THIRTEENTH CONGRESS OF THE REPUBLIC

OF THE PHILIPPINES
Second Regular Session

SENATE

COMMITTEE REPORT NO. _____

Submitted by the Committees on Agriculture and Food and Accountability

of Public Officers and Investigations (Blue Ribbon), on

1
PSR 327 - “RESOLUTION DIRECTING THE COMMITTEE ON
AGRICULTURE AND FOOD TO CONDUCT AN INQUIRY, IN AID

1
RESOLUTION DIRECTING THE COMMITTEE ON AGRICULTURE AND FOOD TO CONDUCT
AN INQUIRY, IN AID OF LEGISLATION, ON THE ALLEGED MISMANAGEMENT AND USE OF
THE FERTILIZER FUND OF THE DEPARTMENT OF AGRICULTURE’S GININTUANG
MASAGANANG ANI PROGRAM TO THE DETRIMENT OF FILIPINO FARMERS WITH THE END
IN VIEW OF CHARTING EFFECTIVE POLICIES AND PROGRAMS FOR THE AGRICULTURE
SECTOR

Whereas, one of the hallmarks of the 1987 Philippine Constitution is the prominence of
declarations aimed at preventing wastage of government resources through the institutions of so-called
“sunshine laws”, viz:

• Section 27, Article II, stating “[t]he State shall maintain honesty and integrity in public
service and take positive and effective measures against graft and corruption.”
• Section 28, Article II, providing “[s]ubject to reasonable conditions prescribed by law,
the state adopts and implements a policy of full public disclosure of all its transactions
involving public interest.”
• Section 7, Article III, mandating “[t]he rights of the people to information on matters of
public concern shall be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen, subject
to such limitation as may be provided by law.”
• Section 1, Article XI, declaring “[p]ublic office is a public trust. Public Officers and
employees must at all times be accountable to the people, serve them with utmost
responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead
modest lives.”

Whereas, the Ginintuang Masaganang Ani (GMA) Program of the Department of Agriculture is
envisioned to generate employment, increase farmers’ income, and achieve greater food security;

Whereas, the fund resources of the Program are meant for the procurement and distribution seeds
(inbred and hybrid) and fertilizer, provision of other location specific intervention, research and
Development (R & D) to improve productivity and farmer’s income and National Expansion of Farmers
Field Schools revitalization of national extension system;

Whereas, the Philippine Center for Investigative Journalism (PCIJ) in a report revealed that the
Department of Agriculture released fertilizer funds during the 2004 presidential campaign and records
would bear that the Department of Budget and Management authorized the release of Seven Hundred
Twenty-eight Million Pesos (P 728,000,000.00) for the purchase of farm inputs and implements;

Whereas, farmers and farm organizations declared that they never received a single-centavo worth
of fertilizers or farm inputs intended for their respective district and accordingly, some of those districts
without agricultural lands were reportedly given

1
OF LEGISLATION, ON THE ALLEGED MISMANAGEMENT AND
USE OF THE FERTILIZER FUND OF THE DEPARTMENT OF
AGRICULTURE’S GININTUANG MASAGANANG ANI PROGRAM
TO THE DETRIMENT OF FILIPINO FARMERS WITH THE END
IN VIEW OF CHARTING EFFECTIVE POLICIES AND
PROGRAMS FOR THE AGRICULTURE SECTOR” by Senator
Ramon Magsaysay, Jr.

Recommending the adoption of the recommendations contained herein:

Mr. President:

The Committees on Agriculture and Food and Accountability of Public

Officers and Investigations (Blue Ribbon) have conducted an inquiry, in aid
of legislation, into P. S. Resolution 327 by Senator Magsaysay, Jr. Six (6)
public hearings2 and a series of dialogues with farmer organizations have
been conducted. A substantial number of witnesses appeared, braving the
threats on their lives : career service officers, local government officials,
ordinary farmers and farm workers affiliated with respectable farmer
organizations and responsible men and women of the Commission on Audit.
Witnesses who answered the summons of the committees, with
corresponding dates, are listed below :

2
appropriation for fertilizers;

Whereas, the truth in this particular issue must be resolved considering that the agriculture sector
particularly our farmers are sweating it out to make both ends meet and are in dire need of government
support: Now therefore be it

RESOLVED BY THE SENATE, AS IT HEREBY RESOLVED, TO DIRECT THE

COMMITTEE ON AGRICULTURE AND FOOD TO CONDUCT AN INQUIRY, IN AID OF
LEGISLATION, ON THE ALLEGED MISMANAGEMENT AND USE OF THE FERTILIZER FUNDS
OF THE DEPARTMENT OF AGRICULTURE’S GININTUANG MASAGANANG ANI PROGRAM TO
THE DETRIMENT OF FILIPINO FARMERS WITH THE END IN VIEW OF CHARTING EFFECTIVE
POLICIES AND PROGRAMS FOR THE AGRICULTURE SECTOR.

Adopted,

Six (6) public hearings have been conducted on the following dates : October 6 and 26, 2005; November
17 and 24, 2005; December 12, 2005 and February 2, 2006.

2
October 6, 2005

Assistant Commissioner Sofronio Flores, Director Tobias P. Lozada, Ms.

Flerida Jimenez - Commission on Audit (COA); Ms. Che Che Lazaro -
ABS-CBN Channel 2 Probe Team; Secretary General Danilo Ramos –
Kilusang Magbubukid ng Pilipinas (KMP); Secretary General Enrico
Cabanit - Pambansang Ugnayan ng mga Nagsasariling Lokal na
Organisasyon sa Kanayunan (UNORKA); Advocacy Officer Emerson
Perucho - Partneship for Agrarian Reform and Rural Development Services
(PARRDS); Executive Director Arce Glipo - Integrated Rural development
Foundation (IRDF); Joseph Canlas – Alyansa ng Magbubukid sa Gitnang
Luzon

October 26, 2005

Commissioner Guillermo Carague, Assistant Commissioner Sofronio Flores,

Assistant Commissioner Emma Espina - Commission on Audit (COA);
President Raymond Ilustre – Fertilizer Industry Association of the
Philippines (FIAP); Secretary General Danilo Ramos – Kilusang
Magbubukid ng Pilipinas (KMP); Atty. Frank Chavez – Taxpayer; Mr.
Villano- League of Provinces; Ka Felix Paz – KMP Bicol Region; National
Vice Chairperson Imelda Lacandazo – KMP Southern Tagalog

November 17, 2005

Former Secretary Emilia Boncodin – Department of Budget and

Management (DBM); Atty. Frank Chavez; Mr. Antonio Salas – Asst.
Provincial Treasurer, Eastern Samar; Mr. Alfonso Esposa – President,
Provincial Irrigations Associations; Mr. Danilo Ramos – Kilusang
Magbubukid ng Pilipinas (KMP); Prof. Cesar Mamaril – farmer, UPLB
Program and IRRI specialist in fertilizer and food management; Secretary
General Nilo Arado –Pahagpong sa mga Mag-uuma sa Panay

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(PAMANGGAS Panay, Iloilo, Aklan, Capiz, Guimaras); Chairman
Guillermo Bautista –Katipunan ng Samahang Magbubukid ng Timog
Katagalugan (KASAMA-TK); Joseph Canlas – Central Luzon; Romulo
Tapayan – Kalipunan ng mga Maliliit na Magniniyog sa Pilipinas (KMMP) ;
Chairperson Fernando Hicap – Pambansang Lakas ng Kilusang
Mamamalakaya ng Pilipinas (PLKM); Ernesto Tañedo – Katipunan ng
Samahang Magsisibuyas.

November 24, 2005

Atty. Frank Chavez – Chavez, Miranda Assoc; Assistant Commissioner

Espina - Commission on Audit (COA); Provincial Agriculturist Jesus Agda
– Borongan, Eastern Samar; Provincial Accountant Vener Dulfo –
Borongan, Eastern Samar; Mayor Antonio B. Rivera - Municipality of
Dolores, Eastern Samar; President Raymond Ilustre – Fertilizer Industry
Association of the Philippine (FIAP); Dr. Araceli Alejar – Fertilizer
Expert/Consultant & Evaluator of Registered Plant Growth Regulators and
Foliar Fertilizers; National President Apolinario Pacardo; Secretary General
Enrico Cabanit - Pambansang Ugnayan ng mga Lokal at Nagsasariling
Organisasyon sa Kanayunan (UNORKA); Secretary General Lito Gacusan
- Samahan ng Gugti ng mga Parag-uma - Sinirangan Bisaya (SAGUPA -SB)
; Mr. Jose Tico – SAGUPA-SB-Northern Samar; “Nanay” Carmen Buena -
National Federation of Peasant Women (AMIHAN); Mr. Jose Barredo –
Taxpayer/witness

December 12, 2005

Undersecretary Jocelyn Bolante was invited as lone resource person but he

fled the same morning for the United States of America, evading the Senate
hearing. Official communication from his lawyers confirming his departure
and explaining his absence, was sent to the committee.

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February 2, 2006
Board member Rebecca Aquino of the Province of Sorsogon; Ms. Flerida
Jimenez, Mr. Joseph Anacay and Delfin Aguilar, Commission on Audit;
Citizen Jose Barredo, Jr.; Avelino Dacanay, Solidarity of Peasant Agaiant
Exploitation-Ilocos; Tonying Flores, FADC, Davao City; Dr. Cesar
Mamaril, PhilRice-Los Banos; May Faustino, chicken and poultry
supplier from Tarlac; Danilo Ramos and Pedro Arnado, Kilusang
Magbubukid ng Pilipinas; Alfredo Ronquillo, Aaron Foundation

Preliminaries

The story of one is the story of all. This old saying remains to be true for
Carmen Buena, a 60-year-old mother and farmer from Sta. Ana, Pampanga,
and head of the women farmers’ group called Amihan.

“Mahirap ang buhay magsasaka. Sa bukid, iwan at datnan ka ng araw at

ulan. Di tulad ng ibang empleyado, may mga benepisyo. Kaming mga
magsasaka, talagang wala, kundi sakit sa baga o di kaya rayuma. May
pagkakataon pa ngang inaalipunga ang aking suso sa maghapong
pagkababad sa putikan kapag nagtatanim,” said Buena3 whose tale of
hardship as a farmer is shared by many in the agriculture sector.

“Mahirap ang buhay magsasaka. Hindi talaga kasya ang kinikita kung
susumahin mo.” The mother of five revealed that during the harvest season,
they usually produce 160 cavans of rice sold for a little more than Php

3
Oral testimony given by Carmen Buena, AMIHAN, to the Committees on Agriculture and Food,
Accountability of Public Officers and Investigations

5
54,000.00. Of this amount, Php 6,750.00 goes to the so-called thresher;
Php 36,250.00 goes to loan payments for farm inputs and the remaining Php
11,010.00 is to be shared by the landowner and the family who tilled the
land. What is left to the hapless farmer is a meager P 5,050.00, which when
computed against the length of time for rice production (usually four
months), gives him a net income of Php 1,376.00 a month or Php 45.87 a
day. It is unimaginable how a family of five (5) to seven (7), which is the
size of a normal agricultural family, can subsist on such a miserable income.

In some countries, the farmers are among the wealthiest and most prolific.
Sadly in the Philippines, our farmers can hardly put enough food on their
table, and are in fact at the bottom of the social and economic strata.
Aggravating their situation is the systemic corruption perpetuated by a few
unscrupulous people in government, who have the temerity to rob them of
the little assistance earmarked for them. It is ironic that our principal
suppliers of food have been reduced to becoming the principal victims of
hunger. We must put a stop to this injustice.

The Philippine Agriculture4

Being an agriculture-based country, the 1987 Philippine Constitution

mandates “promoting industrialization based on sound agricultural
development and agrarian reform as part of the country’s main economic
thrust”.

But, why has our agriculture policy failed so badly?5

As early as the 1700s, it has already been recorded that the agriculture
sector, much less the farm workers, had not been receiving enough
government support.

4
Nationalist Imperialism Book of Alejandro Lichauco and the Filipino Heritage Encyclopedia
5
Taken from the Highlights of the Report and Recommendations of the Congressional Commission on
Agricultural Modernization, entitled: Modernizing Agriculture, pp1

6
“After independence, nationalist policymakers favored industry over
agriculture – seeing agriculture as “backward” and industry as “modern”.
Successive governments used the dollars earned from the export of copra
and sugar to build up national industry. And the high tariffs and an
overvalued peso that nurtured these “infant industries” stunted the growth of
agriculture.”6

The agricultural sector, which traditionally was exclusively reserved for the
Filipino farmers, was eventually opened to international agri-market. Our
local market started competing with imported agricultural products right in
our own backyard.

In order to successfully implement the Import Liberalization as well as the

GATT-WTO Uruguay Round Agreement that opened-up the country’s
market to foreign agri-products, among others, the Agricultural Tariffication
Act was passed. This law repealed earlier laws prohibiting the importation of
onion, potato, garlic, cabbage and coffee. It also repealed the Magna Carta
for Small Farmers and the Seed Industry Development Act.

What was envisioned to enhance the agri-industry, by opening the trade

market, without government’s full assistance to the sector and safety nets set
in place, actually turned the life of the peasants from worse to worst.

As per the Kilusan ng Magsasaka ng Pilipinas, farmers are paying higher

prices for their farm inputs but they have to sell their produce at cheap prices
caused by the monopoly position of big traders and food processing
conglomerates. Moreover, cheap, subsidized imports from the industrialized
countries are now pushing the prices even lower.

The situation have pushed and deprived lots of barrio farmers from their
single source of livelihood. Less than a million jobs in agriculture have been
lost, which increased unemployment rate in the provinces to about 1.3
million in 1998.

6
Ibid

7
What used to be self-sufficient and self-reliant farmers tilling their own
lands are now regular workers in large farms owned by landlords. They earn
only about between 60 to 90 pesos per day. Based on statistics released by
the government, wage and salary earners in farms and plantations increased
13 percent between 1993 and 1997. Based on the statistics of the National
Statistics Office Philippine Yearbook 2005, the average daily wage rate of
farm workers without meals from 1996 to 2003 is 147 pesos. On the other
hand, the number of farmers who work on lands they own continuously
decrease by about 0.5 percent annually during the same years.

“Two-thirds of the Filipino poor—who altogether number almost 5 million

families—live in rural areas. Most of them subsist as farmers, fishers and
gatherers of forest products. The poorest of them are landless workers on
sugar-cane, corn, rice and coconut farms; and fishers on our coastal water.”7

The colonialism in the agri-industry that thrives up to the present brought the
sorry state of farmers being impoverished, dependent, exploited and
oppressed.

Ginintuang Masaganang Ani (GMA) Rice and Corn Program:

Tracing its History

The Marcos Administration

Former Agriculture Minister Arturo R. Tanco, Jr. under the Marcos

administration, launched the innovative Masagana 99 rice production
program during his term of office from 1978 to 1984. The program
revolutionized the rice industry and made the Philippines a rice-exporter and
self-sufficient white-corn producer.8

7
Taken en toto from the Highlights of the Report and Recommendations of the Congressional Commission
on Agricultural Modernization, entitled: Modernizing Agriculture, pp2
8
History of Philippine Agriculture, www.da.gov.ph/about/history.htm

8
The Ministry of Agriculture became the Ministry of Agriculture and Food
(MAF) in 1984 under E.O. 967. Assemblyman Salvador H. Escudero III
was then appointed Minister of MAF. Under his stewardship, the Intensive
Rice Production Program (IRPP) was launched.

The Aquino Administration

In 1986, after the EDSA revolution, Ramon V. Mitra was appointed Minister
of MAF by President Corazon Aquino. The MAF then implemented policy
and institutional reforms that freed the agriculture markets, enabling farmers
to enjoy farmgate rates. After Minister Mitra, MAF Deputy Minister Carlos
G. Dominguez was appointed Minister. On January 3, 1990 President
Aquino appointed Senen Bacani as Secretary. This was when the DA
implemented the Rice Action Program (RAP) which led the country to
export rice in 1992. The Corn Production Enhancement Program (CPEP)
was likewise launched which moved the country to be corn-sufficient.9

The Ramos Administration

In 1992, Roberto S. Sebastian became the Secretary of DA under the

leadership of President Fidel V. Ramos. Secretary Sebastian introduced the
key production approach (KPA), whose guiding principle was planting the
right crop at the right place and time. It was during this time when the
Medium Term Agricultural Development Plan was formulated. When Dr.
Salvador H. Escudero III was reappointed as Agriculture Secretary, he
launched the Gintong Ani Programs. This was to ensure food security and to
help organize subsistence farmers into functional groups.10

The Estrada Administration

Dr. William D. Dar was designated Acting Agriculture Secretary on June 30,
1998 during the term of President Joseph Ejercito Estrada. The Ten-Point
Agenda in agricultural and fisheries was introduced. After a year, former
9
Ibid
10
History of Philippine Agriculture, www.da.gov.ph/about/history.htm

9
Senate President Edgardo J. Angara was appointed as Secretary of
Agriculture in 1999. Being the principal author of the AFMA of 1998, he
put into action the visions of the law.

The AFMA which was approved into law on December 22, 1997 has two
principal objectives, namely:

1. to modernize the agriculture and fisheries sectors by transforming

these sectors from a resource-based to a technology-based industry;
and
2. to pursue a market-driven approach to enhance the comparative

advantage of our agriculture and fisheries sectors in the world

market.11

The Macapagal-Arroyo Administration

Secretary Leonardo Q. Montemayor, appointed on February 12, 2001 during

the PGMA Administration, led the DA in the implementation of AFMA.
The Ginintuang Masaganang Ani Countrywide Assistance for Rural
Employment and Services (GMA-CARES) was implemented. This is the
precursor of the present day Ginintuang Masaganang Ani Rice and Corn
Program.

The Department of Agriculture (DA) is the main agency tasked to promote

agricultural growth and development. Reorganized under Executive Order
116 dated January 30, 1987, the DA is mandated to provide the policy
framework and help direct public investments in agriculture and fishery. In
partnership with local government units (LGUs), it provides the support
services necessary to make agriculture and agri-based enterprises profitable,
and helps spread the benefits of development to the poor, particularly those
in the rural areas.12

11
Ibid
12
Ibid

10
The PhP728 Million GMA Rice and Corn Funds:
FERTILIZER FUNDS SUPPOSEDLY FOR FARMERS

The Php 728 million fertilizer fund inquiry commenced when the farmers
started to look for the fertilizer and other farm implements subsidy and
found none. “Where are the millions of pesos?” “Where are the subsidies?”
“Where are the fertilizers?” These are just some of the questions raised by
the peasant farmers and their families in the countryside.

The Philippine Center for Investigative Journalism (PCIJ) published a report

following “a trail of nearly P3 billion released by the Department of
Agriculture (DA) during the 2004 presidential campaign. Its investigation
found “that big chunks of that money were diverted to congressmen, mayors
and governors who are allies of President Arroyo”. The same yielded the
conclusion that “a portion of the money mysteriously ended up in the hands
of obscure private foundations and companies” and eventually “siphoned to
the Arroyo campaign”.13

The Probe team led by Ms. Cheche Lazaro14 also presented the issue and
emphasized that the farmers as beneficiaries did not receive a single centavo
from the said fertilizer funds.

The following are the factual backdrop of the Php 728 fertilizer fund, per
the testimony of former Department of Budget and Management Secretary
Emilia Boncodin15:

13
Philippine Center for Investigative Journalism, www.pcij.org. The document and the attachment
dossiers of the PCIJ report was submitted as evidence by Atty. Francisco Chavez, TSN, October 26, 2005
14
The Probe report on the “fertilizer fund scam” was presented in the very first hearing of the joint
committees serving as primer for the issue subject of inquiry. During the hearing, Ms Cheche Lazaro
presented and annotated the report. TSN, October 6, 2005.
15
Transcript of Stenographic Notes of November 17, 2005 public hearing. Likewise, Secretary Emilia
Boncodin executed a deposition for the joint committees in the National Kidney and Transplant Institute.

11
One. The DBM released the amount of Php 728 million for the purchase of
farm inputs to the Department of Agriculture, Office of the Secretary, under
Special Allotment Release Order or SARO under E-01-00164, dated
February 3, 2004. This release was charged against the Agriculture and
Fisheries Modernization Program (AFMA) as a continuing appropriation
under Republic Act No. 9206.

Two. On the same day, DBM released the amount of Php 291.2 million to
the Land Bank of the Philippines for the account of the Department of
Agriculture, Office of the Secretary. This amount of Php 291.2 million
represents forty percent (40 %) of the allotment released under the AFMA.

Three. The releases were made by the DBM upon the request of the
Department of Agriculture based on a formal request submitted to the DBM.
In that request, the attachment that is reflected as Annex A of the SARO
was incorporated and that same schedule or attachment contains a listing of
105 congressional districts, 53 provinces and 23 municipalities.

Four. Subsequent releases for the NCA were made also upon the request of
the Department of Agriculture either as a separate NCA or as part of the
common fund that is usually authorized the agencies on a regular basis.

Five. The release made by the DBM was for farm inputs which could
incorporate fertilizers, seeds and even insecticides. But the actual purpose
for which the same will be used will depend on the Department of
Agriculture.

Six16. In the case of the Php 728 fertilizer fund, the request for release was
made by Undersecretary Jocelyn Isada Bolante. Accordingly, from the time
of Secretary Montemayor, Undersecretary Bolante has been given the
authority to make request in behalf of the Secretary of Agriculture and has
never been revoked up to the time of Secretary Luis Lorenzo.

16
TSN, November 17, 2005, 2:48 p.m. This portion is not part of the affidavit of Secretary Boncodin but
is given in reply to the Senate President’s question.

12
Lastly, when asked if the fertilizer fund request made by Undersecretary
Bolante for the Department of Agriculture was upon the instruction of the
President, Secretary Boncodin replied with “I would imagine so.”17

The Php 728 million Fund is just a Portion of a

Larger Fertilizer Fund Released during the Elections of 2004

The Php 728 million fertilizer fund is just part and parcel of the huge fund
releases to the Department of Agriculture totaling Php 2.806 billion intended
for the purchase of farm inputs and implements in 2004, all made just
before the May 10, 2004 elections. Its breakdown as follows :

Nature of Fund/Program SARO Number and Date Amount

GMA Farm Inputs and E-04-0014 Php 728 million

Implements February 3, 2004

GMA Rice and Corn and E-04-00294 Php 1.102 billion

February 11, 2004

Marcos Wealth for CARP E-04-01090 Php 544 million

April 28, 2004

17
TSN, November 17, 2005, 3:28 p.m.

13
GMA Rice Program From Agency Budget Php 432 million

And Fertilizer Procurement Matrix (regular budget)

And Distribution Component

---------------------

TOTAL Php 2.806 billion

============

In a document submitted by the Department of Agriculture18, the Php 728

million fertilizer fund forms part of the Farm Inputs and Farm Implements
Program in 2004 to assist LGUs in boosting their agricultural production and
increasing farmers’ income.

The Mechanics of the Fertilizer Fund Scam

Lawyer Francisco Chavez testified that the fertilizer fund is a modus

operandi that involves a ranking official in the DA who is linked to Mrs.
Gloria Macapagal Arroyo’s husband, Jose Miguel Arroyo. This official
deployed runners whose job was to approach local government officials and
extract a commitment from these officials to purchase fertilizers in liquid
state from them.19

Essentially, the sharing system in the fertilizer fund scam is as follows:

25% for the DA official (referring to Mr. Jocelyn Bolante); 30% for the
mayors, governors and congressmen concerned; 20% for the supplier of the
farm inputs, and 25% for the DA official runners.20

18
Letter of Secretary Domingo Panganiban to the Committee dated November 16, 2005, with attachments
pertaining to the fertilizer fund
19
SPOT Report of the Committees, TSN, October 26, 2005
20
TSN, October 26, 2005

14
Witness Jose Barredo, who admitted to being one of the runners in the
fertilizer scam, presented in detail how they operated.21 His revelations,
made under oath, were substantiated by the following assertions:
1. Barredo worked with a certain Maritess Aytona in the marketing of
liquid fertilizers to local government units and congressional
districts beginning January 2004;

21
Affidavit of Jose Barredo which was read in full, TSN, February 2, 2005. The same is reproduced here
in full text for appreciation:

REPUBLIKA NG PILIPINAS )
______________________ )S.S.

SINUMPAANG SALAYSAY

Ako, si JOSE B. BARREDO, JR. Pilipino, may asawa, may sapat na taong gulang at may tirahan sa 105
Hanglid St., President Roxas, Capiz, matapos manumpa ayon sa batas ay nagsasalaysay ng mga sumusunod:

1. Kilala ko si Maritess “Tess” A. Aytona mula pa noong mga taon ng 1997 dahil sa naging katrabaho ko siya
sa pagbebenta ng mga medicina sa mga Local Government Units (LGUs). Natigil iyon bago mag 2004.

2. Noong mga Enero 2004 ako ay muling inalok ni Tess Aytona na makatrabaho niya. Ang project ay ang
pagbebenta ng liquid fertilizer sa mga LGUs and Congressmen. Ang pundo ay galling sa Department of Agriculture
(DA). Ang fertilizer ay mangagaling sa isang kompanya na may pangalan na FESHAN PHILS. INC. (FEHAN), may
tanggapan sa 16 Sgt. Esguerra Avenue, South Triangle, Quezon City. Ang presidente nito ay si Julie Gregorio. Ang
nagbibigay ng capital na ibinibili ng fertilizer ay isang babae na nagngangalan na Nezy na siyang may-ari ng Dayna
Publishing, isang supplier sa Department of Education.

3. Ang nalaman ko ay ang FESHAN ay siyang may connections kay Usec. Jocelyn “Joc-Joc” Bolante at
itong kompanyang ito ang binigyan ng karapatan ni Usec Bolante na magsupply ng liquid fertilizer sa mga LGU
officials, Congressmen at saka Governors bago mageleksyon ng 2004. Gumamit ang FESHAN maraming brokers at
runners para mahikayat sa mga nasabing official ng gobierno para gamitin ang mga pundong nilaan ng DA para
pambili ng fertilizer sa FESHAN.

4. Ang sabi ni Tess Aytona sa akin ay samahan ko siya sa kanyang pgbebenta ng fertilizer una sa Bulakan.
Ang sabi niya sa akin ay mayroong pundo galling sa DA na ibinibigay para sa mga LGUs para ibili ng fertilizer. Ayon
kay Tess ang nangangasiwa ng pundo na ito ay si DA Usec Bolante. Kapag may pundo na, gaya ng para sa Bulakan,
ay dapat puntahan ang mga namumuno sa LGUs na pinili ng DA. Ginawa naming ito ni Tess at kinausap ang Mayor
ng Pulilan, Bulakan, na si Mayor Castillo. Pumunta rin kami ni Tess kay Mayor Pagdanganan ng Kalumpit, Bulakan at
kay Congresswoman Neneng Nicolas.

5. Isa-isa naming kinausap ni Tess ang mga nabanggit na local officials at sinabi naming sa kanila na
mayroong pundo na nakalaan para sa kanila para ipambili ng fertilizer na manggagaling sa FESHAN. Inalok naming
sila ni Tess ng tinatawag na SOP o commission ng 30% ng pundong ibibigay sa kanila ng DA. Para kay Mayor
Castillo ang pundo ay P5 Million; kay Mayor Pagdanganan ay P3 Million; at ang kay Congresswoman Nicolas ay P3
Million. Si Congresswoman Nicolas ay hindi pumayad na tanggapin ang fertilizer dahil pinili niya na cash ang
tanggapin niya. Nalaman ko na kung ang buong pundo halimbawa ay P3 Million, ang SOP ay P900,000 (30% ng P3

15
 2. The local government units and congressional districts which will
be the recipient of the fertilizer fund were already identified. The
funds on the other hand were to sourced from the Department of
Agriculture;
3. The liquid fertilizers were to be supplied by Feshan Philippines,
Inc. A company with business address at 16 Sgt. Esguerra
Avenue, South Triangle, Quezon City;

Miliion) at ang P2.1 Million naman ay ang kaukulang biniling fertilizer.

6. Kapag pumayag na ang LGU official ay ginagawa ni Tess ang isang Memorandum of Agreement (MOA)
at papipirmahin niya ito sa kainuukulang LGU official at saka pipirma naman para sa DA ng Regional Director ng
Region na sumasakop sa nasabing LGU. Ang sample ng MOA na iyon ay inilakip ditto bilang ANNEX “A”. Ang
MOA na ito ay dadalhin sa RD at kanyang pipirmahan at ipa-nonotaryo ni Tess, at saka kanyang ipalalabas ang pundo
sa upisina ni Usec Bolante patungo sa nasabing RD. Ang paglalabas ng pundo ay dalawang ulit, ang una (First Trance)
ay 65% ng nakalaang pundo para sa LGU. Ang sunod na paglalabas ng pundo (2nd Trance) ay 35% ng nakalaang
pundo. Kung ang nasabing pundo ay nasa kamay na ng RD, kokontakin na ni Tess ang FESHAN at ipadedeliver sa
bumiling LGU ang biniling liquid fertilizer na nasa bottleyas. Ang alam ko ay P1,500 ang presyo na ipinapasa ni Tess
sa lahat ng LGUs.

7. Pinipirmahan ng LGU ang Delivery Receipt at Sales Invoice na galling sa FESHAN kapag naka
pagdeliver na ng fertilizer. Ang sunod ditto ay maglalabas ng cheke ang RD sa pangalan ng LGU alinsunod sa
napagkasunduan nila sa MOA. Pagkadeposito ng LGU ng cheke galling sa RD, ang nasabing LGU ay magbibigay ng
kaukulang bayad na cheke sa FESHAN. Ang gagawin ni Tess ay sasabihan ang FESHAN na ideposito na sa bank
account ko ang kalahatang SOP ng LGU official.

8. Sumama sa akin sa banko ang representative ng LGU official at sa kanya ko inibinigay ang SOP. Ang
pakinabang ko bukod sa buwanang swledo ko na P10,000.00 ay pinangakuan ako ni Tess na bibigyan niya ako ng 3%
to 5% ng SOP para sa pagod ko.

9. Ang pinatrabajo sa kin mismo ay ang Region 6 dahil ako ay isang Illonggo. Ang nagbibigay ng utos sa
akin ay si Tess. Isa sa mga kinausap ko ay si Governor Vicente Bermejo sa kapitolyo ng Roxas City. Sinabi ko sa
kanya na may pundo ang DA na nakalaan sa kanya para pambili ng fertilizer. Tinanong niya kami ni Tess kung
magkano ang SOP niya at ang sagot ni Tess ay 25%. Sinabi ni Governor ay mayroon ng nagoffer sa kanya na supplier
at ang offer ay 40% SOP. Inutusan niya si Tess na kontakin si Usec Bolante sa phone and nakita at narinig kong
nagusap sina Governor Bermejo at Usec Bolante sa telepono. Ako ang nagbigay ng SOP ni Gov. Bermejo galling sa
first chance na pinadala ng DA sa RD.

10. Pinuntahan ko rin sa Bacolod si Congressman Monico Fuentebella at sinabihan ko siya na may pundo
siya na P5 Million mangagaling sa DA para pambili ng fertilizer. Pumayad siya pero ang gusto niya ay 25% lamang
ang fertilizer at 75% ay cash. Kasama ko noon si Tess Aytona.

11. Nagpunta rin ako kay Governor Florencio Miraflores sa Kalibo, Aklan. Sabi sa akin ni Tess bago ako
nakipagkita kay Gov. Miraflores na nagusap na sina Usec Bolante at Gov. Miraflores kaya wala na akong masyadong
ipaliliwanag sa kanya. Dinala ko kay Governor ang MOA para pirmahan niya pero hindi niya pinirmahan hanggang
hindi niya natanggap ang kanyang SOP na P1.5 Million isang araw bago ang Mayo 2004 eleksion.

16
 4. Feshan Philippines, Inc. is linked and connected with
Undersecretary Jocelyn Bolante;
5. Barredo, along with Aytona, negotiates with local government
officials and congressmen, informing them of the fund
appropriated to the LGUs or congressional district, promising local
government officials or congressmen of getting thirty percent (30
%) representing “SOP” or “commission”. The “SOP” or
“commission” can go higher depending on the “request” or
arrangement made by the proponent local official or congressmen;
6. Upon approval of the transaction by the local government official,
a memorandum of agreement is executed;
7. In the case of Mr. Barredo, he identified several municipalities and
congressional district in Bulacan and LGUs and legislative districts
in Region 6 as his area of operation.

12. Pinuntahan ko rin si Mayor Reymar Recaldo ng Kalibo at sinabihan ko siya na ang pundo niya galling sa
DA na pambili ng fertilizer ay P3 Million. May dala ako na P600 Thousand pero hindi niya tinanggap. Tinawagan ko
si Tess sa Maynila at sinabi kong magdala pa ng karagdagang pera para kay Rebaldo at Miraflores. Asawa ko ang
nagdala ng pera isang araw bago mageleksyon noon May 2004 at dinala naming ang kwarta sa bahay ni Mayor
Rivaldo. Ang asawa ni Mayor at mga kapatid ang nagbilang ng pera sa loob ng kuwarto ni Mayor.

13. Hindi tumanggap ng pundo galling sa DA si Congressman Arthur Defensor. Pinabigay na lamang niya
ang allokasyon niya galling DA sa tatlong Mayors na sina Mayor Alex Centena ng Calinog, Mayor Mariano Malones
ng Maasin at Mayor Ramirez ng Lambunao.

14. Si Congressman Oscar Garin ay tumanggap din ng SOP mga dalawang lingo bago mageleksyon ng 2004.
Ang bigay nap undo sa kanya ng DA ay P5 Million. Ang SOP ditto ay P1.250 Million at 75% ng P5 Million ay
fertilizer na ideniliber sa kanya.

15. Si Congressman Edgar Espinosa ng Guimaras ay tumanggap din ng P3 Mpondo galling sa DA. Ang
SOP niya ay 30%,

16. Bago mag eleksyon ng 2004, ay nakipagusap din kami kay Congressman Lacson, Cong. Maranon at
Gov. Maranon pero hindi natuloy ang pagtanggap nila ng pondo galling sa DA dahil sa naglipat sila ng suporta kay
FPJ. Gayundin din ang nangyari kay Cong. Fredinel Castro. Tinanggihan nila ang pondo na inaalok ng DA dahil sabi
niya “alam ko na ang mangyayari diyan” at saka lumipat ng suporta kay FPJ.

17. Maaring hindi ko nasabi lahat ang mga detalye at lahat ng mga taong nakaharap at nakausap ko sa
panahong binabanggit ko ditto sa aking salaysay pero nakahanda naman akong sabihin lahat iyon sa mga susunod na
pagkakataon.

17
The Missing Key Players
(Bolante, Lorenzo, Poliquit, et.al.)

Jocelyn I. Bolante was the first appointee of Ms. Gloria Macapagal-Arroyo

in the Department of Agriculture as Undersecretary (Finance and
Administration). He was already in office prior to the appointment of then
agriculture secretary, Leonardo Montemayor.

Citing provisions from the Administrative Code of the Philippines, Bolante,

as Undersecretary, is guided by the following duties and functions :

a. Advise the Secretary in the promulgation of Department Orders,

Administrative Orders, and other issuances with respect to his area of
responsibility;

b. Exercise supervision and control over the Offices, services

operating units and Officers or Officials, and employees under his
responsibilities;

c. Promulgate rules and regulations, consistent with Department

policies, that will efficiently and effectively govern the activities of
Units under his responsibility;

d. Coordinate the functions and activities of the Units under his

responsibility with those of other Units under the responsibility of
other Undersecretaries;

e. Exercise delegated authority on substantive and administrative

matter related to the functions and activities of Units, under his
responsibility, to the extent granted by the Secretary, through
Administrative Issuances;

18
 f. Perform other functions as may be provided by law, or assigned
appropriated by the Secretary.

But Undersecretary Bolante’s power over the agriculture department was

widely known.22 And it encompasses more than what the Administrative
Code provided.

In fact, at the time that he was Undersecretary, Jocelyn Bolante was

concurrently appointed by the President in other powerful positions: as
Acting Chairman of the National Irrigation Administration, as Acting
Chairman of the Livelihood Corporation and as Acting Chairman of the
Strategic Investments and Development Corporation. At the same time, he
was Director of the National Power Corporation and Land Bank of the
Philippines.23

It is significant that even without background principally on agriculture,

Bolante was appointed by the President (at the time she herself was acting
Agriculture Secretary) and holding a sensitive position at that, as
Undersecretary for Finance and Operation.

In the fertilizer fund scam, Undersecretary Bolante is the declared architect.

He designed it. He was its brains. It was he who worked with the DBM for
the immediate release of the fund. It was him who prepared and submitted
names who would become the fertilizer fund’s proponents. It was
Undersecretary Bolante who sent letters to various congressmen and local
officials informing them of the availability of funds under the DA’s GMA
Project. It was him who directed these officials to coordinate with his office
to discuss all the requirements to facilitate the said project fund.
Undersecretary Bolante in the words of his then Chief of Staff, Ibarra
Poliquit, had a hand in determining how the GMA Project fund works and
will be spent. And that although the DA has a list of officials whose

22
PCIJ, Ibid
23
Portfolio of Undersecretary Jocelyn Bolante as filed in the records of the Department of Agriculture

19
“proposed projects” were to be funded by the fertilizer fund, Bolante was
given the authority to drop them and replace them with others.24

In the Committee of the Whole public hearing of January 31, 2006,

Undersecretary Belinda Gonzales specifically mentioned that it was the
Office of Undersecretary Jocelyn Bolante who ordered the release of funds
to the recipients stated in the list. "I got instructions from Usec Bolante that
this ---- P 100 million ---- will be be transferred to the different regional
offices."25

Secretary Luis Lorenzo and Undersecretary Belinda Gonzales served as co-

signatories of Mr. Bolante in transferring the money from the Department of
Agriculture to the regional field units (RFUs) and to local governments.
Assistant Secretary Jose Felix Montes served as the program’s
spokesperson.

In the case of Secretary Lorenzo, while indeed he did sign a memorandum26

that designates Undersecretary Jocelyn Bolante as the approving authority of
the fertilizer fund, the fact remains that he was aware of the program and
acted as co-signatory in the transaction.27

Former Undersecretary Ibarra Poliquit, per the records submitted by the

Commission on Audit,28 assisted Undersecretary Bolante in the approval of
projects that would be accorded the fertilizer fund. A substantial number of
requests for the approval to issue sub-allotment advise (SAA) with
corresponding cash allocation to DA-RFUs for the implementation of the
GMA Farm Inputs and Implements Program would indicate Undersecretary
Poliquit as the requesting party. In one hearing, from the documents
24
PCIJ, Ibid
25
Belinda Gonzales was subpoenaed four times and extended an invitation once to attend the joint
committees. She was absent in all those hearings citing EO 464. But in the Committee of the Whole,
January 31, 2006, she cannot abscond interpellations given to her and thus, was forced to divulge some
information.
26
Memorandum from the Secretary, March 16, 2004, signed by Secretary Luis Lorenzo addressed to
Undersecretary Jocelyn Bolante where he directed the latter, “in order to expedite the implementation of
the Farm Inputs and Implements Program, with Local Govenrment Units, all requests for fund assistance
under the program shall be subject to your assessment, evaluation, and approval.” The memorandum was
requested during the Committee of the Whole hearing of December 6, 2005 and is reflected in the TSN.
27
A document presented to the Committee dated April 30, 2004, signed by Lorenzo and Bolante in which
they are allowing the debit/credit of the amount of P 4.5 million for the DA RFU Region III-Butuan City
and the same covered by the fertilizer fund.
28
Documents submitted by the Commission on Audit, January 26, 2006

20
submitted by the COA, it was noted that Ibarra Poliquit, then Assistant
Secretary for Field Operations requested for the transfer of P 89 million in
Region IV alone; P5 million in Region V; and P 22 million in Region VII.

BUT NO ONE RECEIVED THE FERTILIZERS.

The Farmers’ Voices. The Peasants’ Woes.

In all public hearings conducted, the farmer groups were its most active and
cooperative participants. Farmers and peasant leaders from as far as the
Ilocos region and Western Mindanao aired their collective grievances.
Theirs are the voices of desperation.

One of the largest farmer organizations in the country, the Kilusang

Magbubukid ng Pilipinas (KMP) through its national leaders, Danilo
Ramos said that not one among their 64 provincial chapter farmer members
from the 15 regions nationwide had received assistance from the so-called
fertilizer fund. Mr. Ramos lamented about their plight that for every bag of
urea fertilizer they would loan, they would pay an equivalent of three (3) 50-
kg bag of palay during harvest, adding that the system of usury is still
widespread because farmers have not received any support whatsoever from
the government.

The KMP emphasized that the meager amount of fertilizer that they should
have received during the year 2004 seemed to point to the direction of the
election fund campaign of Ms. Arroyo.

In the words of respected farmer leader Tatay Greg Rivera, “Ni isang butil
na abono hindi kami nakatanggap”

In their consultations with other farmer organizations, the KMP group of

Mr. Ramos confirmed that other farmers groups which happened to be
within their alliance also indicated not having received fertilizer assistance.

21
Pambansang Ugnayan ng mga Nagsasariling Organisasyon sa
Kanayunan (UNORKA). UNORKA through its Secretary-General Enrico
Cabanit declared that not one of their members received any form of
assistance from the program. They likewise stated that another fund covered
by the Presidential Agrarian Reform Council (PARC) Resolution No. 2003 –
93 -04, Php 544 million has been approved for the GMA Rice Program.
And just like the fertilizer fund, no assistance was given to them. They said
they were not included in the master list of beneficiaries prepared by the
DAR and DA based on the guidelines they have signed.

Farmers from Iloilo reported that no fertilizers or rice seeds managed to

reach them and they have not felt the support of the DA. If ever there were
farm inputs, the DA would sell them to the farmers.

Farmer representatives from Davao del Norte in Mindanao told the

committees that the farmers have not felt the so-called support services of
the government especially the one involving the P728 million fertilizer
assistance.

Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas through

its President Fernando Hicap informed the committees that
PAMALAKAYA consulted their members from the barangay level to the
regional level and from their 100,000 membership, no one signified having
received any support from the said government fund.

Kalipunan ng mga Maliliit na Magniniyog sa Pilipinas through its

President Romulo Tapayan informed that in terms of fertilizer assistance or
subsidy, their ranks have not felt the assistance.

22
Katipunan ng Samahang Magbubukid sa Timog Katalugan (KASAMA-
TK) through its Secretary-General Guillermo Bautista informed that in a
survey made to their members from the 10 provinces of the Southern
Tagalog Region, with reference to the Php 728 million agricultural fund, no
one has ever received even a single granule of the said agricultural inputs.
Their group aired out their sentiments that from the information they have
gathered, P69 million was released to their congressmen, governors and
mayors and they would be interested to know who the recipients were.
Pahagpong sa mga Mag-uuma sa Panay (PAMANGGAS).. Mr. Nilo
Arado said that his organization covers the provinces of Guimaras, Iloilo,
Aklan, and Antique. He informed the committees that their group held a
consultation among their leaders and members, and not one from among
their farmer-members has ever received the farm inputs assistance.

Katipunan ng Samahang Magsisibuyas (KASAMNE) is a federation of

19 primary cooperatives covering 5 towns and 1 city based in Nueva Ecija.
They are rice farmers and grow onions after rice. The federation through its
President, Mr. Tanedo, stated that their farmer members have not received
any subsidy or assistance from the P728 million farm input program.

Alyansa ng Magbubukid sa Gitnang Luzon through its representative

Joseph Canlas informed the Body that their group went around the provinces
of Central Luzon to find out what really happened on the fertilizer fund and
whether the same was given to them and recalled that every farmer member
they asked responded in the negative.

KMP-Souhern Tagalog Chairperson Imelda Lacandazo gave her testimony

that farmer-members of the KMP Southern Tagalog have not received any
fertilizer or farm inputs assistance.

Samahan ng Gugti ng mga Parag-uma - Sinirangan Bisaya (SAGUPA-

SB). Mr. Gacusan, the Secretary General of the Samahan ng Gugti ng mga
Parag-uma – Sinirangan Bisaya, informed the committees that the farmer

23
from Eastern Samar and their members did not receive any assistance from
the fertilizer fund.

SAGUPA- SB, Northern Samar. Jose Tico, a farmer from Northern

Samar, testified that farmers from his area have not received the alleged
farm inputs/fertilizers which emanated from the national government,
meaning Department of Agriculture. They have only read about the
information from newspapers that there are lots of fertilizers being given out
by the government but the same had never reached them.

National Federation of Peasant Women (AMIHAN). “Nanay” Carmen

Buena informed the committees that their federation comprised of 32
provinces. She is a farmer herself, and has not received any fertilizer
assistance, along with any of her members.

KMP, Bicol. Mr. “Tatay” Felix Paz, the overall chairman of KMP-Bicol
said that his farmer-members have not received any assistance, whether in
the form of fertilizers or agricultural fund assistance, particularly in Albay
where he resides.

The Other Courageous Witnesses

The hearings of the joint committees produced valiant witnesses among

ordinary farmers, government employees and public servants in local
government units.

Antonio Andag Salas29 is the Assistant Provincial Treasurer in Eastern

Samar. A crusader of truth, he declared boldly and amid threats to his life,
that contrary to the liquidation report submitted identifying his province as a

29
Witness Antonio Andag Salas appeared before the public hearing of the committees during the third
public hearing. He executed an affidavit detailing his knowledge of the issue and provided the committees
relevant dossiers to prove his allegations. The TSN of November 17, 2005 fully contained Mr. Salas’
testimony.

24
recipient of the fertilizer fund, there were no actual deliveries made. Another
fearless witness, Alfonso Cainto Esposa,30 president of the Pinamalutan
Water Impounding Irrigators Association, corroborated the no-actual-
delivery case as a microcosm of the fertilizer fund scam.

Rebecca L. Aquino is a Bokal, a member of the Sangguniang Panlalawigan

of the Province of Sorsogon. The feisty but heroic Aquino testified on the
“gross overpricing of fertilizers using public funds” in her province. In her
oral testimony, she presented COA’s audit observation for Sorsogon which
cited that the Bio Nature liquid fertilizer which was actually sold in the
market at Php 180.00 to 350.00 had been overpriced at Php 1,500.00 per
bottle. She further cited COA’s findings that the said liquid fertilizers were
not appropriate for rice and corn, the principal crops of the Bicolandia, but
for hanging plants like orchids and other ornamental plants.

The Legitimate Players in the Fertilizer Industry

Are Not Suppliers in the Transaction

The largest group of legitimate players in the fertilizer industry, the

Fertilizer Industry Association of the Philippines (FIAP), through its
president Raymond Ilustre, stated that it has seventeen (17) companies
which are basically into supplying fertilizers by bulk. With a market share of
95 percent, FIAP is responsible for supplying about 1.5 million tons of
fertilizers to farmers on an annual basis. Ilustre pointed out that FIAP did not
participate in the fertilizer project which is the subject of the inquiry.
Some Congressmen Simply Used in the
Fertilizer Fund Distribution

30
Witness Alfonso Cainto Esposa attended the hearing of the committees on November 17, 2005. He
submitted an affidavit and his testimonies in the TSN of the public hearing of the same date.

25
In an impromptu testimony, former Secretary Florencio Abad31 denied that
he made a request or was a proponent in the Php 728-million fertilizer fund.
Accordingly, his name and congressional district were included in the list
prepared by Undersecretary Bolante as an attachment for the release of
SARO and NCA under the fertilizer fund.
Abad stressed that he never requested for any allocation, or received
fertilizers or farm inputs for his legislative district. He added that he had
demanded explanation from the DA but to date, the latter failed to satisfy his
query. He even made a conclusion that his name was merely used.

Abad further mentioned that among the members of the House of

Representatives whose names were used in the fertilizer fund scam were
Representatives Noynoy Aquino of Tarlac and Miguel Zubiri of Bukidnon.
Senator Biazon added to the list Muntinlupa Rep. Ruffy Biazon as not
among the proponents of any project under the fertilizer fund.

The Rape of the Nation:

Ten Reasons Why The Fertilizer Issue is a Scam

The fertilizer fund as covered by the Farm Inputs and Implements program
is a premeditated, systematic and grand agricultural theft. In the words of
farmers and taxpayers, the fertilizer fund scam is the rape of the nation. In
all indications, it was purely adopted to suit electoral purpose.

The mismanagement of the fertilizer fund is novel in its method and

astounding in its shamelessness. In fact, it is an object lesson in the abuse
of power and the misuse of people's money by some officials of the
Department of Agriculture and some local leaders.

31
Secretary Florencio Abad was not invited in the public hearing. He attended the November 17, 2005
hearing, in support of a friend and fellow public servant Emilia Boncodin.

26
Ten reasons are advanced why this fertilizer fund mismanagement is
considered the grand agricultural theft (grand theft agro):

First, as confirmed by Secretary Panganiban himself during the budget

hearing, nobody in the Department of Agriculture knew of the existence of
the Farm Inputs and Implements program. In the files of the Department
itself, there is no single document that would support the existence of such
program.32
32
The relevant details of the transcript of records, Committee of the Whole, December 6, 2005, 11:46
a.m.:

The Chairman: Now, let me go through some…First, just for some information. Can we have a
copy of your Farm Inputs and Implements Program for 2004?

Mr. Panganiban. We got a breakdown of that, Your Honor.

The Chairman. The Farm Inputs and Implements program for 2004? You mentioned in your
submission to the Senate that you implemented the Farm Inputs and Farm Implements program in 2004 to
assist the LGUs, boost their agricultural production and to increase the income of farmers. This is what
you have submitted to us. We have a copy of this program?

Mr. Panganiban. These were submissions they requested when they take over, Your Honor, from
Undersecretary Belinda Gonzales and Assistant Secretary Jose Montes.

The Chairman. I am sorry?

Mr. Panganiban. The one I submitted for the Senate, Your Honor.

The Chairman. Yes, you have submitted this to us. And your representation in your submission
to us is that there was a program that you implemented a farm inputs and farm implements program in 2004
to assist the LGUs boost their agricultural productionand to increase the income of farmers. I assume this
program is in existence. This is your submission. Is there no such program?

Mr. Panganiban. This is only in 2004, Your Honor, that’s why this is a program crafted by former
Secretary Lorenzo and…

The Chairman. All I’m asking is, is there a copy of this program that you mentioned here?
Because your said you implemented a program. What does this---is this a program that is submitted by or
that is in existence in your files in the DA or what?

Mr. Panganiban. This was promulgated only in 2004.

Mr. Chairman. Okay? Do you have a copy of that?

Mr. Panganiban. We shall look for that, Your Honor. We don’t have a copy of it right now.

The Chairman. Okay. You don’t have a copy of this. You mean you implemented a program
without having seen a copy, or at least…I’m sorry. I keep on referring to you. You mean your department
implemented a program or is this just a---you implemented a program without any reference point, a
specific program, that you have cited here?

Mr. Panganiban. Nobody in the Department of Agriculture knew about this program, Your
Honor.. That’s why in…

The Chairman. What?

Mr. Panganiban. …my quest for getting the true picture of…

The Chairman. Nobody knew of the farm inputs and farm implements program?

27
Second, while agricultural and fisheries modernization has been a staple of
the agriculture budget every year since the AFMA enactment in 1997, the
fertilizer fund was a single appropriation meant only for 2004. This huge
expense has not been repeated since. Why it was implemented only in 2004,
in the months of the election season in particular, is an indication of its
intended purpose and illicit objective.

Third, even the design and implementation of the fertilizer fund scam
manifest the height of scandalous corruption. The gross overpricing as
reported by the Commission on Audit is absolutely abominable, with the
ordinary foliar fertilizer (which was allegedly supplied in almost all
transactions) overpriced from almost 700 to 1,250 percent.

The Commission on Audit through an Audit Observation Memorandum

dated January 20, 2006 submitted its report to the committees. Its
observations are all indicative of massive irregularities including
overpricing, frontal violations of the Procurement Law and wanton wastage
of scarce government resources.

In Region V, for example, the COA cited the overpricing of fertilizers to be

from a range of 783.59 percent to as much as percent of the actual market
price of foliar fertilizers. Canvass made by the ATLs of DA-RFUs I and
XII to determine price rationale revealed that the procurement of foliar
liquid fertilizers totaling Php 54,744,200.00 was overpriced by a total
amount of Php 48,067,100.00 or 720 percent.

Based on the canvass made by the ATLs on Foliar Liquid Fertilizer of

equivalent products available in the locality, the procurement of NGOs was
overpriced by a total amount of Php 79,674,649.26 (out of the total Php 92
million).

The Chairman. Except the possibility of Director Belinda Gonzales and Assistant Secretary joey
Montes, Your Honor.

28
In the acquisition of shredders and chippers (which most congressmen in
Manila acquired using the GMA project fund except Paranaque where
“urban gardening” is apparently being practiced), the observation of
overpricing characterized the fertilizer fund implementation. In the case of
towable shredders and chippers, overpricing went as high as 331 percent
while for small shredders and chippers, it was 206 percent.

The purchases were found to be excessive as provided for in the COA

Circular No. 85-55 which states that excessive expenditure signifies
unreasonable expenses or expenses incurred at an immoderate and exorbitant
price. It also includes expenses which are unreasonably high and beyond the
just amount and those in excess of reasonable limits.

Fourth, the fertilizer fund was released in the months of February to May,
the traditional harvest season in the country or “gapasan” months, when
fertilizers are of no use because the planting time starts in November.

Fifth, ghost and questionable suppliers and deliveries haunt the fertilizer
fund scam. AKAME Marketing is the identified supplier of a substantial
number of transactions in the Php 728-million fertilizer fund. Process
servers of the Senate failed to locate its business address indicated in its
registration. Tacloban Star, a regional newspaper in Leyte and Samar,
reported that its telephone number corresponds to a “gulayan” stall in
Kaloocan City.33 Another company named Castle Rock Construction was
awarded multiple contracts under the same fund. COA, in its audit
memoranda, noted that “no copies of the documents from the Department of
Trade and Industry was available that can show that Castle Rock
Construction can engage or do business relative to the trading of
fertilizers.”34 Witness Jose Barredo stated that FESHAN Philippines, Inc.,
one of the largest suppliers, is originally a medical supplier and started to
supply fertilizer only in 2004. Its office address as submitted to the DA is a
non-existing address.

33
Affidavit of Antonio Salas, TSN,
34
Audit Observation Memorandum, Folder 2, Commission on Audit, February 2, 2006

29
Sixth, a document identifying the fertilizer requirements for 2003 submitted
by Frisco Malabanan, Director, GMA Rice Program indicated that it only
needed Php 28.613 million for the entire Philippines. If the said document is
to be adopted and corresponding adjustment made, allocations will not be as
huge as the Php 2.806 billion released for the year 2004. This is a classic
case of gross disproportion between what is needed by the farmers and
wasteful utilization of the farmers’ fund.

Seventh, foliar fertilizer, which is appropriate for ornamental plants and not
for rice, was supplied. Technical experts invited by the Committees are one
in saying that generally, rice would require solid fertilizers which include
urea, ammonium sulfate, ammophos, complete fertilizers, and muriate of
potash, depending on the situation of the soil.

Furthermore, foliar fertilizer is advisable for use in high value crops (HVC)
because it is relatively expensive if it will be applied to rice. Besides it is not
effective in rice mainly because of the stature of the leaf of rice which is
upright. Thus, sprayed foliar fertilizer will just slide down and could not be
absorbed by the plant. The most effective way of applying these nutrients to
the rice plant is by the soil.35

Eighth, the wrong and overpriced kind of fertilizer for rice was even diluted
with water. Call it a case of “double corruption.” In the testimonies
presented during the public hearings, the fertilizers overpriced by almost
1,000 % are not even pure fertilizers but watered down fertilizer.

Ninth, Undersecretary Jocelyn Bolante cunningly, wittingly listed 105

congressmen, 53 governors and 23 mayors to justify the immediately
release of the fund. It specifies uniform amounts, regardless of which
congressional districts or local units the proponents represent, whether the
same are rice or corn-producing LGUs or not. Bolante is not even mindful
that the locality or legislative district from where the proponent came from is
35
Dr. Mamaril, University of the Philippines College of Agriculture, TSN, November 17, 2005, 2:58 p.m.

30
part of the farm-absent Metro Manila. From this list, it can be deduced that
it was an intended flawed program using public funds.

Tenth, Bolante made the list attractive by including a number of politicians

as proponents but in truth and in fact, their names were just used to lend
credence to the project. And when asked to explain, the DA cannot even
justify where it was appropriated, by whom and who disbursed it. Again,
it was a manifestation of pure scam.

RECOMMENDATIONS

1. A law institutionalizing assistance to farmers through a voucher system

must be set in place. The farmers and those in the agriculture sector must be
accorded the right to determine their needs and acquire the tools and other
farm inputs based on actual need. The voucher system would be more
effective in terms of providing timely assistance to farmers than a
centralized flawed system under the current setup.

In the absence of a law and considering immediate reforms that must be

effected, a special provision to this end should be introduced in the 2006
General Appropriations Act.

It should be noted that a similar program was adopted during the time of
President Corazon Aquino under then Agriculture Secretary Carlos
Dominguez which proved to be successful. Reviving and reintroducing the
mechanism will serve the agriculture sector well and efficiently.

2. Administratively, the Department of Agriculture must set up an internal

“pre-audit” service immediately. This is to prevent the large-scale illegal
disbursement of resources and funds earmarked for farmers. Apropos, all
laws, guidelines, rules and regulations, and orders have been put in place

31
pertinent to the institution of an internal audit system; what is needed is its
earnest implementation.

3. A law that would tighten the registration and regulation of foundations,

NGOs, associations and peoples’ organizations must be introduced. In the
case of the fertilizer fund scam, a number of foundations, POs, NGOs and
associations have become agents for money laundering transactions, together
with the National Agricultural and Fisheries Council, a regular attached
agency of the DA.

The nobility and spirit of charity are the hallmarks paving the birth of
foundations, NGOs, POs and associations, which must be emphasized and
embedded in the proposed law.

4. The entire bureaucracy must adhere to the Procurement Law. Former

Budget Secretary Emilia Boncodin and COA (after finding serious
violations in a substantial number of transactions as observed in their
AOMs) recommended that in future procurements, the Department of
Agriculture and the regional field units (RFUs) must ensure compliance with
RA 9184, and obtain the most advantageous price for the government.

5. The committees recommend the total overhauling of the Department of

Agriculture. At present, the department works in such a way as a mafia or
syndicate is operating it. There is a substantial number of projects being
implemented by the Department with huge appropriation but its honest
enforcement is not being seen and most of them are being questioned by
its direct constituents, the farmers, the farmworkers and those in the
agriculture sector.

6. Strong probable criminal culpability is established, hence, criminal and

administrative charges must be filed against:

a. Undersecretary Jocelyn Bolante,

32
 b. Secretary Luis Lorenzo,
c. Undersecretary Ibarra Poliquit,
d. Undersecretary Belinda Gonzales,
e. Assistant Secretary Jose Felix Montes
and
f. all Regional Directors of the Department of Agriculture who
participated in the illegal transactions or dissipation of the Php 728-
million fertilizer fund scam

They must be charged for violating the Law on Plunder and violating the
Anti-Graft and Corrupt Practices Act (Section 3 [e], Republic Act 3019).

In the investigations conducted, from the testimonies of the witnesses who

appeared before the committees and the records of the Commission on
Audit, there appears massive misappropriation, diversion of funds,
malversation of public funds and raids of the farmers’ money. In the case
of Mr. Bolante, testimonies to the effect that he received, directly or
indirectly, commission and percentage of pecuniary benefit from suppliers
in connection with the contracts and transactions pertaining to the fertilizer
fund have been adduced during the public hearings.

The Law on Plunder states, "[a]ny public officer who, by himself or in

connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of
overt or criminal acts as described in Section 1 (d) hereof in the aggregate
amount or total value of at least Fifty million pesos (P50,000,000.00) shall
guilty of the crime of plunder and shall be punished by reclusion perpetua to
death. Any person who participated with the said public officer in the
commission of an offense contributing to the crime of plunder shall likewise
be punished for such offense. In the imposition of penalties, the degree of
participation and the attendance of mitigating and extenuating
circumstances, as provided by the Revised Penal Code, shall be considered

33
by the, court. The court shall declare any and all ill-gotten wealth, and their
interests and other incomes and assets including the properties and shares of
stocks derived from the deposit or investment thereof forfeited in favor of
the State.

The relevant provision of the Anti-Graft and Corrupt Practices Act

specifically violated is Section 3 (e) "[c]ausing any undue injury to any
party, including the Government, or giving any private party any
unwarranted benefits, advantage or preference in the discharge of his official
administrative or judicial functions through manifest partiality, evident bad
faith or gross inexcusable negligence."

Malversation of funds as defined by the Revised Penal Code must likewise

be studied in the case of the several of diversion of funds committed.

7. Evidence submitted by the Commission on Audit, and the affidavits and

sworn testimonies of Antonio Salas and board Member Rebecca Aquino,
statements of Atty. Francisco Chavez and all farmers who appeared before
the committees indicate the involvement of certain local government
officials, including members of the House of Representatives, on the misuse
and abuse of the fertilizer funds purportedly for their own benefit. It is,
therefore, recommended that the Ombudsman together with the Anti-Money
Laundering Council scrutinize the voluminous documents and trace its flow
from the Regional Field Units of the Department of Agriculture to the local
officials and file charges against them, whether elected or appointed, for
violation of the Anti-Graft and Corrupt Practices Act.

A criminal complaint under the same Act and the provisions of the Revised
Penal Code on perjury should be filed against Mr. Jesus Agda, the Provincial
Agricultural Officer of the Province of Eastern Samar on the basis of his
false testimony.

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8. Similarly, the partners, suppliers or subordinates in the private sector
who worked in cahoots with the above-mentioned officials of the
Department of Agriculture who participated in overpricing, supplying
substandard and diluted fertilizers should be charged as co-conspirators
under the Plunder Law and Anti-Graft and Corrupt Practices Act must be
filed. The Ombudsman is advised to check the various records which
would indicate their names and the complete paper trail of their respective
transactions.

Considering the enormous profits these private entities and individuals

amassed, the Bureau of Internal Revenue should likewise investigate these
private entities for possible tax evasion.

9. Although this is the Final Committee Report, the fertilizer fund scam
will never be closed without the testimony of its brains and implementor-
Jocelyn Bolante. Thus, the order of contempt against Jocelyn Bolante must
be enforced. In addition, the following individuals must be held in
contempt:

Secretary Luis Lorenzo

Undersecretary Ibarra Poliquit

The rationale for the enforcement of contempt order against Bolante and the
issuance of contempt against Lorenzo are anchored on their continuous
defiance of the Senate committees.

Four subpoenas and one invitation had been sent to Bolante. An equal
number of subpoenas and invitation had been extended to Lorenzo. Both of
them absconded by leaving for the United States, avoiding the public
hearings for the purpose. The unexplained, hurried flight of both Bolante and
Lorenzo in a number of instances may, as a general rule, be taken as
evidence, having tendency to establish their liability.

35
Flight strongly indicates guilt and betrays the existence of a guilty
conscience. For the wicked fleeth even when no man pursueth, whereas the
righteous are as brave as a lion.36

In the case of Mr. Poliquit, his being Vice President of the GSIS is not
within the contemplation and coverage of Executive Order 464. But
Poliquit sought refuge in the oppressive Executive Order and clothed
himself to be within its ambit and protection. It should be stated that
Poliquit was served four subpoenas and one invitation relevant to the
hearings of the fertilizer mismanagement issue.

10. The Committees recommend that President Gloria Macapagal-Arroyo

must be held accountable in the mismanagement of the fertilizer fund and
take it upon herself to institute measures to correct the flaws in her
administration.

It bears knowing that a number of testimonies adduced during the hearings

were that the fund was indeed used to assure her victory in the 2004
elections. Statements of lawyer Francisco Chavez, the various farmer
organizations led by the Kilusang Magbubukid ng Pilipinas, and the
positive declaration of Secretary Emilia Boncodin that the President may
have knowledge on the Bolante requests for fertilizer funds stand and remain
uncontested in the legislative records.

Cognizant of the presidential immunity and respect accorded to the Chief

Executive, the accusations against her in the fertilizer fund scam is so
serious that it places the position of the Presidency in the balance. The
Palace looks at the issue as a mere political tool. Its refusal to cooperate
violates the spirit of democracy, promotes tyranny and breeds the ground for
instability it has in fact stirred. Failure to disprove the charges, even
resorting to shield those directly responsible for squandering taxpayers'
money, suggest her culpability and involvement in this unforgivable act
36
People v. Orio, 330 SCRA 576 (2000)

36
made against our poor farmers. Her obvious indifference to examine the
matter further and identify the irregularities surrounding the disbursement of
the farmers' fund is equivalent to breach of official duty by nonfeasance37
and inexcusable negligence of sworn obligation. In sum, the same may be
labeled as betrayal of public trust in addition to the violations committed
under the Anti-Graft and Corrupt Practices Act and the Law on Plunder.

Before taking on her official functions, the President makes a symbolic act
before the nation and declares a solemn pledge to the people that the
Constitution requires: "I do solemnly swear (or affirm) that I will faithfully
and conscientiously fulfill my duties as President of the Philippines,
preserve and defend its Constitution, execute its laws, do justice to every
man and consecrate myself to the service of the nation x x x"

With this in mind, the committees urge the President to heed the clarion call
of public service, encapsulated in the dignity of this oft-repeated maxim, that
"a public office is a public trust." The people should be given the
opportunity of seeing the truth in "[t]he State shall maintain honesty and
integrity in the public service and take positive and effective measures
against graft and corruption."

The committees challenge the President to break her silence and put together
the pieces of the unfinished puzzle.

To this date, no effort on her part has been made, no categorical denial was
even heard. But all allegations and testimonies point to her benefiting the
most in an intricate scheme of deception and fraud. Only this much the
committees of the Senate know: that the fertilizer fund was misused. It was
corrupted. It was intended to assure her victory. Mrs. President, could it be
true?

The committees demand the truth. The Filipino farmers deserve no less.
37
Defined as the omission of an act which a person ought to do (Blacks Law Dictionary)

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Epilogue

The history of our race, and each individual's experience, are sown thick
with evidence that a truth is not hard to kill and that a lie told well is
immortal.38

It is unfortunate that the inquiry on the P728-million fertilizer funds has

been tagged as one of the Senate-initiated “destabilization” moves aimed at
unseating President Gloria Macapagal-Arroyo.

Adamant on its position, the Palace, via the dictatorial EO 464, refused to
give the go-signal to Agriculture department officials and others in the
Executive department including those in the government-owned and-
controlled corporations (like Poliquit) to testify in the Senate hearings which
it dubbed as a legislative undertaking “in aid of destabilization.”

Pathetically, it is a political interpretation reflecting the current turmoil

hounding the legitimacy of the incumbent, and disrespectful and insensitive
about the way democratic processes function.

Truth is the only safe ground to stand on. The Senate pursued the inquiry in
search for truth – the hidden facts about public funds distributed shortly
before the 2004 Presidential elections – in aid of legislation, not
destabilization.

Section 7, Article III of the Constitution guarantees the people's right to

information on matters of public concern in this manner:

Sec. 7. The right of the people to information on matters of public

concern shall be recognized. Access to official records, and to
documents, and papers pertaining to official acts, transactions, or
38
Mark Twain, “ Advice to Youth”

38
 decisions, as well as to government research data used as basis for
policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.

The State policy of full transparency in all transactions involving public

interest reinforces the people's right to information on matters of public
concern. This State policy is expressed in Section 28, Article II of the
Constitution:

Sec. 28. Subject to reasonable conditions prescribed by law, the State

adopts and implements a policy of full public disclosure of all its
transactions involving public interest.

In Chavez v. Public Estates Authority, the Supreme Court ruled:

These twin provisions of the Constitution seek to promote

transparency in policy-making and in the operations of the
government, as well as provide the people sufficient information to
exercise effectively other constitutional rights. These twin provisions
are essential to the exercise of freedom of expression. If the
government does not disclose its official acts, transactions and
decisions to citizens, whatever citizens say, even if expressed without
any restraint, will be speculative and amount to nothing. These twin
provisions are also essential to hold public officials at all times x x x
accountable to the people, for unless citizens have the proper
information, they cannot hold public officials accountable for
anything. Armed with the right information, citizens can participate in
public discussions leading to the formulation of government policies
and their effective implementation. An informed citizenry is essential
to the existence and proper functioning of any democracy. As
explained by the Court in Valmonte v. Belmonte, Jr. –

"An essential element of these freedoms is to keep open a continuing

dialogue or process of communication between the government and
the people. It is in the interest of the State that the channels for free

39
 political discussion be maintained to the end that the government may
perceive and be responsive to the people's will. Yet, this open
dialogue can be effective only to the extent that the citizenry is
informed and thus able to formulate its will intelligently. Only when
the participants in the discussion are aware of the issues and have
access to information relating thereto can such bear fruit."39

At the onset, it was emphasized that the inquiry was called to allow the
Senate to separate truth from fiction, either quashing or confirming the
report of the Philippine Center for Investigative Journalism, with the end
view of recommending appropriate measures. The resolution was filed and
the inquiry commenced to honor transparency which is vital to good
governance because public office is a public trust. People deserve the right
to be informed of how effective the government has implemented programs,
such as the “Ginintuang Masaganang Ani Program” or GMA Program
which envisioned a subsidy for farmers in the form of farm implements and
production inputs pursuant to the Agriculture and Fisheries Modernization
Act (AFMA).

Furthermore, it is the constitutional duty of the Senate to exercise its

functions according to its powers, enabling a system of checks and balances
in government. Justice Isagani Cruz emphasized this concept:

What makes the doctrine of separation of powers especially workable

is the corollary system of checks and balances, by means of which one
department is allowed to resist encroachments upon its prerogatives or
to rectify mistakes or excesses committed by the other departments.
The exercise of this authority is not itself an arrogation inasmuch as it
is the Constitution itself that provides for this system of counteraction.
The theory is that the ends of the government are better achieved
through the exercise by its agencies of only the powers assigned to

39
Francisco I. Chavez v. Public Estates Authority, et.al., G.R. No. 133250, July 9, 2002.

40
 them, subject to reversal in proper cases by those constitutionally
authorized.40

To brand the Senate’s quest for truth transparency as part of an orchestrated

destabilization plot smacks of irresponsibility, rooted on an insecure stance
displayed by the current administration due to its lingering crisis of
legitimacy.

Likewise, the premeditated and methodical abuse of the check-and-balance

function of the Senate by Malacanang is chilling, and needs to be stopped.
The absence of remedy to correct the blatant and exploitative acts of the
current administration is severely hurting the country and itself.

The main culprit for the country’s current political woes is the shelving of
truth instead of digging it in order to protect the seat of power which has
long been exposed to be unworthy.

Those who make peaceful revolution impossible will make a violent

revolution inevitable.41

40
Isagani Cruz, Philippine Political Law. Quezon City: Central Lawbook Publishing Co. Inc., 2002, p.7.
41
John F. Kennedy, in speech at the White House, 1962

41