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Should my NGO go on a “pork barrel diet”? The case of the Priority

Development Assistance Fund in the Philippines

Article  in  Emerald Emerging Markets Case Studies · November 2014

DOI: 10.1108/EEMCS-03-2014-0063

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Should my NGO go on a “pork barrel
diet”? The case of the Priority
Development Assistance Fund in the
Philippines
Ronald Umali Mendoza, Manuel De Vera and Charles Siriban
Ronald Umali Mendoza is
an Associate Professor of
Economics,
Manuel De Vera is an
Associate Professor and
Charles Siriban is a
Research Associate are
all based at Asian
Institute of Management,
Makati City, Philippines.
Disclaimer. This case is written
solely for educational
purposes and is not intended
to represent successful or
unsuccessful managerial
decision making. The author/s
may have disguised names;
financial and other
recognizable information to
protect confidentiality.
DOI 10.1108/EEMCS-03-2014-0063
1. Introduction
Mrs Maribeth Ocampo heads an NGO which provides assistance to farmers in provinces
in the Bicol region through programs and projects related to farming skills and training
(targeted at female farmers). The NGO also has different initiatives to discover and
enhance income sources for farmers and their households, so that they diversify their
income, particularly during the lean season and to buffer them against climatic shocks
(such as the typhoons that regularly hit the Bicol region). Expenses associated with these
projects and programs include the costs of the training sessions (e.g. the cost of session
kits and the honoraria paid for resource people) and financial assistance (typically in the
form of grants) that are provided to the female farmers to start their ventures.
In the past, Mrs Ocampo and her NGO, Kapit-bisig para sa Kinabukasan (roughly
translated, “Joined Arms Working for the Future”), mobilized resources for the programs by
tapping the PDAF of their local congresswoman, who was happy to support Mrs Ocampo’s
NGO because of its strong development impact, notably on the productivity of women
farmers in the area. However, their local congresswoman lost in the May 2013 elections and
she was replaced by a new congressman whose reputation for corruption precedes him.
Just as Mrs Ocampo was thinking of reassessing the NGO’s strategy for partnership with
its local legislator, events that unfolded recently have cast doubts on the accountability and
transparency of the legislators’ PDAF. Some media reports released recently indicated the
existence of commissions that NGOs must allegedly pay to the legislators in exchange for
their access to the said funds. In addition, a recently exposed scam involved the creation
of bogus NGOs that allegedly served as conduits through which legislators could take
advantage of their PDAF allocations.
Mrs Ocampo needs to decide whether (and to what extent) to engage with legislators to tap
the pork barrel funds. She also needs to address this question: “Moving forward, what is the
position of my NGO (and more broadly that of all reputable NGOs) on pork barrel funds?”
2. Pork barrel politics
Some scholars track the term “pork barrel” to the practice in the USA during the period
before its Civil War of giving slaves a barrel of salted pork as a handout or reward (Evans,
2004). In modern times, the term “pork barrel” has been used to characterize government
appropriations for local projects meant primarily to channel resources to a government
official’s political jurisdiction. This would be the case, for example, if a member of a
parliament successfully lobbied for public spending on a project that directly benefited his
VOL. 4 NO. 7 2014, pp. 1-19, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
 or her constituency. The term itself has taken on a derogatory meaning in many democratic
countries, as these appropriations are seen to be done to benefit a politician’s constituents
in exchange for their political support, either in the form of votes or campaign contributions.
In many contexts, the direct control and discretion of the politician (often coupled with
opaque tracking of where exactly the funds are channeled) leads to opportunities for abuse
and corruption (Shepsle and Weingast, 1981).
Pork barrel politics in the Philippines had their origins during the American colonial era,
when a public works act (Act No. 3,044) was passed by the Philippine legislature in 1922,
which divided public works projects into two:

1. the first group (whose infrastructure items included national buildings, provincial roads
and bridges) which was under the jurisdiction of the director of public works; and
2. the second group (which included piers, wharves, school buildings and other types of
roads) placed under the jurisdiction of the secretary of commerce and
communications.
The latter group is said to be the prototype of the modern-day pork barrel scheme as the
Senate and the House of Representatives (via a joint committee composed of selected
members from the two chambers) was given power to approve the allocation of funds to
infrastructure items by the commerce and communications secretary (Chua and Cruz,
2007). The said portion of the public works budget was initially allocated in the form of a
lump sum until revisions were made by the Congress of the Philippines in the 1950s, which
allowed the legislators to specify the projects that would be included, and to segregate the
items under the said category from other infrastructure items (Parreno, 1998).
The Martial Law period put an end to the scheme, but the latter part of the Marcos
administration saw the inclusion of Support for Local Development Projects (SLDP) in the
annual national budget, in which each member of the National Assembly received 500,000
pesos to be allocated on “hard” (infrastructure-type) and “soft” projects (which included
scholarships and medical items) (Chua and Cruz, 2007). The pre-Martial Law pork barrel
scheme has returned since the fall of the Marcos administration and since then, changes
have occurred in aspects of it, such as the amount allocated to each legislator, and the
range of items covered by the said funding scheme. (See Box 1 for further details.)
Some journalists have noted that previous presidents have used the pork barrel as a
political tool, particularly when pushing for the approval of certain priority measures[1].
Pork barrel politics also exist in other democracies, for example, in Japan where members
of the National Diet (the Japanese parliament), representing a certain prefecture or
constituency cooperate in serving as intermediaries between the national government and
their local constituencies with regard to the latter’s request for national funding of local
projects (Fukui and Fukai, 1996). India has implemented its own version of the PDAF, the
Member of Parliament Local Area Development Scheme (MPLADS), which was introduced
by the Congress Party in 1993. An initial amount of ten million rupees was allocated for each
parliamentary constituency, which was doubled in 1998 (Keefer and Khemani, 2009).
Researchers have also looked into the impact of the pork barrel scheme on other
democracies, such as the study by Professor Ames (1995) of the University of Pittsburgh
into the case of Brazil, which found evidence that related the receipt of pork barrel funds
to a deputy’s vote on whether to delegate further power to the executive branch in the 1988
Constituent Assembly.
Some studies have also noted the inadequacy of pork barrel projects in some cases to
improve the overall quality of infrastructure, as has been the case in Japan[2], while a study
by Keefer and Kheemani (2009) of the World Bank found evidence in the case of India
which suggests that legislators tend to spend less on pork barrel projects in constituencies
that are strongholds of certain political parties, indicating a possible relationship between
pork barrel spending and constituents’ attachments to certain political parties.

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

 Box 1 Pork barrel politics during the post-Marcos era
(Corazon) Aquino administration: The Mindanao Development Fund (MDF) and the Visayas
Development Fund (VDF) were introduced which were intended to be used to minimize
intra-regional gaps. Ten million pesos were allocated to each legislator from Visayas and
Mindanao to implement projects. The fund scheme, however, was expanded later on and
renamed as the Countrywide Development Fund (CDF) which covered all electoral districts, after
legislators from Luzon lobbied for a share of the funds. In 1992, the General Appropriations Act
(GAA) adopted a provision that aimed to allocate equal amounts to each member of the Congress
(PhP 12.5 million for each congressman and PhP 18 million for each senator) and projects that
could be covered by a legislator’s CDF ranged from “hard” ones (infrastructures) to “soft” ones
(such as textbooks, medical supplies and scholarships).

Ramos administration: Congressional allocations during this period expanded to include special
purpose funds such as the “special purpose” School building Fund (from which each legislator
was entitled to an allocation of PhP 4.5 million per year), the Public Works Fund (allocation of PhP
30 million for each legislator), the El Niño Fund and the Poverty Alleviation Fund. Each legislator
was also entitled to at least PhP 15 million of Congressional Initiative Allocations (CIAs) which are
budgetary items included in allocations to different government agencies in which legislators have
discretion over the disbursement.

Estrada administration: In his first year in office, President Estrada proposed to remove the CDF
from the national budget, while the Schoolbuilding Fund and the CIAs were retained by the
administration. Further, the administration created the Rural/Urban Development Infrastructure
Program Fund (RUDIPF) in which each congressman was entitled to receive PhP 30 million to be
used for hard projects. Later on, the PhP 2.5 billion Lingap para sa Mahirap fund was created,
which was intended to be used to finance projects such as assistance packages for poor families,
livelihood development, rural waterworks and price support for certain agricultural commodities
(particularly, rice and corn), among other things. In this case, legislators were able to control
two-thirds of the fund for their soft projects. It was in the latter part of the Estrada administration
that the PDAF was created.

Arroyo administration: Congressmen and senators were given significant discretion with regard to
the identification of projects under their respective PDAF allocation, so long as the projects funded
were in accordance with the “Ten-Point Policy Agenda” of the administration. Legislators were also
given an allocation from the infrastructure budget of the Department of Public Works and
Highways (DPWH). In 2010, the total lump sum allocation for each senator amounted to PhP 200
million (PhP 80 million for PDAF and PhP 120 million for DPWH) and PhP 70 million for each
congressman (PhP 30 million for PDAF and PhP 40 million for DPWH).
Sources: Parreno (1998), Gutierrez (1998), Chua and Cruz (2007), Noda (2011)

Before the Supreme Court declared the PDAF to be unconstitutional, each congressman in
the Philippines received pork barrel funds of about PhP 70 million per year; and each
Philippine senator received PhP 200 million per year. For a congressman who managed a
successful nine-year run, their allocation totaled PhP 630 million; for a senator who
successfully completed two consecutive terms (12 years), it equaled PhP 2.4 billion.
The recent brouhaha concerning the PhP 10 billion pork barrel scam that implicated former
and current senators and members of the House of Representatives, yet again reminded us
how this practice can prove inimical to democracy. The evidence shows that the headline
figure of PhP 10 billion was just part of a much larger challenge – the deleterious effect of
pork barrel politics on democratic decision-making and good governance appears far
more pernicious. The truth is, countries like the Philippines appear addicted to pork; this
addiction is a fundamental part of what prevents good governance from taking root[3].

2.1 Looks good, but deadly

On paper, the 70-million-peso PDAF (more pejoratively called “pork barrel”) of a district
legislator could be used on infrastructure projects, livelihood projects, initiatives for
improving health, social and economic conditions of communities, funding calamity

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

 assistance and the purchase of equipment. Legislators spent their PDAF allocations
through the Department of Budget and Management (DBM) and the appropriate
implementing agencies [which could include national government agencies (NGAs), local
government units (LGUs), and/or government-owned and controlled corporations
(GOCCs)]. Legislators then submitted a list of their proposed projects along with a list of
contractors and suppliers[4] to the D B M. The DBM then checked if the projects are
aligned with the priorities[5] of the government, after which it released the funds to the
appropriate implementing agency. The implementing agency executed the project
proposal, conducted the necessary bidding processes and coordinated with the LGUs
involved in the proposal. Once all parties were in agreement, the project was carried out in
full by the implementing agency with the approval and cooperation of the heads of the
affected LGUs[6].
This seemingly sound system of checks-and-balances masked a significant amount of
discretion possessed by legislators. Even when audited, pork barrel funds could be
channeled to various projects and programs that were guided less by objectives such as
poverty reduction and fueled more instead by a vicious cycle of rent-seeking and political
perpetuation. Some reports have noted that there was a tendency for some legislators to
pour a significant amount of their PDAF allocation into areas that were considered as their
bailiwicks, as in the case of some congressmen who served as prosecutors in the
impeachment complaint against former Chief Justice Renato Corona[7] (Ilagan, 2012).
Further, some legislators have donated parts of their PDAF allocation to other districts
allegedly for political purposes, as in the case of former Zamboanga del Norte Rep. Cecilia
Jalosjos-Carreon, who was criticized by her fellow Zamboanga del Norte Rep. Angel
Carloto, for allocating a part of her PDAF to his district. In this case, Mr Carloto cited the
decision of Ms Jalosjos-Carreon’s brother to run against him in the congressional race as
a possible reason behind the allocation of those pork barrel monies (Chua and Cruz, 2007).
Corruption scholars and public sector managers often define corruption succinctly as the
abuse of public office for private gain. In theory, public officials execute their mandate in
the interest of the public good. Yet, in practice, the concentration of resources and power
opens the system up to the risk of abuse – a risk that democracies hope to mitigate through
well-designed checks and balances in the public finance system. Table I outlines the
process for tapping PDAF resources allocated to legislators in the Philippines. While
checks and balances were built into the system, the opportunities for abuse remained high
and are also identified in Table I.
The crux of the alleged corruption scam is as follows: the businesswoman, Janet Napoles,
would allegedly make arrangements with a legislator (or his/her chief of staff) by offering a
commission that could reach as high as 60 per cent of the PDAF allocation for a project[8]
in exchange for the right to choose the implementing agency and fund beneficiary. A
similar practice was allegedly in place with LGUs. Essentially, the practice undercut the
intended amount of public services or public goods that could have been produced for any
given amount of PDAF, by channeling part of this to Mrs Napoles and the corrupt legislator.
Furthermore, Exhibit 1 of this case provides a timeline of events relating to the pork barrel
scam uncovered in 2013. The story first exploded when the Philippine Daily Inquirer
published a story regarding the investigation of the National Bureau of Investigation (NBI)
into the alleged PhP 10 billion pork barrel scam. The article cited the affidavits of six
witnesses pointing to the role played by Janet Napoles in the alleged scam which utilized
funds from the PDAF allocations of some congressmen and senators, the Malampaya oil
fund and from allocations made by the DBM to some GOCCs and government agencies.
Social media also played a particularly powerful role in creating broader awareness of the
scandal (further feeding public outrage) due, in particular, to the perceived lavish lifestyle
of the Napoleses. The scam took on a life of its own when netizens started posting pictures
and images of the Napoleses with captions referring to their alleged role in the scam. One

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

Table I The pork barrel allocation process
Process Details Potential flaws

1 Identification of projects/beneficiaries
for pork barrel allocation
2 Submission of request for allocation
(1)
3 Submission of request for allocation
(2)
4 Approval of project request
5 Release of funds to implementing
agency
6 Implementation of programs or
projects
Source: Adapted from GMA News Online (2013)
Lawmaker receives requests for assistance Given the lawmaker’s discretion on
from NGOs and resolutions from LGUs where the funds will go, he or she
Lawmaker selects the projects to be can receive kickbacks via either of
implemented, and the government agencies the following scenarios:
that will serve as implementing units (e.g. Selecting a “favorite or preferred”
NGAs, GOCCs, LGUs) based on a menu of NGO which funnels the money
priority projects laid out in the GAA back to the legislators
Legislator asks permission from a fellow Establishing an NGO which will be
legislator in another district in case the run by the legislator’s relatives
former intends to implement projects in the Striking a deal with a local
latter’s jurisdiction government official
Lawmaker sends the request to the House Case of Janet Lim-Napoles: The
Committee on Appropriations or the Senate businesswoman would allegedly
Committee on Finance together with the seal a deal with a legislator or his/
project list her chief of staff by offering a
Committee chairman endorses the request commission ranging from 40 per
to the House Speaker or Senate President, cent to 60 per cent in exchange for
and the latter in turn forwards it to the DBM the right to choose the
The DBM checks if the project list conforms implementing agency and fund
to the administration’s list of priority projects beneficiary. A similar practice is
or does not fall into the restricted or allegedly in place with the LGUs.
negative list of projects
The DBM releases the fund directly to the
implementing agencies. The DBM serves as
the budget administrator for projects
implemented by LGUs, while the National
Treasury serves as the fund’s administrator
for projects by GOCCs
Copy of Special Allotment Release Order
(SARO) will be given to the legislator
informing the latter of the release of funds
to the implementing agencies
Relevant government agencies implement
the projects and are subject to budgeting,
accounting and auditing rules and
regulations of the government

group spontaneously organized an event for taxpayers and citizens to express their
outrage over the scandal, calling the event a “Million Man March”. People from different
parts of the country staged a protest calling for the abolition of the pork barrel. One of the
main rallies took place in Luneta on August 26, 2013. Others soon followed.

2.2 Seventy million reasons to run for congress

Analysts who are familiar with pork barrel politics note how PDAF can be used by legislators
to increase the likelihood of their reelection or the election of their relatives and allies. The
clientelistic nature of local Filipino politics and the propensity of politicians to label public
goods with their names and/or their likenesses (often characterized by the word, “Epal,” a
derogatory term used by advocates to describe politicians who take too much credit)
perpetuates how many Filipinos view public goods as the bequests of local officials rather
than the product of collective action by the country’s citizens (Table II).
Moreover, the ease by which political capital can be bequeathed to relatives through name
recall means that these projects can be used to consolidate and expand the power of
dynastic clans. A simple calculus of public resources controlled by five prominent political
clans in the country can help paint the picture of part of the economic power these clans
have amassed. Here, we consider the sum of pork barrel funds from congressmen in the

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

Table II Resources controlled by selected political dynasties in the Philippines, including the PDAF
Provincial IRAs
through Governors
or Vice Governors Municipal IRAs through Mayors or Illustrative Total
Family Pork Barrel (PhP) in Clan (PhP) Vice Mayors in Clan (PhP) (PhP)

Dy Family (Isabela) 7,00,00,000.00 1,49,20,29,094.00 55,10,24,549.00 (Three members) 2,11,30,53,643.00

Garcia Family (Cebu) 14,00,00,000.00 (Two members) 1,67,71,63,644.00 14,23,58,193.00 (Two members) 1,95,95,21,837.00
Jalosjos Family 21,00,00,000.00 (Three members) 65,74,64,534.00 40,77,92,922.00 1,27,52,57,456.00
(Zamboanga
Peninsula
Singson Family 14,00,00,000.00 (Two members) 68,07,24,331.00 43,65,82,521.00 (Two members) 1,25,73,06,852.00
(Ilocos Sur)
Tan Family (Western 7,00,00,000.00 87,19,23,236.00 16,68,73,352.00 (Three members) 1,10,87,96,588.00
Samar)
Source: Authors’ calculations based on publicly available information and the AIM Policy Center Political Dynasties Database

clan, provincial internal revenue allotments (IRAs) (from governors of vice governors in the
clan) and municipal IRAs (from mayors or vice mayors in the clan) as an indicative sum of
the public sector resources at their disposal. The resulting sum does not include the local
tax revenues and dues collected by LGUs. Easily, each of these clans can effectively
control anywhere from PhP 1 to 2 billion per annum in public sector resources, and this
accounting does not yet consider the regulatory and other implicit political power that
control over a province implies.
Recent empirical analyses of the use of pork barrel funds suggest that legislators bias the
distribution of their pork barrel in favor of local patrons and allies. Gerrymandering has also
been linked to local government finance allocations. A recent study by Professor Joseph
Capuno in UP suggests that having a mayor that belongs to a political clan is linked to a
greater likelihood that a municipality is converted to a city. Seeking expanded control of
public sector resources has become a major objective by political clans that have become
“fat” (i.e. with clan members occupying multiple elected government positions at the same
time). After all, as evidenced by the data above, securing a mayoral post or a gubernatorial
post affords political families control over more public resources (and with far less effective
checks and balances given family members can occupy key posts).

2.3 Ending the addiction to pork

Before making a decision on her NGO’s position on the pork barrel issue, Mrs Ocampo called
for a meeting with some of the women farmers that her NGO works with. Mrs Ocampo was
surprised by their suggestions on how to proceed. She realized that many of the women
disagreed with the proposal to abolish the pork barrel of legislators. Several mentioned that their
last congresswoman could support many more projects because of her pork barrel. Hence, they
concluded, their new congressman could try to accomplish something similar if they gave him
the chance. Besides, the women started to worry about where their NGO would be able to
obtain money for their projects if the pork barrel were to be abolished.

Many scholars and political analysts concede that political reforms alone cannot solve the
ills attached to pork barrel politics. It goes deeper than this. Indeed, many leaders still fail
to appreciate what is wrong with pork, and they (and their constituents) are not yet very
clear about what exactly the roles of legislators and public servants are. Interviews of
politicians by sociologists reveal how the public also contributes to pork addiction. (These
are direct quotes from a study by Clarke and Sison, 2003, “Voices from the top of the pile:
Elite perceptions of poverty and the poor in the Philippines” published in Development and
Change.)
 “There are some politicians who wish there were more poor people. The poor are the
bailiwick because [. . .] if you are a moneyed politician, it’s better to have poor people

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

 because you can buy them. Give them P200, P300 in the elections and they will vote
for you” (A politician interviewed and cited by the authors).
 “I’m just vice mayor but you know I have an average of twenty to thirty people every day
in (my) house, in (my) office, asking for support. I have no money and they need money.
Even if it’s P100, I’m spending P2000 a day. It’s good I have other businesses, if not
you’ll be forced to steal money from the government to give to the poor [. . .]”.
 “[. . .] Once you’re a government official, people think you are a rich person, that you
can get money from the government. That’s not true [. . .] My salary is only P21,000 (per
month)” (A local politician interviewed by the authors).
Analysts note how pork fuels a vicious cycle of poor people who depend on it for help, and
politicians who ingratiate themselves to less informed voters and strengthen their
stranglehold on power by disbursing it with little accountability. This vicious cycle of
resource diversion and pork consumption has been shown inimical to society’s objectives
of poverty reduction, attracting investments and job generation. Instead, pork is part of
what fuels rent-seeking and dependency. The more competitive and dynamic parts of our
economy will ultimately end up paying for this gross inefficiency – an extra cost that
hobbles our economic competitiveness. Pork will continue to throw sand in the wheels of
high and inclusive growth.

3. Bringing the “Public” back into “Public Finance”

Mrs Ocampo’s NGO works with a broader coalition of NGOs in the Bicol region and she sought
advice from one of her NGO colleagues working on “bottom-up budgeting” – essentially a
community-based budgeting process that seeks strong citizen and civil society engagement in
the budgeting process. She learned that the need for public finance reforms in the Philippines
goes well beyond reforms to the pork barrel system. This opened her eyes to the wider risks for
abuse that discretionary and lump sum funds like the PDAF remain vulnerable to.

Perhaps, for the first time since the pork barrel was introduced in 1922, there appears to be
a broad opportunity to rethink not just the pork barrel, but how public finance is conducted.
Academics and experts have for many years uncovered evidence and produced analyses
on the detrimental features of pork barrel politics.
 Teehankee (2002) posited that the decline in the importance of personal relation-based
rural politics and the emergence of urban political machinery, together with the
establishment of a multiparty democracy in the post-Marcos era, have significantly
decreased the influence and role of the local politicians and thus have made local
politics more intense. This, in turn, has increased the need for local politicians to have
access to state resources (such as pork barrel funds). In a previous study, Professor
Teehankee (2001) also noted that the entry of non-traditional (mostly urban-based and
middle-class) players in the political arena is an outcome of the changes in the
country’s economic dynamics, but these players proved to be vulnerable as well to
pork and patronage politics given the weakness present in our political party and
electoral systems.
 Co (2010), on the other hand, noted that for many government infrastructure projects
(such as those in which legislators play a key role), there is a tendency to give more
weight to political rather than economic-technical considerations. This, in turn, makes
an infrastructure project more prone to issues such as cost overruns and delays in
implementation.
 La Vina (2013), in a recent article, noted that while PDAF has played a key role in calling
the attention of national agencies to implement some important projects in the remoter
areas, there are flaws inherent in the system, as one of the defining features of PDAF
is the active participation of a legislator in directing the implementation of the project,
and in selecting those that will implement it, which are primarily the duties of the
executive branch. In this case, he emphasized that a legislator’s participation in the

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

 process should be limited to the identification stage as one of the many project
stakeholders (which include local governments, people’s organizations and the direct
beneficiaries of the project).
Here, we attempt to synthesize pork barrel’s problems without necessarily implicating those
at fault.
 Pork barrel politics are characterized by significant (and often sole) discretion being
handed to the politicians managing these funds. This has weakened accountability
because of the ways that allocations are no longer necessarily made according to
voters’ preferences or development targets (nor are they made as parts of coherent
national or regional development plans).
 (Many) politicians seem also to demonstrate a strong sense of entitlement for their pork
barrel funds – rationalizing their use in providing various types of support for their poor
and low-income constituents. The pork barrel has also become part of certain
politicians’ self-promotion strategies. With banners and image ads on street corners
and conspicuous areas that promote their ongoing or completed projects, they
routinely credit themselves for “helping the poor” while most people lose sight of the
fact that they themselves – the taxpayers – paid for and provided that help.
 Finally, politicians are also often able to exert strong influence on selecting who the
implementing entity or contractor will be for pork-barrel-financed projects. This once
again opens the door for abuse, given the possible collusion between the contracting
party (e.g. an NGO providing a public service or a private contractor building
infrastructure) and the politician.
Incidentally, some of these features are not necessarily limited to the pork barrel, which
represents just a shade over 1 per cent of the total public sector budget. The pork barrel
fiasco represents the tip of the proverbial iceberg as far as the potential abuse of taxpayers’
money is concerned. Even as many public finance management features have changed in
the past several years due to reforms like zero- and performance-based budgeting (both
geared to shave excess fat and waste in the public sector), opportunities for abuse remain.
The solutions must therefore address the abovementioned fundamental flaws, and
hopefully the effects of these will extend throughout the public financial system.

3.1 Alternatives to pork

If we are to make a break from pork barrel politics, it’s important to understand the options
and how these provide a different dynamic from what’s described above. The following
presents a brief synthesis of recent proposals.

3.2 Putting decision-making in the hands of the people

3.2.1 Bottom-up budgeting. The bottom-up budgeting (BUB) approach initiated by the
DBM involves citizens and civil society groups at the local level in budget preparation and
identifying priority areas for public spending. An estimated PhP 8.4 billion was allocated in
the 2013 national budget through the BUB process for programs and projects intending to
benefit 595 of the poorest municipalities. The intended result is a needs-based,
“people-centric budget” which seeks to achieve both a proper allocation of resources as
well as a substantial reduction of poverty. Some supporters of BUB suggest that the pork
barrel monies be channeled through the BUB process. This approach is fundamentally
different from the pork barrel system because it takes discretion away from politicians and
builds in more direct and participatory governance. Nevertheless, the implementation of
the BUB must overcome challenges such as unclear guidelines, time and procedural
constraints, as well as a lack of a level playing field for civil society organizations (CSOs)
at the local level.
3.2.2 Budget Partnership Agreement. This arrangement presupposes that a certain
government agency has engaged CSOs through the BUB process and is convinced that

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

genuine participatory budgeting can only be sustainable through a formal agreement to
establish regularity, accountability and integrity measures within the BUB process. The
DPWH and the National Housing Authority (NHA) are key government agencies that have
entered successfully into Budget Partnership Agreements (BPAs) with their respective
CSOs. Invariably, the goal of the BPA is to cement the relationship between a government
agency and CSOs when it comes to the budget process – from budget preparation, budget
execution and up to budget monitoring.
3.2.3 People’s Fund. Senator Bam Aquino recently proposed the creation of a People’s
Fund, which would provide greater involvement for taxpayers in selecting where a portion
of their income taxes would go. The People’s Fund would allow taxpayers to select
beneficiaries upon filing their annual income tax returns through a mechanism to be
established by the Bureau of Internal Revenue (BIR). Taxpayers would be able to allocate
5 per cent of their income tax to an accredited charitable institution or CSO, a national or
local priority government project, or a legitimate political party. The eligibility of these
organizations and the conditions and requirements for their receipt and use of funds would
be determined by an interagency committee headed by the DBM. This proposal seeks to
empower citizens and create greater stake-holding in CSOs, development programs and
political parties. Careful attention to putting up very clear guidelines and mechanisms for
determining fund eligibility, effective disbursement and ensuring transparency and
accountability in the implementation of the Fund would have to be put in place to ensure that
poorly governed political parties and fly-by-night NGOs could not gain access to the funds.

3.3 Incentivizing good governance, economic competitiveness and job creation

3.3.1 District Performance Incentive Fund. Camarines Sur Representative Maria Leonor
“Leni” Robredo has proposed an output-based mechanism for allocating the PDAF through
a “District Performance Incentive Fund”. LGUs demonstrating good governance would be
granted greater access to funds. In turn, District Development Councils (DDCs) would
assess the merit of prospective projects. The DDCs, modeled after the People’s Council
piloted in Naga City, would curb the discretionary budgetary power of legislators and
constrain their deliberative autonomy by providing more oversight over project selection.
This mechanism seeks to solidify the constitutional separation of powers as the executive
would be charged with the implementation of projects. If this were to work, it would be
critical to protect the DDCs from “capture” in the same way that political dynasties have
begun to exert strong influence over public finance in many local governments.
3.3.2 Performance Challenge Fund. The government’s Performance Challenge Fund (PCF)
provides additional resources to the least developed municipalities that take concrete
steps to boost transparency and accountability. In 2010, 34th-6th-class municipalities were
the initial beneficiaries of this fund. One proposal seeks to expand the PCF so that it would
not just boost transparency and accountability but also incentivize the creation of a
business-friendly environment and boost public services that would support private sector
investments and job generation in the countryside. This enhanced challenge fund would be
directed to LGUs with demonstrated improvements in good governance and economic
competitiveness, based on clear metrics such as those used by the World Bank’s Doing
Business Indicators or the National Competitiveness Council’s Philippine Cities
Competitiveness Ranking Project. In short, LGUs must be first able to demonstrate these
improvements BEFORE funds could be awarded to them. The overall effect on the policy
environment would be to transform local public finance from a perverse one (encouraging
rent-seeking and promoting patronage, while frittering away taxpayer money) to a very
positive one (encouraging investments in human capital and improved competitiveness so
that it could leverage even more resources from private sector investments).
In addition, there is a proposal to abolish the pork barrel, and instead channel the resources so
that these are aligned to the Philippine Development Plan (PDP) (Monsod and De Dios, 2013).
The pork barrel was never an instrument to complement or support a bigger or overarching

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9

 policy initiative such as the PDP. It is a palliative instrument, at best whimsical, for delivering
supposed public goods. Aligning this with the PDP, complete with restrictions and
prescriptions – and to the extent of including a possible “spatial re-prioritization” dimension to
target provinces/regions that need to catch-up – would make the pork barrel or similar
congressional initiatives more meaningful and more deliberate if they have been intended to
help the executive power coordinate the implementation of the PDP.
A spatial development approach could also help correct the inefficiencies of the uniform
allocation system, which forces congressmen and senators to create all imaginable projects for
implementation (even where sometimes there is no demand) to perpetuate patronage politics.
Still, the existing track record of IRA allocations to provinces appears to shed some doubt on
whether this strategy to allocate to the provinces would make a marked difference in the way
that local public finance is conducted. Indeed, even before the pork barrel scam was
uncovered, analysts from the government’s National Tax Research Center already advocated
reforms in the existing IRA framework (Gonzales, 2009)

3.4 Freedom of information is the key ingredient

All these proposals significantly limit the discretion of politicians (notably legislators) from
controlling pork. Approaches like BUB and the proposed People’s Fund put
decision-making in the hands of the people. On the other hand, access to challenge funds
is premised on LGUs meeting certain conditions, which are, in turn, anchored on clear and
measurable outcomes linked to policy objectives. Challenge funds provide a strong
incentive for LGUs to gain access, and quite possibly also provide an equally compelling
signal of good governance and economic competitiveness to the private sector as well.
Analysts note that by encouraging citizens to engage and setting incentives right, these
proposals may also begin to enlighten citizens that taxpayers are financing these projects,
and that politicians should not feel “entitled” to taxpayers’ resources (i.e. the second point
mentioned above). Some argue that the country might even arrive at better and more
implementable laws when legislators only have to focus on their electoral mandates.
However, when it comes to stopping politicians’ influence on the contracting and service
provision process (the third point mentioned above), it appears that this area is still
potentially vulnerable to abuse. Citizens, civil society groups and investigative journalists
armed with information and evidence on these projects could help address this challenge.
Freedom of information measures could be a critical ingredient in empowering groups
dedicated to transparency and accountability as watchdogs for these projects.
As elements of public finance reform in the broader sense (not just pork barrel monies),
analysts note that these proposals could work better if citizens engage in the design and
implementation of the public budget. As Secretary Butch Abad of the DBM noted,
uncovering and exposing the pork barrel scandal may actually turn out to be the best thing
that has happened for public sector budgeting in this country, as citizens become better
Keywords: informed and more engaged with the government budget.
Public finance, Mrs Ocampo struggled to formulate a final decision on the issue, as she continued to weigh the
Discretionary funds, pros and cons of channeling pork barrel monies to NGOs (notably reputable ones like hers). She
Pork barrel, herself is a taxpayer and she was torn between her commitment to obtain continued financing
Challenge funds, for women farmers in Bicol and her growing sense of distrust for how legislators utilize their lump
Corruption sums and discretionary allocations.

Notes
The protagonist described in this case is a fictional manager of an NGO to whom the students are
expected to relate their case discussions and analyses. All other nouns and personalities mentioned
in this case, unless otherwise stated, refer to actual entities, references to which are all properly cited
and noted. All materials in this case (including pictures and images) are publicly available and are
appropriately referenced.

PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

1. Chua (2007), for instance, cited the passage of the Expanded-Value-Added Tax (E-VAT) Law as an
example. The bill faced an uphill battle in the Lower House as various business interests sought
exemption from being covered by the proposals. The executive department agreed to release
around 9.7 billion pesos in CIAs for infrastructure projects and eventually, the bill was passed by
both chambers of Congress.
2. Fukui and Fukai (1996) noted that despite the significant use of pork barrel politics from the 1950s
to the 1980s, other developed countries have a higher quality of roads (as indicated by the
proportion of paved municipal roads and the quality of prefectural and national roads), and better
access to public sewage systems when compared with Japan.
3. Sections of the analysis that follows build on and draw from Mendoza (2013) and Mendoza and
Melchor (2013).
4. Before the Supreme Court made a decision on the constitutionality of PDAF, House Speaker
Feliciano Belmonte said during the deliberations of the proposed 2014 national budget that all
contracts would undergo a proper bidding process, and that legislators would not be allowed to
choose a contractor to implement their proposed infrastructure projects in their respective districts
(Romero, 2013).
5. In this case, the priority sectors of the government included education, health, social protection,
financial assistance for LGUs, public infrastructure, peace and order, arts and culture (GMA News
Online, 2013).
6. See Table 1 for further details on the allocation process of PDAF.
7. For instance, Ilagan (2012) noted that House Justice Committee Chairman Rep. Neil Tupas
allocated more than one-third of his PDAF allocation from June 30, 2010 to June 8, 2012 (amounting
to PhP 41.7 million) to the local government of Barotac Viejo town (a third-class municipality in which
his brother serves as the mayor) as the implementor of various projects in the district. Rep. Tupas’s
district is composed of 11 towns, one of which is considered as a fifth-class municipality and two
of them as fourth-class municipalities.
8. Some reports noted that the alleged commissions received by legislators from deals with Janet
Napoles ranged from 40 to 60 per cent (see, for instance, GMA News Online, 2013; Sabillo and
Santos, 2013), while Napoles (2014) in her signed affidavit said that alleged commissions received
by lawmakers ranged from 40 to 50 percent.

References
Ames, B. (1995), “Electoral rules, constituency pressures and pork barrel: bases of voting in the
Brazilian congress”, The Journal of Politics, Vol. 57 No. 2, pp. 324-343.

Chua, Y. (2007), “The perks of lawmaking”, Rulemakers: How the Wealthy and the Well-Born Dominate
Congress, Philippine Center for Investigative Journalism, Manila.

Chua, Y. and Cruz, B. (2007), “For the love of pork”, Rulemakers: How the Wealthy and the Well-Born
Dominate Congress, Philippine Center for Investigative Journalism, Manila.

Clarke, G. and Sison, M. (2003), “Voices from the top of the pile: elite perceptions of poverty and the
poor in the Philippines”, Development and Change, Vol. 34 No. 2, pp. 215-242.

Co, E.E.A. (2010), “The long and winding road to infrastructure development and reform”, Philippine
Journal of Public Administration, Vol. 54 Nos 1/2, pp. 153-166.

Evans, D. (2004), Greasing the Wheels: Using Pork Barrel Projects to Build Majority Coalitions in
Congress, Cambridge University Press, Cambridge.

Fukui, H. and Fukai, S. (1996), “Pork barrel politics, networks and local economic development in
contemporary Japan”, Asian Survey, Vol. 36 No. 3, pp. 268-296.

GMA News Online (2013), “Infographic: how pork barrel funds are misused”, GMA News Online, 28
August, available at: www.gmanetwork.com/news/story/323927/news/specialreports/infographic-how-
pork-barrel-funds-are-misused (accessed 16 September 2013).

Gonzales, I. (2009), “NTRC wants government allocations to LGUs based on performance”, Philippine
Star, 9 September, available at: www.philstar.com/business/456696/ntrc-wants-ira-allocations-lgus-
based-performance (accessed 19 September 2013).

Gutierrez, E. (1998), “The public purse”, in Coronel, S. (Ed), Pork and Other Perks: Corruption and
Governance in the Philippines, Philippine Center for Investigative Journalism, Quezon City.

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 Ilagan, K. (2012), “Bailiwicks, not poor towns, grab slabs of House PDAF”, Philippine Center for
Investigative Journalism, 18 July, available at: http://pcij.org/stories/bailiwicks-not-poor-towns-grab-
slabs-of-house-pdaf/ (accessed 2 June 2014).

Keefer, P. and Khemani, S. (2009), “When do legislators pass on pork? The role of political parties in
determining legislator effort”, The American Political Science Review, Vol. 103 No. 1, pp. 99-112.

La Vina, A. (2013), “Now I am convinced: pork barrels must go”, Interaksyon, 21 August, available at:
www.interaksyon.com/article/69052/tony-la-vina–now-i-am-convinced-pork-barrels-must-go (accessed
6 September 2013).

Mendoza, R.U. (2013), “Pork: killing our democracy softly”, Rappler, 21 August, available at: www.
rappler.com/thought-leaders/34984-pork-killing-our-democracy-softly (accessed 26 September
2014).

Mendoza, R.U. and Melchor, M. (2013), “Bringing the ‘public’ back into ‘public finance’”, Rappler, 8
September, available at: www.rappler.com/thought-leaders/38375-bringing-the-public-back-into-
public-finance (accessed 26 September 2014).

Monsod, T. and De Dios, E. (2013), “Scrap pork, empower provinces”, Per Se, 10 September, available
at: www.econ.upd.edu.ph/perse/?p⫽3051 (accessed 19 September 2013).

Napoles, J. (2014), “Affidavit (on the pork barrel scam)”, available at: www.gmanetwork.com/news/
story/362767/news/nation/janet-lim-napoles-affidavit-on-the-pork-barrel-scam (accessed 1 June
2014).

Noda, K. (2011), “Politicization of Philippine budget system: institutional and economic analysis on
‘pork-barrel’”, Discussion Paper No. 11A-04, Policy Research Institute, Ministry of Finance.

Parreno, E. (1998), “Pork”, in Coronel, S. (Ed), Pork and Other Perks: Corruption and Governance in the
Philippines, Philippine Center for Investigative Journalism, Quezon City.

Romero, P. (2013), “Lawmakers can no longer name preferred contractors”, The Philippine Star, 11
October, available at: www.philstar.com/headlines/2013/10/11/1243906/lawmakers-can-no-longer-
name-preferred-contractors (accessed 2 June 2014).

Sabillo, K. and Santos, M. (2013), “Napoles, 37 others face plunder, graft raps”, Inquirer.net, 16
September, available at: http://newsinfo.inquirer.net/488567/napoles-3-senators-face-plunder-raps-
over-pork-barrel-scam (accessed 2 June 2014).

Shepsle, K.A. and Weingast, B.R. (1981), “Political preferences for the pork barrel: a generalization”,
American Journal of Political Science, Vol. 25 No. 1, pp. 96-111.

Teehankee, J. (2001), “Emerging dynasties in the post-Marcos house of representatives”, Philippine

Political Science Journal, Vol. 22 No. 45, pp. 55-78.

Teehankee, J. (2002), “Electoral politics in the Philippines”, in Croissant, A. (Ed), Electoral Politics in
Southeast and East Asia, Friedrich-Ebert-Stiftung, Office for Regional Cooperation in Southeast Asia,
Singapore.

PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

 Exhibit 1

Table EI Timeline of events surrounding the pork barrel scam

Date Highlights

2006 and 2008 Janet Napoles was invited by the Senate Agriculture Committee and the Senate Blue Ribbon Committee in
their respective investigations of the Fertilizer Fund Scam to explain the allegedly overpriced PhP 58 million
fertilizer supply by her company

2013
22 March The NBI rescued Benhur Luy from a condominium unit in Bonifacio Global City. Luy was allegedly detained
by his cousin, Janet Napoles, after the latter learned of his plan to establish his own business, with a
scheme similar to that of Napoles’s businesses. The NBI at that time was looking at Benhur Luy as a
possible witness to the PhP 728 million Fertilizer Fund Scam
1 April The Department of Justice (DOJ) invited Janet Lim Napoles and her husband Reynald Lim in its
investigation on the alleged detention of Benhur Luy from December 2012 to March 2013
10 July The NBI asked the DOJ to reconsider its ruling, after the latter decided on June 10 to dismiss the illegal
detention case lodged by the camp of Benhur Luy against Janet Napoles
12 July Philippine Daily Inquirer published a story regarding the investigation of the NBI on the alleged PhP 10
billion pork barrel scam. The article cited the affidavits of six witnesses (including Benhur Luy) pointing to
the role played by Janet Napoles on the alleged scam which utilized funds from the PDAFs of some
congressmen and senators, the Malampaya oil fund, and allocations by DBM to some GOCCs and
government agencies
13 July Janet Napoles denied the allegations by the whistle-blowers regarding her involvement in the supposed
PhP 10 billion pork barrel scam
15 July The DOJ issued a memorandum to the Bureau of Immigration and NBI to monitor the international travel
activities of Janet Napoles and her brother Reynald Lim
15 July DOJ Secretary Leila De Lima announced that Benhur Luy would be placed under the Witness Protection
Program of the agency
15 July Janet Napoles appeared in a media interview, denying the allegations against her and expressing
apologies to lawmakers who were implicated in the scam
16 July Philippine Daily Inquirer released an article citing the affidavit of Marilyn Sunas, which noted that no delivery
of agricultural kit was ever made to the supposed agrarian reform beneficiaries of the PhP 900 million
Malaympaya Fund project. Sunas served as the project coordinator of Napoles’s company (JLN) and the
Department of Agrarian Reform (DAR) in the said project
16 July Ombudsman Conchita Carpio-Morales created a panel of investigators that would conduct a parallel probe
on the PhP 10 billion pork barrel scam
25 July Rappler released a photo showing Janet Napoles at a party together with Senators Ramon Revilla Jr,
Jinggoy Estrada and their families
29 July Photos and videos of Jeane Napoles, daughter of Janet Napoles, showing her family wealth and lifestyle
became a topic of discussion on social media
5 August Information on Napoles’s properties in the United States (which included a unit at The Ritz Carlton
Residences and an inn near Disneyland both in California) surfaced to the public’s attention
5 August The Senate decided not to investigate the pork barrel scam
7 August An article by Rappler discussed Janet Napoles’s involvement in a PhP 3.8 million deal on Kevlar helmets
with the military which the Sandiganbayan ruled as anomalous
8 August Janet Napoles met with editors, columnists and reporters of the Philippine Daily Inquirer for a roundtable
discussion in the media company’s office
10 August The Bureau of Immigration placed Janet Napoles and Reynald Lim on its lookout bulletin
14 August Makati Regional Trial Court issued an arrest order against Janet Napoles and Reynald Lim for the alleged
illegal detention of Benhur Luy
16 August The Commission on Audit (COA) discussed the initial results of its investigation on how lawmakers used
their PDAF from 2007-2009, noting that more than PhP 2 billion allegedly went to ten NGOs related to Janet
Napoles
16 August The Court of Appeals (CA) issued a freeze order on bank accounts of Janet Napoles, her relatives and staff
at the JLN Group of Companies, and of NGOs linked to her
16 August Department of Foreign Affairs (DFA) canceled passports of Janet Napoles and Reynald Lim
23 August President Aquino announced his intention to abolish PDAF and his proposal to replace it with a new system
in which lawmakers can request projects which will be included as line items in the national budget
26 August People from different parts of the country staged a protest calling for the abolition of the pork barrel. Manila
Archbishop Tagle joined the rally in Luneta
27 August Malacanang announced the formation of an investigative body, composed of officials from the COA,
Department of Finance, DOJ, NBI and Office of the President that will investigate the alleged misuse of
lawmakers’ discretionary funds
(continued)

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 13

Table EI
Date Highlights

28 August President Aquino announced a PhP 10 million bounty for those who could pinpoint the location of Janet
Napoles
28 August Janet Napoles surrendered to President Aquino and was turned over to the DILG and the PNP
30 August Janet Napoles was transferred to Fort Sto. Domingo in Sta Rosa, Laguna from Makati City jail, citing
security reasons
2 September Janet Napoles’s blood sugar level allegedly dropped while her blood pressure increased, with PNP
Spokesperson Sindac noting that the anxiety attack might be due to claustrophobia
2 September Reynald Lim asked the CA to issue a Temporary Restraining Order (TRO) on the warrant order issued by
the Makati Regional Trial Court
2 September It was revealed that Senators Loren Legarda and Ferdinand Marcos Jr were also mentioned in the COA
report, in addition to Senators Enrile, Revilla and Estrada
3 September Janet Napoles suffered hypertension while on detention
7 September Rappler released an article noting that the costs of Janet Napoles’ meals while in jail are above the PhP 50
per day allocation set by the Bureau of Jail Management and Penology for each inmate
10 September Senate President Franklin Drilon admitted meeting Janet Napoles less than ten times at social gatherings
hosted by the Napoles family or on gatherings in which Janet Napoles and her husband Jaime were
present. The Senate President however denied assigning a portion of his PDAF allocation to any of
Napoles’s NGOs
10 September The Supreme Court released a TRO in response to petitions to declare as unconstitutional lump-sum
allocations under the PDAF and Presidential Special Funds (PSF). The TRO stopped the release of the
remaining PDAF allocations of lawmakers under the General Appropriations Act (GAA) of 2013
16 September Various charges (relating to plunder, malversation of public funds, bribery, graft and other corrupt
practices) were filed before the Ombudsman against Janet Napoles, Sens. Juan Ponce Enrile, Jinggoy
Estrada, Ramon Revilla Jr and 34 other personalities
21 September Rappler released an investigative report noting that two of Janet Napoles’s NGOs received PhP 95 million
from the Malampaya Fund in one day, as the Department of Agrarian Reform issued eleven checks dated
December 23, 2009 amounting to PhP 52.5 million and PhP 42.5 million to Tanglaw sa Magsasaka
Foundation, Inc. and Saganang Buhay sa Atin Foundation, Inc. respectively
24 September Senate President Franklin Drilon said that the Senate would abide by the advice of the Ombudsman for
Janet Napoles not to testify yet before the Senate Blue Ribbon Committee
26 September The Bureau of Internal Revenue (BIR) filed tax evasion charges against Janet Napoles and her husband
Jaime whose total liability to the government (according to BIR Comm. Kim Henares) amounted to PhP
44.68million and PhP 16.43 million, respectively
27 September One of the whistleblowers, Marina Sula, noted that Mrs Napoles used companies such as La Roca
Enterprise to purchase properties, and that Mrs Napoles’s properties are spread out across different places
in the country. Witnesses also revealed that they have helped in creating bogus lists of beneficiaries
whenever Napoles’s NGOs would liquidate funds from the government
30 September Ombudsman Conchita Carpio-Morales stood by her earlier opinion for the Senate not to subpoena Janet
Lim Napoles
10 October Tax evasion charges were filed by the BIR against Jeane Napoles for allegedly not paying taxes amounting
to PhP 32 million
21 October The Senate has issued a subpoena for Janet Lim Napoles to testify before the Senate Blue Ribbon
Committee on its hearing on November 7
23 October The House of Representatives approved the proposed 2014 national budget worth PhP 2.268 trillion on third
reading, with the approximately PhP 25-billion PDAF allocation to lawmakers realigned to the budgets of
government agencies tasked to implement the chosen projects of legislators (such as local roads and
bridges, school buildings and water supply systems). These include the D PWH, Department of Education,
Commission on Higher Education, Department of Health, Department of Labor and Employment and
Department of Social Welfare and Development. NGOs would not be allowed to participate in the cited
projects
24 October Janet Lim Napoles was brought to a hospital in Santa Rosa City after she complained of pains, nausea and
continuous vomiting
25 October Concerns over Mrs Napoles’s mental health surfaced as Napoles’s former lawyer, Attorney Lorna Kapunan,
has noted that Napoles would talk to herself at night whenever she is alone
30 October Attorney Lorna Kapunan resigned as one of the lawyers of Janet Lim Napoles. Lawyers who had knowledge
of the resignation cited the differences in strategy between Kapunan and Attorney Alfredo Villamor, who
was the collaborating counsel of Janet Napoles
(continued)

PAGE 14 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

Table EI
Date Highlights

7 November Janet Lim Napoles testified in a hearing conducted by the Senate Blue Ribbon Committee. Napoles
admitted knowing Benhur Luy and his mother Gertrudes, and that she said that the Magdalena Luy Lim
Foundation (which was named after Mrs Napoles’s mother) is legitimate and was formed to conduct
outreach projects. She however denied the existence of other NGOs and has invoked her right against self-
incrimination in some of the questions posed by the senators. Mrs Napoles also denied her involvement in
the Fertilizer Fund Scam and the accusation that she spearheaded the creation of fake lists of beneficiaries
of PDAF-related projects
19 November Fourteen justices of the Supreme Court (SC) have voted to declare PDAF and all legal provisions of past
and present congressional pork barrel laws as unconstitutional. The decision also called for the return of
unused PDAF to the government treasury. Further, the SC also declared as unconstitutional the utilization of
the Malampaya Fund and Presidential Social Fund for purposes other than those stipulated by the relevant
laws
10 December The Bicameral Conference Committee approved the PhP 2.264 trillion budget for 2014 which is lower than
the original proposed amount (PhP 2.268 trillion). The difference represents the foregone pork barrel of Vice
President Binay and fifteen senators who decided to give up their allocation
11 December The Senate ratified the proposed PhP 2.264-trillion budget for 2014
17 December The House of Representatives ratified the proposed PhP 2.264-trillion budget through a viva voce vote
2014
9 January It was revealed that nine senators have realigned their PDAF allocation to different government agencies
(which include some LGUs as in the case of Senator Jinggoy Estrada)
10 January Malacanang defended the realignment of the PDAF allocations of nine senators, saying that these were
done as amendments (not as congressional insertions) during the deliberations conducted by the Senate. It
was also noted that the realignment of the PDAF allocation of Senator Jinggoy Estrada to some LGU units
was given a “conditional approval” by the President, in which case the executive branch has the discretion
to withhold or release the said amount
20 January Senator Ramon Revilla Jr delivered a privilege speech denying his alleged involvement in the pork barrel
scam. He noted that his signature may have been faked by Benhur Luy and that the involvement of
Malacanang on the issue is related to Revilla’s possible candidacy in the 2016 presidential elections
13 February Ruby Tuason, who was the social secretary of former President Joseph Estrada, faced the Senate Blue
Ribbon Committee hearing on the pork barrel scam. Ms Tuason said that she personally delivered
commissions to Senator Jinggoy Estrada from projects with Janet Napoles. Ms Tuason also noted that she
personally delivered commissions for Sentor Enrile to Attorney Jessica “Gigi” Reyes (former chief of staff of
Senator Juan Ponce Enrile)
21 March Janet Napoles was rushed to Ospital ng Makati due to complaints of abdominal pain. During the same day,
Ms Napoles appeared at the Makati Regional Trial Court, appealing that she be allowed to undergo surgery
28 March The Makati Regional Trial Court granted the appeal of Mrs Napoles for her to be confined in a hospital and
receive treatment. The court however did not allow her to be confined at St Luke’s Medical Center (a private
hospital); the court instead allowed her to stay at the Ospital ng Makati
31 March Janet Napoles was transferred from Fort Santo Domingo in Sta. Rosa, Laguna to Ospital ng Makati, where
she would undergo surgery to remove a myoma in her uterus
1 April Senator Teofisto Guingona III released a copy of the draft committee report of the Senate Blue Ribbon
Committee which recommended the filing of plunder charges against Sens. Ramon Revilla Jr, Juan Ponce
Enrile and Jinggoy Estrada over the alleged pork barrel scam
1 April The Office of the Ombudsman announced that it found probable cause to file plunder and graft charges
against Senators Enrile, Estrada, Revilla, Janet Napoles and other personalities implicated in the pork barrel
scam
22 April DOJ Secretary Leila de Lima confirmed meeting with Janet Lim Napoles at the Ospital ng Makati.
Mrs Napoles is said to have revealed various details regarding her involvement in the alleged pork barrel
scam and have expressed her willingness to provide documentary evidence. Mrs Napoles is also said to
have expressed her desire to be placed under the Witness Protection Program of the DOJ
12 May Thirteen out of twenty members of the Senate Blue Ribbon Committee have signed the draft committee
report regarding the alleged pork barrel scam
13 May Senator Teofisto Guingona III released an unsigned copy of the so-called “Napolist” which contains the list
of personalities and government agencies which were dealt with by Mrs Napoles. The list, which came from
former Senator Panfilo Lacson, contains the names of eleven former and current senators and sixty-two
former and current members of the House of Representatives
14 May Philippine Daily Inquirer released a report noting that there are fifteen incumbent senators and ten former
senators who had transactions with Janet Lim Napoles from 2002 to 2012 according to the digital files of
whistle-blower Benhur Luy
(continued)

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 15

Table EI
Date Highlights

16 May DOJ Secretary Leila de Lima gave a copy of the “Napolist” signed by Janet Lim Napoles to Senator
Teofisto Guingona III. The list contains the names of twelve former and current senators (which include
administration allies such as Sens. Francis Escudero and Alan Cayetano) and seventy current and former
members of the House of Representatives (which include Department of Agriculture Secretary Alcala and
DBM Secretary Abad)
18 May Philippine Daily Inquirer released a report noting that some media personalities received cash gifts from
Janet Lim Napoles. The mentioned media personalities later on released statements denying the said
allegation
19 May In an interview, Attorney Bruce Rivera, legal counsel of Janet Napoles, said that they would submit an
amended list of government officials with whom Mrs Napoles has transacted. He confirmed that the
amended list would include names of senators and congressmen who were not included in the initial list
26 May The Senate has received the signed affidavit of Janet Lim Napoles in which she implicated eight former
senators, twelve incumbent senators and around 100 former and current members of the House of
Representatives. Mrs Napoles said in her affidavit that she contributed campaign funds to some senators
and that she learned from DBM Secretary Abad the possibility of using NGOs to profit from government
projects
27 May DBM Secretary Florencio Abad denied Mrs Napoles’ allegations, noting that he never had any dealings with
Mrs Napoles and that the projects cited by Mrs. Napoles with him (which according to Napoles provided
her insights with regards to the ins and outs of the bureaucracy) are non-existent
27 May President Aquino reiterated that Secretary Alcala and Secretary Abad continue to enjoy his trust, noting that
Secretary Abad has introduced measures that aim to increase transparency in the budget process
27 May Senator Teofisto Guingona III said that the Senate Blue Ribbon Committee may reopen its investigation of
the pork barrel scam, noting that consultation among members of the committee may be conducted after
the Senate receives a copy of the digital files of Benhur Luy
28 May Archbishop Emeritus Oscar Cruz called on clergymen to return donations from questionable sources as
Monsignor Josefino Ramirez admitted receiving donations for projects from Magdalena Luy Lim Foundation
(named after Janet Napoles’ mother)
5 June The Office of the Ombudsman denied the appeals filed by Senators Enrile, Estrada and Revilla, Janet
Napoles and other personalities to drop the charges against them regarding the pork barrel scam
6 June The Office of the Ombudsman filed before the Sandiganbayan plunder and graft charges against Senators
Enrile, Estrada, Revilla, Janet Napoles and other personalities (which include Attorrney Gigi Reyes who
served as the chief of staff of Senator Enrile) that were implicated in the pork barrel scam
Source: Various news organizations as reported on the Internet and collected by the authors

Corresponding author
Ronald Umali Mendoza can be contacted at: ronmendoza@post.harvard.edu

PAGE 16 EMERALD EMERGING MARKETS CASE STUDIES VOL. 4 NO. 7 2014

 Abstract
Title – Should my NGO go on a “pork barrel diet”? The case of the Priority Development Assistance
Fund in the Philippines.
Subject area – Public Finance
Study level/applicability – Masters level graduate studies for public and private sector managers.
Case overview – The protagonist in this case is Mrs Maribeth Ocampo a manager of a reputable
non-governmental organization (NGO) that plans to devise a position on the Philippines’ Priority
Development Assistance Fund (PDAF) (or more pejoratively called “pork barrel”). This NGO manager
intends to tap the assistance of their local legislator to fund some of their projects. Her NGO has been
working with farmers in provinces in the Bicol region and one of the recent projects of the group involves
skills training for the female farmers, which aims to provide the latter with a greater variety of income
source which they can tap during the lean season. Expenses associated with the project include costs
of the training sessions (e.g. cost of session kits and honorarium of resource people) and assistance that
will be provided to the female farmers to start their venture.
However, recent reports have surfaced which cast doubts on the accountability and transparency
associated with the PDAF of the legislators. Some reports indicate the presence of commissions that
NGOs must allegedly pay to the legislators in exchange for their access to the said funds, while a recent
scam involves the creation of bogus NGOs that allegedly serve as conduits through which legislators
can take advantage of their allocation. The NGO manager needs to decide on whether and to what
extent to engage with legislators on tapping the pork barrel funds. She also needs to address the
question: “What is the position of my NGO (and possibly all reputable NGOs more broadly) on pork
barrel funds moving forward?”
Expected learning outcomes – This case aims to familiarize the manager with key public finance
concepts such as discretion and accountability; and to develop her/his appreciation of the politics
surrounding the public sector budget and, in particular, discretionary funds. The case is focused on
Philippine legislators’ discretionary funds, the PDAF. However, it can be used to discuss issues
surrounding public finance concepts of transparency, accountability and citizens’ engagement in the
budget process in a much broader context within developing democracies.
The case revolves around the scandal surrounding the pork barrel funds of some legislators that were
exposed for apparent abuse in early 2013. The scandal and its repercussions are still ongoing at the
time of writing this case, so the authors expect to update this case moving forward. It aims to highlight
an example of the role of public institutions and its respective challenges when it comes to critical
decisions of keeping public financial a credible undertaking. It is also expected that this case will help
develop an understanding of the pros and cons in the use of discretionary funds and help the student
identify potential risks for abuse in public finance management with respect to these funds.
Supplementary materials – Teaching notes are available for educators only. Please contact your
library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code – CSS 10: Public Sector Management

VOL. 4 NO. 7 2014 EMERALD EMERGING MARKETS CASE STUDIES PAGE 19

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