Press Release
October 5, 2010


On DND / AFP budget

DRILON: Today we heard the budget of the DND in the total amount of P104.6 billion for 2011. Our defense expenditure is the lowest among the 5 or 6 select ASEAN countries. We are the lowest in terms of defense spending as a percentage of GDP if we compare ourselves with Vietnam who spends 2.5% of GDP for defense expenditure; Singapore 4.9%; Indonesia 3% of GDP; Malaysia 2%; Thailand 1.8% and the Philippines 0.9%. We have the lowest defense expenditure among these ASEAN nations. Unfortunately, while we have already less than 1% of GDP as defense expenditure, the budget of P104.6 billion consists of 80% for personnel service consisting of P45.7 billion for our AFP personnel in the active service, and 36.8 billion for pension funds for retirees. I repeat, for those in the active service, we are spending in the 2011 budget P45.7 billion. For the pensioners, we are allocating P36.8 billion. In other words, of the P104.6 billion budget of the DND, 80% would go to personnel services and retirement and only 20% for MOOE and capital outlay, including the P5 billion modernization fund.

That is why we ask the DND to take a close look at this situation where we cannot hope to modernize if this is the proportion of PS to MOOE and capital expense. In fact, the pension fund allocation is of great concern because in 9 years time, assuming there would be no increases in the salary of the active personnel, our pension requirements would be equal to what we pay those in the active service. In other words, for every P100 that we allocate for the AFP for personnel service in 2019, P50 would go to the active service as salary and P50 would go to the retirees, and that's 80% of our defense budget.

We must confront the problem. First, I require the Phil. Veterans Affairs Office to submit to the committee a listing of all the pensioners that we are now paying pension, the names of the pensioners, their dates of birth, their addresses and the account number used by the PVAO where they deposit the pension payments. Mind you, we have veterans from the World War II which we are paying today as pension and there are currently 30,273 WWII veterans aged 85 years old and above. Not only that, there are 80,876 surviving spouses which should also be around that age, or a total of WWII veterans of 111,149 for which we spend in the current year P6.6 billion and for 2011, P6 billion is allocated. I require the PVAO, submit to me a list of all of these 111,149 names, their addresses, their date of birth, their account number because I suspect, and the present (members) of PVAO are just new, that we need a review of this, because, apart from the 111,149 WWII veterans, a total of P12.684 billion is allocated in the current year General Appropriations Act for pensions to 284,000 pensioners. In 2011, the allocation will amount to P12.7 billion to 271,698 pensioners.

We do not know how the number of pensioners is determined from year-to-year. But certainly we raise doubts as to the accuracy of these figures. We suspect that there are a lot of 'ghost pensioners', and this is the only way that we can ferret it out... yan po ay sinasabi nila 85 years old and above. Medyo mahirap paniwalaan na ganun karami ang mga survivors at surviving spouses ng WWII. Kung bibilangin mo mula 1945 hanggang ngayon, that's a total of 65 years. If in 1945 they were just 20 years old, that means they are 85 years old as of today and their spouses also would be about the same age. Mahirap paniwalaan na meron pang 30,273 mga beterano 85 years and over. Baka ito'y nagsa-shopping pa sa mall. Of course we recognize the reforms being undertaken, bu we do not know how fast the reforms are in the PVAO because every year we allocate billions of pesos for the veterans' pension. So this is one area where we ask them to look at.

We also asked them to give us a report on the utilization of over P31 billion in the modernization fund. The basis of our reports coming from the DND during the hearing did not tally with what they told us. So the committee, when it crafts the budget, will look closely into this area of the pension fund because this is about 38% of the total budget and yet we are not comfortable that these sums would go to the veterans because we suspect that many of them are ghost names.

Q: Ano yung parang mali... masyadong malaki ba yung sa personnel services?

DRILON: It's not wrong, they are forced by the circumstance because by law, you have to pay the veterans' pension. They have no choice but to allocate P36.8 billion for regular pensions and P45.7 billion for the regular AFP personnel. They have no choice on that because they are controlled by the number of veterans on the list...that's 284,000 names. The issue is, are these 284,000 names valid names? Or may mga beterano diyang matagal nang yumao at ang 'ghost' lang ang nagwi-withdraw ng tseke nila?

Q: Once you get the list, ano ang pag asa nating ma-check ito?

DRILON: We will coordinate with the DBM and look at this very closely.

Q: Similar din ba ang structure ngayon sa 2010 budget?

DRILON: Yes. The 2010 budget is P97.280 billion. Similarly structured. In 2010, P33.4 billion was for pensions, P41.4 billion was for regular payroll. At a certain point, these two amounts would be equal and as we go on, the pension would be more than the salary.

Q: If they have the budget for modernization...

DRILON: The difficulty is that given the constraints on our national budget, the modernization fund cannot be increased beyond P5 billion because we are on a deficit spending. The only way that you can increase the modernization fund is to have another Fort Bonifacio, wherein you sold assets and placed it in the modernization fund.

Q: Yung P31 billion accumulated ba ito? Since when?

DRILON: Yes, since the start of the AFP modernization more than 5 years ago.

Q: When was the last time they reviewed the list of pensioners?

DRILON: I do not know. I didn't ask that question. If you are to believe them, they do this on a regular basis.

Q: Is there a necessity to increase modernization fund?

DRILON: There is no question that the modernization fund should be augmented. The problem is where do we get the funds? As of this point, you can look at some of the assets. In part of their briefing would indicate that the Phil. Navy headquarters in Fort Bonifacio... that would be privatized and the proceeds of that privatization should go to the modernization fund. But we would like to see a better utilization of the AFP modernization fund. We have to confront certain issues.

Q: Hangga't hindi naaayos ang listahan nila malabong mapasa ang budget?

DRILON: It is difficult for us to accept that we will increase the budget of the pension because we were not certain about the validity of the list of veterans. In fact, there are alleged arrears in the obligated payments but we do not want to accept that that is a valid claim for arrears because our starting point is the validity of 284,000 listing of the veterans, including 111,149 WWII veterans who are supposed to be 85 years old and above including their surviving spouses. Ako po'y hindi naniniwala na ganon karami ang ating mga beterano lalo nap o yung galling ng WWII. Handa po kaming tumulong sa ating mga beterano ngunit yun lamang ang karapat-dapat na tulungan ang ating tutulungan.

Q: Would you assess the quality of the modernization?

DRILON: We are not happy with the report of those in charge of the modernization. They could not give us an accurate report of the projects completed, and therefore Sec. Gazmin has promised that he will take a second look at their structure for monitoring these modernization projects. The one in charge could not even give an accurate description of which projects have been completed, which projects are in the process of bidding, etc.

Q: Ano po ang gagawin nyo sa pondo sa mga beterano?

DRILON: Sa ngayon, rerebyuhin namin nang husto.

Q: Every single name?

DRILON: Baka hindi makaya ngunit sa palagay ko ay marami kaming makikita. Baka yung iba ay aabot pa ng 100 years old diyan.

Q: About the RSBS (AFP Retirement and Separation Benefits System)

DRILON: We asked questions and what is the status of the RSBS. Apparently they are not complying with the previous order to have it dissolved, notwithstanding the directive of the previous administration to dissolve the RSBS, liquidate their assets, and reimburse the soldiers for their contributions. Up to this day, instead of doing that, they are collecting premiums from the soldiers, which is really a cause of concern.

Q: Pinagkakakitaan ang mga sundalo?

DRILON: What is happening according to their explanation is para bang pag nag-retire si Staff Sergeant 1 at aalis sa RSBS, yung nakolekta sa Staff Sergeant 2 ang pambayad kay Staff Sergeant 1, hanggang mag-retire si Staff Sergeant 2 down the line. They are illiquid, they don't have enough liquid funds. So it's really something that must be looked into.

Q: Di ba nalugi yon dahil ininvest...?

DRILON: Nalugi yon. May mga investment na hindi tama, merong mga investment na nalugi, may investment na nalugi. In fact some of them are facing criminal charges.

Q: Sir sabi ng DND kailangan pa daw ng enabling law para ma-dissolve ang RSBS?

DRILON: We don't believe that. At the very least, they should start liquidating. It is within the power of the executive to say 'we should liquidate this' or 'we start the process of liquidation', meaning that you stop collecting, liquefy your assets and reimburse the soldiers for their contributions. The dissolution, by law, is a technical matter. But the purpose of that executive order is to make RSBS inactive as an ongoing concern so that at a certain time, they will totally cease operations. And there is no law that is necessary to execute the order of the President for RSBS to stop operating. To us, it was used as a justification to continue the collection, which is not valid.

Q: On 2011 budget

DRILON: Bakbakan na sa November. After we receive the General Appropriations Bill from the House, which we expect to be with us about mid-November, then we will look at it, we will look at how they reshaped the budget, we'll have one or two more hearings and then we will report that out. So we should be reporting out to the plenary before the end November.

Q: Before Christmas break approved ang budget?

DRILON: That's our target, yes.

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