“I’M NOT hearing this,” the procurement expert recalls himself saying as he tried to cover his ears. He was recounting an interesting incident that happened sometime last year, while he was helping oversee a public bidding for civil-works contractors to build roads in a southern Philippines province.

The roads project was being funded by a major bilateral donor, which had hired the procurement expert to help ensure the selection of contractors was honest and transparent. The bidding had gone very well; there were many eligible participants and the price bids were genuinely competitive. Members of the bids and awards committee (BAC) also did not take a long time to recommend that the contract should be awarded to the lowest bidder.

But then, the expert said, the winner of the bidding approached him and the BAC members to tell them this: “The mayor just called to ask for his cut. He said we wouldn’t be allowed to enter his town if we didn’t give him something. What should I do?”

That’s when the procurement expert, who spoke to the PCIJ on condition of anonymity as his employment contract forbids him from talking publicly about the project, put his hands to his ears. He said he didn’t know how the story ended – whether the mayor got his cut and how much, if any. But for him, the incident underscores some of the ills that continue to plague many public works projects even as the central offices of the Department of Public Works and Highways (DPWH) begin to make some headway in curbing corruption and collusion in the implementation of big projects.

“For big projects, it’s clear that Secretary Rogelio Singson’s reforms are already making a significant impact,” said the procurement expert, an engineer who used to work for a government-planning agency. “But picking contractors for pork-barrel and local projects is still influenced to a large extent by congressmen or local politicians.”

Exactions by local pols

Even if they do not have a hand in choosing contractors, politicians try to take a slice off the private contractors’ profit margins by threatening to make it hard for them to secure various kinds permits from local authorities. Noted the expert: “Even contractors for major projects being supervised by the DPWH central offices are not spared. Congressmen and local officials demand that contractors see them first before they do any projects in their territories.”

Manolito Madrasto, executive director of the Philippine Constructors Association, the industry grouping of building and infrastructure contractors in the country, and a long-time construction industry veteran, says that as Singson slowly makes some headway in cleaning up the central offices of the DPWH, the problem seems to be shifting to exactions made by local politicians.

“There is still some leakage in public works contracts though it has probably gone down from 30 to 40 percent to only five to 15 percent, most of which go to pay off local officials and politicians,” Madrasto says.

A PCIJ review of the DPWH databases on bid summaries for civil works contracts as well as awarded contracts found that public tenders supervised by central and regional offices tended to be more competitive than those administered by engineering districts, which interact more with local officials. The average number of bidders for contracts worth P50 million and above bidded out by the central and regional offices was 4.4 per project but fell to only 2.4 for contracts worth less than P50 million, which are handled by engineering districts.

Similarly, the “price cut,” or the difference between the authorized budget ceiling, the maximum possible price, and the lowest bid for big projects managed by central and regional offices was 10.9 percent, but was only 4.7 percent for small projects handled by engineering districts.

Not likely to end

The vice president of a major Philippine construction company says exactions from politicians is a problem unlikely to go away soon in spite of Singson or the Aquino administration’s efforts to clean up the DPWH and other national government agencies.

“It seems to be ingrained in our political system,” says the construction bigwig. “I can’t blame these politicians for making these kinds of demands on private contractors because they are just responding to demands made on them by their political supporters and constituents for various kinds of favors. Go to any politician’s house or office, and you’ll see the long lines of people asking for everything from jobs to money for hospitalization.”

The president of a medium-sized construction company says that dealing with politicians’ demands for payoffs is just one of the many challenges facing private contractors on the ground. “In some ways, it’s similar to the problem posed by communist or Muslim rebels asking for revolutionary taxes,” he says. “The appropriate response will depend on the situation but it does not always involve giving them money. Sometimes, CSR (corporate social responsibility)-type of projects like building a school or a livelihood project will do.”

Still, in spite of the problems facing public works contractors, Madrasto says that many of the PCA’s big members are keen to participate in infrastructure projects, including those to be carried out under public-private partnerships (PPP), because of the reforms being put in place in DPWH and other infrastructure agencies.

No more chop-chop?

“We note that he (Singson) is trying to correct the past practice of chopping up a large project into several smaller ones just to accommodate contractors who are not qualified to carry out big projects,” remarks Madrasto. “That’s very encouraging for our members.”

The PCA is helping the DPWH curb collusion among contractors and public works officials, he says.

“We threw out an entire chapter composed of around 20 members because we suspected they were involved in collusive schemes to fix the results of biddings for public works contracts,” says Madrasto, adding that information on their collusive activities were submitted to DPWH.

PCA members are also looking forward to a new mechanism being developed by DPWH for long-term maintenance contracts, lasting five to 10 years, in road and bridge construction, Madrasto says. While holding private contractors to strict performance standards, they will be given a lot of leeway to develop the most cost-effective ways to meet such standards, he says.

It remains to be seen if the reforms to curb collusion and corruption will take root and spread across the entire DPWH organization throughout the country as the agency steps up the implementation of infrastructure projects.

This year, the department is expected to bid out P170 billion worth of projects compared to P156 billion planned last year.

Down then up

The PCIJ review of DPWH data on awarded contracts show that the total value of awarded civil works contracts entered in the agency’s public works registry began to go up toward the end of 2011 after sharply declining in the second half of 2010.

From P121.9 billion, the value of civil works contracts registered with the DPWH in the last year and a half of the Arroyo administration fell by more than half to only P54.96 billion in the first year and a half of the Aquino administration. To be sure, the big slump is not just due to the spending slowdown after the new government reviewed and froze some projects. Some of it is also the effect of the surge in spending under the Arroyo administration just ahead of the May 2010 national elections.

(Click here for a larger version of this figure.)

The number of projects fell from 14,816 to only 9,530 during the same period. But then the value of awarded contracts surged to P7.96 billion in December 2011, the highest since March 2010.

But guarding against collusion among bidders and ensuring the government gets the best price bids when it puts up a public works contract for bidding are not the only challenges facing the DPWH in selecting contractors to build or repair roads, bridges, flood control dikes and other infrastructure projects. It must also choose only those who are qualified to do the work on time and within budget, and with the track record to prove it.

To get a glimpse at the track record of construction companies being awarded millions of pesos worth of public-works contracts, PCIJ generated a list of the hundreds of contractors who won the 9,530 awarded civil works contracts registered since the Aquino administration took over in July 2010, and compared these with some items in the Constructors Performance Evaluation System (CPES) report for 2009, the year before the new administration came in.

The CPES report is prepared by the Construction Industry Authority of the Philippines and Philippine Domestic Construction Board (CIAP-PDCB), joint public-private sector bodies that audit the performance of construction companies carrying out infrastructure projects. CIAP and PDCB have developed a scoring system for a contractor’s workmanship, materials and timeliness in implementing projects. It then adds up the scores and assigns an overall rating for the contractor’s performance for the project. These range from “Outstanding,” “Very Satisfactory,” “Satisfactory,” to “Unsatisfactory” and “Poor.” (Click here to view a copy of the CPES report.)

Bad guys get deals

There were 121 contractors that received a rating of “Poor” and “Unsatisfactory” for at least one completed project between 2007 and 2009, according to the 2009 CPES report. The PCIJ found that 77 of these, or almost two-thirds, were still awarded civil works contracts from the middle of 2010 to 2011.

Altogether, they won contracts worth an aggregate value of P6.4 billion or 11 percent of the total contracts awarded in the last year and a half.

What’s more, even the worst-performing contractors who got more than one “Poor” or “Unsatisfactory” ratings still managed to win huge contracts; the vast majority only have a single failed rating.

A contractor that has four failed ratings got nine projects worth P186.9 million, which is more than four times the average value of contracts per company.

Another with three failed ratings won 32 contracts with a combined value of P245.2 million.

A company with two failed ratings won contracts worth P361.4 million, making it one of the 20 biggest contractors.

A ranking of the contractors by value of aggregate projects showed that two of the Top 10 contractors are not registered with the Securities and Exchange Commission (SEC). It appears that two of the 10 biggest contractors are not in the SEC online database at all, possibly suggesting they are not corporations but only single-proprietorships.

Same with Arroyo

This brings to mind a similar finding made by the PCIJ in 2009 when it examined summary information on over 27,000 DPWH awarded contracts between 2000 and 2008, and discovered that four of the ten biggest contractors were not corporations but only sole-proprietorships.

Another contractor in the Top 10 list seems to be operating with a revoked SEC registration. That seems odd not only for one of biggest contractors around but one which also built the DPWH’s two biggest projects. Though it first registered way back in 1977, the company has no single report filed with the SEC’s online corporate records system.

Perhaps an SEC registration does not count for much in the construction industry so long as a contractor can do the job well. Indeed, nine of the contractors in the Top 10 list had a General Engineering rating of AAA, the highest, while one had a rating of AA, the second highest, according to the Philippine Construction Accreditation Board, the public-private joint body that issues licenses to construction companies wishing to do business in the country.

A PCAB rating of AAA or AA implies a certain degree of financial capacity to carry out and complete large-scale infrastructure projects. If a contractor is not registered with the SEC or does not submit timely reports to the corporate regulator, that makes it harder for the potential clients and the wider public to independently verify its financial position.

Madrasto says that some wily contractors file different financial statements with different agencies to suit different purposes. “They submit inflated figures with PCAB when seeking accreditation and deflated figures with the BIR (Bureau of Internal Revenue) to avoid paying a lot of taxes,” he says. “We in the PCA are advocating the harmonization of submissions to the different regulatory agencies.” – With additional research by Karol Ilagan, PCIJ, April 2012

THE PROVINCE of Pampanga is one of the worst places to be in during the rainy season. Located at the bottom of a geological depression, it lies at the heart of Central Luzon’s drainage system where floodwaters from surrounding provinces converge before rushing out into Manila Bay. And within it lies another sinkhole, the town of Candaba, an old lakebed whose swamps and fields offer a temporary resting place for migratory birds on their way to and from North Asia.

No wonder Candaba’s mayor was furious when Public Works Secretary Rogelio Singson in late July 2010 cancelled a P78-million contract to repair the town’s dikes and riverbanks that help contain waters of the Pampaga river.

At the time, Singson had barely warmed his seat at the Department of Public Works and Highways (DPWH), having been appointed just less than a month before. Yet he seemed already on his way to making his first enemy as DPWH chief, with the Candaba mayor warning that if the river swelled and the dikes collapsed, floodwaters would submerge not just Candaba but also the towns of Mexico, Sta Ana, and San Fernando.

But the cancelled deal to rehabilitate Candaba’s embankments was just one among some 19 contracts for projects to rebuild infrastructure damaged by Typhoons Ondoy and Pepeng that the new secretary nullified after he found they were awarded with no public bidding.

In fact, within months of coming to power on June 30, 2010, the new administration either froze, modified, or cancelled scores of infrastructure projects, in accordance with President Benigno Simeon C. Aquino III’s anti-corruption campaign.

The contract cancellations may have discomfited Candaba’s mayor — and perhaps many of the townspeople themselves. But little harm was done in the end.

A PCIJ review of DPWH databases on awarded civil-works contracts and bidding results reveals that most of the suspended flood-control projects were eventually bidded out and implemented. We also found the DPWH got much lower prices for the contracts to carry out the civil-works projects, suggesting the delays were well worth it.

This is quite a surprise for a department long perceived as hopelessly corrupt and inefficient. The PCIJ itself had no expectations when it reviewed about 2,600 biddings conducted by the DPWH 18 months before, and 20 months after, the Aquino administration came to power on June 30, 2010, to see if there have been any palpable improvements in its procurement activities. Copies or summaries of the bidding results are posted on the DPWH web site but PCIJ also asked for a copy of the database in spreadsheet format, which Singson readily granted. (Link to the DPWH online database)

A similar PCIJ request made to then DPWH secretary Hermogenes Ebdane Jr. was not granted in early 2009. (Related story: WB suspects, whistle-blowers bagged biggest DPWH deals)

Early gains

The PCIJ found that by most indications — and despite apparent resistance from some local officials — the much-maligned department seems to be finally paving its own daang matuwid (straight path), the battlecry of the Aquino administration.

For instance, the cost savings from awarding the suspended post-Ondoy and Pepeng rehabilitation projects through competitive tender could be signs of early gains from the new DPWH secretary’s campaign to curb graft in the department.

In Candaba, for example, the department tendered the contract to repair the dikes and riverbanks in January 2011, six months after it was cancelled. There were eight bidders, including Northern Builders, the original contractor, which offered the lowest bid of only P58.4 million, or a quarter less than the original contract price.

The difference amounts to some P24 million in real savings for the government; it gets the same structure built for much less. Northern Builders began construction in March 2011 and had completed 65.3 percent of the Candaba dike and riverbank works as of February this year.

Costs down 34%

Similarly, most of the 19 civil works contracts cancelled by Singson in July 2010 had been successfully bidded out in 2011, and many of the projects are already being built, according to data gathered by the PCIJ. At least three have been completed as of February 2012. New contract prices for 14 projects on which information is available show that the DPWH was able to bring down costs by an average of 34 percent compared to the original cost.

(Click here for the larger version of this table.)

(Click here for the DPWH database on status of projects and the DPWH database on awarded contracts)

Singson has overhauled procurement and administrative systems and procedures at the DPWH in a bid to clean up the agency, which emerged as the most corrupt government institution in a 2009 survey by polling group Pulse Asia.

That year, the World Bank debarred five construction companies and two of their owners for rigging a series of biddings for bank-funded road projects. The Bank also released an internal report where it alleged that a cartel composed of private contractors and public works officials has been “institutionalized and has operated with impunity for at least a decade, possibly longer,” on account of the “systemic corruption and bid rigging” in the Philippine public works sector.

It added that evidence gathered by World Bank investigators suggested, “the cartel may enjoy support at the highest levels of the Government of the Philippines, including several officials of the DPWH and even reaching the husband of the President (Gloria Macapagal Arroyo) herself.” (Related story: $45m lost to bribes for ‘cartel’ backed by DPWH, pols)

Singson has reshuffled DPWH officials to prevent them “from being too familiar with contractors and suppliers, and to reduce the opportunities for colluding with them.” Too, he had also replaced other officials with serious eligibility deficiencies and pending complaints or cases.

Curbing collusion

The gains from the DPWH’s moves to toughen procurement policies are not confined to suspended projects that were subsequently put up for bidding. There are indications the department is making broader progress in the battle to curb widespread collusion that has artificially inflated the cost of public works projects in the past.

The PCIJ’s review reveals that the average number of bidders for large projects worth P50 million and more went up from 1.3 under the Arroyo administration to 4.4 under Aquino. For projects valued at less than P50 million, the number of bidders rose only a bit from 1.3 to 2.4. More bidders suggest more competition, which should result in lower price bids for DPWH projects.

This seems to be happening especially for big civil-works projects. The PCIJ compared the lowest price bids with the authorized budget ceiling (ABC) before and after the Aquino administration came in. The ABC is the DPWH’s estimate of the maximum cost of carrying out a civil-works project. It expects price bids should be below the ceiling.

We found that the average “price cut,” or the difference between the ABC and the lowest bid, for projects worth P50 million more than doubled to 10.9 percent under Aquino from only 4.2 percent under Arroyo, suggesting more competition perhaps because of the increase in average number of bidders.

For projects worth less than P50 million, the “price cut” more than quadrupled to 4.7 percent under Aquino from 1.1 percent under Arroyo.

Savings rate up

The DPWH claims much better results. It estimates that savings, or the difference between ABC and the awarded amount, on 106 contracts for civil works, goods and consultancies tendered by the central office and project management offices between July 2010 and November 2011 averaged 15 percent.

Savings on 5,091contracts tendered by regional offices and engineering districts averaged only 10 percent, according to its 2011 accomplishment report. Interestingly, post-Typhoons Ondoy and Pepeng rehabilitation projects, which include contracts cancelled by Singson and tendered again in 2011, yielded the biggest savings of as much as 30 percent.

In peso terms, the savings amounted to P5.53 billion between July 2010 and November 2011, says DPWH, adding that it could reach P6 or P7 billion by the end of last year.

The department says that budget allocation for the 5,000 or more projects between mid-2010 and end-2011 was around P60.5 billion. The aggregate ABC, however, was just P52.7 billion and the total contract award for those projects reached only P47.1 billion.

The DPWH considers these results as an indication that the new administration’s moves to curb corruption and inefficiency are beginning to pay off. “Collusion in the bidding of public works projects is being addressed through transparency reforms and strict adherence to public bidding rules,” the department said in its 2011 accomplishment report.

Costly delays

Still, the DPWH’s estimated savings of P5.5 billion, commendable as it is, came after lengthy periods of administrative reviews that postponed the implementation of many projects. These inevitably delayed the completion of badly needed public works such as roads, bridges, classrooms, river dikes, irrigation canals, and others

Economists say the delays in the availability of these crucial facilities have costs, too, and must be taken into account in determining if the DPWH’s savings are indeed significant in the bigger scheme of things.

The impact of the contract cancellations go beyond affected places such as Candaba. The revoked or delayed projects were widely blamed for the Philippine economy growing much more slowly than it should have last year. Infrastructure and other capital outlays fell below budget by 34 percent or P82.7 billion, more than half the total amount of underspending by government in 2011. Though business leaders welcomed the new administration’s anti-corruption drive, many are worried that it is coming at the expense of economic growth.

“The DPWH’s estimates of savings from better procurement must be assessed against the economic costs of delayed infrastructures,” says former budget secretary Benjamin Diokno, now a professor of public finance at the University of the Philippines. “For example, there is a cost when a classroom fails to be completed on time, and that is the value of education foregone by children who cannot be accommodated in schools because of lack of classrooms.”

While estimating the costs of the delayed projects is difficult at this time, one can still have a sense of the magnitudes involved by comparing the DPWH accomplishments in the first 11 months of 2011 with its full-year targets. The department lists some 120 items as major final outcomes (MFO), a document that accompanies its annual budget, but reports accomplishments on only seven items related to the construction of roads and bridges.

Short of target

Based on the DPWH’s 2011 accomplishment report, the department appears to be short of its target to replace temporary bridges with permanent ones by 59.4 percent. That is equivalent 2,203 lineal meters of sturdier bridges, almost the same length at San Juanico Bridge. DPWH is also short of the target for building new bridges by 25.6 percent. That is equivalent to 1,039 lineal meters of new bridges that were not constructed. It is falling behind its target to rehabilitate paved roads by 22.6 percent, equivalent to 253 kilometers of better roads, almost the same as the distance between Manila and Baguio.

More than half of 833 school-building projects worth P754 million assigned to DPWH from the Department of Education in 2011 were not yet started as of November 2011. The DPWH hopes to catch up with its targets this year. It promised that all of the school-building projects began in 2010 and 2011 should be finished by the first quarter of 2012.

It managed to offset some of the shortfalls on its bridge building targets by building more new roads than planned. Of course, that is not much comfort to, say, a heavy-truck driver who must seek a longer route because a temporary or damaged bridge is not sturdy enough. Hopefully, as anti-corruption reforms take root at the department, honest tenders for public works projects would not come at the cost of their timely completion. – PCIJ, April 2012

AMID the rampant misdeclaration or underdeclaration of their Statements of Assets, Liabilities, and Net Worth (SALN) by senior public officials lies a prettier, often overlooked, picture: the few good men and women in high and low positions who follow the law most diligently and truthfully.

To this minority of good SALN filers belong a number of Cabinet members and officials of constitutional commissions. The ties that bind them are a few things. Most came from the private sector or the professions where they founded their wealth. They are political appointees, but until they became part of government nearly all had no history of engaging in party politics or running in elections. Of fairly senior age, most are self-made names with fairly good credentials or work portfolio, even before public office beckoned.

This exceptional few replicate the good example of rank-and-file civil servants who consider filing their SALNs as a most solemn duty. Various media reports on patterns of compliance with the SALN law have celebrated public school teachers, career service personnel, and low-level bureaucrats who submit fully accomplished SALNS every year without fail.

Their compliance with the law has been encouraged in part by employees associations, periodic reminders and review of their SALNs by agency human resource officers, and in the case of public school teachers, risk avoidance. Some public schools have set a firm policy: file no SALN by the April 30 annual deadline, collect no salary for the summer school break.

But trying to assess who filed what kind of SALN can be tricky, in part because those seeking access to SALNs find themselves being forced to go through hoops and red tape.

Faulty SALN filing can actually be a violation of several laws, among them the 1987 Constitution, the Code of Conduct and Ethical Standards for Public Officials and Employees or Republic Act No. 6713 (R.A. No. 6713), and the Anti-Graft and Corrupt Practices Act or Republic Act No. 3019 (R.A. No. 3019).

According to the R.A. No. 3019, “every public officer, within thirty days after assuming office and, thereafter, on or before the fifteenth day of April following the close of every calendar year, as well as upon the expiration of his term of office, or upon his resignation or separation from office, shall prepare and file… a true detailed and sworn statement of assets and liabilities, including a statement of the amounts and sources of his income, the amounts of his personal and family expenses and the amount of income taxes paid for the next preceding calendar year.”

In addition, the Constitution says that public officials must disclose to the public copies of their SALNs.

The fundamental law of the land, in fact, prescribes disclosure of SALNs by senior-rank officials. It states: “In the case of the President, the Vice-President, the Members of the Cabinet, the Congress, the Supreme Court, the Constitutional Commissions and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law.”

Entry, exit SALNs

Transparency, under the Constitution, is a state policy. In Section 8, Article II, the Charter says: “Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest.”

Indeed, apart from filing SALNs every year, the Constitution and R.A. No. 6713 require elective and appointive officials to also submit what might be called their entry and exit SALNs – the first refers to asset records they must file within 30 days from assumption into office, and the second, to asset records their must file within 30 days after resignation or separation from service.

SALN filers and custodians have just three simple tasks under the law, according to lawyer Nepomuceno Malaluan, co-convenor of the Right to Know, Right Now! Coalition. First, make a truthful declaration. Second, submit such declaration within deadline. Third, file and publicly disclose asset records.

The third is a shared task of both the filer and the SALN custodian, who receives, keeps, and is supposed to share SALN copies to the public, in the manner provided by law. Nonetheless, nothing stops all filers who have copies of their SALNs to share and disclose these outright, on request of the public or the media.

The law spells out the manner of disclosure of SALNs under its section titled “accessibility of documents,” says Malaluan. It provides that SALNs shall be made available for inspection at reasonable hours, and for copying or reproduction after 10 working days from the time they are filed, subject to the payment of a reasonable fee to cover the cost of reproduction and mailing of such statement, as well as the cost of certification.

Right to know

Complementing this duty to disclose is the people’s right to access information in the custody of public agencies that the Constitution also guarantees.

Disclosure is required precisely because SALNs are supposed to serve as instruments of such valued principles as transparency and the people’s right to know on one hand, and accountability and good governance on the other.

SALNs are a tracker document: they fix and plot the wealth of public officials, by type of assets and liabilities and time of acquisition, and from their dates of entry to and exit from public office.

SALNs are a reference document as well: they spell out, or should, the context and links of the wealth of public officials, their business interests and financial connections, and where exactly they might get into real, potential, or perceived conflicts of interest when they decide public policy or award public contracts and funds.

Malaluan says the members of the 1986 Constitutional Commission had set high hopes and standards for the potential of SALNs to affirm all these hallmarks of good governance.

The late Sen. Blas F. Ople, a ConCom member, did not see SALNs as documents that should just be archived or left to rot in the filing cabinets of public agencies. Disclosure of their SALNs, Ople had stressed, should be a bigger and more reasonable expectation of the most senior public officials.

Citing ConCom records, Malaluan quotes Ople as saying, “In a society, it is understood that we have to lead by example and those who have this burden more than the others are the holders of the greatest power.”

“(O)ne of the objectives it wishes to serve is the development of a higher level of ethical practice in the government,” Ople had also said, “so that it is addressed to the public’s right to know, but at the same time it would put all public officers within the compass of a duty to disclose their own conflict of interest when this arises or to make available information, such as statements of assets and liabilities and net worth, as a matter of obligation under this provision.”

Half and half

Far too few have heeded Ople’s words, however. Indeed, President Benigno Simeon C. Aquino III and about half of his two dozen Cabinet-rank appointees filed 2010 SALNs that are largely lacking in substantive facts about when and how they acquired their real assets, as well as the details of their investments and liabilities.

Fortunately, the other half filed fairly to absolutely complete SALNs for 2010, in point of both form and substance.

The good filers include Agrarian Reform Secretary Virgilio de los Reyes, Foreign Affairs Secretary Albert del Rosario, Energy Secretary Jose Rene Almendras, Defense Secretary Voltaire Gazmin, Trade and Industry Secretary Gregory Domingo, Finance Secretary Cesar V. Purisima, Public Works and Highways Secretary Rogelio Singson, Tourism Secretary Ramon Jimenez, Presidential Legal Counsel Eduardo de Mesa, National Anti-Poverty Commission Chairman Jose ‘Joel’ Rocamora, Metro Manila Development Authority Chairman Francis Tolentino, Transportation and Communication Secretary Manuel ‘Mar’ Roxas and his predecessor, Jose ‘Ping’ de Jesus. All of them, except for Roxas, had not sought or assumed elective positions.

De los Reyes even attached his income tax return (Form 1700 of the Bureau of Internal Revenue) and his certificate of compensation tax withheld (BIR Form 2316) for the honorarium he received as professor at De La Salle University’s College of Law for the year 2010.

Civil Service Commission (CSC) Chairman Francisco T. Duque is exemplary for the depth of details of his SALN although it is under his watch that the CSC imposed an exorbitant fee of P200 on requesters for each SALN copy, which is typically all of two to five pages long.

Duque’s SALN for 2010 came with four annexed documents. Annex A listed10 real properties he owns, including the exact unit number of the condominium units and addresses of the houses, the exact months and years when he purchased each, and the amount he paid to the last peso, to acquire each one.

Annex B listed six motor vehicles and the exact years and amounts he paid for each one. Annex C listed five investment instruments he has in three country clubs and accounts in two banks, and the exact months and years when he acquired and opened these.

Annex D listed to the last all his jewelry – including two diamond rings with exact stone setting, paintings by Filipino masters that he identified by name, and when and at what cost he acquired these.

In the Cabinet, Foreign Secretary del Rosario comes closest to the completeness of the details that Duque enrolled in his SALN. For instance, del Rosario submitted a three-page list of his business interests and financial connections from1965 to 2010, as well as the executive and board positions he assumed in each one.

Commission on Elections Chairman Sixto Brillantes Jr. and former Commission on Audit Chairman Reynaldo A. Villar filed fairly complete SALNs as well.

Gaps in access

Filing SALNs is advisedly just the first step in complying with the law. The second step, filing truthful and complete SALNs, is the foremost compliance problem. But even worse, publicly disclosing SALNs promptly and at reasonable cost, the third step, seems the most sticky issue for now, a full 23 years after R.A. No. 6713 came into force.

“The public disclosure element plays a very vital cog in the system of accountability that the Constitution wanted to achieve on SALN,” wrote Malaluan in a recent commentary on SALNs. “But the public disclosure component leaves much to be desired in practice.”

He added that in some agencies, notably the Supreme Court and the House of Representatives, “one mechanism to frustrate compliance is through administrative avoidance.”

“Rather than facilitating the orderly implementation of Section 8 (C) of RA 6713, some government agencies apply instead the general duty, also under RA 6713, to act promptly on letters and request within 15 days from request,” Malaluan wrote. “Any response, including acknowledgement, referral, or indication of future action, is regarded as substantive compliance.”

High court huge barrier

Yet worst of all, Malaluan rued that some major custodians of SALNs, notably the Supreme Court again, the Civil Service Commission, and the Office of the Ombudsman, “have promulgated guidelines that go beyond reasonable regulation of the manner of access, and which appear intended more to subvert the plain, mandatory directive of the Constitution for disclosure of SALNs to the public.”

In May 1989, the high court issued an en banc resolution requiring requesters to state the purpose of the request and outlined the conditions under which requests would be denied. Three years later, in September 1992, the tribunal “issued an even more restrictive guideline authorizing the Court Administrator to act on requests only upon a court subpoena signed by a presiding judge in a pending criminal case against a judge or court personnel, or upon an appropriate request personally signed by the Ombudsman,” Malaluan wrote.

In June 2009 as Ombudsman, Ma. Merceditas N.Gutierrez issued Memorandum Circular No. 1 that, Malaluan said, “limits the legitimate reasons for requests, requires requests to be subscribed and sworn to, and introduces a wide discretion for denying requests for SALNs.” Gutierrez’s circular remains in force under the watch of Aquino appointee, Ombudsman Conchita Carpio-Morales.

And finally, on March 11, 2011, the CSC adopted Resolution No. 100356 requiring SALN requests to be sworn to, and imposing a P200 fee for each SALN copy.

And even as it continues to refuse requests for the SALNs of the members of the House of Representatives that PCIJ filed 20 months ago, the lower chamber is also reportedly planning to adopt the CSC’s guidelines on the disclosure of SALNs.

Should this happen, and the House follows even the CSC’s imposition of a P200 fee per SALN copy, the asset records of nearly 300 district and party-list representatives is sure to cost journalists and researchers a fortune – about P60,000 for all the SALNs of the House members.

Already, the Commission on Elections has copied the CSC’s rules. The poll body now also collects a P200 fee for each SALN copy.

The following agencies are the custodians of SALNs:

• The national office of the Ombudsman, for the SALNs of the President, Vice President, and officials of the constitutional commissions (CSC, Comelec, COA).
• The secretary/secretary-general of the Senate and the House of Representatives, SALNs of the senators and congressmen.
• The clerk of court of the Supreme Court, SALNs of the justices.
• The court administrator, SALNs of the judges.
• The Office of the President, SALNs of the Cabinet secretaries, undersecretaries, assistant secretaries, and the heads of the foreign service missions, government-owned and –controlled corporations (GOCCs), and state colleges and universities (SUCs).
• The offices of the Deputy Ombudsman (for Luzon, Visayas, Mindanao), SALNs of regional and local officials and employees, both appointive and elective, including other officials and employees of GOCCs and SUCs.
• The Office of the President, SALNs of the officers of the Armed Forces from the rank of Colonel or Naval Captain, while those of lower rank, below with the Deputy Ombudsman in their respective regions.
• The Civil Service Commission, SALNs of all other public officials and employees.

As a rule, though, copies must also be filed with the respective departments, agencies, and offices of the SALN filers.

FOI boon or bane?

But better compliance with the SALN law may soon happen – that is the guarded optimism that Malaluan holds in light of the long-awaited passage of the Freedom of Information Act. Last February, President Aquino finally transmitted to the Senate and the House his administration’s version of the FOI, which enrolls a provision on the mandatory disclosure and upload online via government websites of the SALNs of all public officials and employees.

Still, Malaluan reckons that good or bad things may happen. The good, he says, is that the FOI may enhance “proactive disclosure, procedure for access, and administrative and criminal penalties for violation of the right to information, plug loopholes not only with respect to access to SALNs but to all other government-held information.”

But the other possibility smells of trouble. Given the controversy that the SALN has generated in light of the impeachment trial of Supreme Court Chief Justice Renato Corona, Malaluan says that the provision on mandatory disclosure online of SALNs in the President’s FOI version could precisely draw heat and flak from the legislators, and challenge the passage of the FOI Act. – PCIJ, March 2012

WHATEVER THE outcome of the impeachment trial of Supreme Court Chief Justice Renato C. Corona, a once-ignored piece of document seems to be getting the attention it deserves at last. The question, however, is whether or not the general public’s increased familiarity with the Statement of Assets, Liabilities, and Net Worth or SALN would finally shame public servants into taking it seriously and accomplishing it beyond token compliance.

Corona is on trial at the Senate impeachment court in part for his alleged failure to disclose not just his SALN, but also the full details of his wealth. According to his prosecutors, Corona misdeclared, underdeclared, or did not declare multimillion pesos of cash and other assets.

But one inconvenient truth is that misdeclaration, underdeclaration, and non-declaration of all sorts of assets in SALNs are rampant across branches of government, political parties, and administrations. Tellingly, too, instead of providing the public greater access to SALNs, internal guidelines in the judiciary, the House of Representatives, and the Ombudsman have led to the opposite and have created more barriers to securing copies of a document that was supposed to help foster transparency in government.

In other words, both individual compliance by public officials and institutional compliance by public agencies with the SALN law are wanting and have failed to honor and do justice to its spirit.

Twenty-five years ago, a new Constitution heralded what should have been an era of transparency, accountability, and good governance in the country. Among other things, it triggered the mandatory filing and disclosure by all civil servants of their SALNs, under Republic Act No. 6713 or the Code of Conduct and Ethical Standards for Public Officials and Employees. R.A. No. 6713 was enacted in 1989.

The SALN is aimed at helping keep public servants honest, since the information it should contain would aid the public in keeping track of any sudden increases in a government employee or official’s wealth. The assumption, of course, is that the data entered in the SALN are all accurate and up to date. For any monitoring to be done, access to that data is also presumed.  

For years now, though, the SALNs of all members of the judiciary have been inaccessible to the public, including the media. Majority of Corona’s prosecutors and members of the House of Representatives have also dug in their heels regarding the release of their SALNs, reportedly because they want to skirt inquiry and intrigue – exactly the situation the chief justice is now in.

Poor form, substance

A cursory review of the SALNs of about 1,500 senior elective and appointive officials that PCIJ has gathered since 1998 yields a possible reason for this: SALNs are mostly deficient in form and substance, with the habitual and seemingly non-disclosure pointing to flagrant sins of commission instead of mere sins of omission.

Many officials, for instance, still refuse to disclose the full details of the current/fair market and assessed values of their real properties, their exact location, and the size of their real properties. They include President Benigno Simeon C. Aquino III himself, Budget Secretary Florencio ‘Butch’ Abad, Health Secretary Enrique T. Ona, and some senators, congressmen (as of their 2009 SALN), and other Cabinet members. 

For a man who knows both his law and his money, Abad offers a puzzling SALN. He reported owning six real properties worth less than a million pesos or basement prices that could leave eBay and sulit.com bargain hunters slack-jawed in envy.

The six properties that Abad enrolled in his December 2010 SALN include a lot and a house in Quezon City (which he said bought and built in 1983 and 1990, and with assessed values of only P203,040 and P584,550), three lots in Batanes (acquired on sale in 2001, 2004, and 2008, with assessed values of P2,250, P64,000, P33,370), and a lot in Batangas (acquired in 2008 with assessed value of P105,000).

Altogether, Abad declared the assessed value of his six real properties to be only P993,070. He left blank the columns for data on current/fair market value and acquisition cost of his real properties.

Meanwhile, Health Secretary Ona, who had a long lucrative private practice as a kidney doctor before his Cabinet posting, declared a net worth of P78.24 million in his December 2010 SALN.  But he opted to be mum about the details of his wealth; regarding his real properties, Ona simply typed the word “various” under the columns for “kind,” “location,” and “year acquired,” and left blank those for the assessed value and fair market value of his properties.

Ona’s net worth was shored up, however, by unspecified “stocks and investments” declared at P75.43 million, even as he reported liabilities such as “personal loans” of P5 million, a car loan from a bank of P750,000, and income tax payable of P65,059.50.

Similarly, President Aquino himself filled out his SALNs for June 2010 and December 2010 by simply typing “various” on and on under the columns for personal and other properties, leaving out many important details like his purchase of a second-hand Porsche (that he later sold), and the firearms he owns.

Cash & investments

PCIJ’s survey of SALNs also shows that while many officials declare having piles of cash on hand and in bank, and investments, they do not disclose how and in what years they acquired their millions.

There is also a tendency by many officials to claim huge sums of investments, time deposits, stocks, and money market placements, but they would not disclose in which business entities, companies or establishments these are lodged. 

Examples of such filers are Vice President Jejomar Binay and Iloilo Rep. Niel Tupas, Jr., chair of the justice committee and lead prosecutor in the Corona impeachment trial.

Binay declared a net worth of P58.09 million in his latest SALN as of December 2010 – all of it representing assets. He had zero liability.

He declared 12 real properties (three in Makati City, three in Batangas, two in Laguna, one each in Muntinlupa, Cavite, Isabela, and Bataan). Of the 12, Binay said he purchased seven, inherited two, earned two others as legal service fees, while two remain mortgaged.

Binay placed the acquisition cost of the 12 properties at only P16.88 million. 

He reported though a constantly growing amount of personal and other properties totaling P42.7 million, or nearly three times more than his real properties. This accounts for P17.52 million “cash on hand and in bank”, P11 million in “receivables,” P7.07 million in “furnitures, antiques, clothings, etc”, and P4.05 million in “investment in business” that Binay said was the “exclusive property of the spouse.”

As for Tupas, his SALNs offer a curious case of constantly rising investments in “time deposits and money markets.”

He reported a significant steady growth in his net worth, according to his disclosed SALNs for 2007, 2008, and 2009, or the years when he served in the 14th Congress.

As of his latest available SALN – 2009 – “time deposits/money market” assets seem to be the pivot of Tupas’s wealth, even as it first appeared only in his 2008 SALN. It just kept growing, despite the fact of the global financial crisis that sent markets in Europe tumbling down in 2008 to the present.

In July 2007, Tupas said he had P8.5 million cash in bank, but zero “investments” or “time deposits/money market” assets. In December 2007, his cash in bank stood at P11.5 million, but still he had zilch for “time deposits/money market.” By December 2008, however, his cash in bank slipped to P2 million, and a new entry, “investments,” came in, which Tupas valued at P11.7 million.

In December 2009, the term “investments” disappeared in his SALN; in its place, Tupas reported he had “time deposits/money market” assets worth P22 million.

The paper trail of real properties (i.e. land, houses, buildings) is fuller and stricter, thus easier to track. In contrast investment instruments could be shrouded in corporate veil, or brokered and sealed with agents, thus easier to hide.

Conflict of interest?

But by not disclosing in which business entities they have investments, public officials open themselves up to conflict of interest situations, which anti-graft laws say could be real, perceived, or potential. Hence transparency requires that they disclose these details.

Too, while many officials admit to incurring huge loans, mortgages, and other liabilities from relatives, friends, banks, credit card agencies, and business associates, they withhold data on the names of their creditors. Yet again, by not disclosing the identities of their creditors, public officials open themselves up to real, perceived, and potential conflict of interest situations.

And even if the SALN form requires the disclosure of specific data, including the incomes of the filer and his or her spouse, many officials do not, or simply will not, file honestly and fully, often leaving the columns blank. 

There are also some senior officials who fill out their forms by hand – which would not be a bad thing in itself, except that the data enrolled usually end up illegible. 

Ex, present Ombudsman 

This is fortunately not the case with the SALN of Ombudsman Conchita . Yet what she filed may likely raise a few eyebrows anyway. 

As a retired associate justice of the Supreme Court, Carpio-Morales’s SALN had not been disclosed previously, on account of court resolutions that placed the SALNs of all justices, judges, and court personnel secret from the public.

But when she assumed office as Ombudsman in June 2011, Carpio-Morales promptly filed her SALN in July 2011. She would not voluntarily release copies of her SALN, though, until last January 2012, amid the impeachment trial of Corona for, among others, non-disclosure of his SALNs.

Carpio-Morales declared a net worth of P40.75 million, representing P14.1 million in real properties and P29.04 million in personal and other properties, but also P2.4 million in liabilities. The last amount, she reported, was “amortization of purchase price of condo unit” to her creditor, the “Eton Group of Companies.”

She said P14.10 million was the total  “acquisition cost” of the nine real properties she “purchased” or built – three residential lots in Muntinlupa, a house and lot in Lemery, Batangas, three condominium units (located at The Fort, Manila, and Albergo in Baguio City), and two memorial lots.

She purchased two of the three condominium units only recently: The Fort condo in 2008 supposedly for P4 million flat, and the Baguio City condo in 2011, for P2,508,000.

Yet while Carpio-Morales reported the “acquisition cost” of all her nine properties, she left blank all the other columns in her SALN where she should have disclosed such details as assessed value, current fair market value, and nature of property (paraphernal, conjugal or community).

She also did not disclose how much in income she is getting as Ombudsman, and what the P25 million she has in “cash/investment inclusive of retirement benefits” actually consists of, in which entities she has investments, and how much of the total was her “retirement benefits.”

In comparison, Carpio-Morales’s resigned predecessor, Ma. Merceditas N. Gutierrez, had stated in her December 2010 SALN the annual income she was getting as Ombudsman: P743,673.50.

Gutierrez also declared the “current/fair market value” of seven real properties she said were “conjugal” assets (three inherited, two “donation”, and two “sale on installment”). She tagged these to be worth P69.5 million in all.

Yet like Carpio-Morales, Gutiertrez withheld details of the P7.5 million she said she has as “investments/savings/retirement benefits,” as well as details of the P13 million of her “loans, credit cards” liabilities that she said she owed “banks/private.”  

In her 2006 SALN, Gutierrez said her P19.8-million “liabilities” then included P4.5-million “loans” with PCIB Equitable, P10.8-million “mortgages” with Allied Bank, and P4.5 million in “private loans.”

The senator-judges

Among the senator-judges, Senate President Juan Ponce Enrile and Sen. Edgardo J. Angara stand out with their fully filled-out SALNs, which show to the last detail of the registration and plate numbers of their vehicles, and dates of acquisition of how many stocks in whichever companies.

In contrast, like President Aquino, opposition Sen. Manuel B. Villar repeatedly typed “various dates” under the column for  “year of acquisition” of his real estate and other properties in his 2010 SALN. 

All that Villar revealed were “investment in shares of stocks” worth P147.8 million, and “other real and personal properties” worth P572.8 million. His net worth: P725.2 million, with zero liabilities.

The colorful Sen. Miriam Defensor Santiago meanwhile said in her 2010 SALN that her assets include nine residential and two agricultural lots (six located in La Paz, Tarlac; two in Iloilo, and one in Lipa, Batangas) worth only P4.18 million. 

The bulk of her wealth or P100.3 million consists of personal and other properties, including P51.2 million “cash on hand/in bank” and P29.06 million in “investments” in unnamed business entities. But because she declared P60 million in “personal loans” to unnamed creditors, Santiago’s net worth slipped to only P40.3 million.

Sen. Joker P. Arroyo filed possibly the most trite of all SALNs among his colleagues. He declared a net worth of P11.05 million in his 2010 SALN. He said he had P7.9 million in “investments” and offered no further details. He also said he owns a “residential” property in Makati City that he said was worth P3.15 million. 

Arroyo, a known resident of posh Dasmariñas Village in Makati, said he acquired it in 1968 for P450,000, but that its assessed value now is only P150,000; he constructed his house for P1.05 million, but that he had improvements made so its value should now be worth P3 million.  

Why bad compliance?

Lawyer Nepomuceno Malaluan, co-convenor of the Right to Know, Right Now! Coalition of the advocates of the Freedom of Information Act, sees three apparent reasons for bad compliance with the law.

The first and least worrisome: Officials who think the SALN is an invasion of their privacy. Malaluan says that “the fear of calling attention to their wealth, of being investigated” could be the most common reason why some officials do not want to expose details of their real and cash assets. 

But the lawyer says that “privacy is not an option for public officials,” and argues: “The minute they embraced public office, they have to embrace the principle of a public office is a public trust. Your personal discomfort (about lack of privacy) must be overcome because of your public mandate.”

Second and a bit worrisome: Officials with a “puwede na” attitude or who take to their duties, including filling out SALN forms, half-heartedly, or with less than best effort. 

“There are officials who think that filling out some spaces and leaving others blank is good enough.” Malaluan notes. And because the SALN custodians are not looking or auditing compliance by form and substance, these officials get away with filing defective or deficient SALNs year on year.

While the first two groups may not be readily accused of “malice” or “malicious intent to deceive” in filing bad SALNs, Malaluan takes exception to yet a third, and the most worrisome, group: officials who file defective or deficient SALNs “knowingly and willfully, with intent to deceive, to hide their unexplained wealth, to avoid compliance with the law.”

This third group includes, he says, “those who want to conceal corruption.”

According to Malaluan, any discussions on how to improve compliance with and enforcement of the SALN law must acknowledge these “multiple tendencies of non-disclosure.” 

Yet even more important, he says, the myriad problems of implementation must be the target of reforms. These include “the problems introduced by internal guidelines in some agencies, the norms and systems for disclosure of documents across government, the standards for filing and filling out SALN forms, and the lack of review by custodians of the quality of SALNs filed.”

Public demand

Through it all, Nepomuceno says the citizens have to demand better and more truthful compliance by public officials. “The reality is there should be more pressure from the people for public officials to disclose, and to disclose truthfully, their assets, their wealth.”

Jose Manuel Diokno, dean of De La Salle University’s College of Law and national chairman of the Free Legal Assistance Group (FLAG), for his part assigns the greatest role in punishing bad SALN filers to the Office of the Ombudsman.

After all, apart from simply submitting SALNs, all public officials are also obliged to grant the Ombudsman access to their tax records – yet another document that could help validate the integrity of the sources of their wealth.

Diokno cites that the law, or R.A. No. 6713, already imposes on all public officials the obligation “to execute…the necessary authority in favor of the Ombudsman to obtain from all appropriate government agencies, including the Bureau of Internal Revenue, such documents as may show their assets, liabilities, net worth, and also their business interests and financial connections in previous years, including, if possible, the year when they first assumed any office in the Government.”

Reiterating a recent FLAG position paper on the issue, Diokno says, “It appears, however, that our public officials have never complied with this requirement; and the Ombudsman has never exercised its right of access to public officials’ BIR and other government records to determine if they are acquiring ill-gotten wealth.” – PCIJ, March 2012

MAGUINDANAO:The Quest for Justice is a documentary produced by the Philippine Center for Investigative Journalism on the second anniversary of the Maguindanao Massacre. After two years, the Ampatuans have allegedly ramped up efforts to reach a settlement with the families of the victims. The families of the victims continue to hold out against the proposed settlement, even as they try to survive from day to day. In the meantime, the Ampatuan clan continues to wield clout in the region with its vast resources and continuing political influence.

This is just the teaser. The entire video will be uploaded next month.

Advocates of the Freedom of Information (FOI) bill raised this question after Malacanang again failed to include the FOI bill in its list of priority measures during the Legislative Executive Development Advisory Council earlier this week.

In a statement sent out to media organizations, the Right to Know, Right Now! Coalition noted with alarm that President Benigno S. Aquino III had raised new concerns over the proposed Freedom of Information Act during the LEDAC meeting in Malacanang. These concerns were apparently added to the list of other reasons that Malacanang had been using to defend its refusal to endorse the bill to Congress.

Media and civil society groups have been pushing for the passage of a Freedom of Information Act for the last 14 years. The measure would give the media and the public easier access to official and public documents. In separate interviews with the media in 2010, then President-elect Aquino had pledged to prioritize the FOI as part of his campaign for more transparency in government.

The Philippine Center for Investigative Journalism is a part of the Right to Know, Right Now! Coalition and the Bantay FOI! Sulong FOI! Campaign.

The full text of the statement follows:

As PNoy defaults on FOI,
Congress must now take the lead

Kung talagang gusto, hahanap ng paraan.
Kung talagang ayaw, hahanap ng dahilan.

This is exactly where President Benigno Simeon C. Aquino III stands on the proposed Freedom of Information bill, which seeks only to enforce a constitutionally guaranteed right of the people to know and secure documents in the custody of government agencies.

The President says he supports the bill in principle, but that he has “specific questions and concerns” that he wants to be settled, before he endorses it as his priority legislation. His concerns, the President says, include his fears that FOI could unlock documents that might expose people to kidnappers, cause government losses in right-of-way cases because of property price speculations, and many other unwanted results.

Yet over the last 14 months in office, he has failed to answer and settle these concerns, and for as long a period, the FOI bill has languished in limbo.

A Malacañang study group on the FOI had told us about other, bigger concerns of the President. Through Deputy Speaker and Quezon Rep. Erin Tañada, chief author of the FOI bill in the House of Representatives, we informally and indirectly engaged the study group in constructive dialogue over the last six months.

Two critical concerns on exceptions were addressed over time in three successive drafts of the FOI bill that the Palace study group crafted – “national security” and the President’s deliberative process. These were in addition to existing exceptions in the FOI bill based on national defense and foreign affairs; military or law enforcement operation; privacy; trade, industrial or commercial secrets; drafts of adjudicatory decisions; privileged information in legal proceedings; executive session of Congress; and exceptions recognized in other statutes or the Constitution.

The legislative process practically ground to a halt, precisely because the President and his study group said they were drafting their own FOI bill. We had hoped that by the opening of the second regular session of Congress, the Palace draft would be done, and the President would have certified it as a priority measure.

We had hoped as much because we still remember: As the presumptive winner of the May 2010 elections, the President had promised to assign first priority to the FOI’s passage into law, and in June 2010, as president, he launched his government on the principles of transparency, accountability, and good governance.

This is the first time we are hearing that the President has new concerns about what he says could be the undesirable results of an FOI law.

The President assures us that he supports the FOI bill “in principle” but that because his concerns linger, he could not act on his own study group’s version of the FOI bill.

What seems like a state of principled indecision in Malacañang makes us wonder: Is the President part of the solution, or part of the problem, in assuring the passage of the FOI bill? Or perhaps neither, because he has chosen to pass up a chance to lead on a strategic policy issue that the Constitution has so clearly mandated him and all public officials to uphold and enforce – the people’s right to know.

The fate of the FOI bill was a leadership call on the President. We had not wished he would default. Yet because he has, we now refocus our efforts on the House of Representatives and the Senate, which should, without need for cue or advice from Malacañang, act now and quickly on the FOI bill.

We do so with eyes wide open that as it was in the 14th Congress under then President Gloria Macapagal Arroyo, the FOI bill could face rough, tough sailing in the 15th Congress. While Mrs. Arroyo and her allies vigorously opposed and killed the bill before it could be ratified, Mr. Aquino and his allies now seem to want to let the bill waste away, and fade in time.

THE RIGHT TO KNOW, RIGHT NOW! COALITION/
BANTAY FOI, SULONG FOI! CAMPAIGN
17 AUGUST 2011

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

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

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

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

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

DILG honor roll

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

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

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

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

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

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

Big challenges

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

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

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

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

Strong signal

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

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

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

Obama project

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

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

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

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

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

Practical tips

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

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

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

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

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

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

Documents for citizens

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

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

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

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

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

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

Least opaque

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

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

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

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

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

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

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

Public interest

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

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

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

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

Useful details

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

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

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

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

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

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

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

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

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

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

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

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

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

Most opaque

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

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

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

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

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

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

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

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

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

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

Politics & revenues

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

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

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

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

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

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

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

IT HAS been described as an “investment in the next generation,” with its supposed results of millions of healthier, better educated Filipinos not expected to be realized anytime soon. But the Conditional Cash Transfer (CCT) program is also an investment that is drawing a substantial chunk of its capital from foreign loans, a fact that has many observers raising red flags.

“The poor of the future will be the ones who will carry the burden of paying off this debt,” says Freedom from Debt Coalition Executive Director Milo Tanchuling, who believes it would be better if the CCT relied on locally sourced funds. That the government is also vague about alternative funding prospects for the program has only made those like Tanchuling uneasy – and wondering if it’s an initiative that is sustainable.

In fact, official records show that the CCT had started out as an entirely government-funded program. But with a dramatic expansion in the program’s coverage since 2008, as well as the acceleration of its implementation, the government opted to supplement the CCT budget with monies from the World Bank and the Asian Development Bank (ADB). Altogether, these loans amount to $805 million or P34.6 billion at current exchange rates.

The funds are intended to support, among other expenses, the targeting of beneficiaries for the CCT, cash transfers to beneficiary-households, project monitoring and impact evaluation, and the institutional strengthening of the Department of Social Welfare and Development (DSWD), the CCT’s lead undertaker.

Official data show that for 2010-2011, about 32 percent or P10.2 billion of the expenses for the CCT would be paid through these loans.

Big money

It’s obviously not free money. The $405-million World Bank loan under its Social Welfare and Development Reform Project allows for a 25-year repayment period including the 10-year grace period (or when the principal does not yet have to be repaid). This means that the Philippines will have to remit its first payment in 2020, and finish paying up by 2034, or after three more presidents, apart from Aquino, would have served their full terms.

The $400-million ADB loan, meanwhile, needs to be repaid in 20 years, including a five-year grace period. The government will have to start paying the ADB loan in March 2016 and continue to do so twice a year until September 2035.

The government’s CCT project involves a total estimated cost of US$1.29 billion for 923,000 households from 2009-2014.  Only a third of the total cost will be shouldered by the government while two-thirds will be financed by loans from the World Bank and the ADB, according to an August 2010 report of the ADB.

According to Socioeconomic Planning Secretary Cayetano W. Paderanga Jr., the long-term nature of the loans will make it much easier for the government to “spread (the payments) out.”

This is important, he says, because the CCT-related loans are not the only foreign debts taken on by the Philippines. Indeed, Bureau of Treasury records reveal that by the end of 2009, the national government’s total foreign and domestic debt was already at P4.4 trillion. By last January, that figure had risen to P4.74 trillion.

As if those figures aren’t mind-boggling enough, there are still the interest payments to consider. For this year alone, says the Department of Budget and Management (DBM), at least P357 billion or about two-fifths of the amount set aside by the government for debt service will go to interest payments.

Not for profit?

CCT advocates have pointed out that the World Bank and ADB loans for the program are concessional loans or those with interest rates that are lower than market rates. World Bank country director Bert Hofman himself says that the international lending agency does not stand to gain financially from the CCT. While the bank does charge interest, he says that’s “only enough to cover (the Bank’s) costs.”

“We don’t make any profits in that sense,” says Hofman. “That’s not our intent. Our intent is poverty alleviation and the financing is a vehicle.”

But the unsettled mystery is why the World Bank extended a bigger loan for the CCT, despite an assessment by its own team that CCTs in most parts of the world do not guarantee fantastic strategic results in the fight against poverty.

A 2009 policy research report by the World Bank, for instance, found CCTs to have increased “the likelihood that households will take their children for preventive health checkups, but that has not always led to better child nutritional status.” The report also found that “school enrollment rates have increased substantially among program beneficiaries, but there is little evidence of improvements in learning outcomes.”

The report – authored by Ariel Fiszbein and Norbert Schady – reviewed assessments made on CCT programs in several countries worldwide. It concluded that while CCTs were “effective” in “reducing short-term poverty” and “increasing the use of education and health services… the evidence of CCT impacts on final outcomes in health and education… is more mixed.”

The same report also found “ample reasons to be cautious” and warned governments to “avoid transforming the obvious virtues of CCTs into a blind advocacy campaign in support of them.”

The report stressed the necessity of combining the CCT with other programs “to improve the quality of the supply of health and education services, and should provide other supporting services” in order to “maximize their potential effects on the accumulation of human capital.”

Yet still, the World Bank gave the Philippines a bigger loan for its expanded project, even before it could finish a full assessment of the first two years of the CCT’s implementation under the Arroyo administration.

Review debt policy

The amounts involved are hardly small. IBON Foundation Research Head Sonny Africa says that by his think tank’s “conservative estimate,” interest payments to the World Bank for the CCT program could reach $94.6 million. The corresponding figure for the ADB loan $107.4 million, for a combined total loan service of $1.007 billion (P44.31 billion). Thus, says Africa, for every $4 borrowed by the government to help finance the CCT, the country will need to pay $1 as interest.

As it is, both Tanchuling and Africa attribute the government’s apparent budget deficiency for social services to the country’s automatic debt payments, which they say eat up a huge portion of the budget. Part of the solution therefore is not only to avoid taking on more debt, but also, Africa says, to put a cap on debt payments. He argues that even if this were done temporarily, it would already provide the government the space to “reinvest on the domestic economy, in rural construction, education, and on industries.”

For Tanchuling, even just a review of the country’s current debt payments is critical. He considers it quite puzzling that the country’s debt stock continues to rise despite the fact that the government “regularly pays what is due.”

He suspects that many of those debts are illegitimate in nature, meaning that the country did not really benefit from those loans. One classic example was the loan to fund the construction of the Bataan Nuclear Power Plant during Martial Law. Despite the billions of pesos borrowed, the power plant never became operational.

A more recent example, says Tanchuling, is the P503.65-million loan from the Bank Austria that the government took out in 1997 for medical-waste incinerators for 26 public hospitals. The incinerators turned out to be an “obsolete technology” and did not even pass the emission level standard of the Department of Health and the World Health Organization. In fact, as early as 2003, the Clean Air Act already prohibited the use of such incinerators. Yet, Tanchuling notes, the government continues to pay P100 million each year to pay off its debt to Bank Austria.

It might bring Tanchuling and Africa some comfort that the Aquino administration is now busy “reviewing and re-arranging certain projects.” In fact, Paderanga says that the government “has already stopped certain projects that it has thought were not worth doing.” But he declines to name the specific projects, financing institutions, and contractors involved “because the government does not want to embarrass them.”

Big social returns

CCT supporters, of course, are not about to lump the poverty alleviation program with such ventures. Filomeno Sta. Ana III of the group Action for Economic Reforms (AER) even says that the hefty interest payments the country will be making for the foreign loans for the program is “insignificant” when compared to the “social returns that the country stands to gain from the CCT in the short- and long-term.”

Actually, both Africa and Tanchuling also say that borrowing is not necessarily a bad thing – provided that the loans are put into good use as development instruments. But one of the problems with this country’s borrowing, says Tanchuling, is that it seems to have become a knee-jerk approach for the current and past administrations instead of being part of a well-thought-out plan.

Africa, for his part, talks of a “two-way dynamic” in which the government on one end “wants money, so (it) will design programs that (it knows) will be acceptable to the World Bank.” At the other end, says Africa, is the World Bank touting “certain programs like the CCTs, which it has been pushing for the last decade and a half.”

World Bank’s Hofman offers a different picture, saying, “It is not us determining what we’re financing in the Philippines. It’s the government that determines what we can usefully finance in the Philippines.”

The way the World Bank works, he explains, is through the development of a “country assistance strategy,” which outlines the Bank’s priorities based on “what the government wants from us in terms of knowledge and project financing.” Currently, says Hofman, that strategy goes under the banner of “making growth work for the poor” and the Bank’s “overarching target of inclusive growth.”

Urged to borrow?

And yet even Albay Governor Jose ‘Joey’ Salceda, an economist and staunch ally of President Benigno Simeon ‘Noynoy’ C. Aquino III, comments quite candidly that even without the CCT, foreign lending institutions such as the World Bank “would have given us the money anyway.” According to Salceda, these institutions have a tendency to “urge the government to borrow.”

There lies another worry for people like Tanchuling and Africa: Once the government starts borrowing from foreign lenders for a program, it cannot seem to stop.  In the case of the CCT, the Aquino administration has set as target 4.6 million beneficiary-families by 2016. While there’s no telling whether the program will still be running by then and beyond, the World Bank itself says that similar initiatives in other countries tend to run for years and years – and supported by loans.

World Bank Human Development Country Sector Coordinator Nazmul Chaudhury says that after an initial four-year cycle for its CCT program, Bangladesh requested another loan from the international lending agency. He also says that Mexico’s program, which is considered one of the most successful so far, “has been running for many, many years” with the help of loans from the Bank.

Socioeconomic Planning Secretary Paderanga says that the Philippine version of the CCT “will be a continuing program…up to the extent that the economy has not yet developed.” But he is uncertain how the CCT would be funded should it continue beyond 2016.

“We will have to look at the resources at that time,” he says.

Salceda, though, says that the key to sustain anti-poverty projects like the CCT is for the government to automatically direct at least one percent of the gross domestic product (GDP) to the poor, just like the Venezuelan model where “the revenues from oil are directly earmarked for the poor.” He argues that if local governments are assured of internal revenue allotments, then “the poor should have a direct share in the national income.”

May lend more

In any case, Hofman says that should the government ever decide to ask the World Bank for another loan to fund future cycles of the CCT, the Bank’s approval would “depend on the performance of the CCT here” or “how it fits within the overall evolving framework of social protection in the Philippines.”

The nature of World Bank’s assistance could also change to technical assistance instead of being a loan, he says. According to the Bank executive, this is what happened with the World Bank’s assistance for Mexico’s CCT program, which began “heavy on the technical aspect.” But later on, says Hofman, the Bank’s assistance “focused on the supply side.”

Another factor to consider would be the fiscal situation of the government – “whether they would actually need any World Bank financing,” Hofman says. Adds Chaudhury: “Maybe the Philippines would have a completely different paradigm (by then)… But it’s really depending on the government.”

To Africa, however, such loans would make more sense – and lead to more universal and lasting results – if they were direct investments in the public health and education system and in creating domestic industries. He says that if these funds were used to develop the rural sector, the government would already effectively address the plight of three-fourths of the population who reside in the rural areas. That would then mean less or no need for programs like the CCT.

For sure, Africa can hardly be pleased with the government’s hard sell of the CCT, which a member of the Aquino Cabinet says is a reflection of the current administration being “defensive” about its anti-poverty programs. This, the cabinet member observes, is largely because of the administration’s failure to communicate its programs effectively to the public.

It could also be because government officials cannot really seem to grasp the CCT’s limits – with no less than President Aquino himself appearing to have misconstrued the CCT as an immediate relief to widespread hunger. Last April, the Social Weather Stations (SWS) revealed the results of its first-quarter survey, which said 4.1 million families had experienced hunger in the three months preceding the poll. The president questioned SWS’s sampling method, which he thought was Luzon and Metro Manila-leaning. He then said that the survey failed to “capture those who benefited from (the administration’s) CCT program,” who are mostly located in the Visayas and Mindanao.

Last September, Social Welfare Secretary Corazon ‘Dinky’ Soliman was also quoted as saying that the CCT is “a life-saver to those drowning in poverty.” Notably, however, Soliman has since toned down her description of the CCT, and is content with saying that it is an important intervention to improve the education and health status of poor Filipinos.

These days, Secretary Paderanga says that the government itself “hopes that there will be less need (for the CCT) in the future.”  This is why, he says, there is “a very strong emphasis on massive infrastructure investment in order to help businesses grow.”

Paderanga explains that the Philippine Development Plan (PDP) 2011-2016, which was released just last week, will provide the framework for “economic activities that would generate employment and reduce poverty much more directly.” He cites in particular business process outsourcing (BPO), tourism, and agro-industrial processing as the main areas to be targeted by the government.

Paderanga also says that the PPDP’s overarching theme, “governance and anti-corruption” – essentially a translation of Aquino’s campaign slogan “Kung walang corrupt, walang mahirap” – is expected to “reduce the cost of doing business, which will also further increase investments by the private sector.”

“If the economy starts to operate and it demands more labor then the unemployment rate will go down,” he says.

Paderanga is confident that, with the kind of economic policies that the administration is putting in place, the economy will grow “bigger in the future,” with an ever-increasing revenue collection and discipline. He predicts that by the time the government repays the loans for the CCT, “it will be a small part of (government’s) problem.” – PCIJ, May 2011

CCT beneficiary-families are also very thankful and happy about the benefits they receive from the program.

And while there have been no widespread changes in the sources of independently-generated income and income-levels of 4Ps households since the program began, the cash grants have eased the severity of lean periods and enable more expenditures and consumption of basic necessities and some non-staple commodities and services during abundant periods.

At the barangay level, the program seems to have helped increase the number of children who have been immunized, as well as in improving children’s weights and families’ ability to manage sickness in the household. Greater awareness of maternal health concerns was also observed.

One significant change, though, was in the physical and material readiness of the children to attend school. Indeed, the IPC researchers note that the CCT children came to class clothed more properly, equipped with the necessary materials, and with full stomachs. The clothing, materials and projects, and food also seem to have made students more interested to come to school and be more active in class.

Parents as well were more participative, interacting more with teachers to monitor their children’s performance. At the very least, they no longer had to feel ashamed about any unpaid school fees.

A reduction of child labor in the areas visited by the IPC was attributed to the program’s frowning on child labor. The need for children to work at an early age remained just so poor households could survive, but the CCT program seems to have led to greater awareness and sensitivity about child labor.

Now the bad news: It remains unclear whether the positive behavioral changes observed were simply a result of the beneficiaries’ compliance with the CCT conditionalities (and could therefore disappear once the program ends) or actually signal the onset of long-lasting improvements.

The CCT families themselves were very unsure of how they would fare once the program ends, seemingly convinced that their future was still bleak. Majority did not see how their children could continue without the CCT, much less complete their schooling.

Says the IPC study: “At this rate then, whether school attendance will translate into academic achievement, completion of education, and eventually gainful employment remains blurry. Parents themselves can only be hopeful about their children completing high school. They acknowledge the lack of other income generating opportunities, high cost of education, and limited provision and duration of 4Ps as major constraints to their children’s full acquisition and benefit of education. The teachers recognize the same formidable constraints and are likewise wary, even befuddled about opportunities for children and youth from the (CCT) households.” – Che de los Reyes, PCIJ, May 2011