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Republic of the Philippines OFFICE OF THE OMBUDSMAN Quezon City REP. TEDDY CASIO and REP.

NERI JAVIER COLMENARES, Bayan Muna Partylist Representatives Complainants, - versus REP. GLORIA MACAPAGAL-ARROYO and ROSARIO URIARTE, Respondents. x-----------------------------------------------------x Case No. _________________

COMPLAINT AFFIDAVIT AGAINST GLORIA ARROYO AND ROSARIO URIARTE FOR GRAFT, MALVERSATION AND PLUNDER _______________________________________ PREFATORY Do not be deceived: God is not mocked, for whatever one sows, that will he also reap. Galatians 6:7 This is not just about stealing people's money. This is about stealing from the poor. Recent information from the Philippine Charities Sweepstakes Office (PCSO), exposed in both houses of Congress, have revealed a level of corruption and abuse that puts to shame even the most heartless of thieves. For what has been stolen in the PCSO, under the administration of former President Gloria Macapagal-Arroyo and her illegally appointed PCSO general manager Rosario Uriarte, is money for the poor. Money that should have been used to cure those who could not afford to get sick, feed those who could not buy food, build homes for the homeless, and give help to the helpless. Charity, they say, begins at home. But for the PCSO, charity begins in Malacaang Palace. We come now to accuse former President Arroyo and former PCSO general manager Uriarte of graft, malversation and plunder involving at least P325 million in PCSO funds that should have went to the poor but instead were illegally used for other purposes. Part of these funds may have been used for political largesse, part to retain the loyalty of public officers to the President. Some were most likely used for partisan electoral purposes, and some were amassed as ill-gotten wealth. These disbursements came from illegally diverted and malversed intelligence funds.

We run to the Ombudsman to complain, expecting it to use all its powers and resources to unearth the evil whose surface we have barely scratched. There are, no doubt, many more pieces of evidence that are beyond the access of ordinary citizens or even legislators like herein complainants. We trust that this complaint will be appreciated not only for the substance that it already contains, but the potential avenues that it opens for investigation and prosecution of those who would steal from the poor. The time for reckoning is now. Let those who sowed corruption now reap the consequences of their actions.

We, REP. TEDDY CASIO, Bayan Muna Partylist representative in Congress, of legal age, a concerned Filipino citizen and taxpayer, with office address at Room 508 Northwing, House of Representatives, Batasan, Quezon City, and REP. NERI JAVIER COLMENARES, Bayan Muna Partylist representative in Congress, of legal age, a concerned Filipino citizen and taxpayer, with office address at Room 210 Northwing, House of Representatives, Batasan, Quezon City, after having been sworn in accordance with law, hereby depose and state that: 1. We are hereby accusing REP. GLORIA MACAPAGAL-ARROYO (hereafter referred to as President ARROYO) and MS. ROSARIO URIARTE (hereafter referred to as MS. URIARTE) for violating: (i) Article 217 [4] of the Revised Penal Code (RPC), (ii) Article 220 of the Revised Penal Code, (iii) Section 3 [e] of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, as amended by RA 1060, and (iv) Republic Act 7080 or the Plunder Law. 1.1 REP. GLORIA MACAPAGAL-ARROYO, of legal age, Filipino and with office address at Room MB2, House of Representatives, Batasan, Quezon City, where subpoena and other processes may be served upon her. She is the former President of the Republic of the Philippines during the period of 2001 to June 30, 2010 and a public official with Salary Grade 33. Currently, she is a Member of Congress representing a district in Pampanga. 1.2 MS. ROSARIO URIARTE of legal age, Filipino and with office address at No. 27-A Scout Lozano St. Barangay Paligsahan, Quezon City, where subpoena and other processes may be served upon her. She is the former General Manager of the Philippine Charity Sweepstakes Office (PCSO for brevity) during the period January 17, 2003, to July 30, 2010, and even became concurrent chair of the agency from April 19, 2004, to August 29, 2004, at that time a public official with salary grade above Salary Grade 27.

2. As a preliminary, it must be pointed out that under Section 1 of the PCSO Charter, the PCSO Board of Directors is composed of only 5 members to be appointed by the President to wit: "It shall have, a Board of Directors, hereinafter designated the Board, composed of five members who shall be appointed, and whose compensation and term of office shall be fixed, by the President. 3. In relation to this, Section 2 of the same Charter provides that the General Manager of the PCSO is a mere appointee of the Board, thus:

Sec. 2. The general manager shall be appointed by the Board of Directors and he can be removed or suspended only for cause as provided by law.

4. However, Ms. Uriarte assumed the position of Vice-Chairman, and even served as its concurrent co-chairman, when she was supposed to be a mere appointee of the Board and therefore accountable to the said Board. Her assumption of this position together with her admitted closeness to then President Arroyo is not only a clear violation of the PCSO charter because she is not even a member of the Board but placed her in a powerful position within the PCSO hierarchy as both a vice-chairman of the Board and its General Manager.

4.1 Relevant to this, Ms. Uriarte admitted on national television during the Senate investigation on 7 July 2011 her personal ties to the President, saying that she is personally close to then President Arroyo and has been working for her in various capacities since she (Arroyo) was an undersecretary of the Department of Trade and Industry in the 1990s. Perhaps, this may explain the appointment of Ms. Uriarte as PCSO General Manager, Vice-Chairman, and later, as the lead implementor of its intelligence fund. [Attached as Annex A is a copy of the news report on her closeness to then Pres. Arroyo]

5. Such usurpation of powers by both Rep. Arroyo and Ms. Uriarte is not only highly irregular and illegal. It also granted Arroyo and Uriarte substantial power and control inside PCSO.

6. On 30 May 2011, Rep. Colmenares exposed in a privilege speech a number of irregularities and anomalies inside the PCSO during the previous administration. These include PCSO entering into contracts with the Philippine Gaming and Management Corp.(PGMC) on the rent of overpriced lotto machines and a 50-year contract on thermal paper production both of which are highly disadvantageous to the Philippine government. He also discussed in that privilege speech the bloated media fund not only the reported 40% commission from media advertisers but also the realignment of media fund to intelligence fund, and the approval of then President Arroyo of the said realignment, without a board resolution approving the amendment to the duly approved budget of the PCSO. 7. The PCSO scandal would soon escalate and other anomalies therein were exposed by other sectors of society and the media, thereby urging the Senate of the Philippines to conduct its own investigation. PRESIDENT ARROYO AND MS. URIARTE VIOLATED ARTICLE 220 OF THE REVISED PENAL CODE 8. Article 220 of the RPC provides:

Art. 220. Illegal use of public funds or property. Any public officer who shall apply any public fund or property under his administration to any public use other than for which such fund or property were appropriated by law or ordinance shall suffer the penalty of prision correccional in its minimum period or a fine ranging from one-half to the total of the sum misapplied, if by reason of such misapplication, any

damages or embarrassment shall have resulted to the public service. In either case, the offender shall also suffer the penalty of temporary special disqualification.

President Arroyo and Ms. Uriarte are public officers __________________________ 9. As heretofore alleged, President Arroyo and Ms. Uriarte are both public officers. Arroyo is the former President of the Republic of the Philippines during the period of 2001 to 30 June 2010 with Salary Grade 33, while Uriarte is the former General Manager of the PCSO during the period of 2004 up to 30 June 2010 with salary grade above Salary Grade 27.

Uriarte requested for and President Arroyo gave her a total of P325 Million for her administration as intelligence/confidential fund, including the realignment of at least P150 Million of the media fund in the 2010 PCSO budget to intelligence fund. _____________________________________

10. Under the PCSO Charter, the PCSO Board approves its budget for the fiscal year containing its projected expenses and sources of funds. 11. In relation to this, it was uncovered that as PCSO General Manager Ms. Uriarte issued a total of eight (8) memoranda / letter requesting former President Arroyo that her office be given intelligence/confidential fund. The copies of said Memoranda / Letter are hereto attached as ANNEXES B to I.

11.1 The total amount of intelligence/confidential fund given to Ms. Uriarte from 2008 to 2010 totaled P325 Million. These documents show that they were all signed and/or approved by President Arroyo. 11.2 Significantly, the Memorandum dated 4 January 2010 issued by Uriarte requesting President Arroyo for intelligence fund suggested to the President that the General Managers Office be given at most, twenty percent (20%) of the Public Relations Fund or a minimum of 150 Million Pesos, to be used as intelligence/confidential fund. (ANNEX H). This latest request has the largest amount involved among the other intelligence/confidential fund requests since 2008. GMA approved the same as shown in her OK in request letters themselves. 11.3 It must be noted that Ms. Uriarte presented no PCSO Board resolution allowing the realignment of the PCSO budget or any authority that would allow Ms. Uriarte to request for such realignment.

12. During the Senate investigation on 7 July 2011, [Attached as annex J is a copy news reports on her testimony] Ms. Uriarte confirmed the accuracy of the

contents of the above-mentioned documents, when she admitted under oath before the Blue Ribbon Committee and on national television, that: 12.1 She indeed submitted a Memorandum-request to President Arroyo on 4 January 2010 for the realignment of the budget for media or advertising expenses from its operations budget to intelligence fund; 12.2 She personally submitted at least two Memoranda-requests to then President Arroyo and discussed the contents with her. 12.3 President Arroyo approved her request for realignment of funds from the operating expense to the intelligence fund, as she personally witnessed the signing thereof by President Arroyo. 12.4 She is the project proponent of the said intelligence fund.

12.5 She has custody of the said funds and was a signatory of the checks for the release of the same funds, and was the payee of the said funds. This admission is also proved by the checks themselves, which shows that Uriarte was both the payee and signatory/payor of the said check. (Samples of such checks are attached as ANNEXES K and L).

13. Ms. Uriarte encashed said checks and disbursed the same.

14. The realignment of the P150 Million public relation or media fund was intended for appropriating it for intelligence work. Diverting funds from the operational expense, which is subject to regular auditing, to intelligence fund which is not subject to regular auditing, clearly exposes the intention of both Arroyo and Uriarte to disburse said funds without the benefit of regular auditing scrutiny, in violation of our laws.

President Arroyo and Uriarte conspired in using the intelligence fund for use other than intelligence work. _____________________________________ 15. During the Senate investigation on 7 July 2011, Uriarte also admitted under oath before the Senate Blue Ribbon Committee and on national television that before President Arroyo approved the realignment of funds, the latter was already very much aware that the intelligence fund will not be used for intelligence work but for: (a) work to roll out the Small Town Lottery (STL) all over the country, (b) relief operations during calamities, and (c) payment for blood money to save OFWs imprisoned abroad. This is so because according to Uriarte, she personally discussed the same with President Arroyo during the times that she asked for the approval of her letter-requests.

16. However, despite such knowledge, President Arroyo still approved the realignment of funds.

17. The illegal motivation of President Arroyo is clear. Despite knowledge that said intelligence fund will not be used for intelligence work, she kept on approving the

various requests of Ms. Uriarte for the grant and realignment of funds to this phantom intelligence fund project for years.

18. In view of the foregoing, it is very clear that President Arroyo and Uriarte conspired in using the intelligence fund for purposes other than intelligence work. This is so because Uriarte could not have committed the illegal use of such intelligence fund had President Arroyo not approved the realignment of funds despite the latters knowledge that the same will not be used for intelligence work. In this regard, GLORIA MACAPAGAL-ARROYO and ROSARIO URIARTE should be charged and should be held liable for violating Article 220 of the RPC. PRESIDENT ARROYO AND URIARTE MAY ALSO BE HELD LIABLE FOR VIOLATION OF ARTICLE 217 (4) OF THE REVISED PENAL CODE 19. Article 217 (4) of the Revised Penal Code provides that:

Art. 217. Malversation of public funds or property. Presumption of malversation.Any public officer who, by reason of the duties of his office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or negligence, shall permit any other person to take such public funds or property, wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall suffer: The failure of a public officer to have duly forthcoming any public funds which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use.

19.1 Under paragraph 4 of the same Article, if the amount involved exceeds P22,000.00, the penalty shall be reclusion temporal in its maximum period to reclusion perpetua (as amended by RA 1060.)

20. The questioned funds were malversed and appropriated by both President Arroyo and Ms. Uriarte for themselves as provided under Art. 217. They have failed to present any accounting of the said funds as Uriarte merely claimed that her one and only copy of her report was with President Arryo. The P150 Million fund, disbursed a few months before the 2010 elections will most likely have been used in the elections. This is malversation and appropriation for gain and benefit of President Arroyo. As to Uriarte, the fact that she cleaned out almost all the intelligence funds for the year in the first 6 months of 2010, and even withdrew P2.5 million and P10 million on June 18, 2010 only 12 days before her term ends on June 30 (as shown in the Senate hearing) only shows the intent to malverse said funds for their benefit.

21. Notably, Uriarte, before national television and in full view and hearing of the Filipino nation during the Senate investigation, admitted that she and President Arroyo had already spent P138 Million of the intelligence/confidential fund approved in 2010. But when asked to account for the spending of the intelligence fund, Uriarte failed

to do so, merely saying that the ONLY COPY of the document was already given by her to President Arroyo. This is clearly a case of malversation by appropriating to themselves the public funds, as provided under Art. 217 above. PRESIDENT ARROYO AND URIARTE ALSO VIOLATED SECTION 3 (e) OF R.A. 3019, OTHERWISE KNOWN AS THE ANTI-GRAFT AND CORRUPT PRACTICES ACT 22. Aside from illegal use of public fund, the foregoing acts of Arroyo and Uriarte also violated Section 3 (e) of R.A. 3019, which provides that: Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: (e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits, advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations charged with the grant of licenses or permits or other concessions.

23. By diverting the media budget of PCSO to intelligence funds and further malversing the same, Arroyo and Uriarte caused undue injury to the Filipino people, as it took away from what would have been spent for charity and very necessary assistance to the needy and the poor. Both President Arroyo and Ms. Uriarte practically took much needed funds for the medical needs of the sick and other social services for the poor. Under the PCSO charter, any savings from operations or any other income of PCSO should go to the charity fund. By realigning said funds, they essentially diverted funds that should have been for the charity fund. Worse, they also besmirched the reputation of PCSO as an institution for the poor and the need into an institution for the rich and the greedy. All of these constitute injury to the Philippine government, the PCSO and the Filipino people. Thus, Arroyo and Uriarte should be charged and held liable for violating Section 3 (e) of R.A. 3019.

PRESIDENT ARROYO AND URIARTE ALSO COMMITTED THE CRIME OF PLUNDER 24. The crime of Plunder under Section 2 of R.A. 7080 is defined as:

Sec. 2. Definition of the Crime of Plunder; Penalties. Any public officer who, by himself or in connivance with xxx subordinates or other persons, amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt criminal acts xxx in the aggregate amount or total value of at least Fifty million pesos (P50,000,000.00) shall be guilty of the crime of plunder and shall be punished by reclusion perpetua to death.


According to Section 1 (d) of RA 7080, ill-gotten wealth means:

Section 1. Definition of Terms. As used in this Act, the term d) Ill-gotten wealth means any asset, property, business enterprise or material possession of any person within the purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents, subordinates and / or business associates by any combination or series of the following means or similar schemes: 1. Through misappropriation, conversion, misuse, malversation of public funds or raids on the public treasury; or

2. By the illegal or fraudulent xxx disposition of assets belonging to the National government or any of its agencies or xxx government-owned or controlled corporations; and 3. By taking undue advantage of official position, authority xxx or influence to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the Republic of the Philippines.

25. The funds, amounting to more than 50 Million pesos, were malversed and appropriated by President Arroyo and Ms. Uriarte for themselves and their personal gain as provided under Art. 217 of the Revised Penal Code. Both committed a series of overt acts, as provided above through (i) conversion or misuse, (ii) disposition of assets and (iii) taking undue advantage of official position. They should be charged, for their acts, with the crime of plunder under RA 7080 or the Plunder Law. OTHER ANOMALIES IN THE PCSO SHOULD BE INVESTIGATED BY THE OMBUDSMAN 26. PCSO throughout the years has increased its budget and spending for media and advertising expenses during the time of Uriarte. That in 2007 it has incurred an Media or PR expense in the staggering amounts of P686,900,486 Million; in 2008 P529,449,558 Million; and in 2009 P1.5 Billion.

27. This inordinate amount of budget allotted and spent for advertising, an item under the Operating Fund of the PCSO budget, was subject of a Commission on Audit (COA for brevity) review. The COA, in its Annual Audit Reports AS EARLY AS 2005, found recurring problem in the presence of deficiencies in the advertising expenses of PSCO, where disbursement vouchers differed with the amounts in the supporting documents, as well as onerous and unchecked and unmonitored advertising contracts and deals. The COA remarked that: PCSO is not engaged in the marketing of consumer products that requires extensive advertising to increase customer awareness and sales nor is there a competition factor to contend with. While these advertisements intend to promote patronage of sweepstakes tickets and lotto games, it is expected of management to always count the costs in carrying out this objective. The number of advertisements placed has to

be carefully planned, evaluated and limited to what is just enough and necessary. Considering PCSOs mandate to raise funds for health and charity programs, instead of spending on advertising expenses, a portion could have been used more meaningfully for charity. If advertising expenses are reduced to even only about 50 percent of the current year amount, at the minimum financial assistance of P10,000 each, at least an additional 35,850 indigents could have directly benefited. These beneficiaries will be the best medium to promote the revenue generating activities of PCSO because the public becomes aware that the funds generated are used to provide financial/medical assistance to poor and needy patients. Prospective bettors will be made aware that they do not only have the chance to win but, at the same time, they are helping provide necessary funds for financial/medical assistance to indigents. (ANNEXES M to M4 Paragraph 11.6-11.7, pages 71-72 of the Annual Audit Report on the PCSO For the year ended December 31, 2008)

28. Clearly, the media fund of PCSO enjoys hefty funding and one that is constantly unmonitored and highly untransparent with its accounting, despite constant reminders from COA. Thus, it would not be outside the mandate of the Honorable Ombudsman to also conduct an investigation on the foregoing matter, including the anomalous contracts mentioned above and in Rep. Colmenares privilege speech, Arroyos highly irregular and illegal act of appointing Uriarte as General Manager of the PCSO and the subsequent illegal assumption of Uriarte as Vice-Chairman of the PCSO Board, and thereafter, file appropriate charges against Arroyo and Uriarte for any violation of the law.

29. We ask the Ombudsman to immediately order the sequestration of all documents, including the liquidation reports, if any, submitted to then COA Chairman Reynaldo Villar, pertinent to the PCSO anomalies. We also ask the Ombudsman to immediately conduct a lifestyle check on both respondents Arroyo and Uriarte including the monitoring of their assets and bank accounts including the freezing of their accounts if necessary. 30. We are executing this Complaint-Affidavit to attest to the truth of the foregoing and to charge Arroyo and Uriarte of the crimes mentioned and discussed above. IN WITNESS WHEREOF, we have hereunto affixed our signatures this 12th day of July 2011 at Quezon City, Philippines.

REP. TEDDY CASIO Bayan Muna Representative Complainant-Affiant

REP. NERI JAVIER COLMENARES Bayan Muna Representative Complainant Affiant

SUBSCRIBED AND SWORN TO before me this 12th day of July 2011 at Quezon City, Philippines. I hereby certify that I have personally examined the affiants and I am satisfied that they read and understood the contents of their affidavit and that they have voluntarily executed the same.