COA questions why Makati City used dev’t funds to repay loans

The Commission on Audit is questioning why Makati City used P391.491 million of development funds to repay loans that have got nothing to do with the city’s social and economic development.

“The amount of P391.491 million from the 20 percent Development Fund was utilized for the amortization of loans pertaining to nine projects which are neither social and economic development projects ... Thus, the very purpose for which the fund was established was not met,” COA said in its 2017 audit report.

Local government units are mandated by the Local Government Code to allot no less than 20 percent of its internal revenue allotment to development projects.

The Interior and Budget departments released Joint Memorandum Circular No. 2017-1, dated February 22, 2017, enumerating which projects can used the development fund:

• construction or rehabilitation of health centers

• LGU-owned potable water system

• evacuation centers

• roads or bridges

• medical equipment

• land relocation for informal settlers

• alternative energy sources

A review of Makati City’s Statement of Appropriations, Allotments, Obligations and Balances involving the development fund showed that P391.491 million was used to pay for interest expense and loans payable, according to COA.

The commission said these loans from Land Bank of the Philippines represent infrastructue projects were not covered by the DILG/DBM memorandum.

COA data showed the Makati City government used the funds to implementation Phase 5 of the controversial Makati City Hall Parking Building and Makati Science High School.

The funds were also used on improvements for the University of Makati and the Nursing building’s management system, the Carmona Covered Court and Koliseyum ng Bayan, development of the Makati City Hall Compound, and the transfer of offices to the Makati Parking Building.

“We recommended that Management ensure that the 20 percent of the Development Fund is utilized for the purposes intended,” the commission said.

In its comment, the Makati City government said the programs in question are classified as development projects.

The housing project in Calauan, Laguna is listed under relocation efforts for informal settlers, while the construction and improvement of school buildings and basketball courts are part of social development projects.

Nonetheless, the city said it will prepare a supplemental budget to return the development fund that was used as loan payments.

But the commission disagreed that projects involving the Makati Science High School and the University of Makati may be charged to the development fund, saying school buildings are covered by the Special Education Fund.

COA also maintained that the construction of the Makati Parking Building is “not allowed” and urged the city government to stick to the DILG/DBM memorandum. —VDS, GMA News