MANILA - The Commission on Audit (COA) is asking the Philippine Coconut Authority (PCA) to investigate some of its officials and employees after finding irregularities in the utilization and awarding of contracts of the P107.940-million Malampaya fund under the Coconut-Corn Intercropping Program.

Among the irregularities revealed in the special audit are unqualified and unlocated beneficiaries, and questionable award of contracts to unqualified companies.

The Coconut-Corn Intercropping Program was undertaken by the PCA in 2008 in partnership with the Department of Agriculture (DA) to reduce and ultimately eradicate hunger in coconut-producing areas.

The agricultural assistance sought to generate income and increase food supply by providing high quality corn. Under the program, a coconut farmer would receive microbial inoculants and a maximum of 10 kilograms of open-pollinated variety white corn seeds per hectare.

But due to its failure to comply with the guidelines of the law and the program, the COA said the Coconut-Corn Intercropping Program has been ineffective in fighting hunger.

"The implementation of Coconut-Corn Intercropping Program out of Malampaya funds in the amount of P107.940 million was not effectively undertaken and charges thereon are questionable. The targeted number of farmer-beneficiaries was not attained, the fund was used to settle previously awarded contracts, and the transactions are questionable," the 2014 COA special audit on the Malampaya fund stated.

"The purportedly distributed corn seeds and inoculants are either of low quality, or not good, or receipt thereof was denied by the purported beneficiaries, or purported beneficiaries cannot be located or unknown at their given addresses. Thus, the objectives of increasing production of high quality corn, and boosting the income of corn farmers were not attained."

INVALID TRANSACTIONS

The audit report revealed that the PCA violated the Procurement Law and the State Audit Code of the Philippines after unlawfully awarding P95.909 million worth of contracts to ineligible suppliers.

Based on COA's evaluation, PCA already signed on August 14, 2008 a P79.901-million contract with Lito M. Arena Trading, and a P16.008-million contract with Romarc Enterprises for the white corn seeds and inoculants supplies, although the request for funds was only submitted to DA on November 19, 2008.

The DA released the money for the program on December 24, 2008, four months after PCA entered into a contract with the suppliers.

"The act of awarding the contract without availability of fund is in violation of Section 85 of Presidential Decree (PD) 1445," read the report. Under PD 1445 or the State Audit Code of the Philippines, no contract involving the expenditure of public funds is allowed unless there is already an appropriation.

The COA also questioned the award of the contract to Lito M. Arenas Trading and Romarc Enterprises because the companies did not meet the requirements for the project.

According to COA, the suppliers had not been operating for at least 10 years, and did not have wide and reliable experience to handle the project. The COA also doubted the physical existence of the suppliers and the documents supporting their transactions.

Lito M. Arenas Trading was reported to have had operations for only 20 months upon contract signing, while Romarc Enterprises reportedly had contracts with government agencies since 2005.
But both companies failed to present supporting documents on their years in operation, and proof of previous transactions.

The COA also found out that the Business Process Licensing Office (BPLO) of Urdaneta City in Pangasinan had no records of Lito M. Arenas Trading's transactions. Meanwhile, the municipal government of Pulilan, Bulacan could not confirm the existence of Romarc Enterprises.

"The transactions of Lito M. Arenas Trading were not reported to the BPLO of the City Government of Urdaneta as it reported sales of only P1.942 million in CY 2009 when its transactions with PCA alone already amounted to P79.901 million. On the other hand, there was no information received from the Municipality of Pulilan, Bulacan as to business status of Romarc Enterprises," the audit report stated.

The COA added that there were also "no documents to manifest that PCA even evaluated the qualification of the suppliers based on the requirements prescribed in the (invitation to bid) as there were no BAC [Bids and Awards Committee] Evaluation Report and Resolutions provided to the team."

FAILURE TO TEST THE PRODUCTS

Aside from evaluating the suppliers, the COA said the agency also failed to test the corn seeds and inoculants to ensure the good quality of products for the farmers. The audit agency found that the quality of the corn seeds was low.

Based on a survey, 53 percent the recipients considered the white corn seeds were of low quality, while 44 percent said the same about the inoculants, factors which negatively affected the plants' germination rate.

INELIGIBLE BENEFICIARIES

The state auditors also found problems in the distribution of the products: some of the recipients of the support were either ineligible or could not be located, and some denied either signing the receipt vouchers or receiving the items.

The program aimed to provide assistance to at least 94,697 farmers. As of 2014, PCA was able to register 83,752 in the program, 313 of whom were interviewed through random sampling.

The audit report revealed that out of 313 beneficiaries, 32 were engaged in a different occupation other than farming, including 10 supposed farmer-recipients from Region 4B who were found to be working for the government: a Sangguniang Bayan member and businessman; barangay captain; barangay kagawad; and government employee.

A municipal agriculturist from Region 9 was also on the list of recipients, but denied receiving assistance from the government.

COA also said that while other beneficiaries confirmed that they repeatedly got assistance, others on the recipients list denied receiving the corn seeds nor signing acknowledgement receipts. A total of 3,138 beneficiaries on the list were interviewed to validate the receipt of the items.

"Of the selected samples of recipients who purportedly acknowledged receipts of deliveries, 162 denied receipts while 489 others cannot even be located at their given addresses. One PCA official, likewise, denied receipt of deliveries while 13 others denied their signatures on DRs [delivery receipts] and IARs though confirmed receipt of items," the COA said.

As of posting, ABS-CBN News was still waiting for the PCA's statement on the special audit report.