure was arrive although it can be assumed thatthis is the estimate annually ( http://www.stopcorruption.eu/en-GB/facts.aspx ).

Similar updated World Bank report reinforces this, whereby it is estimated thatanywhere from US$ 1 to US$ 1.6 trillion are lost to corruption including tax evasion andother crimes annually, half of which reportedly come from developing countries(http://www.dawn.com/2011/06/22/corruption-costs-poor-states-40bn-a-year.html ).

Another study puts an even higher estimate at US$2.6 trillion or the equivalent of5 per cent of the global gross domestic product or GDP (Prakash, 2009). It was alsoestimated that approximately US$50 billion of the proceeds or fruits of corrupt activitiesand similar illegal transactions are deposited annually into Western banks and tax havensand that about US$250 billion are laundered into US banks from both developed andtransitional ( http://www.stopcorruption.eu/en-GB/facts.aspx ).

A fairly recent estimate contained in the 2010 Report of the Asian DevelopmentBank’s Office of Anti-Corruption and Integrity puts world wide loss to corruption in thevicinity of US$ 3.61 trillion annually, noting the cross border flow of proceeds from thefruits of corruption, criminal activities and tax evasion amounts to around 3 to 5 per centof the world’s gross domestic product.

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The Report also added that bribery alone already accounts an estimated $1 trilliona year worldwide and that the proceeds of corruption in bribes received by publicofficials from developing and transition economies are estimated to be between $20

billion to $40 billion per annum, roughly equivalent to 20 to 40 percent of officialdevelopment assistance

(http://www.philstar.com/Article.aspx?articleId=665555&publicationSub CategoryId=66 ).

Be that as it may, the estimated losses and cost brought about by corrupt activitiesfor developing nations are both staggering and disconcerting.

The impact cannot simply be seen or viewed however in simple or specificmonetary terms because the spiraling incidences of widespread and endemic corruptionamong developing societies have been known to have impaired efforts to alleviate

poverty conditions while at the same time eroding development, weakening thecredibility and effectiveness of public leaders and institutions. A fairly recent World

Bank study puts the impact more succinctly:“Theft of assets by corrupt officials, often at the highestlevels of government, weakens confidence in publicinstitutions, damages the private investment climate, anddivests needed funding available for core investment insuch poverty alleviation measures as public health,education, and infrastructure”(http://www.dawn.com/2011/06/22/corruption-costs-poor -states-40bn-a-year.html ).

Developing nations reportedly lose from US$ 20 to US$40 billion each year dueto corruption and this may represent a conservative estimate because the magnitudecannot be ascertained conclusively since corrupt dealings are generally shrouded insecrecy. It is thus possible that these estimates can be considered as tentative andconservative because they are based on or limited to cases that have been exposed andsomehow quantified.

The estimates of losses are disconcerting especially to poor or poverty-strickencountries where corruption takes a toll on the delivery of basic services or those programsthat are supposed to alleviate poverty conditions. Roughly 25 percent of GDP of Africannations or about US$ 148 billion are lost yearly to corruption from those ranging from

petty bribes to anomalies discovered in major public transactions.

About 50 percent in allocated health funds are siphoned off from legitimate userssuch as hospitals, clinics and health centers. Corruption in developing countries has also

been reported as having increased the cost of connecting a household to a water network by as much as 30 percent, inflating the cost of water and sanitation by more than US $48 billion or nearly half of the annual global aid outlays according to a TransparencyInternational Study in 2008 ( http://www.b-fair.net/?p=1378 ).

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Corruption has also been reported to have caused severe damage to theenvironment and the ecology as well as in jeopardizing the livelihood opportunities of

poor communities dependent for their subsistence on natural resources.

A UNDP Report in 2008 on accelerating human development in Asia and thePacific for instance indicated the deterioration and depletion of natural resources, notablyof primary forests and inshore fishing grounds, where many communities rely on for theirlivelihoods in Indonesia. The Indonesian government has estimated that lost forestrevenue costs the nation up to US $4 billion a year or around five times the annual budgetfor the Indonesian department of health ( http://www.stopcorruption.eu/en-GB/facts.aspx ).

Much more can certainly be added to this distressing litany of incidences andcases. These brief and revealing accounts and studies and their data merely digest theextent and magnitude of the corruption problem. The more disturbing problem is thatcases continue to multiply so as to corrode the sensibilities and the moral fabrics of

nation states and their populace. Corruption somehow continues to thrive and seeminglyuntrammeled by efforts and initiatives by upright leaders of countries and of theinternational community. What is being done to address the address and minimizecorruption? To be sure, there have been many responses among nations and theinternational community.

THE RESPONSE OF THE GLOBAL COMMUNITY

Over the years, various efforts, movements and institutions have been launched inmodern times to combat corruption in all its forms and manifestations. Uprightgovernments and leaders have struggled to contain the evils of corrupt practices in theirsocieties even as various penalties and sanctions have been devised to curb corruptactivities.

For the most part, many governments of nation states today have provided for theenactment of varying statutes and legislations, as well as policies and proceduresdesigned to contain corruption in their respective societies. Public organizations andinstitutions dedicated to the investigation, prosecution and prevention of corrupt

practices, among others, have likewise been established as part of the anti-corruptioncampaigns.

Anti-corruption measures have not just proliferated among nation states; theyhave also brought a growing collection of regional and international agreements designedto institutionalize collective action among nation states against corrupt activities. Inrecent years, international accords, protocols and conventions, both plurilateral andmultilateral, have been conceived and initiated by governments, business or civil societyorganizations. These agreements have multiplied through the years, embodying anti-

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corruption principles, commitments, advocacies, measures and counter measurescharacterized by cooperation made among participating member nation states.

Thus, cooperation agreements to fight corruption at the global and regional levelswere launched to underscore and reflect the continuing and collective concern among the

international community of the untrammeled rise of corruption incidences among nationstates.

The more significant ones include: the European Partners Against Corruption(EPAC), 2004; the United Nations Convention Against Corruption (UNCAC, 2003); theFinancial Action Task Force on Money Laundering (FATF): The Forty Financial ActionTask Force Recommendations, as revised in 2003; the African Union Convention onPreventing and Combating Corruption and Related Offences, 2002; the GlobalOrganization of Parliamentarians Against Corruption (GOPAC) launched in 2000 andsupported by its regional networks, namely, the African Parliamentarians NetworkAgainst Corruption (APNAC), the Southeast Asian Parliamentarians Against Corruption

(SEAPAC) and the Latin American Parliamentarians Against Corruption (LAPAC); theCouncil of Europe Criminal Law Convention on Corruption, 1999; the Council of EuropeCivil Law Convention on Corruption, 1999; the Stability Pact Anti-Corruption Initiative(SPAI) in South Eastern Europe, adopted in 1999; the Anti-Corruption Initiative in theAsia-Pacific organized by the Asian Development Bank in 1999; the Group of StatesAgainst Corruption (GRECO), 1999; the OECD Convention on Combating Bribery ofForeign Public Officials in International Business Transactions, 1997 and the companion OECD Revised Recommendation on Combating Bribery in International BusinessTransactions; the European Union Convention on the Fight against Corruption InvolvingOfficials of the European Communities or Officials of Member States, 1997; theOrganization of American States (OAS): Inter-American Convention against Corruption,1996; and the WTO Plurilateral Agreement on Government Procurement, 1994.

If these agreements entered into among member nation states highlighted thegrowing concern and apprehension about the unabated rise of corruption incidences inmany societies today, the rise in the number of international and regional organizationsand movements monitoring, observing or reporting on corrupt activities have likewiseincreased. This growing list of international and regional agreements, conventions, or

protocols has somehow spawned an equally growing number of conferences,conventions, meetings, seminars and other similar for a organized by nation-states,regional associations or civil society organizations operating at the national, regional andinternational levels.

The alarming increase in incidences of corrupt practices has likewise spurred therise of organizations dedicated to combating corruption. Thus, the proliferation of anti-corruption institutions such as the Transparency International founded in 1993, theInternational Association of Anti-Corruption Authorities organized in Merida, Mexico in2003, the Asia-Pacific Economic Cooperation Anti-Corruption Transparency ExpertsTask Force, organized in 2007, the European Anti-Corruption Contact Points Network setup in 2008 and the International Anti-Corruption Academy based in Luxembourg,


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Austria established in 2011, among others, reflect the growing concern on the seriousnessof the corruption problem in the world today.

Along these initiatives, several international organizations have likewiseembarked in anti-corruption projects such as the United Nations and its organizations, the

USAID with its Anti-Corruption strategy Program, the World Economic Forum and itsPartnering Against the Corruption Initiative (PACI) and the International Chamber ofCommerce.

The challenge remains daunting as ever in spite of these initiatives. TransparencyInternational’s Managing Director Cobus de Swardt laments for instance that “only sevenof 38 countries signed up to the OECD anti-bribery convention are actively investigatingand prosecuting companies for bribing foreign officials,” and that the “situation hasshown no signs of improvement for two years.” He adds that “bribery is becomingsophisticated” and that confirms the fact that corruption results in “the denial to publicservices, to economic opportunity, to a voice and to justice – that it cannot be seen as

anything but a criminal act of whom the victim is society at large…” (de Swardt, 2011:24)

The corruption phenomena and measures to counteract them have also broughtabout a rich and fertile stock of country and cross-country researches and studies.Through the years, public administration scholars and academics, researchers andexperts, commentators and practitioners, as well as institutions in the public and privatesectors have grappled with the mysteries and mystiques of corruption, the problematic ofaccountability and the issues of inefficiency in government in their respectivegovernments and societies.

The list of these efforts can be long yet not exhaustive for they may cover onlycertain nationalities where corruption has been acknowledged and accepted. 1 In fact,

1The literature discussing, exploring, analyzing and explaining accountability and the problematicof corrupt practices and the measures to contain them is vast and proliferating. The entries indicated hereare partial listings and certainly not comprehensive enough because they represent only those studies in theAsia-Pacific Region and does not cover other regions or continents (i.e., Latin America, Europe, Africa andAustralia) to which this study did not have access to. The point however is that there are indeed initiativesthat have evolved thru the years with a burgeoning mass of literature so much so that the twin issues ofaccountability and corruption can be treated as a specialized courses or fields of specialization in publicadministration, political science, management or law degree programs. Thus, some of these studies include:Gonzalez, 2011; Scott, 2011; Kwong, 2011; Beh, 2011; Vichit-Vadakan, 2011; Domingo and Reyes, 2011;Transparency and Accountability Network, 2011; Brillantes and Fernandez, 2009; Co, 2009; Ocampo,

2009; Prakash, 2009); Reyes, V.C., 2009; Reyes, D.R., 2009; 1989; 1987; 1982; UNDP, 2008; Boncodin,2007; Holmes, 2007; Constantino-David, 2007; Cabo, 2007; Osborne, 2007; AIM, 2006; Ursal, 2006;Fernandez, 2004; Office of the Ombudsman, Republic of the Philippines, 2004; Balogun, 2001; Vinten,1999; 1994; 1992; WB, 2000; ADB, 1998; Alfiler, 1995; 1979; 1977; 1975; Chua and Gould, 1995; Chee,1991; Dhungel and Goutam, 1991; Hayllar, 1991; Le Herrisier, 1991; Quah, 1991; Tangcangco, 1991;1989; Yan, 1991; Richter, Burke and Doig, 1990; Bacani and Cailao, 1990; Lee, 1989; O’uchi, 1989;Pradhan, 1989; Raksasataya, 1989; Ro, 1989; Simms, 1989; Carino, 1986; 1979; 1977; 1975; Carino andde Leon, 1983; Bok, 1980; Carino and de Guzman, 1979; Bautista, 1979; Briones, 1979; Endriga, 1979;Abueva, 1970; Iglesias, 1963).


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early cross country studies for instance undertaken by academics and scholars in Asia hadto use euphemistic labels or “scholarly sounding” terms such as “deviant bureaucratic

behavior” or “negative bureaucratic behavior” to study and analyze bureaucraticcorruption in Asia and the Pacific.

The use of these terms were resorted to or adopted by academics to disguise theirefforts and be able to conduct unimpeded studies on the phenomena of corrupt behaviorin participating countries which may not be tolerant in exploring or exposing the presenceof corruption in their bureaucracies. They were also resorted to in order to avoidharassment or disapproval by governments of the involvement of their academics in the

project (Carino and de Guzman, 1979; Bautista, 1979; Briones, 1979).

CORRUPTION IN THE PHILIPPINES

The Philippines has struggled against the menace of graft and corruption ingovernment since colonial times. Spanning from the colonial periods marked by theoccupation of three colonial rulers – Spain, the United States and Japan - and moving upto the independence period in 1946, the country has endured continuing bouts andaccounts of corrupt administrations committed by colonial regimes and even by its ownleaders.

In 1986 and in 2001, the country’s people power revolutions toppled and oustedtwo presidents accused of corruption. Impeachment proceedings were likewise filedagainst the president of the previous administration as well as other officials impeachableunder the Constitution. 2

In 2010, the Ombudsman, accused of selective prosecution and inability to fairlyinvestigate and charge leaders and personalities associated with the previousadministration of Gloria Macapagal Arroyo (2001-2010), chose to resign from officeafter being threatened with impeachment in Congress.

As pointed previously, corruption seriously impairs the quality of life in ThirdWorld settings because the limited resources allotted for the delivery of basic services arecompromised when siphoned off from their intended purposes.

The Philippines represents a critical case where corrupt activities have weakenedthe capacity of government to respond to pressing needs in various functions – from suchactivities as the build-up of infrastructure facilities such as irrigation, road networks and

bridges, airports and marine ports to the delivery of basic services in health, education,social welfare, sanitation, and many others.

2 For background information on the history of the Philippines, its government and bureaucracy, theinterested reader may refer to the following materials: Reyes, 2011;2003; Francia, 2010; Abinales andAmoroso, 2005; Corpuz, 1989; 1957; and Agoncillo, 1977.


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Corruption has also eroded the credibility of leaders and institutions causing forthe most part, alienation, disenchantment, disaffection or even outright anger againstgovernment. The incidences of corruption has likewise brought about frustration andhopelessness among upright and well-meaning citizens, who in some cases, have chosento avoid paying taxes “since these will be just stolen, so I might as well be the one to steal

the money I earn.”To be sure, various political leaders, several administrations and their

bureaucracies, political parties, civic organizations and society in general have takeninitiatives to suppress corruption in the Philippines. Unfortunately, corrupt activitiescontinues to thrive, partly as legacies of the colonial periods following independence and

partly as adopted practices by newly installed administrations and their leaders to perpetuate power and enrich themselves.

This perhaps maybe understandable because as in other colonial systems, the periods of colonial regimes had demonstrated that corrupt activities committed by

colonial masters were somehow rewarded instead of sanctioned in spite of periodic anti-corruption proclamations, edicts and other issuances, as well as structures intended tofight corruption.

Conceivably however, colonial legacies may only be among the numerousreasons advanced by studies as to the causes of corruption or why they continue to thrive.But these are not the only reason for there have been numerable analyses andexplanations as to why corruption persists in third world countries in the post-independence era. Such factors as low salaries and poor working conditions of

bureaucrats, poverty, dishonest leadership, the culture of patronage, opportunities tocommit graft and the low risk of detection, lack of political will, weak and slowadministration of justice have been cited by experts and analysts as among the reasonswhy corruption in the Philippines continue to thrive (Quah, 2009; 2003; Reyes, V. Jr.,2009; Obejas, 2008; Ursal, 2006; World Bank, 2000).

ESTIMATING THE LOSS TO CORRUPTION IN THE PHILIPPINES

Apparently, as in the global perspective, there are also no reliable and quantifieddata as to how much is lost to corruption and related anomalies in the Philippinesannually. As the Philippine Transparency Reporting Project maintains, an accurate figureis impossible to gauge for obvious reasons (http://www.stopcorruption.eu/en -GB/facts.aspx ). As pointed out earlier, exact figures as to annual losses to corruptioncannot be accurately gauged because the activities are enshrouded in secrecy andestimates can only be speculative or derived from calculated or informed estimates basedon certain assumptions. Information and data sources such as surveys, publications,commentaries, anecdotes and government data can only provide an indication of the

prevalence of systematic corruption (World Bank, 2000)

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The data as to the figures can also vary from time to time when inflation valuesare factored in over time in the estimates. Data for estimates made two or three decadesago may appear to be not that alarming when compared to current values of whatevercurrency or denomination is used.

Likewise, the estimates can sometimes be reflected only as part of other crimes(i.e., illegal drug dealing, robberies, kidnap for ransom, etc.) and may not be exactlycategorized as “corruption.” But the estimates can be revealing when one views it fromthe point of view of opportunities lost or of services denied because of leakages in thedisbursement of public funds or in the collection of revenues legally accruable to thegovernment.

There is however some certainty that a sizeable amount due the government outof taxes (tax evasion, under-reporting of tax liabilities, corruption in tax collectingagencies, etc.), duties and tariffs (smuggling, under-reporting of tax liabilities) andsimilar forms of government revenues and income are misappropriated. Likewise,

disbursements and expenditure (purchases, contract of services, etc.) are alsosystematically pilfered. Thus, it could be safely assumed that funds entering the publiccoffers and those being disbursed are embezzled thru various corrupt activities.

In the 1980s for instance, former Assemblyman Vicente Millora was cited ascalculating the Philippines’ annual loss to corruption to about 10 per cent of the country’sgross national product. A Commission on Audit appraisal from 1980 to 1985 claimed thatsome US$ 117.5 million was lost due to malversation of public funds and cash shortagesof accountable officers.

The Sandiganbayan, or the Philippine anti-graft court made operational in 1978during the martial law period, noted that the government was defrauded by as much as130.4 million pesos in some 3,395 graft cases filed over a three year period alone from1979 to 1981 (de Guzman, Brillantes and Pacho, 1988; de Guzman, 1988).

In a 2000 World Bank Report, reports on corruption loss in the country made bythe Ombudsman in the Philippines were cited as amounting to as much as US$48 billionover the last 20 years. The figure was reported to be larger than the country’s foreign debtat that time, which was pegged at about US$40.6 billion. The Commission on Audit alsoestimated around that time that the country’s loss to corruption can roughly be 2 billion

pesos annually (WB, 2000).

The World Bank calculates likewise that about 20 per cent of the annual budget ofthe Philippines is lost to corruption or the equivalent of as much as 3.8 per cent of thecountry’s gross national product. From 1995 to 2000 alone, the estimated loss tocorruption was valued at about 609 billion pesos or about US12 billion(http://bti2006.bertelsmann-transformation-index.de/122.0.html?L=1 ; Transparency andAccountability Network, 2011).

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Expanded and extrapolated however for a 20 year period from 1977 to 1997,World Bank estimates reached about US$48 billion or roughly 1.968 trillion pesos(http://www.myreviews101.com/cost-of-corruption-in-the-philippines.html ).

The Office of the Ombudsman has also estimated in 1999 that the amount lost to

corruption in the Philippines could go as high as US$31.5 billion (at the then prevailingexchange rates) or Ph 1.2 trillion during the last twenty five years (as cited in WorldBank, 2000: 35).

Likewise, another estimate made by a Civil Service Commission official in 2004cited a report of the Department of Budget and Management that claimed that the loss tocorruption due to fraudulent practices alone could amount to as much as US$382 millionfrom the previous year alone, and that leakages in road projects transactions could reachto about US$1.3 billion (Fernandez, 2004: 92).

Put in more operational perspectives, based on a claim by Senator Edgardo J.

Angara in 2002 in a speech at the Philippine Senate, losses to corruption in thePhilippines can amount to an average of 22 billion pesos annually which is twice the budget of the Department of Health that year. The loss could also be translated, claimsSenator Angara, to 520 million textbooks for public school children, 63,000 newclassrooms or 1,500 kilometers of concrete farm to market roads (Angara, 2002).

On the other hand, former President Fidel Ramos, in his keynote address to theFletcher School of Law and Diplomacy in 2001 at Tufts University in Massachusettsclaimed that 20 per cent of the government budget of the Philippines is “lost to corruptionevery year” ( as cited in Abinales and Amoroso, 2005: 258).

The Transparency and Accountability Network also cited the Ombudsman in a paper as gauging that 30 per cent of government contracts are diverted to corruptionannually (Transparency and Accountability Network, 2011).

As it is, the 2010 Corruption Perceptions Index of the Transparency International,which measures the perceived levels of public sector corruption in 178 countries aroundthe world, has listed the Philippines as no. 134, along with Azerbaijan, Bangladesh,Honduras, Nigeria, Sierra Leone, Togo, Ukraine and Zimbabwe (de Swardt, 2011).

It is perhaps in this light that recent estimates have increased loss to corruption inthe Philippines to be reaching to about 30 per cent of the annual budget, which would beabout US$11 billion of the US$34 billion national budget for 2010. This would be lost, ifnot already lost to such corrupt practices as ghost projects and manipulated payrolls,rigged biddings of public contracts, protection money, extortion, tax evasion and bribery,among many other forms or manifestations of corrupt practices(http://www.eon.com.ph/eon-sphere/view/309/newsid/141/slaying-the-beast.html ).

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As can be seen from these varying calculations, the estimates of losses tocorruption have practically grown thru the years, from around 10 percent of GNP in the1980s to 20 percent of the national budget in 2001, and rising to the estimated levels of30 percent of the budget in the present period. The point is clear and apparent. Corruptionhas persisted and remains to be a growing industry in the Philippines that has impaired

the capacities and credibility of various institutions of government, has also toppledleaders and impoverished the people who have been systematically and habitually deniedaccess to basic services and opportunities.

On top of these, corruption has likewise weakened the government’s capacity todeal decisively with the separatist movements in Mindanao, a rebellion that has been on-going for over thirty years, as well as with communist rebels, which has persisted forover fifty years. Continuing corruption within the Armed Forces of the Philippines hasdenied those in the front-lines with needed weaponry and supplies because funds have

been diverted by unscrupulous ranking military officers and which later would behighlighted and exposed in the so-called “conversion funds,” which are still the subject of

a senate investigations. Budget appropriations for the military have been diverted to private accounts so as to compromise the modernization program of the AFP.

There are also unverified comments suggesting that military officials would timeand again provoke skirmishes with rebels or with bandits to catch the attention of nationalofficials and justify increases or releases of funds. As such, the Philippines has nowengaged in a protracted war of attrition, particularly in the South, that has not justresulted in the killing of civilians, soldiers and rebels, but has dislocated communities,displaced households and likewise discouraged investments that should bring economicactivities and provide employment and livelihood opportunities.

This is not however to suggest that corruption as phenomenon can be claimed asthe reason for rebellion or for the continuing state of conflict. To be sure, this is attended

by various other complex explanations but it cannot be denied however that corruption inthe ranks of military and civilian officials is a major contributing factor that exacerbatesthe already critical situation. As had been pointed out earlier, corruption hinder andundermine the delivery of basic services in subject areas of conflict, and this certainly can

be considered as an outstanding reason why alienation and frustration with governmentare evoked from the populace and foments rebellion.

Likewise, the unabated increase or rise in crime incidences in the country can alsosomehow be attributed to corruption in the ranks of police officials in the Philippine

National Police. Investigations on police corruption and involvement in crime syndicatesor in individual criminal cases have become part and parcel of continuing investigationsin the Philippines as evidenced by such cases as the purchase of second helicopters

passed off and paid for as brand new. Horror stories of police officers caught involved indrug dealing, carjacking and kidnap for ransom cases, as well as bribery and extortionhave practically become common.


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Corruption in the Philippines is however not entirely a recent phenomenon thathas emerged in the independence era. It has been the bane and blight that has afflictedPhilippine society since colonial times. Similarly, efforts and initiatives to contain andcurb corruption had been a prominent fixture in the colonial story of the country asgovernors after governors introduced various anti-corruption approaches only to discover

that the rapacity continues to grow. If only to highlight the long and hard history that hascharacterized the country’s experiences with corrupt practices, a discussion is providedhere to chronicle at least important though passing accounts of corruption and themeasures established in the Philippines to address them.

CORRUPTION DURING THE COLONIAL PERIODSIN THE PHILIPPINES

Corruption and its various manifestations and practices have been prominentfixtures in the development and evolution of the Philippine nation-state. As a colony ofthree major colonial powers – Spain, the United States and Japan – the country and its

people have grappled and endured with corrupt policies and practices instituted by itscolonizers during these colonial periods. It is therefore no surprise that these habitsspilled over to the period of independence.

It is perhaps a given fact that the subjugation of the islands were not exactlyinspired by benign objectives of converting heathen lands into Christianity or of altruisticmotives of civilizing backward settlements. These are but part of the justifications ofconquest since ultimately, the objectives are dictated by the need to explore opportunitiesin new territories which can be exploited to support the coffers of the colonizers (Reyes,2011b; Francia, 2010; Abinales and Amoroso, 2005; Endriga, 2003; Corpuz, 1989; 1957;Veneracion, 1988).

Corrupt practices could just the same be said as part of the legacies of colonialtimes, transmuted or adjusted in time to suit the ethos of the newly independent states andits leaders. Such practices as bribery, extortion, embezzlement of funds and properties,and similar rent seeking practices marked the colonial periods and carried on to theindependence era.

It must be emphasized however that this reasoning only partly explains the prevalence of corruption in the Philippines for corrupt activities have become “a way oflife” among corrupt bureaucrats and politicians where new methods and practices ofcorrupt behavior have evolved freely.


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Corr uption in the Spanish Er a (1521-1896)

Corruption and mismanagement had characterized the more than 300 hundredyears of Spanish rule in the Philippines. Spanish colonial objectives and the attendant

policies instituted to govern the islands brought about motivations and tendencies thattolerated corrupt practices. While the Spanish conquest was invariably attended by positive and idealistic aims of religious crusades, it was also a colonial venture for“political and private aggrandizement” (Corpuz, 1957: 10).

The noble objectives of converting so-called “heathen lands” into Christianitywere counterbalanced by what Endriga asserts as “the practical objective of increasingthe royal estate through tributes, monopolies, fees and fines,” bringing about what herefers to as “[a] huge body of laws and a plethora of institutions …built up through thecenturies to uphold the economic aims of the colonial enterprise, which nevertheless werenot realized, the colonies being consistently losing propositions” (Endriga, 2003: 394).

For one, the philosophy regarding the colonies was based on the belief that theywere the Crown’s personal possessions and thus could dispose of as he pleased. Publicoffices were part of these possessions in the colonies and were regarded either as

positions of the King to be dispensed with either as grants or favors (“ merced ”) to loyalsubjects including their heirs who were rewarded for their services, or as merchandisesold to highest bidders. The sale of public offices to claimants helped financed the warsand lavish lifestyle of the king and of the elite (Reyes, 2011b; Endriga, 2003; Veneracion,1988; Corpuz, 1957).

In these arrangements, public office positions were thus treated as opportunities toearn or as investments for private gain. It was therefore understandable that thoseappointed in this manner resort to corrupt practices to recoup investments or make themost out of the favor. Corruption was thus the natural consequence in this dynamic. 3 Corpuz described the impact of the sale of offices more vividly as follows:

“…What is important is that the moral aims and theChristian responsibility which the colonial regime

professed as its foundations were tossed as so mucheyewash into the discard by the brazen immorality of

bureaucrats and the criminal collaboration of theirsuperiors. Public office became a commodity to be boughtand exploited, for the lackey turned alcalde viewed the new

position as an investment. He had a limited period of time

3 Veneracion (1988:39-43), citing Nicolas Cushner, 1971, provides a tabulation of some sold offices in thePhilippines during the Spanish era from 1589 to 1826. The listing reflects the records of the buyers, the

public offices bought, the prices paid for and the dates of confirmation to the position by the Council of theIndies (Consejo de Indias), which was the highest policy-making office in the colonies during the Spanishregime.


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in which to make the office pay for the expenses he hadincurred in the process of securing it, to pay off any officialattempts to penalize his frauds and crimes, and to yield hima sizeable fortune at the end of it all…” (Corpuz, 1957:100-101).

This pernicious practice of selling public offices was not only tolerated. It waslegitimized because various laws regulated the sale of offices and even advertised everyweek by the governor with the assistance of the fiscal of the Audiencia, which is an entityto be discussed later.

Once a position was sold by bidding, no “allegation of deceit ormisrepresentation” was allowed to be made by either vendor or vendee, whereby a reportof the evaluation and sale was to be submitted by the governor (Veneracion, 1988: 37). 4

Compounding the situation is the marked corruption in the Church which held

sway even with secular officials. The interdependence of secular and clerical religiousofficials contributed to the mismanagement and corrupt practices were quite prevalent as plunder of the islands were committed to support not only the crown, but religious orders.It was estimated that friar estates owned, according to some accounts, “nearly 40 percentof the surface area in the four Tagalog-speaking provinces” surrounding Manila(Abinales and Amoroso, 2005: 80).

A more specific record provided that “[b]y the end of the nineteenth century, thedrive of the friars for the acquisition of land is suggested by the control of 24.3 per centof arable land in Bulacan, 28.8 per cent in Laguna, 82 per cent in Cavite, and nearly 100

per cent in Rizal” (Abueva, 1988: 27).

During this long period of Spanish colonial rule, several institutions and positionswere established to address the problems of corruption, inefficiency and mismanagement,among others, by the Spanish government. Foremost among these was the Audiencia ofManila , which performed the functions of a superior judicial tribunal, assuming the roleof what is known in the contemporary period as a supreme court. Originally established

by royal decree in 1853, it was abolished six years later in 1589, only to be reconstitutedagain in 1595, and functioned till the end of the Spanish regime.

The Audiencia was composed of the governor and captain-general, acting as presidente-gobernador ; four oidores as members (or a magistrate, although there arerough translations referring to it as “auditor”); a fiscal who served as prosecutor; analguacil mayor or chief constable; a teniente del gran chanciller or assistant to the grandchancellor; and a roster of subordinate clerks and notaries (Corpuz, 1957).

4 For the interested reader, Veneracion, 1988 provides a more detailed discussion of the process of sale andfurnishes examples or incidences involving the sale of offices during the Spanish regime.


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To monitor the provinces and localities, the Audiencia would name an oidor as avisitador who was tasked to inspect not only local administration but the system ofreligious instruction, the tributes assessed, the state of the natives, among other functions.

The internal corruption that plagued this body however weakened and impaired

its efficiency and its authority. Reports of misconduct in the colony had necessitated theadministration in Ma

Pinoy Solutions to Corruption by Briones, Reyes, Domingo

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