MCWD fails to insure properties worth P1.7B

CEBU, Philippines — The Commission on Audit has found that properties owned by the Metropolitan Cebu Water District (MCWD) with insurable value of P1.7 billion were not insured with the General Insurance Fund of the Government Service Insurance System.

COA warned MCWD it can face administrative sanctions for violating Administrative Order No. 141 of the Office of the President.

“Under this circumstance, the Water District is denied of adequate and reliable protection against any damage to, or loss of their properties due to fire, earthquake and other risks from forces of nature,” reads COA’s 2018 Annual Audit Report.

Section 5 of Republic Act No. 656 or the Property Insurance Law provides that every government entity, except a municipal government below first class, is required to insure its property with the General Insurance Fund against any insurable risk therein provided and pay the premium thereon.

AO No. 141 dated August 17, 1994 reiterates the requirement for the insurance of all risk affecting properties, assets and interests of the government and prescribes guidelines for the insurance thereof in order to conserve the resources of the government.

The same requirement is incorporated in AO No. 33 dated August 25, 1987.

COA noted that as of December 31, 2018, the only properties MCWD insured were motor vehicles recorded under the transportation equipment since the Land Transportation Office required it before renewal of registration.

Also insured its eight-story building, including air-conditioning equipment and two passenger elevators, and the building in Barangay Pusok, Lapu-Lapu City, which include the guard house, reinforced concrete reservoir, and perimeter fence as required by the Development Bank of the Philippines since the properties were used as collateral to MCWD’s loan.

The properties that remained uninsured include the P1.3 billion infrastructure assets; P242 million buildings and other structures; P31.5 million machinery and equipment; P12.6 million furniture and fixtures; and P135 million worth of other property, plant, and equipment.

“It is very important for government entities to insure their properties with the GSIS considering the calamities caused by strong forces of nature (earthquake and super typhoon) that occurred within the Province of Cebu and other parts of the country. Failure to insure these assets, the agency cannot be indemnified in case of loss or damage caused by fire, earthquake, storm, or other calamity,” the audit report reads. (FREEMAN)