COA to Millennium Challenge Account-PH: Return P600M DAP funds

MANILA, Philippines – State auditors have urged the Millennium Challenge Account–Philippines (MCA-P) to refund to the national treasury the entire P600 million lump sum fund it received under the Disbursement Acceleration Program (DAP) in 2013.

The Commission on Audit (COA) made the recommendation as it cautioned the MCA-P about possible legal repercussions that may arise from the use of funds released under the DAP, a program wherein certain executive actions had been deemed unconstitutional by the Supreme Court.

State auditors told the MCA-P that projects funded under the DAP  might be challenged based on the SC ruling, even if it has been earmarked for a priority infrastructure program – the Secondary National Roads Development Project (SNRDP) under the Millennium Challenge Compact between the Philippine and US governments.

COA instructed the MCA-P to coordinate with the Department of Public Works and Highways to replace the P600 million, which will be returned to the Bureau of Treasury (BTr).

The US funded the SNRDP with a $214.493 million cash grant for the reconstruction and rehabilitation of 220 kilometers of major roads linking the Samar and Eastern Samar provinces, and the construction of bridges, drainage systems, and road safety and flood control facilities.

Under the compact, the Philippine government was supposed to fill in the estimated P1.24 billion funding gap for the project.

The Department of Budget and Management approved the funding requirement but released P600 million under the DAP.

'Not a cross-border fund transfer'

The MCA-P said that the P600-million fund may not be covered by the SC ruling, as this required the return only of “cross-border fund transfers.” It also pointed out that the money has already been obligated although still on standby as the road project is already ongoing.

“The Supreme Court did not declare that DAP per se is unconstitutional or void. At the very least, it is very clear that the receipt of P600 million does not constitute a cross-border transfer of savings…considering that the MCA-P is a government entity aligned within the Executive,” it explained.

However, to avoid legal questions that might cause delays in its projects, the MCA-P said it is already communicating with the BTr for the return of the money while making representations with the DPWH for the replacement of the P600 million.