By Malou Mangahas and Karol Ilagan
Philippine Center for Investigative Journalism
NEARLY EVERY month in the last half of 2017, the Department of Social Welfare and Development Field Office in Region XII (Central Mindanao) went on a shopping binge and ended up splurging over a billion pesos.
It spent the sum — courtesy of taxpayers — on mongo beans, dried fish, canned fruits, toothbrushes, toothpaste, shampoo, sanitary napkins, slippers, blankets, malong, mats, mosquito nets, frying pans, and kettles, all via negotiated “emergency cases” and “small value” contracts for supplies, in the name of the families displaced by the siege of the Islamic City of Marawi last year.
But 13 of the 14 supply contracts that DSWD-FO XII awarded from June 5 to Nov. 21, 2017 went to only three contractors. The three, malls with grocery stores, are Tacurong Fitmart, Ororama Supercenter, and Ace Centerpoint.
Altogether, the three malls collected P1.09 billion from DSWD-FO XII alone in government supply contracts variably for delivery of hygiene kits, “family kits,” kitchen kits, food packs, and groceries.
So far away
Marawi City is a part of the Autonomous Region in Muslim Mindanao (ARMM), and not of Region XII, or SOCCSKSARGEN, the central Mindanao region that includes the four provinces of South Cotabato, Cotabato, Sultan Kudarat, and Sarangani, as well as General Santos City.
The top three supply contract winners of DSWD-FO XII came from its own area of operations and offices in Koronadal City, even though the bases of these suppliers are located quite a distance away from Marawi itself.
Tacurong Fitmart Incorporated, which is based in Sultan Kudarat, about 252 kilometers or over six hours away by car from Marawi City, secured from DSWD-FO XII seven supply contracts worth a total of P806.8 million.
Ororama Superstore, a mall and store chain with head office in Cagayan de Oro City — 102.9 kilometers or two and a half hours away by car from Marawi City — got three supply contracts from DSWD-FO XII worth a total of P158.8 million.
Ace Centerpoint is a mall based in Koronadal City, South Cotabato that is 283.2-kilometers or nearly seven hours away from Marawi City. It got three contracts from DSWD-FO XII worth a total of P128.9 million.
Tacurong Fitmart and Ace Centerpoint have been perennial winners of contracts from DSWD-FO XII for years now. Ororama Superstore is a relative newcomer to government contracts, but it experienced a phenomenal rise as a top DSWD-FO XII supplier after the Marawi siege.
According to the resolutions of the Bids and Awards Committee (BAC) that handled the contracts, these suppliers were chosen because each had submitted quotations that offered the “lowest and most advantageous price” over the other bidder-suppliers.
The contracts were “negotiated purchases,” which under Republic Act No. 9184, or the Government Procurement Reform Act, are allowed for various instances, including “emergency cases.”
The law’s Revised Implementing Rules and Regulations in Section 52, paragraph 2 explains “Emergency Cases” thus: “In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities. In the case of Infrastructure Projects, the Procuring Entity has the option to undertake the project through negotiated procurement or by administration or, in high security risk areas, through the AFP.”
Apart from DSWD’s 13 contracts that cost a total of P1.1 billion, five other government agencies awarded six smaller supply contracts (P7 million altogether to nine contractors) for Marawi relief efforts from July to December 2017. Award notice abstracts reveal these agencies as DSWD-CARAGA, the Coast Guard Civil Service Command, Department of Education-Iligan City, the National Housing Authority, and the Home Development Mutual Fund – Region X.
To be sure, though, these contracts do not cover all the interventions extended to the estimated 350,000 people from the cities of Marawi and Iligan City, as well as parts of Lanao del Sur, who had to flee their homes because of the five-month battle between soldiers and Islamist militants.
Deliver in 7 days
By all indications, a lot more goods and services at a much more hefty bill may have been provided by government agencies, but the contracts for these have yet to be posted in the Philippine Government Electronic Procurement System (PhilGEPS), the source of documents reviewed by PCIJ. As of press time, PCIJ has found no information showing that any of the award notices had been cancelled since.
At a press briefing last April 20, DSWD-FO XII Director Bai Zorahayda Taha said that relief assistance amounting to over P1.26 billion had been extended to the displaced families. The amount covered financial assistance, cash for work or temporary employment, livelihood assistance, and balik-probinsya or transportation allowance for those who want to return to their homes.
In recent months, however, several incidents have been reported in the news media about the delayed or incomplete distribution of hygiene, family kits, and food packs among beneficiary families.
The nation has refocused again on Marawi this week as the siege of the Islamic City marked its first anniversary last May 23. Which is just as well, since public interest and attention on Marawi’s displaced families seemed to have been dissipating in the last few months. A senior ARMM official also told PCIJ that the latest distribution of goods for Marawi’s displaced families — home-based and at emergency centers — by DSWD-FO XII happened last Jan. 10 yet, or four months ago. Last March 2, DSWD personnel conducted another distribution of goods, but only at the emergency centers, the official said.
The big mystery is why DSWD-FO XII awarded contracts in the hundreds of millions of pesos to malls and store chains with medium-size assets and little or limited financing capacity. These same malls and store chains took on the contracts even though they were required to deliver the huge quantities of goods within a tight timeframe: “within seven days” upon receipt of notice to proceed.
Most of the purchase orders for the contracts stipulated the delivery of the supplies direct to multiple evacuation or temporary shelter sites across Marawi City and other parts of Mindanao.
A standard penalty clause appears in these contracts: “In case of failure to make the full delivery within the time specified above, a penalty of one/tenth (1/10) of one percent for every day of delay shall be imposed on the undelivered items.”
A few other contracts, however, did not state the delivery period required of the suppliers, or even where the supplies should be delivered. This set of contracts stated only that the “Place of Delivery” would be the “RRMS” or the Risk Reduction and Management Service, an agency unit, but not an exact location or place.
All the purchase orders or POs were signed by DSWD-FO XII Director Taha, as well as Rohaifa L. Calandada, said to be the agency’s “regional accountant” who certified to the availability of funds for the contract, and a representative of the supplier. Curiously though, all the POs left blank the space for “Fund Cluster” where the agency’s accountant should have indicated the source of monies that would be used to pay for the supply contracts.
Records of the DSWD-FO XII contracts that PCIJ obtained on a formal request for information with PhilGEPS show that the bids were approved by three BAC members: Jackie A. Lao, chairperson; Emerita Q. Dizon, vice-chairperson; and Mohammad Fayez D. Sarip, provisional member.
The records also show that the shopping frenzy allowed the top three suppliers to alternately or simultaneously bag huge to mammoth contracts from DSWD-FO XII nearly month on month.
Total budget: P3.5B
It is most unusual, however, that on a single day, Nov. 17, 2017, a Friday, the agency simultaneously awarded four multimillion-peso contracts — two to Ororama, and one each to Tacurong Fitmart and Ace Centerpoint.
That day, DSWD-FO XII gave away a total of P756,644,559.20, or three-fourths of the billion-peso amount for supplies that it spent in the second half of 2017 supposedly to assist the displaced residents of Marawi.
It appears, however, that the agency was gearing up for an announced “homecoming” of Marawi’s displaced residents on Nov. 29, 2017, when the government was going to give away food and other supplies. The suppliers, in fact, were given just a week to deliver all the goods, which would give authorities time to prepare and reassemble them into kambalingan or homecoming packages.
The shopping frenzy came after a period of unhurried disbursement of assistance funds. In Marawi last Nov. 18, then DSWD Acting Secretary Emmanuel Leyco at a press conference said that a full month after the five-month siege had ended, DSWD had disbursed only P682 million — P128 million in cash assistance and P500 million in food and non-food items — for the displaced families.
Then again, the amount was yet a pithy fifth of what Leyco said was a total allotted budget of P3.5 billion “for assistance” that, he added, the DSWD hoped to use up by end of 2017.
4 big deals in a day
On Nov. 17, 2017, Ororama won two contracts (P65,176,400 for “hygiene kit” and P72,000,000 also for “hygiene kit, 40,000 units”), or a total of P137,176,400, all in a day’s negotiation.
Ace Centerpoint that same day won a contract worth P30,292,680 for “sleeping kits.” But this small amount would soon be enhanced when, a week later on Nov. 21, DSWD-FO XII awarded Ace Centerpoint yet another contract worth P88,591,800 for “family kits.”
Also on Nov. 17, 2017, Tacurong Fitmart romped away with the lion’s share of P589,175,479.20 for a single contract for “Set B, Family Food Packs.” The award notice abstract for this contract covered the delivery of “family food packs,” each of which consisted of 1 kilo of mongo beans; dried fish, 400 grams; turmeric, 50 grams; iodized salt, 250 grams; brown sugar, 250 grams; instant coffee, 50 grams; Vitamin A-fortified cooking oil, 450 ml per bottle; and packaging box.
The award notice abstract required the delivery of 1,143,120 units of food pack, or a unit cost of around P515.
PhilGEPS shows that the “status” of the award notice abstract for the P589-million contract of Tacurong Fitmart is marked “posted”. This could mean that a notice to proceed has not been issued yet when the document was created.
Yet still, the document was created, published, and last updated on Jan. 29, 2018 by no less than DSWD-FO XII Director Taha, who is also named as the “approver” and “contact person” for the contract. The award notice abstract shows on its margins the existence of three related project documents that PhilGEPS has not yet made available to PCIJ.
Except for this, the rest of the awards won by Tacurong Fitmart, Ororama, and Ace Centerpoint had an “updated” status, which means that a notice to proceed had already been issued.
Tacurong Fitmart: 7 contracts
The immensely big P600-million contract was to be the crowning glory of Tacurong Fitmart’s contracting relationship last year with the social-welfare agency. In all, it bagged seven Marawi-relief contracts from DSWD-FO XII, from June 5 to Nov. 17, 2017, with the six others being:
- Grocery Items (840 box Corned Beef 150g/ 100’s; 2,100 box Sardines/100’s; 487 case 3 in 1 coffee/36×12; 875 case Powdered Cereal Drink 24’s x12). The contract valued P8,165,887.03 was awarded on June 5, 2017.
- Hygiene Kit, 20,000 packs (Composition: Toothbrush for adult-2 pcs; Toothbrush for kids- 2 pcs; Toothpaste for adult- 150ml; Toothpaste for kids-150 ml; Bath soap-80 grams; Hand towel; Alcohol 70%- 150ml; Napkin with wings). The contract valued at P7,049,200 was awarded on June 5, 2017.
- Ramadhan Pack, 95,822 packs (canned fruit cocktail at 836 grams, 2 pieces); condensed milk in can 300 ml, 2 pieces; all-purpose cream 250 ml box, 2 pieces; powdered choco malt drink 500 grams; 1 kilo brown sugar; 1 liter oil (plastic bottle); 340 grams bihon soy sauce; and chicken broth cubes). The contract valued at P82,288,100.72 was awarded on June 21, 2017. Each unit would cost around P858.
- Hygiene Kit (each with 2 pcs Toothbrush for adult, medium; 2 pcs Toothbrush for kids, medium; Toothpaste, 150ml for adult; toothpaste, 150ml, for kids; Bath Soap, 80g; Hand towel, red/blue/yellow,100% cotton, 11x 8 inch; shampoo 150ml; napkin with wing, all night). The contract valued at P10,718,700 was awarded on July 24, 2017.
- Grocery Items (17,147 Century tuna flakes in oil at P1,492.65 per case,155 grams, 50/case; 17,862 cases of Argentina corned beef at P1,608.6 per case, 150 grams, 48/case; 5,954 cases of Nescafe Blend & Brew 3-in-1 coffee at 1,361.04 per case, 240/case; and 285,780 pieces of Hobi bihon at P53 per kilo). The contract valued at P77,577,254.91 was awarded on Sept. 22, 2017.
- Kitchen Kits, Dining Utensils (each kit with 5 pieces stainless steel spoon; 5 pieces of stainless steel fork; 5 pieces of plastic drinking glass; 5 pieces plate; plus cooking ware including a metal-alloy-zinc frying pan, cooking pan with cover and handle, and a ladle). The contract valued at P31,810,800 was awarded on Oct. 11, 2017.
Top supplier then, now
Before the armed conflict in Marawi, Tacurong Fitmart was already DSWD-FO XII’s No. 1 contractor, having provided more than P120.8 million worth of relief items, also for victims of other disaster- and conflict-related events from 2015 to 2017.
After the siege of Marawi, Tacurong Fitmart’s contracting history with DSWD-FO XII shot up to P927 million, keeping its No. 1 spot. Elsewhere, Tacurong Fitmart has also bagged contracts from the City of Tacurong, Department of Labor and Employment (DOLE)-Region XII, Department of Public Works and Highways (DPWH) – South Cotabato, and the Province of South Cotabato, PCIJ analysis of PhilGEPS data show.
Its Marawi-relief contracts alone come up to a total of P806.7 million. This amount is bigger than the total amount of contracts (P673.8 million) implemented by DSWD-FO XII from 2015 to 2017, based on PhilGEPS data.
According to its latest available financial statement at the online repository of the Securities and Exchange Commission (SEC), Tacurong Fitmart had its current assets at P191.8 million and current liabilities at P141.3 million in 2014. It also had non-current assets worth P41 million in 2014. The company’s asset value at the time is way below the value of the Marawi supply contracts it won in 2017.
If its financial position remained the same in 2017 as in 2014, it must have had a credit line in order to be able to deliver all the goods procured by DSWD-FO XII.
A family-owned wholesale and retail business, Tacurong Fitmart has been registered with the SEC since 1992. Among its stockholders are Maria Virginia H. Villaruel, Derrick H. Villaruel, Deangelo H. Villaruel, Dexter H. Villaruel, and Ramona V. Ong, according to its 2014 general information sheet or GIS. Maria Virginia H. Villaruel is Tacurong Fitmart’s president.
Interestingly, a Virgina H. Villaruel in 2004 donated campaign materials worth P200,000 and media placement valued at P500,000 to Richard Gordon, who was then running for senator.
Ororama: 4 contracts
Ororama, meanwhile, had to deliver P158.8 million worth of goods in 2017. For purposes of comparison, it can be said that the company’s current assets in 2014, which then stood at P170 million (latest available information), is higher than the contract amount it is supposed to deliver.
But then its current liabilities were at P222.8 million, according to its 2014 financial statement. Ororama Supercenter’s financial position was not in tip-top shape in 2014, although it did have non-current assets worth P106 million, which could be sold for more liquidity. It also reported retained earnings at P33 million.
Ororama is a new entry to DSWD-FO XII’s list of contractors, at least according to PhilGEPS data from 2015 to 2017. But it had bagged contracts worth P164 million from other agencies in the region such as the City of Tacurong, Department of Labor and Employment – Region XII, Department of Public Works and Highways – South Cotabato, and the Province of South Cotabato, PCIJ analysis of procurement data show.
A store chain based in Cagayan de Oro and which started in 1969, Ororama now has three branches, one in Cogon, Carmen, and the TLP (Total Lower Price) store at Market City in Lapasan, Cagayan de Oro, according to its website. Ororama sells various items such as glassware, kitchenware, and ready-to-wear clothes.
Erwin Bryan O. See, Susan O. Lim, Ong Eng He, Genevieve O. See-Yap, and Michelle Marisa O. See are the listed owners of Ororama in the company’s 2015 GIS. A wholesale and retail business, Ororama registered with the SEC in 1996.
Ororama placed a very far second to Tacurong Fitmart among the contractors that would be most blessed with Marawi-relief contracts. Still, it won three multimillion-peso contracts from DSWD-FO XII, and a fourth more modest one from HDMF-RX (Home Development Mutual Fund-Region X that is more popularly known as Pag-IBIG Fund):
- Grocery Items (11,206 cases Tuna Flakes in oil, 50’s/ case; 5,604 cases Sardines, 155g, 100’s/ case; 4,670 cases 3 in 1 coffee,8 x 30 x 20 g; 3,244 Powdered Cereal Drink Vanilla Flavor, 12×24’s); The contract valued at P20,730,476.80 was awarded on July 7, 2017.
- Hygiene kit with no specified contents and unit cost and number. The contract valued at P941,800 was awarded by the HDMF-RX on July 19, 2017.
- Hygiene Kit, 40,000 units, with each set containing 1 piece Sunny Ware plastic bucket with cover (20 liters capacity); 5 pieces of Colgate toothbrush (3 for adult, 2 for children); 5 pieces Unique toothpaste (100 ml); 7 pieces Palmolive shampoo (180 ml each); 10 pieces Safeguard bath soap (135 grams each); 3 pieces Tide laundry bar (380 grams each); 1 four-roll coreless Tissue; 1 Sisters sanitary napkin (8 per pack); 2 pieces of 8-inch comb; 1 piece Gillette disposable plastic shaving razor; and 1 3-inch nail cutter.
The purchase order did not specify the unit cost for each item, but the whole set is supposed to cost P1,800 each. The contract valued at an absolute P72 million was awarded on Nov. 17, 2017.
- Hygiene Kit, 36,208 sets, with each set containing 1 piece Sunny Ware plastic bucket with cover (20 liters capacity); 5 pieces of Colgate toothbrush (3 for adult, 2 for children); 5 pieces Unique toothpaste (100 ml); 7 pieces Palmolive/Sunsilk shampoo (180 ml each); 10 pieces Safeguard bath soap (135 grams each); 3 pieces Tide laundry bar (380 grams each); 1 two-ply, four-roll coreless tissue; 1 Sisters sanitary napkin (8 per pack); 2 pieces of 8-inch comb; 1 piece Gillette disposable plastic shaving razor; and 1 3-inch nail cutter. The purchase order said each kit would cost P1,800. The contract valued at P65,176,400 was awarded on Nov. 17, 2017.
Ace Centerpoint: 3 contracts
The third-placer among the Marawi-relief contractors, Ace Centerpoint, meanwhile won three contracts from DSWD-FO XII:
- Malong, 40,000 pcs, with the following specifications: thick double tri-colors/5 colors, 1 yard width and 1 1/2 yard height. The contract valued at P9,990,000 or P249 per malong was awarded on June 21, 2017.
- Sleeping Kit, 38,104 pcs, each containing 2 70” X 80” wool blankets; 1 piece or at least 72” X 80” plastic mat; 1 piece mosquito net; 1 piece malong-like (“wrap around like tube cloth”);and 1 piece packaging. The contract valued at P30,292,680 or P795 per kit was awarded Nov. 17, 2017.
- Family Kit, 38,104 pcs, each containing 5 pieces of at least 24” X 46” bath towel; 2 pieces ladies’ large cotton panties; 2 pieces men’s large cotton briefs; 3 pieces girls’ medium cotton panties; 3 pieces medium cotton boy’s briefs; 2 pieces white large cotton sando bra (adult); 3 pieces white medium cotton sando bra (child); 4 pieces unisex cotton T-shirt for adult; 6 pieces unisex cotton T-shirt for children; 4 pieces unisex cotton shorts for adult; 6 pieces unisex cotton shorts for children; 2 pieces rubber slippers for adult; 3 pieces rubber slippers for children; and 3 pieces carton for packaging. The contract valued at P88,591,800 or P2,325 per kit was awarded on Nov. 21, 2017.
A sole proprietorship, Ace Centerpoint’s contact person for the Marawi projects is Dianalyn Valles, head of its accounting department.
In the 2007 elections, Ace Centerpoint donated posters worth P117,500 to Datu Pax Sandigan Mangudadatu, then running for district representative. Companies at the time were still allowed to donate to candidates. — PCIJ, May 2018