The state trading firm Philippine International Trading Center, now at the center of a controversy involving a P33.4 billion in “parked” funds, is being used as a “pawn” by agencies to skirt their obligations to return unused funds to the national coffers and avoid procurement-related liabilities, Senate Minority Leader Franklin Drilon said Tuesday.
“It appears like government agencies are using PITC to skirt the end-of-the-year validity of appropriations. They are releasing the funds before the lapse or expiration of the appropriation,” Drilon said in a privilege speech and called on the Senate to investigate the issue.
“Is this a scheme? PITC is being used as a pawn. PITC effectively provides a mechanism to hide inefficiencies in government.
“Instead of returning to the General Fund the money that they cannot utilize, it seems that government agencies deposit the funds in PITC. Billions of pesos in public funds are parked in the bank accounts of PITC.”
Drilon said once agencies were unable to obligate and disburse the funds allotted to them by the end of the year, the appropriation would lapse and the funds would revert to the National Treasury.
That would negatively affect their absorptive capacity and could be used by the Department of Budget and Management to reduce their appropriation in the next budget cycle.
He said that to park unused funds with PITC in the guise of the procurement of goods and services only to skirt the end-of-the-year validity of appropriations was a violation of Section 10 of the general provisions of the General Appropriations Act.
Section 10 of the GAA mandates the reversion of funds when the terms have expired, or when they are no longer necessary for the attainment of the purposes for which the funds were established.
This could be the reason behind the tremendous growth in PITC’s consumers’ deposits in a span of five years: from only P4.8 billion in 2015 it grew to P33.4 billion in 2019.
Citing his sources, Drilon said some agencies were turning to PITC to avoid procurement-related liabilities. He said that for any procurement through PITC, the mother agency or source agency would not be liable for the bid process as it was not the head of the procuring entity or HOPE, but the PITC.
“Kung may problema man sa bidding, labas na ang ahensya,” Drilon said.
He said the billions of public funds parked in PITC should be returned.
“I believe that this practice is improper, or shall I add, dishonest. The handling of public funds has become a bad habit in government,” Drilon said.
The Senate’s chief fiscalizer also questioned the authority of the PITC to impose a service fee of 1 to 4 percent and to engage in construction of fire stations, multipurpose halls and lighthouses when it was clear from Executive Order 133 that the state firm may only engage in export and import trading on new or non-traditional products and markets not normally pursued by the private business sector.
“I was surprised with the coverage or kind of procurements that PITC is undertaking for the government bureaucracy: from face towels, t-shirts, shoes, guns, x-ray machines and firetrucks to infrastructure projects such as fire stations, lighthouses, multi-purpose halls, and training centers,” he said.