Graft and Corruption: The Philippines' Unbeatable

Foe

Acknowledgement

In every little or big things doing, people are always involved. Few or many, their
collective efforts make easy and possible.
It is with this line that I would like to convey heartfelt thanks and appreciation for all
those who are directly and indirectly involved in this undertaking.
To for her encouragement and assistance, comments and suggestions that enable
me to pursue this baby thesis.
To all my friends, for their great support, effort and encouragement to finish this study.
To all my classmates for their thoughtfulness, prayers and inspirations.
To my loving parents, brothers and sisters who extended time and effort, cooperation,
financial and moral support, their unconditional love that strengthened my determination
to finish this study.
And above all, to our Almighty God, the provider of knowledge, wisdom, strength and
everlasting love and guidance for giving me the courage and severance to complete the
study and made it possible.

 Introduction
Among the challenges to national development in the Philippines are graft and
corruption, which are manifest in many various forms including bribery, kickbacks,
embezzlement, vote buying, cronyism, and nepotism. Additionally, corruption facilitates
criminal enterprises such as black marketing and illegal gambling syndicates, both also
prevalent.
Corruption has both political and socio-cultural roots: the political system and its
institutions allow graft and corruption to flourish, but it is people not institutions, who are
robbing government funds.
Graft and corruption is a problem of the past, present and future public administrators.
We cannot deny the fact that most if not all officials as well as rank and file employees
are grafters and corruptors.
 Graft and corruption is a rampant and wide malpractice among government agencies
whether in the national, local, government-owned, or controlled cooperation’s. It is
already a part of our culture, a bad habit, and foremost and among others, it is deeply
rooted and embedded among the Filipinos.
 Graft and corruption is one of many important and unresolved problems of a public
administrator. Government officials are ruined by different kinds of people from elective
to appointed, from permanent or regular to casuals, substitutes and contractual. They
also differ in their skills, talents, personality, economic strata and values as a whole.
Their needs depends to what position they actually hold, be it pure clerical to a money
involved position that can abets graft and corruption.
Graft is the acquisition of money, position, etc by dishonest or questionable means, by
taking advantage of public officer to obtain fees, perquisites, profits on contracts or
legislation, or pay for work not done, or service not performed. It is singly committed.
 Corruption is an improper consideration to commit a violation of duty, impairment of
integrity, virtue or moral principle. It is done in collusion with others.
Corruption is detrimental to every citizen’s survival. However it is also Filipino culture
that tolerates and permits corruption to prevail.  It is important that the Filipino people
will know the vitality of putting an end to the ‘cancer’ which is crippling the society and
gnawing at the people’s basic needs for survival. This then will determine the course of
action that needs to be taken towards alleviating the country’s economy and thus
improve the people’s lives.

Background of Study

SPECIFIC TYPES OF CORRUPTION IN THE PHILIPPINES

In 1988, graft and corruption in the Philippines was considered as the "biggest problem
of all" by Jaime Cardinal Sin, the Archbishop of Manila. Then President Corazon C.
Aquino likewise despaired that corruption has returned. In 1989, public perception was
that "corrupt government officials are greater threat to the country" than the communist
guerrillas. In 1992, former President Fidel V. Ramos considered graft and corruption as
the third major hindrance towards attaining his development strategy for the country.
A decade later, in 1998, the country got good marks from Transparency International
and the Political and Economic Risk Consultancy (PERC), LTD. The Philippines then
placed 6th out of the 11 Asian countries surveyed under the PERC corruption
perception index (CPI), a measure of lost development opportunities in terms of
investment.
However, while the anti-corruption landscape in the Philippines has improved, its low
score of 6.5 still placed the Philippines as highly prone to corruption. In general, national
and international opinion depict the Philippine as still corrupt and being unable to
effectively fight this problem.
Indeed, today, graft and corruption in the Philippines remains. About 30 % of the
national budget is reportedly lost to graft and corruption every year. Thus, the 1999
budget of P 590 billion pesos (approximately US$15.5 billion) will stand to lose about P
170 billion pesos (approximately US $ 4.47 billion).
The administration of President Joseph Ejercito Estrada has vowed to reduce graft and
corruption by 80 % before the end of his term.

There are 8 types of corruption frequently practiced in the Philippines namely: tax
evasion, ghost projects and payrolls, evasion of public bidding in awarding of contracts,
passing of contracts, nepotism and favoritism, extortion, protection money and bribery.
Tax Evasion
This is very rampant, particularly in the private sector due to the refusal of those
engaged in private businesses to honestly declare their annual income and to pay the
corresponding taxes to the government.
Ghost Projects and Payrolls
This is done by high officials of the government whereby non-existing projects are
financed by the government while non-existing personnel or pensioners are being paid
salaries and allowances. This practice is rampant in government agencies involved in
formulation and implementation of programs and projects particularly in infrastructure
and in the granting of salaries, allowances and pension benefits.
Evasion of Public Bidding in the Awarding of Contracts
Government offices, particularly bids and awards committees forego the awarding of
contracts through public bidding, or award these contracts to favored business
enterprises or contractors. Sometimes, members of bids and awards committees are
very subjective of awarding the contract to those who can provide them with personal
benefits.
To legally evade public bidding, purchasing government agencies would embark on a
“piece-meal purchasing strategy” whereby small amount of supplies and materials will
be bought in a continuous process. In which case, internal agreements between the
buyer and the supplier is done whereby a certain percentage of the price value will be
given to the buyer which sometimes result to overpricing and the purchase of sub-
standard supplies and materials.
The practice of passing contracts from one contractor to another
In the construction of infrastructure projects, contractors have that practice of passing
the work from one contractor to another and in the process certain percentage of the
project value is retained by each contractor and sub-contractors resulting to the use of
substandard materials or even unfinished projects.
Nepotism and Favoritism
Government officials particularly those occupying high positions tend to cause the
appointment or employment of relatives and close friends to government positions even
if they are not qualified or eligible to discharge the functions of that office. This is one of
the root causes of inefficiency and the overflowing of government employees in the
bureaucracy.
Extortion
This is done by government officials against their clients by demanding money, valuable
items, or services from ordinary citizens who transact business with them or with their
office. This is rampant in agencies issuing clearances and other documents, those
involved in the recruitment of personnel, or those performing services that directly favor
ordinary citizens.
“Tong” or Protection Money
This is a form of bribery which is done by citizens performing illegal activities and
operations. They deliver huge amount of money to government officials particularly to
those in-charge of enforcing the law in exchange for unhampered illegal operation. The
law enforcement officer who receives the money will be duty-bound to protect the citizen
concerned together with his illegal activities from other law enforcement authorities. This
is practiced mostly by gambling lords and those engaged in business without the
necessary permits.
The “Lagay” system or Bribery
The “lagay” system or the act of citizens to bribe government officials occupying
sensitive positions in government is perpetuated due to bureaucratic red tape. Too
much paper requirements, long and arduous processing of documents, ineffective and
inefficient personnel management and the absence of professionalism in the public
service force ordinary citizens to employ extraordinary and illegal methods for the
immediate processing and issuance of required personal documents. The most
frequently employed method is offering a considerable amount of money to a
government official who can facilitate the issuance of the desired documents in
agencies issuing licenses, permits, clearances, and those agencies deputized to make
decisions on particular issues.
Another method in this category is the employment of “fixers” whereby people will pay
certain individuals who may or may not be government employees to process or obtain
personal requirements for them.
C. MEASURES EMPLOYED TO CONTROL GRAFT AND CORRUPTION
The government employs legal measures and anti-corruption bodies to combat the
problem of graft and corruption.
1. LEGAL MEASURES
a. The 1987 Philippine Constitution
Article XI of the 1987 Philippine Constitution, titled “Accountability of Public
Officers”, states in Section 1 that “public office is a public trust. Public
officers and employees must at all times be accountable to the people,
 serve them with utmost responsibility, integrity, loyalty and efficiency, act
with patriotism and justice, and lead modest lives.”
Section II of the same article states that the President, Vice-President,
members of the Constitutional Commissions and the Ombudsman may be
removed from office on impeachment for bribery and graft and corruption.
b. Republic Act No. 3019 also known as the Anti-Graft and Corrupt Practices
Act of 1960
This law enumerates all corrupt practices of any public officer, declares
them unlawful and provides the corresponding penalties of imprisonment
(between 6-15 years) perpetual disqualification from public office, and
confiscation or forfeiture of unexplained wealth in favor of the government.
c. Executive Order No. 292 or the Administrative Code of 1987
This order reiterates the provisions embodies in Section 1, Article XI of the
1987 Constitution. It also gives the President the power to institute
proceedings to recover properties unlawfully acquired by public officials
and employees.
d. Republic Act No. 6713 also known as the Code of Conduct and Ethical
Standards for Public Officials and Employees of 1989
This act promotes a high standard of ethics and requires all government
personnel to make an accurate statement of assets and liabilities, disclose
net worth and financial connections. It also requires new public officials to
divest ownership in any private enterprise within 30 days from assumption
of office to avoid conflict of interest.
e. Republic Act No. 6770 also known as the Ombudsman Act of 1989
This provides the functional and structural organization of the Office of the
Ombudsman which will be discussed later on.
f. Republic Act No. 7055 also known as An Act Strengthening Civilian
Supremacy over the Military
This law creates two avenues for trying erring members of the Armed
Forces of the Philippines and other members subject to military laws.
Crimes penalized by the Revised Penal Code and other special penal laws
and local government ordinances shall be tried in civil courts. Military
courts shall take cognizance of service-oriented crimes only.
g. Republic Act No. 7080 also known as the Act Defining and Penalizing the
Crime of Plunder
This act penalizes any public officer who by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business
associates, accumulates or acquires ill-gotten wealth, through a
combination of series of event criminal acts, an aggregate amount to total
value of at least fifty million pesos (P50,000,000).
 h. Republic Act No. 8249 also known as the Act Further Defining the
Jurisdiction of the Sandiganbayan
This classifies the Sandiganbayan as a special court and places it at par
with the Court of Appeals.
i. Presidential Decree No. 46 declares it unlawful for government personnel
to receive gifts and for private persons to give gifts on any occasion
including Christmas, regardless of whether the gift is for past or future
favors. It also prohibits entertaining public officials and their relatives.
j. Presidential Decree No. 677 requires the Statement of Assets and
Liabilities to be submitted every year.
k. Presidential Decree No. 749 grants immunity from prosecution to givers of
bribes and other gifts and to their accomplices in bribery charges if they
testify against the public officials or private persons guilty of those
offenses.
2. CONSTITUTIONAL ANTI-CORRUPTION BODIES

The 1987 Philippine Constitution has created constitutional bodies to deal on

graft and corruption and to effectively implement the provisions of public
accountability. These bodies are granted fiscal authority to ensure their
independence and their actions are appealable only to the Supreme Court.
These constitutional bodies are:

a) The Office of the Ombudsman (OMB)

The Office of the Ombudsman investigates and acts on complaints filed against
public officials and employees, and serves as the “people’s watchdog” of the
government. The Ombudsman and his deputies (Overall Deputy Ombudsman,
Deputy Ombudsman for the Military, One Deputy Ombudsman each for Luzon,
Visayas and Mindanao) are the “protectors of the people”. This office:

i) oversees the general and specific performance of official functions so that laws
are properly administered;

ii) ensures the steady and efficient delivery of public services;

iii) initiates the refinement of public procedures and practices; and

iv) imposes administrative sanctions on erring government officials and

employees, and prosecute them for penal violations.

b) The Civil Service Commission (CSC)

The CSC is the central personnel agency of the government which is mandated
to establish a career service and promote moral, efficiency, integrity,
 responsiveness, progressiveness, and courtesy in the civil service. It shall also
strengthen the merit and rewards system, human resource development, and
public accountability. It has jurisdiction over administrative cases including graft
and corruption brought before it on appeal.

c) The Commission on Audit (COA)

The COA is the watchdog of the financial operations of the government. It is

empowered to examine, audit, and settle all accounts pertaining to the revenue
and receipts of, and expenditures or uses of funds and property under the
custody of government agencies and instrumentalities. It shall promulgate
accounting and auditing rules and regulations for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or
unconscionable expenditures, or use of government funds and properties.

d) The Sandiganbayan

The Sandiganbayan is the anti-graft court of the Philippines. It has jurisdiction

over civil and criminal cases involving graft and corrupt practices and such other
offenses committed by public officers and employees. It is in charge of
maintaining morality, integrity and efficiency in the public service.
3. OTHER GOVERNMENT ANTI-CORRUPTION BODIES 

Other government agencies in the fight against corruption are the following:

a) The Department of Justice (DOJ)

The DOJ conducts preliminary investigations on complaints of a criminal nature

against public officials that are filed with the Department, subject to the approval
of the OMB if the offense investigated was committed by the public official in
relation to his office. The DOJ also prosecutes in these cases if the public officials
involved belong to ranks lower than salary grade 27[LOVE1] .

b) The National Bureau of Investigation (NBI) and the Philippine National Police
(PNP)

These law enforcement agencies conduct fact-finding investigations on graft

cases. They conduct entrapment operations which, if successful, results in the
arrest and filing of criminal complaint against the perpetrators in the courts. It
may issue subpoena and serve warrants of arrest issued by the courts. The NBI
agent or policeman who conducted the investigation also acts as witness for the
prosecution during journal preliminary investigation and the prosecution of the
case by the Ombudsman.

c) The Presidential Commission on Good Government (PCGG)

 This was created primarily to go after ill-gotten wealth. It is also tasked to adopt
safeguards to ensure that corruption shall not be repeated and institute measures
to prevent the occurrence of corruption.

d) The Presidential Commission against Graft and Corruption

This was created under Executive Order No. 151 by then President Ramos to
investigate graft and corruption cases in the executive department. It has
jurisdiction over corruption cases if the crime involves:

i) Appointees with rank of or higher than Assistant Regional Director;

ii) At least one million pesos;

iii) An offense that may threaten grievous harm to national interest; and

iv) Cases specifically assigned by the President.

e) The Inter-Agency Anti-Graft Coordinating Council

The council coordinates the government anti-corruption efforts. It is composed of

the Commission on Audit, the Civil Service Commission, the Ombudsman, the
Department of Justice, the National Bureau of Investigation and the Presidential
Commission against Graft and Corruption.
D. IMPEDIMENTS TO THE ANTI-CORRUPTION EFFORTS
Despite the existence of these graft and corruption counter measures, this menace
remains a major problem of the Philippine government. This can be attributed to the
following factors:
1. Specific culture of Filipinos is enhancing the proliferation of graft and corruption.
The strong family ties justify giving benefits to unqualified recipients which are
very evident in employment and awarding of contracts. This societal
phenomenon is adversely affecting professionalism, efficiency and effectiveness
in the government service as well as in the construction of public infrastructure
and procurement of government supplies and materials that are sometimes
substandard and overpriced.
2. The Filipino culture of gift giving justifies bribery and extortion thereby making it
hard for law enforcement and anti-corruption agencies to arrest the problem. This
social practice renders inutile the law prohibiting gift giving thereby further
enhancing this corrupt practice.
3. Agencies deputized to fight graft and corruption are not well funded by the
government. There is also lack of recognition, merits, awards and rewards given
by the government for the efforts of anti-corruption bodies. Personnel of these
agencies mandated to go against corrupt public officials are vulnerable to bribery
because of lack of financial support, integrity and professionalism. Measures
 have to be introduced in the recruitment of anti-corruption personnel to ensure
that they possess morality, honesty, integrity and dedication to duty.
4. Transparency is not religiously observed particularly in government transactions.
The public is denied access to activities of government officials. The people are
not informed, in detail, of the share of each executive department, the legislature
and the judiciary, in the national budget and how these departments spend their
financial requirements.
5. Effective monitoring of government programs and projects as well as
expenditures are not being seriously undertaken by those tasked to monitor
them. They are also vulnerable to bribery and do not actually conduct thorough
inspection but merely rely on information gathered.
6. The statement of assets and liabilities, which is an effective mechanism to curb
graft and corruption is religiously submitted yearly by all public officials. However,
no agency of government is deputized to examine the veracity of the data
entered in those statements. Most public officials with unexplained wealth can
successfully hide the same by paying accountants to make accurate and official
statements for them.
7. Other anti- corruption provisions may work against getting good people in
government. One example is the requirement of divestment, currently, the only
approach to the possible conflict of interest that will be encountered by the entry
of well- qualified people in the government. The current divestment procedure
may be too harsh since it could effectively mean that no top industrialist should
be a Secretary of Trade and industry, and no top banker may be Central Bank
Governor. That would be closing to the government a valuable human resource.
Besides, the appointing power must put a person where his expertise is. Others
would circumvent the law by divesting themselves with their direct link to a
business enterprise by transferring their interests to trusted relatives or friends
but in reality, they still remains in control of the enterprise.
Billions allocated to infrastructure projects, community development, and improving the
lives and health of the Filipino people have gone into individuals’ pockets, or Swiss bank
accounts, instead of designated projects. This travesty results in untold misery now, and
guarantees more in the future. We can only imagine what the country would look like if
these funds had been properly spent, but certainly there would be less poverty and
more “island paradise.” The officials who squander the country's resources have a
stranglehold on the development and prosperity of the entire nation.

Scope and Limitation:

The purpose of this study is to review the “state-of-the-art” in Philippines graft and
corruption condition. The study has two objectives. First, it aims to review the essential
elements of the various approaches that have been used to analyze the causes and
effects of corruption. Thus, the study is organized as a literature review, extracting
andevaluating the core elements of corruption research in economics, political science
and sociology/anthropology. Second, it aims to explore how research has been applied
in the Philippines . This is a question of what policy recommendations have beenmade,
and what might be learned from the anti-corruption campaigns and policies.

Related Literature
According to “The 2009 Index of Economic Freedom”
The Philippines ranks 104th freest among 170 countries. Our low ranking is perceived
to be primarily a result of our long-standing problem of corruption. As of 2008 based on
Transparency International’s Corruption Perception Index (CPI) our country is placed
141st among 180 countries. In a scale of 1 to 10, 10 being “highly clean” and 0 as
“highly corrupt”, the Philippines “Confidence Rating” score ranged from 2.1-2.5.
Related Study
According to a study by Transparency International, for every 10 percent increase in
corruption, immunization rate drops to 20 percent.  It deprives the children from having
quality education that can give the country hope for a better future.  An investigation
conducted by the Philippine Center for Investigative Journalism (PCIJ) in 2009 found
that corruption in all levels in the educational system is widespread; starting from the
central office of the Department of Education to the public schools in remote islands. It
can also compromise the safety of the public.
According to the Social Weather Station “corruption hurts national development”.  It
discourages investments from coming in. The study also discusses the reasons why
corruption continues to flourish in Philippine society. The Philippines lacks
implementation of programs that promote transparency which could lessen the
temptation for corruption of power and resources by high-ranking officials. It is hard to
combat corruption if the society tolerates such wrongdoing and if officials who succumb
to corruption are never held accountable. The study also notes that “countries that
succeed in controlling corruption have higher level of human development”.
Another study which recognizes the vitality of combating corruption is a study conducted
by Vinay Bhargava, country director of The World Bank in 1999 entitled Combating
Corruption in the Philippines. This study was initiated by the Estrada administration in
1999. Like AIM-HGC’s study, it recognizes the fact that corruption hinders foreign and
even local investments which quells any chance for economic growth. This study also
ascertained that corruption is not limited to the public sector. Because of the
participation of private sectors, they should just as likely be trained/educated for
combating corruption.
According to the study made by the Philippine Center on Transnational Crime (PCTC),
about 30% of the national budget  reportedly goes to graft and corruption. This study
names the specific types of corruption prevalent in the Philippines. It also names the
efforts that government took to control graft and corruption. It also gives a list of the
factors which hinders the implementation of the anti-corruption measures. The Filipino
culture is greatly to be blamed. Particularly the culture of gift-giving which is a form of
bribery or ‘lagay.’ Having close family ties is also a culprit. Prioritizing family members
despite qualifications leads to Nepotism. The ‘kumpadre system’ and paying ‘utang na
loob’ encourages Cronyism. Another significant obstacle is the lack of funding from the
government to implement the anti-corruption programs. Transparency in government
transactions and consistent monitoring on projects are key factors in fighting corruption.

This study proposes 9 strategies for fighting corruption. “The 9 Key Elements” are:

 reducing opportunities for corruption by policy reforms and deregulation

 reforming campaign finance
 increasing public oversight
 reforming budget processes
  improving meritocracy in the civil service
 targeting selected departments and agencies
 enhancing sanctions for corruption
 developing partnerships with the private sector
 supporting judicial reform

According to the study of United Nations Development Programme’s (UNDP’s) country

director Renaud Meyer, corruption "is a primary obstacle in the effective delivery of
public services and fulfillment of basic rights." European Union ambassador to the
Philippines, Alistair MacDonald said “"Freedom from the disastrous effects of corruption
is as much a human right as is the freedom from fear or the freedom from hunger…"

Definition of Terms:
Political Corruption: is the use of legislated powers by government officials for
illegitimate private gain.
Lagay System --- “grease money” is given to the person in charge / official of a government office/agency
for obtaining something they need/want expediently.

Extortion --- Almost everybody in government offices from government employees, to high-ranking
government officials are reputed for collecting extra money just so they will process the documents the
people need.
Collecting ‘tong’ --- ‘tong’ is the substantial amount of money given to the government particularly to
the law enforcers so they will ‘look the other way’ from your illegal activities.
Rigged bidding --- ‘staged bidding’;  a secret deal was made between the dealer and the Bids and Awards
official prior to the bidding to ensure that the favored bidder gets the deal.
Ghost employees--- including names of bogus people in the roster of employees of a government office
for the purpose of getting more wage budget for a particular office.
Overpricing--- The price for the transaction or procurement of an important document is charged more
than its original value to include the ‘grease money’.