Red flags in Imee’s Ilocos Norte and P66.45M tobacco fund use

Mara Cepeda

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Red flags in Imee’s Ilocos Norte and P66.45M tobacco fund use
Missing documents, improper bidding processes, and officials mum on the issue surround the alleged misuse by Ilocos Norte Governor Imee Marcos of millions worth of tobacco funds

WAR IN THE NORTH. Ilocos Norte 1st District Representative Rodolfo Fariñas leads the probe into the alleged misuse of tobacco funds under Governor Imee Marcos.

MANILA, Philippines – The spotlight is on Ilocos Norte Governor Imee Marcos, who is being accused of misusing the province’s tobacco funds to purchase motor vehicles. 

This is the subject of an ongoing House probe initiated by no less than her political rival, Ilocos Norte 1st District Representative and Majority Leader Rodolfo Fariñas together with two of his deputies – Pampanga 3rd District Representative Aurelio Gonzales Jr and Pampanga 4th District Representative Juan Pablo Bondoc.

Fariñas, former Ilocos Norte governor, showed copies of documents indicating P66.45-million worth of tobacco funds were used for the following:

  • P18,600,000 on December 1, 2011 for 40 mini-cabs to be given to barangays
  • P15,300,000 on May 25, 2012 for 5 secondhand buses
  • P32,550,000 on September 12, 2012 for 70 Foton mini trucks for municipalities

The tobacco fund was created through Republic Act Number 7171, which mandates 15% of tobacco excise taxes shall be allotted for a special support fund for tobacco farmers in the identified provinces, mostly in the Ilocos region. (READ: FAST FACTS: Tobacco funds in the Philippines

The law specified the money can be used only for the following: 

  • Cooperative projects that will enhance the quality of cigarettes, increase productivity and the market, and increase the income of farmers
  • Livelihood projects that can be started using the tobacco fund as capital to develop alternative farming systems for farmers
  • Agro-industrial projects that will help tobacco farmers to eventually take the helm as owners of processing systems in the industry
  • Infrastructure projects such as farm-to-market roads to ease transportation and lessen costs 

The probe has since led to the detention of 6 Ilocos Norte officials for giving “dismissive” answers during the hearings.  

A subpoena to appear in the next hearing on July 25 was also issued against Marcos, who was advised by her brother and former senator Ferdinand “Bongbong” Marcos Jr to ignore it. 

If she fails to show up, she will be arrested by the House. (READ: House prepares detention room for Imee Marcos)

Marcos maintains the motor vehicle transactions were above-board because the farmers themselves had requested for the vehicles. But the House committee on good government and public accountability’s investigation has so far raised several red flags in the purchases. 

Rappler also obtained documents indicating another P57.5 million of the tobacco funds was used for Marcos’ pet project, Programang Ikauunlad ng Mamamayan Ekonomiya at Ekolohiya, or what local officials call “P Imee.” 

Missing original documents

HARD-HITTING QUESTIONS. Majority Leader Rodolfo Fariñas leads the grilling of resource persons during the investigation. Photo by Jasmin Dulay/Rappler

Information about the transactions was first relayed to Fariñas by barangay captains in his district. They said they were issued mini-cabs that did not have documents, leading to further problems.  

“So nasisita sila, nahuhuli ng LTO (Land Transportation Office) dahil wala namang registration. Ang kanilang more urgent concern is sila ang nag-aabono sa fuel and oil ng mga vehicles (So the LTO apprehends them because they do not have registration. Their urgent concern is that they are the ones paying for the fuel and oil of the vehicles) because they could not use their budget in the barangay because these vehicles are not booked or documented as owned by the barangays,” Fariñas said.

He was able to secure copies of the purchase requests, obligation requests, disbursement vouchers, and checks used to buy the vehicles. But he said the original documents, stored at the Ilocos Norte capitol, disappeared ever since they initiated the probe.  

“As soon as the resolution was filed for the investigation of these transactions, all the documents relating thereto were stolen from the COA office at the provincial capitol, and all the offices of the provincial treasurer, accountant, budget officer and development coordinator have destroyed all their files,” said Fariñas.

This was backed by Marilyn Llaguno, Commission on Audit (COA) supervising auditor for Ilocos who had audited the transactions made by the provincial government at the time. 

Under oath, Llaguno told lawmakers during the first hearing on May 2 that she could not find the disbursement vouchers that were supposedly placed inside the document store room at the capitol. 

COA audit team leader Vicenta dela Cruz then requested other copies of the said documents from provincial accountant Eden Battulayan and bids and awards committee chairperson Pedro Agcaoili. 

Both Battulayan and Agcaoili wrote to Dela Cruz saying the originals of the documents were no longer in their custody because they were submitted to COA for post-auditing. 

In a separate hearing, COA Chairman Michael Aguinaldo testified that only the documents relating to the purchase of the mini-cabs, secondhand buses, and Foton mini trucks were missing.

With only copies of the original documents available, can the House still push through with the investigation? Rule 128 of the Rules of Court says yes.

Section 5 states: “When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.”

Cornelio Viernos, a member of the team who audited the transactions for the secondhand buses and mini trucks, also testified during the investigation that Fariñas’ copies of the documents contained the same information as the original ones given to COA for post-auditing. 

Cash advances used to pay for vehicles

Ilocos Norte bought the 40 mini-cabs, 5 secondhand buses, and 70 Foton mini trucks through cash advances, a violation of COA Circular 92-382 which states that all disbursements by local government units should be made in checks, except in certain cases. 

The document, issued on July 3, 1992, details the rules and regulations on accounting and auditing rules, pursuant to the Local Government Code of 1991.  

Cash advances are only allowed in the following cases:

  • Salaries and wages
  • Commutable allowances
  • Honoraria and other similar payments to officials and employees
  • Petty operating expenses 

Rappler obtained a copy of an Audit Observation Memorandum (AOM) issued by COA supervising auditor Rizalino Franco Jr to Marcos on January 8, 2013.

In the AOM, Rizalino identified the purchase of the 5 secondhand buses and 70 Foton mini trucks in 2012 as among the cash advances “not in accordance to the provisions of COA Circular 92-382.”

“We recommend that management should strictly observe rules and regulations on the proper granting of cash advances,” wrote Rizalino.

Checks issued ahead of bidding process completion

Documents from COA and the Philippine Government Electronic Procurement System (Philgeps) also show that Marcos authorized the release of money ahead of the completion of the bidding processes for the motor vehicles.

These documents were also submitted as evidence to the House committee on good government and public accountability. 

The notice to bid for the secondhand buses – worth P15.3 million – was posted on May 24, 2012 in Philgeps. The Ilocos Norte provincial government gave interested bidders until June 14, 2012 to purchase the bidding documents. 

But on the same day the notice to bid was published on Philgeps, Battulayan, Marcos, and provincial treasurer Calajate already signed a disbursement voucher authorizing the release of P15.3 million to buy 5 secondhand buses.

The check was immediately issued the next day, signed by Calajate, Marcos, and Genedine Jambaro from the Provincial Treasurer’s Office. This means the Ilocos Norte provincial government already authorized the release of P15.3 million even while the bidding process was still ongoing. 

The same situation occurred for the purchase of 70 Foton mini trucks worth P32,550,000.

The notice for direct contracting for the mini trucks was posted on Philgeps on September 12, 2012. Battulayan, Calajate, and Marcos signed the disbursement voucher for the release of P32,550,000 on the same day. A check for the transaction was also issued on September 12, 2012. 

As for the 40 mini-cabs worth P18.6 million, Philgeps deputy executive director Maria Rosa Clemente told lawmakers they have no record of the bidding process for it in their system. 

Ilocos Norte executives refusing to talk

DETAINED OFFICIALS. (L-R) Evangeline Tabulog, Josephine Calajate, Encarnacion Gaor, Genedine Jambaro, Eden Battulayan, and Pedro Agcaoili during a House hearing on June 20, 2017, when they still refused to properly testify before lawmakers. Photo by Jasmin Dulay/Rappler

The House committee on good government and public accountability had issued a subpoena for the following officials to appear during the hearing on May 29: 

  • Pedro Agcaoili, Provincial Planning and Development Office chairperson
  • Josephine Calajate, provincial treasurer
  • Eden Battulayan, provincial accountant
  • Encarnacion Gaor, Provincial Treasurer’s Office staff
  • Genedine Jambaro, Provincial Treasurer’s Office staff
  • Evangeline Tabulog, provincial budget officer

The 6 local executives were signatories to the purchase requests, obligation requests, disbursement vouchers, and checks for the purchase of the motor vehicles in question.  

Fariñas asked them one by one to verify their signatures on the documents. 

But they all had the same line: They cannot remember signing the documents anymore given the many transactions they had to process, even if the purchases in question amounted to millions of pesos. They then asked the committee if they could see the original copies so they could properly comment. 

Fariñas had asked Jambaro if she remembers signing a check worth P15.3 million for the secondhand buses. 

Jambaro replied: “Your honor, ‘di ko na talagang maalala sa dami ng transactions sa amin (Your honor, I really can’t remember because of the number of transactions we have).” 

Gaor gave a similar answer when Fariñas asked her if she signed a cash advance for the purchase of mini-cabs. 

“That was the exact same testimony given by [Jambaro]… Walang maniniwala sa ‘yo (No one will believe you),” said a laughing Fariñas.

The House panel then unanimously agreed to cite all 6 officials in contempt. They have been detained at the House Legislative Building since May 29. (READ: ‘Mastermind’ muzzling Ilocos Norte execs in House probe, says Fariñas

With the help from veteran lawyer Estelito Mendoza, the so-called “Ilocos 6” managed to secure a ruling from the Court of Appeals (CA) Special 4th Division ordering their provisional release. (READ: ‘Maawa naman kayo,’ detained Ilocos Norte officials tell House)

But the House leadership refused to grant it, with Speaker Alvarez even calling the CA Special 4th Division judges “idiots.” 


As for Marcos, she has already publicly indicated she is not too keen on appearing in the next hearing on July 25. 

House committee on good government and public accountability chairperson Johnny Pimentel then spearheaded the preparations for her detention room. 

“The Governor has already tried to explain in media interviews where the money went, how it was spent, and so on. Why can’t she just dutifully show up at our hearing, hand in the documents that her staff couldn’t produce, recount her remarks under oath, and submit herself to a proper cross-examination by the committee?” asked Pimentel. –

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Mara Cepeda

Mara Cepeda specializes in stories about politics and local governance. She covers the Office of the Vice President, the Senate, and the Philippine opposition. She is a 2021 fellow of the Asia Journalism Fellowship and the Reham al-Farra Memorial Journalism Fellowship of the UN. Got tips? Email her at or tweet @maracepeda.