According to presidential spokesman Edwin Lacierda,

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1 POLITICAL 11 President funds different from PDAF Malacañang VP Binay asks Congress to remove pork barrel allocation President Benigno Aquino lll s spokespersons have stressed that special funds at the disposal of the Chief Executive are different from congressional pork barrel and therefore must not be abolished. According to presidential spokesman Edwin Lacierda, the President s Social Fund (PSF) is subject to scrutiny by the state auditor, the Commission on Audit. Mr. Lacierda also noted that under the Aquino administration, there have been no reports of misuse of the funds. Malacanang also said that unlike the pork barrel funds of legislators, the PSF is not sourced from taxes collected from Filipino taxpayers and does not have a fixed amount. The PSF is supported and replenished by a percentage of the profits from the government s main revenue generating agencies the Philippine Amusement and Gaming Corp. and the Philippine Charity Sweepstakes Office. Meanwhile, Vice President Jejomar Binay has asked Congress to remove the P200-million pork barrel from the 2014 budget of the Office of the Vice President (OVP). A statement released by the OVP said that VP Binay made the decision to end speculation and politicking on the true nature of the fund. The vice president hopes that his decision will assure the public that government officials are sensitive to populace s sentiments and are committed to serve with transparency and accountability. I know that my decision will affect many projects such as scholarships for students, medical assistance and medicine for our needy countrymen and the construction of buildings for senior citizens but I know that our countrymen will understand, VP Binay said. The OVP s P200 million fund for locally-funded projects started in 2011 and originally came from the unused Priority Development Assistance Fund (PDAF) of then Sen. Benigno Aquino III. In 2012 and 2013 the amount was integrated into the OVP s regular budget. VP Binay said that since he assumed office, the locallyfunded projects of the OVP have all passed the scrutiny of the Commission on Audit (COA). One COA report even lauded the OVP s social services programs including those that medical, dental, burial, and transportation assistance to some 31,691 poor beneficiaries across the country. The state auditors also lauded VP Binay s grant-in-aid scholarship program and credited his office for distributing school bags and school supplies to nearly 16,000 beneficiaries.moreover, COA hailed the OVP s accounting unit for being awarded as one of the most outstanding accounting offices among national government agencies in 2011 and With the removal of the P200 million, the OVP s budget is down to P217 million from the original P417 million VP Binay s office was requesting.

2 12 POLITICAL THE PRESIDENT S SOCIAL FUND (PSF) A trust fund that is supported and replenished by a percentage of the profits of the Philippine Amusement and Gaming Corp (PAGCOR) and Philippine Charity Sweepstakes Office (PCSO); A portion also comes from the Malampaya Fund - royalties from the Malampaya Gas Project off Palawan that is managed by the Shell Philippines Exploration, along with its partners Chevron Malampaya and PNOC Exploration Corporation. Includes the contingency and calamity funds. The PSF is used for: Financial assistance for families of slain soldiers Financial assistance for victims of natural calamities Donation to other countries beset by disaster or distress Not part of the General Appropriations Act (GAA) Amount of the President s Social Fund varies because it is not funded by the GAA How the PSF is spent is subject to the audit of the Commission on Audit (COA) Cannot be itemized because unforeseen events can occur. The President may be liable for malversion if the PSF is itemized UPDATES: PLUNDER, GRAFT CHARGES FILED VS SENATORS Plunder charges have been filed with the Office of the Ombudsman against Senators Juan Ponce Enrile, Jinggoy Estrada and Ramon Revilla Jr. for allegedly rechanneling their pork barrel funds to questionable non-government organizations (NGOs). According to the complaint filed by the National Bureau of Investigation (NBI), the 3 lawmakers received a total of P581 million in kickbacks. Charged with malversation, direct bribery, and other graft and corrupt practices were former district representatives, former chiefs of staff or assistants of the lawmakers, former executives of state-owned firms, and heads of the bogus NGOs. It is not yet certain whether the senators and congressmen involved should be suspended once the charges reach the Sandiganbayan (Anti-graft court). Senate President Franklin Drilon said that the lawmakers could be suspended upon conviction. Sen. Drilon added that the Upper Chamber would have to study the provisions of the Plunder Law and Senate rules. Sen. Miriam Defensor-Santiago, for her part, stressed that under the Plunder Act, the accused shall be automatically suspended when the Office of the Ombudsman files plunder charges in court. PORK BARREL FUNDS TO BE DISTRIBUTED TO NATIONAL AGENCIES The House of Representatives will remove the P27 billion lump sum for Priority Development Assistance Fund (PDAF) in the proposed P2.268-trillion national budget for next year. House Speaker Feliciano Belmonte Jr. said the funds will be distributed to various agencies such as the Departments on Public Works, Education, and Health. Lawmakers hailed the VP s decision and called on President Aquino to likewise give up his own lump-sum funds amounting to P217.6 billion. These special purpose funds (SPFs) under the Office of the President are the following: Calamity funds (P7.5 billion); Contingent funds (P1 billion); Department of Education school building fund (P1 billion); E-government fund (P2.478 billion); International commitment fund (P4.8 billion); Miscellaneous and personnel benefits (P80 billion); Pensions and gratuity fund (P120.4 billion); and Feasibility studies fund (P400 million). Executive Secretary Paquito Ochoa had defended President Aquino s refusal to remove the SPF s under the Office of the President, saying that the President only has direct supervision over the calamity and contingent funds of the lump sum funds. The rest are implemented by other government agencies. The president should be commended for suspending the release of the pork barrel. However, the entire system must eventually be abolished. Senators and congressmen have the responsibility to improve the lives of Filipinos by approving sensible laws, not by identifying projects to be funded by PDAF. Also, they should not be selecting specific localities or communities to support, but look toward improving the nation as a whole. Meanwhile, village officers, mayors, and governors can work with the regional and local development councils in identifying projects to be prioritized and implemented using public funds. Resolution of the pork barrel scam is a major test case for President Aquino. Cases must be filed against lawmakers involved in the P10 billion pork barrel scam, regardless of their political affiliation. If President Aquino can reform (or completely abolish) the PDAF system, other high-profile corruption cases could follow. And that would be a great legacy for his administration.

3 POLITICAL 13 Government officials and private individuals charged with plunder, malversation, direct bribery and/or graft and corrupt practices in connection with the alleged pork barrel scam Lawmakers and former lawmakers charged with plunder: 1. Sen. Juan Ponce Enrile (amount of kickbacks from Napoles: P172.8 million) 2. Sen. Ramon Bong Revilla Jr. (amount of kickbacks from Napoles: P224.5 million) 3. Sen. Jose Jinggoy Ejercito Estrada (amount of kickbacks from Napoles: P183.8 million) 4. Ex-Rep. (now Masbate Gov.) Rizalina Seachon-Lanete (amount of kickbacks from Napoles: P108.4 million) 5. Ex-Rep. Edgar Valdez (Apec party-list) (amount of kickbacks from Napoles: P56.1 million) Former lawmakers charged with malversation, direct bribery and other graft and corrupt practices: 6. Ex-Rep. Rodolfo Plaza (Lone District Agusan Del Sur) (amount of kickbacks from Napoles: P42.1 million) 7. Ex-Rep. Samuel Dangwa (Lone district, Benguet) (amount of kickbacks from Napoles: P26.8 million) 8. Ex-Rep. Constantino Jaraula (Lone District, Cagayan de Oro) (amount of kickbacks from Napoles: P20.8 million) Chiefs of staff or representatives of the lawmakers charged with either plunder or malversation, direct bribery and other graft and corrupt practices: 9. Jessica Reyes Chief of Staff, Sen. Enrile 10. Richard Cambe Staff, Sen. Revilla 11. Ruby Tuason Representative, senators Enrile/Estrada 12. Pauline Labayen Staff, Sen. Estrada 13. Jose Sumalpong COS, ex-rep. Lanete 14. Jeanette dela Cruz District Staff, ex-rep. Lanete 15. Erwin Dangwa COS, ex-rep. Dangwa 16. Carlos Lozada Staff, ex-rep. Dangwa Heads of agencies charged with either plunder or malversation, bribery and graft and corrupt practices: 17. Alan Javellana former president National Agribusiness Corp. (Nabcor) 18. Gondelina Amata president, National Livelihood Development Corp. (NLDC) 19. Antonio Ortiz former director general, Training and Research Center (TRC) 20. Dennis Cunanan former deputy director general (now director general), TRC 21. Salvador Salacup former president, ZNAC Rubber Estate Corporation (ZREC) (now assistant secretary, Department of Agriculture) Napoles NGO presidents also charged with plunder and malversation: 22. Jocelyn Piorato Agricultura para sa Magbubukid Foundation Inc. (APMFI) 23. Nemesio Pablo Agri and Economic Program for Farmers Foundation Inc. (AEPFFI) 24. Mylene Encarnacion Countrywide Agri and Rural Economic and Development Foundation Inc. (CARED) 25. John Raymund de Asis Kaupdanan para sa Mangunguma Foundation Inc. (KPMFI) 26. Evelyn De leon Philippine Social Development Foundation Inc. (PSDFI) 27. Ronald John Lim Ginintuang Alay sa Magsasaka Foundation Inc. (GAMFI) Implementing agency officials and employees charged with plunder or malversation, bribery or graft and corrupt practices by conspiracy: 28. Victor Cacal Nabcor 29. Romulo Revelo Nabcor 30. Ma. Ninez Guanizo Nabcor 31. Julie Johnson Nabcor 32. Rodhora Mendoza Nabcor 33. Alexis Sevidal NLDC 34. Sofia Cruz NLDC 35. Chila Jalandoni NLDC 36. Francisco Figura TRC 37. Marivic Jover TRC Charged with plunder, malversation and corruption of public officials: 38. Janet Lim-Napoles owner of JLN Group of Companies and mastermind of the Priority Development Assistance Fund (PDAF) scam operations Sources: Offi cial Gazette, Department of Justice, Inquirer.net

4 14 POLITICAL The 2014 National Budget The proposed P2.268 trillion national budget for 2014 is 13% higher than this year s budget of P2.006 trillion. The budget will fund the implementation of key programs that will support the government s inclusive growth goal. For 2014, the Social Services sector will continue to have the largest share of the Budget at P842.8 billion as the government expands social protection and basic social services to increasingly benefit the poor. Some P590 billion will be set aside for Economic Services to build more vital infrastructure projects such as roads and support the growth of key sectors like tourism, agribusiness, and manufacturing. A robust manufacturing sector will provide well-paying jobs to Filipinos, even to the less-educated and less-skilled. The manufacturing subsector was among the main drivers of the country s growth in the 2nd quarter of Socioeconomic Planning secretary Arsenio Balisacan emphasized this during the release of 2nd quarter GDP growth figures. With the rebound of the industry sector, we are optimistic that more stable, productive and remunerative jobs, even for the less-skilled, will be generated, which will address persistent unemployment and underemployment and will lead to better quality of life, Mr. Balisacan said. It should be noted that P399 billion will be allotted to infrastructure spending. The budget is equivalent to 3 % of GDP. The Budget department had mentioned that infrastructure spending will reach 5 percent of the country s GDP by This will put the Philippines at par with its Asian neighbors in terms of infrastructure spending. The Department of Education will receive P336.9 billion, the largest allocation among agencies. The funds will be used to hire more teachers, build more classrooms and procure books, desks and other materials. The allocation will also support the implementation of the expanded basic education program or K+12. The Department of Public Works and Highways (DPWH), as the infrastructure arm of the government, will receive the second largest budget with P213.5 billion, an increase of 40% from its 2013 allocation. The increase will enable the agency to construct and rehabilitate more roads and bridges to support the growth of job-generating sectors like tourism. Also in the Top 10 is the Department of Social Welfare and Development (DSWD) with P79 billion. A huge chunk (P62.6 billion) of the department s allocation will be used for the expansion of the Aquino administration s flagship poverty alleviation program, the Pantawid Pamilyang Pilipino program or Conditional Cash Transfer (CCT) that is projected to benefit 4.44 million indigent families in 2014, up from 3.92 million poor households this year. The expanded program will also provide a P500 monthly cash grant to 10.2 million children aged also belonging to the households covered by the CCT until they finish high school. THE BUDGET SECTOR LEVELS (PHP BILLION) PERCENT SHARE CHANGE PARTICULARS PROGRAM PROPOSED AMOUNT PERCENT Social Services Economic Services General Public Serv Debt Service Defense Net Lending (1.6) (5.8) TOTAL 2, , SUBMISSION AND ENACTMENT OF NATIONAL BUDGETS, 2000 TO 2013 FISCAL YEAR OPENING OF CONGRESS SUBMISSION TO CONGRESS ENACTMENT 2000 July 26, 1999 July 27, 1999 February 14, July 24, 2000 July 24, Reenacted 2002 July 23, 2001 August 22, 2001 January 21, July 22, 2002 August 21, 2002 April 23, July 28, 2003 August 6, Reenacted 2005 July 26, 2004 August 25, 2004 March 15, July 25, 2005 August 24, Reenacted 2007 July 24, 2006 August 28, 2006 March 23, July 23, 2007 August 21, 2007 March 16, July 28, 2008 August 29, 2008 March 16, July 27, 2009 August 24, 2009 February 08, July 26, 2010 August 25, 2010 December 27, July 25, 2011 July 26, 2011 December 15, July 23, 2012 July 25, 2012 December 19, July 22, 2013 July 23, 2013? Source: Department of Budget and Management (DBM, Offi cial Gazette)

5 POLITICAL 15 The Department of Health will get P87 billion. Part of the proposed budget will be used for the implementation of its Universal Healthcare program. Nearly P15 million of the agency s budget will be set aside for preventive healthcare services for 14.7 million poor households. In 2013 the Aquino administration started implementing the Bottom-Up budgeting (BUB) process that allows the poorest municipalities to identify and develop local poverty reduction projects in consultation with their communities and the civil service organizations (CSOs) in their localities. This led to P8.4 billion in poverty reduction projects, developed by 595 cities and municipalities, which were integrated into the 2013 National Budget. President Aquino expanded the BUB process this year and the number of participating municipalities and cities rose to 1,226. The funds for the BUB process was increased to P20 billion to cover the needs for the following community-based projects: electrification, potable water, education, health, training, livelihood opportunities, and the protective services of these local government units (LGUs). The Aquino administration must ensure that safeguards are in place to guarantee the efficient spending of public funds. The government s partnership with civil service organizations (CSOs) and other corruption watchdogs must be strengthened to make sure that the national budgets are free of lump sum allocations, which are highly vulnerable to corruption. MNLF declares independence amidst MILF peace process The Moro National Liberation Front (MNLF) has declared independence amidst the ongoing peace process between the Philippine government and the Moro Islamic Liberation Front (MILF). On August 12, 2013, the Moro National Liberation Front (MNLF) formed a federal state called Bangsamoro Republik in Talipao, Sulu where MNLF founding chairman Nur Misuari proclaimed himself president. The MNLF refers to the Bangsamoro Republik as a sovereign nation under colonial occupation, which covers the entire Mindanao, Palawan, Malaysian states of Sarawak and the resource-rich Sabah (see box). The move has been anticipated early this year due to MNLF s opposition to the ongoing peace negotiation between the Philippine government and the Moro Islamic Liberation Front (MILF). MNLF argues that the Framework Agreement on the Bangsamoro (FAB) between the Philippine government and MILF signed in 2012 is tantamount to abrogating the 1996 Final Peace Agreement (FPA). The Philippine government and MNLF have a long history of conflict. It was until the 1976 Tripoli Peace Agreement (also called BICO - binding international commitment and obligation) was signed to establish the Autonomous Region in Muslim Mindanao (ARMM) (see box) that MNLF recognized the territorial integrity and sovereignty of the country. But, this agreement was never implemented. The ARMM only composed of the provinces of Basilan, Sulu, Tawi-tawi, Maguindanao and Lanao del Sur. In 1989, the MNLF campaigned to abolish the ARMM. Nonetheless, ARMM was still established and Chairman Misuari agreed to become its 1st governor. The 1996 FPA provided for a transitory period of 2 years to create a law for a new autonomous government in place of the ARMM, but it was not until 2007 that the Philippine government and MNLF together with the Organization of Islamic Cooperation (OIC) started to undertake a tripartite review of the implementation of the peace agreement. The Office of the Presidential Adviser on the Peace Process (OPAPP) said that the government is fully committed to the 1996 FPA and even uses it as baseline in the FAB negotiations. The OPAPP called upon Chairman Misuari to join the peace talks. Moreover, they urged him to give the FAB a chance and put the Bangsamoro agenda above personal interests. However, the MNLF said it will no longer grant any talks with the government. Chairman Misuari is currently seeking the full support of the OIC after submitting an interim constitution to the United Nations. According to Atty. Emmanuel Fontanilla (Legal Counsel of Chairman Misuari), the declaration is in line with the United Nations General Assembly Resolution 1514 of 1960 granting independence to all colonized countries. Mr. Fontanilla also stated that the group will exercise all legal and peaceful means to attain its political objective. Meanwhile, the Philippine government and the MILF said that MNLF s declaration of independence will not prevent them from reaching the final peace agreement. The 2 remaining annexes of the agreement are expected to be signed before the end of The FAB involves 4 annexes, 2 of which have already been signed early this year (see table). Apart from the signing of FAB, a Bangsamoro Transition Commission (BTC) has already been created and is tasked to immediately draft the Bangsamoro Basic Law (BBL) after all annexes are signed. The BBL, certified by President Benigno Aquino III as urgent, is targeted to be passed in Once passed, a Bangsamoro Transition Authority (BTA) will assume the responsibility of ensuring the continuous functioning of governments in the area. BTA is expected to be in place by 2015 to ensure smooth transition towards the new Bangsamoro political entity by PROVINCES THAT COMPRISE THE AUTONOMOUS GOVERNMENT FOR MUSLIMS (AS LISTED IN THE 1975 TRIPOLI AGREEMENTS) 1. Basilan 2. Sulu 3. Tawi-tawi 4. Zamboanga del Sur 5. Zamboanga del Norte 6. North Cotabato 7. Maguindanao 8. Sultan Kudarat 9. Lanao del Norte 10. Lanao del Sur 11. Davao del Sur 12. South Cotabato 13. Palawan

6 16 POLITICAL Unless the 2 rebel groups reconcile, they will remain threats to peace and security in the country. MAP OF THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN) MEMBER COUNTRIES ANNEXES OF THE FRAMEWORK AGREEMENT ON THE BANGSAMORO (FAB) FAB ANNEXES Annex I. Transitional Arrangements and Modalities February 27, 2013 Annex II. Revenue Generation and Wealth Sharing July 13, 2013 Annex III. Power Sharing Not yet signed Annex IV. Normalization Not yet signed DATE SIGNED The government envisions a Bangsamoro that is inclusive of political groups in the Bangsamoro including MNLF and indigenous groups. But, with the MILF insisting a leading role and the MNLF considering the agreement as a tool for war in the Mindanao region, war could possibly break out once again. And, unless the 2 rebel groups reconcile, they will remain threats to peace and security in the country. PH, U.S discuss expanded access to military bases The Philippines and the United States are working on an agreement that will expand the access of American forces to the Philippines military bases. The move is seen to counter an increasing security threat from China over the disputed Spratly Islands. The access agreement will allow the U.S. to store parts and supply that will be useful in crisis and to temporarily base U.S. Marines and Navy in the country. A 30-hectare (74-acre) area was identified for the bases. A wider access to military bases in the country and the rotational presence of U.S. troops is deemed to be helpful to enhance the country s defense especially in the midst of a heightening territorial dispute with Beijing which sparked in In the case that the conflict becomes violent, the Philippines is no doubt at a disadvantage, considering its inferior defense system and equipment. Relying on the United States to improve the country s defense system is highly necessary at this point. Subic Bay was chosen because of its strategic location. It had once been the home of the largest military installation of the U.S. in Southeast Asia. These bases were pulled out a decade ago when the Philippine Senate rejected (on a vote) the extension of a basing treaty signed in The rejection was due to domestic opposition to the presence of American troops. Since then, U.S. troops are allowed temporary visits for maintenance and refueling justified by the 1999 Visiting Forces Agreement. The Philippine government welcomes the idea of an access agreement. The 2 countries have a stable alliance built through the Mutual Defense Treaty signed in 1951, stating that both the Philippines and U.S. will support each other if either one will be attacked by an external party. Amid speculations on the terms of the agreement, Philippine and American governments stressed that no new U.S. bases will be established and the agreement is just an attempt to work more closely for a more steady relationship between the 2 countries. U.S. Air Force Colonel Carl Baker also said that the

7 18 POLITICAL Relying on the United States to improve the country s defense system is highly necessary at this point. agreement would definitely lead to more ship work in Subic, but the troops dispatched in the area will rotate for no more than 6 months at a time and would number a few thousand at most. There has been limited information on the execution of the agreement (e.g. what facilities will be built and what equipment will be brought in). Both panels have not reached an agreement on the duration of this setup. The U.S. wants to use Philippine bases for up to 20 years, but Philippine Assistant Foreign Secretary Carlos Sorreta maintained that the government presented a shorter period for its counterproposal. In an embassy press release, the following agreements were enumerated: Facilities used for prepositioning remain the property of the Philippines, The Philippines maintains the primary responsibility and authority in matters of security, Any prepositioning of activities will not violate Philippine environmental laws, Any construction will have to be removed by the U.S. once the approved activity is completed, Stronger language on non-prepositioning of prohibited weapons. Despite some protests, the proposed agreement may still prove to be an advantage for the country. The Philippine defense system has been largely dependent on U.S. support, which comes in the form of joint military training exercises and civil-military operations. This access agreement would further deepen the country s alliance with the United States. The agreement would also improve the Philippines defense posture in terms of its territorial conflict with Beijing.