MANILA, Philippines – The Department of Budget and Management (DBM) has withheld P8.3 billion for personnel services of the Armed Forces of the Philippines (AFP) for the 2011 fiscal year in the wake of revelations that the military organization has 20 percent phantom personnel.

Budget Secretary Florencio B. Abad gave this information to Sen. Franklin M. Drilon, chairman of the Senate Committee on Finance and chairman of the Budget Committee of the bicameral Commission on Appointments (CA), which met at the Senate building to decide whether or not to confirm him as permanent DBM secretary.

Abad said DBM estimates that the AFP has 129,000 actual troops and 126,000 retirees but the military organization never gave the actual number of personnel supposedly due to national security reasons.

Based on the estimates of Drilon and Abad, the P8.3 billion withheld from the AFP represents 20 percent of the AFP’s P44-billion personnel services (PS) budget.

Asked by Drilon whether the withheld P8.23 billion could be a source of the controversial practice of the AFP converting them into hidden funds for “top-heavy” but secret expenses had it been released, Abad said the DBM is still awaiting the results of the current Senate hearings on alleged corruption in the military establishment.

“We have not gotten the information their (AFP’s) roster (of actual AFP members) as basis in budgeting. We have estimates based on the testimony of (retired Lt.) Col. (George) Rabusa (a former AFP budget officer who revealed widespread corruption at the AFP),” Abad said.

Rabusa had testified that he and other AFP finance officers had collected “unused” or “saved” funds for “pabaon” (retirement send-off money) for retiring AFP chiefs of staff, particularly Generals Angelo T. Reyes, Diomedio Villanueva, and Roy Cimatu.

The total “pabaon” supposedly given to the three former AFP chiefs amounted to P290 million (Reyes –P50 million; Villanueva – P160 million; and Cimatu – P60 million).

Before he died in an apparent suicide Tuesday morning, Reyes vehemently denied the allegations.

Sen. Teofisto L. Guingona III, chairman of the Senate Blue Ribbon Committee which is investigating AFP corruption, earlier told the Manila Bulletin that the Department of the Interior and Local Government (DILG) Secretary Jesse Robredo had informed him that the PNP’s authorized troop ceiling is 120,000 but there are actually only 80,000 warm bodies receiving their salaries.

If each of the 40,000 phantom PNP personnel gets P15,000 a month, the PNP has P7.2 billion that could be converted into its slush fund.

Guingona, however, stressed that the focus of his committee is still on the AFP and would later shift its probe into controversial issues at the PNP.

“There are unfilled positions at the PNP twice that of the Department of National Defense (DND). Our estimated difference (in the PNP troop ceiling as against warm bodies) is P6 billion,” Abad said.

Abad expressed fears that the number of retirees (126,000 at present) and the number of estimated 126,000 AFP personnel would cross by the year 2016.

“This is a crisis waiting to explode,” Abad warned. Drilon had issued the same warning in last year’s hearings on the 2011 budget.

Rep. Roilo Golez, CA vice chairman, said one way of fund conversion at the AFP general headquarters is for the GHQ to skim a little from the budgets of the major services and then impound them, sent them back to the office of the AFP chief of staff.

“This is a practice made possible due to centralized budget system of the AFP,” Golez said.

Golez urged the DBM to allow the AFP to copy the PNP model which was to decentralize its budget system.

Sen. Ralph G. Recto, chairman of the Senate Committee on Ways and Means and former socio-economic planning secretary during the latter part of the Arroyo administration, said the second biggest item at AFP that could be converted into slush funds is the retirement benefits.

“If 20 percent can be skimmed from the PS (personnel services), about P7 billion or 20 percent of P30 billion to P35 billion in retirement funds could be had because until today we do not know the troops in the ground,” Recto said.

Sen. Francis Escudero, chairman of the Senate Committee on National Defense, proposed that the DBM or the DND hire civilian personnel for actual civilian roles and leave the role of fighting the country’s enemies or the lawless to the AFP and the PNP.

This will rationalize the management of government personnel, he added.

Cimatu denies

Meanwhile, Cimatu, the country’s Special Envoy to the Middles East, denied accusations that he pocketed millions of pesos in military funds during his short stint as AFP Chief of Staff.

Ambassador Cimatu arrived at the Ninoy Aquino International Airport (NAIA) late Tuesday evening from Afghanistan aboard an Emirates Airways flight.

Shortly upon his arrival, Cimatu flatly denied he received a welcome nor send-off money as alleged by Rabusa.

“I categorically deny that I received any funds for my personal use or aggrandizement – be this the so-called 'pasalubong' or 'pabaon' or any other guises – from anybody in the AFP,” Cimatu said.

“I will not dignify these allegatoins, nor will I second guess the motivations of those who are coming out with these almost a decade after the fact.”

“All I can say is that I welcome the opportunity to clear the air and I am ready to face any investigation to get to the bottom of these allegations anytime,” Cimatu added.

When asked about the death of Reyes, Cimatu refused to comment on the matter.

‘Irregular’ use of funds

As this developed, government officials told the House of Representatives Wednesday that all the reimbursements and transactions that the Armed Forces of the Philippines (AFP) made using the US$53 million worth of donations coming from the United Nations (UN) since 1997 to 2009 could have been “irregular”.

Maria Soledad Doloiras, an expert from Department of Budget and Management (DBM), said that the military and the Department of Foreign Affairs (DFA) violated Executive Order No. 388 when they made inter-agency transactions in using UN donations since 1997.

“The reimbursements from UN should be deposited to the treasury since it forms part of the receipts of the government with the Executive Order (EO No.) 338,” Doloiras told the House Committee on National Defense in a committee hearing held Wednesday morning.

Saying that financial assistance from outside sources are considered as government funds, Doloiras said DFA should have deposited the annual UN funds to the national treasury under the AFP trust account instead of directly turning over the money to military to maintain annual UN peacekeeping missions.

“All receipts of the government must be deposited with the treasury and if there is a purpose that receipt is given, the agency or the recipient of that receipt should request from DBM the release of such amount,” Doloiras told lawmakers.

Rizalina Mutia, the director of Commission of Audit (CoA) on military cluster, disclosed that the audit agency reminded DFA to transfer all UN money back to the national treasury instead of depositing the multi-billion amount directly to military accounts in Landbank and United Coconut Planters’ Bank.

Citing a letter from then CoA Chairman Guillermo Carague in 2006, Mutia said they also warned that “the practice of releasing UN reimbursement directly to the AFP instead to the national treasury is not in accordance with existing accounting and auditing procedures.”

“The DFA should call the direct releases of UN releases to the national treasury pursuant to Executive Order No. 388 (of 1996). So, despite this letter of the chairman, the amounts have been continuously remitted to these accounts,” the government auditor noted.

Mutia said that money donations, which the UN replenishes annually amounting to US$53 million since 1997 to 2009, are meant to address the personnel, major equipment and provision, as well as self-sustaining goods and services of UN Peacekeeping forces in various countries like Haiti and Liberia.

Foreign Affairs official Leslie Gatan said the Philippines has been receiving annual funds from the UN to send peacekeeping forces in distressed countries because of the general provisions of the Geneva Convention.

Elmer Cato, the special assistant to the Office of the Undersecretary for Administration, said hey only allowed remittance of UN fund directly to the military upon learning that operations of the Philippine military contingent to UN peacekeeping missions would be compromised.

Cato and AFP Vice Chief of Staff Lt. Gen. Reynaldo Mapagu, however, failed to cite formal documents that authorized them to do so. (With a report from Rio Rose Ribaya)