TAN Paper on Corruption and Anticorruption in the Philippines (March 2011)

Transparency and Accountability Network

Corruption and Anti-Corruption in the Philippines

A Paper Prepared by Transparency and Accountability Network

for GTZ Philippines March 2011

Corruption and Anti-Corruption in the Philippines Transparency and Accountability Network, March 2011

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TABLE OF CONTENTS

ACRONYMS 3 LIST OF TABLES, FIGURES AND BOXES 4 EXECUTIVE SUMMARY 5

I. Forms of Corruption 7 II. Scale of Corruption 11 III. The Political Economy of Corruption in the Philippines 15 IV. Anti-Corruption Efforts 26 V. Recommendations 33

REFERENCES 35


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ACRONYMS

AFP Armed Forces of the Philippines BIR Bureau of Internal Revenue BOC Bureau of Customs CHR Commission on Human Rights COA Commission on Audit COMELEC Commission on Elections CSC Civil Service Commission DA Department of Agriculture DBM Department of Budget and Management DENR Department of Environment and Natural Resources DEPED Department of Education DILG Department of the Interior and Local Government DOF Department of Finance DOH Department of Health DOJ Department of Justice DOTC Department of Transportation and Communication DPWH Department of Public Works and Highways DSWD Department of Social Welfare and Development DTI Department of Trade and Industry GSIS Government Service Insurance System HOR House of Representatives KBL Kilusang Bagong Lipunan (New Society Movement) Lakas Lakas ng Bansa (Nation’s Power) LAMP Laban ng Masang Pilipino (Strugge of the Pilipino Masses) LDP Laban ng Demokratikong Pilipino LP Liberal Party LTO Land Transportation Office NAPC National Anti-Poverty Commission NP Nacionalista Party NPC Nationalist People’s Coalition NSA National Security Adviser NTC National Telecommunications Commission NUCD National Union of Christian Democrats OMB Office of the Ombudsman OP Office of the President PAGC Presidential Anti-Graft Commission PAGCOR Philippine Amusement and Gaming Corporation PCGG Presidential Commission for Good Governance PCSO Philippine Charity and Sweepstakes Office PDIC Philippine Deposit Insurance Corporation PDP-Laban Partido Demokratikong Pilipino-Lakas ng Bayan (Philippine Democratic

Party-People’s Power) PMP Partido ng Masang Pilipino (Party of the Philippine Masses) PnM Pwersa ng Masa (Force of the Masses) PNP Philippine National Police PPC People Power Coalition PRP People’s Reform Party Reporma-LM Partido para sa Demokratikong Reporma-Lapiang Manggagawa (Party for

Demcratic Reforms-Workers’ Party) SSS Social Security System SWS Social Weather Stations TAN Transparency and Accountability Network TI Transparency International UMDP Union of Muslim Democrats of the Philippines UNIDO United Nationalist Democratic Organization


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LIST OF TABLES, FIGURES AND BOXES

Table 1. Summary of Philippine Anti-Corruption Laws 7 Table 2. The Philippine Anti-Corruption Agencies 10 Table 3. How Much Corruption Is there in the Public Sector 13 Table 4. Do Companies in your line of Business Need to 13 Give Bribes in Order to Win Government Contracts Table 5. Estimated Financial Losses Due to Corruption, 1995-2000 14 Table 6. 2005 Budgetary Allocations of Different Agencies 15 of the Philippine Government, Total Re-enacted Budget Php907.56 Billion Table 7. 2001 Arroyo Appointees 17 Table 8. Corruption Scandals that Challenged the 19 Arroyo Government’s Legitimacy Table 9. Select Cases with Arroyo’s Interest and the Supreme Court 20 Table 10. Select ‘Big Fish’ Cases Before the Office of the Ombudsman 21 Table 11. Arroyo Appointees to Constitutionally Independent Bodies 22 Table 12. Political Party Coalitions in 2001, 2004, 2007, and 2010 23 Table 13. Public Perception of the Arroyo Presidency and 24 Political Wins in the 2001, 2004, 2007, 2010 Elections Table 14. Government Anti-Corruption Efforts 27 Table 15. Philippine UNCAC Roadmap 28 Table 16. Summary of CSO Initiatives by Objective 29 Table 17. List of CSO Initiatives by Objective 30 Table 18. Summary of Donor Initiatives related to Anti-Corruption 31 Figure 1. Philippine Corruption Perception Index rating, 2001-2010 11 Figure 2. Philippine CPI Ratings and Other Asian Countries, 2001-2010 12 Figure 3. Public Perception of the Arroyo Presidency and 24 Political Wins in the 2001, 2004, 2007, and 2010 Elections Box 1. NBN-ZTE Controversy 25 Box 2. OMB’s Lack of Funds? 26


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EXECUTIVE SUMMARY

The Philippines has a fairly advanced anti-corruption legal framework. The Philippine government has passed nine anti-corruption laws and established ten institutions designed to fight corruption. Even with this, however, the Philippines’ corruption record is a dismal high, according to international and local perception surveys.

According to the Political and Economic Risk Consultancy (PERC 2010), the Philippines is the fourth most corrupt country in Southeast Asia, next to Vietnam, Cambodia, and Indonesia respectively. The Philippines was considered to be at its most corrupt state in 2008, hitting its lowest mark of 2.3 (10 being least corrupt and 1 being most corrupt) on Transparency International’s (TI) Corruption Perception Index. On TI’s Global Corruption Barometer, the Philippine government’s anti-corruption efforts are seen to be ineffective (48%), and some 69% think that corruption has, in fact, increased (Global Corruption Barometer, 2010).

Local perceptions also confirm these findings. The Social Weather Stations (2008) said three out of five Filipinos perceive ‘a lot of corruption’ in the public sector. The business sector shares the same opinion. In a 2007 SWS enterprise survey, 44% of those surveyed said that he/she has personal knowledge of a corrupt transaction with government (2007 SWS enterprise survey).

Corruption has taken its toll on the country’s development. The World Bank (2001) estimated that more than 20 per cent of the national budget is annually lost to corruption. In money terms, this is an estimated US$12 billion from the period 1995-2000. The Ombudsman adds that an estimated 30 per cent of government contracts are diverted to corruption annually. Corruption in the country has deep roots in the political economy. Political and economic powers are monopolized by the elites of Philippine society. This consolidation of power blurs the public-private divide through the interplay of public and private interests, an environment conducive to corruption. Corruption becomes an accumulation strategy that the elites adopt to entrench their private interests in the public sphere. The Philippine government system is a considerably important factor in the configuration of corruption in the country. The Philippines has a strong presidential system that affords the president wide and vast powers, including and most importantly the power of the purse and the power to appoint. This makes the presidency a most sought after position of power among elite groups. Institutionally, the President (or the executive branch) is balanced by the legislature and the judiciary. In reality, however, this system of checks and balance is not functional. The legislature is unable to balance competing interests of society because of its current configuration. It is captured by local elites. Further, the legislature’s behavior towards the President is weakened by weak party discipline and budgetary needs. The President, on the other hand, is tied to local interests because of his/her dependence on local elites to muster electoral support. This is attributed to weak political parties. Other constitutionally independent bodies, including the judiciary, have also been weakened by “unchecked/ unbalanced” appointments, apparent in President Gloria Macapagal-Arroyo’s nine-year administration. Arroyo maximized her use of the power to appoint to dispel opposition, legitimize government policies, strengthen power hold and protect her political and economic interests. The dysfunctional system of checks and balance has allowed some individuals and institutions to freely pursue rent-seeking activities as “independent monopolists.” This has


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increasingly happened as globalization and democratization (including decentralization and devolution) efforts began. New sources of and opportunities for corruption appeared and new players emerged. Corruption has far-reaching impact on the country’s development (political, socio-economic, and societal). To address this, government, civil society groups and the donor community have pursued ways to minimize the effects of corruption. Government’s anti-corruption efforts in the past decade have mostly focused on improving its prosecutorial function. The donor community has also supported government programs with capacity-building efforts and the introduction of information technology aimed at improving government systems and processes. Civil society efforts, also donor-supported, on the other hand, are focused at opening or expanding spaces for public participation. These efforts range from direct participation such as monitoring (ex: procurement, budget, project implementation) to indirect participation such as campaigns for greater transparency in government systems and process (ex: appointments). President Benigno Aquino III and his government could draw lessons from the political economy and the ‘corruption’ footprints left by the Arroyo government. An analysis of the political economy has shown the critical role of the Office of the President to rein in power and power abuses. The interplay of political and economic forces in Philippine society and its impact on government institutions (e.g. legislature) may be tempered by the tactical use of the President’s budgetary powers to negotiate for difficult reforms that require legislative support. The President should also use his appointment powers more carefully to strengthen constitutionally independent institutions, specifically the Supreme Court, Office of the Ombudsman, Commission on Audit, and the Commission on Elections. Further, Aquino could initiate institutional safeguards to make the appointments process more transparent and accountable. These institutional safeguards could survive even beyond the Aquino government, as it sets a precedent difficult to reverse. Anti-corruption efforts necessary to reduce corruption significantly:

1. Strengthening the prosecution of corrupt individuals and institutions. Improving the conviction rate of the Office of the Ombudsman would send the message to public officials that corruption is a high risk, low reward activity. Lifestyle check investigations should continue as a strong deterrent against corruption; this would entail the appointment of a credible Ombudsman, and

2. Strengthening partnerships and engagements between government and civil society groups. This includes, of course, expanding spaces for public participation and increasing transparency of government systems and processes.

The passage of the Freedom of Information Law is critical in so many levels. Not only would an FOI law give life to the constitutional right of the people to access public information; it would also help strengthen democratic and political accountability of government.


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FORMS OF CORRUPTION

Corruption comes in different forms and functions. As Robert Klitgaard puts it, corruption “embraces a wide array of illicit behaviors, including bribery, extortion, fraud, nepotism, graft, speed money, pilferage, theft, embezzlement, falsification of records, kickbacks, influence-peddling, and campaign contributions.”1

In the Philippines, corrupt practices range from as simple as “lagay” (bribery) or speed money for faster release of a government license to a convoluted system of rent-seeking activities in politics and such other practices that abuse public office and functions. The culture of patronage in the country has been embedded in its governance systems and institutions with public office abuses committed from low ranking government officers to the highest levels of public authority. This has thus resulted in a “weak state engaged in rent-seeking activities that cause corruption and mismanagement of the Philippine political economy”. (Abad, 2010: 3-4)

The Legal Environment

The Philippines suffers from a long history of corruption entrenched in its governance systems and institutions. Despite efforts to counter corruption through various legislation, the lack of enforcement and application of these laws remain a gargantuan task and enormous challenge for government. According to Abad, “While there is no dearth of laws and institutions, they have been reduced to mere formalities. Clientelism and bureaucratic capture continue to characterize governance institutions in the country.” (Ibid: 13) Instead of public interest in mind, governance institutions “are not driven by public good but are captured by their own political and economic interests.”(Ibid)

The 1987 Philippine Constitution provides the framework for accountability in public office with Article XI defining public office as a public trust and that “public officials and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.” The same Article provides that the President, Vice President, members of the Supreme Court, Members of the Constitutional Commission, and the Ombudsman may be removed from office for graft and corruption or betrayal of public trust.

Various Philippine laws define acts considered as corrupt practices ranging from receiving of gifts to acquisition of ill-gotten wealth. The corresponding penalties for committing these corrupt acts and practices range from aresto mayor (imprisonment of one month and one day to six months), to perpetual disqualification from public office, to forfeiture of properties, to reclusion perpetua (lifetime imprisonment). Some of the anti-corruption laws in the country include the Ombudsman Act of 1989, Anti-Graft and Corrupt Practices Act, Code of Conduct and Ethical Standards for Public Officials, Forfeiture Law, Plunder Law, and the Anti-Red-Tape Act. The Philippine anti-corruption laws are summarized in the following table:

Table 1. Summary of Philippine Anti-Corruption Laws2 Phil ippine Law Summary Penalty/Sanction

Republic Act 6770 (The Ombudsman Act

of 1989)

This Law provided the powers and structure of the Office of the Ombudsman. The Law states that as “protectors of the people”, the Office shall “act promptly on complaints filed

1 See Robert Klitgaard, “Strategies Against Corruption”, http://unpan1.un.org/intradoc/groups/public/documents/CLAD/CLAD0035403.pdf 2 This table is based on the Compilation of Anti-Corruption Laws in the Philippines as primary reference. Other references include the Chan Robles Virtual Library and the LawPhil Project of the Arellano Law Foundation


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in any form or manner against officers or employees of the Government, or of any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations, and enforce their administrative, civil and criminal liability in every case where the evidence warrants in order to promote efficient service by the Government to the people”

Republic Act 3019 (Anti-Graft and Corrupt Practices Act)

This law enumerates all corrupt practices of any public officer. Some of which includes influencing another public officer to perform an act constituting violation of rules/laws; direct or indirect request or receiving of any gift/benefit in connection with any government contract which the public officer in his official capacity has to intervene; causing any undue advantage to any party or giving any party unwarranted benefits in the discharge of his official capacity, evident bad faith, or gross inexcusable negligence; entering on behalf of the government, into any transaction grossly disadvantageous to the government; divulging confidential information, etc.

The same Law also provides prohibition on private individuals and certain relatives to capitalize on their family or close personal relation to any public official. Furthermore, spouse or any relative either by consanguinity or affinity within the third civil degree of the President, Vice President, Senate President, Speaker of the House, is prohibited to intervene, directly or indirectly, in any business, transaction, contract or application with the Government.

Imprisonment of not less than six years and one month nor more than 15 years

Perpetual disqualification from public office

Confiscation or forfeiture in favor of the government of any prohibited interest and unexplained wealth manifestly out of proportion to the public official’s salary and other lawful income

Republic Act 1379 (Forfeiture Law)

The Law provides that any amount of property acquired by a public officer during his incumbency which is manifestly out of proportion to his salary and other lawful income shall be presumed prima facie to have been unlawfully acquired.

Unlawfully acquired properties shall be declared property of the State

Title Seven (7), Crimes Committed by Public Officers, Revised Penal Code

The Code provides the crimes and corresponding penalties for crimes committed by public officers that include Dereliction of Duty (i.e., Knowingly rendering unjust judgment, judgment rendered through negligence, malicious delay in the administration of justice, betrayal of trust by an attorney, solicitor), Bribery, Fraud against the Public Treasury, Malversation of Public Funds or Property.

Arresto Mayor3, Prison Correccional4, Prison Mayor5, Reclusion Perpertua6 (depending on the seriousness of the offense)

Republic Act 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees)

This Law promotes a high standard of ethics in government office. It requires all government personnel to make an accurate statement of assets and liabilities, disclose network and financial connections. It also requires new public officials to divest ownership in any private enterprise within 30 days from assumption of office to avoid conflict of interest.

Fine not exceeding the equivalent of six (6) months salary or suspension not exceeding one (1) year, or removal depending on the gravity of the offense

Republic Act 7080 (Plunder Act)

The Act penalizes any public officer who by himself or in connivance with members of his family, relatives by affinity or consanguinity, business associates, accumulates or acquires ill-gotten wealth, through a combination of series of criminal acts with an aggregate amount to total value of at least fifty million pesos (P50,000,000).

Reclusion Perpetua

Lost of all retirement and gratuity benefits

Presidential Decree 46 The Decree declares it unlawful for government personnel to receive gifts and for private persons to give gifts on any occasion including Christmas, regardless of whether the gift is for past or future favors.

Penalty of imprisonment for not less than one (1) year nor more than five (5) years and perpetual disqualification from public office

Presidential Decree 749

The Decree grants immunity from prosecution to givers of bribes and other gifts and to their accomplices in bribery charges if they testify against the public officials or private

3 Imprisonment of one month and one day to six months 4 Imprisonment of six months and one day to six years 5 Imprisonment of six years and one day to 12 years 6 Lifetime imprisonment, not exceeding 40 years


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persons guilty of those offenses.

Republic Act 9485 Anti-Red Tape Act7

The Law aims to promote integrity, accountability, proper management of public affairs and public property as well as to establish effective practices aimed at the prevention of graft and corruption in government. It is the policy of the State to maintain honesty and responsibility among its public officials and employees, and shall take appropriate measures to promote transparency in each agency with regard to the manner of transacting with the public, which shall encompass a program for the adoption of simplified procedures that will reduce red tape and expedite transactions in government.

Penalties under this Act range from suspension to dismissal and perpetual disqualification from public service

Republic Act 9160 (Anti-Money Laundering)8

The Act criminalizes money laundering; creates a financial intelligence unit (FIU); imposes requirements on customer identification, record-keeping and reporting of covered and suspicious transactions; relaxes strict bank deposit secrecy laws; provides for freezing/seizure/forfeiture recovery of dirty money/property and; provides for international cooperation

The penalty of imprisonment ranging from six (6) months to one hundred thousand to three million pesos depending on the seriousness of the offense.

The Philippines’ Anti-Corruption Agencies

The Office of the Ombudsman

The Office of the Ombudsman (OMB) serves as the lead anti-graft government agency tasked to: 1) investigate anomalies and inefficiency in government, 2) prosecute graft and corruption cases, 3) conduct administrative adjudication of cases involving government excesses, 4) provide public assistance, and 5) implement graft-prevention programs. (Ombudsman, 2008)

Certain Constitutional provisions were made to insulate the Office of the Ombudsman from political interference and ensure the Ombudsman’s independence. The 1987 Constitution provides that the appointment of the Ombudsman needs no congressional confirmation. The Constitution further provides that the Ombudsman has a fixed term of seven years and can only be removed from office through impeachment. The Office likewise enjoys fiscal autonomy. (Ibid.)

The Republic Act 6770 or the “Ombudsman Act of 1989” which spells out the powers and structure of the Office of the Ombudsman states that as protectors of the people the Ombudsman shall “act promptly on complaints filed in any form or manner against officers or employees of the Government, or of any subdivision, agency or instrumentality thereof, including government-owned or controlled corporations, and enforce their administrative, civil and criminal liability in every case where the evidence warrants in order to promote efficient service by the Government to the people”. (Section 13)

While directed to “give priority to complaints filed against high ranking government officials,” (Section 15 of RA 6770), the current Ombudsman has been constantly criticized for her inefficiency and inability to prosecute high profile cases. The OMB likewise suffers from low public confidence due to the current Ombudsman’s perceived close ties with the Arroyo family, which has been implicated in major corruption cases in the last several years. Because of these apparent loyalties to the appointing power, Ombudsman Merceditas Gutierrez has been under fire almost from the beginning of her term. She has faced constant calls for resignation and continues to be the subject of impeachment complaints. In a recent decision, the Supreme Court has given Congress the go signal to begin impeachment proceedings against the Ombudsman.

7 See http://www.chanrobles.com/republicacts/republicactno9485.html 8 See http://www.lawphil.net/statutes/repacts/ra2001/ra_9160_2001.html


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Other Anti-Graft Government Agencies

Apart from the Office of the Ombudsman, several bodies were created under the Philippine Constitution to effectively ensure accountability in government. These agencies include the Civil Service Commission (CSC), Commission on Audit (COA), and the Sandiganbayan. These institutions all have fiscal autonomy to ensure independence and their actions can only be appealed to the Supreme Court.

Table 2. The Philippine Anti-Corruption Agencies ANTI-CORRUPTION AGENCIES Constitutionally Independent Bodies Other Agencies Office of the Ombudsman Department of Justice Civil Service Commission National Bureau of Investigation Commission on Audit Philippine National Police

Presidential Commission on Good Government Department of Finance-Revenue Integrity Protection Service

Sandiganbayan

Anti-Money Laundering Council

The Civil Service Commission is the central human resources agency of the government mandated to establish a career service and promote moral, efficiency, integrity, responsiveness, progressiveness, and courtesy in the civil service as well as strengthen public accountability in government services. The CSC has jurisdiction over administrative cases including graft and corruption brought before it on appeal.9

The Commission on Audit, on the other hand, is the Philippines' supreme audit institution. The Philippine Constitution grants it powers to audit all accounts pertaining to all government revenues and expenditures of government resources and to prescribe accounting and auditing rules, gives it exclusive authority to define the scope and techniques for its audits, and prohibits the legislation of any law which would limit its audit coverage.10

The Sandiganbayan, the country’s anti-graft court, has jurisdiction over civil and criminal cases involving graft and corrupt practices and such other offenses committed by public officers and employees.11

Other government offices involved in ensuring public accountability are the Department of Justice, National Bureau of Investigation and Philippine National Police, Presidential Commission on Good Government, Anti-Money Laundering Council, etc. The Revenue Integrity Protection Service (RIPS) being the anti-corruption program of the Department of Finance created by Executive Order 259 (December 17, 2003) investigates allegations of corruption in the Department of Finance and its attached agencies such as the Bureau of Internal Revenue and the Bureau of Customs, the Bureau of Local Government Finance, Bureau of Treasury, Central Board of Assessment Appeals, the Insurance Commission, the National Tax Research Center, the Fiscal Incentives Review Board, and the Privatization and Management Office. RIPS then files the necessary charges against erring officials and employees with the proper government agencies (e.g., Office of the Ombudsman).12

9 www.csc.gov.ph 10 www.coa.gov.ph 11 www.sb.judiciary.gov.ph/about.html 12 www.rips.gov.ph


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SCALE OF CORRUPTION IN THE PHILIPPINES

Despite a fairly advanced legal framework and the existence of independent commissions and accountability bodies, the Philippines suffers from a very high perception of corruption as reflected in international and domestic surveys.

The Transparency International’s Corruption Perception Index (CPI), which measures the perception of the degree of corruption as seen by business people and analysts, constantly shows the Philippines as one of the worst in the Asia-Pacific region. From 2001-2010, the country’s performance shows a downward trend with the highest score of 2.9 in 2001, to its lowest in 2008 with a rating of 2.3.13

Figure 1. Philippine Corruption Perception Index Rating, 2001-2010

The CPI14 in 2008 was 2.3, down from 2.5 in the previous year. Among more than 180 countries surveyed, the Philippines ranked 141st in 2008, lagging behind most of its neighboring countries such as Singapore which ranked 4th place with an index of 9.2, Malaysia in 47th place with 5.1; and Thailand in the 80th spot with 3.5. The neighboring countries closest to the Philippines were Vietnam in the 121st spot with a score of 2.7 and Indonesia that landed on the 126th place with a score of 2.6.15

The 2009 Philippine CPI rating improved slightly after having scored 2.4 and ranked 139th among 180 countries. Despite the slight improvement however, the country continues to perform behind most of its Asian neighbors. Indonesia for example, which ranked lower than the Philippines from 2001 to 2003, overtook the Philippines in 2008 and has been rating better than the country since then with a score of 2.8 in 2010. Thailand and Malaysia have been performing better than the Philippines with an average rating of 3.4 and 4.9 respectively for the past ten years as compared to the Philippine average of 2.5.16

13 www.transparency.org 14 Rates countries from 0 to 10 where a grade of 10 means the country is perceived as very clean while a rating of 0 means the country is perceived as very corrupt. 15 See http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table 16 www.transparency.org. 2.5 is the Philippine average based on 2001-2010 computation.

0

1

2

3

4

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Philippines


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Thailand

Figure 2. Philippine CPI Ratings and Other Asian Countries, 2001-2010

The Philippine corruption image reflected in the CPI findings seems to be validated by other survey findings such as that of the Political and Economic Risk Consultancy (PERC). In a PERC survey released in March 2010, the Philippines is 4th most corrupt country in Southeast Asia with a score of 8.06 next to Vietnam with 8.07, Cambodia with 9.10, and Indonesia with 9.27. This annual survey conducted by PERC uses a scoring system ranging from 1-10 with 10 being the worst in terms of corruption.17

The Global Corruption Barometer 2010 on the other hand reports that 48 percent of respondents believe that the Philippine government’s action against corruption is ineffective. Furthermore, only six percent of those surveyed think that corruption in the country declined, 25 percent think it is the same, while 69 percent think corruption has increased. The 2010 Global Corruption Barometer reflects the views of more than 91,500 people in 86 countries and territories surveyed.18

Local Findings Confirm CPI and PERC Results

International surveys are commonly criticized for reflecting mere perceptions rather than actual levels of corruption. Additionally, these surveys reflect the perceptions of foreign respondents. In the Philippines however, the findings of international perception surveys are well corroborated by local surveys that try to capture levels of corruption as viewed and as experienced by people in their dealings with the government. An example of which is the Social Weather Stations’ Survey of Enterprises where Filipino business managers are survey respondents.

In addition to considering perceptions of corruption, SWS Enterprise surveys attempt to capture business managers’ actual experience with corruption such as bribery. In 2007 for example, forty-four percent of those surveyed have personal knowledge of a corrupt transaction with government by a company in their own line of business (in the last 3 months from the conduct of the survey). (Social Weather Stations, 2007: 7) When asked “how much corruption do they think there is in the public sector”, 65.7 percent 19of the business managers

17 See http://www.mb.com.ph/articles/247016/corruption-worsens-indonesia 18 www.transparency.org 19 This is based on the average ratings from 2000-2007.

0

1

2

3

4

5

6

7

8

9

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Philippines

Indonesia

Thailand

Malaysia

Singapore

Vietnam

South Korea


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surveyed think that there is “A lot”, from 2000 to 2007. The highest perception of corruption was recorded at 77 percent in 2001 and lowest in 2002/03 with 60 percent during the 8-year period (2000-2007). (Ibid) In 2008, the perception of corruption in the public sector also did not improve with three out of five seeing “a lot” of corruption in the public sector, according to SWS. (Social Weather Stations, 2008) Table 3. How Much Corruption is there in the Public Sector?

2000 2001 2002/03 2003/04 2005 2006 2007 A lot 63% 77% 60% 66% 66% 67% 61% Some 25 19 29 26 28 28 33 A l itt le 10 4 10 6 5 5 5 None 2 0 1 2 1 1 .3

(Source: The 2006-2007 SWS Surveys of Enterprises on Corruption)

The Survey also shows that bribery is still believed to be highly pervasive in government transactions with a great percentage of Filipino managers thinking that “almost all/most companies need to give bribes in order to win government contracts” (from 2000-2007). The following table shows that most number of managers who think that almost all/most companies in their line of business need to give bribes to win government contracts was at record high of 57 percent in 2002/03 and 2003/04 during the eight-year period and lowest in 2006 with 47 percent.

Table 4. Do companies in your line of business need to give bribes in order to win government contracts?

2000 2001 2002/03 2003/04 2005 2006 2007 Almost All Companies 23% 15% 22% 23% 21% 17% 18% Most Companies 32 41 35 34 33 30 30 “Almost All/Most” Sub-total 55 56 57 57 54 47 48 Few Companies

Hardly Any Companies

None of the Companies

24

8

11

25

8

10

23

7

12

24

7

11

25

7

13

27

8

17

27

9

14 (Source: The 2006-2007 SWS Surveys of Enterprises on Corruption) As to how much of a public sector contract is allotted for bribery, the 2007 Enterprise Survey is said to have a median response of 20 percent. Bribery-allotment is also said to vary with 37 percent of managers putting it at 10 percent or less, 25 percent putting it between 11-20 percent, and 32 percent of those surveyed putting it at 21 percent or more of a government contract. (Ibid) Furthermore, the government transactions where bribes are prevalent includes local and national government permits and licenses, payment of income taxes, compliance with import regulation, and supplying government with goods and services, among others. (Ibid: 10) The Survey of Enterprises also rates the sincerity of government agencies in fighting corruption. In 2008, agencies with good net sincerity included the Social Security System (SSS), Department of Trade and Industry (DTI), Supreme Court, and city/municipality governments while Department of Health (DOH), Commission on Audit (COA), Department of Finance (DOF) had moderate ratings. Agencies with poor net sincerity included Government Service Insurance System (GSIS), Department of Agriculture (DA), Department of Justice (DOJ), Philippine National Police (PNP), Department of the Interior and Local Government (DILG), Presidential Anti-Graft Commission (PAGC)20, Department of the 20 PAGC was dissolved by President Benigno Aquino III in November 2010


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Environment and Natural Resources (DENR), Commission on Elections (Comelec), Department of Transportation and Communication (DOTC), and Office of the President (OP) and agencies with bad/very bad ratings were Land Transportation Office (LTO), Presidential Commission on Good Governance (PCGG), House of Representatives (HOR), Bureau of Internal Revenue (BIR), Department of Public Works and Highways (DPWH), and Bureau of Customs (BOC).21 Agencies that were classified as mediocre in terms of sincerity were Department of Education (DepEd), Armed Forces of the Philippines (AFP), Sandiganbayan, Office of the Ombudsman, Trial Courts, Senate, and Department of Budget and Management (DBM).22 Cost of Corruption Over the years, a number of studies have tried to measure the amount of public funds lost due to corruption. Former Ombudsman Aniano Desierto in 1999 declared that about P1.4 trillion has been lost due to graft and corruption or about P100 million everyday since the creation of Tanodbayan in 1988. (Batalla, 2000: 7) The World Bank on the other hand estimated that about 20 percent of the national budget is lost to corruption. Following the Bank’s estimate, it could be concluded that about 3.8 percent of the country’s GNP yearly is lost due to corruption from 1995-2000. (Ibid: 8) Table 5. Estimated Financial Losses Due to Corruption, 1995-2000

Particulars 1995 1996 1997 1998 1999 2000 Total Budget, Php Billion 372.1 445.7 476.2 506.1 593.7 651.0 Nominal Gross National Product, PhP billion

1,958.9 2,261.3 2,522.9 2,794.1 3,100.8 3,478.4

Total Budget as % of GNP 19.0% 19.7% 18.9% 18.1% 19.1% 18.7% Losses Due to Corruption, % based on WB Estimate

20% 20% 20% 20% 20% 20%

Estimated Losses Due to Corruption, PhP Billion

74.4 89.1 95.2 101.2 118.7 130.2

Six Year Total Losses, Php billion 609.0 Estimated Losses as % of GNP 3.8% 3.9% 3.8% 3.6% 3.8% 3.7% Average Annual Loss as % of GNP 3.8% (Source: De-institutionalizing Corruption in the Philippines: Identifying Strategic Requirements for Reinventing Institutions by Eric Batalla, 2000, p. 8) The country’s losses due to corruption however “cannot be simply quantified in financial terms” because it also affects other economic factors and indicators such as prices and productivity, incomes and employment, etc. (Ibid) Corruption likewise adversely affects the country’s development because of the diversion and misuse of government funds meant to develop national systems crucial to economic development such as transportation systems, infrastructure, etc. (Ibid) Another important point Batalla raised is how corruption damages the national psyche. (Ibid) The extent to which corruption is prevalent in the country generates apathy among the citizens backed up by the fact that public officials seldom get sanctioned for corrupt practices. This also results in “weakened trust relationships between government and citizens that constitute the basis of all social interaction.” (Abad, 2010: 13)

21 See http://www.tag.org.ph/pdf/2008SWS%20_entSurvey.pdf. 22 See http://www.tag.org.ph/pdf/2008SWS%20_entSurvey.pdf.


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THE POLITICAL ECONOMY OF CORRUPTION IN THE PHILIPPINES

Corruption in the Philippines, especially under the government of Gloria Macapagal-Arroyo, is fittingly and easily characterized by “state capture.” Corruption is systemic, political and grand in nature where at center-stage are powerful elites who mold and direct policies that favor specific private interests. The competing elites in Philippine society draw their power from interweaving political and economic positions. Those who have the wealth have better access to political power and those who have political power improve their access to wealth. These interweaving interests blur the lines between the private and public spheres, an environment conducive to corruption. Philippine elites also subscribe to a culture of neopatrimonialism that is “decentralized.” The powerful families and clans are spread across the regions and have well-established constituencies in their respective bailiwicks. In a sense, the state has become “merely a façade that masks the realities of deeply personalized political relations” (Andvig, Fjeldstad, et al. 2000: 55) and “the ultimate organizer and defender of the long-term interests of the ruling class.” (Ibid: 29) Corruption activities are just part of the accumulation strategy of the ruling elites. Political contests in the Philippines have been mostly set around the Presidency. The vast powers of the president and the resources23 (see Table 6) attached to the executive branch make the presidency a most sought after position for power accumulation among various elite groups. Since the restoration of democracy in 1986, each presidential election has had no less than five candidates24. These electoral contests are even made more intense with the multiple-party system, where parties and coalitions are organized and reorganized along lines of vested private interests and not on party ideologies and/or platform. Table 6. 2005 Budgetary Allocations of Different Agencies of the Philippine Government, Total Re-enacted Budget Php 907.56 Billion

Sub-Institution Amount ( in PHP) % of Total Government Budget

Executive All departments, bureaus and units

416.8 billion 45.93

Office of the President 3.4 billion 0.38 PAGC 18.5 million <0.01 PNP 35.2 billion 3.88 Legislature 4.51 billion 0.50 COMELEC 1.3 billion 0.14 COA 3.65 billion 0.40 Judiciary 7.52 billion 0.83 Ombudsman 647 million 0.07 Regional and Local Government

158 billion 17.44

Internal Revenue Allotment 152 billion 16.71 ARMM 6.69 billion 0.74 CSC 472 million 0.05 CHR 197 million 0.02 Debt Service Fund – Interest Payments

302 billion 33.24

Net Lending 7.6 billion 0.84 TOTAL 902.696 billion 99.46 (Source: Quimson, 2006:19)

23 The National Integrity Study (Quimson, 2006) shows that the President has at his/her disposal some 46% of the national budget. Data used is from the 2005 General Appropriations Act. 24 In the 1992 elections, there were seven candidates vying for Presidency; in 1998, ten; 2004, five; and in 2010, nine candidates.


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The Philippines has a strong presidential system. The president has monopoly of executive power and “orchestrates the execution of policy and allocation of spoils.” (Llanto 2007: 6) The president controls budget making25 and implementation. The president also has sole jurisdiction over ordinary policy implementation and regulations. The president’s control and access to state resources attract politicians from different parties to align themselves with him/her post-elections “to have a share in patronage resources of the government.” (Ibid.; Mendoza, 2001; DAP). Party switching is often observed in Congress just right after elections, a showing of weak party discipline. This feature of Philippine politics facilitates the ‘compromise exchanges’ between the executive and legislative branches of government. (Kawanaka, 2010) The legislature is generally captured by elite interests (Bernardo & Tang, 2008). Ideally, the legislature provides check and balance on the president’s vast powers through general legislation. At the onset, however, because of interests to access state resources, Congress lines are tilted in favor of the President. Either party-switching activities take place or opposition members agree to negotiate their positions on specific interests of the president. These negotiations happen through the exercise of “reverse power balance in policymaking processes.26” (Kawanaka, 2010: 9) “Through offering compromises,…each player [President/Congress] seeks concessions from the opponent in other [policy] areas where the opponent is dominant.” (Ibid: 1) Pork barrel fund releases, for instance, have been used by the president to “persuade” Congress to approve the president’s priority bills. Weak party discipline also makes the president (pre-election) dependent on local elites to mobilize electoral support. As a consequence, the president is tied to local elite interests. This symbiotic and gridlock relationship between local and national politicians tie down the executive-legislative branches to personal vested interests that tend to result in entrenching the incumbents’ powers. The legislature becomes ineffective in balancing competing interests in society. (DAP) De Dios and Esfahani, on the other hand, see the co-equal branches of government as ‘independent monopolists.’ With a dysfunctional system of checks and balance, the governance system has become vulnerable to state capture. (DAP) At play are elite interests that find expression in official state functions. Like most colonized countries, the form and system of government of the Philippines is a legacy of its colonizers (the Americans), transplanted to Philippine society and deplete of socio-cultural context. Social norms of gift-giving and networks of solidarity, including extended families, common in Philippine society are “corruption-inclined” under the Weberian model of public administration. Even the “notion of public office is essentially a western concept,” (Andvig, Fjeldstad, et al. 2000: 65) transferred to the Philippines albeit the personalized political relations. Of course, the Philippine political modernization process – through a shared social experience of corruption by the people and a shared struggle for reform – has brought society to a closer understanding of the public-private divide and of the social malady called corruption. The phenomena of globalization and democratization have also contributed to the current political economy of corruption. This was particularly observed in the post-Marcos era. Harris-White and White (1996) noted that corruption in the Philippines became more decentralized and uncoordinated. (Andvig, Fjeldstad, et al. 2000)

25 While the budget requires approval from Congress, the initiation of the budget process (budget proposal) lies with the Office of the President. 26 This includes the legislative inquiries conducted by Congress in aid of legislation.


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The relationship between the level of corruption and the level of democracy is not linear but bell-shaped. “When authoritarian control is challenged and destroyed through economic liberalizations and political democratisations, but not yet replaced by democratic checks and balances, and by legitimate and accountable institutions, the level of corruption will increase and reach a peak before it is reduced with increasing levels of democratic governance.” (Ibid: 57) During the dictatorship of President Ferdinand Marcos, Marcos centralized rent opportunities; Marcos controlled corruption activities. When democratization efforts set in, along with decentralization and devolution, new opportunities for corruption and rent-seeking also arose; and new players (local chiefs executive) emerged. Globalization and democratization actually increased the sources and scales of corruption, at least in the short and medium term. Andvig, Fjeldstad, et al. (2000) note that countries with at least 40 years of consecutive democracy, on the other hand, are able to enjoy more “significant, although small corruption dividend.” (Ibid: 59) The Arroyo Story. Then-vice president Arroyo’s rise to power in January 2001 was triggered by the politicized process of ‘impeachment,’ which culminated in a people power uprising (“People Power 2”) leading to the ouster of Estrada. Arroyo was later on elected President in a hotly contested and controversial election in 2004. Issues of the legitimacy of her government continued when a year later allegations of cheating arose in the so-called “Hello Garci” incident. Arroyo and a top Commissioner that she appointed in the election commission were allegedly caught on tape talking inappropriately about Arroyo’s votes27. This is further compounded by allegations that the President used government programs and funds (health cards and fertilizer funds) for campaign purposes. This and her other decisions (appointments to independent institutions, support for charter change) were highly suspect as part of a grand scheme to keep Arroyo in power much longer and/or to protect her interests even beyond her term as president. Arroyo began her presidency in 2001 with enough political capital – public support28 and backing from politicians and the military – but also with too much political debt. It is not surprising that in less than a month of holding office, President Arroyo already made payback appointments involving personalities known to have supported People Power 2 (Table 7). Table 7. 2001 Arroyo Appointees

Appointees in 2001 Government Post Other Details Congressmen who supported the impeachment trial Pantaleon Alvarez DOTC Secretary Davao del Sur Cong Simeon Datumanong DPWH Secretary Mike Defensor General Manager of NHA Quezon City Congressman Feliciano Belmonte, Jr. House speaker (with the endorsement

of the President) Head of prosecution panel during impeachment

Leonardo Montemayor Department of Agriculture Nani Braganza Department of Agrarian Reform Pangasinan Congressman Roilo Golez Replaced Abadia as NSA Paranaque Congressman Military supporters Lisandro Abadia National Security Adviser and Dir.

General of National Security Council AFP Chief of Staff during Aquino and Ramos administration

Renato De Villa Executive Secretary Former Defense Secretary (Ramos administration)

Ret. Gen. Eliseo Rio, Jr. NTC Commissioner Eduardo Ermita Defense Secretary Batangas Congressman KOMPIL supporters Dinky Soliman DSWD Secretary Supported People Power 2

27 The inappropriateness is attributed to the fact that Arroyo was both a contestant in the elections and incumbent President who had direct access to an official charged with election management and administration. 28 Arroyo began with a net satisfaction rating of +24 (www.sws.org.ph).


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Vicky Garchitorena Presidential Management Staff Supported People Power 2 Ging Deles NAPC Supported People Power 2 COPA supporters Lingoy Alcuaz PCSO Director Supported People Power 2 Pastor Boy Saycon PIDC Supported People Power 2 Marine Gen. Edgardo Espinosa

Manila Economic Coordinating Office Supported People Power 2

“Ramos Boys” Arturo Valdez Usec. Of DOTC Ret. Maj. Gen. Leo Alvarez Presidential assistant for military

affairs

Rene Villa Presidential assistant for Western Mindanao

Jesus Dureza Presidential assistant for Eastern Mindanao; OIC of Mindanao Economic Development Council

Avelino Cruz Chief Presidential Legal Counsel The Firm29; Ramos’ lawyer in 1992 elections

Antonio Carpio Supreme Court Justice The Firm Simeon Marcelo Solicitor General The Firm; Principal private prosecutor in

the impeachment trial; Ramos’ lawyer in 1992 elections

Other supporters Ephraim Genuino PAGCOR Behind the production of records used

against Estrada Mar Roxas DTI Secretary Quit with GMA in Estrada’s cabinet amid

jueteng scandal Chavit Singson DILG ‘unofficial’ consultant on

jueteng30 Whistleblower on Estrada’s involvement in jueteng

Howard Dee Presidential Adviser for Indigenous People

Leader of a business group who supported EDSA 2

Renato Corona Presidential spokesperson; Chief Justice of the Supreme Court

Arroyo’s chief of staff when VP

Supreme Court personalit ies* Hilario Davide United Nations envoy Swore her into office Artemio Panganiban Chief Justice succeeding Davide Talked Davide into swearing Arroyo as

President of the Philippines (Source: TAN31) *These appointments were made in 2005 when Davide retired as Chief Justice of the Supreme Court. The political environment was polarized and became further intensified because of the elections in May 2001. Arroyo immediately replaced over 4,000 Estrada appointees amidst preparations for the May 2001 contest32. She was juggling both reorganizing government and organizing her political team for the elections. At the height of public clamor for reform and change, Arroyo was held back by political debts. The May 2001 election results showed a divided nation. In the senatorial race alone, votes were closely split between administration and opposition candidates – 50.8% (administration) vs. 45.8% (opposition)33. Nine hundred of 1500 municipal mayors withdrew their support for the Arroyo government34. Even the military was split between Philippine Military Academy batch 1969 and batch 197035. With only three years away from national and presidential elections, Arroyo had to consolidate her hold of government through stern policies and key appointments. 29 Carpio, Villaraza, Cruz, Marcelo & Angangco law firm was dubbed “The Firm” because of its perceived influence with those in power. (Pazzibugan, 2010) 30 Later on, this ‘consultancy’ post of Singson was denied by DILG Secretary Lina, when news reports came out that Singson was ‘negotiating’ with jueteng lords in behalf of the department. 31 Various news stories from www.newsflash.org 32 Echeminada, P. (2001) ‘4,000 Estrada appointees to be replaced’ Retrieved January 29, 2011 from http://www.newsflash.org/2001/02/hlframe.htm 33 Teehankee, J. Undated: 175 34 Vanzi, S. (2001) ‘900 mayors shift support to Estrada’ Retrieved January 29, 2011 from http://www.newsflash.org/2001/05/hlframe.htm 35 Vanzi, S. (2001) ‘Military split confirmed by AFP Brass’ Retrieved January from http://www.newsflash.org/2001/01/hlframe.htm; Lopez, J.P. (2001) ‘Infighting among brass in Armed Forces ominous’ Retrieved January from http://www.newsflash.org/2001/01/hlframe.htm


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Stern policies. The Arroyo government met destabilization plots with a firm hand. On May 1, 2001 protesters, mostly supporters of former President Estrada, were forcefully dispersed and the alleged protest organizers were arrested without warrants. The so-called Oakwood mutineers (July 2003) were forced to surrender after hours of standoff with government. Even after the May 2004 elections, the government maintained an all-out war policy against destabilization plots, such as the coup d’etat attempt in 2006 and the Manila Peninsula rebellion in 2007. The government declared a state of rebellion in 2006 and a state of national emergency in 2007. It also issued a calibrated preemptive response policy (CPR), which meant that government had limited tolerance for mass demonstrations and protests. Nostalgic of the Martial Law days, these actions received much flak from the opposition and the general public.36 Politics of survival. The kind of corruption scandals that broke out in the Arroyo government is characteristic of a government scrambling for control and bent on staying in power. The first corruption scandal faced by the Arroyo government was of a typical rent-seeking activity. The First Gentleman Mike Arroyo was accused of receiving bribe money (P50 million) to get the President to recall her veto of a telecommunications franchise37. As this got public attention as with other related controversies (military-Abu Sayyaf collusion, government legitimacy) Arroyo’s trust ratings dipped38. Corruption controversies that followed reflected a government caught in its own web of traps. (Table 8) The politics of survival set in. Table 8. Corruption scandals that challenged the Arroyo government’s legitimacy

Corruption scandals Details “Hello Garci” (2004) Arroyo appointed (ad interim) Virgilio Garcillano in 2004 as

Commissioner of Comelec. Garcillano, allegedly, ensured Arroyo’s victory in the May 2004 elections

Fertilizer Fund Scam (2004) Department of Agriculture Undersecretary Jocelyn Bolante is accused of diverting P728 million fertilizer fund to the election campaign of Arroyo in the 2004 presidential elections.

Brown bag bribery (2007) Malacanang allegedly distributed brown bags of monies (P20,000 to P500,000) to local officials (mayors, governors and Congressmen) after a meeting. The money is meant to ‘buy’ their support for GMA (vs. impeachment; for charter change).

(Source: TAN39) These scandals illustrate the Arroyo government’s alleged efforts to secure power. These also show the thin ice on which the Arroyo government’s legitimacy stood. The Power of Appointments. In a politically tactical manner, Arroyo shrewdly used her appointment powers to maintain a ‘hold’ on constitutionally independent institutions. Arroyo was sworn to office by Supreme Court Chief Justice Hilario Davide, Jr. in January 2001. The court became embroiled in politics, with the Chief Justice sanctioning Arroyo’s

36 Various news stories from www.newsflash.org 37 Vanzi, S. (2001) ‘‘First Gentleman a liar’ says former Malacanang Secretary’ Retrieved February 1, 2011 from http://www.newsflash.org/2001/07/hlframe.htm; Vanzi, S. (2001) ‘Senate building Mike’s case’ Retrieved February 1, 2011 from http://www.newsflash.org/2001/07/hlframe.htm; Romero, P. (2001) ‘GMA willing to face Congressional probe’ Retrieved February 1, 2011 from http://www.newsflash.org/2001/07/hlframe.htm; Arquiza, R. & M. Villanueva (2001) ‘Mike ready to face accusations; was in U.S. for back problems’ Retrieved February 1, 2011 from http://www.newsflash.org/2001/08/hlframe.htm 38 Arroyo began her Presidency with a net satisfaction rating of +24. This fluctuated in the following months and reached a negative rate in March 2003 (-14). (www.sws.org.ph) 39 Various news stories from www.newsflash.org


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takeover of government and the court deciding on the Arroyo government’s legitimacy. The Supreme Court’s ‘political’ disposition became key in installing the Arroyo government. In her power to appoint members of the high court, Arroyo carefully picked individuals commonly perceived to be allies. Amongst the first appointments made by Arroyo to the high court was Antonio Carpio from “The Firm.” By perhaps a stroke of luck, Arroyo in her nine years in power appointed all fifteen justices of the high court save one, earning the court the name “GMA court.” Just days before the end of her term, Arroyo insisted on naming the replacement for the retiring Chief Justice, triggering the controversy of ‘midnight appointments’. Because of controversies surrounding the GMA appointees to the Supreme Court, the court’s independence has been questioned as it decided cases involving Arroyo - constitutionality of Proclamation 1017, Executive Privilege, People’s Initiative, Midnight Appointments, Calibrated Preemptive Response, among others. (Table 9) Table 9. Select cases with Arroyo’s interests and the Supreme Court

CASES Arroyo appointees who voted in favor of GMA posit ion

Arroyo appointees who voted against the GMA posit ion

Presidential Proclamation 1017 – Government declared a state of national emergency and rendered warrantless arrests. Ruling: PP1017 is constitutional insofar as it constitutes a call of the President on the AFP to suppress lawless violence. Enforcement of laws not related to lawless violence is unconstitutional.

Arroyo appointees: Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna, Chico-Nazario, Garcia (7); Tinga, Corona, Velasco, Jr. (3) [11 concurring (complete list): Sandoval-Gutierrez, CJ Panganiban, Puno, Quisumbing, Ynares-Santiago, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna, Chico-Nazario, Garcia] [3 dissenting - Tinga, Corona, Velasco, Jr.] Puno (on leave)

Calibrated Preemptive Response – This policy replaced the ‘maximum tolerance’ policy towards rallies and mass demonstrations. Ruling: CPR and ‘no permit, no rally’ is unconstitutional

(0)

Azcuna, CJ Panganiban, Austria-Martinez, Corona, Carpio- Morales, Callejo, Sr., Tinga, Garcia, Velasco, Jr. (8) [13 - Azcuna, CJ Panganiban, Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Tinga, Garcia, Velasco, Jr.] On leave - Chico-Nazario, Carpio

Executive Order 464– This policy required heads of departments to secure the consent of the President before appearing in Congressional hearings. Heads of departments may also invoke ‘executive privilege’ which is a rule of confidentiality for conversations with the President. Ruling: EO 464 partly valid (Sections 1 and 2a). Sections 2b and 3 are void – prior consent needs to be secured from the President before officials can show before Congressional hearing;s.

Carpio-Morales, CJ Panganiban, Carpio, Austria-Martinez, Corona, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr. (10) [14 - Carpio-Morales, CJ Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, Garcia, Velasco, Jr.] Puno (on leave)

People’s Initiative – This is one of the modes in which the Constitution can be amended. The government pushed for this method to be allowed by the Supreme Court even in the absence of an enabling law Ruling: People’s initiative is dismissed

Corona, Tinga, Chico-Nazario, Velasco, Jr., Garcia (5) [Puno, Quisumbing, Corona, Tinga, Chico-Nazario, Velasco, Jr., Garcia (7)]

Carpio, CJ Panganiban, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna (6) [Carpio, CJ Panganiban, Ynares-Santiago, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna (7)]

Midnight Appointments – This is on the controversy on whether Arroyo can appoint the Chief Justice during a period prohibited by the Constitution

Bersamin, De Castro, Brion, Peralta, Del Castillo, Abad, Villarama, Perez, Mendoza (9)

Carpio- Morales (1)


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Ruling: Petition for certiorari and mandamus is dismissed. There is no midnight appointment.

[Bersamin, Velasco, Jr., Nachura, De Castro, Brion, Peralta, Del Castillo, Abad, Villarama, Perez, Mendoza (9)] Nachura, Velasco – Case is premature Carpio, Corona – inhibited Puno did not vote

(Source: TAN40) From the select cases shown above, it appears that Arroyo appointees ‘delivered' for Arroyo in the midnight appointments issue. One case showed a split position between Arroyo appointees. Two cases showed partial victories for the Arroyo government – PP1017 and EO 464. In the calibrated preemptive response case, the Arroyo appointees were united and struck down the CPR and the no permit/no rally policy of government. Arroyo also made key appointments to the Office of the Ombudsman in 2002 and 2005. In 2002, the much distrusted Aniano Desierto retired and was replaced by Solicitor General Simeon Marcelo, also from “The Firm.” Unexpectedly, Marcelo exhibited independence and true to the mandate of his office, he seriously pursued big fish cases, including the Garcia plunder case41. After just three years in office, Marcelo resigned reportedly due to health reasons. Marcelo was replaced by the former Department of Justice Secretary and Chief Presidential Legal Counsel, Merceditas Gutierrez. Gutierrez displayed amicable relations with key personalities in the Arroyo administration. “Big fish” cases involving close affiliates of the Arroyos were dropped, if not weakly pursued. (Table 10) With a ‘friendly’ Ombudsman in place, many accusations of corruption and/or impropriety against people perceived to be close to the president simply did not prosper. Because of her constitutionally protected term,42 Gutierrez will stay in office a few years beyond GMA’s term as president, which strategically places her in a position to ‘protect’ her principal even when she (Arroyo) is no longer in office. Table 10. Select ‘big fish’ cases before the Office of the Ombudsman

Case (Personality/ies) Ombudsman Action/Inaction (Updates) Sec. Nani Perez bribery case (DOJ Secretary Hernando Perez, First Gentleman Mike Arroyo, President Gloria Macapagal-Arroyo)

2006 – The Ombudsman recommended filing of extortion, graft and falsification charges against Perez before the Sandiganbayan for the $2-million bribe (of the $14 million bribe) of Manila Rep. Mark Jimenez. The Sandiganbayan dismissed the case because the information submitted by the Office of the Ombudsman was found fatally defective. Robbery charge against Perez was also dismissed for violation of Perez’s right to speedy trial.

NBN-ZTE case (NEDA Sec-General Romulo Neri, Comelec Chairman Benjamin Abalos, First Gentleman Mike Arroyo, President Gloria Macapagal-Arroyo)

April 21, 2009 resolution recommending the filing of graft charges against NEDA Sec-Gen. Romulo Neri and Comelec Chair Benjamin Abalos. The Ombudsman cleared the First Gentleman Mike Arroyo and President Gloria Macapagal-Arroyo. Neri was ordered suspended six months without pay. Ombudsman also filed cases against whistleblower Jun Lozada – malversation and graft cases while Lozada was with the Philippine Forest Corporation.

Fertilizer Fund Scam (DA Undersecretary Jocelyn Bolante, DA Secretary Luis Lorenzo, President Gloria Macapagal-Arroyo)

Task Force Abono was created to investigate the 181 transactions related to the fertilizer project. In July 21, 2010, the Ombudsman ordered the suspension (six months) of 8 provincial government officials for their involvement in the purchase of P5M worth of fertilizers in 2004.

General Carlos Garcia Plunder Case (General Carolos Garcia, AFP generals

The Ombudsman entered into a plea bargain agreement with General Garcia, reducing his plunder case into direct/indirect bribery with forfeiture of properties. The plea bargain agreement is before the Sandiganbayan, awaiting approval. It is currently the

40 http://sc.judiciary.gov.ph/jurisprudence/decisions/index.php 41 Ombudsman Simeon Marcelo initiated the investigation of General Carlos Garcia’s plunder case. 42 The Ombudsman can only be removed from office by impeachment.


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including General Angelo Reyes, ) subject of Congressional inquiry (as of February 23, 2011). Comelec-MEGAPACIFIC case (Top Comelec officials including Chairman Benjamin Abalos)

January 13, 2004 – Supreme Court nullified the Comelec-MEGAPACIFIC case for illegal and grave abuse of discretion. September 27, 2006 – The Ombudsman in a resolution absolved all respondents to the Comelec-MEGAPACIFIC controversy for all administrative and criminal liabilities for lack of probable cause. October 13, 2006 - Nine senators submitted a petition for review to the Supreme Court to annul the Ombudsman resolution

(Source: TAN43) Clearly, the public is short-changed in the way the Ombudsman handled the select cases above. The Ombudsman’s soft stance towards ‘Arroyo and Friends, Inc.’ has led to the exoneration of public officials, as in the COMELEC-Megapacific case, and pursuit of smaller fish, as in the Nani Perez bribery, NBN-ZTE, and fertilizer fund scam cases. The plunder case of Garcia as it now unfolds, could also lead to his exoneration or an unjust diminution of the case. The Commission on Elections, charged with election management and administration, has also been meddled with, in fact, early in the Arroyo administration through the power to appoint. The most controversial appointments made to Comelec were just before the May 2004 elections, when the President herself was a candidate. The appointments of Virgilio Garcillano and Manuel Barcelona were made only months before the 2004 presidential elections. Crucially, their appointments were made ad interim, automatically allowing them to sit and perform their functions without the need of a Commission on Appointments confirmation. Garcillano and Barcelona exercised their powers and authority until Congress adjourned44, which directly affected the operations and results of the May 2004 elections. The circumstances surrounding this appointment served as a backdrop to the “Hello Garci” controversy, which allegedly involved the President and Commissioner Garcillano. The Civil Service Commission and the Commission on Audit have likewise been ‘touched’ by the hand of the President through her appointments to these offices. The table below summarizes the appointments made by the President to constitutionally independent bodies. Table 11. Arroyo Appointees to Constitutionally Independent Bodies

Appointees Date Appointed Date to Retire/ Retired Commission on Elections – management and administration of elections Chairman Alfredo Benipayo February 19, 2001 June 4, 2002 Commissioner Resurreccion Borra February 16, 2001 February 15, 2008 Commissioner Florentino Tuason February 21, 2001 February 15, 2008 Chairman Benjamin Abalos June 5, 2002 October 1, 2007* Commissioner Virgilio Garcillano February 10, 2004 June 11, 2005** Commissioner Manuel Barcelona February 10, 2004 June 11, 2005** Commissioner Romeo Brawner September 18, 2005 May 25, 2008*** Commissioner Rene Sarmiento April 7, 2006 Present Commissioner Nicodemo Ferrer June 9, 2006 February 2, 2011 Commissioner Moslemen Macarambon November 5, 2007 Present Chairman Jose Melo January 26, 2008 January 15, 2010 Commissioner Lucenito Tagle July 8, 2008 February 2, 2015 Commissioner Gregorio Larrazabal October 14, 2009 February 2, 20011 Commissioner Armando Velasco November 8, 2008 February 2, 2013 Commissioner Elias Yusoph October 14, 2009 February 2, 2015 Supreme Court – court of last resort Chief Justice Renato Corona April 9, 2002 (as Associate

Justice) May 17, 2010 (as Chief

October 15, 2018

43 Various news stories. See References. 44 The CA did not confirm the appointment of Garcillano and Barcelona. Though reappointed several times, they were not reappointed by Arroyo after the “Hello Garci” controversy broke out in mid-2005.


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Justice) Senior Associate Justice Antonio Carpio October 26, 2001 October 26, 2019 AJ Ma. Alicia Austria-Martinez April 12, 2002 April 30, 2009 **** Associate Justice Conchita Carpio-Morales September 3, 2002 June 19, 2011 AJ Romeo Callejo, Sr. September 3, 2002 April 27, 2007 AJ Adolfo Azcuna October 24, 2002 February 15, 2009 AJ Dante Tinga July 4, 2003 May 10, 2009 AJ Chico-Nazario February 10, 2004 December 5, 2009 AJ Cancio Garcia October 6, 2004 October 19, 2007 AJ Presbitero Velasco Jr. March 31, 2006 August 8, 2018 AJ Antonio Eduardo Nachura January 22, 2007 June 13, 2011 AJ Teresita Leonardo-de Castro December 3, 2007 October 8, 2018 AJ Arturo Brion March 17, 2008 December 29, 2016 AJ Diosdado Peralta January 14, 2009 March 27, 2022 AJ Lucas Bersamin April 3, 2009 October 18, 2019 AJ Mariano del Castillo July 29, 2009 July 29, 2019 AJ Roberto Abad August 7, 2009 May 22, 2014 AJ Martin Villarama November 6, 2009 April 14, 2016 AJ Jose Perez December 26, 2009 December 14, 2016 AJ Jose Mendoza January 4, 2010 August 13, 2017 Chief Justice Artemio Panganiban December 20, 2005 December 7, 2006 Chief Justice Renato Puno, Jr. December 8, 2006 May 17, 2010 Ombudsman – investigates, prosecutes government officials who are guilty of crimes Simeon Marcelo October 10, 2002 September 30, 2005* Merceditas Gutierrez December 1, 2005 October 10, 2009 / December

1, 201245 Commission on Audit – examine, audit, and settle all accounts and expenditures of public funds and properties Chairman Reynaldo Villar February 7, 2004 (as

Commissioner) April 15, 2008 (as Chairman)

February 2, 2011

Commissioner Juanito Espino, Jr. May 5, 2006 February 2, 2013 Commissioner Evelyn San Buenaventura January 5, 2010 February 2, 2011 Chairman Guillermo Carague February15, 2001 February 2, 2008 Civil Service Commission – deals with civil service matters; oversees integrity of government actions and processes Chairman Karina David February 23, 2001 February 2, 2008 Chairman Ricardo Saludo April 21, 2008 September 30, 2009** Chairman Francisco Duque III January 11, 2010 February 2, 2017 Commissioner Mary Ann Fernandez-Mendoza May 5, 2006 February 2, 2013 Commissioner Cesar Buenaflor February 2004 February 2, 2011 (Source: TAN46)*Resigned, **Bypassed/Rejected by the Commission on Appointments, ***Deceased, ****Retired early In the Supreme Court alone, Arroyo was able to make a total of 22 appointments. Three of these appointments were for the Chief Justice post. Eight of the 22 appointees were short-lived. The appointees’ tenures were shorter than the President’s nine-year stay in office – on the average, the eight transients of the Supreme Court served for only 4.5 years. Weak Party Discipline In the Arroyo administration, political party coalitions constantly changed as the popularity ratings of the President dropped. From 2001 to 2010, coalition-switching was apparent, showing a habitual realignment of interests among political groupings (Table 12). Table 12. Political party coalitions in 2001, 2004, 2007, and 2010 Election year Administration Coalit ion Opposition Coalit ion Other coalit ions/

unattached 2001 (8) Lakas-NUCD-UMDP, LP, Reporma-LM,

AD, PDP-Laban, NPC, NP, PROMDI (2) LDP, PMP (1) PDSP

2004 (5) Lakas-CMD, LP, NPC, PRP, NP (3) PDP-Laban, LDP, PMP (2) Alyansa ng Pagasa (AD, PROMDI, Reporma), LDP Aquino wing

45 Ombudsman Merceditas Gutierrez’ stay in office is subject for debate. It is not clear whether she already finished Marcelo’s term in 2009 or she is granted a full term and ends her term in 2012. This issue has not been submitted to the Supreme Court for resolution. 46http://sc.judiciary.gov.ph, www.coa.gov.ph, www.csc.gov.ph, www.comelec.gov.ph, www.ombudsman.gov.ph


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2007 (5) Lakas-CMD, NPC, LP-Atienza wing, LDP, PDSP

(5) UNO, AD, PDP-Laban, NP, PMP, LP, NP, KBL-Marcos wing

2010 (1) Lakas-Kampi-CMD (1) LP NP, PMP, etc. (Source: TAN47) Notably in the 2007 elections, the LDP-PMP opposition group at the start of the Arroyo government split. LDP affiliated with the administration party. On the other hand, a close ally of the administration, the Liberal Party, joined the opposition PMP, as with AD, NP and PDP-Laban. The opposition coalition in 2007 drastically expanded. In the 2010 elections, when Arroyo’s popularity ratings reached a historic low, her own party (Lakas-Kampi) suffered the most in terms of defections. Many of the defectors transferred to the Liberal Party coalition. Arroyo’s unpopularity also hurt administration candidates during elections (Table 13). Table 13. Public perception of the Arroyo presidency and political wins in the 2001, 2004, 2007, and 2010 elections 2001 2004 2007 2010 Public net satisfaction rating of Arroyo

+19.67A +17.67B -9.33C -38D

Administration candidates Senate seats won 8 7 3 2 (% change) -12.5% -57% -50% House seats won 141 176 142 107 (% change) +25% -19% -25% (Source: TAN48)

A. Average rate (March 2001, April 2001, May 2001) B. Average rate (January 2004, February 2004, March 2004) C. Average rate ( September 2006, November 2006, February 2007) D. Average rate (September 2009, December 2000)

Figure 3. Public perception of the Arroyo presidency and political wins in the 2001, 2004, 2007, and 2010 elections

47 Information was gathered from http://en.wikipedia.org/wiki/Philippine_general_election,_2001, http://en.wikipedia.org/wiki/Philippine_general_election,_2004, http://en.wikipedia.org/wiki/Philippine_general_election,_2007, http://en.wikipedia.org/wiki/Philippine_general_election,_2010. 48 Information from www.sws.org.ph, http://en.wikipedia.org/wiki/Philippine_general_election,_2001, http://en.wikipedia.org/wiki/Philippine_general_election,_2004, http://en.wikipedia.org/wiki/Philippine_general_election,_2007, http://en.wikipedia.org/wiki/Philippine_general_election,_2010.

-‐40 -‐35 -‐30 -‐25 -‐20 -‐15 -‐10 -‐5 0 5 10 15 20 25 30

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200

2001 2004 2007 2010

House seats

Senate seats

Satisf. Rating


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The figure above illustrates clearly how the administration candidates experienced Arroyo’s kiss of death. At the Senate, the decrease in votes had been consistent starting 2004 – 12% drop (2004), 57% drop (2007), and 50% drop (2010); at the House, the kiss of death was only felt in the 2007 and 2010 elections. In 2004, votes increased by 25%. This was later on reduced by 19% in 2007, and another 25% in the 2010 election. Independent Monopolists. De Dios and Esfahani (2001) explain that a dysfunctional system of checks and balance makes the different branches of government and its other instrumentalities vulnerable to corruption. Individuals and institutions act like independent monopolists, beyond government scrutiny and oversight, thus the abuses. (DAP) Of course, there is the additional dynamics of a principal’s ‘blessing,’ which further emboldens (by tolerance or sanction) erring officials and offices. Different corruption scandals that have troubled the country illustrate different levels of monopolistic exercise of power and authority, bordering on ‘corruption,’ either as direct or indirect participants. A case study in point is the NBN-ZTE controversy. Box 1. NBN-ZTE Controversy The NBN-ZTE controversy was a questioned deal between the government of the Philippines and the Chinese company ZTE. It was an overpriced contract, which involved top government officials, including Comelec Chairman Benjamin Abalos, NEDA Secretary General Romulo Neri, DOTC Secretary Leandro Mendoza and the First Gentleman Mike Arroyo. Allegedly, even the President herself is implicated in the case. The ‘independent monopolist’ in this case is Comelec Chairman Benjamin Abalos. Allegedly, Comelec Chairman Benjamin Abalos brokered this deal and ensured the awarding of the contract to ZTE. The agreed price of the deal was $329 million, which included kickbacks. Abalos, who had no ‘official business’ whatsoever with the contracting process, was able to represent the government in dealing with the Chinese business firm and even skirted through government processes with a seemingly free hand. Testimonies of witnesses and actors involved in the controversy indicate knowledge of a higher authority. Unfortunately, the full story behind the controversy was not uncovered. Public discussion on the issue was cut short when President Arroyo herself cancelled the contract.


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Anti-Corruption Efforts of Government, Funding Institutions, and Civil Society Organizations Curbing corruption in the country has been the focus of various efforts by government and civil society organizations (CSOs) over the past decades. International funding institutions have also provided grants and funding support to government and CSOs for projects aimed at countering corruption. The following tables will present the different anti-corruption efforts made by government, international donors, and civil society. A. Government Initiatives The government’s initiatives to counter corruption are centered on prosecution with Office of the Ombudsman as the lead government agency. According to the Ombudsman, the anti-corruption campaign in the country is actually “gaining ground”. (Ombudsman, 2009: 7) In 2009, the Ombudsman proudly reported a conviction rate of 33.6 percent with Sandiganbayan convicting mayors, municipality treasurers, registers of deeds, among others (Ibid: 54). The Ombudsman has also completed at least 2,000 fact-finding investigations with 17 officials from DPWH formally charged for preliminary investigation for involvement in the anomalous bidding for World Bank-funded road projects for violations of R.A. No. 3019 and R.A. No. 6713. (Ibid: 8) The Ombudsman also reported almost 8,000 criminal and administrative cases acted on in 2009 and the dismissal from service of a number of government officials that includes a finance undersecretary, assistant secretary, provincial administrator, mayors, BIR regional director, postmaster general, police superintendents, university president and principals of public high schools. (Ibid: 10) Lifestyle check investigations is also a continuing program of the Office of the Ombudsman. In 2009, the OMB reported that select investigators were trained on forensic accounting,! complex financial investigation, and investigating and prosecuting kleptocracy. (Ibid: 51) During the same year, the OMB received around 328 new lifestyle check complaints and has finished investigating 217 complaints. Based on their report, a total of 775 lifestyle check complaints nationwide are still being investigated by the OMB as of December 31, 2009. (Ibid: 52) Other government anti-corruption efforts are centered on prevention through systems review and reform. These include the integrity development reviews of agencies, establishment of agency integrity development committees, and anti-corruption scorecards. Anti-corruption promotional activities are also undertaken by government to include trainings and education campaign to raise awareness about anti-corruption laws and regulations and the different agencies mandated to promote accountability in government.

Box 2. OMB’s Lack of Funds? To defend the OMB from critics, the Ombudsman has constantly enumerated reasons for its inefficiency and some of which point to lack of resources. It is said that the OMB only gets 0.065 percent of the total national budget that prevents the Office from hiring competent staff to help ensure successful prosecution of corrupt public officials. (based on GTZ briefing paper) Based on a research conducted by the Philippine Center for Investigative Journalism however, the OMB under Gutierrez’s term (beginning 2005), “has enjoyed access to more funds than any of her three predecessors combined”. (Mangahas and Ilagan, 2010) In fact, the OMB’s budget tripled from 392.08 million in 2003 to P1.33 billion in 2009 apart from the foreign grants directed to the institution such as that of the Philippine Threshold Program with the US Millennium Challenge Corporation of about $6.5 million. The OMB likewise got a $716,600 grant from the European Union to set-up a case management software that the OMB never used until the Project closed in 2007. It has also received funding support from Australian Agency for International Development’s Philippine-Australia Human Resource Development facility and United States Agency for International Development. (Ibid)


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Table 14. Government Anti-Corruption Efforts49 Agency Prosecution Prevention Promotion

Investigation and prosecution

Conduct of Integrity Development Review (IDR)50 to agencies such as Department of Environment and Natural Resources (DENR), Department of Agrarian Reform (DAR), Light Rail Transit Authority (LRTA), National Irrigation Authority (NIA), Philippine Veterans Affairs Office (PVAO), Philippine Navy (PN), Bureau of Corrections (BuCor), Bureau of Fire Protection (BFP), Land Registration Authority (LRA), Procurement Service (PS) under the Department of Budget and Management, and the Department of Health (DOH)

Ombudsman Citizens’ Charter

Conduct of lifestyle check investigations

The OMB, through its Bureau of Resident Ombudsman, also facilitated the establishment of sixteen (16) agency based tripartite committees called Integrity Development Committee (IDC) that will monitor the progress of the implementation of the recommendations of the IDR

OMB Social Service Caravan

Nationwide trainings to educate the people about the Ombudsman and its efforts; Public Accountability Seminars; Ehem! Aha! Seminars; eight-day Executive Course on Strategic Planning and Management of an Effective Corruption Prevention Program.

Office of the Ombudsman

Institutionalization of mediation system for non-graft cases

OMB created a Task Force to monitor the procurement of ballot counting machines and other election technologies to be used in the fully automated 2010 elections. Duties of the task force include observing the procurement proceedings from bid submission to awarding of the contract to monitoring of contract implementation. (Ombudsman 2009)

Magsumbong sa Ombudsman (radio program) and Ombudsman: Kakampi Laban sa Katiwalian (TV show)

Integrity Development Action Plans of national government agencies

Presidential Anti-Graft Commission

Anti-Corruption Scorecard51

Revenue Integrity Protection Service

Investigates allegations of corruption in the Department of Finance

Mamamayan Muna, Hindi Mamaya Na52

Civil Service Commission

Values Orientation Workshop on the Code of

49 Sources: GTZ paper on Corruption in the Philippines "Corruption and Anti-Corruption in the Philippines: Possible entry-points for German development cooperation” (September 2009), OMB Annual Report 2009, websites of CSC, PAGC, and RIPS 50 IDR is a tool that aims to “determine the level of integrity development within a government agency and identify the agency’s vulnerability to corruption and also assesses the adequacy of agency safeguards to prevent corruption…” (Ombudsman, 2009: 64) 51 The ACS is a “tool for assessing the impact and effectiveness of the anti-corruption efforts carried out by the agencies in the Executive Branch with special focus on the four perspectives of the Integrity Development Action Plan (IDAP): Prevention, Education, Investigation/Enforcement and Strategic Partnership”. (www.pagc.gov.ph/Project.htm ) 52 Launched in 1994 to “address the need for behavioral reforms in government service, specifically the manner state workers deal with clients. Mamamayan Muna, Hindi Mamaya Na is said to be both a courtesy campaign and a client satisfaction mechanism, it hopes to promote among civil servants prompt, courteous and efficient service.” (http://www.csc.gov.ph/cscweb/ethics.html)


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Conduct and Ethical Standards for Government officials and Employees

Dangal ng Bayan Award53 The United Nations Convention Against Corruption (UNCAC) One of the breakthrough accomplishments of the Philippine government in recent years is the ratification of the UN Convention Against Corruption in 2006. UNCAC employs a comprehensive approach to anti-corruption by addressing prevention, criminalization and law enforcement, international cooperation, asset recovery and technical assistance. The UNCAC’s ratification in the Philippines is said to have been an instrument in consolidating and streamlining the various anti-corruption efforts of government through the National Anti-Corruption Program of Action, the body created in 2007 with the objective of integrating and eradicating overlaps in the anti-corruption efforts of the Ombudsman, other government agencies, and civil society groups. The Multi-Sectoral Anti-Corruption Council represented by government and civil society serves as the coordinating body of NACPA.54 A Roadmap for UNCAC’s implementation in the Philippines was presented during the UNCAC Philippine Summit in May 2009. This Roadmap was based on the validated results of a series of focus group discussions on the assessment of the country’s compliance with the Convention (Table 15).55 Table 15. Philippine UNCAC Roadmap Approach Actor Activity

Ombudsman Integrity Development Reviews, anti-corruption research, revisiting the gifts policy under RA 6713, bids and awards committee observers’ feedback handling capacity-building through the Center for Asian Integrity

COA

Restoration of selective pre-audit and comprehensive audits of government offices, enhanced risk-based audit approach, electronic national government accounting system and promulgation of the Philippine Government Accounting Standards

CSC

Initiatives to promote integrity and accountability such as the PMS-OPES, implementation of ARTA, stakeholders’ dialogue, rules on transparency, database for the statement of assets, liabilities, and networth (SALN), values formation

OP Harmonization of the IRR of the Government Procurement Reform Act to cover foreign-funded procurement, cascading of national guidelines on internal control system, tripartite code of conduct on public procurement

Prevention

PAGC Moral renewal action program and the integrity development action plan on internal control, internal audit, integrity check and agency code of conduct

Criminalisation MSACC

Adoption of legislative agenda for enactment of a law criminalizing bribery of foreign public officials and officials of public international organizations, amendment of the Anti-Money Laundering law to broaden the list of predicate offenses that give rise to laundering of corruption proceeds

International Cooperation DOJ

Amendment of Extradition Law (PD 1069); enactment of law on MLA, forging more extradition treaties and MLA treaties, conduct of activities to increase awareness among judges on the importance of international legal cooperation

Asset Recovery Bangko Sentral Issuances on measures to prevent and detect the transfers of proceeds of

53 The Dangal ng Bayan Award is conferred annually to government employees who have been paragons of the highest standards of ethics. (http://www.csc.gov.ph/cscweb/ethics.html) 54 Based on the GTZ Briefing Paper, "Corruption and Anti-Corruption in the Philippines: Possible entry-points for German development cooperation", September 2009 55 Based on the GTZ Briefing Paper, "Corruption and Anti-Corruption in the Philippines: Possible entry-points for German development cooperation", September 2009


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ng Pilipinas corruption

AMLC Amendment of RA 0160 and enhancement of cooperation with foreign and domestic law enforcement agencies and financial investigation units

Source: "Corruption and Anti-Corruption in the Philippines: Possible entry-points for German development cooperation", September 2009 A number of government agencies have also opened their systems through partnerships with civil society such as DPWH with Bantay Lansangan (Road Watch); DepEd with Ateneo School of Government; DBM with various civil society organizations engaged in budget advocacy, among other partnerships. B. Civil Society Initiatives Civil society initiatives promoting social accountability have flourished over the past years. In a scoping study commissioned by the Affiliated Network for Social Accountability East Asia and the Pacific (ANSA-EAP), social accountability practices in the Philippines were categorized under three major themes/objectives: 1) political/democratic accountability56; 2) financial accountability57, and; 3) accountability for performance58. The following table provides a quick summary of the various practices based on the three major themes/objectives: Table 16. Summary of Social Accountability Practices in the Philippines

Objective Public Sector Function SAc Practice Methods and Tools Political/Democratic

Accountability Policies and plans that builds or strengthens the enabling environment for democaric practice and accountable institutions

Political and electoral reforms Campaign for a graft-sensitive culture Participatory policy-making and planning

Policy advocacy Self-awareness workshops Engaging and empowering communities for service improvement

Financial Accountability Revenue, appropriations, allocations, expenditures

Informed budget advocacy Tracking public expenditure Participatory budgeting

Budget advocacy and budget analysis Training workshops

Accountability for Performance

Delivery of goods and services

Public monitoring and oversight

Monitoring by public watchdogs Citizens’ charter Social covenants Report Cards Opinion polls

(Source: Abad, Henedina (2010) , Social Accountability Practices in the Philippines: A Scoping Study, Affiliated Network for Social Accountability in East Asia and the Pacific, Ateneo de Manila University, p. 28) Many of the anti-corruption and social accountability initiatives of civil society focused on expanding spaces for public participation ranging from direct participation such as monitoring of agencies’ budget implementation to indirect participation such as campaigns for greater transparency and accountability in government systems and processes (appointments monitoring, advocacy work for the passage of Freedom of Information Bill, etc.).

56 “involves actions that creates and strengthens the societal institutions to actualize social accountability and in the process, increase the citizens’ trust in government” (Abad, 2010: 19) 57 Concerned with how government “allocates, disburses and utilizes financial resources… can be differentiated into subcategories such as 1) informed budget advocacy; 2) public expenditure tracking; and 3) participatory budgeting”. (Ibid: 21) 58 Focuses on the “delivery of public goods and services and how public sector actors fulfill their roles and responsibilities”. (Ibid)


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The ANSA-EAP study clustered anti-corruption/social accountability initiatives of civil society organizations by objective as shown in Table 17.59 Table 17. List of CSO Initiatives by Objective

Type by Objective Social Accountability Practice (Past and Present)

Implementing Organization

Freedom of Information Bill Campaign Access to Information Network (ATIN), Right to Know! Right Now! Network

Advocacy for the for the passage of Government Procurement Reform Act, Anti-Money Laundering Act, and Anti-Red Tape Act

Lifestyle Check Philippine Center for Investigative Journalism

Citizens’ Participation in Lifestyle Check Transparency and Accountability Network (TAN)

Electoral Reform Consortium for Electoral Reforms (CER)

Automated Election System Watch Center for People Power and Governance (CenPEG)

Monitoring of Campaign Finance PCIJ, TAN, CER, Lawyers’ League for Liberty (Libertas)

Ehem! Aha! Ateneo de Davao

Social Artistry approach to the localization of Millennium Development Goals and in fighting corruption

National Center for Public Administration and Governance

Key Appointments Watch (Office of the Ombudsman, Supreme Court, Commission on Elections)

TAN, Alternative Law Groups (ALG), Philippine Association of Law Schools (PALS), Libertas

Political/Democratic Accountability

Co-financing and Co-production of Basic Services Institute for Popular Democracy (IPD)

Department of Agriculture Budget Analysis Caucus of Development NGO Networks (CODE-NGO)

Education Watch Action for Economic Reform

Philippine National Budget Monitoring Project InciteGov, the Budget Network

Priority Development Assistance Fund (PDAF) Watch CODE-NGO

Official Development Assistance (ODA) Watch MODE

Debt and Public Finance Campaign Freedom from Debt Coalition

Local Gender Budgeting WAND

Internal Revenue Allotment Watch CBCP-NASSA

CSO Participation in Monitoring Public Procurement

Procurement Watch, Bishops-Businessmen’s Conference, Evelio B. Javier Foundation, Inc., Parish pastoral Council for Responsible Voting, National Movement for Free Elections, Bantay Lansangan

Alternative Budget Initiative Social Watch Philippines

Textbook Count and Textbook Walk Government Watch – Ateneo School of Government

Medicines Monitoring National Movement for Free Elections-Makati Business Club

Building Bridges towards Good Governance with LGUs and Other Agencies

Citizens Network for Good Governance – Negros

Participatory Local Governance La Salle Institute of Governance

Counter Corruption in Procurement and Delivery of Services

Coalition Against Corruption – Makati Business Club

Financial Accountability

Capacity-Building for BAC Observers Evelio B. Javier Foundation, Inc.

Performance Accountability Participatory Planning and Budgeting

Naga People’s Council and City Government

59 Note that TAN also tried to include other CSO initiatives not included in the original table.


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Report Card Survey

Development Academy of the Philippines, Up National College of Public Administration and Governance, TAN

Monitoring Infrastructure Projects for Good Governance Concerned Citizens of Abra for Good Government

Localized Anti-Poverty program 2 CODE NGO

Road Projects Monitoring Bantay Lansangan

SWS Surveys SWS

Transparency and Accountable Governance Iloilo CODE

Participatory Monitoring of Barangay Infrastructure Projects and Procurement of Medicines in the Province of Isabela

PAJDGG

(Source: Abad, Henedina (2010), Social Accountability Practices in the Philippines: A Scoping Study, Affiliated Network for Social Accountability in East Asia and the Pacific, Ateneo de Manila University, pp. 23-24) C. International Donor Initiatives The donor community is supportive of the anti-corruption campaign in the country. Some of the projects use information technology to improve government processes and systems. These include the call center and complaint handling systems of BIR and DPWH respectively, the electronic procurement system, the case filing system of Sandiganbayan and the Ombudsman’s database of Statements of Assets, Liabilities, and Networth. Donors also gave particular attention to the judiciary, DPWH, COA, and the Ombudsman in improving institutional capacities among others. They are also supportive of CSO participation and partnership with government that aims to improve latter’s accountability and public service delivery. (Table 18) Table 18. Summary of Donor Initiatives related to Anti-Corruption

Donor Anti -Corruption Effort/Init iatives

Strengthening the Anti–Money-Laundering (AML) Regime and designing and developing a transaction monitoring system for the Financial Intelligence Unit

Providing advice on areas requiring legislative reform Asian Development Bank

Strengthening the independence and defining judicial accountability

ADB works with the Office of Auditor General, Integrity Division (OAGI) to protect and maintain confidentiality of whistleblowers and staff who fear reprisals. The OAGI is also designated as the initial point of contact for allegation of fraud, corruption, and abuse among ADB-financed projects

Enhancing the efficiency and accountability in the trial courts

Training for Supreme Court and appellate justices, court administrators and presiding executive judges

Developing an automated audit tool in the conduct of financial audit to enhance the Public Accountability Programme of the Philippine Commission on Audit

Australian Agency for International Development (AusAID)

Institutional support provided to Bantay Lansangan

Establishing BIR Call Centre Systems Support Project

Promoting the Government Electronic Procurement System (GEPS)

Reviewing and consolidating BOC rules and regulations nationwide

Canadian International Development Agency (CIDA)

Supporting Workshops on Guidelines and Inter-Agency Coordination in Fighting Corruption

Supporting EU-OMB Corruption Prevention Project European Commission (EC)

Strengthening the Anti–Money Laundering Council by providing training


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Assisting the Judiciary Programme Access to Justice for the Poor

Supporting EU-OMB Corruption Prevention Project Component Winning the Cooperation of the Wider Public

Assisting Graft and Corruption Prevention Education (GCPE) Teaching Exemplars

Building capacity for investigation and prosecution for Anti–Money Laundering in judicial and law enforcement agencies and civil society

Transforming the PNP into a more capable, effective and credible work force United Nations Development Programme (UNDP)

Pursuing enhanced capacities of oversight agencies for change management and bureaucratic reforms complementing efforts of the Presidential Committee on Effective Governance (PCEG)

Making government procurement more transparent

Adopting the Integrity Development Review

Making transparent and accountable management at the Bureau of Internal Revenue

Strengthening Judiciary and Media Relations

Promoting Rule of Law Effectiveness (ROLE) through Work Shops, training sessions for Court of Appeals and prosecutors

United States Agency for International Development (USAID)

Campaign and Electoral Reform

Supporting the Government’s Procurement Policy Board (i.e. mapping capacity of internal audit units in each agency nationwide)

Mapping capacity of internal audit units in each agency nationwide

Supporting DPWH Complaints and Action Centre (CAAC)

Supporting Judicial and Civil Service Reform Project

Promoting education in corporate governance for boards of directors

OMB computerized data base and integration of statement of assets and liabilities

Supporting Sandiganbayan in computerization of court record management system

World Bank

Millennium Challenge Account-Philippines Threshold Program Technical Assistance project –provided support to OMB for trainings, acquisition of surveillance equipment, information management, distribution of GCPE Teaching Exemplars, and the institutionalization of mediation for non-graft cases from 2006-2008

Strengthening collaboration between civil society and government on anti-corruption efforts in the Philippines

Support to MSACC/NACPA through a full-time expert in strategic planning and awareness-raising activities

Millennium Challenge Corporation

Support to OMB in introducing alternative dispute resolution to reduce the backlog of inor graft cases, establishing an integrity development institute, a “virtual” learning institute for personnel development of the OMB, and other government personnel performing investigative, prosecutorial, and public assistance functions.

Source: GTZ paper on Corruption in the Philippines "Corruption and Anti-Corruption in the Philippines: Possible entry-points for German development cooperation” (September 2009) and Quimson, Gabriela (2006), National Integrity Systems, Philippines


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RECOMMENDATIONS PNoy’s Context Benigno Aquino III was elected president in the May 2010 elections with a wide margin lead against his closest opponent. Aquino received aproximately 15 million votes (42%) against the deposed President Joseph Estrada who received 9 million votes (26%). Aquino won on a platform of good governance with the campaign slogan “Kung walang corrupt, walang mahirap!” (“If there’s no corruption, there’s no poverty.”) This resonated well among the ordinary Filipinos. In the beginning of his government, Aquino received a very high trust rating (+83),60 the highest in history. Aquino’s political party (the Liberal Party) also improved its hold of key government posts. In the beginning of the 2010 elections, the Liberal Party emerged as the strongest opposition party. Defectors from other camps gravitated towards the Liberal Party. The Liberal Party also produced significant political wins in the elections, beginning with the President. At the Senatorial race, three of the LP candidates came through – Senators Franklin Drilon, Ralph Recto, and Teofistio Guingona III.61 The LP produced the most victories at the Senate compared to other political parties/coalitions. At the House of Representatives, after a few more defections for the Liberal Party post-elections, the Liberal Party secured the Speakership, including chairmanships of key committees. Simply put, Aquino starts off with high political capital – a strong public support and political party advantage. This is a political advantage that could shield him and his government from unnecessary influence from other interest groups. Lessons from the political economy and Arroyo’s mark The center of power and power abuses in the Philippine political economy is the president. There are many powers available to the president that may be used to institute reforms or wipe them out. It is important therefore to know the president’s circumstances and the invisible ties (including those that he makes along the way), which define his actions. The political economy and the imprints of President Gloria Macapagal-Arroyo’s nine-year rule are a rich source of knowledge and lessons from which President Aquino can learn. Power of the purse. Opposition in the House, history has shown, usually dissipates at the beginning of a President’s term. The President’s choice for House Speaker often wins. Kawanaka (2010) explains that this is because the Congress seems to be at the mercy/end of the President’s power of the purse. The president could prudently use this power to pursue his reform agenda, especially the difficult ones that need the extra push – e.g. freedom of information, political party reform. It should not be used to string along personal political loyalties but rather pull in reform program allies. Power to appoint. The power to appoint is a delicate power that has serious and far-reaching repercussions on institutions. Like the power of the purse, the power to appoint should be prudently used to strengthen institutions and the reform agenda of the government. Again, it should not be used to create personal loyalties but coordinate the reform agenda of government. The good governance reform agenda of government would require functional institutions and a functional system of checks and balance. A government that has any one of its institutions dysfunctional will be slowed down significantly in its quest for good

60 88% of adult Filipinos had high trust of Aquino while 4% had little trust, resulting in a net trust rating of +83. 61 The Senate composition is currently as follows: Independents (5), Lakas-Kampi (4), LP (4), NP (4), NPC (2), PMP (2), PRP (1), LDP (1).


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governance. The Aquino government should be conscious about correcting mistakes of the past by making the right appointments. The power to appoint is a personal and political power available to the president. While it is a personal political choice and relies heavily on the political will of the President, there are institutional safeguards that can be put in place to insulate the president from the damaging politics of appointments. One such safeguard that the President can help institutionalize and initiate is setting a standard and transparent search process at the Office of the President. Institutions that have been tainted by the politics of the past that should be closely watched are the Office of the Ombudsman, Commission on Elections, Supreme Court, and the Commission on Audit. Appointments to these offices should be made very carefully and with transparency to regain public trust in the institutions. Lessons from anti-corruption efforts There is need to continue strengthening the prosecution function of government, whether that be in capacity-building efforts or through systems reforms. This will lead to an improved conviction rate of the Office of the Ombudsman and will consequently send the message that corruption is a high risk, low reward exercise for government officials. Lifestyle check investigations should also continue to be implemented to deter excessive lifestyles, often a strong indication of corruption activities among high-level government officials. Government should also continue to partner with civil society organizations in improving transparency and accountability mechanisms in government systems and processes. Direct and indirect participation openings should be further improved. A critical measure that will improve anti-corruption efforts in the country is the Freedom of Information law. The passage of the FOI will not only give life to the constitutional right of the people to access public information, it will be centrally instrumental to strengthening democratic and political accountability of government.


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Vanzi, S. (2001) ‘Senate building Mike’s case’ Retrieved February 2, 2011 from http://www.newsflash.org/2001/07/hlframe.htm Vanzi, S. (2001) ‘Survey shows what angered masses’ Retrieved February 2, 2011 from http://www.newsflash.org/2001/05/hlframe.htm “An Act to Improve Efficieny in the Delivery of Government Service to the Public by Reducing Bureaucratic Red tape, Preventing Graft and Corruption, and Providing Penalties Therefor” retrieved 5 March 2011 from http://www.chanrobles.com/republicacts/republicactno9485.html “An Act Defining the Crime of Money Laundering, Providing Penalties Therefor and for Other Purposes” retrieved 5 March 2011 from http://www.lawphil.net/statutes/repacts/ra2001/ra_9160_2001.html www.coa.gov.ph www.inquirer.net/specialreports/thebolantecase/ www.newsflash.org www.pagc.gov.ph/Project.htm www.sb.judiciary.gov.ph/about.html www.rips.gov.ph www.transparency.org http://www.transparency.org/news_room/in_focus/2008/cpi2008/cpi_2008_table "RP is 4th most corrupt in Southeast Asia Indonesia tops PERC survey", 20 March 2010, retrieved 4 February 2011 from http://www.mb.com.ph/articles/247016/corruption-worsens-indonesia EO 464 http://sc.judiciary.gov.ph/jurisprudence/2006/april2006/G.R.%20No.%20169777.htm CPR http://sc.judiciary.gov.ph/jurisprudence/2006/april2006/G.R.%20No.%20169838.htm People’s Initiative http://sc.judiciary.gov.ph/jurisprudence/2006/october2006/174153.htm

TAN Paper on Corruption and Anticorruption in the Philippines (March 2011)

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