COA raises concerns over Baguio’s ‘diversion’ of DPWH’s building project fund

BAGUIO, Philippines – State auditors raised concerns about alleged irregularities in the city government’s use of funds in the implementation of a P50-million project funded by the Department of Public Works and Highways (DPWH).

In its 2022 audit report, the Commission on Audit (COA) stated the city hall used funds originally designated for a multipurpose building in the Athletic Bowl for the ongoing construction of the Youth Convergence Center and Sports Complex.

The COA referred to a P50-million budget from the DPWH for the multipurpose building project, which the local government was responsible for implementing based on its memorandum of agreement (MOA) with the department.

“The purpose of the Project MOA between the City Government of Baguio and the DPWH for the implementation of the DPWH Project was not achieved, and the funds released were used for purposes other than that authorized therein,” stated the COA in the report.

One of the two contracts between the city government and the project contractor, M.E. Sicat Construction, also caught the attention of state auditors.

According to their report, the second contract attached to the voucher of the first partial payment for the DPWH project had a “doubtful date of execution, which is the same as that of the Statement of Work Accomplished.”

“It appeared that Contract 2 was just drawn to support the payment of the first partial billing of the DPWH project,” read part of the COA report.

The auditors also revealed that the 50.36% project accomplishment for which city hall made a payment after the first progress billing for the DPWH project was “actually the 6.7 percent project accomplishment” of the entire Youth Convergence Center and Sports Complex.

COA pointed out that the government’s procurement policies provide that the first progress payment may be made only after a contractor accomplishes at least 20% of a project.

“The first progress billing with an actual project accomplished of 6.7% was not valid for payment, especially since the Contractor had received an advance payment of 15 percent of the contract amount upon mobilization,” said the state auditors.

COA concluded that the initial amount downloaded by DPWH to the city, amounting to P25 million, “was disbursed to the Contractor of a City Government Project as a loan.”

City hall denies fund diversion

In a video released by the Baguio City Public Information Office on Tuesday, July 18, city administrator Bonifacio Dela Peña maintained that the local government used the DPWH fund for its intended purpose.

“The word ‘misuse’ is not true. The fund was well-audited, and it went to where it was allotted,” said Dela Peña in Tagalog.

He explained that city hall only had a P341 million budget for the Convergence Center, and it needed P50 million more to complete the project.

“We needed P391 million to complete it, and so we requested funding from the congressman… but the DPWH project title for the P50 million was different,” Dela Peña said.

He said the local government had to stick to the “multipurpose building” project title given that the DPWH did not have a “convergence center” under its list of projects.

Dela Peña said the P50 million was intended for the construction of the foundation, posts, a second building level, and a parking area.

He further explained that city hall clustered the project for the bidding process since “it was one and the same.”

Dela Peña said, “That is where the problem is – the project title was different, but when we had our exit conference with COA, they said that we just needed a certification that the project is one and the same.”

He also denied allegations that spread on social media that Baguio Mayor Benjamin Magalong had the funds from the DPWH diverted.

“What we will do is answer the COA report. We will address that, and we have identified four documents to refute all these allegations,” Dela Peña said. – Rappler.com