Recital of Facts on the NBN-ZTE Contract and Northrail Project

By Rep. Teddy Casiño
Delivered before the House Committee on Justice on its deliberations of the impeachment complaint vs. Pres. Gloria Macapagal-Arroyo
November 24, 2008


Mr. Chairman, my distinguished colleagues.

Former speaker Jose de Vencia has given a substantial account of the facts of the President’s knowledge and involvement in the anomalous NBN-ZTE contract. May I just be allowed to add a few more facts.

A few months after the infamous golf game between the former speaker, the President, COMELEC Chair Benjamin Abalos and ZTE officials, the President, through NEDA which she herself chairs, and the DOTC which is under the Executive, approved the ZTE’s proposal for a government to government contract. From a BOT project before the golf game, it became a government to government contract. Wala hong public bidding, lumobo na ang presyo ng ilang beses sa original proposal, at may mga lantarang paglabag sa ating procurement laws.

I would like to cite a ruling by the Supreme Court in Villena vs. Secretary of Interior and I quote:

“…the multifarious executive the multifarious executive and administrative functions of the Chief Executive are performed by and through the executive departments, and the acts of the secretaries of such departments performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive presumptively the acts of the President.”

Pero hindi lang ho ang pagpirma ni Pangulong Arroyo sa pamamagitan ng kanyang mga opisyal at bilang chair ng NEDA at NEDA-ICC ang nirereklamo ng mga complainants. Higit pa dito, nirereklamo din ng mga complainants na tumanggap ng suhol ang Pangulo. Ang suhol o bribe ay nagre-range sa golf game, na malamang binayaran ng ZTE, hanggang sa mamahaling lunch. Ito rin ang laman ng affidavit at testimony ni Jose de Venecia Jr. sa Senado kung saan sinabi niyang narinig niya si Chairman Abalos na humihingi ng pera sa mga ZTE officials na “the President and the Speaker are waiting for it.”

The most glaring evidence of wrongdoing was the testimony of former NEDA Chief Romulo Neri who admitted being offered a P200 million bribe by COMELEC Chair Abalos, the President’s golfing buddy. After being informed of this, wala hong nangyari. The President did not stop the project. In fact, in April 21, 2007, si GMA mismo ang pumunta sa China para i-witness ang pirmahan ng supply contract. Pinagyayabang pa ito mismo ng Malacanang. Sa isang press release na may title “So much investments, so little time for PGMA in China,” sinabi ng Malacanang press office sa lead paragraph, and may I quote, “She came and went like a thief in the night bringing with her an avalanche of Chinese investments to the tune of $904.38 million.”

Yung mga nagsusulat ng press release sa Malacanang mismo ang nagsabing parang isang magnanakaw sa dilim na pumunta si GMA sa China, which shows us that Malacanang still has hope because some people there can still say the truth.

The President later admitted to the media that she knew of the irregularity but could do nothing for lack of time. Oh come on. What a lame excuse. Worse, she even used executive privilege to prevent the Senate from asking Sec. Neri further about it and even risked a constitutional crisis just to cover up the anomalies.

Thus, the complainants believe that the President committed betrayal of public trust, culpable violation of the Constitution, graft and corruption and bribery in relation to the NBN-ZTE contract.

Now Mr. Chair, allow me to proceed to the precursor of the NBN-ZTE contract which is the Northrail project. We have heard it said that the Chinese businessmen in the NBN-ZTE deal insisted they wanted a “Northrail-type contract.” This shows that Northrail was a template for future projects, namely the NBN-ZTE deal and Cyber Education Project which was discontinued after much public opposition.

Kapag kinumpara po natin ang NBN-ZTE at Northrail, mapapansin ang ilang matingkad na pagkakapareho:

1. Ang lalaki ng kontrata, bilyun-bilyon ang halaga ng proyekto: $329.5M (P15.8B) para sa NBN-ZTE, $503M (P24.1B) para sa Northrail.
2. Sa parehong proyekto, isa ang panggagalingan ng pondo na uutangin ng gobyerno at babayaran natin: ang China Export Import Bank.
3. Sa parehong proyekto, China ang nag-assign ng contractor na sa kanila rin galling – ZTE para sa NBN at CNMEC para sa Northrail
4. Sa kabila ng napakaliking perang involved, parehong walang public bidding ang proyekto dahil daw ito’y executive agreement sa pagitan ng gobyerno ng China at Pilipinas.
5. Sa pareho ring proyekto, hindi kinuha ng Malacanang ang approval ng Monetary Board bago ito umutang.
6. Sa parehong proyekto, walang Certificate of the Availability of Funds na required para sa counterpart funds ng gobyerno.
7. At pinakamahalaga, sa parehong maanomalyang proyekto, bakas na bakas ang kamay ng Pangulong Arroyo.

Ang sabi ho nila, delikadong masagasaan ng tren. Matapos ko pong pag-aralan ang mga dokumento ng Northrail, naisip ko hong mas delikado palang masagasaan ng isang drawing na tren katulad ng Northrail, na ngayon ay buo-buong komunidad ang sinasagasaan at bilyon-bilyon ang nalulustay.

Ladies ang gentlemen, allow me to present to you the facts about the President’s impeacheable acts relating to the Northrail Project.

The complainants allege that the respondent, President Gloria Macapagal-Arroyo, committed culpable violation of the Constitution and graft and corruption by entering into contracts that violated the Constitution, were violative of several laws and grossly disadvantageous to the government.

Nilabag ni Pangulong Arroyo ang Konstitusyon at gumawa ng graft and corruption sa pagpasok sa mga kontratang lumabag sa Konstitusyon, labag sa iba pang mga batas, at dehado sa gobyerno.

Bakit po natin ito sinasabi? What are the facts?

Ang Northrail ay nakapaloob sa mga priority projects ng Pangulo mula pa noong 2001. Noong September 14, 2002, isang Memorandum of Understanding ang pinirmahan ng North Luzon Railways Corp. (NLRC), na pinangangasiwaan ng Office of the President, at ng China National Machinery and Equipment Corp. (CENMEC), para sa updating ng feasibility study at upang ilakip ang ilang instruksyon ng Pangulo kaugnay ng proyekto.

Matapos ang isang taon, Disyembre 2003, inaprubahan ng Board ng National Economic Development Authority at NEDA-Investments Coordinating Committee (NEDA-ICC), na kapwa pinamumunuan ni Pres. Arroyo bilang chairperson, ang proyekto batay sa proposal ng CENMEC para sa Northrail Phase 1 Section 1 (Caloocan to Malolos). Wala pang isang buwan, Disyembre 30, na-execute na ang supply contract sa CENMEC na nagging epektibo noong July 23, 2004.

Bago nito, noong Pebreo 26, 2004, pinirmahan naman nina Finance Sec. Juanita Amatong at ni Eximbank of China Chair and President Yang Zijin ang kasunduan para sa isang $400 milyong loan para pondohan ang proyekto. Ang Buyer Credit Loan Agreement No. 04555 ay pinirmahan sa mismong Premier Guest House ng Malacanang. Sa seremonyas na iyon, ipinagyabang ni Executive Secretary Alberto Romulo na ang Northrail project ay “a very important landmark in the ‘many-splendored’ performance of President Gloria Macapagal-Arroyo.”

Sabi pa ni Romulo, “It has been the desire of President Macapagal-Arroyo to fast track the railway program.”

Ang kasundunang ito kaugnay ng $400 million utang ay muling ipinagtibay noong state visit ni Pangulong Arroyo sa China noong Setyembre 2004. Siya mismo at ang kanyang secretary of Trade and Industry Cesar Purisima ang nag-witness sa mga pinirmahang dokumento.

Samakatuwid, dalawang kontrata o kasunduan ang ating pinopokusan dito, mga kontratang pinirmahan ng mga alter-ego ng Pangulo bilang pagtupad sa kaniyang mga utos at patakaran: 1) Ang supply contract sa pagitan ng NLRC at CENMEC kaugnay ng 32.2 kilometrong Northrail Phase 1, Section 1 mula Caloocan hanggang Malolos; at 2) Ang kasunduan kaugnay ng $400 milyong utang ng gobyerno sa Eximbank of China para pondohan ang nasabing proyekto ng NLRC at CENMEC. Ang pagpasok sa mga kontratang ito ng kaniyang mga alter-ego ay hindi itinatwa ng Pangulo hanggang sa kasalukuyan.

Ngayon, ano ang problema ng mga kontrata at kasunduang ito?

1. Walang prior concurrence ng Monetary Board ang $400 million loan agreement na pinirmahan ng Executive at ng Eximbank of China, labag sa Sec. 20, Article VII ng Konstitusyon.

Ayon sa Section 20, Article VII ng Constitution: The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law.”

Sa kasong ito, si Pangulong Arroyo ay hindi kumuha ng pagsang-ayon ng Monetary Board bago pirmahan, sa pamamagitan ng kanyang Sec. of Finance, ang loan agreement BCLA No. 04555.

2. Hindi dumaan sa competitive bidding ang proyekto alinsunod sa RA 9184 o ang Government Procurement Reform Act.

Sa kabila ng napakalaking halaga ng proyekto, P24.1 bilyon, hindi idinaan sa competitive bidding ang kontrata. Ang dahilan ng hindi pagsunod sa probisyong ito ng batas ay dahil daw ang proyekto ay isang kasunduan sa pagitan ng dalawang gobyerno. Subalit may ruling na ang Makati Regional Trial Court noong May 15, 2007, na ipinagtibay ng Court of Appeals nito lamang September 30, 2008, na ang kontrata ay hindi isang executive agreement o tratado, at kung gayon ay subject sa ating mga batas.

Sa mismong $400 million loan agreement sa Eximbank of China, nakasaad doon na ang proyekto ay ibibigay sa Chinese firm na CENMEC bilang prime contractor, kayat ayos na ang butu-buto, wala na talagang bidding na isinagawa.

Ito mismo ang kinumprima ng Commission on Audit sa kanilang 2007 report na inilabas noong Pebrero 2008.

3. Ang kontrata ay hindi alinsunod sa Government Auditing Code and the Administrative Code of 1987 na nagre-require ng certification na may necessary and available appropriation ang mga kontratang pinapasok ng gobyerno.

Ang bagay na ito ay una nang isiniwalat ng UP Law Center sa kanilang pag-aaral ng kontrata noong 2005 at kinumpirma sa latest COA Audit Report 2007. Ayon sa COA, ang P86.9 million government counterpart sa Phase 1, Sec. 1 ng Northrail project ay walang Certificate of Availability of Funds (CAF) na labag sa Sec. 86 ng Presidential Decree 1445 na nagsasaad na: “No contract involving the expenditure of public funds by any government agency shall be entered into or authorized unless the proper accounting officials of the agency concerned shall have certified to the officer entering into the obligation that funds have been duly appropriated for the purpose,”

4. Ang dalawang kontrata ay naglalaman ng mga probisyon na “manifestly and grossly disadvantageous to the government” labag sa Sec. 3(g) ng Republic Act 3019 o ang Anti Graft and Corrupt Practices Act:

Batay sa magkakahiwalay na mga pag-aaral at imbestigasyon ng UP Law Center, Commission on Audit, at Senate bilang Committee of the Whole:




To conclude, Mr. Chair, when the President assumed office in 2001 and again in 2004, she made an oath to preserve and defend the Constitution, execute its laws, do justice to every man. Yan po ang Art. VII, Sec. 5 ng Konstitusyon. Ito pong sinumpaang tungkulin ang siyang nilabag ng Presidente sa kasong ito.

The complainants believe that President Gloria Macapagal-Arroyo, committed culpable violation of the Constitution and graft and corruption by entering into contracts that violated the Constitution, were violative of several laws and grossly disadvantageous to the government.

Earlier, former Speaker de Venecia appealed to the conscience of our colleagues. May I also appeal to their sense of dignity and honor as members of the House and leaders of our nation to hold the highest official of the land accountable for her wrongdoings.

Thank you, Mr. Chair.###

"NO" Vote to the Approval of 2009 General Appropriations Act

Explanation of 'NO' Vote to the Approval of 2009 General Appropriations Act

By Rep. Teodoro A. Casiño
November 11, 2008

Mr. Speaker, when we started the plenary debates on the budget, I remember that we spent at least five hours debating on the macroeconomic provision. And the reason for that, Mr. Speaker, is that, the budget was formulated without considering the global crisis that exploded around September of this year. And because of that, we wanted –we needed to debate the macroeconomic provisions because we needed to rework the budget to make the budget more responsive to the global crisis; to reduce the budget or if that was not possible, then, to rechannel the budget to the items that needed it, that needed increases in this budget given the impending crisis in the Philippines economy brought about by external developments.

After more tan five hours, Mr. Speaker, it appears that the committee did not take into consideration these very urgent points. And we still have the budget as it is, basically, originally proposed, more than P1.4 trillion in budget.

Mr. Speaker, specially, we wanted a reduction in debt service, specifically on unjust or illegitimate debt because a fourth of the budget or more than half of all expenditures, if we include the principal, went to this budget alone.

We wanted a reduction in the discretionary funds, otherwise know as the pork barrel, both the presidential and the legislative kind; and it was already mentioned like the Kilos Asenso program, Kalayaan sa Barangay, the two-billion Reforestation program. These are discretionary funds which are basically political in nature-political finds.

We wanted a reduction in intelligence and confidential funds, including the 650-million peso intelligence funds under the Office of the President, reduction in defense spending. On the other hand, we wanted increases, significant, substantial increases in the budgets of education, health, housing, social services. Increases in the budgets economic services and a reprioritization of infrastructure projects, not only as pump priming, but more importantly infrastructure to spur national industrialization, food security, and modernization in the agricultural sector.

We wanted an increase in the budget of Public Attorney’s Office, for example, in order to implement the law that we passed last Congress.

Sadly, Mr. Speaker, political considerations have once again hijacked the budget. Sinabi na namin noon na iyong P1.4 trillion budget is unrealistic, hindi ito nag-re-reflect ng tunay na kakayanan ng economy. This will result in a bigger debt burden years from now. And the budget- this kind of a budget, in this kind of a crisis situation, will be used basically to fund the political interest of the Arroyo administration for the 2010 elections.

Therefore, Mr. Speaker, I vote no to this budget. Thank You.