EXECUTIVE SUMMARY
INTRODUCTION
The Public Estates Authority (PEA) was created by virtue of Presidential Decree
No. 1084 dated February 4, 1977, as amended by Executive Order No. 525 dated
February 14, 1979 and Executive Order No. 654 dated February 26, 1981, with the
following objectives: 1) to reclaim land, including foreshore and submerged areas, by
dredging, filling, or other means, to acquire land;
2) to develop, improve, acquire,
administer, deal in, subdivide, dispose, lease, and sell any and all kinds of lands,
building, estates, and other forms of real property, owned, managed, controlled and/or
operated by the government; and, 3) to provide for, operate or administer such services
as may be necessary for the efficient, economical and beneficial utilization of the above
properties.
As of the year ending 1998, PEA completed the construction of 230 meters of
the Containment works-Seawall portion of the Central Business Park 1(A) Development
Project and 34 meters of drainage lines. It completed the relocation of 2,089 families out
of 2,219 families from the Alabang Stock Farm.
It received 21,000 Pabahay 2000
socialized housing units from Filinvest Alabang, Inc. and was able to dispose of 4,242
units. Accomplishments on the Heritage Park Project were 98.31% on the horizontal
works, 54.35% on the electrical works, 48.13% on the landscaping and nursery works,
92.77% on vertical works-building, 32.30% on vertical works-terrasoleum, and 9.59% on
monumenting. On its building projects, it completed the renovation/construction of the
Brentwood Building Project housing the Presidential Action Center Building. It also
completed the renovation/construction of the National Statistics Office's existing
warehouse into an interim office, and the construction of the Sandiganbayan Office
Building was already 82.41% complete as of the end of the year.
Also in 1998, PEA's assets of P23,221.94M and liabilities of P21,712.38M
increased over that of last year by P807.85M, and P810.61M, respectively. Net income
of P7.02M decreased by P28.88M, while its net worth of P1,509.56M decreased by
P2.76M. Current ratio of 1.18 increased by 0.14 while debt/equity ratio increased by
0.56.
Funds generated consisted of P70.689M in operating and service income and
P59.273M in other income (income from loans, interest on treasury bills, etc.) or a total
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of P129.962M. Operating expenses totaled P122.94M and a net income for the year of
P7.02M was realized.
SCOPE OF AUDIT
The audit included, among others, the verification of compliance and regularity of
transactions and, to a limited extent, the evaluation of the adequacy and effectiveness of
systems and procedures of certain aspects of the Authority's operation.
STATE AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS
The Auditor rendered an unqualified opinion on the fairness of presentation of the
financial statements of Public Estates Authority.
SUMMARY OF SIGNIFICANT FINDINGS AND RECOMMENDATIONS
The
following
are
the
significant
findings
and
the
corresponding
recommendations:
1.
The absence of internal control system in the custody and management of
construction materials intended for the renovation/upgrading of the NSO
Warehouse resulted in inventory shortages and overages, and loss and/or
pilferages of some of the materials. Install adequate internal control system
relative to the custody and management of construction materials intended for
projects undertaken by administration so as to prevent and detect fraud, waste
and losses in the use of government funds and/or properties.
2.
Several disbursements were made by the Authority in violation of law and/or
existing rules and regulations, viz: a) employees hired or appointed after July 1,
1989 were allowed to receive monthly rice allowance (one sack of rice) in
violation of Section 12, RA 6758 which authorized the granting of additional
compensation only to incumbents as of July 1, 1989; b) officials and employees
were paid anniversary bonus in the amount of P21,000.00 each or a total of
P5.5 million, in violation of the provisions of AO No. 263 issued on March 28,
1996; c) officials and employees were paid centennial anniversary bonus in the
amount of P3,000.00 each or a total of P.804 million on May 8, 1998, in violation
of AO No. 322 issued by the Office of the President on March 20, 1997; d)
members of the Inter-Agency Technical Committee on Environmental Concerns
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were paid monthly honoraria in the total amount of P126,000.00 in violation of
DBM Circular Letter No. 3-98 dated January 12, 1998, which strongly
discouraged the payment of honoraria.
Follow strictly laws and issuances
governing or affecting disbursements in order to curb and/or avoid unnecessary
and excessive expenditures of government funds.
3.
The Authority entered into a compromise agreement involving the exchange of
its property with an estimated value of P.5 billion more or less with two (2)
private claimants whose titles appear to be spurious. The agreement was not
submitted to the Office of the President for final approval as required by the
PEA Board. Conduct a fact-finding investigation to pinpoint the officials and
employees of PEA who were responsible for the said transaction, and file the
appropriate administrative and criminal actions against them if warranted by the
evidence.
4.
The failure of the Authority to forge a formal agreement with Shoemart, Inc. (SM)
on the rate of the supervision fee before the commencement of the CBP-1A
Project resulted in Authority's inability to collect the said fee which as of
December 31, 1998 already amounted to P12.4 million. Convince SM to agree
to 2.5% as the industry standard rate for supervision fee or negotiate for a
reasonable rate which is acceptable to both parties.
Thereafter, a formal
agreement should be executed embodying the terms and conditions of payment.
If despite the exercise of diligent effort toward this end no agreement is reached
by the parties, bring the matter to court in order for the court to fix the rate.
5.
The continued ownership by the Authority of 3 no-longer-needed parcels of
land with a total area of 77,475 sq.m. at Paliparan, Dasmariñas, Cavite for
almost 4 years resulted in its incurrence of expenses representing payments
made for security services in the total amount of P7.9 million for the period
April 1, 1995 to December 15, 1998.
Make a prompt study on how the
properties could be disposed of to avoid further incurrence of expenses for
security services and suffering from deterioration in the value of the properties.
The findings and recommendations were discussed with management and their
comments were considered in the report, where appropriate.
III
STATUS OF IMPLEMENTATION BY THE AUTHORITY OF PRIOR YEAR'S AUDIT
RECOMMENDATIONS
The Authority had fully implemented five (5), partially implemented two (2), and
had not implemented two (2) out of the nine (9) audit recommendations embodied in the
Annual Audit Report for the CY 1997.
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