CEBU, Philippines — Even with an overall “unmodified opinion” from the Commission on Audit, Cebu City’s transactions in 2020, it appears, were far from flawless.
In its report, COA pointed out deficiencies in the city’s COVID-19 response efforts, including in its Emergency Subsidy Program, in the purchase of rice for relief operations, in the construction of its quarantine building, and in the purchase of masks and test kits
City Administrator Floro Casas, Jr. was quick to say the city has already explained its side to COA.
“Kana nga mga findings amoa na nang natubag, amo na nang na-correct, amo na nang na-justify,” he said.
Amelioration program
COA said the distribution of aid for the Emergency Subsidy Program through the Social Amelioration Program to the city’s 80 barangays amounting to P836,892,000 included 632 beneficiaries who received a total of P3,792,000 but “were not eligible for the program, contrary to the pertinent provisions of the Department of Social Welfare and Development Memorandum Circular No. 09, series of 2020 or the Omnibus Guidelines in the Implementation of the ESP.”
It recommended that the Special Disbursing Officer and the City Development and Social Welfare Officer send demand letters to the 632 ineligible beneficiaries so they can refund the aid.
It also recommended for the City Legal Office to conduct further investigations for administrative, civil and criminal actions, if warranted.
The Department of Social Welfare Services, in a letter, expressed confusion and bafflement as to why it should be the one to send demand letters for the return of the SAP benefits when its participation was reportedly "merely to encode the data gathered and submitted."
It said it has no hand in the identification of beneficiaries, as well as in the verification, because these duties lie with the barangays and Department of Social Welfare and Development (DSWD).
Suppliers
COA also observed that “Several purchases of rice for COVID-19 relief operations totaling P67,376,600 were awarded to unqualified suppliers, contrary to Section 3.3 of Government Procurement Policy Board (GPPB) Circular No. 01-2020 dated April 6, 2020, thus negotiation of the most advantageous price may not have been achieved, prejudicing the interest of the government.”
The city justified that the 2016 Revised Implementing Rules and Regulations did not distinguish the type of business permit to be submitted by the bidders and what was emphasized that the bidder must have a business permit by the city or municipality where the principal place of business of the bidder is located to show that the bidder is operating a legitimate business.
It added these were the only suppliers who were willing to help the city even though they would be paid on a later date, adding, there was no more time to look for suppliers as residents were clamoring for rice due to the lockdown.
COA said the city procured well-milled rice from Best Buy Mart Incorporated, Simon Industrial Products Trading Corporation, and Sellchem Global Trading Incorporated.
However, COA sad the business permits for 2019 the suppliers submitted showed the true nature of the businesses: Best Buy Mart Incorporated - General Merchandise is (non-essential) wholesaler/retailer and a dress shop; Simon Industrial Products Trading Corporation - wholesale, distributor, retailer-non-essential; and Sellchem Global Trading Incorporated- wholesale, distributor, retailer-non-essential.
Section 150 of the National Internal Revenue Code of 1997, as amended, enumerates examples of non-essential goods as all goods commonly or commercially known as jewelry, whether real or imitation, pearls; perfumes and toilet waters; and yachts, among others.
Quarantine building
Meanwhile, COA said the Construction Agreement between the city and LEDA Construction Incorporated was not entered into and the Notice to Proceed was not issued before the start of the construction of the quarantine building at Block 27 at the North Reclamation Area for P58,851,245.67, contrary to GPPB Circular 01-2020, "thus casting doubt on the legality of the procurement."
Casas said this was an emergency purchase since the number of COVID-19 cases had started to rise at that time and the city needed an additional facility to address the outbreak.
Mask and test kits
Meanwhile, COA said the procurement of 20,000 pieces KN95 mask amounting to P4,380,000 was in excess of the maximum retail price set under the Department of Health Department Memorandum No. 2020-0144-A dated April 14,2020, thus "incurring excessive expenses of P1,340,000.00."
The city justified that the price was reasonable considering that they were procuring the mask through credit as payment would be for a later date. Likewise, it included the cost for the delivery of the items to Cebu City.
It also said the price set by DOH was on cash basis.
Furthermore, COA said various documentary requirements and procedures were not followed in the procurement of 1,670 boxes of rapid anti-body test kits totaling P42,585,000, contrary to GPPB circular 01-2020, thus "negotiation under the said emergency procurement modality may not be achieved”; and that the city did not submit the summary/list of donations received, distributed and balance and its supporting documents, as well as the required one-time report for cash and in-kind donations contrary to Commission on Audit Circular No. 2020-009 dated April 21, 2020, thus "cash and in-kind donations may not have been properly accounted for and the transparency of the utilization of the donations was not achieved," among others.
Answered
Casas said the “unmodified opinion” from COA in the end would show that the city has explained the supposed deficiencies.
For the first time since it was chartered in 1937, the city received the highest remark from the COA following a look into the its financial statements for 2020.
“Gihatagan mi sa COA og unmodified opinion. Ngano mang gihatagan mi sa COA og unmodified opinion despite those findings? Because kani sya nga findings nakit-an ni sya during sa ilang audit. During sa ilang audit magsige man gyud mi conference nila,” Casas said.
“Ni-reply gyud mi nila, nihatag mi nila with basis why kana ilang findings nahitabo and tungod kay acceptable siguro sa COA ang amoang explanation, that's why we were still given with unmodified opinion despite of the findings. In short, kana nga mga findings amoa na nang natubag, amo na nang na-correct, amo na nang na-justify,” he added.
Casas said the city government welcomes COA’s recommendations as these can guide the city in its future transactions. — JMO (FREEMAN)