SJE TRANSCRIPT BLUE RIBBON HEARING NO. 2 SUGAR FIASCO
30 August 2022

SJE: Thank you, Mr Chair. I would like to propound some questions addressed to Administrator Serafica. This is in furtherance to my questions during the first hearing regarding Section 2 of Sugar Order 4. My first question is: Why do you allow or promote assignment of sugar allocations? Is that your idea? By the way, you drafted this SO 4, right?

Serafica: Yes, Your Honor.

SJE: I asked this question last hearing and you answered in the affirmative

Serafica: Yes, Your Honor

SJE: You are familiar with Section 2 of Sugar Order 4, so why do you allow or promote assignment of sugar allocation? Is that your idea?

Serafica: If I may read Section 2 your honor, qualified participants, industrial users, sugar producers, planters associations, mills and sugar traders that are duly registered with SRA as international trader for crop year 2021-22 and in good standing are qualified to participate in this import program provided that an industrial user must have complied with Memorandum Circular number 17 series of 21-22, provided further that a qualified participant may assign its import allocation to another qualified participant. The assignor is considered the importer on SRA record, as used in this order; industrial users shall refer to food and beverage manufacturers using sugar in the manufacture of their finished products in the country of their domestic market. There are some industrial users, your honor, who would rather do or assign importation through an international trader. That is their prerogative so they will hire the services of an international trader to import for them.

SJE: Are you aware that you are only encouraging financially incapable or fly-by-night companies to participate and be given sugar allocations, fully knowing well that they will thereafter assign or sell to another qualified participant their sugar allocation for a fee or commission?

Serafica: In this case your honor, in the Memorandum Circular Number 17, only industrial companies were required to submit under oath their actual consumption from Jan to July of this year, then Aug to Dec on projection and it's under oath whatever is their projection or actual consumption will be pro-rated whoever they are and how many they are correspondingly to their submission of under oath documents, your honor.

SJE: For sugar allocations that were issued from 2018 up to the first half of 2022, can you submit to the committee the list of all the names of the personalities that were given allocations including their respective volumes?

Serafica: We will comply, your honor.

SJE: When can you submit it? Do you have a copy of the list of names right now?

Serafica: I don't have it with me your honor but I think I need the help of the committee, the assistance of the committee to ask this from the SRA because I have no more access to SRA records since I already resigned from SRA, your honor.

SJE: Mr. Chair can we please instruct the committee to acquire all those documents needed?

SFNT: Can you repeat that, your honor?

SJE: The name of the personalities that were given allocation including their respective volumes.

SFNT: The Committee Secretary is instructed to acquire the list of names/personalities and their allocation with corresponding volumes, several traders pursuant to SO3 and the previous allocations given by the SRA. So, directed.

SJE: And likewise, kindly submit to us the list of names of all qualified applicants that assigned their allocations and their respective assignees

SFNT: Likewise, per request of Sen Estrada the same is granted.

SJE: Thank you, Mr. Chair.

SJE: As mentioned in the last hearing, may I know your reason for not requiring the posting of performance bond in Sugar Order number 4?

Serafica: It will just add up cost as far as the consumers in this case your honor, the cost of money on the importers, definitely they will pass this on to the consumers with all the rising cost now that the consumers are already undergoing this will be an additional cost on their part when this imported sugar comes in.

SJE: But according to the Senate President refundable naman to di ba?

Serafica: Even though it is refundable your honor it is still part of their cost of bringing in the sugar to the country.

SJE: You are not protecting the interest of the government by not letting them post a performance bond unlike in Sugar Order number 3, am I correct?

Serafica: If I may just read the Section 10 of SO 4. Prohibited Acts and Sanctions: Submission of misleading or false information or documents, non-compliance or violation with any provision of this order, any orders, resolutions or circulars of SRA shall result in the disqualification to participate in future sugar import programs of SRA. This is without prejudice to other penalties as provided in the SRA Book of Penalties and existing laws such as the Agricultural Anti-Smuggling Act.

SFNT: Sen Estrada, with your permission, if I may interject?

SJE: Yes.

SFNT: Administrator, yung sinasabi nyo magiging liable yung nagviolate subalit sana-draft nyo na SO 4 yung assignor ang magiging importer, so if the assignor is the importer and the assignee commits a violation, who will then be laible, the importer on record or the importer who just received his assigned rights. The assignor is the importer on record, the assignee has no name, The assignor-assignee relationship is just between them. The real nexus is between SRA and the original assignor. SRA has no relationship with the assignee. If the assignee violates, the violator is not the assignee but on record, the assignor. The assignor now can escape liability because he has nothing to do with that, he already assigned. Yun ang magulo sa SO 4 Mr. Serafica. Yun ang tinatanong ni Senator Estrada, sino yung magiging liable, yung actual na nag violate or violator on record na hindi naman nag violate. Paki sgaot po yung tanong ni Senator Estrada.

Serafica: Again I go back to what is written on Section 2 qualified participant may assign its import allocation to another qualified participant, the assignor is considered the importer on SRA record, as used in this order

SFNT: Yun ang sinasabi ko, yung assignor on record pero si assignee wala sa record. Simplify natin ito. Parang LTFRB, wag naman magalit sa kin LTFRB, ikawinisyuhan ko ng prangkisa ang ginawa mo nagkabit system ka, ang nakabangga ng bus yung may prangkisa, parang kabit system it ng mga franchise, dun ka ba nakakuha ng idea?

Serafica: Dito po sa Section 2 industrial user must have complied with Memorandum Circular number 17 series of 21-22, this qualification is under oath they have to submit their actual consumption from Jan to July.

SFNT: Who will submit ? The actual importer?

Serafica: Industrial Users, your honor.

SFNT: Yun na nga ang magulo dito, so una ang tanong ni Sen. Estrada, ano ang authority mo na alisin yung nandun sa dating SO3? Pagpunta sa SO 4 wala ng performance bond. We have to determine accountability. In this case you diluted everything, pwedeng umiwas si original assignor importer kasi on record lang ako ginamit lang ako kasi di ko na kayang ipagpatuloy medyo gumulo yun kaya dinidiin ni Sen Estrada yung tanong nya. Simple lang, bakit mo ginawa yun?

SJE: Baka meron sya pinapaboran na iba.

Serafica: We do not do that. This is for all industrials in this case, your honor, for as long as they comply what is in Circular 17

SJE: Sagutin mo muna yung tanong ni Chairman

SFNT: You may answer the question. Pasensya na napataas boses ko.

Serafica: Mr Chair, again on the qualifications of the participants, it is well provided here in Section 2 Mr. Chair, that a qualified participant after having complied with Memorandum Circular number 17 may assign its import allocation to another qualified participant, in this instance, the assignor is considered the importer on SRA record.

SFNT: Your section 2 will not determine liability between the assignor and assignee. Because it is only the original assignor has the legal relationship with SRA kasi sya yung nag import maging yung Section 2 mo gumulo na. Section 2, qualified participants, Industrial users, sugar producers, planters' associations, mills and sugar traders that are duly registered with SRA as international sugar trader for crop year 2021-22 and in good standing are qualified to participate. What is the assignee is not in good standing, what if it is only the original assignor is in good standing, di ba circumvention na po ito, because the assignor is considered the importer on SRA record so you can only after the original assignor as used in this order industrial users shall refer to food and beverage manufacturers using sugar in the manufacture of their finished products in the country of their domestic market. Ang tanong ulit dito bakit hahayaan ipasasaiba, bakit hindi na lang pumili ng qualified importers? Tanong ko sayo ha, although this is a gray area, importer can assign to an assignee, can assignee assign to another assignee and have a sub-assignee, hanggang ilang level yun?

Serafica: its only on once instance

SFNT: Nakalagay po dito yun? Saan nakalagay dito na hanggang isang assign lang? Wala.

Serafica: In this case your honor there are documents that need to be submitted to SRA, the act of assignment is documented

SFNT: How many assignments can be done? Can an assignee sub-assign, can a sub-assignee again sub-assign, wala dito yun. This can be interpreted in another way nakatatlong assign assign na.

Serafica: Only qualified international trader registered in SRA in good standing your honor.

SFNT: I have taken too much time Senator Estrada,

SJE: You should continue.

SFNT: Go ahead.

SJE: Tinatanong kasi ni Chairman, ilan beses ba pwedeng mag reassign. Baka pwede nyo sagutin kasi ang sagot nyo basta nasa good standing pwede kayo mag reassign, isang beses, dalawang beses?

Serafica: For example, if an industrial company, your honor wants split his allocation assuming his allocation is 10,000MT, he can assign it to 2 or 3 International Traders of his choice but this are all covered with Deed of Assignment, submitted to SRA, Your Honor

SJE: Pano kung pumalpak?

Serafica: They will be liable to all of this

SJE: That's why there is an importance in posting a bond, yun ang sinasabi ko. Unlike in Sugar Order Number 3 na meron talagang Performance Bond, basahin ko Section 8.2 in Sugar Order Number 3 ha

SJE: Bakit nyo tinanggal sa SO Number 4, e pwede naman isoli itong performance bond. I believe you are not protecting the interest of the government? I believe you are not protecting the interest of the government.

Serafica: As Ive said here, my appreciation or my judgement on the added cost to the consumers, we are already relying on expensive retail prices, your honor.

SJE: Mr. Chair I still believe that this person is not protecting the interest of the government by neglecting or by not including the Performance Bond in Sugar Order Number 4. Magkano lang yun? Magkano lang ang Performance Bond? Kung inilagay mo dyan sa SO4, how much cost will it entail the users

Serafica: Cost of money of importers will be passed on to consumers

SJE: Magkano sa tingin mo?

Serafica: I have no idea, Your Honor

SJE: Ditosa SO 3

SJE: Again, yun pa din ang sagot mo

Serafica: Yes, Your Honor

SJE: As SRA Administrator, have you taken steps to inquire from the exporting countries the total volume of imported sugar exported that were in fact exported to the Philippines and checked vs the actual sugar volume?

Serafica: I did not research into that, your honor.

SJE: Why?

Serafica: Because what we monitor is what comes in in every importation program. When importers submit their documents of their imported sugar, they submit all the data to the SRA including origin of the port submitted prior to SRA issuance of import clearances, once imported sugars land in our shores your honor.

SJE: As SRA Administrator, you should have taken steps to inquire from the exporting countries are you remiss of our duty as SRA Administrator?

Serafica: I am not, your honor. I have been doing my best in the exercise of my duties and functions.

SJE: Anyway, Thank you Mr Administrator. I would like ot ask some questions to the newly-appointed Commissioner of the Bureau of Customs,

SJE: how many cases of agricultural smuggling were apprehended by the BOC from 2018 up to the present?

BOC: We have more or less 125 cases your honor.

SJE: How many cases were filed involving agricultural products?

BOC: 125 cases your honor.

SJE: Meron na bang na sintensyahan dyan?

BOC: All of the cases are with the DOJ.

SJE: Becausee as far as I'm concerned, maraming mga kaso na nasa ilalim ng DOJ na na-dismissed because of lack of evidence and failure to actively prosecute those cases. Why is this so?

BOC: Regarding that your honor if we already filed the cases with the DOJ your honor, it is already beyond the purview of the BOC your honor.

SJE: how long have u been in the bureau

BOC: I have been acting BOC comm for 35 days,Your Honor. I have been with BOC enforcement and security service for 4 yrs... and 11 months

SJE: Can you please submit the list of cases since 2018? During the last Congress, former Senate President Sotto exposed some of the smugglers or protector in the bureau, what happened to them? Did you file charges? And who is this Manuel Tan, Andrew Chang and Luz Cruz, they're all allegedly, according to the former SP, they're all smugglers. Have you acted on this?

BOC: I have already directed our customs intelligence and investigation service to review the investigations that we have against them and if there is a need, if the evidence is strong enough we will file the cases against them.

SJE: So you haven't filed any cases against them?

BOC: I do not have yet...under my watch...please give me time.

SJE: When you assumed...did you act on this expose by the former SP?

BOC: yes your honor

SJE: so what is the status?

BOC: I have already directed the CIIS, the customs intelligence and investigation service, to thorough gather evidence against them so that once the evidence is strong your honor we will not be wasting the time of the DOJ, so that we will be sure that there will be prosecution and conviction that will happen your honor.

SJE: How many personalities are involved?

BOC: More or less your honor right now, the active cases that we have filed against 294 importers and 76 brokers.

SJE: Importers of?

BOC: Violators of agricultural products your honor.

SJE: Like sugar, poultry, correct? Rice, bigas. Most prominent are Manuel Tan, Andrew Chang and Luz Cruz. These are all smugglers, agricultural smugglers. Kasama ito sa 294 na sinasabi mo?

BOC: Yes your honor but we will check the records. Let me check our records. I will provide you...

SJE: Can you please update this committee with regards to the status of the cases that you filed against these alleged smugglers the soonest possible time. Thank you, Mr. Chair.