Getting down to the bottom of fake SAROs


Emeritus Leonor Magtolis Briones

Last Monday, November 25, the public was jolted by a newspaper report that fake SAROs amounting to P879 million were discovered after the Department of Agriculture inquired from DBM whether these particular SAROs were already released officially. DBM denied releasing these SAROs; they were still unsigned.

By Tuesday, DBM Secretary Butch Abad announced no money had been released since the genuine SAROs were not even signed yet. Department of Agriculture Secretary Alcala was quoted as saying that mayors were getting calls from certain DBM officials who were asking for money in exchange for prioritizing the release of individual SAROs for their projects.

Now that it has been confirmed that there was a failed attempt to collect on P879 million in fake SAROs, it is time to dig deeper and identify who the ringleaders of these nefarious schemes are. It is not enough that this particular scheme was stopped just in time; the perpetrators have to be singled out and punished.

Stories about fake SAROs, ghost beneficiaries and plain extortion have been circulating about DBM employees in several administrations. While fake SAROs are created on a wholesale basis, there are also stories about individual SAROs which are held hostage, subject to the payment of a certain percentage of the project cost.

Secretary Alcala is quoted as saying there is an extortion syndicate working inside the DBM. The veracity of this observation has to be checked. Right from the beginning of this PDAF debate, I have always maintained that the investigation of these huge funds should not be limited only to congressmen and senators. The participation of members of Executive Branch has to be checked as well. It is the easiest thing to heap opprobrium on the heads of legislators; after all, surveys show they are the least trusted among government officials. Massive fraud cannot be perpetuated without collusion at most, or sheer carelessness at least on the part of the Executive.

The Commission on Audit itself has observed that the DBM has been remiss in exercising caution during the budget process, especially in the inventory of SAROs, notices of cash allocations, as well as other means of determining accountability in implementing the budget.

These incidents confirm the observation that the Napoles scam is only the tip of the iceberg. I have pointed out time and again that the plunder of PDAF funds is comprehensive and systemic. Even at the height of the highly charged senate investigations, the chief of staff of a new senator reported being visited by groups peddling projects and presenting “NGO’s” volunteering to implement them.

Did the Supreme Court err in striking down Pagcor contributions to the government?

A news report states that the Supreme Court may have erred in its landmark decision on the PDAF when it struck down Section 12 of PD 1869, which is on Pagcor remittances to the General Fund, as unconstitutional. Section 12 of PD 1869 refers to remittances made directly by Pagcor for infrastructure. It provides that 50 percent of Pagcor income after taxes should be remitted to the National Treasury. Pagcor officials insist that this provision does not refer to the President’s Social Fund, which is voided by the Supreme Court. To Pagcor, it is Section 7 of PD 1993, which refers to the PSF especially when it provides that Pagcor earnings, with the approval of the President can be expended for infrastructure and socio-civic projects.

The conclusion of the report is that it should be Section 7 of PD 1993 which should be abolished, and not Section 12 of PD 1869. At first glance, it may be so.

However another glance at both sections shows that these refer to the same source of funds, which is 50 percent of net income less taxes. I am a mere layman but my understanding is that both Section 12 of Ph1869 and Section 7 of PD 1993 are referring to the Pagcor remittance authorized by the two PD’s.

I examined the two PDs. Both refer to the 50-percent share of the government in the aggregate gross earnings after deduction of the 5-percent franchise tax. The two PDs refer to infrastructure and socio-civic projects “as may be directed and authorized by the Office of the President of the Philippines.” The only difference is that PD 1993 specifically mentions “restoration of damaged or destroyed facilities due to calamities . . .”

I have just finished reading the decision of the Supreme Court on the PDAF issue. It is very clear that the Supreme Court is referring to both decrees. All throughout the text of the decision the phrase “PD 1869, as amended by PD 1993 . . .” recurs again and again. Therefore both, PD’s are covered by the decision. I don’t believe the Supreme Court erred in its citation.

On the proposed supplemental budget for disaster rehabilitation Congress and the Senate have announced that they will pass a supplemental budget for disaster rehabilitation. The two houses have already approved a joint resolution and the Treasurer of the Philippines has certified that funds are available. According to reports, sources of the funds are those which remain unobligated as of 2013, portions of the P2.268-trillion national budget for 2014, and P13.5-billion unspent PDAF funds from the 2013 budget. The total amount to be made available is P55 billion.

Some observations:
1. On the unobligated funds from the 2013 budget, those which will be utilized for the disaster rehabilitation fund should be specifically identified. There are unobligated funds which may not be made available for rehabilitation if these are covered by separate laws.

2. On portions of the P2.268-trillion national budget for 2014. Utilizing portions of the 2014 national budget for the disaster rehabilitation fund may not be allowed since this has not even been passed yet. How can a supplemental budget for 2013 be funded from a 2014 budget which does not exist yet?

What can be done is to include the proposed additional budget allocations in the 2014 national budget for disaster and rehabilitation as part of the regular budget amendments. There is no need to include this in the supplemental budget.

3. The need for detailed items of expenditure. The Supreme Court has already declared congressional lump sums as unconstitutional. Special funds were abolished as a matter of policy, as early as the 1950s. However, these funds started sneaking back into the budget over the years without the public noticing it.

Right now, both houses of Congress are making sure that the requirements for passing a supplemental budget will be met. An important sine qua non is that there should be no lump sums and special funds in this budget. Media and the public must scrutinize the form and components of the proposed supplemental budget to insure that public interest will be protected and public funds will not be plundered. Not anymore!


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  1. this is the most corrupted and evil government i have ever seen in my 60yrs of existence.,…may god help the filipino people

  2. Pabagsak na talaga ang gobyernong Pnoy….tumutulo na ang laway at nagkakagulo-gulo na mga paliwanag ng tauhan niya…

    Susmarosep, nakakahiya na ang gobyernong ito sa corruption and ineptitude..

  3. Mr. President, is this your DAANG MATUWID? Why is it that there are so many scams during your term? You dont make a difference! Mas masahol kapa kaysa sa previous administration. Special mention to Mr. Roxas and Soliman. I was once your fan coz I think you are straight. Mr. Roxas, if you think of your 2016 Career, huwag nalang kasi basang-basa kana especially during the YOLANDA crisis. I will campaign against you.

  4. Madam Treasurer, please have the people at the national printing office checked. They have the capability and equipment to print these fake SAROs. They also have the security paper for SAROs.