The provincial government has dismissed the Commission on Audit’s (COA) critical observation about its cash management stemming from its decision to keep a P2.08 billion savings in a bank deposit while incurring a P1.26 billion loan for its various projects.
Provincial treasurer Elino Mondragon said Monday in a statement issued by the Provincial Information Office (PIO) that they have already reached out to the COA to explain the loan issue flagged by the COA’s Audit Observation Memorandum (AOM).
Mondragon also denied the provincial government was “scolded” by COA as earlier reported, pointing out that the audit is still an ongoing process, with the AOM being a part of it.
“Hindi tayo scolded. Ang pinagkunan nila ay AOM. AOM is still on process para i-explain sa kanila kung bakit nangyari ‘yong pag-loan. In fact, ini-explain din natin nang maigi ‘yan sa COA at ang COA naiintindihan ang side ng provincial government of Palawan. Ipinakita rin natin ang lahat ng certification ng bangko na hindi tayo nag-time deposit,” Mondragon said.
The COA 2018 annual report included an observation that the provincial government did not practice “sound” fiscal management, noting that it had incurred a P68.26 million interest expense for its existing loan while earning only P18.56 from its time deposit account under the General Fund.
High Yielding Account
Mondragon explained that the amount questioned by the COA in its memorandum was funds already appropriated to programmed expenses but have yet to be disbursed.
“Itong mga pera na ito is hindi free from obligations. Ito ay may kaakibat na bayarin na hindi lang natatapos. Kaya while nandito itong pera, kailangan namin itong alagaan,” he said.
“Walang time deposit ang provincial government kasi wala akong hawak na ceritificate of time deposit,” he added.
Mondragon explained that what the provincial government did was to park the funds in a high-yielding savings account (HYSA) which offers an interest rate of 4 to 4.5 percent per annum, which is higher than the ordinary savings account that only provides 0.1 to 0.2 percent per annum.
“Ang ating current savings account ang interest niyan is nasa 0.1% to 0.2% per annum lang, swerte ka na kung mabigyan ka ng 0.3-0.4% ng ordinaryong savings account. Dahil si Governor (Jose Alvarez), may alam sa proseso sa bangko, so nag-explore tayo kung papaano kikita habang hindi pa nagagamit o hindi pa available ‘yong babayaran. Inilagay muna natin sa ngayon sa HYSA at hindi sa time deposit,” he said.
Mondragon explained it was placed in HYSA while the provincial government is waiting for vouchers from ongoing projects in Palawan.
There is nothing wrong, he said, in doing this because the funds earn 4 to 4.5 percent per annum compared to the the ordinary savings account that only earns 0.2 percent.
“Ngayon, kasalanan ba na ilagay ang P1 billion doon sa mas mataas na interest? Kasi ang alam namin mas makakatulong. And, in fact, nagre-reflect ‘yan sa report ng accounting, bakit hindi nila tingnan ang report ng accounting para malaman nila kung magkano ang kinikita ng province?” he said.
Mondragon said their P1 billion loan was made because the HYSA cannot be used since they are already appropriated.
He said the P2.08 billion in HYSA is intended for priority projects.
“Ngayon, ‘yong loan namin na P1 billion, dapat lang na mag-loan dahil hindi mo puwedeng gamitin ‘yong naka-high yield savings kasi mayroon ng kaakibat na appropriations ‘yon,” Mondragon also said in the statement.
He explained further that the funds of the provincial government has a General Fund, a 20 percent and a trust fund.
The P2.08 billion in question, he said, consists of the 20 percent fund and General Fund, and could also include a trust fun.
“Ang tanong nila, bakit tayo nangutang ng P1.2 billion samantalang mayroon tayong P2.08 billion na time deposit o high yield saving accounts. ‘Yong pera kasi ng gobyerno may General Fund, 20% fund, mayroong trust funds. Itong sinasabi nila na P2.08 billion – ito ay mga 20% at General Fund, maaaring may kasama rin itong trust fund. Now, bawat LGU (local government unit) o gobyerno nasyunal, munisipyo, syudad o probinsya, ang budget nila ginagawa ahead of time. Doon palang ini-estimate na mayroon silang perang darating, ngayon ‘yon dumating sa kanya ibig sabihin mayroon ng kaakibat na appropriations –bago pa man ‘yan maideposito. Kasi ang gobyerno ahead siya mag-appropriate hindi pa man niya nakukuha ang pera ina-appropriate na niya. Ang tanong, ‘bakit may pera siya?’ Kung may pera man siya dyan, ibig sabihin may hindi lang siya nai-implement na project, mayroon siyang mga bayarin, mayroon siyang pagkakagastusan na hindi puwedeng gamitin ng pangkasalukuyang pagkakataon,” he said in the statement.
P154.5 million in heavy equipment rental payments by LGUs
On the alleged failure to collect the P154.5 million in rental payments for heavy equipment leased to the municipalities in the province, Mondragon said collection was discontinued because at the moment, documents and contracts are being prepared to enter into lease agreements.
He said this is because COA issued a notice of disallowance.
“Itong P154 million na lease agreement, actually may mga nagbayad pero nagkaroon ng notice of disallowance ang COA kaya pinapa-hold natin ‘yong pangongolekta. Inaayos natin ‘yong mga agreements and contracts between mga municipalities pero ang alam ko ‘yong ating opisina ng PEEDO (Palawan Provincial Economic Enterprise Development Office) inaayos na rin nila ‘yong mga dokumento and once maayos na ‘yong mga dokumento at magsangayon na sa regulation ng COA, i-implement na natin ang pangongolekta,” he said.
COA 2018 Annual Report of Palawan
COA said lease agreements for the rent of heavy equipment to various municipalities failed in the technical aspects like monthly lease payment and period of lease to know the sound judgment and fairness of the contract.
“Lease agreements for rental of heavy equipment of the PGP to various Palawan municipalities lacked technical aspects such as monthly lease payment and period of lease to determine the reasonableness of the contract amount rendering it defective and difficult to enforce resulting in uncollected operating lease receivables of P154,575,011.12, thus deprived the PGP of additional resources therefrom,” the COA report said.
The auditors also said the province incurred a total of P1,264,474 from the Philippine Veterans Bank (PVB), Land Bank of the Philippines (LBP), and the Municipal Development Fund Office (MDFO) to finance its various programs.
In 2018, the Commission said the province’s total loans availed added to existing loans is P2.54 billion. They noted further that the province still availed itself of loans despite the fact that it still has “substantial unused and available funds for its needs.”
“Despite, however, having sufficient financial resources in time deposits, the PGP unnecessarily resorted to credit financing for its various programs and project which seemingly does not conform to sound cash management,” said COA.