COA warns NHA over use of ‘borrowed’ funds from other agencies

MANILA, Philippines — The National Housing Authority (NHA) “borrowed” P4.901 billion from the trust funds of other government agencies and spent them on other housing projects not covered by the money’s intended purpose, according to state auditors.

In its 2020 audit report on the NHA, the Commission on Audit (COA) told the agency to stop using the trust funds of other government agencies for unauthorized purposes, warning that its officials and employees could face disciplinary action and criminal charges.

The COA said P4.901 billion from the P11.568 billion in trust funds of the Department of Public Works and Highways (DPWH), Department of Transportation (DOTr), and the Office of the President “was used to cover the cash requirements of other (NHA) projects/programs in 2019 and 2020.”

This was contrary to provisions of the 2020 General Appropriations Act, Presidential Decree No. 1445 or the Government Auditing Code and a 1994 COA circular on the grant, use and liquidation of fund transfers to implementing agencies.

Resettlement sites

This “exposes the concerned officers to disciplinary actions” under Executive Order No. 292 or the 1987 Administrative Code, and criminal liabilities under existing penal laws, the COA said.

The trust funds were intended for the resettlement of informal settlers affected by the North-South Commuter Railways Project under the DOTr, the Marawi City rehabilitation project under the Office of the President, the Harbor Link Project, C-5 North Link, and South Link project, and North Luzon Expressway-South Luzon Expressway connector project under the DPWH.

The three memorandums of agreement (MOA) for these projects stated that the funds should be used “solely for the purpose prescribed” in the MOA.

The COA found that P4.901 billion was spent on other projects related to the R-10 widening project, rehabilitation and housing for victims of Typhoons “Yolanda” and “Sendong,” transitional housing and rehabilitation of Marawi City, housing for informal settlers affected by the Manila Bay rehabilitation, North Triangle project and those living in danger areas, as well as housing projects for police and military personnel.

State auditors added that “projects that have recently commenced are with the highest percentage of borrowings over the total projects’ fund,” ranging from 12 percent to 71 percent of the project’s fund.

The biggest amount borrowed was from the DOTr’s North-South Commuter Railway Extension project, with P448.319 million or 71 percent of its P631.820 million funds taken and used for other projects.

NHA explains

The NHA explained that the borrowing or “cross access of restricted cash” was made to “temporarily augment the cash deficiencies of other projects/programs” pending the release of funds by the Department of Budget and Management (DBM).

As of June 30, 2021, the NHA said it has reverted P1.699 billion to the agencies’ trust funds, leaving a balance of P3.201 billion. The agency was also expecting P2.121 billion from the Bureau of Treasury for the NHA’s various programs.

But for the COA, the current status of trust funds “are indications that the pertinent provisions on its administration are not carried out by NHA.”

“Continuous infraction shall subject the erring officials and employees to disciplinary actions… and to appropriate criminal action under existing penal laws,” the audit body warned.

The commission said the findings were a reiteration of audit observations made in previous years.

It told the NHA to stop this practice and instead request the DBM to release funds for NHA housing projects so that the “borrowed” funds can be reverted to the agencies’ trust funds.