COA tells Cebu province to return P40.7-M unspent PDAF

CEBU CITY, Philippines —  State auditors have directed the provincial government to seek authority from the Department of Budget and Management (DBM) to utilize the P40.7 million unexpended Priority Development Assistance Funds (PDAF) for future projects otherwise, return it to the national treasury.

In its 2018 Audit Report, the Commission on Audit (COA) pointed out that the province “still did not return to the National Treasury the remaining unutilized Priority Development Assistance Fund (PDAF) balance of P40, 769,414.12, which had been idle in its treasury for 5 to 12 years, despite the lack of basis or authority to use them for future projects.”

“PDAF were funds released by the national government in Calendar Year 2013 and prior years, to implementing agencies to finance specific priority development programs and projects as identified by the Members of Congress from a PDAF project list for the specified year,” read the discussion on the audit report.

The PDAF balance in the province as of December 31, 2018 is reflected below:

The unexpended PDAF balance of the Province of Cebu as of December 31, 2018. (Photo grabbed from COA Audit Report for Fiscal Year 2018)

The Supreme Court decision also served a permanent injunction against the disbursement of the PDAF, except those covered by Notice of Cash Allocations (NCAs). COA first recommended for the province to return the PDAF downloaded to it by the congressmen and senators in 2013 when the Supreme Court declared PDAF unconstitutional.

“The same recommendation was reiterated in the CY 2017 AAR (annual audit report), but management was unwilling to return the unspent funds. Its reason was anchored on the Supreme Court decision that only the release/disbursement of PDAF funds that were not covered by NCAs were permanently enjoined and to be reverted back to the unappropriated surplus of the general fund of the national government,” reads the audit report.

The Audit Report also cited that during the 2018 exit interview, the Provincial Legal Office (PLO) manifested an intent to ask for authority from the DBM to allocate the PDAF balance for future projects of the province.

Since the PDAF are national funds downloaded to the local government unit, it is considered as a trust fund and must only be used for the purpose that the funds were downloaded for.

“The applicable law concerning the use of trust funds is Section 4 (3) of Presidential Decree No. 1445 which states that ‘Trust funds shall be available and may be spent only for the specific purpose for which the trust was created or the funds received’, “the state auditors noted.

Absent any expression from the DBM allowing the province to further keep the funds and spend it for its projects, the province is advised to revert the amount to the general fund of the national government for it to be reappropriated for more urgent projects./dbs