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COA probes P23B gas fund under Arroyo

60 percent released before 2010 elections


The Commission on Audit (COA) is investigating disbursements amounting to P23.6 billion from the Malampaya Fund by the Arroyo administration, 60 percent of which were released during a spending binge before the May 2010 presidential election, the Inquirer has learned.

Then Budget Secretary Rolando Andaya Jr. and his deputy, Undersecretary Mario Relampagos, signed more than 150 statement of allotment release orders (Saros) covering P14 billion between Oct. 21, 2009, and Dec. 29, 2009, ostensibly for victims of Tropical Storm “Ondoy” and Typhoon “Pepeng” and other infrastructure projects.

Andaya, an incumbent Camarines Sur representative, confirmed that the funds were released upon the orders of then President Gloria Macapagal-Arroyo, who is currently on her second term as Pampanga representative, during a series of Cabinet-level meetings, but he maintained that these were all aboveboard.

“Malampaya Law states that releases must be approved by the OP (Office of the President),” he said in a text message.

Arroyo’s spokespersons, Elena Bautista-Horn and Gary Olivar, did not reply to the Inquirer’s repeated requests for comment.

The P23.6 billion being audited by the COA out of the government share in the operation of oil and natural gas fields in Malampaya off Palawan is more than twice the P10-billion pork barrel scam allegedly perpetrated by bogus nongovernment organizations (NGOs) controlled by businesswoman Janet Lim-Napoles.

Malampaya review

The Malampaya review is separate from the COA’s special audit of the P101 billion in soft and hard projects financed from the Priority Development Assistance Fund (PDAF), or pork barrel, of senators and members of the House of Representatives from 2007 to 2009. Results of the audit, released on Friday, showed that a substantial amount of PDAF funds went to bogus Napoles NGOs and ghost projects.

The COA had issued a 2010 report that stated that the government had accumulated P77.1 billion in royalties and fees from the Malampaya Fund as of 2010. That includes the P23.6 billion under investigation.

In a June 27, 2011, memorandum, COA chair Grace Pulido-Tan said: “It has come to the attention of this commission that there were funds released by the Department of Budget and Management (DBM) direct to the different national and local government agencies chargeable against the DOE (Department of Energy)-Malampaya Fund to cover the cost of additional requirements or the various programs and projects implemented by them … from 2006 to Dec. 31, 2010.”

Tan ordered the audit to determine what percentage of the fund was used for purposes other than its avowed objective, the percentage unused and its disposition. The review would also cover procurement and the use of the assets.

The biggest mystery is why the COA has not yet come out with results more than two years after Tan ordered the review.

P900-million DAR scam

The COA inquiry has assumed added significance amid revelations that P900 million from the Malampaya Fund supposedly for victims of Ondoy and Pepeng that ravaged Luzon in 2009 had been diverted to dummy agencies of Napoles.

The National Bureau of Investigation has summoned 97 mayors whose signatures were allegedly faked to secure funding for agricultural kits, purportedly coursed through the Department of Agrarian Reform (DAR), to be used by storm victims in areas covered by the state land-to-the-tiller program.

The NBI inquiry into the Malampaya Fund is part of the larger probe into allegations by six whistle-blowers, all former employees of Napoles, that the businesswoman channeled P10 billion from the PDAF and other state agencies over the past decade to ghost projects.


Based on the COA memo, the recipients of the Malampaya Fund were the Department of Public Works and Highways (DPWH), with P7.073 billion; Department of Agriculture (DA), P5.824 billion; Palawan, P3.958 billion; Department of the Interior and Local Government (DILG), P2.14 billion; Department of Finance-National Housing Authority (DOF-NHA), P1.398 billion; Department of National Defense (DND), P1.198 billion; DAR, P900 million; Department of Health (DOH), P745.926 million; DOE,  P250 million; DBM, P62 million; Department of Transportation and Communications (DOTC)-Philippine Coast Guard, P50 million; and Department of Science and Technology-Philippine Atmospheric, Geophysical and Astronomical Services Administration (DOST-Pagasa), P400,000.

The Inquirer obtained the memo from an employee of one of the agencies that received the Malampaya bonanza. The employee felt that the memo had become relevant given the interest in the P900-million DAR controversy. The complete list showed a wide view of the Malampaya Fund.

Blanket authority

The Malampaya Fund disbursements were staggering in scope—roughly equivalent to one year’s worth of the annual pork barrel of senators and members of the House of Representatives—but highly suspect in their timing and the choices of projects. The fund was originally intended to finance energy-related projects.

Malampaya Fund purpose

Budget Secretary Florencio Abad said the biggest question in the Malampaya Fund releases was whether these were meant for energy and exploration and development.

“That is the principal purpose of the Malampaya Fund. But there is a catch-all phrase to the law: ‘and for such other purpose as the President may deem necessary,’” Abad said.

The official was also clueless on why the COA was dragging its feet on the review. “Why is the COA taking some time? I have no idea but if I may guess, it’s tracing and reconciling documents,” Abad said.

Only three Saros involving the Malampaya Fund were released outside the October to December 2009 period: P4 billion to the DA for the “augmentation of the Agriculture Guarantee Fund Pool and the rice self-sufficiency and other commodity programs” on Nov. 3, 2008; P1 billion for the AFP Modernization Fund on Dec. 4, 2008; and the P3.958 billion total remittances to Palawan that began in 2006.

About P7 billion were for typhoon-related projects—P1.8 billion coursed through the DA; P20 million for Ondoy victims in Botolan, Zambales; the P900 million to the DAR; P400,000 to the DOTC-Pagasa to draw up rehabilitation plans; P1.398 billion to the DOF-NHA for the construction of 6,484 housing units in Rizal; and P2.14 billion to the DILG to augment police emergency response capacity; P745.926 million to the DOH to rebuild the typhoon-damaged state hospitals; and P10 million to the DND for the repair of the Philippine Military Academy’s infrastructure damaged by typhoons.

DPWH share

The DPWH Office of the Secretary got the single biggest allocation in the department’s package—P2.773 billion for roads, highways, bridges and flood-control projects.

The other major allocations in the DPWH portfolio were P551.562 million for the rehabilitation of roads in Pangasinan; P216.250 million for its central office for an unspecified purpose; Laguna, P450 million; Antique, P270 million; Albay, P255 million; Leyte, P235 million; Region I with P207.8 million; Sarangani, P200 million; Quezon, P200 million; Butuan City, P185 million; Zamboanga provinces, P160 million; Misamis provinces, P125 million; Agusan del Norte, P120 million; Western and Northern Samar provinces, P105 million; Iloilo, P100 million; Bukidnon, P90 million; Pampanga, P80 million; Camarines Sur, P76.8 million; Sultan Kudarat, P60 million; Batangas, P50 million; Cebu, P50 million; Cagayan, P48 million; Romblon, P45 million; Aklan, P40 million; North Cotabato, P36 million; Cavite, P30 million; Rizal, P30 million; Metro Manila, P26 million; Surigao del Sur, P10 million; Pangasinan, another P24 million; and Nueva Ecija, P15 million.

Limit Palawan’s share

In December, 2007, Arroyo issued Executive Order No. 683 limiting the share of Palawan from the Camago-Malampaya royalties to 20 percent from 40 percent (pending a court dispute on Palawan’s rightful share) while granting her almost full control of the rest of the oil and gas bonanza.

Some critics claimed that with EO 683, Arroyo turned the Malampaya Fund into her personal pork barrel and bypassed Congress’ power of the purse.

The executive order empowered the DBM to release funds to the implementing agencies on the directive by the Office of the President or written request of the province of Palawan, the Palawan congressional districts or the highly urbanized City of Puerto Princesa; and a certification that the designated projects fall under the investment program of Palawan province, Puerto Princesa, and projects identified in the development program of the national government or its agencies.

Based on the Saros, only the DOE’s P250-million electrification projects for 211 barangays (villages) and the DND’s purchase of a P2.7-million power generator for the Philippine Army were directly related to power.

Environmentalist Gerry Ortega was murdered in January 2011 allegedly for his exposés regarding the misuse of Palawan’s share of the Malampaya Fund.

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Tags: Commission On Audit (COA) , gas fund , Gloria Arroyo , Malampaya fund , Pork barrel

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