THE Commission on Audit (COA) has required the immediate refund of P3.792 million distributed under the government’s social amelioration program (SAP) to 632 ineligible beneficiaries in Cebu City, and directed the City Legal Office to conduct further investigation and file charges.
State auditors also asked Cebu City officials to explain why over P1.5 million in special risk allowances were granted to non-public health workers. If the explanation is untenable, those who approved the release must refund the amount.
Other items flagged by COA in its annual audit report:
- Procurement of 20,000 pieces of KN95 was overpriced by P1.34 million;
- Rice worth P67.37 million was purchased from “unqualified” suppliers;
- The City failed to comply with documentary requirements and procedures in the procurement of 1,670 boxes of rapid antibody test kits worth P42.5 million;
- The City failed to submit the summary or list of donations received and distributed, and balance, and its supporting documents, as well as the required one-time report for cash and in-kind donations; and
- Construction of the Cebu City Quarantine Center was not covered by a construction agreement between the City and Leda Construction Inc. nor by a notice to proceed.
Cebu City Administrator Floro Casas Jr., in a press conference on July 14, 2021, said the City will neither conduct an investigation nor send demand letters since SAP is being implemented by the national government.
He said the proper party that should send the demand letters and conduct an investigation is the Department of Social Welfare and Development (DSWD).
Cebu City’s Department of Social Welfare and Services (DSWS), in a rejoinder to the audit report, expressed confusion and explained that its participation in the program was only to encode the data gathered. The DSWS has no hand in identifying the beneficiaries of the program.
Casas also said the Cebu City Government merely helped by providing a facility and personnel for the distribution of the cash assistance.
The City asked the COA to be relieved of the responsibility of demanding from the ineligible beneficiaries to return the cash assistance “for the simple reason that their part in the distribution was limited to encoding of data.”
State auditors denied the City’s request, saying its justification is “unmeritorious.”
COA said the agreement between the City and DSWD specifies the procedure, which requires barangay personnel to conduct house-to-house distribution of the social amelioration card (SAC).
They will also be the one to collect the accomplished SAC forms and endorse these to the DSWS, while the DSWS will review the “completeness and correctness” of the encoded data and submit these to the DSWD field office.
COA also stated that the payroll contains a certification under oath of the DSWS officer-in-charge, thus, such office cannot be relieved from the responsibility of demanding refunds from ineligible recipients.
In its report, the COA said a total of P836.892 million in SAP funds were distributed to beneficiaries in Cebu City’s 80 barangays. Of this amount, P501.066 million was disbursed through cash advances by the special disbursing officer while P335.826 million was coursed through fund transfers to the selected barangays.
The beneficiaries included 632 individuals who were not eligible for the program, but received P6,000 each or a total of P3.792 million.
State auditors found out that these individuals are currently employed in the barangays or in the Cebu City Government, who are excluded from receiving the Emergency Subsidy Program (ESP).
The COA report also flagged several transactions made by Cebu City as part of its pandemic response.
The City purchased 20,000 pieces of KN95 masks at P219 each, which was P67 higher than the Department of Health (DOH) price of P152. COA said the transaction was overpriced by P1.34 million.
COA also found out that there was no proof of market scanning in compliance with procurement laws. Supplier Markabi Distributors Philippines Inc. is not registered with the Food and Drug Administration.
The City said the price already included the cost of delivery and was based on credit while the DOH price was based on cash.
Auditors said the suppliers of rice were unqualified.
Based on the COA report, the City procured 3,000 sacks at 50 kilos per sack from Best Buy Mart Inc.; 2,360 sacks at 25 kilos per sack, 4,100 sacks at 50 kilos per sack, and 5,000 sacks at 50 kilos per sack from Simon Industrial Products Trading Corp.; and 15,000 sacks at 50 kilos per sack from Sellchem Global Trading Inc.
COA said Best Buy is a general merchandise wholesaler/retailer and a dress shop, while Simon and Sellchem are wholesalers, distributors and retailers of non-essential items.
COA said these suppliers are considered not technically and legally capable of delivering the items. Dealing with ineligible suppliers and non-observance of procurement laws render the transactions illegal.
Casas said the City has explained the transaction and argued that these were emergency purchases, considering the pandemic.
Opposition Cebu City Councilor Nestor Archival questioned the transactions, describing these as “very irregular.”
“These are all, most of the items that are stated in COA are very irregular, kon (or) in a every strict sense, that’s illegal,” said Archival.
Archival said he will move for a corollary motion in the City Council, seeking recommendations from COA on what the concerned agencies should do to correct the irregularities.
Casas said despite the findings of COA, the City was still given a rating of “unmodified opinion.”
“In short, we were able to answer all the findings, we were able to correct it, and we were able to justify it,” said Casas.
“After considering all those findings and our answers, we were given unmodified opinion still,” he said.
He said the City will use COA’s findings as guide for future transactions of the City.