COA flags Baguio gov’t for ‘misuse’ of funds

‘P25 million given to contractor as loan’ 

By Aldwin Quitasol

BAGUIO CITY -- The Commission on Audit or CoA has called out the City government here headed by Mayor Benjamin Magalong for “misusing funds” intended for a national project.
    An audit revealed the city government used P50 million in Department of Public Works and Highways funds to pay for the progress billing of its ongoing Youth Convergence Center and Sports Complex project instead of using it for the construction of the Multi-Purpose Building at the Athletic Bowl Oval at Burnham Park in this summer capital.
    The COA said this was in violation of the memorandum of agreement between the city government and the DPWH, which stipulated that the P50-million fund was to be used solely for the construction of the multi-purpose building.
    CoA said the city government’s actions “did not achieve the purpose of the project MoA.”
    Worse, the initial P25-million fund transfer released by the DPWH was disbursed to the contractor of a city government project as a loan, CoA added.
    The Baguio City government responded to the audit findings by saying that executing an amended MoA with the DPWH may have required complicated procedures.
    The LGU asked whether a certification from the bids and awards committee and the head of the procuring entity stating that the DPWH project had been “clustered” with the city government would be sufficient to resolve the audit issue.
CoA responded that “another legal document may be executed as long as it contains the explicit approval of the DPWH as the funding agency on the ‘clustering’ of the two subject projects.”
    The COA disclosed in recent finding the purpose of a downloaded amount from the government to fund construction of a multi-purpose building at the Baguio Athletic Bowl at Burnham Park here was not achieved. 
    “Funds released through SARO-BMB-A-22-0002808 was used for purposes other than that authorized therein," the COA noted.
    The statement was part of the COA annual audit report on the City of Baguio for the year that ended December 31, 2022. 
On Nov. 18, 2021, a project memorandum of agreement (MOA) was forged between the city government of Baguio and the DPWH.
    In the said MOA, it was agreed the Baguio City government will undertake implementation by contract of the DPWH project.
    This included, "construction/repair/rehabilitation/improvement of various infrastructure buildings including local projects like construction of the multi-purpose building at the Athletic Bowl. The project is worth P50 million. On March 18, 2022, Special Allotment Release Order (SARO)-BMB-A-22-0002808 in the mentioned amount was issued with the stipulation that the funds released shall be used solely for the purposes indicated therein,” the COA said.
    “The city government therefore,” the COA added, “was designated as implementing agency to accomplish the DPWH project which is a nationally funded project under the General Appropriations Act for the fiscal year of 2021 (GAA FY 2021) DPWH Regular Infrastructure Program, Local Program.”
    The COA noted that subject project was not a local project of the city government of Baguio to be funded by the DPWH, but rather, a national government project to be implemented by the city government of Baguio.
    An initial cash advance amounting to P25 million was released by the Baguio City District Engineering Office (DPWH-BCDEO) on June 14, 2022 for the first partial payment for the construction.
    The disbursement voucher (DV) stating the amount was supported with a Statement of Work Accomplished (SOWA) showing that the project paid was 50.361 complete as of August 39, 2022 was certified by the Baguio City Buildings and Architecture Office (CBAO). 
    The contract agreement attached to the DV contained two projects. Project A was construction of the multipurpose building at Athletic Bowl while B was the Baguio City Youth Convergence Center and Indoor Sports Complex at the same place.
    Through verification, a bids and awards committee resolution was unanimously adapted by the city government on January 11, 2022 confirming the construction of the multi-purpose building and the construction of a youth convergence center both at Athletic Bowl were one and the same.
    The COA also noted that “based on contract documents submitted, these showed the invitation to bid for the city government project – construction of a youth convergence center and sports complex was posted three months before the project MOA was executed for the DPWH project "Construction of multipurpose building at the Athletic Bowl. On August 2-24, 2021, an invitation to bid for the construction of the youth convergence center was posted and the bid opening was conducted on September 7, 2021.”
    The COA bared “there were two contracts drawn between the city government and the construction firm which won in the contract bid. The contract 1 included A. The construction of the youth convergence center and sports complex care of CBAO and B. the Baguio City Youth Convergence Center and indoor sports complex care of the CBAO again.
    The amount of the first contract is P381, 253, 484.88 and dated December 2021.
    “The contract 2 includes the construction/repair/rehabilitation/improvement of various infrastructure buildings including local projects like the construction of the multi-purpose building at the Athletic Bowl and the youth convergence center and sports complex and the Baguio City Youth Convergence Center and Indoor sports complex amounting to P381,253,484.88 and dated August 30, 2022.
    “Funds for the city government project were obligated before bidding was posted on August 2, 2021 with the following breakdown: A. The construction of the youth convergence center and sports complex care of CBAO with approved budget for contract (ABC) of P50 million sourcing the fund from the Trust Fund (416-019-008) and B. Baguio City Youth Convergence Center and Indoor sports complex care of the CBAO with ABC of P340,386, 870.80 with funding source from Annual Investment Plan and 1st Supplemental AIP of 2020. The overall amount us P390,386,870.80
    "Verification of the subsidiary ledger balance of the Trust Fund account 416-019 revealed that as of date of bidding, there were no funds received from the DPWH, nor any funds available under that account for the construction of the youth convergence center and sports complex care of CBAO. Therefore, the purchase/obligation request for the purpose was not valid and that the component-A portion of the City Government Project -Construction of a Youth Convergence Center and Sports Complex c/o CBAO amounting to P50 million was not actually funded when the projects was posted for bidding,” the COA revealed upon verification of necessary documents.
    According to the COA, the funds received from the DPWH for the construction of the multi-purpose building were used to pay the progress billing of another ongoing city project contrary to the terms of the Project MOA, as well as to the GAA FY 2021.