05 January 2012

In a Resolution promulgated today, the Panel of Prosecutors created by virtue of Department of Justice Order No. 305, s. 2011, found probable cause to charge high-ranking officials (past and present) of the Armed Forces of the Philippines (AFP) and their civilian co-conspirators for Plunder, as defined and penalized by Republic Act No. 7080.

The case was filed by Colonel GEORGE ABONITA RABUSA in behalf of the Filipino people, and in his capacity as former Budget Officer of the Office of the Deputy Chief of Staff for Intelligence, J2 ("OJ2"), a position which he held from 1994 to 1998, and of the Office of the Deputy Chief of Staff for Comptrollership, J6 ("OJ6") from January 6, 2000 to July 16, 2002. Rabusa alleged that, by reason of such posts he held in the AFP, he acquired personal knowledge of the "rampant irregularities in the military establishment," perpetrated by members of the so-called "comptrollership mafia".

Rabusa claimed that respondents, as public officers and officers of the AFP, accumulated ill-gotten wealth through misappropriation, conversion, misuse or malversation of public funds amounting to more than P50 Million pesos, by taking undue advantage of their official position and their resulting control over AFP funds to unjustly enrich themselves at the expense, and to the damage of the Filipino people and the Republic of the Philippines.

Plunder was claimed and found to have been committed through a series of overt criminal acts, following a scheme whereby funds of the AFP were converted through the collusion of key officials of the AFP. Col. Rabusa explained three (3) aspects of this scheme:

i. Conversion of funds in the Office of the Chief of Staff through the Office of the Deputy Chief of Staff for Comptrollership using the Intelligence Service of the Armed Forces of the Philippines (ISAFP, "OJ7") and the Office of the Deputy Chief of Staff for Intelligence ("OJ2"). Complainant Rabusa claims that respondents, in collusion with one another, have been converting commercial vouchers into cash. The converted cash sourced from Comptroller/SDO ISAFP, intended by law to be used for Intel Projects, are thereafter used to pay monthly cash incentives, administrative-related expenses and other expenditures incurred in the OJ2, and were also being diverted to personal use by some of the respondents and even "for personal requirement of (the late) General Angelo Reyes."

ii. Conversion through the so-called "Operating Program and Budget" ("OPB") and "Provisions for Control Directed Activities" ("PCDA"). Rabusa explained that the OPB is the document on which the yearly implementation of the General Appropriations Act (GAA) is based. A line item, called the PCDA (also referred to as "slush fund"), was inserted into the OPB, the funds of which were sourced from allocations contributed by all the J staffs of the AFP. When such contributions are insufficient, the slush fund is augmented - from the contributions from the three (3) major services of the AFP, namely the Army, Navy and Air Force.

According to complainant, there is no legal basis for the PCDA and that it was created by, and irrtemal to, the AFP-GHQ to I accommodate programs, projects and activities (official or unofficial) that the AFP leadership wants to accomplish during his term.

Hence, in essence, a form of discretionary funds of the OCSAFP was created and maintained by the misappropriation of another approved expense class and by the conversion of funds to cash using intelligence projects. Stated otherwise, funds which have been allotted for a certain purpose is instead misapplied for the personal use of the CSAFP.

During the time of Respondent Villanueva as Chief of Staff, he added to the funds under his control the Operational Enhancement Funds, Special Operations and East Timor Funds.

iii. The "Retum to Sender" ("RTS") Process. Complainant explained that the RTS is the system by which AFP funds are converted, misused and malversed. The fund would be converted to cash for a fee (or "conversion cost" at the rate of between 15% to 20% or depending on the share agreed upon by the parties) through procurement offices. The converted amount would be returned to the sender, less the conversion rate. So-called "ghost deliveries", among others, are also a manner by which this scheme was perpetrated.

The DOJ Panel of prosecutors found a semblance of truth in Col. Rabusa’s illustration of the "rampant irregularities in the AFP." Most, if not all, of the respondents admitted to the existence and use of the OPB as a way to implement the lump-sum appropriations made by the Philippine Congress of the AFP Budget. In fact, one of the respondents, BGen. De Leon, actually affirmed the existence of the scheme illustrated by the complainant, as demonstrated by his admission that he indeed received the amount of P10 Million from him as additional support of the CSAFP.

Hence, the Panel found probable cause to believe that it was through the realignment of the GAA, using the OPB and PCDA scheme, that respondents were able to convert AFP funds to purposes that are different from their original allotment, some of which were funneled to personal or unofficial uses.

Based on an examination of the scheme, illustrated by the Complainant, it appears that the malversation and/or conversion of the AFP’s funds would not have been possible without the complicity and/or concurrence of the Deputy Chief of Staff for Comptrollership who, along with complainant, formed the "central bank of the AFP." Neither would have the process been successful and maintained for such a long time without the auspices and/or approval of the respective auditors of the ISAFP and OJ7. In any case, the Panel found unfathomable how a mere Colonel like the complainant would have been able to produce huge amounts, absent the existence of the scheme he illustrated.

Hence, the following are recommended to be charged with the crime of Plunder:

1. Major General CARLOS F. GARCIA (Ret.) who, in his capacity as AFP Deputy Chief of Staff for Comptrollership, J6, commenced the process of the RTS conversion through his issuance of allotment advice. He, likewise, prepared the OPB where the PCDA was inserted to become source of "slush funds" coming from contributions from J staffs and other major units/services, and signed the PCDA status report that complainant regularly prepared, thereby indicating his knowledge and assent thereto. Further, in cases involving higher officials, it was respondent Garcia who dealt with them, as Complainant Rabusa’s dealings were merely limited to the alleged bagmen ofthe CSAFP.

Though Respondent Garcia claimed the defenselof double jeopardy, he failed to establish that the instant case and the Ombudsman/Sandiganbayan case subjected to plea bargaining are based on the same facts and circumstances.

2. Major General JACINTO LIGOT (Ret.) who, in his capacity as J6 during the transactions mentioned, is similarly liable as Respondent Garcia. Further, he was also involved in the purchase of 105 Howitzer Ammunition from Thailand wherein no bidding was held and no govemment contract was executed. Criminal liability attached to him, he being the J6 who decides on the propriety of financial transactions in the AFP.

Though the Panel noted the pendency of a criminal case against Ligot in the Office of the Ombudsman, there is yet no showing that the instant case involves similar facts and circumstances as said case.

3. BGen. BENITO ANTONIO DE LEON validated the existence of the RTS system and the PCDA through his admission that he indeed received from the complainant the amount of P10 Million in at least four instances. With his binding admission, coupled with his knowledge of the inner systems of the Office of the Comptroller, he being a "seasoned comptroller," probable cause was found to hold him for trial for the crime of Plunder.


5. Lt. Col. ERNESTO PARANIS (Ret.)

The participation of Respondent Donato, as the Budget Officer/Comptroller of ISAFP, and of Respondent Paranis as the CO of the Finance Service Unit of ISAFP were found to have been essential in facilitating the conversion scheme in the AFP. Donato would, among others, request for cash allocation from the OJ6 and Paranis would then prepare checks for cash advance under the RTS scheme.

6. GENEROSO DEL CASTILLO, in his capacity as Chief of the Accounting Division of the OJ6 during the time of Gen. Reyes, Gen. Villanueva and Gen. Cimatu, is held to have acted in complicity with the AFP officials as his approval of the subject transactions gave rise to its eventual validation and perpetuation. His "consent" appeared to have been predicated on his share of 1% in the "conversion cost/rate" allotted to the ISAFP. He likewise received 2% of the conversion rate allotted to the OJ7 (Civil Military Operations). He allegedly amassed and accumulated the total amount of P66,259,700 from the coffers of the AFP funds

7. DIVINA CABRERA, in her capacity as resident auditor of ISAFP for 13 years, which in itself is a blatant violation of Commission on Audit Rules and Regulations, provided indispensable cooperation in that it would have been impossible for her not have monitored releases over and above the regular ISAFP budget, as the SDO of ISAFP would not have been able to continue making cash advances if he had accumulated huge accountabilities. It appears that, in exchange for a monthly support of P50,000 to P75,000 a month, as well as part of the 10% conversion cost in ISAFP, she ensured the validation and perpetuation of the scheme in her capacity as Resident Auditor.

8. Former Chief of Staff Gen. DIOMEDIO VILLANUEVA (Ret.) received from complainant, through respondent Atendido, an estimated total of P62 Million of converted funds, guised as OCSAFP support pursuant to PCDA. He also received an average of P5 Million a month which he then used for his travels, domestic and international, official and unofficial. He also knew of, and made use of, the AFP’s rented house in Acropolis Village in Quezon City, the rental for which (P120,000/month) was paid from the PCDA. He was also involved in the anomalous purchase of the Unmanned Aerial Vehicle (UAV) by the AFP which did not pass through the normal bidding and/or acquisition process. It was established that $2Million was paid for the demonstration units of the UAV sourced through converted funds, through the joint orchestration by Villanueva, the late General Reyes, respondents Cimatu, Garcia and complainant Villanueva was also a recipient of P160 Million "pabaon" upon his retirement as CSAFP, which amount was never denied to have been produced by Complainant.

9. Maj. Gen. HILARIO ATENDIDO (Ret.) is also being charged for l his participation as "bagman" or "money bag" of respondent Villanueva, and for also having received P10 Million during the last three months of respondent Villanueva’s term.

10. Former Chief of Staff Gen. ROY CIMATU (Ret.) admits the existence of the OPB/PCDA, though he argues that such is not "cash" but "fund." Precisely, it is Complainant’s allegation that the "fund" was converted into cash and used to provide for the "regular monthly allocation/utilization" for the CSAFP and OCSAFP.

11. Col. ROY DEVESA (PA), former Executive Assistant to the late CSAFP Gen. Reyes, is also being charged for his participation as "bag man" for the late General, and with whom the Complainant had direct contact. All in all, he is alleged to have received about P150 Million of converted funds, about P75 Million of which was for his other expenses, i.e., official and unofficial travels.


As for the other eleven respondents, namely, Lt. Gen. GAUDENCIO PANGILINAN, Maj. Gen. EPINETO LOGICO (Ret.), Capt. KENNETH PAGLINAWAN (PN), Gen. EFREN ABU (Ret.), Col. GILBERT GAPAY (PA), Maj. EMERSON ANGULO (PA), Maj. Gen. ERNESTO BOAC (Ret.), Col. ROBERT AREVALO, ARTURO BESANA, CRISANTO GABRIEL and MANUEL WARREN, they are not recommended to be charged with the crime of Plunder "for insufficiency of evidence."

In accordance with DOJ Department Circular No. 26, s. 2008, and conformably with the ruling of the Supreme Court in the case of Honasan v. DOJ Panel of Investigating Prosecutors and with Seciton 4, Rule 112 of the Revised Rules on Criminal Procedure, the resolution of the DOJ Panel, along with the entire records of the case, will be forwarded to the Office of the Ombudsman for approval and/or appropriate action, in light of the fact that the charge of Plunder is a case cognizable by the Sandiganbayan.

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