VERA FILES FACT CHECK: Gadon makes inaccurate claims on Red Cross funding, audit

Lawyer Larry Gadon has claimed that the Philippine Red Cross (PRC) receives substantial funding from the government. This is misleading.

The PRC can be audited because it gets funds from the government, he said. This lacks context.

STATEMENT

On Sept. 4, Gadon shared a video of himself uploaded on the Facebook (FB) page of Sonshine Media Network AM radio station DZAR 1026. It was a four-minute monologue, during which he urged President Rodrigo Duterte to revoke the appointments of six presidential nominees to the PRC’s Board of Governors for failing to submit an annual report to the chief executive.

Part of Gadon’s talk went this way:

Akala yata nila ay sila ay talagang independent nga at pinapalagay pa nila na hindi sila pwedeng i-audit. ‘Yan ay mali, sapagkat ang Philippine National Red Cross ay tumatanggap ng napakalaki, milyon-milyon, daang milyon na pondo galing sa gobyerno … May karapatan ang gobyerno na i-audit ang kanilang paggastos diyan sa pondo na binibigay ng gobyerno, at ‘yan ay nasa batas ‘yan.”

(They [referring to PRC board members] probably thought they were really independent and they think they cannot be audited. That’s wrong, because the Philippine National Red Cross receives a big amount, millions, hundreds of millions of funds from the government … The government has the authority to audit their spending of the funds from the government, and that is in the law.)

Source: DZAR 1026 official Facebook page, Sen. dapat nang tanggalin bilang chairman ng Phil. Red Cross, Sept. 4, 2021

He continued:

Ang lottery, ang kinikita ng isang lottery, isang araw na lottery, ay napupunta sa Philippine National Red Cross para sa kanilang general fund. At ang isa pang araw uli ng lottery, ang kinikita nito, ay inilalaan naman sa kanilang blood bank.”

(The lottery, the proceeds from a lottery, one day of a lottery, goes to the Philippine National Red Cross for its general fund. Another day of the lottery, its proceeds, is allocated for its blood bank.)

Source: DZAR 1026 official Facebook page, Sen. dapat nang tanggalin bilang chairman ng Phil. Red Cross (Archived), Sept. 4, 2021


Gadon’s post got 4,200 interactions on FB, while his video on DZAR 1026’s FB page garnered 295,000 views and 20,899 interactions as of Sept. 15, according to social media monitoring tool CrowdTangle. A modified version of the video posted on the FB page Kapeng Barako on Sept. 6 has 27,000 reactions, 4,500 comments, and 724,000 views on the same date.

FACT

While the PRC — an independent, autonomous, non-governmental organization — receives proceeds from lottery draws of the Philippine Charity Sweepstakes Office (PCSO), it has no allocation in the annual General Appropriations Act or the national government budget approved by Congress.

The PCSO, a government-owned and -controlled corporation under the Office of the President, has the mandate to raise and provide funds for health programs, medical assistance and services, and charities through sweepstakes, lotteries, and other fund-raising activities.

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Section 5(d) of Republic Act (RA) No. 10072, the Philippine Red Cross charter, provides that the PCSO should allot for PRC “at least one lottery draw yearly for the support of its disaster relief operations in addition to its existing lottery draws for the Blood Program.”

Section 6(b) of RA 1169, or the 1954 charter of the PCSO, provides that the PCSO should allot 30% of its receipts from sales of sweepstakes tickets to a charity fund, from which contributions should be paid to health programs and charities such as the PRC.

A cursory search shows that PRC received two checks worth P889,451 in May and another worth P767,110 in July this year.

Justice Secretary Menardo Guevarra, in a Sept. 9 response to a query posed by journalists covering the Department of Justice, said that the government can audit PRC.

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The PRC is not subject to the regular audit of the Commission on Audit (CoA). However, Article IX-D, Section 2 (1) of the 1987 Constitution states that the CoA can conduct a post-audit of a non-government organization, such as the PRC, that receives a direct or indirect subsidy/equity from the government.

Any government organization can request the CoA for a special audit of an NGO like PRC on a case-by-case basis, as provided in Articles 4.8 and 6.2 of CoA Circular No. 96-003.

Both provisions in the Constitution and the CoA circular were cited by Presidential Spokesperson Harry Roque during a Sept. 7 press briefing to justify the CoA’s jurisdiction to audit the PRC.

CoA is mandated to conduct an annual, regular audit of revenues and spending of government agencies such as the Department of Health, and GOCCs with original charters, and post-audit constitutional bodies and offices granted fiscal autonomy, autonomous state colleges and universities, other GOCCs and their subsidiaries, and other non-governmental entities receiving subsidy or equity from the government.

COA can conduct a temporary or special pre-audit to correct deficiencies in agencies where the “internal control system” is “inadequate.”

PRC was previously audited by Swiss-based international auditing firm KPMG International and its Philippine management firm affiliate R.G. Manabat & Co.


Sources

DZAR 1026 official Facebook page, Sen. dapat nang tanggalin bilang chairman ng Phil. Red Cross (Archived), Sept. 4, 2021

Official Gazette, Republic Act No. 10072, accessed Sept. 9, 2021

Governance Commission for GOCCs, Republic Act No. 1169, accessed Sept. 14, 2021

Philippine Charity Sweepstakes Office official Facebook page, PCSO Office of the General Manager…, May 25, 2021

Philippine Red Cross official Facebook page, Pinagkaloob sa Philippine Red Cross (PRC) ng PCSO…, July 8, 2021

Philippine News Agency, COA has power to open PRC’s books: Guevarra, Sept. 9, 2021

The Manila Bulletin, COA can audit PRC on subsidies given by gov’t entities like PCSO, Sept. 9, 2021

News5 official Facebook page, May kakayahan ang Commission on Audit na suriin ang Philippine Red Cross…, Sept. 9, 2021

Official Gazette, Article IX, 1987 Constitution, accessed Sept. 13, 2021

Government Procurement Policy Board, Commission on Audit Circular No. 96-003, accessed Sept. 13, 2021

Presidential Communications Operations Office, Press Briefing with Presidential Spokesperson Harry Roque | September 7, 2021, accessed Sept. 13, 2021

KPMG International, Independent Auditor’s Report on the IFRC’s Financial Statements for the Philippines – Typhoon Mangkhut Emergency Appeal (MDRPH029)..., accessed Sept. 14, 2021

International Federal Red Cross [Federation-wide Databank and Reporting System], Philippine Red Cross 2015 (Our Audited Financial Statements), accessed Sept. 9, 2021


(Guided by the code of principles of the International Fact-Checking Network at Poynter, VERA Files tracks the false claims, flip-flops, misleading statements of public officials and figures, and debunks them with factual evidence. Find out more about this initiative and our methodology.)

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