A member of the Philippine National Police (PNP) documents a self-confessed drug user who voluntarily surrendered to the police on their "Operation Tokhang (approach and talk)" in Pasig city, metro Manila, Philippines September 15, 2016. Picture taken September 15, 2016

MANILA, Oct 7 (Reuters) - There are two versions of how Manila pedicab driver Neptali Celestino died.

According to Philippines police, he shot at plainclothes officers during a sting operation on Sept. 12, and they returned fire. His family says police burst into their ramshackle home, cornered an unarmed Celestino and shot him in front of his teenage sons.

Whatever the case, Celestino's days seem to have been numbered. His name had appeared on a police "watch list" of drug suspects drawn up with the help of community leaders and other people who lived alongside him in Palatiw, a frenetic, traffic-choked area on the eastern side of the nation's capital.

The local officials who help cops draw up these lists are foot soldiers in a war on drugs that has led to the killing of more than 3,600 people since President Rodrigo Duterte took office on June 30.

Most of the 1,377 people shot by the police had appeared on the lists, according to national police chief Ronald Dela Rosa. It was unclear how many of the remaining 2,275 victims, who human rights activists suspect were mostly killed by vigilantes, were on the lists.

The campaign draws its momentum from President Duterte: last Friday, he seemed to compare himself to Hitler and said he would be "happy to slaughter" three million drug addicts in the Philippines. But the campaign's efficiency depends on the lowliest officials in the country's barangays - its districts and villages.

"They are on the forefront of this fight," Dela Rosa told Reuters. "They can identify the drug users and pushers in their barangays. They know everyone."

MOTORBIKE-RIDING ASSASSINS

Interviews with local police, residents and barangay officials reveal the mechanics of an anti-drugs crusade that the popular Duterte has vowed to wage until next June in the face of global condemnation.

Barangay leaders, known as "captains," have been instrumental in drawing up the lists, say police.

Maricar Asilo Vivero is the captain of Pinagbuhatan, a Manila barangay with about 145,000 people, and says she is an enthusiastic supporter of Duterte's campaign.

"The war on drugs is good," she said. "It lowers crime. It identifies those who want to change."

The night before, said Vivero, motorbike-riding assassins killed two men who had been named as pushers on the barangay's watch list. Vivero said she sympathised with the victims' families but didn't feel responsible for the deaths.

People weren't included on the watch list with "the objective of killing them, or asking the police or authorities to kill them," she said. "Our objective is to guide them, to direct their lives to the better - not to kill."

Asked if people named on the watch list were more likely to get killed, Vivero replied: "No, I don't think so."

There were 323 suspected users and dealers on Pinagbuhatan's watch list, according to a computer print-out seen by Reuters. It had been swelled by people who had gone to the barangay office to admit to police they were users, a process known as "surrendering".

OFTEN A FAMILY AFFAIR

The origins of the barangay system predate the arrival of Spanish colonisers in the 16th century. In Manila, a barangay can consist of just two densely populated streets; in the countryside, it can sprawl for miles.

Each has a barangay captain and six kagawad, or councilors, who are elected in polls often dogged by allegations of corruption. And as with more senior posts in the Philippines, the barangay captaincy often passes between members of the same family.

The barangay office sits at the heart of the community and, on any given day, its hallways are clogged with people seeking so-called "clearances." These are certificates, signed by the captain, for people needing to establish residency, set up a business, apply for a job or enroll a child at a local school.

Barangay captains routinely attend the weddings, baptisms and funerals of constituents, and even victims of serious crimes will sometimes report to them first rather than the police.

"They trust us more and get an immediate response," said Eriberto Guevarra, who for 11 years was captain of Palatiw.

His wife Dinah now occupies the position, while Eriberto works at her side as a self-styled "peace and order czar".

"DRUG PERSONALITIES"

The Barangay Anti-Drug Action Committees (BADACs) play a key role in helping the police identify alleged drug dealers and users in each district.

Each BADAC's 6-10 members are chosen by the barangay captain, who also chairs the committee. They might be teachers, church workers, youth leaders or members of other civil society groups.

Each BADAC provides the names of what police term "drug personalities", meaning suspected users or dealers, most of them small-time. Police say they then "validate" these names in consultation with national anti-narcotics and intelligence officials. They also add names of their own.

First created by the government in 1998, BADACs were meant to convene every month, but for years many did little or existed only on paper. Duterte not only revived the BADACs, he made them the lynchpin of his war on drugs.

Duterte pioneered the nationwide campaign in the southern city of Davao, where he was mayor for 22 years.

There, barangay leaders and police compiled similar lists that were used by death squads to assassinate hundreds of alleged drug dealers, petty criminals and street children, said Human Rights Watch in a 2009 report. Duterte denied any involvement in the killings.

Dinah Guevarra, a village chief, leads the pledging of a new life of a married couple who are self-confessed drug users and had voluntarily surrendered to the police's "Operation Tokhang (approach and talk)" in Pasig city, metro Manila, Philippines September 15, 2016. Picture taken September 15, 2016

"A GRUDGE AND A GUN"

Officials say the watch lists are not arbitrary hit lists.

Metro Manila's list of 11,700 users and dealers has been "validated and revalidated by intelligence", said Kimberley Molitas, police spokeswoman for a region that has seen more than a quarter of the drug-war deaths.

Human rights monitors and some officials counter that the process is open to abuse.

Lists have included the names of people "who are not even drug users, never mind pushers," said Karen Gomez-Dumpit, a commissioner at the Philippines' Commission on Human Rights.

"It's an environment conducive to someone with a grudge and a gun to hunt you down," she said.

In one high-profile case, the bullet-riddled body of Mark Culata was found in Cavite, a province south of Manila, on Sept. 9. It bore a placard identifying him as a drug dealer.

Culata's mother Eva told local media that her 27-year-old son had nothing to do with drugs and had been heading overseas to start a job. Police told Reuters in a statement that investigators were considering the "illegal drug trade and love triangle" as a possible motive.

Four officers involved in the case have been moved to administrative positions pending an investigation by the National Bureau of Investigation, the Philippines equivalent of the FBI. Culata's death was raised as a possible extrajudicial killing in a Philippines Senate hearing on Oct. 3.

Police told Reuters that watch lists are confidential. But so-called "knock and plead" operations, in which police visit drug suspects at their homes and urge them to mend their ways, means inclusion on a list is often public knowledge.

Drug pushers and users are also urged to "surrender" to the police at barangay meetings that are, again, public. Their names are added to the watch list.

The process resembles a mass arrest. The so-called "surrenderers" are questioned by police, who ask for details of their dealers and fellow users. This information can be used to identify other drug suspects, police said. The names of surrenderers are later added to a national database so they can be watched even if they move to another barangay.

After the questioning, the users are fingerprinted and pose for a mugshot holding a whiteboard bearing their name and that day's date. Raising their right hands, they then swear to stay away from drugs and support "the government and the police in their noble campaign."

In the following weeks, said barangay captain Vivero, surrenderers are expected to do community service such as painting walls, unclogging sewers or picking up trash.

INTENDED TO CHANGE

Former barangay leader Eriberto Guevarra said he tried to avert the killing of pedicab driver Celestino. The dead man, Guevarra said, was just a small-time dealer and user, not the "notorious pusher" police dubbed him.

"He was endangered because he was on the watch list," he said.

Guevarra said he had warned Celestino to stop dealing and using drugs. Three days before his death Celestino had attended a three-hour "drug awareness" seminar run by police and barangay officials.

"It was his intention to change," said Guevarra.

John Patrick Celestino, 17, one of Celestino's four children, trembled as he recalled the night his father died.

The dogs began barking at about 9 p.m. There were armed men at the door who showed John Patrick a photo on a cellphone. "Is this your father?" they demanded.

When he said it was, according to John Patrick, the men rushed upstairs and kicked open the door to a small room where Celestino was hiding.

John Patrick, who had followed them to the room, said: "The men kept shouting, 'Where's the shabu?' Where's the shabu?'" referring to the local name for crystal methamphetamine, a highly addictive drug widely available in the Philippines.

He told them his father was unarmed and begged them not to shoot. But one gunman fired three rounds into the room, and the teenager heard his father gasp with pain.

The gunman then ordered John Patrick to flee. As he ran downstairs, he heard five more shots.

Police said they found a .22 revolver and three sachets of shabu on Celestino. His wife Zandey, 38, denies this was the case.

"My husband had already surrendered, so why did they kill him?" she asked. "Why didn't they give him one more chance?"

Sitting around his coffin, relatives told a Reuters reporter of a long-running feud with another family, who they blamed for telling the police that Celestino was a drug dealer. Reuters was unable to independently verify this claim.

Relatives sits in-front of a poster of Neptali Celestino, who was killed in a police anti-drugs operation, at his wake in Pasig city, metro Manila, Philippines September 15, 2016. Picture taken September 15, 2016. To match Special Report PHILIPPINES-DUTERTE/HITLISTS REUTERS/Romeo Ranoco

"NEFARIOUS ACTIVITIES"

Celestino was on the watch list as a drug dealer, confirmed Chief Superintendent Romulo Sapitula, director of the Eastern Police District of Manila.

"The information came from the community," he said. "It was given by barangay officials and validated by the police."

The "best information" comes from the neighborhood itself, he added. "Most of the watch lists which came from that place are true and correct."

Celestino's surrender as a drug user didn't put him above suspicion, said Sapitula.

"There are some on the watch list who surrender but continue their nefarious activities," he said. "They pretend to embrace the programme, but in reality ... they are still doing their old thing. And there are some who surrender as users when they're really pushers."

Sapitula confirmed the operation was carried out by seven or eight members of the anti-narcotics police. He rejected the family's claim that drugs were planted on Celestino. An internal investigation, he said, had concluded that the police opened fire in self-defence because Celestino had "opted to shoot it out".

Sapitula said family members shouldn't be afraid to file a formal complaint, but only "if they're innocent" and not involved in criminal activities.

The Celestinos told Reuters there was little point appealing to the same people who had killed their relative. Zandey said she feared not only for the safety of her children, but for other members of her extended family who, like Celestino, had "surrendered" to authorities.

Her older son, Cedric, 19, was so traumatized by the killing that he has stopped talking, she said.

"IT WILL BE BLOODY"

Some local leaders plead with the police to spare lives.

In the Manila slum of Tondo, barangay captain Erick Simbiling said two policemen recently told him they had "scheduled to kill" a local man who was a small-time but persistent drug dealer.

"I spoke to the policemen and said, 'Please give him a chance,'" Simbiling said.

He then visited the dealer and urged him to surrender to the authorities. The dealer did so, like hundreds of thousands of others nationwide, and then fled the barangay.

The barangay captains are under pressure from the president himself. Duterte has vowed to publish a list of a thousand elected officials suspected of drug ties. Prominent among them are captains who have connived with terrorists and drug lords, he told reporters on Sept. 18.

But not all barangays have toed the line. Police in central Luzon told Reuters that 31 of the region's 3,100 barangays had not supplied a watch list.

Romeo Caramat, police chief of Bulacan province in central Luzon, said these barangay officials were probably either allied to Duterte's political opponents or bankrolled by drug traffickers.

"Actually, one of the barangay captains who was uncooperative got killed," said Caramat. The man was shot in early August in San Jose Del Monte city by unidentified assassins on a motorbike, he said.

"One barangay chairman runs out of luck!" added Caramat, laughing. He described the man as "a well-known drug pusher and user" who had not included himself on his barangay's watch list.

The dead captain, Damaso Santiago, was a drug user, not a dealer, said his younger brother Arman Santiago. "Anyone you ask, they will say he does not peddle drugs. He was just a victim of drug use," said Arman.

Police chief Caramat described his province's 17,000 drug dealers and users as "a walking time bomb". For him, the death toll in his province is a measure of the campaign's success.

"It will be bloody," he said. "You have a problem with dengue. You think you can solve it without killing mosquitos?"

--- With additional reporting by Clare Baldwin, Manuel Mogato and Neil Jerome Morales in Manila