COA: P203M Distributed to Seniors, PWDs Against the Law

The Commission on Audit (COA) said the Cebu City government had violated the law when it used P203.7 million out of the funds originally intended for the construction of a new hospital building and distributed them for cash assistance of senior citizens, persons with disabilities (PWD), barangay officials and other workers.

The state auditors brushed aside the arguments of Mayor Michael Rama claiming that City Treasurer Diwa Cuevas has the discretion on how to use the money that are within the General Funds in line with the city’s “one fund concept.”

City Ordinance 2388 was enacted by the City Council appropriating P325 million for various purposes, including the P300 million appropriation for the construction of the new Cebu City Medical Center (CCMC) building.

The old CCMC building has been demolished, upon the order of the mayor, after it incurred heavy damage due to the 7.2 magnitude earthquake in 2013.

COA said the construction of the new hospital building has been considered urgent as certified by the mayor when he recommended that the P300 million that was earlier allocated for the improvement of Mahiga Creek be realigned for CCMC construction.

The city treasurer has set aside the P300 million under the General Fund Account (CCMC Construction) to secure the funding of the construction of the new hospital building and placed the subject funds in time deposit.

But COA discovered that the amount has been withdrawn upon maturity per Land Bank of the Philippines (LBP) Credit Advice dated December 8, 2014 and the P203.7 million was used to pay for dole outs.

The report published in The Freeman, show that the P168.3 million was used for senior citizens’ cash assistance, P28 million for PWD’s, P793,800 for the honorariums of consultants, P6.5 million for the additional honorarium of barangay officials.

When the issue broke out, the city treasurer justified the city’s actuation by saying that since there is no actual construction yet, the funds earmarked for the project are idle and therefore it can be used for other purposes.

Cuevas assured that the amount can be replenished in January because by that time the city can already start collecting business taxes. But her explanation was not accepted by the state auditors.

The state auditors said the P300 million, although part of the funds in the city treasurer’s custody, it was not earmarked for the expenditures in granting cash assistance, but to fund the new CCMC construction Phase 1.

COA further said that City Ordinance 2388 would not have been approved due to lack of funds because the law provides that after the local chief executive shall have submitted the executive budget to the City Council, no ordinance providing for a supplemental budget shall be enacted, except when it is supported by actual funds.

The ordinance was supported only with fund that was realigned from the budget intended for the Mahiga Creek improvement.

Meanwhile, COA also questioned the demolition of the old CCMC building by JLC Corporation that was undertaken without proper documentation and the scrap materials from the destroyed building were not properly accounted for.

Section 79 of the Government Accounting and Auditing Manual (GAAM) provides that when government property has become unserviceable for any cause, or is no longer needed, it shall, upon application of the officer accountable thereof, will inspect the structure in the presence of the auditor.

If found out that there are still something valuable in that building, it shall be sold at public auction to the higest bidder.

COA said the city engineer’s office has no knowledge on how the service of the JLC Corporation was procured.

Although City Engr. Jose Marie Poblete had submitted list of inventory items from the demolished hospital worth P9 million which are now under the custody of the Department of Public Works and Highways (DEPW) and CCMC, but it did not include the scrap iron bars.