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Other issues Passing on to the public the burden of settling
largely private debts raises enough ethical and equity issues, but that a large
part of these debts were possibly incurred under fraudulent circumstances and
now saddle the Filipino people with onerous conditions, raises even stronger
arguments against honoring them any further. Of the 419 assumed loan accounts that passed on to
government in 1992, at least 130 accounts amounting to P50.29 billion have been
found to be behest loans. This means that they are positive for at least two of
the indicators defined by Ramos when he created the Presidential Ad Hoc Fact
Finding Committee on Behest Loans (PAFFCBL): undercollateralized bad credit mortgage, undercapitalized borrowers, endorsements by high government officials (credit), extraordinary speed in release of loans, stockholders or management closely associated with the Marcos cronies, corporate layering, and
diversion of loans proceeds to other purposes.30 Topping the list
are Marinduque Mining Corporation with total loans from the PNB of P7.03
billion; the Philippine National Construction Corporation with P6.17 billion
(P5.18 billion from the PNB and P.099 billion from the DBP) and Batong Buhay
Gold Mines with P49.3 billion from PNB.31 Until today, the Filipino people fight an uphill
battle to prosecute those who incurred these bad debts, in the absence of
strong political will on the part of government to deal with this matter
decisively. As early as 1987, Aquino issued Executive Order 150 creating the
Presidential Blue Ribbon Committee for mortgage of initiating a probe. However,this was soon replaced by the Senate Blue Ribbon investigation body led by
former senator (now vice president) Teofisto Guingona. COA also embarked on its
own probe of 16 corporations in 1992 but failed to gather enough basis to
warrant the filing of charges. 32 Meanwhile, efforts of the to recover at least
a part of old behest loans are meeting with little success at the Ombudsman's
office, which must first establish probable cause for any case to prosper.
Significantly, in 2001, the Ombudsman Aniano Disierto was found by the Supreme
Court to have exercised grave abuse of authority when he threw out the case of
Philippine Seeds, Inc. on a technicality, and not on the merits of the case.
Some 44 cases of a strongly behest nature will prescribe in 2002 if the PCGG
does not file them within the year.33 Legitimizing the debt burden: other instruments Several instruments made it possible to pass on
private debts to the Filipino people, as loans assumed by the National
Government. A major instrument, the only one of its kind in the world, is a bequest of the Marcos regime - specifically Section 31 of Presidential Decree 1177, or the Budget Reform Decree of 1977 - that provides for the automatic appropriation of tax revenues for debt service payments. The Aquino government went a step further by instituting mortgages of theRevised Administrative Code of 1987 which provides "(a) personal retirement premiums, government service insurance, and other similar fixed expenditures, (b) principal and interest on public debt, remortgages and national government guarantees of obligations which are drawn upon, are automatically appropriated"(boldface italics supplied). Effectively, this measure:
The significant growth of the public sector's domestic
debt during Aquino's term also bears looking into. Despite wooing prospective bad credit, Aquino failed to attract new loans from creditors. This scarcity inforeign financing and failed efforts at tax reform prompted heavy borrowings
from the domestic market to pay for an oppressive debt burden. While the
foreign debt grew only slightly, domestic debt ballooned from P118.4 billion in
1986 to loans in 1993. "The shift from foreign to domestic debt meant
that a large amount of fraudulent and behest loans had been securitized and
therefore legitimized."
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