Malampaya Funds National Housing AuthorityRepublic of the Philippines Commission on Audit Special...

Malampaya Funds

National Housing Authority

Special Audits Office Report No. 2015-04

Sectoral Performance Audit

National Housing

Authority

Republic of the Philippines

Commission on Audit

Special Services Sector

SPECIAL AUDITS OFFICE

Commonwealth Avenue, Quezon City Philippines Tel. No.: (+632) 931-7455 / Telefax No.: (+632) 931-9235

December 15, 2015

Atty. SINFOROSO R. PAGUNSAN

General Manager

National Housing Authority

Elliptical Road, Diliman

Quezon City

Sir:

We are pleased to transmit the report on the sectoral performance audit of

Malampaya Funds released by the Department of Budget and Management to the

National Housing Authority (NHA) covered by four Special Allotment Release Orders

dated November 19, 2009 and December 29, 2009 in the total amount of P1.399

Billion.

The audit was conducted pursuant to COA Office Order No. 2011-715 dated

October 12, 2011 and subsequent issuances to assess the effectiveness of NHA’s

program implementation and propriety of utilization of funds taking into consideration

the contracts, Terms of Reference, and applicable laws, rules and regulations. The

draft report containing the results of audit was forwarded to that Office for comments

on August 26 , 2014. The comments received on November 10, 2014, were evaluated

and incorporated in the report, where appropriate. This report will form part of the

Overall Report on the Sectoral Performance Audit of Malampaya Funds covering

releases to a number of government agencies.

We look forward to the implementation of the audit recommendations

contained therein and would appreciate being informed of the actions taken thereon

within one month from receipt hereof.

We acknowledge the cooperation and assistance extended to the Team by the

officials and employees of the NHA.

Very truly yours,

By Authority of the Chairperson:

Director IV

TABLE OF CONTENTS

Title Page

List of Tables

Part I Executive Summary 1

Introduction 2

Audit Objective 3

Audit Scope and Methodology 3

Audit Conclusion 5

Management’s Comments 5

Team’s Rejoinder 6

Recommendations 6

Part II The Funded Programs 8

Community Initiative Approach Program (CIAP) and Balik-

Probinsya Program 9 - 19

Part III Audit Observations 20

Chapter I - CIAP 21

- On fund utilization and the purpose of providing

permanent residence to qualified beneficiaries not

fully achieved 22

- On projects not totally compliant with the

contract 28

Chapter II - Balik Probinsiya Program 32

- On non-attainment of the number of targeted

family-beneficiaries and expected benefits from

the program not maximized 33

- On funds received for the Program all drawn as

cash advances

Part IV Recommendations 37

LIST OF TABLES

Table

No. Title Page

1 Program Process 10

2 Schedule of Special Allotment Release Orders (SAROs) Released 11

3 Schedule of Notices of Cash Allocations (NCAs) Released 11

4 Purposes of Fund Utilization 11

5 Breakdown of Loans Granted to Qualified Relocatees 12

6 Schedule of Amortization Payments 12

7 Schedule of Implemented Projects 12

8 Schedule of Payments to Developers/Constructors 13

9 Obligations of the Parties to the MOA 13

10 Schedule of Constructed Units and Developed Lots

by Constructors/Developers

18

11 Schedule of Payments to Contractors 19

12 Schedule of Distribution of Developed Lots and Housing Units 20

13 Status of Occupancy 21

14 Samples of Housing Units Used for Other Purposes 22

15 Schedule of Cash Advances Granted to Disbursing Officer 30

16 Schedule of Beneficiaries of Balik-Probinsya Program 31

1

Part I

Executive Summary

EXECUTIVE SUMMARY

2

The policy of the State to hasten the discovery and production of indigenous

petroleum through the utilization of government and/or private resources, local and

foreign was categorically declared under Presidential Decree (PD) No. 87,

otherwise known as “The Oil Exploration and Development Act of 1972,” as

amended. To achieve this objective, embodied in the Act are contractual

arrangements calculated to yield the maximum benefit to the Filipino people and

revenues to the Philippine Government, and at the same time assure just returns to

participating private enterprises, particularly those that will provide the necessary

services, financing, technology and assume in full all exploration risks. The

government may directly undertake exploration and production of indigenous

petroleum or may indirectly undertake the same under service contracts.

For this purpose, the Petroleum Board was created but later abolished under PD 910

promulgated on March 22, 1976 and its powers and functions were transferred to

the Energy Development Board (EDB). Under PD 910, all fees, revenues and

receipts of the EDB from any and all sources including receipts from service

contracts and agreements, all money collected from concessionaires as well as

government share representing royalties, rentals, production share on service

contracts and similar payments, shall form part of a Special Fund to be used to

finance energy resource development and exploration programs and projects of the

government and for such other purposes as may be thereafter directed by the

President. The use of special fund for such other purposes was clarified by the

Supreme Court in GR. No. 208566 promulgated on November 19, 2013 to mean

that “such other purposes refer only to other purposes related to energy resource

development and exploitation programs and projects of the government.” It was,

however, stressed therein that the Court’s pronouncement must be applied

prospectively in view of the operative fact doctrine.

On December 11, 1990, a Service Contract (SC), known as SC 38, and

Memorandum of Clarification were entered into by the government, represented by

then President Corazon C. Aquino, as the first party, with Occidental Philippines,

Inc. and Shell Exploration B.V. as the second party or Contractor, to undertake and

execute petroleum operations under the full control and supervision of the Office of

Energy Affairs (OEA), now Department of Energy (DOE). As reflected in the

Provisional Implementation Agreement entered into by the Department of Budget

and Management (DBM), DOE and Department of Finance (DOF) as the National

Government Agencies (NGAs), with the Province of Palawan on July 25, 2007, the

SC covered the Camago-Malampaya Reservoir, among others, which is referred to

as the “Natural Gas Project.”

INTRODUCTION

EXECUTIVE SUMMARY

3

The SC provides that the DOE shall be entitled to receive in kind, petroleum equal

in value to 60 percent of net proceeds, while the Contractor will retain an amount

equal to its fee of 40 percent of the net proceeds from the Petroleum Operations. In

each year, Contractor will recover from the gross proceeds resulting from the sale of

all petroleum produced under the SC an amount equal to all operating expenses;

provided, that the amount so recovered shall not exceed 70 percent of the gross

proceeds from production in any year. Provided further, that if in any year, the

operating costs exceed 70 percent of the gross proceeds from the production, or

there are no gross proceeds, then the unrecovered expenses shall be recovered from

the gross proceeds of succeeding year.

Based on the records of the DOE, for the period January 1, 2002 to June 30, 2013,

the Contractor remitted to the government a total of P173.280 Billion as share from

the net proceeds from petroleum operations. These receipts are accounted for as

Malampaya Funds. Of the total receipts, P38.830 Billion had been released to

various NGAs and Government-Owned and Controlled Corporations (GOCCs),

including the National Housing Authority (NHA) for the implementation of various

programs and projects.

Releases by the DBM to NHA were covered by four Special Allotment Release

Orders (SAROs), dated November 19 and December 29,2009 in the total amount of

P1.399 Billion for the implementation of two projects, the Community Initiative

Approach Program (CIAP) with allocation of P1.392 Billion and the Balik-

Probinsya Program with an allocation of P6.900 Million.

The audit was conducted to assess the effectiveness of NHA’s program

implementation and propriety of utilization of funds, taking into consideration the

contracts, Terms of Reference, and applicable laws, rules and regulations.

Scope

The sectoral performance audit of Malampaya Funds covered collection, allocation

and utilization of releases to a number of implementing agencies (IAs). However,

this Report covered only the results of audit of P1.399 Billion fund released to the

NHA. The results of audit discussed in this Report will be incorporated in the

AUDIT OBJECTIVE

AUDIT SCOPE AND METHODOLOGY

EXECUTIVE SUMMARY

4

Overall Report on the Sectoral Performance Audit of Malampaya Funds covering a

number of government agencies.

Methodology

To achieve the audit objectives, the Team performed the following audit techniques,

among others:

- Obtained copies of and studied relevant laws, rules, regulations,

policies, procedures, and guidelines pertinent to the utilization of funds

and implementation of the programs;

- Gathered and analyzed Memoranda of Agreement (MOA), contracts

(such as Loan Agreements) and Terms of Reference (TOR);

- Obtained and reviewed documents on related transactions and assessed

whether funds were used for the purpose intended and disbursed in

accordance with existing laws, rules and regulations;

- Interviewed selected beneficiaries to confirm receipt of benefits from

NHA, either in the form of developed lots or housing units under the

CIAP, or financial assistance under the Balik-Probinsya Program;

- Inspected/validated the physical existence and condition of the sampled

developed lots and constructed housing units;

- Confirmed with the Philippine Contractors Accreditation Board

(PCAB) as to issuance of license to contractors; and

- Analyzed and evaluated all documents and information gathered to

assess the effectiveness of the implementation of the programs.

The Audit Team

The sectoral performance audit of Malampaya Funds is being conducted by a Team

composed of 24 Members from the Special Audits Office (SAO), Special Services

Sector (SSS) and 4 Members from the Technical Services Office (TSO), Systems

and Technical Services Sector (STSS), Commission on Audit (COA), pursuant to

COA Office Order No. 2011-715 dated October 12, 2011 and subsequent issuances.

Of the 28 personnel, 5 were involved in the Audit of the NHA which was conducted

simultaneously with the audit of other agencies implementing projects out of

Malampaya Funds. The sectoral performance audit started in November 2011 and

is still on-going, with the audit of the NHA as one of those already completed.

EXECUTIVE SUMMARY

5

The intended purpose under the CIAP of providing permanent residence or

relocation to qualified beneficiaries by constructing housing units or developing

lots was not fully realized. Of the 1,037 sampled housing units within the ten (10)

resettlement sites inspected by the Team, only 788, representing 75.99 percent,

were still being occupied by the original beneficiaries. The rest were either already

sold or being rented to others, or remained unused, or only used occasionally which

is not in accordance with the conditions set forth under the agreement between the

NHA and beneficiaries.

A number of units as accepted from the constructors/developers, were not totally

compliant with the requirements under the contract with one of the

constructors/developers found to be not registered with PCAB.

On the other hand, out of the 300 families that were selected to receive financial

assistance under the Balik-Probinsya Program (BPP), only 169 families or 56.33

percent actually availed of the assistance due to failure of the others to comply with

the requirements, leaving the fund balance of P3.013 Million unutilized.

Moreover, the amount of P6.90 Million allocated for the BPP was all drawn as cash

advances covered by 13 checks on August 2 and 3, 2010 without first determining

the needs. Of the total cash advances, only P2.438 Million was used from August

to November 5, 2010, while the balance of P4.462 Million was returned on

November 15, 2010.

The Audit Highlights summarizing the deficiencies noted during the Audit were

forwarded to the General Manager on August 26, 2014. Their comments, requested

to be submitted not later than September 8, 2014, which was extended until

November 7, 2014, were received by the Office on November 10, 2014.

Management claimed that immediate repairs/corrective works have been undertaken

by Goldenville Realty Development Corporation for its project in Blk. 13, Phase 5

of Towerville Resettlement Project with supporting photos to prove the claim. In

addition, the Project Offices under the supervision of Southern Luzon & Bicol

Management (SLB-AMO) committed to perform the following courses of action to

comply with the Team’s recommendations:

AUDIT CONCLUSION

MANAGEMENT’S COMMENTS

EXECUTIVE SUMMARY

6

a. Requiring all developers to strictly follow the provisions of the MOA;

b. Conducting regular occupancy check of the relocated families and to

religiously send notices to the awardees for their monthly obligations to the

NHA;

c. Advising all developers to undertake repair works, if necessary, and

directing all beneficiaries to report to the NHA all defects and to submit

punch list of all the fixture of the housing units as per plans and

specifications; and

d. Conducting regular meetings with all the beneficiaries/awardees for any

management update and concerns

a

The Audit Team appreciates the immediate action taken by the NHA and its

commitment to take appropriate action to ensure the attainment of objectives.

Immediate actions should also be undertaken in other projects.

The proposed actions, may, however, not be sufficient to ensure that the NHA’s

mandate is fully served. The selection process should be enhanced to assure that

only qualified beneficiaries are awarded units. Compliance by the relocatees with

the MOA should be also strictly enforced, and monitoring mechanism should be

strengthened.

In view of the deficiencies noted in the implementation of projects, the Team

recommends the following courses of action:

Ensure that the projects are fully compliant with the MOA and Terms of

Reference before acceptance and payment. In no case should a contractor

be fully paid unless the obligations under the MOA and plans and

specifications are strictly complied with;

Require the Constructors/Developers to undertake repairs/corrective

measures on the noted deficiencies and to attend to water and power

connections;

RECOMMENDATIONS

TEAM’S REJOINDER

EXECUTIVE SUMMARY

7

Ensure that Constructors/Developers are eligible before entering into

tripartite MOA with them and the Community Association for financing of

the acquisition of developed lots and completed housing units by eligible

beneficiaries.;

Strengthen monitoring of compliance by the relocatees/awardees with the

provisions of the Loan Agreement. Enforce the cancellation of award to the

original lot allocatee/awardee in the event of non-compliance with the terms

and conditions under the Loan Agreement;

Refrain from granting successive cash advances to any disbursing officer

without liquidation of prior cash advances as this practice is not in

consonance with COA Circular No.97-002 as reiterated under COA

Circular No. 2009-002; and

Return unused/unutilized Malampaya Fund to the Bureau of Treasury.

8

Part II

The Community Initiative Approach Program

(CIAP) and Balik-Probinsya Program

CIAP AND BALIK-PROBINSYA PROGRAM

9

NHA is a government-owned and controlled corporation in charge of providing

housing assistance to the lowest 30 percent of urban population through slum

upgrading, squatter relocation, development of sites and services, and construction

of core housing units.

Under Republic Act (RA) No. 7835, otherwise known as the Comprehensive and

Integrated Shelter Financing Act (CISFA), NHA is mandated to implement the

components of the National Shelter Program, such as resettlement, construction of

medium-rise public and private housing, cost recoverable program and local

housing.

To pursue its mandate, one of the programs adopted by the NHA is the

implementation of the Community Initiative Approach Program (CIAP). This

program is intended for informal settler families qualified to be relocated and to

acquire housing units (developed lots/house and lot package) in resettlement sites of

their choice, to be developed by a contractor, also of their choice. In other words,

the program is intended to provide permanent residence or relocation to qualified

beneficiaries by constructing housing units or developing lots. Qualified families

are those included in the following category:

affected by calamities, such as massive flooding, typhoons, volcanic

eruption and those living along danger zones, waterways, rivers,

shorelines, esteros, creeks and the like;

who do not own any real property; and

who are not yet awardees of any Government Housing Program.

CIAP

The CIAP process is presented in Table I in the next page.

INTRODUCTION


10

Table 1: Process-Community Initiative Approach Program

Developer/Constructor offers its services to the Community Association (CA).

CA conducts site inspection together with the NHA representative. If CA approves the location as permanent relocation site of its affected families/members, CA informs Developer/ Constructor to coordinate with NHA.

CA enters into Contract Agreement with the Developer/Constructor where:

Developer/Constructor shall finance the full development of service lots and completed housing units;

Individual members/awardees of the CA shall acquire through the NHA’s financing, the service lots and completed housing units offered by the Developer/Constructor.

NHA and awardee of developed lots and housing units enter

into Conditional Contract to Sell and Loan Agreement.

NHA, Developer/Constructor and CA enter into tripartite agreement (MOA) in case developer/contractor is eligible and compliant with the TOR, for financing the acquisition of developed lots and completed housing units by the awardee/eligible beneficiaries.

The NHA evaluates Contract Agreement taking into consideration compliance with the Terms of Reference (TOR) on the Relocation Program for Families affected by

Calamities and those living in danger areas.


11

To cover the funding requirements, then Chairman of Housing and Urban

Development Coordinating Council (HUDCC), requested for release of fund from

the Calamity Fund. The DBM granted the request but the funds released was

charged against Malampaya Funds covered by the following Special Allotment

Release Orders (SAROs):

Table 2: Schedule of Special Allotment Release Orders (SAROs) Released

SARO No. Date Amount Purpose

F-09-08388 11/19/2009 P 481,600,000 For relocation of families affected by the recent typhoons (Priority 1- 1,661 units in existing resettlement sites)

F-09-08389 11/19/2009 810,360,000 For relocation of families affected by the recent typhoons (Priority 2- 6,484 units being developed in Rodriguez & Calauan)

F-09-08416 11/19/2009 6,900,000 For relief operations, rehabilitation, reconstruction and other works and services to areas affected by natural calamities

F-09-09527 12/29/2009 100,000,000 For relocation of families affected by the recent typhoons (Priority 3- Pinugay Housing Project, Baras, Rizal)

Total P 1,398,860,000

The funding requirements were covered by the following Notices of Cash

Allocations (NCAs):

Table 3: Schedule of Notices of Cash Allocations (NCAs) Released

NCA No. Date Amount

253068-4 November 19, 2009 P 6,900,000

253116-3 December 29, 2009 100,000,000

253085-0 March 3, 2010 1,291,960,000

Total P 1,398,860,000

The said amount was recorded in the books of the NHA as “Subsidy Income from

the National Government”. As reflected in the Statement of Comprehensive

Income for Calendar Year (CY) 2010, the fund was fully utilized as of November

2011 for the following purposes:

Table 4: Purposes of Fund Utilization

SARO No. NCA No. Amount

(in millions) Actual Utilization

F-09-08388 253085-0 P 1,291.960 For the acquisition of developed lots and housing units in various resettlement sites under the CAIAP F-09-08389

F-09-09527 253116-3 100.000

F-09-08416 253068-4 6.900 Financial assistance to families under Balik-Probinsya Program

Total P 1,398.860

A qualified relocatee under the CIAP is entitled to a minimum of 32 sq. m. lot and

20 sq. m. floor area of housing unit (HU) at a cost of P100,000.00 and P75,000.00,


12

respectively, or a total of P175,000.00. Said amount, less government subsidy

amounting to P35,000.00, is granted as a loan to the qualified relocatee in the

amount of P140,000.00, broken down as follows:

Table 5: Breakdown of Loans Granted to Qualified Relocatees

Particulars Unit Cost Total Cost

Developed Lot P 100,000.00

P 175,000.00 Housing Unit 75,000.00

Less: Subsidy (Lot) 25,000.00

35,000.00 Subsidy (Housing Unit) 10,000.00

Loan Amount P 140,000.00

As reflected in the loan agreement, the relocatee shall pay within a period of 30

years, subject to the rules and regulations specified by the NHA, at six percent

interest rate from the 6th to the 30th year in accordance with the following Schedule

of Amortization Payments:

Table 6: Schedule of Amortization Payments

Payment Period Monthly Amortization Daily

Amortization Developed Lot Housing Unit Total

Year 1 to Year 5 P150.00 P50.00 P 200.00 P6.67

Year 6 to Year 10 193.00 207.00 400.00 13.33

Year 11 to Year 15 293.00 207.00 500.00 16.67

Year 16 to Year 20 443.00 207.00 650.00 21.67

Year 21 to Year 25 593.00 207.00 800.00 26.67

Year 26 to Year 30 604.20 205.33 809.53 26.98

To implement the CIAP, NHA entered into contracts with three

developers/contractors, which were chosen by the community/homeowners’

association, for the development of lots and housing units in the following sites:

Table 7: Schedule of Implemented Projects

Constructors/Developers/Projects

Housing Units (Hus) Lots

Amount (in M P)

No. of HUs

Cost/HU (in M P)

Amount (in M P)

No. of Lots

Cost/Lot (in M P)

Baque Corporation

Southville 8 Housing Project 135.225 1,803 0.075 115.342 1,803 0.064

Southville 5 Housing Project 14.400 192 0.075 19.200 192 0.100

Southville 7 Housing Project 152.700 2,036

Southville 3A Housing Project 4.649 65 0.075 18.300 183 0.100

Sub-total 306.974 4,096 152.842 2,178


13

Table 7: Schedule of Implemented Projects

Constructors/Developers/Projects


Amount (in M P)

No. of HUs

Cost/HU (in M P)

Amount (in M P)

No. of Lots

Cost/Lot (in M P)

Gateway Sand Builders

Southville 8A Housing Project 75.525 1,007 0.075 65.344 1,007 0.064

Southville 7A Housing Project 114.975 1,533

Sub-total 190.500 2,540 65.344 1,007

Goldenville Realty and Devt. Corporation

Southville 4 Housing Project 56.250 750 0.075 100.000 1,000 0.100

Southville 5A Housing Project 150.000 2,000 0.075 200.000 2,000 0.100

Towerville Resettlement Project 30.000 400 0.075 40.000 400 0.100

Southville 9 Housing Project 46.875 625 0.075 53.037 663 0.080

Sub-total 283.125 3,775 393.037 4,063

Total 780.599 10,411 611.223 7,248

As of May 2012, the constructors/developers were, so far, paid in the following

amounts:

Table 8: Schedule of Payments to Constructors/Developers

Constructors/Developers


Amount (in M P) No. of HUs

Amount (in M P) No. of Lots Contract Payment Contract Payment

Baque Corporation

Southville 8 Housing Project 135.225 131.063 1,750 115.342 108.740 1,750

Southville 5 Housing Project 14.400 14.066 190 19.200 17.895 192

Southville 7 Housing Project 152.700 150.690 2,036

Southville 3A Housing Project 4.649 4.631 65 18.300 13.320 148


Southville 8A Housing Project 75.525 75.525 1,007 65.344 63.441 1,007

Southville 7A Housing Project 114.975 114.975 1,533



Southville 5A Housing Project 150.000 127.128 1,719 200.000 186.399 1,871

Towerville Resettlement Project 30.000 30.000 400 40.000 40.000 400


Total 780.599 751.203 10,075 611.223 576,732 6,970

In a Memorandum of Agreement (MOA) entered into by the NHA,

Developers/Constructors and Community Associations, the parties are under

obligation to:


14

Table 9: Obligations of the Parties to the MOA

Party Obligations/Responsibilities

NHA Finance acquisition by affected families of developed lots and constructed housing units ready for occupancy;

Release payment to Developer/Constructor for developed lots in the amount not to exceed P100,000.00 per lot and completed housing units in the amount not to exceed P75,000.00 per housing unit compliant with the TOR;

Pay the retention money upon issuance of a Certificate of Completion by the Developer/Constructor;

Process the Loan Agreements covering developed lots and completed housing units being acquired by the individual member/family;

Issue billing and demand notices and Official Receipts for payment of amortizations by the members/beneficiaries;

Provide other forms of Technical Assistance to the Association as may be requested; and

Cancel award to the original lot allocatee/awardee in the event that the latter refused to sign the NHA Loan Agreement/or and allocate or re-award the same to other qualified beneficiary as required under NHA existing policy on beneficiary selection and lot award.

Developers/ Constructors

Undertake full development/repair works of lots and construction of housing units, in accordance with plans, designs and specifications in the TOR and applicable laws, rules and regulations;

Provide Association and NHA with all necessary documents for the financing of the unit;

Submit to NHA, prior to payment, As-Built Plans, Certificate of Completion and Acceptance, Certificate of Inspection and Acceptance Report duly signed by the concerned member/family, and Certificate of Occupancy of completed housing units issued and ready for occupancy by qualified beneficiary; and

Issue Warranty/Undertaking on compliance with documentary requirements covering developed lots and completed housing units being acquired as required in the TORs.

Community Associations

Submit to NHA HLURB registration and other documentary requirements for the acquisition of the identified developed lots acceptable to the members/families and compliant with the approved TOR; and

Ensure that each member beneficiary execute and submit the following: a. Loan Agreement(s) duly signed and notarized to cover assignment of loan in the

amount of not more than P100,000.00 for developed lots and P75,000.00 for completed housing units in favor of the Developer/Contractor;

b. Other documents required by the NHA; and c. Abide with all conditions of NHA cited in the TOR.

The responsibilities of the Developer/Constructor are further defined under the

TOR, as follows:

Deliver the developed lots with completed sites for community facilities or

open spaces in accordance with agreed and approved plans, designs,

specifications, standards and timeframe;

Undertake all corrective/repair works, at its own expense, on land

development project components/infrastructure facilities found defective or

below specifications within 30 days from receipt of notice to the NHA;


15

Warrant complete, satisfactory and faithful performance of all works in

accordance with the design, plans and specifications approved by the NHA,

the concerned LGU and other regulatory agencies;

Warrant the issuance of individual titles in the name of the NHA within 30

days from execution of Deed of Sale with the NHA and the validity,

legality and authenticity of said titles;

Maintain and secure, at the proponent’s expense, all completed serviced

homelots and subdivision infrastructure facilities until turn over and

acceptance by the concerned LGUs or other agencies, but not to exceed one

(1) year from the date of actual acceptance of the developed lots/units

covered by a particular deed of sale;

Ensure the extension and installation of permanent electrical and water

facilities up to the service entrance of the residential lots, the cost of which

shall be shouldered by the proponent/landowner-developer and ensure that

the same are operational and/or available prior to occupancy of the serviced

homelots and sites for community facilities;

Ensure submission of Surety/Guaranty Bond in favor of and acceptable to

the NHA, equivalent to ten percent (10%) of the gross purchase price to

cover the remedial works for any deficiency in the land development

undertaken by the proponent for a period of one (1) year starting from the

date of the acceptance of the lots/units covered by a particular deed of sale;

Submit certified true copies of test results. All tests for land development

component shall be undertaken by the proponent in the presence of duly

designated NHA representatives as well as other agencies to determine its

good condition and operation. The costs of tests shall be for the account of

the proponent. All tests shall be undertaken prior to actual sale.

As provided under the TOR, there should be allocation of spaces for community

facilities such as elementary and secondary schools, health center/clinic, multi-

purpose hall, livelihood center, market, fire/police outpost, and parks and

playground. The Team conducted ocular inspection of sample relocation sites from

May 29 to November 29, 2013 to determine their present condition. Results of

inspection are documented by the following pictures:

Towerville Resettlement Project, Minuyan, San Jose Del Monte

Health Center

Basketball Court/Park


16

HUs with broken/missing jalousies and damaged doors

Southville 8 and 8A Housing Projects Bgy. San Isidro, Rodriguez, Rizal

High School Building under construction

Elementary School Building

Facility for Livelihood Program

HUs with cracks on walls/damaged doors and doorlocks


17

HUs with cracks on walls

HUs with surface scaling on the floor

Southville 3A Housing Project,Bgy. San Antonio, San Pedro, Laguna

Facility for Livelihood Program

HU used as worship area

Southville 7 & 7A Housing Projects, Bgy. Dayap, Sto. Tomas, Calauan, Laguna

Entrance Gate, Southville 7

HU used as worship area

HUs with missing/broken jalousies/damaged doors


18

HUs with broken/missing jalousies and damaged doors or with indication of deterioration


19

Southville 9 Housing Project, Pinugay, Baras, Rizal

HUs with broken/missing jalousies and damaged doors

HUs with cracks on flooring

The locations of the housing projects were observed to be accessible to

transportation, with police visibility and near public markets.

Balik-Probinsya Program

DBM released to NHA P6.900 Million under SARO No. 084116 covered by NCA

No. 253068-4, both dated November 19, 2009, for relief operations, rehabilitation,

reconstruction and other works and services to areas affected by natural calamities.

This fund was utilized by the NHA for the implementation of Balik-Probinsya

Program. Under this program, 300 families living along Manggahan Channel will

be selected and will be given P23,000.00 each, should they opt to return to their

respective provinces. As of audit date, a total of 169 families availed of the

program.

20

Part III

Audit Observations

21

Chapter I

Community Initiative Approach Program

CIAP

22

1. The purpose of providing permanent residence to qualified beneficiaries

through the development of relocation sites for families affected by typhoons

was not fully achieved. Of the sample 1,037 housing units at ten resettlement

sites, only 788 units, representing 76 percent, were still being occupied by

original beneficiaries which is not in accordance with the conditions set forth

under the agreement between NHA and beneficiaries. The 249 other

beneficiaries either sold or rent out the units to others, or did not at all use the

units or using the unit only occasionally.

As previously discussed, NHA is mandated to provide housing assistance to the

lowest 30 percent of urban population through slum upgrading, squatter

relocation, development of sites and services and construction of core housing

units. Among the beneficiaries of NHA are families affected by typhoon. To

address this concern, the DBM, in response to the letter-request dated

November 10, 2009 of the then Vice-President and Chairman of HUDCC,

released a total of P1.399 Billion from November 2009 to March 2010, to

NHA, to cover the Agency’s funding requirements for the relocation of

affected families through the implementation of the CIAP. This program is

intended for informal settler families qualified for relocation. Under this

program, the families will be resettled at their choice resettlement sites to be

developed by their choice developer. Qualified families are those:

affected by massive flooding, typhoons, volcanic eruption and similar

calamities, and those living along danger zones, waterways, rivers,

shorelines, esteros, creeks and the like;

who do not own any real property; and

not yet awardees of any Government Housing Program.

Upon release of the amount of P1.399 Billion, NHA contracted the services of

the following contractors purportedly selected by beneficiaries in the total

amount of P1.392 Billion for the development of 7,248 lots and construction of

10,411 housing units (HUs) under the CIAP:

Table 10: Schedule of Constructed Housing Units and Developed Lots by Contractors

Contractors

Contracted Amount (in M) No. of Units

Lots HUs Total Lots HUs

Baque Corporation 152.842 306.974 459.816 2,178 4,096

Gateway Sand Builders 65.344 190.500 255.844 1,007 2,540

Goldenville Realty and 393.037 283.125 676.162 4,063 3,775

OBSERVATIONS

CIAP

23

Table 10: Schedule of Constructed Housing Units and Developed Lots by Contractors

Contractors

Contracted Amount (in M) No. of Units

Lots HUs Total Lots HUs

Dev. Corp.

Total P 611.223 P 780.599 P 1,391.822 7,248 10,411

The projects were reported completed from 2009 to 2012 with contractors paid

in the total amount of P1.328 Billion as tabulated below:

Table 11: Schedule of Payments to Contractors and Corresponding Accomplishments

Contractor Project Locations Payments Accomplishments

Date Amount Lots HUs

Developed Lots

Baque Corporation Southville 8 Housing Project, Bgy. San Isidro, Rodriguez, Rizal

12/23/09 to 3/22/12

P 108.740 1,750

Southville 5 Housing Project,Bggy. Timbao, Binan, Laguna

1/13/10 to 5/11/12

17.895 192

Southville 3A Housing Project, Bgy. San Antonio, San Pedro, Laguna

1/19/10 to 2/3/11

13.320 148


Southville 8A Housing Project, San Isidro, Rodriguez, Rizal

12/23/09 to 5/31/10

63.441 1,007


Southville 4 Housing Project, Bgy. Caingin, Sta. Rosa, Laguna

11/18/09 to 7/07/10

93.900 939

Southville 5A Housing Project, Bgy. Langkiwa, Binan, Laguna

11/18/09 to 3/11/11

186.399 1,871

Towerville Resettlement Project, Bgy. Minuyan, SJDM

12/09/09 to 3/2/10

40.000 400

Southville 9 Housing Project, Bgy. Pinugay, Baras, Rizal

3/29/10 to 5/23/11

53.037 663

Sub-total (Developed Lots) P 576.732 6,970

Housing Units (Hus)

Baque Corporation Southville 8 Housing Project, Bgy. San Isidro, Rodriguez, Rizal

11/18/09 to 5/13/10

131.063 1,750

Southville 5 Housing Project, Bgy. Timbao, Binan, Laguna

11/18/09 to 5/24/12

14.066 190

Southville 7 Housing Project, Bgy. Dayap, Sto. Tomas, Calauan, Laguna

12/03/09 to 5/27/10

150.690 2,036

Southville 3A Housing Project, Bgy. San Antonio, San Pedro, Laguna

1/25/10 4.631 65

CIAP

24

Table 11: Schedule of Payments to Contractors and Corresponding Accomplishments

Contractor Project Locations Payments Accomplishments

Date Amount Lots HUs


Southville 8A Housing Project, San Isidro, Rodriguez, Rizal

11/18/09 to 5/19/10

75.525 1,007

Southville 7A Housing Project, Bgy. Dayap, Sto. Tomas, Calauan, Laguna

12/03/09 to 4/2/12

114.975 1,533


Southville 4 Housing Project, Bgy. Caingin, Sta. Rosa, Laguna

11/18/09 to 7/07/10

56.250 750

Southville 5A Housing Project, Bgy. Langkiwa, Binan, Laguna

11/18/09 to 3/11/11

127.128 1,719

Towerville Resettlement Project , Bgy. Minuyan, SJDM

12/09/09 to 3/2/10

30.000 400

Southville 9 Housing Project 3/29/10 to 5/19/11

46.875 625

Sub-total (Housing Units) P 751.203 10,075

Total Amount Paid to Contractors P 1,327.935

Of the reported developed lots and constructed housing units, 6,970 lots and

10,075 HUs were reportedly distributed to purported victims of Typhoons

Ondoy and Pepeng as of December 2013 as tabulated below:

Table 12: Schedule of Distribution of Developed Lots and Housing Units

Housing/ Resettlement Project Location

Accomplished Distributed

Lots HU Lots HU

Southville 8 Bgy. San Isidro, Rodriguez, Rizal

1,803 1,803 1,750 1,750

Southville 8A 1,007 1,007 1,007 1,007

Southville 5 Bgy. Timbao, Biñan, Laguna 192 192 192 190

Southville 4 Bgy Caingin, Sta. Rosa, Laguna 1,000 750 939 750

Southville 5A Bgy. Langkiwa Biñan, Laguna 2,000 2,000 1,871 1,719

Southville 7 Bgy. Dayap, Sto. Tomas,Calauan, Laguna

2,036 2,036

Southville 7A 1,533 1,533

Towerville Phase I Bgy. Minuyan, SJDM, Bulacan 400 400 400 400

Southville 3A Bgy. San Antonio, San Pedro Laguna 183 65 148 65

Southville 9 Bgy. Pinugay, Baras, Rizal 663 625 663 625

Total 7,248 10,411 6,970 10,075

The obligations of the awardees under the Loan Agreement with NHA are as

follows:

Pay to NHA their obligation subject to the rules and regulations of the

NHA;

CIAP

25

Strictly use the property for his/her own personal and family use and

benefit, and not for the use and benefit of any undisclosed party. The

purpose of the sale is to provide the Awardee with a permanent

relocation site to be exclusively utilized by himself/herself and his/her

dependents and not as a means of investment, speculation or profit

therefrom by way of assignment of his/her rights herein acquired or

lease or subletting to others;

Not to sell or transfer the lot/unit;

Not to change or convert the use of the residential lot/unit without the

written consent from the NHA;

Not to abandon the lot/unit without informing NHA. Otherwise, he

shall be perpetually disqualified from any assistance under the

government housing program;

Not to sell, encumber, mortgage, lease, sublet or in any manner alter or

dispose of his/her lot or rights and interest thereon, in whole or in part,

within ten (10) years from issuance of the Transfer Certificate of Title

(TCT), except through hereditary succession, without obtaining the

prior written consent of the NHA; and

Assume payment of monthly power and water charges upon occupancy

of the lot/unit, and pay monthly assessment fees to homeowners’

association for maintenance, security, garbage collection and other

appropriate fees, if any.

While the provisions of the Loan Agreement are restrictive, the same were

apparently not observed by the awardees as manifested in the results of

inspection of the project sites and interviews with the awardees conducted by

the Team between May 29, 2012 and November 29, 2013. Of the 1,037

inspected units at the 10 resettlement sites, 249 units, representing 24.01

percent, were either already sold or being rented to others, unused, or used only

occasionally, as tabulated below:

Table 13: Status of Occupancy

Housing Project Occupied by Beneficiaries

Occupied by Others

Occasionally Occupied

Vacant Total

Southville 8 38 31 1 2 72

Southville 8A 99 41 3 7 150

Towerville Phase 5 134 36 9 4 183





Southville 7A 106 16 9 2 133


Southville 9 187 13 7 4 211

CIAP

26

Table 13: Status of Occupancy

Housing Project Occupied by Beneficiaries

Occupied by Others

Occasionally Occupied

Vacant Total

Total 788 195 31 23 1,037

Percentage 75.99 18.80% 2.99% 2.22% 100%

The units sold or rented out were even used for other non-residential purposes

which is also prohibited under the agreement. As provided therein, the relocatee

is also prohibited to change or convert the use of the residential lot/unit without

the written consent of the NHA. Non-compliance with this requirement alone,

shall be considered a breach of the conditions and considered sufficient ground

for the cancellation of the award thereof. Samples of housing units used for

other purposes follow:

Table 14. Samples of Housing Units Used for Other Purposes

Location Actual Utilization

Lot 50, Blk. 6, Southville 8, Rodriguez, Rizal

Maternity Clinic

Lot 13, Blk. 17, Southville 8A, Rodriguez, Rizal

God’s Creation Full Gospel International Ministry

Lot 4 Blk 21, Southville 3A, San Antonio, San Pedro Laguna

Iglesia ni Cristo

CIAP

27

Table 14. Samples of Housing Units Used for Other Purposes

Location Actual Utilization

Lots 14 & 15, Blk 43, Southville 7A, Bgy. Dayap, Sto. Tomas, Calauan Laguna

Living Epistle Christian Family Church

Lot 24, Blk. 55, Southville 5 Binan, Laguna

Sari-Sari Store

Lot 24, Blk. 55, Southville 5A, Binan, Laguna

Jesus the Gospel Church International

The Team also noted housing units being used as billiard hall, computer shop,

NHA barracks, garage and bodega, among others.

It appears that the qualifications of beneficiaries were not properly screened as

those apparently not in need were likewise awarded a unit. Thus, while the

funds were used for the purpose intended, the goal of providing permanent

residence to qualified beneficiaries may not be considered fully served.

Moreover, such violations by the awardees were apparently tolerated by NHA

as the prescribed sanctions were not imposed.

Management’s Comments Team’s Rejoinder

The Project Offices concerned under the

supervision of Southern Luzon & Bicol

The proposed actions may not

be sufficient to ensure that the

CIAP

28


Management (SLB-AMO) shall

undertake the following courses of action

to ensure compliance with your

recommendations:

a. Project Offices to conduct regular

occupancy check of the relocated

families and to religiously send

notices to the awardees for their

monthly obligation to the NHA;

b. Conduct regular meetings with all the

beneficiaries/awardees for any

management update and concerns;

and

c. Other recommendations are being

adopted to all our project offices.

NHA’s mandate is fully

served. The selection process

should be enhanced to ensure

that only qualified

beneficiaries are awarded

units, and compliance by

relocatees with the MOA

should be strictly enforced and

sanctions imposed for non-

compliance thereof.

Monitoring mechanism should

be likewise strengthened.

2. The projects were accepted from the developers without ensuring their

compliance with the requirements under the contract. A number of units

have no water and power connections and with noted deficiencies.

As discussed earlier, NHA entered into contracts with four contractors for the

development of 7,248 lots and construction of 10,411 HUs. All contracted

works were reportedly completed from 2009 to 2012, and contractors fully

paid by NHA within the same period.

Under the contracts, the contractors were obligated, among others, to:

Undertake full development/repair works of lots and construction of

housing units, in accordance with plans, designs and specifications in

the TOR and applicable laws, rules and regulations;

Submit to NHA, prior to payment, As-Built Plans, Certificate of

Completion and Acceptance, Certificate of Inspection and Acceptance

Report duly signed by the concerned member/family, and Certificate of

Occupancy of completed housing units issued and ready for occupancy

by qualified beneficiary;

Deliver the developed lots with completed sites for community

facilities or open spaces in accordance with agreed and approved plans,

designs, specifications, standards and timeframe;

CIAP

29

Undertake all corrective/repair works, at its own expense, on land

development project components/infrastructure facilities found

defective or below specifications within 30 days from receipt of notice

from NHA;

Warrant complete, satisfactory and faithful performance of all works in

accordance with the design, plans and specifications approved by the

NHA, the concerned LGU and other regulatory agencies;

Maintain and secure, at the proponent’s expense, all completed serviced

homelots and subdivision infrastructure facilities until turn over and

acceptance by the concerned LGUs or other agencies, but not to exceed

one (1) year from the date of actual acceptance of the developed

lots/units covered by a particular deed of sale;

Ensure the extension and installation of permanent electrical and water

facilities up to the service entrance of the residential lots, the cost of

which shall be shouldered by the proponent/landowner-developer and

ensure that the same are operational and/or available prior to occupancy

of the serviced homelots and sites for community facilities;

Ensure submission of Surety/Guaranty Bond in favor of and acceptable

to the NHA, equivalent to ten percent (10%) of the gross purchase

price to cover the remedial works for any deficiency in the land

development undertaken by the proponent for a period of one (1) year

starting from the date of the acceptance of the lots/units covered by a

particular deed of sale;

Submit certified true copies of test results. All tests for land

development component shall be undertaken by the proponent in the

presence of duly designated NHA representatives as well as other

agencies to determine its good condition and operation. The costs of

tests shall be for the account of the proponent. All tests shall be

undertaken prior to actual sale.

Inspection of the projects, however, disclosed that, apparently, NHA accepted

the projects and awarded the same to the beneficiaries without ensuring that the

developers complied with the requirements under the contract. The Team noted

the following deficiencies during inspection:

Resettlement Project Remarks

Southville 7 and 7A, Calauan, Laguna

No power and water connections in a number of households. The projects were undertaken by Baque and Gateway Sandbuilders.

CIAP

30


Southville 8, Rodriguez, Rizal

Towerville Phase I, SJDM, Bulacan

Sampled units constructed by Goldenville Realty Development Corporation were not compliant with specifications and not acceptable in a number of cases as discussed below:

In a number of units within Blk. 13, the following deficiencies/deviations from plans and specifications were noted:

- Cracks were noted on walls and lintel beam

- The door jambs were made of 2”x2” angle bar, instead of fabricated A100 Steel Jamb filled with concrete cement;

- Flooring slab is now under early stage of deterioration, where separation of sand and stone from the matrix is visible due to inferior quality of concrete cement mixture;

- Cracks on walls, particularly in comfort room partition, which may be due to poor compaction of backfill that caused settlement of wall footings;

- There was no backfilling at the rear elevation of the building with a height of 2 meters and width of 2.20 meters, which may endanger the lives of the occupants.

- Exterior and interior walls were block finished instead of rough cement plaster finished, as per plans schedule for wall finishes;

- There was no lintel beam provided on top of CHB wall;

- The 4” Concrete Hollow Blocks (CHB) and concrete mixtures were of inferior quality, and plastering of walls were of poor

CIAP

31


workmanship as sand and stone separate from the matrix exposing the reinforcing bars;

- Sagrod welded on C-purlins was made of 6 mm. diameter plain steel bar, instead of 10 mm. diameter steel bar.

Occupants in Lot Nos. 21 and 22, Blk. 13, claimed that upon turn over, the floor was only gravel bedding and not floor slab, as specified in the contract.

The Team confirmed with Philippine Contractors Accreditation Board (PCAB)

as to issuance of license to the subject contractors to ensure their technical

capability to undertake the project. In its reply dated August 29, 2014, PCAB

informed the Team that Gateway Sand Builders, Inc., one of the

developers/constructors, has no record with PCAB.


The findings refer to Blk. 13, Phase 5,

Towerville Resettlement Project. During

the inspection of the COA Team as

assisted by the NHA Project Technical

Staff, the developer was instructed to

immediately undertake the necessary

repairs/corrective works on the identified

lots/units.

The Project Offices concerned under the

supervision of Southern Luzon & Bicol

Management (SLB-AMO) shall:

require all developers to strictly

follow what is stated in the MOA;

advise all developers to undertake

repair works, if necessary, and to

direct all beneficiaries to report to the

NHA all defects and to submit punch

list of all the fixture of the housing

units as per plans and specification.

Similar corrective measures

should be undertaken in all

project sites with the same

deficiencies, inspected or not.

In the first place, projects

found not compliant with plans

and specifications should not

have been accepted.

Moreover, the cases of absence

of power and water

connections should

immediately be addressed.

32

Chapter II

Balik-Probinsya Program

BALIK-PROBINSYA PROGRAM

33

DBM released to NHA P6.900 Million under SARO No. 084116 covered by NCA

No. 253068-4, both dated November 19, 2009, for relief operations, rehabilitation,

reconstruction and other works and services to areas affected by natural calamities.

This fund was utilized by the NHA for the implementation of Balik-Probinsya

Program. Under this program, 300 families living along Manggahan Channel will

be selected and will be given P23,000.00 each, should they opt to return to their

respective provinces.

1. Out of the 300 targeted family-beneficiaries, only 169 or 56.33% were

actually benefitted by the program due to failure of the others to comply with

the requirements. Correspondingly, only 56.33% or P3.887 Million out of

the P6.900 Million fund allocated for the program was utilized, leaving an

unutilized balance of P3.013 Million, thus the expected benefits to be derived

from the Balik-Probinsya Program were not maximized.

In view of the damage caused by Typhoon Ondoy in 2009 and the need to clear

waterways along Manggahan Channel, then Mayor Roberto Eusebio sought

help from the NHA for financial assistance for some 300 affected families who

wanted to return to their provinces, among others. To address such request,

NHA initiated the Balik-Probinsya Program whereby financial assistance in the

amount of P23,000.00 for each family shall be provided to 300 families who opt

to return to their provinces.

The Local Inter-Agency Committee (LIAC) identified more or less 1,342

families. Those identified were then deliberated upon by the Beneficiary

Selection and Awards Committee (BSAAC) of NHA, of which 300 families

were selected on a “first come, first served” basis.

To fund the program, then Vice-President requested on October 8, 2009, from

the DBM for the release of P6.90 Million from Calamity Fund. Subsequently,

on November 19, 2009, SARO No. F-09-08416 in the amount of P6.90 Million,

covered by NCA No. 253068-4, was issued to NHA, out of Malampaya Funds

and not from Calamity Fund.

INTRODUCTION

OBSERVATIONS


34

Based on records, out of the total amount of P6.90 Million, the reported

expenses for the program was only P3.887 Million as of December 2012

pertaining to only 169 families assisted or 56.33 percent of the total targeted

families of 300 as tabulated below:

Table 16: Schedule of Beneficiaries of Balik-Probinsya Program

JEV No. LV No. Period Amount No. of

Beneficiaries

10-12-10282 10-08-159 Aug. 2-17, 2010 P 483,000 21

10-12-10283 10-10-187 Aug. 26-Oct. 1, 2010 506,000 22

10-12-10284 10-11-283 Aug. 26-Nov. 5, 2010 437,000 19

10-12-10792 10-09-164 Aug. 2-26, 2010 506,000 22

10-12-10793 10-090174 Aug. 2-Sept. 17, 2010 506,000 22

11-09-7215 11-06-062 May 5-June 13, 2011 483,000 21

11-11-221 October 2011 460,000 20

12-01-751 11-12-263 2011 23,000 1

12-08-7615 12-08-259 2012 483,000 21

Total P 3,887,000 169

Intended for Balik-Probinsya Program P 6,900,000

Unutilized Balance P 3,013,000

The low turn-out was claimed to be due to the failure of interested beneficiaries

to comply with the requirements to qualify under the program. The

requirements included, among others, proofs of occupancy/residency, and that

they were included in the census master list of families.

As mentioned earlier, there were more or less 1,342 families identified by the

LIAC from which the targeted families were selected by the BSAAC of NHA. The number of needy families initially identified is more than enough to

complete the 300 families originally intended to be benefitted from the

program. Apparently then, NHA did not request for substitution or take action

to inform LIAC of available funds under the program due to disqualified

applicants earlier identified. Consequently, the number of families benefitted

by the program was not maximized.

2. The P6.90 Million received for the Balik-Probinsya Program was all drawn

as cash advances covered by 13 checks. The successive grant of cash

advances without liquidation of previously granted cash advances and

without proof of immediate need is in violation of COA Circular No. 97-002

dated February 10, 1997. Moreover, of the initial cash advance of P6.900

Million, only P2.438 Million was used, with P4.462 Million in cash eventually

returned by the Disbursing Officer (DO) in November 2010. Subsequent cash


35

advances amounting to P1.5 Million were granted in 2011 and 2012 of which

P1.449 Million was used.

COA Circular No. 97-002 dated February 10, 1997 as reiterated under COA

Circular No. 2009-002 dated May 18, 2009 provides, among others, that no

additional cash advance shall be allowed to any official or employee unless the

previous cash advance given to him is first settled or a proper accounting

thereof is made.

Examination showed that in order to implement the project, 13 cash advances in

the amounts of P500,000.00 and P900,000.00 were drawn by the designated DO

on August 2 and 3, 2010 or 8 months upon release of funds by the DBM

without determining the needs. The cash advance checks were either encashed

by the DO after 8 to 59 days or deposited to the Philippine Veterans Bank

(PVB) account three months later. Of the total cash advances, only P2.438

Million was reportedly utilized from August 11 to November 5, 2010. The

unused fund amounting to P4.462 Million was returned by the DO under OR

No. 3650671 dated November 15, 2010. It is worthy to note that the checks

totaling P4.4 Million were deposited to a PVB account only on November 17,

2010.

The summary of cash advances granted to the DO and subsequent utilization

and return is presented below:

Table 15: Schedule of Cash Advances Granted to Disbursing Officer

Check Date Amount

Utilized Unutilized Amount Number Date Encashed Deposited Date Amount

196696 08/02/10 08/10/10 P 500,000 08/12-17/10 P 483,000

196697 08/02/10 08/20/10 500,000 08/24-26/10 506,000

196698 08/02/10 08/26/10 500,000 10/04-11/5/10 437,000

196699 08/02/10 09/20/10 500,000 09/21-10/04/10 506,000

196700 08/02/10 09/30/10 500,000 09/01-17/10 506,000

Sub-total of Encashed Checks P 2,500,000 P 2,438,000 P 62,000

232801 08/02/10 11/17/10 500,000 500,000

232802 08/02/10 11/17/10 500,000 500,000

232803 08/02/10 11/17/10 500,000 500,000

232804 08/03/10 11/17/10 500,000 500,000

232805 08/03/10 11/17/10 500,000 500,000

232806 08/03/10 11/17/10 500,000 500,000

232807 08/03/10 11/17/10 500,000 500,000

232808 08/03/10 11/17/10 900,000 900,000

Sub-total of deposited Checks P 4,400,000

Total P 6,900,000 P 2,438,000 P4,462,000


36

Table 15: Schedule of Cash Advances Granted to Disbursing Officer

Check Date Amount

Utilized Unutilized Amount Number Date Encashed Deposited Date Amount

Note: Unutilized amount returned by the DO per OR No. 3650671 dated 11/15/2010

232903 05/05/11 500,000 06/03-13/11 483,000 17,000

232933 06/06/11 500,000 2011 483,000 17,000

269546 02/23/12 500,000 2012 483,000 17,000

Sub-total P 1,500,000 P1,449,000 P 51,000

Total P3,887,000 P3,013,000*

*4,462,000 – 1,449,000 = 3,013,000

NHA granted additional three cash advances from May 5, 2011 to February 23,

2012 to the same SDO in the amount of P500,000.00 each or a total of P1.5

Million of which P1.449 Million was used.

The successive grant of cash advances without liquidation of previously granted

cash advances and without proof of immediate need is in violation of COA

Circular No. 97-002 dated February 10, 1997 as reiterated under COA Circular

No. 2009-002 dated May 18, 2009.

37

Part III

Recommendations

RECOMMENDATIONS

38

In view of the deficiencies noted in the implementation of projects, the Team

recommends the following courses of action:

Ensure that the projects are fully compliant with the MOA and Terms of

Reference before acceptance and payment. In no case should a contractor

be fully paid unless the obligations under the MOA and plans and

specifications are strictly complied with;

Require the Constructors/Developers to undertake repairs/corrective

measures on the noted deficiencies and to attend to water and power

connections;

Ensure that Constructors/Developers are eligible before entering into

tripartite MOA with them and the Community Association for financing of

the acquisition of developed lots and completed housing units by eligible

beneficiaries.;

Strengthen monitoring of compliance by the relocatees with the provisions

of the Loan Agreement. Enforce the cancellation of award to the original

lot allocatee/awardee in the event of non-compliance with the terms and

conditions under the Loan Agreement;

Refrain from granting successive cash advances to any disbursing officer

as this practice is not in consonance with COA Circular No.97-002 as

reiterated under COA Circular No. 2009-002; and

Return unused/unutilized Malampaya Fund to the Bureau of Treasury.

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