To: Hon. Samuel R.

Martires, The Office of the Ombudsman

From: Susannie Jean V. Acain

Re: Philippine Sea Games Organizational Committee (PHISGOC) controversy regarding the 30th
SEA Games

Facts

The 30th South East Asian Games was held in the Philippines from 30 November 2019 –
11 December 2019. While the entire event was indeed joyful and festive, the same was not
without issues.

PHISGOC which was incorporated only late last year, has been made in charge of the
game preparations and management even though there were already two other government
agencies which were tasked to such duty, the Philippine Sports Commission and the Philippine
Olympic Committee.

Even before the event officially started, several issues arose when a large silver cauldron
came into vision. It may be an ordinary cauldron used during sports games for others but issue
does not include the way it looks, but on how expensive such cauldron was.

A total of P7.5 Billion was allocated as the entire fund to be used for the SEA Games.
Senate Journal No. 41 which contains minutes of the session on December 6, 2018, showed the
breakdown of the proposed P7.5 Billion SEA Games budget as follows:

Game Services 1,525,000,000

Sports 1,371,000,000
Venues 1,326,000,000
Administration and Finance 566,000,000
Marketing and PR 525,000,000
Ceremonies 450,000,000
Information Technology and Telecom 446,000,000
Athelet’s Village Operations 368,680,000
Broadcast and Media 296,000,000
Security 250,000,000
Volunteers 125,320,000
International Relations and Protocol 55,000,000
Accreditation and Uniforms 47,840,000
Human Resources 38,000,000
Medical and Doping 107,000
 The Congress however, reduced the amount to just P5 Billion during the bicameral
conference committee level and retained the funds under the PSC. President Duterte on the other
hand, agreed to boost the SEA Games budget by P1 Billion in May this year. The money was
taken from the Office of the President’s contingency fund in the 2019 budget.

Even if the multi-billion peso SEA Games fund was placed under the PSC’s 2019 budget,
it was still the Phisgoc led by Cayetano that ultimately got the power over the fund due to an
agreement signed on August 14 by Phisgoc, PSC, and POC for the country's hosting of the SEA
Games. Under this agreement, the PSC is mandated to train the Filipino athletes and give public
funds to Phisgoc so the latter can prepare for, organize, and execute the sporting events for the
SEA Games. On the other hand, the POC, as franchise-holder of the games, was tasked to
monitor Phisgoc’s activities and ensure it complies with the contract.

The P6 Billion fund for the SEA Games is under the budget of the Philippine Sports
Commission but it was transferred to DFA’s budget even if it has no mandate to help develop
sports in the Philippines. It appears the P7.5 Billion line item was glossed over by the House
when it scrutinized the DFA budget under the 2019 General Appropriations Bill, as it was only
in the Senate when the funds were found to have been lodged under the DFA on December 6,
2018. Note that the discovery happened at the Senate Plenary already. This means the Senate
Committee on finance approved the P7.5 Billion allocation as well.

It was not only the entire budget that was highly questionable. The cauldron itself was
allegedly priced at P55 Million. Moreover, polo shirts cost P5,150 each and socks priced at
P2,700 per pair. In a letter dated April 25, 2019, PHISGOC asked PSC chairman William
Ramirez to shoulder the cost of purchasing of 1,150 sets of sportswear from Asics since the
brand will only foot the bill for 1,350 sets. Each set cost P41, 160.

About P1.5 Billion worth of funds for the Southeast Asian Games did not undergo public
bidding which was justified by House Speaker Cayetano on the ground that it falls under the
exceptions under procurement law and that it followed the guidelines of government procedures
particularly during the submission of liquidations.

The question regarding the constitutionality of Alan Peter Cayetano being PHISGOC
chair also come into play. Mr. Alan Peter Cayetano was a member of the cabinet, as department
head of the Department of Foreign Affairs when he was designated as PHISGOC chair and
continued in such position when he was elected to the House of the Representatives and
eventually chosen as its Speaker.

The Indigenous Peoples’ Rights Act (IPRA) of 1997 (RA 8371) was enacted mainly to
protect the ancestral lands that were given to indigenous People to help preserve their culture and
way of life. The Aetas of Tarlac were also given P30 per square meter or P300,000 per hectare as
just compensation.

Tarlac Representative Noel Villanueva called the attention of Congress and Department
of National Defense on the harassment made against hundreds of Aetas families in Capas, Tarlac
where they were allegedly intimidated by the presence of the military unit to force them to leave
their communities. He further said, “A military outpost manned by the Philippine AirForce and
positioined between Barangays Patling and Sta. Juliana has been preventing, since 2014, the
ingress of construction materials to be used for house repairs and the egress of forest and
agricultural products to be sold by the Aetas in the barangay centers for their daily subsistence.”

PHISGOC’s officials include Alan Peter Cayetano as its Chairman, Abraham Tolentino
as its vice chairman and Ramon Suzara as chief operation officer. The PHISGOC has
emphasized that the POC and the Philippine Sports Commission are integral and indispensable
components of the organizing committee. Both heads of the POC and PSC are at the helm of the
PHISGOC Executive Board as co-vice chairmen to oversee all preparations for the games.

The Philippine Sports Commission is composed of:

William Ramirez Chairman

Ramon Fernandez Commissioner
Charles Raymond Maxey Commissioner
Celia Kiram Commissioner
Arnorld Agustin Commissioner
Merlita Ibay Executive Director
Issues involved

1. Whether or not the funds involved in the SEA Games is justified

2. Whether or not the lack of public bidding insofar as the P1.5Billion pesos is concerned
constitutional
3. Whether or not the designation of Mr. Alan Peter Cayetano as the chairman of PHISGOC
constitutional
4. Whether or not the construction of New Clark City in Tarlac done in accordance with the
law

Recommendation

1. The total amount of P6 Billion was used for the entire SEA Games. P55 Million of which
went to the cauldron, which is composed of P4.4Million for the design, P13.4 Million for
its foundation and P32 Million was alloted for its construction. Allan Pineda aka Apl De
Ap for one was paid P26.5Million for his performance during the SEA Games.
Extreme extravagance is undeniable and unecessary. Such large amount may have been
alloted for other more important things, the ones that may be used for longer period of
time and for the benefit of the entire Filipino population and not merely for an event for
12 days.
An immediate investigation regarding the transparency of the expenses made during the
SEA Games is recommended. And in case of unexplainable transactions, the Chairman,
Vice Chairman and all other officials in PHISGOC and PSC should be held accountable
therefor.
It is true however the PHISGOC’s primary function was to oversee and manage the entire
30th SEA Games. Now that is has come to a halt, PHISGOC no longer exists. But it does
not mean that the personalities involved in the questionable release of large amount of
money may no longer be held liable therefor. It is therefore recommended that
administrative charges should be filed against the Officials of PHISGOC and PSC,
without prejudice to the filing of criminal charges against them.
2. It is mandated by Section 10, Rule IV of the IRR of the Procurement law that all
procurement of goods or services shall be done through competitive bidding, except as
provided in Rule XVI of this IRR. While it may be true that the procurement law
 provides for exceptions for public bidding, the same however in all instances the
procuring entity shall ensure that the most advantageous price for the Government is
obtained.
The prices of every material used during the 30th SEA Games were undeniably
astronomical and highly questionable. With the requirement of public bidding being
bypassed, the officials involved in the questionable manner of procurement must be held
liable for violation of the Republic Act 9184 otherwise known as the Government
Procurement Reform Act.
3. Section 13, Article VII of the 1987 Constitution provides that the members of the Cabinet
shall not, unless otherwise provided in this Constitution, hold any other office or
amployment during their tenure. It further provides that they shall not, during said tenure,
directly or indirectly, practice any other profession, participate in any business, or be
financially interested in any contract with, or in any franchise, or special privilege
granted by the Government or any subdivision, agency, or instrumentality thereof,
including government-owned or controlled corporations or their subsidiaries. During this
time, Cayetano was still the foreign secretary.
Furthermore, Section 13, Article VI of the Constitution says "no Senator or Member of
the House of Representatives may hold any other office or employment in the
Government, or any subdivision, agency, or instrumentality thereof, including
government-owned or controlled corporations or their subsidiaries, during his term
without forfeiting his seat." Cayetano continued to chair PHISGOC even after being
elected to the House of Representatives and eventually being chosen as Speaker.
The following grounds should be used to declare Mr. Cayetano’s designation as
PHISGOC chairman null and void.
4. Republic Act No. 8371 otherwise known as the Indigenous peoples rights Act provides
that the State shall protect the rights of the indigenous people to their ancestral domains
to ensure their economic, social and cultural well being and that no ICC/Ips will be
relocated without their free and prior informed consent, nor through any means other than
eminent domain. Where relocation is considered necessary as an exceptional measure,
such relocation shall take place only with the free and prior informed consent of the
ICCs/IPs concerned and whenever possible, they shall be guaranteed the right to return to
their ancestral domains, as soon as the grounds for relocation cease to exist. When such
return is not possible, as determined by agreement or through appropriate procedures,
ICCs/IPs shall be provided in all possible cases with lands of quality and legal status at
least equal to that of the land previously occupied by them, suitable to provide for their
present needs and future development. Persons thus relocated shall likewise be fully
compensated for any resulting loss or injury.
It is true however that the power of eminent domain is an inherent right of the
Government that may be exercised whenever necessary, but it shall be validly execised
only by following the proper procedure as provided by law, that is by giving notice and
just compensation.
A criminal charge for grave coercion may also be filed against the military who
prevented the Aetas the ingress and egress from their ancestral land, if the allegations
were found to be true.
An investigation must be done in order to know whether the compensation given to Aeta
communities were just and no threats or coercion done in the process thereof and whether
or not the land where they were relocated was of equal quality as that of the land
previously occupied by them and suitable to provide for their present needs and future
development.
To: Hon. Samuel R. Martires, The Office of the Ombudsman

From: Susannie Jean V. Acain

Re: Metropolitan Water and Sewerage System, Manila water and Maynilad concessions
controversy

Facts

The problem of Metro Manila regarding water supply did not occur just now. Apparently
it already existed way back more than two decades ago. With the increasing number of
population in Metro Manila, the demand for water supply increased accordingly but the supply
did not.

The issue regarding the Metropolitan Waterworks and Sewerage System (MWSS) and
Manila Water started way back in 1997. The MWSS was only able to cover less than 70% of the
entire Metro Manila. The Ramos administration believed that the only way out of this mess was
the privatization of the MWSS to improve the services and at the same time ease pressure on the
government to handle the daunting task. In order to do so, Ramos signed the Republic Act No.
8041 or the National Water Crisis Act in 1997. The primary objective of privatization was to
transfer the financial burden of providing water to the private sector, improve service standards,
increase operational efficiancy and minimize tariff impact.

Further, the government entered into a concession agreement with private companies
which was meant to expire 25 years later or on year 2022. On year 2009, during the Arroyo
administration or 13 years before the said concession expires, the agreement has already been
renewed.

According to the agreement, the rates change once every 5 years to take into account
current market conditions, the Philippine economy’s performance, new laws, Metro Manila’s
new needs, as well as the companies’ future investment plans. The most notable issue is a
stipulation in the contract regarding the fact that the Philippine government had no control over
the setting of rate and no interference may be made and in any event that the government made
its interference, it may be held accountable for indemnity for possible losses.
 Earlier this year, there had been an allegation that the water companies involved in this
issue started to hoard water supply which resulted to water interruption in many areas in Metro
Manila. This allegation was grounded on the fact that when President Duterte threatened these
water companies to revoke their concession agreement, water suddenly started to flow
uninterruptedly.

MWSS petitioned to raise their tariffs from 2014-2018 but the same was refused by the
Regulatory office. As a result the amount that was meant to be collected accumulated to billions
of pesos and became a subject of an arbitral award administered by Permanent Court of
Arbitration in Singapore. The award was in favor of the private water companies and obliges the
Philippine government to pay Manila Water P7.4 Billion from actual losses for the refusal of the
regulator to allow the water concessionaire to raise water rates over the past several years. An
amount of P3.4 Billion on the other hand was granted in favor of Maynilad for the same ground.

After the water companies were threatened by President Duterte to take over the said
companies by way of expropriation and cancel the concession agreement, the companies decided
to waive whatever amount of money was granted in their favor by the arbitral ruling. They also
said that they were open to renegotiate the supposed onerous provisions of their water concession
agreements.

The following are the key executive officials of Maynilad:

Manuel V. Pangilinan Chairman
Isidro A. Consunji Vice-Chairman
Ramoncito S. Fernandez President and CEO
Randolf T. Estrellado Chief Operating Officer
Ricardo F. Delos Reyes Chief Finance Officer
Atty. Lourdes Marivic P. Espiritu Head, Legal and Regulatory Affairs

The following are the key executives officials of Manila Water:

Fernando Zobel de Ayala Chairman
Jaime Augusto Zobel de Ayala Vice Chairman
Jose Rene Gregory D. Almendras President and CEO

MWSS Board of Trustees:

Reynaldo V. Velasco Chairman
Emmanuel B. Salamat MWSS Administrator/Vice Chairman
Issues:

1. What crime/s may be filed against the parties involved in the water concession, if
any?
2. What charges may be filed against public officers that are involved in the
controversial water concession?

Recommendation:

1. President Rodrigo Duterte threatened the water companies to revoke its concession
agreement and to file criminal charges for economic sabotage. The Revised Penal Code
or any special law does not define what an economic sabotage is and what acts that may
fall thereunder. But syndicated estafa as provided by PD 1689 may be filed against the
group of persons involved.
Presidential Decree No 1689 however provides that any persons who shall commit estafa
or any forms of swindling defined in article 315 of the Revised Penal Code shall be
punished by life imprisonment to death if the estafa is committed by a syndicate
consisting of five or more persons formed with the intention of carrying out the unlawful
or illegal act, transaction, enterprise or scheme and the defraudation results in the
misappropriation of money contributed by stockholders, or members of rural banks,
cooperative, samahang nayon or farmers association or of funds solicited by
corporations/associations from the general public.
2. Section 3 of the Republic Act No. 3019 otherwise known as the Anti-Graft and Corrupt
Practices Act provides that:
“Section 3. Corrupt practices of public officers – In addition to acts or
omissions of public officers already penalized by existing law, the following shall
constitute corrupt practices of any public officer and are hereby declared to be
unlawful:
xxx
e. Causing any undue injury to any party, including the
Government or giving any private party any unarranted benefits, advantage or
preference in the discharge of his official administrative or judicial functions
through manifest partiality, evident bad faith or gross inexcusable negligence.
 This provision shall apply to officers and employees of offices or government
corporations charged wih the grant of llicenses or permits or other concessions.
xxx
f. Entering, on behalf of the Government, into any contract or
transaction manifestly and grossly disadvantageous to the same, whether or not
the public officer profited or will profit thereby.
Xxx”
The concession while it maybe true that it was agreed upon by both parties, but its
manifest disadvantage against the Government and the public may be a ground for the
declaration of nullity of such agreement and a ground for criminal charges which may be
filed against all public officials who were involved in the previous negotiation of the
concession.