2012 gaa deliberation

REPUBLIC OF THE PHILIPPINES

Senat:e Pasay City

Journal

SESSION NO. 32 Tuesday to Friday, November 15 to 18,2011

FIFTEENTH CONGRESS SECOND REGULAR SESSION

SESSION NO. 32 Tuesday to Friday, November 15 to 18,20 II

CALL TO ORDER

At 10:43 a.m., the Senate President, Han. Juan Ponce Enrile, called the session to order.

PRAYER

Sen. Teofisto "TG" L. Guingona III led the prayer, to wit:

Dear Father God, we come before You as we start again our budget session, our legislative session.

We pause before You in prayer, dear God.

We give You thanks for our esteemed coHeagues in our government with their families and communities and for the life experiences that led them to these positions.

In great humility, remind us that our decisions matter to people, matter to You that You care deeply about what we decide here.

Help us to be more accountable to our actions, to be transparent to exercise good governance, and to accomplish things beyond selfish interests. And that when this session has ended, when the final bill has been passed, when the gavel comes down, when

we are back in the quiet of our homes and praying to You in the privacy of our own hearts, accept our prayers of forgiveness for all the ways in which we have fallen short of Your holy mission.

All these we pray in the most Holy and gracious Name of Jesus.

Amen.

ROLL CALL

Upon direction of the Chair, the Secretary of the Senate, Atty. Emma Lirio-Reyes, called the roll, to which the following senators responded:

Angara, E. J. Cayetano, P. S. DrBon, F. M. Ejercito Estrada, J. Enrile, J. P. Escudero, F. J. G. Guingona Ill, T. L.

Lacson, P. M. Lapid, M. L. M. Legarda, L. Marcos Jr., F. R. Revilla Jr., R. B. Sotto !!I, V. C.

With 13 senators present, the Chair declared the presence of a quorum.

Senators Arroyo, Cayetano (A), Defensor Santiago, Honasan, Osmefia, Pangilinan, Recto, Trillanes and Villar arrived after the roll call.

Senator Pimentel was on official mission abroad.

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APPROVAL OF THE JOURNAL

Upon motion of Senator Sotto, there being no objection, the Body dispensed with the reading of the Journal of Session No. 31 (November 14, 2011) and considered it approved.

At this juncture, Senate President Enrile relinquished the Chair to Senate President Pro Tempore Ejercito Estrada.

REFERENCE OF BUSINESS

The Secretary of the Senate read the following matters and the Chair made the corresponding referrals:

MESSAGE OF THE PRESIDENT OF THE PHILIPPINES

Letter of His Excellency, President Benigno S. Aquino III, dated 27 October 201 I, certifying to the necessity of the immediate enactment of House Bill No. 50 I 5, entitled

AN ACT DEFINING THE CRIME OF FINANCING OF TERRORISM, PROVIDING PENALTIES THEREFOR AND FOR OTHER PURPOSES,

to address the urgent need to criminalize the financing of terrorism and classify it as a predicate offense to money laundering, in order to protect the citizenry from the evils of terrorism, strengthen national security and safeguard public interest.

To the Committee on Rules

MESSAGES FROM THE HOUSE OF REPRESENTATIVES

Letter from the House of Representatives, informing the Senate that on 10 October 20 I I, the House of Representatives passed the following House Joint Resolution/House Bills in which it requested the concurrence of the Senate:

HOllse Joint Resolution No. 16, entitled

JOINT RESOLUTION EXTENDING THE LIFE OF THE CONGRESSIONAL OVERSIGHT COMMITTEE ON

TUESDAY, NOVEMBER 15,2011

DANGEROUS DRUGS, CONSTITUTED PURSUANT TO SECTION 95 OF REPUBLIC ACT NO. 9165, OTHERWISE KNOWN AS THE COMPREHENSIVE DANGEROUS DRUGS ACT OF 2002

To the Committee on Public Order and Dangerous Drugs

House Bill No. 4145, entitled

AN ACT IDENTIFYING OTHER PERSONS CRIMINALLY LIABLE FOR ELECTION OFFENSES AND INCREASING THE PENALTIES FOR ELECTION-RELA TED OFFENSES, AMENDING SECTIONS 263 AND 264 OF BATAS PAMBANSA B1LANG 881, AS AMENDED, OR THE "OMNIBUS ELECTION CODE OF THE PHILIPPINES," AND SECTION 46 OF REPUBLIC ACT NO. 8189 OR "THE VOTER'S REGISTRATION ACT OF 1996," AND FOR OTHER PURPOSES

To the Committee on Electoral Reforms and People's Participation


AN ACT PRESCRIBING RATES OF PAY AND ALLOWANCES FOR OFFICERS AND ENLISTED PERSONNEL OF THE ARMED FORCES OF THE PHILIPPINES (APP) WHILE ON OVERSEAS DUTY WITH A PHILIPPINE EXPEDITIONARY OR PEACEKEEPING CONTINGENT PURSUANT TO A PHILIPPINE COOPERATIVE COMMITMENT TO A UNITED NATIONS SANCTION OR POLICY AND FOR OTHER PURPOSES

To the Committees on National Defense and Security; and Finance


AN ACT TO FURTHER STRENGTHEN THE ANTI-DRUG CAMPAIGN OF THE GOVERNMENT, AMENDING

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TUESDAY. NOVEMBER 15.2011

FOR THE PURPOSE SECTION 21 OF REPUBLIC ACT NO. 9165, OTHERWISE KNOWN AS THE COMPREHENSIVE DANGEROUS DRUGS ACT OF 2002

To the Committee on Pnblic Order and Dangerons Drugs

and House Bill No. 5246, entitled

AN ACT RECOGNIZING THE EARLY YEARS FROM ZERO (0) TO SIX (6) AS THE FIRST CRUCIAL STAGE OF DEVELOPMENT AND FOR THIS PURPOSE STRENGTHENING THE EARLY CHILDHOOD CARE AND DEVELOPMENT COUNCIL, RENAMING THE DAY CARE CENTER AS CHILD DEVELOPMENT CENTER AND FOR OTHER PURPOSES


Letter from the House of Representatives, informing the Senate that on 12 October 20 II, the House of Representatives adopted Senate Bill No. 2946 as an amendment to House Bill No. 4357, entitled

AN ACT CONFERRING UPON A MEMBER OF THE SANGGUNIANG BA YAN, SANGGUNIANG PANLUNGSOD AND SANGGUNIANG PANLALAWIGAN THE APPROPRIATE CIVIL SERVICE ELIGIBILITY

To the Archives

BILL ON FIRST READING

Senate Bill No. 3008, entitled

AN ACT IMPROVING THE PLIGHT OF FILIPINO PUBLIC SCHOOL TEACHERS BY UPGRADING THEIR MINIMUM SALARY FROM SALARY GRADE II TO 15

Introduced by Senator Villar

To the Committees on Education, Arts and Culture; Civil Service and Government Reorganization; and Finance

RESOLUTIONS

Proposed Senate Resolution No. 631, entitled

RESOLUTION DIRECTING THE APPROPRIATE SENATE COMMITTEES TO LOOK INTO, IN AID OF LEGISLATION, THE RECENT SPATE OF VIOLENCE COMMITTED BY THE YOUTH

Introduced by Senator Cayetano (P)

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To the Committee on Youth, Women and Family Relations


RESOLUTION COMMENDING THE DELEGA TlON WHICH REPRESENTED THE PHILIPPINES IN THE RECENTLY CONCLUDED WIZARDS AT MATHEMATICS INTERNA TlONAL COMPETITION (WIZMIC) HELD IN LUCKNOW, INDIA ON OCTOBER 21-24, 2011

Introduced by Senator Pimentel III



RESOLUTION URGING THE SENATE COMMITTEE ON LABOR, EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, INTO THE REPORTED DEPLOYMENT BAN ISSUED BY THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION IN FORTY-ONE COUNTRIES WITH THE END IN VIEW OF REVIEWING THE GOVERNMENT POLICIES AND PROCESSES FOR THE PROTECTION OF THE OVERSEAS FILIPINO WORKERS


To the Committees on Labor, Employment and Human Resources Development; and Foreign Relations

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RESOLUTION URGING THE COMMITTEE ON AGRICULTURE AND FOOD TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, ON THE STATE OF THE PHILIPPINE SOYBEAN INDUSTRY WITH THE END IN VIEW OF STRENGTHENING SOYBEAN PRODUCTION WHILE ESTABLISHING A VIABLE PRODUCT PROCESSING INDUSTRY FOR THE SAME


To the Committee on Agriculture and Food


RESOLUTION CONGRATULATING AND COMMENDING THE POUNDFOR-POUND KING SARANGANI REPRESENTA TIVE EMMANUEL DAPIDRAN PACQUIAO OTHERWISE KNOWN AS THE PEOPLE'S CHAMP MANNY "PACMAN" PACQUIAO FOR SUCCESSFULLY DEFENDING HIS WORLD BOXING ORGANIZATION WELTERWEIGHT WORLD TITLE, VIA MAJORITY DECISION, FROM MEXICAN BOXER JUAN MANUEL MARQUEZ AT THE MGM GRAND GARDEN ARENA IN LAS VEGAS, NEVADA, THE UNITED STATES OF AMERICA ON 12 NOVEMBER 2011

Introduced by Senator Lapid


COMMUNICA nONS

Memorandum from the Government Service Insurance System, dated 4 October 2011, submitting to the Senate its First Year Accomplishment Report, which includes initiatives launched by the current board and management to provide responsive services to its members and pensIoners.

To the Committee on Government Corporations and Public Enterprises

TliESDA Y, NOVEMBER 15,2011

Letter from the National Grid Corporation of the Philippines, dated 7 October 20 II, submitting to the Senate its 20 I 0 Year-End Performance Highlights, containing NGCP's finances and results of operations, in compliance with Section 15 of Republic Act No, 9511.

To the Committee on Public Services

Letter from the Office of the PI'esident of the Philippines, dated 10 October 2011, transmitting to the Senate the letter of His Excellency, Benigno S. Aquino Ill, addressed to Speaker Feliciano R, Belmonte Jr., certifying to the necessity of the immediate enactment of House Bill No. 5023, entitled

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY ONE, TWO THOUSAND TWELVE, AND FOR OTHER PURPOSES,

pursuant to Article VI, Section 26 (2) of the 1987 Constitution.


Letter from the Department of Labor and Employment, dated 14 October 2011, submitting to the Senate the Department's M id-Year Report to Congress (January to June 2011) based on the submission of the department's 38 Philippine Overseas Labor Offices, pursuant to Sections 2 and 3 of Republic Act No.1 0022,

To the Committees on Labor, Employment and Human Resources Development; and Foreign Relatious

Letters from the Bangko Sentral ng Pilipinas, dated 19 and 26 October 2011, submitting to the Senate the following:

BSP Circular No. 738, series of2011, dated 11 October 2011, in compliance with Section IS(a) Republic Act No. 7653 (The New Central Bank Act); and First Semester 2011 Status Report of the Philippine Financial System, pursuant to

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Section 39(c) of Article V of Republic Act No. 7653 (The New Central Bank Act).

To the Committee on Banks, Financial Institutions and Currencies

Letter trom the OtTice of the Undersecretary for Migrant Workers' Atfairs, dated 26 October 20 II, submitting to the Senate a soft copy in CD of the Report to Congress on Assistance to Nationals for the period of January to June 20 I I, pursuant to Section 33 of Republic Act No. 8042 (The Migrant Workers and Overseas Filipinos Act of 1995), as amended by Republic Act No. 10022.

To the Committees on Labor, Employment and Human Resources Development; and Foreign Relations

Letter from the Bangko Sentra! ng Pi/ipinas, dated 27 October 20 II, submitting to the Senate the Report to Congress on Public Sector/ Publicly-Guaranteed Private Sector Foreign Loans Approved by the Bangko Sentra! ng Pilipinas in the Third Quarter of 20 II.

To the Committees on Economic Affairs; and Finance

SPECIAL ORDER

Upon motion of Senator Sotto, there being no objection, the Body approved the transfer of Committee Report No. 79 on House Bill No. 5023 from the Calendar for Ordinary Business to the Calendar for Special Orders.

COMMITTEE REPORT NO. 79 ON HOUSE BILL NO. 5023

Upon motion of Senator Sotto, there being no objection, the Body considered, on Second Reading, House Bill No. 5023 (Committee Report No. 79),

entitled

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND TWELVE, AND FOR OTHER PURPOSES.

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Pursuant to Section 67, Rule XXIII of the Rules of the Senate, with the permission of the Body, upon motion of Senator Sotto, only the title of the bill was read without prejudice to the insertion of its full text into the Record of the Senate.

The Chair recognized Senator Drilon for the sponsorsh ip.

SPONSORSHIP SPEECH OF SENATOR DRILON

Senator Drilon presented House Bill No. 5023, the proposed General Appropriations Act of 2012, for the consideration of the Body.

The full text of Senator Drilon 's sponsorship speech follows:

A BUDGET FOR THE FILIPINO PEOPLE

Today, I rise to sponsor a most important piece of legislation that the Congress of the Philippines is constitutionally mandated, through its power of the purse, to enact every single year.

I speak of no less than the General Appropriations Act. More than a motley assortment of figures, the national budget is a financial blueprint that lays out the foundation of our country's economic growth.

On July 26, 2011, President Benigno S. Aquino III submitted a National Expenditure Program to Congress, the first budget that is entirely prepared under his administration.

The President proposed an obligation budget ofPI.816 trillion for 2012, higher by lOA percent over the 20 II budget, representing 16.5 percent of the country's Gross Domestic Product. Net of debt servicing and Internal Revenue Allotment, the 2012 budget is higher by 20.8 percent over the equivalent portion of the 20 II national budget.

On October II, 20 II, the House of Representatives passed, without major amendments, the President's 2012 national budget as contained in House Bill No. 5023, or the General Appropriations Bill.

As chairman of the Committee on Finance, it is my humble submission that the President's 2012 national budget deserves our full support. We therefore seek its immediate enactment.

Economic wi"ds of change

Two months ago, OUf nation's economic managers, the Development Budget Coord ina-

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tion Committee (DBCC), laid down the macroeconom ic assumptions that gave flesh to our national budget for Fiscal Year 2012.

The economic indicators presented were alarming. For the first semester of 20 II, our economy grew by a lackluster 4.0% compared to a robust 8.7% growth in the same period last year. In particular, our second quatter growth was 3.4% which, according to the NSCB, is less than half of the 8.9% growth in the same quarter of last year. The same was true for the first quarter of this year, when our economy grew by only 4.6%, barely half of our 8.4% GOP growth rate last year.

And what were the contributory factors to our weak economic performance this year compared to last year?

External factors - the confluence of world events beyond our control - all put undue pressure on our domestic economy_ In particular, the domestic economy is now reeling under the adverse effects of the European debt crisis, political unrests in the Middle East and North Africa region, the natural disasters in Japan, and the ensuing weak global economy. We see lower growth for the U.S. economy engendered by its fiscal problems and Standard & Poor's downgrade of its credit rating to AA+ from the previous Triple A. Added to that is the fiscal underspending of the government which, as admitted by our economic managers themselves, unfortunately dragged down our economic growth for the first semester of 20 I I.

To give the DBCC time to assess the impact on our domestic economy of the dramatic global changes around us as well as the government's fiscal underspending, we had a third DBCC briefing last October 12, 20 I I.

The revised GDP growth for 2011, at 4.5%-5.5%, is now expected to be lower than the 5.0%-6.0% growth assumption that was approved by the DBeC in July 2011. This is attributed to the weaker than expected performance of our economy in the first half of 20 II. To bolster eco~Qrn!C_. a'!tiyity, _ Q~ef .!.!R. J?rJv.at_e_ ~~~~or __ confidence, and counter the adverse effects of fiscal underspending, Pres. Noynoy Aquino launched a P72 billion Disbursement Acceleration Program consisting of projects with multiplier effects on the economy.

No changes were made by the DBCC in the projections for inflation, foreign exchange rates, and Dubai crude oil for this year and the coming year. However, the assumptions for the domestic and foreign interest rates,


imports and exports growth for 20 I I and 2012 were lowered on account of the weak external environment.

UResults-Focused Budget"

Dubbed as a "Results-Focused Budget," the 2012 national budget reflects the five priorities of the Aquino Government's "Social Contract with the Filipino People" as defined in Executive Order No. 43, dated May 13,2011. These priorities are:

A. Governance that is transparent, accountable and participatory.

B. Empowenment of the poor and vulnerable, and poverty reduction.

C. Economic growth that is sustainable, inclusive and rapid.

D. Peace that is lasting and just, and strengthening the rule of law.

E Integrity of the environment and climate change adaptation and mitigation.

How does the 2012 budget support these five pillars of the Aquino administration?

A. Transparent, accountable and participatory governance

The Aquino administration defines good governance as one that thrives in Daylight. Thus, consistent with the principle, "Daylight in Governance," several provisions were adopted to foster transparency, accountability and participation in the budget.

First, lump-sum funds were fleshed out, with the allocation directed and released to the smallest implementing units. Consistent with this principle, the Committee has proposed that the operating budget of the Bureau of Fire Protection's district, city and municipal fire stations, based on the number of firemen, equipment maintained, etc., shall be distributed within five days from receipt of such allocation by the Bureau's regional offices. Similarly, the MOOE of the PNP's Support Units shall be distributed to the said operating units based on established crieri.!. -Rec-all that- h.lmp-;u;':'· -b~dgcti';gll;;s ----- -- - .

encouraged political intervention and allowed anomalies in the use of public funds--such as the fertilizer fund scam-to flourish.

Second, the generation and use, or abuse, of "savings," which made possible anomalous practices such as "conversions" and the "pabaon" systems in the AFP, are sought to be checked. Under this budget, Personal Services were all funded based only on filled positions to

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prevent abuse in the use of savings from unfilled positions, Thus, P23A billion was added to the Miscellaneous Personnel Benefits Fund or MPBF to cover the unfilled positions in the DlLG, DepEd, DOH, DND, SUCs, TESDA, AFP, PNP and the Constitutional Offices, with their release subject to the submission of appropriate documentary requirements.

As expected, the use of the M B PF to cover the budget for the over 67,132 unfilled positions in the bureaucracy has generated strong objections, particularly from the Judiciary and the other Constitutional Offices which asserted their constitutionally-guaranteed fiscal autonomy, To put this issue in context, the Judiciary generates over PI. 985 billion annually in "savings" for over 5,539 unfilled positions; the eOA generates over Pl.8 billion in "savings" from 6,482 unfilled positions; the Comelec, PI623 million from 547 unfilled positions; the Civil Service Commission, PI22 million from 269 vacancies; and the Ombudsman, P567,7 million frolll 1,062 vacancies, Under the principle of tiscal autonomy, these funds are automatically released to these constitutional agencies and can be realigned by the heads of these bodies for purposes other than payment of salaries,

The House of Representatives cut the MBPF by P5,025 billion allocated to the unfilled and new positions in the constitutional agencies and added the corresponding amounts to the budgets of these offices, Thus, the budget of Congress was increased by P28L7 million, The General Appropriations Bill returned P5,025 billion representing the funding for new and unfilled positions from the MBPF to the Judiciary which was increased by P2,039 billion; to the COA whose budget was increased by P 1.851 billion; to the Come lee whose budget was increased by 162.3 million; to the Civil Service Commission by PI22,8 million; to the Ombudsman whose budget was increased by P567,7 million; and to Congress whose budget was retained to P28L7 million,

Moreover, the HOllse of Representatives included a Special Provision, which reads as 1"lIows:

"Funding Requirements For The Filling Of U~filled Positions, The amount appropriated under [PI AlP] shall be used exclusively to fund the personal services requirements in filling unfilled positions: PrOVided, That any unutilized funds at the end of the liscal year shall revert back to the National Treasury in accordance with Section 28, Chapter 4, Book VI of E,O, No. 292, S,

1987, in relation to Section 60 of the General Provisions of this Act: Provided, further, That the [ state agency] shall submit to the Office of the President and Congress a report on the utilization offunds on a quarterly basis,

Your Committee adopted the House version with a slight amendment that would authorize the use of savings from unfilled positions in the Judiciary and other Constitutional Offices for the construction of the Manila Hall of Justice and the maintenance of other halls of justice in the country, and the buildings housing the Sandiganbayan, the Court of Tax Appeals, the Court of Appeals, the Civil Service Commission, the Commission on Audit, the Commission on Elections, and the Ombudsman,

On the matter of the ARMM or the Autonomous Region of Muslim Mindanao, your Committee is alarmed at the corruption committed with impunity in the regional government of the ARMM, For example, in COA's Special Audit Report No, 2010-05 for ARMM-DPWH, payments to suppliers and contractors amounting to PI. 123 billion were considered spurious. In another instance, deficiencies amounting to P363A million were discovered in the implementation of projects worth P422,7 million, In other words, out of projects worth P422.7 million, about 85% of this amount was pocketed and went to corruption, These and many more findings of the extent of corruption in the regional government of the ARMM compelled your Committee to: (1) provide that all disbursements be subject to pre-audit by COA in view of inadequate internal control; and (2) cut P96,943 million and P4 million in discretionary expenses in the Office of the governor and vice governor, respectively.

Likewise, we cut P37,532 million for feasibility studies in the budget of the Southern Philippines Development Authority, or SPDA, which has totally failed in its mandate as an economic office for Mindanao notwithstanding its existence for several years.

On the use of Confidential and Intelligence Funds, your Committee has proposed an amendment that will require all agencies, including GOCCs with such allocation, to submit to the President, the Senate and the House of Representatives a quarterly report on the use of such funds, We oppose the House amendment which would effectively allow LGUs to allocate funds for confidential and intelligence activities,

Finally, to instill fiscal discipline in the operation of GOCCs, your Committee allocated

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PIOO million as the initial operating expenses of the Governance Commission for GOCCs, or GCG, created under the GOCC Governance Act ono I I.

B. Empowerment qf the poor and the vulnerahle, and poverty reducaon

The 2012 budget is again decidedly biased for the poor.

For one, the Social Services sector continues to receive the lion's share of 31.7% of the budget, equivalent to P575.8 billion, an increase of 10.4% over the current P521.4 billion.

The centerpiece program of this Administration's poverty reduction agenda ~ the Panlawid Pami/yang Pilipino Program (4Ps), or the Conditional Cash Transfer Program ~ is being expanded to benefit three million households by January 2012, with a proposed budget of P39 billion. This represents an increase of 700,000 households Irom the current 2.3 million beneficiaries. Your Committee recommends that this Chamber support this program, given the inroads that had been accomplished this year. It is worthy to note that there will also be an increase in the use of the National Household Targeting System (NHTS), a tool for government to locate and help the truly poor. Allow me to mention also, at this point, your Committee's amendment of the Special Provision on the Conditional Cash Transfer of the DSWD, which effectively transferred P800 million in administrative cost to Cash Grants to benefit 61,538 additional indigents families.

In support of this Administration's poverty reduction program, your Committee proposed the amendment of the special provision that requires an amendment of the Phil Health Charter as a condition before 5.2 million of the poorest households, identified under the National Household Targeting System, can be enrolled in the National Health Insurance Program, This Chamber is presently debating on the bill proposed by Sen. Pia Cayetano which will amend the charter of the Phil Health. The national expenditure program would have imposed as a condition the passage of this amendment before an additional P8 billion can be released. By deleting such condition, this amendment proposed by your Committee will authorize the release, without the need of amending the Phil Health Charter, of P 12 bi I I ion from the national budget to pay for the premiums of 5.2 million indigent households at P2,400 per household per annum, which is presently co-financed by local government units. In view of the substantial increase, your Committee proposed that the administrative cost should not excced 5% of the premium

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contribution. Further, all government health care providers shall be automatically considered as Phil Health-accredited effective April 1,2012, in view of the absence of PhilHealth-accredited public health institutions in a number of provinces, depriving covered PhilHealth members of medical care.

Since the appropriation of PI2 billion will now allow the enrollment of the 5.2 million poorest households, we now challenge LGUs to work at subsidizing the second to the lowest quintile of our population based on the National Household Targeting System.

As part of the poverty alleviation program, of the P1.5 billion allocation in the DILG budget for first- and second-level water projects in waterless municipalities, your Committee proposed to transfer P750 million to the LWUA for thirdlevel potable water projects.

The Lower House realigned PI61 million in the DepEd to add P300 to each public school teacher's chalk allowance. Your Committee supports this amendment.

C. Economic growlh thai is rapid, inclusive and sustainable

To support a rapid, inclusive and sustained economic growth, the proposed national budget invested in economic services that support drivers of growth, such as the significant increase in the spending for infrastructure services for irrigation systems and fann-tomarket roads that will spur agribusiness and the roads to tourism destination. To support this agenda, the economic sector will receive P438.9 billion, or 24.2% of the 20 12 national budget. This is 21.3% higher than the sector's 20 II allocation, and has the second biggest share of the 2012 national budget. This year's expenditure program calls for a larger infrastructure budget of P 182.2 billion, or 25.7% higher than this year. This will include funding for public-private partnerships amounting to P20.6 billion.

To sustain the national projected disbursements ofP1.855 trillion in 2012, revenues must be increased by 11.1% to PJ.569 trillion from its current year's target of P 1.41 I trill ion.

Next year's national budget is designed to narrow our fiscal deficit to P286 billion or 2.6% of our GDP in 2012. It remains on track with this government's medium-term goal to achieve a fiscal deficit of 2% of GDP by 2013.

As part of fiscal consolidation, the debt burden on the national budget has been reduced by three percentage points, from 22.6% or P372 billion in 2011, to 19.6%, or P356. I billion in 2012.

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Your Committee supports the Aquino administration's program of achieving selfsufficiency in rice by 2013. We believe this is a little ambitious but we nevertheless Sllpport the same. As Shimon Peres said when we had the opportunity to sit with him, "The difficulty in agriculture is that God is a joint venture pattncr." Nevertheless, your Committee recommends that this Chamber restore the P811 million in irrigation projects which was cut and deleted by the House of Representatives under the budget of the Department of Agriculture.

D. A lust and lasting peace, and the rule of law

President Aquino, in his budget message, recognized that the state of our country's national security, justice and peace poses a big challenge to our economic and social development. Thus, the budget allocates about P 196,8 billion or about 8.1 % more than the current appropriation, to support the government's etTorts in attaining peace and promoting the rule of law.

As a strategy to end the long standing conflict with the various rebel groups, the budget provides for a PAMANA program, an interagency project to build peaceful communities in 1,921 conflict-affected barangays in 171 municipalities in 34 provinces. The Payapa at Masaganang Pamayanan, or PAMANA program, has a budget of PI.9 billion, which the Committee supports, with the amendment that it will be identified as a single fund for better monitoring, as proposed by the Senate President, to be implemented by the DILG, the DSWD, and the DAR, We deleted a provision for administrative cost as the program will be implemented by the existing bureaucracy in the amount of P138.3 million. The Office of the Presidential Adviser on the Peace Process will monitor the implementation of the PAMANA program.

To protect our national territory and boundaries, P107.8 billion is allocated to the Department of National Defense (DND). Of serious concern to the Committee is the fiscal burden on the DND/AFP budget as a result of retirement benefits provided under existing laws. Under the present budget, out of P107.8 billion, P34 billion, or a full 32% of the DND budget, is provided for the pension of veterans, Compare this to the grossly inadequate P5 billion for AFP modernization program. And, un less reforms are implemented, we have to provide in 2016 a bUdget for our veterans bigger than the regular salary of our soldiers in the active service. We call on the Aquino administration to address this problem,

On the matter of the Intelligence Funds, the Lower House transferred PI 00 million from the President's Intelligence Funds to the AFP. The Committee supports this amendment.

The DOl has a budget of P9.7 billion for 2012, which is 14.8% higher than this year's. The House of Representatives increased the DOl budget by P200 million for the lUSIP program and PIOO million forthe DOl building. The Committee does not endorse the House amendments, and fUlther recommends a cut of P33 million budgeted for the NJiS program, which is already being undertaken by the NBI, and the creation of an Office for Cybercrime, which has no enabling statute. However, the Committee recommends that the DOl prosecutors be allowed the use of income derived from filing fees paid by the parties in cases pending in the DOl.

E Environment and climate change mitigation and adaptation

As President Aquino strongly emphasized in his budget message, the 2012 budget must ensure the integrity of our environment, for the pOOl' are the worst victims of climate change. Thus, the budget funds critical climate change adaptation and mitigation activities with P36.2 billion, or 18,2% more than the 20 II allocation. The Committee fully supports this budgetary request of the President.

After conducting 45 or so budget hearings and technical working group meetings over a two-month period, the Committee on Finance is fully convinced that this budget deserves the support of this Chamber.

As proposed by the Committee, Programmed Appropriations amount to PI,092,371,425,000 while Unprogrammed Funds total P152,821 ,845,000.

All in all, the Total New Appropriations amountto PI ,245, 193,270,000, the same level as the House-approved General Appropriations bill.

When to say NO

The great communicator, former president of the Ul1ited States, Ronald Reagan, once said, "Balancing your budget is like protecting your virtue. You have to learn when to say NO. "

With this proposed national budget, we say "No" to budgeting methods that do not foster transparency and accountability.

We say "No" to debilitating poverty that slowly saps the life out of the truly poor and vulnerable through better targeting systems.

We say "No" to unbridled graft and corruption that consigns our people to perpetual backwardness and underdevelopment.

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And we say "Yes!"

"Yes" to sustained and equitable economic growth.

"Yes" to a budget that would empower every Juan to eventually reap its benefits.

"Yes" to a budget that is truly biased for the poor.

COSPONSORSHIP SPEECH OF SENATOR ANGARA

At the onset, Senator Angara stated that his speech was in support of the sponsorship speech of Senator Drilon and would focus on the budgets of the Department of Education, the Commission on Higher Education, the State Universities and Colleges, the Department of Science and Technology, the cultural institutions, the Depart-ment of Trade and Industry, and the housing agencies.

Following is the fuff lext (if his speech:

In today's knowledge-based and inforrnationdriven age, we face multiple challenges unthinkable in previous generations. Not only are we overwhelmed by the dizzying pace of technological innovation, we are also challenged in raising the living standards of our people through quality jobs and access to our far-flung islands, both physically and digitally.

We need to boost our competitiveness through education, technology, infrastructure and smart governance. These issues are already rocking the status quo in other countries and even overthrowing governments abroad.

The Arab Spring is remaking the Arab world, speedily gathering strength is the Occupy Movement, overtaking Wall Street as well as main streets in many communities in the developed world, protesting against massive unemployment and unrestrained corporate greed. This radical change is one compelling reason why government-as-usual will be harmful to our health and prosperity and even more hurtful to our sense of national dignity.

I rise to sponsor the budgets of the Department of Education, the Commission on Higher Education, the State Universities and Colleges, the Department of Science and Technology, the cultural institutions, the Department of Trade and Industry, and the housing agencies.

Education, science and technology, culture and the arts, trade and industry, shelter - these


are the core elements that define who we are and what we can become. Let me briefly discuss each of them.

III vesting in Education

Education is a precondition to any form of development, whether social, economic, and so on. This becomes even more apparent when we evaluate our present situation.

In the latest Global Competitiveness Report of the World Economic Forum, we only ranked 110'" out of 183 countries in terms of the quality of our primary education. Our ranking in math and science is even poorer - I 151h • If we allow this situation to persist, we can only expect the quality of our educational system to decline and even jeopardize our 61" place in the world ranking.

Yet, the country's public expenditure on education amounts to only 2.6% of our Gross Domestic Product and about 15% of the total government budget, a figure lower than any of the other Southeast Asian countries.

Basic Education: Gearing for the Future

During the DepEd budget hearings, Secretary Luistro vowed to work fast to fill the shortages in our physical needs.

The shortage in classroom today is about 66,000, and Secretary Luistro promised that by the end of this year, the shortage will be reduced to about 34,000, and the whole shortage will be erased in 2012.

The DepEd also pledged to work on overcoming other physical shortages like desks, books, and water and sanitation facilities. That is how it should be so that our teachers and educators can concentrate on the more important issues of curriculum change, effective teaching methods, retraining of teachers in math, science and 1)10st importantly in communication arts -in language - and the use of educational technologies.

We hope that future budget discussions will focus on these issues rather than spending agonizing time, year after year, at the appalling school supply shortfalls.

There are two policy issues that still beg some answers. The first is the need for connectivity in our school system. The internet is a powerful medium for learning, yet our connectivity penetration is very shallow, and that ought to be a priority for 2012, and so we allotted quite a substantial amount of almost P2 billion for computerization. Second, we must scale up

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the school feeding program of the DepEd as well as the DSWD because there are two million children who go to school hungry every day.

Higher Education: Innovation Centers

In this fast-changing world. we need to build our country's capacity to innovate through research and development. Our spending for research and development is a miniscule 0.12%, about 11% of 1% as against the UNESCO's prescription that we must spend at least I % of our Gross Domestic Product on research and development, the lowest in Southeast Asia, we are one of the lowest, ahead only of Timor Leste and Cambodia, so we have a lot of catching up to do.

In the 2012 budget, however, with the support of the chairman and the support of DOST, CHED, DA, as well as the SUCs, we have put together and incorporated a model of innovation which we call innovation clusters.

Let me explain what innovation clusters will be. For the first time, we will have an innovation drive producing practical technologies that are usable by the government, industry, and even universities. This will be a consortium of the government, the university, as well as the industry - a tripartite joint venture in research and development.

What areas wi II they concentrate or focus on? We are suggesting areas like cloud computing, which is the next level to our laptops, storing all our fi les, among others. We already have people in this country who can spread the information on cloud computing. Another area to focus on would be algae. It is a potential source of animal feed as well as energy for ethanol. It is perfect for us since we have vast areas that are unutilized. The university, on the other hand, will get a chance to demonstrate what they can do if they have the funding whieh they have been complaining about. And the government, on the other hand, is simply willing to contribute their funding to the enterprise.

Let me then enumerate the following areas of innovation clusters:

1. Algae research cluster;

2. Cloud computing and sqftware as a service cluster based in Cebu where there is already a private industry set-up that universities like the San Carlos University, the Cebu Institute of Technology and the UP can do research;

3. Smart agriculture and preCision farming. In this age of climate change and shrinking land and water supply, we need to do

preCISIOn farming which utilizes satellite monitoring and imaging to pinpoint the productivity of our crops, the salinity of our soil, the onset of pests, among others. The technology is already available. An outstanding Filipino scientist in Washington, a NASA scientist, is already doing this and helping the Mariano Marcos University in Batac, Bocos Norte, training the faculty of that university in precision farming and using satellite data to help farmers become more productive.

What else? We have natural plants that can be source of medicine. We are not taking fuB advantage of that, only foreign pharmaceutical companies; and yet some of the best bio-technologists, biochemists in our country can help us put together a natural medicine program and a wellness program for Filipinos;

4. Responsible mining technologies. There are technologies now, especially in Australia, that do not use mercury or lead in the mining industry. They are using water-based products in mining that are environmentally friendly.

5. Disaster Science and Management. We are one of the countries most vulnerable to climate change. In fact, we are No. lOin the world. And that is why we need to set up a research facility as well as trained people to help us do better forecasting and prepare our people how to cope with disaster, and how to mitigate when disaster strikes. These are six areas where Filipinos can excel. But except for the lack of focus and funding, we are unable to utilize the talents and the natural supply of products in these areas.

The DOST, CHED, Department of Agriculture, and the E-Government Fund have all fuBy cooperated to concretize these innovation clusters by providing government's contribution to the consortium.

Cultural institutions

In the area of intercultural institutions, we have provided some modest funding to the National Historical Commission for the first-decade celebration of the Filipino-Spanish Friendship Day, and to the National Library for digitization and preservation of priceless papers and documents that are just bundled up in the National Library. We are providing as well some research money to the SUCs of Cordillera so that they can continue to do their preservation and conservation work on their cultural heritage, on their biodiversity as well as to adapt to climate change.

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Sheller allli h"u"illg

Shelter and housing, next to public works or even parallel to public works, are the most prolific creators of jobs, These are stimulative activities that create the work and indirect jobs in places where they are needed most, in rural and poor communities, According to the Housing and Urban Development Coordinating Council, every 100 jobs generated in the housing sector is accompan ied by another 18 jobs created in the auxiliary industries supportive of housing, The cost of creating one job in the housing industry is so modest. It requires only P6,500 to create one job in the housing industry, And yet the multiplier effect of house construction is such that for every peso invested in housing construction, an equivalent of P2 is created for the economy.

The magnitude of our housing backlog is so staggering that we need some P361 billion until 2016 to be able to close this gap, I do not think the government alone can supply the money needed to close this gap, We need the active and bigger support of the private sector.

Trade alld illllu,'try

We just came back from the APEC meeting in Honolulu, There in Honolulu, a Trans-Pacific Partnership is being created and is sponsored by no less than the United States, There are nine countries aspiring to join this Trans-Pacific group: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam, apart from the United States,

Why is the Philippines not applying as a member? Well, if we want to expand our trade, and we want to create more jobs here internally, we better think seriously about joining this, I am sure our economic ministers are studying this prospect but if we are late, we will be again late catching the bus, We encourage the Department of Trade and Industry to pursue this new grouping in the Pacific,

In the 16'" and 17'" centuries when Manila was the center of global trade through the Manila-Acapulco Galleon Trade, we were at the center of global trade and we started the globalization that we are now witnessing, The Filipinos were pioneers. Now we are seeing a return to the Pacific, Even President Obama confessed that the Pacific is the center of the recovery of the world because the U,S" Europe and Japan are down on their knees economically, But we cannot just simply ride through the tide; we have to do our own homework and be an active,


vigorous player rather than a bystander. I hope that our economic ministers, headed by Secretary Abad and Secretary Paderanga, are watching this development very keenly because we may be left behind as we are already being left behind by our neighbors,

The budget is biased towards helping the micro, small- and medium-scale firms and enterprises-not the San Miguels or the PLOTs of this country-because they are the ones creating the jobs in this country and they are mostly in the countryside, So, they really need total support of our government.

Cone/usion

We are witnessing the economic turbulence engulfing European Union, Japan and the United States. These economic downturns are highI ighting how a world that has become prosperous, by and large, is now ironically becoming more inequitable - stoking widespread unrest and discontent. We have seen that in the Arab Spring and how it has remade the face of the M idd Ie East. We are seeing it again in the Occupy Movement of young people who have absolutely no chance at landing a job and who are now complaining - and complaining rightly - that this is an unjust, inequitable system that ought to be corrected,

Let us not wait for that Occupy Movement to hit our shores, I remember the Quarter Storm that hit UP in the 1960s, This Occupy Movement was initiated by a small group of students in France which spread like wildfire, 1 think this Occupy Movement is such a phenomenon that people and business are asked to monitor and watch because this is a protest of young people against an inequitable system and the corporate greed and the growing inequity between the few who are very rich and the millions who are very poor.

The Philippines has a unique opportunity to escape this economic turbulence abroad if we do the right thing and at the right time, I think the right time is the formula, We have got to do it at the right time, not yesterday or two weeks ago, but today,

Unless we do that, I am afraid we will be swept away by the tsunami pace of change taking place now all over the world,

This national budget is our foremost weapon to do equity and justice, create jobs and raise the living standards of our people if we spend right, if we spend on time, and if we push everyone to spend it honestly,


COSPONSORSHIP OF SENATOR RECTO

Senator Recto, likewise vice chairman of the Committee on Finance, delivered the following speech:

Before I dwell on some specifics of next year's budget, let me take a great leap backward and discuss some details of the national budget a 100 years ago.

Although a century separates 1912 and 2012, the issues they contronted then are the same ones we are confronting now.

The national narrative remains unaltered, even in the field of expenditures, that while today's budget sports a lot of zeros, the purposes for which they were appropriated then still exist today.

In 1912, total expenditures reached P30.2 million, which is what our government intends to spend in eight minutes next year.

One hundred years ago, the education sector can operate on a P3.6 million annual outlay, an amount which can barely build six classrooms today but sufficient then to run 3,396 schools, pay the salary of a teaching corps of 8,360, and construct 135 schoolhouses.

One hundred years ago, the public works budget was P4.39 million, which already included the paving of 291 kilometers of road, the same amount we spend today for the "reb locking" of a postage-stamp-size span in EDSA.

Total capital outlays in 1912 was P8.35 million, an amount which would send a congressman into tantrums today if that is what is given him as first tranche of his budgetary eannarks.

While the ledger of government disbursements in 1912 features miniscule amounts by today's standard, the uses for which they were released were the same as today's: Solving the Mora problem, eradicating mosquitoes, ending the classroom shortage, promoting rice independence, plugging tax leakages, among others.

I f the 2012 budget has allocation for interest payments, so did its 1912 ancestor, but a measly P 1.425 million.

The continuing past is also evident in the way the budget was acted by the legislature. If we think that reenacted budgets are a latter-day phenomenon, the 1912 budget was also a reenacted onc due to the failure of the Philippine Assembly to pass one for that year.

If we think that 21"' century annual budgets suffer fwm devaluation on account of popula-

tion increase and inflation, the 1912 budget was smaller too by PI 0,000 in real terms over the 1911 level,

But on one score, the 1912 budget was superior to its 2012 descendant, and that it was premised on a surplus, as revenues realized were P31.2 million which was P I million higher than expenditures.

While the Bureau of Customs today plays second fiddle to the BIR, a hundred years ago it was responsible for 58% of total collections as compared to Bureau of Internal Revenue's equity of 30%. and in that age of the abacus, it cost P3.06 to collect PlOD worth of taxes.

The composition, however, of some aspects of the revenue effort, a century ago, hews to contemporary fiscal contours. For example, personal vices financed the virtues of Americanstyle governance. Wines, liquors, cigars and cigarettes combined for almost P9 million of total revenue take ofP31.2 million. Sin taxes accounted for almost 30 centavos for every peso that was remitted to the public coffers. In contrast, banks chipped in less than one percent, which would shed light on the DNA of this sector's legendary parsimony.

I intentionally made a detour to this memory lane to drive home one point that is constant in appropriating funds. Whatever the era, whatever the form of government, budgeting is bound by this set of rules: That appropriation is a mere downstream activity of revenue collection; that it is taxation which makes appropriation possible; that expenses are always pegged on income; that the privilege to spend springs from the duty to collect taxes.

Yes, the budget presented to us today is a catalogue of expenditures. But because too often we are mesmerized by big numbers, we seem to overlook the important fine print - that every peso that will be spent will be collected from the people. Though the budget contains the price tag of projects, it does not state who the payor is, which is the taxpayer, because whatever peso we will put in his pocket we actually pick from his pocket first.

And yet, the legislative tradition is that when it comes to the appropriations bill, we only sponsor and highlight the expenditures. We seldom sponsor the revenues it would entail.

It could probably be because of a political culture which has led our people to demand pork on their plate without giving a hoot on how the pigs are raised and butchered.

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So, today, let me break from tradition and instead of delving on the spending side, walk you instead through the revenue underpinning of this budget, because the projects, activities, programs therein can only rise on the scaffolding of taxation.

Doing so would likewise give us a bctter appreciation of the revenue-appropriation dialectics, so when the temptation to finance new spending arises, we will be reminded that budgetary intentions are always tempered by revenue limitations.

Before I proceed, let me acknowledge the Finance Team-the Customs and BIR people who are here. They are the people responsible for raising the billions in this budget and for translating our campaign rhetoric into reality.

Because in the division of labor in appropriating money, while it is the Budget people who get the credit, it is they who must raise the cash.

And how much must they raise next year? PI.816 trillion a year or about P4.98 billion pesos a day lang naman. If government were a taxi, they are the designated payor of the P207.5 million-meter charge per hour.

Of the P 1.1816 trillion, the revenue portion is PI.568 trillion. Yung balance na P286 billion ang deficit, ibig saMhin uutangm.

Of this financing requirement) the Bureau of Internal Revenue has been assigned a goal of PI.066 trillion and the Bureau of Customs P365.1 billion. Non-tax revenues such as fees and charges (P63 billion) and Treasury income (P69 billion) will put in an additional PI38 billion.

Thus, on a daily basis, Kim's army at the BIR must raise 1'2.92 billion while Ruffy's fiscal stevedores must haul in 1'1 billion.

And that is a hard job to do in a political culture that sees spending taxes as a virtue, but collecting them as a sin; which treats their evasion as a duty, but their imposition a crime.

The fact is, we have begun to treat taxes as text promos: we want to pay little for unlimited services.

And that thinking has even infected many of those in government whose concept of good governance is to grant as many tax breaks to as many people. One example of this is the grant of P44.8 billion of incentives to BOI and PEZA of which an estimated P26 billion are redundant.

The DOF secretary has vowed to raise an additional PI71 billion next year from BIR and


BOC alone. BIR's 2012 target is PI26 billion bigger than this year's level while BOC's hike in collection quota is P45 billion more.

Of the Pl71 billion projected increase, PI28 billion will be attributed to economic growth - so the best way to raise taxes is to grow the economy-while about P40.5 billion will accrue from "tax administration measures",

The latter includes the drive to make honest men out oftaxmen through various transparency, integrity and anti-corruption measures.

This is good because the law only says we must pay taxes. There is nothing in the Tax Code that says that we must leave a tip or pay extra for good service. Good performance at work, after all, is not V AT-able.

If this is the tack to be taken, then our taxmen might consider looking into the ratio of tax burden to sales of major industries, which is below the accepted curve.

For example, the petroleum industry pays a tax - V AT, percentage, excise, among others, included - of II :8% out of its gross sales, which is below the 12% VA T which is the biggest fuel additive today.

The power sector pays a total tax of 7.34%, despite the fact that our monthly electricity bills are peppered with taxes, fees and charges.

The car industry pays a gross tax of 8.83%, yet a V AT is automatically tucked in all vehicle sticker prices, not to mention excise taxes.

Telecoms which posted sales of P237 billion last year, had a tax burden of 12%, which is a whisker above the VAT benchmark.

Instead of trying to liposuction more taxes out of plastic surgeons, the BIR may wish to focus on these industries considering that when it comes to the oil sector it has to deal with 2 I returns only, 20 in telecoms, and 58 in power.

Each of these corporations has become revenue agents of the government. Tax paid by the consumer on every phone call made, every liter of gas bought, every gallon of water flushed down the toilet are paid to them and not to the BIR. Businesses are supposed to breath through tax loopholes. But let it be through their own tax obligations and not through tax payments simply coursed through them.

What we see in this budget are columns of expenditures but if we view them from the prism of taxes, we might fully grasp the real value of each, appreciate the sacrifices made by

TUESD!\ y, NOVEMBER 15.2011

taxpayers, and embrace the need to properly spend them.

For example, the projected individual income tax payments in 2012 ofP222 billion will only be enough to pay the salaries of DepEd employees and the benefits of the govemment employees who will retire next year.

In fact, if we combine individual income tax payments with the projected corporate income tax payments of P364 billion, the sum is still P7 bi Ilion short of the total PS requirement of P593 billion for 2012.

Our payroll burden now runs at PI.56 billion a day.

BIR's forecast for excise tax collection of P56 billion from both alcohol and tobacco will just be used to pay for the pension of soldiers, policemen and other uniformed personnel which is pegged at about P54.5 billion next year.

Taxes frol11 mining activities in the amount of PI.8 billion will just be used to cover representation expenses of PI. 73 bill ion.

Taxes from automobile sales of about P2.9 billion is what the DOTC will spend in about one month and three days in 2012.

If we will spend all BIR collections from V A T in 2012 - P226 bi Ilion - in education it can run public elementary and high schools but only half of the state colleges.

All import duties to be paid in 2012 would only be equivalent to 10 months budget of the DPWH that year.

All excise tax collections of the BOC - from gasoline, liquor, tobacco, vehicles in 2012 - can only finance five-and-a-halt~months of DSWD operations.

As I have said every expenditure carries a hidden fiscal cost. If our people are informed of the taxes it wou Id take to finance mundane public projects and services, it may lessen their agitation for more of these and demolish the myth that the Senate is like a public mint that can print money or a souped up Wowowee show of 24 genies who can give them all they want.

The fact is that it would require the excise tax payments on 1,362,]97 bottles of locally distilled rum to finance the concreting of a onekilometer of road; and it would require the excise tax on almost two million sticks of Winston cigarettes to fund the construction of one classroom.

To buy a police car, government must collect the excise lax on the full tank of gas of 45,977 motorcycles.

And to pay for the basic salary of one teacher for one year alone, the tax on 543,000 packs of noodles would have to be collected.

And who will pay for all of these? Not Malacailang, neither the Senate, nor the House, but the people themselves, those whom we represent. Sila ang boss natin.

In closing, let me remind our friends from the Executive branch who are here today that the budget is meant to be executed because monies collected from the people for the people are meant to be spent.

If the budget is the book of tax rebates then let us allow our people to enjoy the dividends of their tax payments. Tax paid promptly must be spent promptly.

I understand that holes in the spending pipelines must be plugged first before the taps are fully opened. I am, however, sure that after 500 days, the patching up has been finished.

Because if funds would still flow in trickles, then I would be tempted to join those who are clamoring that the finance managers be canonized en masse as apostles of austerity.

Hopefully, the initial disturbing drift toward a kind of parsimony that harms the public more than it helps them will now stop. Otherwise, some agencies may need laxatives to coax more funds out of them.

My friends, reporting a surplus created out of withholding services and strangling infrastructure work can never be a fiscal virtue.

On the contrary, it is anti-progress because funding delayed is development denied. Hindi nangangahulugim na ang daang matuwid ay dapat mabagal.

I thank you for bearing with this unconvention~1 sponsorship of mine. I do believe that a holistic appraisal of the bill before us entails the presentation of the other side of the budgeting coin, which is revenue.

I urge my colleagues to pass this budget.

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MANIFESTATION OF SENATOR SOTTO

Senator Sotto manifested that the Members have been given a copy of the schedule of the plenary debates on the budgets of the different departments for th is week.

He said that for the day, the Body would take up the following: the General Principles, the Department

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of Finance and its attached agencies, the National Economic and Development Authority and its attached agencies, the Joint Legislative-Executive Council, the Department of Justice, the Presidential Communications Operations Office and the Department of Environment and Natural Resources.

DEBATE ON GENERAL PRINCIPLES

Thereupon, the Body proceeded to the debate on General Principles and the Chair recognized Senator Drilon, sponsor of the measure, and Senator Cayetano (P) for her interpellations.

INTERPELLATION OF SENATOR CAYETANO (P)

Preliminarily, Senator Cayetano (P) commended Senator Drilon for his thorough discussion of the budget and also lauded Senator Angara for his eyeopening speech on the topic of education, science and technology; and Senator Recto for h is unconventional but enlightening speech that he delivered.

She then asked Senator Drilon to give the details regarding the P72-billion Disbursement Acceleration Program that he mentioned in his speech.

SUSPENSION OF SESSION

Upon motion of Senator Drilon, the session was suspended.

It was 12:18 p.m.

RESUMPTION OF SESSION

At 12:28 p.m., the session was resumed.

Upon resumption, in reply to the query of Senator Cayetano (P), Senator Drilon stated that based on the Disbursement Acceleration Program list, the disbursements were as follows:

• LRT I and II rehabilitation - PI.8 billion

• National Housing Authority - PI I billion

• PhilHealth subsidy for indigent families - P1.496 billion

equity infusion to the Bangko Sentrat ng Pilipinas - PIO billion


Philippine Heart Center - upgrading of physical plant and medical equipment - P357 million

Credit Insurance Mortgage Guaranty of the HGC - equity infusion - P400 million

• Philippine Postal Corporationpurchase of foreclosed property, payment of mandatory obligations and franking privilege - P644 mi II ion

PCMC - capital and equipment renovation - P280 million

LCOP - PI05 million

PEDCOR - equity infusion - P570 million

Department of Agriculture -irrigation, farm-to-market roads, integrated community-based, multi-species hatchery and farming - P2.23 billion

Mindanao Rural Development Project - NIA - Agno River Integrated Irrigation Project - P2.23 billion

Department of Agrarian Reform - P5.5 billion

• Office of the Presidential Adviser on the Peace Process - activities for the peace process, PAMANA - PI.8 billion

• DOST

•

•

•

- P425 million

DOF/Bureau of Customs - settlement of principal obligation with POIC consistent with the CISS and SGS - P2.8 billion

DPWH - various infrastructure - P5.5 billion

TESDA - training program - Pl.1 billion

ARMM - comprehensive peace and development intervention - PS.5 billion

DOST/MRT - purchase of additional MRT cars - P4.5 billion ,- r

TUESDAY, NOVEMI3ER 15,2011

• LGU - SUppOll funds for various other local projects - P6,5 billion

• GOCCs and GFls - P26,9 billion

Senator Cayetano (P) noted that from the random enumeration of the various projects, it would appear that the funding was spread very holistically, She requested a copy of the document, saying (hat she wanted to see what projects have real mUltiplier effects,

Moving on, Senator Cayetano (P) recalled that in the budget last year, very little extra funding was allotted for infrastructure because the government apparently wanted to rely on the PPPs, However, she noted that in 2012, the proposed budget infrastructure allocation increased by 21 % over last year's budget. She asked if the government was successful with the PPPs or if the increase was an acknowledgment that there had not been much movement in the PPPs since public resources were really funding the infrastructure projects,

Senator Drilon admitted that there was a dip in infrastructure projects and unfortunately only a few PPP projects took off, thus, the amount of 1'182.2 billion was allotted for infrastructure projects and 1'20,6 billion for PPPs in 2012,

As regards the savings of (he Department of Health (DOH) from unfilled positions that were created by laws establishing various hospitals but were still being withheld by the DBM, Senator Drilon disclosed that he had sat down with the budget and health secretaries and it was agreed that for the current budget, the DOH would be authorized to hire 12,500 nurses, 1,500 midwives and 125 physicians,

To the observation that the medical staff must be supported by administrative personnel, Senator Drilon informed the Body that the DBM had agreed that a certain number of administrative staff would be hired this year and next year,

Adverting to the automatic debt appropriation, in particular with regard to fraudulent loans, Senator Cayetano (1') suggested that the Senate look into the existing foreign debts of the government and consider suspending interest payments on some if there is prima facie evidence that they were fraudulently

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obtained or were wasteful or that charges had been filed against individuals who were involved with them, This, she believed, would be consistent with the statement in the sponsorship speech that legislators should say no to unbridled graft and corruption,

Senator Drilon agreed that the said loans should be carefully examined, However, he admitted that the Committee on Finance does not have the technical staff to do so in detail. He gave assurance, nonetheless, that the Committee would ask the DOF to examine loans that were secured by the past administration,

Senator Cayetano (1') recalled that no less than President Aquino himself had raised the same issue when he was in the Senate, pointing out that in 2008, the Senate put in the GAB a special provision on the suspension of interest payments but President Arroyo subsequently vetoed it. She signified that she might consider proposing that the same provision be inserted in the 20 I 2 budget. However, she requested that the matter be discussed with the economic team, saying she did not want the President to veto a special provision that he supported some years ago,

Senator Drilon gave assurance that the Committee would consider the proposal that would be discussed with the econom ic team,

As regards the matter of self-sufficiency in rice, Senator Cayetano (I') believed that preventing wastage _. would not be a viable solution to the shortage in rice but a conscious shift to the production of high-yield crops,

Senator Cayetano (P) lamented that several of her proposals had been denied by the DBM even though these were consistent with the five priorities underscored in the sponsorship speech of Senator Drilon, For instance, she noted that the DBM rejected a project for setting up solar lanterns in areas without electricity even though this was in line with government's goal to alleviate povelly, She also recalled having appealed to the DBM to reconsider its decision turning down a proposal to implement an IT-based electronic health system that would enable a recipient municipality to create a responsive, safe, streamlined and evidence-based health delivery system, only to be informed that the denial was due to the fact the DBM could not fund the necessary software, She pointed out that it would be difficult for the country to move forward if fund limitations hinder it from keeping pace with advancements in technology,

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Even as she acknowledged tliat environment and climate change are priorities in the proposed national expenditure program, Senator Cayetano (P) questioned why the DBM denied her request to use her PDAF to set up material recovery facilities which is required under the Solid Waste Development law. She disclosed that the DBM also rejected another proposal for the construction of playgrounds for children, citing various qualifications such as the condition that these ought to be attached to a daycare center. Moreover, she recalled that the agency turned down her offer to use her PDAF to fund the cinematics project of the Film Development Council which would have helped enhance the creativity of young film makers.

As regards the suggestion for the DBM to review these proposals; Senator Drilon said that he would request the DBM secretary to take a second look at the projects that would be allowed earmarking under the fund.


Senator Sotto informed the Body that Senators Lacson, Legarda, Defensor Santiago and Arroyo were also scheduled to interpellate on the general principles of the bill.


Upon motion of Senator Sotto, the session was suspended.

It was 12:49 p.m.


At 3: 16 p.m., the session was resumed with Senate President Pro Tempore Ejercito Estrada presiding.

Thereupon, the Chair recognized Senator Drilon, sponsor of the measure, and Senator Lacson for his interpellation.

INTERPELLATION OF SENATOR LACSON

At the outset, Senator Lacson congratulated Senator Drilon and the two vice chairmen of the Committee of Finance for conducting hearings even during the recess. For his interpellation, he stated that he would follow the lead of Senator Recto who


concentrated on the other side of the national budget which is the budget expenditures and sources of financing (BESF) book. Also, he observed that the national budget is the most interesting yet most complicated piece of legislation that he has encountered as a lawmaker, noting that after the Executive Department submits its budget proposal to Congress, the House of Representatives and Senate make it more complicated with amendments, insertions or congressional initiatives, most of which are inconspicuously part of some choice departments or agencies' allocations to implement the congressmen's or the senators' pet projects. But he surmised that the most complicated aspect in the budget process is in implementation as he hoped that the Department of Budget and Management maintains its course and continues to be in a reform mode under the new Administration. He clarified that under the General Principles, he wanted to focus first on the tax and nontax revenues, the actual figures and projections of which are source-generated and reflected in the BESF book. He pointed out that in Section C of the National Government Revenues documents covering three fiscal years are found in Table C.I (Revenue Program by Source), Table C.2 (Revenue Program by Collecting Department or Agency by Source), Table C.3 (Revenue Program by Collecting Department) and Table C.4 (Nontax Revenue Program by Collecting Department Agency by Source). He stated that tax revenues arc the income gained by government from taxation while nontax revenues are collected from sources other than the compulsory tax levies, for instance, payment for one direct service rendered by government agencies to the public; regulatory and investment activities; income of the Bureau of Treasury from investment activities particularly interest on bank holdings; gain on foreign exchange; interest on deposits and other propriety government ventures, including inputs from foreign branch and income derived from privatization of government utilities. At this juncture, he showed the tabulation on the Revenue Program by Source from the BESF of 2012 from which data he sourced a consolidated overview of the national government revenue for the period 2002 to 2012.

As regards the Taxes on Net Income, Senator Lacson observed a stcady collection throughout the period except in 2009 where there was a decline. Comparing the 2002 collections ofP226 million against the projected P647 million for 2012, which represents an increase of only 186% over a ten-year period, he asked whether such was the most that could be

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expected in 2012 considering all the changes, improvements, and developments made during the aforesaid period. In reply, Senator Orilon assumed that the projection for 2012 was based on historical data as he confirmed the 180% increase from 2002 to 2012.

Senator Lacson explained that he asked the question in the context of the revenue items on taxes on property and taxes on domestic goods and services which posted an increase of 394% and 306%, respectively, for the same period. Compared to them, he said, the taxes on net income and profits pale in comparison. Senator Orilon explained that taxes on net income and profit depend on how profitable the companies are, although he surmised that there could be some leaks in the tax collection. He said that the OOF and the BIR were precisely taking extra efforts in their tax collection initiatives and he expressed hope that both agencies could be more robust in their collection of taxes on net income and profits.

As regards taxes on the international trade and transactions, Senator Lacson noted a reverse scenario - tax collection went down starting 20 I 0, from P260.9 billion in 2008 down to P220 billion in 2009 and further down to P80.89 in 20 I 0, then P79,4 bi II ion in 2011. Senator Orilon explained that international trade and transactions are easier to monitor, the reason the taxes thereon were projected at a higher rate than taxes on income and profits.

Senator Lacson asked why there was a drastic decline in the collection of taxes.


Upon motion of Senator Orilon, the session was suspended.

If was 3:30 p.m.



Upon resumption, Senator Orilon stated that according to the Bureau of Customs, the drop in tax collection from 2009 to 20 I 0 was due to tariff rate reduction, for instance, on petroleum.

Asked whether the V AT on toll fees imposed in the current year was included in the data, Senator

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Orilon replied in the affirmative, adding that VAT collection on toll is not that significant as it is only at PI.2 billion a year.

Asked what items were included in the "Other Taxes" item, Senator Orilon enumerated motor vehicles fees, the Bureau of Fire Protection fire code tax, the real property tax, immigration tax, metro flood control tax, fires charge, trouble tax and special oil import tax.

Asked what significance the Revenue Program by Source on Nontax Revenues has on the revenue, program of the government vis-a-vis the tax revenue, Senator Orilon stated that PI23 billion was projected to be collected from nontax revenue in 2012.

As to the reason behind the drop from P138 billion in 2011 to PI23 billion in 2012 in terms of nontax revenues, Senator Orilon stated that it was due to a drop in the national government's income, from P3S.7 billion to P 17.6 billion. He also said that there was a very high dividend collection from GovernmentOwned and -Controlled Corporations (GOCCs) in the amount of P23.99 billion while projecting only PS.5 billion for 2012. He stated that his Committee was partly responsible for the good collection in 2011, having collected and rearranged for the payment of back dividends by the Central Bank amounting to over P9 billion.

Asked why there was no definite pattern on the nontax revenue collection of the Bureau of Treasury, Senator Orilon explained that the rise and fall of the income depends on the interest rate that is collected by the Bureau of Treasury, therefore, the rates of interest would be the determining factor.

As regards the P68.9-billion income ofthe Bureau of Treasury as compared to the PIS.S-billion projection of the same agency, Senator Orilon said that the composition ofthe P68.9-billion income of the Bureau of Treasury in 20 II is found in the revenue program by source. He stated that despite the significant drop in dividends on stocks from P23.7 billion to P5.5 billion, there was a drive to collect dividends from GOCCs in 20 II which resulted in high income for dividends. Thus, he surmised that the 2012 projection for the dividends on stock was a little conservative. He expressed hope that the newly constituted GOCC Governance Council would be able to monitor dividend declaration of GOCCs which, under the law, would require them to remit 50% of their profits to the national government as dividends.

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Adverting to the Airport Terminal Free Report, Senator Lacson asked why there was a projection of P455 million when there was a collection of only P46 million in 2005. Senator Drilon responded that the Committee would look into the matter.

Senator Lacson also observed that the Manila International Airport Authority (MIAA) profit was quite disturbing because there was a significant drop in collections from more than PI billion in 2009 to P550 million as projected in 2012. Senator Drilon said that the Committee would ask the DOTC, which has supervision over the airport terminal fees and profits of the MIAA for explanation.

As regards the consolidated report on the revenue program by source from 2002 to 2012, Senator Lacson observed that the nontax revenue steadily increased its performance of P70.7 billion in 2002 to P203 billion in 2007, but it drastically decreased to PI23 billion as revenue projection for 2012.

Senator Drilon took note of Senator Lacson's statement.

Comparing the highlighted revenue program by source with the revenue program by collecting department, Senator Lacson pointed out the discrepancies in non-tax collections or nontax revenues from 2008 to 2010, citing a particular revenue by source amounting to PI53,726,000,000 and revenue program by collecting department amounting to P 155,419,000,000 in 2008. He posited that revenue program by source should exactly be the same as revenue program by collecting department because the source of revenue would come from the collecting departments. In other years, he said, the revenues were all exactly the same.

Asked how such discrepancies would be accounted for, Senator Dri Ion answered that he cannot respond for a specific year but he pointed out that a BESF footnote would show that the total nontax revenues reflected in 2010 was based on cash operations report; however, per agency submission, the total nontax revenue amounted to P 112, 746,000,000. He assumed that the lag in reporting time has caused these discrepancies.

Asked which department is in charge of nontax revenues, Senator Drilon stated that it depends on the nature of fees being collected, saying that this could be lodged in the different departments of the


bureaucracy, i.e. energy industry fees would be collected by the (DOE), and employment permits would be collected by the Department of Labor and Employment (DOLE).

Asked if there is a single agency that monitors or reviews all nontax revenues, Senator Drilon disclosed that the amounts are directly remitted by collecting agencies to the National Treasury. However, he said that the budget preparation and projection ofthe revenue for the following year is done by the DBM based on the reports of the different collecting agencies. Thus, he stated that there are discrepancies between the two reports simply because the basis in the first case would be actual collections and in the second case, it would be projections by the different agencies.

To address the inconsistencies in the performance of different departments on their collections, Senator Lacson suggested that there should be a single agency which should monitor and review the collections, as he stressed that the other side of the national budget is equally important as the expenditure side. Senator Drilon agreed, saying that the Bureau of Treasury should be the agency tasked to make the report because all funds are remitted to them. However, he said that once the Governance Commission for Government-Owned or -Controlled Corporations (GCG) is fully operational, it can take charge of monitoring GOCC remittances.

Moreover, as far as the national government agencies are concerned, Senator Drilon said that it should be the Executive Secretary who should monitor remittances since these agencies are all under the supervision of the Office ofthe President He informed the Body that there is a task force on fees and charges under the National Tax and Research Center (NTRC), which monitors the fees and charges of different government agencies including the GOCCs. Senator Lacson said that the task force personnel should be invited during the deliberations on the 2013 budget to hear their view on certain inconsistencies regarding the collection of fees.

Senator Drilon said that they will review the data culled from the DBCC hearing as he adm itted that the BESF was not closely scrutinized. Thus, for the 2013 budget, he said that the DBCC report should present a more detailed exam ination of the sources of funds. He apologized to Senator Lacson for not being able to get all the data when the Committee started the hearings on the 2012 budget

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Referring to the earmarking by virtue of a law passed by Congress, a presidential pronouncement, or an international agreement, Senator Lacson noted that a comparative review of earmarked revenues from the BESF of 2004 to 20 I I would show that all have reflected the amounts corresponding to their total balance "as of December 3 I"; on the other hand, the BESF for 2012 did not reflect a total balance. He asked whether this was an oversight.



II was 3:55 p.m.



Responding thereto, Senator Drilon stated that according to the DBM, it cannot indicate the total balance because certain agencies failed to submit their respective balance reports.

Senator Lacson observed that this marked the first time a balance report was not given out, noting that a balance report had always been indicated in the previous years, the last being in December 31, 2009. Senator Drilon assured the Body that the Committee would call the DBM's attention should the same thing happen again in the 2013 budget deliberations. He agreed to the observation that the BESF was incomplete.

On another matter, Senator Lacson stated that based on the BESF book, the Earmarked Revenues item was classified into the General Fund Proper and the Special Accounts in the General Fund - under the General Fund Proper is the Use of Income; and under the Special Accounts in General Fund are the Annually Appropriated, Automatically Appropriated and the Foreign Grant. He inquired into the mechanics and utilization of the Use of Income.



II was 3:57 p.m.

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In reply, Senator Drilon explained that Use of Income can be utilized I) through a substantive law which specifies how the income realized by a particular agency would be spent; and 2) through a special provision in the GAA that provides for its use. To amplify, he said that under the National Prosecution Service Act of 20 I 0, the DOl is allowed the use of income, in this case the filing fees it collects, to augment the allowances of prosecutors, but the same law provided for a iimitation period, which has lapsed, determined by the effectivity of the salary standardization law. Notwithstanding, he said that the present budget also provides for a continuation of the Use ofincome to supplement the allowances of the prosecutors.

As to the mechanics and utilization of the Special Accounts in the General Fund, in particular the Annually Appropriated vis-a-vis the Use of Income under the General Fund Proper, Senator Drilon stated that funds in the Use of Income would be sourced from the Special Accounts in the General Fund, so that in the case of the DOl, the collection from filing fees would go to the special accounts from which the allowances of the prosecutors would be drawn, as authorized under the GAA.

Adverting to the Department of Agriculture (DA), Senator Lacson stated that the DA's balance, as of December 3 I, 20 I 0, was P506 million and for 2012, it has a projected revenue of PI41 million and a projected expenditure of P45 million. He said that several statutes authorize the DA to acquire Earmarked Revenues from, among others, registration fees, fines, penalties, funds and charges. Asked how the fund was utilized, Senator Drilon stated that because the special account is a continuing fund, future expenditures can be properly charged to it. To illustrate, he said that funding for the AFP Modernization comes from the proceeds of the sale of land under the jurisdiction of the BCDA and for that purpose, a special account or trust account was created whose continuing balance depends on the utilization and income accrued for a particular year.

As to how the government would spend the P50 billion Earmarked Revenues for 2012, Senator Drilon replied that it can only be used for the specific purpose for which it was collected and not for

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general operations, To illustrate, he noted that the specific purpose of the Motor Vehicle User's Charge (MVUC) is for the maintenance of the national roads,

Senator Lacson observed that there was a balance of P94.5 billion as of December 31, 2009, and he asked how government ran up a budget deficit in 2010, Senator Drilon explained that the deficit was based on actual cash, He clarified that the whole amount of the balance may not be disbursed in a given year so there would still be an available balance, but only to be disbursed for the specific purposes for which the funds were earmarked, He added that the agency in charge of reviewing the earmarked revenues is the DBM.

On whether there were instances when the earmarked revenues were indiscriminately spent or abused by an agency, Senator Drilon replied that according to the DBM no such incident has ever happened because the disbursements were based on specific requests and sourced only from earmarked funds.

To the observation that the use of earmarked revenues falls outside congressional scrutiny, Senator Drilon agreed, saying that Congress has delegated to the concerned agency the authority to appropriate such funds,

At this point, Senator Lacson noted the balance statements of different departments: Department of Foreign Affairs - no balance from 2002 to 20 I 0; Department of Agriculture - a complete balance statement; DILG - balances as of December 31, 2002 and December 20 I 0 only; Judiciary - no balance, revenues and expenditures for the ten-year period except for 2004 and 2006,

Senator Drilon stated that the Committee would take note of the deficiency as he added that even the Bureau of Internal Revenue has not reported its balance,

As regards overall savings, Senator Lacson stated that the historical nature of the NEP rests on three years of data containing the national government budget, the corporate operating budget, general provisions and detailed annexes. Specifically, he expressed interest in the subtitles "Transfer From" and "Transfer To." He inquired on the meaning and nature of the "Overall Savings."




It was 4:15 p.m.


At 4: 16 p.m., the session was resumed.

In response to the query of Senator Lacson, Senator Dri Ion stated that as defined under Section 53 of the GAA, savings refer to portions or balances of any programmed appropriations in the GAA free from any obligation or encumbrance which are: I) still available after the completion or final discontinuance or abandonment of the work, activity or purpose for which the appropriation is authorized; 2) from appropriations balances arising from unpaid compensation and related costs pertaining to vacant positions and leaves of absence without pay; and 3) from appropriations balances realized from the implementation of measures resulting in improved systems and efficiencies that thus enabled agencies to meet and deliver the required or planned targets, programs and services approved in the GAA at a lesser cost .

Asked about the items under "Transfers From" and "Transfers To" from one department or line agency to another, Senator Drilon clarified that "Transfers From" enumerated the agencies from which savings were realized in the amounts indicated in the overall savings portion of the budget, while "Transfers To" enumerated the agencies to which the amounts were transferred whose budgets in effect were augmented.

Referring to his slide presentation, Senator Lacson showed that from the item "Overall Savings Transfers" covering the period 2002 to 20 I 0, the DepEd reflected a total of P145,5 billion. However, he pointed out that every year, there were complaints from the DepEd about lack of teachers, desks and classrooms. That being the case, he asked why the DBM would take out P145.5 billion from the DepEd and transfer it to other agencies or departments and if such policy reflects the absorptive capacity of the agency.

Replying thereto, Senator Drilon said that in general, there are appropriations in the budget which


would 110 longer be utilized for various reasons and therefore, on the basis of that judgment, the funds are transferred to the agencies that needed augmentation. In the case of the DepEd, he explained that there were various reasons why the DepEd's budget was not utilized. For instance, he said that as a matter of policy, the DBM may not allow the hiring of additional clerks or non-teaching personnel and therefore, the funds appropriated for that purpose would be considered as a candidate for transfer to another agency. He further pointed out that under the current budget, the DOH complained about the lack of nurses and yet there Were 200,000 nurses who were not practicing their profession. He said that the DOH could not fill up these positions with nurses because the itcms are clerical and administrative in nature. He said that here is a situation where, on one hand. nurses are needed yet the DOH has savings on personal services because of the policy of not increasing the non-technical pOltion of its bureaucracy. He remarked that this is one of the reasons why funds are being transferred from an agency to another that necd the funds for some activity.

Senator Lacson observed that while it was a sound explanation, he still could not understand why PI45 billion would be taken out of DepEd as a "transfel' from" and then have P796 million as a "transfer to" the DepEd. Senator Drilon clarified that this was a realignment within the DepEd budget.

To the observation that there was also a transfer to the DepEd from other depaltments, Senator Drilon remarked that said amount was used for the tcachers' productivity incentive bonus because there was no appropriation for that pUl'Pose. He said that resources had to be pooled from the other agencies since the DepEd bureaucracy was so large.

Senator Lacson commented that it appears that the I'e was no planning because he could not understand why certain funds would be taken out trom one agency, in this instance, the DepEd, and at the same time, realigned or transferred from other agencies to the DepEd. Senator Drilon did not dispute the statement, noting that even the U.S. government does not have an overall plan. He acknowledged that there were unforeseen incidents that happened during the course of the budget hearings.

Asked how the departments avail of overall savings transfers and who authorizes them, Senator Drilon replied that a particular agency might ask for

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authorily for additional bonus but if it does not have enough funds for that purpose, funds would be transferred to it from other agencies upon approval of the President.

To the observation that Congress is no longer informed about the matter, Senator Drilon said that Congress gets a report which is reviewed for the next budget hearing. He explained that this was the result of a non-line item budget, adding that the power to realign is also authorized under the Constitution. He explained that the latitude as far as this matter is concerned would be limited to a certain extent by putting all the appropriations for unfilled items in the Miscellaneous Personnel Benefits Fund.

Asked if this was sound budget management, Senator Drilon replied that given the size of the bureaucracy, the DBM must be given leeway since it cannot check all the amounts or figures which the different department agencies submit at the start of the budget hearings.

Senator Lacson said that he would not have any problem if it was done very objectively. However, he said that if it was done because one department is the favorite of the one approving the transfer then something is wrong with the bureaucracy.

Senator Dri Ion said that it is an accepted fact that each agency would try to bloat its budget proposal so that once it was approved, there is enough fiscal space within the budget to enable the head of the agency to declare savings and realign funds. He revealed that there are a lot of budgetary practices that the DBM is continuously trying to correct but it takes time. He recalled that he had pointed out in his sponsorship speech that the matter of the allocation offunds for unfilled positions in the Miscellaneous Personnel Benefits Fund has caused a lot of complaints but it is a reform that has to be implemented to have transparency in the budget.

Asked if there has been a serious study conducted by either the Executive branch or Congress on overall savings from unfilled positions, Senator Drilon replied that no such study has been conducted so far. He said that it only indicates that government has to be more precise in the budgeting of the funds because savings can only arise out of an appropriation which is higher than what is actually needed. He said that the DBM has started to monitor the allocation of the budget for unfilled position more closely,

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adding it was the first major step to have more transparency in the budget process. He asked Senator Lacson to be present in the next DBCC briefing of the 20 I 3 budget so that the matter of the revenue side and the sources of funds could be better understood by all.

INTERPELLATION OF SENATOR DEFENSOR SANTIAGO

Asked by Senator Defensor Santiago if the budget secretary was present in the Chamber, Senator Drilon explained that Secretary Abad was in the Senate that morn ing but had to go to Malacanang that afternoon for a conference on the TRO issued by the Supreme Court in the petition tiled by former President Gloria Macapagal Arroyo.

But Senator Defensor Santiago insisted that Secretary Abad had nothing to do with that issue as she proposed that the Senate discipline any member of the economic team of any administration who does not appear dUl'ing the budget hearings.

Asked if the finance secretary was present in the Chamber, Senator Drilon repl ied in the affirmative, adding that the NEDA Director General was also there.

Senator Defensor Santiago congratulated Senator Drilon for revising the GDP growth for 20 II at 4.5% to 5.5%. For 2012, she doubted ifany weight can be given to the economic growth forecast of 5.5% to 6.5% in light of recent developments such as the debt crisis in Europe, the budget crisis and economic weakness in the U.S. and the triple tragedy in Japan.

Referring to her slide presentation, she showed that the major international financial institutions -IMF, World Bank and ADB - have downgraded GDP forecasts in 2011 and 2012. She asked what the basis was for the revision for 2012 of the growth forecast of 5.5% to 6.5%, given the fact that it should only be 4.7% according to IMF; it should only be 5.0% according to World Bank; and it should only be 5.1 % according to the ADB.

Scnator Drilon stated that the forecast was made by the DBCC at the start of the budget preparation during the first half of the year. He said that the reason why the DBCC was called for a second briefing was to give them the oppOltunity to review the GDP growth given the external factors, and the


DBCC decided to maintain the GDP projection for 2012 while the GDP projection for 2011 would be lowered.

Asked who among the members of the Committee dared to go against the predictions of major financial institutions of the world, Senator Drilon replied that the DBCC is composed of the Finance secretary, NEDA secretary, Budget secretary, and the Central Bank governor.

Adverting to Annex A on "Poor Budget Implementation," Senator Defensor Santiago noted that for fiscal year 20 II, the appropriate fiscal policy was for the government to spend more on public infrastructure and social services. She said that Congress went along with the President's budget request for 20 II which was approved on time and with little amendments. She added that the agreed budget deficit should be around P300 billion or roughly 3% of the GDP; however, the Aquino administration has apparently failed to move projects as authorized by Congress. She pointed out that for the first three quarters, from January to September, actual spending compared to program spending was lower by P214 billion while the total program expenditures was P 1.283 trillion, which was much higher than the total actual expenditures at P1.070 trillion. Even if interest payments were excluded, she said that the total program expenditures for the first three qUalters was P 1.042 trillion while total actual expenditures was P848 billion. She stated that the extent of underspending of the productive part of the budget was PI94 billion.

Senator Defensor Santiago asked whether the massive underspending was deliberate due to some bureaucratic red tape or incompetence on the part of the spending agencies. Senator Drilon shared the concern of Senator Defensor Santiago that, indeed, the underspending dragged down the country's economic growth for the first semester, adding that this was also admitted by the economic managers who are tlying to have a catch-up program through the immediate release of about P72 billion for fastmoving projects which were enumerated during the interpellation of Senator Cayetano (P) 011 the General Principles of the GAA.

Considering the serious delays in project implementation, Senator Defensor Santiago said that the emerging scenario is that the targeted deficit of P300 billion will not be met and, most likely, the

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TliESDA Y. NOVEMBER 15.20 II

deficit will only be PI50 billion which is half of the programmed deficit. In fact, she pointed out that from January to September, the programmed deficit was supposed to be P242 billion while the actual deficit was only P53 billion or a difference of P 189 billion.

As regards the P72-billion tiscal stimulus program by the Executive Department and the PI O-billion additional subsidy to BSP by the DBM, Senator Defensor Santiago stated that these were not part of the discussion when the 20 II President's budget was being deliberated upon by Congress last year. She surmised that the President has used the national budget not as a tool for national development but, in fact, acq u iesced so that the budget became a drag on econom ic growth.

Senator Drilon stated that the source of the stimulus would come from one windfall dividend t)'om the OFls, the continuing appropriations for 2010, and the identified 2011 appropriations of slowmoving projects of agencies or personal services savings. He affirmed that the programs were not discussed nor predicted at the start of the budget.

On the constitutional law issue, Senator Defensor Santiago stated that spending adjustments require congressional concurrence. She maintained that the power of the purse belongs to Congress, and she asked how the government was able to transfer P72 billion without prior consultation with Congress. She pointed out that the 2012 cash budget of P1.84 trillion is 8.37% higher than the 2011 original budget but it is 23.12% higher than the emerging 2011 budget of P 1.5 trillion. On the revenue side, she said that there were serious doubts on the capability of the Bureau of Customs to collect P365 billion in 2012. In 2011, she said that the BOC is expected to have a revenue shortfall of around P49 billion, and for the first three quarters, it has a realized shortfall of P35 billion. She predicted that with uncertain revenue collections partly because of slower growth unexpected with about halfofthe 2011 infrastructure spending expected to spill over to 2012, the emerging deficit in 2012 might be around P350 billion rather than P286 billion.

Senator Defensor Santiago explained that the amount of P350 billion is equivalent to the target deficit ofP280 billion plus P50 billion for a combination of public infrastructure and fiscal stimulus that will be paid in 2012 plus some revenue shortfall of

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P20 billion which is a conservative estimate. She then asked how the economic managers will address the emerging large budget deficit.

Senator Drilon replied that the disbursement of funds will take into account the collection of the expected revenue so that with less collection, there will be less disbursements in order that the government will not exceed the projected deficit of P300 billion. He also agreed that there is a great possibility that the budget deficit cannot be held at the level of P300 billion because of a number of infrastructure projects spilling over to 2012.

Senator Defensor Santiago asked if the budget adjustment plan, in the event of larger than expected deficit, has been explained to legislators from both Houses of Congress, discussed within the Cabinet, or it would be executed without prior consultation with Congress as was done with the P72-billion stimulus program. Senator Drilon stated that the Finance Committee intends to fully activate the Senate Oversight Committee on Public Expenditures, which shall be required to prepare a quarterly report of disbursements being done by various departments with significant budgets so that the program deficit and the ability of the government to raise the revenues required to meet the goals of the budget can be monitored more closely.

Senator Defensor Santiago recalled a privilege speech she delivered, calling the attention of the executive department on the need for transparency and fiscal responsibility in the use of funds, some created way back during the martial law years, which are not subject to congressional review and approval, citing specifically the PC SO Fund, Pagcor Fund, Malampaya Fund, Road Users' Tax, and many more. She said that the use of those funds have not been subject to scrutiny; hence, these are prone to abuse. She noted that some of their uses were now being addressed by specific programs, projects, and activities that are funded in the national budget, yet these funds continued to be allocated and disbursed by unelected officials who are not accountable to the people. She asked the Sponsor's position on the proposal to have the proceeds of these funds deposited in the National Treasury and their uses subject to congressional review and authorization.

Senator Drilon said that it was Congress that delegated the power to appropriate the funds to those agencies. He said that the abuses committed in those

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agencies became the catalyst for the GOCC Governance Act to have an agency that wou Id monitor the use of public funds.

To the suggestion that the funds be returned to the National Treasury and discussed during the budget deliberations, Senator Drilon said that the funds are already deposited in the National Treasury, adding that it is in the budgeting of these funds that the boards exercise the delegated authority of Congress to appropriate the funds. Senator Defensor Santiago stated that the delegation should be withdrawn, to which Senator Driloll agreed.

INTERPELLATION OF SENATOR LEGARDA

At the onset, Senator Legarda stated that based on the DBCC's recent adjustments, the projected revenue for 2011 was 13.7% which is 0.4% below the programmed 14.2%, and she attributed this to the inability of the Bureau of Internal Revenue and the Bureau of Customs in meeting their revenue targets for the year compounded by the economic slowdown all over the world. Therefore, she said that there is a program tax effort of 12.6% and the outlook for 2011 tax effort is at 12.2%. For 2012, she noted that the DBCC retained the 14.2% revenue target but it increased its program tax effort from the 20 I I outlook to 12.2% to a higher 12.9%.

Senator Legarda asked what justified the retention of the 14.2% revenue target for 2012, given that the government has failed to make its 14.2% revenue target for this year. Senator Drilon replied that there are two major components of the tax administration program which makes the Department of Finance confident that it would be able to make a higher revenue program for next year: 1) new legislation to restructure certain tax regimes like the rationalization of the tax incentives or the sin tax law; and 2) the existing intensified tax administrative effort which involves the filing of cases against erring taxpayers. He said that he would like to inculcate in the minds of the taxpayers that it does not pay not to pay the right taxes. Senator Legarda said that the programs mentioned are ongoing although not effectively implemented.

As regards certain legislative measures that should be prioritized by Congress such as the rationalization oftiscal incentives, which has been filed in previous Congresses, and the restricting of sin taxes which will allow the automatic adjustment of sin taxes using


the NSO-established tobacco and alcohol industries and unifying existing tax rates, Senator Drilon stated that these two measures were informally discussed with Senator Recto, chairman of the Committee on Ways and Means, and the vice chairman, and they have agreed to work on the measures after the budget so that by the end of the second regular session, the new tax measures would be enacted.

With the administrative measures and the proposed legislation, Senator Legarda asked what would happen in the event that the tax measures are not passed. Senator Drilon stated that the targets would not be downscaled, the government should exert extra effort on the administrative measures to increase tax collection, and the fee structure in certain areas should be reviewed.

Asked on the amount lost in revenues from Customs tariff and duties as a result of smuggling, Senator Drilon said that according to the secretary of Finance, World Bank studies estimate it to be approximately P60 billion, and this includes smuggling in airports and ports of every kind of product including basic commodities such as rice, sugar and even oil.

Recalling the remark of the secretary of Finance during a budget hearing that it is Utopia to even dream of totally eradicating smuggling, Senator Legarda asked on the realistic figure and percentage of curbing, if not totally eliminating, smuggling. Senator Drilon said that while there are no exact targets for the Bureau of Customs, the expected improvement in collections for both the BOC and BIR was approximately P72 billion for 2011 and at least the same amount for 2012. He disclosed that in 2011, revenues rose to 14% compared to 2010 in an economy that grew only by 4%. He opined that while indeed the total elimination of smuggling would generate P60 billion on top of the P70 billion generated in 20 II, such is an ideal situation that may take time to achieve. However, he expressed hope that the government would be able to collect more by imposing stricter measures to curb smuggling.

Relative thereto, Senator Legarda noted that the DBCC revised its growth targets from the previous assumptions of 5.5% to 6.5% for 2012 to 5% to 6% similar to the projection llsed for the 2011 national budget, in view of the fact that the country's GDP growth rate hit only 4% on the first half of 2011. She also noted that in his sponsorship speech, Senator Drilon attributed the slowdown to external factors


like the tsunami and impending nuclear disaster in Japan and tensions in the Middle East and North African regions, worsened by the public sector's underspending of P139,7 billion, and the absence of election-related spending for the year. Given the scenarios, Senator Legarda asked how the economy wou Id actually be driven to grow by 5% to 6% in 2012,

In reply, Senator Drilon believed that the budget for 2012 has been so crafted to achieve the projected growth rate and in order that the domestic economy would respond to the stimulus that the government has been putting on stream. For instance, he said, the infrastructure budget of P 182.2 billion for 2012 is an increase of 25.7% from that of the previous year.

Senator Legarda also noted that based on the July 2011 labor force survey, unemployment rate was pegged at 7,1%, or 2.8 million unemployed workers which hardly changed from the 7% unemployment rate recorded in July 2010. Moreover, she observed that the quality of jobs created as measured by the unemployment rate also worsened from 17.9% in July 2010 to 19.1% in July 2011, affecting 7.1 million workers.

Asked how the government could substantially reduce the number of unemployed and underemployed and how it could improve the quality of oppo/tllnities for 2012, Senator Drilon replied that there are a number of drivers in the economy; for instance, government efforts are geared toward the establishment of BPOs in the country that would result in employment-generating activities, and towards higher production through improved infrastructure in the agricultural sector. Given that the infrastructure sector budget has been increased by 25%, he expressed contidence that the private sector would respond to the leadership of President Aquino and would be able to pump in funds into the economy as evidenced by its significant contribution in terms of GDP growth which is expected to continue in 2012. Moreover, he revealed that there are a number of other measures in place such as job matching for graduates, proper monitoring of what is foreseen to be available jobs in the future, and gearing of the school curriculum towards such opportunities that would produce employable skills. He said that such plans are in the pipeline aimed toward alleviating the difticult employment situation in the country.

Senator Legarda commented that while the BPO sector has grown massively in the past years,

555

neighboring countries like India and China, that are aggressively encouraging their citizens to learn English, are a big threat to the Philippines. She revealed that a Filipino-American investor she recently met who operates also out of the U.S. East Coast has, in fact, warned on the probabJe decline of employment opPOliunities in the sector in the next three years if the Filipinos do not improve their English proficiency.

Given the lack of focus in English in the educational system and the lack of support for the IT sector, Senator Legarda asked how the Philippine government would address the threat of losing its niche in the market particularly because of the aggressive stance of China and other countries. Senator Drilon said that he would have a detailed response when the DepEd budget is discussed. However, he affirmed the need to address the problem in view of the fact that the declining proficiency in English has adversely affected the country's ability to attract BPO companies, as evidenced by the complaints of recruiters in the industry that out of over a hundred that they interview, about two percent only would qualify for the job.

Senator Legarda lamented that in the face of numerous complaints about the lack of classrooms and equipment, the need to train teachers better in terms of English proficiency has somehow been neglected.

On the issue of hunger, Senator Legarda said that based on a Social Weather Stations survey for the third quarter of 20 11, the proportion of families experiencing involuntary hunger at least once in the past three months was at 21.5%, or an estimated 4.3 million families nationwide, a 6.4 percentage point increase from the four-year low of 15.1 %, or three million families in June 2011, and 7.5 points higher than the 13-year average of 14%, although still below the 24% in December of 2009.

Asked if the proposed budget of 2012 seeks to address the worsening self-rated hunger and poverty by Filipino families, Senator Drilon said that he does not believe that there is a worsening hunger situation. Nonetheless, he said that the while the government is conscious of the poverty situation in the country, Congress has ensured that the budget is biased in favor of the poor by providing two direct interventions: first, the Pantawid Pamilyang Pilipino Program (4Ps) or the conditional cash transfer where P39 billion has been allocated, increasing the coverage

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by 700,000 beneficiaries, and the realignment of P800 million so that it could provide benefits to additional 63,000 beneficiaries; and second, with the direct intervention of Congress, P 12 billion was allocated for the enrolment in PhilHealth of the poorest 20% of the population, or the amount of P2,400 for PhilHealth premium per year per household. Moreover, he said that the government aims to cover 5.2 million households in its National Housing Targeting System.

Senator Dri Ion said that the Department of Social Welfare and Development has been tasked to commission the SWS to undertake a survey that would provide an assessment of how far the CCT program has been effective in alleviating poverty in the country.

Senator Legarda expressed satisfaction over the increasing number of poor families that are being enrolled in PhilHealth, over and above the original target of five million when the PhilHealth law was still being enacted, and that such increase is being effected without the need for a law.

On a related matter, Senator Legarda noted that the DBCC attached a fiscal risk management to the 20 II General Appropriations Act that recognizes disasters as creating large fiscal risks for the budget She said that the statement also noted that "the massive flooding 01'2009 caused by typhoons Ondoy and Pepeng led to a staggering US$4,4 billion in total damage and losses or the equivalent of 2.7% of the country's GDP in 2009."

Senator Legarda quoted further the pOltion of the statement, to wit:

In practice, the bulk of the cost of disasters remains with the National Government as LGU funds are rapidly depleted in the event of a disaster and there is compelling reason why disaster impact should be evaluated in public investment planning from the national to the local levels. Governments are responsible for a stock of public assets which includes schools, health facilities, roads. and intrastructure. At the same time, they are often the insurers of last resort for the houses and assets of low-income households and communities. A well balanced portfolio of investments for disaster risk reduction and management is therefore encouraged to enhance the sustainability of public spending, to strengthen financial protection and fiscal


stability, and to ensure a more predictable recovery and reconstruction in the event of a catastrophic disaster. This portfolio may include a mix of various investments such as national and local contingency funds, credit and insurance.

Senator Legarda asked how the government intends to substantially lessen its fiscal vulnerability to disasters and how the budget would be effectively used as a tool to build the country's resilience to disasters and climate change.

Senator Drilon replied that the principal instrument is a catastrophe bond which can be secured from the World Bank and triggered by the OCCUrrence of certain risks that can affect the country's economy and growth rate. He explained that it was intended as a standby measure that can respond to unforeseen events that might affect the projections for 2012.

Asked if the catastrophe bond is a cushion in times of calamities as a back-up measure in case the GAA is insufficient, Senator Drilon explained that it is intended as a liquidity cushion provided at a very low cost or at a rate of less than I % spread over a period of 25 years. It is a mechan ism that can provide some comfort during calamities, he said.

On another matter, Senator Legarda disclosed that the country has not availed of a single dollar from the Adaptation Fund despite of the fact that it is the third most vulnerable and at risk country in the world simply because the government has not appointed the National Implementing Entity (NIE). She said that there are countries in Africa which are smaller than the Philippines that have accessed the Adaptation Fund of the UNFCCC. She recalled that in one of the hearings of her Committee, Senate President Enrile even suggested that the DBP and Landbank be appointed as the NIE. Asked if the DOF had indeed been designated as the NIE, Senator Drilon replied that according to the finance secretary, discussions on the matter were still being held led by the Climate Change Commission.

At this point, Senator Legarda said that she was glad both Secretaries Purisima and Padaranga were present in the budget deliberations considering that billions of dollars of the Adaptation Fund were waiting to be accessed. She disclosed that in a recent meeting with the UN Office for Project Services (UNOPS), which manages the adaptation projects all

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TUESDAY, NOVEMI3ER 15,2011

over the world, she learned that Maldives, with less than a million population, had already accessed US$I 0 million for water projects. She said that the Maldives was able to do so because it identified the UNDP as its NIE, She opined that if a government agency like the DOF would be appointed immediately as the NIE, the country would be able to access the Adaptation Fund during catastrophes and calamities since the country has already been qualified to be at risk. In response, Senator Drilon said that the finance secretary has noted Senator Legarda's suggestions.

Further, Senator Legarda bal'ed that during the meeting, the UNOPS executive director assured her that the country could access the Adaptation Fund in the form of grants at least six months from the appointment of the NIE or after complying with the requirements. She lamented that the P I billion proposed budget for the PSF would not be enough to meet all the needs.

Moving on to the public-private partnership program, Senator Legarda recalled that the President unveiled during his State of the Nation Address his flagship infrastructure project until 2016. She said that based on information she gathered from sources, the PPP has almost grounded to a halt and that of the I I projects for roll-out in 20 II, only the P 1.4 billion Daang Hari South Luzon or SLEX link road project would start next year with the bidding already scheduled in December 20 II, while the other projects like the P7.7 billion MRT-LRT extension program was still under review by the DOTC. She said that the DOTC luis raised the possibility of a PPP-hybrid scheme under which, using the aDA, it would build, maintain and operate the facility. She noted that under the original PPP program, private sector financing would supposedly be used to fund construction, Relative thereto, she asked why the PPP program has not yet commenced and what prompted the change of strategy from the original PPP to the hybrid model, if reports were accurate.

In response, Senator Drilon said that one of the major reasons in the delay of the PPP was that the feasibility studies have taken longer than expected. Insofar as the DOTC projects, such as the MRT, are concerned, he said that there was a review of the viability gap in the implementation of the MRT-PPP, a fact that should give an assurance that extra efforts were being undertaken to roll out more PPP projects next year. He pointed out that the Daang Hari SLEX link road project was on schedule with

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the deadline for submission of bids set on December 8, 20 I I. He disclosed that there were other PPP projects lined up for 2012 including the school infrastructure project, which was already endorsed by the ICC Technical Board, along with two or three more projects, While admitting that there was not much success in 20 I I, he hoped that there would be more roll-outs in 2012 and more significant improvements in utilizing the PPP to fast-track infrastructure development.

Senator Legarda noted that in the 20 II GAA, a total of P12,5 billion was set aside for PPP strategic support fund, with the DPWH and the DOTC receiving P5 billion each and the DA, P2.5 billion. Considering that the roll-out of the flagship PPP program failed to take off in 20 II, she asked whether the P12,5 billion would be allocated to agencies in the 2012 GAA or returned to the National Treasury. Senator Drilon replied that the fund would be carried over to next year's budget and that insofar as the DPWH is concerned, the amount would be used for the acquisition of right-of-way and for feasibility studies, while the DA has in its pipeline a number of PPP projects. He expressed hope that by 2012, all these projects would be successfully bid out.

Senator Legarda thanked Senator Drilon for including environmental protection, climate change, mitigation and adaptation in his five social contract priorities, and as regards to reports that the mining industry was being exempted from Executive Order No, 23, which declared a moratorium on the cutting and harvesting of timber in the natural and residual forests, she said that there was a clarification later that the mining industry was not exempted from the ban although certain mining companies were exempted in view of their current projects on environmental protection. In response, Senator Drilon said that the matter would be relayed to the DENR and, at the proper time, the concerns of Senator Legarda wou Id be addressed by Secretary Paje,

Senator Legarda agreed to defer her queries on the allocation to cI imate change adaptation in the 2012 GAB, the data base on disaster losses and vulnerability to disasters, and the flood control program until the deliberations on the budget of the DPWH.

Proceeding to another matter, Senator Legarda noted that the Medium-Term Philippine Development Plan (MTPDP) was approved by the President sometime in May 20 II which resulted in complaints

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from environmentalists that not every aspect of the MTPOP was actually green. She disclosed that a green audit was conducted and some sectors were not pleased with the way the MTPDP had not acceded to the concerns of some NGOs over environmental safeguards.

Asked whether the 2012 budget is actually attuned to the MTPOP and how it diners from the previous year's budget, Senator Drilon stated that the 2012 budget is attuned to the MTPDP as he noted that the Philippine Council for Sustainable Development was being revitalized and that regular meetings were being held to make sure that the budget was being used to address the climate change goal in the MTPDP.

In answer to further queries, Senator Orilon confirmed that MTPDP was still evolving and its implementation was being closely monitored. He also said that according to Secretary Paderanga, the Council was already in the process of being formed and that NEDA would be needing the assistance of the Senator. For her part, Senator Legarda stated that she had already offered her services.

INTERPELLATION OF SENATOR ARROYO

At the onset, Senator Arroyo recalled that in the 20 I 0 national budget, he proposed an insertion of a provision, which Congress approved, that the national debt should not exceed 55% of the Gross Domestic Product (GDP) which, however, was vetoed by then President Arroyo; the following year, he proposed the insertion of a similar provision with a condition that should the Executive Department exceed the 55% limi~ it should ask the permission of Congress.

For this year, Senator Arroyo said that the Senate could enter into a compromise with the Executive to retain the 55% of the G DP as Congress cannot allow the Executive branch to keep on borrowing unchecked by any agency of the government.

On the present percentage of the foreign borrowings to GDP, Senator Drilon replied that for the current year, it is 50.9 % but it would be reduced to 50.2% next year.

If the level of borrowings went down during the last few years, Senator Arroyo commented that he could not understand why the two presidents vetoed the special provision for the same reason.


Asked if he would be open to reintroduce the said provision which would be worded in such a way that the Executive Branch would not feel threatened, Senator Drilon replied that he has always been open to it but it is a question of convincing the Executive branch that there is enough leeway and flexibility in the special provision. At the same time, he said, certain limits have to be imposed so that there can be a check on the ability of the Executive to keep 011

borrowing.

Assuming that the present debt was about 51 % of the GDP, Senator Arroyo asked if the Committee would agree to increase its level further to 55%. Senator DrBon reiterated that in general, he would be willing to incorporate a special provision that in case the debt level reaches a certain percentage of GDP, no further debt could be incurred unless authorized by Congress. The key, he said, is to find that percentage that would give the Executive flexibility and, at the same time, ensure the appropriate check is in place to prevent runaway borrowings. However, he pointed out that for the past two years, the Aquino Administration has shown a responsible use of its power to incur additional debts, adding that the national debt is projected to go down to 50.2% next year from 51 % this year.

On a related matter, Senator Arroyo noted that Congress has no say in the matter of debt payments because the DOF and the National Treasury merely submit bill of indebtedness and the legislature cannot touch or question it. He asked if the Committee would be willing to put in a certain degree of operational system that would enable Congress to know exactly what the national government is paying for. He pointed out that as far as foreign borrowings are concerned, the Constitution mandates that they must be approved by the Bangko Sentral ng Pilipinas but Congress, with its much-vaunted power of the purse, has no say.

Senator Drilon agreed that Congress is almost helpless as far as the power of the Executive to incur foreign debts is concerned, pointing out that in the past administration, projects like the North Rail burdened the government with heavy debts that did not even pass the Monetary Board, a clear case of abuse of power. He reiterated that he was open to the suggestion that at a certain level of national indebtedness as a percentage of GDP, congressional concurrence must be secured.

TUESDAY. NOVEMIlER 15.2011

Senator Arroyo commented that the hands of Congress are tied because the Supreme Court had sustained the power of then President Corazon Aquino to automatically appropriate money, pursuant to PO 1177, for foreign debt payments. He asked if something could be done like crafting a legislation which would, in effect, neutralize the decision of the Supreme Court. Senator Drilon replied that it cannot be done in the budget but Congress can certainly legislate to amend PO 1177.

As to the attorney's fees being paid by the govemment to lawyers handling cases abroad like the Piatco, Senator Arroyo bared that when he tried to inquire as to how much fees the lawyers were getting, he was told that such information cannot be revealed as it is covered by the nondisclosure proviso in their contracts. He said that he does not even know whether the matter passed through NEDA.

Senator Drilon said that the matter of attorney's fees does not pass through NEDA and the present finance secretary is not aware how much fees had been paid by the past administration. Nonetheless, he believed that the matter was not covered by any confidentiality clause as these are huge public funds paid to private individuals. He gave assurance that in the exercise of its oversight function, the Oversight Committee on Public Expenditures can raise the matter to the DBM at the proper time.



It was 5:53 p.l11.



TERMINATION OF THE PERIOD OF DEBATE ON THE GENERAL PRINCIPLES OF HOUSE BILL NO. 5023

There being no other reservation to interpellate on the general principles of the proposed national budge~ upon motion of Senator Drilon, there being no objection, the Body closed the period of debate on the general principles of the bill.

559

MANIFESTATION OF SENATOR DRILON

Senator Drilon informed the Body that Senator Recto, vice-chair of the Committee on Finance, would respond to queries on the budget of the Department of Finance and its attached agencies.

DEPARTMENT OF FINANCE AND ITS ATTACHED AGENCIES

Senator Recto presented the budget of the Department of Finance and its attached agencies.


With the permission of the Body, the session was suspended.

It was 5:58 p.m.




Preliminarily, Senator Legarda noted that the World Bank's board of executive directors has approved a P500 million contingent line of credit for the Philippines called the Disaster Risk Management Development Policy Loan with catastrophe deferred drawdown option which allows the country to have immediate access to funding for emergency relief, recovery and reconstruction efforts following a major disaster. Since drawdown from this financing support would be triggered by a presidential declaration of a state of calamity, she pointed out that the operation would give the country flexibility to lise the funds only if needed. Moreover, she pointed out that the country could avail of the funds for 15 years since the three-year borrowing period could be renewed up to four times. She believed that the loan is a positive development in improving the country's post-disaster activities, relief, rehabilitation, reconstruction and recovery. However, she noted that the disaster risk reduction and management framework stresses the need to allocate resources more flexibly to deal with disaster risks in a proactive manner which is disaster preparedness and prevention.

Relative thereto, Senator Legarda asked what priority actions the Department of Finance is initiating to lessen the government's fiscal vulnerability to

560

disasters and if the catastrophe drawdown option could be used for disaster prevention as well. In reply, Senator Recto said that local government units as well as all major departments, such as the DPWH, have incorporated disaster risk reduction programs in their budgets as part of the MediumTerm Philippine Development Plan for Disaster Risk Reduction.

However, Senator Legarda pointed out that while LGUs use part of the internal revenue allotment (IRA) as calamity funds for disaster preparedness, not all government agencies have set aside funding for disaster risk reduction. Senator Recto agreed that sllch allocation should be included in the budget of every depmtment.

Since the country is visited by at least 20 typhoons every year, Senator Legarda asked whether the catastrophe drawdown option could also be used for disaster preparedness and if the DOF would be in charge of disbursing the funds to the agencies that would be in need of reconstruction. Senator Recto explained that the DOF would borrow the funds but would turn over the money to the Treasury for eventual disbursement by the Department of Budget and Management to the departments and agencies of the Executive branch.

Upon further queries, Senator Recto explained that the fund is essentially a standby loan which works like a grant as the creditor is not required to pay interest on it. Moreover, he said that the Philippines has become a model for the World Bank as it is the first Asian nation to be offered such a vehicle due to the fact that it is ranked third among countries that are prone to disasters in Asia.

Asked if the fund could be used to purchase mobile shelters/hospitals in flooded areas, Senator Recto replied that while this was possible, allocations for such programs were not included in the proposed budget. He clarified that since the fund - which is still unutilized- is considered as budgetary support, the government does not need to consult the World Bank on how the funds wou Id be spent.

Senator Legarda cited a World Bank study which revealed that government resources allotted for post-disaster reconstruction from 1992 to 2008 was below 10% of the total direct property damages incurred annually or approximately 3% of total post-disaster recovery and reconstruction needs.


This, she said, showed that the current public system of disaster risk financing in the country could not cope with the annual aggregate effects of disaster events.

She pointed out that various priority actions had been proposed and studied including the following:

1. The introduction of fiscal incentives and proactive risk management at LGU level;

2. To address the existing impediments that undermine the insurance provision in the country;

3. Encourage innovative micro-insurance solutions; and

4. To promote the structural integrity, particularly of LGU-owned facilities.

Asked on the status of these proposals and which are being pursued by the DOF, Senator Recto replied that the DOF is being assisted by the World Bank and the ADB in studying the feasibility of' implementing micro-insurance solutions.

In closing, Senator Legarda lauded the DOF for giving serious consideration to the proposal for micro-insurance solutions. She asked to be given more information on the program as she believed that this priority action would not only encourage the development of innovative micro-insurance programs that can help alleviate poverty and generate income for millions of poor and indigenous people but would also be used as a buffer against disaster risks.

SUBMISSION OF THE BUDGETS OF THE DEPARTMENT OF FINANCE AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budgets of the Department of Finance and its attached agencies, namely, the Office of the Secretary, Bureau of Customs, Bureau of Internal Revenue, Bureau of Local Government Finance, Bureau of Treasury, Central Board of Assessment Appeals, Cooperative Development Authority, Insurance Commission, National Tax Research Center, Privatization and Management Office and Securities and Exchange Commission were deemed submitted for the Body's consideration. ,- r



With the permission of the Body, the Chair suspended the session,

It was 6: 12 p,lI1.


At 6: 16 p.m" the session was resumed,

NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY

Senator Recto presented the budget of the National Economic and Development Authority and its attached agencies,

INTERPELLATION OF SENATOR SOTTO

Senator Sotto inquired on the role of the National Economic and Development Authority (NEDA) as regards foreign grants or technical assistance to private institutions in the Philippines. In reply, Senator Recto stated that NEDA has nothing to do with foreign grants to the private sector.

Asked by Senator Legarda what particular matter he was referring to in his question, Senator Sotto replied that an international organization, the International Planned Parenthood Federation (JPPF), which is connected to DKT, the top manufacturer of condoms and contraceptives in the world, gave US$617,000 to the Family Planning Organization of the Philippines, supposedly for "nurturing legislators."

Asked further by Senator Legarda what the phrase "nurturing legislators" meant, Senator Sotto said that he was not given an answer when he raised the same question during the plenary debates on the reproductive health bill,

Senator Legarda manifested that she would ask that the matter be clarified when the plenary debates on the RH bill resume.


Senator Legarda stated that she would be asking NEDA about its programs on Disaster Risk Reduction (DRR) and Climate Change Adaptation (CCA). She disclosed that as of June 20 II, there were 340 3nl and 6th class LGUs that still needed to update and

561

incorporate simple hazard maps into their Comprehensive Land Use Plans (CLUPS), aside from the 23 provinces that had not institutionalized the DRR and CCA in their local plans,

Asked how NEDA was assisting the LGUs in mainstreaming DRR and CCA into their local plans, Senator Recto replied that the national government, through NEDA and the different departments and agencies like the DA and DENR, plans to pool resources and purchase a national map to determine the hazardous areas in the country and also provide the LGUs with their respective maps,

To the comment that the geohazard map has been 100% completed as relayed to her by the DENR during the committee hearings, Senator Recto clarified that the geohazard maps are only for f1oodprone areas and not for the other disasters and have a very low resolution of I :50,000 which is still not applicable and not enough to assist the LGUs with their CLUPS,

Senator Legarda clarified that precisely, she asked assistance from NAMRIA since there were no flood-risk maps, noting that geohazard maps are different from flood-risk maps, which are important to a flood-prone country like the Philippines, Senator Recto revealed that the NEDA was currently working on the different maps.

On whether the NEDA was also assisting the LGUs with their CLUPS, Senator Recto answered in the affirmative, saying that the CLUPS would be incomplete without the maps. He bared that the Australian Agency for International Development was also assisting NEDA in an ongoing project called Integrating Disaster Risk Reduction and Climate Change Adaptation in Local Development Planning and Decision-Making Process, a program intended for all provinces, which started in August 2009 and is expected to end in July 2012,

Asked what the NEDA was currently working on in terms of vulnerability and risk mapping and how much its allocation for 2012 is, Senator Recto stated that at the provincial level, the NEDA was assisting LGUs to come up with risk assessments, the results of which would be incorporated in the CLUPS.

In answer to further queries, Senator Recto supposed that the CLUPS of the 340 LGUs were incomplete but he gave assurance that it would be

S62

made a priority project of NED A since it is funded in the 2012 national budget and also by foreign grants.

On a related matter, Senator Legarda revealed that Mr. Jan Mattson, UNOP Executive Director, had asked her to request the NEDA and the DENR to come up with any project proposal on Disaster Risk Reduction and Climate Change that the UN could fund. She said that she would give the NEDA and the DENR a copy of the project proposal of Maldives as a format or guide to give them an idea what is acceptable to the United Nations.

Senator Recto gave assurance that NEDA would work with Senator Legarda on the matter.

SUBMISSION OF THE BUDGET OF THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the National Economic and Development Authority and its attached agencies, namely, Office of the Director General, National Statistics Coordination Board, National Statistics Office, Philippine National Volunteer Service Coordinating Agency, Public-Private Partnership Center of the Philippines, Statistical Research and Training Center, the Tariff Commission and the Philippine Institute for Development Studies were deemed submitted for the Body's consideration.



It was 6:33 p.m.



JOINT LEGISLATIVE-EXECUTIVE COUNCIL

Senator Recto presented the budget of the Legislative-Executive Development Advisory Council (LEDAC).

Senator Sotto stated that Senator Defensor Santiago has expressed her desire to interpellate on

TUESDAY, NOVEMBER IS. 201 I

the budget of the LEDAC but she was not present in the hall. He reminded the Body that as agreed upon during the caucus, the Body would try to facilitate the passage and submission of the budgets of the different agencies and departments whose officials are present in the gallery.

He said that he would have no objection to the motion of Senator Recto to submit the budget of the LEDAC for the Body's consideration, without prejudice to the possibility of a motion for reconsideration in case one who is in favor of the submission would move to reconsider the same.

Thereupon, the Chair recognized Senator Recto, sponsor of the measure, and Senator Osmefia for his interpellation.

INTERPELLATION OF SENATOR OSMENA

Asked by Senator Osmefia on the budget allocation for LEDAC, Senator Recto replied that the total budget for 2012 is P2 million which is the same as last year's.

Asked how many LEDAC meetings have been held in the current year, Senator Recto said that there was one meeting.

Asked how much was actually spent for one meeting in 20 II, Senator Recto stated that LEDAC spent P860,000.00.

SUBMISSION OF THE BUDGET OF THE LEGISLATIVE-EXECUTIVE DEVELOPMENT ADVISORY COUNCIL (LEDAC)

Upon motion of Senator Sotto, there being no objection, the budget of the Legislative-Executive Development Advisory Council was deemed submitted for the Body's consideration, without prejudice to the motion of Senator Defensor Santiago to reopen and discuss the budget of the LEDAC.


Upon motion of Senator Sotto, the session was suspended to allow the PCOO staff to enter the hall.

It was 6:52 p.m.


At 6:55 p.m., the session was resumed. , r


PRESIDENTIAL COMMUNICATIONS OPERATIONS OFFICE (PCOO) AND ITS ATTACHED AGENCIES

Senator Orilon presented the budget of the Presidential Communications Operations Office and its attached agencies. He likewise acknowledged the presence in the Chamber of Secretary Coloma.

Senator Orilon stated that the budget of the pcao is P997,439,000, the same amount indicated in the NEP. He added that the House of Representatives introduced no amendments and the Committee also had no amendments to the proposed budget of the office.

He recommended that the Body favorably consider the same.


Senator Legarda noted that there is no annual line item allocation in the GAA for the operation of the national television station PTV -4. She stated that in the past, the funds for PTV -4 came from the discretionary fund of the Office of the President and congressional initiatives.

Asked if PTV -4 has an allocation from the P90 million budget of the PCOO, Senator Orilon replied in the negative, adding that PTV-4 is not under the PCOO.

Senator Legarda surmised that only the PIA and the Radyo ng Bayan are under the PCOO. She inquired how PTV-4 was able to operate without an allocation from the government when its charter, which recently expired, prohibits it from raising commercial revenues.

Scnator Orilon noted that PTV-4 is able to generate revenues trom the Philippine Charity Sweepstakes Office. He stated that during the previous administration, the station operated out of congressional insertions but there were no similar proposals in the 2012 budget. However, he assured that funds for the network's operations would come from government agencies that utilize it to air info shows like organic agriculture by the OA.

Senator Legarda believed that presently, the people behind PTV -4 are seeking to amend its chmter precisely to allow them to sell commcrcial

563

spots for their viability. Senator Orilon disclosed that PTV -4' s chmter allowed it to air commercial materials for the first 10 years of its operation, after which it is no longer allowed to engage and generate funds commercially. He stressed that the 2012 budget does not provide for subsidy for the network.

On whether it is possible for Congress to insert a provision in the GAA that would grant PTV -4 a budget, Senator Orilon stated that it would have to be reviewed and taken up with the OBM. He said that it would not be possible for Congress to earmark a portion of the POAF for the operations of the network because OBM sets the policy. However, he said that according to Senator Sotto, the bill amending the charter of PTV -4 was among the priority measures agreed upon during the last LEOAC meeting.

Senator Legarda informed the Body that she authored the bill amending the charter of the network. She inquired if it is possible for Congress to pass the bill on Third Reading before the Christmas break since I) it is a LEOAC bill; 2) it is the national television station; and 3) it is a simple bill. She stated that it is only a matter of extending the charter. She said that she would request Senator Honasan to create a subcommittee that she would chair to hear the proposed bill. She believed that the national network has potential, not for propaganda, but for information dissemination of the various projects of the departments. She proposed that part of the P4 billion generated by the National Telecommunications Commission (NTC) from the use of cellular phones and airwaves be used instead to resuscitate and sustain PTV -4. Senator Orilon supposed that the OBM would be willing to fund the operations of PTV-4 with whatever is in excess of the P4 billion.

On whether that would partake of an amendment to the GAA, Senator Orilon pointed out that the GAA does not provide for funds for PTV -4.

At this juncture, Senator Legarda asked what Congress would have to do in order to transfer the excess of NTC's P4 billion to PTV-4.


Upon motion of Senator Orilon, the session was suspended.

It was 7:06 p.m.

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At 7:07 p.m., the session was resumed,

Respond ing thereto, Senator Drilon stated that Congress would have to pass a bill increasing the capitalization of the network and for the government to subscribe to the share of PTV -4 in excess of the P4 billion.

Asked if it is possible for Congress to provide bridge financing to PTV-4 until such time the bill is enacted into law, Senator Drilon expressed doubt Congress could do so, saying he did not know where to source the fund. He stated that the PCOO would look into the matter of bridge financing, and that it wou Id be best to leave the prv -4 issue to the Executive Department which, he believed, would not allow the network to go down with the charter amendment pending, He explained that the bridge financing would require the Committee to look for funds within the GAB which could displace other budgets,

Senator Legarda stated that even in the remotest possibility, Congress could find the funds, she would be supportive of it. In the meantime, she said that the bill to amend PTV's charter is in the hands of Congress and urged the Members to support it.

INQUIRY OF THE CHAIR

Asked by the Chair whether there are plans to privatize RPN-9, Senator Drilon replied in the aftirmative. He stated that 22.8% of the equity of Channel 9 is owned by government; 34%, by Solar Enteltailllnent; 32%, by FEMIl, the group identified with former Ambassador Benedicto; and 14%, by other sectors. He said that the government has no eq u ity contro I.

Asked if RPN-9 and Solar Entertainment have an agreement, Senator Drilon replied that Solar Entertainlllent is a blocktimer of the station.

At this juncture, the Chair disclosed that he was in receipt of a letter from the president of the employees union of RPN-9 stating that they have not been paid their salaries and that an estimated P300 million of separation and retirement pay have yet to be paid to retired or resigned employees.

Senator Drilon clarified that as far as salaries are concerned, the payment is current but there were claims tor unpaid salaries which remain to be addressed,


He stated that certain benefits were not given because of cash flow problems,

As regards the retirement and separation pay of retired or resigned employees, Senator Drilon stated that because government is not a majority equity owner, the liability remains with the corporation assuming that the station is privatized. He explained that under the Corporation Law, the backpays would remain a liability of the corporation. He said that it was unfortunate that as the Committee was defending RPN-9's budget, it cannot speak for the private stockholders.

The Chair stated that according to the letter, there was a Special Allotment Release Order involving the amount of PI13 million issued to RPN-9; however, Mr. Albano, president of the station, did not pay the salaries of the employees. The Chair added that the employees were requesting the Senate to look into the matter.

SUBMISSION OF THE BUDGET OF THE PRESIDENTIAL COMMUNICATIONS OPERATIONS OFFICE AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Satta, there being no objection, the budgets of the Presidential Communications Operations Office and its attached agencies -Presidential Communications Operations Office proper, Bureau of Broadcast Services, Bureau of Communication Services, National Printing Office, News and Information Bureau, Philippine Information Agency and the Presidential Broadcast Staff - was deemed submitted for the Body's consideration without prejUdice to a motion to reopen the period of interpellations at a later time.


Senator Solto manifested that consideration of the budget of the Department of Environment and Natural Resources was suspended indefinitely because the DENR secretary was indisposed.



It was 7:19 p.m.



At 7:21 p,m" the session was resumed with Senate PI'esident Enrile presiding,

DEPARTMENT OF JUSTICE AND ITS ATTACHED AGENCIES

Senator Dri Ion presented the budget of the Department of Justice (DOJ) in the amount of P8,488,000,728, He said that the DOJ budget was increased in the GAB by P200 million for the JUSIP program and PI 00 million for the DOJ building but the Committee did not endorse the House amendments and, in fact, recommended that the P33 million for the NJIS program be cut since, in the view of the Committee, it was already being undertaken by the NBI. He bared that the Committee also found no basis for the creation of the Office of the Cybercrime because it has no enabling statute, However, he said that the Committee recommended that the DOJ prosecutors be allowed the use of income derived from the filing fees paid by the parties in cases pending in the DOJ,

RESERVATIONS TO INTERPELLATE

Senator Sotto manifested that the following senators have made reservations to interpellate on the DOJ bUdget: Senators Ejercito Estrada, Guingona, Legarda, Escudero and Defensor Santiago, in that order,

INTERPELLATION OF SENATOR EJERCITO ESTRADA

At the outset, Senator Ejercito Estrada stated that he would not ask any questions on policy or the DOJ budget itself. However, he asked for the reaction of the justice secretary to the temporary restraining order (TRO) that the Supreme Court issued in favor of former Pres. Gloria Macapagal Arroyo.

Senator Drilon replied that according to Secretary De Lima, as of that time, the DOJ has not yet received a copy of the TRO issued by the Supreme Court and that being the case, the watchlist order against former President Arroyo stands.

Senator Ejercito Estrada expressed his full support for the justice secretary's decision not to allow former President Arroyo to leave the country for

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fear she might not come back and face the charges against her.

Asked when the justice secretary would resolve the cases against former President Arroyo and her spouse, Senator Drilon said that while the justice secretary cannot pinpoint a particular date, she gave assurance that every effort would be exerted to resolve them before the end of the year.

Senator Ejercito Estrada recalled that within three months after Mrs. Arroyo grabbed power from then Pres. Joseph Estrada in 200 I, the President and himself were jailed even without any charges being filed against them, He observed that a lot of cases have been filed against Mrs. Arroyo, perceived to be the most corrupt President of the Philippines, yet she has not been jailed. He said that he wanted the cases resolved immediately and to see Mrs. Arroyo behind bars because of the numerous anomalies during her Administration.

Further, Senator Ejercito Estrada revealed thaI when media asked him whether Secretary De Lima should apologize to the Arroyos for saying that the former President was seeking political asylum from the Dominican Republic, he replied that the Secretary should not because the Arroyos had a lot to answer to the nation.

Asked where Secretary De Lima got information that former President Arroyo was seeking political asylum from the Dominican Republic, Senator Drilon said that when asked by media whether she had received reports of the purported request of the former President for asylum, Secretary De Lima confirmed that she did and that it was her duty to verify and investigate such reports.

Asked if it has been verified that former President Arroyo was seeking political asylum from countries other than the Dominican Republic, Senator Drilon said that the information of the DOJ was that the ambassador-at-Iarge of the Dominican Republic visited the Philippines in October 20 II, which visit was never coordinated with the Department of Foreign Affairs. He said that the DOJ was still verifying the purpose of the visit of the Ambassador but that there was no confirmation as to whether the former President sought political asylum from the Dominican Republic or any other country. He added that the report was still being investigated by the DOJ. r

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Asked on the timeline to resolve the cases against the former President, Senator Drilon reiterated that there was no timeline but the DOJ would endeavor to resolve them before the year is over.

In closing, Senator Ejercito Estrada stated that the resolution of the cases against the former President would be the best Christmas gift for the Filipino people.

INTERPELLA TlON OF SENATOR GUINGONA

Asked by Senator Guingona to conlirm if the special allowance for the DOJ prosecutors to be collected from the National Prosecution Service and the Office of the Chief Special Counsel has been continued or restored, Senator Drilon confirmed that through a special provision, the Committee has allowed the use of income by the prosecutors as authorized under a previous law. He said that this is income emanating Irom the filing fees paid by litigants with cases pending before the DOJ Prosecution Service.

Further, Senator Drilon suggested that the justice secretary review the cases where fees were being charged, saying that government should be extra sensitive to the people's constitutional right of access to courts. For instance, he asserted that persons who filed rape cases should not be made to pay filing fees but in cases involving the collection of private debts which are considered criminal in nature, the collection of filing fees is justified as this is the civil aspect of the criminal complaint. With that caution, he said that the Committee has allowed use of income to augment the income of prosecutors sourced from the filing fees collected by the DOJ.

Senator Guingona hoped that the justice secretary would move to rationalize the fees, underscoring the need to balance access to justice and the allowances for prosecutors.

As to the difference between the House version and the Senate version as regards the DOJ budget, Senator Drilon replied that the House version added P200 million for the halls of justice and PI 00 million for a DOJ building, which the Senate Committee on Finance did not endorse. He said that the Committee intends to discuss the proposal with the House of Representatives in the bicameral conference committee to seek further c1aritlcations regarding those items,


Asked if the House version authorized the special allowance provisions from any increase in fees or new fees imposed upon the effectivity of RA 9279, Senator Drilon stated that he was not aware since there was no amendment in the General Appropriations bill which would allow the use of income for the prosecutors. He said that this was actually the amendment that the Committee on Finance proposed in the Senate version, He gave the assurance that both Houses can always reconcile the use of income provision proposed by the Senate and the PI35 million found in the General Appropriations bill.

INTERPELLA nON OF SENATOR ESCUDERO

Citing information that former President Arroyo was on her way to the airport to catch one of the flights that night, on the assumption that she has a copy of the TRO which shall be presented before the Bureau of Immigration officials, Senator Escudero asked on the standing instruction ofthe DOJ Secretary to the Bureau of Immigration officials in the airport. Senator Drilon said that according to Secretary De Lima, since she has not been served a copy of the TRO, she has instructed the Bureau of Immigration oftlcials to bar the former president from leaving the country, and that once she has received the TRO, a motion for reconsideration would be filed.

Senator Escudero stated that he was one with the DOJ Secretary in finding ways and means to prevent, although through a different means, the former President from escaping liability from cases that may be filed against her. But he pointed out a 'fRO is, by nature, ex parte, and it is heard and issued by the court on the basis of the petition filed by the petitioner, without hearing the other party which, in this case, is Secretary De Lima and the other officials of the Executive branch. He added that the filing of a motion for reconsideration and the pendency of a motion for reconsideration, even if filed timely, might not stall the effectivity of a TRO as commonly practiced, that is why oral arguments are immediately scheduled after the issuance of the TRO because it is when the court would decide whether or not the restraining order should be maintained or lifted.

Senator Drilon acknowledged the statement and citation of authorities made by Senator Escudero but he stated that the DOJ has taken the position that a motion for reconsideration would stall the effectivity

HJESDAY. NOVEMBER 15.2011

of a TRO, a risk the Secretary was willing to take and argue before the Supreme Court. In the end, he said that it would be the court which will resolve the validity of the position taken by the Secretary of Justice.

Senator Escudero pointed out that the statement made by Court Administrator Midas Marquez, that the TRO is immediately executory would raise several issues: I) a possible constitutional crisis between two coequal branches of government, namely, the Supreme Court and the Executive branch; and 2) the lawyer offormer President Arroyo would most probably file cases of contempt for violation of the order of the court. He expressed hope that Secretary De Lima would look after the lower employees of the Bureau of Immigrations who might be caught in between, and cover them with the mantle of protection that she has as DO} Secretary and alter ego of the President. Senator Drilon assured the Body that the Secretary of Justice has taken full responsibility for the acts of her subordinates who are acting on her orders. He said that for proper order, the Court Administrator should refrain from making rulings on the issue since it is a matter for the Supreme Court to resolve, othelwise, there would be confusion in the interpretation of the ruling of the Supreme Court arising from the statements of the Court Administrator. Senator Escudero joined Senator Drilon in his admonition with respect to the remarks made by the COUll Administrator.

Asked on the number and status of pending cases tiled against former President Arroyo, Senator Drilon said that two of the three plunder and other anti-graft cases pending, and a case of election sabotage have already been submitted for resolution. He clarified that the two plunder cases pertain to the fertilizer fund scam, which was filed in July 20 II and is still at the preliminary investigation stage; and the OWWA fund, which was filed in May 20 II and submitted for resolution in October 20 II. He said that there was a third plunder case, filed by a person named DaniloLihaylihay arising from nonpayment of capital gains tax for the Iloilo Airport. However, he pointed out that this was a peculiar case that would probably be dismissed because the government was the purchaser of the land and it cannot be determined how the former president could be liable for nonpayment of taxes for capital gains.

Senator Escudero hoped that the DOJ can expedite or facilitate the resolution of these cases so

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that the government can take the safer route of getting a hold-departure order from the courts.

Senator Escudero asked if representations can be made with a country that does not have an extradition treaty with the Philippines for a national to be brought back home. He surmised that there are some situations where it might be easier because of the absence of certain procedures and rules that are normally required in an extradition treaty that the Philippines entered into with another country and which might be even limited to certain crimes. He asked what would happen if the DF A cancels the passport of a national who is staying in a country which does not have an extradition treaty with the Philippines. To the question involving a person who is the subject of a request for return to the Philippines, Senator Dri/on stated that it would depend on the municipal laws of the country where the person is situated. As far as the cancellation of the passport is concerned, he said that it would mean that the holder would become an undocumented alien in the country where the person is situated, and his deportation would depend on the municipal laws of that country. He confirmed that it is not an automatic bar simply because of the absence of an extradition treaty with the other country and neither an automatic return to the Philippines just because of the cancellation of the passport.

On another matter, Senator Escudero stated that while reading through laws, all he could find was a provision saying that the Ombudsman has primary jurisdiction as far as cases filed with the Sandiganbayan are concerned. He then asked whether the DOJ could file cases directly with the Sandiganbayan against government officials who are under the jurisdiction ofthe Sandiganbayan. Replying in the negative, Senator Drilon recalled that during his incumbency as DOJ Secretary, the DOJ had an understanding with the Office of the Ombudsman that the DOJ prosecutors would conduct the preliminary investigation, the results of which would have to be endorsed to the Office of the Ombudsman which would have the authority to review and, if it agrees with the information, wou Id file the case within its jurisdiction. He stated that presently, the same procedure was being followed.

Asked why such cases are not simply endorsed to the Office of the Ombudsman as soon as they are filed with the DOJ to shorten the process, Senator Drilon pointed out that there are instances when the

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Ombudsman has no personnel in a particular locality to investigate, thus, a prosecutor has to be deputized and conduct the preliminary investigation, the results of which are submitted to the Resident Ombudsman who has jurisdiction of the area, for appropriate action, He added that it would be terribly inconvenient for a respondent in a far-flung area to be haled to an area where there is a Resident Ombudsman.

Senator Escudero cited, for instance, a plunder case involving a person residing in Metro Manila against the former President which clearly falls under the jurisdiction of the Sandiganbayan. He pointed out that the resolution of the case would have been expedited. He stated that while he understood that it could not be filed directly with the Office of the Ombudsman during the incumbency of Merceditas Gutierrez, he could not comprehend why it was not filed in the same office considering that it was filed already in May and July 20 II. Senator Drilon clarified that the cases were filed when Merceditas Gutierrez was still the Ombudsman whose impartiality the petitioner might have found doubtful. He opined that the DOJ, having commenced the investigation, might have deemed it convenient and necessary in the public interest to continue with the preliminary investigation and submit the results of such investigation to the Ombudsman for appropriate action. Likewise, he affirmed Senator Escudero's observation that the Ombudsman, by virtue of its being a constitutional body, has the authority to decide whether or not to file or dismiss the case.

On another matter, Senator Escudero disclosed that while in Davao the previous week, there was an uproar in the local media over the release of four alleged drug pushers because their petition for habeas corpus was granted by the court. As a background, he narrated that the prosecutor resolved that cases should be tiled against them and his resolution was sent to DOJ Manila for review pursuant to Circular No. 19 but after a year it remained unacted upon. He recalled that in a conversation with President Aquino, the latter expressed concern about how drug cases were being handled, noting that many are dismissed by the courts due to technicality. Expressing the need to review in parti-cular incident of drug cases dismissed at the local prosecutor level, he suggested the delegation of some of the filllctions of the DOJ in handling the cases so that these may be acted upon with dispatch.

Senator Drilon stated that Cil'cular No. 19 which requires an automatic review of drug cases was


issued by DOJ secretaries after his incumbency from 1990 to 1992 when such automatic review was nonexistent and only the fiscals decided the cases. He said that in case the pol ice officer or the private respondent is not satisfied, he can elevate the case by way of an appeal to the Secretary of Justice; however, the filing of the case is not held in abeyance pending resolution by the Secretary.

Recognizing the merit in reviewing such cases, Senator Drilon said that the DOJ Secretary has informed him that in some cases, the review is lodged with the Regional State Prosecutor. He suggested that the DOJ Secretary consider letting the ordinary appeal process take its due course so that if the respondent is not satisfied with the ruling of the fiscal, he can always elevate the matter to the Secretary of Justice by way of a regular appeal and, in the meantime, the information is filed in court. Senator Escudero expressed hope that the Secretary would indeed review the particular circular including some of the previous practice of previous secretaries with respect to the formation of special panels which effectively deprives a respondent of a onelevel appeal process, as practiced in celebrated cases,

Senator Drilon said that, on the other hand, the removal of one layer in the appeal process could also expedite the prosecution of the case. But he pointed out that the decision of the panel is approved by the Chief State Prosecutor and is still appealable to the Office of the Secretary of Justice.

As regards the disembarkation of certain nationals in airports, Senator Escudero said that he was informed by Commissioner David that such policy is in line with the implementation of the anti-trafficking laws of the country which he fully subscribes to. He noted, though, some shades of arbitrariness with respect to disembarkation, particularly in light of the report that 60,000 of Filipino nationals with valid visas and passports and tickets who were about the leave the country were ordered to disembark from the plane because they have been previously profiled by the Bureau of Immigration as suspect or liable for trafticking.

Senator Escudero said that what bothered him was that profiling might be based on how the person looks or how much money he carries with him. He asked on the remedy and appeal process when a person is wrongfully ordered to disembark, especially considering that much money has already been spent

TUESDAY, NOVEMIlER 15,2011

for the ticket and for terminal fees which might have been borrowed, In reply, Senator Drilon said that a technical working group was constituted to review the existing policies on offloading and the Secretary expects to receive the recommendations within the week, He recognized, however, that the offloading issue is difficult to resolve because there are indeed people who desire to go abroad without the appropriate employment contract, eventually becoming a burden to the Philippine government He believed that the right to travel of individuals must be balanced with the public welfare, especially since they would be exposed to abuses as they are unprotected by any contract

Asked on the exact figure of offloaded Filipinos, Senator Drilon confirmed that there have been 60,000 cases, although a number of them were allowed to proceed with their travel after a review of their case, He assured Senator Escudero that he would be given the number of those who were eventually allowed to leave together with the report of the technical working group,

Senator Escudero said that he raised the issue in view of several complaints of wrongfully offloaded passengers who were not allowed to rcbook their tickets, He expressed hope that an arrangement could be done between the BID or the DOJ and the airlines so that wrongfully offloaded passengers could still fly to their destinations or could be granted some accommodation,

Asked how a person should look like for him/her to be ordered offloaded, or how the BID profiles or identifies a person who can or cannot leave the country, Senator Drilon clarified that profiling is not based on appearance but is primarily based on their employment contracts, He said that BID agents are trained to ask a set of questions on the basis of which a judgment is made whether he/she is a tourist or is seeking employment abroad,

Senator Escudero, however, pointed out that not all passengers are asked such questions, He believed that the immigration official must have a basis of who he is going to question, in the same manner that a police officer, when arresting a person without warrant, is required by the COUll to be able to verbalize and put into words what led him to believe that the person is about to commit a crime or has committed a crime, and, in the case of passengers, whether the person is about to be trafficked or has the intention of being trafficked into a foreign land,

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Senator Drilon said that before further inquiry is made for purposes of determining whether or not a passenger will be offloaded, taken into account, among others, is the age, admittedly based on how young they look and how scantily they are dressed, particularly those who are going to Japan or Italy but do not look like they could financially afford to travel there on their own, He said that the use of sixth sense would help in spotting those who are potential burdens to the government if allowed to leave the country,

Senator Escudero expressed apprehension on the use of sixth sense and questioned how a BI officer wou Id be able to use that as basis to make a judgment to offload a female passenger who was wearing a mini-skirt, boots, tight-fitting top and holding a Louis Vuitton or Hermes bag that could be genuine or fake, He said that he cannot agree with the use of sixth sense in selecting, segregating and isolating these people from the rest of the passengers as it would be done in an arbitrary manner.

Relative thereto, Senator Escudero asked on the mode of compensating those passengers who were wrongfully offloaded as he disclosed that his office has received numerous complaints about the matter, adding that 60,000 is not a small number to trifle with, For clarification, he asked whether the intention was to protect the interest of travelers or to prevent human trafficking, and if the case is the latter, whether majority of the 60,000 Filipino offloaded passengers were females,

In reply, Senator Drilon said that he could not say with certainty that majority of them were female since trafficking applies to both genders, He admitted that Senator Escudero raised very difficult policy and constitutional issues and expressed hope that the recommendation ofthe technical working group could clarifY a number of these issues to minimize, if not totally avoid, the occurrence of the practice,

Asked whether the policy could be suspended while on review, Senator Drilon said that according to the justice secretary, the recommendation could be submitted within the week so she would presumably issue the pertinent circular before the month is over.

Senator Escudel'o suggested that the issues on remedies and appeal of an offloaded passenger and the mode of compensation he/she can avail of be discussed during the budget deliberations,

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Finally, Senator Escudero asked why the appointment of the justice secretary has not yet been submitted to the Commission on Appointments for confirmation as he assured Secretary De Lima of his support. He noted that Raul Gonzales sat as justice secretary for seven years without being confirmed as he was bypassed by the CA several times although the President kept reappointing him. He recalled that as a result of the Gonzales case, then Senator Aquino filed a bill providing that the President can no longer reappoint a nominee who had been bypassed thrice by the CA. He also recalled that Senator Drilon appeared in the hearing on the bill as a private citizen to oppose it, saying it could tie the hands of the President. In response, Senator Drilon said that as relayed to him by Secretary De Lima, she has already complied with all the documentary requirements.

Senator Escudero assured Secretary De Lima of his support in seeking justice and making sure that those responsible for past crimes and sins would not get away. He expressed hope that the people in the new majority would be a cut above the people ofthe past administration as far as how they did things against the members of the then opposition and that even then, those in the opposition were right. He hoped, moreover, that the new majority would follow the processes outlined in the law and abide by any decision of the court.

At this juncture, the Chair interjected to announce that former President Arroyo was at Terminal 1 of the airport where she intended to board a flight to Singapore and that the BI officials were blocking her departure.

In reaction, Senator Escudero hoped that the incident would not escalate and result in a constitutional crisis and that the BI officials concerned would have adequate legal representation from the DOJ in the event a contempt charge was filed against them. He opined that what was being done to fonner President Arroyo may appear to be the right thing to do considering what she did to the country, but he asked how it would be perceived if it was done against a person whose guilt is not that apparent to the people.


At this point, the Chair inquired into the status of the plunder charge against General Ligot, et al. In response, Senator Drilon said that the case has been


submitted for resolution while the tax evasion case was still pending before the Court of Tax Appeals.

As to when the DOJ would finally resolve the plunder case, Senator Drilon said that the Chief State Prosecutor assured him that the office was working on it and it would be resolved before the year is over.

To the comment of the Chair that the case has been languishing before the DOJ for several months already, Senator Drilon explained that the DOJ received the case in May 20 II but before it could be acted upon, the complaint was amended in July 2011 and that according to the Chief State Prosecutor, the office was trying its best to resolve the case at the soonest possible time.


Sharing the concerns of Senator Escudero, Senator Sotto hoped that nothing untoward would happen at the airport as he recalled that the downfall of another President started at the airport many years ago.


Preliminarily, Senator Legarda asked about the programs of the Department of Justice (DOJ) in stepping up its campaign against human trafficking. She stated that she was one of the authors and cosponsors of the 2003 Anti-Trafficking Law which her subcommittee was presently seeking to amend. She recalled that in her 20 II Global Repolt on Trafficking in Persons on June 27, 2011, U.S. Secretary of State Hillary Clinton cited the country for its increased prosecution of traffickers and its efforts to address con'uption and trafficking-related cases, which has raised the country'S scoreboard on trafficking-inpersons under Tier 2 status in 20 II. She lamented, however, that not too long after that, U.S. Ambassador Thomas mentioned in a forum that 40% of male tourists come to the Philippines for sex, a statement, although eventually withdrawn, had factual basis as shown in a confidential letter the Ambassador wrote the Department of Foreign Affairs.

She said that while said letter was not made public, the Ambassador's statement was based on an NGO's report, and it was enough reason to be alarmed at the unabated human trafficking in the country. She believed that vigorous efforts must be pursued to eliminate human trafficking and to punish


perpetrators of the crime, Precisely, she stressed, there is need to expand the coverage of the antihuman trafficking law by holding liable even those who attempt to traffic persons, especially the most vulnerable - the women and children, She then asked about the DO],s current campaigns against human trafficking, the prosecutorial services rendered as well as the convictions secured in human trafficking cases, and a feedback on the problem areas that the prosecutors have encountered in the course of prosecuting human trafficking cases, which infonnation, she opined, would be helpful in determining the areas in the law to be amended or revised, In response, Senator Drilon pointed to an appropriation of P50 mi II ion for the implementation of the Anti-Trafficking in Persons Act, including a PI 0 million confidential fund, with the DO.l being the council-secretariat. He explained that per the inventory of cases fi led before the DO] from 2003 to 20 I 0, there were a total of 976 trafficking-in-person cases prosecuted by the DO.l, segregated as follows: trafficking for sexual exploitation, 930; organ trafficking, I; and labor tl'afficking, 45, He added that out of the 976 cases, there were 39 convictions, two acquittals, 85 were archived, 190 were dropped, withdrawn or dismissed, 21 were filed under other penal laws, 301 were submitted for resolution; and 338 were filed in court.

Upon further queries, Senator Drilon replied that most of the victims in the 976 cases came from the provinces of Zamboanga, Davao, Cebu and Samar. He also said that there seemed to be no pattern as to the gender of the victims and the location where they were brought except that some were trafficked to the NCR and eventually abroad,

Asked whether cases had been filed against trafficking syndicates who trafficked Filipinos in Malaysia, Nigeria and other countries in Africa, Senator Drilon stated that the justice secretary had informed him that task forces had been sent to Malaysia, Taiwan and Hong Kong to gather evidence on trafficking of women,

Senator Legarda lamented that there are places nearby where women and children are clearly trafficked and exploited. She rued that while law enforcement agencies have tried to close down some establishments or joints where women were trafficked, others continue to operate even with the knowledge of law enforcers, She asked how the DO] as chair of the Inter-Agency Council Against Trafficking

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(IACA T) was coordinating with law enforcers to stem human trafficking, She also asked on the working relationship between the NBI and the PNP to apprehend human traffickers,

In reply, Senator Drilon informed the Body that the NBI has been closely coordinating with the PNP as part of the national inter-agency task force on human trafficking,

Senator Legarda inquired whether the high incidence of human trafficking in the Philippines is due to the lack of seriousness on the part of government authorities to strongly implement the law or the low conviction rate of human trafficking cases, Senator Drilon replied that there were 39 convictions in trafficking-in-person cases, but he admitted that it would be difficult to cite any particular reason for the delay in the prosecution of said cases, He assumed that causes for the delay in the prosecution of ordinary criminal cases would apply to trafficking-inpersons cases,

As to which agency or branch of the government has the responsibility to create special courts for human trafficking cases, Senator Drilon clarified that the power to create special courts is with the Supreme Court,

Asked how the prosecution of anti-human trafficking cases could be expedited, Senator Drilon stated that the Supreme Court was constantly instituting measures to speed up the resolution of cases, He admitted though that there are so many reasons for the delay like lawyers resorting too much to the Rules of Court, the laxity of the presiding judges, and the huge numher of vacancies in the courts,

As to which part of the anti-trafficking law should be amended to strengthen it, Senator Drilon suggested that the confidentially clause be deleted so that those who were charged with the crime could be shamed before the pUblic,

As regards the issue of human trafficking through the Internet, Senator Legarda inquired whether the NBI has a cybercrime unit and a separate antitrafficking section that work hand-in-hand with the PNP in stemming, if not totally eliminating, human trafficking in the country, Senator Drilon replied in the affirmative, He confirmed that the NBI is a member of the IACA T,

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As to how the U.S. government was helping the Philippine authorities in improving the situation, Senator Drilon stated that the U.S. government was providing technical support and information but not monetary assistance.

In this regard, Senatror Legarda requested the DOJ to provide hel' with copies of the so-called shared information between the U.S. government and the Department and other pertinent data to be used in amending the law at the proper time.

On whether the DOJ has provided the NBI with modern and necessary equipment in its fight against drug and kidnap-for-ransom syndicates, Senator Drilon said that the budget for equipment of the NBI would be considered in the GAB because it has separate fundings for the purchase of crimefighting capabilities such as slll'veiliance equipment. He gave assurance that he would earmark an amount from his congres-sional initiative fund for DNA machines.

At this juncture, Senator Legarda said that she would suspend her interpellation until the next day's session.



It was 8:45 p.m.



SUSPENSION OF CONSIDERATION OF THE BUDGET OF THE DEPARTMENT OF JUSTICE

Upon motion of Senator Drilon, there being no objection, the Body suspended consideration of the budget of the Department of Justice.


Senator Sotto manifested that Senators Arroyo, Defensor Santiago and Trillanes had reservations to interpellate on the budget of the DOl

TUESDAY. NOVEMIlER 15.2011

SUSPENSION OF CONSIDERATION OF HOUSE BILL NO. 5023

Upon motion of Senator Sotto, there being no objection, the Body suspended consideration of the bill.


Upon motion of Senator Sotto, there being no objection, the Chair declared the session suspended until ten o'clock in the morning of the following day.

It was 8:48 p. m.


At 10:15 a.m., Wednesday, November 16,2011, the session was resumed with Senate President Emile presiding.


(Continuation)

Upon motion of Senator Sotto, there being no objection, the Body resumed consideration, on Second Reading, of House Bill No. 5023 (Committee Report No. 79), entitled

AN ACT APPROPRIA TlNG FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND TWELVE, AND FOR OTHER PURPOSES.

Senator Sotto stated that the budgets of the following departments and its attached agencies would be taken up for the day's session: Department of Foreign Affairs, International Commitments Funds, Department of Energy, Energy Regulatory Commission, and State Universities and Colleges. He said that deliberations on the budget of the Department of Justice would resume later in the afternoon.

Thereupon, the Chair recognized Senator Drilon, Chairman of the Committee on Finance.

DEPARTMENT OF FOREIGN AFFAIRS AND ITS ATTACHED AGENCIES

Senator Drilon presented the budget of the

,. I'"

TUESDAY & WEDNESDAY. NOVEMBER 15 & 16.2011

Department of Foreign Affairs (DFA) and its attached agencies, namely, the Office of the Secretary, Foreign Service Institllte, Technical Cooperation Council of the Philippines, and UNESCO National Commission of the Philippines.

He stated that DF A is mandated by the Foreign Service Act to implement the three pillars of the country's foreign policy:

I) Preservation and enhancement of national security;

2) Promotion and attainment of economic security; and

3) Protection of the rights and promotion of the welfare and interest of Filipinos overseas.

Moreover, he said that the budgetary allocation for DFA including its attached agencies is PIO.91 billion for 2012, the large bulk of which goes to the Office of the Secretary.


Senator Sotto inquired into the Legal Assistance Fund (LAF) being utilized by the DFA for Overseas Filipino Workers (OFWs) who need legal assistance abroad.



It was 10:19 am,


At 10:20 a.m., the session was resumed,

Upon resumption, Senator Drilon said that for 2011, the LAF amounted to P80 million, of which as of November 9, 20 II, it amounted to P7,157,902, leaving a balance of P72,842,097,58, He stated that the disbursements pertained to about 10 posts, the most significant of which is the utilization of the LAF in the following Philippine embassies abroad: Kuwait, P2 million; Riyadh, PI.6 million; Amman, P867,000; Beil'ut, P538,000; Cairo, P522,000; and Doha, P686,000.

For 2012, Senator Dri Ion said that the allocation for the implementation of the Migrant Workers and

573

Overseas Filipinos Act amounts to PI92.9 million which includes an additional P30 million for the LAF so that by January 2012, there will be a total balance of over PIOO million,

Asked how much the Overseas Workers Welfare Administration (OWWA) Welfare Fund contributed to LAF in 20 II, Senator Drilon replied that it contributed P20 million, the same amount it would contribute in 2012. He explained that the LAF can only be used for legal assistance to all distressed overseas Filipinos, and he stated that there might have been insufficiencies in the fund for general assistance in the national aspect such as when there is repatriation, that is why OWW A funds are tapped for repatriation purposes which is part of the assistance to the nationals portion of the budget. However, he said that as far as the LAF is concerned, records would show there are sufficient balances.

As to the meaning of an OFW in distress, Senator Drilon stated that a distressed OFW could be a runaway or victim of abuse in need of assistance to be repatriated or the repatriation is due to civil strife. He informed the Body that the DFA has assisted around 7,100 OFWs languishing in various jails abroad,

Senator Sotto clarified that he was not scrutinizing the DF A budget because he has nothing against the agency, He said that he would like to find out ifthere was enough budget for the DFA, in view of the complaints of some OFWs that they have difficulties in seeking help from the DFA. He cited the incident involving the use of blood money for an OFW in the Middle East, which was funded by the Philippine Charity Sweepstakes Office (PCSO),

Senator Drilon said that there is no provision for blood money in the 2012 budget but this would be sourced from the Office of the President's discretionary funds or PCSO,

Asked whether an OFW needing blood money can be classified under the category of "distressed OFWs," Senator Drilon posited that although there were OFWs who were convicted of crimes and in distress, it did not trigger an allocation for blood money.

INQUIRIES OF THE CHAIR

Asked by Senate President Enrile how much of DFA's total budget would be spent abroad and

574

within the Philippines, Senator Drilon replied that about 66,33% of the fund or P72 billion will be spent for 94 posts abroad consisting of embassies, consular offices, missions, the UN, as well as representations in international bodies. He said that these postings should be rationalized because their presence in terms 'of political, economic or consular services cannot be justified in many countries. He added that whatever savings the agency has from the closure of celiain embassies would be placed in areas where there are most Filipinos in order to augment the LAF. He said that he was very pleased to note that the Foreign Affairs Secretary was very receptive of this thrust, adding that appropriate recommendations have already been made to the Otlice of the President on the matter of postings abroad.


Asked by Senator Ejercito Estrada on the whereabouts of Secretary del Rosario, Senator Orilon replied that the Secretary was currently in a meeting with U.S. Secretary of State Hillary Clinton.

At this juncture, Senate President Enrile relinquished the Chair to Senate President Pro Tempore Ejercito Estrada.


As she expressed full support for the DFA budget, Senator Legarda extended her warm welcome to the officials of the DFA who, she said, were always organized and often assisted her during her trips abroad. She stated that the absence of the foreign secretary in the Chamber was understandable because he would be in a meeting in Malacaiiang with U.S. Secretary of State Hillary Clinton that she and the Senate President would also attend.

Senator Legarda informed the Body that the Technical Cooperation Council of the Philippines (TCCP), created by virtue of Executive Order No. 17 issued on September 1, 1992, and chaired by the Secretary of Foreign Affairs, is tasked to undertake research on the technical assistance requirements of the Philippines. She believed that government must exhaust all technical cooperation agreements and reactivate those that may be lying idle. She inquired if the TCCP has a secretariat that implements its directive and whether the Philippine posts abroad were aware of it.

WEDNESDAY, NOVEMBER 16,2011



It was 10: 36 a.m.


At 10:38 a.m., the session was resumed.

Responding thereto, Senator Drilon said that the DFA has formed the TCCP but given its very insufficient budget, it has concentrated on providing technical assistance to lesser developed countries like Laos, Cambodia, Fiji, Samoa, Myanmar and Sri Lanka.

But Senator Legarda clarified that she was referring to the technical cooperation being extended by First World nations to the Philippines.



It was 10:39 a.m.



Senator Drilon stated that the Philippines has not received any technical assistance from foreign countries under the UN Resolution on Economic and Technical Cooperation Among Developing Countries.

Senator Legarda pointed out that it would be timely and relevant for the DF A to activate its research on the technical requirements of the Philippine so that it could ask assistance from developed countries with regard to science and technology, climate change adaptation and disaster risk reduction. Senator Drilon reiterated that the DFA has concentrated on providing technical assistance to least developed countries. However, he stated that the Department would take note of the suggestion of Senator Legarda.

Senator Legarda reasoned that even as the Philippines gives technical assistance to Laos and Cambodia, the DF A could activate the secretariat and seek technical cooperation from developed nations.

WEDNESDAY, NOVEMBER 16,20 II

As to who is in charge of the TCCP, Senator Drilon stated it was Ass!' Sec, Jose Maria Carino, also the head of Cultural Diplomacy,

Senator Legarda underscored the need 10

prioritize the TCCP, saying it would be a waste not to take advantage of agreements when the country can have access to research through technical cooperation, Moreover, she expressed full support for Cultural Diplomacy, believing as she did that beyond economic, political and social diplomacy, it is the name of the game today,

Asked ifthe Cultural Diplomacy unit has sufficient funding to be tidly operational by 2012, Senator Drilon replied it has no funds at aiL

But Senator Legarda recalled that during the hearing, the DF A declared cultural diplomacy as one of the pillars of international relations, Without a budget for cultural diplomacy, she asked how the DFA can proclaim it as part of its diplomatic efforts, In response, Senalor Drilon explained that with the very limited budget of the DFA, it would rather prioritize assistance to over 9 million overseas Filipinos who remit more than $20 billion a year. But he acknowledged that the DF A should not neglect cultural diplomacy, He stated that precisely, the Committee has asked for the rationalization of the 94 postings abroad so that the DFA can have some fiscal space to provide for meritorious activities such as cultural diplomacy, For her part Senator Legarda believed that for the Philippines, cultural diplomacy can be one of the country's strongest points on the globa I stage,

Agreeing that every OFW must be protected, Senator Legarda asked which countries are categorized as highly problematic, Senator Drilon replied that the DF A could brief the Senator on this matter and provide her a list He opined that diplomatically, it would not be prudent for the Committee to identify these countries into the record,

On whether the term "highly problematic country" I'efers to a country where Filipinos are being trafficked or where a big number ofOFWs are not being protected, Senator Drilon opined that a country would qualifY as such if; for instance, it plays host to many Filipino nationals who are distressed or find themselves in trouble, or if its culture and legal systems do not provide adequate protection to migrant workers,

575

In closing, Senator Legarda reiterated support for the DFA budget and expressed hope that it would be increased to allow the Department to extend assistance to Filipinos abroad and also pursue other matters such as techn ical coopemtion and cultural diplomacy,

In connection therewith, Senator Drilon informed the Body that the assistance fund for overseas Filipino nationals would be increased by 89% in the proposed budget, that is from P793 million to P150 million.

INTERPELLATION OF SENATOR ANGARA

At the onset, Senator Angara stated that the Philippines is a maritime country with future potential sources of income from food and energy from the West Philippine Sea which is part of the country's territory, He recalled that Justice Coquia and former Senator Tolentino were part of the assembly of experts that looked into this issue at one point.

Asked on the state of preparation to safeguard the country's territory and whether the DFA has a maritime office, Senator Dri Ion informed the Body that the DFA has an Office of Ocean Concerns headed by Assistant Secretary Asuque, a maritime lawyer, and Dir, Niel Ferrer, an expert on UNCLOS, He stated that various agencies were working with the Office in crafting a unified position on issues relating to seafarers, shipping and ports, He added that the Office coordinates Philippine participation in meetings of international maritime organizations,

Senator Angara believed that the description given by the Committee is a broad mandate that includes seafarers' concern, However, he said that he was more concerned about how government can develop expertise in natural resources found in the oceans, He recalled that when the Spratiy issue erupted, the only ASEAN country that sided with the Philippines was Vietnam, He stated that earlier, Bali proposed to declare the Spratly as a peace zone but it received a lukewarm reception and the ASEAN members, according to news reports, were not even united behind the concept.

Moreover, Senator Angara stated that as soon as the Spratly issue erupted, Vietnam immediately hired the best international lawyers trained in maritime law from Washington, Geneva and New York, He said that Vietnam, which cannot be pushed around,

576

subsequently sat down with China and arrived at a modus vivendi. He inquired if the Philippines government has done likewise.

In reply, Senator Drilon said that the DFA was currently negotiating with a New York law firm for legal and technical assistance on issues concerning ocean concerns in general and the Spratly in palticular.

Senator Angara observed that the Philippines was sti \I in the process of negotiating with international law experts when its neighbors had already engaged expelts and were already receiving legal advice.

Senator Angara said that there are only two surviving Filipino experts on the law of the sea as of this time - Prof. Florentino Feliciano and Atty. Estelito Mendoza, both of whom were not exactly in the pink of health. He recalled that along with Senator Tolentino, Attorney Mendoza was part of the negotiating panel that concluded the UNCLOS. On the other hand, he disclosed that Indonesia has retained its original negotiators so that its institutional memory was kept intact. He asked if the DF A has an institutional memoly.

Further, Senator Angara stressed that the stakes are so high because China was ready to go to war over the Spratly, knowing it has gas and oil deposit so huge it can sustain another 25 years of development. He asserted that the Philippines made the mistake of joining ajoint exploration survey with China because it is the only one in control of the data and it is selective in sharing the same. He said that it is a pious hope that the Spratly wou Id be declared a zone of peace, underscoring that the Philippines must prepare itself

Senator Angara disclosed that six young outstanding students of the U.P. recently came back from Yale, The Hague and John Hopkins, all of whom were trained in international law. He said that he has taken the initiative of convincing the Dean and UP President Pascual, who was present in the Chamber, to put up an Institute of Maritime Affairs at the U.P. Law Center so that it can provide the academic support the DFA would require. He said that the Philippines has human talents but it lacks the organizational ability to mobilize them and engage the best minds in the world when so much is at stake.

Senator Angara surmised that most Filipinos probably have Chinese blood and this could either be


a bludgeon or an instrument of good, He cautioned though that should the counlty have a problem with China, these Filipinos might have difficulty choosing sides, but they can also be instruments of diplomacy and mediation. He said that he understood the legal implications of having to negotiate and sit down and negotiate again because Filipinos may be deemed to have waived their right under the UNCLOS to pursue a legal remedy under the United Nations. He said that these are judgments on where the ultimate national interest lies. He pointed out that the country could willingly give up that technical legal right to pursue a legal case in the U.N. versus the potential of concluding an agreement, for instance, on the NOIth Sea oil, similar to what the contending countries like U.K. and Norway, or Norway and the Northern countries did. He reiterated that there was so much at stake and the country needed to tap every single talent in this effoll.

Senator Drilon concurred with Senator Angara, noting that there was indeed an urgency and need to put up a group to provide technical expertise on maritime issues. He said that he would take it upon himself to constantly remind the DF A of the need to strengthen institutional knowledge of maritime issues given the fact that the country has over 7,000 islands and these concerns should be given top priority.

He agreed likewise that the country was grossly unprepared at this time as he acknowledged the perception that it is not a top priority of the DF A. He requested the DFA, in the next 30 days, to submit to the Senate a definite plan of action on this concern.

Senator Angara appreciated the suggestion of Senator Drilon, noting that action is an essential part of diplomacy. He expressed hope that the DF A would attend to the request and see it as an opportunity.

Moving on to another matter, Senator Angara asked whether the DFA has training, scholarship and fellowship programs within the foreign service for young career diplomats geared towards a definite career path similar to that given by ASEAN countries like Thailand, Malaysia, Singapore and Indonesia. Senator Drilon replied that the program for the development of career diplomats is basically handled by the Foreign Service Institute (FSI) which was mandated under the Foreign Service Act to serve as the center for the development and professionalization of the career foreign service corps.

WEDNESDAY. NOVEMBER 16.2011

Asked on the allocation for scholarships, training and fellowships, Senator Drilon replied that it is P40,870,OOO for the Foreign Service Institute and out of that amount, PI ,271 ,000 is allocated for "training and scholarship expenses" which he assumed can also be used for foreign scholarships.

Senator Angara disclosed that he has just sent two scholars from the U.P. to train in archival conservation in Mexico and he pointed out that P 1.2 million might not be sufficient for the transportation and accommodation expenses of even one scholar. He noted that the D FA does not really have a systematic institutional program for sending out young career diplomats to train in the same way that other countries do. Senator Drilon revealed that he has strongly suggested to the foreign affairs secretary that the DFA rationalize its postings and use part of its funds for training and scholarship for young diplomats. He said that he cannot see the wisdom of having 94 postings and spending an average of about P20 million per post. With this redirection, he stated that the government can provide funds for the training and scholarship expenses of career diplomats.

Senator Angara expressed support for the suggestion and disclosed that he has supported some of the DFA scholars because the DFA does not provide any scholarships. He said that it was a pity that with such a talented pool of officers, the government does not have enough funds for their training. He noted that the country has so many offers of scholarships and wondered if the NEDA passes them on to other departments. Senator Drilon said that he was informed that the DF A receives scholarship grants Irom various foreign entities which supplement the budget for training and scholarship.

Senator Angara commented that it is a chancy contingent funding because it would depend upon the generosity of the donors. But he expressed concern that a recipient of an Australian scholarship, for example, might have divided loyalty because he/she might feel beholden to Australia that has given him/ her the opportunity to advance his/her career. He stated that a young career diplomats would have to come back to the Philippines rather than stay in his foreign posting. He rued that career diplomats do not have an attachment for their own country not because they are unpatriotic but because their country has not given them the opportun ity to advance their careers.

As regards the total contributions to international organizations where the Philippines sits as a member,

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Senator Drilon stated that the 20]2 budget for the International Commitment Fund (ICF) amounts to P2,628,248,000. He proceeded to enumerate various international agencies or organizations of which the following departments or agencies are members:

DAR - Center on Integrated Rural Development in Asia-Pacific (CIRDAP);

• DA - Animal Production and Health Commission for Asia and the Pacific, International Agriculture Research, Food and Agriculture Organization, IRRI, the World Organization for Animal Health, UN Convention to Combat the Certification;

• DepEd - Southeast Asian Ministers of Education Organization, the Southeast Asia Ministers of Education Organizational Regional Center for Education, Innovation and Technology, the SIMMEO Regional Center for Graduate Study and Research in Agriculture (CIRCA);

SUCs - University of the Philippines Eastern Regional Organization for Public Administration;

• DOE - International Energy Forum;

• DEN R - UN Environment Program (UN EP), the Coordinating Committee for Coastal and Offshore Geosciences Programs in Eastern Southeast Asia, International Hydrographic Organization, International Tropical Timber Organization, Asean Center for Biodiversity, etc.

DOF - Asian Development Bank (ADB), InterGovernment Group of 24, World Custom Organization, the Micro Economic and Finance Surveillance Office;

• DFA - APEC, ASEAN, International Committee of the Red Cross (ICRC), UN, Organization for the Prohibited and Chemical Weapons and 25 other organizations.

Senator Angara pointed out that among those organizations, some are really outstanding and add to the enhancement, improvement and development of the economy in agriculture; however, many of them do not really contribute at all to the overall prosperity and development of the country. He stated that it is time to rationalize the membership, similar to the suggestion of rationalizing posts to concentrate on agencies that are really meaningfully helping in the social, economic and academic development of the country.

578

Senator Drilon said that the 2012 budget would show a reduction by about P823 million in terms of funding contributions to international organizations li'om the present level of contribution, Senator Angara suggested that the reduction be done selectively and not across-the-board, He said that the contributions for organizations with minimal impact On the country should be reduced while the contributions should be increased for organizations that really help the country, like FAO, UNESCO, IRRI, among others. Senator Drilon said that the DFA would lead the rationalization but it has to consider the inputs of other agencies before deciding on the matter, Senator Angara asked that the DF A take the leadel'ship in doing the rationalization by offering the main recommendation and doing the inter-agency consultation.

On a Iinal note, Senator Angara stated that the Philippine Sea problem partakes ofa policy statement because it comes from the Senate which is an active participant in diplomacy and in foreign relations, He hoped that the DFA would seize the supportive stance of the Senate towards conserving and protecting the country's maritime assets.


Commenting on the suggestion to hire law firms from other countries to give advice on the West Philippine Sea (South China Sea) issue, Senator Osmefia pointed out that there were already local experts like the Kalaw, Carpio-Villaraza, and Romulo Mabanta law finns, He said that there have been numerous discussions and analysis on the issue by distinguished thinkers like Justice Carpio, Peter Galbraith, and Heidi Yorac. However, he cautioned that the specifics of this issue should not be debated in public so as not to divulge the plan to the other party, and he advised that it has to be a multipronged, multi-lateral effort. He noted that the UNCLOS seemed to be the only legitimate internationally accepted forum that can help settle the issue since it is a treaty to which China has already acceded, Although they could withdraw anytime, he said that a multi pronged pressure from different nations, particularly in Asia, would be more effective than a one-on-one effOit. Senator Drilon pointed out that the approach the Philippines has always taken is a multilateral rather than a bilateral approach as far as the Spratly and China are concerned.

Asked on the total budget of the DF A, Senator Drilon replied it is PI 0.9 billion, but as regards the

WEDNESDAY, NOVEMBER 16.2011

number of commercial attaches, he said that he would secure the information from the DT\'

Upon further queries, Senator Drilon said that there are two agricultural attaches - one in Washington and another in Rome, four defense attaches (subject to verification), and quite a number of labor attaches,

Asked if the labor attaches report to the DOLE, Senator Drilon explained that pursuant to the Foreign Service Act, it is a one-country team approach led by the DF A with the head of the post as team leader who would coordinate all efforts of the various attaches posted in the embassies. As regards budgetary support, he stated that various agencies would have control over the budgetary releases so that, for instance, defense attaches would be funded by the budget of the DND, and insofar as their policy thrust is concerned, it is under the supervision of the agencies to which the attaches are attached,

But Senator Osmefia recalled that in his recent trip to Thailand for an inspection visit, he was surprised to discover that there was no agricultural attache in the embassy, although there was a very competent commercial attache who did some research on Thai agriculture, He asked if there are plans to revisit the way the departments are supposed to work together to provide better service from the various outposts that were set up around the world, He stressed that the agriculture attache is important since the country purchases rice from other countries, and this contributes to food security. He lamented that the country has not yet reached the level of selfsufficiency in rice, nor will it achieve it in the near future, because the DA does not even know where it can get its statistics and neither does it have the men on the ground to do the proper inventory.

Senator Drilon explained that the detennination as to which country a particular attache would be posted is determined by the line agency, He said that the DFA, particularly the head of the post in a particular country, could recommend and would have its own inputs but the decision rests in the head of the cabinet agency or department, who will be in charge ofthe particular activity. He emphasized that whether or not an agriculture attache will be posted in Thailand is an issue which the Secretary of Agriculture will determine,

Senator Osmefia recalled that about two or three decades ago, Malaysia formed super ministries to


cover multi-departmental focus on a particular industry. To illustrate, he said that Malaysia's super ministries - Department of Trade and Department of Industry - for primary industries covered rice, rubber agriculture. He surmised that certain problems would be difficult to resolve if it would be left to one ministry that is focused only on its mandate.

Further, Senator Osmeila believed that the mandate after the first processing step for primary agricultural crops should fall under the DTI so that if the govemment would like to go beyond simply rice production, for instance, it could package and sell rice like Minute Maid or Uncle Ben's Rice in the U.S. He stated that a super ministry should be formed so that, in this case, the DA and DTI could work together on the particular issue. He hoped that the DFA officials would encourage and push agricultural attaches in different countries to be on top of things so that they could compare notes and send periodic reports to the Senate, the DA, DFA, UP, and other agricultural schools to keep up with the progress that other countries have been making.

Asked whether the Philippines has a cabinetlevel representative to the Food and Agricultural Organization in Rome (FAO), Senator Drilon informed the Body that the ambassador to Italy serves a dual purpose since he is also an ambassador to the FAO.

Senator Osmef\a asked if it would be difficult to separate the two and have someone focus on the FAO, which is a very important UN agency in view of the peculia!' needs of the country.


With the permission of the Body, the Chair suspended the session.

If was 11:33 a.m.


At II :35 a.m., the session was resumed.

Upon resumption, Senator Drilon said that the DF A had been requested to rationalize its postings abroad to be able to field more people in inadequately manned areas where assistance to nationals is a principal issue. He expressed hope that with such rationalization, the DFA could also find a physical space to consider a separate ambassador to the FAO.

579

Senator Osmeila requested Senator Drilon to intervene in urging the Department of Agriculture to send some agricultural attaches to four or five countries in Asia that really need monitoring to be able to learn how to time the country's purchases right as well as to source cheaper food, particularly rice.

On another matter, Senator Osmeila said that he was shocked beyond belief to have found for himself in a visit to the Philippine Embassy in Washington two to three months ago the absence of furniture in the official residence of Ambassador Cuisia because of looting. He recalled that the embassy used to be a very lovely house when he frequented it as a student at Georgetown University.

Asked if the proposed budget contains funds for the refurbishment of embassies, Senator Drilon replied that the DF A's capital outlay has been increased by a hefty 224%, or from Pl.38 million in 2011 to P4.5 million in 2012. Senator Osmefta, however, lamented that P4.6 million is merely US$1 00,000, barely enough to furnish one embassy. He expressed hope that at the proper time, the Committee on Finance would entertain a proposal to increase the capital outlay to ensure that the major diplomatic functions are carried out in a more respectable way that would at least reflect the Filipino culture and people. Senator Drilon surmised that the DFA has other sources that can be utilized for capital outlay such as the Building Fund. Senator Osmena pointed out that with assets of about US$I 00 million, Congress could authorize the setting aside of one tenth of I % for the wear and tear of such assets, following ratios used in accounting and finance, to just simply maintain and avoid the ring-around-the-collar look which reflects on the country.

Articulating complaints on the nonpayment of retirement benefits, Senator Osmena asked on the amount of total payables. Senator Drilon replied that retirement benefits of regular plantilla personnel are paid on time and, if there might indeed be outstanding balances, these are already under process and they are claims that are not beyond 12 months. He also said that if there are complaints in the release of benefits, these come not from plantilla positions but from some local hires, on minor issues such as documentation which are now being resolved.

Senator Osmefta requested a report on the local hires and their aging schedules, stating that he gets embarrassed every time people approach him

tP'1

580

complaining that they have not been paid their benefits for 3, 4 or 5 years.

As regards passport application, Senator Drilon stated that the Aseana Business Park building can accommodate the public with an average waiting time of one hour for the entire passport application process.


Replying to the query of Senator Ejercito Estrada, Senator Drilon said that the Philippines has an extradition treaty with nine (9) countries-China, Hong Kong, Switzerland, South Korea, United States of America, Australia, Canada, Thailand, Indonesia, United Kingdom, India, Spain and Micronesia.

Asked which of the countries recognize the right to asylum. Senator Drilon said that it would depend on the policy of each country where asylum is being sought, particularly in relation to its national interest. He affirmed that Singapore is not one of the countries with which the Philippines has an extradition treaty.

INTERPELLATION OF SENATOR ESCUDERO

At the outset, Senator Escudero lauded the deployment ban ofOFWs in certain countries which, he said, manifested the concern of the POEA·DOLE for them. However, he also agreed to the DFA's raising of alarm over such a decision because it would affect the standing of the countries where the ban is imposed.

Asked by Senator Escudero why both agencies would have to argue a~out the ban in public, Senator Drilon admitted that, indeed, the two agcncies did not talk. He affirmed that while the DOLE issued the ban to protect the OFWs, the DFA has requested for time (0 discuss the issue with the countries concerned in order to find ways and means by which the Philippines can prosecute the national interest and the interest of the OFWs without prejudicing the country's relations with the countries concerned. He likewise disclosed that the DFA has given itself 90 days to come up with labor agreements with the 41 countries.

Senator Drilon said that as a fonner Secretary of Labor himselt~ he finds it extremely diftlcult to


compel foreign governments to enter into labor agreements with the Philippines that aim to provide a modicum of legal protection to overseas workers. In fact, he said, there are many instances when municipal laws of these countries would not even recognize workers as part of their Labor Code. He expressed hope that such episode of the DOLE's banning deployment in 41 countries would result in a situation where the countries would be compelled to sign labor agreements with the Philippines.

Senator Escudero expressed sympathy with the DFA as far as the issue was concerned, particularly in its actual pursuit to obtain a migrant workers' agreement or treaty with other countries, just to show the OFWs that the DFA is fighting and pushing for such agreements.

Asked ifPOEA-DOLE has lifted the deployment ban, Senator Drilon replied in the affirmative, as he cited the DF A's request for 90 days within which to sit down and discuss with 41 countries what measures could be undertaken in order to protect the welfare of Filipino workers, given the fact that the primary consideration for the issuance of the deployment ban is the lack of protection of OFWs in the countries concerned.

Senator Escudero noted that the Philippine government has been haled to court by a German company in connection with the NAIA Terminal III contract, also by a Belgium company as regards the cancelled Laguna Lake contract, and possibly by France or by the United Kingdom regarding the bridge program that the Philippine government is reviewing. He then asked whether the DF A is being consulted in contract cancellations involving foreign companies. Senator Drilon said that the DFA was never consulted; however, the cancellations were premised on the fact that many of the contracts were found to be prejudicial to the national interest. He clarified that the policy issue is either to honor the contract and suffer its burden or cancel the contract and face a lawsuit. He cited as an example the P 18-billion Belgian contract to dredge Laguna de Bay.

Senator Escudero stressed that he was not taking issue with the cancellation of the contracts which was done on merit and for good cause but the government, he pointed out, should have at least consulted or informed the country's representatives and ambassadors abroad to let them know what to say to their foreign counterparts. Senator Drilon


agreed that the pertinent agencies should have briefed the OF A on the basis of the action taken on a particular contract.

Asked whether the OFA was consulted or took part in setting up the meeting in Japan between the President and the head of the MILF, Senator Orilon said that the meeting was held upon the advice of the Office ofthe Presidential Adviser on the Peace Process and while the OFA was not intimately involved in the decision, it was duly informed of the meeting.

Senator Escudero stated that based on pictures later released, the setting of the meeting was similar to talks between two heads of states. Relative thereto, he asked how the OF A would classify or characterize under diplomatic laws the meeting between the head of state and the head of a rebel group, in a foreign land. In response, Senator Orilon said that it was characterized as an informal meeting on internal issues and under its mandate, the OF A has no role to play. He added that the absence of a OFA representative in the meeting strengthened the position of the government that the matter was an internal issue that did not involve a foreign government.

Senator Escudero countered that his only reservation was that the meeting was done in a foreign land. He sympathized and empathized with the OF A with the hope that it would be informed and consulted more often so that it is better equipped to answer queries.

Upon further query, Senator Orilon corrected that 7,100 OFWs, facing one case or another, should be aptly called "distressed OFWs" and that they were not necessarily in jail. He clarified that 12,000 OFWs were actually in jail, most of whom had problems with immigration or had employment-related problems, while others committed common crimes. He stressed, however, that the figure is no cause for alarm because many of the immigration cases carried with them a penalty of detention in immigrationjails. He added that the figure 7, I 00 refers to OFWs that the OFA actually assisted.

Senator Escudero said that the OFA should know exactly how many OFWs were in jail and their specific cases. Senator Orilon explained that the OF A did not have the exact figure, pointing out that the number fluctuates from 4,000 to 12,000 and the nature of their offense was principally immigrationrelated, mostly lack of proper documentation.

581

Senator Escudero requested to be furnished with the exact number of detained Filipinos abroad as well as the actual classification of their cases.

As regards the particular office in the OF A that oversees the matter, Senator Orilon said that it is the Office of the Undersecretary for Migrant Affairs headed by Usee. Esteban B. Conejos, Jr.

Senator Escudero explained that he raised the issue because he wanted to know if the funds allocated for distressed Filipinos, which include those who are detained, were adequate and sufficient based on the experience of the OF A the previous years. Senator Orilon said that the sum of PI 50 million - an increase of 89% over the present allocation of P79.3 million - was allocated for assistance to nationals abroad.

Asked whether said allocation has a counterpart in the OOLE budget, Senator Orilon said that as far as the workers who pass through the POEA are concerned, there is the OWWA fund with an approximate asset of P 12 billion. He added that there were instances when the said funds were tapped for non-registered or non-OWW A members when so authorized by the government subject, however, to reimbursement. He disclosed that part of the allocation next year is the reimbursement of previous obligations to OWW A, which, incidentally, has a total budget of P162.5 million was allocated for assistance to nationals abroad.

Proceeding to another matter, Senator Escudero recalled that Spain pursued and entered into a prisoner exchange agreement or treaty with the Philippines because one of its nationals in the Philippines was incarcerated by virtue of a final judgment of the court. He asked whether the Philippines has entered into a prisoner exchange treaty or agreement with other countries. He added that a Filipino national incarcerated abroad should be given the option to choose to serve his sentence at home where he can be visited by his family unless he prefers to remain incarcerated abroad. For instance, he pointed out that in the case of a Filipino adjudged guilty for having a committed a crime, justly or otherwise, and ordered to suffer the penalty of 30 years imprisonment in a Saudi Arabianjail, that 30-year sentence is tantamount to a death sentence as far as his family is concerned because they would never be able to visit him in jail. He stated that Filipino workers are constrained to

582

work abroad because they do not have money but once incarcerated abroad, the families they left in the Philippines cannot be expected to spend their last money to visit them in jail even once a year. He also inquired as to the prognosis of having a similar agreement with all countries where there were Filipino workers.

In response, Senator Drilon said that as a matter of policy, the DFA pursues agreements on bilateral transfers of sentence to persons, and he cited similar agreements with Hong Kong and Thailand. He said that Rep. Ronald Singson would stand to benefit from the agreement with Hong Kong, upon request. He added though that while these agreements exist, he was not aware of the corresponding conditions. As to multilateral convention, he said that it was still being reviewed to determine whether acceding to it would be of national interest.

Senator Escudero pointed out that it was Spain that pursued the agreement for only one national. He then asked about the efforts undertaken by the DF A, to pursue the same in other countries where there are many Filipino workers. In reply, Senator Drilon said that there were ongoing negotiations with Denmark, Kuwait and the Kingdom of Saudi Arabia in the pursuit of similar agreements on the transfer of sentence of persons.

Senator Escudero advised the DF A to become more active in this pursuit with special focus on the top 10 or 20 countries where there are a lot of Filipinos who are either residing or working there so as to provide them the benetit of the option under said agreements. Senator Drilon agreed that Filipinos should be given an option to be transferred to the country's penitentiaries.

Senator Escudero remarked that while incarcerated Filipinos abroad would most likely choose not to avail of the option because conditions in foreign jails might be better, just the same, they should not be depl'ived of the option to be closer to their families.

Relative to the travel ban and TRO fiasco involving the Arroyos, Senator Escudero asked on the effect of the cancellation of a passpOit of a Filipino national who is abroad, whether or not the Philippines has an extradition treaty with it; and, on the possible grounds for the cancellation. In response, Senator D"ilon said that the cancellation of a passport can take place under the following instances: by viliue of


a court order, by conviction in a criminal offense, or by the declaration ofthe person as a fugitive from justice.

As regards the effect of the cancellation of the passport of a person who happens to be abroad, Senator Drilon said that he/she becomes an undocumented alien and the policies and laws of the foreign country would govern whether or not he/she should be deported.

In a situation where a court has issued an arrest warrant against a person who cannot be found, Senator Escudero asked if all it would take for the DF A to cancel his/her passport is a declaration from the Secretary of Justice that he/she is a fugitive from justice. Senator Drilon stated that it is the court that must declare a person a fugitive from justice but in a situation where the arrest warrant cannot be served because the person is outside the jurisdiction of the court, it can order the cancellation of his/her passport. He pointed out, however, that the passport can be cancelled without a court order when, for instance, said document was found to have been tampered with or obtained fraudulently. He said that on a limited basis and under that circumstance, administrative action is feasible.

Asked what the next step wou Id be once the passport of a Philippine national has been cancelled and after representations had been made by the DFA with its counterparts in the country where the person is located. Senator Dri Ion recalled that when he was still justice secretary, there were instances when he received notices, diplomatic notes or requests from foreign countries seeking the deportation of their nationals whose passpOits had been cancelled. He stated that he acceded to the requests on a number of occasions, especially in the absence of an extradition treaty with the requesting foreign governments. The Philippines, he underscored, has absolute discretion on what to do with undocumented al iens.

Senator Escudero observed that when the passpOit of a person is cancelled, the usual practice is for his/ her government to request his/her deportation back to his/her country. He asked whether such is also being practiced in the Philippines and which agency is authorized to make the request. In reply, Senator Drilon said that the DFA is not aware of such a policy but he surmised that it might be a policy of the DOJ.

Senator Escudero pointed out that in the case of Senator Lacson, there was no court order cancelling , r


his passport precisely because the case was pending before the Supreme Court. Senator Drilon said that he did not really know if the passport of Senator Lacson was cancelled or not, but if it was, it could be assumed it was pursuant to an order of the court.

Asked if it should be the DOJ, through the Bureau of Immigration, that should request the deportation ofa Philippine national abroad as a result of the cancellation of his/her passport, Senator Drilon replied it would be the logical step, whether or not the Philippines has an extradition trea1y with the foreign country, as he emphasized that the Philippines takes action on the basis of national interest.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF FOREIGN AFFAIRS AND ITS ATTACHED AGENCIES

There being no other interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Department of Foreign Affairs and its attached agencies was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE INTERNATIONAL COMMITMENT FUND

There being no interpellation, upon motion of Senator Sotto, there being no objection, the budget of the International Commitment Fund was deemed submitted for the Body's consideration.



It was 12:22 p.m.



ANNOUNCEMENT OF SENATOR SOTTO

At this juncture, Senator Sotto announced that in the afternoon session, the budgets of the following agencies would be considered: Department of Justice, Department of Energy, State Universities and Colleges, Department of Labor and Employment, Department of Health and the Department of Interior and Local Government.

583


Upon motion of Senator Sotto, the session was suspended until three o'clock in the afternoon.

It was 12:24 p.m.


At 3:20 p.m., the session was resumed with Senate President Pro Tempore Ejercito Estrada presiding.

DEPARTMENT OF LABOR AND EMPLOYMENT

Senator Drilon presented the budget of the Depal1ment of Labor and Employment (DOLE) in the amount of P6.990 billion representing an increase of P597 million or 9.4% higher than the present budget of P6.39 billion. He said that the P2.746 billion allocation for the Technical Education and Skills Development Authori1y (TESDA) is 39.3% of the entire DOLE budget, while the Office of the Secretmy has a proposed budget of P2.3 billion.

INTERPELLATION OF SENATOR CAYETANO (A)

Asked by Senator Cayetano (A) on the current national unemployment rate, Senator Drilon replied that it was pegged at 7.1 % which represents the percentage of Filipinos who have no jobs in the labor force and are actively looking for employment.

On whether the DOLE's unemployment statistics does not include a person who is not actively looking for work, Senator Drilon replied in the affirmative.

Asked if the DOLE considers a person to be employed even if he only works for a season, Senator Drilon explained that based on international standards, a member of the labor force who works for at least an hour during the reference period (week that the survey was taken) is considered to be employed.

To simplify the gathering of such information, Senator Cayetano (A) suggested that the government utilize the "happiness factor" or similar user-friendly surveys to gauge the country's development. He recalled that a survey conducted in Taguig revealed that 50% or one out of two residents considered

r

584

himself to be unemployed, He asked whether the DOLE had conducted a survey on the ordinary Filipino's perception regarding the unemployment situation in the country, Senator Drilon replied that the DOLE did not have such information, However, he surmised that the results of the Taguig survey might have been due to the fact that the respondents do not consider work activity in the informal or agricultural sectors as actual employment He believed that the question "May trabaho ka 0 wala?" can elicit a response which would be completely different from the data that is based on internationally accepted standards of measuring employment

Senator Cayetano (A) explained that he asked the question because he wanted the public and the government agencies to have a true picture of the unemployment situation so that the government would see the enormity of the problem and take steps to address the same, He noted that the 7, I % unemployment rate - which does not take into consideration the estimated 10 million Filipino overseas workersgave the erroneus impression that 90% of Filipinos are employed, He suggested that the DOLE work in pal1nership with local government units or survey companies to develop a system of determining the actual employment situation around the country so that it could, in turn, work on creating more jobs in the areas that are in need of the same,

Moreover, Senatol' Cayetano (A) cited a World Bank study which revealed that the lack of emphasis on science, technology, engineering and mathematics was the reason why higher education does not yield the expected growth and advancement for the nation, He pointed out that many people learn only too late that getting a diploma is not a guarantee for employment He informed the Body that when he found out that 50% of the people in Taguig do not have work or think that they do not have work, this gave him the extra zeal to find a work or livelihood for them, or sponsor entrepreneurship seminars,

Senator Cayetano CA) believed that the government's weakness in the area of research and statistics hinders it from providing the public with a clear picture of the actual employment and economic situation in the country, For instance, he said that most Filipinos do not experience the economic growth reported through government data which showed increases in gross national product (GNP) and the gross domestic product (GDP), He also pointed out that the changes made in the parameters of the


Family Income and Expenditure Survey (FIES) make it more difficult to determine the actual income of families,

In a related matter, Senator Cayetano (A) also expressed concern over DOLE statistics which revealed that there were more unemployed educated individuals than those who had less education (high school graduates· 1,270,000, college graduates· 1,249,000 and elementary graduates ·339,000), He noted that while only 14% of the 23% of Filipinos who went college were able to complete their tertiary education, 1,27 million of these graduates were unemployed, He then urged the different agencies and departments to provide more user-friendly infonnation that would enable educational institutions, including state universities and the TESDA, to reformat their programs in a certain area, and give a more accurate picture of the jobs that are available and the skills needed for gainful employment

On another matter, Senator Cayetano (Al recalled Chief Justice Artemio Panganiban's column entitled Shabby Treatment r<f OFWs at the Airport in 2008, He asked why an ordinary OFW would find it hard to get an exit penn it whereas fonner President Arroyo, who was being accused of plunder, did not need one, Acknowledging that exit permits were meant to protect OFWs, he asked, however, how many OFWs who tried to secure exit permits were protected and how many were hassled, He recalled that in his column, Chief Justice Panganiban asked the OFWs to e-mail him their problems and based on the information they submitted, he made a matrix and a chart on who to deal with in government and what documents were required relative to such matters as applying for overseas jobs, pre-departure, working and living abroad, vacation (baUkbayan) and reintegration,

In connection therewith, Senator Cayetano (A) asked whether any group has studied the system and simplified the process, as he also asked the POEA to look into the situation of OFW s Hong Kong who had to pay HK$50 for certain forms that ran out In reply, Senator Drilon stated that the POEA has a continuing review of its rules and regulations which is necessary to prevent unscrupulous agents from victimizing OFWs, He admitted though that in the process of simplifying the process, there is a tendency to overdo things which sometimes result in undue difficulties for OFWs.

Senator Cayetano (A) suggested that DOLE put up in its website a blog where OFWs can channel


their complaints, problems and suggestions on how to make the system better and easier, after which a group can sort out or categorize the issues, Senator Dri Ion acknowledged the suggestion and revealed that a standard Q and A and Frequently Asked Questions (FAQl forms would be made available in the POEA website,

On a related matter, Senator Cayetano (Al assumed that agencies like the DOLE, POEA and the OWWA were being blamed for the proliferation of unskilled or underage OFWs, He recalled his meeting with Filipinos from Mindanao, aged 16 and below, who were working as OFWs in Jordan although they cannot even speak English, Apparently, he said, the parents of these young people borrowed money to send them to Jordan to work and they were afraid to be sent home for fear of being scolded by their parents,

Asked how those OFWs were able to get passpOlts, Senator Drilon stated that falsification of birth certificates is not unusual, especially in the case of Muslims in Mindanao where one needs only to get a certification from the Office of Muslim Affairs that he is IS-years old or older and it is accepted at face value by the POEA because it is a public document He admitted that because of these incidents, there is a tendency to overregulate and balancing becomes very critical and difficult

Senator Cayetano (A) pointed out that the DOLE should not be blamed for these incidents but emphasized that somebody must be held accountable, Senator Drilon stated that precisely, as regards the issue of offloading, one of the things that the Bureau of Immigration would look into is the age of the recruited worker, acknowledging that many in the bureaucracy face difficulty when the birth certificate does not reflect his/her correct age,

Senator Cayetano (A) surmised that such problems arose because nobody was apprehended and jailed, and many of the victims do not cooperate for various reasons, He narrated that one of his neighbors was sent home after being maltreated by his employer but he refused to file charges because some people at the Embassy supposedly told him to keep quiet or else he would not get any assistance from them, He stressed that unless the DOLE coordinates with the other agencies, it would be blamed for untoward incidents because it is at the frontline,

585

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF LABOR AND EMPLOYMENT AND ITS ATTACHED AGENCIES

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Labor and Employment and its attached agencies, namely: the Office of the Secretary, Institute of Labor Studies, National Conciliation and Mediation Board, National Labor Relations Commission, National Maritime Polytechnic, National Wages and Productivity Commission, Philippine Overseas Employment Administration, Professional Regulation Commission and the Technical Education and Skills Development Authority was deemed submitted for the Body's consideration,


Upon motion of Senator Sotto, the session was suspended,

It was 3:53 p.m,


At 4: 14 p,m" the session was resumed,

At this juncture, the Chair recognized Senator Angara, vice chairman of the Committee on Finance,

STATE UNIVERSITIES AND COLLEGES

Senator Angara presented the budget of the state universities and colleges (SUCs),


Preliminarily, Senator Cayetano (A) requested that he be allowed to show couple of slides to set the tone of the questions he would like to ask, He pOinted out that the first slide illustrates the fact that the more education a person has, the less poverty he will suffer; however, the next slide showed that, unfortunately, whether it is basic or tertiary education, the past governments, including the present one, say that the country should have more than enough funding before the government can increase the budget for education; the third slide showed that the budget for education in 20 II is only 229% of the Gross Domestic Product (GOP), which is way below the 6% GOP or P300 billion short of the level

586

recommended by the United Nations and even below the 3,9% average GDP in the East Asia region, He pointed out the direct relationship between the spending in education and how the Philippines is being lell behind by its neighboring countries,

Adverting to another slide, Senator Cayetano (A) pointed out that:

• One out of 10 Filipinos never goes to school;

• Out of 100 who enter Grade I, only 86 reach Grade II, wh ich means that 14 drop out from school;

76 finish Grade III and only 65 finish Grade VI;

• 58 go to high school but only 43 graduate therefrom; and

• 23 enrol in college but only 14 graduate with a college degree,

Citing the enrolment facts and figures for 2009-20 I 0, he stated that there were 2.7 million Filipinos attending school- 1 million in public schools and 1,6 in private schools but only 469,654 graduated from schooL He said the next slide would show that according to the records of the National Statistical Coordination Board (NSCB), 83.3% dropped out from college from 1994 to 2004; recent UNESCO statistics (2008) showed that 73% of the Filipino youth were forced to drop out of school due to the unattainable price of higher education in the country,

Moreover, Senator Cayetano (A) said that there are three major reasons for nonattendance of those in the 16-24 age bracket based on the 2008 FLEMMS study: unemployment or job hunting; high cost of education; and lack of interest

In addition, he said that there are more unemployed educated individuals, He enumerated the following unemployment statistics in the country:

• College graduates - 1.249 billion;

• High school graduates - 1.270 billion;

Elementary graduates - 300,039

He stated that unemployment may be a reflection of the quality of jobs available in the country and disconnection of courses, or because ofthe 10 million Filipinos working abroad,

Referring to the next slide, Senator Cayetano (A) slaled that the graph indicated that there was an


increase in enrollment but it also showed that the budget has not kept pace with enrollment He said that the NEP for 2007-2012 on the graph appears like a pine tree, climbing in 2007, peaking in 2009-20 I 0 and sliding down in 2012, He noted that the statistics, on the other slide, came from the CHED and DepEd websites and they were shown to the people,

Senator Cayetano (A) explained that he wanted to show the sl ides before asking questions because the Members of the House of Representatives and the Senate have different views on the SUCs, He recalled that last year, he was disturbed by the announcement of President Aquino that "SUCs should be self-sustaining," and Senator Angara then discussed how Harvard University and Stanford University were able to do it But he pointed out that compared to the SUCs, Harvard and Stanford had good locations and alumni who are world leaders, or leaders of companies listed in the Fortune 500, circumstances that are not applicable to many SUCs,

Asked how CHED views the number of SUCs, Senator Angara opined that there were too many SUCs and to complicate matters, chartered cities have even put up their own colleges and universities, He stated that there were about 80 city-chartered colleges and universities, many of which were substandard, lacked supervision and without standards for recruiting faculty and formulating curriculum,

Senator Angara stated that at present, there were 111 SUCs and counting, Fortunately, he said that Chairperson Licuanan of CH ED and Congress had agl'eed to hold back on the creation of SUCs and study how they can be consolidated within each region, the idea being to create one regional university and attach some of the smalier SUCs to it He said that CHED had implemented a consolidation program in Region XI and the SUCs seemed to be receptive because I) it would improve the overall supervision of tertiary education and make it more competitive; and 2) it would rationalize scarce state resources and allow SUCs to employ more people, He opined that other economies, other than economy of scale, could be achieved in having one central management within one province,

Citing the 12 SUCs in Samar and Leyte, Senator Angara stated that many of them are small and struggl ing to survive, yet they are close to each OtllCr. He noted that many SUCs create more branches than UP which has more resources, He maintained

WEDNESDAY. NDVEMBER 16,2011

that by consolidating the SUCs on a regional basis, CHED would be able to target and concentrate scarce resources.

Senator Cayetano (Al observed that Senator Angara mentioned many key concepts that he could not disagree with, one of which is the quality of many local universities or SUCs. But he pointed out that there are also some local universities like the University of Makati with very impressive facilities and faculty development and growing to such a degree that it has become even patl of Taguig City, which is being disputed. However, he disagreed that there are too many SUCs as he pointed out that 23 out of 100 students only attend school, 14 of whom graduate, and 77 cannot go to school because of the lack of SUCs or that SUCs do not have enough resources to absorb them.

On the matler offamily income and expenditure, Senator Cayetano (Al asserted that the 2003 survey was better than the 2009 survey because it was done in detail. He then proceeded to read the data based on the 2009 survey, to wit:

ANNUAL INCOME OF FILIPINO • under P40,000 - 4.1 %; • over P40,000 to PS9,999 - 8.7%; • P60,000 to P79,999 - 11 A%; and

P80,000 to P99,999 - 10.9%.

But after the P99,999 level, he noted that the diffet'ence skipped by more than P20,000: PIOO,OOO to P299,000 - 46% - and it gave an impression that half of the Filipinos were eal11ing almost P300,000 a year.

Using his own computation, Senator Cayetano CAl asserted that a family earning P300,000 a year would have a monthly income of P2S,000 a month; if a person spends P30 per person per meal, a meal for a family of five would cost P150, or P450 per day, or a total of P13,500 a month; assuming that all five members either go to school or work, the lowest transportation fare would be P40 two-way a day, or P6,000 a month; food and transportation would cost PI9,SOO while the remaining P5,500 would be for housing rent, electricity and water. Under such a situation, he said, family members are refrained from getting sick, buying new clothes, and even sending text messages unless it is unlimited or pam-load. He supposed that if the 46.7% were added to those belonging to the lower-income brackets, it would show that less than 20% of Filipinos can afford to go

587

to college. He stated that even with the next level of P300,OOO to P499,OOO, with the average tuition fee of a private or state university, it would still be difficult for parents to send three children to schooL

Senator Cayetano CAl stated that government is investing so much in basic education as he commended Sec. Armin Luistro for convincing President Aquino to increase the budget of the DepEd. However, he lamented that the SUCs were being left behind as he begged the Committee to add a little to their appropriation.

Senator Angara disagreed with the observations of Senator Cayetano CAl on income levels, as he maintained that not all those belonging to the lower income bracket would be able to send their children to tertiary education. However, he opined that those belonging to the 20% with income of P300,000 and above would rather send their children to private schools like Ateneo, La Salle and Miriam and some to UP because it is competitive. He believed that there is no correlation between the inability of the Filipino family to spend for higher education and the small number of SUCs. Moreover, he stated that even if correlated, there would probably be more SUCs that can absorb students. However, he said that many are prevented because only 23 enter tertiary education right away from high school when only IS graduate. He averred that there is a huge community of non-graduates because there is no system that takes care of them. He stated that basically, the Filipinos do not have the income level to enable them to send their kids to higher education. He said that tertiary education, in this age of information and communication, is an essential preparation for life; without it, the next generation would be as illiterate as if they never went to schooL

Senator Cayetano CAl asserted that SUCs are hard up because government is not giving them enough money and, therefore, they could either limit their student population or increase tuition fees. Thereafter, he gave a comparison of tuitions fee for a Computer Science course in a semester in private schools as against SUCs and local universities and colleges:

Private Schools Tuition

De La Salle University P60,OOO.OO De La Salle-SI. Benilde University P20,OOO.OO San Beda College PS5,OOO.00 San Juan De Letran University P42,700.00 San Sebastian College P37,OOO.OO

588

SUC,-!Loeal University and College

TUP Pamantasan ng Lungsod

ng Maynila Taguig City University

Tuition

P 4,800,00

P 3,648.00 o

Senator Cayetano (A) noted that there were 11,000 students in Taguig City University and that the local government of Taguig City, which allotted P200 million to the university, does not charge them a single centavo, not even for ID, He stressed that if government would give more to tertiary education, there wou Id be more than 23 student-enrollees and more than 14 graduates,

Moreover, Senator Cayetano (A) stated that even if government docs not increase the enrollment, the quality of education would not be sacrificed. He said that the idea that "an education from La Salle would be better than from TUP" is debatable. He cited UP-PGH which is a premier medical school despite its low funding.

Recalling the budget message of the President last year, Senator Cayetano (A) argued that instead of putting the burden of public education on the students, government must provide for it. He agreed that tertiary education cannot be shouldered 100% by the government but he maintained that it could be done at the local level. Citing Taguig City University, Senator Cayetano (A) stated that the local government allotted a budget of PI 00 million for scholarship for 2011; P200 million in 2012; and by 2014, every Taguigefto would be guaranteed P30,OOO to P50,000 a year for the school of his/her choice. He reiterated it could be done at the local level because the local government can choose its pet project.

Senator Cayetano (A) stated that admittedly the national government can provide SUCs only so much but he noted that based on the statistics, the budget of the SUCs does not increase every year. He commended Senator Angara's advocacy for education, as a senator and as a private citizen, by putting up scholarship programs for science and the arts. He asserted that the cheaper but more quality education from the SUCs, the more students would enroll. He stressed that of all the departments and programs of government, there seems to be resistance from the Aquino government in putting more funding in SUCs.

Agreeing with Senator Cayetano (A), Senator Angara posited that of all the sectors in the education

WEDNESDAY. NOVEMBER 16,2011

system, government is underspending the most in tertiary education which is the most crucial stage in a person's life. For this reason, he said that during the 2012 budget hearings, with the help of Senator Drilon, the CHED and other departments like the DOST and the DA, the Committee tried to augment the funding of the SUCs.

Senator Angara agreed with Senator Cayetano (A) that the figures nominally increase but he conceded that the per capita spending is going down in real terms. He noted that government was at a crossroad because it was uncertain whether to continue financing a system that is expanding in (erms of number because doing so might be only spreading misery all around because the pie is not getting bigger. He remarked that CHED Chair Licuanan was right when she suggested that the whole terrain be surveyed to see whether it could be rationally restructured, not by removing or eliminating any institutions, but in terms of curriculum, and recruitment and deployment of faculty and from then on, to begin really vigorously helping the advance of tertiary education. He opined that the principal fault in public tertiary education system is not so much that the State is not giving it enough but that 85% of the higher education enrollment is in the private higher education system which responds to market demand even in terms of academic offering.

Senator Angara recalled the time when nursing was so popular that everyone was offering it, then it was followed by IT, and it caused a glut in nursing and 11' graduates because the private sector was responding to what it perceived to be the market demand. He observed that most private tertiary institutions were motivated by a genuine desire to educate but it is unfortunate others were motivated by profit. He clarified that government was not proposing to remove or diminish the role of the private sector in higher education since it has a unique role especially in the whole of Southeast Asia. The private sector, he observed, was actively handling 85% ofthe education of the Filipino youth compared to 95% government support in Malaysia and almost 100% in Singapore. But he acknowledged that if the State did so, it would go bankrupt. However, he asserted that there must be more than just physical consolidation and rationalization; the government should begin to put together a massive large-scale student loan and financial assistance program to address the root cause of low attendance and low graduation rate from tertiary education.


Senator Angara believed that ultimately, more than just a student loan assistance program, government must also create a public institution that can extend assistance to private tertiary education in terms of capital outlay, noting that many higher education institutions have outstanding laboratories, libraries, playgrounds, and campuses, He said that if govern-ment can put together such a system, it would correct Senator Cayetano's concern that the youth are being shortchanged by starving higher education system,

For his part, Senator Cayetano CA) said that on a policy level, he does not disagree with Senator Angara who basically articulated the problem of the higher education system, However, he argued that while the private highel' education institutions may be motivated by profit, it makes them more efficient since they can offer better facilities and attract more people who can afford to pay for quality education. He posited that the answer to the problem is competition. He observed that by fully funding UP, it has been a good competitor to San Beda, Ateneo, UST and La Salle. He stressed that it is not just an issue of money but also of professors and faculty. He agreed with the proposal to increase the scholarship and student loan programs for higher education. However, he believed that there should be a change in the thinking that higher education is equal to a better future or more jobs and that SUCs should be self-sufficient. Economic conditions, he said, are not right to expect the SUCs to fund themselves or increase tuition fees.

Senator Cayetano CA) said that the debate becomes really difficult because the legislators! policy-makel's are looking at the situation from the aspect of theory and from actual practice where universities were able to develop and academic freedom flourished under certain conditions. For this reason, he said, most legislators wanted to consolidate SUCs. He lamented that transportation fares to and from SUCS are so expensive that local government officials - congressmen, mayors and governors -have lobbied for their own satellite schools because the closer the school is to the student, the lesser the chance for him!her to drop out.

On another matter, Senator Cayetano CA) opined that President Aquino should not stick to his campaign promise of no new taxes. He revealed that when he asked people ifthey would agree to tax text messaging and put the revenues raised from it to education,

589

more than half said it was okay. He calculated that the Special Education Fund, which is an extra one percent of the real property (ax collected by the LGU, is equivalent to P 15 billion or P20 billion a year, so that if another one percent for a Special Education Fund for higher education was added, the government would have PI5 billion more which would be about P 150 million for each SUC. He explained that for a P5 million condominium unit in Makati, Ortigas or the Fort, the real property is 20% of the assessed value or PI million and 1% of it is PI 0,000. He said that even half a percent would give the government between P7.5 and PIO billion a year, and that it would only cost the Owner of the condominium unit an extra P5,000. But he posited that it would be good for the condominium owner in the long term because with a better economy, there would be more jobs, more people would finish college and work, and more people would buy condominiums with higher value.

Senator Cayetano (A) commented that the Aquino Administration seemed to expect the SUCs to generate funds for their programs or that they should be left to fend for themselves, but unlike UP, he pointed out, they have no prime land to rent out. He said that many of the proposals to generate additional funds have already been discussed but he wanted them aired on the floor because many of the allies of the Aquino administration were listening. He expressed hope that many of the ideas being discussed on the floor would be the subject of legislation by next year or the year after, halfway into the current administration.

On another matter, Senator Cayetano (A) recalled that during his sponsorship of the amendments to (he UP Charter bill, there was a debate between some of the progressive faculty members and some of the more conservative members ofthe UP administration on whether or not UP could sell its land, and the compromise was that UP would be given PIOO million a year for the next five years, as a Centennial Fund, to develop the land.

Asked if the PIOO million Centennial Fund was allocated or appropriated for the UP in the 2012 budget, Senator Angara replied that the Centennial Fund was given only once, during the centennial year of UP.

But Senator Cayetano CA) pointed out that the agreement was for UP to be allocated or given PI 00 million for five years. Senator Angara explained that

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such legislative promise was hardly kept because the Higher Education Fund has never been increased nor augmented despite the provision that Pagcor and PC SO would put in a certain percentage of their income, Besides, he noted that the flow of income to these agencies is irregular and unpredictable,

Nevertheless, Senator Angara took note of Senator Cayetano's observation that there seemed to be a reluctance on the part of the Aquino Administration to create new sources of revenue either by taxation, levy or any other way, He opined that the government may have to slowly reopen the door for taxes similar to what administrations abroad did, like U,S, Pres, George H, Bush who raised taxes in spite of his campaign promise not to do so, He noted that even today's Republicans are saying no to new taxes, concerned as they were that the treasury would go bankrupt because of the high deficit. He pointed out that no one should write in stone a promise not to raise taxes, He recalled that Senator Recto very aptly pointed out in his sponsorsh ip speech that the Philippines is a revenue-loving or a spending-loving country, however, Filipinos seem to forget that there must be some source for that spending which is taxation, He also took note of Senator Recto's observation of the under-taxation of energy and sin taxes on liquor, cigarettes, among others. He said that if government does start to il11pose new taxes, even just I % to the Special Education Fund can be dedicated to the most essential social services - education, health and housing. He pointed out that if government increases by 1% the Special Education Fund, the SEF of all LGUs would be increased by almost PIO billion a year. He added that it is a known fact that the I RA share of local governments has been increasing in the aggregate so that if 5% of the 20% development fund were dedicated to tertiary education, it would bring in another P5 billion to PIO billion to higher education. He emphasized that there were so many ways to augment the funding for higher education if only there was some leadership signal towards that direction.

Senator Cayetano (A) observed that for the Special Education Fund, the proposed increase could be time-bound, for instance, for three or five years, He reiterated his previous example that an additional I % or PIO,OOO for every P5 million worth of condominium unit will give the State PIS billion to 1'20 billion or P 150 million to P200 million per SUC; and just half of it could yield about P75 million for


each SUC. He pointed out that there were certain LGUs like Makati, Manila and Taguig that spend a lot on their local colleges and not all of them rely on the IRA. He cited Makati which only relies on 6% to 8% of its IRA, so much unlike a lot of LGUs that are 70% to 90% dependent on their IRA, that is why they cannot really fund scholarship programs. He acknowledged the efforts being exerted by Senator Angara and the CHED for higher education as he suggested that they can be part of the lobby group to convince the Aquino Administration that there need to be additional sources of revenue for higher education. He said that the SUCs really need this boost in funding through student loans, scholarship programs or by giving them the money directly,

Senator Cayetano (A) suggested that the duty to collect dues be passed on to SSS and GSIS and that the loans be repaid when the borrowers get jobs, He mentioned a study made by the World Bank which noted that for generations, Filipinos have been promised higher education and better lives, jobs and economy but that has no longer been the case in the last few decades, and the study concluded, that the focus was wrong.

Senator Cayetano (A) stated that in the next budget hearings, he wanted to see an analysis of what the priority courses shou Id be, He suggested that every public employment officer in the municipality collect data from every company applying for permit regarding employment qualifications and statistics, and then forward the information to the SUCs. He added that the trend in a particular area should be carefully analyzed and developed.

Senator Angara agreed that the old belief regarding higher education is no longer true at the present time since the quality and nature of jobs and the global demands have completely changed, Five years ago, he recalled that people would never think that young women would be working in night shifts as it was prohibited by law. At present, he said that almost 600,000 women work in night shifts in the call center industry and in the next three years, they are expected to number about a million.

Senator Angara also observed that at present, the jobs that are in great demand are "creative jobs" such as animators, artists, painters, engineers and inventors, He underscored that the world has completely changed and the education system must accol11modate changes. He lamented that the country


is quite slow in responding to the almost radical global transformation at the workplace, He stated that there is a need to catch up and confront the issue to slowly eliminate unemployment among the mass of people who are nonetheless educated,

Senator Cayetano (A) recalled that college students used to take for granted their language elective since they saw it as a subject to be passed for the sake of getting a degree, At present, he said that since call centers give 30% to 50% premium to those who know a foreign language, students even major in foreign languages, He pointed out that when CHED, TESDA and DepEd were created, there was really a good reason (0 specialize, But right now, he said, the three agencies should come together and come up with a curriculum that would develop students in a holistic manner. To illustrate, he said that foreign languages should be taught to the fastest learners - kindergarten and elementary students, He said that discussions should be made on how all the changes can be integrated in the DepEd, TESDA and CHED as he acknowledged that the problem is more than just lack of funds, He hoped that by next year, the funding sources for the SUCs would be identified.

INTERPELLA nON OF SENATOR CAYETANO (P)

Senator Cayetano (P) noted that English, Spanish and Chinese are the three most spoken languages in the world, Compared to any country in the world, she believed that the Philippines is in the best position to be the leader in outsourcing since Filipinos already speak good English, the Filipino language shares common words with the Span ish language, and Chinese schools are abundant in the country, She asked if CHED could seriously look into this opp0l1unity,

She recounted that during her visit to two special schools in Ncw York - the Art and Design School and Quest to Learn, a school which uses gaming to teach children - she learned that the former was already teaching students concepts in architecture, fashion design, illustration, and even animation, jobs that would be eventually outsourced, and she believed that the Philippines can dominate these outsourced jobs,

Asked if the government was working on finetuning the education system to meet demand, Senator

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Angara agreed that the Filipinos have a unique opportunity to learning foreign languages, He stated that languages as electives could be offered in either K-I I or K-12 and even high schooL

As to the current requirement for foreign language, Senator Angara recalled that during his time, it was 24 units, then it was reduced to 12 units, and now to six units,

Senator Cayetano (P) suggested that learning a foreign language like Spanish or Chinese be made a requirement 01' a serious option for students who do not have an idea what course to major in, Senator Angara stated that these ideas could be incorporated in the new education system, adding that it is quite fortunate the education system seems to be in a period of reform,

Senator Cayetano (P) also mentioned that a lot of jobs were already being autsourced so the Filipinos must be prepared to tap them, otherwise, they would go to India or China, She cautioned that South Korea, China and even Japan were focusing on English to accommodate all the business of English-speaking countries, and the Philippines just have to step up,

Senator Angara said that while the Philippines is in the process of looking at its education system, the opportunity to upgrade the call centers into genuine data processing centers should be looked into, For instance, he mentioned that many of the advanced countries were outsourcing medical diagnoses, and the massive number of unemployed nurses in the country could be trained in that area, He claimed that the country was not yet prepared to train nurses, physical therapists and other health workers in this kind of skill, so TESDA can begin the process.

Further, Senator Angara said that the massive number of lawyers doing notarial work could also be trained to do documents from pharmaceuticals, drug companies and other sectors in the West that need lawyers to analyze and put them in proper storage, He said that there is a huge potential for the unemployed and underemployed to upgrade their skills and do work related to their training, He stressed that the country's education and training centcrs must be prepared to train and retrain these professionals in those fields,

With regard to the clamor among students for an increase in the budget of the SUCs,

/r

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Senator Cayetano (P) said that to support the increase, a program must be presented to ensure the students that they are getting valuable education that would redound to jobs,

Senator Cayetano (P) stated that she has always maintained the belief that not all SUCS must survive and that, akin to Darwin's theory of survival, only those who are titlest do, Therefore, she said that more funds should be poured into specializing the SUCs and providing for alternative learning institutions in the region for everybody else,

Asked how the University of the Philippinesthe national university of the country-could bring back its fonner glory, Senator Angara believed that UP must leverage its own natural assets, particularly its well-trained faculty, its well-developed curriculum and its well-endowed landholdings, However, he lamented that UP lacks an international outlook and has become so parochial and insular that it tends to think that it is the best when it is not He said that even if UP might be the best among local universities because of the breadth and reach of the discipline it handles, it badly needs to internationalize its faculty and even its student bodies especially in view of the fact that intel'l1ational collaboration with universities is very essential and crucial to academic excellence,

Asked if UP has tie-ups with other universities similar to the tie-ups of American universities with Asian universities, such as the National University of Singapore, as well as the universities in Tokyo, Hong Kong, and Australia, Senator Angara replied that UP has similar tie-ups but in a very small scale when compared to the National University of Singapore, and even of Malaysia, Indonesia and Korea,

Considering the fact that the Philippines is the second IT capital next to India, Senator Cayetano (P) asked how UP could present its case to Ivy League schools and mention its place in the rankings of top universities in Asia, Senator Angara expressed confidence that UP and the other leading universities in the country would not have difficulty competing with other universities because it has the advantage of having Western models of education and is an attractive partner to many topnotch universities, However, he underscored the need, for a little drive and resources, particularly in being able to offer the visiting professors the same facilities and laboratories and even accommodation they are accustomed to, otherwise, they would not be attracted to come to


Manila but to other Asian universities, What is required, he said, is an effort and a deliberate systematic campaign to internationalize higher education in the country lest it remains in the bottom of world ranking,

Senator Cayetano (P) hoped that initiatives towards such end cou Id be presented to her after the debates, saying that she would be very happy to support a budget increase for 20 12 so that such plans could happen as soon as possible, Senator Angara gave the assurance that he would sit down with CHED Chairman Licuanan and some representatives of SUCs who already have their own exchange programs to find out whether they could set up a framework for internationalization that could be utilized by UP to strengthen its own academ ic offering, strengthen its faculty, and enliven campus life,

Asked if UP continues to attract young graduates into its faculty, Senator Angara said that it is attracting and is continuing to recruit bright, young graduateseven summa and magna cum laudes-and has a massive upgrading of faculty training, In fact, he said, almost 90% of its faculty hold doctoral as well as masters degrees, He recalled that when he once attended a UP commencement exercise where 300 summa, magna and cum laudes graduated, he tried to convince one of them to join his staff but his offer was declined when the particular student expressed commitment to teach in UP, He hoped that UP could make teaching a permanent attraction so that young, bright Filipinos could make it a part of their ambition to be able to teach in the country's premier university,

To recap, Senator Angara affinned that nominally, the budget of sues for 2012 is slightly lower at its face, However, when looking deeper into it, he said that it is larger than the 20 II budget because almost P400 million was put together frol11 the budgets of the agencies of Chairman Licuanan, Secretary Montejo and Secretary Alcala into what are called "innovation clusters" or state colleges and universities formed into a consortium with the industry and with the government.

Replying to further queries, Senator Angara stated that the fund that is deposited with CHED is an innovation fund for very specific areas of growth in specific universities all over the country, The second source of funding, he said, is a P500 million fund under the CHED budget, half of which is open to


MOOE as well as Capital Outlay but not available to all 110 SUCs, only to deserving ones that are encouraged to apply for such extra funding.

Asked if government has the political will to shut down SUCs if necessary, and grow where growth is needed, Senator Angara clarified that the SUCs would not be threatened to shut down but would be advised to rationalize and shift focus so that they become relevant. He admitted, however, that there are more SUCs than local universities, the former totaling over 200 in addition to about 1,700 private colleges and universities, way too much even for a large population like the Philippines. He said that in the public sector, Chairman Licuanan is doing a fine job stalting it with Region XI, or the Davao provinces. He disclosed that all the regions want also a review and overhaul oftheir respective structures not towards narrowing the opportunity to enroll but towards expanding.

Senator Cayetano (1') expressed the belief that what is needed is just closer and better working relationship with the students so that they would also be informed that the objective is to provide them with physically accessible and affordable yet relevant education.


At the outset, Senator Legarda stated that economic growth could be best sustained through technological innovations that come about from research and development. As regards the so-called innovation clusters, she revealed that the country's Asian neighbors have allocated an average of at least .5% of their GDP for science and technology (S&T), while the Philippines has been allocating only an average of .12% of GDP for S&T. She said that the results of such priorities clearly show that those that have had high rates of capital formation including in research and development have enjoyed higher productivity and economic growth. She recalled that during a COMSTE hearing, a very creative idea that Senator Angara had posed was to partially address the problem by the so-called innovation clusters.

Asked ho'w the five (5) innovation clusters would be divided geographically and equitably among SUCs in the country so that most regions competent in such areas are actually served, Senator Angara revealed that it would be the first time for government to launch the innovation cluster which would be expert-

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based. He said that if the person's expertise is in smart farming or agriculture and he knows something about the use of satellite in agriculture, then he would be supported through the cluster for precision farming and sma.t agriculture. He said that Mariano Marcos State University in Batac, llocos Norte is probably one of the first state universities that focused on acquiring the skill at using satellite imaging to foretell the quality of soil, the moisture, the weather, and even the onset of pest or threat to crops. He said that smart farming, which is still new in the Philippines, is already widely used by farmers in NOIth America and Europe. He revealed that Filipino farmers are being taught precision farming by a Filipino NASA scientist, and that the DA, DOST and CHED have been convinced to put more money towards advancing the technology.

He affirmed that the Mariano Marcos State University would be one of the consortium of SUCs that would be the center for such an endeavor.

At this juncture, Senator Legarda disclosed the alarming decline of mango production in the country, saying that according to Gov. Imee Marcos, there was a 20% decline brought about by climate change. Indeed, she said, there is a correlation between climate change and agriculture, in this case mango production. She noted that aside from !locos Norte, Zambales, Guimaras and Cebu also produce mangoes. Senator Angara agreed as he noted that mango production has become nationwide and not merely confined in Zambales and Guimaras.

To Senator Legarda's observation that mango production could be an area of research for precision farming and smart agriculture, Senator Angara replied that it is one of the advantages of training farmers in using satellite data and imagery which are available at a click or at a push of a button.

Senator Legarda noted that another cluster is responsible mining technology and asked to be enlightened about it in view of the controversy about small mining. She believed that the innovation cluster for said area should focus on Mindanao in order to allay the fears of environmentalists, local governments, POs and NGOs and also to avoid opposition to SUC- or CHED-support for small mining for fear that they could adversely impact the environment.

Senator Angara pointed out that if things were done right, there could be an estimated US$1 0 bi Ilion

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investment in the mining sector alone in the next five years, He lamented, however, that it is being deterred because communities object to mining for fear that it destroys their environment and it does not deliver the promised jobs and overall upliftment of their conditions. He said that responsible mining implies doing research on the whole mining world for technologies that are friendly to the environment and redound to the general welfare of the commun ity. As an example, he pointed out that there is now a substitute for mercury and lead in leaching gold and copper since both are known to destroy the groundwater and the soil, infecting the environment in the process, and resulting in all sorts of ailments for people exposed to them. He explained that the newly discovered technology could convince people that mining need not be against their own interest, the environment and nature itself and that mining could be another way of improving the community with the creation of good and well-paying jobs.

Asked which SUC would be the center for the cluster, Senator Angara said that there would be a consortium of state and private universities in Mindanao which includes the Mindanao State University, the University of Southern Philippines in Kabacan, Cotabato, the University of the Philippines in Davao, and Xavier University in Cagayan de Oro. He said that the consortium and some mining companies were willing to put almost US$2 billion in the next five years into building water-testing and soil-testing laboratories to help not only the entire community but also improve the facilities of the participating universities.

As to the third cluster which is algae research, Senator Angara explained that algae, which can be created out of carbon dioxide and bioenergy, has been found to be a rich source of animal feeds, ethanol and food supplement, but feeds for either poultry, hogs, dairy or fish are considered to have the most attractive use. He said that if produced on a commercial scale, animal feeds could considerably lower the cost of feeds itself and eventually the cost of fish, poultry and hogs. He further pointed out that the potential of algae is so huge that it is already being produced in commercial quantity in the United States and that all that has to be done is to bring in the technology and adapt it to the country's needs. He disclosed that algae is considered a magic feed because its energy and protein content is better than soya and corn as shown in laboratory tests.


Senator Legarda noted that the ICT for cloud computing is one of the five clusters which is not yet popular in the country but is already being used by corporations in the United States. She said that instead of archiving hard copies in external hard drives or USBs, the Philippine Senate could archive everything through cloud computing,

Asked how the SUCs would benefit from the innovation cluster of ICTs for cloud computing and which of the SUCs would be its center, Senator Angara said that Cebu was the venue chosen for cloud computing research because it has good state and private higher education schools like San Agustin, San Carlos, UP Cebu, and the Cebu Technological University that were already advanced in computer education and most importantly, more, a big American company, has already invested almost a billion U.S. dollars for its laboratory in Cebu.

Senator Angara noted that there was already an existing application in Google to which state universities could subscribe to get rid of their traditional storage system by storing their data in the cloud. He said that there would be an infinite vast storage space which only required the use of an internet connection. He further clarified that the innovation cluster would primarily aim to train people on the use of cloud computing for the purpose of adapting the technology. He said that the hard process of basic research would be leapfrogged in order to immediately apply technology to the system.

As regards the innovation cluster on disaster science and management, Senator Legarda pointed out that more than 20 typhoons hit the country yearly and that the Philippines ranked as the third country most vulnerable or at risk to climate change. She asked how the innovation cluster in this area would work out in SUCs and what SUCs were selected as centers for said innovation,

In response, Senator Angara said that he did not know of any institution which mitigates the effects of disaster. However, he disclosed that the Hyogo Prefecture in Kobe, Japan has a center for disaster risk reduction and that the Taiwanese and Korean governments have already offered to provide the country with equipment and trainors, He explained that the disaster management center would train local officials as well as school officials for disasters and cope with damages. He said that Japan, which is disaster-prone but considered the most prepared


country in the world, was able to immediately rehabilitate itself after it sutfered an earthquake, tsunami and nuclear explosion owing to its long experience in disaster management. He informed the Body that the centers are strategically located along the Pacific side of the Philippines where the early warning devices of PAGASA and the PHIVOLCS are located and where most typhoons and even earthquakes originate. He disclosed that initially, a center would be put up in the Aurora State College to which Japan, Taiwan and Korea have already pledged equipment and trainors once the physical facilities were in place; other centers would be in Visayas and in Mindanao, on the Pacific side.

Senator Legarda said that while this matter had been discussed in the hearings, she wanted it on record during the budget deliberations to make sure that the funding mechanism for the operationalization of these innovation clusters would be realized in the 2012 budget so that during the deliberation on the 2013 budget, the fruits of the allocated resources could already be seen.

Senator Angara stressed, however, that the innovation would still be experimental in nature and he hoped it would be successful so that it could be utilized throughout the country. He said that the first five clusters would be very crucial in proving to the government and its foreign partners that the innovation could and would work in the Philippines.

Senator Legarda proposed the inclusion, if viable, of a sixth cluster for natural resources and forestry, asserting that deforestation has wrecked so much havoc in forest reserves. In response, Senator Angara said that the sixth cluster is on generating alternative medicine out of the country's biodiversity but he gave assurance that the Committee would work vigorously towards setting up a natural resource cluster.

To the observation that there is a Traditional and Alternative Medicine Act authored by then Sen. Juan Flavier but which is not being implemented, Senator Angara said that the Committee wanted to explore more the plethora of plants in the country, not just {agundi, because thc world is now more inclined to use organic and natural products which favors the Philippines that has, fortunately, a deep and wide biodiversity and very good biochemists and biotechnologists. Senator Legarda stated that she would lend her knowledge and experience to the creation and operation of said cluster.

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On another point, Senator Legarda said that the quality of education depends largely on the qualifications and competencies ofthe faculty, mentors or teachers. She asked if enough was being invested to ensure that the pool of academic experts were being assisted and supported, noting that there appeared to be a lack of support for improving competencies and skills of teachers.

Asked how legislators were actually helping the CHED in realizing the objectives of Memorandum No. 40 that required all faculty members to have at least a master's degree by 2012, Senator Angara said that every SUC has a faculty development program but its supporting budget is not enough to support a genuine faculty development in the direction it wants to go. But, he pointed out, there is budgetary support in the 2012 budget for teachers' training in the consortium of 10 to 12 normal universities and support for engineering and research development in the consortium of the top eight engineering schools with the aim of producing a corps of scientists and technologists that can become the critical mass for technological innovation in the country. He expressed hope that in the future, the support would also cover other disciplines like arts and humanities.

As to how CHED was preparing college students for growth in the areas of IT and BPOs, Senator Angara acknowledged that there is a need to adjust the curriculum to make it responsive to the fastchanging world where there are jobs that were unknown several years ago. In addition, he recalled that during the hearing on the DOLE budget, he suggested that the Department come up with a manpower planning or job survey every three years to enable the schools to adjust their course offerings. He said that DOLE would not simply publish a manpower mapping survey but would also coordinate with the CHED, DepEd and educational institutions so that the programs could be matched with the market and in the process eliminate many course offerings and even specific subjects in technical disciplines that have become obsolete or irrelevant.

In this regard, Senator Legarda read into the record a portion of a publication by KPMG-EquaTerra which compared the Philippines to China and the possibility of the latter overtaking the former in the BPO outsourcing industry, to wit:

The Philippines is particularly strong in voice-based processes and remains a location of choice for the next three to five years until, we

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expect, China becomes a viable mature location. For a "future proof" alternative to India, for back office data support technical helpdesk and IT application services, China would be the recommended location of choice today.

China is really developing quickly and its rate of development is likely to be exponentially higher than other outsourcing locations. Indeed the sheer skill of industry in China and the size of the graduate population (around three million per year), coupled with the aforementioned investment will make China a very compelling proposition. At the moment, English linguistic skills in China are lagging behind other locations, but this is expected to change quickly as oral English is now being taught in schools (previously it was not). It is expected within a few years there will be more English speakers in China than any other country.

The Philippines has the most wel1 developed outsourcing industry of those assessed in terms of maturity, capability, and the range of services offered. But its overal1 appeal was hampered by its lack of infrastructure development. If this issue however can be addressed it shOll Id continue to be a major player.

She explained that she put the article into the record to set a direction and assist the CHED, SUCs and even the S&T sector to focus on the possible threats that China could pose to the Philippines.

Senator Angara pointed out that right now the Philippines has taken the title "Call Center of the World" ti'om India but it is actually a strategy, on the part of India, to slowly give up the voice part of the BPOs and call centers and concentrate on providing high value services like animation and software design. He stated that the country ought to go in that direction, taking advantage of the ingenuity and creativity of Filipinos in the field of linguistics.

On the obselvation that the curriculum must be revised to meet the challenges of the future, Senator Angara informed the Body that CHED and the Business Processing Association of the Philippines have signed a memorandum of understanding to adjust course offerings to current needs which, he believed, should be done as fast as possible considering that changes and innovations in the field of technology are taking place at a very fast pace.

In closing, Senator Legarda expressed hope that the quality of graduates of the SUCs would greatly improve.


SUBMISSION OF THE BUDGET OF THE STATE UNIVERSITIES AND COLLEGES

There being no other interpellation, upon motion of Senator Satta, there being no objection, the budgets of the State Universities and Colleges were deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON HIGHER EDUCATION

Likewise, upon motion of Senator Sotto, there being no objection, the budget of the Commission on Higher Education (CHED) was deemed submitted for the Body's consideration.



It was 6:23 p. m.



Upon resumption, the Chair recognized Senator Recto, vice chairman of the Committee on Finance.

DEPARTMENT OF ENERGY AND ITS ATTACHED AGENCIES

Senator Recto presented the budget of the Department of Energy (DOE) and its attached agencies.


At the outset, Senator Legarda stated that she would limit her queries to two issues which include rural electrification. Relative thereto, she asked how the DOE aims to complete its rural electrification program which seeks to provide electricity to 90% of all unelectrified households by 20 I 7 and whether its proposed 2012 budget would be sufficient to meet the six-year deadline. Senator Recto said that the administration has a plan to provide electricity to an estimated three million households using the proposed P2.S-billion appropriation subsidized from the budget of the National Electrification Administration (NEA) for 20 I 2. He said that the P2.5 billion annual allocation for the next six years will allow the DOE to meet its target. .JPr


Asked whether the DOE has mapped out the otT-grid coml1lunities and determined the extent that renewable energy sources could be tapped to service their needs, Senator Recto clarified that the threemillion household estimate would include 2.5 million homes in the grid area and 500,000 that are in offgrid locations,

As regards the Renewable Energy Law, Senator Recto clarified that the implementation of the law was not sidelined as it was being handled by the Energy Regulatory Commission (ERC). He explained that while the ERC was tasked to study the tariff mtes for potential RE investors, it had to put electricity rate increases on hold while it determines whether utilizing more renewable energy could lead to higher electricity rates since the Philippines charges the most expensive electricity rates for residential consumers in Asia, However, he pointed out that the Philippines is way ahead of other industrialized countries in the utilization of alternative energy sources, He noted that while other countries promised to save on 20% of energy sources, green energy currently makes up 46.3% of the Philippines' total primary energy mix while 40% sources renewable power.

On whether the DOE was assessing the implementation of incentives to RE developers, Senator Recto replied in the affirmative,

Asked whether the DOE or the National Power Corporation (NPC) has undertaken a mapping of unelectrified areas to establish the viability of using cleaner and renewable forms of energy for those areas through private sectol' support, Senator Recto I'eplied that said activity was a continuing process,

Given the energy sector's vulnerability to weather disturbances, Senator Legarda sought assurance that the reSOUrce allocation for the DOE's 2012 budget would be climate-I'esilient budget for the sector, Senator Recto pointed out that the government only manages a small portion of the energy sector while 70% has been privatized through private sector ownership of various distribution utilities, transmission firms and gencos, He noted that the private sector and the government acted quickly to insure that power was restored to areas hit during two calamities the previous month, This, he said, was in line with the DOE's mandate to insure sustainable, stable, secure, sufficient, accessible and reasonablypriced energy,

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Through pol icymaking, Senator Recto pointed out that the DOE continues to invest in clean energy and promote energy efficiency as illustrated by the fol/owing:

•

•

•

Launching of the National Renewable Energy Program on June 4, 20 II;

Drafting of renewable portfolio standards/rules for finalization;

Conduction of feed-in tariffs;

Production of 149.5 million liters of bio-diesel (with the private sector);

Issuance of certificate of accreditations to manufacture bio-ethanol which produced 13 million liters/year;

Issuance of certifications of registration and notice to proceed for green fortune innovations which is expected to produce 99,4 million liters/ year;

41 CNG fed-buses operating in the BatangasLaguna-Manila route resulting in savings for importation and burning of diesel equivalent of 630,000 liters;

Electric veh icles program;

• Alternative fuel bill which has resulted in savings of 88.6 million liters of gasoline displacement from 17,500 taxis using LPG;

• Engaging of the Japan International Cooperation Agency (JICA) for the updating and expansion of the master plan study for the development of the natural gas industry in the Philippines;

Engaging of the World Bank for feasibility studies for LNG in Mindanao; and

• Launching of a low carbon future through renewable energy, natural gas and sustainable fuels for transport to promote energy efficiency,

Noting that the President has organized a water task force committee, Senator Legarda sought the DOE's commitment to urge the NAPOCOR to update its dam protocols. She recalled that during the hearing of the Disaster Reduction Oversight Committee concerning the pre-emptive release of dam water last September which resulted in loss of lives and livelihood, the NAPOCOR blamed the National Water Resource Board (NWRB) of the DENR for not allowing the former to release the

.lIP f"i

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water and lessen the effects of flooding in the affected areas. She sought an assurance that the DOE and the DENR shall work closely with concessionaires operating these dams since they also have a responsibility not only to produce power and help in irrigation but also to protect the lives and livelihood of the downstream communities such as those in Central Luzon who were adversely affected not only by rainwater but by the release of water hom the dams. Senator Recto gave assurance that the DOE was supportive of Senator Legarda's proposals.

Senator Legarda also requested a more proactive coordination between the DoE and other concerned agencies.

SVBMISSION OF THE BVDGET OF THE DEPARTMENT OF ENERGY AND ITS ATTACHED AGENCIES

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budgets of the Department of Energy and its attached agencies, namely, the Energy Regulatory Commission, the National Electrification Administration and the Philippine National Oil Company, werc deemed submitted for the Body's consideration.

SVSPENSION OF SESSION


It was 6:41 1'.111.


At 6:46 p.m., the session was resumed with Senate President Enrile presiding.

DEPARTMENT OF HEALTH AND ITS ATTACHED AGENCIES

Senator Drilon presented the budget of the Department of Health and its attached agencies.

REMARKS OF SENATOR DRILON

At the outset, Senator Drilon stated that for 2012, the health sector has a budget of P58. 7 billion, of which P42.69 billion would go to the Department of Health (DOH). He stated that under the National Expenditure Program, a total of P3 billion was


allocated for enrolment in PhilHealth of 20% of the country's population and another P8 billion, subject to the condition that the PhilHealth Charter would be amended first, which proposal was amended by the Committee by making available PI2 billion for the enrolment of 5.2 million households covered by the National Household Targeting System that would cover the lowest quantile of the population. Also, he revealed that the Committee has required all public health units to get PhilHealth accreditation so as not to deprive the very poor families of the 0ppoltunity to avail of the much-needed medical care. Another amendment to the NEP, he said, is the setting of a 5% limit on administrative cost but the Committee might amend it later so as not to unduly restrict the ability of PhilHealth to administer its program.


At the onset, Senator Ejercito Estrada adverted to reports that Health Secretary ana visited and personally checked on the condition of former President Arroyo, after which a report was made and submitted to Justice Secretary de Lima.

Asked on the result of the visit and whether Mrs. Arroyo was really sick, Senator Drilon "eplied that according to the report, fanner President Arroyo was recuperating well from the operations that she underwent.

Since her condition is not a matter of life and death, asked why Mrs. Arroyo was in a !'Ush to leave the country to seek urgent medical treatment abroad, Senator Drilon proposed that the former President be subpoenaed by the Senate to answer that question.

At this juncture, Senate President Em'i!e relinquished the Chair to Senate President Pro Tempore Ejercito Estrada.


At the outset, Senator Sotto expressed support for the Department of Health, particularly the additional funds for PhilHealth. He recalled that during the budget hearing, he asked Secretary ana for a breakdown of an item ofP2.5 billion on Family Health and Responsible Parenting, an increase of PI. 7 billion from the 2011 allocation, which the Secretary subsequently provided. He noted that in the 2012 budget there is an allocation of PI,752,599,700 for

WEDNESDAY. NOVEMBm< 16,2011

senior citizens' vaccines and activities and he asked what vaccines would be administered to senior citizens. Senator Drilon explained that senior citizens aged 60 to 69 years old need pneumococcal and influenza vaccines, as specified in the Senior Citizen's Law.

Asked how much is one anti-pneumonia vaccine, Senator Drilon replied that the prices range from PI,OOO to PI,700, which is good for five years,

Senator Sotto revealed that Senate President Enrile recently got a vaccine shot which cost only P500. Senator Drilon clarified that the amount of PI,700 is for pneumococcal vaccine which currently costs P500 per dose and would increase to P650 next year; and for influenza vaccine which currently costs P350 per dose and would increase to P403 next year. He added that the pneumococcal vaccine is given once every five years, while the influenza vaccine is given once a year.

At this juncture, Senate President Enrile clarified that the influenza vaccine is given yearly and the mix is sometimes changed.

Senator Drilon clarified that since the influenza strain oftenly changes, the vaccine must be changed to adapt to il.

Asked by Senator Enrile if the Institute for Tropical Medicine prepares the influenza vaccine as it does vaccines for certain types of diseases, Senator Drilon replied that the influenza vaccine was being imported.

Upon further queries of Senator Sotto, Senator Drilon clarified that the P 1.8 billion item for "preventable diseases control" is intended for children but does not include dengue vaccine which is yet to be developed. He clarified that the cervical cancer vaccine falls under another item.

As regards the PI97 million for Maternal Newborn, Child Health and Nutrition (MNCHN) Strategy to CHDs and LGUs, asked what the objectives of the item are and whether it includes a provision for family planning, either in cash or in kind, Senator Drilon stated that it is part cash grant to LGUs based on their performance, for instance, in immunizing a certain number of children.

Senator Sotto recalled that he mentioned in his privilege speech last year that several provinces did

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not receive any cash grant but were nevertheless listed by the DOH as recipients. For instance, he bared that according to DOH records, 1I0cos Norte supposedly received P644,525 in 2008; P602,000 in 2009; and P2.4 million in 20 \0. Senator Drilon explained that said funds were made available to 1I0cos Norte but the province did not actually receive them because it failed to sign a Memorandum of Agreement with the DOH. He added that Batangas and Quezon also failed to execute the MOA, hence, no deliveries were made to them.

As to where the funds of the three provinces went, Senator Drilon said that they became unexpended savings which were realigned for training and suppl ies of other provinces.

Senator Drilon informed Senator Sotto that there is a COA report thereon which can be made available to Senator Sotto. Thereupon, Senator Sotto requested to be fum ished with a copy of said report.

On what supplies were bought through the MNCHN grant, Senator Drilon stated that it was used for vitamins, training materials and transportation expenses or maintenance and operating expenses in general.

Noting that one of the objectives of the MNCHN Strategy is to increase the contraceptive prevalence rate, Senator Sotto asked what the current rate was and the programs aimed towards attaining that objective. In response, Senator Drilon said that it was 51 %, and he cited the programs for responsible parenthood such as family planning, maternal and child health, and nutrition.

Senator Sotto noted that under the "leveraging services for priority health programs of family health and responsible parenting" item in 2009, the procurement of MNCHN commodities amounted to P500 million or P300 million but this was cut to P200 million in 20 I 0, at the instance of Senate President Enrile and himself, when they found out that it was supposed to be used to buy condoms and contraceptives.

Asked if the P300 million for MNCHN commodities in the 2012 budget included family planning supplies and what they are, Senator Drilon clarified that the family planning supplies would depend on the choice of the LGUs. He confirmed that if the LGUs so decide, IUDs and condoms can be included.

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At this juncture, Senate President Enrile pointed out that the RH bill lists condoms, IUDs, injectables, etc. as safe, legal and effective family planning supplies or essential medicines.

Senator Sotto noted that a portion of the allocation for family health and responsible parenting is for micronutrient supplementation for women and children, management of childhood illness and newborn screelll ng.

Asked if such programs are in line with the MNCHN Strategy, Senator Drilon replied in the affirmative. As regards the allocation for the supplements and where they would come from, Senator Drilon stated that micronutrient supplementation has an allocation of P245,109,279.

Senator Sotto pointed out that P40,431 million of the allocation to family health and responsible parenting is for capability-building or training on NBS, BEMONC, CEMONC, ENC and micronutrients.

On whether the DOH conducts capability building or training on a regular basis, Senator Drilon affirmed that it does.

Senator Sotto stated that the DOH was implementing the MNCHN Strategy in line with DOH Administrative Order 2008-0029 and that part of it is a provision for Basic and Comprehensive Emergency Obstetric and Newborn Care, i.e., BEMONC and CEMONC, which already exist and are P3lt of the 2012 budget. Senator Drilon stated that the implementation was only up to 50%.

Asked on the allocation to the Health Facilities Enhancement Program, Senator Drilon replied that it is PS billion in 2012, adding that the program seeks to reduce maternal and newborn morbidity and mortality.

On whether the allocation of P4 billion to contraceptives can be added to BEMONC and CEMONC instead, Senator Drilon explained that many pregnancies occur among the poorest of the poor and the program that targets 5.2 million households is for unplanned pregnancies. But hc denied that the program has to do with abortion clinics.

At this juncture, Senator Legarda asked if the DOH program aims to get rid of unplanned pregnancies. Senator Drilon clarified that the program is


on responsible parenthood and responsible parenting to prevent unplanned pregnancies.

Asked by Senator Legarda if the program would require the procurement of equipment or contraceptives like IUDs and abortifacient pills, Senator Drilon replied in the negative. He reiterated that there is no budget for abortions and that he was referring to unplanned pregnancies.

Senator Sotto observed that in the Special Provisions of the budget of the Department of Health, there is an item of PS billion for "Health Facilities Enhancement Program" meant "to upgrade hospitals and health care facilities of the DOH in compliance with the Millenium Development Goal to improve maternal health."

Upon query, Senator Drilon explained that the health facilities refer to existing DOH district hospitals and rural health units with birth capabilities and new birthing homes in far-flung areas. He confirmed that included in the program are pre-pregnancy services, antenatal care, care during delivery and post-natal and post-partum care.

At this point, Senator Sotto enumerated the projects under the "Family Health and Responsible Parenting" program, to wit:

Adolescent Health Manual Family Health Guide Community Health Team

Training Manual Family Health Guide Book

P 500,000 P35,000,000

P31,2S0,000 P37,500,000

On whether family planning education is included in said program, Senator Drilon replied in the affirmative, adding that it also includes birth spacing and responsible parenthood seminars.

Asked how the materials would be distributed, Senator Drilon stated that the program aims to cover the 5.2 million poorest families listed in the National Household Targeting System for Proverty Reduction.

As regards the PI22 million allocation to Women's Health and Safe Motherhood Project II, Senator Drilon explained that the target beneficiary of phase two, which would be in the form of infrastructure projects, are provinces with the highest mortality rate: Sorsogon, Albay, Masbate, Catanduanes and Surigao del Sur.

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Asked how many doctors, midwives and health workers the DOH would hire in 2012 under the Human Resource Development Program that has an allocation ofPI.905 billion, Senator Drilon stated that the Department would hire 17,283 nurses in two batches, the tirst one this year and the next, in 2012; 567 midwives; and 331 physicians. He added that the program includes training and development.

At this juncture, Senator Sotto stated that his assertion that the DOH has an existing reproductive health program had been contirmed by the existence of projects related to it. He asked if the Committee is allocating P7.7 billion for health services which are interrelated with the RH bill. He believed that since the DOH was already implementing an RH program, even without the passage of the RH bill, Filipino women would not be deprived of reproductive health service. In reaction, Senator Drilon stated that 50% of Filipino women belonging to the poorest family would not be covered by the allocation. He explained that 5.2 million households belong to the lowest quintile and another 5.2 million households to the next 20%. He said that these families belong to the category that earns less than P6,000 a month.

On whether there is a bias against the 50%, Senator Drilon stated that it is the lack of funds that dictate services would be limited to only 50%.

Senator Sotto questioned the ability of the DOH to cater to the remaining 50% even if Congress enacted the RH bill.

On the same point, Senator Legarda asked if only 50% of the poorest of the poor Filipino women would be served with the P7.7 billion budget and if the DOH was pushing for the RH bill to serve the other 50%. Senator Drilon insisted that the matter be taken up when consideration of the RH bill resumes, not during the budgt deliberations.

However, Senator Legarda questioned the need to pass a measure whose resources can be utilized to fund the same DOH program to wholly serve the poorest of the poor Filipino women.

For his part, Senator Sotto suggested that add itional funds be given to the Department for the program instead of passing the RH measure.

Senator Legarda observed that with a P7. 7 bill ion budget, the DOH can serve only 50% of

601

the poorest women while the other 50% remain unserved. However, she said that there is an argument that passing the RH bill would enable the DOH to serve the other 50%. If the 2012 budget is inadequate, she asked why Congress should pass the RH bill if it would just be an unfunded law.

Responding thereto, Senator Solto stated that the best argument against the RH bill would be the DOH which was already implementing an RH program. Hc supposed that the only thing that the RH bill wishes to do is to prescribe the use of contraceptives. He said that Congress does not oppose the reproductive health program of the DOH but it would nitpick on the funds to be spent for contraceptives and condoms.

Asked if the 2012 DOH budget provides for infant mortality rate and maternal health, Senator Drilon replied in the affirmative.

On whether the 2012 budget would allow the Philippines to meet the Millennium Development Goals by 2015, Senator Drilon stated that it would be extremely difficult to do.

Proceeding to the budget of the Commission on Population (POPCOM), Senator Sotto observed that from P290 million in 20 II, it increased to P291 million in 2012.

As regards the item on Coordination of the Population Policy and Programs that has a P220 million allocation, Senator Drilon replied that the amount is really used for maintenance and operating expenses, advocacy, printing and information dissemination in pursuing a project, like responsible parenthood, at the barangay level.

Asked with whom the POPCOM coordinates, Senator Drilon explained that there are national, provincial and municipal activities that the POPCOM coordinates with the private sector.

Asked what POPCOM has been doing since its creation in 1971 and the impact of its activities on popUlation control, Senator Drilon stated that the POPCOM is basically an advocacy body and that it would be difficult to measure the results of these advocacies. He added that the POPCOM has conducted seminars, printed and disseminated family planning materials, among others.

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Senator Sotto asked on the difference between what is being done by the DOH and the POPCOM with regard to population programs as he pointed out that the DOH has PI48389 million allocated for grants, subsidies and contributions in support thereof, Noting that there might be redundancy in what the DOH and the POPCOM are doing, he further asked to whom the grants, subsidies and contributions are given, In response, Senator Drilon said that the POPCOM operates through the LGUs to which it gives grants for population-related activities,

To the observation that there seems to be a parallelism between the activities of the POPCOM and the DOH with regard to population activities, Senator Drilon said that since the DOH cannot cover all areas it would want to cover, the POPCOM is doing complementary activities and supplemental services, especially support to the private sector,

Senator Sotto pointed out another parallel ism as he adverted to line I, page 565 which states that: "The Population Commission provides for formulation and development of long range and annual population family planning plans and programs and coordination of the implementation of the national popUlation policies" with an allocation of P20 million, He noted that the DOH also has this item,

At this juncture, the Senate President Pro Tempore relinquished the Chair to Senator Legarda,

Asked on the budget of the National Nutrition Council, Senator Drilon stated that it is P321,892,000 for 2012,

Senator Sotto noted that pursuant to Administrative Order No, 2006-0012 (Revised Implementing Rules and Regulation of Executive Order No, 51, otherwise known as the Milk Code), advertisement or promotion of infant formula breast milk substitute and other related products are prohibited because they tend to exaggerate or leave impressions that undermine breastmilk and breastfeeding, However, he said that while it is ideal for mothers to breastfeed their babies there are instances when she is unable to do so, for instance, when she is too weak after giving bilth or when she cannot produce milk at aiL However, he disclosed that despite these conditions, some hospitals still do not allow mothers to use formula milk, He asked if the inter-agency committee (lAC) that was created by EO 5 I has addressed the issue of formula


milk advertisements by issuing the guidelines as it is empowered to regulate advertisements, Senator Drilon stated that there are guidelines and, basically, the milk formula advertisements are not allowed pursuant to the provisions of the Milk Code, He said that the lAC was just implementing the policy set by Congress in the Code,

Senator Sotto noted that a Supreme Court decision declared that the absolute prohibition on promoting formula milk is ultra vires of the DOH, therefore making the AO null and void, Senator Drilon clarified that the Supreme Court decision did not invalidate the whole law but only three provisions, the most significant of which is the voiding of the administrative sanctions,



It was 7,'54 p,m,


At 7:56 p,m" the session was resumed,

Upon resumption, Senator Sotto said that he has been enlightened by Senator Drilon on the issue,

On the matter of the guidelines issued by the lAC of the FDA, Senator Drilon said that the Committee would furnish Senator Sotto with a copy thereof,

Senator Sotto said that there are some products, especially contraceptives like condoms, that are endorsed by some movie stars and the public is not properly informed of their complete side effects,

INTERPELLATION OF SENATOR DEFENSOR SANTIAGO

Senator Sotto informed the Body that Senator Defensor Santiago has submitted a list of questions on the budget of the Department of Health (DOH), which he read into the record, to wit:

The country is under pressure to attain the MDGs by 2015, The eight MDG goals: I, Eradicate extreme poverty and hunger; 2, Achieve universal primary education; 3, Promote gender

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WEDNIOSDAY. NOVEMBER 16.2011

equality and empower women; 4. Reduce child mortality; 5. Improve matel'11al health; 6. Combat HIY! AIDS, malaria and other diseases; 7. Ensure environmental sustainability; and 8. Develop a global partnership for developmcnt.

At least four of those goals are directly related to health: poverty, child mortality, maternal health and HIY/AIDS and other dreaded diseases. However, budgetary support continues to be inadequate in spite of the enormity of health problems of the country.

Both the Department of Health and the Alternative Budget Initiative of Social Watch agree that the country's health spending is way below global standards. The DOH states that World Health Organization pegs the standard health expenditure at 5% of a country's GOP. The Philippines' health spending has never gone beyond 3.9% of GOP. From 1995 to 2008, health expenditure on the average was 3.52 I % of GOP, lower than that ofYietnam at 5.4%, China at 4.6%, India at 4.4%, Japan at 7.7% and the US at 13.4%.

The FY 2012 Gene"al Appropriations Bill (GAB) recommended P42,279,963,000 for the Department of Health, compared to P32 billion for FY 20 II. The Senate Committee on Finance has reduced the GAB recommendation to P42,204,963,000 which means a cut ofP75 million.

The net addition ofPIO billion compared to the 20 II budget is miniscule compared to the huge increases in social welfare, education and public works.

/. Of the eight MDG goals, the goals on nutrition and reduction of maternal mortality may not be attained. This assessment is based on monitoring reports of government agencies collated by NEDA.

Quest;o,,: With inadequate increase in the DOH budget, can the MOG goals on health which the Philippines committed to the United Nations be attained?

Senator Legarda inte,jected that she asked the same question earlier, to which Senator Drilon answered that it would be almost impossible that the MDG goals on infant mortality and maternal health would be reachedby 20 I 5.

2 Health authorities rcport that universal health care financing will cost at least P360 billion for the next three years. The DOH has originally proposed that its budget be increased to P80 billion to include part of the costs of universal health care financing.

Questioll: The Senate Committee on Finance has recommended only one-half of what is necessary to assure basic health services for the Filipino people. What steps are being undertaken to assure that national funding can be generated to cover the huge tinancial gap?

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Senator Drilon replied that this is a question of availability of funds. Since the funding is inadequate, he said that the DOH has come up with some innovative ideas like the public/private sector partnership in order to improve the hospital facilities. However, he acknowledged that more funds would be needed; thus, new taxes may be imposed, the proceeds of which would be specifically earmarked for the health sector. He noted that a lot of public funds are spent to address ailments arising from smoking and liquor, therefore, as a matter of policy, there should be enough rationale and basis to increase the sin taxes, and such increase, he said, can be earmarked for the health sector to address the inadequacies in the budget.

3. For several decades now, the Department of Finance under different administrations has been recommending increasing the rates of so-called sin taxes. These are the taxes which are imposed on cigars, cigarettes, wine and alcoholic drinks. The proceeds from the increases in these taxes can be used to augment the budget for health.

The objective here is twofold: discourage the consumption of tobacco and alcohol which are considered dangerous to health, and to generate funds to augment deficiencies in the health budget.

Questioll: Is the Senate Committee on Finance prepared to SUppOlt the increase in so-called ""sin taxes" to raise more revenue for health?

Senator Drilon said the he had earl ier expressed support for the increase of sin taxes, the proceeds of which would be earmarked for the health sector. He pointed out that smoking alone is a burden to the DOH since an estimated P60 billion in public funds is spent annually to address cigarette- and cigar-related ailments.

4. As pointed out earlier, the government itself has admitted that the goal of reducing maternal mortality rate is at risk. At the same time, other health problems are escalating due to factors like climate change, inadequate health facilities, lack of trained health personnel, etc.

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Questiol/: Since the Committee members are unable to increase the budget of the Department of Health significantly, are the individual members of the Committee prepared to support the passage of the Reproductive Health bill as a declaration of commitment to enhance the health of mothers even with inadequate budget support?

Senator Sotto, an advocate against the RH bill, answered in the negative.

The Chair said that Senator Sotto has told him that most of the reproductive health issues are funded in the present DOH budget including maternal health care concerns.

Instead of increasing the small health budget rccommended by the GAB, the Senate Finance Committee has further decreased it by P75 million.

Questiol/: What is the justification for the Committces action? What were the budget items specifically reduced?

Senator Drilon clarified that the DOH budget was not reduced, as he explained that the Committee simply rejected the House amendment because of disagreement 011 the funding sow'ce of this P75 million that the House inserted in the DOH budget, which involves the slashing offunds from the irrigation budget of the DA. He said that if there was an acceptable source for the additional P75 million, the Committee would have no problem in adopting the amendment.

To further clarify, Senator Drilon stated that the House increased the National Expenditure Program or the President's budget by P200 million which was, however, sourced out of the funds allocated for irrigation projects of the DA, and he believed that such a move would be inconsistent with the plan of the DA to achieve rice self-sufficiency by 2013. He said that, in effect, the original allocation for the DOH under the President's budget or the National Expenditure Program was restored. He maintained that it was not a cut made in pursuit of a policy but simply a cut made because of the disagreeable source of fund.

SUBMISSION OF THE BUDGETS OF THE DEPARTMENT OF HEALTH AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection,


the budgets of the Department of Health and its attached agencies, namely, the Local Water Utilities Administration, Lung Center of the Philippines, National Kidney and Transplant Institute, Philippine Children's Medical Center, Philippine Institute for Traditional Authority of Health Care, Commission on Population, and National Nutrition Council, were deemed submitted for the Body's consideration.



It was 8: 13 p. m.


At 8:22 p.m., the session was resumed with Senator Legarda presiding.

DEPARTMENT OF JUSTICE (Resumption)

Upon resumption, the Body resumed consideration of the budget of the Department of Justice.

Thereupon, the Chair recognized Senator Drilon, Chair of the Committee on Finance, and Senator Sotto to present the questions prepared by Senator Defensor Santiago.

QUESTIONS OF SENATOR DEFENSOR SANTIAGO

On behalf of Senator Defensor Santiago, Senator Sotto presented the following questions and Senator Drilon provided his answers, accordingly:

I. The advances to officers and employees account of P85,nO,924.09 which included advances to the Witness Protection, Security and Benefit Program ofP74,800,290.52 remain unsettled at year-end contrary to existing auditing rules and regulations thereby resulting to the nonrecording of the related expense accounts for travels, supplies, and others. What has the sponsor done to remedy the situation?

Senator Drilon said that out of the unliquidated cash advances in the amount of P85.7 million, only 5.5% or P4, 731,481.66 has remained unliquidated as of September 30, 2011, P2.952 million of which


represents cash advances under the Witness Protection Program. He said that the appropriate documents have been submitted to the Commission on Audit which has yet to issue a credit advice. As regards the unliquidated cash advances for local travel amounting to 1'948,382, he said that this has been reduced to 1'66,694, the appropriate documents for which have also been submitted to the COA auditor for issuance of credit advice.

2. Under Executive Order No. 292, Title 3, Chapter 2, Section 6, the Secretary of the Department of Justice shall be assisted by three undersecretaries. However, in 2007, two undersecretaries were appointed. Do we still have 5 undersecretaries? Or are you now complying with the mandate of EO 292?

Senatol' Drilon said that there are only three undersecretaries in the Department, as required by law.

3. We always hear the DOJ filing charges against public personalities. To date, have we ever convicted anyone under your watch?

Senator Drilon pointed out that the conviction Or acquittal would be dependent on the courts. He affirmed that a number of cases have been filed against prominent personalities and are pending before the courts particularly those involved in violating the Internal Revenue Code.

4. What is the status of Mr. Nori Unas? They presented him before the media as their star witness in poll fraud charges against the members of the previous administration. Has he been admitted in the Witness Protection Program being the Provincial Administrator of Maguindanao from 200 I to 2009. When Ampatuan Sr. was Governor, Unas has been described as the Ampatuan family's underboss and conciliary rolled into one. Do they really consider him a credible witness considering his alleged role in the Maguindanao massacre?

Senator Drilon said that Unas has been accepted provisionally into the Witness Protection Program and the evaluation of his testimony is a continuing process.

5. What is the status of the murder of Palawan journalist and environmentalist Dr. Gerry Ortega? On June 8, 20 II, a panel of prosecutors ruled that there was no probable cause to indict former Palawan Governor Joel Reyes, his brother Mayor Mario Reyes of Coron,

Palawan and former Marinduque Governor Jose Antonio Carreon. Indicted was a certain Edrad who gave testimony that he received money from Reyes for the hit job, another suspect identified as Marlon Recamata and three others who were found by the panel to have taken part in the plot to ki II Ortega. There are rumors that Mr. Reyes is a relative by affinity of a Malacanang official.

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Senator Drilon stated that a reinvestigation is ongoing and would be decided accordingly once the case is submitted tor resolution. He said that Secretary de Lima has no information whether or not Mr. Reyes is related to somebody in Malacanang.

6. On the Parole Information Administration: The funds transferred to NCC which is recorded in the agency books as due ITom NGAs amounting to PI 17,296,412.37 remained unliquidated for several years leading the 2009 COA report to describe it as of doubtful validity. What is the status of this account? Have it made the necessary adjustments to fairly present the account due from NGAs?



It was 8:31 p.m.



Upon resumption, Senator Drilon said that upon the directive of the Office of the President, the funds were transferred from the Parole Information Administration to the National Computer Center pursuant to a policy that all the funds related to computerization should be consolidated with the National Computer Center. He revealed, however, that the advances have not been liquidated, notwithstanding etTorts on the part of the PIA.

7. The same COA report found out that management realigned and transferred funds ITom the central office to its regional offices and vice versa out of the savings from Personal Services to the Maintenance and Other Operating Expenses. This is contrary to Section 69 of Republic Act 9524 which explicitly stated the direct release of funds to the regional offices from the DBM. What has the agency done to address this?

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Senator Drilon replied that accordingly, the funds were remitted by the DBM to the regional offices, He said that at the end of the fiscal period, the regional offices would submit a report to the Office of the Secretary of Justice which would, in turn, transmit the consolidated report of all the regions to the Department of Budget and Management He added that whatever unexpended balance there is would be returned to the National Treasury,

8, On the Bureau of Immigration: Deliveries costing Pili ,299,759.082 by the Procurement Service of DBM consisting of IT equipment and software were not recorded in the books, thus understating the IT equipment and software account and overstating the due from NGA's account. The remaining balance ofP41,214A08.76 continues to be undelivered for more than two years. Have the records of its office been reconciled with the records of the PS-DBM to reach the correct receivable balance?

Senator Drilon said that reconciliation has already been done on BIR's accounts, P24 million of which is a balance consisting of undelivered equipment

9. On the Public Attorney's Office: In the 20 I 0 eOA audit report, the balances of various Property, Planned and Equipment (PPE) accounts totaling P 168,074,625.71 did not reconcile with the property records of PI52,795,367.89, or a difference of PI 5,279;2.57.82 due to recording of undelivered PPE amounting to P I 1,545,805.39 and unaccounted PPE ofP3,733,452.43. Has the relevant department been ordered to regularly update and reconcile the PPE records and do the necessary adjustments, if necessary?

Senator Drilon stated that reconciliation is ongoing and (here is assurance that the account would be placed in order in five weeks' time.



[/ was 8:38 p.m.





At the onset, Senator Lacson noted that letter (d) of locally-funded projects under the item "Construction and/or completion of the Manila Hall of Justice" in the amount of P400 million in the 2012 NEP was amended as follows by House Bill No. 5023 (House version): "Construction and/or repair, rehabilitation of the halls of justice nationwide (JUSIP)" with an allocation of P200 million. He also noted that letter ( e) was inserted in the House version which reads "Construction and/or repair, rehabilitation of the DOJ building, Padre Faura, Manila" with an allocation of P1 00 million. He said that the Senate Committee on Finance disagreed to these House amendments and instead it reduced to zero the original proposal under the 2012 NEP.

Asked why said items were deleted and whether or not the construction of the halls of justice nationwide or the Manila Hall of Justice was not among the priorities of the Administration, Senator Drilon confirmed that there was, indeed, an appropriation of P400 million in the NEP for the construction of the Manila Hall of Justice at the old site of the Jai Alai building. He explained that said item was deleted because subsequent to the NEP, the Supreme COUlt officially informed in writing the Executive branch and the Committee of its intention to rehabilitate the old GSIS building. He said that the Committee did not agree to the House amendments that provided for separate allocations of PI 00 million for the Padre Faura building and another P200 million for the JUSIP; instead, the Committee provided that the P2 billion savings of the Supreme Court from unfilled positions be moved from the Miscellaneous Benefit Personal Fund to the Judiciary so that it could be the source of funding for the hall of justice in Manila, He said that the special provision so provides that: "Unutilized funds from unfilled positions may be used to fund the renovation, repair of the old GSIS building in Arroceros Street, Manila to a Manila Hall of Justice and the repair and maintenance of other Halls of Justice." He pointed out that there is a budgetary authority for the use of the savings although the amount for the construction of the Manila Hall of Justice cannot be determined at present in view of the intention of the Supreme Court to renovate instead the old GSIS building.

Senator Lacson said he was surprised that the P400 million allocation for the construction of the building of the Manila Hall of Justice was deleted in

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the Senate version because he knew for a fact that one of the factors that contribute to the slow dispensation of justice is the lack of courtrooms, Senator Drilon recalled that when he reassumed the position of justice secretary in 1992, a bidding was held for the construction of the Manila Hall of Justice which was won by a joint venture but the DOJ waS restrained trom doing so by no less than the judge of the RTC of Manila upon the petition of the losing bidder. He lamented that up to now, the DOJ was still trying to build the Manila Hall of Justice.

Asked why the Committee cut P33 million from the budget of the DOJ - P5 million from the Office of the Cybercrime and P28 million from the National Justice Information System (NJIS), Senator Drilon explained that the NJIS was already being undertaken by the NBI and there is no law creating the Office of the Cybercrime,

Asked whether the P28 million allocation for the NJIS was transferred to the NBI, Senator Drilon replied that there was no such request from the NBI. He said that the NJIS is a new center to be established in the DOJ but the Committee deemed it to be a duplication of the work being done by the NBI that has its own NJIS allocation of P20 million in the 2012 NEr.

Senator Lacson said that he raised the question because in h is budget message, the President mentioned that the facilities and equipment of the NBI crime laboratories and forensic investigation would be modernized and upgraded. Senator Drilon explained that the P20 million NJIS budget of the NBI was not cut but the P28 million under the Office of the Secretary of Justice for the same purpose,

Asked where the P400 million for the Manila l'lall of Justice and the P33 million from the NJIS and Otllce of the Cybercrime would go, Senator Drilon said that the Comm ittee used the amount as a source of allocation for some budgetary amendments - for instance, PI million was allocated to the Governance Commission for Government-Owned and Controlled Corporation wh ich had no budget and part of the amount was allocated for the purchase of equipment of various govef'lllllent hospitals.

Senator Lacson pointed out that in the NEP, the budget proposals for the following agencies are as follows:

PNP AFP BID NBI

P73, 181 ,682; P95,985,516; P461 ,997,000; and P842,559,OOO

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He appealed to the Committee that part of the P433 million taken from the DOJ budget be reallocated to the NBI and the BID, arguing that they are also law enforcement agencies albeit with less personnel than the AFP and the PNP, In response, Senator Drilon said that the Committee would be open to amendments at the proper time, adding that P20 million was, in fact, allocated to the NBI for equipment purchase in recognition of its need to augment its assets and to help it become more effyctive as a law enforcement agency.

Senator Lacson said that it was his understanding that there is a pending bill for the modernization of the NBI but since it would take time to enact it into law, he would introduce amendments to augment the budgets of the NBI and the BID at the proper time.

At this juncture, Senator Legarda relinquished the Chair to Senate President Pro Tempore Ejercito Estrada.


Senator Sotto manifested that Senator Trillanes would no longer interpellate on the DO) budget.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF JUSTICE AND ITS ATTACHED AGENCIES

Upon motion of Senator Sotto, there being no objection, the budget of the Department of Justice and its attached agencies, namely, the Office of the Secretary, Bureau of Corrections, Bureau oflmmigration, Land Registration Authority, National Bureau of Investigation, Office of the Government Corporate Counsel, Office of the Solicitor General, Parole and Probation Administration, Presidential Commission on Good Government, and the Public Attorney's Office, was deemed submitted for the Body's consideration.



It was 8:55 p.m.

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At 9:04 p.m., the session was resumed with Senator Legarda presiding.

DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

Upon resumption, Senator Drilon presented the budget of the Department of the Interior and Local Government.

Preliminarily, Senator Drilon stated that the budget of the DILG, including the PNP, is P94,SI2,741,OOO in the NEP and the GAB-House version but the Committee reduced the amount by PI.7 billion. Of that amount, he explained, P7S0 million was transferred to the Local Water Utilities Administration for third-level water projects since the GAB-House version and the NEP already allocated PI.S billion for tlrst- and second-level water system. Further, he said that the Committee provided additional funds for the Pamana Fund of the DILG and the Pamana Funds under the Office of the Presidential Adviser on the Peace Process (OPAPP) were moved to other operating agencies because OPAPP is not an operating nor an implementing agency. He explained that 76.7% or P73.8 billion of the DILG budget would go the Philippine National Police (PNP).


At the onset, Senator Lacson read special Provision No. I of the DILG budget, to wit:

U,<e of II/come. In addition to the amounts appropriated herein, fees and charges authorized to be collected by the Philippine National Police by virtue of its absorption of the then Philippine Constabulary Integrated National Police of the PC/INP and AFP units shall be classified as trust receipts to augment its appropriations. Provided, that the PNP shall submit either in printed or by way of electronic document to the DBM, the House Committee on Appropriations and the Senate Committee on Finance separate quarterly reports on its income and status of the trust receipts. Failure to submit said requirement shall render any disbursements from the trust receipts void and shall subject the erring officials and employees to disciplinary action in accordance with Section 43; Chapter 5 and Section 80, Chapter 6, Book 6 of E.O. No. 292 and to appropriate criminal action under existing penal laws.


Senator Lacson asked if the amounts collected by the PN P from license fees, charges, etc. were being disbursed following said procedure.



It was 9:10 p.m.



In reply to the query, Senator Drilon stated that the collection varied from P800 million to P900 million in the previous years, but for this year, it is estimated to be about P800 million. He gave assurance though that the Committee would submit a more accurate data in the next day's session.

As to how the PNP disburses the amount collected as trust receipts, Senator Drilon explained that the funds are, in effect, supplemental allocations to the PNP and are being spent in accordance with a work program approved by the Napolcom and the DBM, like scholarships.

On whether the PNP is the sole beneficiary of the trust receipts, Senator Drilon replied that 40% of the fund goes to the PNP, 20% to the Bureau of Fire Protection, 10% to the Bureau of Jail Management and Penology, and 30% to the Armed Forces of the Philippines. He added that the scholarship funds are sourced from firearm fees.

Asked if the Napolcom had arrogated unto itself the 40% share of the PNP, Senator Drilon replied that the funds are being managed by the Napolcom but the scholars are the legitimate children of members of the PNP.

As to why Napolcom manages the fund which come from trust receipts collected by the PNP, Senator Drilon surmised that it was the consequence of the constitutional provision that the PNP shall be under the supervision and control of the Napolcom.



It was 9:18 p.m.

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WEDNESDAY. NOYICMBER 16.2011



Upon resumption, Senator Drilon explained that the disbursement of the trust fund is covered by Republic Act No. 6963 that established the scholarship program for the legitimate children of deceased or permanently incapacitated members of the PNP at the elementary, high school, vocational and college levels. He said that under the law, the scholarship benefit is limited to the payment of tuition and miscellaneous fees payable to the school which shall be remitted by the Napolcom to the school upon presentation of the required documents such as the approved enrolment or registration form.

On whether R.A. 6963 specifically identified trust receipts as the funding source for the scholarship program, Senator Drilon replied that while he has not examined the law itselt; the information and notes that he had received from the DILG showed that the scholarship fund is sourced from fees collected by the PNP.

Senator Lacson recalled that during his term as PNP chief, the PNP, as the sole manager of the fund, distributed shares to agencies like the AFP and BJMP, and the Napolcom never benetitted from the fund. Senator Drilon said that while the matter was not reviewed during the committee hearings, the DILG has given assurance that it would review the procedure and submit a report to his committee and to Senator Lacson within the week.

Asked on the number of scholarship beneticiaries among the members of the PNP, Senator Drilon replied that 1,079 scholarships wOlth P12.5 millionor an average of P II ,500/scholar - were granted in 2010.

Senator Lacson noted that before 2009, the payment for licenses, fees, permits and school IDs for security guards was covered by an order of payment addressed to the Land Bank; however, he learned that under the new scheme, the Land Bank receives P200 while P 150 is paid to the contractor, Nanjing Industrial Tools and Equipment Company without the accompanying order of payment. He believed that the Land Bank ought to receive all the proceeds since it was improper for the contractor to get a share of the collection without an order of payment.

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It was 9:25 p.m.



Senator Drilol1 informed the Body that during the break, Senator Lacson showed the DILG and PNP officials some contracts which were entered into by the previous administration and which violated certain government auditing rules. He said that DILG Secretary Robredo has given assurance that the documents would be reviewed and he would take appropriate action if these are found to be inconsistent with auditing rules.

Senator Lacson said that P65,60 I ,956,000 of the P674.7 billion allocated for all departments and agencies in 20 I 0 was appropriated for the DILG. Moreover, he said that the 20 I 0 GAA had a Special Purpose Fund ofP629.6 billion and P355.1 billion for automatic appropriations.

As regards the huge amount that was allocated to the D1LG from the Special Purpose Fund (SPF) and the automatic appropriation, Senator Drilon explained that in 2010, certain funds, particularly allocations to the LGU such as the Barangay Ofticial Death Benefits Fund (P27.120 million), Intemational Commitment Fund (P9.125 million), Miscellaneous Personnel Benefit Fund (P328.759 million), PDAF (P4.750 million) and Retirement and Gratuity Fund (PI I\.9 million), were transferred to the DILG.

For his palt, Senator Lacson noted that the DILG received funds from the following:

• P735 million - from Contingency Fund (P800 million) ;

• PIO billion - from MPBF (P74.1 billion);

• P4.7 million - from PDAF (PI0.8 billion); and

• P 18.4 billion - from Pension and Gratuity Fund (P79.9 billion)

Relative thereto, asked how the DILG used the monies it received from the Contingency Fund, Senator Drilon gave assurance that Senator Lacson would be given a report on the matter before the end of the week.

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Senator Lacson pointed out that based on the 20 I 0 GAA and the 2012 NEP, the total obligations of the DlLG increased by more than 30% or P99,S billion, Of this amount, he noted that the depaIiment had an unused appropriation of P4263 billion, unreleased appropriation of 1,9 billion, and unobligated appropriation fo P2,3 billion, Senator Drilon I'eplied that this was possibly due to the fact that other items in the budget were transferred to the PNP, He said that his Committee would provide Senator Lacson with a detailed repOli on the actual funds that had been trails felTed to the DILG, He explained that the Executive branch used such fund transfers to augment or adjust the budgets of the different agencies when exigencies would require such action,

Senator Lacson commented that from the point of view of sound budget management the DlLG has failed to properly manage its budget considering that it received much appropriation but failed to obligate certain amounts as evidenced by the P250 million it had in savings, and yet it has Pl02 million in oversavings, Senator Drilon said that budget management ultimately depends on the leadership of the agency and the approving authorities, However, he assured Senator Lacson that unlike its predecessor, the present leadership has greater respect for the budget process. Senator Lacson recalled that the previous DlLG secretary was able to haggle tor the transfer of funds from other items in the budget due to his close association to the former President.

Senator Lacson hoped the Senate would take a closer look at its oversight functions, especially in the next budget hearing.

On another matter, Senator Lacson adverted to RA 6975, on the power of the LGUs over the PNP un its. As a matter of practice, he noted that the mayors pick their chiefs of police from the three names submitted by the PNP while governors choose from among five nominees of the PNP.

Asked on the role of the Napolcom in the designation of such police officials, Senator Drilon replied that the list of nominees generated by the Chief PNP is submitted to the Napolcom for confirmation. He added that the legal basis for the procedure is the Constitution which mandates that there shall be a PNP, national in scope and civilian character, under the supervision of the Napolcom.

Senator Lacson argued that the procedure is tantamount to micromanaging. Besides, he pointed


out that there is a Napolcom circular saying that it shall review the nominees in case of disagreements or conflicts. Senator Drilon assumed that it was the 200 I circular as he gave assurance that the Napolcom exercises its powers pursuant to Section 14 of the PNP law which vests it with administrative control over the PNP.

But, Senator Lacson noted that based on the circular, the Napo1com will only come in in case of conflict or disagreement between the LGUs and the PNP as regards the nominees. Senator Drilon admitted that the DlLG Secretary was not aware of the circular, stating that the present procedure is that nominees are submitted to the Napo1com for confirmation. As regards the legal basis for the action, Senator Drilon cited Section 14 (Powers and Functions of the Commission) of the PNP Law which states, "a) Exercise administrative control over the Philippine National Police."

INTERPELLATION OF SENATOR HONASAN

Primarily, Senator Honasan said that he would focus his queries on the regular reporting system of different agencies under the DlLG.

Senator Honasan observed that the procurement program of the PNP recently came under scrutiny when issues were raised regarding the purchase of helicopters and rubber boats, among others. Nonetheless, he lauded the PNP for submitting to the Committee on Public Order and Dangerous Drugs its initial proposed 2013-1016 procurement list under the capability enhancement program, which was currently under deliberation. He opined that the proposal should be part of an expression of capability reflected in an approved table of organization and equipment because the intended equipment must address a long-term objective. He added that a longterm procurement plan would insulate the procurement process from unnecessary external influences. He requested that after the budget deliberations, the proposal be included in the regular reporting system of the PNP under the DlLG. Senator Drilon acknowledged the suggestion and assured that it would be made part of the agenda of the Committee in the exercise of its oversight function.

As regards the issue on firearms, Senator Honasan stated that preparatory to the reporting out of the firearms regulation bill, the PNP reported that 99% of crimes are committed with unlicensed firearms.


He recalled that during the hearing on October 11, 20 II, he suggested that the Committee study the feasibility of implementing, free of charge, a registration progmm to compliment an amnesty proposal. He revealed that the PN P estimated that about onemillion unregistered firearms were circulating as of August 31,20 II, while the Chief of the PNP Firearms and Explosives Division agreed that the free registration of unlicensed firearms would motivate people to register their firearms. For the record, he asked the PNP for an update on the results of the study. Senator Drilon gave assurance that the proposal would be studied by the PNP, taking all consideration into account and regular reports would be submitted to the Comm ittee.

On another matter, Senator Honasan stated that the Bureau of Fire Protection (BFP) is authorized to collect Fire Code fces as provided in Section 13 of RA No. 9514 (Revised Fire Code of the Philippines). As part of the reporting system, he asked the BFP to submit a matrix of the Fire Code fees collected and their utilization since the effectivity of the law in December 2008; the status and the impact of the fund utilization on the modernization of the BFP, its acquisition and improvement of facilities, fire trucks, fire fighting emergency and rescue equipment Senator Drilon replied that the data requested are intact as he assured Senator Honasan that the same would be made available to him within the next seven days.


At this juncture, Senator Sotto read into the record the following questions of Senator Defensor Santiago on House Bill No. 5023.

Que,~liol1 No. I: According to several news reports, there is a deficit of firetighters in the country. What steps have its agency taken to improve the recruitment rate of firefighters?

The 2012 GAB allocates a budget for the hiring of 500 additional Fire Officers I.

Que.'tion No.2: In the 2009 eOA Report, it was alleged that the construction of the national headquarters' building has remained incomplete due to a defaulting contractor. Has the building been completed already? Were they able to coordinate with the DPWH on the disposition of the contract on the possible recoverable amount f1'om the defaulting contractor?

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Senator Drilon stated that the building has been completed and the BFP has transferred (0 it

Questioll No.3: The 2009 eOA Report also claimed that a balance of PI 9,874,378.02 due from nongovernment agencies includes an advance of P17,OS2,374.S9 to the Department of Budget and Management Procurement Services for the procurement of firefighting equipment and supplies which have remained undelivered in 2009. Have these firefighting equipment and supplies been delivered already?

Senator Dri Ion revealed that some of the equipment were delivered already but were reconciled to come up with the exact figures as to how much should be returned to the National Treasury. He stated that those funds were transferred to the DBM under the Procurement Law, thus, there is a need to reconcile the deliveries and whatever balance will be used for additional equipment or remitted to the Na(ional Treasury.

Questioll No.4: In the 2009 GAA, P2.1 million was allocated under the locally-funded projects for the construction of police stations. The same amount was allocated in the 20 II budget How much of the P2.1 billion appropriation has been released. In which areas are the police stations newly constructed? In which areas will the 2012 proposed appropriations be constructed and does the Sponsor have an estimate total requirement for police stations that would need new construction for the next five years?

Senator Drilon clarified that the P2.1 billion allocation was for capability enhancement; P2 billion for firearms, transportation and communication equipment; PIOO million for the construction of police stations, from which 19 police stations would be built

To a related que,y, Senator Drilon said that none of the P2.1 billion has been released but a a request for the release of PL8 billion was pending before the OBM. He then cited the areas where new police stations would be built, to wit: Natividad, Pangasinan; Gonzaga, Cagayan; Lukban, Quezon; Calintaan, Mindoro Occidental; San Andres, Catanduanes; San Jose de Buenavista, Antique; Oimiao, Bohol; Pinabacdao, Samar; Tungawan, Zamboanga Sibugay; Cagayan de Oro City; Pantukan, Compostela Valley; T'boli, South Cotabato; Jabonga, Agusan del Norte; Dumalondong, Lanao del Sur and Bontoc, Mt Province. He stated that there are 15 locations and 13 were being bidded out; the T'boli station in South Cotabato was 70%

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complete as of July 4, 20 II; the Bontoc station in Mt Province was 30% complete as of June 20 II. He added that in 2012, 19 police stations would be built. He added that the total cost of 15 police stations is PIOO million, and 13 out of the IS stations are already in the bidding process.

Asked how many police stations are proposed to be constructed for 2012, Senator Drilon answered that there are 19 police stations, He added that more than 700 pol ice stations would be needed for the next five years,

As regards the Philippine Public Safety College, Senator Sotto observed that P21 ,200,000 is allocated to the education and training program under the Colleges Capital Outlay in the 2012 GAB which is more than PI3 million or 136% increase from the P8,980,000 budget in 20 I L Senator Drilon explained that there is a capital outlay of P21.2 million for the construction of a two-storey dormitory building and two-storey 6-unit classroom and P2.5 million for the purchase of a mini bus. He also informed the Body that there has been no capital outlay in the previous year.


The Chair stated that Section IS(b) of the Climate Change Act designates the DILG, along with the Local Government Academy, to facilitate training programs for LGUs on climate change adaptation. It then asked if the DILG has complied with the provision on capacity building and adaptation, Senator Drilon replied that it is being done in 27 provinces for the current year.

Thereafter, the Chair requested that it be furnished with a copy of the curriculum of the Local Government Academy and the DILG and an update on the status of capacity building programs.

SUBMISSION OF THE BUDGETS OF THE DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT AND ITS ATTACHED AGENCIES

Upon motion of Senator Sotto, there being no objection, the budgets of the Department of the Interior and Local Government and its attached agencies, namely, the Bureau of Fire Protection, Bureau of Jail Management and Penology, Local Government Academy, National Police Commission,

WEDNESDAY & THURSDAY, NOVEMBER 16 & 17,2011

Philippine National Police, and Philippine Public Safety College, were deemed submitted for the Body's consideration,




Upon motion of Senator Sotto, the Chair declared the session suspended until ten o'clock in the morning of the following day.

It was 10:05 p.m.


At 10: 15 a.m., Thursday, November 17, 20 II, the session was resumed with Senate President Enrile presiding.


(Continuation)

Upon motion of Senator Sotto, there being no objection, the Body resumed consideration, on Second Reading, of House Bill No, 5023 (Committee Report No. 79), entitled

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND TWEL VE, AND FOR OTHER PURPOSES.

Senator Sotto stated that the parliamentary status was still the period of interpellations.

Thereupon, the Chair recognized Senator Drilon, Sponsor of the measure.

DEPARTMENT OF AGRICULTURE

Senator Drilon presented the budget of the Department of Agriculture.

THURSDAY. NOVEMBER 17.2011

REMARKS OF SENATOR DRILON

Senator Dri Ion stated that the developing experience of cmerging Asian economies shows a strong link between agricultural growth and overall economic performance. The rapid growth in the agriculture of a country, he said, induces rural nonfarm growth that reduces substantial poverty in the rural areas, citing as a prominent example Thailand. Given the challenges, he revealed that the Department of Agriculture and its attached agencies set the following objectives for 2011 and 2012:

I. Improve food security and increase rural incomes;

2. Increase sector resilience to climate change risk; and

3. Enhance policy environment and governance.

Senator Drilon said that the DA and its attached agencies and corporations have a budget of P61.7 billion in 2012, representing a 60% increase over the P38.5 billion budget in the current GAA. He added that the Committee has sustained the P6I, 181 ,522 budget recommended by the President in the National Expenditure Program; and it disapproved the House amendment to cut P800 million from the allocation for irrigation projects, believing as it did that irrigation projects are necessary to help the country achieve rice sufficiency by 2013.

INTERPELLATION OF SENATOR ANGARA

At the outset, Senator Angara lauded the extraordinary fortune ofthe Department of Agriculture (DA) at achieving a 60% increase in its budget in 2012. For his interpellation, he said that he would ask policy questions on food in general and coconut security in pmticular.

As regards food security, Senator Angara stated that at present, one of the hottest topics in the global community is the looming food crisis as borne by the fact that food prices have risen to 27% from January to the present this year; that global investment in agriculture over the past decade has been at its lowest; and the gains in the Green Revolution of the '60s and '70s were eroding. He pointed out that many food analysts and agricultural scientists were pJ'edicting that prices of food, across the board, would increase in leaps and bounds.

Nonetheless, Senator Angara expressed elation that the Philippines has always been optimistic about

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achieving rice sufficiency by 2013. He hoped that it would come to pass or else, he cautioned, a rice crisis might trigger civil unrest, rice being the staple food of Filipinos. He underscored that Filipinos, however, have to produce a basket of food to sustain their body and spirit, saying that they cannot subsist on rice alone.

Adverting to an article he read in a newspaper as regards the methods to increase the yield in food production, Senator Angara cited its principal premise that Filipinos cannot continue cutting trees in forests to increase agricultural land since it has minimal gains compared to the damage it brings to the environment. Instead, he said, the article suggested that to get the extra yield in agriculture, Filipinos ought to maximize and increase the yield out of existing natural resources, whether land or fishpond or orchards or the sea in marine culture; second, modern farming techniques, for instance, the application of fertilizer and more innovative irrigation system, like using less water for more yield, should be adopted; and third, cutting food wastage in households and restaurants should be aggressively pursued. He pointed out that according to studies, almost a third of the food annually produced in America and Europe go to waste. He asserted that government must extensively fund post-harvest facilities, which concern not only the traditional drier but also food storage and preservation equipment. He pointed out that there is now a vital shift in diet, from meat and dairy to vegetables.

Senator Angara asked if the DA has any plans in the next four years of the Aquino Administration not just to increase the yield but also productivity through the suggested methods. He believed that the DA is capable of introducing modern farming, innovative irrigation and post-harvest facilities.

Asked on the allocation in 2012 for the aforementioned programs, Senator Drilon replied that the DA recognizes the need not only for selfsufficiency in rice but also to make food staples available and secure, realizing the role that a stable food supply plays not only in the economy but also in social stability. As regards sufficiency in rice, he informed the Body that the DA has the Philippine Food Staples Sufficiency Program aimed at eliminating dependence on rice imports, producing more domestically to provide food security, irrigating new lands and rehabilitating and restoring existing irrigated lands. As regards the DA programs, he stated that

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the biggest increase is in the expenditure for irrigation projects - Pl2 billion in 2012 from the current budget of P7, 7 billion,

Senate Pres,ident Enrile asked whether the DA has any inventory of the grains that can be grown in the Philippines, He pointed out that there are many types of grains, oats, millet and sorghum in other countries aside from rice and corn, and he asked if there are similar types of grains in the country that can be planted on the rolling hills and which are adaptable to the climate and soil condition in the country. He suggested the use of every square inch of arable land to produce camote, yam, togue or ube as a substitute for carbohydrate requirement in order to reduce dependency on rice and corn.

Senator Drilon replied that the DA is doing an inventory of grains and seeds that can respond to the needs of the people such as drought-tolerant rice seeds, submarine type seeds that can be used even when there are floodings, upland rice programs, and hybrid varieties.

Senator Angara said that apart from the diverse variety of rice strain, based on soil testing, sorghum can also be grown in the country. Further, he infonned the Body that he has been advised on the potential of the sago plant which grows mainly on marsh land and provides high protein and energy, and that this was being used extensively in Mindanao. He suggested that agricultural scientists look into this because it can be a good substitute for rice or corn.

Citing the country's extensive experience in root crops, Senator Angara said that the people can join the global shift from basic staple food to plants that provide carbohydrate, energy and protein. Senator Drilon stated that the DA is fully familiar with this; however, it will take a little more time before the general population would make the shift. In the meantime, he said, the government should provide for the trad itional needs of the people especially those in the rural areas who still consider rice as the basic staple food. He informed the Body that the DA is embarking on an information campaign to show other substitutes and expanding the areas for sorghum planting, which are part of the DA's program.

Asked by Senator Angara on the funding for the program of providing substitute grains, Senator Drilol1 replied that the budget is about P 1.9 billion, which also covers the planting of high-value crops.

THURSDAY, NOVEMBER 17, 2011

At this point, Senate President Enrile recalled that during the term of President Marcos, there was scarcity of rice in the country, causing food riots in Manila, and in order to solve the rice crisis, the government made use of white corn that were converted into corn grits and mixed with rice to supplement the available rice supply. In this regard, he suggested that the DA promote the production of white corn instead of spending money for the importation of rice from Cambodia, Vietnam and Thailand.

Senator Drilon replied that the DA is fully cognizant nf the merits of the program on corn grits, pointing out that aside from creating a task force to look into this area, it has an aggressive program which targets the production of 1,5 million metric tons of corn grits. He informed the Body that the department's Nutritional Corn Program has a budget of nearly PI billion for 2012, which shall cover the promotion of open-pollinated white corn varieties, cost-reduction technologies for yellow corn and provision for more post-harvest facilities. He estimated that about 14 million Filipinos would be taking corn grits as a basic staple.

Senate President Emile said that Filipinos will never be hungry if edible root crops like camote will be planted to all available lands.

Still on root crops, Senator Drilon stated that the DA would have a higher budget of P 1.34 billion in 2012 to be used for high-value crops, which is a 44% increase compared to its budget in the previous year.

Senator Angara said that over and above the programs promoted by the DA, research and development (R&D) in agriculture has the highest economic and social return. He said that without R&D, more resilient varieties on rice or fruits, longer life shelf for fruits and vegetables, or better preserved and conserved fish and marine resources, will never be discovered.

Asked on the R&D allocation for agriculture, Senator Drilon said that it is about PI.9 billion: P960 million for the Bureau of Agricultural Research; P341 million for the Philippine Rice Research Institute, and P455 million for various research projects under the DA.

Senator Angara stated that the country has very good agricultural scientists and technologists, but the DA only contracts R&D to different SUCs, which


do velY limited in-house research. He asked on the breakdown of the rice research program of the department as he would later on connect this to the matter on innovation clusters that will place the SUCs, government research institutes under the DOST and the industry, the first time that there would be a consortium of the three big participants that would increase R&D money by tenfold and would provide the leverage in the country's agl'iculture and fanning assets.



II was 10:49 a.m.



Upon resumption, Senator Drilon informed the Body that the DA's R&D budget of about PI.9 billion shall also cover P398.4 million for the corn program, P123.2 million for high value crops, and P6S.S million for the livestock program. He said that the department does not stop at research as there is a program which calls for applying the results of the research to the actual operation.

Senator Angara commented that the resident research capability is not as extensive because DA is a line operational agency rather than a staff research type. He stated that the researches farmed out to Los Banos, CLSU, Western Visayas State University, Cabacan, among others, involve a pool of high-class and well-trained agricultural scientists and technologists. He asked whether the R&D budget would be used purely for research purposes. Senator Drilon stated that the allocation shall be used solely for research purposes since there is a different budgetary allocation for extension services.

As far as the Philippine Rice Research Institute is concerned, Senator Drilon stated that 20% of its budget shall cover extension services while 80% shall be used for general operations. Senator Angara said that the Committee on Finance can disaggregate the portion devoted to pure R&D for agriculture and fisheries.

On another matter, Senator Angara recalled that during the budget presentation of CBED and SUCs,

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it was agreed that the government must begin leveraging the research capability and assets of SUCs in the country in view of the fact that the outstanding SUCs are largely unfunded and untapped.

Senator Angara informed the Body that in a meeting with the science secretary, the CHED chair and Agriculture Secretary Alcala, five clusters were created to heJp R&D in agriculture, stressing that R&D is not about coming up with a discovery and putting it on the shelf but about practical inventions and discoveries that are quickly commercializable.

For instance, Senator Angara stated the DA could adopt a program on precision and smart agricultural techniques, where farmers can rely on satellite imaging to determine the state of the soil and its fertility, and when droughts and infestation are coming. However, he said that the farmers need to be trained on how to use the data. Fortunately, he stated that several state universities (SUs) have embarked on this kind of program and that thanks to the government's Balik-Scientists Program, a top NASA scientist has introduced the use of satell ite imaging and remote sensing in agriculture.

Senator Angara identified the SUs where precision and smart agricultural techniques were being applied: Mariano Marcos State University, 1I0cos Norte; Visayas State University, Baybay; Bicol University, Albay; University of Southern Mindanao, Kabacan; Mindanao State University, lIigan. He stated that these SUs, together with the DOST-Philippine Council for Agriculture and Forestry and Natural Resources Research and Development (DOST-PICARRD) and the Philippine Council for Aquatic and Marine Research and Development (PCMARD), would form a consortium and share trainers, knowledge and inform-ation. He expressed his appreciation for Secretary Alcala's substantial contribution in setting up the cluster on precision farming and smart agriculture.

Likewise, Senator Angara informed the Body that the other cluster formed was for algae research in which the U.S. was far advanced. He said that there is no need to reinvent the technology; it just needs to be brought into the country and adopted.

Moreover, he noted that algae have a higher energy content than soya and corn; their protein content is better and they can be produced very cheaply, one product derived from them being animal feeds.

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At this juncture, the Chair inquired as to the type of water the algae breed in. Senator Angara stated that both fresh-water algae and brackish-water algae are being used. He said that meat, poultry, fish and dairy would cost much cheaper if fed with algaebased feeds. He informed the Body that the Alcantaras from Sarangani were already producing algae and scientists from the University of Southern Mindanao, Mindanao State University and UP Mindanao were already utilizing them. He stressed that for the first time, the country's natural endowment is being used to increase productivity and yield. He said that there would be more clusters to be set up, all of them impacting agricultural productivity.

Senator Angara stated that he would take lip more agricultural innovations at the proper time. He believed that R&D in agriculture especially at this time of climate change and unpredictable weather and funding, must be focused and government needs to apply concentrated, systematic and institutional efforts.

Senator Drilon commended the efforts of Senator Angara in putting up the clusters thereby joining together different agencies and SUs in coming up with innovative, consolidated and targeted R&D in agriculture. He stated that Secretary Alcala has expressed his support for these endeavors and wanted to sit down with Senator Angara to coordinate the relationship and synergy between the DA and the SUs conducting the research.

Apart from the clusters already formed, Senator Angara disclosed that there would be other clusters on marine and other aquatic resources which would be supportive of Secretary Alcala's drive for higher productivity and food security. As regards the issue of sufficiency, he clarified that it means almost attaining the level of production that can feed the country; while in food security a rate of90% - 100% in production need not be attained as the shortfall can be compensated either by exporting the excess and thereby earn foreign exchange or impOlting the balance which might be the more cost-benefit formula.

Senator Angara opined that everyone aims for food security to ensure there is food when needed. He stated that rice is very unpredictable and unlike other grains, it requires massive water, fertilizer and inputs. He believed that the clusters can serve as the research arm of the DA that need not do R&D as it is, in fact, being undertaken by the cluster with financial backing Irom the industries.

THURSDAY, NOVEMBER 17,2011

Moving on to another matter, Senator Angara stated that one-fourth of the country's popUlation depends on coconut for livelihood and that 69 of 81 provinces grow it. He stated that because coconut is abundant in Quezon and Aurora, he was able to obtain his education on income derived from it. He said that even President Aquino was euphoric about coconut water when he came back from the U.S. He added that a partner of Pepsi Cola in the United States came to the Philippines last March, went to Mindanao and Sariaya and Tiaong, Quezon, to talk to coconut millers and plantation owners and concluded a PI billion deal to buy coconut water.

As regards the sudden increase in the value of coconut, Senator Angara stated that coconut water was found to have better energy content than Gatorade, the most popular energy drink in the market, which is every athlete's favorite drink but whose micronutrients are chemical-based. On the other hand, he said that coconut water is natural water and, like banana, rich in potassium,

However, Senator Angara lamented that most of the coconut trees in Calabarzon have been cut; and while Bicol has still a lot of coconut trees standing, some are infested with kadang-kadang and it is prohibited to bring coconut seedlings out of the region. He said that the largest concentration of coconut trees in the country is found in Mindanao. He revealed that he and Senate President Enrile have been pushing for the long overdue release of the coco levy fund so that it could be spent on the development of the coconut industry. He hoped that with the leadership of Senator Pangilinan, chair of the Committee on Agriculture, the Senate could tackle the rehabilitation and recovery of the coconut industry so that the PCA could utilize the multi-billion peso fund.

Senator Angara recalled that the Philippines used to be the number one coconut producer in the world but Indonesia has overtaken it and Thailand would follow soon. He lamented that at the rate the trees were being cut and not replaced soon enough through replanting, the country might lose the agricultural advantage it used to have. He said that every part of a coconut tree is now commcrcializable, usable and saleable. The coconut has now turned into a golden tree; it is not a tree of life anymore, he said.

Senator Angara expressed hope that there would be enough allocation for R&D in the PCA so that many researches on coconut could be disseminated and technology transferred to the grassroots.

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TIIURSDAY, NOVEMBER 17,2011

In reaction, Senator Drilon stated that the DA Secretary concurred with the sentiments of Senator Angara, He said that recognizing the coconut industry's potential, the Committee has doubled the PCA budget from the current level ofP539,9 million to pl.ln billion in 2012, Moreover, he said that of the proposed budget, P502 million would be allocated to replanting, P336 million to fertilization, P36 million to coconut R&D and P75 million to agriculture R&D, In addition, he stressed that no cutting of coconut tree would be allowed unless there is a simultaneous program of replanting,

Senator Angara stated that there has been 'a cutting-replanting policy for a long time but nothing has happened,

The Chair informed the Body that there was a pending bill in Congress proposing the liquidation of all investments of the Coconut Investment Fund under the trusteeship of the United Coconut Planters' Bank (UCPB) into cash. He said that Congress expects to raise at least P I billion from the sale of oil mills, San Miguel shares and the probable privatization of the UCPB, He believed that PI 00 million has been earmarked for the purpose of reviving and modernizing the coconut industry, He said that it is a given that the future oftlle country lies in agriculture, especially in the coconut industly, He added that sugar, with low glycemic index, can be made from the coconut flower, adding that there is a plant in Davao that produces 50,000 tons of sugar at US$3,000 per ton. Finally, he said that Senator Recto was due to submit his committee report on the bill soon,

Senator Angara stated that there is a huge treasure that government has not tapped by not developing the coconut industry, He said that the PIOO billion principal does not matter anymore considering that there is a potential to earn 8% or P8 billion a year from the industry, It is important, he stressed, for the PCA and the coconut industry people to try to put together a master plan, He stated that if everyone gets a conditional cash transfer or a chunk of the 100 billion allocation but has nothing to show for it in ten years' time, it would be such a waste, He dpined that P36 million for R&D in PCA is very miniscule and can only do so much.

Senator Drilon enumerated the other allocations to PCA, to wit:

• Product Research and Development - P20.5 M

• Agricultural Research and Development - P75A M

Market Research and Development - PI6 M

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Senator Angara suggested that government tap outstanding SUs - specifically the Visayas State University in Baybay, the premier center of coconut research in the country; Bicol University; and UP Los Banos, along with private firms that can do aggressive marketing to teach the PCA so that it need not spend the P75 million for R&D. He explained that this collaborative work between the line agency and research institutions for the benefit of the coconut industry can multiply maybe even 10 times the small amount allocated to the DA for research purposes,

For his part, Senator Drilon said that he recognizes the merit of synergy and collaboration and that the suggestion would be aggressively pursued so that funds allocated for particular endeavors would yield more value.

In closing, Senator Angara thanked the agriculture secretary for allowing him to sit down with the DA's R&D staff so that they could put together a focused, targeted agenda for R&D in agriculture.

At this juncture, Senate President Enrile relinquished the Chair to Senator Honasan.

MANIFEST A nON OF SENATOR PANGILINAN

At the outset, Senator Pangilinan stated that his statements are more of a manifestation of support for the proposed budget of the Department of Agriculture (DA). He recalled that he attended quite a number of Finance Committee hearings and raised quite a number of issues concerning the agriculture sector. He said that he fully supports the proposed 2012 DA budget as presented and defended by Senator Drilon.

He noted that it was manifested earlier that there is a 60% increase in the budget of the agriculture and fisheries sectors, the highest probably in the history of the DA and in all departments. He lamented that for the past 20 years, the agriculture and fisheries sectors have been neglected, citing the annual income of a farmer which, to date, is P23,OOO that is in large part (60%) augmented by otf-farm income from sales of a sari-sari store, remittances from relatives

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working and living abroad, sale of iongganisa in the wet mal'ket, among others. He said that it was interesting to note that the 60% increase in the budget of the agriculture and fisheries sectors is giving their members the recognition they have long been denied and deprived of.

Senator Pangilinan noted that there is a healthy respect for and recognition of the farming sector in China, Taiwan, South Korea, Malaysia, Thailand and .Japan. He said that the lesson learned from these powerhouses in agriculture is that when farmers are secure, the country can secure food. Thus, he stressed, if the Philippines wishes to achieve food security it must secure its farmers and fisherfolk.

He pointed out that China, Taiwan, South Korea, Malaysia, Thailand and Japan were able to fast-track their industrialization by primarily focusing on increasing the incomes of their farmers and fisherfolk, and the corresponding increase in the income of farmers and lisherfolk led to a greater demand for manufacturing and consumer goods which created a multiplier effect in the entire economy.

He opined that the 60% increase is not only necessary but long overdue. He said that if the Philippines wanted to reach the level of industrialization and development of the likes of China, Taiwan, South Korea, Malaysia, Thailand and Japan, it has to precisely address the largely agriculture-based economy. He noted that on record, 34% of the country's labor force is directly employed in agriculture.

He clarified that if other agri-related industries like manufacturing and milling are considered, the figure increases to almost 66%; and according to expelts, if manufacturing and agro-industrial enterprises are included, the figure would be higher. He said that the figure should also include GDP contribution since 18% or 1/5 of GDP comes from agriculture. He hoped that in the next five years, the support for agriculture would be sustained.

Senator Pangilinan narrated that when he was in China, he noticed that the country had about six 01'

seven government TV channels called CCTV which are devoted to education, entertainment, news, and one channel to agriculture and national defense, a clear indication that China gave primacy to agriculture as it has placed it in the same category as national defense, which is tantamount to saying that food security is a national security issue.


Senator Pangil inan said that another reason why he supports the DA budget is that for the first time in a long time, the Department of Agriculture has focused on increasing the income of the rural population. He noted that before, the DA's focus was on yield, output, increasing the farm-to-market roads, increasing the irrigated lands, but unless the increase in irrigated lands, increase in farm-to-market roads and increase in access to credits result in increase in the income of the farmers and fisherfolk, they remain sound representing nothing. He stated that ultimately, the country cannot have a sustainable economy even if the yield increases but the farmers remain poor. He said that this refocus on the income of farmers and the fisherfolk that will improve their quality of life must be supported. He pointed out that the average age of the Filipino farmer is 57 but when he was in Sinoloan, he met farmers aged 60,61,71, 74 and 78 who should already be retired but they are constrained to work because the present generation of Filipinos are not interested in farming. He cautioned that the situation should ring alarm bells because if the new generation of Filipinos see no future in agriculture, the Philippines would have no future as a nation because there will be no one to feed the people.

In closing, he reiterated that the 60% increase in the agriculture budget is something that must be supported because increasing the quality of life of farmers and fisherfolk is the right direction for the nation to take.

Senator Drilon thanked Senator Pangilinan for his support for the budget of the Department of Agricu Iture.

INQUIRY OF SENATOR SOTTO

Senator Sotto asked if the Filipino farmers, based on the profile and age bracket, would be beneficiaries of the PI.7 billion for vaccines for senior citizens in the DOH budget. Senator Drilon wished that there would be a closer synergy and collaboration between the DOH and the DA as far as senior citizens are concerned.


At the outset, Senator Legarda said that her questions are meant not to block the budget of any agency but to support it, provide enlightenment and clarification and heighten the level of debate in the Chamber. She noted that for 2012, there is a budget


for irrigation amounting to P24,765 billion which, she believed, is P 17 billion more than the 20 II budget of P7.753 billion.

Senator Drilon c1aritied that the irrigation project would be increased from P7.7 billion (2011 OAA) to P19,9 billion in 2012, and that this is in addition to the P4,8 billion worth offoreign-assisted irrigation projects and another P2 billion subsidy to the National Irrigation Administration for repair and maintenance of existing irrigation assets. He bared that he was also working on additional funding from the Republic of Korea for the Halaur River Irrigation Project in the Island of Panay which will rehabilitate 22, 000 hectares of existing irrigated rice land plus an additional 12,000 hectares or a total of 34,000 hectares. He said that the irrigation project will cost about P13 billion and he hoped to achieve it in 2012,

Senator Legarda believed that the impact of climate change on the country's water supply and irrigation must really be focused on. She asked whether the selection of the projects took into consideration the impact of climate change on water supply in various regions and provinces and whether the DA has conducted a mapping survey to indicate which provinces were experiencing the worsening EI Nino or drought.

Asked whether the DA was able to distinguish the impact of climate change on the various regions of the country through mapping, Senator Drilon replied that the DA has created the National Agriculture and Fisheries Council Committee on Climate Change where agriculture and fisheries stakeholders are invited to pallicipate in its policy-making and strategybuilding, and that most of the members are representatives ti'om the private sector who provide recommendations and solutions to climate change policies and programs. He added that the depaIlment has crafted its climate change policy thrust and program to insure Philippine agriculture and fisheries against climate risks by building the adaptive capacity of fanning and fishing communities. To aid in the implementation of these programs, he informed the Body that the department is working on a climate change information system that will provide useful information to the agriculture and fisheries sectors to help them decide on how to adapt to the impacts of climate change through the Unified Enterprise Oeospecial Information System (UEOIS). He stated that the Strategic Agriculture and Fisheries Development Zones (SAFDZ) maps will be updated and

619

overlaid with six climate change risk maps to determine the production areas that are vulnerable to climate change.

Senator Legarda requested the newly-formed council to furnish her with a copy of their findings on risk mapping and how the irrigation facilities and the increased irrigation budget were distributed among regions, taking into consideration the unique climate in various regions of the country,

Asked if the SAFDZ has been finally completed, Senator Drilon replied that it was still ongoing, and that he would ask the department to give the definite date of its completion. Senator Legarda recalled that the completion of the SAFDZ was a prerequisite towards making the AFMA more effective, an act which was enacted more than 10 to 15 years ago when she was not yet in the Senate. She asked why the SAFDZ has not yet been completed when she was about to end her second term in the Senate. Senator Drilon attributed it to the LOU's failure to take the initiative of providing the necessary information, However, he gave assurance that the current administration is seriously pushing the comp letion of the SAFDZ maps. Senator Legarda asserted that if the SAFDZ would zone the whole country in terms of agriculture needs, and if the combined SAFDZ and risk mapping would give information on locations prone to heavy rainfalls, drought, and the crops that would be productive in a given area, it would provide an essential guide on detai ling the budget and making it effective, Senator Drilon agreed, saying that the SAFDZ maps will be updated and overlaid with climate risk maps to determine the production areas that are vulnerable to climate change.

Senator Legarda lamented that there has been so much systems loss not only because of corruption but because of the inefficient utilization of the country's scarce resources.

Adverting to a COA report in 2009, Senator Legarda noted that 93% of the National Irrigation Administration's (NIA) property plant and equipment, including irrigation canals and laterals, under its general fund amounting to P64 billion were deficient and with inadequate records, prompting the Alternative Budget Initiative (ABI) to suggest that the NIA's budget should not be increased. She clarified that this was before Secretary Alcala's term. She asked if the NIA has already complied with the COA requirements

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since the present budget for irrigation is being increased. Senator Drilon admitted that there was indeed a COA finding during the past administration, as he gave assurance that the present leadership of the DA is looking into the findings in order to resolve the problem. He said that it is a question of failure to reflect accurately in the records of the department the projects that were implemented under the budget.

Senator Legarda said that she wanted to make sure that the agency for which a substantial amount would be given should also liquidate and perform its function of transparency in governance which is one of the pillars of the present administration.

On another matter, Senator Legarda pointed out that the feasibility studies and detailed engineering budget of various projects have been allotted a significant amount of P250 million. She asked whether these are feasibility studies of existing DA projects or for possible PPP projects, requested by LOUs, or conducted in-house by the DA or contracted out. Senator Drilon explained that every project with a substantial budget requirement would need to have a feasibility study as required by the Investment Infrastructure Committee of the NEDA. He stated that the P250 million allocated for feasibility studies would be for big-ticket items and even for possible PPP projects.

Asked if the DA works in coordination with the NEDA for the completion of feasibility studies, Senator Drilon said that these two agencies conduit with each other as far as agriculture-based projects are concerned.

Senator Legarda asked the DA for a copy of feasibility studies that would need more funding from the government since the department is in a better position to give specific projects which the farmers, fisherfolk, and the most vulnerable agricultural population would need and which can be funded internationally not by loans but by grants. She pointed out that there are U.N. agencies and adaptation fund projects ti'om the UN FCC where funds can be accessed. Senator Drilon said that a list would be provided by the DA to serve as guide in determining possible source of funds for feasibility studies in areas where this is necessary.

Senator Legarda sought information from the R&D department of the DA regarding the decline in mango production, not only jj'om the !locos Region

THURSDAY, NOVEMBER 17,20 II

where a 20% decline was felt, but from all over the country, a problem which was brought to her attention by Governor Marcos and mango producers in other parts of the country. She asked if this was a new phenomenon and if aggressive research and development was being undel1aken to correct the situation.

Senator Drilon confirmed the tindings that there was a decline in mango production, and the initial suspicion was that the fruits were falling off the trees due to climate change. He said the department was caerfully studying to see what kind of interventions can be undertaken to help the mango farmers. He expressed concern that unless this problem is immediately addressed, the government might lose this very lucrative market. Senator Legarda remarked that the same was true with the coconut industry as earlier discussed by Senator Drilon; the government was not maximizing or exploiting the country's potential to be a major coconut producing and exporting country. She cautioned that the govel11ment might lose the agriculture, which the Philippines is known for, because of lack of funds for R&D.

Asked whether the implementation of the National Information Network, which has a budget of P92,446 million in 2012 and P91.872 million in 2011, would cover the monitoring of mango and climate-resilient crops, and whether this can be tapped to enhance and cite specific knowledge on the vulnerability of agriculture and fisheries to climate change, Senator Drilon stated that the matter on the vulnerability of crops is not under the National Information Network budget but in another program, as he clarified that the National Information Network's budget is for the farmers' registry and database to determine the location of farmers, and their produce. He said that the department is in the process of computerization.

As regards the Philippine Crop Insurance Corporation that has a budget of P 184 million which is a farm subsidy to attached corporations, Senator Legarda agreed with the increase of the budget from PI13 million in 2011 because the weather index crop insurance protects farmers from the financial risks associated with extreme weather changes. She asked how many small farmers have crop insurance policies and how etfective these policies have been in protecting them from extreme weather events.

Senator Drilon reported that in the current year, the Philippine Crop Insurance Corporation has covered

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THURSDAY. NOVEMBER 17,2011

120,000 farmers, and with the 60% increase in the subsidy next year, this can cover 220,000 farmers. Likewise, he informed that Body that the Philippine Crop Insurance Corporation (PCIC) has paid P330 million to the fanners in Central Luzon affected by typhoon Pedring.

Senator Legarda disclosed that she was briefed the previous day by Bulacan Governor Alvarado and the Secretary of Agricu Iture on the damage wrought by typhoons Quiet and Pedring amounting to more than P2.5 billion in the Province of Bulacan alone, half of which represented loss of livelihood in the agricu Iture sector.

Asked whether the claim that the promises of assistance from the national government have not found their way into the province up to this time, Senator Drilon expressed certainty that the PCIC has paid P330 million to farmers affected by typhoon Pedring. He said that while there are additional assistance coming, the government cannot cover one hundred percent of the losses. He added that there are programs being worked out to alleviate the difticulties of farmers in Central Luzon.

Senator Legarda stated that as an advocate of organic agriculture since decades ago, she would hear complaints about the high cost of organic produce. She asked how traditional farmers could be convinced to shift to such healthier and more cost-efticient products, noting the complaints of farmers in Mountain Province and Benguet that the DA's regional and provincial oftices are not promoting their production. She pointed out that there is willingness on the part of traditional farmers to welcome the shift, in spite of the cynicism in some areas, but there was apparent absence of technology and knowledge.

Senator Drilon confirmed that under the leadership of Secretary Alcala, one of the DA's thrusts is the promotion and development of organic agriculture. He admitted, howcver, that organic products are generally more expensive, particularly those that are nearer the point of sale because of the marketing thrust that the nearer the source, the fresher the produce. He agreed that organic products should be cheaper because high-priced fertilizer are not used, however, as the law of supply and demand dictates, the low supply of organic products results in an increase in the price.

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Asked by the Chair if the DA has a program that allows it to converge with the other departments like the DOH and DepEd in making the next generation competitively healthier and smarter as in the case of Brazil where a certain percentage of its agricultural produce is allocated towards feeding school children, Senator Drilon cited, among other activities, the convergence with the DepEd in promoting "Gulayan Sa Paaralan," and with the DPWH for water impounding projects. He gave the assurance that there is enough funding for these convergence activities.

SUBMISSION OF THE BUDGETS OF THE DEPARTMENTS OF AGRICULTURE AND ITS ATTACHED AGENCIES

Upon motion of Senator Sotto, there being no objection, the budgets of the Department of Agriculture and its attached agencies, namely, the Office of the Secretary, the Agricultural Credit Policy Council, Bureau of Fisheries and Aquatic Resources, Cotton Development Administration, Fertilizer and Pesticide Authority, Fiber Industry Development Authority, Livestock Development Council, National Agricultural and Fishery Council, National Meat Inspection Service, Philippine Carabao Center, Philippine Center for Post-Harvest Development and Mechanization, were deemed submitted for the consideration of the Body.



It was 12:10 p.m.


At 12: I 0 p.m., the session was resumed.

SUBMISSION OF THE BUDGETARY SUPPORT FOR GOVERNMENT CORPORATIONS UNDER THE DEPARTMENT OF AGRICULTURE

Upon motion of Senator Drilon, there being no objection, the budgetary support for government corporations under the budget of the Department of Agriculture, namely, the National Dairy Authority, National Food Authority, National Irrigation Authority, Philippine Coconut Authority, Philippine Crop

622

Insurance Corporation and the Philippine Rice Research Institute, was deemed submitted for the Body's consideration,



It was 12: II p.m.


At 12: 13 p.m, the session was resumed.

SUBMISSION OF THE BUDGET OF THE CREDIT INFORMATION CORPORATION

Upon motion of Senator Drilon, there being no objection, the budget of the Credit Information Corporation was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PHILIPPINE CENTER FOR ECONOMIC DEVELOPMENT

Upon motion of Senator Drilon, there being no objection, the budget of the Philippine Center for Economic Development was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE SOUTHERN PHILIPPINES DEVELOPMENT AUTHORITY

Upon motion of Senator Drilon, there being no objection, the budget of the Southern Philippines Development Authority was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE ANTI-MONEY LAUNDERING COUNCIL

Upon motion of Senator Drilon, there being no objection, the budget of the Anti-Money Laundering Counci I was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE CLIMATE CHANGE COMMISSION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no


objection, the budget of the Climate Change Commission was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE DANGEROUS DRUGS BOARD

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Dangerous Drugs Board was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE GAMES AND AMUSEMENT BOARD

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Games and Amusement Board was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE MINDANAO DEVELOPMENT AUTHORITY

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Mindanao Development Authority was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE GOVERNANCE COMMISSION FOR GOVERNMENT-OWNED AND CONTROLLED CORPORATIONS

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Governance Commission for Government-Owned and Controlled Corporations was deemed submitted for the Body's considel·ation.

SUBMISSION OF THE BUDGET OF THE NATIONAL ANTI-POVERTY COMMISSION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Anti-Poverty Commission was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL COMMISSION ON MUSLIM FILIPINOS


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TIIURSDAY. NOVEMBER 17.2011

objection, the budget of the National Commission on Muslim Filipinos was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAl_ INTELLIGENCE COORDINATING AGENCY

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Intelligence Coordinating Agency was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL SECURITY COUNCIL

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objectioll, the budget of the National Security Council was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PASIG RIVER REHABILITATION COMMISSION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Pasig River Rehabilitation Commission was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PHILIPPINE COMMISSION ON WOMEN

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Philippine Commission on Women was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PHILIPPINE RACING COMMISSION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Philippine Racing Commission was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PRESIDENTIAL COMMISSION FOR THE URBAN POOR

There being no reservation for interpellation, upon motion of Senator Dri lon, there being no objection, the

623

budget of the Presidential Commission for the Urban Poor was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PHILIPPINE COMMUNICATION DEVELOPMENT AND STRATEGIC PLANNING OFFICE

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget ofthe Philippine Communication Development and Strategic Planning Office was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PRESIDENTIAL LEGISLATIVE LIAISON OFFICE

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Presidential Legislative Liaison Office was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PRESIDENTIAL MANAGEMENT STAFF

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Presidential Management Staff was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON FILIPINO OVERSEAS

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Commission on Filipino Overseas was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON FILIPINO LANGUAGE

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Commission on Filipino Language was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE DEVELOPMENT COUNCIL OF THE PHILIPPINES

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the

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624

budget ofthe Development Council of the Philippines was deemed submitted for the Body's consideration,

SUBMISSION OF THE BUDGET OF THE HOUSING AND LAND USE REGULATORY BOARD

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Housing and Land Use Regulatory Board was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE HOUSING AND URBAN DEVELOPMENT COORDINATING COUNCIL

There being no reservation for interpellation, upon motion of Senatol' Drilon, there being no objection, the budget of the Housing and Urban Development Coordinating Council was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE MOVIE AND TELEVISION REVIEW AND CLASSIFICATION BOARD

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Movie and Television Review and Classification Board was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL COMMISSION ON INDIGENOUS PEOPLE

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Commission on Indigenous People was deemed submitted for the Body's consideration.



11 was 12:18 p.m.




SUBMISSION OF THE BUDGET OF THE NATIONAL COMMISSION ON CULTURE AND THE ARTS

There being no reservation for interpellation, upon motion of Senator Dri Ion, there being no objection, the budget of the National Commission on Culture and the Arts was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL HISTORICAL COMMISSION OF THE PHILIPPINES

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Historical Commission of the Philippines was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL LIBRARY OF THE PHILIPPINES

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Library of the Philippines was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL ARCHIVES OF THE PHILIPPINES

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the National Archives of the Philippines was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE OPTICAL MEDIA BOARD

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Optical Media Board was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE PHILIPPINE SPORTS COMMISSION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Philippine Sports Commission was deemed submitted for the Body's consideration.

THURSfJA Y, NOVEMBER 17.2011

SUBMISSION OF THE BUDGET OF THE CULTURAL CENTER OF THE PHILIPPINES

There being no reservation for interpellation, upon motiol1 of Senator Orilon, there being no objection, the budget of the Cultural Center of the Philippines was deemed submitted for the Body's consideration.

SUBMISSION OJi' THE BUDGET OF THE DEVELOPMENT ACADEMY OF THE PHILIPPINES

There being no reservation for interpellation, upon motion of Senator Orilon, there being no objection, the budget of the Development Academy of the Philippines was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE HOME GUARANTY CORPORATION

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Home Guaranty Commission was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL HOME MORTGAGE FINANCE COl~PORA TlON

There being no reservation for interpellation, upon motion of Senator Drilon, there being no o~jection, the budget of the National Home Mortgage Finance Corporation was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE NATIONAL HOUSING AUTHORITY

There being no reservation for interpellation, upon motion of Senator Orilon, there being no o~jection, the budget of the National Housing Authority was deemed submitted for the Body's consideration.


U pan motion of Senator Sotto, the session was suspended until three 0 'clock in the afternoon of the same clay.

II was 12:21 p.m.


At 3:27 p.m" the session was resumed with the Senate President Pro Tempore presiding,

625

DEPARTMENT OF AGRARIAN REFORM

Upon resumption, Senator Recto, Vice Chairman of the Committee on Finance, presented the budget of the Department of Agrarian Reform.


Upon motion of Senator Satta, the session was suspended,

II was 3:28 p.m.




Upon resumption, Senator Sotto manifested that Senator Legarda would no longer interpellate on the budget of the Oepal1ment of Agrarian Reform,

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF AGRARIAN REFORM

There being no other reservation to interpellate, upon motion of Senator Satta, there being no objection, the budget of the Department of Agrarian Reform and its attached agencies was deemed submitted for the Body's consideration,


U pan motion of Senator Sotto, the session was suspended,

It was 3:33 p.m.



DEPARTMENT OF TOURISM

Upon resumption, Senator Recto presented the budget of the Department of Tourism.


Asked by Senator Satta on the specific marketing programs of the Department of Tourism (DOT) for the international and domestic market which are

626

funded in its 2012 budget, Senator Recto replied that in 2012 the DOT has P466 million for marketing and promotions broken down as follows:

• South Korea • Japan • China • North America • entire Asia Pacific • Europe • India • Middle East

P70 million P62 million P45 million P95 million PI03 million P54.8 million PI9 million P15.7 million

Additionally, he said that the DOT would also allocate funds for the Internet for marketing purposes and a specific amount for the country's participation in an exposition in South Korea next year.

On whether the DOT has new advertising slogans, Senator Recto stated that during the Committee hearing on its budget, the Department promised to come out with the slogans before the end of the year. He stated that the advertising agencies would make their presentations by Monday next week.

Asked how the DOT's advertising and promotional budget for China compares with its allocation for other countries, Senator Recto replied that it is less than 10% of the P466 mill ion allocation. He surmised that the adjustment in the promotional budget came as a result of the country's new state of relations with China. However, he disclosed thatthe DOT was working with private companies such as Resorts World Genting and Belle Resources to put up casinos in 2012 and 2013 which are expected to be major attractions for Chinese tourists. He pointed out that Genting Malaysia attracts 20 million visitors every year and that number is a far cry from the 3.5 million visitors - including balikbayans - which come to the Philippines during the same period.

Senator Sotto believed that rather than utilizing its budget to sell the country to Europe or NOllh America, the DOT ought to focus its efforts on aggressively promoting the Philippines to China considering that about 100 million Chinese tourists travel to different parts of the world every year and if the Philippines tapped only 10% of that number or 10 milian, it can forget other foreign tourists. He noted that based on the mid-year arrival statistics for 20 I I, the top destinations of 32 million Chinese tourists were Asian countries: Hong Kong - 12.7

THURSDAY, NOVEMBER 17.2011

million, Macau - 7.5 million, Japan - 920,000, Thailand - 834,000, Taiwan - 829,000, and Singapore - 757,000.

For his part, Senator Recto noted that Malaysia, with 28 millions visitors, draws in the most tourists in the region, followed by Thailand with IS million. However, Senator Sotto noted that Malaysia was not included in the top destination list of Chinese tourists. He agreed to the suggestion that the DOT concentrate on promoting the Philippines to China. He pointed out that the United States and Europe were experiencing economic problems unlike China which registered the fastest growth rate in the region. He believed that the new casinos would draw in Chinese visitors to the Philippines.

Replying to further queries, Senator Recto believed that the DOT ought to realign its promotional budget from Europe to augment the P45 million allocation for China.

Senator Sotto expressed hope that the DOT would update the Members on the results of its promotional programs for Chinese tourists.

Senator Sotto asked whether the DOT was preparing a program to increase local and foreign tourist arrivals in the Palawan Underground River, which was recently recognized as one of the new Seven Wonders of the World. In reply, Senator Recto stated that in anticipation of increased tourist arrivals in Palawan, the DOT was working with the Puerto Princesa city government, the DOTC and the DPWH to enhance infrastructure. As a matter of fact, he said that the proposed DOTC budget included a P1.2 billion allocation for the airport in Puerto Princesa.

Asked whether there is truth to reports that some photographers had been prohibited from taking pictures in Intramuros, Manila Bay, Luneta Park, Ayala Avenue and other tourist spots, Senator Recto replied in the negative. However, he explained that professional photographers ought to obtain the permission of local government authorities before taking pictures in tourist locations.



It was 3:57 p.m. 'r

THIIRSDAY. NOYI'MBER 17.2011



SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF TOURISM

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Tourism and its attached agencies, namely, Intramuros Administration, National Parks and Development Committee, and the Tourism Promotions Board was deemed submitted for the Body's consideration.



II was 3:58 lUll.



OFFICE OF THE PRESIDENTIAL ADVISER ON THE PEACE PROCESS

Senator Dri Ion presented the budget of the Office of the Presidential Adviser on the Peace Process (OPAPP).


Senator Drilon stated that P569.639 million has been allocated to the OPAPP, a portion of which is for the Pamana project.

Senator Drilon recalled that as he earlier manifested in his sponsorship speech, upon the suggestion of Senate President Emile during the Committee hearings, the Pamana Funds of the Ortice of the Presidential Adviser on the Peace Process (OPAPP), DAR, DILG and DSWD were consolidated into one fund called the Pamana Fund, now a separate item in the 2012 GAB - Senate version. By virtue of the transfer, he said that the budget of the OPAPP was reduced to P240,296,000.

INQUIRY OF SENATOR SOTTO

Senator Sotto informed the Body that only Senator Escudero had reservation to interpellate on the

627

OPAPP budget but he assumed that the latter had already brought up his concerns with Senator Drilon.

Askd if Senator Escudero would still interpellate, Senator Drilon replied that he had no information about it as he disclosed that what they discussed was the objection of the senator to the administrative cost of P 138,300,000 in implementing the Pam ana Fund to which the Committee agreed. He said that the item was removed subsequently as the Committee agreed that OPAPP is only a monitoring agency and not an implementing agency, therefore, it should not implement the program.


With the permission of the Body, the Chair suspended the session ..

It was 4: 09 p. m.



Senator Drilon stated that the OPAPP has been unfairly criticized about the P5 million supposedly given to the MILF leadership, and in the interest of fairness, he presented the following time lines which transpired relative to the issue:

February 7, 2006

The Government, represented by panel Chair Silvestre C. Afable, Jr., and the MILF. under panel Chair Mohager Iqbal, signed a Joint Statement agreeing in principle to establish the Bangsamoro Leadership and Management Institute (BMLI) in Cotabato City as a capacity-building center for emerging leaders and professionals. Part of the statement reads as follows:

"Both parties reaffirmed the need to intensify capacity building programs with the assistance and support of the international community and donor institution."

May 4,2006

Both Afable and Iqbal signed another Joint Statement, paragraph 6 of which reads as follows:

"The panels committed to move forward the establishment of the Bangsamoro Leadership and Management Institute (BLMI) which is envisioned as an agent of change in

628

the social and political environment of the Bangsamoro people";

April 21, 2010

Another Joint Statement was signed, this time by Ambassador Rafael Seguis for the Philippines and Iqbal for the MILF, in the presence of Datuk Othman Bin Abrazak reiterating the support for the BLMI;

November 28, 2007

Sec. Rodolfo Garcia, then member of the ORP panel, in a memo which Exec. Secretary Eduardo Ermita received on December 3, 2007, requested for funding assistance to start the BLMI; paragraph 4 of the memo reads as follows:

"In view of the past agreements to establish the BLMI and to be able to positively report the matter during the up-coming round of negotiations, may we, therefore, request funding assistance, amounting to P5,156,000.00 to jump-strut the BLMI and pave the way for this establishment and the subsequent operation in Cotabato City covering a one-year operation."

Senator Drilon said that it was by virtue of the agreements that the Aquino Administration delivered P5 million to the BLMI, a duly registered SEC organization. He revealed that the P5 million check, dated August 19, 20 I I, is still intact in Metro Bank account with a balance of P4,996,575, and was not used for any other purposes, much less to buy guns to shoot Filipino soldiers.

Senate President Pro Tempore Ejercito Estrada said that the public perception was that the reason why the government gave P5 million to the Bangsa Moro Leadership and Management Institute (BLMI) was for them to buy ammunitions and kill soldiers.

SUBMISSION OF THE BUDGET OF THE OFFICE OF THE PRESIDENTIAL ADVISER ON THE PEACE PROCESS

There being no further interpellation, upon motion of Senator Sotto, the budget of the Office of the Presidential Adviser on the Peace Process was deemed submitted for the Body's consideration.

PAMANA FUND

Senator Drilon presented the budget of PI, 764,300 for the Payapa at Masaganang Pamayanan


(PAMANA). He stated that the Pamana Fund would be implemented by the DAR (P 16,500,000); D1LG (P958); and DSWD (P789,800,000). He explained that the consolidation of the fund was made upon the request of Senate President Enrile.

SUBMISSION OF THE BUDGET OF THE PAMANA FUND

Upon motion of Senator Drilon, there being no objection, the budget of the Pamana Fund was deemed submitted for the Body's consideration.


U pan motion of Senator Drilon, the session was suspended.

It was 4:29 p.m.



ADDITIONAL REFERENCE OF BUSINESS

The Deputy Secretary for Legislation, Atty. Edwin B. Bellen, read the following matters and the Chair made the corresponding referrals:

BILL ON FIRST READING

Senate Bill No. 30]0, entitled

AN ACT ESTABLISHING A STUDENT ASSISTANCE PROGRAM SUPPORTED BY BANKING AND GOVERNMENT FINANCIAL INSTITUTIONS, AND FOR OTHER PURPOSES


To the Committees on Edncation, Arts and Cnlture; Banks, Financial Institntions and Cnrrencies; and Ways and Means

RESOLUTIONS


RESOLUTION DIRECTING THE SENA TE COMMITTEE ON TRADE AND COMMERCE TO CONDUCT

JII' r

TIIURSD;\Y. NOVEMBER 17.2011

AN ASSESSMENT, IN AID OF LEGISLATION, ON THE STATE OF PYROTECHNICS INDUSTRY IN THE COUNTRY AND THE IMPLEMENTATION OF REPUBLIC ACT NO. 7183 OTHERWISE KNOWN AS "AN ACT REGULATING THE SALE, MANUFACTURE, DISTRIBUTION AND USE OF FIRECRACKERS AND OTHER PYROTECHNIC DEVICES," WITH THE END IN VIEW OF PROTECTING THE PUBLIC FROM UNSAFE AND SUBSTANDARD PRODUCTS WHICH ENDANGERS LIVES AND PROPERTIES


To the Committees on Public Order and Dangerous Drugs; and Trade and Commerce


RESOLUTION URGING THE COMMITIEE ON TRADE AND COMMERCE TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, IN ORDER TO ASSESS THE ADEQUATENESS OF THE CURRENT LAWS AND REGULATIONS GOVERNING THE SALE, DISTRIBUTION, MANUFACTURE AND IMPORTATION OF CHRISTMAS PRODUCTS, PARTICULARLY CHRISTMAS LIGHTS, WHICH ARE SOLD ON THE LOCAL MARKET AND THE IMPLEMENTATION THEREOF, TO PROTECT AND PREVENT HARM ON THE BUYING PUBLIC

Introduced by Senator Vi liar

To the Com mittee 011 Tmde alld Commerce


RESOLUTION DIRECTING THE SENATE COMMITTEES ON ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS; AND WAYS AND MEANS TO INQUIRE AND INVESTIGATE, IN AID OF LEGISLATION, GOVERNMENT'S

BORROWING PROCESS IN RELATION TO THE ISSUANCE OF POVERTY ERADICATION AND ALLEVIATION CERTIFICATES (PEACe) BONDS, WITH THE END IN VIEW OF DETERMINING WHO ARE THE ACCOUNTABLE PUBLIC OFFICIALS AND PERSONS AND ENACTING REMEDIAL LEGISLATION

Introduced by Senator Ejercito Estrada

629

To the Committees on Acconntability of Pu blic Officers and Investigations; and Finauce

COMMITTEE REPORT

Committee Report No. 80, prepared and submitted jointly by the Committees on Banks, Financial Institutions and Currencies; Justice and Human Rights; and Public Order and Dangerous Drugs, on Senate Bill No. 3009 with Senators Osmefia III, Lacson, Defensor Santiago, Villar, Guingona III, Escudero and Honasan II as authors thereot~ entitled

AN ACT TO FURTHER STRENGTHEN THE ANTI-MONEY LAUNDERING LAW, AMENDING FOR THE PURPOSE SECTIONS 10 AND 11 OF REPUBLIC ACT NO. 9160, OTHERWISE KNOWN AS THE "ANTIMONEY LAUNDERING ACT OF 2001," AS AMENDED, AND FOR OTHER PURPOSES,

recommending its approval in substitution of Senate Bill Nos. 2484 and 2783 taking into consideration Proposed Senate Resolution Nos. 82 and 461.

Sponsors: Senators Osmefia III and Guingona III

To the Calendar for Ordinary Bllsilless

DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS

Senator Drilon presented the budget of the Department of Public Works and Highways, an agency that is mandated to plan, design, construct and maintain infrastructure particularly the national highways; manage the flood control and water

630

resources development system and other public works in accordance with national development objectives; and ensure the safety of all infrastructure facilities and guarantee that public works and highways are of the highest efficiency and quality. He stated that the Committee on Finance has recommended a budget of PI 09,633,405,000, and he informed the Body that there were changes in the GAB compared to the NEP but these were requested by the DBM, in view of the errors discovered after the NEP was crafted.


Senator Legarda expressed support for the DPWH budget especially the portion which funds the flood control programs. She inquired into the efforts being undertaken by Secretary Singson, who was recently appointed by President Aquino as head of the Water Resources Management Council, which is an activation of a council that was a product of a very old law expanding the National Water Resources Board (NWRB) that supposedly manages all water resources in the country under the DENR. She expressed the need to coordinate the efforts of all government agencies which are geared towards water resources management.

Senator Legarda stated that the Philippines as an archipelago has so much water that it poses a threat when it causes floods; but, there are times when water becomes so scarce like during E1 Nino that it causes drought. She stated that an interagency task force composed of several agencies had been put up to improve water management and that the NIA, the DPWH and other agencies were allotted money to put up rain water collection facilities to make sure that water resources are not put to waste.

Asked how the task force would coordinate all the agencies that manage water and its program on flood contro I, Senator Dri Ion rep lied that before the creation of the task force, about 38 agencies were involved in managing water resources with each one not knowing what the other was doing. He stated that President Aquino created the task force with Secretary Singson as its head to coordinate all the agencies concerned with water management so as to have uniformity in policies on irrigation, domestic use, hydropower and flood management. He said that the task force has submitted to the President an Integrated Water Resource Management Approach and the River Basin Approach.


Senator Legarda noted that it took a long time to create the task force but that she welcomed it because she believed government efforts should be coordinated. She expressed hope that instead of thinking of policies, the task force would actually take quick and decisive action before a crisis strikes.

As regards the budget for flood control, Senator Drilon stated that the allocation would still be with the DPWH. He explained that the task force is not legally mandated to reorganize the agencies but it will coordinate with the offices involved in water management. However, he stated that it would need a mandate from the President to whip the agencies in line as there is a tendency among them to protect their turf and budget. He said that when the President created the task force, he gave Secretary Singson full authority to properly manage water resources and coordinate the activities of the 38 agencies involved in water management.

Senator Legarda believed that the flood control program would be for naught if it is simply focused on flood control in downstream communities when, in fact, water flows from upstream communities.

Asked what the DPWH has done to address this matter, Senator Drilon informed that Body that the NIA and the DENR have a convergence program to address upstream problems. He stated that in a discussion with Secretary Singson, he learned that it would be better to have upstream catch basins than flood control canals that simply discharge water into the open sea.

Senator Legarda pointed out one of the reasons why there is flooding is that urban settlements and fishponds have overtaken waterways and that it is imperative to relocate thousands of families to clear the waterways.

As to where the DPWH would relocate the displaced families, Senator Drilon stated that the Supreme Court has issued a writ of mandamus directing the DPWH Secretary to clear the waterways, and that PIO billion has been allocated in the 2012 budget for the relocation of displaced families. He said that an inventory of the waterways in Central Luzon has just been completed.

Senator Drilon narrated that there were 3,500 informal settlers living along the 30-kilometer Iloilo River that his office, the local government and the

, r


National Housing Authority were forced to relocate. He added that they also had to close and relocate shipbuilding facilities located right in the river that were discharging pollutants, and fish pens that pO'ovide livelihood to informal settlers were also removed. He said that informal settlers, shipbuilding facilities and fishpens have killed the Iloilo River and that clearing waterways is a very complex operation that needs funding and political will.

Senator Legarda lauded the efforts of Senator DO'ilon in saving the Iloilo River. She expressed hope that rivers all over the country would be dredged and cleared of informal settlers who, she hoped, would be provided with adequate livelihood and housing elsewhere. She reiterated that it is not just a matter of clearing the river but also clearing the upstream as well.

Senator Lcgarda warned that what happened in Central Luzon when the Pampanga River overflowed last Octobeo' 2011 could happen next year and the years to come. She stated that the flooding in Candaba and Angat caused losses in lives and more than PI2 billion damages to crops and properties. She asserted that if waterways remained clogged or converted for commercial purposes, and the massive deforestation in the Sierra Madre continues with the resulting soil erosion, the same problem will happen again and again. Senator Drilon disclosed that PS.9 billion has been allotted for flood control, putting up seawall, building drainage projects; securing right-ofway and clearing operations.

Still on the same matter, Senator Legarda stated that the MMDA is in charge of cleaning esteros and canals and the flood control program. She said that with the little resources that the MMDA has, the DPWH is helping with the flood control in the Camanava area. Citing Espana street in Manila, she said that MMDA Chair Tolentino reported that it did not flood in spite of heavy rains because MMDA removed three Olympic-size pool of solid wastes from drainages and canals. She said that she was looking forward to the close coordination between the DPWH and the MMDA on a massive Linis Canal Program before the rainy season comes in May 2012. Senator Driton confirmed that there is close coordination between the DPWH and MMDA which meet on a regular basis.

Senator Legarda recalled that in a hearing last year, Secretary Singson mentioned that the Rain Wateo' Act (RA 6716) was already being implemented,

631

and that he has put up retarding basins to serve as an underground water catchment which is being done by the private sector but not fully implemented by the government.

Asked if the retarding basin project could be institutionalized in urban areas around the country, Senator Drilon replied in the affirmative. He stated that the DPWH has a P200 million budget allotted for water supply retarding basins, a model of which will be implemented in Imus River in Cavite.

Senator Legarda urged the DPWH to push the concept and to continue implementing the Rain Water Act. She said that the DPWH and the DepEd can collaborate to make sure that all classrooms have water catchments basins.

On a final note, Senator Legarda recalled that during the past hearings, the Secretary informed the Committee about the continuing retrofitting of public infrastructure like bridges, government hospitals, buildings, etc., and in the process, he identified bridges, one being Ayala Bridge, that are most likely to be badly damaged in the event of a 7.0 magnitude eaothquake. She stated that a World Bank study showed that hundreds of thousands would be affected along the West Valley fault should an earthquake of the same magnitude hit Metro Manila. Senator Drilol1 stated that the 2012 allocation is for the retrofitting of 15 bridges in Metro Manila and that it does not cover government hospitals.

Senator Legarda stated that only the DPWH has the capacity al1d techn ical capability to assess the structural integrity of government hospitals and public schools. She suggested that the Department include them in the retrofitting projects. Senator Drilon replied that the DPWH can only assess the structural fitness of government buildings as it did when the Senate requested to have the Film Center evaluated for change of venue. He said that the Department would have to give the funding back to the agency.

Senator Legarda asked what makes the 2012 DPWH budget any different from the previous budget to assure the Members that it is a climate-resilient budget. She stated that according to the UN, at least I % of GDP should go to Disaster Risk Reduction (DRR) structures. She suggested that the DRR investment be computed to determine if it abides by the I % of GOP minimum requirement for disaster risk reduction.

632

Responding thereto. Senator Drilon stated that the GAB carries a disaster-related rehabilitation project with an allocation of P550 million, However. he asserted that more than anything else. it is confidence in the DPWH leadership that would carry the nation through in all the projects, in accordance with the objectives for which they established,

Senator Legarda expressed SUppOlt to DPWH Secretary Singson and everyone in the department who share the vision for a holistic flood control program that will take into consideration the needs of downstream and upstream communities as well as the socio-economic livelihood of the people affected by the floods, She disclosed that in a talk with Secretary Singson, the latter informed her that he would take this matter into serious consideration as head of the inter-agency water resources and that he would eventually appoint someone to the Executive department, probably someone from PAGASA who can collate all the data from the 38 agencies and take a decisive action before a crisis strikes so that people downstream are not affected,

Senator Drilon agreed, stating that it is about time for such coordination to take place because there has been a lot of finger-pointing in the past. He stressed that it was about time an official I ike Secretary Singson took responsibility for the matter. He added that the PAGASA, a member of the interagency committee or council, is not the focal agency or authority on the issue,


At the outset, Senator Lacson stated that his interpellation on the DPWH budget will focus on its evolution from the time of its preparation, deliberation, implementation and accountability,

Senator Lacson remarked that the budget of the DPWH is like a tale of two journeys, the first one an international flight, which is a comparative review of the DPWH budget as proposed in the NEP versus the actual GAA and its implementation,

To illustrate his point, Senator Laeson presented the following figures:

20fl Nhl' !-IO/l,\<: j'('/'.I/O!! S!fllale 1,(,/,,1/11/1 2011 (;AA

1'1008 U PI0081l PI0081l 1'1008 B

2011! N/:/' f-{ Ii 0767

P96.607.120,OOO B

1'117,257,544,0008

Sellate Ve/'lwn R A 1)Y7() (;AA

1'113,OJO,544,000 B

1'126,930,988,000 B


20(/9 NU' HO!l.\(f V<!(:<'1rJ11 Senale VI'I:I{{}II 2!)fJl) GAA

1'1123 B 1'120.5 B 1'19.8 B

200N NI:'I'

P867 B

HOllIe //enIlJII ,,'el1aleVe/'llO/1 200N (,AA

P907 8 1'947 B

20 I 0 DPWH Programs and Projects General Summary

Office of the Secretary for General Administration and Support Operations and Operations including locally-funded and foreign-assisted projects - P126.9 B.

Senator Lacson acknowledged that he was aware that the preparation of the 2010 national budget was the handiwork of the Arroyo administration but it was in the same period that the Aquino administration assumed office.

Comparing the budgets of the DPWH since 2008, Senator Lacson cited the constant increases from the NEP up to the GAA. However, he noted that in the 2011 budget, the amounts were maintained and he commended Rep, Joseph "Jun" Abaya and Senator Drilon for warding off attempts by the other legislators to make adjustments to it. He hoped that the 2012 DPWH budget of P109.633 B would remain intact.

Senator Drilon replied that the Committee reported out exactly the same amount in the GAB and the NEP, taking into account the errata submitted by the DBM.

Moving on to what he called the domestic fl ights, Senator Laeson stated that this is a series of items contained in the budget and how they evolved into something else until their implementation.

Senator Lacson clarified that he would focus on the 20 I 0 budget because after all, the appropriations and obligations in the 2012 NEP were based on the 2010 GAA.

For his part, Senator Drilon noted that the 2010 GAA contained a lot of congressional insertions and therefore he had reservations about the validity of a comparison between the 2010, 2011 and 2012 budgets.

Senator Lacson adverted to the following items in the 2010 budget under General Admin and Support, Support Operations and Operations:

C. Construction and Rehabilitation Infra Facilities, routine maintenance of national roads and bridges - P2 B

'r


D. Preventive Maintenance of National Roads and Bridges - P2.9 B

Asked by Senator Lacson whether these allocations are lumpsum, Senator Drilon confirmed that there is an allocation of P2 billion appearing on page 715 of the 20 I 0 OAA under DPWH for routine maintenance of national roads and bridges and while its appears to be a lumpsum, there are documents which indicate the allocation was based on the length of the national road.

On whether the allocation has been fully utilized, Senator Drilon replied that it was, and because it was inadequate, it was augmented by the MVUC.

Asked how much was added by the MVUC to the P2 billion item, Senator Drilon said that subject to verification, P3 billion was augmented, for a total of P5 billion for routine maintenance of national roads and bridges. He confirmed that it was obligated but even assuming there were some unobligated amounts, he said that by the end of 20 II, they could no longer be utilized.

Senator Lacson asked the Finance Committee for a copy of the breakdown of the appropriations so far obligated. Senator Drilon said that the list will be submitted at a later time.

Senator Dri Ion assured Senate Lacson that there would be no more lumpsums in the 2012 budget He added that in six months or eight months' time, the Senate would be looking again at the 2013 budget and that an activated Oversight Committee 011 Public Expenditures would look into the matter on a regular basis. He agreed that the 20 I 0 OAA was very much relevant in the current year budget, saying there is a wealth of experience on how it was abused. He recalled that in his sponsorship speech, he mentioned about the inclusion in the OAB- Senate version of a policy disallowing lumpsums and that the Committee did what it should to minimize or avoid it

Senator Lacson noted that by admission, not all of the P5 billion for the routine maintenance of national roads and bridges had been fully obligated. Senator Drilon admitted that not the entire amount has been obligated. However, he explained that it has a two-year validity; the DPWH has until December 3 I, 20 I I to obligate the items in the 20 I 0 OAk

633

Senator Lacson explained that he was interested in dissecting every item of the budget because of leakages that are always present in every year of project implementation and that legislators should focus on this matter because public monies were being misspent.

Moving on to another matter, Senator Lacson stated that under the 20 I 0 budget was an item for urgent national arterial and secondary road illld bridges, a specific amount of which was decongestion. In particular, he cited the following:

Construction/Improvement/Concreting! Widening!Rehabilitation of NAIA Expressway and other major roads in Metro Manila - P956,950,OOO.

Asked if the amount is a lumpsum, Senator Drilon replied that supporting documents for the item would indicate that it is not a lumpsum because there are specific items where the budget would be assigned.

As regards Item H, widening of Manila, North Road including Traffic Management - BulacanPampanga section and Tarlac Province, Senator Lacson observed that the item for traffic decongestion was intended for Metro Manila, and asked why are the provinces of Bulacan, Pampanga and Tarlac were included in it

Senator Drilon said that he could not immediately respond to the specific question since he was not in the Senate when that budget was crafted. He asked that he be given time to look into the matter.

Senator Lacson asked why there is a line budget item pertaining to provinces or areas outside Metro Manila such as Bulacan, Pampanga and Tarlac, all under the item "Metro Manila."


Upon the motion of Senator Drilon, the session was suspended.

II was 5:28 p.m.



Upon resumption, Senator Drilon enumerated the following allocations in the 20 I 0 DPWH budget: , r

634

B. PROJECT (s) I. Locally-Funded Project (s)

a. National Arterial and P66,172,861,000 Secondary National/ Local Roads and Bridges I. Urgent National 31,574,136,000

Arterial and Secondary Roads and Bridges

a. Traffic Decongestion 8,824,651,000 I. Metro Manila 5,742,951,000

xxx

h. Widening/Concreting of McArthur Highway (Manila North Road) including Traffic Management

2,160,720,000

I. Meycauayan (Bulacan) 1,472,785,000 to Mabalacat (Pampanga), Intermittent Sections

2. Tarlac Province 687,935,000

Senator Dri Ion stated that it is a traffic decongestion project, therefore, to decongest the traffic in Metro Manila, the Manila North Road needs to be widened and improved. He pointed out that the budget for traffic decongestion is P8.8 billion, P5.7 billion of which is in Metro Manila and P2.1 billion for the widening and concreting of McArthur Highway, Manila Road.

Asked on the meaning of HDM4, Senator Drilon replied that it is the Highway Development Management Program version 4.

Senator Laeson pointed out that under Rehabilitation of Damages or Damaged National Roads from HDM4 is the item "Nationwide" with a lump-sum appropriation of P 1.3 77 billion. He asked how this was obi igated since it consists of all the regions in country. Senator Drilon clarified that the "Nationwide" allocation of PI ,377, 153,000 is not part of Region XIII which has a separate item of P249,528,000. Further, he stated that the HDM4 categorizes the condition of national roads. He said that the appropriation for "Nationwide" is necessary because events that will take place during the budget year which will atfect the condition of the national road network cannot be exactly predicted. He gave assurance that the DPWH Secretary has promised to look into the matter and provide the available data.

Senator Lacson said that he understood the need for some buffer amount to augment the other items


since it pertains to Rehabilitation of Damages or Damaged National Roads from HDM4 but he needed information on how the budget for the item "Nationwide" was spent. Senator Drilon stated that he would look into the pertinent records and submit his response and the necessary documents on Monday.



II was 5:43 p.m.



Upon resumption, Senator Satta expressed the desire of Senator Lacson to continue with his interpellation at a later time.


At the outset, Senator Cayetano (A) asked how the laws regarding right-of-way are implemented, as he recalled that his father, former Senator Rene Cayetano, authored the law that when one deposits the amount for the zonal value, the judge is supposed to order the DPWH to take possession and use the projects. He stated that despite the clarity of the law, some judges have different interpretations. The reason it is in the courts for litigation, he said, is that the owner does not agree that the value given to him is the fair value, for instance, if the land's zonal value is PI,OOO but he wants P3,000. He noted likewise that some of the judges sit on the case or do not release the case. Asked whether the DPWH is experiencing such instances all throughout the regions and, if so, what it is doing to address the problem, Senator Drilon replied that these are not isolated cases and that they happen all over the country. As a remedy, he said that the Secretary has written the court administrator requesting that the Supreme Court issue the appropriate circular calling the attention of the lower court judges of the provision of the law which would allow the DPWH and public works projects to take possession once the amount indicated in the zonal value is deposited in the court.

Senator Cayetano (A) said that he was raising the issue because the DPWH has always been

'(7


blamed for project delays, He disclosed that there are, in fact, two laws: first, when the amount is deposited for the zonal value, the judge is supposed to allow the taking of the possession or entry; second, the judges are not allowed to issue TROs.

Senator Cayetano (A) stated that he would raise the matter again during the deliberations on the budget of the Judiciary. He requested a copy of the letter of the Secretary to the Court Administrator to be able to make the proper representation not to dispute about the implementation of the law but to remind the judges that the intent of the law was to speed up all of the public works projects.

Asked whether the mandate of Republic Act No. 6685 that in providing work, contractors accord pl'iority to socially and financially disadvantaged residents of the LGU where DPWH project is being implemented, Senator Drilon affirmed that when contracts are implemented, 50% of the unskilled labor is soul'ced from the locality where the project is located. He said that the DPWH is monitol'ing the implementation of said law.

Senator Cayetano (A) said that he has heard of certain areas in the United States wherein workers of contractors of government contracts are paid double, knowing that these are lucrative contracts. He believed that it is time that Filipinos appreciated the effort of Secretary Singson for lowering the contracts of public works projects ali over the country, even as some eyebrows have been raised and much to the consternation of other contractors. He expressed certainty that the DPWH is proud of such feat, particularly of the political will of the Secretary, as he expressed hope that the latter, without increasing the contract prize, could get more money into the pockets of the laborers rather than the contractors making most of the profits.

Senator Cayetano (A) likewise noticed the existence of contractors who do not have either the equipment or the capital to win the bid for public works contracts. He asked if the DPWH could study the idea of establishing a construction cooperative for small and simple projects such as pathways, basketball courts, waiting sheds, or even drainage which do not require the expertise of an architect or a supervising engineer. He noted that in Europe, the estate tax and progressive income tax have become effective mechanisms in transferl'ing wealth, but in the case of the Philippines, wealth is still concentrated among the

635

rich. He opined that the real problem is how to generate more jobs to put money in people's pockets. He said that for projects amounting to P I million and below, the contractors could instead rent or borrow equipment instead of buying them, which concept is being studied by the City of Taguig. He said that the good thing about cooperatives is that their finances are open so that corruption can be minimized, especially since the contracts are for simple projects ranging from P500,000 to P2 million. In answer, Senator Drilon gave assurance that the DPWH Secretary wou Id study the matter.

On another point, Senator Cayetano (A) asked whether the Ondoy-related projects that were found flawed and subsequently cancelled were already being undertaken by others that were found above board. In reply, Senator Drilon stated that some of the projects were already completed, while others were still underway. He added that because of the reform measures that Were undertaken, a good portion of the Ondoy funds was saved for the implementation of new projects.

In response to a further query, Senator Drilon said that P5 billion out of PII billion of the Ondoy funds went to the DPWH.

Senator Cayetano (A) pointed out that every time special allocations are made in times of calamities, local officials such as mayors, governors as well as barangay chairmen would lament that they did not receive the funds. He noted that Marikina, Taytay, Taguig, et cetera were directly hit by Typhoon Ondoy. and even as he commended the DPWH Secretary for being a reformist and transparent, he stressed that the people should know where the funds went. In reply, Senator Drilon said that the information is available in the DPWH website and that Senator Cayetano (A) would be furnished with a hard copy.

But Senator Cayetano (A) insisted that under the agreement, the National Coordinating Council was supposed to set up a special website solely for Ondoy funds,

At this juncture, Senator Cayetano (A) asked to be given a written update on the funds of the PPP. He stated that there is a major project in Taguig City that would affect the proposed C-6 in southern Metro Manila. He said that the road dike west of Manggahan Floodway is being called the C-6 but the real C-6 is supposed to be an eight-lane road, with

636

four lanes on each side. He said that a Korean consultant was hired to make the alignment and he wanted to make sure that the consultant conferred with the LLDA and the LGUs concerned, noting that this was not done in 1998 when DPWH constructed the west part of Manggahan. He said that the DPWH refused to spend another P4 billion to move the dike towards the lake which could have saved I, I 00 hectares of land. Right now, he said, the price of land a kilometer away from the dike is valued at P30,000 per square meter and land two kilometers away, P II 0,000. For this reason, he sought an assurance that the alignment for the C-6 project would be a product not only of a foreign consultant but also of the ROC of Metro Manila, the MMDA, the LLDA and the LGUs around the Laguna Lake. In response, Senator Dri Ion gave assurance that the endorsements of the LGUs would be secured accordingly.

At this point, Senator Cayetano (P) adverted to the piece of land in the City of Taguig that the President granted to the DPWH. He said that he had been working on this project with the DPWH leadership but he also wanted the other people of the DPWH to see that there can be creativity and valuebuilding in the use of the property. He said that the DPWH has often becn perceived to be in the top five or top ten most corrupt agencies in the country and he knows that engineers in the private sector get much more pay than government engineers. He believed that if government cannot raise the salaries of its personnel, it should at least increase their benefits. He stated that after the land was granted to the DPWH, its officials sought to coordinate with him and local government to explore the possibility of creating value for the agency's housing project instead of the usual run of the mill low-cost housing.

At this juncture, Senator Cayetano (A) gave a visual presentation showing an area located in front of Camp Bagong Diwa that used to be a storage for equipment for Regions IV -A or IV -B. He explained that the left side of the property was also owned by the City and was given to a city college through an executive order. He said that the land surrounding the area is cheap because it is government-owned. He noted that during the past administration, the DPWH initially planned to get the services of a contractor to build houses with an average cut of about 60 to 120 square meters each; however, the government cannot expect to collect much taxes from the property since the houses were worth less and there is not enough space for parking or sports facilities.

------


Senator Cayetano (A) said that it was for these considerations that he conferred with the DPWH leadership and asked an urban planner to draw up a plan wherein the front portion, about 500,000 square meters, was allotted for a commercial block that could generate money to sustain development. He stated that the lots were divided in rows to accommodate a swimming pool, a club house, a condominium, an executive management office, and a parking lot at the basement. He then presented a series of slides showing how the area looked like with the condominiums and the commercial spaces. He also pointed out that the location of the area is right beside the Bicutan Interchange which has an access to C-5 and a ready access to the future C-6.

He said that the final decision is up to the DPWH Secretary as well as the property developers. He explained that he only wanted to show the difference between simply giving out land and creating more value from land. He said that the Pag-IBIG already has funds for the project and that it is open to talks on how to make housing affordable to the DPWH personnel. He added that he would take up the matter in private with the DPWH Secretary as he expressed hope the latter would continue to support the project.

Senator Cayetao (A) observed that the DPWH owns many lots in different regions and builds projects for the DOTC and the NHA. He said that if the DPWH can make a model housing program for its employees, it could benefit government employees all over the country,

INTERPELLATION OF SENATOR LACSON (Continuation)

Senator Lacson pointed out that in 2002 and 2003 GAAs, there were entries in the lump-sum appropriations in the amount of P956.950 million for the NAIA Expressway and other major roads in Metro Manila, a portion of which was used to pay security agencies, salaries and RATA. He clarified that he was not blaming the present DPWH for the irregularities, but he said that the matter should be looked into.

In response, Senator Drilon said that he has gone through the budget of the national government for the past several years and he agreed that the practice was improper. He said that he was surprised because it was very apparent that the past administration had

THliRSDAY, NOVEMBER 17, 2011

no respect at all for the General Appropriations Act in terms of the execution of the budget. He revealed that there were actually worse cases in the implementation of the budget. He assured Senator Lacson that the present DPWH leadership and the Aquino administration do not indulge in these illegal practices,

Senator Lacson said that he has heard good things about Secretary Singson and that he agrees to Senator Drilon's observation, But he reiterated his aversion to lump-sum appropriations, noting that from 2002 to 2010, a total of P 124.1 billion was appropriated in lumpsum for various infrastructure and local projects, another P60.3 billion for nationwide projects, and another appropriation for leadership funds. At this point, he gave a powerpoint presentation which showed a handwritten footnote of former President Arroyo and a letter from Joaquin Lagonera to then DPWH Acting Secretary Bayani Fernando that said:

"May I respectfully transmit the attached handwritten note of the President dated March 3 I, 2003 and based on the March 10, 2003 letter of Angeles City Mayor Carmela Lazatin which is quoted as follows: OK, DPWH from bridge fund otherwise leadership fund."

Senator Drilon affirmed that the leadership funds are no longer in the 20 II GAA and 2012 GAB.

As regards the lump-sum appropriations which amounted to 1'33.4 billion in 20 I 0, Senator Lacson disclosed that the DPWH Secretary has assured him that the President already ordered that the release of the remaining P20 billion be stopped. But Senator Drilon clarified that about PI 0 billion was released before July 1, 20 I 0, and afterwards, the DPWH Secretary stopped further releases.

Regard ing double appropriations, Senator Lacson pointed out that in 2010 GAA, there were 52 items for the construction/improvement of roads in some 26 areas that amounted to Pl.8 billion, but some of which they intended to fund either did not exist or were still unpaved.

Senator Drilon commented that whether the funds are double appropriations or lumpsums, if the implementor is a crook, graft would be committed.

Further, Senator Lacson revealed that in 2005, there were 114 line items that amounted to 1'26.7 billion, supposedly for projects costing PIOO million and above, but some of them were realigned. In this

637

regard, he said that he got a copy of the letter of DPWH Secretary Ebdane dated April 21, 2005, to DBM Secretary requesting the realignment of funds to locally and foreign assisted projects, one being the Subic-Clark-Tarlac Expressway (SCTEX). Since the BCDA volunteered to fund the SCTEX, he questioned why no one tried to correct the entry in the 2005 GAA for the same project to prevent double funding. He stated that the real purpose of the realignment was not to fund the SCTEX project but other items. He explained that he had made these observations to encourage the DPWH people to follow the lead of the President and their Secretary to reform the Department and not allow these bad practices to happen again.

Senator Drilon believed that if the leadership of any agency is minded to commit graft, no amount of restrictions and safeguards in the GAA would prevent him/her from doing it given that there is so much executive power over the disbursement and execution of the budget. However, he pointed out that the moral standard of the present Administration is something the people can be proud of unlike the past Administration, who wantonly disregarded budget rules. He commended the Aquino Administration and the DPWH leadership for taking it upon themselves not to repeat the malpractices and corruption of the past.


Preliminarily, Senator Drilon expressed appreciation to Senator Defensor Santiago, who was unable to come, for sending in her written questions as it would facilitate the debates on the 2012 GAB.

Thereafter, Senator Sotto posed the following questions of Senator Defensor Santiago to the Sponsor:

I) What is the status of the road-user's tax?;

2) What was the balance of the fund when President Aquino assumed office on July I, 20 I O?;

3) How much has been collected since then up to the 3 I" of October 2011; and

4) How much has been obligated as of the October 31,2011.?

Senator Drilon replied that for the period 2001 to 2010, a total of P70,393,043,752.36 was collected under the MUVC item and based on the celtification of the National Treasury, out of this amount

638

PS9,00 I ,641 ,070 was disbursed, leaving a balance of approximately PI \,300,000,000 billion as of October 2010, and if the actual MVUC collection from January to August 2011 of P7,36S,474,087.84 were added, the releases amounting to P2,926,63 1.08 and pending commitments of P3,403,210 were deducted, PI2,400,03S,762.20 would be the unobligated balance.

Que.>titm: What was the basis for the allocation of this road user's tax? Is there a difference from the way the allocation process was being done during the time of the previous administration and the allocation process of the Aquino Administration? That is the reason why we asked how much has been collected from July 2010 to August. Is it the same process and what is the basis for this allocation?

Senator Drilon explained that the DPWH used a different process from that of the past administration. He cited reports that the previous administration did not have a sound criteria for approving road projects and often based its selection on political affiliation; on the other hand, the current administration not only based its selection on preventive maintenance of national roads but makes the effort to equalize these allocations among the different congressional districts.

Questio/!: Can we say that the allocations process is now based on existing roads and implied scheduled maintenance work and not by congressional districts?

Senator Drilon stressed that the DPWH tries to provide equal allocation of funds for preventive maintenance for every congressional district.

At this juncture, Senator Sotto noted that Senator Defensor Santiago doubted if it would be possible for the DPWH to be equitable in the allocation considering that one district might have more old roads than another. Senator Drilon clarified that it is not possible to be truly equitable in the allocation of road board projects not only because there are gaps in the vehicles used and the state of the roads but also because road conditions differ province by province and region by region. As such, he said that localities where roads easily deteriorate due to constant use would certainly receive more funding assistance. However, he emphasized that there is an equitable allocation in the present practice and policy of the board.

Questio/!: Is the allocation of the road users tax posted in the DPWH website?

THURSDAY, NOVEMBER 17.2011

Senator Drilon replied that the updated allocations are posted in the official website of the Road Board.

Question: Does the Department already have a program for the road maintenance in 2012 and can it be made available to members of Congress or the general public?

Senator Drilon replied in the affirmative.

Questio/!: Who is responsible for monitoring the identification, allocation and utilization of the fund? If NGOs, who gets to choose the NGOs - the NGO board? Are these NGOs the types who take advantage of their connection with the Administration to receive special accommodation? For example, which NGO is monitoring the use of the fund in the province of Tarlac or Quezon or Pampanga?

Senator Drilon stated that various agencies implement different kinds of funds. For instance, he mentioned Fund-lSI, a special road support of the DPWH; while Fund-152 which was being implemented by the DlLG; and Fund-IS3 on road safety which is under the DPWH while the DOTC has a fund for special vehicle pollution control. He said that NGOs such as Balllay Lansanga/! and Transparency International monitor the DPWI-\'s implementation of the programs and that the public can monitor the utilization of the funds in Transparency International's official website.

Question: Do you agree with the proposal that under the One Fund concept, all taxes, fees and charges should be remitted to the Treasury and that they should be dispersed only with the expressed authorization by Congress? Should the road user's fund then not be expressly included in the President's annual budget which is submitted to Congress for authorization?

Senator Drilon believed that while such a policy direction can be pursued, the law ought to be amended considering that RA 8794 expressly delegates this power to the Road User's Tax Board. As a matter of policy, he said that the delegation of the power to appropriate as contained in RA 8794 should be reviewed. He believed that there are various other laws wherein Congress delegated the right to appropriate public funds to other agencies such as GOCCs and SUCs.

Question: Who are the members of the Road Users' Tax Board?

, r

TllLJRSDi\ Y, NOVEMIlER 17,20 II

In answer, Senator Drilon identified the private sector representatives in the Board:

Col. Rodolfo de Ocampo - nominated by the Truckers' Association;

Atty. Joselito Manalo - nominated by the Bus Operators

Association; and

Rolando Evangelista - nominated by the Pasang Masda

For his part, Senator Satta noted that the members were nominated by NGOs.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS

There being no further interpellation, upon motion of Senator Satta, there being no objection, the budget of the Department of Public Works and Highways was deemed submitted for the Body's consideration.


Upon motion of Senator DI'ilon, the session was suspended.

II was 6:58 p.m.



DEPARTMENT OF NATIONAL DEFENSE

Senator Drilon presented the budget of the Department of National Defense.

MANFESTATION OF SENATOR DRILON

Senator Drilon stated that PI 06,880,220,000 is appropriated for the Department of National Defense (DND) in the 2012 GAB to protect the country's national boundaries and territories. He revealed that the Committee neither touched nor revised the budget submission of the DND because it acknowledged the fiscal burden on the DND as a result of the retirement benefits and pensions of war veterans which comprise P34 billion or 32% of its total budget. Compared this, he said, to the grossly inadequate allocation of P5 billion for the modernization program. He cautioned

639

that in the next five years, the allocation for the pension of war veterans would become bigger than the regular salary of soldiers in active duty, thus, the need for the Aquino Administration to address the problem immediately.

At this juncture, the Senale Presidenl Pro Tempore Ejercito Estrada relinquished the Chair to Senator Legarda.

INTERPELLATION OF SENATOR CAYETANO (P)

Senator Cayetano (P) observed that the DN D is a field dominated by men but it also has women equally worthy and able who have to balance work life and family life aside from concerns at the workplaces.

Asked on the projects and initiatives under the DND-Gender and Development (GAD) program which is allocated P2 million in 2012, Senator Drilon enumerated the following:

• Conduct GAD symposium for senior leaders;

• Conduct gender sensitivity awareness programs;

• Attending the summer international course on GAD;

Facilitation of health and welfare activities;

• Conduct of DND-wide performance audit;

• Orientation seminar on gender mainstreaming and the Magna Carta for Women;

Development of GAD related materials;

Establishment of a child-minding center; and,

Establishment of a GAD resource center and health card.

Senator Cayetano (P) asked that she be furnished with a copy of the programs and be assigned a point person with whom she can work to help in the implementation of the programs. Also, she recommended that the DND put up a breastfeeding center. Because of the size of the DND, she also urged some of its officers to get masteral courses so that they can serve as in-house experts for the Department rather than outside consultants. Senator Drilon replied that the DND Secretary has tasked Dr. Sta Ana to coordinate with Senator Cayetano (P) on the GAD initiatives.

640


At the outset, Senator Sotto expressed full support for the budget of the DND, He took note of the allocation of P32 billion for pensions of veterans which represents 32% of the total DND budget as compared to the P5 billion allocation for the AFP Modernization Program,

Asked how many AFP pensioners there were, Senator Drilon replied that there were approximately 350,000 pensioners, 247,000 of whom are veterans and widows,

Asked how many pensioners, who are over 100 years old and above, still receive their pay, Senator Drilon gave the following breakdown: age 100, 24; age 101, 14; age 102,9; age 103,3; 104,2; and age 110, I. He said that he will not be surprised if some pensioners marry their caretakers because of the survivorship pension which the spouse will receive when the pensioner dies,

On the concern that the government is spending more for these pensioners than what it is spending for the DND, Senator Drilon stated that this was the reason why he sounded the alarm, the matter being highlighted for the first time during the budget debate, He informed the Body that he has received a written report on what could be done in order to address the problem, However, he believed that the government should have the political will to solve the problem.

As to the other PY AO pensioners, Senator Drilon said that there are 64,067 AFP retirees with an average of 60 years old and 48,093 survivorship pensioners or spouses of deceased pensioners who receive an average monthly pension of PI2,265,00.

Asked why these pensioners receive double retirement benefits, from the PY AO and the AFP as well, Senator Drilon stated that they receive from the PY AO old-age pension amounting P5,000 for those who reach age 65 and this continues even if they are 100 years old.

Senator Sotto recommended that the DND scrutinize the issues being brought out in its budget, and that it should gear its goals towards supporting soldiers who are currently in the service by granting them bigger salaries and benefits in terms of education and health progmms,



Senator Ejercito Estrada asked if the AFP has instituted or implemented reforms regarding its budget so as not to repeat the old practice ofthe pasalubong or pabaon system that was discovered during the investigation on the AFP budget scam early this year. Senator Drilon recalled that in one of the Blue Ribbon Committee hearings, one session was devoted to hear the AFP chief of staff describe the new policies the new leadership adopted so that the pabaon system will no longer be repeated, He informed the Body that the DND has submitted an 18-point action plan involving logistics, personnel and financial management aspects of its operations. He expressed confidence in the present AFP Chief of Staff, General Eduardo Oban, Jr., that he would sincerely implement reforms in view of the fact that the pabaon system has caused embarrassment to and demoralization among the officers and men of AFP. Likewise, he expressed certainty that the DND secretary down to the last soldier of the AFP will not allow these corrupt practices to destroy their institution.

Senator Drilon pointed out that the 2012 AFP budget has consciously veered away from lump-sum appropriations which gave the opportunity for the pabaon system, explaining that the Committee on Finance removed the special provisions granting the DND and the AFP to propose realignment in their budgets. He explained that the operating units of the AFP down to the level of company units will be allocated a definite amount of MOOE which will be published in the AFP website. He added that all funds will no longer be centralized in the general headquarters but will be distributed directly to major services. He stated out that the pabaon system was made possible due to the discretion given to the AFP chief of staff whose office holds the centralized disbursement. He said that instead of issuing cash advances, purchase cards wi II be used in 2012, the pilot-testing of which will be undertaken early next year. To further minimize the opportunity for conversions, he stated that the budgets for unfilled positions was placed in the Miscellaneous Personnel Benefits Fund (MPBF), which can only be used upon the hiring of personnel corresponding to the budgeted items.

Senator Ejercito Estrada sought assurance that the reforms started by General Oban wi II be pursued by his successors after his retirement on December 13, 20 II. Senator Drilon stated that the reforms have

THURSDAY. NOVEMBER 17,2011

been institutionalized and appropriate directives and policies have been issued to be followed by his successors. He expressed confidence that these reforms will be continued for the good of the organization.

In closing, Senator Ejercito Estrada commended the Defense Secretary together with the AFP Chief of Staff for doing a good job.


Noting that the National Disaster Risk Reduction Management Council (NDRRMC) is in charge of strategies on preparedness, rehabilitation and reconstruction in times of crisis, the Chair asked whether the DND has coordinated its effolls with the NDRMMC to make sure that there is just one entity that will prepare and respond during times of crisis such as typhoons. In the past, the Chair said that problems came about because of lack of coordination, and a point agency that will engage in quick decisive action such as the release of water from dams, update on pre-emptive release of water and dam protocols, and giving of advice to LGUs.

Asked if there is a budget for the OCD as a secretariat of the NDRRMC. Senator Drilon replied that there is a P530-billion budget for operations under the Quick Response Fund, which is a standby fund for relief and recovery programs in order that the situation and living conditions of the people in communities or areas stricken by disasters, calamities, epidemics or complex emergencies may be nonnalized as quickly as possible.

In reply to fUllher query, Senator Drilon said that the Quick Response Fund for Central Luzon which was allocated for the DSWD, has been disbursed. He stated that he would submit to the Chair a complete report on the Quick Response Fund allocation at the soonest possible time.

On whether there is a standby fund for the predisaster preparedness programs of the NDRMMC and OCD, Senator Drilon informed the Body that the NDRMMC Fund can also be utilized for disaster risk reduction or mitigation and Pall of this fund is the Quick Response Fund. He affirmed that the funding shall cover preparedness, pre-disaster and post-disaster.

The Chair requested the undersecretary who is in charge of this funding and the OCD to submit a report on how the budget was disbursed.

641

Senator Drilon gave assurance that the DND would comply with the request.

Taking advantage of the presence of the AFP hierarchy, the Chair stated that during the elections in 2004, 2007 and 2010, there was a black propaganda that circulated, completely baseless and untrue, that she authored a bill seeking to take away the vacation pay, benefits and privileges of men and women in uniform in the military as well as in the police. The Chair stressed that no senator or congressman in his/her right mind would file a bill to take away the privileges of the hardworking, discipl ined and competent men and women in uniform,

As rega~ds the AFP's Personal Services, the Chair observed that the AFP reported savings as follows:

Year

2008 2009 2010

Savings

P 5,621,781.00 8,008,686.00 64,066,609.76

Asked if the AFP could provide the projected savings for 2011 and if the same could be converted into additional benefits for its personnel, Senator Drilon stated that the savings from PS in 2012 will be placed in the Miscellaneous Personnel Benefits Fund (MPBF) which represents the budget for unfilled positions in the AFP. He recalled that during the investigation of the Blue Ribbon Committee, it was discovered that the source of the "pabaon" came from Personal Services. He stated that there has never been an accurate count of the troops' strength so the budget has always been accepted and the PS given leeway. He said that what the Committee did in the 2012 GAB is to put in the MPBF the portion of the PS pertaining to unfilled positions that can only be drawn upon submission of the list of positions for actual hiring. He said that there would still be savings but not of any significant amount and it will be used in case circumstances which were not anticipated arise. He added that the savings from 2008 to 2010, as cited, were accurate which was why the Committee suspected that they were the source of indiscretion committed by the previous leadership in the AFP. He informed the Body that the MPBF has been allotted P907,398,000 in 2012 for 4,605 unfilled unifonned positions.

Asked if the savings for 2010 and 2011 could be given to uniformed personnel, Senator Drilon replied that there are no savings for 2011 because the DBM released only 80% of the AFP's budget.

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At the outset, Senator Cayetano (A) expressed condolences to the AFP for losing soldiers in an ambush last month and in previous years' encounters. He inquired into how the families of the fallen soldiers were doing.

Senator Cayetano (A) stated that there is no choice but to follow the Salary Standardization Law with regard to military pay but he inquired if there are benefits that can be institutionalized by an executive order instead of a law. Senator Drilon stated that as a matter of policy, whatever benefits the DND wants to institutionalize require budgetary allocations and must be presented as part of its budget.

Senator Cayetano (A) pointed out that the Senate follows the Salary Standardization Law but he supposed that the Senate and other government agencies are more creative in giving benefits. Saying that the Senate was trying to equalize benefits for everyone, he inquired if it is possible for a military officer or enlisted personnel, who is either injured or dies in the line of duty, to receive, other than the death benefits, his/her pay as if he/she were alive until the age of 56 years.

Asked on the number of casualties the previous years, Senator Dri Ion stated that in 20 I 0, 100 were killed in action and in 20 II, 113.

Senator Cayetano (A) opined that ISO casualties a year would not make an impact on the budget if the policy would be to treat someone killed in action as if he/she is alive; and even promote him/her so that the family c~lI1tinues to get his/her pay. He stated that it is ironic they are called heroes when they die in the line of duty but their families are left with nothing. He said that the life of the man in uniform

. is very difficult; it is bad enough that a member of the family is in military/police service, but much, much worse if a mother or father dies while on duty. Senator Drilon stated that the spouse of the soldier/ police is entitled to a survivorship pension equivalent to 50% of base pay and 50% of longevity pay.

But Senator Cayetano (A) pointed out that families would only get halfofwhat they are entitled to in the event their loved ones die in the service of country. He asked whether the AFP and the DND can study


the possibility of given full pension and benefits. Senator Drilon replied in the affirmative.

As regards the retirement age, Senator Drilon replied that the mandatory age is 56 years old in the military.

Senator Cayetano (A) presumed that if life begins at 40, military personnel would be retiring at 16 years old. But he noted that presently, people aged 65, 75 and 80 are still productive. He said that the government invests so much in the military, yet after 56, they do not have a choice but to retire. He disclosed that in the U.S., there are several programs that integrate retired military personnel into civilian life and according to a study, the best elementary school teachers are enlisted personnel. He said that towards the last three years of their life in the military, the personnel undergo retraining programs and there are already agreements where they would be employed. In the case of retired Filipino soldiers, he said that those from the engineering brigade could be employed by the DPWH or DOTC until they reach 65, the retirement age. In response, Senator Drilon stated that there is a continuing study and there are a lot of factors to consider. He explained that it is not as simple as raising the retirement age because it would affect the career path of junior officers who look forward to taking over the leadership once the senior officers retire. He stated that the Department was conscious of the need to review all the systems.

Senator Cayetano (A) recalled that he had been proposing the integration since 2001, when he was still in the House of Representatives. He narrated that he saw a recent cable network program entitled "Helmets to Hard Hats" that featured the integration of the military men after they got home from the first Iraq War when there was already a recession in America. He stated that they were not treated like heroes, they were out of jobs and their families were hard up. He said that some foundations took it upon themselves to retrain the former soldiers in construction and arranged with developers to hire them.

Senator Cayetano (A) stated that in the Philippines, retired soldiers get employed in the security industry but the opportunities are limited. He expressed hope that the leadership of the DND and the AFP would report to Congress in the next budget hearing on integration programs for retiring personnel that can be adopted.

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TIIURSDAY, NOVEMBER 17.2011

On another matter, asked if there is a budget for recreational facilities, Senator Drilon replied that there are five existing golf courses in military camps for use of officers and retired officers.

Senator Cayetano (A) recalled that when Camp John Hay was still under U,S, control, it had a bowling alley, mini-golf course, and three chapels for different denominations and that the families of the U,S, servicemen were living inside the camp, but the situation is different in Filipino military camps because families of soldiers have to call their loved ones just to spend time together. He believed that R & R is one way of increasing the morale of soldiers, He stated that military camps should have facilities like badminton and basketball COUlts, minigolf courses or bowling alleys that are exclusive for servicemen and their families. He remembered a TV report a few years ago that the military was building a resort in Boracay and the slant of the news was "Baki! sa Boracay 7" He be lieved, however, that the military deserve to have a private resort in Boracay because they are the ones who face the enemy and they should not be deprived of some luxllly.

On whether there is a budget for R & R, Senator Drilon replied that the personnel are given a transportation allowance for R & R.

Senator Cayetano (A) asserted that the soldiers would rather spend their R & R inside the camp with their loved ones because their budget for R & R is just too small. Senator Drilon stated that the situation is dictated by the limited resources of the military,

Senator Drilon acknowledged that recreational facilities are impOitant for the morale of soldiers but he pointed out that they have to compete with the other needs of the armed services given the limited budget. He said that the AFP leadership looks at the priorities, for example, the funding for the AFP Modernization and the payment of pensions of veterans. Perhaps in the future, he said, when there is more liscal space in the budget of the AFP, recreational facilities can be provided for men and women in uniform.

Senator Cayetano (A) acknowledged that there is limited liscal space but he noted that if government, for instance, allocates PI,OOO each for the R & R of 100,000 members of the AFP, that would be

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equivalent to PIOO million or if the soldiers are given PS,OOO each, that would be psoo million, He believed that building the recreational facilities inside the camps would be more convenient for soldiers who can also save on transportation fare. He said that he does not have studies to support his position but he believed that the DND leadership could attest that even with the most modern equipment, even with the most disciplined military, soldiers are still people and it is necessary to treat them humanely, He argued that soldiers who are able to see their family regularly, who know their family is secure, who have time for R & R, for arts and culture, are a better fighting force than those who are starved of family, and arts and culture,

Given its present budget, Senator Cayetano (A) proposed that the AFP just be given a meager amount for one or two camps and perhaps, some LGU or senator or congressman can pitch in and have the project duplicated in other parts of the country.

Responding thereto, Senator Drilon said that the Committee will find it difficult to realign portions of the budget for recreational facilities given the very limited fiscal space and the many needs of the AFP. He said that perhaps for the 2013 budget, the Committee could look at the proposal again.

Senator Cayetano (A) said that he was not trying to put the Senate on the spot by making it commit to realign the AFP budget with its limited budget space; rather, he brought up the idea to convince the leadership that maybe PIO million here or PIOO million there that was supposed to be used for another purpose can be put to better use to boost the morale of the 100,000 men and women in uniform. Acknowledging the lack of budget for uniforms, pay and arms and ammunition, he argued that with planning, the project for one good country club in one of the camps could be started,

Moving on to another matter, Senator Cayetano (A) recalled that during the hearings on the pabaon, one of the reasons given why the military commanders in the field needed money was that hospitals do not admit injured soldiers without any deposit He pointed out that in terms of equipment there is a world of difference between government hospitals like V. Luna General Hospital, Veterans Memorial Hospital and the Fort Bonifacio hospital, on the one hand, and top private hospitals, on the other hand,

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Asked if there is an allocation for additional equipment for government military hospitals, and whether they have MRI or a CT scan machine, Senator Dri Ion repl ied that the Veterans Hospital has a MRI machine but not V. Luna and the Fort Bonifacio hospitals.

Senator Cayetano (A) observed that other government hospitals like Lung Center of the Philippines, Philippine Heart Center, the National Kidney Institute, among others, have already gone semi-private and have modern and state-of-the ali equipment, that is why some patients would prefer going there than to Makati Medical or st. Luke's Hospital. He suggested that perhaps more money could be put into government military hospitals so that even if the State cannot increase the pay of. soldiers, they and their families would have an assurance they have some place to go in case something happened to them.

As to the memoranda of agreements between private hospitals and the AFP or DND that private hospitals shall not ask for deposits from members of the military who seek treatment, Senator Drilon replied that soldiers, especially those hurt in combat, who needed hospitalization would be immediately attended to in private hospitals.

Senator Cayetano (A) said that he was happy to hear that because during the committee hearings, he received complaints from some veterans that private hospitals refused to treat them without a deposit.

Asked if there is an insurance policy for members of the military and for how much a member is insured for, Senator Drilon replied that there is a group insurance for the military under the AFP Mutual Benefit Association, Inc.

As regal'ds the death benefit, Senator Drilon said that it is about P200,OOO to P300,OOO, depending on the ran k of the deceased.

Senator Cayetano (A) recalled meeting a U.S. general during an event in Taguig City who told him that the U.S government recently increased the insurance benefits of its military personnel from US$200,OOO to US$400,OOO per person. He said that according to the U.S. general, it would be cheaper for the government to give insurance, and the bigger the group to be insured, the cheaper the premiums. He suggested that this is something that the GSIS would perhaps be willing to do. He reasoned that a


P500,OOO or a million insurance for a soldier would be less burdensome to the government and it would, at the same time, allow him/her access to better health case.

On another matter, Senator Cayetano (A) confirmed that the City of Taguig and the DND and PV AO have come up with an agreement as regards the Libingan ng mga Bayani. He revealed that there has been a continuing controversy about the cemetery in the City of Taguig because for years, the military has failed to develop the property and some of its retired members were living in the premises. He stated that the city government came up with the computation that even in the next 100 years, it would be impossible to till up the whole cemetelY. However, he disclosed, an agreement was recently made between the parties concerned and urban planners on what would be best for everyone.

Senator Drilon said that he was informed that a committee had been formed with the City of Taguig and the AFP precisely to look for ways and means to arrive at a win-win situation for all concerned. He said that the AFP and the DND were awaiting the nominee of the City of Taguig to the committee.

Senator Cayetano stated that he wanted the matter on record because like in any battle or war, there are people who are out to destroy the negotiations and who refuse to find a win-win situation for everyone.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF NATIONAL DEFENSE

There being no other interpellations, upon motion of Senator Honasan, there being no objection, the budget of the Department of National Defense and its attached agencies, namely, the DND Proper Office, Government Arsenal, National Defense College of the Philippines, the Office of the Civil Defense, the Philippines Veterans Office, the Veterans Memorial Medical Center, the Armed Forces of the Philippines, Philippine Army, Philippine Air Force, Philippine Navy and the General Headquarters, was deemed submitted for the Body's consideration.


Upon motion of Senator I-Ionasan, the session was suspended.

It was 8:20 p.m. ; r



At 8:28 p.m" the session was resumed.

DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT AND ITS ATTACHED AGENCIES

Senator Dri Ion presented the budget of the Department of Social Welfare and Development (DSWD) and its attached agencies.

Senator Drilon stated that the GAB-House version allocated a budget of P49,348,88 billion for the DSWD while the Committee recommended a budget of P48,762, 175 billion. He explained that while there appears to be a reduction in the DSWD budget, this was more apparent than real because what the Committee did was to move to a single fund, the allocation for the Pam ana program which the Depaltment itself would be implementing. In fact, he said that the budget of the DSWD was even increased if the Body would consider that a portion of the Pamana fund that pertained to the Office of the Presidential Adviser on the Peace Process (OPAPP) was transferred (0 the DSWD.

Senator Drilon stated that the centerpiece program of the budget remains to be the 4Ps or the conditional cash transfer which is budgeted at P39 billion. He explained that the beneficiaries will be increased by 700,000 next year from the current 2.3 billion beneficiaries as of the end of the year. He emphasized that the beneficiaries will be chosen on the basis of the National Household Targeting System Poverty Reduction list which is a list of those in the lowest bracket in the economic sector.

Senator Drilon pointed out that one of the amendments that the Committee introduced was to reduce the operating cost or administrative cost of the conditional cash transfer program by about P800 million, and transfer this as additional benefits for additional cash grants to 61,000 families.

In closing, Senator Drilon urged the Body to support the budget of the DS WD given (he track record of the program so far.

MANIFESTATION OF THE CHAIR

The Chair stated that she will no longer interpellate on the budget of the DSWD as she expressed full

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support for the DSWD budget especially with her confidence in the integrity, hard work and discipline of Secretary Soliman.


On behalf of Senator Defensor Santiago, Senator Honasan read the following questions regarding House Bill No. 5023, to which Senator Drilon responded accordingly:

Question No. I: As of July 31, 20 II, of the P21.2 billion appropriated for the Pantawid Pamilyang Pilipino Program or the 4Ps, the total obligations incurred was P7.9 billion, This leads P 13.3 billion unobligated or a utilization rate of 37.2%. If DSWD was doing its job efficiently, utilization rate should be around 58%. Please explain the big divergence between plan and actual spending. By the way, does obligation mean that funds were actually disbursed and received by the beneficiaries or is there a difference between obligation and actual disbursement.

Senator Drilon replied that as of August 2011, the actual disbursement amounted to 69% and there is a difference between obligation and disbursement since the program calls for disbursement every two months. He explained that the actual receipt by the beneficiary wi II be on the th ird week of the month when funds are released so that the DSWD personnel can check compliance with the conditions for the grant.

Question No.2: How many were the intended beneficiaries under the 4Ps program this year? How many have actually received benefits as of the end of October 20 II? Are their names available in the DSWD website?

Senator Drilon stated that the names are available in the DSWD database and the Secretary has provided the information to the other Members of the Body who have requested for it. He said that a copy of the names can be likewise submitted to the office of Senator Defensor Santiago, should she require it. On the number of beneficiaries, he said that from January to August 2011, a total of2,024, 135 households have received cash grants.

Question No.3: Who is responsible for distributing the cash to beneficiaries, regular staff of the DSWD or contractual workers or

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institutions? And if the process is being outsourced, has the contract undergone competitive bidding?

Senator Dri Ion stated'that the disbursements are made through the Landbank which is a government bank. He explained that the money does not pass through the hands of any personnel of the DSWD because the beneficiaries are issued A TM cards; but if the cards are not yet available, the Landbank shall conduct over-the-counter payments and if there is no Landbank branch in the municipality or if it is not accessible to the beneficiaries, rural banks or cooperatives shall disburse the money. He said that the beneficiaries may go to couriers and money transfer outlets but only in extreme cases where there is no Landbank, rural bank or cooperative in the area.

Questioll No.4: Who is responsible for monitoring the performance of the conditional cash transfer program, regular staff of DSWD or other institutions? If the latter, how are they chosen? Were they chosen through competitive bidding?

Senator Drilon stated that there are various levels of monitoring that are being done: I) The DepEd shall monitor compliance with the requirement that the child attends a certain number of days in a month so that the conditional cash grant will continue; 2) The DOH's rural health units are the network through which the requirements of visitation for mothers are imposed; 3) The DSWD, at the municipal level, shall monitor and ensure that the beneficiaries are really qualified (0 receive the cash grants; and 4) The LOUs and the civil society organizations. Senator Drilon informed the Body that by next year, a quarterly review of the disbursements through the Oversight Committee on Public Expenditures would be done.

Question No.5: How many will be the intended beneficiaries under the CCT program next fiscal year and how much will be the total appropriations for 2013, 2014. 2015 and 2016?

Senator Dri Ion stated that by next year, an additional 700,000 beneficiaries will be included in the program, therefore, by the end of next year, there should be about three million registered beneficiaries in the program. He said that the budget for the CCT program for next year is P39 billion but the budget for 2013 to 2016 have not yet been determined.

THURSDAY. NOVEMBER 17. 2011

Questioll No.6: If loans were not available from the World Bank and the Asian Development Bank (ADB), would the government undertake this program on such a large scale? What are the terms of the loans, interest rates, commitment fee, and the number of years to pay in a grace period?

Senator Drilon stated that there are foreign loans extended by the World Bank and ADB to support the program, but the loans would only cover about 600,000 households and the remaining 2.4 million households for 2012 would be supported by the national coffers. He added that the concessional loans that the World Bank and ADB have extended to the government has a 10-year grace period, 25 years to pay at I % interest.

Questioll No.7. Cannot the Government of the Philippines finance this program without borrowing money from international financial institutions?

Senator Drilon said that at present, only 600,000 of the total beneficiaries would be fully funded from borrowings and the balance of 2.4 million beneficiaries for 2012 would be fully funded by the national budget. He affirmed that the national budget could absorb the 2.4 million beneficiaries and stay within the planned program deficit under the Medium Term Development Plan.

Questioll No.8. Does the Aquino administration have an exit plan, and up to what year will this program continue?

Replying in the affirmative, Senator Drilon said that beneficiaries of the program are expected to graduate from the program after five years, thus, an exit program would be sustained and would provide the beneficiaries sustainable livelihood after two years of the five-year program.

Questioll No.9. Is there any solid evidence that as a result of the CCT program. dropout rates in elementary education have declined? Who did the study. if any?

Senator Drilon confirmed that the DSWD has engaged the services of the SWS which validated the decrease in dropout rates. Likewise, he said that in his personal discussions with congressmen, they expressed the need for funds for additional school buildings because in their areas where CCT is being implemented, the dropout rate has dropped.


Queslioll No. /0. Is there evidence that as a result of the CCT program more children are getting medical attention from government's medical facilities including health units? Who is keeping track of this inlormation?

Senator Drilon said that an SWS survey relative thereto ind icated that there was a high awareness of the conditionalities imposed on pregnant women, on children between zero and five years old, and on chi Idren of school age between six to 14 years old. He said that conscious of the need to show results out of the substantial budget on CCT, the Committee has required the DSWD to engage the services of survey companies to be able to get an accurate data as to the reduction in the dropout rates as well as on the pre-natal checkups. He said that the Committee would report to the Body the results of the surveys conducted by reputable survey companies to find out whether or not the program is achieving the purposes for which it was established.


Asked by Senator Lacson if there is a continuing effort to revalidate the issue on household beneliciaries, Senator Drilon replied in the affirmative, as he pointed out that it is, in fact, the first item in fulfilling the program's conditionalities. He explained that the funds are made available every two months but the actual receipt is on the third week of the month in order that the DSWD's field personnel would have time to revalidate compliance with the conditions. The screening of the actual beneficiaries, he said, was done even before they were chosen, and a mechanism is in place to verify the entitlements. He revealed that about 165,172 households, or 5% of the total number of program beneficiaries, were delisted as a result of such delisting process.

Asked if there are some more households deemed unqualified beneficiaries but still remain in the program, Senator Drilon said that while the list of beneficiaries is not 100% accurate, there is a high degree of confidence that they are, in general, legitimate beneficiaries.

Senator Lacson said that based on a recent repOlt from COA, the contents of which he was not at liberty to divulge, some of the beneficiaries that were reported to be deemed unqualified are still presently in the list, particularly a household which

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lists, among its assets, the following: TV set, VTR, VHS, VCD, DVD, sal a set, telephone, and cell phone. Senator Drilon said that the DSWD has already acted on the report and has delisted the unqualified beneficiaries. Senator Lacson, insisted, however, that the same· COA report claimed that said beneficiaries were still in the current list. He clarified that he was not casting aspersion on the competence of the Secretary, but that he merely wanted to point out the fact to help in the effort to continuously monitor and validate the household beneficiaries.


Asked by Senator Ejercito Estrada if indeed the purpose of CCT is to reduce poverty, Senator Drilon replied that the goal is to keep children in school and to keep them healthy. However, he said that while the program is a human investment program for children that in the process would also alleviate poverty, it is not principally designed as a poverty alleviation program but as a scheme to reduce school dropout rates and child mortality so that the nation's goals as a society could be met. Pointing out the alarming dropout rates, he said that for every 100 who enter grade I, only about 14 would finish college and 7 would finish vocational school.

If indeed one of the program's purposes is to alleviate poverty, Senator Ejercito Estrada asked why the SWS survey from September 4 to 7 showed that 52%, or lOA million families rated themselves poor, up from 49%, or 9.8 million families, in March and June of this year. Senator Drilon pointed out that the results of the surveys were sentiments of the respondents for the particular period when the survey was taken, particularly on the question which asked whether they consider themselves poor. He cautioned against taking the surveys in isolation, as he noted that on the same survey conducted by the SWS, the question "Do you expect a change in the quality of your life in the next 12 months?" was meant to be answered only by beneficiaries of the 4Ps and 37% of the 4Ps households expected a change in their quality of life and only 9% said it would be worse.

Moreover, Senator Drilon disclosed that in the self-dated poverty threshold of the beneficiaries of the 4Ps program and the nonAPs beneficiaries in the entire Philippines as of September II, only 20% were beneficiaries of the 4Ps. Thus, he said that he

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finds no basis to judge based on the self-rated responses of the respondents, since 80% of them are non-4Ps households,

On the goal of the Aquino government to reduce the country's poverty incidence from 33% to only 16.6% in 2016 through CCT, Senator Drilon reiterated that the alleviation of poverty is the function and the object of the entire government and the 4Ps is not the sole program to achieve it. He said that the budget of the Department of Agriculture, which is bigger, is also designed to alleviate poverty in the country. He emphasized that the 4Ps program is not per se a poverty alleviation program but principally an investment in human resources.

Asked whether the DA expects a decline in the number of poor people upon the approval of the 2012 budget, Senator Drilon admitted that the allocation for the 4Ps is insutlicient to improve the general poveliy situation of the country, reiterating that everything is designed to alleviate poverty -the entire budget of government; the various laws that encourage investments from the private sector; and the policy to push the country as a location for BPO.

On the number of beneficiaries under the CCT program for the current year, Senator Drilon said that program targeted 2.3 million households for 2011 and an additional 700,000 for 2012 so that by the end of said year, the number of beneficiaries would reach three mi Ilion.

In answer to fUliher queries, Senator Drilon said that the program was fully implemented in 2008 and that studies were being made to assess its impact, He disclosed that those who were enrolled in 2008 are expected to graduate from the five-year program in 2013. Since the program is primarily an investment in human resources through education, he said that the DSWD was required to conduct surveys, through the SWS, to determine whether the dropout rate went down and whether the children's health improved as a result of the program. He noted that the appraisal conducted by the SWS and the UP National College of Public Administration and Governance (UP-NCPAG) concluded that the CCT is principally for human resource development through health and education assistance; it does not aim to totally eradicate poverty but is actually a bridge program toward poverty alleviation.


Senator Ejercito Estrada noted that the program started during the time of the Arroyo Administration and he assumed it must have been successful, otherwise, the Aquino Administration would not have adopted it. Senator Drilon stated that it was fonner Sec. Esperanza Cabral, with the support of professional DSWD staff, who launched the program that was patterned after Brazil's Bulsa Pamilya and Mexico's Oportunidades.

Asked on the outcome of the programs in Brazil and Mexico, Senator Drilon disclosed that in Brazil, it brought down hunger and poverty incidence to a single digit. He said that articles on the Brazilian success were available for perusal.

Asked whether the program is expected to bring the same results for the country, Senator Drilon expressed confidence it wou Id succeed through the efforts of the very professional staff of the DSWD.

Asked to provide the complete data of beneficiaries specifically in San Juan, Senator Drilon said that there were a total of 427 household beneficiaries among 18 barangays in San Juan with a total disbursement of P2 million.

Senator Ejercito Estrada pointed out that there were 21 barangays in San Juan, and he asked why there were no beneficiaries from the three barangays. Senator Drilon replied that the beneficiaries were based on a listing under the National Household Targeting System for Poverty Reduction (NHTSPR) which has set a threshold income of P4,000, and it was possible that there were no qualified beneficiaries from the three barangays that included Greenhills.

Asked on the role of the LGUs in choosing the beneficiaries, Senator Drilon said that it was primarily the NHTSPR which was utilized and once the beneficiaries were chosen, the LGUs were consulted and informed as part of the validation process.

At this juncture, Senator Lacson noted that as the term "household beneficiaries" suggests, the homeless are automatically disqualified from the program. In response, Senator Drilon said that for street families, there is a separate CCT program and a housing program and once they have provided a specific address, they can enroll in the CCT.

THLJRSDA Y. NOVEMBER 17. 2011

Senator Lacson noted that the primary reason why the homeless cannot be qualified as beneficiaries is that they have no permanent address. He hoped that a system could be devised to include the homeless poorest of the poor. Senator Drilon thanked Senator Lacson for pointing out that the homeless were not included in the listing of the NHTSPR, although he believed that there is a separate program for them.

Senator Lacson asked how the homeless cou Id be identified and how the program could be extended to them. In response, Senator Drilon cited the ongoing Rapid Appraisal Program which, to date, already identified 600 to 800 families were already identified in Metro Manila, 126 of whom are Badjaos.

At this point, Senator Ejercito Estrada asked if the Committee could foresee other problems, aside from budgetary constraints, that could hinder the success of the program. Senator Drilon said that DSWD is constantly aware that there are unqualified families who would exert every effort to join the pl·ogram. He said that one of the aspects of the program is strengthening it to make sure that only those who al'e qualified can avail of the benefits. He also adverted to the distance that has to be traveled to reach the beneficiaries as another continuing challenge to the DSWD considering that they were chosen on the basis of income and not on the basis of their location. He said that there are instances when it costs more to bring the cash to the beneficiaries, especially those who reside in far-flung areas where there is no available transportation, like in the case of those in Sarangani, Davao Del Sur as well as in Mapun and Turtle Island. He disclosed that the money was remitted to these beneficiaries through Globe Telecom's GCash facility which entails additional expense for the government.

In answer to a further query, Senator Drilon said that the government pays Globe Telecom P75 for every transaction once every two months.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT AND ITS ATTACHED AGENCIES

There being no further interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Social Welfare and Development and its attached agencies was deemed submitted for the Body's consideration.

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It was 9:25 p.m.



DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

Upon resumption, Senator Drilon presented the budget ofthe Department of Environment and Natural Resources.

Senator Drilon stated that the Committee recommended a budget of PI6,790,860 billion for the Department of Environment and Natural Resources (DENR) which was the same as in the GAB-House version.

INTERPELLATION OF SENATOR GUINGONA

At the onset, Senator Guingona noted that there was a difference between the House version and Senate version of the GAB in the sense that there is an automatic appropriation in the latter for the Integrated Protected Areas Fund (\PAF). However, he pointed out that out of the 68 IPAs, only 12 have been able to access their funds even though most of them were earning enough for the improvement of their respective areas, because the past administration vetoed the provision on automatic appropriation for the funds. He asked Senator Dri Ion to give his commitment that he would do his utmost to retain the automatic appropriation for the IPAF in the bicameral conference committee. Senator Drilon did.


At the onset, the Chair (Senator Legarda) stated that it has always been very supportive of the DENR, however, there had been contradictory statements from the Aquino Administration and DENR officials on the issue of mining exemptions from the total log ban in Executive Order 23.

The Chair recalled that according to newspaper reports, the mining industry was exempted from said

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order which declared a moratorium on the cutting and harvesting of timber in the natural and residual forests; however, the officials of the Bureau of Mines and Geophysical Sciences were quoted at a mining conference in Baguio City as saying that the Aquino Administration had exempted the industry from the ban provided it participates in the National Greening Program (NGP), The Chair requested a clarification, saying it does not make sense to allow mining companies to cut trees and replace them by planting trees which takes decades to grow.

Senator Dri Ion exp lained that the log ban does not apply to the mining industry when they clear the area of trees that belong to the State. He stated that the ban contemplates logging activities conducted for private commercial profit.

On whether the statement of the President that the mining industry is exempted from the log ban is simply a reiteration of the present policy, Senator Drilon replied that the exemption provided for in EO 23 has nothing to do with the logging business. It is unfortunate, he said, that trees have to be cut to fultill the intent of the operations. Nonetheless, he stated that the mining companies are required to replace every tree cut with at least 100 indigenous seedlings. He said that the cut trees are then turned over to the DENR which donate them to the DepEd for its school building program.

With mining as a major source of investment revenues for the present and previous administrations, the Chair expressed great concern over increased logging activities as the government tries to attract more investments in mining whose concessionaires are automatically exempted from the log ban. Senator Drilon clarified that mining finns are required to plant at least 100 indigenous seedlings for every tree cut which they should maintain for at least three years. Moreover, he said that there are about 30 million hectares in the entire country and the ecological footprint of the mining industry was not as significant in terms of the logging ban. However, he believed that the Aquino Administration had considered all factors before deciding on the matter which was done for the greater national interest.

Although it appreciated Senator Drilon's decision to prioritize Social Contract No.5, the Chair observed that with the EO in place, it would be futile since the exemption would only encourage more mining operations. It acknowledged that the mining industry


indeed leaves a limited ecological footprint, but it pointed out that its activities still adversely impact the environment considering that the Philippines has less than 800,000 hectares of forest cover. It said that the chair of the task force on water management believed he would not be effective in his position without the cooperation of the DENR and the DA. In fact, it said that according to Secretary Singson, the flooding was caused not so much by the release of water from the dams, the lack of updated protocol or the presence of informal settlers in the waterways, but more so by the siltation of rivers and soil erosion resulting from deforestation.

The Chair added that Secretary Singson himself not only underscored the urgency of having the denuded mountains of Sierra Madre reforested or of putting a stop to the illegal activities of loggers and poachers but also expressed concern over the fact that government continues to promote extractive activities. Senator Drilon gave assurance that the Chair's concerns on the mining industry's exemption from the logging ban would be relayed by the DENR Secretary to the Office of the President.

On another matter, the Chair expressed support for the allocation for the NOP but emphasized that paoties involved in extractive industries must plant trees but they must not be exempted from the logging ban. It said that decades-old trees were being sacrificed for newly planted ones that would take decades to grow. It also asked whether the NOP was being implemented in coordination with the DPWH and the NIA particularly since the DENR Secretary himself believed that such a costly program and close coordination among the concerned agencies would be futile if there is no careful planning as to where to plant the seedlings. Moreover, it asked if mapping has been done on denuded, deforested areas and soil-erosion prone areas that silt waterways. Senator Drilon replied that the DENR has undertaken mapping of these areas and the data were available.

The Chair said that the DENR Secretary knew about the desecration of national parks and watersheds which have caused the loss of livelihood and death. It appreciated the fact that there is an allocation for the delineation of forest limits to preserve Mt. Pulag which has been desecrated and was an example of how people have disregarded their natural resources. Relative thereto, it asked whether the NGP includes planting and reforestation of natural and national

, r


parks. Senator Drilon said that reforestation and replanting activities were major components of the NGP.

On another matter, the Chair pointed out that an Integrated Watershed Protection and Management System was also integral to the livelihood of downstream communities as tlooding will persist unless the upstream is well-managed. Senator Drilon explained that the President had done away with the proposed PI8 billion dredging operation of Laguna de Bay in the absence of a program to address the upstream situation where the denudation has caused soil erosion and siltation.

For its part, the Chair believed that the convergence of the DENR, DA and the DPWH was vital in saving the environment. Relative thereto, it asked whether the DENR's 2012 budget would allow the people and the communities to be more responsive to extreme weather events. Senator Drilon replied that the fact that one-fifth of the DENR's budget was being appropriated for the NGP makes it ditferent from the previous years. The Chair expressed its intention to closely monitor the program.

Apart from a P76 million allocation for marine biodiversity, the Chair noled that the DENR also loaned P505 million from the Asian Development Bank for a similar purpose. It asked whether the ADB fund will be used for the coral triangle initiative which aims to build coral reefs in the Visayan seas. Senator Orilon replied in the affirmative as he explained that the money would be used for the coral reef rehabilitation and conservation program and would include the following activities:

• Social mobilization;

• Conduct of orientation training;

• Site identification;

• Suitability assessment;

Site preparation;

• Coral stock identification and sourcing;

• Conduct of actual reef rehabilitation and conservation; and

• Monitoring of coral reefs rehabilitated and conserved

The Chair surmised that the DENR has mapped areas which are rich in marine I'esources but would

651

also closely monitor illegal fishing activities therein. It asked whether the OENR was implementing the project with the assistances of NGOs and POs, Senator Orilon stated that it would be undertaken in collaboration with the Bureau of Fisheries and Aquatic Resources and the local government units concerned.

To the observation that the program could generate jobs for the youth, LGUs and POs, Senator Drilon agreed.

The Chair asked on the allocation for RA 9003 through the Solid Waste Management Council (SWMC). It said that an allocation has been set aside for the SWMC in response to the perennial complaints of LGUs about the absence of a solid waste management program even though 20% of them are able to implement the same. It believed that the OENR ought to implement the 10-year-old law as improper waste management is the cause of disease outbreaks and tlooding. In reaction, Senator Orilon said that the DENR has set aside P84 million for the solid waste management program as he stressed that the law's implementation was principally the responsibility of the local government units.

Upon further query, Senator Orilon said that the BFAR would assist the LGUs in creating their Material Recovery Facilities (MRFs) by providing seed capital to initiate the long-delayed implementation of the program.

Asked whether the DENR has completed its geohazard maps, Senator Orilon explained that Maps I: I ,000 which are for the entire country have been completed while work was continuing to finish Maps 1: 10,000 which would be more useful to local governments.

On another matter, the Chair expressed concern over how the National Power Corporation and the National Water Resources Board have been blaming each other over the recent pre-emptive release of water from dams that caused the nation Pl2 billion in damages to livelihood and properties. Senator Drilon gave assurance that the DENR was closely coordinating with the NWRB.


At this point, Senator Honasan posed the following questions of Senator Defensor Santiago on

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the DENR budget to which Senator Drilon responded accordingly:

Questioll No I: What is the Department's unobligated allotment in 20 I O?

Senator Dri Ion stated that under the National Expenditure Program, the unobligated allotment in the 20 I 0 budget for the Office of the DENR Secretary was PI,691,671,000 while in 2011, PI,145,020,000 was obligated, leaving a balance of P383,865,OOO as of October 3 I, 20 II, representing 75% utilization.

Questioll No.2: What are the major reasons for the delay? To what extent is the delay in the obligation and implementation of this project, a reflection of your Department's low, absorptive capacity as alleged by the Department of Budget and Management? What concrete measures have been adopted by the DEN R authority in order to expedite the obligation and implementation of this project? Is it reasonable to assume that the programs and projects that were authorized in 20 I 0 and have remained unimplemented to date are law implemented projects of the government? Senator Honosan stated to provide the Senator a list of these programs and projects and their expected outputs.

Senator Drilon gave assurance that a list of the projects would be made available as he explained that the bulk of the funding was for a two-year cadastral survey which was delayed because of questions on the bidding, thus, it could not be awarded. But he revealed that there was an accelerated program in 20 II which resulted in the obligation of about P 1.4 million, leaving a balance ofP380 million.

Questioll No.3: What is the Department's reaction to the reported call for the abolition of the DENR, and the establishment of the National Environment Protection Agency in its place?

Senator Drilon believed that there was no basis for the call to abolish the DENR as he stressed the very critical role it is playing in society and the governance of natural resources.

Questioll No.4: In the 20 I 0 Annual Audit Report of the Commission on Audit, the auditor rendered an advance opinion on the fairness on the presentation of the financial statements of the DENR due to accounting errors and deficiencies. What steps were taken by the


Department to comply with the COA recommendations on the following items?

A) Undocumented assets in the amount of P662.446 million;

B) Unrecorded receivables from the sale of three residential lots in the amount of P5S.IIS million;

C) Unliquidated for one year to three years expended fund transfers in the amount of PI 12.772 million;

D) Unrecorded deliveries of various software, licenses and office supplies in the amount of P89 million; and,

E) Undocumented liability accounts in the amount of P64.388 million.

Senator Drilon explained that the aforementioned COA findings pertain to the previous years' erroneous bookkeeping. He revealed, however, that the current DENR leadership has an action agenda to address the findings, for instance, conducting a quarterly monitoring of compliance with the consolidated annual audit report requirement, implementing 13 recommendations in 2009 and another 25 in 20 II. As regards findings on undocumented accounts from the old government auditing system to the new one, he admitted that the DENR had a hard time reconstituting them because the accounting stockroom was flooded and destroyed by a typhoon. As part of the action plan, he said that the DENR also monitored each region to address the audit findings. He explained that the bulk of unliquidated fund transfers to the national government agencies and the LGUs were under Fund 1.0 I; and out of the P 154.5 million P II 0 million was already liquidated, leaving a balance of P44 million. He also clarified that the three-year unliquidated and uncollected advances by officers and employees amounting to P8.155 million represents a portion of the intelligence funds and that the liquidation documents on P7.5 million had credit notice dated August 15, 20 II.

Questioll No.5: For the Office of the Secretary, below are significant observations of the COA. Please give us an update on the status of these big items.

A. The success implementation of the Upland Development Program whose total allotment in 20 I 0 was P630.596 million; the communitybased forestry management program, whose total amount in 2010 of P 17 .S3 which could not be determined because of the failure to


conduct monitoring and overall program and project evaluation;

B. Five regions could have generated additional income in the estimated amount of P47,09 had collection of foreshore lease and revocable permit applications and rental fees from foreshore occupants been intensified;

C Low-fund utilization rate for 4 foreignassisted special projects.


Upon motion of Senator Drilon, the session was suspended,

It was 10:19 p.m.


At 10:20 p,m., the session was resumed,

Senator Drilon said that the Upland Development Program is an assistance program to the affected upland community in the form of livelihood and employment opportunities, He said that the Office of the Secretary was looking for ways to better measure and report the development of the program.

Questioll No, 6: (For the Environmental Management Bureau) According to news reports, the DENR Secretary and the MMDA Chair, Francis Tolentino, have recommended to revisit incineration as a garbage solution. Is this true? If yes, what was the basis for the recommendation? The Clean Air Act which the Environmental Management Bureau is mandated to implement recognizes the problems with incineration. The DENR should have been the first to oppose this move in order to protect our people and the environment from the dioxins, furins, heavy metals and other toxic by-products of incineration. Further, under the Ecological Solid Waste Management Act, another environmental law which the EMB is mandated to implement, waste can be converted to badly needed resources, so burning waste is supposedly tantamount to burning money, It also reportedly worsens climate change because virgin materials require more energy to process.

Senator Drilon stated that the law prohibits incinerators which emit toxic poisonous fumes even though the Supreme Court ruled that incinerators that do not emit toxic and poisonous fumes are not

653

covered by the ban, thus, there is an available option to the DENR which it is not taking, anyway.

Questioll No.7: (For the Mines and Geo-sciences Bureau) Is it true that the DENR will be lifting the ban on mining applications and reconsidering even those that have been rejected?

Senator Drilon replied that the mining policy is being reviewed by the Office of the President.

Questioll No.8: According to news reports, the DEN R Secretary has recommended that areas where mining companies are operating be turned into mineral reserves so that the government can collect a higher percentage of the company's income. What was the basis for this recommendation?

Senator Dri Ion stated that in the revised Implementing Rules and Regulations (IRRs) of the Mining Act, mining companies located within the declared mineral reservations will pay 5% royalties and 5% gross income. He said that the declaration of a mining reservation enables government to collect higher taxes, otherwise, it can collect only 2% excise tax. It is to the advantage of the government to declare such areas as mineral reservations, he said.

Questioll No.9: (For the National Mapping and Resource Information Authority-NAMRIA) In the 20 I 0 COA report, the auditor made the following observations: Several deficiencies regarding the execution of the contract in the amount of P79.96 million entered into between NAMRIA and Philtech Instrumentalities, Inc. such as:

a. Mobilization cost of P4.216 million was not deducted from the progress billings;

b. Liquidation damages of P7.996 million were not imposed on delayed completion of 16 active geodetic stations; and

c. Mobilization fees and six progress billings in the amount of PI 1.244 million and PI3 million were paid without the signature of the officer in charge, accounting unit. Please update us on the status of this item.

Senator DriJon stated that management has complied by submitting copies of vouchers where mobilization fees were applied. As regards the imposition of liquidated damages in the amount of P7.996 billion, he said that no liquidated damages can be assessed because the contract for 16 active geodetic stations was cancelled and only six were continued.

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On the third finding to ensure that no disbursement voucher shall be approved or prepared without the signature of the OIC accounting unit, Senator Drilon said that it had been complied with.

Questio/l No. 10: (For the National Water Resources Board) In a 20 I 0 policy paper entitled, "Tightening Water Regulation," which forms part of the water series of Forensic Solutions headed by Secretary Alberto Agra. the group said that the country's water problem is actually ironic because the country has enough freshwater resources, rainfall, surface water and groundwater to meet the requirements of the country's ever-increasing popUlation and rapid urbanization and industrialization,

The paper also noted that although the National Water Resources Board is designated under the Water Code of the Philippines as chief overseer of water resources management in the country, the NWRB actually shares if not competes, for its ostensibly all-encompassing mandate with more than 30 other government offices and corporations that all deal with either water supply, irrigation, hydropower, flood control, water management or water-related concerns in accordance with their respective mandates.

It added: Worse, NWRB sutTers underfunding from the national government which limits its ability to hire experts, obtain complete data from planning and management, and to regularly mon itor water resources and water-resource activities at the local and national levels.

Forensic Solutions reportedly said these 30-plus agencies and corporations include the Local Water Utilities Administration, National Economic and Development Authority, Department of Public Works and Highways, Department of Agriculture, Department of Environment and Natural Resources, Department of Health, Department of Interior and Local Government, National Il'I'igation Administration, Laguna Lake Development Authority, and National Power Corporation.

To abate further water supply shortage, the group said: Measures must be taken short of an overhaul of the current water regulatory system. The NWRB as the apex regulatory body must be strengthened to perform its mandate of managing water resources. Coordination among agencies involved in water regulation must be emphasized, and the functions of each, streamlined."

Has the DENR considered the study conducted by th is group?

THURSDAY, NOVEMBER 17. 2011

Senator Honasan stated that in her questionnaire, Senator Defensor Santiago may direct the DENR and the NWRB to draft a bill incorporating the recommendations of the 2010 study conducted by Forensic Solutions.

In response, Senator Drilon stated that those observations were well taken, and that they were among the reasons why the President issued Executive Order No. 62 which, in effect, created a super body, an Inter-Agency Committee on the Water Sector headed by the DPWH Secretary as lead convenor, to consolidate and coordinate all the agencies involved in water resources management.

Senator Drilon expressed confidence that with the issuance of the executive order, all concerns wou Id be addressed in detail. He requested the Members, however, to await and allow the Council to establish an overall plan which may include necessary legislation, as suggested in the study.

As regards the directive, Senator Drilon urged that the Counci I be allowed to have an overall and general review of the situation first.

Questio/l No. II: (For the Palawan Council for Sustainable Development Staff) The Puerto Princesa Subterranean River National Park was recently named in the new Seven Wonders of Nature provisional list. What is the major hindrance encountered in its campaign?

Senator Drilon replied that the DENR Secretary was the campaign manager and because of his efforts, the underground river was included as one of the new Seven Wonders of Nature. He stated that even if there were obstacles, the Department Secretary was able to overcome them.

Questio/l No. 12: The new Seven Wonders of Nature contest is now reportedly embroiled in a controversy involving millions of dollars in allegedly "surprise" fees. Maldives and Indonesia withdrew their respective entries from the contest and accused organizers of forcing them to pay surprise fees of up to US$500,OOO or P21.6 million, the United Kingdom's The Guardian reported. Are you aware of these surprise fees?

Senator Drilon said that DENR was aware of the controversy but was not involved in it.

TlIlJRSDAY & FRIDAY. NOVEMBER 17 & 18.2011

SUBMISSION OF THE BUDGET· OF THE DEPARTMENT OF ENVIRONMENT

There being no other reservation for interpellation, upon motion of Senator Honasan, there being no objection, the budget of the Department of Environment and Natural Resources and its attached agencies, namely, the Office of the Secretary, Environment Management Bureau, Mines and Geosciences Bureau, National Mapping and Resource Information Authority, National Water Resources Board, and Palawan Council for Sustainable Development Staff, was deemed submitted for the Body's consideration.


Senator D,·i Ion mentioned that there were two agency budgets left in the agenda, those of the Comelec and the PDEA. In view of the lateness of the hour, he asked that said budgets be taken up when the session resumes in the morning of the next day.


Upon motion of Senator Honasan, there being no objection, the Body suspended consideration of the bill.


Upon motion of Senator Honasan, there being no objection, the Chair declared the session suspended until ten 0' clock in the morning of Friday, November 18, 20 II.

[t was j(UIl p. n1.


At 10:16 a.m., Friday, November 18,2011, the session was resumed with Senato,· Honasan presiding.


(Continuation)

Upon motion of Senator Sotto, there being no o]ejection, the Body resumed consideration, on Second Reading, of House Bill No. 5023 (Committee Report No.79), entitled

AN ACT APPROPRIATING FUNDS FOR THE OPERATION OF THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY-ONE, TWO THOUSAND AND TWELVE, AND FOR OTHER PURPOSES.

655

Senator Sotto stated that the pari iamentary status was the period of interpellations.

MORNING AGENDA

Senator Sotto stated that the Body would consider the budgets of the following departments and their attached agencies:

Congress of the Philippines;

• Philippine Drug Enforcement Agency;

• Commission on Elections;

• Office of the President;

• Office of the Vice President;

• The Judiciary;

• Civil Service Commission;

• Commission on Audit;

• Office of the Ombudsman;

• Commission on Human Rights;

• Autonomous Region in Muslim Mindanao; and

• Department of Science and Technology.

Thereupon, the Chair recognized Senator Drilon, Sponsor of the measure.

CONGRESS OF THE PHILIPPINES

Senator Drilon presented the budget of the Congress of the Philippines, which has a total allocation of P8,961 ,450,000.

Respecting the fiscal autonomy of constitutionally created agencies, he said that the Committee transferred P281.7 million from the Miscellaneous Personnel Benefits Fund (MPBF) to the Congress of the Philippines, and apart from this significant change, it accepted the budget proposed by the Executive department under the NEP and the GAA.

656


Preliminarily, Senator Sotto said that congressional committees are the anchor points in the exercise of the legislature's lawmaking and oversight powers, He noted that the Senate has 38 committees and 34 oversight committees that conduct vital functions in policy formulation activities, and he believed that the secretariat staff in these committees should be strengthened to ensure that the Senate's performance meets the expectations of the people,

He pointed out that committee secretariats in the best congresses and parliaments in other countries were fully staffed un like the Senate which has 27 committee secretaries and only 23 support staff. Moreover, he noted that the Philippine House of Representatives not only has about five to seven secretariat personnel providing support services to every committee, but also has a separate Committee Affairs Department which is headed by a deputy secretary, He pointed out that strengthening the secretariat staff would ensure a better flow of information between committees and the Senate to government departments and instrumentalities,

Senator Sotto explained that the committee secretariat staff coordinate all committee activities and ensure that the committee chair and its members have the needed support, Further, he observed that the lack of manpower in the secretariat has prompted the senators to call on their own staff to discharge functions that are supposedly to be performed by the committee support group, He said that strengthening the committee secretariat would require a total funding of P137,65 million in the next three years:

Phase I: P50.5 million for implementation in 2012;

Phase II: P50') million for implementation in 2013; and

Phase III: P36,8 million for implementation in 2014,

Senator Sotto said that upon implementation of Phase I, each committee secretary would already have at least two staff helping him/her: with one techn ical person and one clerical staff. He stated that the lack of manpower of the committee secretariat was evident from the fact that the 23 pcople assisting the Senate committees were also performing other functions,

FRIDAY, NOVEMBER 18,2011

In closing, he proposed to offer an amendment to the budget that could fund the strengthening of the committee support system,

Senator Drilon clarified that the MPBF, which was funded for unfilled positions, was returned to Congress since there were funds available for the purpose, As such, he said that Senator Sotto's proposal can be taken under serious consideration, Senator Sotto said that he understood Senator Drilon's position particularly as the report on the outcome of the workshop has only been released the previous week, He said that he would provide Senator Drilon with a copy of the study and the proposals,

SUBMISSION OF THE BUDGET OF THE CONGRESS OF THE PHILIPPINES

There being no further interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Congress of the Philippines, which includes the Senate, Senate Electoral Tribunal, Commission on Appointments, House of Representatives, and House Electoral Tribunal, was deemed submitted for the Body's consideration,

OFFICE OF THE VICE PRESIDENT

Senator Orilon presented the budget of the Office of the V ice President

He explained that the NEP and the GAA allocated P40 I ,786,000 that would cover the increase for the second tranche implementation of the salary adjustments mandated under EO 900 and MOOE in the amount of PIll ,570,000, as well as a Capital Outlay of PIOO,OOO for the Vice President's POAF for infrastructure projects, He said that the remaining P5,7 million would be used to purchase motor vehicles that would replace the existing vehicles in the OVP, He also pointed out that subsidies and donations accounted for the increase in the MOOE along with the integration of another portion of the President's POAF amounting to P99.5 million,

SUBMISSION OF THE BUDGET OF THE OFFICE OF THE VICE PRESIDENT

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Office of the Vice President was deemed submitted for the Body's consideration,


THE JUDICIARY, THE SUPREME COURT, LOWER COURTS, THE PRESIDENTIAL ELECTORAL TRIBUNAL, SANDIGANBAYAN, COURT OF APPEALS, AND THE COURT OF TAX APPEALS

Senator Drilon presented the budgets of the Judiciary, Supreme COUli, lower courts, Presidential Electoral Tribunal, Sandiganbayan, Court of Appeals and Court of Tax Appeals.

He explained that his committee recommended PIS,078,891,000 billion allocation for the Judiciary. However, he noted that the Miscellaneous Personnel Benefit Fund (MPBF) has been the subject of debate between the Judiciary and the Executive branch in view of the proposal to transfer a portion of the Judiciary's budget into the fund to cover the appropriation for unfilled positions.

Regarding the fiscal autonomy of the Judiciary, Senator Drilon said that his Committee concurred with the amendment of the House of Representatives which reduced the MPBF by PS,02S,000,000 allocated to the unfilled and new positions in the constitutional agencies and added the corresponding amounts to the budgets of these constitutional offices. As a result, he said that the Committee's proposed budget for the Judiciary was increased by P2,093,000,000 which would then be allocated to the Supreme Couti, lower courts, Court of Tax Appeals and the Sandiganbayan. To address the issue on savings, he said, the Oftlce of the President proposed that the budget for unfi lied positions be placed in the MPBF.

Senator Drilon stated that Supreme Court Administrator Midas Marquez has reported that there are 106 unorganized courts which are funded annually. These, he said, include SO regional trial courts, 13 metropolitan trial cOUlts, 26 municipal trial courts in cities, one municipal circuit trial court and IS shari'ah circuit courts.

Senator Drilon said that according to the Court Administrator, the total savings from funded but unorganized courts is P440.6 million, which was one of the reasons why there was the issue between the Office of the President and the Judiciary because there are organized courts which have vacancies as well as in other branches of the judiciary reaching an estimated total of S,SOO vacancies.

657

ACKNOWLEDGMENT OF THE PRESENCE OF GUESTS

At this juncture, Senator Drilon acknowledged the presence in the gallery of representatives from the Judiciary, namely, Supreme Court Associate Justice Diosdado Peralta; Presiding Justice Andres Reyes of the Court of Appeals; Court Administrator Midas Marquez and the heads of the other Judicial branches.

SUBMISSION OF THE BUDGETS OF THE JUDICIARY, THE SUPREME COURT, LOWER COURTS, PRESIDENTIAL ELECTORAL TRIBUNAL, SANDIGANBAYAN, COURT OF APPEALS AND COURT OF TAX APPEALS

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budgets of the Judiciary, the Supreme Court of the Philippines and the lower courts, Presidential Electoral Tribunal, Sandiganbayan, Court of Appeals and Court of Tax Appeals were deemed submitted for the Body's consideration.



It was 10:37 a.m.



OFFICE OF THE PRESIDENT AND ITS ATTACHED AGENCIES

Senator Drilon presented for consideration the budget of the Office ofthe President and its attached agencies.

Senator Drilon informed the Body that the NEP allocated P2,69S,422,000 for the Office of the President, which the House of Representatives reduced by P 100 million, particularly on the Confidential and Intelligence Expenses which was decreased from P600 million to PSOO million and transferred to the Department of National Defense (DND).



If was 10:41 a.m.

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Upon resumption, Senator Drilon revealed that the Office of the President was not informed of the budget cut which, he said, was a departure from the inter-Chamber courtesy practiced by both Houses. In this particular case, he assumed that there was consultation between the House of Representatives and the Office of the President as far as the reduction of the Confidential and Intelligence Funds and the transfer of reduction to the DND. Nevertheless, he said that he would still recommend the approval of the budget of the Office of the President as contained in the 2012 GAB with the coila/ilia that the Senate panel would bring up the issue on the budgetalY cut during the bicameral conference.

SUBMISSION OF THE BUDGET OF THE OFFICE OF THE PRESIDENT AND ITS ATTACHED AGENCIES

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Office of the President and its attached agencies was deemed submitted for the Body's consideration.



It was 10:45 a.l11.



CIVIL SERVICE COMMISSION AND THE CAREER EXECUTIVE SERVICE BOARD

Senator Dri Ion presented for consideration the budget of the Civil Service Commission (CSC) and the Career Executive Service Board.

He stated that the 2012 GAB reflects a budget of P728,000,89I for the Civil Service Commission or an increase by PI22,000,836 by virtue of the decision of the House of Representatives to cut the Miscellaneous Personnel Benefits Fund (MPBF) and transfer the corresponding amount to the CSC in recognition of the constitutionally mandated fiscal autonomy ofthc agency, and to cover the funding for

FRIDAY. NOVEMBER 18,2011

unfilled positions which were previously placed under the MPBF. He said that the Committee on Finance was endorsing this amendment to the GAB.

SUBMISSION OF THE BUDGET OF THE CIVIL SERVICE COMMISSION AND CAREER EXECUTIVE SERVICE BOARD

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budgets of the Civil Service Commission and the Career Executive Service Board were deemed submitted for the Body's consideration.



It was 10:53 a.m.



COMMISSION ON AUDIT

Senator Drilon presented for consideration the budget of the Commission on Audit, which reflects an allocation of P6,634,000,662 for 20 12 under the GAB.

Senator Drilon said that there is a positive variance between the GAB and NEP: the GAB increased the budget allocation of the COA by PI,851,076,000 as a consequence of the transfer of the amount from the MBPF to the COA which corresponds to the budget for unfilled positions. He stated that the Senate Finance Committee supported the amendment of the House of Representatives which recognized the fiscal autonomy of constitutional bodies such as the Commission on Audit, and included a special provision that there should be a report on the utilization of this fund to be submitted to the Office of the President, and both Houses of Congress for purposes of transparency.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON AUDIT

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Commission on Audit was deemed submitted for the Body's consideration.

FRIDAY, NOVEMBER IS, 2011



II was 10:57 a.m.


At 10:59 a.m" the session was resumed.

OFFICE OF THE OMBUDSMAN

Senator Drilon presented the budget of the Office of the Ombudsman, which has an allocation of P 1,308, 746,000 under the GAB, reflecting an increase of P567,793,000 compared to the NEP. He stated that the increase represents the funding for unfilled positions in the Office of the Ombudsman, which was previously lumped under the MPBF. He said that the Committee did not recommend any other revision in the budget of the Office of the Ombudsman.

SUBMISSION OF THE BUDGET OF THE OFFICE OF THE OMBUDSMAN

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Office of the Ombudsman was deemed submitted for the Body's consideration.



II was 11:03 a.1I1.



COMMISSION ON HUMAN RIGHTS

Senator Drilon presented the budget of the Commission on Human Rights.



It was 11:05 a.m.

659



Upon resumption, Senator Drilon stated that GAB allocated P273, I 00,000 to the Commission on Human Rights (CHR) which is PI ° million higher compared to the appropriation under the NEP. He informed the Body that the House of Representatives inserted the PI 0 million to fund the investigation of all forms of human rights violations involving civil and political rights especially extrajudicial killings and enforced disappearances as well as the implementation of Republic Act No. 9745 (Anti-Torture Act of 2009). He said that the Committee on Finance was not inclined to adopt this amendment, but it is willing to revised the proposal during the bicameral conference committee. In the meantime, he submitted the P263, I 00,000 budget for the Commission on Human Rights for the Body's consideration.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON HUMAN RIGHTS

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Commission on Human Rights was deemed submitted for the Body's consideration,



II was 11'10 a.m.


At II: 13 a.m., the session was resumed.

AUTONOMOUS REGION IN MUSLIM MINDANAO

Senator Drilon presented the budget of the Autonomous Region in Muslim Mindanao amounting to PI 1,616,764,000 which represents a cut of PIOO,943,000 from the allocation that was provided for under the GAB. He stated that of the PIOO,943,000 Special Purpose Fund under the General Administration and Support Services, P96, 94 3, 000 was supposed to go to the ARMM governor, and P4 million to the ARMM vice governor.

660

However, Senator Drilon reiterated that the Committee was alarmed at the level of corruption during the regime of former Governor Ampatuan. He stated that in COA Special Audit Report No. 20 I 0-05 for the ARMM-DPWH, payments to suppliers and contractors amounting to PI, 123,000,000 were considered spurious and in another instance, deficiencies amounting to P363,400,000 were discovered in the implementation of projects worth P422,700,000 - these are just two of the many findings of corruption during the term of Governor Ampatuan.

Senator Drilon informed the Body that in view of the level of corruption, the Committee was compelled to I) provide that disbursements in the ARMM be subject to pre-audit by COA because of the inadequate internal control; and 2) cut P96.9 million and P4 million in discretionary expenses of the offices of the governor and vice governor, respectively.


Asked by Senator Sotto how much was cut from the ARMM budget, Senator Drilon stated that the Committee cut PI 09,043,000 from the PII ,717,707,000 budget submission in the GAB-House version. He said that except for thc Special Purpose Fund of the ARMM governor and vice governor, none of the other services were affected by the cut.


Initially, Senator Legarda observed that for many years there have been many internally displaced persons in Datu Piang, Maguindanao due to the conflict, and she believed that it is the responsibility of the OPAPP to address the problem of IDPs. But she asked who would address the problem now since the budget of the office has been realigned to other agencies. Senator Drilon said that subject to confirmation, it is now in the budget of the DSWD.

But Senator Legarda recalled that when asked the same question about the IDPs, the response of the DSWD officials was that there was no allocation from the local government for that program. In reaction, Senator Drilon stated that subject to confirmation, the budget is under the Pamana Fund to be implemented by the DSWO and not the ARMM.

As regards the Simuay River, Senator Lcgarda observed that it always overflows because of

FRIDAY, NOVEMBER 18, 2011

siltation, waste, water lilies, et cetera. She stated that while Cotabato City is not part of the ARMM, the river affects many areas in the ARMM. She said that the local government had sought the help of the OPWH to dredge the river but no assistance came.

On whether dredging projects are provided for in the OPWH budget, Senator Drilon believed that such activities fall under the item on flood control of the OPWH, subject to confirmation.

Thereafter, Senator Legarda requested that more definitive information be given and placed on record. She stressed that the lOPs in Maguindanao and other areas within the ARMM, the pollution of the river system and the relocation of the people living along the riverbanks are among her concerns.

SUBMISSION OF THE BUDGET OF THE AUTONOMOUS REGION IN MUSLIM MINDANAO

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Autonomous Region of Muslim Mindanao was deemed submitted for the Body's consideration.



It was 11:22 a.m.



COMMISSION ON ELECTIONS

Senator Orilon presented the budget of the Commission on Elections.

In presenting the budget of the Commission on Elections (Comelec), Senator Drilon stated that no less than the newly confirmed Comelec chair, Sixto Brillantes, Commissioners Lim and Lagman were in attendance for the deliberation on the Comelec budget to which PI 0,026,978,000 is allotted in 2012.

Senator Drilon informed the Body that out of respect for the fiscal autonomy of the Comelec, the


Committee did not make any revision in the GABHouse version which is higher by PI62,341,000 compared to the NEP, He said that the increase represents the budget for 547 unfilled positions in the Comelec and it would be up to its discretion whether or not to fill them.


Senator Sotto stated that Senator Cayetano (A) has waived his reservation to interpellate on the Comelec budget.

SUBMISSION OF THE BUDGET OF THE COMMISSION ON ELECTIONS

There being no interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Commission on Elections was deemed submitted for the Body's consideration.



11 was 11:27 a.m.



DEPARTMENT OF SCIENCE AND TECHNOLOGY AND ITS ATTACHED AGENCIES

Senator Angara presented the budget of the Department of Science and Technology.

In presenting the budget of the Department of Science and Technology (DOST), Senator Angara stated that the biggest creator of domestic jobs in the country is the science and technology sector. He cited the BPO industry which has created almost 600,000 well-paying jobs and has earned the country almost US$9 billion. He projected that in four years' time, those numbers would increase to 1.3 million jobs and about US$22 to US$23 billion in earnings. He said that just as S&T is the number one creator of jobs, ICT or the internet sector is the biggest creator of wealth in the world right now. He cited Google, Microsoft, Yahoo! and the YouTube as main products of the internet.

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Senator Angara stressed that S&T is a very important sector to the country and if the projects and programs outlined by Sec. Mario Montejo would materialize in 2012, the new DOST would be going out for new technologies to create more jobs. He said that the programs would be focused on strategic areas where practical solutions are needed.

The new DOST, he informed the Body, would inaugurate five innovation clusters focusing on key technologies. He stated that it will be the first time that the academe, universities, government, industry and private sector would combine in a public-private partnership venture that would put together Filipino talents and resources and multiply their output through international exchange.

He stated that if there is PIOO in R&D money, it can be multiplied by PI ,000 through the system. He explained that industry, government and academe would come in and invest in R&D, and with the cooperative framework, through the DOST, resources would be pooled from universities, academe, and public and private research institutions.

Senator Angara then proceeded to explain the five experimental clusters being developed by the DOST together with its scientists and university people, to wit:

I. Algae research. He said that this technology is already well-advanced in other countries especially in the United States. [n particular, he mentioned an outstanding company in Iowa that produces algae for animal feed. He explained that the potential of the technology would help produce animal feed that would be used as energy fuel or would provide energy as well as protein, corn and soya at a lesser cost. He hoped that this vanguard technology may help the country in its drive fOJ' food security as it will bring down the cost of food in the country. He enumerated the following institutions that will be involved: The Central Luzcn State University, UP Visayas, University of Southern Mindanao, apart from PCAARRD, the research institute of DOST and DA which is quite keen on producing costeffective and affordable animal feed.

2. Food security drive. He said that this involves precision farming and smart agriculture. He explained that precision farming simply means taking advantage of satellite imaging and remote sensing to determine soil productivity, climate

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change, onset of drought and flooding, and quality of growing crops. He said that all these have ail'eady been taken for granted by farmers in the West but this is something new in the country. He stated that the purveyor of training in the country will be the following institutions: Mariano Marcos State University in Batac, 1I0eos Norte; Visayas State University in Baybay, Leyte; Xavier University in Cagayan de Oro, and Ateneo Observatory and University of San Carlos in Cebu. However, he said that since there is lack of synergy among these universities, the industry and government, they are being brought together by this cluster.

3. Disaster management and climate mitigation. He stated that climate change has introduced an unknown, unpredictable and devastating factor into food production. He explained that producing food in the Philippines is hard because of the country's archipelagic nature as well as its proneness to natural disasters like typhoon and earthquake, among others. He said that this is even more compounded by the unpredictable changes being brought by climate change.

Senator Angam revealed that Taiwan, Japan, Korea, Australia, New Zealand, and the U.S. (Hawaii), are all willing to help the Philippines. In this regard, he said that the government has started to construct and build a center that will teach LGUs on how to cope with disaster when it strikes, and how to protect the schools, children and pupils in cases of disaster.

Senator Angara said that if the triple disaster that hit Japan recently - tsunami, earthquake and nuclear leak - would hit any other country, he was almost positive that pal1icular country would disappear from the face of the earth but not Japan, because for so many hundreds of years of being hit by so many disasters, they have learned how to be resilient and how to prepare their citizenry and public officials on how to cope with disasters. He said that Japan is slowly rebuilding and recovering, and hoped that the Philippines will be able to do the same in the next 10 to 20 years. He said that there is one typical disaster management center in Kobe which the Japanese government set up in the Hyogo prefecture as a result of the Kobe disaster in 1996. He emphasized that the government does not have to wait for a Kobe-type of disaster to hit the Philippines because Typhoon Ondoy alone was already a warning lesson to the country.

FRIDAY, NOVEMBER 18.2011

Senator Angara said that the initial members of the consortium are Bicol University, Ateneo Observatory, UP Diliman, PAGASA, PHIVOLCS, and Aurora State University. He informed the Body that foreign governments are willing to provide the country with the equipment and training if there are physical facilities to hold and conduct the equipment and training.

4. Cloud-computing and software as a service. He disclosed that the Filipinos will be trained in cloud-computing in Cebu where Morphlabs is located, which is a private company that has already invested almost $5 million into the facility. He said that the government can tap the UP Visayas, UP Diliman, Mindanao State University and University of San Carlos to partner with Morphlabs so that the company can provide the latest laboratory and funds to augment government and university funding.

5. Mining technologies. Senator Angara stated that the Philippines has not even explored 10% to 15% of its mining resources because of the natural fear among communities, especially those in the provinces, against mining since there are irresponsible mining companies that will destroy the environment, livelihood and even lives of communities. He expressed the need for the introduction of mining technologies that will educate communities in the provinces that mining can be a source of jobs, wealth and progress and not just environmental degradation, disease and sickness to their communities. He informed the Body that new technologies have introduced bioleaching that is harmless and friendly to the environment as this is plantbased. He said that the people and community leaders should be trained on responsible mining technologies at hand so that the people can now benefit from the natural bounties that nature and God has given the country.

Senator Angara said that in the end, the greatest renewable resource in the Philippines is not so much wind, sun or water but its people. He added that the people are the nation's richest renewable resource and this is the reason why it is important to concentrate on education and training, and to bring in new technologies wherever it can be found as it is now easy to access technology through the power of the internet. He believed that if the government can lift the living standards of the people, they would opt to stay in the country and enjoy the pleasure of the ¥r

FRIDAY. NOVEMIlER 18. 2011

company of their family and friends. He posited that the biggest and the most active vehicle to realize that dream, if done right, is the Department of Science and Technology (DOST).

Senator Angara said that the government has that unique opportunity to make the DOST not simply a passive grant-giving and research manager but an active agent of progress and development in the country. He lamented that the Philippines is beating only Cambodia and Timor Leste in the ranking among Southeast Asian countries. He said that he wanted to see the Philippines at least at par with Thailand because it is the Filipino farmer who taught the Thai farmer to plant rice in the Philippines and to do genetic engineering in the country; Thailand's economy is four times bigger than the Philippines and the country spends P20 billion for rice impolled from Thailand. He pointed out that because ofthe extensive tlooding in Thailand, the Philippines will have to rely on its own people, talent and ingenuity to survive the highly competitive world.

He cautioned that if the country does not move fast enough, Vietnam will overtake the Philippines in two years time. He said that the Philippines should be competitive so that the youth and the next generation will not blame the current generation for defaulting on that role and making them lose their heritage.


Senator Legarda said she wanted to know about PAGASA's climate data section archives of meteorological data which has been storing weather-related data gathered by the 75 field stations for more than 50 years and used mainly by PAGASA for its climate change projection scenarios. She said that based on her understanding, the data cannot measure seizure temperature, surtace water or sea level rise but the unit stores various impOllant data like rainfall, wind speed, humidity, even strong weather disturbances.

Asked whether the data bank which collects all these unprocessed data is actually utilized by PAGASA, if this data management unit is shared with other agencies of the government, and whether the climate data bank and the climate data management unit are adequately funded under the 2012 budget, Senator Angara replied in the affirmative, saying that the data bank will be utilized for projection from 2012 to 2050.

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Senator Legarda observed that since the data does not include surface temperature of the sea, this may not include research which could be useful for the DA and the BF AR for fish yield.

Senator Angara said that the meteorological buoy, which measures the rise and fall of the ocean water and temperature, would help fisherfolk too.

Noting that the monitoring of sea temperature and level can already be done, Senator Legarda asked if the information is readily available to technical, scientific and government agencies, including the LGUs so that they can warn their constituents in times of natural hazards. [n response, Senator Angara explained that the information can be accessed by technical people in some agencies as he stressed that there is a need to put together some sort of academy on disaster to spread knowledge about new technologies in layman's term. He added that there is a cluster precisely for that.

Senator Legarda stated that the DPWH, DA and DENR are three of the most relevant agencies, and she believed that the DOST is necessary in the reactivation of the task force on water resources. She stated that the incident in San Roque dam and the tragedy in Central Luzon were caused by lack of coordination among agencies that manage water, irrigation and power generation. She relayed the information given her by Secretary Singson that there are 38 government agencies that manage water including a unit in the DPWH with 240 personnel that measures rainfall three times a day and keep the data to themselves. She asked if the PAGASA unit that handles the data bank has closely coordinated with the DPWI-I rainfall unit.

Senator Angara stated that the problem about water is not simply because of the antiquated protocols on water re leases from dams but also the various overlapping agencies with no central direction. He said that precisely, there is a task force that would coordinate all national, provincial and regional agencies to rationalize water management. As regards rainfall, he pointed out that most of it flows to the sea and is not stored in water catchment areas which other countries do. He pointed out that water is the source of food and life, and the very limited fresh water resource of the planet, which is only 3% of the total water source, is the root cause ofthe problems about water. He also noted that the flooding caused by antiquated water protocol has to be looked into,

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which would be easier to do than reforming the water structure which should be done immediately,

Senator Legarda agreed to the suggestion of Secretaries Almendras and Singson that there must be one among the 38 agencies that can act decisively even before a crisis strikes, She recalled that the heads of these agencies unanimously pointed to the DOST since it has engineers and the scientific knowhow to make that decision.

Senator Angara stated that the structure was still being studied and the process was ongoing. He said that the choice of lead agency and chief technical adviser would be set aside for the meantime since the main concern of NEDA, DPWH and DA is to set up an advanced, progressive and proper structure and thus remove the overlapping and expensive mode of supplying water.

To the observation that the DOST was not informed of its assignment in the task force, Senator Angara clarified that the executive order enumerates the division of labor among the departments, and for its part, the DOST has been specifically tasked to monitor rainfall and do flood forecasting.

As regards flood risk mapping, Senator Legarda pointed out that the geohazard maps with I :SO,OOO scale have been completed by the DENR, however, the geohazard map with a I: 10,000 scale would be more useful to some LGUs like Batangas and Iloilo. She asked whether the DOST, which has the capability to come up with a flood risk map, has an allocation for it in its 2012 budget so that it can assist the DENR in the geohazard mapping. Senator Angara replied that Mindanao has been thoroughly mapped for geographical hazards, as well as mining and underground resources. However, he said that Luzon and Visayas have not yet been mapped but there was a standing offer, still in the proposal stage, from the Japanese and Spanish governments to do it in a I :S,OOO scale, which is much clearer. He lamented that the country is quite slow in producing this kind of planning despite the fact that several governments are offering ODA.

MANIFESTATION OF SENATOR LACSON

Senator Lacson stated that it cannot be denied that the DOST, a prime mover of the Philippine economy, has a budget ofP2,027,3SS,000 in the 2012 GAB and an additional P60 million - PI 0 million for


the Committee on Research and Development for algae research and commercialization and PSO million for PAGASA for the establishment of the Aurora Disaster Management Training Institute. He said that after identifying additional sources of allocation from the Special Purpose Fund (SPF), where the different departments and agencies get their additional funding, he would propose to augment the budget of DOST. This year, he mentioned that the SPF has P232,498, ISO,OOO, including a P66.9 billion Unprogrammed Fund. With such big allocation, he urged the chair and vice chair to support his initiative.

To the observation of Senator Angara that Senator Lacson has been waiving his PDAF in favor of the DOST, Senator Lacson clarified that he took P60 million from another agency and had it transferred to the DOST. He explained that it was upon his own initiative and he had manifested that it be used for R&D.


On the five clusters reflecting the initiatives of the Department of Science and Technology, specifically food security, the Chair (Senator Honasan) said that it found inspiration and encouragement in the statement of Senator Angara that the most important renewable resource is the people, for which reason, it wanted to raise the issue of convergence.

The Chair recalled that the UN World Food Program has identified Brazil as the country which defeated poverty the fastest. It recalled that in 2003, when Pres. Luiz Inacio Lula da Silva took office, he declared that everyone in Brazil will eat three meals a day, thereby launching the "Zero Hunger Program": instead of food subsidies, Brazil invested in a school feeding program and from 2003 to 20 II, it has lifted 24 million Brazilians out of poverty even when in 20 I 0, the total population of Brazil reached 190 million. The Chair added that the Brazilian government required that one-third of the food being fed to students of a certain locality be purchased from farmers of said locality.

So as to protect and secure the most strategic and important resource of the country - the next generation, the Chair stated that they must be sheltered, clothed, educated and fed to make them healthier, smarter and competitive with their generation in other counties. It also mentioned that the DOST has a Food and Nutrition Research Institute.

FRIDAY. NOVEMBER 18. 2011

On the issue of convergence, the Chair stated that the DOST must be strategically engaged in protecting the children and asked what the direction was being taken to do so.

As regards the announcement of Secretary L1uistro that undernourishment among public school children is being addressed by the DepEd with the aim of improving the academic performance of students as they experience difficulty paying attention to lessons in class because of hunger, the Chair asked if the Food and Nutrition Council Research Institute (FNCRI) is engaged in any attempt to imaginatively and innovatively address the problem beyond the milk feeding programs and the nutritional requirements. Senator Angara disclosed that there is 27%, or 27 out of 100, incidence of malnutrition in Filipino children aged 0-5, the formative years of a person when everything that is told to a child is absorbed and assimilated by his brain, and half of what he has learned during that period is what he will carryon to adulthood. Given the fact that 27% of children are malnourished, he said that it is no surprise that 40% of these children, when they get to Grade 1 up to Grade 3, already drop out of school because they could not withstand the rigors of schooling as malnutrition has devastated their body and spirit.

For the 6-18 year old age group in school, Senator Angara said that 30% are malnourished and are either underweight or whose heights are stunted compared to their Chinese, Malaysians, Singaporeans and other Asian counterparts.

Senator Angara said that the role of the FNCRI is to produce baby food. He recalled that when he introduced the breastfeeding law in 1990, his colleagues wondered in amusement why he was interested in the subject. After explaining to them the benefits of breastfeeding, he said that everybody signed up as coauthor of the measure. He believed that the breastfeeding law, the production of baby food and his Oh My Gulay! (OMG) project go hand in hand in fighting the silent hunger that is plaguing the country, likewise stressing the need not merely on a school-wide scale but on a national scale.

Citing a report by the Philippine Children's Foundation Data that 100 Filipino children aged 0-5 die everyday, the Chair noted that the cause of death is not only malnourishment but also malnutritionrelated causes. Affirming what he said were dismal

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statistics, Senator Angara underscored the need for convergence as the key to combating child malnutrition.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF SCIENCE AND TECHNOLOGY AND ITS ATTACHED AGENCIES

Upon motion of Senator Sotto, there being no objection, the budget of the Department of Science and Technology and its attached agencies, namely, the Office of the Secretary, the Advanced Science and Technology Institute, the Food and Nutrition Council Research Institute, the Forest Products Research and Development I nstitute, the Industrial Technology Development Institute, the Industrial Technology Development Institute, the Information and Communications Technology Office, the Metals Industry Research and Development Center, the National Academy of Science and Technology, the National Research Council of the Philippines, the Philippine Atmospheric, Geophysical and Astronomical Services Administration, the Philippine Council for Agriculture, the Forestry and Natural Resources Research and Development, the Philippine Council for Aquatic and Marine Research and Development, the Philippine Institute of Volcanology and Seismology, the Philippine Nuclear Research Institute, the Philippine Science High School, the Philippine Textile Research Institute, the Science Education Institute, the Science and Technology Information Institute, the Technology and Promotion Institute, and the EGovernment Fund, were deemed submitted for the Body's consideration.


Upon motion of Senator Satta, there being no objection, the Chair suspended the session until three o'clock in the afternoon.

II was 12:26 p.m.


At 3: II p.m., the session was resumed.

DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS

Senator Recto presented the budget of the Department of Transportation and Communications.

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Asked by Senator Satta if the L TO receives anything when a driver undergoes drug testing as a requirement for the renewal ofhislher license, Senator Recto replied in the negative.

Senator Satta stated that he and Senator Honasan had filed a bill removing mandatory drug testing as a requirement for the issuance of a driver's license. He recalled that when he was chair of the Dangerous Drugs Board, he found out from the records of the Department of Health that from 2002 to 2009, only 0.06% tested positive out of the 24 million drivers who took the test. He expressed doubts about the accuracy of the result as he concluded that RA 9165 was not effective at all. For this reason, he proposed that mandatory drug testing be conducted instead on drivers who were involved in accidents.

Senator Recto said that according to the DOTC secretary, he would execute the laws passed by Congress. For himself, he asked to be made coauthor of said measure.

Senator Sotto reasoned that removing the requirement would save drivers P400 for a drug test which is not effective at all.

Asked if the National Telecommunications Commission (NTC) is under the DOTC, Senator Recto replied that it is under the Office of the President. However, he said that he would entertain questions about the agency's budget.

Senator Sotto recalled that he suggested in the last LEDAC meeting that a study be made on his proposal to require the telecommunication companies to register prepaid SIM cards, noting that the Philippines is one of the very few countries in the world which does not require it. He said that prepaid SIM cards have been used in kidnapping, carnapping as well as in bombing but the NTC cannot trace their owners.

Senator Recto supported the proposal as he added that SIM cards can also be cross-checked based on the quantity sold and the tax payments made. He said that it could turn out to be beneficial to the Bureau of Internal Revenue.

Asked whether the NTC has done anything about the abuse of prepaid SIM cards, Senator Recto


said that the NTC supports the position of Senator Satta and it is continuously doing a study on the matter.

Senator Sotto noted that the NTC had once directed the telecommunication companies to register their prepaid SIM cards but they were able to secure a temporary restraining order (TRO) from the court which was lifted this year.

Asked whether the NTC could enforce the registration at this point, Senator Recto said that the NTC is doing it in a prudent manner and its technical working group is working with the House on a piece of legislation.

On whether telecommunication compa11les are against registration, Senator Recto said that the private sector is expected to have some difficulty doing it and naturally opposes it as it did in the past.

Senator Sotto narrated that he heard one of the lawyers of a telecommunication company say that it would be difficult to register prepaid cards which were already in the market. However, he contested the claim, saying that if the company can actually monitor the SIM card load status, it is possible to register the prepaid cards.


Upon motion of Senator Lacson, the session was suspended.

II was 3:21 p.m.


At 3 :22 p.m" the session was resumed.


Preliminarily, Senator Lacson lauded Senator Recto for his unconventional yet enlightening sponsorship speech on the budgets of agencies under his jurisdiction.

In his visual aid, Senator Lacson pointed out that the national government expenditures is shown under Section B of the Budget Expenditures and Sources of Financing (BESF) which is divided into three sections, namely, Personal Services by Agencies which is a sub-special purpose funds with various line items;

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FRIDAY. NOVEMBER 18.2011

Maintenance and Other Operating Expenses (MOOE) by departments which is also a sub-purpose fund with various line items; and Capital Outlay (CO).

He explained that the national government expenditures are usually presented in historical data covering a three-year period: the actual data in the prior year, the adjusted data for the current appropriation, and the projected data for next year's appropriation.

Focusing on the MOOE of the DOTC, Senator Lacson asked why there were no actual data for the year 2002, adjusted data for 2003, and projected expenditure for 2004 for Personal Services, Senator Recto assumed that the DOTC did not submit the information to the DBM.

Thereafter, Senator Lacson presented the projected expenditure and actual expense for the following years:

l'MR PROJECTED ACTUAL EXPENDITURE EXPENDITURE

2005 P514.2 million P940 million 2006 Pl.059 billion PI.5 billion 2007 P 1.20 billion P1.342 billion 2008 P1.5 billion ---------2009 P 1.884 bill ion P1.898 billion 2010 P 1.269 billion Pl.462 billion

He noted that the same is being adopted for the 2012 BESF.

Under the item "rent," Senator Lacson said that reduction in the figures in BESF for 2004 and 2006, as well as for 2005 and 2007 appears normal but minimal; however, the reduction in the BESF in 2006 was shocking because the projected expenditure was P2J billion against the actual expenditure of Pl59 million as shown in the 2008 BESF.

Asked what happened considering that the rentals are usually covered by lease contracts where amounts are already fixed, Senator Recto said that the budget in 2006 was actually a reenacted budget. He noted that the same slide showed that the adjusted data amounted to P1.56975 million as against the actual expense ofP1.59529 million.

At this point, Senator Lacson asked for a detailed explanation on the difference in having a reenacted bUdget.

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Senator Recto conceded that indeed, there was a huge discrepancy between the projected budget of P 1.59 billion for 2010 and the actual P5 billion. However, he clarified that such discrepancies only occur in instances when the agency operates under a reenacted budget as had been the case for the DOTC in 2006 and 2007. For instance, he noted that in 2006, the Pl59 million projected rental budget of the DOTC under MOOE ballooned to P5 billion. He said that Secretary Roxas was not involved in the implementation of the rental increases as the latter was not yet in office at the time.

Senator Lacson underscored the importance of having Congress review the agency's management of previous budgets rather than focusing only on current proposed appropriations. Relative thereto, Senator Recto explained that the discrepancy was due to the increase in the equity rental payments for the MRT-3, which would be pegged at US$130 million in 2012.

As regards the observation that such situations reflect poor planning on the part of the DOTC, Senator Recto noted that equity rental payments for MRT-3, which is a 25-year Build-Operate-Transfer (BOT) project initiated in year 2000, comprised the biggest item in the MOOE budget of the DOTe. As such, he said that there would be certain years when more payments are made on the project. For instance, he said that these payments would rise from US$130 million in 2013 to US$150 million in 2025 for a total of US$2.399 billion.

Asked why the projected P2.557 billion in 2008 was lowered to P1.63 billion, Senator Recto clarified that equity rental payments do not follow normal patterns. He said that the US$39,999,996 which was paid in 2008, was a bigger amount since it compensated for deficiencies in payments the previous years.

Noting that there should be more consistency between projected and actual annual figures for taxes, insurance premiums and other fees, Senator Lacson sought an explanation for the discrepancies in the figures for the following years:

DOTC BUDGET FOR TAXES, INSURANCE PREMIUMS AND OTHER FEES

YEAR PROJECTED ACTUAL

2004 P32 million P76 million 2005 P29 million P256 million 2006 P29 million P 1.8 billion

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2007 2008 2009 2010

P38 million P200 million PI65 million PI42 million

P3, I billion P2,7 billion PL6 billion P2 billion

Senator Recto explained that much of the discrepancy was also due to the importation of materials, spare parts and equipment for the MRT-3 project However, he expressed confidence that such situations would no longer happen under the leadership of Secretary Roxas who was appointed to the position last July,

Upon further queries, Senator Recto replied that the amount of the budget that was paid for taxes, insurance prem iums and other fees were not avai lable at that moment but could be reflected in the records of the Senate while figures for 20 I 0 should be in the NEP,

On another matter, Senator Lacson asked on the procedure implemented by the DOTC in insuring its attached agencies, He noted that in the case of the Cebu Port Authority (CPA) which has been insured for P 117,712,500, the DOTC not only paid the GSIS a facultative premium ofP504,892,000 as of January 20 I I but also paid Phil ippine National Reinsurance Corporation (PHILNARE) the amount of P128,845 as legal commission for the latter's service of rein suring the CPA with the final insurer,

Senator Lacson sought clarification on whether the GSIS owned a majority share of the PHILNARE, which was created through a presidential decree of former President Marcos in 1977, To save money on commissions, he believed it would be better for the DOTC to have GSIS as its final insurer.

Asked whether the PHILNARE actually receives such commissions, Senator Recto replied that the Senate Committee on Government Corporations and Public Enterprises could make inquiries with the GSIS regarding the matter.

Senator Lacson identified the directors of PHILNARE and the shares owned by each one as follows:

NRC director

Helen Dy Robert Vergara

(GSIS general manager) Roberto Crisol

Shares owned

100

1,000 1,000


Alfonso Salcedo Jr, Gregorio Ty Yu Jose Teodoro Limcaoco DaniloGozo Yvonne Yuchengco

100 1,000

100 1,000

100

Noting that most of the reinsurance for the DOTC was being handled by Malayan Insurance, Senator Lacson asked for the criteria being used in the selection of final insurers, Senator Recto replied that the Senate Committee on Government Corporations and Public Enterprises could ask the GSIS regarding its reinsurance policy,

Asked by Senator Osmefia whether Malayan Insurance Company is the sister company of the bank that did the PEACe bonds deal, Senator Recto answered that it was the first time he became aware of it

Asked by Senator Lacson about the government policy on insuring its assets, properties and installations, Senator Recto replied that all government's assets are insured with the GSIS as he promised to look into the policy on reinsuring,

On another matter, Senator Lacson bared that he has received derogatory reports he received about the qualifications of Atty, Teofilo Guadiz, the director of Traffic Adjudication Service (T AS), who was supposedly appointed L TO regional director for NCR, In reaction, Senator Recto confirmed that the same repOlis have reached the DOTC secretary who would act properly on the matter.

Asked on the status of the ongoing study on how to I itigate the case against Stradcom, Senator Recto replied that Stradcom was still operating but it was in a transition period because its contract will expire on 2013 and both the DOTC and the L TO were looking at the possible violation of the implementation of the contract

Senator Lacson feared that the government might have lost about P2 billion while the case was pending,

As to when the consession agreement started, Senator Recto stated that the 10-year concession agreement with Stradcom started in 1998 but was extended by DOTC until 2013,

Asked who owns the data stored by Stradcom when the contract expires, Senator Recto said that it would remain with the L TO. ,r


On the reported threat of Stradcom that it would take with it the data and the whole system once the contract expires, Senator Recto said that the position of the government is that it owns the data. Further, he said that an administrative case had been filed against Stradcom with the Office of the Secretary.

As to the effectiveness of the services offered by Stradcom, Senator Recto explained that in general, it is working but he acknowledged that just like in other systems, there are glitches sometimes which would be taken into consideration when L TO considers bids in 2013.

To illustrate the glitches in the system, Senator Lacson noted that plate number MAR-22 was issued to two types of vehicle - an Isuzu Latero Wagon and a Mitsubishi Pajero Wagon. He asked how it happened when the system is supposed to be computerized and technologically advanced. Senator Recto replied that the L TO was resolving issues one at a time, for which reason, it is reviewing the contract with Stradcom. In the case of the issuance of the plate numbers for two different types of vehicles, he said that the L TO manually checks the data with the different L TO offices and once it locates the other vehicle without the data, it makes the proper correction.

On the observation that when Stradcom registers an imported vehicle, it is supposed to charge only once for a three-year period but actually charges per year, Senator Recto clarified that in the past, the registration was yearly but Stradcom revised it to three years so that the government could collect revenues in advance. But he agreed that lor Stradcom to collect thrice for one transaction is a violation of the contract, the reason it is facing an administrative case.


Upon motion of Senator Osmefia, the session was suspended.

11 was 4:03 p.m.


At 4:04 p.m., the session was resumed with Senator Honasan presiding.


On the matter of insurance payments, Senator Osmeiia asked whether the GSIS has a monopoly

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on all nonlife insurance on all properties owned by government, including government-owned and -controlled corporations (GOCC), and whether the GSIS can dictate how much the premium should be, Senator Recto answered in the affirmative.

Senator Osmefia observed that no insurance company totally covers and takes the risk on the properties that it insures, thus, it always reinsures in order to spread the risk, for instance, with other big companies like AIG and Marsh & McLennan. He stated that for the last 50 years, the reinsurance program of GSIS has been operationalized this way whereby it retains only about 10% to 20% of the original risk and spreads the remaining 80% of the risk to reinsuring companies, several of which are fly-by-night shell corporations registered in countries that are virtual tax havens. For instance, he bared, when a ship that belongs to PNOC Shipping & Transport Corporation and insured by the GSIS sinks, it files a claim with GSIS, the original insurer, but the reinsurance company somewhere in the Virgin Islands collapses itself, leaving GSIS holding the bag. While the going is good, he said, the reinsurance company collects all the premiums but when the property is damaged by fire or any disaster, it puts itself out of business.

As regards the Philippine National Reinsurance Company (Philnare), another reinsurance company of the GSIS that also does business with various companies around the world, he said that there is a need to subpoena its records, especially in light of the report that GSIS owns 60% of its shares.

On another matter, Senator Osmefia inquired about the construction of aerodomes in 2005 and 2006 to which he objected during the budget hearings. He asked on the number of publicly constructed aerodomes considering that every congressional district was given P20 million to 30 million to set up aerodomes without economic justification. Senator Recto revealed that there were 86 aerodomes, 46 of which were operational and have scheduled flights. He gave assurance that the Committee would provide a list.

On whether the other 40 aerodromes have any chance of scheduling flights in the next five years or if any service carriers have indicated willingness to invest money and serve a particu lar aerodrome, Senator Recto replied that there was none yet but he assumed that if 10 million tourists coming 111,

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a number of aerodromes would be viable, But he admitted that at the moment, there were only 3 to 3,5 million tourists.

Citing the case of Indonesia, Senator Osmefia stated that it has eight to 10 million tourists and although this number is rising, they tend to visit one place - Bali. He argued that there is therefore no justification to put up an airport in a town 10 miles from Balikpapan or Banjarmasin or Manado because people are still not going there. He stressed that he was asking for the list of the 86 aerodromes in the Philippines because they were built with public monies and he presumed most of them are going to be an absolute waste of funds now and in the future, He noted that some existing aerodromes have been expanded and many millions have been spent for that purpose, yet there are still no service flights due to lack of demand.

On whether the DOTC and the DOT undertake economic feasibility studies, Senator Recto stated that they do. However, he pointed out that sometimes, the politicians themselves want to have an airport constructed in their district so they can allocate a certain amount in the GAA for it. In this case, he said, the mandate of the DOTC is just to follow whatever is in the GAA.

Senator Osmefia stressed that the DOTC is mandated to prepare and present a budget for approval of the DBM and Malacafian, before it is presented to Congress. He asserted that congressmen cannot just demand that an airport be built in their districts without any justification.

Asked if the DOTC even bothers to come up with an economic justification for the construction, extension, widening, upgrading or fencing of an aerodrome, Senator Recto replied that it does. He added that according to Secretary Roxas, the DOTC intends to spend on airports that have traffic and maintain the others that do not. The investments, he said, would be toward airports that have commercial operations. But he agreed with Senator Osmefia that it is a waste of money to maintain aerodromes that are not economically viable.

At this juncture, Senator Osmefta requested a copy of the economic feasibility studies andjustifications for the constructed aerodromes, He stated that he would like the Committee of Ways and Means or the Committee on Public Services to conduct a


hearing to determine how public monies are being spent. Senator Recto noted that those were valid concerns and gave assurance that the DOTC wou Id provide the information requested.

Moving on to another subject, Senator Osmefia asked how many roll on-roll off (RORO) ports were ordered from contractor Eiffel Matiere of France and financed by BNP Pari bas. Senator Recto stated that DOTC has PIO billion for 72 locations but because the project was suspended nothing has been built yet.

As to the number of RORO sites that are feasible, Senator Recto said that only two out of the 72 RORO locations are economically viable, that the value of the steel pilings is P2.6 billion; that the payment for the other RORO projects was still being discussed but there was no lawsuit yet; and that BNP Pari bas, Eiffel Matiere's private funder, is fully guaranteed by the French government.

Asked if there was public bidding for the ROROs, Senator Recto stated that there was no public bidding because the Official Development Assistance (ODA) projects are government-togovernment; hence, public bidding is conducted outside Philippine jurisdiction. He admitted, however, that he was unaware if there had been a public bidding elsewhere.

Asked why Eiffel Matiere was immediately selected when there were other contractors, Senator Recto said that he would have to ask the firm about it. He emphasized that meanwhile, the DOTC was focused on suspending the contract and preventing further deliveries.

Senator Osmefia posited that for the sake of future generations, Congress has to plug the loopholes and ensure it would not happen again.

Moving on to another agency, Senator Osmena observed that P66 billion worth of bridges were ordered without bidding and most of them were of no use.

Asked if the DOTC, the DPWH and the national government were concerned about these continuing scams that bilked Filipinos out of their money that could have been used to build schools, Senator Recto answered that the present Administration was likewise concerned about these issues which is why the

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contracts were suspended. He asserted that NEDA shou Id look into the issue to ensure that the money borrowed from ODA is for priority projects of the Administration under the Medium-Term Philippine Development Plan. He acknowledged, however, that it was a supplier-driven credit which foreign governments use to export to other countries.

Asked how supplier-driven projects constructed by big manufacturers that never went through public bidding can be prevented, Senator Recto believed that the Legislative Executive Development Advisory Council (LEDAC) should look into amending the ODA law.

Senator Osmelia hoped that he can work with the DOTC to ensure that th is type of scam is prevented. However, he admitted that he has been having difficulty in putting together NEDA documents pertaining to the approval of bridges and ROROs. Senator Recto gave assurance that he wou Id look into it.

Proceeding to another matter, Senator Osmeiia requested clarification on MRT bonds which have a very complex financing structure. He stated that it is almost impossible to explain to the public the payout scheme which started at a very low base and progressed at a very steep incline up to the end of the 25-year period. He observed that there was a buyout clause in the contract that set a particular price which government has to pay in a paliicular year. Further, he disclosed that it was impossible to calculate the price on a straight line basis but nonetheless, the contract was signed, sealed and delivered. Senator Recto replied that he has not read the contract but he was told there is a buyout clause that can be exercised any time. He agreed with Senator Osmelia that the contract was not a straight line type of financing since there was a particular price to be paid every year.

Senator Osmei'ia stated that the buyout price of MRT bonds in 2008 was US$776 million. He asked if it is the highest price the government would have paid had it bought the MRT lock, stock and barrel. Also, he mentioned that the bonds were traded at a high discount because the government was not servicing the 15% implied interest on the bonds. Senator Recto admitted that he was not fully aware of it.

Senator Osmei'ia further disclosed that since the bondholders were not getting paid, there were voucher

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funds as others picked up the bonds at great discounts. Likewise, he bared that sometime in 2005 or 2006, President Macapagal-Arroyo issued an executive order instructing an inter-agency committee to study the possibility of buying up the MRT bonds with a view of a government takeover and refinancing. When 70% or 80% of the bonds were collected, he said, the bondholders told government they wanted a higher price and so the Filipino people ended up paying an enterprise value of US$I billion for the MRT.

Senator Osmelia stated that there were sti II about 865 bonds not excluding the 17% held by three local banks. He explained that if the bonds were bought at more or less the same price plus another US$137 million, the total amount of the bonds would be US$I ,00 I ,000,000. Senator Recto countered that the government has already paid for the 865 bonds at 83% of their actual price.

But Senator Osmelia commented that if 17% of the bonds were bought, it would have an enterprise value of US$I billion which places the price of MRT at about US$59 million per kilometer. However, he believed that the actual cost of the MRT is US$40 million per kilometer, compared to both LRT 2 and MRT which were built each at a cost of US$51 million per kilometer. He inquired why government is paying US$59 million per kilometer for a IS-year old MRT.

As regards the fare of MRT 3, Senator Osmefia stated that it is PIS for three stops but there is a proposal to increase it to P60 end-to-end. Senator Recto denied there was such a proposal, saying that the P 15 is end-to-end. He stated that although the fare from end-to-end should be P60, government thought it best to subsidize P45 and charge the remaining PIS to the public. He said that if the cost of maintenance and operating expenses were to be covered by the fare, MRT has to charge the public P20-P25.

But Senator Osmelia stated that based on the LRT's 2011 Projected Operating Expense of PI.667 billion, not counting the equity rentals government have to pay, the fare should be P 11.

Senator Recto clarified that the maintenance and operating expenses are almost P2 bill ion, that is why the Committee came up with PIS.

Senator Osmefia observed that the DOTC has yet to buy the MRT from the Land Bank of the

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Philippines (LBI') for an overpriced amount of US$225 million, In the meantime, he said, the riding public is burdened by the overprice. Since the MRT was already recovering its operating expenses from the passengers, he argued that they should be paying only 1'50 which could go down if the government would put the MRT in a legitimate financing scheme.

Further, Senator Osmena averred that if government decides to subsidize and charge the public 1'35, it is still the people's money that pays for the overpriced MRT. He recalled that in 2008, Sec. Larry Mendoza refused to sign the contract because it did not make sense to buyout the MRT bonds for more than US$670 million ..

Senator Recto supposed that the Blue Ribbon Committee and the Committee on Banks, Financial Institutions and Currencies would tackle the issue together in January 2012.

Senator Osmeila stated that the Committee has learned many things in the hearings and studies undertaken and would like to share its findings with the Comm ittee on Ways and Means and the DOTC which made a surprising stand in 2008. Since the "Iongpals" was paid by LBI' and DBI', he asserted that the DOTC was being made to buy it at 100% or US$l billion. He posited that DBP did not want to engage in peripheral business but it was holding the bulk of the equity in the MRT 3 and it does not have an exit strategy.

Senator Recto averred that government, through the DOTC, already paid 15% to DBP and LBP.

Senator Osmel1a believed that the payments were a waste of the people's money and that the national government would be borrowing on a 25-year note.



II was 4:39 p.m.




SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS AND ITS ATTACHED AGENCIES

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Transportation and Communications and its attached agencies, namely, Office of the Secretary, Civil Aeronautics Board, Maritime Industry Authority, the Office of Transport-ation Cooperatives, Office of Transportation Security, Toll Regulatory Board, National Telecommunication, Commission and the Phi lippine Postal Corporation, was deemed submitted for the Body's consideration.


Upon motion of Senator Sotto, the session was suspended

II was 4:42 p.m.



DEPARTMENT OF EDUCATION

Senator Angara presented the budget of the Department of Education.

MANIFESTATION OF SENATOR ANGARA

At the outset, Senator Angara stated that he could not say he was pleased to present the budget of the Department of Education (DedEd) because it is a classic case of management of scarcity.

He recalled that he came to the Senate 22 years ago, even then when the DepEd budget was discussed and debated on the floor, the concentration was on scarcity and not abundance - shortage of classrooms, textbooks, and teachers. Up to now, he said, the country is still short on these items. He pointed out that the challenge of managing 23 million young people in the midst of scarcity is truly difficult and he expressed pity to the person who managed this huge institution. However, he opined that despite the shortages and the suffering, managing the Department is worth it because it is the place where the nation is putting its trust in the future.

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He confirmed that the DepEd gets the largest share of the national budget and that next year, it will receive P238,766,000,000, But, he conveyed the Education Secretary's wish during the committee hearings that some of the shortages be bridged by the end of 2012 because there are more challenges facing the Department in terms of enhancing the basic education system, He revealed that this year, the Depaltment wi II be undergoing a top-to-bottom review, introducing early childhood learning, mandatory kindergalten, thereby adding two more years to basic education, He said that it takes quite some patience to work out, discuss and consult with all the stakeholders and it also takes time and patience to find the resources necessary to support reforms,

Senator Angara stated that this is the situation at the DepEd and its officials were exerting a mighty effort to introduce K-12, He said that at the congressional level, the Early Childhood Act has already been completed and was just awaiting the almost ministerial automatic ratification of the bicameral conference l'eport by both houses of Congress, He added that the same process has already been completed for the Kindergarten Act but both Houses have yet to confront the K-12 issue which is probably more complex and complicated than the first two issues, But he expressed confidence that by the time the DepEd shall have completed its curriculum and program review by 2018, a full basic education comparable to the rest of the world can be offered to the Filipino youth,



It was 5:02 1'.1/1,




Senator Legarda noted that there were only four years left before 20 IS, the target year to achieve the Millenium Development Goals (MDGs), Among the many MDG commitments of the Philippines pertaining to primary or elementary education, she asked if the DepEd would have the budgetary support in 2012 to enable the country to achieve the literacy goals set in

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the MDGs or the capability to make a big turnaround in four years' time considering the decline in enrolment in elementary education from 2006 to 2007 and the very minimal reversal in 2008,

Asked whether the Philippines by 20 IS would have already achieved the MDG on universal primary education, Senator Angara repl ied in the negative, but he believed that by 2015, the Philippines would be pretty close to achieving about 96% to 97% enrolment

Asked where the Philippines is right now in terms of achieving the MDG goals for primary education, Senator Angara replied that it is at 89,9%,

As to the changes in the curriculum the DepEd has initiated and the kind of budgetary support it has to speed up the process so that the Philippines can achieve what its neighbors have tried to do, Senator Angara remarked that for 2012, the budget of the DepEd has jumped quite remarkably in absolute amount of P22 billion, equivalent to almost 12% which is quite a respectable increase considering the bigger base of the budget of the DepEd in 20 I 1. However, he lamented that judging by international standards like those of UNESCO, the Philippines falls far short of the benchmark of 6% of G DP because the country's allocation is only 2, I % of GDP, He said that it may still be lower compared to the country's neighbors, He explained that it is not the most ideal of figures but that is what the small national income can afford,

On the quality of education and literacy, Senator Legarda stated that initiatives to upgrade the quality of education delivered to Filipino children must be strongly supported given the fact that achievement test results have been generally low and uneven across regions, particularly at the secondary level. To illustrate, she said that according to the 2008 Functional Literacy Education and Mass Media Survey, about 20% of Filipinos who completed elementary education and 10% of Filipinos who reached high school were not functionally literate, She asked how the budget would address the seemingly deteriorating quality of education and what steps were being undertaken to ensure that an adequate number of qualified and motivated teachers are given continuous professional development.

Senator Angara stated that in the regional context, the country's growth in literacy is second to Thailand, which is the highest in the region, However, he

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admitted that the country's functional literacy, or the ability to follow instructions, is low and those who cannot read and follow instructions are as good as i II iterate,

Relative to the budget, Senator Angara noted that historically, the per head spending of the Philippines on education is probably the lowest in the region, and that political will is needed for education to get the highest allocation, among other things that are beyond the control of the Department, the administrators and the people, so the politicians might have to do more to help the education sector,

Senator Legarda asked if it was a matter of resources as she pointed out that even with an increase in the allocation for education, there was nothing more to be done since resources were limited, Senator Angara said that apart from having resources, a sense of priority is also necessary, He added that more resources could be allocated for education but this was not being done,

Senator Legarda stated that schools in disasterprone areas, especially in the countryside, are among the most vulnerable, so the destruction of schools, learning centers, community-organized day care centers and facilities, modules and instructional materials by disasters, natural or man-made, and the disruption of classes have a negative impact on the quality of education being delivered to school children, She disclosed that the UNICEF has come out with a report on children's vulnerability to climate change and disaster impact in East Asia and the Pacific where the Philippines was specifically cited, Apparently, she said, based on interviews, Filipino children were affected not only by floods, typhoons and other natural hazards, but also by the conversion of their schools into evacuation centers, She asked what kind of intervention was being done by the DepEd to ensure that quality education and learning are not constantly being threatened by disasters and whether there is coordination among agencies of government to limit the vulnerability of children,

In answer, Senator Angara mentioned the DepEd special program, Hazard Resilient School Building, currently being implemented in Regions III, IV -B and V, He explained that while these school buildings might not survive all types of disasters, they will protect school children and double as evacuation centers, Given the unpredictability of weather and climate change, he believed that this is how school building construction ought to be done in the future,


Senator Legarda asked if the geohazard maps and flood risk maps were being used to address the problem in classroom shortage, Senator Angara explained that the geohazard maps are being utilized in the construction of hazard-resilient school buildings, However, he noted that the geohazard mapping is still incomplete; only Mindanao is fully mapped while the rest is still in the process of being mapped, He added that over a period of five years, the DepEd has tried to map and identify the school buildings, almost 5,000 at the latest count, that are vulnerable to hazards, He said that the next step would be to vigorously pursue the construction of hazard resil ient schools,

Senator Legarda recalled asking the DPWH to assist the DepEd and the DOH in assessing the structural integrity of school buildings and government hospitals, She said that according to the DepEd, 588 out of the 685 schools inspected nationwide for safety last year were found to have structural defects; and that 869 schools built many decades ago were still being used, She expressed concern that the children might be in harm's way if the structural integrity of the school buildings is not assessed properly,

In reaction, Senator Angara pointed out that the country's problem is more basic since it pertains to shortages of classrooms, school buildings, desks, et cetera, He said that the reconstruction of hazardprone school buildings, for instance, has not yet been done since the shortages are yet to be filled,

Adverting to the UN ICEF report, Senator Legarda reiterated that the Filipino children are among the worst affected as they are exposed to climate change, health risks, displacement, abuse and exploitation, and education deprivation, She emphasized that climate change is a real-time issue,

Senator Angara said that even before climate change, the Philippines has been considered the worst place for mothers and children because of high maternal and infant Il,lortality rates, He lamented that there is so much to attend to with so little time and resources, He agreed that cI imate change adaptation is very important, however, the basic needs of the people and school system should be prioritized,

On improving the access of the indigenous peoples (IPs) to education, Senator Legarda stated that the DepEd has formulated a policy framework that aims

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to make the educational system truly inclusive and respectful of learners, especially those belonging to the minority groups. Senator Angara confirmed that the policy framework is being pursued through several methods like alternative delivery modes, accreditation and equivalency program, special education and madrasa for the Muslims.

Asked if that policy framework was being funded, Senator Angara said that there is an allocation for the policy framework for IPs, citing the amount of P200 million available for the alternative delivery mode programs and the Project E-Impact. He stated that every aspect and level of the education system, from pre-education, primary, secondary, post-secondary, telliary, to graduate school, should be looked into because the country is being left beh ind by its Southeast Asian neighbors. He pointed out that one additional year of education will create opportunities for a person and it will add half a percent to the country's GDP. He emphasized that education gives a very high social and economic return. He rued that the problem is so common yet it is taken for granted. He noted that competitiveness is also low as seen in the country's ranking in the World Economic Form - 75 out of 144, the same rank three or five years ago.

Senator Legarda asked how the country is doing in terms of competitiveness, especially in English linguistic skills, as she pointed out that China has been very aggressive in teaching English when it used to be very passive about it. She also asked if there is a special language program. Senator Angara said that with the introduction of Grades II and 12, there is an opportunity to put communication arts in Grade 12 as an elective. He underscored the importance of reviewing the educational system to improve and decongest the curriculum. He added that Mathematics, Science and Communication should also be improved in the primary curriculum.

Senator Legarda recalled sponsoring a measure in 2003 which included ecology in primary education, believing as she did that it would be instructional for children whose parents work closely with nature.

Asked if it is being implemented by the DepEd, Senator Angara said that it has been integrated in Science and Social Studies. Senator Legarda pointed out that the inclusion of the subject in the basic education curriculum was meant to humanize the issue of environment.

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Senator Legarda noted that the Madrasah road map, which DepEd created as embodied in DepEdOrder No. 51 in 2004, identified various objectives, including "to institutionalize Madrasah education into the national education system to develop consultation involving education stakeholders" and "to undertake appropriate advocacy initiatives in support of Madrasah education." Asked on the budget for Madrasah education, Senator Angara said that P300 million in the DepEd's budget for 2012 is the counterpall budget of government to the AUSAlD project not only for Madrasah schools in the ARMM but also for the schooling of indigenous peoples.

Replying to further queries, Senator Angara said that the budget to improve the competence of elementary and high school public school teachers could be found under the item "pre-service training" for which P862 million for 2012 has been appropriated.

Senator Legarda aired the dilemma of majority of the recipients of Metrobank's Outstanding Teachers Award, in which she was among the judges, of finding sponsors or government scholarships for their postgraduate studies, as many of them could not go past their masters degrees. Senator Angara revealed that for 2012, a Faculty Development Program under the CHED budget has been included, particularly for the 3N Network which is a consortium composed of 10 state normal schools. The program, he explained, contains substantial amounts of money for faculty training and development, in addition to what the DepEd already provides for their own training. He said that initially, 100 scholarship lots for 10 normal schools all over the country were made available.

Since teachers are at the heart of education, Senator Angara stressed the need for them to be well equipped to deliver good education. He stated that the current means towards this end is through unconventional means whereby the individual teacher's talent is enhanced with social ski lis, and they are thought of organization and cooperation skills.

Senator Angara said that the DepEd, under the leadership of Secretary Luistro, is of the belief that to be able to teach subjects effectively, one does not need to be formally educated as a teacher; for instance, DPWH engineers could be tapped to teach math subjects. He said that thinking out of the box could address the lack of competent and qualified teachers.

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Senator Legarda said that Congress has been trying to upgrade and improve the five-decade old Magna Carta for Public School Teachers but has not been successful in passing such a law. She asked if there are efforts to address the nonpayment of hazard pay, one of the issues that crop up during pub I ic hearings. Senator Angara replied that the DepEd budget contains a provision for hazard pay in the amount of PI8S million, although he admitted that it might not be able to cover the entire backlog.

At this point, Senator Legarda again corrected of what she lamented as an utterly false, baseless and malicious information that is texted every election campaign, the issue that she filed a bill to remove the benefits of teachers, particularly their summer pay. She believed that no person in his or her right mind would do such a thing, as she disclosed that she has, in fact, authored a bill for the Magna Carta for Public School Teachers that aims to increase their wages, salaries and benefits. She said that she was glad that the DepEd family was around so that when the issue crops up again during election time, they would be able to address the issue accordingly. Senator Angara expressed the belief that the electorate is intelligent enough not to believe in such false rumors as evidenced by Senator Legarda's consistent topping of the polls. Senator Legarda said that she just wanted to put the matter on record being herself a product of Philippine education, She said that she would not be where she is if not for her very good teachers in the schools that she attended and she would not want any teacher to feel that there is any senator who is trying to deprive them of any benefit that is due them, She reiterated the nonexistence of such a bill that seeks to deprive teachers of their benefits.

As regards teacher training program, Senator Angara disclosed that the Philippine Normal University is developing a teacher training module that is available online which he hoped could be disseminated and supported being the quickest and cost-effective way of enhancing the capabilities of teachers.

Senator Legarda said that she would no longer ask any questions on the budgets of the attached agencies, although she expressed hope that the budgets of the Philippine High School for the Arts and the National Museum could be increased. She announced that there would soon be a textile museum within the National Museum.



On the assumption that the most important and strategic resource of the nation are the children, the Chair stated that while there is a temporary condition of the lack of classrooms, teachers, books and other teaching materials, it would be more than made up and compensated by the fact that the government is not lacking in vision and the required energies to protect such strategic resource by making them smarter, healthier, and more competitive so that they could effectively compete with their contemporaries.

The Chair recalled that the 2005 budget of the Department of Education provided for a Malusog na Simula, Yaman ng Bansa feeding program consisting of milk, eggs, coco pandesal, and vegetablebased noodles, It said that the milk could be sourced from a local dairy supplier or cooperative in localities where such local suppliers or cooperatives are present

Further recalling the previous day's statement of Secretary Luistro particularly on the proposal to hit two birds with one stone in better addressing the issue ofundemourishment among public school children in the country "by expanding the feeding program to 15 provinces and a city within the school year" and attempting "to improve the academic performance of the students who are most vulnerable to dropouts," the Chair suggested instead the "hitting of three birds with one stone." It stated that two birds would constitute addressing undernourishment to improve attendance in class, while three birds would constitute undernourishment, education and sustainable poverty alleviation which would reflect on the operationalization of the convergence thrust of government.

Asked by the Chair on the status of the feeding program, Senator Angara replied that P77 million has been allocated for 20 II for school-based pure feeding program targeting kindergarten and Grades I, II and III pupils, ages five to nine years old. He said that when other interventions such as nutrition education, Gulayan sa Paaralan, and medical/dental/optical services are added to the amount, the total amount would be P130 million. He said that half of what is being taught to a child between ages five to nine would be remembered by him during adulthood, his brain having such great capacity to absorb, is malleable and easily taught. He said that it was unfortunate that th is aspect was being neglected, as evidenced by reports that almost 37% from ages o to five are underweight and underheight.

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Senator Angara said that the number of incidence is still not acceptable at 30% even if it is smaller, percentage-wise. He lamented that at present, there is a growing generation of stunted Filipino children, both mentally and physically, as a consequence of which, there is high dropout rate in Grades I to III, and he attributed it primarily to the fact that most of the children in Grade I are hungry and cannot stand the rigors of the classroom while some are not yet ready for school. Given these circumstances, he believed that the budget allocation which included medical, dental and optical services could be considered puny.

He noted thaI another department with a huge budget is the DSWD which has P2.8 billion for its supplemental feeding program. Speaking of convergence, he recalled that during the hearings, he suggested that Ihe school feeding budgets of DSWD and DepEd be pooled together, since both are trying to respond to the same problem of malnutrition. He lamented, however, that he has just read a written response from the DepEd saying that his proposal was not possible while the DSWD explained that its feeding program is dedicated to three and four year-old children. He maintained that the age of the children should not matter since they all need intervention. He stressed that the segmentation ought to stop immediately to give way to convergence and cooperation between the two agencies. He said that in synergy, the country's peso could go further.

Senator Angara said that he would reiterate his suggestion to Sec. Dinky Soliman. He recalled that it was he who pioneered the school feeding program in 1997 because he bel ieved in the importance of the formative years of children. He said that the school menu was based on the one scientifically formulated by the Food and Nutrition Institute of the DOST as well as the National Nutrition Council of the DA. He stressed that the matter ought to be given priority and that the concerns could be answered adequately through the deployment of the huge pooled money of almost P3 billion.

The Chair recalled that when Senator Legarda asked whether the problem was just a question of resources, Senator Angara clearly and categorically replied that it was also a question of priorities. Taking these into consideration, it said that the assumption is that the care of the children, the most precious and most strategic resources of the country,

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shou Id be on the top of the national order of priorities and shou Id serve as the measuring device for the climate change advocacy of Senator Legarda, the concern for the Filipino family, the pro-life advocacy of the Majority Leader as well as Senator Angara's aggressive approach towards education. It stressed that the defining character should be to serve the objective of protecting children at all cost, for the present and for the future. Ironically, it said, the timeline within which intervention is allowed through nutrition is just one-half of the double edgedsituation. It pointed out that children are not just malnourished; they are actually dying based on the datum that malnutrition is killing 100 Filipino children everyday. If that is how the government takes care of its strategic resources, he said, the country has serious problems.

Illustrating how convergence can be utilized to help the parents of the children, like the farmers, the Chair said that the DepEd can converge with the Department of Agrarian Reform and the Department of Agriculture by purchasing the food being used in the school feeding program from the poorest farmers and agrarian reform beneficiaries. It agreed with Senator Angara that a clear sense of national priorities should be developed.

The Chair commended Senator Angara for being a certified statesman, proof of which was his "Oh My Gulay" project which sounds simple but actually hits the crux of the matter. It noted that in the ancient world, heroism was not defined in iconic terms but when ordinary people such as parents, men and women, young or old, build for the next generation.

Senator Angara thanked the Chair and said they have no choice now but to decide on investing more in education and training people especially in preserving and conserving the most precious resource, the children.



11 was 6:01 p.m.


At 6:0 I p.m., the session was resumed.

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SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF EDUCATION AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Education and its attached agencies, namely, National Book Development Board, National Council for Children's Television, National Museum, Philippine High School for the Arts, and DepEd Building Program, was deemed submitted for the Body's consideration.



It was 6: 03 p.l11.



DEPARTMENT OF TRADE AND INDUSTRY AND ITS ATTACHED AGENCIES

Senator Angara presented the Budget of the Department of Trade and Industry, including its attached agencies, totalling P3,033,573,000. He described the DTI as the designated driver for job creation and the promotion of trade and investment.

Senator Angara said that the DTI's principal thrusts for 2012 include industry development and investment promotion, the development and promotion services of micro, small and medium-sized enterprises, and the promotion of international trade negotiations, facilitation and promotion. He stated that the interconnected global economy ought to prompt the government to exert more effort in attracting investments, which comprise one-third of global GDP, and trade, which makes up two-thirds of global output. He lauded PEZA Secretary General Lilia de Lima and Board of Investments Undersecretary Cristino Panlilio for their efforts to generate more trade and investments for the Philippines. However, he pointed out that although the BOI had attracted up to P337 billion in investments, exports in 2011 went down by 3% compared to the previous year.

Amid the economic challenges facing the world particularly the serious economic downturn in the European Union, United States and Japan, Senator Angara expressed hope that the government would


take steps to stimulate the domestic economy and interact more aggressively with more Asean neighbors. He noted that the Philippines would have a sufficient market if it strengthened free trade relations with China. He expressed hope that the DTI would ensure that the Philippines not only survives the recession but also prospers in the long run.


Stating that she had authored the Micro, Small and Medium-Sized Enterprises (MSME) Law which was being implemented by the DTI, Senator Legarda pointed out that the fact that more than 90% of the economy was being run by MSMEs proved that the sector was indeed an economic driver.

Senator Legarda explained that RA 9501 (amended MSME Law) provides more assistance to entrepreneurs by requiring lending institutions to allocate at least eight percent of their loan portfolio to MSMEs; moreover, the law sought to provide access to new technologies and regular entrepreneurship training programs for workers along with a comprehensive development plan (0 ensure viability and growth of MSMEs in the country. She recalled that Senator Angara also helped raise the ceiling for qualification as a micro-enterprise to P3 million from PI.5 million. In view of the importance of the MSMEs, she hoped that the sector would be given a budget for 2012 as it had not received any allocation the previous year.

Asked how the MSME sector was doing and the DTI's initiatives to further promote micro enterprises, Senator Angara said that it was likely that there was no budget for it.

Senator Legarda urged Senator Angara to find ways to realign or increase the DTI budget for this purpose. She suggested that the unprogrammed Special Purpose Fund be realigned or that the Committee include a budget for microenterprises which include the I ikes of small sugar manufacturers, cloth weavers, which are the drivers of the rural economy and the engine of economic growth. Senator Angara replied that P583.991 million is the allocation for MSMEs in 2012 which would be used for training and capacity-building as well as for providing equipment.

Asked about the Design Center of the Philippines, Senator Angara replied that the proposed Design Council Act would allow the DTI to enlarge the scope and reach of the Design Center, which was created to help small entrepreneurs have more


exposure to market their products through patlicipation in trade fairs. This, he believed, would be of much assistance to MSMEs particularly since creative industries are the most prolific and productive in the product and services sectors.

As regards the observation that design and packaging were key elements to successful marketing, Senator Angara said that the Design Center, which had a P73 million allocation, was also finding ways to improve the packaging of products and services of MSMEs. He pointed out that the country has an abundance of creative people who would greatly benefit from government's assistance. Moreover, he said that I 8% of the DTI' s total budget was set aside for SMEs.

Asked whether the continuous application of the MSME law would have the auto project under it, Senator Angara replied that P67 million had been allocated to it

Relative thereto, Senator Legarda expressed her intention to enter into a more lengthy discussion on MSMEs after the passage of the DTI budget She said that she intended to meet with the head of the Center for International Trade Expositions and Missions (CITEM) to discuss the possibility of having the DTI launch an Asean trade fair that is similar to European trade fairs. She suggested that the Philippines, through CITEM or the Philippine Trade Training Center, organize an Asean trade fair like the biannual Maison & Objet Trade Fair Paris which showcases the best European products in furniture, clothing, textile, handicraft, kitchen, bathroom design, gifts and souvenirs. While having one Asean trade fair rotating among member-nations might seem a difficult undertaking, she expressed excitement over holding such an event

She suggested that SMX MOA, the PTTC, the World Trade Center and other areas be used as exhibition centers where buyers and exporters from the Philippines and other Asean neighbors can converge and trade their products and indigenous ailS and crafts.

Asked whether the DOT has an allocation for such programs like an Asean Trade Fair, Senator Drilon answered in the affirmative, adding that there is allocation of P88 million for the biannual CITEM exhibits as he welcomed the proposal of holding a separate Asean Trade Fair.

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Senator Legarda opined that the cooperation of Asean countries must be solicited aside from the different provinces that also have their own products to showcase.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF TRADE AND INDUSTRY AND ITS ATTACHED AGENCIES

There being no other reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Trade and Industry Judiciary and its attached agencies, namely, the Office of the Secretary, Board of Investments, Construction Industry Authority of the Philippines, Construction Manpower Development Foundation, Philippine Trade Exposition and Missions, Center for International Trade Expositions and Missions, Cottage Industry Technology Center and the Product Development and Design Center of the Philippines, was deemed submitted for the Body's consideration.



It was 6:33 p.m.



PHILIPPINE DRUG ENFORCEMENT AGENCY

Senator Dri Ion presented the budget of the Philippine Drug Enforcement Agency (PDEA), which has an allocation of P643, 241, 000 under the 2012 GAB and the same as what is contained in the NEP for 2012. He said that the Committee on Finance has not recommended any change in the budget proposal for PDEA.


Senator Sotto manifested that Senate President Enrile and Senator Cayetano (A) have withdrawn their reservation to interpellate on the PDEA budget He said that Senate President Enrile would submit an amendment to the PDEA budget on Monday, November 21,201 L

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SUBMISSION OF THE BUDGET OF THE PHILIPPINE DRUG ENFORCEMENT AGENCY

Upon motion of Senator Sotto, there being no objection, the budget of the Philippine Drug Enforcement Agency was deemed submitted for the Body's consideration,


With the permission of the Body, the Chair suspended the session,

11 was 7:38 p,m,



OTHER EXECUTIVE OFFICES

Senator Drilon presented the budgets of the Other Executive Offices, namely, the Authority of the Freeport Area of Bataan, Cagayan Economic Zone Authority and Zamboanga City Special Economic Zone Authority,


Upon motion of Senator Dri Ion, the session was suspended,

It was 7:38 p,m,



Upon resumption, Senator Drilon stated that PI 00 million is allocated to the Authority of the Freeport Area of Bataan in the 2012 National Expenditure Program which is similar to the appropriation under the GAB. He said that the Committee on Finance did not introduce changes in the budget and adopted the GAB-House version,


Asked by Senator Osmefia whether the Authority of the Freeport Area of Bataan submitted its financial statement for 2010, Senator Drilon replied in the affirmative, as he clarified that the PI OO-million allocation for Capital Outlay is equity contribution,


He said that the AFAB chairman and administrator is Deogracias G,P, Custodio,

As regards the PIOO million, Senator Drilon confirmed that it can be booked as capital outlay, subsidy, or equity contribution,

On the suggestion to standardize the entry in the books of the various freeports, Senator Drilon explained that it is all uniform since in the budgeting books, equity contribution is classified as capital outlay,

Senator Osmefia observed that the Authority of the Freeport Area of Bataan reported P323 million from January to June 2012 and another P342 million from July to December 20 II, Senator Drilon explained that from January to June 20 I 0, it was under the Bataan Export Zone Authority and from July to December 2011, it was under the Authority of the Freeport Area of Bataan,

Asked how many locators raised the P666 million revenue, Senator Drilon replied that there were 41 locators in aIL

As regards the advantages of converting the BEPZ into a free port, Senator Drilon explained that as a freeport, it would no longer be under the authority of PEZA, and in terms of return on investment for the community, the advantage is that more locators are attracted to the free port, He added that 15 new locators moved in s'ince its conversion into a freeport, But Senator Osmefia commented that the number was not very impressive,

Asked if there was economic loss to the government with the conversion of BEPZ into a free port, Senator Drilon said that the conversion made no difference in tax incentives, importation, et cetera,

Asked why government has to contribute PIOO million to the free port every year and how long it would last, Senator Drilon replied that under the charter, the national government is supposed to contribute an equity of PIOO million in the next five years, On the use of PIOO million, he presumed that it can be utilized for operations; capital outlay; maintenance and operating expense, but basically, he said, it is being used for capital outlay or capital expenditures as it allows the free port to sustain its operations on the basis of revenues generated, He added that the equity that government would infuse is basically used for capital expenditures (CAPEX),

FRIDAY, NOVEMBER 18, 20 II

He further explained that the PIOO million will be used for road networks, renovation of buildings, road improvements, landfill solid waste management project, security fence, power substation, et cetera.

Senator Osmefia observed that the operating loss of Bataan reached P94,422,000 in 20 I 0; in 20 II, its projected loss is P92,547,000; and in 2012, P78,797,000,

Senator Orilon replied that the losses were attributed to the depreciation of the old buildings, But he gave the assurance that its cash flow statement is positive,

On whether the government set targets for the various free ports, Senator Drilon replied in the negative, saying that the Governance Commission for GCG would have been the logical body to set those targets for the national government

Asked how much the government has invested for the last 30 years or so in the Bataan Export Processing Zone, Senator Drilon replied that the Authority has to undertake the appraisal of the present assets so that it can determine the value of government investments.

Senator Osmefia then requested that the Authority submit the total investment that the government has made in the Bataan Export Processing Zone and the Bataan Free Port to give the Senate a better idea on how they performed over the past 30 years, Senator Ori Ion agreed,

SUBMISSION OF THE BUDGET OF THE AUTHORITY OF THE FREEPORT AREA OF BATAAN

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Authority of the Freeport Area of Bataan was deemed submitted for the Body's consideration.

CAGAYAN ECONOMIC ZONE AUTHORITY

Senator Orilon presented the budget of the Cagayan Economic Zone Authority.

Senator Orilon stated that the NEP allocated P915,503,000 for the operations of the Cagayan Export Zone Authority; P903,500,000 for the equity and P 12,300,000 for maintenance and operating expense, He stated that the both the House of

681

Representatives and the Senate did not propose any amendments to the budget submitted by the Executive.


At the outset, Senator Osmefia requested that the Body be provided a copy of the financial statements of the CEZA, He observed that in 2010, CEZA had an operating revenue ofPI35 million and non-operating revenue of P21 million or a total of PI56 million. He inquired as to where the nonoperating revenue was sourced, Responding thereto, Senator Orilon stated that the non-operating revenue came from interest income, miscellaneous income, fines and other penalties, but the bulk of the operating revenues came from franchising and licensing fees, He stated that under the NEP, it is allotted PI49,845,000.77 and the estimate for the current year is P\38,746,090.

Senator Osmefia disclosed that the CEZA's expenses were as follows:

Year

2010 2011 2012

Amount

P I 57 million 181 million (projected) 195 million (projected)

He noted that essentially, the CEZA is simply collecting franchise fees and he asked why its expenses were so high,


Upon motion of Senator Orilon, the session was suspended,

It was 8:01 p,m.


At 8:04 p,m" the session was resumed.

Responding to the query, Senator Orilon stated that the Maintenance and Operating Expenses of the CEZA for the current year was P\03,520,000 for the following major items:

Consultants, Contractual and Other Services (janitorial, security and other professional expenses) P28,6 million

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Sports, Christmas, Tourism and

Special Events Other MOOE Travel Expenses Supplies and Materials Rent

24.9 million 23.7 million 5.8 million 5.9 million 6.5 million

As to current expenses, Senator Drilon stated that the total equity as of August 20 II was P3.44 billion; the net profit for 2011 is P4 million; while the projected profit for 2012 is P4,S36,000. He added that there is a total of P724.9 million operating income since 2005 and he conceded that there is a very low rate of return by standards in the private sector and he challenged the CEZA to come up with a more acceptable rate of return.

On whether the government can expect that level of operations from CEZA in the next four years, Senator Drilon believed that the management realizes that P3.6 million return could stand a great improvement. Together with Senator Osmefia, he expressed hope that in the future, the CEZA would show a better return on investment. He averred that the first few years of operation would be capital intensive but after being fully operational, a higher return is expected.

Despite the lackluster performance, Senator Drilon stated that the Committee gives credit to the PS.6 billion capital investment generated by locators within the zone as of August 20 I I. He said that the capital investment has a positive effect on the economy of Cagayan.

Senator Osmefia recalled that the Tampakan Mining was supposed to be set up in South Cotabato and is expected to generate investment amounting to US$5 billion. He said that when asked about the money to be spent in the country and outside in terms of heavy equipment like bulldozers, trucks and payloaders, the officials of the firm could not give a response because actually 10%-15% of the US$5 billion is to be spent in Cotabato.

Asked how much of the PS.6 billion was spent on the freeport itself and how much on imported capital equipment, Senator Drilon explained that there was no capital equipment imported, it was all invested in the zone. He stated that the investments were in hotels and buildings that house guests of the casinos. He said that only the computers were imported.


Senator Osmei\a expressed hope that there would be an oversight for all the freeports. He opined that tighter monitoring of the investments of government in freeports would bear more fruit.

SUBMISSION OF THE BUDGET OF THE CAGA Y AN ECONOMIC ZONE AUTHORITY

There being no other interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Cagayan Economic Zone Authority was deemed submitted for the Body's consideration.



It was 8: 14 p. m.


At S: 15 p.m., the session was resumed.

ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY

Senator Dri Ion presented the budget of the Zamboanga City Special Economic Zone Authority.

Senator Drilon stated that the budget being presented by the Committee was the same budget recommended in the GAB-House version which was based exactly on the NEP, without any proposed amendments.

Senator Drilon stated further that of the P60, I 00,000 budget, there is PII million for capital equity contribution and P49.1 million for MOOE.


Asked by Senator Osmei\a how much the total government expenditures, equity contributions, subsidies, infrastructure, et cetera in the Zamboanga City Special Economic Zone Authority were, Senator Drilon replied that the actual releases since 1997 amounted to P760,500,000.

Senator Osmena asked why it dropped when it was almost PSI billion about five years ago. Senator Drilon clarified that the amount being cited is the

)If" r

FR[DAY, NOVEMBER [8,201 [

approved equity under the GAA and not actual releases, He said that the total appropriation from 1997 up to 2011 was P9S0,4SO,000 and under the budget authority, P760,SOO,000 was actually released,

Asked if there would be a net loss of about PS9 million by the end of2011, Senator Orilon replied in the affirmative, adding that the projection for 2012 is almost the same amount, P59.6 million.

Senator Osmefia observed that the figures show a one-sided balance sheet as he noted the operating revenue of P5 million and the net profit of minus P59 million. He asked how far and how long government would have to justify this kind of expenditure before it realizes that it is a losing proposition, Senator Orilon said that it would depend on the President whether or not to approve further contributions and allocations for the Zamboanga City Special Economic Zone Authority and certainly, he said, Congress is empowered to make decisions on that issue.

Senator Osmefia recalled that in 1996, he voted in favor of the Zamboanga City Special Economic Zone Authority at the behest of Rep. Clara Lobregat but as years went by, he saw nothing to justify the continued expenditures on it. He lamented that of the P60 million allocated to the Zamboanga City Special Economic Zone Authority in 20 II, there was only a contribution of P5 million in revenues and all went down to losses. For his part, Senator Orilon admitted that the expenditures cannot be justified and are difficult to justifY. He said that the GOCC Governance Council was precisely set up so that there will be a specific agency in charge of GOCCs. He said that it was unfortunate the Zamboanga City Special Economic Zone Authority is under the Office of the President and, therefore, it is like an independent body.

Senator Osmefia stated that the other day, he raised a point on rehabilitating some of the Philippine embassies abroad. He said that there was a capital outlay ofP4 million for all Philippine embassies, some of which are badly dilapidated. He asserted that an additional PIOO million to P200 million allocation could make them a little bit more presentable to diplomats.

As to how many locators there were in the Zamboanga City Economic Zone Authority, not counting the bowling alley, the sports club and the hotel, Senator Orilon replied that there were 15 registered locators. He enumerated the business activities of the locators, to wit: facilities operator;

683

manufacturing, processing of technically specified natural rubber of microbial coco cellulose; trading and reconditioning of used industrial and heavy equipment/agricultural machines; utilities enterprise (Globe Telecom); production of high value crops and vegetables (Golden River Farm); fighting cock breeding; production and processing of biofuels (Nipa Tech Energy); seafood manufacturing and processing (Seachamp International Export Co.); manufacturing of pasteurized canned crab meat (Southgate Ace Marine). He added that the rest of the r ocators were engaged in leisure farming on 5-hectare leased highland properties.

To the observation that these busillesses collect about less than haifa million pesos a month, probably mostly rental, Senator Ori Ion agreed.

Senator Osmefia further observed that government spent P750 million to collect a rental of only P5 million from the zone that has an operating loss of P59 million or P4.5 million a month. He said that Congress has to take care of this matter at the proper time. He expressed disappointment that after 15 years, he sees no future for the zone. He believed that there is a time for a corporation to cut losses and put its money where it can make an economic return for the benefit of the people.

Asked how many jobs have been created by the Zamboanga City Special Economic Zone Authority, Senator Orilon replied that there are no data as to the number of jobs created for 20 II but he darified that the various locators employed 326 workers in 2009 and 326 in 20 I O.

Senator Osmeiia assumed that most of the laborers or workers were low-income laborers 01'

farmers. He computed that with P750 million and 400 workers, there is a capital investment of P2 million per job but if that amount was placed in a bank instead, it would have earned P200,000. He lamented that it was a waste of resources.

In closing, Senator Osmeiia stressed that the Committee should seriously consider addressing the matter because the government is desperately scrounging for funds to finance its velY important programs such as building schools, constmcting farmto-market roads as well as post-harvest facilities to ensure food self-sufficiency and food security. He said that a little savings here and there would tremendously benefit even the people of Zamboanga.

684

SUBMISSION OF THE BUDGET OF THE ZAMBOANGA CITY SPECIAL ECONOMIC ZONE AUTHORITY

There being no further interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Zamboanga City Special Economic Zone Authority was deemed submitted for the Body's consideration.

AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY

Senator Dri Ion presented the budget of the Aurora Pacific Economic Zone and Freeport Authority .

Senator Drilon stated that in 20 II, P 145 million was allocated to the Authority and that this was increased by P187.5 million under the GAB-Senate version, bringing the total to P332.5 million for 2012.


At the onset, Senator Osmefia recalled that he requested about a dozen documents during the hearings on the Aurora Pacific Economic Zone and Freeport Authority (APECO) last October 3 and 12,20 II, and only four had been submitted so far. He asked where the other documents were, like the study to mitigate the effects of liquefaction of the Casiguran International Airport. In reply, Senator Drilon clarified that said study was done by the Civil Aviation Authority of the Philippines (CAAP) for the Casiguran International Airport, adding that the APECO management was not completely involved in its preparation nor did it have access to it since the Casiguran International Airport is outside the jurisdiction of the APECO.

Upon further queries, Senator Drilon clarified that the resource person present in the Chamber cannot as yet identify the contact persons in CAAP from whom the document can be sourced. However, he said that the APECO has the liquefaction report for the zone which was done by the DENR.

Senator Osmefia requested a copy of the liquefaction report for the land within the APECO. Also, he inquired about reports which allegedly prove the participation of residents in areas affected by the APECO project. Senator Drilon stated that according to the APECO management, the Aurora Special

fRIDAY. NOVEMBER 18.2011

Economic Zone Authority (ASEZA) law is a refilled bill, the original of which was filed by then Congresswoman Bellafor Angara-Castillo in 1995; and that as shown in the transcripts of the hearings, Mayor Fidel Salamera was consulted, he testified and he favorably endorsed the bill.

Further, Senator Drilon stated that Mayor Salamera did convene a meeting with the Casiguran municipal council and other leaders ofthe community where the issue was discussed. Senator Osmefia requested a copy of the minutes of said meeting.

Asked how much government has invested or expended in the APECO and ASEZA, its predecessor, Senator Drilon reported that from 2008, when the operation was started, up to the current year, a total of P578,050,000 was actually released out of an authorization of P I ,654,800,000 under the GAAs. He added that in 20 II, the actual release in the form of notice cash allocation was P4 I ,250,000.

Senator Osmefia asked if an economic study was made to show the viability of the free ports. He explained that before a commercial venture is put up, a study is normally done to determine the return on investment and the economic return to the community. He observed that sometimes, the return on investment is not so important if it determined that the locals would be benefitted by the project. He noted that the World Bank and NEDA have a way of coming up with their opinion on economic return.

Senator Drilon stated that before the NEDA approves a project, an examination is done and the economic rate of return is determined to justify whether or not public funds will be expended for it. In the case of export processing zone (EPZ) authorities, he surmised that the study is one of the documents the Committee asks for during the hearings on the bills.

Senator Osmefia disclosed that the transcripts of the hearings show that local officials and private individuals who opposed the project as well as indigenous peoples were not invited. He lamented that it was a well-orchestrated hearing that resulted in the expenditure of some P600 million of the people's money. Like other free ports, he said that he sees no future in the APECO and doubts if the people would get back their money's worth. He added that it cannot be justified to the Filipino people why the capital was not spent elsewhere.


Asked what municipality has jurisdiction over the APECO area, Senator Drilon stated it is Casiguran, He confirmed that the five affected barangays of Casiguran are Dibet, Esteves, San lldefonso, Cozo and Culat.

On whether the Sanggunian of the LGUs concerned passed an ordinance or resolution that expressed concurrence in the project, Senator Drilon recalled that in the hearings in 1997 when the ASEZA Charter was first submitted, the municipal councils of Baler and Casiguran, in addition to the provincial board of Aurora, recommended the approval of the measure with two amendments,

Since the APECO covered the entire 12,400 hectares of Bgy, San I1defonso, Senator Osmena asked if any approval was obtained from the barangay or frol11 the indigenous peoples, as required by law, Senator Drilon answered in the negative,

As regards the members of the Board of APECO, Senator Drilon enumerated the following:

I, The governor of the Province of Aurora;

2, The congressional representative of the district covering the site of the APECO;

3, The president and the CEO of APECO;

4. The mayor of the Municipality ofCasiguran, alternating every year with the mayors of the Municipalities of Dinalungan and Dilasag for a term of one year each;

5. One representative from the domestic investors;

6. One representative from the foreign investors;

7. One representative from the workers in the APECO; and

8, Two prominent citizens of the country, one of whom shall be a resident of Aurora,

Senator Dri Ion stated that the President of APECO is Mr. Roberto Mathay and at present, the Board has only five sitting members: the Governor, the Congressman, Mayor Briones of the Municipality of Dilasag, Ms, Harley Rose Daquioag from the labor sector, and Mr, RobellO Mathay, He also clarified that the Municipalities of Dinalungan and Dilasag are separate from Casiguran.

685

Senator Drilon affirmed that Roberto Mathay was initially appointed to the board as representative ofthe local investors and was subsequently appointed as president and CEO of APECO, He agreed that a new representative for the local investors should be appointed because Mr. Mathay already occupies two seats as representative of the local investors and as president and CEO,

Replying to further queries, Senator Drilon affirmed that presently, there are only five members appointed in the Board out of ten seats provided by law, thus the absence of a majority with which to conduct business. However, he said that in February when the board still had enough members to constitute a quorum, standing authorities were given to the president and CEO of APECO to act on certain matters,

As regards its budget, Senator Dri Ion said that APECO is working on the basis of the authority granted and approved by the DBM as manifested by its inclusion in the National Expenditure Program.

With respect to locators, Senator Drilon said that there is only one locator in APECO, a power generation company called the Echo Market Solutions that is building a biomass plant, with a start-up of one-fourth megawatt and with the provision to bui ld up to two megawatts. He said that the power company's business model is to sell power to the local utility, ORELCO, and not necessarily to locators in the zone, He affirmed that the power plant is located in Dinalungan which is outside of the zone, but is planning to build a plant within the ecozone which would generate one-fourth of a megawatt.

Senator Osmeila said that it puzzles him why a power plant has to be located inside the zone and identified as a locator when it could be located anywhere, pointing out that it does not need tax breaks and other benefits that a free port would bestow upon it. Senator Drilon explained that the power plant is located outside of the zone because of issues of connectivity to the grid, but a plant will be put up inside the zone to service the locators as the zone is developed,

Asked if a power plant in Pagbilao, for instance, that applies as a locator in APECO would entitle it to the tax benefits under the zone, Senator Drilon pointed out that the power company is availing of the tax breaks and incentives under the Renewable

686

Energy Act. He affirmed that a locator, so long as it is registered, does not have to be physically located inside the zone to qualify for the incentives under the Renewable Energy Act.

Replying to further queries, Senator Drilon said that the power company is now owned by a Mr, Pronove after Mr. Mathay, the company's founder, divested his shares in the company even before he became the president and CEO of APECO, He said that the source of energy of the biomass plant, which will start operation in February 2012, are forest residues, coconut wastes and briquettes, and possibly rice, to be sourced locally and capable of generating y. megawatt

Asked how many days in a year the plant would be able to produce power, Senator Drilon said that the rated capacity is 365 days, Senator Osmefia remarked that there is no such 365-day plant.

Senator Osmefia asked on the capacity factor or the number of days in a year that the power plant operates, as he pointed out that like coal plants, the older ones will operate 10 months in a year and the newer ones 11 months in a year because they need one month to clean, maintain, repair and replace, Senator Drilon said that the capacity factor would be 330 days out of365 days, Senator Osmena maintained that such claim is impossible, He said that having chaired the Committee on Energy, he had studied and learned that biomass plants average about seven months in the year if it is all locally sourced, If the company imports some of its requirements for feed stock, he said that they could operate for eight months, and none of them could reach 12 months a year,

Asked how international the airport is, Senator Drilon said that the airport is not under the jurisdiction of APECO, While it is called an international airport, he said that there are no international or domestic regular flights operating there yet, only private aircraft,

At this point, Senator Drilon revealed that there is a PI 00 million item in the budget to be used for the extension of the runaway of Baler Airport, and not for Casiguran International Airport, He bared that similar to the latter, Baler Airport still does not have any scheduled flights,

Senator Osmefia said that the DOTC has earlier provided him a list of airports and aerodromes in the


country: ten (10) international airports, including Clark, Mactan, NAIA, Subic, Puerto Princesa, Gen San, Zamboanga, Davao, Kalibo and Laoag; 15 Principal Class I airports; 18 Principal Class II airports; and 41 community airports which are used by general aviation aircrafts such as private planes like King Airs and Dorneys, and commercial planes, He said that he could not find in the list Casiguran International Airport even as he could confirm that there is a runway there based on his trips to Casiguran in the 1960s,

Senator Drilon said that it is now incumbent upon the management of APECO as a concerned corporate citizen of Aurora to bring the matter to the attention of the DOTC, Senator Osmefia said that the word "international" could be removed for it to be called simply as Casiguran Airport,

At this point, Senator Osmefia manifested his desire to propose amendments to the budget of APECO at the appropriate time,

Senator Drilon acceded to Senator Osmefia's request to be furnished with a copy of the Industrial Development Corporation (IDC) contract.

Senator Osmefia bared that IDC is owned by Jojo Ong who used to be a member of the APECO board, He said that the government has already paid Mr, Ong a total of P85 mill ion for the purchase of the IFMA rights, He added that the IFMA is nonexistent since the free, prior and informed consent of the indigenous people was not secured as required by law, He also requested a copy of the contract for the purchase of the land,

SUBMISSION OF THE BUDGET OF THE AURORA PACIFIC ECONOMIC ZONE AND FREEPORT AUTHORITY

There being no other reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget of the Aurora Pacific Economic Zone and Freeport Authority was deemed submitted for the Body's consideration,


Upon motion of Senator Drilon, the session was suspended,

It was 9:18 p,m,




ALLOCATIONS FOR LOCAL GOVERNMENT UNITS

Senator Drilon presented the Allocations for Local Government Units.

Senator Drilon informed the Body that the Allocations for Local Government Units (ALGU) in the amount of P 18,303,490,000 as proposed in the NEP was adopted in the House and Senate versions of the 2012 GAB. He said that the allocations are broken down as follows:

Special Share of LGUs in the proceeds of national taxes

Barangay Officials Death Benefit Fund

Fianancial Subsidy to LGUs MMDA

P 16,679,895

50 million 200 million 1,373,569,000

INTERPELLATION OF SENATOR MARCOS

At the outset, Senator Marcos noted that the President made a promise to allocate 1'6.5 billion for local government units (LGUs) to be called Local Government Support Fund (LGSF) which the DBM Secretary reiterated to the Committee. He asked, however, where the allocation can be found in the LGU budget, adding that it was not included in the budgets of the DBM and the DILG. In response, Senator Drilon said that it was actually released in 2011 and charged against the 2011 GAA. He also contirmed (hat the LGSF would come from savings or unprogrammed funds sourced from dividend collections trom the GOCCs. He disclosed that as Committee chair, he was responsible for collecting 1'9 billion from the P23.5 billion dividends paid by GOCCs which was used for the LGSF in the current year.

Asked whether the same can be reverted to the general funds as savings, Senator Drilon recalled that the 2011 NEP only allocated 1'5 billion for GOCC dividends but the actual collection was 1'23 billion plus. For this reason, he bared, the President authorized the use of a portion of the unprogrammed funds, taken from (he excess collections for dividends of the GOCCs, to establish the LGSF. He admitted

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that there was no specific item for the LGSF, but he explained that it was so authorized in the GAA, in broad language, that the unprogrammed fund could be utilized to support such kind of national priority item.

Senator Marcos said that the important point that needs to be established is that the source of the 1'6.5 billion was clearly identified. He recalled that the guidelines on the LGSF were not yet formulated during the committee discussions.

Asked whether the guidelines were already finalized so the LGU administrators would know when and how to avail of the LGSF, Senator Drilon said that DlLG-DBM Joint Circular No. 002, series of 20 II, dated November 6, 20 II, on the guidelines for the implementation and utilization of the LGSF, had already been issued,

Senator Marcos further recalled that during the committee discussion, it was understood that the LGSF would be limited to infrastructure projects but he noted that there were changes in the guidelines with the inclusion of local economic enterprises that are essentially self-sustaining and more profitable for the LGUs to undertake. In response, Senator Drilon said a small leeway was given in the use of the LGSF,

Noting that paragraph 4 of the circular refers to requirement and procedures, processing and release of LGSF, Senator Marcos asked whether it essentially deals with economic enterprises and does not seem to apply to infrastructure projects. In reply, Senator Drilon said that if it involves an infrastructure project, the standard documentary requirement would be a program of work, He agreed with Senator Marcos that a program of work would suffice for a one-page project proposal while in an economic enterprise it would be more likely a feasibility study.

Another new element, Senator Marcos noted, is electrification, although he believed this is part of the Millenium Development Goals (MDGs), and he noticed that the MDGs also include primary education, kindergarten, reduction of child mortality, construction of water supply, procurement of medical equipment and construction of RHU s,

Asked whether the other MDGs are deemed included even if not specifically mentioned in the guidelines, Senator Drilon said that the purpose ofthe

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circular was to limit the utilization of LGSF to the three areas since the LGUs were already behind in achieving these goals.

Senator Marcos noted that the Philippine Disaster Risk Reduction Management Act already falls under the MDG Disaster Preparedness and Alleviation Goal.

As regards the creation of the LGSF and its management, Senator Drilon said that the DILG would administer the money and it would be released directly to the LGUs.

Senator Marcos noted that highly urbanized cities were excluded from availment of the LGSF.

Senator Drilon stated that the DILG's role is to review the LGU's proposal and approve it, after which, the DBM remits the funds directly to the LGU.

As regards the requirement on acquiring the seal of good housekeeping, Senator Drilon said that 1) there must be no adverse COA opinion in the examination of the LGU's financial standing; and 2) the LGU's expenses must be posted on the website, a requirement for transparency.

Senator Marcos asserted that the LGUs might encounter problems with the COA criteria, noting that some of them are actually unable to close their books at the beginning of the year. Thus, he believed that under this circumstance, the degree of violation or the divergence f1'om the standard procedure must be taken into account. Further, he assumed that if the first requirement is to be strictly followed, velY few LGUs will qualify to avail of the LGSF. He manifested that at the proper time, he would introduce an amendment to give the LGUs some leeway in this regard. In reaction, Senator Drilon welcomed the proposal but explained that the requirements are spelled out in the joint circular of the DBM and DILG, But he asked ifit is appropriate to incorporate a special provision to govern disbursements for the prior year, He informed the Body that as of the beginning of November 2011, no adverse COA findings had been relayed to the LGUs and that during said month, over 847 LGUs that had adverse records with COA qualified after submitting the required explanation and documents to the Commission. In light of the concerns of Senator Marcos, he proposed that COA wait some time after the deadline to determine if, indeed, LGUs were finding it difficult to comply with the reporting requirement after which,


he would join Senator Marcos in proposing some degree of liberality.

Senator Marcos agreed that it is important for the LGUs to close their books at the beginning of the year as required by COA but he pointed out that balancing the book or coping with accounting procedures might not be the expertise of the LGU staff.

On another matter, Senator Marcos suggested that fourth, fifth, and sixth class provinces be given preferential treatment in the disbursement of the LGSF because they are the most in need.

Asked whether the DBM has a mechanism to reflect preferences in the disbursement of the funds, Senator Drilon replied that the DBM secretary would study the suggestion as the Department goes over the proposals of the LGUs.

For his part, Senator Marcos offered to assist in the implementation of the LGSF as he lauded its inclusion in the 2011 GAA.



It was 9: 44 p. m.


At 9:45 p.m" the session was resumed.

SUBMISSION OF THE ALLOCATIONS FOR LOCAL GOVERNMENT UNITS

There being no other interpellation, upon motion of Senator Sotto, there being no objection, the Allocations for Local Government Units and its component items, namely, Special Share of LGUs in the Proceeds of National Taxes, Barangay Official Death Benefit Fund, Financial Subsidy to Local Government Units (and Metro Manila Authority) was deemed submitted for the Body's consideration.



It was 9:45 p.m.




DEPARTMENT OF BUDGET AND MANAGEMENT

Senator Dri Ion presented the budgets of the Depaltment of Budget and Management (DBM).

Senator Drilon said that the National Expenditure Program allocated P836.777 million for the DBM which is the same proposal under the GAB-House version. He said that the Committee did not propose any changes.

Thereafter, Senator Drilon acknowledged the presence in the gallery of DBM Sec. Florencio B. Abad.

SUBMISSION OF THE BUDGET OF THE DEPARTMENT OF BUDGET

There being no reservation for interpellation, upon motion of Senator Sotto, there being no objection, the budget of the Department of Budget and Management and its attached agencies, namely, the Office of the Secretary and the Government Procurement Policy Board, was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGETARY SUPPORT TO GOVERNMENT CORPORATIONS

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the Budgetary Support to Government Corporations was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET FOR THE CALAMITY FUND

Upon motion of Senator Drilon, there being no objection, the budget for the Calamity Fund was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET FOR THE CONTINGENT FUND


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objection, the budget of the Contingent Fund was deemed submitted for the Body's consideration.

MISCELLANEOUS PERSONNEL BENEFITS FUND

Senator Drilon presented the budget for the Miscellaneous Personnel Benefits Fund (MBPF).

Senator Drilon explained that some adjustments were made in the MBPF that was allocated P 114,439,842,000 in the 2012 National Expenditure Program and PI 09,461 ,996,000 in the GAB-House version, or a reduction ofP4,977,846,000. This amount, he explained, was realigned to various constitutional agencies as a consequence ofthe policy recognizing their fiscal autonomy and that their unfilled positions require allocations. Further, he revealed that the Committee decreased the allocation of P 180 million in the GAB for unfilled positions in the AFP and PNP. In closing, he urged the Body to approve the PI 09,281,996,000 MBPF.

SUBMISSION OF THE BUDGET OF THE MISCELLANEOUS PERSONNEL BENEFITS FUND

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget for the Miscellaneous Personnel Benefits Fund was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET FOR THE RETIREMENT BENEFITS FUND

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget for the Retirement Benefits Fund in the amount of P34,437,891 ,000 was deemed submitted for the Body's consideration.

SUBMISSION OF THE BUDGET FOR THE PRIORITY DEVELOPMENT ASSISTANCE FUND

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget for the Priority Development Assistance Fund in the amount of P24,890,000,000 was deemed submitted for the Body's consideration.

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SUBMISSION OF THE BUDGET FOR THE UNPROGRAMMED FUND

There being no reservation for interpellation, upon motion of Senator Drilon, there being no objection, the budget for the Unprogrammed Fund in the amount of PI52,821,845,000 was deemed submitted for the Body's consideration.

TERMINATION OF THE PERIOD OF INTERPELLATIONS

Upon motion of Senator Sotto, there being no objection, the Body closed the period of interpellations on House Bill No. 5023 (Committee Report No. 79),





II was 10:05 p.m.



FRIDAY, NOVEMBER 18.2011

REQUEST OF SENATOR DRILON

Senator Drilon requested the Members to submit their amendments to the Committee on or before the morning of Monday, November 21, 20 11, saying that Dir. Yolly Doblon will wait for them. He also requested an all-senator's caucus after the roll call on Monday to discuss the amendments in the hope that the budget would be approved on Second and Third Readings on the same day.

ADJOURNMENT OF SESSION

Upon motion of Senator Sotto, there being no objection, the Chair declared the session adjourned until three o'clock in the afternoon of Monday, November 21, 2011.

It was 10:08 p.m.

I hereby certify to the correctness of the foregoing.

Approved on January 16,2012

2012 gaa deliberation

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