Beneficiaries seek accounting of MMFF funds

(First of two parts)

MANILA, Philippines — Movies featuring the country’s most popular stars—including presidential sister Kris Aquino, comedian Vice Ganda, screen favorites John Lloyd Cruz and Jennylyn Mercado, and young love team Alden Richards and Maine Mendoza—are likely to make the 2015 Metro Manila Film Festival another smash hit, possibly raking in much more than last year’s almost P1 billion earnings.

But government auditors and MMFF critics say proceeds from the festival, in dwindling amounts, are not reaching their intended beneficiaries on time, and that an accounting of the festival proceeds is long overdue.

MMFF officials, on the other hand, say the festival is a private undertaking not covered by government audit rules and regulations, even if it is run by the Metro Manila Development Authority (MMDA).

The main issue is the amusement tax collected from Metro Manila theater owners who screen only MMFF entries for 10 days from Dec. 25 until Jan. 5.For that period, the local government units waive amusement taxes in favor of movie industry beneficiaries.

But the MMFF has still to remit some P108 million in amusement tax revenues to its intended beneficiaries. Of that amount, P82,787,440 is from proceeds from the 2002 to 2008 festivals, according to a special audit of the Commission on Audit in 2009. Also still unremitted is some P26 million for the years 2009 to 2013.

Last month, actor and Film Academy of the Philippines (FAP) president Leo Martinez asked chairman Emerson Carlos of the MMDA, which administers the MMFF, to comply with the findings of the 2009 COA audit.

“All that the FAP is asking is for the MMFF Philippines (MMFF-P) Executive Committee to comply with these findings,” Martinez wrote in a letter dated Nov. 9.

FAP is one of four agencies supposed to share half of the MMFF proceeds. It is supposed to get 20 percent, the Motion Picture Anti-Piracy Council another 20 percent, the Film Development Council of the Philippines 5 percent, and the government-run Optical Media Board 5 percent.

The other half is supposed to go to the Movie Workers Welfare Fund (Mowelfund), a 5,000-member nonprofit organization founded by former actor and producer, former president and now Manila mayor Joseph Estrada for the welfare of workers in the movie industry.

As of two weeks ago, beneficiaries like the FAP had still not received last year’s tax revenues in full. Martinez said the MMDA still has a balance of P1 million for MMFF 2014.

While the law requires the MMDA to distribute the proceeds 20 days after the last day of the film festival, Mowelfund education director Edgardo Vinarao said the foundation has been receiving the money in installments, and in lesser amounts, even if the MMFF’s earnings have been increasing yearly.

MOWELFUND education director Edgardo Vinarao recalls the difference in the operations of the Mowelfund when it still had sufficient funding from the government. VERA Files/Maria Feona Imperial

“Why is it that while the MMFF gross ticket sales are growing, the amount received by the beneficiaries is decreasing?” Vinarao said.

The answer apparently lies in the fact that the MMFF can make up the rules as it goes along, and that year after year, those rules can change. In 2013, for example, the MMFF created a rule allowing the festival organizers to utilize the amusement tax before it is distributed to beneficiaries.

“All amusement taxes, other than non-tax revenues shall form part of the MMFF fund, and shall be released to the designated beneficiaries after deducting all the operational and incidental expenses of the MMFF,” says what is called Rule 10 of the MMFF 2013.

MMFF executive committee member Dominic Du said 75 percent of the money collected is given to the beneficiaries. Around 20 percent is allotted for the prizes and 5 percent to augment operating expenses.

The MMFF’s expenses include holding the Awards Night and giving out prizes for, among others, Best Picture, Best Actor and Actress, Best Float, Best Director. Compensation for receptionists and usherettes, and logistical expenses during meetings also form part of the operating costs, Du said.

Rule 10 has been there long ago, he added, but it was only put down in writing in 2013. 

When Martinez wrote the MMDA demanding an accounting of MMFF funds, it was the MMFF that responded. A two-page letter signed by MMFF Executive Chairman Jesse Ejercito included the breakdown of expenses for MMFF 2013.

Ejercito said the total Metro Manila tax revenues collected during the 10-day festival amounted to P19.7 million. Only P14 million was released to the beneficiaries. P4.7 million was used for the MMFF awards night, P594,000 for the festival’s operating expenses and P500,000 was donated to typhoon Haiyan victims.

Ejercito also rejected the idea that the FAP had a right to demand an accounting of the MMFF fund.

“Our position is consistent with the law and existing jurisprudence, where the right to demand accounting may be exercised only by the trustors over the trustee (MMFF), which in this case are the Metro Manila local government units (LGUs),” the letter read.

Meanwhile for Du, though FAP is one of the beneficiaries or trustors, it doesn't necessarily have the right to demand accounting.

"If I’m only helping you and you’re only benefiting from what I give you, do you have the right to demand how I spend the money?” Du said. 

Martinez finds this unjust, saying any citizen can question and demand an accounting from the MMDA, given that amusement taxes are public funds.

According to Martinez, of the P14 million that was given to the beneficiaries in 2013, 20 percent or P2.8 million was allocated to FAP. The first tranche was P1 million, while the P1.8 million balance was divided into five tranches and given every other month. Martinez said FAP received the last tranche in January 2015—a month after another the festival.

“They are taking advantage of our money. Why would they earn from it? They do not give it immediately even if they already have it 20 days after the last day of the festival,” he said of the MMDA.

For the longest time, the MMDA has not been held accountable for the delayed and incomplete disbursements, Martinez said.

Lawyer Gloria Galanida-Calvario, supervisor of the COA special audit of MMFF funds from 2002 to 2008, said the MMDA should follow the specified distribution scheme for the beneficiaries, which means that the MMDA should not touch the money. 

“Under the law, the MMDA is just a trustee,” Calvario said, pertaining to the MMC Executive Order 86-09, the law that created the MMDA's operation and management of the film festival.

Calvario said Rule 10 defeats the MMFF’s purpose, which is to provide funds for the “benefit of actors, actresses and people who work behind the camera.”

Du and MMFF spokesperson Marichu Maceda said the entire issue is a mere case of conflicting interpretations of the law. Du said the awards are also given to industry players, who can be considered beneficiaries.

“It’s an incentive, to encourage them to do better,” Du said.

MMFF spokesperson Marichu Maceda says the entire issue boils down to who wants to run the film festival. VERA Files/Maria Feona Imperial

Maceda said while these incentives in the form of awards make the festival “more commercial,” she firmly believes that they are needed to make the festival survive.

“That is how we interpret the EO that created the festival. We can deduct from there to give out as rewards to deserving industry people,” Du said.“But the FAP can’t, so let the court decide.”

Du said it is better to wait for the court’s decision on whose interpretation is correct.

Last year, Martinez filed a petition before the Quezon City Regional Trial Court to compel the MMDA to release the P82 million balance of tax revenues. The case hasn’t been moving, and its scheduled hearing on Sept. 19 was canceled due to stormy weather.

The MMFF representatives also maintain they should not be subject to audit by the COA to begin with. Maceda said the Department of Justice considers the MMFF a private entity. “So by law, COA has no authority over private companies,” she said.

“We have our own auditor. COA is to audit only government,” she added.

However, Desiree Aquino, leader of the team who performed the 2009 special audit, said the portion of the funds that is subject to audit is amusement taxes.

Even if MMFF is a private entity, the amusement taxes from the LGUs are government funds, Aquino said.

(To be concluded)

VERA Files is put out by veteran journalists taking a deeper look into current issues. Vera is Latin for “true.”