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Introduction

Corruption has ferocious impacts on economic and societal development and is subject

to a vast range of institutional, jurisdictional, societal, and economic conditions. Corruption as one

of the oldest phenomenon in human society exist in every country current world. Corruption can

be defined in many ways such as general disease of body politics, public exploitation and abuse

of public office for private gain. The causes of corruption also are many in number. For example,

cultural factor, psychological factor and system related factors may cause corruption in every

society. There are some factors such as monopoly power, discretionary power and weak

accountability of public officials may give opportunities for corrupt acts. Corruption may decrease

the efficiency of public spending, decrease the budget revenues, raise the budget deficit, hinder

Foreign Direct Investment, reduce the effectiveness use of aid, dissolve political legitimacy and

hinders the democratic development.

Graft is one of the forms of corruption that is getting money in dishonest or questionable

ways. Corruption needs to discuss in the society so that the people will be aware of what is

happening in our government. We all know that it is one of our biggest problems in our country

even before and until now. It is usually more widespread and deep-rooted in developing countries.

In developing countries, aside from its immediate effect on the limited resources of the

government, corruption leaves an intense adverse impact in the integrity and competency of the

government in alleviating poverty.

According to Professor Susan Rose-Akerman: “Corruption is a symptom that something

has gone wrong in the management of the state. Institutions designed to govern the

interrelationships between the citizen and the state is used instead for personal enrichment and

the provision of benefits to the corrupt. The price mechanism, so often a source of economic

efficiency and a contributor to growth, in the form of bribery, undermines the legitimacy and

effectiveness of government.” (R.D. Pathak, “The Role of E-Governance in Tackling Corruption

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and Achieving Societal Harmony: Indian Experience”, available at

<http://www.napsipag.org/pdf/tackling_corruption.pdf>. We need to fight corruption because it

discourages investments, limits economic growth, alters the composition of government

spending, undercuts a nation’s mission to reduce poverty and hinders improvement in the quality

of life for the rural and poor segments of the developing countries. (J. Mistry and A. Jalai, “An

Empirical Analysis of the Relationship Between E-Government and Corruption”, available at

http://www.uhu.es/ijdar/10.4192/1577-8517-v12_6.pdf, citing Bharga and Bolongiata.

“Challenging corruption in Asia: case studies and a framework for action”, The International Bank

for Reconstruction and Development/ The World Bank. Working Paper No. 27580. Washington,

D.C. http://bit.ly/W5Urku.) “…corruption cripple’s development in many ways (Gray and Kaufmann

1988; Hutchcroft 1997). It worsens income inequality and poverty (Gupta, Davoodi, and Alonso-

Terme 1998), reduces investment rates (Mauro 1997), lowers economic growth (Tanzi and

Davoodi 1998), diminishes democratization, and weakens representation (Ocampo 2001). It

enervates economy and society in insidious ways. It is, as World Bank president James

Wolfensohn put it, a cancer." Challenging Corruption in Asia, pp. 3-4, Bhargava and Bolongaita

[2004 ed.]

According to the 2018 Corruption Perceptions Index reported by Transparency

International, Philippines is the 99 least corrupt nation out of 175 countries. Corruption rank in the

Philippines averaged 93.17 from 1995 until 2018, reaching an all time high of 141 in 2008 and a

record low of 36 in 1995.

This paper will present a condensed report on corruption in the Philippines. Information

was compiled by the authors from documents, articles, newspaper clippings and other data

gathered from the reports and journals of other researchers. The authors would like to work on

this process so that the Filipino citizens will enlighten their mind in choosing their leaders and at

the same time they will be awaken on what is happening in the political aspect of our state. This
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paper will become the avenue to edify every Filipino in our country and will serve as well as an

eye-opener to the readers.

Methodology

This study is an attempt to examine the graft and corruption in the Philippines through

descriptive research design. According to Shami & Hussain (2008) descriptive research is “a type

of research used to depict present day condition, settings and events”. In the quest of the study,

interview and secondary data will be used in gathering required data.

Review of Related Studies

According to the World Bank and Transparency International, corruption is the “misuse of

public offices for private use.” (Sapanjeet Kaur, “E-Governance-Impact on Corruption”,) A similar

definition was provided by Professor Susan Rose-Akerman: “Corruption is a symptom that

something has gone wrong in the management of the state. Institutions designed to govern the

interrelationships between the citizen and the state is used instead for personal enrichment and

the provision of benefits to the corrupt. The price mechanism, so often a source of economic

efficiency and a contributor to growth, in the form of bribery, undermines the legitimacy and

effectiveness of government.” (R.D. Pathak, “The Role of E Governance in Tackling Corruption

and Achieving Societal Harmony: Indian Experience”)

In the study conducted by (Fjeldstad, Sissener, et. al) Corruption is a complex and

multifaceted phenomenon with multiple causes and effects, as it takes on various forms and

functions in different contexts. The phenomenon of corruption ranges from the single act of a

payment contradicted by law to an endemic malfunction of a political and economic system. The

problem of corruption has been seen either as a structural problem of politics or economics, or as

a cultural and individual moral problem. The definition of corruption consequently ranges from the
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broad terms of “misuse of public power” and “moral decay” to strict legal definitions of corruption

as an act of bribery involving a public servant and a transfer of tangible resources.

Nelson Nogot Moratalla in his paper about “Graft and Corruption: The Philippine

Experience” also stated that corruption has been viewed as a “cultural and psychological

phenomenon in a country marked by incompatible legal and cultural norms” (Tapales 1995:407).

The former emphasizes “rationality and universal principles of action” as against and in conflict

with “reliance and obligation toward kinship, friendship and primary groups” (Bautista 1982). This

conflict is highlighted in the use of the alibi of a gift-giving culture to justify bribery and extortion,

or the Filipino regard for the other (pakikipagkapwa-tao) to justify giving benefits to unqualified

but personally known recipients.

In the study conducted by Ledivina V. Carilq'o entitled “The Definition of Graft and

Corruption and the Conflict of Ethics and Law”, Ledivina pointed out that the Philippine Law follows

the public-office definition of graft and corruption and includes those acts that are clearly private-

regarding as well as those which may only appear to be so. The bureaucratic-legal norms are in

marked contrast with personalism which the culture demands. The incongruence between legal

and cultural standards is such that what are deemed unacceptable by law fall within the ideal and

acceptable behavior according to the culture. and vice-versa. Nevertheless, the persistence of

graft and corruption in Philippine society does not necessarily manifest a legal-cultural conflict

since the most problematic form of corruption involves cash payments, which are both not legally

and culturally acceptable. In addition, (Endriga, 1979) found that the phenomenon of graft and

corruption in the present Philippine bureaucracy could be traced to the Philippine colonial

experience, especially during the Spanish period, but certain features in the culture of pre-

conquest Philippines could be described as amenable to corrupt behavior. It was during the

American period that public service was very much improved because (1) adequate

compensation was given to those in the civil service; and (2) the civil service law was effective in
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punishing guilty officials. The climate of rectitude was maintained throughout the Commonwealth

period. A recent study has characterized some main forms or manifestations of corruption,

according to a number of basic characteristics (Amundsen 1999). The main forms considered are

bribery, embezzlement, fraud and extortion. Even when these concepts are partly overlapping

and at times interchangeable with other concepts, they may identify some basic varieties of

corruption. Furthermore, in the study entitled “Graft and Corruption Practices Among Selected

Public Officials in Mindanao, Southern Philippines”, The findings revealed that the mayor

informants got elected through vote buying and bribery. Politics and family matters intersect as

informants are supported by their families during election who used guns, gold and goons to

ensure election victory. The clannish nature of the community finds expression also in the

selection of relatives in municipal employment and in accessing municipal resources. The most

prevalent corruption practice disclosed by the informants is amassing the internal revenue

allotment (IRA) for personal purposes in order to recover the huge amount of money spent during

election. Other types of corruption practices also include falsification of documents, nepotism,

bribery, kickbacks, and evasion of public bidding. These public officials also do not seem to

perform official duties in their towns as they live outside of their municipalities. Interagency

involvement of corruption among different government agencies in the areas studied are also

uncovered. Moreover, the perceived negative effects of corruption are manifested in the poor

delivery of the community’s basic social services in health, water supply, education, and security

protection. Corruption also adversely affects the construction of community infrastructure facilities

and the establishment of an equitable and solid economic base. The study has implications to the

strict policy implementation of the provisions of the 1991 Local Government Code of the

Philippines, The Anti-Graft and Corrupt Practices Act, and other pertinent laws in order to improve

the transparency, integrity and accountability of public officials not only in southern Philippines

but also in the entire country.

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A good number of independent bodies and advocates have undertaken surveys and

researches on corruption in the Philippines, with a common aim of promoting good governance,

accountability, and help counter corruption. Studies have shown that it is not by twist of fate why

most government initiatives are unsatisfactorily or even failed to combat corruption (Larmour &

Wolanin, 2001; SWS, 2004). Several factors including the governance environment in which weak

institutions and lack of political will facilitate and enable the ‘culture of corruption’ (Varela, 1996).

Among the most profound consequences of corruption are: a) social dislocation caused by

distorted economic growth, poverty and income inequality, b) shattered political credibility and

demoralized bureaucracy, and c) endangered public order and safety (Larmour & Wolanin, 2001).

If corruption is assumed to arise from greed and the discretionary powers of public officials,

there is still fresh and enough hope for offering a vision of leadership and a strategic reform of the

political and bureaucratic system; and that of the people’s attitude toward public office and public

service. Let this be the battle cry of every Filipino. (Pacoy, E. P., 2008)

Body

There are many definitions of corruption based on the different studies conducted by

different researchers. Below are the following definitions of corruption;

The word corruption is derived from the Latin word “corruptus,” which means “corrupted”

and, in legal terms, the abuse of a trusted position in one of the branches of power (executive,

legislative and judicial) or in political or other organizations with the intention of obtaining material

benefit which is not legally justified for itself or for others.

There have been a number of different attempts at defining corruption. However, no

precise definition can be found which applies to all forms, types and degrees of corruption, or

which would be acceptable universally. According to Oxford English Dictionary (OED) the term
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corruption in political context is defined as “Perversion or favor, the use or existence of corrupt

practices, especially in a state, public corruption, etc.”

One of the most popular definition of corruption was given by Leslie Palmier (1983, p.207).

According to this definition corruption is seen as the use of public office for private advantage.

According to Friedrich (1966, pp.174-5) the use of public office for private advantage is not always

widely perceived in a given society to be corrupt. "Particularly if an individual making personal

gain is simultaneously making a positive contribution to the society-there is no necessary

contradiction between private advantage and contributing to the general good-many citizens will

see such actions as at least acceptable and sometimes even just reward."

For our further discussion about the Forms of Corruption we take the definition given by

Leslie Palmier (1983, p.207) use of public office for private gain. This definition is both simple and

sufficiently broad to cover most of the corruption that we face, and it is also widely used in

literature. Public office offers many opportunities for private gain. Bribes are one of the main tools

of corruption. The Oxford English Dictionary defines a bribe as “a reward given to pervert the

judgment or corrupt the conduct.” A bribe consists of an offer of money by an outside party to

secure desired action from the governmental officials. Bribes can influence the choice of private

parties to supply public goods and services and the exact terms of those supply contracts.

According to Robert Thobabeen (1991, p.62) buying contracts can be called also Kickbacks

"when government officials may use their bargaining power with contractors and their discretion

in awarding contracts to obtain a fee or service charge for arraigning the contract. Another type

of corruption is the misuse of public property and funds. Control of property provides

opportunities for mismanagement and corruption. An extreme form is the large-scale

“spontaneous” privatization of state assets by enterprise managers and other officials in some

transition economies.
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Theft of government financial resources is another form of corruption, officials may

pocket tax revenues or fees (often with the collusion of the payer, in effect combining theft with

bribery) steal cash from treasures, extend advances to themselves that are never repaid, or draw

pay for fictitious “ghost” workers, a pattern well documented in the reports of audit authorities.

Robert Thobabeen (1991, p.63) brings another form of corruption Influence Peddling

when individuals with access to people in high places are sometimes tempted to trade on the

influence of high ranking government officials. "There is money to be made through sale of

access, the arrangement of contracts and timely intervention to secure favorable disposition of

regulatory decisions and government contract. The use of these kinds of connections for personal

gain is usually described as influence peddling." Patronage is another form of corruption. The

assignment of government positions to political supporters has long been a practice in politics.

While civil service regulations at the national and state level may effectively curtail the number of

patronage jobs, political appointments remain at the top levels of government and provide a

legitimate way for elected politicians to influence bureaucracy through the appointment of legal

executive officials. The process becomes corrupt when appointees are expected to pay for their

jobs.

Leslie Holmes (1993, p.205) brings three major forms of patronage. These are the

following. 1. Nepotism In this context " is the granting of public office on the bases of family ties."

This is a good example of a point where different cultures have very different attitudes towards

some forms of corruption. 2. Shared experience "there the patron and client have usually worked

together in the past and are on good terms and the patron promotes or has promoted the client

on the basis of these past experience and warm relationship." 3. Shared Interest In this case,"the

patron does not have common experience with someone he she wishes to promote, but rather a

common interest" (for example, they both come from the same republic and/or are of same ethnic
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group; they both favor a large increase in defense expenditure in contrast to what others want,

they are of the same gender.)

Amundsen (2000) suggested five main forms of corruption related to education, namely:

embezzlement; bribery; fraud; extortion; and favoritism. He defines these various terms as

follows:

Embezzlement: This involves the theft of public resources by public officials. One

example in the education sector is the use of PTA funds aimed at school developmental projects

or construction for private secondary school library;

Bribery: This involved payment (in money or in kind) given or taken in a corrupt

relationship to be employed as a teacher or when such person does not have the appropriate

credentials to be engaged into the system but been employed as a teacher;

Fraud: This has to do with economic crime that involves some kind of trickery, swindling

or deceit. One manifestation in the education sector is the producing of extra-result or statement

of result issued by the proprietor or school principals; another is the existence of ghost teachers

on payrolls especially when such school is being owned by a teacher who has little or no

educational experience;

Extortion: money and other resources extracted by the use of coercion, violence or

threats to use force. There may be fewer examples of violence or threats to use violence in the

education sector compared to other sectors. However, sexual harassment of pupils by the

teachers or the obligation for parents to pay illegal or unauthorized fees if they want their child to

be admitted to school; and

Favoritism: This has to do with mechanism of power abuse implying ‘privatization’ and a

highly biased selling of school resources or equipment. This includes cases of nepotism, where

a public officer gives the priority to his or her family members or friends. There are many examples
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of favoritism in the educational field, including the recruitment of administrators based on their

committee of friends, associations or family friend (Amundsen, 2000).

Effects of Corruption

1. Bureaucratic Inefficiency

Corruption, in theory, should increase bureaucratic inefficiency. From a game theory

perspective, those who are benefitting from the inefficient system by engaging in corrupt activities

have no incentive to streamline the system. Thus, similarly to cultural values, corruption and

bureaucratic inefficiency may be a viscous cycle. This theory received some initial empirical

support in a paper found that firms that pay bribes are more likely to spend more management

time with bureaucrats (Kaufman and Wei, 1999). The theory received further support after 2006

in a paper that finds the presence of corrupt officials can lead to bureaucratic delay in allocating

licenses to productive individuals (Ahlin and Bose, 2007).

2. Business and (Local) Investment Climate

It has been argued that high levels of corruption will reduce a country’s growth levels by

affecting the investment climate or investment quality. This can occur due to inefficient public

investment—even though investment levels may increase in absolute terms, the absolute

productivity may be reduced due to inefficient allocation of funds. Corruption can also lead to

lower levels of infrastructure, thus deteriorating the investment climate of a nation. Early empirical

evidence to support both these hypotheses was found in a paper that uses data from 69 countries

in the period 1980–1983 (Tanzi and Davoodi, 1998). This was supported by a later study that also

provided evidence to support the theory that corruption modifies the structure of public

expenditure (De la Croix and Delavallade, 2009). A different study found that, using data from

different districts in Liberia in 2010, corruption reduces the willingness to contribute to public

goods, thus damaging the local investment climate (Beekman et al., 2014). Reduction in
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investment quality was further evidenced in a paper, that using Italian public works data form the

period 2000–2005, found higher levels of corruption resulted in less efficient infrastructure

expenditure (Castro et al., 2014). Another study that used data from 80 municipalities in the

Philippines also found that corruption affects the local investment climate via deteriorating the

health outcomes of its population (Azfar and Gurgur, 2008).

3. Civil and Political Rights

Theoretically, corruption is believed to affect institutions in such a way that the protection

and promotion of human rights is reduced; one would thus expect a negative relationship between

the two. A paper, using cross country data, focusing on human rights and governance found that

countries with higher levels of corruption have lower levels of political and civil liberties

(Kaufmann, 2004). A later study that focused more specifically on corruption and human rights

found that, using data from 186 countries for the period 1980–2004 and three measures of

corruption, there was a positive relationship between corruption and human rights. However, not

all the measures of corruption were statistically significant (Landman and Schudel, 2007).

4. Economic Growth

Theoretical arguments have been made for the effects of corruption on economic growth

via lower levels of investment, lower quality of investment, higher levels of indirect taxation, and

misallocation of resources due to distorted incentives. Large amounts of empirical studies have

been published to support these theories. One paper provided evidence that there was a

significant relationship between the allocation of talent to unproductive activities and corruption,

as well as higher levels of indirect taxation and corruption, thereby reducing growth rates (Tanzi

and Davoodi, 2001). A later paper that focused on the effects of corruption on economic growth

in the United States found that states with higher levels of corruption had lower levels of economic

development (Glaeser and Saks, 2006). A Later study that used data from 60 countries and
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accounted for a country’s level of economic freedom found slightly different results: their results

indicate that corruption reduces (increases) economic growth in countries in which economic

freedom is low (high) (Swaleheen and Stansel, 2007). A later paper countered this study by

suggesting that evidence for the “grease the wheel hypothesis” is very weak, and that there is a

very strong negative correlation between wealth per capita and corruption, and that the effect of

corruption on GDP per capita will lead to unsustainable development (Aidt, 2009).

5. Foreign Direct Investment

Attempting to invest in a foreign country often requires some form of public permit. In

corrupt countries it is more likely that obtaining such a permit may require a form of bribe, thus

increasing the cost of engaging in such activities and reducing the overall levels of FDI. In addition,

some individuals or firms will simply choose not to engage in such corrupt practices and, thus,

may simply avoid economic relations with such countries, again reducing levels of foreign direct

investment in absolute terms. An empirical study that used data from the World Bank in 1997

found evidence to support that higher levels of corruption were significantly associated with lower

levels of investment, though this relationship was much weaker when the levels of corruption were

considered to be very predictable (Campos et al., 1999). One popular exception for the

relationship between corruption and FDI is the study by Egger and Winner (2005). They use data

for a sample of 73 developed and less developed countries for the time period of 1995–1999.

Their results support a clear positive relationship between corruption and FDI. More recent

studies, however, support the negative impact of corruption on FDI. Exemplarily, a study used

data from 20 OECD source countries and 52 host countries over the period 1996–2003. It was

found that even though corruption reduced FDI overall, this was not the case if the country had

previously received high levels of FDI (such as China), but especially the case if the country had

low levels of FDI (such as Venezuela) (Barassi and Zhou, 2012). Other more recent studies
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confirmed this negative relationship (cf. Busse and Hefeker, 2007; Al-Sadig, 2009; Mathur and

Singh, 2013).

6. Income Inequality/ Poverty

It has been argued that corruption increases income inequality and poverty by lowering

growth levels, having a biased tax system, poor quality social programs, education inequality and

asset ownership bias (Gupta et al., 2002). Gupta’s empirical study provides evidence that an

increase in 21 corruption results in both higher inequality (measured using the Gini coefficient)

and an increase in the percentage of poverty (Gupta et al., 2002). Gyimah-Brempong and de

Camacho (2006) use panel data from 61 countries over a 20-year period investigating regional

differences in the effect of corruption on income distribution. Their results suggest that corruption

indeed breeds income inequality, with the largest effects being found in Latin American and

African countries. However, more recent research is at odds with these findings, although mostly

for Latin America in particular. Dobson and Ramlogan-Dobson (2010) and Andres and Ramlogan-

Dobson (2011) find an inverse relationship of corruption and income inequality in Latin America,

suggesting that institutional reform policies that are in place are misguided.

7. International Trade

In a similar manner to engaging in foreign direct investment, international trade most often

requires some form of publically issued license or permit. In nations with higher levels of

corruption, the costs associated with the acquisition of the necessary licenses and permits may

be especially high due to the need to pay bribes etc. Thus, it is theorized that higher levels of

corruption have a negative effect on levels of international trade. Oftentimes, the levels of

corruption within institutions associated with trade have an impact on levels of trade. This

assertion has been reinforced empirically by a study that found that the increased perceived

uncertainty of a country’s institutions relevant to trade is negatively correlated with the level of
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international trade (Bugel, 2010). An analysis of the relationship between corruption and ¨ trade

in African nations, similarly found there to be a negative relationship between corruption and trade

(Musila and Sigue, 2010). This is strengthened by another paper that found that corruption

insecurity acts as a hidden tax on trade (Anderson and Marcouiller, 2002). Interestingly, some

studies have looked at the effect of

corruption, not only on the importing state but also on the exporting state. A 2011 study found that

corruption generally has a more robust impact on the exporting country.

8. Political Legitimacy

From a theoretical standpoint it has been argued that for a political system to function, it

must be considered legitimate, both nationally and internationally. A theoretical assessment by

Bo 22 Rothstein and Jan Teorell asserts that people determine and value political legitimacy

through lack of corruption, lack of discrimination, and the quality of governance (Rothstein, 2008).

Thus, corruption undermines such legitimacy. An early study found empirical support for this

theory; when using data from 16 mature economies, it was found that individuals residing in more

corrupt economies expressed more negative reviews on the performance of their political system

(Anderson and Tverdova, 2003). Another study found some evidence to support this theory using

data from studies conducted by Vanderbilt University (Seligson, 2006). A different study, which

sought to determine what makes a state legitimate, using data from 72 different countries, found

that general governance was a highly significant element, of which corruption was a factor (Gilley,

2006).

9. Shadow Economy

In theory, corruption can be viewed as a measure of taxation that might make it an

economically rational decision for entrepreneurs to go underground. However, as Dreher and

Schneider (2010) point out, one should differentiate between high- and low-income countries:
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countries with high incomes have a wealth of public goods (such as legal institutions) that may

lead corruption to be a substitution to the shadow economy whereas in low-income countries the

two may be compliments. A similar examination looks at the relationship between corruption and

the shadow economy with regard to income to reveal that the shadow economy reduces

corruption in highincome countries, while increasing corruption in low-income states (Schneider

and Buehn, 2009). An early study created a model that suggested that corruption and shadow

markets are substitutes (Choi and Thum, 2005), this received support in a later paper that re-

examined the relationship (Dreher et al., 2009). A later empirical study finds that, using cross-

sectional data for 98 countries, there is in fact no robust relationship when perception-based

indices are used. However, when using an index based on a structural model, shadow economies

and corruption are compliments in countries with low incomes (Dreher and Schneider, 2010).

More evidence was found in a later paper that focused on the effects of decentralization on both

corruption and the shadow economy. This paper found a positive relationship between the two

using data from a number of indices for corruption and the shadow economy from 145 countries

(Dell’Anno and Teobaldelli, 2015).

New Developments in Effects of Corruption

1. Brain Drain

Higher levels of corruption could theoretically increase a country’s brain drain problems.

Corruption is associated with a number of unfavorable outcomes, which might act as push factors

to potential migrants. It has been argued that returns on education would be particularly affected

(high levels of unemployment, lack of social advancement, slower economic growth etc.), thus

those particularly sensitive to such a push factor (highly skilled individuals) would be more likely

to emigrate due to this (Dimant et al., 2013). Few empirical studies were done prior to 2006,

however this theory has received strong support in more recent years. Empirical evidence using

data from 111 countries in the period 1985–2000 found that corruption was indeed particularly
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significant in fueling skilled emigration (Dimant et al., 2013). Further empirical evidence was

provided from a paper that found that high levels of corruption effect emigration levels of skilled

labor far more than unskilled labor using data from 20 OECD destination countries in the period

1980–2010 and 115 origin countries in the period 1995–2010 (Cooray and Schneider, 2014).

Even more empirical evidence was provided from a paper that, using data from 230 countries,

found corruption to be a significant push factor in emigration (Poprawe, 2015).

2. Fiscal Deficit

Theoretically it has been argued that as corruption reduces public income (lower levels of

growth, higher levels of inequality) and increases public expenditure (more inefficient spending),

it thus follows that it will also increase fiscal deficits. Some initial empirical evidence to support

this was found in a paper that showed that, after controlling for multiple variables, US states with

higher levels of corruption have lower bond ratings, and thus taxpayers need to pay more to

borrow, increasing the likelihood of fiscal deficit (Depken and Lafountain, 2006). A later paper

provided further evidence that showed that corruption leads to deviations from the optimal public

expenditure structure, reducing growth and thus public income (De la Croix and Delavallade,

2009). More evidence is provided in a later study that, using data from Italian public works during

the period 2000–2005, shows that public contracts execution is more inefficient in areas with

higher corruption, thus increasing government expenditure (Castro et al., 2014).

3. Human Capital

One would expect corruption to have a negative impact on human capital. Higher levels

of corruption are associated with lower levels of education, health, socioeconomic development,

and hence lower levels of human capital. Initial empirical evidence was found in support of this

argument in a paper that, using a sample of 63 countries, found a statistically significant negative

relationship between corruption indices and levels of human development (Akc¸ay, 2006). A later
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study that was based in the Philippines and focused on the effects of corruption on health also

found that corruption negatively affected the health levels (Azfar and Gurgur, 2008).

Other Effects of Corruption

In an article of WordPress, they identified three major effects of graft and corruption in the

Philippines. First is the famous poverty. It strikes and victimizes with no option. Even the rich,

now, could feel the impact of poverty. Thus, they have to double their time in earning/preserving

their living. How about the poor? They become even poorer. With poverty, problems on hunger

and lack of homes rises. Poor families build their houses along the railroads, under the bridge or

even sleep on sidewalks because they cannot afford to buy or even rent a house with a minimum

pay rent of P1,000 per month. Without a home, the children’s health is also affected. The results

of the 2011 national nutrition survey of the Food and Nutrition Research Institute (FRNI) showed

that malnutrition among Filipino children is still prevalent. The study’s findings, shared with the

public recently, categorized children based on age, namely: 0 to 5 years old and 5 to 10 years

old. Results showed that 15.9% or two out of 10 children from 0 to 47 months old were born with

low birth weight or were less than 5.5 lbs. The results also showed that 20.2% of children in this

category were underweight, while 33.6% were stunted or had lower heights for their age. 7.3% of

the children suffered from acute malnutrition. In the 5 to 10 years old category, results were much

higher. 32% of children in this category were underweight while 33.6% had low heights for their

age. The percentage of children suffering acute malnutrition was 8.5%. (www.rappler.com))

The second effect is the much-seen underdevelopment in our country. Philippines is not

that developed in the sense that: there is a lack of infrastructures that can also give works to the

people and there will be no more reasons that they will go abroad to seek jobs, a lack of much

needed facilities in the public hospitals and that is why most of the Filipino cannot be medicated

and totally be healed, the situation of urinals and even in schools – where the sad thing is that, it

is classified as public yet the people still have to pay, and lack of drainage systems and the
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excessive tax rates paid by the people. Lastly, while the people double their efforts in doing two

or more jobs just to earn an extra and enough money, greedy and corrupt politicians also double

their efforts in stealing on people’s money by implementing EVAT’s or other price hikes and ghost

projects. The minimum wage of an ordinary worker is P270 a day and it is really not that enough

to buy and to provide their family needs and to send their children in school and here come these

added taxes making our Mom’s budgeting system complicated.

(www.nwpc.dole.gov.ph/pages/statistics)

One of the most argumentative issues is the exact economic impact of corruption. The

agnostic view of economists regarding corruption is somewhat startling for many who tend take a

more ethical view of it. Barro and Sala-i-Martin [1995:440, fn. 14] conclude, for example, that “the

theoretical effect of corruption is unclear; in some cases, the economy would operate more

efficiently if governmental rules can be readily overcome by cash payments”. Even much earlier,

of course, Adam Smith gave the benefit of the doubt to the smuggler, and presumably would have

excused the corrupt customs official.

The perceived effects of graft and corruption in the municipalities are perpetuation of

nepotism, failure to deliver basic social services such as health services, safe water supply/water

system and low level of education. Municipal development in all forms are sluggish with the

absence of employment opportunities for the rural folks. Although the agricultural sector is

considered good by all informants but public facilities such as roads still need improvement or still

needed to be built. Municipal halls are the priority projects of the mayors despite the fact that

these municipalities had long been established for decades already. (Ponce, et. al)

There are also important poverty relevant effects. Regardless of the prosperity of a

municipality, corruption hurts satisfaction with public clinics, immunization rate of children, and

leads to delays in vaccinations (the magnitude of this effect is more significant in poor

municipalities). However, unlike rich municipalities, poor and middle-income municipalities also
 19

report more waiting at public clinics and a higher frequency of being denied of vaccines when

corruption is widespread. Corruption in public clinics is also more likely to deter households living

in poor municipalities and forces them to opt for self-medication. (Azfar & Gurgur, 2001)

Legal Basis about Corruption

Philippine initiatives against corruption have taken the form of law and anti-graft bodies created

by the Constitution, law and executive orders. In addition to the state, other institutions have been

active in the fight against graft and corruption.

A. Anti-corruption Laws

The accountability of public officials is enshrined in the Constitution of 1987, as it has been

in the Malolos Constitution of 1898, the Commonwealth Constitution of 1935 and then the

Constitution of 1973, the Martial Law period. Article XI of the 1987 Constitution, entitled

“Accountability of Public Officers”, states the fundamental principle of public office, as public trust.

It requires full accountability and integrity among public officers and employees. The President,

Vice-President, members of the Supreme Court, members of the Constitutional Commissions and

the Ombudsman may be impeached for violations of the Constitution, treason, bribery, graft and

corruption, other high crimes, and for betrayal of public trust. Other public officials committing

such acts can be investigated and prosecuted through the regular judicial process provided by

law.

The Philippine government is directed to maintain honesty and integrity in the public

service, and to take action against graft and corruption (Section 27, Art. II). It is also directed to

give full public disclosure of all transactions involving the public interest (Section 28, Art. II). This

provision is complemented by the Bill of Rights within the Constitution, which gives people the

right to information on matters of public concern, including official records, documents and papers
 20

pertaining to official acts, transactions or decisions, and to government research data used as the

basis for policy development (Section 7, Art. III).

The Anti-Graft and Corrupt Practices Act (RA 3019) was passed in 1960. It enumerates

what may be considered corrupt practices by any public officer, declares them unlawful and

provides the corresponding penalties of imprisonment (1 month, 6 years and 15 years), perpetual

disqualification from public office, and confiscation or forfeiture of unexplained wealth in the favour

of the government. It also provides for the submission by all government personnel of a statement

of assets and liabilities every two years. Considered landmark legislation at the time, it also elicited

the following wry comment: “The anti-graft law was passed not because there was a need for it

but only to appease public opinion. There was no urgent need for anti-graft legislation because

the Revised Penal Code and other laws were sufficient to bring the guilty to court” (Congressman

Manuel Zosa, quoted in G.U. Iglesias, 1993:35).

B. Laws During the Martial Law Period (1972-1986)

Presidential Decree no.6, which took effect six days after the imposition of Martial Law,

was the “legal” basis for the purge of almost 8,000 officials and employees in the first year of the

dictatorship. The provision for summary proceedings was reiterated in Presidential Decree No.

807, the Civil Service Act of the period and was repealed by the Corazon Aquino administration.

All other anti-graft presidential decrees remain in effect. This includes:

(i) Presidential Decree No. 46 (1972), making it unlawful for government personnel to

receive, and for private persons to give, gifts on any occasion including Christmas, regardless of

whether the gift is for past or future favors. It also prohibits entertaining public officials and their

relatives.

(ii) Presidential Decree No. 677 (1975) requires the statement of assets and liabilities to

be submitted every year.

 21

(iii) Presidential Decree No. 749 (1975), granting immunity from prosecution to givers of

bribes or other gifts and to their accomplices in bribery charges if they testify against the public

officials or private persons guilty of these offences.

C. Laws of the Redemocratization Period (1986 to the present)

Immediately after Aquino’s assumption to office, she promulgated the “Freedom

Constitution” which, among other provisions, declared all government positions vacant unless

otherwise identified (Section 3, March 28, 1986). This Freedom Constitution was the basic law of

a revolutionary government and was superseded by the Constitution of 1987. Six new anti-

corruption laws emerged under its operation.

The Administrative Code of 1987 (Executive Order No. 292) incorporates in a unified

document the major structural, functional and procedural principles and rules of governance. It

reiterates public accountability as the fundamental principle of governance. In 1989, the Republic

Act No. 6713, the Code of Conduct and Ethical Standards for Public Officials and Employees was

passed. It promotes a high standard of ethics and requires all government personnel to make an

accurate statement of assets and liabilities, disclose net worth and financial connections. It also

requires new officials to divest ownership in any private enterprise within 30 days from assumption

of office, to avoid conflict of interest. The Ombudsman Act of 1989 (RA 6770) provides the

functional and structural organization of the Office of the Ombudsman. The Act further defining

the Jurisdiction of the Sandiganbayan (RA 8249) places the Sandiganbayan as a special court on

par with the Court of Appeals.

D. Constitutional Anti-Corruption Bodies

The 1987 Constitution established special independent bodies to support the principles of

honesty, integrity and public accountability. These are:

 22

(i) the Office of the Ombudsman as the people’s protector and watchdog; (ii) the Civil Service

Commission as the central personnel agency; (iii) the Commission on Audit as the supreme body

responsible for auditing the government’s expenditures and performance; and (iv) The

Sandiganbayan as a special court that hears cases of graft and corruption.

E. Other Laws

Since then numerous mechanisms have been designed to counteract corruption in the

Philippines. The traditional approaches include setting the legal framework and establishing anti-

graft and corruption bodies like presidential committees, commissions, task forces, and other

units. The other traditional approach is to strengthen the legal framework against corruption.

Foremost in this framework is provided by Article XI of the 1987 Philippine constitution, which

covers accountability in the public service. Section 1 states, “Public office is a public trust. Public

officers and employees, must at all times, be accountable to the people, serve them with utmost

responsibility, integrity, loyalty, and efficiency; act with patriotism and justice, and lead modest

lives.” Article XI also provides for an antigraft court and an Ombudsman (Section 5). The anti-

graft court is called Sandiganbayan and the Office of the Ombudsman (OMB) is also known as

the Tanodbayan. The latter has the rank equivalent to that of a Constitutional Commission.

Aside from constitutional provisions, Congress has passed a number of laws, namely:

1. The Ombudsman Act of 1989 (Republic Act No. 6770);

2. The Anti-Graft and Corrupt Practices Act (R.A. No. 3019)

3. An Act Declaring Forfeiture in Favor of the State Any Property Found to Have Been Unlawfully

Acquired by Any Public Officer or Employee and Providing for the Procedure Thereof (R.A. No

1739)

4. Code of Conduct and Ethical Standards for Public Officials and Employees (R.A. 6713);
 23

5. Revised Penal Code (Title VII), Crimes Committed by Public Officers

The Civil Service Commission is the lead agency in implementing RA 6713 and in 1989

issued that Act’s Implementing Rules. At present, the Tanodbayan and the PCAGC are the

principal actors in government to act on complaints and cases of graft. Some of the cases are

resolved by the Tanodbayan while the others upon determination of probable cause are elevated

to the Sandiganbayan. As may be petitioned, cases where the accused have been found guilty

are sent to the Supreme Court or to the Court of Appeals. Currently, administrative cases are

automatically sent to the Court of Appeals while criminal cases like the violation of the Anti-Graft

and Corruption Practices Act go directly to the Supreme Court.

Despite the existence of anti-corruption laws, bodies, and mechanisms, the Philippines

continues to suffer from financial, social, economic, political, and diplomatic losses due to

corruption. Various estimates of losses have been suggested. But as Bhargava argues, “Most

estimates of losses due to corruption are imprecise and not very rigorous.”

A survey released in 2010 showed ranked the Philippines as the fourth most corrupt of 16

major Asia-Pacific investment destinations. The Philippines scored 8.06 in the 2010 survey,

indicating that--against its neighbors in the region--it swung from worst to bad. In 2009, its score

of 7.0 landed it on the 6th most corrupt spot. In 2008, it was ranked the most corrupt. The survey

was conducted by the Hong Kong-based Political & Economic Risk Consultancy, which provides

strategic business information and analysis for companies doing business in East and Southeast

Asia. The PERC's corruption survey polled 2,174 middle, senior, and expatriate business

executives in Asia, Australia and the United States. [Source: abs-cbnNEWS.com, Reuters, AFP,

March 9, 2010]

Corruption Survey by Political & Economic Risk Consultancy: 1) Singapore: 1.42; 2)

Australia: 2.28; 3) Hong Kong: 2.67; 4) United States: 3.42; 5) Japan: 3.49; 6) Macau: 4.96; 7)
 24

South Korea: 5.98; 8) Taiwan: 6.28; 9) Malaysia: 6.47; 10) China: 6.52; 11) India: 7.18; 12)

Thailand: 7.60; 13) Philippines: 8.06; 14) Vietnam: 8.07; 15) Cambodia: 9.10; 16) Indonesia: 9.27.

The survey looked at how corruption affected different levels of political leadership and

the civil service, and how major institutions fared in terms of corruption. It also examined how

corruption is perceived to affect the overall business environment, and how easy or difficult it is

for companies to deal with the problem internally and externally when they encounter it. On a

scale of zero to 10, zero is the best possible score, indicating the lowest level of corruption among

politicians and civil servants.

It is difficult to estimate the total losses due to corruption. The best measure is the

amounts involved in cases filed with the Ombudsman. The Office of the Ombudsman (OMB)

reported that about P9 billion was lost to government due to malversation, estafa (swindling) and

violation of the provision of RA 3019 (the Anti-Graft and Corrupt Practices Act) for a period of

eight and a half years (1990 to June 1998) (OMB 1998). In the Ombudsman’s report, 63 agencies

and departments contributed to the losses. However, the top ten of these agencies alone

accounted for almost P8.5 billion.

Pork and Other Perks: Corruption and Governance in the Philippines. Manila: Philippines

Center of Investigative Journalism, Evelio B. Javier Foundation and Institute of Popular

Democracy). The above-mentioned study by Guerrero and Rood reported that in a September

1996 national survey by SWS, respondents were asked how much they believed was wasted due

to corrupt practices. Fifty-one percent of the respondents said that more than 50 percent of

funding for road building was wasted. More than 60 percent of respondents said they thought that

in the process of collecting taxes, providing free books to children in public schools, and installing

modern equipment like computers in government offices, more than 30 percent of the funding

was wasted.
 25

Conclusion

Corruption in the Philippines has always existed and prevalent, it could be traced to the

Philippine colonial experience, especially during the Spanish period. Also, it was stated in the

research conducted by Cariño that the persistence of graft and corruption in Philippine society

does not necessarily manifest a legal-cultural conflict since the most problematic form of

corruption involves cash payments, which are both not legally and culturally acceptable.

Certain conclusions can be derived from the above assessment and discussion. First,

there is a vicious cycle that nurtures corruption, poverty, and underdevelopment. Second,

systemic corruption in the Philippines will persist because it has been deeply embedded in the

nation’s history, culture, and public and private sector institutions. Third, the fight against

corruption in the Philippines is a monumental undertaking.

Philippines has a comprehensive set of laws that may have ascertained all the possible

instances of graft and corruption that can be devised. The anticorruption agencies have been

given ample powers to identify and punish offenders and the Philippines has unleashed many

weapons against irresponsible behavior in the government, yet corruption continues.

The disproportionate role corruption plays in the Philippines must be traced to more

ultimate factors in the structure of Philippine politics and economy. These include the system of

patronage in politics, at both local and national levels; the lack of information among the majority

(originally due to poverty, ignorance and alienation); the manipulation of government by powerful

outside vested interests (originally based on landownership and relations of dependency); the

entrenchment of a stratum of political opportunists and big money politics; and a political system

used as means of wealth accumulation based on manipulations of the electoral process (including

media, skillful use of resources and contributions). It is these which ultimately explain the failure
 26

of the presumptive controls over the presumed relationship between the public and its would-be

servants.

Research on this topic and the implementation of an effective regulatory policy, suitable

codes of conduct, political and bureaucratic transparency, and effective anticorruption measures

can help to mitigate the dissemination of corruption. The only way to be successful in the fight

against corruption is if we know the causes and begin to eliminate them.

Institutional strengthening is very important in the Philippine’s anticorruption strategies.

One of the most important institutions to take action is the civil service. The civil service should

be protected from the unwarranted political interference. Such civil service would not only be a

protection against corruption but would also guarantee that goods and services would be

delivered efficiently. Thus, civil service reform is one of the most important part in fighting against

corruption. The Judicial System is another institution that is very important. The strict enforcement

of rules and regulations is very significant combating corruption. If an official knows that rules and

regulations are strictly and consistently enforced, he/she will less likely engage in corrupt

behavior. The Budget Reform is the other factor combating corruption. Government should

develop well-functioning budget processes, allocate resources strategically, and enable programs

and projects to be implemented efficiently and effectively. Good financial management system is

also a powerful instrument for preventing, discovering, or facilitating the punishment of fraud and

corruption. Audit and control are viewed as a valuable instrument for improving government fiscal

management and for increasing the efficiency in the allocation of public financial resources. Civil

society and the media serve as watchdogs in the public sector, so they are very important also.

Anti-corruption campaign must be continued in the country and at the same time strictly

implementation of anti- corruption laws is one of the ways to at least lessen this kind of disease

in Philippine society.
 27

Since Transparency International emphasized the primary role of government in anti-

corruption initiatives and governance reforms, the same call for action is felt and perceived by its

civil servants today. The persistent appeal for civil service reforms, financial efficiency, and

genuine civil society participation hangs back.

When better could be that appropriate time to start a fundamental reorientation in our

approaches to politics, the government, and civil service than now? Since curbing corruption is

everybody’s concern including the government, the political will of leadership, civil servants, civil

society, the community, business and the labor sector, crusades are needed more than advocacy.

The initiatives to minimize fraud and corruption in the government service may sound idealistic

for the present generation. The Filipino youth and the masses are wide awake to the grim reality

that there is moral decline in politics and in the civil service. While politics is marred with issues

on procurement and fiscal integrity, the civil service is perceived to have been constrained with

public service delivery. Moral decadence is widespread because even those with the highest

noble intentions are swayed to forfeit their morals into the politics of corruption.
 28

Works Cited/ References

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Corruption On Economic And Political Development Of Armenia”

James Roumasset (2008, October 27). “The Political Economy of Corruption: A Philippine

Illustration”

Eugen Dimant* and Guglielmo Tosato (January 2017). “Causes and Effects of Corruption: What

Has Past Decade’s Empirical Research Taught Us? A Survey”

Nwankwo Benedict Chimezie & Nweke Prince O. (2016). “Effects of Corruption on Educational

System: A Focus on Private Secondary Schools in Nsukka Zone”

Nacnac, D. (2016, August 10). IN NUMBERS: Impact of corruption on the Philippines.

Retrieved from https://amp-rappler-com.

Corrales, N. (2018, May 17). President Rodrigo Duterte has revealed names of government

officials under investigation over corruption. Retrieved from https://newsinfo-

inquirer-net.

Ferrer, R. D. & de Dios, E.S. (2000) Corruption in the Philippines: Framework and context. The

Political Economy of Corruption: Studies in Transparent and Accountable

Governance.

Treisman, Daniel (2000): “The causes of corruption: a cross national study”, Journal of Public

Economics, vol. 76, pp. 399-457.

Ponce, S.L, et. al. (2013). Graft and Corruption Practices Among Selected Public Officials in

Mindanao, Southern Philippines. Journal of Government and Politics Vol.4 No.2.

Reinikka, R.; Svensson, J. Survey Techniques to Measure and Explain Corruption. Policy

Research Working Paper No. 3071. Washington, DC: World Bank. 2003b.