senate blue ribbon committee report on pdaf scam

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SIXTEENTH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) First Regular Session )

S E N A T E

COMMITTEE REPORT NO. __________

Submitted by the Committee on Accountability of Public Officers and Investigations (Blue Ribbon) on _______________. Re: Proposed Senate Resolution No. 41 of Senator Francis Joseph 1

Chiz Escudero; Proposed Senate Resolution No. 133 of Senator 2 Miriam Defensor Santiago; Proposed Senate Resolution No. 192 of 3 Senator Aquilino Koko Pimentel; Proposed Senate Resolution No. 4 196 of Senator Alan Peter Compaero Cayetano; Proposed 5 Senate Resolution No. 204 of Senator Joseph Victor Ejercito; and 6 Proposed Senate Resolution No. 254 of Senator Maria Lourdes 7 Nancy Binay 8

9

Recommending its approval. 10 11

Sponsor: Senator Teofisto TG Guingona III 12 13

14 MR. PRESIDENT: 15

The Committee on Accountability of Public Officers and Investigations (Blue 16

Ribbon) has conducted an inquiry, in aid of legislation, on the following referrals: 17

Proposed Senate Resolution No. 41, introduced by Senator Francis Joseph Chiz 18

Escudero, entitled: 19

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RESOLUTION DIRECTING THE SENATE COMMITTEE ON ACCOUNTABILITY OF 1 PUBLIC OFFICERS AND INVESTIGATIONS (BLUE RIBBON) TO CONDUCT AN 2 INQUIRY INTO THE ALLEGED TEN BILLION PESOS PRIORITY DEVELOPMENT 3 ASSISTANCE FUND (PDAF) SCAM INVOLVING THE JANET LIM-NAPOLES 4 GROUP WITH THE END IN VIEW OF ENACTING LEGISLATIVE MEASURES TO 5 ADDRESS THE SAME 6

7

Proposed Senate Resolution No. 133, introduced by Senator Miriam Defensor 8

Santiago, entitled: 9

RESOLUTION DIRECTING THE COMMITTEE ON CONSTITUTIONAL 10 AMENDMENTS, REVISION OF CODES AND LAWS, TO CONDUCT AN INQUIRY, 11 IN AID OF LEGISLATION, ON THE SENSE OF THE SENATE THAT THE PDAF 12 (PRIORITY DEVELOPMENT ASSISTANCE FUND) SHOULD BE HALVED IN 2014, 13 THE REMAINING SUM TO BE HALVED AGAIN IN 2015, THUS PHASING OUT 14 THE PORK BARREL IN 2016 15

16

Proposed Senate Resolution No. 192, introduced by Senator Aquilino Koko 17

Pimentel, entitled: 18

RESOLUTION DIRECTING THE PROPER SENATE COMMITTEE TO CONDUCT AN 19 INQUIRY IN AID OF LEGISLATION, ON THE ALLEGED P10-BILLION PRIORITY 20 DEVELOPMENT ASSISTANCE FUND SCAM 21 22 23 Proposed Senate Resolution No. 196, introduced by Senator Alan Peter 24

Compaero Cayetano, entitled: 25

RESOLUTION AUTHORIZING AND DIRECTING THE COMMITTEE ON 26 ACCOUNTABILITY OF PUBLIC OFFICERS AND INVESTIGATIONS (BLUE 27 RIBBON COMMITTEE) TO APPOINT A SPECIAL INDEPENDENT 28 INVESTIGATOR IN THE PERSON OF FORMER SENATOR PANFILO PING 29 LACSON TO LOOK INTO THE ALLEGATIONS OF CORRUPTION IN THE USE 30 AND IMPLEMENTATION OF THE PRIORITY DEVELOPMENT ASSISTANCE FUND 31

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(PDAF) BY LEGISLATORS WITH THE INDISPENSABLE PARTICIPATION OF 1 THE IMPLEMENTING AGENCIES AND THEIR BIDS AND AWARDS 2 COMMITTEES, SOME NON-GOVERNMENT ORGANIZATIONS, AND SUPPLIERS 3 STRONGLY ENJOINING ALL SENATORS TO OPEN TO THE PUBLIC THEIR PDAF 4 FINANCIAL RECORDS IN THE SPIRIT OF TRANSPARENCY, ACCOUNTABILITY, 5 AND REFORM 6

7

Proposed Senate Resolution No. 204, introduced by Senator Joseph Victor Ejercito, 8

entitled: 9

RESOLUTION URGING HIS EXCELLENCY, PRESIDENT BENIGNO SIMEON C. 10 AQUINO III TO CREATE AN INDEPENDENT COMMISSION TO INVESTIGATE 11 THE MISUSE OF THE PRIORITY DEVELOPMENT ASSISTANCE FUND (PDAF) 12 BASED ON THE FINDINGS OF THE COMMISSION ON AUDIT WITH THE END 13 IN VIEW OF PROVIDING RECOMMENDATIONS FOR THE APPROPRIATE USE 14 OF PUBLIC FUNDS PURSUANT TO POLICY OF TRANSPARENCY AND 15 ACCOUNTABILITY 16 17

Proposed Senate Resolution No. 254, introduced by Senator Maria Lourdes Nancy 18

Binay, entitled: 19

RESOLUTION DIRECTING THE SENATE COMMITTEE ON ACCOUNTABILITY OF 20 PUBLIC OFFICERS AND INVESTIGATIONS (BLUE RIBBON) TO EXPAND THE 21 SCOPE OF THE COMMITTEES INQUIRY ON THE ALLEGED MISUSE OF THE 22 PRIORITY DEVELOPMENT ASSISTANCE FUND (PDAF) TO INCLUDE THE 23 GRANT AND RELEASE OF PUBLIC FUNDS BY NATIONAL GOVERNMENT 24 AGENCIES, LOCAL GOVERNMENT UNITS (LGUs), GOVERNMENT-OWNED OR 25 CONTROLLED CORPORATIONS (GOCCs) AND THEIR SUBSIDIARIES TO NON-26 GOVERNMENT ORGANIZATIONS (NGOs) FOUNDATIONS/PEOPLES 27 ORGANIZATIONS (POs) 28 29

The Committee has the honor to submit its Final Report. 30

Recommending the adoption of the recommendations contained herein. 31

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TABLE OF CONTENTS

Page 1. INTRODUCTION

1.1. Preliminaries 1.2. Series of Hearings on the PDAF Scam

2. ANTECEDENT FACTS

2.1. Overview

2.1.1. Priority Development Assistance Fund 2.1.2. Special Audits Office Report on Priority

Development Assistance Fund (PDAF) and Various Infrastructure Including Local Projects (VILP)

2.1.3. Objectives of the Committee Report 2.1.4. Scope of the Committee Report

2.2. PDAF Disbursement Procedure

2.3. PDAF Scam

2.3.1. Creation 2.3.2. Negotiation

2.3.3. Implementation/Diversion of Funds

2.3.3.1. Advance payment of kickbacks 2.3.3.2. Preparation of the Endorsement Letters 2.3.3.3. Collection 2.3.3.4. Liquidation

2.3.4. Splitting of the Loot 2.3.5. Who receives kickbacks

2.3.5.1. Legislators 2.3.5.2. Chiefs of Staff or Representatives of

Legislators 2.3.5.3. Implementing Agencies

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2.3.6. How kickbacks are received

2.3.6.1. Legislators 2.3.6.2. Chiefs of Staff or Representatives of

Legislators 2.3.6.3. Implementing Agencies

2.4. In the interest of fair play

3. FINDINGS 3.1. Absence of an appropriation law or ordinance earmarking

certain amounts to be specifically contracted out to NGOs

3.2. Absence of NGO accreditation

3.3. Absence of accountability in the monitoring of PDAF-funded projects

3.4. Accountability of Legislators

3.5. NGO Participation in Government Projects

3.6. Accountability of Private Persons

3.7. Certain legislators have committed a breach of duty to the

public

3.8. Circumstances such as flight and barefaced denials belie the assertion of innocence

4. RECOMMENDATIONS 4.1. Prosecution

The Whistleblowers Ruby Tuason Dennis Cunanan Other Persons of Interest for Further Investigation

4.2. Application as State Witness

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4.3. Referrals

4.3.1. Referral to Senate Committee on Ethics & Privileges 4.3.2. Referral to the Integrated Bar of the Philippines

(IBP) and the Supreme Court for Disbarment or Disciplinary Proceedings against members of the Legal Profession involved

4.4. Policy Measures

4.4.1. Institutionalize real-time audit of NGOs that receive government funds

4.4.2. Blacklist NGOs and/or their incorporators / officers/ their private sector partners for any wrongdoing

4.4.3. Enhance the supervisorial and regulatory functions of the Securities and Exchange Commission (SEC) over non-stock, non-profit organizations (NSPOs)

4.4.4. Enhance the supervisorial and regulatory functions of the Cooperative Development Authority (CDA) over cooperatives

4.4.5. Computerization of a centralized database on NGOs of the Securities and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), the Commission on Audit (COA), the Cooperative Development Authority (CDA), the Department of Labor and Employment (DOLE), the Department of Budget and Management (DBM), the Department of Social Welfare, and Development (DSWD), and other pertinent agencies

4.4.6. Amend Commission on Audit Circular 2007-001 in order to i) prohibit NGOs, which have been in operation for less than three (3) years from being recipients of government funds and ii) require NGOs to prove their capacities

4.4.7. Direct the Board of Directors or Management of Government Owned or Controlled Corporations to undergo a mandatory seminar on good governance

4.5. Legislative Measures

4.5.1. Passage of a law on NGO Accreditation for Government Contracts

4.5.2. Passage of a law mandating COA to audit NGOs

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handling government funds 4.5.3. Passage of a law mandating NGOs, that are

recipients of government funds, to comply with R.A. 9184 (Government Procurement Reform Act) and its Implementing Rules and Regulations (IRR)

4.5.4. Reiterating the need to pass Freedom of Information bill

4.5.5. Reiterating the need to pass Amending the Government Procurement Reform Act

4.5.6. Reiterating the need to pass An Act Amending R.A. 3019, Otherwise known as the Anti-Graft & Corrupt Practices Act

4.6. Statement of Support

4.6.1. Supporting the endeavour of the Governance Commission for Government Owned or Controlled Corporations (GCG) to streamline Government Owned or Controlled Corporations (GOCCs) by ensuring that only GOCCs, relevant to national development, are allowed to exist

4.6.2. Supporting all pertinent recommendations of the COA found in its Special Audits Office Report No. 2012-03

4.6.3. Supporting legislative measures of UNCAC

5. CONCLUDING REMARKS

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COMMITTEE REPORT 1

1. INTRODUCTION 2

1.1. Preliminaries 3

We are all deeply concerned about the spread of corruption, 4 which is a virus capable of crippling governments, and discrediting 5 public institutions, thus undermining society and its development, 6 affecting in particular the poor. 7

8 xxx 9

10 We are convinced that examples should be set: by governments in 11 ensuring the integrity of their officials; by political parties in 12 promoting transparency in their financing; and by the private 13 sector in applying high standards of accountability. 14 15 We are convinced that safeguarding integrity is not only a matter 16 of enacting correct laws and establishing an independent, 17 effective and efficient judiciary, but may also require in some 18 cases changes in attitude and in long-standing practices. 19 20 We are aware that corruption cannot prosper in the full light of 21 openness. Transparency and impartial forms of public control as 22 well as cooperation by the private sector are of the utmost 23 importance. Independent and investigative media have a vital role 24 to play. 25

26 Final Declaration, Global Forum on 27 Corruption and Safeguarding Integrity II 28 (17 December 2001) 29

30

Corruption in the bureaucracy has always been the proverbial bane of national 31

development. Indisputably, corruption is the greatest impediment to good governance, 32

transparency and accountability in any government. It not only destabilizes the rule of 33

law and weakens democracy, but such phenomenon violates human rights as well, 34

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particularly, the right of equal access to public service.1 By fostering economic 1

inequality, corruption further marginalizes the poor, demoralizes society, and cripples 2

our strength as a nation. The effects of corruption are so extensive and devastating 3

that it is not difficult to classify corruption as a crime against humanity. 4

Transparency Internationals 2013 Corruption Perceptions Index2 still places the 5

Philippines in the red zone, despite a slight improvement in its rankings.3 This 6

indicates that although the governments anti-corruption drive is being mobilized, there 7

is still so much to do to weed out corruption significantly, if not entirely. 8

It is interesting to note that the Senate investigation into the Priority 9

Development Assistance Fund (PDAF) scam coincides with the governments concrete 10

efforts to comply with the United Nations Convention Against Corruption (UNCAC). The 11

UNCAC lays down the ultimate goals of any anti-corruption drive: 12

Article 1. Statement of Purpose. The purposes of this Convention are: 13 14

a) To promote and strengthen measures to prevent and combat corruption 15 more efficiently and effectively; 16 17

b) To promote, facilitate and support international cooperation and technical 18 assistance in the prevention of and fight against corruption, including 19 asset recovery; 20 21

c) To promote integrity, accountability and proper management of public 22 affairs and public property. 23

24

1 Universal Declaration of Human Rights, G.A. Res. 217 A (III), December 10, 1948 [hereinafter UDHR], Par. 2, art. 21. 2 Transparency International is a global civil society organization leading the fight against corruption. Transparency International, available at http://www.transparency.org (last accessed March 27, 2014). 3 The index, which measures the perceived levels of public sector corruption in 177 countries and territories, showed the Philippines notched up to 94th place from 105th last year Transparency International, available at http://www.transparency-ph.org/2013/12/corruption-index-ph-remains-in-red-zone/ (last accessed March 27, 2014).

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The Office of the President (OP) and the Office of the Ombudsman (OMB), as a 1

result of a Memorandum of Agreement,4 recently spearheaded a series of round table 2

discussions and special working groups to implement the countrys 21-point UNCAC 3

Action Agenda.5 This includes legislative measures such as increasing the penalty for 4

graft and corrupt practices, passage of a whistleblowers protection act, and 5

criminalizing graft and corrupt practices in the private sector, among others. The 6

Philippine Senate ratified the UNCAC back in 8 November 2006. Aside from violating 7

our domestic laws, the perpetrators of the PDAF Scam have violated the UNCAC as well. 8

This Committee Report relates to the exploitation, in endemic proportions, of the 9

PDAF. It shall focus on the modus operandi to divert, misappropriate, and ultimately 10

steal billions in taxpayers money to the detriment of the Filipino people. The method 11

applied to funnel public funds for private gain requires a comprehensive network of 12

government personalities that is astonishingly efficient, meticulous and organized. It is 13

a testimony of how the sacred principle Public Office is a Public Trust has been 14

callously desecrated repeatedly by those who have sworn to uphold the law and serve 15

the people with utmost responsibility, integrity, loyalty, and efficiency.6 16

Thus, the Senate, in aid of legislation, through this Committee Report, makes an 17

examination and analysis of the PDAF scam, particularly with respect to how the 18

enormous amount of more than Php6 Billion from the national treasury was turned over 19

4 The MOA was entered into on 14 June 2013. It aims to (1) establish an implementation and review mechanism on the Philippines compliance with its State obligations under the UNCAC; and (2) institutionalize the Integrity Management Program (IMP) as an output of the harmonization of the corruption prevention programs of the OP and OMB. OP, OMB ink MOA on UNCAC compliance and IMP implementation. available at http://www.ombudsman.gov.ph (last accessed March 27, 2014). 5 See Annex A. 6 PHIL. CONST. art. XI 1.

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to eighty-two (82) foundations, eight (8) of which are linked to the alleged PDAF scam 1

mastermind, Janet Lim-Napoles (JLN).7 The modus operandi executed by Janet Lim-2

Napoles, with the indispensable cooperation of certain government officials and 3

employees, will serve as an illustration of how the PDAF was manipulated and 4

misappropriated. 5

This Committee Report is divided into four parts. The first part deals with the 6

Preliminaries; the second part is the Antecedent Facts; the third part is the Findings of 7

the Committee; and the final part contains the Committees Recommendations. 8

1.2. Series of Hearings on the PDAF Scam 9

The 16th Congress has conducted a total of nine (9) hearings on the following 10

dates with the following guests: 11

1.2.1. The Hearings 12

August 29, 2013 13

Chairperson Maria Grace M. Pulido-Tan (Commission on Audit/COA) and Director 14 Susan Garcia (Special Audits Office, COA) 15

16 The August 29, 2013 hearing focused on the presentation of Commission on 17

Audit (COA) Commissioner Grace Pulido-Tan regarding the Special Audits Office Report 18

on Priority Development Assistance Fund (PDAF) and Various Infrastructure Including 19

Local Projects (VILP). 20

September 5, 2013 21

Secretary Proceso J. Alcala (Department of Agriculture/DA); Undersecretary 22 Mario L. Relampagos (Department of Budget and Management/DBM); Mr. Alan Q. Umali 23

7 TSN: SMVilladiego III-1, August 29, 2013, 10:35AM [hereinafter BLUE RIBBON TRANSCRIPT FOR AUGUST 29, 2013] at 22.

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(Head, Zamboanga del Norte College Rubber Estates Corporation/ZREC); Assistant 1 Secretary Salvador S. Salacup (DA) and former head of ZREC; Director Susan P. Garcia 2 (Special Audits Office, COA); Director Rufina S. Laquindanum (COA); Director 3 Carmencita N. Delantar (Budget and Management Bureau, DBM); Mr. Honesto Baniqued 4 (President, National Agribusiness Corporation/NABCOR); Mr. Alan A. Javellana (former 5 head of NABCOR); and Ms. Rhodora Mendoza (former Vice President for Administration, 6 NABCOR) 7 8

The September 5, 2013 hearing presented the side of the implementing agencies 9

that served as conduit for PDAF, as well as the presentation of the Department of 10

Budget and Management (DBM) on the step-by-step procedure of PDAF disbursement. 11


Secretary Leila De Lima (Department of Justice/DOJ); Assistant Secretary 13 Zabedin M. Azis (DOJ); Director Susan P. Garcia (Special Audits Office, COA); Mr. Alan 14 Q. Umali (Head, Zamboanga del Norte College Rubber Estates Corporation/ZREC); 15 Assistant Secretary Salvador S. Salacup (DA) and former head of ZREC; Mr. Honesto 16 Baniqued (President, National Agribusiness Corporation/NABCOR); Ms. Gondolina A. 17 Amata (President, National Livelihood Development Corporation/NLDC); Mr. Dennis 18 Cunanan (Director General, Technology Resource Center/TRC); Atty. Levito Baligod 19 (counsel for Benhur Luy); and Mr. Benhur Luy (whistleblower) 20 21

The September 12, 2013 hearing served as the venue for key whistleblower, 22

Benhur Luy, a relative and a former employee of Janet Lim-Napoles, to narrate how the 23

PDAF scam was accomplished. 24


Secretary Leila De Lima (Department of Justice/DOJ); and Assistant Secretary 26 Zabedin M. Azis (DOJ) 27 28

The September 24, 2013 hearing, which was summary in nature, aired 29

Department of Justice (DOJ) Secretary Leila De Limas position to defer, subject to the 30

opinion of the Office of the Ombudsman, the presentation of the rest of the 31

whistleblowers, as the publicity of the hearing may prejudice the safety of the 32

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witnesses.8 Blue Ribbon Chairperson Teofisto TG Guingona III disagreed, saying that 1

this was an attempt to undermine and diminish the power of the Senate Blue Ribbon 2

Committee.9 3


Secretary Leila De Lima (Department of Justice/DOJ); Undersecretary Jose F. 5 Justiniano (DOJ); Assistant Secretary Zabedin M. Azis (DOJ); Mr. Benhur Luy 6 (whistleblower); Ms. Gertrudes Luy (whistleblower); Ms. Marina Sula (whistleblower); 7 Ms. Merlina Suas (whistleblower); Ms. Mary Arlene Baltazar (whistleblower); and Ms. 8 Simonette Briones (whistleblower) 9 10

The September 26, 2013 hearing focused on the respective testimonies of six (6) 11

whistleblowers, who all have personal knowledge of how the PDAF scam was 12

perpetrated. 13

November 7, 2013 14

Secretary Leila De Lima (Department of Justice/DOJ); Undersecretary Jose F. 15 Justiniano (DOJ); Assistant Secretary Zabedin M. Azis (DOJ); Atty. Martin Mees 16 (Director, Witness Protection Program, DOJ); Atty. Rene Cartera Villa (Chairman, Local 17 Water Utilities Administration/LWUA); Atty. Howard Areza (Public Attorneys 18 Office/PAO); Atty. Marlon E. Buan (PAO); Atty. Analisa Soriano (PAO); Ms. Janet Lim- 19 Napoles; Mr. Benhur Luy (whistleblower); Ms. Gertrudes Luy (whistleblower); Ms. 20 Marina Sula (whistleblower); Ms. Merlina Suas (whistleblower); Ms. Mary Arlene 21 Baltazar (whistleblower); and Ms. Simonette Briones (whistleblower) 22 23

The November 7, 2013 hearing provided the alleged PDAF mastermind, Janet 24

Lim-Napoles, the opportunity to confirm or deny the accusations hurled against her by 25

the whistleblowers. 26

27

28

8 Rules of Procedure of the Office of the Ombudsman, Administrative Order No. 07 (1990), 2, Rule 5. 9 TSN: ctsotto, II-1, September 24, 2013, 9:38AM [hereinafter BLUE RIBBON TRANSCRIPT FOR SEPTEMBER 24, 2013] at 16.

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January 30, 2014 1

Chairperson Teresita J. Herbosa (Securities and Exchange Commission/SEC); 2 Chairperson Maria Grace M. Pulido-Tan (Commission on Audit/COA); Chairman Cesar L. 3 Villanueva (Governance Commission for GOCCs/GCG); Chairman Augusto P.I. Carpio 4 (Philippine Council for NGO Certification); Executive Director Dennis S. Santiago 5 (Government Procurement Policy Board/GPPB); (OIC)-Executive Director Giovani T. 6 Platero (Cooperative Development Authority/CDA); and Advocacy Program Officer Jet 7 Pacapac (Caucus of Development NGO Networks/CODE-NGO). 8 9 The January 30, 2014 hearing gave relevant government agencies and private 10

organizations the opportunity to share policy recommendations and remedial measures 11

to prevent another PDAF scam from occurring and to ensure the judicious 12

management of all forms of public funds. Particular emphasis was given on enhancing 13

ways to validate, accredit and certify legitimate NGOs and other non-stock and non-14

profit organizations. 15

February 13, 2014 16

Secretary Leila De Lima (Department of Justice/DOJ); Assistant Secretary 17 Zabedin M. Azis (DOJ); Atty. Martin Mees (Director, Witness Protection Program, DOJ); 18 Ms. Ruby Tuason (whistleblower); Mr. Benhur Luy (whistleblower); Ms. Gertrudes Luy 19 (whistleblower); Ms. Marina Sula (whistleblower); Ms. Merlina Suas (whistleblower); 20 Atty. Dennnis P. Manalo (counsel of Ms. Ruby Tuason); and Atty. Benedicto Valerio 21 (counsel of Ms. Ruby Tuason) 22 23 24 The February 13, 2014 hearing zoomed in on the testimony of Ruby Tuason, 25

who described herself as a go-between in the execution of the PDAF scam, and 26

confirmed that she personally delivered PDAF kickbacks to legislators. 27

March 6, 2014 28

Secretary Leila De Lima (Department of Justice/DOJ); Assistant Secretary Zabedin M. 29 Azis (DOJ); Atty. Martin Mees (Director, Witness Protection Program, DOJ); Mr. Benhur 30

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Luy (whistleblower); Mr. Dennis Cunanan (Director General, Technology Resource 1 Center/TRC) 2 3 4 The March 6, 2014 hearing focused on the testimony of Dennis Cunanan, a top 5

official of an implementing agency, who claimed that legislators exerted pressure to 6

ensure that their respective PDAFs would go to a particular Non-Government 7

Organization (NGO) that the legislators themselves have chosen. 8

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2. ANTECEDENT FACTS 1

2.1. Overview 2

2.1.1. Priority Development Assistance Fund (PDAF) 3

The Priority Development Assistance Fund (PDAF) is essentially a discretionary 4

fund, to finance, as the name suggests, priority development projects, whose 5

disbursement is partially controlled by lawmakers. A euphemism for pork barrel funds, 6

the PDAF has always been a contentious national issue. In 1934, when the 1935 7

Constitution was being formulated, there was a proposal to prohibit pork barrel funds 8

altogether. The sponsor of the proposal traced the name pork barrel to a degrading 9

ritual in slavery days. At a fixed day and hour, a barrel stuffed with pork would be rolled 10

out and a multitude of black slaves would cast their famished bodies into the porcine 11

feast to assuage their hunger. The 1934 proposal was defeated and the pork barrel 12

institution lived on.10 13

The following brief history of PDAF is culled from the Special Audits Office Report 14

of the Commission on Audit (COA): 15

The practice of providing a certain amount for the projects of the 16 legislators started in 1989, upon the creation of the Mindanao 17 Development Fund and Visayas Development Fund, with lump sum 18 appropriations of Php480.0 Million and Php240.0 Million, respectively. 19 These funds were intended to support development projects identified by 20 Representatives from Visayas and Mindanao areas. Subsequently, in 1990 21 the Countrywide Development Fund (CDF) was created with an initial 22 funding of Php2.3 Billion to cover the implementation of projects 23 identified by the Senators and Representatives including those from the 24 Luzon area. In 2000, the CDF was renamed as PDAF.11 25

10 Joaquin G. Bernas, S.J., The Future of the Barrels of Pork, available at http://opinion.inquirer.net/59649/the-future-of-the-barrels-of-pork (last accessed March 27, 2014). 11 COMMISSION ON AUDIT SPECIAL AUDITS OFFICE REPORT NO. 2012-03 [hereinafter COA REPORT] at 2.

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The same Report also itemized the government projects, that are qualified for 1

PDAF funding from 2007-2009: 2

For CY 2007 to 2009, the projects eligible for funding under PDAF are 3 described as soft projects under the category of education health, 4 livelihood, comprehensive integrated delivery of social services, financial 5 assistance to address specific pro-poor programs of the government, 6 historical (sic), arts and culture, peace and order; and small infrastructure 7 projects such as irrigation, rural electrification, water supply, housing and 8 forest management...12 9

10

On November 19, 2013, voting 14-0, the Supreme Court issued a landmark 11

decision, Belgica vs. Executive Secretary13 declaring the PDAF unconstitutional. The 12

Supreme Court ruled that there has been a violation of the doctrine of separation of 13

powers, the principle of non-delegability of legislative powers, and the system of checks 14

and balances. Specifically, the Supreme Court declared as unconstitutional: 15

a) The entire 2013 PDAF Article; 16 17 b) All legal provisions of past and present Congressional Pork Barrel 18 Laws, such as the previous PDAF and CDF14 Articles and the various 19 Congressional Insertions, which authorize/d legislators whether 20 individually or collectively organized into committees to intervene, 21 assume or participate in any of the various post-enactment stage of the 22 budget execution, such as but not limited to the areas of project 23 identification, modification and revision of project identification, fund 24 release and/or fund realignment, unrelated to the power of congressional 25 oversight; 26

27 c) All legal provisions of past and present Congressional Pork Barrel 28 Laws, such as the previous PDAF and CDF Articles and the various 29 Congressional Insertions, which conferred personal, lump-sum allocations 30 to legislators from which they are able to fund specific projects which 31 they themselves determine; 32

33 12 Id. 13 Belgica v. Executive Secretary, G.R. Nos. 208566; 208493 and 209251 (2013). 14 Countrywide Development Fund.

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d) All informal practices of similar import and effect, which the Court 1 similarly deems to be acts of grave abuse of discretion amounting to lack 2 or excess of jurisdiction.15 3

4 5

2.1.2. Special Audits Office Report on Priority Development 6

Assistance Fund (PDAF) and Various Infrastructure 7

Including Local Projects (VILP) 8

On 16 August 2013, the COA published its Special Audits Office Report No. 2013-9

03, a government-wide performance audit on the PDAF and Various Infrastructure 10

including Local Projects (VILP). The audit was conducted from June 15, 2010 to 11

September 13, 2012 pursuant to COA Office Order No. 2010-309 dated May 13, 2010 12

and subsequent issuances.16 The audit covered the calendar years 2007 to 2009. The 13

said report details several glaring irregularities in the release of PDAF by implementing 14

agencies to non-government organizations (NGOs), one of which is the absence of an 15

appropriation law or ordinance earmarking certain amounts to be contracted out to 16

NGOs,17 among others. 17

During her presentation before the Blue Ribbon Committee on 29 August 2013, 18

COA Commissioner Grace Pulido-Tan stated that the 8 foundations linked to Janet-Lim 19

Napoles received a total of almost Php 2 Billion, Php1.93 Billion of which came from the 20

PDAF allocations of senators.18 As noted during the Audit, a number of NGOs are either 21

15 Belgica v. Executive Secretary, supra note 13. 16 COA REPORT, supra note 11, at cover page. 17 Id. at 15. 18 BLUE RIBBON TRANSCRIPT FOR AUGUST 29, 2013, supra note 7, at 25.

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non-existent or cannot be located or lack legal personality to transact business. Worse, 1

a number of them were found to have submitted questionable documents.19 2

This Audit Report, together with the Senate Resolutions filed, became the 3

primary bases for the Blue Ribbon Committee to initiate an investigation in aid of 4

legislation into the PDAF scam. 5

2.1.3. Objectives of the Committee Report 6

In his Opening Statement, the Chairperson of the Blue Ribbon Committee, 7

Senator Teofisto TG Guingona III, enumerated the questions that he felt the public 8

wanted answered: 9

THE CHAIRMAN: Kaugnay ng mga pangyayari, nadinig natin ang 10 maraming tanong ng mga kababayan natin. Una, ano ba talaga ang 11 nangyari? What really happened here? Pangalawa, bakit nangyari at sino 12 ang dapat managot? Why did it happen and who should be held 13 accountable? Pangatlo, ano ang dapat gawin para hindi na ulit mangyari 14 ito? What must be done so that what happened will not happen again in 15 the future. Mahalaga ang punto ng taong bayan...20 16 17

In consonance with the aforementioned goals, this Report has been prepared to 18

determine the following: 19

a) How the PDAF scam was perpetrated; 20

b) What laws/rules and regulations/government issuances were violated; 21

c) Who will be held accountable for such violations; and 22

d) What measures/reforms are needed to prevent public funds from 23

being misappropriated in the future. 24

25

19 COA REPORT, supra note 11, at 22. 20 BLUE RIBBON TRANSCRIPT FOR AUGUST 29, 2013, supra note 7, at 8-9.

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2.1.4. Scope of the Committee Report 1

This Committee Report will deal with the PDAF Scam by using the Janet Lim-2

Napoles modus operandi as a case in point. 3

While the Blue Ribbon Committee is fully aware that the exploitation of PDAF, in 4

all its incarnations, may have spanned across several administrations, this Report, in the 5

interest of expediency, will focus on CY 2007-2009 only. This is primarily because the 6

Special Audits Report of the Commission on Audit on PDAF and Various Infrastructure 7

including Local Projects (VILP) released by the COA was limited to the said period and 8

the pertinent resolutions referred to the Blue Ribbon Committee were also sparked by 9

this Report. 10

As a side note, the terms non-government organizations/NGOs and 11

foundations are used interchangeably. The same could be said with the terms 12

kickback/s and commission/s. 13

2.2. PDAF Disbursement Procedure 14

The procedure for the disbursement of PDAF, by and large, could be illustrated 15

by the following flow chart: 16

17

Legislator

Department

of Budget &

Management

(DBM)

Implementing

Agencies (IAs)Beneficiaries

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Although there are other steps in between, the diagram shows the fundamental 1

phases only, for the sake of simplicity. 2

This chart is verified and further substantiated by Undersecretary Mario L. 3

Relampagos of the DBM, during his presentation last 5 September 2013.21 4

Foundations, in light of the constitutional mandate that the state shall 5

encourage non-governmental, community-based, or sectoral organizations that promote 6

the welfare of the nation,22 were allowed to participate in the implementation of 7

government-funded projects. This is what paved the way for Janet Lim-Napoles-8

controlled foundations to take part in the PDAF. Hence, a more detailed PDAF flow 9

chart would appear this way: 10

11

The irregularities occur in between these steps. And as the following discussion 12

would show, the ultimate step receipt of benefits by the people the raison d'etre of 13

PDAF is more often than not, omitted entirely from the process. 14

15

16

21 TSN: CBGealan VII-1 September 5, 2013, 10:17AM [hereinafter BLUE RIBBON TRANSCRIPT FOR SEPTEMBER 5, 2013] at 60 onwards. 22 PHIL. CONST. art. II 23.

Legislator DBM IAs NGOs Beneficiaries

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2.3. PDAF Scam 1

2

The modus operandi carried out by Janet Lim-Napoles and her conspirators 3

serves as a relevant illustrative example of how the PDAF was pilfered from its rightful 4

recipients in order to feed the insatiable greed of a few. This discussion on the PDAF 5

Scam is derived from the testimonies of the whistleblowers during their appearance in 6

the Blue Ribbon hearings, their respective affidavits submitted to the National Bureau of 7

Investigation (NBI), as well as other documents submitted by several government 8

agencies to the Committee. 9

2.3.1 Creation 10

Foundations are created by people under the control of Janet Lim-Napoles. 11

These entities are then qualified to participate in government-funded projects, such as 12

those financed by the PDAF. 13

These foundations appear legitimate, as they dutifully complied with 14

documentary requirements of the Securities and Exchange Commission (SEC). However, 15

several glaring badges of fraud, which will be brought to light in the succeeding 16

paragraphs, negate the authenticity of these entities. 17

Creation of NGOs

by Napoles and

company

Negotiation

between Napoles

group and

Legislators

regarding

kickbacks

Implementation

of scheme

Splitting of the

Loot

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According to the whistleblowers, upon the instructions of Janet Lim-Napoles, 1

they created and registered several foundations with the SEC whose incorporators and 2

officers are under the control and/or employ of Janet Lim-Napoles. These foundations 3

are the following: 4

1) Abundant Harvest for People's Foundation, Inc. 5 2) Agricultura Para sa Magbubukid Foundation, Inc. (APMFI) 6 3) Agri & Economic Program for Farmers Foundation, Inc. (AEPFFI) 7 4) Bukirin Tanglaw Foundation, Inc. 8 5) Countrywide Agri & Rural Economic Development Foundation, Inc. 9

(CARED) 10 6) Dalangpan Sang Amon Utod Kag Kasimanwa Foundation, Inc. 11 7) Ginintuang Alay sa Magsasaka Foundation 12 8) Gintong Pangkabuhayan Foundation, Inc. 13 9) Karangyaan Para sa Magbubukid Foundation, Inc. 14 10) Kasaganahan Para sa Magsasaka Foundation, Inc. 15 11) Kaupdanan Para sa Mangunguma Foundation, Inc. 16 12) Masaganang Ani Para sa Magsasaka Foundation, Inc. (MAMFI) 17 13) Masaganang Buhay Foundation, Inc. 18 14) Micro Agri Business Citizens Initiative Foundation, Inc. (MABCIFI) 19 15) Gintong Pangkabuhayan Foundation, Inc. 20 16) People's Organization for Progress and Development Foundation 21

(POPDFI) 22 17) Philippine Agri & Social Economic Development Foundation, Inc. 23

(PASED) 24 18) Philippine Social Development Foundation, Inc. (PSDFI) 25 19) Saganang Buhay sa Atin Foundation 26 20) A Smile Foundation, Inc. 27 21) Social Development Program for Farmers Foundation, Inc. (SDPFFI) 28 22) Tanglaw Para sa Magsasaka Foundation, Inc.23 29

30

Eight (8) foundations from the aforementioned list are implicated in the 31

disbursement of the PDAF, as testified to by COA Commissioner Grace Pulido-Tan on 32

the 29 August 2013 hearing of the Blue Ribbon Committee, to wit: 33

1) Agri and Economic Program for Farmers Foundation Inc. (AEPFFI) 34 2) Agricultura Para sa Magbubukid Foundation Inc. (APMFI) 35 3) Countrywide Agri and Rural Economic Development (CARED) Foundation Inc. 36

23 Joint Statement of Benhur K. Luy, Merlina P. Suas, Gertrudes K. Luy, and Anabelle Luy-Reario, August 5, 2013, Par. 3.

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4) Masaganang Ani Para sa Magsasaka Foundation, Inc. (MAMFI) 1 5) People's Organization for Progress and Development Foundation Inc 2

(POPDFI) 3 6) Philippine Agri and Social Economic Development Foundation Inc. (PASED) 4 7) Philippine Social Development Foundation Inc. (PSDFI) 5 8) Social Development Program for Farmers Foundation, Inc. (SDPFFI). 6

7

The whistleblowers further enumerated the personalities running these 8

foundations on behalf of Janet Lim-Napoles: 9

The presidents and incorporators of the above-listed foundations and JLN 10 owned-or-controlled corporations are JLNs relatives, JLN Corporation 11 employees and househelpers (i.e. driver, body guard, nanny, gardener, 12 maids, etc.) They are the following: 13 14 1) Reynaldo Jojo Lim 15 2) Ronaldo Francisco Lim 16 3) Evelyn Ditchon De Leon 17 4) Nova Kaye Dulay 18 5) Marina C. Sula 19 6) Simonette Briones 20 7) Jaime Garcia Napoles 21 8) James Christopher Lim Napoles 22 9) Jeane Catherine Lim Napoles 23 10) Jane Catherine Lim Napoles 24 11) John Christian Lim Napoles 25 12) Rosita Kawson Co 26 13) John Raymund de Asis 27 14) Felimon Agustin 28 15) Simplicio Gumafelix 29 16) Vanessa Eman 30 17) Lilian Espanol 31 18) Jesus Castillo 32 19) Eulogio Rodriguez 33 20) Lorna Ramirez 34 21) Genevieve Uy 35 22) Ronald John Lim 36 23) Jocelyn Piorato24 37 38 39

24 Id. Par. 4.

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In some cases, searching for nominal or dummy incorporators and/or trustees 1

to constitute these foundations necessitated an enterprising mind: 2

Most of the names of the incorporators and Board of Trustees in these 3 NGOs came from telephone directories, are dead, or were supplied by the 4 presidents of the NGOs without the consent of the person listed as 5 incorporator. Details of each company are accurately reflected in the 6 record on file with the Securities and Exchange Commission (SEC).25 7 (Emphasis supplied) 8 9

From the foregoing, a pattern is established where those employed or under the 10

control of Janet Lim-Napoles served as officers and/or trustees of these foundations. 11

Another patent illustration of fraud was revealed by the Chairman. During his 12

Opening Statement, he showed pictures of the respective places of business of SDPFFI, 13

MAMFI and POPDFI, all of which could not be considered as an office by a reasonable 14

person. 15

In conjunction with this, the Chairman further uncovered another deception in 16

the incorporation papers of Janet Lim-Napoles-linked NGOs: 17

xxx 18

CHAIRMAN: Now, we were able to look into the corporate papers of 19 these NGOs and found that Mr. Benhur Luy was involved in all threeMr. 20

Benhur Luy was involved in all three. And a certain Collin Liyoc served as 21

witness in two documents. And all three documents were notarized by 22

Atty. Joel Gordola who appears to be notary public in Quezon City. News 23

reports showed that Atty. Gordola is in poor health and unable to speak 24

for himself. His wife told reporters that Atty. Gordola never notarized 25

these documents.26 (Emphasis supplied) 26

xxx 27

25 Sworn Statement of Marina Sula, August 29, 2013, Par. 6. 26 BLUE RIBBON TRANSCRIPT FOR SEPTEMBER 5, 2013, supra note 21, at 10.

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The Chairman carried on with inconsistencies in certain signatures found in the 1

aforementioned corporate papers: 2

CHAIRMAN: Upon comparing the three documents, we also found 3 inconsistencies, particularly in the signatures of the parties: MAMFI, 4

POPDFI and SDPFFIAyan, tignan ninyo, tatlong pirma ni Benhur Luy sa 5

tatlong organizations. Pareho ba?27 6

7

These signature samples are found in the Articles of Incorporation of MAMFI, 8

POPDFI and SDPFFI. The conspicuous disparity in the strokes of the signatures suggest 9

falsification. 10

Another fact worthy of note is the use by many entities of the same Tax 11

Identification Number (TIN) and Authority to Print (ATP). The Bureau of Internal 12

Revenue (BIR) does not allow more than one entity to use the same TIN or ATP. COA 13

Commissioner Grace Pulido-Tan concluded that the scheme is all in the family: 14

15

27 Id.

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MS. PULIDO-TAN. ...Kagaya po doon sa naunang foundation, ang mga 1 proyekto po ay training, farm initiative production packages na 2 nagkakahalaga ng 42 hindi pesos po ito, 42, 893 per package po ito, 3 at saka livelihood kits. You will notice the same suppliers: Ditchon Trading 4 for trainings; MMRC Trading for the farm kits; and Sim-Gum Trading for 5 the livelihood kits. Nag-confirm po ang Ditchon ng kanyang transaksiyon 6 for meals, venue and other training requirements in Tayug, Pangasinan. 7 Iyong MMRC hindi po nag-confirm ng kanilang transaksiyon. Gumagamit 8 din po ito ng TIN being used by another foundation, MAMFI. It had no 9 business permit. And even if it was selling supposedly farm imports 10 including fertilizers, it was not a licensed fertilizer handler. It was also 11 using an ATP being used by MAMFI and Sim-Gum Trading. So, ang akin 12 pong ano dito noong una ko pong nakita, Ay, all in the family.28 13 (Emphasis supplied) 14 15

The dubious nature and purpose of these organizations is further highlighted by 16

the following strategy utilized by the cohorts of Janet Lim-Napoles, whenever a 17

government inspection is conducted at the respective registered places of business of 18

these foundations: 19

These foundations do not really conduct business in their registered place 20 of business. When the foundation applied for accreditation and the 21 concerned government agency conducts inspection, we simply furnish the 22 registered foundation with a computer, office tables and chairs, and some 23 documents. After the inspection, that office is again abandoned and the 24 operation of the foundation is resumed or carried-on in the office of JLN 25 Corporation at the 25th floor of Discovery Center Suites, Ortigas Center, 26 Pasig City.29 27

28

To show a semblance of legitimacy as to their operations, Janet Lim-Napoles 29

accomplices would simply simulate an office for the foundation, in so doing deceiving 30

the government and making a mockery of what a bona fide foundation is supposed to 31

be. 32

28 BLUE RIBBON TRANSCRIPT FOR AUGUST 29, 2013, supra note 7, at 30-31. 29 Joint Statement of Benhur K. Luy, Merlina P. Suas, Gertrudes K. Luy, and Anabelle Luy-Reario, August 5, 2013, Par. 6.

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The nature of business of these PDAF-related foundations, furthermore, appears 1

legitimate on paper. The primary purpose of each, as described in their respective 2

Articles of Incorporation, is consistent with the typical social development thrust of a 3

foundation. By way of example are the following: 4

FOUNDATION PRIMARY PURPOSE

Agri and Economic Program for Farmers Foundation Inc. (AEPFFI),

To encourage members in the effective utilization of local resources in development activities & thereby improve the living condition in the community.

Countrywide Agri & Rural Economic Development (CARED) Foundation, Inc.

To promote socio-economic development in the rural areas through implementation of livelihood & employment generation

Masaganang Ani Para sa Magsasaka Foundation (MAMFI)

To develop & harness the peoples participation in every economic activity towards the development of the community through self-help and self-reliance.

5

For all intents and purposes, they appear as development-oriented organizations. 6

Upon closer inspection though, none of them adhered to their corresponding primary 7

purposes. This was confirmed by no less than Benhur K. Luy and Merlina P. Suas, two 8

of the whistleblowers who served as employees of Janet Lim-Napoles for a long time. 9

Luy worked under Janet Lim-Napoles from 2002 to 2012 (10 years), while Suas was 10

employed with Janet Lim-Napoles from 1997 to 2012 (15 years).30 The institutional 11

knowledge acquired by both from all those years of service is indisputable. Ultimately, 12

30 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Par. 1.

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Luy and Suas testified that these foundations were established to serve merely as 1

channels to reroute funds: 2

Ginamit ni Gng. Napoles ang mga foundations na ito bilang daluyan o 3 conduits ng pondo na galing sa Gobyerno kagaya ng PDAF ng mga 4 lawmakers, MALAMPAYA FUND, FERTILIZER FUND, at iba pang mga 5 pondo galing sa mga ahensiya ng Gobyerno gaya ng DA, DAR, NABCOR, 6 TRC, NLDC at ZREC.31 (Emphasis supplied) 7

8

Once these foundations are already ripe to transact with the government, 9

Janet Lim-Napoles begins to solicit PDAF from certain legislators, by engaging in 10

negotiations with them, regarding their kickbacks. 11

2.3.2 Negotiation 12

In order to obtain funding, Janet Lim-Napoles would approach certain legislators 13

to entice them to grant a portion of their respective PDAFs to her foundations. The 14

enticement comes in the form of kickbacks for the legislators, which would be 15

obtained from the PDAF itself. In the interest of clarity, kickback is defined as an 16

amount of money that is given to someone in return for providing help in a secret and 17

dishonest business deal.32 18

In some cases, the legislators themselves would come up to Janet Lim-Napoles, 19

to offer their own PDAF, as the following exchange would show: 20

SEN. ESCUDERO: Kayo ang nag-volunteer, hindi sila lumapit at nag-21 apply? 22 23 MR. LUY: Kasi, sir, nong pumasok po ako kay Ms. Napoles, may mga 24 ilang ilang lawmakers na kasi pumupunta sa opisina. So, ganoon na po 25 yong kalakaran ng office. 26

31 Id. at Par. 3.1. 32 Available at http://www.merriam-webster.com/dictionary/kickback (last accessed March 27, 2014).

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1 SEN. ESCUDERO: Pumupunta sa opisina para kunin yong parte nila? 2 3 MR. LUY: Pumupunta po sa kanila na inaaalok nila yong kanilang PDAF. 4 5 SEN. ESCUDERO: Nagpupunta sa opisina para alukin yong PDAF nila sa 6 inyo. 7 MR. LUY: Yes, po, kung gusto daw po kami ang mag-implement, 8 ganoon. 9 10 SEN. ESCUDERO: So, walk-in sila. 11 12 MR. LUY: Ganoon po. 13 14 SEN. ESCUDERO: Walk-in sila, walk-in na mga customer kumbaga. 15 16 MR. LUY: Opo, pumupunta dun. Kasi, sir, nong nandoon ako, refer, may 17 ganoon, refer, refer, refer. 18 19 SEN. ESCUDERO: So, word of mouth, ika nga. 20 21 MR. LUY: Yes, sir.33 (Emphasis supplied) 22

23

This business transaction is described by the whistleblowers in the following 24

manner: 25

Kakausapin ni Gng. Napoles ang lawmaker na makakapag-bigay ng 26 pondo, at pagkakasunduan nila ang komisyon o kickback na dapat 27 matanggap ng kausap niya. Alam namin ito dahil sinasama niya kami 28 noon sa mga ilang meetings niya sa mga lawmakers, at ito rin ang 29 kinagawian na sa mga sumusunod niyang mga transaksyon. At 30 nakokompirma namin ito tuwing nag-uutos si Gng. Napoles sa amin na 31 maghanda o magpadala ng pera para sa mga nakausap niya. Ang 32 kasama namin na laging naghahanda ng pera ay sina Ronald John Lim at 33 John Raymund Bong De Asis.34 (Emphasis supplied) 34

35 36

33 TSN: Mhulep XV-1, September 12, 2013, 1:34PM [hereinafter BLUE RIBBON TRANSCRIPT FOR SEPTEMBER 12, 2013] at 124-125. 34 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Par 4.1.

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According to Merlina P. Suas, the PDAF, that is the subject of negotiation, is 1

usually allocated as follows:35 2

RECIPIENT % SHARE FROM PDAF Legislator 50%

Chief of Staff of Legislator 5% Contact in the Implementing Agency (IA) 10%

Janet Lim-Napoles 35% Total = 100%

3

From this sharing arrangement, the largest chunk of the kickback goes to the 4

legislator, with Janet Lim-Napoles coming in second. It could also be inferred that the 5

rightful beneficiaries of the PDAF received 0% share. 6

In her affidavit, Suas further claimed that each of the following senators, who 7

purportedly transacted with Janet Lim-Napoles, received 50% kickback from the PDAF: 8

Senators Jinggoy Estrada, Juan Ponce Enrile and Ramon Revilla, Jr.36 9

Once the agreement on the splitting of the loot has been finalized, the next 10

course of action is to implement the plan. 11

2.3.3 Implementation/Diversion of Funds 12

2.3.3.1 Advance Payment of kickbacks 13

As part of the PDAF process, the project documents are sent to DBM. DBM will 14

now evaluate these projects. The legislator will write a letter to DBM requesting for the 15

release of their PDAF. After evaluation, DBM will issue a Special Allotment Release 16

35Karagdagang Sinumpaang Salaysay ni Merlina Suas Y Pablo, September 2013, Par. 51. 36 Id. Pars. 53-54.

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Order (SARO). A SARO is a directive authorizing fund releases to government 1

departments and agencies.37 Mr. Luy explained the process in detail: 2

Alinsunod sa napagkasunduan ni Gng. Napoles at ang kaniyang kausap 3

na lawmaker, magbibigay siya ng advance payment ng kickback kapalit 4

ang sulat ng lawmaker sa Department of Budget and Management na 5

kung saan ay humihiling ang mga lawmaker ng release ng kaniyang 6

PDAF. 7

8

Pagka na-release na ang Special Allotment Release Order (SARO), ang 9

kausap ni Gng. Napoles ay nagpapadala sa opisina namin (JLN 10

Corporation) ng kopya ng SARO para masingil nila ang balanse ng 11

komisyon o kickback. Kaya pagkatanggap ng opisina namin ng kopya ng 12

SARO ay nagpapahanda na muli si Gng. Napoles ng pera para mapick-up 13

ng lawmaker (o ang kaniyang representante) ang mga pera sa opisina 14

namin o para ipadala sa kanila sa kung saan man. Minsan ay ipinapadala 15

rin ang kickback nila sa pamamagitan ng bank transfer, at minsan sa 16

pamamagitan ng checke.38 17

18

There were instances, however, that even if the legislator had not yet written to 19

the DBM, said legislator will request for an advance payment as well: 20

Ngunit, may mga pagkakataon rin na kahit wala pang sulat ang legislator 21

sa DBM ay humihingi na ng kaunting advance ang mga ilang legislators 22

kapalit ng susunod na PDAF allocation nila; at meron ding pagkakataon 23

na late magbayad si Gng. Napoles ng mga komisyon nila.39 24

25

The advance kickback ensured the PDAF scam-participants will move on to the 26

next stage. 27

28

29 37 Official Gazette, DBM to phase out SAROs, ABMs in 2013 budget, available at http://www.gov.ph/2012/01/26/dbm-to-phase-out-saros-abms-in-2013-budget (last accessed March 27, 2014). 38 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Par. 4.2, 4.3. 39 Id., Par. 4.3.1.

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2.3.3.2 Preparation of the Endorsement Letters 1

Once the SARO is released, the Implementing Agency is now the one tasked to 2

execute the project. It is at this stage wherein the legislator issues another letter to 3

facilitate the diversion of funds. This letter which is also known as an endorsement 4

letter - contains the amount allocated, the SARO number, the date, the place where it 5

will be implemented, and most importantly, the favored NGO that will implement the 6

project.40 7

It should be emphasized that these endorsement letters are vital to the whole 8

PDAF scheme, because it also serves as basis for the payment of kickbacks: 9

Kapalit ng bayad ng balanse ng komisyon o kickback ay ang pangalawang 10 sulat ng lawmaker sa Implementing Agency (IA) na naglalaman ng 11 pangalan ng NGO na pinili ni Gng. Napoles na maging recipient at 12 implementer (sic) ng project na pinondohan ng PDAF ng lawmaker na 13 nasabi. Kaya ang lawmaker ay nagpapadala ng sulat sa IA na dine-14 designate niya ang NGO na una nang pinili ni Gng. Napoles.41 (Emphasis 15 supplied) 16

17

Ms. Suas gave a detailed explanation of how these endorsement letters are 18

prepared, upon the instruction of Janet Lim-Napoles, and with coordination from the 19

respective offices of the legislators: 20

T: Kayo rin ba ang gumagawa ng mga endorsement letter ng mga 21 politicians? 22 23 S: Opo. Si Benhur K. Luy ang gumagawa ng draft ng endorsement letter. 24 25 T: Sino ang nag-uutos kay Benhur Luy na gumawa ng draft ng 26 endorsement letter? 27 28

40 Karagdagang Sinumpaang Salaysay ni Merlina Suas Y Pablo, September 12, 2013, Par. 22. 41 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Par. 4.4 at 4.

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S: Si Madame Jenny po. 1 2 T: Matapos magawa ang draft ng endorsement letter, saan na ito dinadala? 3 4 S: Pinapadala namin ito thru email or fax sa mga politicians at ililipat ito 5 sa letterhead nila at ine-edit nila sa kanilang opisina. Kapag pirmado na 6 ng mga politicians, ito ay itatawag nila sa opisina ng JLN Corporation para 7 kunin namin o kaya naman ay mga tauhan na ng politicians ang 8 nagdadala sa opisina ng JLN Corporation.42 9 10

Ms. Suas further idenitifed these politicians, as follows: 11

12 T: Maaari mo bang linawin kung ano ang ibig mong sabihin sa sinabi mo 13 na politicians? 14 15 S: Sila po ay mga senador at congressman. 16 17 T: Maaari mo bang sabihin kung sino-sino ang mga senador at 18 congressman na iyong tinutukoy kung saan ini-email o pinapa-fax ang 19 draft ng endorsement letter? 20 21 S: Opo, sa opisina nina Senator Jinggoy Estrada, Juan Ponce Enrile at 22 Ramon Bong Revilla, Jr. Sa mga Congressman, ay hindi ko na 23 matandaan.43 24 25 26

Dennis L. Cunanan, the Director General of the Technology Resource Center 27

(TRC), one of the Implementing Agencies involved in the disbursement of the PDAF, 28

revealed in his Affidavit dated 20th February 2014, that legislators personally 29

handpicked and endorsed certain NGOs of Janet Lim-Napoles, contrary to the claims of 30

the legislators that they had no participation in the selection of NGOs.44 31

42 Karagdagang Sinumpaang Salaysay ni Merlina Suas Y Pablo, September 12, 2013, Pars. 23-25. 43 Id., Pars. 26-27. 44 Pork Scam | Jinggoy denies knowing Cunanan; Bongs camp says ex-TRC chiefs testimony all lies, available at http://www.interaksyon.com/article/81236/pork-scam--jinggoy-denies-knowing-cunanan-bongs-camp-says-ex-trc-chiefs-testimony-all-lies, February 21, 2014 (last accessed March 27, 2014).

Senators accused of plundering their own pork barrel allocations on Friday downplayed the Department of Justice's decision to accept former Technology Resource Center (TRC) director general Dennis Cunanan as provisional state witness.

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Mr. Cunanan claimed that no less than the legislators themselves personally 1

spoke with him over the telephone/cellular phone to confirm their endorsements of 2

certain NGOs, and to inquire as to the progress of their respective PDAF-funded 3

projects. He detailed his experience on talking to Senators Revilla and Estrada: 4

I could not also forget the time when a representative of several NGOs, 5 Mr. Benhur Luy, came to our office to follow-up and discuss their pending 6 PDAF funded projects at the TRC endorsed by Sen. Estrada and Sen. 7 Revilla. During our meeting, in an obvious attempt to pressure us to 8 immediately approve the said projects, he took out his cellular phone and 9 called the offices of Senators Revilla and Jinggoy Estrada. 10 11 After initially speaking to some people on the other line, Benhur Luy gave 12 me his phone and asked me to talk to Sen. Revilla, and later, Sen. 13 Estrada. I remember vividly how both Senators Revilla and Estrada 14 admonished me because they thought that TRC was purportedly 15 delaying the projects. Both Senators Revilla and Estrada insisted that 16 the TRC should honor their choice of the NGO, which they selected to 17 implement the projects, since the projects were funded from their PDAF. 18 They both asked me to ensure that TRC would immediately act on and 19 approved their respective projects.45 (Emphasis supplied) 20 21

22 Mr. Cunanan further expounded on the phone conversation with Senators Revilla 23

and Estrada during the March 6, 2014 hearing of the Blue Ribbon Committee: 24

25 SEN. AQUINO. Okay. Let me go to that particular instance na 26 nagkausap iyong mga senador. 27 28

Senators Jinggoy Estrada and Ramon "Bong" Revilla Jr. also denied Cunanan's allegations that they had endorsed and handpicked the non-government organizations allegedly controlled by businesswoman Janet Lim-Napoles to implement the projects under the TRC that were bankrolled by the lawmakers' Priority Development Assistance Fund (PDAF).

Estrada said he didn't know Cunanan and he never talked to him on the phone. He also said that he had never dealt with government agencies implementing projects funded through his PDAF.

Also, Estrada said it was "unethical" for lawmakers to follow up with implementing agencies through phone calls the projects funded through their pork barrel allocations. (Emphasis supplied)

45 Sworn Statement of Dennis L. Cunanan, February 20, 2014; pp. 10-11 of 36.

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Ill call you Decu. Alam ninyo po, si Decu matanda ho sa akin iyan pero 1 ano po, isa ring student leader iyan noong kapanahunan ko. 2 3 So Decu, noong panahong nakausap mo iyong mga senador, si Benhur 4 iyong nagbigay sa iyo ng telepono, tama ba iyon? 5 6 MR. CUNANAN. Yes, Your Honor. Iyong pangalawa kay Senator Revilla 7 at saka iyong una kay Senator Estrada. 8 9 SEN. AQUINO. Benhur, do you concur with that? Did you call the 10 senators directly or did you call their chief of staff? Sino iyong tinawagan 11 mo noon? 12 13 MR. LUY. Sir, ano po kung dito po sa Upper House po, si Pauline 14 Labayen kay Senator Estrada and then dito po si Atty. Richard 15 Cambe kay Senator Revilla po. 16 17 SEN. AQUINO. So you have their numbers? 18 19 MR. LUY. I have their numbers, sir. 20 21 SEN. AQUINO. And Im sure you have given this evidence to DOJ 22 already? 23 24 MR. LUY. When I was illegally detained, sir, na-confiscate lahat iyong 25 cell phones ko po. 26 27 SEN. AQUINO. So wala kang record noong tawag na iyon? 28 29 MR. LUY. Wala na po. But pwede po natin ma-subpoena the telcos kasi 30 alam ko po iyong number ko na dati ginagamit ko at saka I have the 31 numbers of the ano- 32 33 SEN. AQUINO. Was that a prepaid phone or postpaid. 34 35 MR. LUY. Postpaid. 36 37 SEN. AQUINO. Okay. So the record should be there. 38 39 MR. LUY. But I remember, sir, na Atty. Richard Cambe has a Smart and 40 Globe 41 42 SEN. AQUINO. Pero hindi mo matandaan iyong number mismo, hindi 43 na, ano? 44 45 MR. LUY. Hindi na po. 46 47

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SEN. AQUINO. Okay. So Im sure Secretary De Lima thats have you 1 subpoenaed his phone records already just to prove that these phone 2 calls did happen? 3 4 MS. DE LIMA. NBI is taking care of that, Your Honor. I know that they 5 have undertaken steps precisely in preparation for trial. 6 7 SEN. AQUINO. Okay. Let me ask about that particular instance because 8 Decu, a number of the senators, especially Senator Estrada has 9 vehemently denied that he has even met you or spoken to you. Hindi ka 10 daw niya nakilala ever at hindi ka man niya nakausap which is why 11 12 SEN. AQUINO. which is why I want to know if there is actually real 13 evidence showing that the conversation did take place. Tell us about that 14 conversation. At kung mayroon ka nga ba talagang proof regarding, you 15 know, the veracity or the truth to that conversation. 16 17 MR. CUNANAN. Your Honor, at that time, Benhur was lobbying for the 18 project in their behalf dahil iyong NGO niya ang iyong social, iyon iyong 19 nag po-process nung PDAF nung dalawa. And I was telling him na it has 20 to go through a degree of processing pa, iyong pina-follow up niya. 21 Tapos sabi niya Tinatawagan ko ho iyong opisina, iyong legislator para 22 kausapin kayo. Sabi ko, Sige. Parang ganoon, hindi ba? I was even 23 doubting if he can really call. And he did. So, noong nakausap niya 24 muna si Labayen, most likely on the line kasi nung pinasa sa 25 akin, ang sinabi kaagad ni Labayen, Director, kausapin kayo ni 26 Senator. So, dahil deputy director ako noon at nasa opisina ako. 27 Noong pinasa, siyempre shocked ako na pinasa. Sinabi sa akin, 28 Ano pang problema niyan, bakit hindi niyo pa tapusin? Para ma-29 implement na, hinihintay na iyan sa ground. Sabi ko Senator, 30 pino-process lang ho naming. Hindi naman ho talaga ganun 31 kadali-dali lahat iyon. Doon kami natapos. 32 33 So, walang duda na hindi siya iyon dahil, you know, from the 34 other line ganoon ang pinasok. Tapos, iyong napapanood din 35 natin sa pelikula at nakikita natin sa TV iyong kanyang 36 personality. So, kabisado mo iyong boses. 37 38 Sumunod, finalow up (follow-up) yong kay Senator Revilla. So, 39 ang kausap niya si Atty. Cambe on the phone. And then Atty. 40 Cambe said May way ba na fast-track? Parang ganoon. So, sabi 41 ko, Inaayos naman. So, we just have to wait. Tapos, hinold 42 (hold) ako for a while then sabi, O, si Senator may ano lang. 43 Tapos, iyon. Iyong parang, Magtatagal pa ba naman iyan, PDAF 44 ko naman iyan, authorized naman iyong NGO. Baka pwede niyo 45 nang i-process niyo na iyan, madaliin niya no. Your Honor, 46 iyong circumstance na iyon hindi ko lang talaga madetalye 47

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talaga iyong exact words dahil it happened a long time ago. Pero 1 I do not get phone calls I do not get to talk every day to 2 senators.46 (Emphasis supplied) 3

4

This allegation of legislators going the extra mile to ensure that their respective 5

PDAFs will be transferred to their chosen NGOs, is illuminating in terms of the extent of 6

the participation of and the undue influence exerted by legislators in the over-all 7

disbursement of the PDAF. 8

2.3.3.3 Collection 9

The office of Janet Lim-Napoles will then follow up with the DBM for the release 10

of the Notice of Cash Allocation (NCA) to the NGO. Not unlike the SARO, the NCA is a 11

document authorizing the release of public funds. The NCA is then used to claim the 12

check which is then either encashed or deposited into a bank account controlled by 13

Janet Lim-Napoles: 14

Agad naman mag-follow-up ang opisina namin sa DBM para ma-release 15 ang Notice of Cash Allocation (NCA); 16 17 Pagka-release ng NCA ay agad naman ang aksyon ng IA at mabilis ang 18 pag-release ng cheke sa NGO na binanggit sa sulat ng lawmaker. Ang 19 tumatanggap at nagde-deposito sa checke para sa NGO ay kung sino ang 20 inutusan ni Gng. Napoles sa aming mga empleyado, na karaniwan ay si 21 Evelyn D. De Leon, John Raymund De Asis, at kami (Benhur at Merlina). 22 23 Pagkadeposito ng cheke sa account ng NGOs ay agad pinapatawagan ni 24 Gng. Napoles ang bangko para magpa-reserve ng pondo para ma-25 withdraw agad ang pera pag nag-clear ang cheke. 26 27

Pagka-withdraw ng pera sa bangko ay agad dinadala kay Gng. Napoles 28 ang cash sa opisina ng JLN Corporation sa Discovery Center Suites, 29 Ortigas Center, Pasig City. Pagkatapos naming ma-account o mabilang 30 kung magkano ang pera na dinala doon, ay saka nag-uutos si Gng. 31 Napoles kung magkano ang maiiwan na cash sa opisina at kung magkano 32

46 TSN: MPMENDOZA XVI -1, March 6, 2014, 11:51 AM & Caturla I-2, March 6, 2014, 12:01 PM [hereinafter BLUE RIBBON TRANSCRIPT

FOR MARCH 6, 2014] at 130-133.

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ang dadalhin sa bahay niya sa 18-B, Pacific Plaza Towers, Bonifacio 1 Global City, Taguig City.47 (Emphasis supplied) 2

3

Since all the involved NGOs are under the direct control of Janet Lim-Napoles, 4

she encounters no problem in encashing the government checks that were issued in the 5

name of the NGOs. It has been the practice in Janet Lim-Napoles office that whenever 6

an individual is assigned to be the president of the NGO or Foundation, said person is 7

made to sign several withdrawal slips in advance: 8

T: Papaano naman mai-encash ng representative ni Janet Lim Napoles 9 gayong ang tseke ay nakapangalan sa presidente ng NGO o foundation? 10 11 S: Kasi po kapag naatasan ang empleyado na maging presidente ng NGO 12 o foundation, magpapagawa na si Madame Janet Lim Napoles ng 13 madaming pre-signed withdrawal slips. Hawak din ni Madame Janet Lim 14 Napoles. Kaya kapag available na ang pera, may access na siya para ipa-15 withdraw ang mga ito. Bukod dito, ay may contact person na rin siya sa 16 bangko.48 (Emphasis supplied) 17

18

There are also instances wherein the withdrawals were made by the President 19

of the foundation or any authorized representative to be determined by JLN, 20

accompanied by some security personnel of JLN.49 This is expounded by Ms. Suas: 21

For instance, I, Merlina P. Suas know that one of my pre-signed 22 withdrawal slip in the possession of JLN was used on December 27, 2012, 23 Peoples Organization for Progress and Development Foundation, Inc. 24 (POPDFI) withdrew Ten Million Pesos (P10, 000,000.00) from its account 25 in Land Bank - Greenhills Branch. JLN authorized a driver of JLN 26 Corporation - Eulogio Rodriguez - to withdraw the said amount.50 27

28

47 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Pars. 4.6-4.9. 48 Karagdagang Sinumapaang Salaysay ni Benhur Luy y Kilapkilap, September 12, 2013, Par. 88. 49 Joint Statement of Benhur K. Luy, Merlina P. Suas, Gertrudes K. Luy, and Anabelle Luy-Reario, August 5, 2013, Par. 9.1. 50 Id., Par. 9.1.1.

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The encashed amount is then brought to the office of Janet Lim-Napoles in 1

Discovery Center Suites located in Ortigas Center, Pasig City. Janet Lim-Napoles will 2

then decide as to the amount that will be left at the office and the amount that will be 3

brought to her home. The househelpers of Janet Lim-Napoles will then receive the 4

money handed over by employees of JLN Corporation to the house of Janet Lim-5

Napoles. The staggering quantity of bills and amounts of money being delivered to the 6

house of Janet Lim-Napoles is highlighted in the following testimonies: 7

Kami, Gertrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo at 8 Avelina Lingo, bilang kasambahay ni Gng. Napoles noon, ang 9 tumatanggap ng pera na dinadala ng mga empleyado ng JLN Corporation 10 sa 18-B Pacific Plaza Towers. Karaniwan ay maraming bags ng pera ang 11 dinadala nila sa nasabing bahay ni Gng. Napoles, at kami ang 12 nagbubuhat sa mga bags na ito mula elevator papasok sa condominium 13 unit. 14 15 Noong una ay nilalagay lamang namin ang mga bags na naglalaman ng 16 pera sa Masters Bedroom, ngunit nang nagrereklamo si Gng. Napoles 17 dahil pati ang kama na niya ay may nakapatong na mga bags, ay 18 sinabihan kami na ilagay na lamang ang iba sa bathtub sa masters 19 bedroom. Kaya mula noon, sa bathtub na naming nilalagay ang mga 20 dumarating na pera galing sa JLN Corporation.51 (Emphasis supplied) 21 22

After attaining control of the funds, Janet Lim-Napoles will now justify the 23

disbursement by preparing a liquidation report/report of disbursement - which is a 24

requirement under the MOA. 25

26

27

28

51 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Pars. 4.11-4.12.

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2.3.3.4 Liquidation 1

Once Janet Lim-Napoles controlled NGOs receive the PDAF funds, Janet Lim-2

Napoles will then ask her staff to prepare the liquidation of these funds.52 Mr. Luy 3

detailed how they liquidate these funds: 4

T: Paano ninyo ginagawa ang sinasabi mong liquidation? 5 6 S: Pini-prepare na namin ang report of disbursement. Pinapa-notarize po 7 namin itong report of disbursement na pirmado ng presidente ng NGO, 8 accountant or book-keeper, at noted ng Chief-of-Staff ng proponent o 9 kung yong na-assign na representative galing sa opisina ng proponent o 10 mismo yong proponent. 11 12 T: Ano ibig mong sabihin sa proponent? 13 14 S: Yung mga lawmakers, yung Congressman o Senador po.53 15

16

Ms. Suas also recounts on how she participates in the liquidation of government 17

funds, along with the family of Janet Lim-Napoles, her driver, househelpers and 18

gardeners: 19

THE CHAIRMAN. Okay, So, Ms. Suas, basically, ang nangyari 20 gumagawa po kayo ng foundations, nagkokontak kayo ng mga line 21 agencies at inaayos ninyo iyong proseso para iyong PDAF mapunta sa line 22 agencies; from the line agency, pupunta sa mga foundation na ginawa 23 ninyo, at from the foundation, wala ng liquidation. O iyong liquidation 24 papaano ginagawa? 25 26 MS. SUAS. Nagkakaroon din po kami ng liquidation. After nakuha na 27 po namin iyong full payments po sa agency, nagli-liquidate din po kami. 28 Sina-submit po namin iyong liquidations to the agency kung saan kami 29 nag-implement. 30 31 THE CHAIRMAN. So iyong dokumentong pang-liquidate ay gawa-gawa 32 lang ninyo? Ganoon po ba iyon? 33 34

52 Karagdagang Sinumpaang Salaysay ni Benhur Luy Y Kilapkilap, September 12, 2013, Pars. 104. 53 Id., Pars. 105-106.

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MS. SUAS. Opo. Kami na rin po ang gumagawa ng mga liquidations 1 po.54 2

3 Ms. Sula gives her own account on the liquidation process: 4

5

MS. SULA. ...Ako rin po iyong tumutulong din po na nagli-liquidate pag 6 kailangan lang ng mga tao nila. Like po doon sa - example, doon sa list of 7 beneficiaries, kami po ni Ms. Janet Napoles, Jo Christine Napoles, James 8 Christopher, John Lim, mga kasambahay ang pagpipirma nong mga list 9 of beneficiaries nong 2009. Kasi po sa sobrang dami, lahat po, pati 10 driver, kasambahay, mga gardener. Inaabot nga po kami ng mga 12 11 oclock o 10 oclock sa office po sa 2502 Discovery Center 55 (Emphasis 12 supplied) 13 14

When questioned about the liquidation process, Janet Lim-Napoles denied any 15

knowledge. The whistleblowers, however, detailed Janet Lim-Napoles participation in 16

the liquidation process: 17

THE CHAIRMAN. X X X 18 19 And so in the ending, ang last na lang, last stage would be the 20 liquidation. 21 22 Ms. Napoles, kapag hawak mo na daw iyong pera, na-withdraw na sa 23 NGO, nagbibigay kayo ng utos na mag-liquidate na. At ayon kay Merlina 24 Suas, iyong liquidation documents, gawa-gawa na lang. In fact, sabi ni 25 Mary Arlene Baltazar, maraming mga pekeng beneficiaries na nakalista sa 26 liquidation. Totoo ba ito? 27

28 MS. NAPOLES. Hindi po totoo. 29

30 THE CHAIRMAN. Hindi totoo. 31 Merlina, do you confirm this? 32

33 MS. SUAS. iyong mga pangalan po ng beneficiaries na peke ay totoo 34 po yon dahil yon po ang inuutos niya sa amin. 35

36 THE CHAIRMAN. Totoong ano? 37

38 MS. SUAS. Totoong fake po iyong mga 39

54 TSN: Jmbaisa VII-1, September 26, 2013, 11:12 AM [hereinafter BLUE RIBBON TRANSCRIPT FOR SEPTEMBER 26, 2013] at 48-49. 55 Id. at 95-96.

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1 THE CHAIRMAN. Beneficiaries? 2

3 MS. SUAS. pangalan po ng mga beneficiaries. 4

5 THE CHAIRMAN. So kunwari yong pera natanggap nitong mga taong 6 ito, ganon po ba yon? 7

8 MS. SUAS. Hindi po, Your Honor. 9

10 THE CHAIRMAN. Paano yon? 11

12 MS. SUAS. Kasi itong mga beneficiaries po na ito ay wala po silang 13 natanggap ni isang item po dahil iyong pera po na na-withdraw ng NGO 14 ay ni-remit po naming lahat kay Mrs. Napoles. 15

16 THE CHAIRMAN. Marina. 17

18 MS. SULA. Nagsisinungaling po siya kasi doon po sa list of beneficiaries 19 na mga peke, pumirma din po siya doon kasama ang mga anak niya. 20

21 THE CHAIRMAN. Pumirma si Ms. Napoles? 22

23 MS. SULA. Nameke rin po siya ng pirma doon, si Madam Napoles, sa 24 mga list of beneficiaries. Kasi doon po kami pumipirma ng mga list of 25 beneficiaries sa conference room. Pag maraming-marami napo, galing 26 doon siya sa office niya, wala siyang gagawin, pupunta po siya doon at 27 makikisalo po siya sa amin na pumirma nong mga pekeng pirma ng mga 28 list of beneficiaries. Ang dami po naming klase ng ballpen. Siya rin po 29 pumipirma doon. 30

31 THE CHAIRMAN. Totoo ba ito, Ms. Napoles? 32

33 MS. NAPOLES. Hindi po. 34

35 THE CHAIRMAN. Hindi kayo pumipirma, hindi nagpepeke ng 36 beneficiaries, ganoon po ba yon? 37


40 MR. LUY. Sir. 41

42 THE CHAIRMAN. Benhur. 43

44 MR. LUY. Opo. Meron po kami, sir na mga list of beneficiaries kaya po 45 ang audit report na lumalabas na meron talaga iilan doon na pangalan 46 nila, tapos hindi yon ang pirma nila. So, paano po naming yon 47

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nagkakaron kami ng kopya ng listahan ng bukod pa kase sa ginagawa 1 pong nagpepeke ng 2

3 THE CHAIRMAN. Pakiulit ulit iyong parang 4

5 MR. LUY. Sa COA Report, sir, may mga findings lumalabas na sila iyong 6 mga tao na yon pero hindi yon ang pirma nila. 7

8 THE CHAIRMAN. Ah, so totoong tao pero 9

10 MR. LUY. Pero hindi iyon ang pirma nila. 11

12 THE CHAIRMAN. hindi pirma nila. Uh-huh, I see56 (Emphasis 13 supplied) 14

15

The above-mentioned statements highlight how government funds were diverted 16

away from the intended beneficiaries and placed into the private pockets of certain 17

individuals. 18

2.3.4 Splitting of the Loot 19

Ms. Suas gave the following breakdown of the kickbacks on the PDAF Scam and 20

the individuals involved: 21

T: Maari mo bang ipaliwanag ang ibig mong sabihin na ang pondo na sa 22 halip napunta sa dapat na beneficiaries ay napunta kay Madame Jenny at 23 sa mga senador? 24

25 S: Dahil sa ang pondo mula sa PDAF na dapat mapunta sa mga proyekto 26 ay pinaghahatian. Limampung porsyento (50%) sa mambabatas, limang 27 porsyento (5%) sa Chief of Staff ng mambabatas, sampung porsyento 28 (10%) sa implementing agency at ang natitirang tatlumput limang 29 porsyento (35%) ay napupunta kay Madame Jenny. 30

31 T: Maaari mo bang sabihin kung paano mo nalaman ang sistema ng 32 hatian na iyong binanggit? 33

34 S: Sinasabi sa amin ni Madame Jenny.57 (Emphasis supplied) 35

56 TSN: Mhulep IX-1, November 7, 2013, 11:58 AM & HSGayapa X-1, November 7, 2013, 12:08 PM [hereinafter BLUE RIBBON TRANSCRIPT FOR NOVEMBER 7, 2013] at 74-77. 57 Karagdagang Sinumpaang Salaysay ni Merlina Suas Y Pablo, September 12, 2013, Pars. 51-52.

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1

Ms. Suas remained steadfast in her testimony even when Janet Lim-Napoles 2

denied knowledge of this splitting: 3

THE CHAIRMAN. X X X 4 5

Ayon kay Merlina Suas, sinabi mo sa kanya na ang hatian ng PDAF 6 iyong hatian ganito: 50 percent sa lawmaker, sa mambabatas. So, kung 7 100 million iyon di 50 million sa lawmaker; five percent sa mga chief of 8 staff; tapos, 10 percent sa mga head ng implementing agency; tapos, 9 iyong natitirang 35 percent ay napupunta sa inyo. Totoo ba ito? 10 11 MS. NAPOLES. Hindi ho. 12 13 THE CHAIRMAN. Merlina, paki-confirm lang. 14 15 MS. SUAS. Totoo iyon po, Senador, kasi hindi po naming nalalaman 16 iyan kung hindi niya sinasabi sa amin na ito po ang hatian na pag 17 senador, 50 percent, 10 percent sa implementing agency; tapos 5 18 percent doon sa agent at mayroon pa rin siyang binigay na 1 percent 19 para sa NGO. 20 21 THE CHAIRMAN. Para sa NGO? 22 23 MS. SUAS. Opo. 24 25 THE CHAIRMAN. Pero kayu-kayo rin iyong NGO, hindi ba? 26 27 MS.SUAS. Opo. Pero iyon po ang promise po niya sa amin. Pero hindi 28 po binibigay. 29 30 THE CHAIRMAN. Hindi binibigay? 31 32 MS. SUAS. Opo. 33 34 THE CHAIRMAN. Okay. Ang nakikita natin dito, napaka-organized na ng 35 scheme. Pati iyong hatian, very very organized.58 (Emphasis supplied) 36 37

58 BLUE RIBBON TRANSCRIPT FOR NOVEMBER 7, 2013, supra note 56, at 36-37.

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This splitting of the loot among Janet Lim-Napoles, the legislators, the Chiefs of 1

Staff of the legislators, and the implementing agency effectively dispossessed the 2

beneficiaries of what is due them. 3

2.3.5 Who receives Kickbacks 4

Mr. Luy is familiar with the individuals who receive kickbacks from Janet Lim-5

Napoles, because he was the one tasked to record all financial transactions of Janet 6

Lim-Napoles, her corporations, and Janet Lim-Napoles-controlled NGOs. Mr. Luy was 7

also able to record the officials who received payment from Janet Lim-Napoles based on 8

the cash vouchers signed by the officials or their representatives: 9

Ang pera na binibigay sa mga kausap ni Gng. Napoles ay nakatala sa 10 record of financial transactions ni Benhur K. Luy, dahil siya ang naatasan 11 ni Gng. Napoles na mag-record mula September 2004 hanggang July 12 2010. Lahat ng financial transaction ni Gng. Napoles at ang mga NGOs, 13 kabilang ang mga owned-or-controlled corporations ni Gng. Napoles, ay 14 nirekord ni Benhur K Luy na kung saan ang pinagbabasehan niya ay ang 15 mga Cash Vouchers ng JLN Corporation na nagpapakita rin ng mga 16 signatures ng mga opisyal o representante ng opisyal na tumanggap 17 nito.59 18

19

Mr. Luy further expounded on these cash vouchers: 20

21

Gaya po ng sinabi ko, ako po ang inuutusan ni Madame Janet Lim 22 Napoles na gumawa ng mga dokumento at maghanda ng pera para sa 23 rebates ng mga senador o congressman na mga ito. May voucher po kasi 24 ang mga pera na lumalabas sa JLN Corporation. Doon sa voucher ay 25 nakalagay ang pangalan ng taong pagbibigyan gaya ng Senador o Chief 26 of Staff nila, o Congressman, o sinumang public official na kumukuha ng 27 rebates sa mga government projects na ipinatutupad ng NGOs o 28 foundations ni Madame Janet Lim Napoles. 60 (Emphasis supplied) 29

30

31

59 Pinagsamang Sinumpaang Salaysay of Benhur K. Luy, Merlina P. Suas, Getrudes K. Luy, Nova Kay Batal-Macalintal, Elena S. Abundo, & Avelina C. Lingo, September 11, 2013, Par. 5. 60 Karagdagang Sinumpaang Salaysay ni Benhur Luy Y Kilapkilap, September 12, 2013, Par. 51.

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These vouchers are color-coded and each party receives their own copy: 1

2

THE CHAIRMAN. Okay. Tapos, di ba, Benhur, dito sa mga vouchers 3 may mga color coding pa kayo mayroong white, may yellow, tama po 4 ba iyon? 5

6 MR. LUY. Yes po, sir. Ang white po, sa original ledger ng or file ng 7 proponent, ng lawmakers; tapos ang yellow, sa accounting, which ako 8 naman po iyong accounting. 9

10 THE CHAIRMAN. So sa iyo pumupunta iyong yellow? 11

12 MR. LUY. Opo. Tapos ang pink po napupunta po iyon sa mga kausap, sa 13 chief of staff, sa lawmakers at saka din po iyong mga nag-e-agent-agent 14 kasi iyon po iyong katibayan naming, sir. Kaya po may kopya sila, iyon po 15 iyong katibayan naming pag nagkaproblema kami sa computation, pag 16 hindi nag-tally ang records sa pagkuha po na kanilang komisyon.61 17

18

The vouchers, however, were unfortunately destroyed upon the orders of Janet 19

Lim-Napoles: 20

THE CHAIRMAN. So ang dami talagang doukumento na katibayan? 21 22

MR. LUY. Opo. Sir, at saka po bukod po sa voucher, ang gusto po din ni 23 Ms. Napoles kasi kasi bukod sa voucher, mayroon pong endorsement 24 letter at saka signed memorandum of agreement. Iyon po iyong 25 katibayan na talagang natanggap din nila kasi ang opisina po ay 26 naninigurado din na talagang may dokumento kami na panghawakan. 27

28 THE CHAIRMAN. Pero nasaan na itong mga dokumento? 29

30 MR. LUY. Noon dinitain (detain) po ako noong December 19, hindi ko na 31 po alam kung ano na sunod na nagyari sa mga documents na iyon 32

33 THE CHAIRMAN. Ms. Napoles, totoo ba ito? 34


37 THE CHAIRMAN. Ano iyong totoo? 38

39 MS. NAPOLES. Hindi ko alam sa kanila. 40

41

61 BLUE RIBBON TRANSCRIPT FOR NOVEMBER 7, 2013, supra note 56, at 42-43.

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THE CHAIRMAN. Hindi mo alam sa kanila. Okay. 1 2

MS. SULA. Sir. 3 4

THE CHAIRMAN. Marina, yes. 5 6

MS. SULA. Opo. Totoo po may mga voucher na ginagamit ang JLN 7 Corporation. Katunayan nga po, kaming dalawa ni Arlene Baltazar ang 8 magkatulong na sini-shred naming lahat ng mga project at sa mga 9 voucher doon sa Pacific Plaza Tower.62 10

11

While the vouchers were no longer presented as evidence, the whistleblowers 12

themselves have identified the individuals who were able to receive kickbacks. Aside 13

from Janet Lim-Napoles, the recipients of PDAF kickbacks, as testified by Mr. Luy, are 14

the legislators, their respective chiefs of staff and/or representatives, and the heads of 15

implementing agencies. 16

2.3.5.1 Legislators 17

While Mr. Luy has admitted that he did not personally hand over kickbacks to the 18

Senators involved with the PDAF Scam, he has nonetheless personally delivered 19

kickbacks to the Congressmen and the Chiefs of Staff of the Senators.63 Mr. Luy 20

furthermore disclosed that codenames are assigned to lawmakers they dealt with: 21

T: Maaari mo bang sabihin kung anu-ano ang mga codenames ng mga 22 ka-transact ni Janet Lim Napoles na pulitiko o kanilang Chief-of-Staff? 23 24 S: Opo. TANDA kay Senator Juan Ponce Enrile, SEXY/ANAK/KUYA kay 25 Senator Jinggoy Estrada, POGI kay Senator Bong Revilla, GUERRERA 26 kay Congressman Rizalina Seachon-Lanete, BONJING kay Congressman 27 Rodolfo Plaza, BULAKLAK kay Congressman Samuel Dangwa, SUHA 28 kay Congressman Arthur Pingoy, at KURYENTE kay Congressman Edgar 29

62 Id. at 43-44. 63 Karagdagang Sinumpaang Salaysay ni Benhur Luy Y Kilapkilap, September 12, 2013, Par. 67.

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Valdez. Mayroon pa po ibang codename nasa records ko. Sa ngayon po 1 ay sila lang po ang aking naalala.64 2 3

In their affidavit,65 Mr. Luy and Ms. Suas detailed the amount of money 4

received by the legislators based on Mr. Luys accounting records from 2004-2010: 5

7.1. PDAF ni Senator Ramon Revilla III na ang tumanggap sa komisyon 6 na naitala ay si Atty. Richard Cambe: 7

a) Usapan sa komisyon 50% 8 b) Kabuuan na PDAF P652,000,000.00 9 c) Kabuuan na komisyon P326,000,000.00 10 d) Naitala na komisyon P 224, 512, 500.00 11 12

7.2. PDAF ni Sernator Juan Ponce Enrile na ang tumanggap sa komisyon 13 na naitala ay sina Ms. Ruby Tuason at Atty. Jessica Gigi Reyes: 14

a) Usapan sa komisyon 50% 15 b) Kabuuan na PDAF P726,550,000.00 16 c) Kabuuan na komisyon P363, 275,000.00 17 d) Naitala na komisyon P172,834,500.00 18 19

senate blue ribbon committee report on pdaf scam

Documents

proposed senate resolution

resolution authorizing

proper senate committee

ribbon committee

senator miriam defensor

senator francis joseph

senator joseph victor

senator maria lourdes