COA: City Uses P28M Pagcor Funds for Power Bills, Cash Gifts

The Commission on Audit (COA) has discovered that the Lapu-Lapu City government had spent P28.8 million out of the donations that the city had received from the Philippine Amusement and Gaming Corporation (Pagcor) to pay its electricity bills and cash gifts to senior citizens, which the state auditors described it as questionable.

COA-7 Regional Director Alicia Malquisto told Lapu-Lapu City Mayor Paz Radaza that her administration had violated the provisions of the Government Accounting and Auditing Manual, which mandates that “Trust Funds shall be available and may be spent only for the specific purpose for which the trust was created or the funds received.”

The Lapu-Lapu City government is receiving a monthly donation amounting to P1.5 million from Pagcor on condition that it will be spent only for specific projects as contained in the memorandum of agreement (MOA) signed by both parties.

In January 2013, Lapu-Lapu City government had a balance of P13,804,559 from the Pagcor donations. But since Pagcor is regularly giving the city P1.5 million every month, the amount will supposedly reach P31.8 million by the end of the year.

But the state auditors discovered that the city had spent P8.2 million for the payment of its electrical bills and another P20.6 million when it distributed cash gifts to senior citizens. Because of these spending, Pagcor Funds had depleted to only P2.9 million as of last December.

“Being regular maintenance and operating expenses of the city, such expenses should have been paid out of the general fund, not the Trust Fund. A trust fund should be spent only in pursuance of its intended purpose, this is not subject for appropriation for another purpose by the Sanggunian,” the state auditors stressed.

But the Lapu-Lapu City officials insisted that the use of the funds for the payment of Christmas cash gifts to senior citizens still fall under the Pagcor’s guidelines “sustainable economic livelihood projects for the less fortunate segments of the community, including the elderly.”

Mayor Radaza also explained that the use of the funds for the payment of electric bills still falls under the guidelines that states the donation can be spent for “projects which have to do with peace and order in the locality.”

But COA said the Lapu-Lapu City officials already stretched the guidelines too far from its intentions.

“The mere giving out of Christmas cash gifts cannot by itself be considered a livelihood project that will provide employment and generate income for the recipient. It also said that the regular electricity consumption of the city cannot qualify as a project that has to do with peace and order.

COA also found out that the donated Pagcor funds in Lapu-Lapu City were not kept in a separate bank account, so as to avoid being used for other projects that are not related to the conditions set by Pagcor.

The state auditors has recommended that the amount illegally taken from the Pagcor’s Fund be reimbursed and warned the city officials to refrain from using trust funds for purposes other than those intended to avoid disallowances in audit.