Annual Financial Report · Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City 2012 Annual Financial Report National Government Agencies Volume I - A

Republic of the Philippines

COMMISSION ON AUDIT Commonwealth Avenue, Quezon City

2012 Annual Financial Report

National Government Agencies

Volume I - A

FY 2012

Annual Financial Report

National Government

Volume I-A

Page

I. INTRODUCTION 1

II. REPORT HIGHLIGHTS 5

III. APPROPRIATIONS, ALLOTMENTS, OBLIGATIONS AND BALANCES 18

Overview

Appropriations, Allotments, Obligations and Balances

IV. FINANCIAL STATEMENTS

Condensed Balance Sheet 46

Condensed Statement of Income and Expenses 47

Condensed Statement of Government Equity 48

Condensed Statement of Cash Flows 49

Notes to Financial Statements 50

V. FINANCIAL ANALYSES

Balance Sheet 61

Assets

Liabilities

Equity

Statement of Income and Expenses 96

Revenue/Income

Expenses

Statement of Cash Flows 122

Cash Inflows

Cash Outflows

Net Cash Provided By (Used)

Cash Balances

VI. NATIONAL GOVERNMENT DEBT 131

VII. SPECIAL ACCOUNTS IN THE GENERAL FUND 151

VIII. COMPREHENSIVE AGRARIAN REFORM PROGRAM 156

IX. SIGNIFICANT AND COMMON AUDIT OBSERVATIONS 170

AND RECOMMENDATIONS

TABLE OF CONTENTS

i

ii

List of Tables and Charts

Table No. Particulars Page

Report Highlights

II-1 Allotment by Source of Appropriations and Allotment Class 7

II-2 Obligations by Source of Appropriations and Expenditure Class 8

II-3 Unalloted/Unreleased Appropriations, by Source 9

II-4 Unobligated Allotments, by Source 10

II-5 Comparative Composition of Liabilities 13


III-1 Appropriations, Allotments, Obligations and Balances 20

III-2 Comparative Details of Appropriations 22

III-3 Comparative Regular Appropriations By Department/Agency 25

III-4 Appropriations for Special Purpose Funds 26

III-5 Appropriations for Unprogrammed Fund 27

III-6 Budgetary Support to Government Corporations 28

III-7 Comparative Details of Allocations to LGUs 31

III-8 Automatic Appropriations 32

III-9 Appropriations by Department/Agency Continuing and Source 33

III-10 Sources and Nature of Allotments 34

III-11 Regular Allotments, by Department/Agency and Allotment Class 35

III-12 Allotment from Special Purpose Funds 37

III-13 GOCCs with Budgetary Support from the National Government 38

III-14 Allotments from Allocations to LGUs 39

III-15 Allotment from Priority Development Assistance Fund 40

III-16 Allotments from Automatic Appropriations 40

III-17 Summary of Unreleased Appropriations 42

III-18 Summary of Allotments, Obligations and Balances 42

III-19 Obligations Covered by Allotments, by Department/Agency and Allotment

Class 43

III-20 Obligations Not Covered by Allotments, by Department/Agency and

Allotment Class 45

Financial Analyses

V.1-1 Assets, Liabilities and Equity 61

V.1-2 Annual Growth in Assets CYs 2008-2012 61

V.1-3 Comparative Composition of Cash 63

V.1-4 Departments/Offices with more than P1.0 billion Cash in Bank – Local

Currency 66

V.1-5 Departments/Offices with more than P100 million Cash in Bank – Foreign

Currency 68

iii

V.1-6 Details of Receivables by Account 69

V.1-7 Top Ten Departments with Huge Balances to Intra-Agency Receivable

Accounts 75

V.1-8 Composition of Investments 77

V.1-9 Major Classification of Property, Plant and Equipment 79

V.1-10 Components of Construction in Progress 80

V.1-11 Departments with more than P100 million worth of Public Infrastructures 81

V.1-12 Components of Land and Land Improvements 81

V.1-13 Components of Buildings 82

V.1-14 Components of Other Assets Group 82

V.1-15 Comparative Components of Current Liabilities 84

V.1-16 Top 10 Departments/Offices in Accounts Payable 85

V.1-17 Comparative Components of Long-term Liabilities 92

V.1-18 Departments/Offices/Agencies with Completed Public Infrastructures and

Reforestation Projects 94

V.2-1 Income/Revenue, Expenses, Subsidies and Net Loss 96

V.2-2 Comparative Income Taxes, By Source 98

V.2-3 Comparative Taxes on Goods and Services, By Source 98

V.2-4 Comparative Components of Property Taxes 99

V.2-5 Departments/Offices Which Reported Service Income 100

V.2-6 Components of Business Income 101

V.2-7 Components of Permits and Licenses 101

V.2-8 Components of Other Income 102

V.2-9 Departments/Offices which Reported Interest Income 102

V.2-10 GOCCs/GFIs with Dividend 103

V.2-11 Departments with Income from Grants and Donations 104

V.2-12 Departments/Offices which Reported Miscellaneous Income 105

V.2-13 Breakdown of Income, by Department/Office and by Book 105

V.2-14 Regional Breakdown of Income by Source 107

V.2-15 Departments/Offices with Highest Current Operating Expenses 108

V.2-16 Comparative Components of Personal Services 109

V.2-17 Departments/Offices with Big Expenses for Personal Services 109

V.2-18 Comparative Details of Maintenance and Other Operating Expenses 110

V.2-19 Departments/Offices with Big Maintenance and Other Operating

Expenses 111

V.2-20 Comparative Consumption of Supplies and Materials,

By Top Departments/Offices 112

V.2-21 Comparative Components of Repairs and Maintenance Expenses 113

V.2-22 Comparative Details of Subsidy To LGUs, GOCCs and NGOs/POs 114

V.2-23 Breakdown of Subsidy to LGUs as Reported by DBM CO and ROs 115

V.2-24 Breakdown of Subsidy to GOCCs as Reported by DOF-BTr 116

V.2-25 Comparative Components of Financial Expenses 118

V.2-26 Regional Breakdown of Expenses and Subsidies 118

V.2-27 Comparative Details of Subsidy From (To) National Government Agencies 119

iv

V.2-28 Comparative Details of Subsidy To NGAs as Reported by BTr 120

V.2-29 Comparative Details of Gains/(Losses) 121

V.2-30 Comparative Condensed Statement of Income and Expenses 121

V.3-1 Comparative Revenue Generated, by Agency 123

V.3-2 Receipt of NCA, By Department 124

V.3-3 Breakdown of Other Receipts 124

V.3-4 Breakdown of Inflows from Investing 125

V.3-5 Breakdown of Borrowings 125

V.3-6 Remittances to NT, by Agency 126

V.3-7 Payment of Operating Expenses, by Department 127

V.3-8 Subsidies and Donations to Other NGAs/LGUs, NGOs/POs 127

V.3-9 Investments in Stocks, Bonds and Other Securities, by Department/Office 128

V.3-10 Composition of Financing Outflows 129

National Government Debt

VI-1 National Government Financing 134

VI-2 Adjusted Balance of Outstanding NG Debt 135

VI-3 Outstanding NG Debt, Calendar Year 2012 136

VI-4 Comparative Outstanding NG Debt 138

VI-5 Composition of Domestic Issuances 140

VI-6 Foreign Debt Availments 141

VI-7 Repayments by Creditor 142

VI-8 Growth of Outstanding NG Debt 143

VI-9 Comparative Interest Payments of the NG 145

VI-10 Comparative Other Financial Expenses of the NG 146

VI-11 Appropriations for Foreign-Assisted Projects by Department/Agency 147

VI-12 Allotments for Foreign-Assisted Projects by Department/Agency 148

Special Account in the General Fund

VII-1 Appropriations, Allotments and Obligations, Special Account in the

General Fund (Net of CARP) 152

VII-2 Expenses by Department/Office Special Account in the General Fund

(Net of CARP) 155

Comprehensive Agrarian Reform Program

VIII-1 Appropriations for CARP 157

VIII-2 Statement of Appropriations, Allotments, Obligations and Balances 158

VIII-3 Balance Sheet 158

VIII-4 Statement of Income and Expenses 160

v

Chart No. Particulars Page

Report Highlights

II-1 Appropriations, Allotments and Obligations 5

II-2 Allotment by Class 8

II-3 Assets, Liabilities and Equity 12

II-4 Comparative Composition of Assets 12

II-5 Results of Current Operations 14

II-6 Cash Flows, by Activities 16


III-1 FY 2012 GAA Regular Appropriations by Sector 18

III-2 FY 2012 NG Budget by Allotment Class 21

III-3 Appropriations per GAA for FYs 2008 to 2012 23

III-4 Sources of Automatic Appropriations 31

III-5 Unreleased/Unallotted Appropriations 41

Financial Analyses

V.1-1 Percentage Distribution of the Major Categories of Assets 62

V.1-2 Trend of Cash 62

V.1-3 Percentage Distribution of Property, Plant and Equipment 79

V.1-4 Trend of Liabilities 83

V.2-1 Comparison of Actual and Programmed Revenue 97

V.2-2 Expenses of the National Government 108

V.3-1 Segment of Cash Flows 122

V.3-2 Trend of Net Cash Provided by (Used in) Operating, Investing and Financing

Activities CY 2003-2012 130

National Government Debt

VI-1 NG Debt By Source for FY 2012 137

VI-2 NG Debt Growth 143

VI-3 Actual Debt Service Expenditure of the NG 144

Special Account in the General Fund

VII-1 Total Assets, Liabilities and Equity, By Department, Special Account

in the General Fund (Net of CARP) 153

VII-2 Income by Department, Special Account in the General Fund (Net of CARP) 154

Significant and Common Audit Observations and Recommendations

IX-1 Summary of Audit Opinions Calendar Year 2012 171

ACRONYMS

AAB Authorized Agent Bank DPWH Department of Public Works and Highways

ACEF Agricultural Competitiveness Enhancement Fund DSF Debt Service Fund

ADB Asian Development Bank DSWD Department of Social Welfare and Development

AFAE Access Facilitation and Access Enhancement Services DTI Department of Trade and Industry

AFP Armed Forces of the Philippines E.O. Executive Order

AFPMATF AFP Modernization Act Trust Fund ECCDC Early Childhood Care and Development Council

AGDB Authorized Government Depository Bank EP Emancipation Patent

AGPF Agricultural Guarantee Pool Fund FAPs Foreign Assisted Projects

AGSBs Authorize Government Servicing Banks FDCP Film Development Council of the Philippines

AJD Agrarian Justice Delivery FE Financial Expenses

ALDA ARCs Level of Development Assessment FOREX Foreign Exchange

ALGU Allocations to Local Government Units FSP Foreign Service Post

AO Administrative Order FY Fiscal Year

ARBOs Agrarian Reform Beneficiaries Organizations GAA General Appropriations Act

ARBs Agrarian Reform Beneficiaries GE Government Equity

ARCs Agrarian Reform Communities GFIs Government Financial Institutions

ARF Agrarian Reform Fund GOCCs Government-Owned and/or Controlled Corporations

ARISP Agrarian Reform Infrasturture Support Projects GOP Government of the Philippines

ARMM Autonomous Region in Muslim Mindanao GSTLF Gasoline Station Training and Loan Fund

ASPs Approved Survey Plans GTEB Garments and Textile Export Board

BAC Bids and Award Committee HDMF Home Development Mutual Fund

BCDA Bases Conversion and Development Authority HEDF Higher Education Development Fund

BESF Budget of Expenditures and Sources of Financing HGC Home Guaranty Corporation

BFP Bureau of Fire Protection HSRC Human Settlement Regulatory Commission

BI Bureau of Immigration IACAT Inter Agency Council Against Trafficking

BIR Bureau of Internal Revenue IAs Implementing Agencies

BOC Bureau of Customs IBRD International Bank Reconstruction Development

BS Balance Sheet IMF International Monetary Fund

BSF Bond Sinking Fund IRA Internal Revenue Allotment

BSGC Budgetary Support to Government Corporations IT Information Technology

BSP Bangko Sentral ng Pilipinas JJWC Juvenile Justice Welfare Council

BSWM Bureau of Soils and Water Management KALAHI-CIDSS Kapit-Bisig Laban sa Kahirapan-Comprehensive

BTr Bureau of the Treasury and Integrated Delivery of Social Services

BTr-GOP Bureau of the Treasury-Government of the Phils. KKB Kapangyarihan at Kaunlaran sa Barangay

CARP Comprehensive Agrarian Reform Program LBP Land Bank of the Philippines

CB-BOL Central Bank of the Philippines – Board of Liquidators LGUs Local Government Units

CDC Cash Disbursement Ceiling LOI Letter of Instructions

CHED Commission on Higher Education LRA Land Registration Authority

CIDA Canadian International Development Agency LTO Land Transportation Office

CIP Construction in Progress MARINA Maritime Industry Authority

CLOAs Collective Land Owners Awards MDFO Municipal Development Fund Office

CO Capital Outlay MDS Modified Disbursement System

CO Central Office MIGA Multilateral Investment Guaranty Agency

COA Commission on Audit MMDA Metropolitan Manila Development Authority

COE Current Operating Expenses MOOE Maintenance and Other Operating Expenses

COMELEC Commission on Elections MPBF Miscellaneous Personnel Benefits Fund

COP Congress of the Philippines MRDP Mindanao Rural Development Program

CTU Cebu Technological University MRT Metro Rail Transit

CY Calendar Year MRTDC Metro Rail Transit Development Corporation

DA Department of Agriculture MVUC Motor Vehicle Users' Charge

DAP Disbursement Acceleration Program MWSS Metropolitan Waterworks and Sewerage System

DAR Department of Agrarian Reform NABCOR National Agribusiness Corporation

DBM Department of Budget and Management NBC National Budget Circular

DBP Development Bank of the Philippines NCA Notice of Cash Allocation

DDB Dangerous Drugs Board NCAA Non-Cash Availment Authority

DENR Department of Environment and Natural Resources NCCA National Commission for Culture and the Arts

DepEd Department of Education NCR National Capital Region

DFA Department of Foreign Affairs NDC National Development Company

DILG Department of the Interior and Local Government NEDA National Economic and Development Authority

DND Department of National Defense NFA National Food Authority

DOE Department of Energy NG National Government

DOF Department of Finance NGAs National Government Agencies

DOH Department of Health NGAS New Government Accounting System

DOJ Department of Justice NGDAD National Government Debt Accounting Division

DOLE Department of Labor and Employment NGOs Non-Governmental Organizations

DOST Department of Science and Technology NHA National Housing Authority

DOT Department of Tourism NIA National Irrigation Administration

DOTC Department of Transportation and Communications NIPAS National Integrated Protected Areas System

ACRONYMS

vi

NIRT National Internal Revenue Taxes

NORM Naturally Occuring Radio Active Materials

NPC National Power Corporation

NSDF National Sports Development Fund

NSO National Statistics Office

NT National Treasury

NTCA Notice of Transfer of Cash Allocation

OEO Other Executive Offices

OPSF Oil Price Stabilization Fund

OSEC Office of the Secretary

PAGCOR Philippine Amusement and Gaming Corporation

PAG-IBIG Pagtutulungan sa Kinabukasan: Ikaw, Bangko Industriya at Gobyerno

PARC Presidential Agrarian Reform Council

PBD Program Beneficiaries Development

PCAARRD Philippine Council for Agriculture, Aquatic and Natural Resources Research Development

PCGG Presidential Commission on Good Government

PCSO Philippine Charity Sweeptakes Office

PD Presidential Decree

PDAF Priority Development Assistance Fund

PDIC Philippine Deposit Insurance Corporation

PHIC/PHILHEALTH Philippine Health Insurance Corporation

PHILGUARANTEE Philippine Guarantee and Investment Corporation

PI/RP Public Infrastructure/Reforestation Project

PMO Privatization and Management Office

PNB Philippine National Bank

PNP Philippine National Police

PNPP Philippine Nuclear Power Plant

POs Peoples’ Organizations

PPA Philippine Ports Authority

PPE Property, Plant and Equipment

PPPP Pantawid Pamilyang Pilipino Program

PRRC Pasig River Rehabilitation Commission

PS Personal Services

PSC Philippine Sports Commission

PYA Prior Years' Adjustments

R.A. Republic Act

RA Regular Agency

RCO Regional Consular Offices

RFU Regional Field Unit

RLIP Retirement and Life Insurance Premium

ROP Republic of the Philippines

Ros Regional Offices

RPSU Regional Payroll Services Unit

SAAOB Statement of Appropriations, Allotments, Obligations & Balances

SAGF Special Account in the General Fund

SBGFC Small Business Guarantee and Finance Corporation

SCF Statement of Cash Flows

SGF Special Guaranty Fund

SILCAB Social Infrastructure and Local Capability Building

SING Subsidy Income from National Government

SPF Special Purpose Fund

SPTB Special Purpose Treasury Bonds

SRF Special Reserve Fund

SRTC Statistical Research and Training Center

SSF Securities Stabilization Fund

SUCs State Universities and Colleges

TDM Tax Debit Memo

TEF Tax Expenditure Fund

TOP Treasurer of the Philippines

TRAs Tax Remittance Advices

UF Unprogrammed Fund

UNDP United Nations Development Programme

UNFPA United Nations Population Fund

UP University of the Philippines

VAT Value Added Tax

WB World Bank

ACRONYMS

vii

I. INTRODUCTION

1

INTRODUCTION

1.1 Legal Bases

Section 4, Article IX-D of the Philippine Constitution directs the Commission on

Audit (COA) to submit to the President and Congress the Annual Financial Report

(AFR) of the National Government. Furthermore, Section 41 of Presidential Decree No.

1445, the Auditing Code of the Philippines, requires that annual report on the financial

condition and results of operations of all agencies of the government which shall

include recommendations of measures necessary to improve their effectiveness and

efficiency shall be submitted not later than September 30 of each year.

In compliance with this mandated function, the COA, through the Government

Accountancy Sector (GAS) submits to the President and Congress the Annual Financial

Report (AFR) of the National Government (NG) for calendar year (CY) 2012.

1.2 Objectives

The AFR provides information on the total approved budget, releases of

allotments, obligations incurred and Notice of Cash Allocations (NCA) and other

disbursement authorities received by national government agencies (NGAs), cash

inflows and outflows and the financial condition and results of operations as presented

in the consolidated financial statements of the NGAs. The budget informations serve as

useful tools for the Congress in the ratification of appropriations and other laws, while

the other financial data used guide the President, legislators, economic planners and

other government officials in the formulation of economic policies, in the development

of budget plans, and other deliberations in aid of legislation.

1.3 Contents/Features

The financial statements featured in the AFR are as follows: Balance Sheet (BS),

Statement of Income and Expenses (SIE), Statement of Government Equity (SGE) and

Statement of Cash Flows (SCF), in condensed and detailed form with comparative

figures for CYs 2011 and 2012.

It also shows the appropriations, allotments, obligations and balances by

department/agency and by source, and the common and significant audit observations

and recommendations.

The report comprises of the following:

Volume I-A – Contains the Report Highlights, Condensed Financial

Statements, and Financial Analyses, and write-ups on the

Appropriations, Allotments, Obligations and Balances, NG

Debt, Special Accounts in the General Fund, and

Comprehensive Agrarian Reform Program

2

Volume I- B – Includes the Detailed Financial Statements by Department/

Office, Schedules and Annexes

1.4 Methodologies

1.4.1 Appropriations, Allotments, Obligations and Balances

The budget data presented in this report comprise the total current year’s

appropriations, prior year’s continuing appropriations set by law to be available

until the end of the year and automatic appropriations which do not require

periodic action by Congress. The total allotments released by the Department of

Budget and Management (DBM) during the year are monitored and recorded in

the Registry of Appropriations and Allotments (RAPAL) maintained by COA-

GAS. These informations are consolidated together with the obligations incurred

sourced from the Statement of Allotments, Obligations and Balances submitted

by NGAs.

The appropriations and allotments were reconciled with the records of the

DBM and the NGAs and necessary corrections and adjustments were

communicated and effected accordingly. Similarly, obligations incurred by

agencies were confirmed to ascertain that such commitments were duly covered

by allotments and overdraft in allotments, if any, was properly coordinated with

the concerned agency.

1.4.2 Financial Statements

The overall consolidated financial data presented in the AFR were culled

from the 2012 financial reports of the NG which were prepared by agency

accountants in accordance with the rules and regulations under the New

Government Accounting System (NGAS). The accounts in the advance copies

of trial balances submitted by NGAs were uploaded into the AFR System from

which the individual agency BS, SIE as well as the SGE were generated and

compared with the audited FS submitted by the COA audit sector. The system

also generated the overall consolidated FS by department/office.

The elimination of inter-agency and intra-agency accounts was based on the

overall BS. The inter-agency receivables were eliminated with the inter-agency

payables to show the amount of cash expected to be realized from the

receivables and the actual payables subsisting between NGAs, LGUs and

GOCCs. On the other hand, the intra-agency receivables were also eliminated

with intra-agency payables to show the balances of reciprocal accounts

subsisting between the Central Offices (COs), the Regional Offices (ROs)/Staff

Bureaus, and the Operating Units (OUs). Inasmuch as the inter-agency and

intra-agency accounts are not reconciled at the agency level, these accounts still

reflect balances even after the elimination was done.

3

The aggregate income of the NG was based on the consolidated SIE

generated from the system presented by Regular Agency (RA) Book and

National Government (NG) Book. The details of the total income presented in

this report was based on the consolidated Report of Income (ROI) submitted by

the NGAs, since under the NG Book maintained by the Bureau of the Treasury

(BTr.), the various tax revenue accounts are categorized as Other National Taxes

while majority of non-tax revenue accounts are classified as Other Service

Income.

The SCF submitted by NGAs were analyzed and converted into the

prescribed format to expedite inputting and processing of data into the AFR

system. Due to the absence of a module to offset collections of income/revenue

against remittances to the National Treasury, manual computation was done.

The offsetting, however, was made on the overall SCF due to lack of

information as to the nature of remittances made. The intra-agency and inter-

agency transfers were likewise not eliminated in the absence of data as to the

transferor/donor and transferee/recipient. The system generated the overall

consolidated SCF by book, by department/office and by agency.

1.4.3 National Government Debt

The data on NG debt were based on the 2012 advance copy of the FS,

Actual Debt Service Expenditures provided by the BTr, Department of Finance.

Budget information were sourced from the 2013 Budget of Expenditures and

Sources of Financing (BESF) and the 2012 General Appropriations Act (GAA),

R.A. No. 10155, furnished by the Department of Budget and Management

(DBM). The National Government Debt Accounting Division (NGDAD), BTr

submits to COA-GAS the analyses of loans and bonds payable, both foreign and

domestic. Based on the analyses, the data on beginning balances of outstanding

NG debt are reconciled with the ending balances reflected in the 2011 report. The

availments and repayments during the year were also based on the NGDAD

analyses. The ending balance of NG debt is reconciled with the Loans and Bonds

Payable, foreign and domestic, appearing in the BS of the BTr - NG Book.

Appropriations for foreign assisted projects by department/agency were taken

from the 2012 GAA, while releases of allotments were based on the Agency

Budget Matrices (ABMs) and individual Special Allotment Release Orders

(SAROs) of the particular agencies. Comparative data between programmed and

actual budget for NG debt were based on the BESF and the COR.

1.4.4 Special Account in the General Fund (SAGF)

The financial information for SAGF as of December 31, 2012 were obtained

after the consolidation of the trial balances submitted by national government

agencies except the CARP (Fund 158) which is presented in Part VIII of this

report. Not included herein are the transactions pertaining to SAGF, which were

integrated in the General Fund 101 of the departments/agencies since no separate

books were maintained. However, the income collected by various NGAs and

remitted to the National Treasury was included based on the actual income

4

recorded in the books of the BTr either as Grants and Donations or Other Service

Income. The utilization of the amount is subject to the approval of special budget

released through SAROs and issuance of NCAs.

1.4.5 Comprehensive Agrarian Reform Fund (CARP)

The data on budget/appropriations, allotments and obligations exhibited in

this portion were gathered from the financial reports of implementing agencies

which received fund releases during the year to implement CARP projects,

materials submitted by the Presidential Agrarian Reform Council (PARC) and

reports from the DAR auditing unit in-charge of the consolidation of the CARP.

For Fiscal Year 2012, the entire budget data of DAR for all funds were

consolidated into the CARP inasmuch as it is its mandate. Besides it is difficult

to determine how much from Funds 101 and 102 are not CARP related.

Furthermore, two implementing agencies were no longer components of the data

on appropriations, allotments and obligations for this year since no releases of

allotments were made to the DPWH while the appropriation intended for DOF-

LBP was withdrawn by the DBM and transferred to the pooled savings.

However, there was transfer of funds to DOF-Municipal Development Fund

Office (MDFO) for CARP implementation.

This year’s consolidated data on assets, liabilities, equity, income and

expenses were based on the Balance Sheet and Statement of Income and

Expenses of all CARP implementing agencies including DOF-LBP and DOF-

MDFO.

1.5 Coverage

The financial information presented in this AFR were gathered from the audited

and advance copies of financial statements (FS)/reports of 323 national government

agencies (NGAs). There were 505 Preliminary Trial Balances (PTB)/FS of the cited

number of NGAs which were uploaded into the AFR System in order to generate the

Over-all Consolidated Financial Statements of the National Government. It is worth

mentioning that for Fiscal Year 2012, there was 100 percent submission of advanced

copies of FS by the NGAs’ accounting units compared to last year of 98.48 percent.

On the other hand, of the total 323 agencies, only 264 or 81.73 percent audited

financial reports were submitted by the auditors and downloaded from the COA Web.

Compared to last year audited FS of 224, there was an increment of 40 or 17.86

percent. This year’s unsubmitted audited FS of the 59 agencies/offices were received by

GAS after the cut-off date.

II. REPORT HIGHLIGHTS

5

REPORT HIGHLIGHTS

2.1 Budget Information

The total appropriations, allotments and obligations of the national government

for fiscal year 2012 amounted to P2.530 trillion, P2.379 trillion, and P2.196 trillion,

respectively. Chart II-1 shows the graphical presentation of appropriations,

allotments, and obligations.

2.1.1 Appropriations – P2.530 trillion

This year’s total available appropriations amounted to P2.530 trillion for

the NG operations, financial subsidy to LGUs, budgetary support to GOCCs,

repayment of loan principal and payment of interest and for other purposes.

This is higher by 11.02 percent or P230.812 billion than the 2011 level of

P2.094 trillion.

The sources of appropriations for this year are the following:

The appropriations authorized under RA No. 10155, the General

Appropriations Act (GAA) of 2012 amounting to P1.561 trillion, comprised of

Regular Appropriations – P868.87 billion, Special Purpose Funds (SPF) –

Republic Act (RA) No. 10155 P1,561.14 billion

Other Acts 763.39 billion

Balance of Previous Year’s

Appropriations

205.02 billion

Total P2,529.55 billion

2,529.56

2,379.41

2,195.76

Chart II-1 Appropriations, Allotments and Obligations

(in billion pesos)

Appropriations Allotments Obligations

6

P367.54 billion, Automatic Appropriations – P315.95 billion and Special

Account in the General Fund – P8.78 billion.

The details of appropriations authorized under Other Acts or laws for the

year totaling P763.39 billion are as follows:

Amount

(in million pesos)

1. Debt Service Fund (DSF) 706,139.31

Principal Repayment 398,313.81

Interest Payment 307,825.50

2. Special Account in the General Fund (SAGF) 29,637.87

3. Retirement and Life Insurance Premium 27,612.53

Total 763,389.70

Note: Difference between totals and sum of components is due to rounding off.

The unobligated/unreleased balance of the preceding year’s

appropriations authorized to be used in the current year under RA No. 10147,

the 2011 GAA, and other laws amounting to P205.02 billion consisted of the

following:

Amount

(in million pesos)

1. Unobligated Allotments

140,318.35

RA No. 10147 114,256.35

Regular Appropriations 96,627.92

Special Purpose Fund 14,050.12

Automatic Appropriations 1,951.92

Special Account in the General Fund 1,626.39

Other Acts 26,062.00


Automatic Appropriations 20,837.85

2. Unreleased Appropriations 64,704.62

RA No. 10147 64,704.62


Special Purpose Fund 51,167.29

Special Account in the General Fund 1,000.00

Total 205,022.97 Note: Difference between totals and sum of components is due to rounding off.

2.1.2 Allotments – P2.379 trillion

Of the total available appropriations, P2.379 trillion or 94.06 percent was

released/allotted to fund the programs and projects of various NGAs, including

repayment of loan principal, and payment of interest, commitments fees and

other charges. These were sourced from the following: RA No. 10155 – P1.449

trillion, Other Acts – P763.31 billion and forwarding balances of continuing

appropriations – P167.42 billion. Table II-1 presents the details of allotments

by source and allotment class.

7

Table II-1 Allotment by Source of Appropriations and Allotment Class

(in million pesos)

Source Allotment Class

Total PS MOOE FE CO

RA No. 10155 1,448,673.40 531,702.76 616,860.52 0.57 300,109.55

Regular 845,600.60 427,086.44 217,630.08 0.57 200,883.50

SPF 278,493.39 101,897.62 79,314.48 - 97,281.30

SAGF 8,629.99 2,483.74 5,956.30 - 189.95

Automatic 315,949.42 234.96 313,959.66 -_ 1,754.80

IRA 273,309.59 - 273,309.59 - -

Tax Subsidy 33,232.97 - 33,232.97 - -

Customs

Duties

4,938.63

-

4,938.63

-

-

SAGF 2,190.52 230.08 972.38 - 988.06

Grants and

Donations

1,612.97

4.87

849.21

-

758.89

Tax Refunds 599.76 - 599.76 - -

Sale of Assets 44.97 - 40.72 - 4.25

NIPAS 20.00 - 16.40 - 3.60

Other Acts

Automatic 763,310.96 27,626.54 7,996.77 307,825.50 419,862.15

DSF 706,139.31 - -__ 307,825.50 398,313.81

Principal 398,313.81 - - - 398,313.81

Interest 307,825.50 - - 307,825.50 -

SAGF 29,559.85 14.74 7,996.77 - 21,548.34

RLIP 27,611.80 27,611.80 - - -

Continuing 167,424.14 955.70 59,277.85 0.64 107,189.94

Unobligated 140,318.35 955.70 48,520.66 0.64 90,841.34

RA No. 10147 114,256.35 571.66 40,414.56 0.64 73,269.49

Regular 96,627.92 560.86 34,156.99 0.64 61,909.43

SPF 14,050.12 10.80 3,557.59 - 10,481.73

Automatic 1,951.92 - 1,149.75 - 802.17

SAGF 1,626.39 - 1,550.23 - 76.16

Other Acts 26,062.00 384.04 8,106.10 _- 17,571.85

Regular 5,224.14 375.48 825.71 - 4,022.96

Automatic 20,837.85 8.57 7,280.39 - 13,548.89

Unreleased 27,105.79 -_ 10,757.19 - 16,348.60

Regular 13,315.16 - 1,223.41 - 12,091.75

SPF 12,790.63 - 8,533.78 - 4,256.85

SAGF 1,000.00 - 1,000.00 - -

Grand Total 2,379,408.50 560,285.00 684,135.15 307,826.72 827,161.63


Out of the total allotments for the year, 44.6 percent or P979.45 billion

was released for Debt Service and Internal Revenue Allotments with P706.14

billion and P273.31 billion, respectively. Debt Service was intended for the

payments of principal and interest of loans of the NG while the IRA was

released as subsidy of the NG to LGUs.Chart II – 2 presents the allotments by

class.

8

By Expense Class, CO received the lion’s share of 34.76 percent or

P827.16 billion, of which P398.31 billion was allotted for loan principal

repayments.

2.1.3 Obligations – P2.196 trillion

The reported obligations covered by allotments for the year reached

P2.196 trillion while P350.79 million was an overdraft. Table II-2 shows the

details of obligations by source of appropriations and expenditure class.

Table II-2 Obligations by Source of Appropriations and Expenditure Class

(in million pesos)

Source Expenditure Class

Total PS MOOE FE CO

RA No. 10155

1,319,085.03

528,779.24

570,617.09

0.57

219,688.12

Regular 738,661.96 425,226.27 178,524.39 0.57 134,910.73

SPF 260,502.25 100,847.19 75,615.73 - 84,039.33

SAGF 5,771.75 2,453.44 3,147.51 - 170.79

Automatic 314,149.07 252.35 313,329.46 - 567.26

IRA 273,309.59 - 273,309.59 - -

Tax Subsidy 33,057.97 - 33,057.97 - -

Customs Duties 4,938.24 - 4,938.24 - -

SAGF 1,111.12 248.99 757.90 - 104.22

Grants and

Donations

1,076.08

3.36

615.45

-

457.27

Tax Refunds 599.74 - 599.74 - -

Sale ofAssets 40.36 - 38.04 - 2.32

NIPAS (Sec. 16

RA 7586)

15.97

-

12.53

-

3.45

PS MOOE CO FE

560.29

684.14

827.16

307.83

Chart II-2 Allotments by Class

(in billion pesos)

9

Table II-2 continued

Source Expenditure Class

Total PS MOOE FE CO

Other Acts 742,950.14 26,697.14 5,606.92 307,825.50 402,820.58

DSF 706,139.31 - - 307,825.50 398,313.81

Principal 398,313.81 - - - 398,313.81

Interest 307,825.50 - - 307,825.50 -

RLIP 26,652.40 26,652.40 - - -

SAGF 10,158.43 44.74 5,606.92 - 4,506.77

Continuing 134,078.13 697.06 53,227.82 0.64 80,152.60

Unobligated 108,504.59 697.06 43,243.24 0.64 64,563.65

RA No. 10147 97,555.30 546.55 36,140.08 0.64 60,868.02

Regular 83,054.18 534.29 31,031.61 0.64 51,487.63

SPF 12,391.93 10.80 3,274.64 - 9,106.49

SAGF 1,205.38 1,129.57 - 75.81

Automatic 903.81 1.47 704.25 - 198.09

Other Acts 10,949.29 150.51 7,103.15 - 3,695.63

Regular 2,690.77 141.94 595.08 - 1,953.75

Automatic 8,258.52 8.57 6,508.07 - 1,741.88

Unreleased 25,573.54 - 9,984.59 - 15,588.95

RA No. 10147

Regular 12,436.48 - 1,071.23 - 11,365.25

SPF 12,712.31 - 8,488.60 - 4,223.71

SAGF 424.75 - 424.75 - -

Grand Total 2,196,113.30 556,173.44 629,451.84 307,826.72 702,661.30

Difference between totals and sum of components is due to rounding off.

2.1.4 Unused/Balance of Appropriations – P333.79 billion

At year-end, the appropriations had an unused balance of P333.79 billion

consisting of unalloted/unreleased appropriations and unobligated allotments

with P150.15 billion and P183.65 billion, respectively.

The unalloted/unreleased appropriations represent the balance of the total

appropriations for the year of P2.530 trillion over the total allotments released

to various national government agencies of P2.379 trillion. Table II-3 shows

the balance of appropriations by source.

Table II-3 Unalloted/Unreleased Appropriations, by Source

(in million pesos)

Source Appropriations Allotments Unreleased Current Year 2,324,532.39 2,211,984.36 112,548.03

RA 10155 1,561,142.69 1,448,673.40 112,469.29

Regular 868,874.46 845,600.60 23,273.86

SAGF 8,783.42 8,629.99 153.42

SPF 367,535.40 278,493.39 89,042.01

Automatic 315,949.42 315,949.42 -___

IRA 273,309.59 273,309.59 -

Tax Subsidy 33,232.97 33,232.97 -

10


Source Appropriations Allotments Unreleased

Customs Duties 4,938.63 4,938.63 -

SAGF 2,191.19 2,190.52 0.68

Grants and Donations 1,612.30 1,612.97 (0.68)

Tax Refunds 599.76 599.76 -

Sale of Assets 44.97 44.97 -

NIPAS 20.00 20.00 -

Other Acts 763,389.70 763,310.96 78.75

DSF 706,139.31 706,139.31 -

SAGF 29,637.87 29,559.85 78.02

RLIP 27,612.53 27,611.80 0.73

Continuing

Appropriations

205,022.97 167,424.14 0.04

RA 10147 178,960.97 141,362.14 37,598.83

Alloted 114,256.35 114,256.35 __ -__

Regular 96,627.92 96,627.92 -

SPF 14,050.12 14,050.12 -

Automatic 1,951.92 1,951.92 -

SAGF 1,626.39 1,626.39 -

Unalloted 64,704.62 27,105.79 37,598.83

Regular 12,537.32 13,315.16 (777.83)

SPF 51,167.29 12,790.63 38,376.66

SAGF 1,000.00 1,000.00 -

Other Acts 26,062.00 26,062.00 -__

Alloted 26,062.00 26,062.00 _ -__

Regular 5,224.14 5,224.14 -

Automatic 20,837.85 20,837.85 -

Total 2,529,555.36 2,379,408.50 150,146.86


The unobligated balance of allotments amounting to P183.65 billion

refers to the variance between total allotments of P2.379 trillion and obligations

covered by allotments of P2.196 trillion. The unobligated balance of allotments

by source is presented in Table II-4.

Table II-4 Unobligated Allotments, by Source

(in million pesos)

Source Allotments Obligations Balance

Current Year 2,211,984.36 2,061,684.38 150,299.98

RA 10155 1,448,673.40 1,318,969.99 129,703.41

Regular 845,600.60 738,633.51 106,967.08

SAGF 8,629.99 5,758.45 2,871.55

SPF 278,493.39 260,452.25 18,041.14

Automatic 315,949.42 314,125.78 1,823.64

IRA 273,309.59 273,309.59 -

Tax Subsidy 33,232.97 33,057.97 175.00

Customs Duties 4,938.63 4,938.24 0.39

SAGF 2,190.52 1,088.59 1,101.93

11


Source Allotments Obligations Balance

Grants and Donations 1,612.97 1,075.31 537.66

Tax Refunds 599.76 599.74 0.02

Sale of Assets 44.97 40.36 4.62

NIPAS 20.00 15.97 4.03

Other Acts 763,310.96 742,714.39 20,596.57

DSF 706,139.31 706,139.31 -

RLIP 27,611.80 26,635.85 975.95

SAGF 29,559.85 9,939.23 19,620.62

Continuing Appropriations 167,424.14 134,078.13 33,346.01

RA 10147 141,362.14 123,128.84 18,233.30

Alloted 114,256.35 97,555.30 16,701.06

Regular 96,627.92 83,054.18 13,573.75

SPF 14,050.12 12,391.93 1,658.19

Automatic 1,951.92 903.81 1,048.11

SAGF 1,626.39 1,205.38 421.01

Unalloted 27,105.79 25,573.54 1,532.25

Regular 13,315.16 12,436.48 878.68

SPF 12,790.63 12,712.31 78.32

SAGF 1,000.00 424.75 575.25

Other Acts 26,062.00 10,949.29 15,112.71

Alloted 26,062.00 10,949.29 15,112.71

Regular 5,224.14 2,690.77 2,533.37

Automatic 20,837.85 8,258.52 12,579.33

Total 2,379,408.50 2,195,762.51 183,645.99


The total unobligated allotments for the current year consist of PS – P4.21

billion, MOOE – P54.69 billion and CO – P124.74 billion. The balance for

MOOE and CO were retained as continuing allotments which are authorized to

be used in the following year while those for PS were reverted in accordance

with the existing laws.

2.2 Financial Condition

As of December 31, 2012, the NG had total assets of P4.074 trillion and total

liabilities of P6.019 trillion resulting to negative government equity of P1.946

trillion. Compared to the previous year, all components of the Balance Sheet

increased as shown in Chart II-3.

12

2.2.1 Assets – P4.074 trillion

The total assets of the NG increased by P693.92 billion or 20.53 percent

more than last year’s P3.380 trillion. This was due to the increases in Current

Assets of P373.43 billion, Investments – P256.13 billion and Property, Plant

and Equipment – P68.93 billion offset by the decrease in Other Assets – P4.57

billion. The graphical presentation of comparative composition of assets is

shown in Chart II-4.

Current Assets increased by P373.43 billion this year due to increments in

all of its components, majority of which are contributed by Cash and

Receivables with P210.62 billion and P156.39 billion, respectively.

Current Assets Investment Property, Plant

and Equipment

Other Assets

Chart II-4 Comparative Composition of Assets

(in billion pesos)

2012 2011

4.074

6.019

(1.946)

3.380

5.462

(2.083)

Assets Liabilities Equity

Chart II-3 Assets, Liabilities and Equity

(in trillion pesos)

2012

2011

13

Investments’ growth of P256.13 billion this year is brought about by the

P155.41 billion increments in Sinking Fund contributions and P100.72 billion

improvement in Investment in Securities.

Property, Plant and Equipment, net of accumulated depreciation showed

minimal increase of 6.98 percent or P68.93 billion while Other Assets

decreased by P4.57 billion.

2.2.2 Liabilities – P6.019 trillion

The burden of liabilities increased from P5.463 trillion last year to P6.019

trillion or by P556.94 billion this year. The growth was contributed by the

following: Long Term Liabilities – P158.55 billion, Current Liabilities –

P396.33 billion and Deferred Credits – P2.06 billion.

Table II -5 Comparative Composition of Liabilities

(in billion pesos)

Particulars Amount Increase/(Decrease)

2012 2011 Amount Percent

Long Term Liabilities 4,803.31 4,644.76 158.55 3.41

Bonds Payable 4,107.16 3,777.31 329.84 8.73

Domestic 2,936.96 2,563.09 373.87 14.59

Foreign 1,170.20 1,214.22 (44.02) (3.63)

Loans Payable 696.06 867.34 (171.28) (19.75)

Foreign 695.10 866.20 (171.10) (19.75)

Domestic 0.96 1.14 (0.18) (15.90)

Mortgage Payable 0.05 0.03 0.02 77.26

Other Long Term

Liabilities

0.05

0.08

(0.03)

(42.04)

Current Liabilities 1,187.03 790.70 396.33 50.12

Bonds/Loans Payables 640.42 297.38 343.04 115.35

Inter-Agency Payables 227.25 118.49 108.76 91.79

Other Liability Accounts 148.07 85.47 62.60 73.25

Payable Accounts 136.72 114.37 22.35 19.54

Intra-Agency Payables 34.58 175.00 (140.42) (80.24)

Deferred Credits

Other Deferred Credits 29.12 27.06 2.06 7.61

Total 6,019.46 5,462.52 556.94 10.20


Majority or 99.82 percent or P4.795 trillion of the total Long Term

Liabilities was reported by the BTr – DOF, being the agency tasked to control

and service NG’s public debt, both foreign and domestic.

14

2.2.3 Government Equity – (P1.946 trillion)

As in previous years, liabilities of the NG exceeded the assets resulting to

negative balance of P1.946 trillion in equity. This year’s level posted a positive

increase of P136.98 billion or 6.58 per cent compared to negative P2.083

trillion reported in 2011.

The decrease in the negative balance was brought about by net income –

P239.97 billion offset by adjustments related to prior years’ transactions –

P25.42 billion, completed public infrastructures – P28.03 billion and

reforestation projects – P1.30 billion, which were transferred to the Registry of

Public Infrastructures and Registry of Reforestation Projects, respectively, and

the remittance to National Treasury for disposal of assets – P11.36 million.

2.1 Results of Current Operations

For the year ended, the NG attained a net operating income of P785 billion by

generating a total income/revenue of P1.579 trillion from operations and incurring

current operating expenses of P793.51 billion. After deducting the financial support

to LGUs – P301.85 billion, GOCCs – P70.48 billion and NGOs/POs – P621.53

million; financial expenses of P318.34 billion; net subsidy to NGAs of P9.78 billion

and adding other gains of P156.05 billion, the government earned a net income of

P239.97 billion. Chart II-5 shows the graphical presentation of the results of

operation.

Income/Revenue Current

Operating

Expenses

Income from

Current

Operations

1,578.51

793.51 785.00

1,399.02

709.72 689.29

Chart II-5 Results of Current Operations

(in billion pesos)

2012

2011

15

1.3.1 Income/Revenue – P1.579 trillion

This year’s income/revenue of P1.579 trillion grew by P179.49 billion or

12.83 percent compared to previous year’s P1.399 trillion and surpassed the

projected amount of P1.561 trillion1 by P17.89 billion. The actual

income/revenue was generated from taxes – P1.357 trillion and non-taxes –

P221.98 billion.

The NG failed to realize its projected tax revenue of P1.427 trillion2 by

4.9 percent or P70.90 billion while general income of P221.98 billion exhibited

a 66.66 percent or P88.79 billion favorable variance over the estimated amount

of P133.20 billion.

Tax revenue of P1.357 trillion registered an increase of P134.58 billion

compared to last year’s figure of P1.222 trillion. This year’s tax revenue came

from the following sources:

Amount

(in million pesos)

Value Added Tax 365,316.80

Income Tax - Corporations 276,350.92

Income Tax - Individuals 179,033.03

Final Tax 162,304.09

Excise Tax on Articles 119,884.93

Value Added Tax - Expanded 80,484.26

Documentary Stamp Tax 54,678.11

Import Duties 42,386.03

Business Tax 54,134.95

Fines and Penalties - National Taxes 1,291.42

Motor Vehicles Users Charge 9,593.59

Capital Gains Tax 8,964.99

Other National Taxes 2,101.22

Total 1,356,524.34


On the other hand, the general income increased by P44.91 billion from

P177.07 billion in 2011 to P221.98 billion this year. It is composed of Other

Income – P104.55 billion, Service Income – P62.50 billion, Business Income –

P45.83 billion and Permits and Licenses – P9.11 billion.

1.3.2 Current Operating Expenses – P793.51 billion

The current operating expenses of the NG totaling P793.51 billion

surpassed last year’s amount of P709.72 billion by 11.81 percent or P83.79

billion. The composition of the current operating expenses are as follows: PS –

P565.02 billion or 71.20 percent and MOOE – P228.50 billion or 28.80 percent.

1Table C.1, Revenue Program, by Source, 2011-2013, page 199,Budget of Expenditures and Sources of

Financing, Department of Budget and Management 2Ibid

16

Expenses for PS rose by P52.90 billion this year primarily due to the

implementation of the 4th tranche of the modified Salary Schedule for civilian

personnel and the modified Base Pay Schedule for military and uniformed

personnel, both provided under the Senate and House of Representatives Joint

Resolution No. 4, series of 2009, approved on June 17, 2009, and as mandated

under Executive Order No. 900, issued on June 23, 2010.

1.3.3 Income from Current Operations – P785.00billion

The current operation of the government for fiscal year 2012 resulted to

an income of P785.00 billion, exhibiting 13.88 percent growth or P95.70 billion

more than last year’s P689.29 billion.

2.2 Cash Flows

The NG ended the year with cash balance of P643.30 billion, out of which

P494.84 billion was recorded under the NG Books and P148.46 billion was under the

RA Books. The cash flows were classified by operating, investing and financing

activities as shown in Chart II-6.

2.4.1 Cash Inflows – P4.745 trillion

The total inflows of P4.745 trillion came from operating activities –

P3.064 trillion, investing activities – P170.85 billion and financing activities –

P1.510 trillion. Of the total inflows, the bulk or 89.86 percent amounting to

P4.264 trillion consisted of proceeds from domestic and foreign loans – P1.510

trillion, collections of revenue/income – P1.471 trillion and receipt of NCA –

P1.283 trillion.

OperatingActivities

InvestingActivities

FinancingActivities

3,064.19

170.85

1,509.67

2,688.57

515.84

1,215.49

375.63

(345.00)

294.18

Chart II-6 Cash Flows, by Activities

(in billion pesos)

Inflows Outflows Cash Provided(Used)

17

2.4.2 Cash Outflows – P4.420trillion

The aggregate cash outflows reached P4.420 trillion, the bulk or 94.53

percent of which was used for the replenishment of negotiated MDS checks –

P1.204 trillion, payment of long term liabilities – P946.42 billion, payment of

operating expenses – P621 billion, investment – P398.52 billion, grant of

subsidies and donations – P346.15 billion, payment of interest expense – P269

billion, remittance of personnel benefit contributions and mandatory deductions

– P167.32 billion, purchase/construction of property, plant and equipment and

public infrastructures – P116.51 billion and release of intra-agency fund

transfers – P109.29 billion.

2.3 National Government Debt

The outstanding debt balance of NG at year end amounted to P5.435 trillion

consisting of domestic debt – P3.463 trillion or 63.71 percent and foreign borrowings

– P1.972 trillion or 36.29 percent.

The outstanding balance does not include the following contingent liabilities of

the NG:

Particulars Amount ( in billion pesos)

Total Foreign Domestic

NG Direct Guarantee on GOCC Loans 498.41 354.36 144.04

GFI Guarantee Assumed by NG per

Proclamation 50

3.66

3.52

0.14

Total 502.06 357.88 144.18

Excluded in the amount of P502.06 billion are the contingent liabilities of the

NG under the build-operate-transfer and/or build-lease-transfer projects and the

guarantees extended by the government financial institutions.

From year 2003 to 2012, the outstanding debt grew by an average of P213.36

billion or 5.21 percent. The domestic debt showed an average growth rate of 7.32

percent or P172.29 billion per year while the annual growth of foreign debt is 2.54

percent or P41.08 billion.

III. APPROPRIATIONS,

ALLOTMENTS,

OBLIGATIONS AND

BALANCES

18

APPROPRIATIONS, ALLOTMENTS, OBLIGATIONS AND BALANCES

3.1 Overview

The National Government (NG) budget for the year was described by

President Aquino as ‘Results-Focused Budget’ anchored on the five areas of priority

towards the achievement of his Administration’s Social Contract with the people,

namely: anti-corruption and good governance, poverty reduction and empowerment of

the poor, inclusive economic growth, just and lasting peace and the rule of law, and

integrity of the environment.

The 2012 GAA was

approved with total appropriations

of P1.245 trillion. Of this amount,

P868.92 billion or 69.78 percent

was budgeted for Regular

Appropriations and P376.27 billion

or 30.22 percent was for SPF.

Of the regular

appropriations of P868.92 billion,

Social Services Sector have the

biggest share with an aggregate

amount of P339.31 billion or 39.05

percent. The Education

Department, under Social Services

Sector continued to receive the lion

share with P201.82 billion or 23.23 percent in fulfillment of the state’s constitutional

commitment to provide free basic education. This year’s appropriations for the

DSWD of P48.77 billion was used primarily to support various social protection

programs, such as the conditional cash transfer (CCT) under 4Ps Program, social

feeding program, social pension for indigent senior citizens and the extension of

KALAHI-CIDSS.

To support rapid, inclusive and sustainable growth, economic services, in

particular, infrastructure and other capital outlays especially those supporting

agriculture, tourism and industrial development had been given greater emphasis in

this year’s budget. Department and agencies providing Economic Services got the

second biggest share in regular appropriations with combined allocations of P242.28

billion or 27.88 percent of the total regular appropriation for the year. The Department

of Agriculture got a significant rate of increase of 52.29 percent or P18.17 billion that

can be attributed to the government’s Rice and Food Sufficiency agenda which

include the construction and rehabilitation of irrigation facilities, establishment of

postharvest facilities, expansion of research and development and increased

provisions for the National Rice, Corn, Fisheries, Livestock and High Value Crops

Programs.

Meanwhile, the department and agencies under the General Public Services

Sector shared P189.95 billion or 21.86 percent and the defense departments got

Social Serv ices39.05%

Economic Serv ices

27.88%

General Public Serv ices

21.86%

Def ense11.21%

Chart III-1 FY 2012 GAA

Regular Appropriations by Sector

19

P97.37 billion or 11.21 percent of the total regular appropriation for the year. Chart

III-1 shows the sectoral distribution of the regular appropriations under the GAA for

2012.

3.2 Appropriations, Allotments, Obligations and Balances

An appropriation is an authorization under past Acts of Congress,

Presidential Decrees or other legislative enactments, for payments to be made with

funds of the government under specified condition and/or for specified purpose.

Allotments on the other hand, are the authorizations issued by the DBM to NGAs

to incur obligations or commitment to pay a sum of money for the implementation

of specific programs, projects and other expenditure items

In the Philippines, there are two sources of budgets being executed in a

given year, namely: the GAA for the current year which contains appropriations

intended to finance the programmed activities of departments and agencies and

special projects and other programs of the NG; and the balances of prior year’s

appropriations which are set by law to be available as continuing appropriations

until the end of the following year. In addition to these, automatic appropriations

provided by standing appropriation laws and Presidential Decrees also form part

of the total NG budget for the year.

The FY 2012 total NG budget aggregated at P2.529 trillion. Of this

amount, P1.245 trillion was provided under this year’s GAA, The balance was

sourced from Automatic Appropriations of P1.079 trillion and Continuing

Appropriations amounting to P205.02 billion.

Total allotments released by the DBM to carry out the functions of the NG

amounted to P2.379 trillion or 94.06 percent of the total NG budget for the year.

Of this amount, P1.133 trillion was released from this year’s GAA and the balance

was issued from the Automatic Appropriations of P1.079 trillion and Continuing

Appropriations of P167.42 billion.

Obligations incurred for the year aggregated to P2.196 trillion equivalent

to 92.28 percent of the total allotments released for the year. Of this amount,

P1.005 trillion was incurred under the GAA, P1.057 trillion for Automatic and

P134.08 billion for Continuing Appropriations.

The balances of unreleased appropriations and unobligated allotments for

this year’s budget stood at P150.15 billion and P183.64 billion, respectively, a

total of P333.79 billion.

Table III-1 shows the summary of appropriations, allotments, obligations

incurred and balances for the year which are separately discussed in the

succeeding pages of this report. The details are presented by appropriation source

in Schedules 1 and 2, and by department/agency in Schedules 3 and 4, Volume I-

B.

20

Table III-1 Appropriations, Allotments, Obligations and Balances

(in million pesos)

Particulars Appropriations Allotments

Unreleased

Appropria-

tions

Obligations* Unobligated

Allotments

General Appropriations Act

Regular Appropriations 858,385.67 845,600.60 12,785.08 738,633.51 106,967.08 Personal Services 427,086.87 427,086.44 0.42 425,199.15 1,887.29

Maintenance and Other

Operating Expenses 219,917.02 217,630.08 2,286.93 178,523.06 39,107.02

Financial Expenses 0.57 0.57 - 0.57 -

Capital Outlays 211,381.22 200,883.50 10,497.72 134,910.73 65,972.77

Special Account in the

General Fund 8,783.42 8,629.99 153.42 5,758.45 2,871.55

Personal Services 2,483.74 2,483.74 - 2,447.75 35.99


Operating Expenses 6,109.72 5,956.30 153.42 3,139.91 2,816.39

Capital Outlays 189.95 189.95 - 170.79 19.16

Special Purpose Funds 367,535.40 278,493.39 89,042.01 260,452.25 18,041.14 Unprogrammed Fund 152,821.85 76,161.38 76,660.46 70,396.07 5,765.31

Miscellaneous Personnel

Benefits Fund 70,318.07 70,318.07 - 70,046.10 271.97

Budgetary Support to

GOCCs 52,863.63 52,198.67 664.95 52,198.67 -

Retirement Benefits Fund 31,559.90 31,559.90 - 30,781.58 778.32

Priority Development

Assistance Fund 24,890.00 21,774.60 3,115.40 14,123.35 7,651.25

Allocations to LGUs 20,134.41 17,368.38 2,766.03 16,199.84 1,168.54

Calamity Fund 7,500.00 2,832.52 4,667.48 1,665.04 1,167.47

International Commitments

Fund

2,683.25 2,444.68 238.57 2,259.19 185.49

PAMANA Fund 1,764.30 1,708.20 56.10 1,438.91 269.29

DepEd School Building

Program

1,000.00 825.38 174.62 549.24 276.14

E-Government Fund 1,000.00 642.91 357.09 367.63 275.28

Contingent Fund 1,000.00 658.70 341.30 426.61 232.09

Adjusted Appropriations 1,234,704.49 1,132,723.98 101,980.50 1,004,844.21 127,879.77

Overall Savings 10,488.78 - 10,488.78 - -

Personal Services 38,880.28 - 38,880.28 - -


Operating Expenses (9,748.76) - (9,748.76) - -

Capital Outlays (18,642.74) - (18,642.74) - -

Appropriations per GAA 1,245,193.27 1,132,723.98 112,469.29 1,004,844.21 127,879.77

Automatic Appropriations 1,079,339.12 1,079,260.38 78.75 1,056,840.17 22,420.21

Debt Service – Principal 398,313.81 398,313.81 - 398,313.81 -

Debt Service – Interest 307,825.50 307,825.50 - 307,825.50 -

IRA 273,309.59 273,309.59 - 273,309.59 -

Other Automatic

Appropriations

99,890.22 99,811.48 78.75 77,391.27 22,420.21

Total Current Year’s

Appropriations 2,324,532.39 2,211,984.36 112,548.03 2,061,684.38 150,299.98

Continuing Appropriations

Allotted Continuing

Appropriations

140,318.35

140,318.35

. -

108,504.59

31,813.76

Regular Appropriations 101,852.07 101,852.07 - 85,744.95 16,107.12

Personal Services 936.34 936.34 - 676.23 260.11


Operating Expenses

34,982.70

34,982.70

-

31,626.69

3,356.00

Financial Expenses .64 .64 .- .64 .-

21

(Table III-1 continued)


Unreleased

Appropria-

tions

Obligations* Unobligated

Allotments

Capital Outlays 65,932.39 65,932.39 - 53,441.38 12,491.01


General Fund 1,626.39 1,626.39 - 1,205.38 421.01

Personal Services - - - - -


Operating Expenses 1,550.23 1,550.23 - 1,129.57 420.66

Capital Outlays 76.16 76.16 - 75.81 0.35

Special Purpose Funds 14,050.12 14,050.12 - 12,391.93 1,658.19 Personal Services 10.80 10.80 - 10.80 -


Operating Expenses

3,557.59

3,557.59 -

3,274.64

282.95

Capital Outlays 10,481.73 10,481.73 - 9,106.49 1,375.24

Automatic Appropriations 22,789.77 22,789.77 - 9,162.32 13,627.45 Personal Services 8.57 8.57 - 10.03 (1.47)


Operating Expenses

8,430.14

8,430.14

-

7,212.33

1,217.82

Capital Outlays 14,351.06 14,351.06 - 1,939.97 12,411.10

Unallotted Continuing

Appropriations

66,232.45

27,105.79

39,126.66

25,573.54

1,532.25

Regular Appropriations 14,065.16 13,315.16 750.00 12,436.48 878.68


Operating Expenses

1,223.41

1,223.41

-

1,071.23

152.18

Capital Outlays 12,841.75 12,091.75 750.00 11,365.25 726.50


General Fund

1,000.00

1,000.00 -

424.75

575.25


Operating Expenses

1,000.00

1,000.00

-

424.75

575.25

Special Purpose Funds 51,167.29 12,790.63 38,376.66 12,712.31 78.32


Operating Expenses

17,337.41

8,533.78

8,803.63

8,488.60

45.18

Capital Outlays 33,829.88 4,256.85 29,573.03 4,223.71 33.14

Overall Savings (1,527.83) - (1,527.83) - -

Total Continuing

Appropriations

205,022.97

167,424.14

37,598.83

134,078.13

33,346.01

Total NG Appropriations 2,529,555.36 2,379,408.50 150,146.86 2,195,762.51 183,645.99

* Does not include obligations not covered by allotments of P350.79 million


3.2.1 National Government Budget –

P2.529 trillion

The NG budget for the year

aggregated at P2.529 trillion, higher by

P120.77 billion or 5.01 percent over last

year’s level of P2.409 trillion. Of the total

NG Budget for the year, P1.245 trillion or

49.23 percent was provided from the

GAA. Automatic Appropriations

consisted of P1.079 trillion or 42.67

percent and Continuing Appropriations of

P205.02 billion or 8.11 percent.

PS, 599.65, 23.71%

MOOE, 713.31, 28.20%

FE, 307.83, 12.17%

CO, 908.77, 35.93%

Chart III-2 FY 2012

NG Budget by Allotment Class

22

Chart III-2 shows the distribution of the FY 2012 NG Budget by Allotment

Class and Table III-2 shows the comparative details of the total NG Budget for

fiscal years 2012 and 2011.

Table III-2 Comparative Details of Appropriations

Particulars

Amount (in million pesos)

Percent 2012 2011

Increase /

(Decrease)

Regular Appropriations 858,385.67 765,405.33 92,980.34 12.15

Personal Services 427,086.87 399,406.94 27,679.93 6.93


Operating Expenses 219,917.02 185,401.47 34,515.55 18.62

Financial Expenses 0.57 2.57 (2.00) (77.73)

Capital Outlays 211,381.22 180,594.35 30,786.86 17.05


General Fund 8,783.42 12,566.90 (3,783.48) (30.11)

Personal Services 2,483.74 2,372.55 111.19 4.69


Operating Expenses 6,109.72 9,969.80 (3,860.08) (38.72)

Capital Outlays 189.95 224.55 (34.60) (15.41)

Special Purpose Funds 367,535.40 229,210.85 138,324.55 60.35

Personal Services 102,385.39 91,363.21 11,022.18 12.06


Operating Expenses 106,913.46 75,111.78 31,801.68 42.34

Capital Outlays 158,236.55 62,735.86 95,500.69 152.23

Overall Savings 10,488.78 (6,795.32) 17,284.10 (254.35)

General Appropriations Act 1,245,193.27 1,000,387.76 244,805.51 24.47

Automatic Appropriations 1,079,339.12 1,093,332.70 (13,993.58) (1.28)

Debt Service – Principal 398,313.81 444,196.12 (45,882.31) (10.33)

Debt Service – Interest 307,825.50 266,068.29 41,757.21 15.69

IRA 273,309.59 286,944.24 (13,634.65) (4.75)

Other Automatic

Appropriations 99,890.22 96,124.05 3,766.17 3.92


Appropriations 2,324,532.39 2,093,720.46 230,811.93 11.02

Continuing Appropriations

Allotted Continuing

Appropriations 140,318.35 91,315.22 49,003.13 53.66

Unallotted Continuing

Appropriations 66,232.45 207,136.70 (140,904.25) (68.02)

Overall Savings (1,527.83) 16,613.50 (18,141.33) (109.20)

Total Continuing

Appropriations 205,022.97 315,065.42 (110,042.45) (34.93)

Total 2012 NG Appropriations 2,529,555.36 2,408,785.89 120,769.47 5.01 Difference between totals and sum of components is due to rounding off.

23

3.2.1.1 General Appropriations Act (R.A. No. 10155) – P1.245 trillion

In his Budget message, President Aquino described the FY 2012 GAA as a

“Result-Focused Budget’ that embodies his Administration’s commitment to lift

the marginalized sector from poverty through honest and effective governance. It

is focused on fulfilling the Social Contract with the people and firmly anchored on

Aquino Administration’s vision and priorities. Chart III-3 presents the NG

Appropriations per GAA for the years 2008 to 2012.

The 2012 GAA (R.A.

No. 10155) was signed by the

President on June 29, 2011

with total appropriations for

the year of P1.245 trillion.

The amount is higher by

24.47 percent over last year’s

GAA of P1 trillion. Of the

approved GAA for the year,

P868.92 billion or 69.78

percent was allocated for

Regular Appropriations and


percent was for SPF.

For Regular Appropriations, Social Services Sector got the largest share of

P339.31 billion or 39.05 percent followed by the Economic Services at P242.28

billion or 27.88 percent. On the other hand, the General Public Services shared

P189.95 billion or 21.86 percent while the Defense was shared at P97.37 billion or

11.21 percent.

The amount of P339.31 billion provided for Social Services Sector was

sliced for the following components: Education, Culture and Manpower

Development - P232.21 billion; Social Security, Welfare and Development –

P61.33 billion; Health Services – P44.08 billion; Other Social Services – P1.36

billion and Housing and Community Development – P329.90 million.

The Economic Services Sector allocation of P242.28 billion was composed

of: Communication, Roads and Other Transport – P144.48 billion; Agriculture

and Agrarian Reform – P71.17 billion; Natural Resources and Environment –

P17.32 billion; Trade and Industry – P3.81 billion; Tourism – P1.63 billion;

Power and Energy – P1.58 billion; Water Resources Development and Flood

Control – P50.63 million and Other Economic Services – P2.24 billion.

• Regular Appropriations – P858.39 billion

The regular appropriations for programmed activities of the

departments and agencies of the NG amounted to P868.92 billion. This

includes P11.28 billion SAGF which was appropriated in pursuit of specific

800 1,000 1,200 1,400

2008

2009

2010

2011

2012

1,066.18

1,170.33

1,304.41

1,000.39

1,245.00

Chart III-3 Appropriations per GAA for

FYs 2008 to 2012

(in billion pesos)

24

programs provided in the Special Provisions of the GAA, leaving an available

allocation of P857.64 billion. Of this amount, P12.03 billion of the regular

appropriations of DOH was transferred to SPF particularly Budgetary Support

to GOCCs and transfers from Overall Savings of P12.78 billion were made.

Thus, the adjusted Regular Appropriations for the year stood at P858.39

billion higher by P92.98 billion or 12.15 percent than last year’s comparable

amount of P765.41 billion.

The DepEd remained on top with P200.80 billion, higher by P18.12

billion or 9.92 percent than last year’s P182.67 billion. This year’s

appropriations of the Education Department was utilized primarily for the

implementation of universal kindergarten program and hiring of new school

teachers to fill the gap for teachers shortages, procurement of more than 2.53

million school desks, chairs and textbooks, rehabilitation of classrooms, and

provision for other educational facilities. Meanwhile the largest rate of

budgetary increase for the Comelec at 528.27 percent can be attributed to the

preparations for the holding of the nationwide midterm elections of national

and local officials on May 2013.

The budget of the Social Welfare Department grew by 35.22 percent or

P13.09 billion from last year’s P37.16 billion. This year’s appropriations of

DSWD was expended for the implementation of various social protection

programs of the NG such as the expansion of the coverage of conditional cash

transfer under the 4Ps Program which supported three million households

(from 2.3 million last year), Social Feeding Program and the extension of the

KALAHI-CIDSS, rice subsidy, and pensions for indigent senior citizens,

among others. These are clear indications of the Aquino Administration’s

sincerity in alleviating the condition and protecting the interest of the

vulnerable sectors.

The significant 56.84 percent increase in the appropriations of the DA

from last year’s level of P33.39 billion to this year’s P52.37 billion was due

mainly to the government’s Rice and Food Sufficiency Program which

includes the construction and rehabilitation of irrigation facilities,

establishment of postharvest facilities, expansion of research and development

and provision for the National Rice, Corn, Fisheries, Livestocks and High

Value Crops Program.

The DBM had a substantial increase of 308.40 percent pertaining to the

transfers from pooled savings amounting to P3.46 billion needed to complete

the full requirement for the one-time payment of the unremmitted NG share in

the premium to the GSIS contribution of DepEd personnel.

Comparative details of regular appropriations by department/agency

are shown in Table III-3.

25

Table III-3 Comparative Regular Appropriations By Department/Agency

Department/Agency


Percent 2012 2011

Increase /

(Decrease)

Regular Appropriations per GAA 868,919.15 767,889.61 101,029.54 13.16

SAGF (Annually Appropriated) (11,283.42) (12,171.47) 888.05 (7.30)

Transfer to SPF (BSGC) (12,028.00) (4,035.34) (7,992.66) 198.07

Transfers from Overall Savings 12,777.93 13,722.53 (944.60) (6.88)

Adjusted Regular Appropriations 858,385.67 765,405.33 92,980.34 12.15

Education 200,795.56 182,674.24 18,121.32 9.92

Public Works and Highways 117,897.43 114,625.80 3,271.64 2.85

National Defense 107,272.52 104,217.44 3,055.09 2.93

Interior and Local Government 93,288.14 87,208.45 6,079.69 6.97

Agriculture 52,367.67 33,389.26 18,978.41 56.84

Social Welfare and Development 50,248.44 37,159.91 13,088.53 35.22

Health 29,857.32 28,659.10 1,198.22 4.18

Transportation and

Communications 26,546.07 30,858.07 (4,312.00) (13.97)

State Universities and Colleges 22,205.64 21,373.93 831.70 3.89

Environment and Natural Resources 16,955.87 11,823.26 5,132.61 43.41

The Judiciary 15,075.89 13,621.52 1,454.37 10.68

Commission on Elections 14,170.26 2,255.45 11,914.82 528.27

Finance 13,252.96 13,735.76 (482.80) (3.51)

Autonomous Region in Muslim

Mindanao 12,187.14

11,780.14 406.99 3.45

Foreign Affairs 10,881.05 10,550.06 330.99 3.14

Congress of the Philippines 9,413.11 8,491.34 921.77 10.86

Science and Technology 9,138.66 9,362.30 (223.63) (2.39)

Justice 8,573.54 7,700.50 873.04 11.34

Labor and Employment 7,477.17 7,277.72 199.45 2.74

Other Executive Offices 6,758.71 4,481.74 2,276.98 50.81

Commission on Audit 6,634.66 4,293.33 2,341.33 54.53

Agrarian Reform 5,612.08 3,885.31 1,726.78 44.44

Budget and Management 4,728.53 1,157.81 3,570.72 308.40

National Economic and

Development Authority

4,598.92

2,122.20

2,476.72

116.71

Office of the President 2,609.42 4,605.61 (1,996.19) (43.34)

Trade and Industry 2,604.56 2,483.98 120.58 4.85

Tourism 1,880.74 1,606.53 274.20 17.07

Presidential Communications

Operations Office

1,339.98

929.60

410.38

44.15

Office of the Ombudsman 1,308.75 1,031.90 276.85 26.83

Energy 1,250.62 930.06 320.56 34.47

Civil Service Commission 777.25 666.85 110.40 16.55

Office of the Vice-President 401.79 177.11 224.68 126.86

Commission on Human Rights 273.10 266.90 6.20 2.32

Joint Legislative-Executive Councils 2.14 2.19 (0.05) (2.20)

Total 858,385.67 765,405.33 92,980.34 12.15 Difference between totals and sum of components is due to rounding off.

26

• Special Account in the General Fund – P8.78 billion

From the original appropriations of P11.28 billion, the amount was

reduced by transfers made to Overall Savings of P2.50 billion. Thus, the

adjusted SAGF for the year amounted to P8.78 billion, lower by P3.78 billion

or 30.11 percent from last year’s SAGF of P12.57 billion.

• Special Purpose Funds – P367.53 billion

The SPFs are funds appropriated in pursuit of specific plans and

activities of the NG. Unlike other funds in the GAAs that are allocated for

specific government agencies which are expected to show clear accountability

over their use, SPFs are not under the accountability of any particular

government agency/office or unit. Instead, said funds form part of the NG

budget that the President allocates for special programs and projects.

Under the GAA, the total allocations for SPF were originally approved

at P376.27 billion representing 30.22 percent of the total appropriations for

2012. During the year, additional amount of P12.03 billion was sourced from

Regular Appropriations to augment the allocation for BSGC. However, the

amount was reduced by P20.77 billion representing transfers to Overall

Savings for an adjusted appropriation of P367.53 billion. Presented in Table

III-4 are the comparative appropriations for the SPFs.

Table III-4 Appropriations for Special Purpose Funds

Particulars


Percent 2012 2011

Increase /

(Decrease)

Total SPF per GAA 376,274.12 232,498.15 143,775.97 61.84 Transfer from Regular Appropriations 12,028.00 4,035.34 7,992.66 198.07

Transfer to Overall Savings (20,766.72) (7,322.64) (13,444.07) 183.60

Adjusted Special Purpose Funds 367,535.40 229,210.85 138,324.55 60.35

Details Unprogrammed Fund 152,821.85 78,252.49 74,569.35 95.29

Miscellaneous Personnel Benefits Fund 70,318.07 59,397.93 10,920.14 18.38

Budgetary Support to GOCCs 52,863.63 19,538.82 33,324.81 170.56

Retirement Benefits Fund 31,559.90 20,275.94 11,283.96 55.65

Priority Development Assistance Fund 24,890.00 24,620.00 270.00 1.10

Allocations to Local Government Units 20,134.41 15,902.79 4,231.61 26.61

Calamity Fund 7,500.00 6,000.00 1,500.00 25.00

International Commitments Fund 2,683.25 2,964.33 (281.08) (9.48)

PAMANA Funds 1,764.30 - 1,764.30 -

Contingent Fund 1,000.00 1,000.00 - -

DepEd School Building Program 1,000.00 1,000.00 - -

E-Government Fund 1,000.00 258.54 741.46 286.79

Adjusted Special Purpose Funds 367,535.40 229,210.85 138,324.55 60.35 Difference between totals and sum of components is due to rounding off.

27

� Unprogrammed Fund – P152.82 billion

Unprogrammed Fund (UF) is a standby appropriation for additional

agency expenditures for priority programs and projects on top of the original

budget. Subject to Presidential discretion, this fund shall be released only

when the revenue collections exceed the original revenue targets submitted by

the President pursuant to Section 22, Article VII of the 1987 Philippine

Constitution, including savings generated from programmed appropriations for

the year.

On the third year of the Aquino Administration, the budget for UF

reached P152.82 billion from last year’s amount of P78.25 billion. The

remarkable increase of 95.29 percent was attributed to the inclusion of the new

components namely: Debt Management Program that will allow access to

lower cost of borrowing and lower maturity period for GOCCs and Disaster

Risk Reduction Management to fund the disaster risk reduction and

management in some areas recently hit by disaster.

Of the existing components of the UF, Budgetary Support to GOCCs

had an increase of P16.60 billion or 192.72 percent due mainly to the

intensified support extended to GOCCs in the Agriculture Sector for the

implementation of the NG’s Rice Self-sufficiency Program.

The UF of P152.82 billion represents 6.57 percent of the current year’s

appropriations. Table III-5 shows the comparative appropriations for UF.

Table III-5 Appropriations for Unprogrammed Fund

Particulars


Percent 2012 2011

Increase /

(Decrease)

Debt Management Program 85,182.51 - 85,182.51 -

Support to Infrastructure Projects and

Social Programs

25,446.05

37,942.00

(12,495.95) (32.93)


Disaster Risk Reduction and

Management 14,200.00 - 14,200.00 -

General Fund Adjustments 1,553.95 6,500.00 (4,946.05) (76.09)

Support to Foreign-Assisted Projects 1,224.79 10,806.66 (9,581.87) (88.67)

Collective Negotiation Agreement - 8,487.81 (8,487.81) (100.00)

Strategic Government Reforms - 2,000.00 (2,000.00) (100.00)

Payment of Total Administrative

Disability Pension -

3,000.00

(3,000.00) (100.00)

Support for Pre-School Education - 902.00 (902.00) (100.00)


� Miscellaneous Personnel Benefits Fund – P70.32 billion

The MPBF was originally appropriated under the GAA at P109.30

billion. During the year, P38.98 billion was transferred to Overall Savings

28

that resulted to an adjusted allocation of P70.32 billion. The amount is

greater by P10.92 billion or 18.38 percent over last year’s P59.40 billion due

mainly to the implementation of the fourth and final tranche of salary

increase for government workers authorized under the Senate and House of

Representatives Joint Resolution No. 4, s. 2009, as implemented by E.O. No.

811, s. 2009.

� Budgetary Support to Government Corporations – P52.86 billion

Special Provision No. 1 of the GAA on Budgetary Support to

Government Corporations (BSGC) states that all income and revenue

collected by GOCCs from all sources shall be used to cover all of its

operating requirements. Any deficiency may be augmented by the

budgetary support from the NG, which may be either subsidy or equity

investments to GOCCs.

Appropriations for BSGC aggregated to P52.86 billion which includes

transfers from Regular Appropriations of P12.03 billion and Overall Savings

amounting to P19.26 billion. This year’s BSGC exhibited a substantial

increase of P33.32 billion or 170.56 percent over last year’s P19.54 billion.

The increase was due mainly to the infusion of equity investments to BSP of

P17.48 billion and expansion of health insurance program at P12.05 billion.

The GOCCs under the Agriculture sub-sector also posted significant

increase of P4.01 billion or 102.25 percent attributed to the implementation

of Rice and Food Sufficiency Program of the NG. Table III-6 shows the

comparative appropriations for the FYs 2012 and 2011.

Table III-6 Budgetary Support to Government Corporations

Particulars


Percent 2012 2011

Increase/

(Decrease)

Finance 17,476.52 - 17,476.52 -

Bangko Sentral ng Pilipinas 17,476.52 - 17,476.52 -

Agriculture 7,938.50 3,925.00 4,013.50 102.25

National Food Authority 4,000.00 2,500.00 1,500.00 60.00

National Irrigation Administration 2,060.60 - 2,060.60 -

Philippine Coconut Authority 1,182.76 542.70 640.06 117.94

Philippine Rice Research Institute 340.90 453.50 (112.60) (24.83)

Philippine Crop Insurance

Corporation 183.77 113.77 70.00 61.53

National Dairy Authority 170.47 315.02 (144.55) (45.89)

Energy 3,832.50 800.00 3,032.50 379.06

National Electrification

Administration 3,832.50 800.00 3,032.50 379.06

Health 13,378.49 939.11 12,439.38 1324.59

Philippine Children’s Medical

Center 449.40 322.80 126.60 39.22

Lung Center of the Philippines 260.31 263.26 (2.95) (1.12)

National Kidney and Transplant

Institute 282.08 183.05 99.03 54.10

Philippine Heart Center 300.15 133.00 167.15 125.68

29


Particulars


Percent 2012 2011

Increase/

(Decrease)

Philippine Health Insurance

Corporation

12,046.55 - 12,046.55 -

Philippine Institute of Traditional

and Alternative Health Care 40.00 37.00 3.00 8.11

Public Works and Highways 700.00 - 700.00 -

Local Water Utilities Administration 700.00 - 700.00 -

Tourism 750.00 65.00 685.00 1053.85 Tourism Promotions Board 750.00 65.00 685.00 1053.85

Trade and Industry 430.42 223.99 206.43 92.16

Aurora Pacific Economic and

Freeport Zone 332.50 136.30 196.20 143.95

Center for International Trade

Expositions and Missions 88.51 79.69 8.82 11.07

Cottage Industry Technology Center 9.41 8.00 1.41 17.63

Transportation and Communications - 131.00 (131.00) (100.00) Philippine National Railways - 131.00 (131.00) (100.00)

National Economic and Development

Authority

33.00

585.30

(552.30)

94.36)

Philippine Institute for

Development Studies

33.00

585.30

(552.30)

(94.36)

Other Executive Offices 8,322.13 6,028.29 2,293.84 38.05

National Housing Authority 5,631.03 4,275.00 1,356.03 31.72

National Home Mortgage Finance

Corporation 500.00 500.00 - -

Home Guaranty Corporation 500.00 500.00 - -

Cagayan Economic Zone Authority 915.50 294.19 621.31 211.19

Cultural Center of the Philippines 195.00 195.00 - -

Authority of the Free Port Area of

Bataan 100.00 100.00 - -

Zamboanga City Special

Economic Zone Authority 60.10 60.10 - -

Southern Philippines Development

Authority 28.39 59.00 (30.61) (51.88)

Credit Information Corporation 28.41 - 28.41 -

Philippine Center for Economic

Development 14.50 - 14.50

-

Philippine Postal Corporation 301.00 - 301.00 -

Development Academy of the

Philippines 48.20 45.00 3.20 7.11

Budgetary Support to Government

Corporations – Others 2.07 6,841.14 (6,839.07) (99.97)


30

� Retirement Benefits Fund – P31.56 billion

Retirement Benefits Fund is used for the payment of pension,

retirement and terminal leave benefits, incentive package for employees

availing of the Rationalization Program per E.O. No. 366, s. 2004, and

payment of monetization of leave credits.

For the year, appropriations for Retirement Benefits Fund stood at

P31.56 billion, net of transfers to Overall Savings of P2.88 billion, posting

an increase of P11.28 billion or 55.65 percent over last year’s budgeted

amount of P20.28 billion.

� Priority Development Assistance Fund – P24.89 billion

Over the years, the PDAF or the ‘pork barrel’ is one category under

the SPFs that enjoys hefty allocation. The main purpose of PDAF is to

finance the priority development programs and projects of individual

legislator. Those commonly referred to as "soft projects" are identified and

implemented under this Fund following a shortlist or menu as provided for

in the GAA such as scholarship programs, medical assistance to indigent

patients, livelihood support programs, purchase of IT equipment, rural

electrification, water supply, peace and order and financial assistance to

LGUs for their respective priority programs and projects. On the other hand,

“hard projects’’ include infrastructures such as roads and bridges, flood

control, school buildings, hospitals, health facilities, public markets, multi-

purpose buildings, and multi-purpose pavements.

The annual allocation of legislators shall not exceed the amount of P70

million for each Congressional District and Party list Representative; and

P200 million for each Senator.

For the year, appropriation for PDAF stood at P24.89 billion, slightly

higher by P270 million or 1.10 percent than last year’s amount of P24.62

billion.

� Allocations to Local Government Units – P20.13 billion

Appropriation for ALGU was originally approved at P18.30 billion.

During the year, transfers of P1.83 billion from Overall Savings were made

resulting to an adjusted amount of P20.13 billion. The ALGU serves as the

funding source for various development projects in the LGUs and the

MMDA.

The ALGU represents 5.48 percent of the total SPF or 1.62 percent of

the total appropriations in the GAA. Of the total allocations of P20.13

billion, 82.84 percent or P16.68 billion was budgeted for the Special Shares

of Local Government Units in the Proceeds of National Taxes defined under

Chapter 1, Section 285 of R.A. No. 7160, Local Government Code of 1991,

31

and P2.03 billion or 10.09 percent for Financial Subsidy to LGUs. Table III-

7 shows the comparative details of ALGU.

Table III-7 Comparative Details of Allocations to LGUs

Particulars


Percent 2012 2011

Increase/

(Decrease)

Special Shares of LGUs in the

Proceeds of National Taxes 16,679.90 11,871.13 4,808.77 40.51

Financial Subsidy to LGUs 2,030.92 2,615.40 (584.49) (22.35)

Metropolitan Manila Development

Authority 1,373.60 1,209.18 164.41 13.60

Pasig River Rehabilitation

Commission

- 157.08 (157.08)

(100.00)

Barangay Officials Death Benefits

Fund

50.00

50.00

-

-


3.2.1.2 Automatic Appropriations – P1.079 trillion

Automatic appropriations refer to

appropriations programmed annually

or for some other period prescribed by

law, by virtue of outstanding

legislation which does not require

periodic action by Congress. Falling

under this category are expenditures

authorized under PD No. 1967, R.A.

No. 4860 and R.A. No. 245, as

amended, for the servicing of domestic

and foreign debts, Commonwealth Act

186 and R.A. No. 660, for the

retirement and life insurance premiums

of government employees, PD No.

1177 and E.O. No. 292, for net lending

to government corporations, and PD No. 1234, for various special accounts and

funds.

The Automatic Appropriations of P1.079 trillion represents 46.43 percent of

the total current year’s appropriations.

Shown in Chart III-4 and Table III-8 are the sources and components of

automatic appropriations for the year.

Chart III-4 Sources of Automatic

Appropriations

GAA29.27%

Other Acts

70.73%

32

Table III-8 Automatic Appropriations

(in million pesos)

Particulars 2012 2011 Increase /

Decrease Percent

Debt Service – Principal 398,313.81 444,196.12 (45,882.31) (10.33)


IRA 273,309.59 286,944.24 (13,634.65) (4.75)

Tax Subsidy 33,232.97 18,999.93 14,233.04 74.91

SAGF 31,828.39 34,401.48 (2,573.10) (7.48)

RLIP 27,612.53 25,430.61 2,181.91 8.58

Customs Duties 4,938.63 14,420.64 (9,482.01) (65.75)

Grants and Donations 1,612.97 2,548.05 (935.08) (36.70)

Tax Refunds 599.76 294.04 305.72 103.97

Sale of Assets 44.97 9.29 35.68 384.07

NIPAS 20.00 20.00 - -

Total 1,079,339.12 1,093,332.70 (13,993.58) (1.28) Difference between totals and sum of components is due to rounding off.

This year’s appropriations for Debt Service – Principal Amortization was

budgeted at P398.31 billion lower by P45.88 billion or 10.33 percent than last

year’s level of P444.20 billion. On the other hand, Interest Payments of P307.83

billion rose by P41.76 or 15.69 percent from last year’s appropriations of P266.07

billion. The combined allocations for Debt Service - Principal Amortization and

Interest Payments represent 30.38 percent of the total current year’s

appropriations of P2.324 trillion.

The allocation for IRA was reduced by 4.75 percent or P13.63 billion from

last year’s level of P286.94 billion. The reduction was due mainly to the low

collection of National Internal Revenue Taxes (NIRT) for the year 2009 as

certified by the BIR which is the base year for the computation of the 40 percent

share of the LGUs in the NIRT pursuant to Sections 284 and 285 of R.A. 7160,

the Local Government Code 1991.

3.2.1.3 Continuing Appropriations – P205.02 billion

Continuing appropriations also known as ‘extended appropriations’ refer to

appropriations available to support obligations for a specified purpose or project,

like multi-year construction projects which require the incurrence of obligations

even beyond the budget year.

At the end of the year, the balance of continuing appropriations consisted of

P140.32 billion of unobligated allotments sourced from last year’s GAA which

were valid for obligations up to December 31, 2012 and unreleased appropriations

under R.A. 10147 amounting to P66.23 billion. The amount was reduced by P1.53

billion representing transfers to Overall Saving leaving a balance of P205.02

billion. Presented in Table III-9 are the departments/agencies with Continuing

Appropriations.

33

Table III-9 Appropriations by Department/Agency Continuing and Source

(in million pesos) Department/Office Total Regular SAGF SPF Automatic

Public Works and Highways 56,557.50 40,790.65 - 9,327.37 6,439.48

National Defense 19,799.81 5,719.47 - 295.49 13,784.85

Education 13,932.17 13,567.78 - 364.39 -

Agriculture 12,127.73 10,019.01 77.76 1,821.27 209.69

Finance 10,350.77 1,468.58 - 8,713.59 168.60

Health 8,391.14 8,043.39 - 347.58 0.17

Social Welfare and Development 6,450.14 5,612.00 - 822.56 15.58

Interior and Local Government 5,211.86 4,680.13 - 46.67 485.06

Transportation and Communication 5,002.65 4,900.72 - 0.00 101.93

Commission on Elections 4,733.29 4,393.23 - 8.81 331.25

Agrarian Reform 4,399.79 1,657.72 2,439.88 302.19 -

Budget and Management 3,346.90 247.50 - 3,069.23 30.17

Environment and Natural Resources 2,195.30 1,698.92 99.80 6.50 390.08

Tourism 1,911.19 1,910.26 - 0.15 0.78

Foreign Affairs 1,829.16 1,379.04 - 450.11 -

Other Executive Offices 1,557.65 1,082.90 - 276.99 197.76

Labor and Employment 1,187.78 1,101.82 6.81 79.16 -

Office of the President 1,175.15 1,164.18 - 5.00 5.97

The Judiciary 1,142.80 1,140.66 - 1.40 0.74

Science and Technology 1,111.02 1,019.13 - 91.65 0.24

Congress of the Philippines 1,105.59 1,077.43 - 28.16 -

National Economic Development

Authority

988.56 484.62 .03 476.63 27.28

Energy 950.57 432.18 - 0.90 517.50


Mindanao

735.79 687.39 - 48.40 -

Office of the Ombudsman 627.42 627.42 - - -

Trade and Industry 474.79 365.40 2.12 88.04 19.23

Justice 388.51 300.68 - 24.41 63.41

State Universities and Colleges 212.69 148.80 - 63.89 -

Commission on Audit 154.28 154.28 - 0.00 -


Authority

65.36 - -

65.36

-


Operations Office

25.68 10.83 -

14.85

-

Office of the Vice-President 22.62 22.62 - - -

Commission on Human Rights 7.37 7.37 - - -

Civil Service Commission 1.00 1.00 - - -

Joint Legislative-Executive

Councils

0.11 0.11 - - -

SPF – Unreleased Appropriations 38,376.66 - - 38,376.66 -

34


Department/Office Total Regular SAGF SPF Automatic

Overall Savings (1,527.83) - - (1,527.83) -

Total 205,022.97 115,917.23 2,626.39 63,689.58 22,789.77


3.2.2 ALLOTMENTS – P2.379 trillion

Allotments are authorizations issued by the DBM to NGAs to incur

obligations for the implementation of programs, projects and other expenditure

items. For 2012, allotments aggregated at P2.379 trillion or 94.06 percent of the

total NG budget for the year of P2.529 trillion. Of this amount, P2.212 trillion

was released under current year’s appropriations and the balance was from

Continuing Appropriations amounting to P167.42 billion.

Almost 49 percent of the total current year’s allotments were issued under

Automatic Appropriations mainly for the debt servicing requirements of the NG

consisting of Debt Service – Principal Amortization of P398.31 billion, and

Interest Payment of P307.83 billion. The allotments released for IRA amounted

to P273.31 billion and for other Automatic Appropriations totaling to P99.81

billion. Table III-10 shows the detailed sources and nature of allotments released

for the year including those releases/transfers from current year and prior year

pooled savings amounting to P61.25 billion primarily utilized for priority

expenditures of the NG as shown in Schedule 7, Volume I-B.

Table III-10 Sources and Nature of Allotments

(in million pesos)

Particulars Total PS MOOE FE CO

General Appropriations Act 1,132,723.98 531,467.80 302,900.86 0.57 298,354.75 Regular 845,600.60 427,086.44 217,630.08 0.57 200,883.50

SAGF 8,629.99 2,483.74 5,956.30 - 189.95

SPFs 278,493.39 101,897.62 79,314.48 - 97,281.30

Automatic Appropriations 1,079,260.38 27,861.50 321,956.43 307,825.50 421,616.95

Debt Service – Principal 398,313.81 - - - 398,313.81

Debt Service - Interest 307,825.50 - - 307,825.50 - IRA 273,309.59 - 273,309.59 - - Tax Subsidy 33,232.97 - 33,232.97 - - SAGF 31,750.37 244.83 8,969.15 - 22,536.39

RLIP 27,611.80 27,611.80 - - - Customs Duties 4,938.63 - 4,938.63 - -

Grants and Donations 1,612.97 4.87 849.21 - 758.89

Tax Refunds 599.76 - 599.76 - -

Sale of Assets 44.97 - 40.72 - 4.25

NIPAS 20.00 - 16.40 - 3.60 Total Current Year’s

Allotments 2,211,984.36 559,329.30 624,857.29 307,826.07

719,971.70 Continuing Appropriations 167,424.14 955.70 59,277.85 0.64 107,189.94

Unobligated Allotments 140,318.35 955.70 48,520.66 0.64 90,841.34

Unreleased Appropriations 27,105.79 - 10,757.19 - 16,348.60

35


Particulars Total PS MOOE FE CO

Total Allotments 2,379,408.50 560,285.00 684,135.15 307,826.72 827,161.63


In terms of allotment class, the bulk of the allotments went to CO with

P827.16 billion or 34.76 percent which includes P398.31 billion for loan

principal repayments. Releases for MOOE aggregated at P684.13 billion or

28.75 percent in which P273.31 billion was allotted to IRA. On the other hand,

allotments for PS totaled P560.28 billion or 23.55 percent and FE reached


3.2.2.1 Allotments from Regular Appropriations – P845.6 billion

In pursuit of the Aquino Administration’s Social Contract with the

people as reflected in the NG budget for the year, total allotments for

programmed activities of various agencies of the NG stood at P845.6

billion, higher by P86.97 billion or 11.46 percent than last year’s level of

P758.63 billion.

The DepEd under the Social Services Sector got the highest release of

P199.56 billion affirming that basic education remains the top priority of

the NG, followed by the DPWH under Economic Services Sector with

P117 billion mainly to finance various priority infrastructure projects such

as construction of farm to market roads, and rehabilitation and

maintenance of national roads and bridges in support of agricultural

programs of the NG. The DND on the third place at P107.22 billion

generally to fund the AFP Modernization Program for the year. Table III-

11 shows the regular allotment releases to different departments/agencies

by allotment class.

Table III-11 Regular Allotments, by Department/Agency and Allotment Class

(in million pesos)

Department/Agency Total PS MOOE FE CO

Education 199,559.00 155,232.60 26,531.56 0.57 17,794.27

Public Works and Highways 117,004.11 4,122.35 6,004.01 - 106,877.76

National Defense 107,222.30 81,919.36 19,464.86 - 5,838.09

Interior and Local Government 93,220.87 78,519.04 11,469.92 - 3,231.90

Social Welfare and Development 50,248.44 865.58 49,142.68 - 240.18

Agriculture 48,394.47 3,030.16 14,810.00 - 30,554.31

Health 27,808.79 8,046.20 14,468.86 - 5,293.74

Transportation and

Communication 24,655.27 3,493.92 9,012.78 12,148.57

State Universities and Colleges 22,000.64 18,897.04 3,102.59 - 1.00

Environment and Natural

Resources 15,888.64 5,120.52 7,367.94 - 3,400.18

The Judiciary 15,075.89 11,380.77 3,416.49 - 278.63

36


Department/Agency Total PS MOOE FE CO

Commission on Elections 14,170.26 1,903.20 10,131.57 - 2,135.49

Finance 13,180.67 5,232.47 4,035.58 - 3,912.63

Autonomous Region for Muslim

Mindanao 12,187.14 7,755.34 2,110.30 - 2,321.49

Foreign Affairs 9,792.91 5,363.25 4,292.80 - 136.86

Congress of the Philippines 9,413.11 3,482.59 5,563.82 - 366.69

Science and Technology 9,134.56 2,715.85 5,352.18 - 1,066.52

Justice 8,487.48 6,122.81 2,188.76 - 175.91

Labor and Employment 7,477.17 3,067.66 4,098.10 - 311.40

Other Executive Offices 6,758.71 2,822.63 3,226.44 - 709.65

Commission on Audit 6,634.66 5,922.17 442.72 - 269.78

Agrarian Reform 5,609.73 1,987.69 1,448.66 - 2,173.38

Budget and Management 4,728.53 4,235.73 399.68 - 93.12

National Economic

Development Authority 4,598.92 1,187.08 2,722.58 - 689.26

Office of the President 2,609.42 487.54 1,957.24 - 164.64

Trade and Industry 2,604.56 1,091.69 1,430.39 - 82.48

Tourism 1,880.74 298.90 1,399.63 - 182.21


Operations Office 1,339.98 598.54 489.00 - 252.44

Office of the Ombudsman 1,308.75 1,100.13 192.49 - 16.12

Energy 1,250.62 246.16 917.01 - 87.45

Civil Service Commission 777.25 615.09 153.26 - 8.90

Office of the Vice-President 301.79 39.15 206.87 - 55.76

Commission on Human Rights 273.10 181.60 78.80 - 12.70

Joint Legislative- Executive

Councils 2.14 1.63 0.51 - -

Total 845,600.60 427,086.44 217,630.08 0.57 200,883.50


3.2.2.2 Allotments from Special Purpose Funds – P278.49 billion

The total allotments from SPF amounted to P278.49 billion or 75.77

percent of the total SPF appropriations for the year. The amount is higher

by P116.69 billion from last year’s level of P161.80 billion. About 27.35

percent or P76.16 billion of the total allotments releases were issued from

UF with a significant increase of P55.71 billion or 272.45 percent as

compared to last years’ allotment of P20.45 billion. The increase of

allotments from UF was due mainly to the release of P55.53 billion

intended for debt management program, a new component of the UF. On

the other hand, the MPBF shared P70.32 billion or 25.25 percent of the

total SPF releases to cover the fourth and last tranche of salary increase of

government officials and employees effective July 1, 2012 while

Budgetary Support to GOCCs constituted P52.20 billion or 18.74 percent.

Table III-12 shows the comparison of SPFs for the last two years. Details

of allotments from SPFs are presented in Schedule 5, Volume I-B.

37

Table III-12 Allotments from Special Purpose Funds

Particulars


Percent 2012 2011

Increase /

Decrease

Unprogrammed Fund 76,161.38 20,448.76 55,712.62 272.45

Miscellaneous Personnel Benefits

Fund 70,318.07 59,397.93 10,920.14 18.38


Retirement Benefits Fund 31,559.90 20,275.94 11,283.96 55.65

Priority Development

Assistance Fund 21,774.60

20,423.24 1,351.36 6.62

Allocations to LGUs 17,368.38 14,793.43 2,574.95 17.41

Calamity Fund 2,832.52 5,708.23 (2,875.71) (50.38)

International Commitments

Fund 2,444.68

2,964.33 (519.65) (17.53)

PAMANA Fund 1,708.20 - 1,708.20 -

DepEd School Building

Program 825.38

824.30 1.08 0.13

Contingent Fund 658.70 671.32 (12.62) (1.88)

E-Government Fund 642.91 258.54 384.37 148.67


• Budgetary Support to Government Corporations – P52.20 billion

In pursuance to Special Provision No. 1 of the GAA on Budgetary

Support to Government Corporations (BSGC), allotments for budgetary

support to GOCCs soared to P52.20 billion constituting equity investments

of P19.27 billion and subsidies of P32.93 billion. As compared to last year’s

level of P16.04 billion, a remarkable increase of 225.45 percent or P36.16

billion was reported which was attributed to the equity investment made by

NG to Bangko Sentral ng Pilipinas of P17.48 billion comprising 33.48

percent of the total allotments for BSGC for the year. Moreover, about 54.56

percent or P28.48 billion of allotment released as subsidy were reported by

the following GOCCs: Philippine Health Insurance Corporation - P11.90

billion, National Housing Authority - P5.50 billion, National Food Authority

- P4.0 billion, National Electrification Administration - P3.83 billion,

National Irrigation Administration - P2.06 billion and Philippine Coconut

Authority - P1.18 billion. Huge allotments released for these GOCCs for

2012 were due mainly to the NG intensive support to GOCCs under the

Social and Economic Sectors.

Table III-13 shows the complete distribution of allotments to various

GOCCs of the NG.

38

Table III-13 GOCCs with Budgetary Support from

the National Government

(in million pesos)

Particulars Total Subsidies Equity

Investments

Bangko Sentral ng Pilipinas 17,476.52 - 17,476.52

Philippine Health Insurance Corporation 11,902.64 11,902.64 -

National Housing Authority 5,503.18 5,503.18 -

National Food Authority 4,000.00 4,000.00 -

National Electrification Administration 3,832.50 3,832.50 -

National Irrigation Administration 2,060.60 2,060.60 -

Philippine Coconut Authority 1,182.76 1,182.76 -

Cagayan Economic Zone Authority 903.50 - 903.50

Tourism Promotion Board 750.00 750.00 -

Home Guaranty Corporation 500.00 - 500.00

National Home Mortgage Finance

Corporation 500.00 500.00 -

Philippine Children's Medical Center 449.40 449.40 -

Philippine Rice Research Institute 340.90 340.90 -

Aurora Pacific Economic Zone and

Freeport Authority (ASEZA) 332.50 55.00 277.50

Local Water Utilities Administration 320.87 320.87 -

Philippine Postal Corporation 301.00 301.00 -

Philippine Heart Center 300.15 300.15 -

National Kidney and Transplant

Institute 282.08 282.08 -

Lung Center of the Philippines 260.31 260.31 -

Cultural Center of the Philippines 195.00 195.00 -

Philippine Crop Insurance Corporation 183.77 183.77 -

National Dairy Authority 170.47 170.47 -

Authority of the Freeport Area of Bataan 100.00 - 100.00

Center for International Trade

Expositions and Missions 88.51 88.51 -

Zamboanga City Special Economic

Zone Authority 60.10 49.10 11.00

Development Academy of the

Philippines 48.20 48.20 -

Philippine Institute of Traditional and

Alternative Health Care 40.00 40.00 -

Philippine Institute for Development

Studies 33.00 33.00 -

Credit Information Corporation 28.41 28.41 -

Southern Philippines Development

Authority 28.39 28.39 -

Philippine Center for Economic

Development 14.50 14.50 -

Cottage Industry Technology Center 9.41 9.41 -

Total 52,198.67 32,930.16 19,268.52


39

• Allocations to Local Government Units – P17.37 billion

Total allotments from ALGU of P17.37 billion exhibited an increment

of P2.57 billion or 17.41 percent from last year’s release of P14.79 billion.

Special Shares of LGUs in the Proceeds of National Taxes at P13.94 billion

constituted 80.28 percent of the aggregate allotment for ALGU which

primarily consists of P5.84 billion Shares of LGUs in Tobacco Excise Tax

provided under R.A. No. 7171 and R.A. No. 8240, Prior Year’s Obligations

of the NG with P6.09 billion for IRA Monetization Program provided under

Special Provisions of the GAA and the balance amounting to P2.01 billion

was allotted under Shares in Utilization and Development of National

Wealth provided under R.A. 7160 and R.A. 9513, Value Added Taxes under

R.A. 7683, 7953 and 8407 and Special Privilege Tax under R.A. 7156 as

presented in Schedule 1, page 261 of Volume B of this report. Table III-14

shows the details of allotments released to LGUs.

Table III-14 Allotments from Allocations to LGUs

Particulars Amount

(in million pesos)

Percentage

Distribution

Special Shares of LGUs in the Proceeds

of National Taxes

13,943.47 80.28

Financial Subsidy to LGUs 2,028.42 11.68

Barangay Officials Death Benefits Fund 28.10 0.16


Authority

1,368.39

7.88

Total 17,368.38 100.00 Difference between totals and sum of components is due to rounding off.

• Priority Development Assistance Fund – P21.77 billion

The total allotments for PDAF reached P21.77 billion, equivalent to

87.48 percent of the P24.89 billion appropriated for the year. The amount is

higher by P1.35 billion or 6.62 percent over last year’s comparable amount

of P20.42 billion. Table III-15 shows the comparative allotments by

department/agency for the years 2012 and 2011.

The DPWH got the highest share with P12.17 billion used primarily

for “hard projects” such as construction, repair and rehabilitation of priority

public infrastructure projects such as roads, bridges, flood control facilities,

water supply systems, school buildings and other educational facilities,

hospitals and other health facilities, public markets and multi-purpose

buildings.

The DBM was allotted with P5.95 billion as financial assistance for the

implementation of priority programs and projects of various LGUs

nationwide and the DSWD got P907.28 million for the implementation of

“soft projects” like the KALAHI-CIDSS program which promotes

community participation in the design and implementation of pro-poor

activities in their respective areas.

40

Table III-15 Allotments from Priority Development Assistance Fund

Department/Agency


Percent 2012 2011

Increase /

Decrease

Public Works and Highways 12,170.06 11,352.03 818.03 7.21

Budget and Management 5,954.88 5,413.93 540.94 9.99

Social Welfare and Development 907.28 681.45 225.83 33.14

Other Executive Offices 756.39 324.28 432.11 133.25

State Universities and Colleges 441.72 516.02 (74.30) (14.40)

Health 435.77 390.37 45.40 11.63

Finance 429.66 716.48 (286.82) (40.03)

Labor and Employment 269.95 243.36 26.59 10.92

Agriculture 232.03 620.59 (388.56) (62.61)

Education 90.72 63.14 27.58 43.68

Energy 34.50 - 34.50 -

Interior and Local Government 32.74 35.61 (2.87) (8.05)

Trade and Industry 13.92 21.75 (7.83) (36.01)


Mindanao 5.00

30.50 (25.50) (83.61)


Resources -

13.73 (13.73) (100.00)


3.2.2.3 Allotments from Automatic Appropriations – P1.079 trillion

Allotments charged to Automatic Appropriations aggregated at P1.079

trillion, representing 48.79 percent of the total current allotments for the

year of P2.212 trillion. Debt Service – Principal Amortization of P398.32

billion shared 36.91 percent while Debt Service – Interest Payment and

IRA accounted for P307.83 billion or 28.52 percent and P273.31 billion or

25.32 percent, respectively. Table III-16 shows the comparative figures of

allotments for the last two years.

Table III-16 Allotments from Automatic Appropriations

(in million pesos)


Decrease Percent

Debt Service – Principal 398,313.81 444,196.12 45,882.31 (10.33)


IRA 273,309.59 286,944.24 (13,634.65) (4.75)

Tax Subsidy 33,232.97 18,999.93 14,233.04 74.91

SAGF 31,750.37 34,401.48 (2,651.12) (7.71)

RLIP 27,611.80 25,430.61 2,181.19 8.58

Customs Duties 4,938.63 14,420.64 (9,482.01) (65.75)

Grants and Donations 1,612.97 2,548.05 (935.08) (36.70)

Tax Refunds 599.76 294.04 305.72 103.97

Sale of Assets 44.97 9.29 35.68 383.89

41



Decrease Percent

NIPAS (Sec. 16 RA 7586) 20.00 20.00 - -

Total 1,079,260.38 1,093,332.70 (14,072.32) (1.29) Difference between totals and sum of components is due to rounding off.

Details of allotments from Automatic Appropriations are presented in

Schedule 6, Volume I-B.

• Internal Revenue Allotments – P273.31 billion

For the year, allotment for IRA amounted to P273.31 billion, down

by P13.63 billion or 4.75 percent than last years’ level of P286.94 billion.

The decrease in allotments was due to reduction of appropriations

attributed to the lower NIRT collection in 2009, the base year of IRA for

2012.

3.2.3 Unreleased/Unallotted Appropriations – P112.55 billion

Section 63, General

Provisions of R.A. No. 10155

provides that appropriations for

MOOE and CO authorized under

this Act shall be available for

release and obligation for a period

extending to one calendar year

after the end of the year. Section

28, Chapter IV, Book VI of E.O.

No. 292, also states that

appropriations for Capital Outlays

shall remain valid until fully spent

or reverted.

At yearend, the unreleased appropriations showed a balance of P112.55

billion or 4.84 percent of the total current year’s appropriations. The unreleased

appropriations for Regular aggregated at P12.79 billion comprised of PS – P0.42

million, MOOE – P2.29 billion and CO – P10.50 billion; SAGF with MOOE –

P0.15 billion; and SPFs accounted at P89.04 billion composed of PS – P0.49

billion, MOOE – P27.60 billion and CO – P60.96 billion. The total unreleased

appropriations for PS are for reversion, except for those agencies with authority to

retain while MOOE and CO are for retention as continuing appropriations.

Summary and details of unreleased/unalloted appropriations are shown in Chart

III-5 and Table III-17.

CHART III-5 Unreleased/Unalloted

Appropriations

79.11% 11.36%

0.14%

9.32%0.07%

Regular SAGF SPFs

Automatic Pooled Savings

42

Table III-17 Summary of Unreleased Appropriations

(in million pesos)


Unreleased

Appropria-

tions

Percent

General Appropriations Act 1,245,193.27 1,132,723.98 112,469.29 9.03

Regular 858,385.67 845,600.60 12,785.07 1.49

SAGF 8,783.42 8,629.99 153.43 1.75

SPFs 367,535.40 278,493.39 89,042.01 24.23

Overall Savings 10,488.78 - 10,488.78 100.00

Automatic Appropriations 1,079,339.12 1,079,260.38 78.75 0.01

Debt Service – Principal 398,313.81 398,313.81 - -

Debt Service – Interest 307,825.50 307,825.50 - -

IRA 273,309.59 273,309.59 - -

Other Automatic

Appropriations 99,890.22 99,811.48 78.75 0.08


Unreleased Appropriations 2,324,532.39 2,211,984.36 112,548.03 4.84 Difference between totals and sum of components is due to rounding off.

3.2.4 Obligations – P2.196 trillion

For the year, obligations reached P2.196 trillion or 92.30 percent of the total

allotment released excluding an overdraft of P350.79 million. Table III-18 shows

the Summary of Allotments, Obligations and Unobligated Allotments.

Table III-18 Summary of Allotments, Obligations and Balances

(in million pesos)

Particulars Allotments Obligations* Unobligated

Allotments

General Appropriations Act 1,132,723.98 1,004,844.21 127,879.77

Regular 845,600.60 738,633.51 106,967.08

SAGF 8,629.99 5,758.45 2,871.55

SPFs 278,493.39 260,452.25 18,041.14

Automatic Appropriations 1,079,260.38 1,056,840.17 22,420.21

Debt Service – Principal 398,313.81 398,313.81 0.00

Debt Service – Interest 307,825.50 307,825.50 0.00

IRA 273,309.59 273,309.59 0.00

Other Automatic

Appropriations 99,811.48 77,391.27 22,420.21


Appropriations

2,211,984.36

2,061,684.38

150,299.98

Continuing Appropriations 167,424.14 134,078.13 33,346.01

Unobligated Allotments 140,318.35 108,504.59 31,813.76

Unreleased Appropriations 27,105.79 25,573.54 1,532.25

Total Continuing

Appropriations

_167,424.14

_134,078.13

_33,346.01

Total 2,379,408.50 2,195,762.51 83,645.99 * Does not include obligations not covered by allotments of P350.79 million

Difference between total and sum of components is due to rounding off.

43

Over the years, the DOF topped the list of spending departments with P886.75

billion due mainly to debt servicing requirements of the NG amounting to P706.14

billion. For 2012, P398.31 billion was obligated for debt principal amortization

and P307.83 billion for interest payments, including commitment fees, bank

charges and other financial charges.

In second place was the DBM, with total obligations of P303.76 billion

consisting of IRA – P273.31 billion; ALGU – P16.15 billion and various funds –

P14.30 billion.

The DepEd was on the third spot with P240.53 billion, of which P203.39

billion or 84.56 percent was obligated for payment of salaries, allowances and

other personnel benefits of teaching and non-teaching personnel, procurement of

more than 2.53 million school desks, chairs and textbooks, rehabilitation of

classrooms and provisions of other educational facilities.

Table III-19 shows the Obligations Covered by Allotments, by

Department/Agency, and by Allotment Class.

Table III-19 Obligations Covered by Allotments, by Department/

Agency and Allotment Class (in million pesos)

Department/Agency Total PS MOOE FE CO Finance 886,752.24 6,671.58 91,994.92 307,825.50 480,260.24

Budget and Management 303,756.32 5,620.59 297,904.90 - 230.83

Education 240,534.19 203,391.05 23,493.80 0.57 13,648.75

Public Works and Highways 158,031.62 5,751.17 16,610.64 - 135,669.82

National Defense 125,221.01 101,036.04 20,133.27 - 4,051.69

Interior and Local

Government 124,616.81 106,859.86 13,596.09 - 4,160.86

Agriculture 56,668.37 3,927.92 17,958.03 - 34,782.42

Social Welfare and

Development 55,774.83 1,105.80 54,187.54 - 481.48

Health 34,413.61 10,234.00 16,295.26 - 7,884.35

State Universities and

Colleges 29,272.62 25,705.09 3,554.56 - 12.97

Transportation and

Communication 19,463.91 4,986.46 10,950.35 - 3,527.09

The Judiciary 17,748.99 14,340.31 3,045.02 - 363.66


Resources 17,257.16 6,492.62 7,382.02 - 3,382.53

Autonomous Region for

Muslim Mindanao 14,237.32 9,165.62 2,442.44 - 2,629.26

Agrarian Reform 12,400.67 5,278.96 5,534.38 - 1,587.33

Foreign Affairs 11,778.46 5,670.43 5,923.34 - 184.68

Justice 10,817.91 8,058.92 2,495.57 - 263.42

Science and Technology 10,293.32 3,484.98 5,540.86 - 1,267.49

Congress of the Philippines 9,929.89 4,376.47 5,464.58 - 88.85

Other Executive Offices 9,881.60 3,708.01 5,436.91 - 736.68

Labor and Employment 9,149.82 3,957.19 4,944.15 - 248.48

Commission on Elections 9,014.44 2,547.22 3,391.26 - 3,075.95

Commission on Audit 7,027.62 6,437.74 394.93 - 194.95

44

(Table III-19 continued) Department/Agency Total PS MOOE FE CO


Development Authority 4,075.77 1,551.15 2,300.93 - 223.69

Tourism 3,964.39 420.28 1,454.54 - 2,089.58

Trade and Industry 3,333.50 1,460.48 1,555.48 - 317.54

Office of the President 2,575.12 574.69 1,840.80 - 159.63

Office of the Ombudsman 1,847.37 1,136.78 185.89 - 524.71

Energy 1,768.34 314.38 1,392.52 - 61.45

Metropolitan Manila

Development Authority 1,361.21 41.31 1,067.57 - 252.34

Presidential

Communications Operations

Office 1,313.66 773.10 510.10 0.64 29.82

Civil Service Commission 843.64 682.44 154.47 - 6.72

Commission on Human

Rights 353.25 257.74 83.32 - 12.19 Office of the Vice-President 281.56 49.53 221.39 - 10.64

Joint Legislative – Executive

Councils 1.99 1.64 0.34 - 0.02

Total 2,195,762.51 556,071.55 629,442.14 307,826.72 702,422.10


At the end of the year, seven departments/agencies reported overdrafts or

obligations in excess of allotments totaling P350.79 million. The National

Tobacco Administration, an attached GOCC of the DA, incurred an overdraft of

P219.2 million attributed to allotments originally released for MOOE but

obligated for PS and CO at P30 million and P189.2 million, respectively. The

allotments were retained as continuing appropriations pursuant to Section 63,

General Provisions of R.A. No.10155.

The Office of Civil Defense under DND and the Local Government

Authority of the DILG incurred an overdraft of P50 million and P0.77 million

respectively, by utilizing the unobligated balance of allotments under R.A. 9970

which has already lapsed on December 31, 2011 and should have been reverted to

the unappropriated surplus of the NG.

The CSC’s overdraft of P43.83 million was incurred for the payment of

clothing allowances of P1.33 million and salaries of P42.50 million for the third

and fourth tranches of the Salary Standardization Law.

The DOTC’s overdraft of P23.29 million pertains to obligations incurred for

PS and MOOE in the fourth quarter of 2012, chargeable against Aviation Security

Fees. The Office for Transportation Security requested for the release of

allotments but it was denied by the DBM.

The DOJ had an overdraft of P13.30 million, of which P5.70 million was

incurred for various expenses of personnel assigned under LRA-CARP while the

P7.60 million was due to the withdrawal of allotments made by the DBM in 2012

of which replacement were issued and received by LRA in June 2013. On the

other hand, the overdraft of NEDA of P0.41 million resulted from payment of

45

benefits of NSO personnel transferred from DOST-PCAARRD without

corresponding allotments released by DBM.

Shown in Table III-20 are the details of Obligations Not Covered by

Allotments, by Department/Agency and Allotment Class.

Table III-20 Obligations Not Covered by Allotments, by Department/

Agency and Allotment Class

(in million pesos)

Department/Agency Total PS MOOE CO

Agriculture 219.20 30.00 0.00 189.20

Defense 50.00 0.00 0.00 50.00

Civil Service Commission 43.83 42.50 1.33 0.00

Transportation and

Communication 23.29 23.29 0.00 0.00

Justice 13.30 5.70 7.60 0.00

Interior and

Local Government 0.77 0.00 0.77 0.00

National Economic

Development Authority 0.41 0.41 0.00 0.00

Total 350.79 101.89 9.70 239.20


3.2.5 Unobligated Allotments – P150.30 billion

The unobligated allotments of the NG reached P150.30 billion, the

difference between total current year’s allotments of P2.212 trillion and current

year’s obligations of P2.062 trillion. The details of the unobligated allotments are:

PS – P3.96 billion, MOOE – P48.64 billion and CO – P97.70 billion. Section 63,

General Provisions, R.A. No. 10155, provides that appropriations for MOOE and

Capital Outlays shall be available for release and obligation for a period extending

to one fiscal year after the end of the year in which such items were appropriated.

Thus, at yearend, the unobligated allotments of P3.96 billion for PS shall be

reverted while the P48.64 billion for MOOE and P97.70 billion for CO shall be

retained as allotted continuing appropriations, available for obligation up to

December 31, 2013.

IV. FINANCIAL STATEMENTS

2012 2011 Increase Percent

(Decrease)

Current Assets 1,640,576,735.84 1,267,143,564.88 373,433,170.95 (1.39)

Cash (Note 4.6) 473,138,386.76 262,514,417.66 210,623,969.10 80.23

Receivables (Note 4.7) 996,942,254.42 840,556,881.90 156,385,372.53 18.60

Inventories 28,423,305.02 26,370,237.42 2,053,067.60 7.79

Prepayments (Note 4.8) 132,985,935.98 130,055,757.04 2,930,178.94 2.25

Other Current Assets 9,086,853.65 7,646,270.87 1,440,582.78 18.84

Investments (Note 4.9) 1,272,374,276.07 1,016,243,590.62 256,130,685.45 25.20

Property, Plant and Equipment (Note 4.10) 1,055,985,429.43 987,058,346.31 68,927,083.12 6.98

Land and Land Improvements 241,058,943.27 198,777,358.39 42,281,584.88 21.27

Buildings 139,002,738.18 141,098,205.34 (2,095,467.17) (1.49)

Leasehold Improvements 351,217.27 350,682.77 534.50 0.15

Office Equipment, Furniture and Fixtures 35,462,372.97 32,879,306.56 2,583,066.40 7.86

Machineries and Equipment 50,139,045.48 48,382,515.82 1,756,529.66 3.63

Transportation Equipment 24,814,077.58 24,859,590.07 (45,512.49) (0.18)

Other Property, Plant and Equipment 6,427,973.24 7,081,960.80 (653,987.57) (9.23)

Construction in Progress 558,729,061.45 533,628,726.55 25,100,334.91 4.70

Other Assets (Note 4.11) 104,932,786.81 109,501,927.00 (4,569,140.20) (4.17)

TOTAL ASSETS 4,073,869,228.15 3,379,947,428.82 693,921,799.33 20.53

Current Liabilities (Note 4.12.1) 1,187,033,086.88 790,701,366.82 396,331,720.06 50.12

Payable Accounts 136,721,319.50 114,370,525.68 22,350,793.82 19.54

Inter - Agency Payables 227,245,461.72 118,488,033.22 108,757,428.50 91.79

Intra - Agency Payables 34,577,016.11 174,995,591.31 (140,418,575.20) (80.24)

Other Liability Accounts 148,069,683.51 85,466,695.29 62,602,988.22 73.25

Bonds/Loans Payables 640,419,606.03 297,380,521.32 343,039,084.71 115.35

Long Term Liabilities (Note 4.12.2) 4,803,310,945.24 4,644,761,074.53 158,549,870.71 3.41

Deferred Credits (Note 4.12.3) 29,120,363.77 27,060,301.55 2,060,062.23 7.61

TOTAL LIABILITIES 6,019,464,395.89 5,462,522,742.90 556,941,653.00 10.20

EQUITY

Government Equity (Note 4.13 ) (1,945,595,167.75) (2,082,575,314.08) 136,980,146.33 (6.58)

TOTAL LIABILITIES AND EQUITY 4,073,869,228.15 3,379,947,428.82 693,921,799.33 20.53


LIABILITIES

ASSETS

National Government of the Republic of the Philippines

Condensed Balance Sheet

As of December 31, 2011

Amount (In thousand pesos)

46

INCOME/REVENUE 1,578,507,720.01 1,399,016,708.69 179,491,011.32 12.83

Tax Revenue 1,356,524,342.38 1,221,943,746.14 134,580,596.24 11.01

General Income 221,983,377.63 177,072,962.55 44,910,415.09 25.36

Permits and Licenses 9,108,475.62 7,739,470.97 1,369,004.65 17.69

Service Income 62,495,122.15 32,029,531.38 30,465,590.77 95.12

Business Income 45,828,145.29 45,430,648.15 397,497.14 0.88

Other Income 104,551,634.58 91,873,312.05 12,678,322.53 13.80

LESS : CURRENT OPERATING EXPENSES 793,511,382.98 709,723,668.65 83,787,714.33 11.81

Personal Services 565,015,368.52 512,110,992.85 52,904,375.67 10.33

Maintenance and Other Operating Expenses 228,496,014.46 197,612,675.80 30,883,338.66 15.63

Income from Current Operations 784,996,337.03 689,293,040.04 95,703,296.99 13.88

Subsidy to LGUs, GOCCs, NGOs/POs (372,951,878.05) (391,266,566.73) 18,314,688.68 (4.68)

Local Government Units, net (301,846,117.75) (317,896,685.84) 16,050,568.09 (5.05)

Government Owned and/or Controlled Corporation (70,484,225.52) (72,842,240.62) 2,358,015.11 (3.24)

NGOs/POs (621,534.79) (527,640.28) (93,894.51) 17.80

Income after Subsidies 412,044,458.98 298,026,473.31 114,017,985.67 38.26

Less: Financial Expenses 318,336,903.82 282,771,722.55 35,565,181.26 12.58

Income/(Loss) before Other Income/Expense Items 93,707,555.16 15,254,750.75 78,452,804.41 514.28

Net Subsidy From/(To) National Government

Agencies (9,783,809.69) 2,794,300.81 (12,578,110.50) (450.13)

Net Gain/(Loss) 156,048,694.01 (31,674,006.17) 187,722,700.18 (592.67)

Loss of Assets (108,239.22) (38,690.85) (69,548.37) 179.75

Loss on Guaranty (2,861,322.22) (3,157,035.48) 295,713.27 (9.37)

Gain/Loss on Foreign Exchange (FOREX) 157,658,198.72 (28,471,379.95) 186,129,578.67 (653.74)

Gain/Loss on Sale of Disposed Assets (142,156.44) (49,962.08) (92,194.36) 184.53

Gain/Loss on Sale of Securities 1,502,213.18 43,062.21 1,459,150.97 3,388.47

NET INCOME(LOSS) 239,972,439.49 (13,624,954.60) 253,597,394.09 (1,861.27)

Difference between totals and sum of components is due to rounding off


Condensed Statement of Income and Expenses

For the Year Ended December 31, 2012


2012 2011 Increase

(Decrease) Percent

47

Increase

(Decrease)

Government Equity, Beginning Balance (2,130,811,114.49) (1,959,632,220.07) (171,178,894.42) 8.74

Retained Operating Surplus 214,556,858.43 (90,389,381.58) 304,946,240.01 (337.37)

Current Operations 239,972,439.49 (13,624,954.60) 253,597,394.09 (1,861.27)

Prior Years' Adjustments (25,415,581.05) (76,764,426.98) 51,348,845.92 (66.89)

Transfer to Registry of Public Infrastructures (28,028,993.87) (31,598,932.88) 3,569,939.00 (11.30)

Transfer to Registry of Reforestation Projects (1,300,561.62) (952,188.85) (348,372.77) 36.59

Remittance to National Treasury from Assets

Disposal (11,356.20) (2,590.70) (8,765.50) 338.35

Government Equity, Ending Balance (Note 4.13) (1,945,595,167.75) (2,082,575,314.08) 136,980,146.33 (6.58)


Percent


Condensed Statement of Government Equity

As of December 31. 2012


2012 2011

48

2012 2011

Increase

(Decrease) Percent

Cash Flows from Operating Activities

Cash Inflows

Collection of Income/Revenues 1,470,920,258.22 1,348,113,052.52 122,807,205.70 9.11

Receipt of Notice of Cash Allocation 1,283,101,356.62 1,150,006,445.40 133,094,911.22 11.57

Receipt of inter-agency fund transfers 174,315,093.79 155,830,789.94 18,484,303.86 11.86

Receipt of intra-agency fund transfers 34,536,859.20 32,355,819.38 2,181,039.81 6.74

Collection of Receivables 31,037,715.16 12,377,792.86 18,659,922.30 150.75

Receipt of subsidy from Other NGAs, LGUs, GOCCs 711,554.33 2,194,063.72 (1,482,509.39) (67.57)

Other Receipts 54,779,240.35 36,125,355.34 18,653,885.00 51.64

Adjustments 14,789,330.62 102,958,528.11 (88,169,197.48) (85.64)

Total Cash Inflows 3,064,191,408.30 2,839,961,847.27 224,229,561.03 7.90

Cash OutflowsReplenishment of negotiated MDS checks 1,203,976,379.92 1,089,043,014.23 114,933,365.68 10.55

Payment of operating expenses 620,995,465.36 658,076,578.69 (37,081,113.33) (5.63)

Grant of subsidies and donations 346,152,334.18 379,264,294.42 (33,111,960.24) (8.73)

Remittance of Personnel Benefit Contributions and

Mandatory Deductions 167,322,202.02 133,263,196.08 34,059,005.94 25.56

Release of inter-agency fund transfers 61,430,402.93 94,606,466.16 (33,176,063.22) (35.07)

Release of intra-agency fund transfers 109,290,334.68 69,767,888.65 39,522,446.03 56.65

Payment of Accounts Payable 61,976,417.72 69,046,323.79 (7,069,906.07) (10.24)

Grant of Cash Advances for travel and for special

purpose or time bound undertaking 23,614,504.81 20,236,837.32 3,377,667.48 16.69

Purchase of Inventories 13,843,140.69 14,733,562.31 (890,421.62) (6.04)

Other Disbursements 47,286,937.07 27,847,837.98 19,439,099.09 69.80

Remittance to National Treasury 18,589,975.54 9,974,874.08 8,615,101.46 86.37

Adjustments 14,087,446.34 102,703,129.60 (88,615,683.26) (86.28)

Total Cash Outflows 2,688,565,541.24 2,668,564,003.31 20,001,537.93 0.75

Cash Provided By (Used In) Operating Activities 375,625,867.06 171,397,843.96 204,228,023.10 119.15

Cash Flows from Investing ActivitiesCash Inflows

Proceeds from matured investments 56,233,209.08 319,828,070.22 (263,594,861.14) (82.42)

Sale of investments 103,964,314.80 30,509,090.79 73,455,224.01 240.77

Collection of long-term loans 2,106,426.03 2,644,226.37 (537,800.34) (20.34)

Sale of property, plant and equipment 8,542,282.25 91,560.16 8,450,722.10 9,229.69

Total Cash Inflows 170,846,232.16 353,072,947.54 (182,226,715.38) (51.61)

Cash OutflowsInvestments 398,518,144.03 408,014,366.70 (9,496,222.67) (2.33)

Purchase/Construction of Property, Plant and -

Equipment, Public Infrastructures and Other

Assets 116,513,243.78 83,333,796.15 33,179,447.63 39.82

Grant of loans 812,641.06 527,883.22 284,757.84 53.94

Total Cash Outflows 515,844,028.87 491,876,046.07 23,967,982.80 4.87

Cash Provided By (Used In) Investing Activities (344,997,796.71) (138,803,098.54) (206,194,698.17) 148.55

Cash Flows from Financing Activities

Cash Inflows

Proceeds from Domestic and Foreign Loans 1,509,666,983.13 1,365,394,131.22 144,272,851.91 10.57

Cash Outflows

Payment of Long-Term Liabilities 946,419,070.24 1,221,329,483.19 (274,910,412.95) (22.51)

Payment of Interest Expense 269,004,955.30 240,292,424.49 28,712,530.81 11.95

Transfer to Local Loans Account 65,701.80 65,934.32 (232.53) (0.35)

Total Cash Outflows 1,215,489,727.34 1,461,687,842.00 (246,198,114.66) (16.84)

Cash Provided By (Used In) Financing Activities 294,177,255.79 (96,293,710.78) 390,470,966.57 (405.50)

Total Cash Provided by Operating, Investing and

Financing Activities 324,805,326.14 (63,698,965.35) 388,504,291.49 (609.91)

Add: Cash Balance, Beginning January 1 318,494,967.26 381,252,483.63 (62,757,516.37) (16.46)

Cash Balance, Ending December 31 (Note 4.6.2) 643,300,293.40 317,553,518.28 325,746,775.12 102.58


The National Government of the Republic of the Philippines

Statement of Cash Flows

For the Year Ended December 31, 2012

Amount (in thousand pesos)

49

50

NOTES TO FINANCIAL STATEMENTS

4.5 Summary of Significant Accounting Policies/Procedures

4.5.1 Funds and Books Maintained

The New Government Accounting System (NGAS) which took effect on

January 2002, authorized the national government agencies (NGAs) to maintain

two (2) sets of books of accounts, namely:

Regular Agency (RA) Books – used to record the receipt and utilization of

Notice of Cash Allocation and other income/receipts which the agencies are

authorized to use and to deposit with the National Treasury and/or with the

Authorized Government Depository Banks (AGDB).

National Government (NG) Books – used to record the income which the

agencies are not authorized to use and are required to be remitted to the

National Treasury.

The accounting system of the NG adopts the one fund concept in recording

the financial transactions and in the preparation of the financial statements.

However, separate fund accounting is done when specifically required by law, or

by a donor agency, or when necessitated by circumstances subject to prior

approval of the Commission on Audit.

4.5.2 Use of NGAS Chart of Accounts

The accounts used are in conformity with the NGAS Chart of Accounts

prescribed under COA Circular No. 2004-008 dated September 20, 2004, the

Updated Description of Accounts, and COA Accounting Circular No. 2006-001

dated November 6, 2006.

4.5.3 Control of Appropriations and Allotments and Monitoring of Obligations

Following the NGAS policy, separate registries are maintained by the COA

to record the appropriations and allotments, by agency/source/allotment class; and

by the NGAs to record the allotments and obligations by allotments class and by

program/project/activity.

4.5.4 Notice of Cash Allocation (NCA)

The receipt of NCA by the agency is recorded in the books as debit to

account “Cash-National Treasury, Modified Disbursement System (NT, MDS)”

and credit to account “Subsidy Income from National Government (SING)”.

The unused/lapsed/expired cash balance under the Cash-NT, MDS is

reverted by debiting the account SING and crediting Cash-NT, MDS.

51

At the end of the year, an adjustment is prepared for the restoration of cash

equivalent to the unreleased checks and recognition of the appropriate

payable/liability accounts. On the first working day of January, a reversal journal

entry is made by the agencies by debiting the appropriate liability account and

crediting the Cash-National Treasury, MDS.

4.5.5 Maintenance of Petty Cash Fund and Payroll Fund

Petty Cash Fund is maintained under the Imprest System. All replenishments

are directly charged to the expense account.

Payroll Fund pertains to cash advances for salaries and wages and other

personnel benefits in accordance with COA Accounting Circular No. 2006-001

dated November 9, 2006.

4.5.6 Foreign-Assisted Projects

Government agencies implementing Foreign-Assisted Projects may use any

of the following methods:

Working Fund/Imprest Account Availment, whereby the lending/donor

institution provides the implementing agency with seed money from the

loan/grant for the payment of eligible expenditures, subject to replenishment;

Direct Payment Scheme, where suppliers/contractors/consultants are paid

directly by the lending institution and borrowings are recorded based on the

withdrawal authorization/advice of payment or any proof of disbursements;

100% Cash Loan Financing Scheme, which requires 100% appropriation and

allotment cover and the loan proceeds will provide the cash requirement;

Grants in Cash and In Kind; and

Commodity Loan and Grant; among others.

4.5.7 Inventory Valuation

The perpetual inventory system is used to account for inventories where

regular purchases are recorded as inventory account and issuances from stock as

expenses. However, purchases out of Petty Cash Fund for immediate use are

charged outright to appropriate expense accounts.

The cost of ending inventory of office supplies and materials and other

inventory items is computed using the Moving Average Method.

Small value tangible items with estimated useful life of more than one year

are recorded under the appropriate supplies inventory account upon acquisition

and as expense upon issuance as prescribed under COA Circular No. 2005-002

dated April 14, 2005. Other tangible assets not included in the list of Annex A of

the said Circular are classified as Property, Plant and Equipment, subject to

depreciation.

52

4.5.8 Property, Plant and Equipment

Property, Plant and Equipment used in government operations are carried at

cost less accumulated depreciation. For assets under construction, the

Construction Period Theory is adopted where billings for on-going projects are

recorded under the Construction in Progress account.

The Straight-Line Method of depreciation is used in depreciating the

Property, Plant and Equipment with estimated useful lives ranging from 5 to 40

years as set in COA Circular No. 2003-007 dated December 11, 2003. A residual

value computed at ten percent of the cost of the asset is recognized and

depreciation starts on the following month after the purchase.

4.5.9 Public Infrastructures and Reforestation Projects

Public Infrastructures such as roads, highways, bridges, public parks and

plazas, canals, irrigations, as well as those for environmental purposes like

reforestation projects, etc. are assets of the government for use by the general

public and technically not owned by the implementing agencies. During

construction, these are recorded as Construction in Progress, and upon

completion, these are reclassified to Public Infrastructures and Reforestation

Projects. At the end of the year, the completed Public Infrastructures and

Reforestation Projects are transferred to the Registry of Public Infrastructures and

Registry of Reforestation Projects maintained by the agency, respectively. The

corresponding amounts are shown as deductions in the Statement of Government

Equity.

4.5.10 Recognition of Liabilities

Liabilities are recognized at the time goods and services are

accepted/rendered and suppliers/creditors bills are received.

Commitments or obligations incurred by agencies which are not yet due and

demandable (services not rendered and/or goods not yet delivered) are recorded in

the registries, hence, not recognized as liability.

4.5.11 Revenue and Expense Recognition

The Modified accrual basis of accounting is used. Income is recorded upon

delivery of goods and services except for tax revenues, duties, fees, fines and

penalties, including user charges, which are recognized upon collection. Expenses

are recognized when incurred and reported in the financial statements in the

period to which they relate.

Collections of income due for remittance to the National Treasury are

recorded in the NG books of the NGAs as liability, “Due to National Treasury”

with subsidiary ledger of the specific income account. Upon receipt of the

remittance, these are recorded as income in the NG books of the Bureau of the

Treasury. The collections of income authorized to be used by the agencies are

recorded in the RA books and are likewise remitted to the National Treasury.

53

Upon receipt of the remittances by the National Treasury, these are recorded in the

BTr-NG books as liability, “Due to Other NGAs”.

4.5.12 Accounting for Discounts, Premiums and Interests on Borrowings

Premiums on NG Bond Sinking Fund and managed funds’ Investment in

Bonds are recorded as deferred charges while discounts are treated as other

deferred credits. These are being amortized over the life of the securities as

adjustment to interest income or Due to Other GOCCs in the case of managed

funds.

Interest expenses are recorded upon payment of domestic and foreign

liabilities. Bond discounts, premiums, and accrued interests on issuance of regular

domestic bonds are directly charged or adjusted to interest expense on transaction

dates. The recording of interests for domestic bond issuances is on cash basis as it

is impractical to accrue considering the difficulty in monitoring and manual

processing of voluminous transactions. However, bond discounts, premiums and

accrued interests on the issuance of domestic Zero-Coupon Treasury Bonds, Bond

exchanges and global or foreign bonds are accrued and taken up as Deferred

Charges, Other Deferred Credits and Interest Payable, respectively. Bond

discounts and premiums taken up as Deferred Charges and Other Deferred

Credits, respectively, are amortized over the life of the bonds.

4.5.13 Foreign Currency Translation

Transactions in foreign currencies are recorded in Philippine Peso based on

Bangko Sentral ng Pilipinas (BSP) exchange rate prevailing at the date of the

transactions. At the end of the year, foreign currency denominated monetary

assets and liabilities at balance sheet date are restated based on BSP Weighted

Average Rate published on the 1st working day of the following month in the BSP

Reference Rate Bulletin. Any difference in the revaluation of assets and liabilities

are recognized as a gain or loss on foreign exchange.

4.5.14 Prior Years’ Adjustments Account

Fundamental errors on income and expenses of previous years were

corrected using the Prior Years’ Adjustments account. Errors affecting current

year’s operation were adjusted to the appropriate accounts.

4.6 Cash

4.6.1 The total cash balance aggregating P473,138,386,764.35 consisted of the

following:

Accounts Total NG Books RA Books

Cash on Hand 3,997,636,243.97 723,850,007.09

3,273,786,236.88

Cash-National

Treasury, MDS 5,972,273,126.61 21,678,440.34 5,950,594,686.27

54

Accounts Total NG Books RA Books

Cash in Bank –

Local and

Foreign Currency

463,168,477,393.77

323,930,746,638.17

139,237,730,755.60

Cash in Bank –

Local Currency

420,675,035,426.80* 289,430,074,535.86 131,244,960,890.94

Cash in Bank –

Foreign Currency 42,493,441,966.97* 34,500,672,102.31 7,992,769,864.66

Total 473,138,386,764.35 324,676,275,085.60 148,462,111,678.75

* Includes Cash-Bangko Sentral ng Pilipinas in local and foreign currency amounting to P219,212,982,142.54

and P11,686,894,951.26, respectively.

Cash on Hand consists of Cash in Vault – P2,158,083.86;

undeposited/unremitted collections – P2,171,523,778.66; unliquidated cash

advances by Cash Disbursing Officers – P477,105,670.51; Payroll Fund –

P1,234,216,027.82 and balance of Petty Cash Fund – P112,632,683.12.

The Cash-National Treasury, Modified Disbursement System (MDS) under the

RA books in the amount of P5,950,594,686.27 pertains to unclaimed/unreleased

MDS checks of agencies at the end of the year that was adjusted to the cash

account in compliance with COA Circular Letter No. 2002-001 dated December

16, 2002. As appearing in the NG books, the amount of P21,678,440.34

represents the unreleased checks of the DOF-BTr-GOP pertaining to NG

subsidy to various GOCCs – P13,995,900.00 and the amount requested for

write-off since it was dormant since 1990 – P7,682,540.34.

The Cash in Bank, Local and Foreign Currency in the NG books totaled

P323,930,746,638.17. The amount of P310,131,166,423.34 or 95.74 percent

pertains to BTr-GOP accounts which included free balances that are available

for NG operations – P230,794,387,534.46; project loan/grant proceeds

earmarked to be utilized by various implementing agencies –

P4,338,866,344.05; restricted accounts for special/sinking fund, BTr managed

funds and escrow accounts – P74,719,260,284.42; and MDS Seed Money –

P278,652,260.44.

The Cash in Bank, Local and Foreign Currency in the RA books aggregated

P139,237,730,755.60. These include P33,206,860,345.52 or 23.85 percent from

SUCs which comprises the current account deposits – P13,768,965,297.86, time

deposits – P18,019,253,954.59 and savings deposits – P1,418,641,093.07. Also

included are the cash balances of agencies under the Comprehensive Agrarian

Reform Program (CARP) Fund – P 4,027,185,603.69.

4.6.2 Cash ending balance per Balance Sheet (BS) is smaller by P170,161,906,631.57

compared to the balance per Statement of Cashflows (SCF). The difference

represents Sinking Fund cash accounts lodged under Investments in BTr-GOP

amounting to P170,162,252,465.49 and cash accounts of DOTC of P345,833.92 due

to the non- submission of the SCF by Maritime Industry Authority Regional Office

No. 9 .

55

4.7 Receivables

4.7.1 The total Receivables in the amount of P996,942,254,423.28 is net of Allowance for

Doubtful Accounts of P3,101,028,742.72.

Loans Receivables – GOCCs totaled P120,854,349,573.51 which consists mainly

of BTr-GOP’s loan outlays to GOCCs of P117,611,682,436.28 or 97.32 percent

of which, P6,983,513,003.81 is already due and demandable.

Inter – Agency Receivables aggregating P645,872,120,511.5 comprised of the

following: Due from GOCCs – P475,166,866,890.51; Due from National

Treasury – P91,420,936,433.02; Due from NGAs – P47,723,999,392.65; Due

from LGUs – P24,225,865,911.29 and Due from NGOs/POs –

P7,334,451,884.08.

Due from GOCCs includes fund transfers to the GOCCs for implementation of

projects, guarantee fees receivables from GOCCs/GFIs, NGs refinancing of BSP

advances/payments on liabilities retained with CB-BOL, and other receivables

from GFIs/GOCCs. The account is settled upon receipt of goods or services,

liquidation of fund transfers, and payment of advances and other receivables. The

BTr-GOP reported P455,703,675,092.93 or 95.90 percent of the total Due from

GOCCs.

Due from NGAs includes P248,008,713.75 receivables of BTr-GOP from various

NGAs which remained dormant for more than 20 years, hence, to be requested for

write-off.

Intra – Agency Receivables totaled P30,498,185,729.90 includes the following:

Due from Other Funds – P22,665,859,108.77; Due from Operating Units –

P3,259,612,431.67; Due from Regional Officers/Staff Bureaus –

P2,803,029,469.70 and Due from Central Office – P1,769,684,719.76.

4.7.2 In the overall consolidation of the balance sheet accounts, inter-agency receivables

are being eliminated with inter-agency payables. This is to reflect the amount of cash

expected to be realized from the receivables and the actual payables subsisting

between NGAs. Likewise, intra-agency receivables are being eliminated with intra-

agency payables to reflect the balances of reciprocal accounts subsisting between

central offices, regional offices/staff bureaus and operating units. However, for CY

2012, elimination was not made due to lack of supporting documents. Previous year’s

ending balances of affected inter and intra agency receivables were restated to be

comparable with CY 2012 ending balances.

4.8 Prepayments

Prepayments totaled P132,985,935,984.43 of which, P104,593,525,516.95 or

78.65 percent was reported by BTr-GOP. The said amount includes Deferred Charges

pertaining to discounts on Bond Exchange, issued Zero-Coupon Bonds and global bonds

issued abroad, and premium on investments in bonds held by Bond Sinking Fund (BSF),

Special Guaranty Fund (SGF), Securities Stabilization Fund (SSF) and Metropolitan

Waterworks and Sewerage System (MWSS) which are being amortized over the life of the

bonds amounts P104,555,886,227.22 and Other Prepaid Expenses of P37,639,289.73 that

was converted from the balance of Deferred Charges under Fund 102 and was already

56

included in the request for write-off per letters dated February 21, 1992, September 24,

1996 and October 16, 1998.

4.9 Investments

The total Investments included the following:

Accounts Amount Percent

Sinking Fund P 932,220,692,824.28 73.27

Investments in Stocks 170,552,924,193.21 13.40

Other Investments and Marketable

Securities 121,145,250,000.83

9.52

Investments in Bonds 33,981,441,118.21 2.67

Investments in Treasury Bills 14,473,967,935.93 1.14

Total P1,272,374,276,072.46 100.00

Sinking Fund pertains to amounts set aside for the liquidation of long-term debt.

The Sinking Fund balance of P932,220,692,824.28 includes BTR-GOP’s Sinking Fund

accounts of NG issued and NG Guaranteed bonds issued by GOCCs such as LBP,

MWSS, HGC, NFA, NPC, PPA and HDMF totaled P170,162,252,465.49; and

Securities (Bonds) and Securities (ROP) aggregated to P761,732,029,718.46; and BTr-

CARP Sinking Fund of P326,410,640.33.

4.10 Property, Plant and Equipment

The Property, Plant and Equipment (PPE) amounting to

P1,055,985,429,429.19 was net of Accumulated Depreciation totaling

P155,363,063,454.32 and the completed Public Infrastructures (PIs) and Reforestation

Projects (RPs) amounting to P28,028,993,870.52 and P1,300,561,620.53, respectively.

These completed PIs and RPs were reported in the respective trial balances of the

concerned departments/agencies. However, following the NGAS policy that completed

PIs/RPs shall be transferred to the respective Registry of Public Infrastructures and

Registry of Reforestation Projects, these were automatically closed and the amount

deducted from the total Government Equity for purposes of the consolidated financial

statement presentation.

The PPE were classified as follows:

Particulars Gross Amount Accumulated

Depreciation Net Book Value

Land and Land

Improvements

245,454,683,902.56 (4,395,740,633.02) 241,058,943,269.54

Buildings 188,819,940,520.75 (49,817,202,344.16) 139,002,738,176.59

Leasehold Improvements 504,101,719.37 (152,884,454.15) 351,217,265.22

Office Equipment,

Furniture and Fixtures

67,923,121,035.16 (32,460,748,068.96) 35,462,372,966.20

Machineries and Equipment 90,974,030,127.32 (40,834,984,644.43) 50,139,045,482.89

Transportation Equipment 50,315,730,647.42 (25,501,653,067.53) 24,814,077,579.89

Other Property, Plant and

Equipment

8,627,823,477.70 (2,199,850,242.07) 6,427,973,235.63

Construction in Progress 558,729,061,453.23 ________-_______ 558,729,061,453.23

Total 1,211,348,492,883.51 (155,363,063,454.32) 1,055,985,429,429.19

57

4.11 Other Assets

The total Other Assets amounting to P104,932,786,805.67 included the

P72,585,590,016.58 or 69.17 percent reported by BTr-GOP under the Other Assets

account consisting of the following:

Particulars Amount

Part of the transferred assets under Proclamation

No. 50 wherein disposition and sale are being

handled by Privatization and Management Office

(PMO) and PNPP/NPC, which were reclassified

from Other Property, Plant and Equipment account

P67,953,640,020.42

Part of the transferred assets from DBP, PNB and

PHILGUARANTEE in the form of financial assets

4,629,763,954.00

Appraised value of diamonds in the Treasury Vault

deposited by various government agencies which

are escheated in favor of the ROP per Court Order

dated May 5, 1997

2,174,810.00

Total P72,585,578,784.42

The DOF-PMO also reported P15,026,423,088.13 or 14.32 percent under the

Other Assets account. This includes reclassification of accounts transferred from the

former Asset Privatization Trust (APT) and Board of Liquidators (BOL) which were

recorded based on book balances only. Said accounts were not supported and have

remained dormant since its recording in PMO books.

4.12 Liabilities

4.12.1 Total liabilities of the NG in the amount of P6,019,464,395,892.94 comprised of

Current Liabilities – P1,187,033,086,878.69; Long-Term Liabilities –

P4,803,310,945,240.84 and Deferred Credits – P29,120,363,773.41.

Current Liabilities

Out of the total current liabilities of P1,187,033,086,878.69; 53.95

percent or P640,419,606,027.37 pertains to BTr-GOP’s outstanding

government Treasury Bills recognized as Loans Payable – Domestic in the

amount of P277,334,421,319.79; T-Bonds issued domestically by the NG

recognized as Bonds Payable – Domestic of P255,649,373,976.49; offshore

bond flotation of ROP recorded as Bonds Payable – Foreign of

P32,856,402,612.00 and Loans Payable – Foreign of P74,579,408,119.09.

Long-Term Liabilities

Long-Term Liabilities totaled P4,803,310,945,240.84 of which, 99.82

percent or P4,794,721,281,728.82 was reported by the BTr-GOP. The

P4,794,721,281,728.82 includes: Bonds Payable – Domestic -

P2,929,836,665,496.73; Bonds Payable – Foreign – P1,170,199,569,158.00

and Loans Payable – Foreign – P694,685,047,074.09.

58

The total Bonds Payable - Foreign including current portion consists of:

Particulars Currency Original Amount Peso Equivalent

Euro Bonds EUR 500,000,000 P 27,105,318,300

US Bonds US$ 24,317,065,000 998,896,396,070

Japanese Yen

Bonds

JPY 100,000,000,000 47,375,257,400

PHPeso

Bonds

PHP 129,679,000,000

129,679,000,000

Total P1,203,055,971,770

• Deferred Credits

Deferred Credits of P29,120,363,773.41 included P6,575,582,899.60 or

22.58 percent reported by the BTr-GOP consisting of the following:

Particulars Amount

Premium on issuance of bonds

offshore

P4,481,754,852.95

Discount on Investments in Treasury

Bonds and ROP Bonds held by BSF,

SGF, SSF, MWSS-SRF and NG

which are being amortized over the

life of the bonds

577,064,555.47

Converted balance under Fund 105

which had remained dormant for over

30 years and was already requested

for write-off

565,952.85

Contra-account in setting up the

receivable from DBP and PMO

44,612,225.83

Proceeds from ROP’s issuance of

Debt Exchange Warrants which

entitles the holders during exercise

period to tender dollar/euro bonds and

receive in exchange a peso

denominated treasury bonds

1,471,585,312.50

Total P6,575,582,899.60

4.12.2 Contingent Liabilities

Contingent liabilities aggregated P502,062,640,132.58 represents the NG’s

direct guarantee on GOCC loans and GFI guarantees assumed by the NG. These

were not included in the reported NG liabilities but disclosed by the BTr-Debt

Monitoring and Analysis Division. These liabilities were broken down as follows:

59

Particulars

NG direct

Guarantee

on GOCC Loans

GFI Guarantee

Assumed by NG

per Proclamation

No. 50

Total

Foreign:

US Dollar

Currency $8,621,917,769.83 $85,663,027.20 $8,707,580,797.03

Equivalent

Peso Currency

P354,360,820,339.85 P3,520,750,417.95 P357,881,570,757.80

Domestic 144,045,000,000.00 136,069,374.78 144,181,069,374.78

Total P498,405,820,339.85 P3,656,819,792.73 P502,062,640,132.58

Contingent liabilities of the NG under the build-operate-transfer and/or

build-lease-transfer projects and the guarantees extended by GFIs were excluded

in the above data.

4.13 Government Equity

The total equity amounting to a negative P1,945,595,167,746.61 is the

difference between the total assets and the total liabilities accounted as follows:

NG books – negative P3,118,178,731,111.35 and RA books – P1,172,583,563,364.74.

Previous Year’s negative balance of equity of P2,082,575,314,075.76 decreased

by P136,980,146,329.15 or 6.58 percent computed as follows:

Results of Current Operations:

NG books 24,077,982,700.30

RA books 215,894,456,785.83 P 239,972,439,486.13

Prior Years’ Adjustments (25,415,581,053.45)

Completed Public Infrastructures and

Reforestation Projects transferred to Registries

(29,329,555,491.05)

Remittance to National Treasury from

Assets disposal

(11,356,195.54)

Total 185,215,946,746.09

Difference in equity beginning balance as of January

2012 with ending balance as of December 31, 2011

(48,235,800,416.94)

Decrease in negative balance of Government

Equity (GE)

P 136,980,146,329.15

Prior years’ adjustments (PYA) made by the agencies in CY 2012 totaled

negative (deduction from GE) P25,415,581,053.45 was derived from the combined

PYA of six agencies amounting to P23,259,872,985.87 and negative PYA of 29

agencies aggregating to P48,675,454,039.32. The DOTC, DOH, DSWD, DOE and

DPWH are the top five agencies with the highest negative PYA with the combined total

of P31,054,918,959.10 while DOF has the biggest positive PYA of P19,455,901,973.77.

60

4.14 Income/Revenue

The total income for CY 2012 comprised of Tax Revenue and General Income

consisting of Permits and Licenses, Service Income, Business Income and Other

Income. Bulk of the income was sourced from Tax Revenue amounting to

P1,356,524,342,379.83 or 85.94 percent. It included Motor Vehicles Users Charge of

P9,593,590,345.70.

4.15 Subsidy to LGUs, GOCCs, NGOs/POs

4.15.1 Net Subsidy to LGUs of P301,846,117,749.69 is the difference between Subsidy

from Other LGUs of P2,197,675,788.48 and Subsidy to Local Government

Units of P304,043,793,538.17. Total amount of subsidy released by the DBM to

LGUs totaled P298,564,756,965.94.

4.15.2 Subsidy to Government Owned and Controlled Corporations of

P70,484,225,515.49 was incurred mainly by BTr-GOP in the amount of

P70,403,251,050.44 or 99.89 percent, of which, P13,995,900.00 is still

unreleased as of December 31, 2012. Out of P70,403,251,050.44 BTr-GOP’s

subsidy to GOCC, P2,643,137,182.00 pertains to prior years’ allotment and

P31,794,673,529.44 represents tax subsidy to GOCCs, conversion of advances

and offsetting of guarantee fee.

4.15.3 Subsidy to NGOs/POs in the amount of P621,534,787.07 was spent by 13

agencies. Out of the total amount, P497,802,551.35 or 80 percent was paid by

five agencies including ARMM - P117,937,100.23; OEO - P116,414,751.03;

DepEd – P114,082,935.00; DOH - P89,367,765.09 and The Judiciary –

P60,000,000.00. The subsidy to NGOs/POs by OEO was incurred by NCCA,

DDB and FDCP.

4.16 Subsidy From/(To) National Government Agencies

Net Subsidy From/(To) National Government Agencies of (P9,783,809,691.19)

consisted of the following:

Total Subsidy from NGAs P 1,300,991,593,760.50

Total Subsidy to NGAs (1,310,775,403,451.69)

Net Subsidy From/(To) NGAs (P 9,783,809,691.19)

Out of the total subsidy to the National Government Agencies of

P1,310,775,403,451.69, BTR-GOP spent the highest in the amount of

P1,276,074,949,378.93 or 97.35, net of subsidy income from NG account representing

tax subsidy, equity contribution and subsidy to GOCCs in the amount of

P91,743,483,402.44.

V. FINANCIAL ANALYSES

61

FINANCIAL ANALYSES

5.1 Balance Sheet

The financial condition of the National Government (NG) as of December 31, 2012 as

shown in the Consolidated Balance Sheet consisted of Assets P4.073 trillion, Liabilities and

Deferred Credits P6.019 trillion and resulting to a negative Equity P1.946 trillion.

Compared to Fiscal Year 2011, NG assets grew by P693.92 billion or 20.53 percent

from P3.379 trillion; the liabilities and deferred credits up by P556.94 billion or 10.20

percent from P5.462 trillion; while equity dropped by P136.98 billion or 6.58 percent from

negative P2.082 trillion. Table V.1-1 shows the comparative assets, liabilities and equity

for CY 2012 and 2011.

Table V.1-1 Assets, Liabilities and Equity

Particulars


Percent 2012 2011

Increase

(Decrease)

Assets 4,073,869.23 3,379,947.43 693,921.80 20.53

Current Assets 1,640,576.74 1,267,143.56 373,433.17 29.47

Investments 1,272,374.28 1,016,243.59 256,130.69 25.20

Property, Plant and

Equipment

1,055,985.43

987,058.35

68,927.08

6.98

Other Assets 104,932.79 109,501.93 (4,569.14) (4.17)

Liabilities 6,019,464.40 5,462,522.75 556,941.66 10.20 Current Liabilities 1,187,033.09 790,701.37 396,331.72 50.12

Long-Term Liabilities 4,803,310.95 4,644,761.07 158,549.88 3.41

Deferred Credits 29,120.36 27,060.30 2,060.06 7.61

Equity (1,945,595.17) (2,082,575.31) 136,980.15 (6.58)


5.1.1 Assets – P4.073 trillion

For the last five years, CY 2008 to

CY 2012, aggregate assets of the National

Government continuously grow at an

average of 8.88 percent as shown in Table

V.1-2. This year 2012 realized the highest

growth at 20.53 percent from 5.38 percent

in 2011, while the year 2009 had the least

growth at 0.36 percent.

NG’s Assets consisted of Current

Assets – P1.640 trillion or 40.27 percent of

the total, Investments – P1.272 trillion or

31.23 percent, Property, Plant and

Equipment – P1,055 trillion or 25.92

percent and Other Assets – P104.93

billion or 2.58 percent. Of these

components, Current Assets showed the highest growth at 29.47 percent, followed by

Investments and PPE with 25.20 percent and 6.98 percent increases, respectively. The

Table V.1-2 Annual Growth in Assets

CYs 2008-2012

Year Amount (in million pesos) Per-

cent Assets Growth

2012 4,073,021.34 693,921.80 20.53

2011 3,379,947.43 172,683.99 5.38

2010 3,207,263.44 268,339.57 9.13

2009 2,938,923.87 10,414.72 0.36

2008 2,928,509.15 242,243.75 9.02

2007 2,686,265.40

Average Growth 277,520.77 8.88

Note: 2007-2008 assets were based on BS data per

Volume I-B of AFRs excluding the elimination of

inter/intra-agency receivable/payable reciprocal

accounts

62

Other

Assets

2.58%

Property,

Plant and

Equipment

25.92%

Investmen

ts

31.23%

Current

Assets

40.27%

smallest components, Other Assets decreased by 4.17 percent. Chart V.1-1 presents the

percentage distribution of the major categories of assets for fiscal year 2012.

Chart V.1-1 Percentage Distribution of the

Major Categories of Asset

•••• Cash – P 473.14 billion

At year-end, NG cash of P473.14 billion exhibited a growth of P210.62 billion or

80.23 percent from P262.51 billion in 2011,. This was largely due to the increases in the

Cash in Bank by P209.35 billion or 82.48 percent and in the Cash - National Treasury MDS

by P1.89 billion or 46.44 percent, which was partially offset by 13.51 percent reduction in

the Cash on Hand. Chart V.1-2 shows the trend of cash for CYs 2007 – 2012 while Table

V.1-3 shows the comparative composition of cash.

Chart V.1-2 Trend of Cash

(in billion pesos)

5.1.1.1 Current Assets – P1.640 trillion

The NG’s aggregate Current

Assets of P1.640 trillion represented

40.27 percent of the total assets. It

showed an increase of P373.43 billion

or 29.47 percent from the 2011 level of

P1.267 trillion. This was due to the

growth in all the components of this

group of assets. Cash realized the

highest growth at 80.23 percent,

followed by the Receivables – 18.60

percent, Other Current Assets – 18.84

percent, Inventories – 7.79 percent and

the Prepayments had the least growth at

2.25 percent.

0

100

200

300

400

500

Cash on Hand 6.14 4.98 5.51 3.97 4.62 4.00

Cash, NT-MDS 4.71 5.72 4.51 6.29 4.08 5.97

Cash in Bank 205.10 295.25 324.38 313.92 253.81 463.17

2007 2008 2009 2010 2011 2012

63

Among the major components of cash, total Cash in Bank P463.17 billion

accounted 97.89 percent of the total. Cash-National Treasury, MDS and Cash on Hand

shared P5.97 billion or 1.26 percent and P4.00 billion or 0.84 percent, respectively. From

the years 2008 to 2009, Cash in Bank increased by an average of 7.13 percent, but in

2010 to 2011, it dropped to an average 11.19 percent, but for this year 2012, it bounced

back to a significant increase of 82.48 percent.

Table V.1-3 Comparative Composition of Cash

Particulars Amount (in million pesos)

Percent 2012 2011

Increase/

(Decrease)

Cash on Hand 3,997.64 4,622.03 (624.40) (13.51)

Cash in Vault 2.16 2.22 (0.07) (2.98)

Cash – Collecting Officers 2,171.52 2,351.55 (180.03) (7.66)

Cash – Disbursing Officers 477.11 733.46 (256.35 (34.95)

Petty Cash Fund 112.63 106.13 6.51 6.13

Payroll Fund 1,234.22 1,428.67 (194.46) (13.61)

Cash- National Treasury MDS 5,972.27 4,078.19 1,894.08 46.44

Cash in Bank 463,168.48 253,814.19 209,354.28 82.48

Bangko Sentral ng Pilipinas 230,899.88 51,709.41 179,190.47 346.53

Cash in Bank – Local Currency 201,462.05 175,410.42 26,051.63 14.85

Current Account 113,022.04

18.96

83,469.56 29,552.48 35.41

Savings Account 51,632.60 58,666.38 (7,033.78) (11.99)

Time Deposit 36,807.41 33,274.48 3,532.93 10.62

Cash in Bank – Foreign Currency 30,806.55 26,694.36 4,112.19 15.40

Current Account 3,738.20 3,658.21 79.98 2.19

Savings Account 7,841.15 6,955.36 885.79 12.74

Time Deposit 19,227.20 16,080.78 3,146.41 19.57

Total 473,138.39 262,514.42 210,623.97 80.23 Difference between totals and sum of components is due to rounding off

�� Cash in Vault balance of P2.16 million was reported by the BTr-GOP.

�� Cash – Collecting Officers account balance of P2.17 billion pertains to the collections

of national government agencies which were not yet remitted/deposited to the National

Treasury/Authorized Government Depository Bank (AGDB) as of year-end. The

Judiciary, reported the highest balance aggregating P1.02 billion that represents 47.06

percent of the total, followed by the DOF with P462.68 million or 21.31 percent. The

other departments/offices with more than P30 million balance to this account were:

Departments/Offices Amount

(in million pesos) Percent

Judiciary 1,021.85 47.06 Finance 462.68 21.31

Justice 108.06 4.98

Transportation and Communications 107.27 4.94 State Universities and Colleges 99.45 4.58 Health 72.10 3.32 Energy 54.52 2.51

Public works and Highways 43.18 1.99

Other Executive Offices 40.69 1.87 Foreign Affairs 31.92 1.47 Other Departments/Offices 129.81 5.98

Total 2,171.52 100.00

64

�� Cash – Disbursing Officers of P477.11 million represents unliquidated cash advances

of authorized disbursing officers at year-end. A decrease of P256.35 million or 34.95

percent was noted compared to 2011 level of P733.46 million. The departments/offices

that reported more than P10 million unliquidated cash advances were as follows:


(in million pesos) Percent

Social Welfare and Development 111.71 23.42

Foreign Affairs 98.05 20.55

State Universities and Colleges 57.36 12.02

Transportation and Communications 56.34 11.81

Public Works and Highways 39.66 8.31

Science and Technology 30.55 6.40

Other Executive Offices 28.62 6.04

Health 17.58 3.69

Environment and Natural Resources 10.29 2.16

Other Departments/Offices 26.73 5.60

Total 477.11 100.00

� The DSWD-OSEC reported the highest unliquidated cash advances of

P111.71 million representing 23.42 percent of the total P477.11 million

unliquidated cash advances of the NG at year end. The bulk of which,

amounting to P107.61 million pertains to cash advances to DSWD Field

Offices II and X for projects such as Cash for Work and Social Pension for

Indigent Senior Citizens.

� The DFA-OSEC reported P98.05 million or 20.55 percent of the total, that

included prior years’ working funds of the Regional Consular Offices (RCOs)

and Foreign Service Post (FSP) granted before the introduction of the New

Government Accounting System (NGAS) in 2002, cash advances granted to

Finance Officers in the RCOs and FSPs, and Regular and Special Disbursing

Officers in the Home Office.

� State Universities and Colleges combined balance P57.36 million or 12.02

percent of the total. Six SUCs that shared the aggregate amount of P41.75

million or 72.79 percent were: University of Eastern Philippines – P9.54

million, Bohol Island State University – P9.16 million, Eastern Samar State

University – P8 million, Capiz State University – P5.87 million, University of

Southeastern Philippines – P4.97 million and Western Visayas College of

Science and Technology – P4.22 million.

� The DOTC- OSEC’s P56.24 million pertained to the unliquidated cash

advances reported by the attached agencies: LTO, CARAGA and the

Philippine Coast Guard.

�� Petty Cash Fund granted to duly designated custodian to cover petty expenses P112.63

million, an increment of P6.51 million or 6.13 percent was noted compared to P106.13

million in 2011. As in the previous year, the COMELEC and the DOH – OSEC were

the two agencies that reported the highest with P19.85 million and P15.27 million or

17.63 percent and 13.56 percent, respectively.

65

�� Payroll Fund balance P1.23 billion dropped by P194.46 million or 13.61 percent

compared to P1.43 billion of last year. This fund represents cash advances for payment

of salaries, allowances and other emoluments which remained unliquidated at year-end.

The departments that reported more than P40 million balance were:

Departments/Offices

Amount

(in million

pesos)

Percent

Education 321.26 26.03

Interior and Local Government 216.99 17.58

Finance 156.70 12.70



National Defense 65.70 5.32

Health 57.75 4.68

Agriculture 52.26 4.23

National Economic and Development Authority 40.81 3.31


Total 1,234.22 100.00

Schedule 7, Volume I-B presents the list of departments/agencies with Cash on

Hand presented by account.

�� Cash - National Treasury, MDS account refers to the Notice of Cash Allocation

(NCA) received from the DBM and it is credited for the amount of MDS checks issued

by agencies. The balance of P5.97 billion pertained to the unreleased/unclaimed MDS

checks at the end of the year for payment of accounts payable and other current

liabilities which were restored back to cash account by agencies in compliance with

COA Circular Letter No. 2002-001 dated December 16, 2002. The departments/offices

that reported more than P100 million worth of unreleased MDS checks as of year-end

were the following:

Departments/Offices Amount (in million

pesos) Percent

Interior and Local Government 1,519.20 25.44

Agriculture 1,357.07 22.72



Tourism 298.80 5.00

Agrarian Reform 295.40 4.95

Health 228.18 3.82

Finance 217.67 3.64




Labor and Employment 126.43 2.12

National Economic and Development Authority 125.89 2.11

Congress of the Philippines 122.11 2.04


Total 5,972.27 100.00

66

Among the agencies the PNP under DILG reported the highest

unclaimed/unreleased MDS checks totaling P1.32 billion, followed by the DA-OSEC

with P1.24 billion and DSWD – OSEC with P605.37 million.

Schedule 8, Volume I-B shows the list of department/agencies with unclaimed/

unreleased MDS checks at the end of year.

�� Cash, Bangko Sentral ng Pilipinas of P230.90 billion consisted of deposits in local

currency P219.21 billion and in foreign currency P11.69 billion. Compared with

P51.71 billion in prior year, a significant increase of P179.19 billion or 346.53 percent

was noted. Of the total, BTr-GOP accounted P230.86 billion or 99.98 percent

representing deposits for the account of the Treasurer of the Philippines that included

P168.49 billion free balances that can be used for NG operations; P3.33 billion project

loan/grant proceeds earmarked to be utilized by various implementing agencies; and

P59.03 billion restricted accounts that refer to various special/sinking funds, managed

fund and escrow account.

�� Cash in Bank, Local Currency of P201.46 billion, more by P26.05 billion or 14.85

percent compared to P175.41 billion in prior year. It consisted of Current Account –

P113.02 billion, Savings Account – P51.63 billion and Time Deposits – P36.81 billion.

Table V.1-4 shows the departments/offices with Cash in Bank in Local Currency

deposits of more than P1.0 billion; and Schedule 9 Volume I-B presents the

departments/offices/agencies maintaining deposits in Cash in Bank, Local Currency.

Table V.1-4 Departments/Offices with more than P1.0 billion

Cash in Bank-Local Currency

(in million pesos) Departments/Offices Current Savings Time Total Percentage

Finance 20,819.91 39,796.66 14,717.22 75,333.79 37.39

State Universities and Colleges 13,762.23 1,277.11 17,889.15 32,928.49 16.34

Agriculture 14,564.27 49.75 14,614.02 7.25

Education 9,431.99 10.49 40.00 9,482.47 4.71

Judiciary 1,019.84 7,935.56 443.72 9,399.12 4.67

National Defense 6,254.18 1,278.82 0.01 7,533.01 3.74

Other Executive Offices 7,130.82 0.96 7,131.78 3.54

Transportation and

Communications

4,707.34 44.82 1,215.78 5,967.95 2.96

Health 5,706.11 4.87 5,710.97 2.83

Budget and Management 3,166.65 1.97 2,500.00 5,668.62 2.81

Public Works and Highways 4,448.19 24.74 4,472.93 2.22

Labor and Employment 4,246.60 42.61 4,289.21 2.13

Agrarian Reform 3,630.84 1.17 3,632.01 1.80

Interior and Local Government 2,868.28 0.45 2,868.73 1.42

Social Welfare and

Development

1,602.16 5.16 1,607.32 0.80


Mindanao

1,518.91 1,518.91 0.75

Energy 1,457.20 5.70 1,462.90 0.73

Trade and Industry 187.52 951.45 1,138.97 0.57

Metro Manila Development

Authority

1,040.32 1,040.32 0.52

Other Departments/Agencies 5,458.68 200.33 1.52 5,660.53 2.81

Total 113,022.04 51,632.60 36,807.41 201,462.05 100.00


67

Some of the national government agencies with large deposits in local currency

that contributed to the above departments on top of the list were:

� Under the DOF, the BTr-GOP of P56.46 billion the highest consisting of free

balances available for NG operations, restricted accounts of various sinking

funds/managed funds and various project loan/grants proceeds earmarked to be

utilized by various implementing agencies and MDS seed money. The BIR,

MDFO and BOC followed with P14.08 billion, P2.44 billion and P1.59 billion,

respectively.

� Among the SUCs, the University of the Philippines System (UPS) topped with

P19.19 billion deposits, followed by the Batangas State University with P1.15

billion and Bulacan State University, ranked 3rd, with P883.42 million. SUCs are

authorized under R.A. No. 8292, the Higher Education Modernization Act of

1997, to deposit in AGDB as Special Trust Fund the collections of income from

tuition fees and other school charges.

� DA – OSEC totaling P13.68 billion that includes funds received from different

agencies for implementation of various projects; transfer of funds from dollar to

local currency accounts; revolving funds authorized under RA 1433 - Plant

Quarantine Law, RA 7308 - Seed Act, RA 9168 – Plant Variety Protection Fund,

RA 1578 – ATI, and RA 7308 - BAI; various grants and donations; CARP Fund

158 – P387.92 million; and P11.44 million unreleased checks.

� Dep-Ed- OSEC’s P9.09 billion that comprised deposits by the central office,

regional offices, operating units/division offices and attached agencies. The bulk

of which P7.21 billion represented the remittances of deductions of the

implementing units to cover RPSU payrolls for the month of December received

by the Regional Office a few days before the cut-off date and disbursements were

not effected during the reporting period. Also included were fund transfers to CO

and RO for teacher’s deductions and government share to be remitted on the 1oth

day of the following month to different GOCCs and private institutions, inter-

agency fund transfers to cover funding requirements for implementation of

various Centrally-Managed Projects and of the operating units, cash balances of

trust collections of secondary schools for student related activities balance of

funds for income generating project of operating units recorded in the books as

trusty liability.

�� Cash in Bank – Foreign Currency of P30.81 billion, over by P4.11 billion or 15.40

percent from P26.69 billion in 2011 consisting of current account – P3.74 billion,

savings account – P7.84 billion and time deposit – P19.23 billion. Table V.1-5 shows

the departments/offices with more than P100 million deposits in foreign currency and

Schedule 9, Volume I-B presents the complete list of departments/agencies with Cash

in Bank, Foreign Currency.

� Of the P22.94 billion reported by the DOF, the BTr-GOP accounted P22.81

billion or 99.94 percent that included free balances and restricted accounts. The

MDFO shared P118.47 million deposits in current accounts under Project Loan

Proceeds working fund.

68

Table V.1-5 Departments/Offices with More than P100 million

Cash in Bank- Foreign Currency (in million pesos)

Departments/Offices Current Savings Time Total Percentage

Finance 118.47 3,926.55 18,897.42 22,942.44 74.47

Foreign Affairs 3,278.35 330.49 199.30 3,808.14 12.36

Energy 837.10 837.10 2.72

Social Welfare and

Development

807.19 807.19 2.62

Justice 416.88 416.88 1.35

Tourism 226.22 151.27 377.49 1.23

Public Works and

Highways

288.96 288.96 0.94


Colleges

6.73 141.53 130.10 278.37 0.90

Labor and Employment 100.84 176.90 277.75 0.90

Agriculture 223.74 0.38 224.11 0.73


Resources

137.49 137.49 0.45

Transportation and

Communications

117.72 117.72 0.38

Other Departments/Offices 7.58 285.33 ________ 292.91 0.95

Total 3,738.20 7,841.15 19,227.20 30,806.55 100.00


� The DFA-OSEC has P3.81 billion deposits maintained by the Foreign Service

Posts, of which P3.28 billion or 86.09 percent are for working funds that included

the balances of the International Commitment Fund (ICF), and P12.54 million

were prior year’s balances forwarded as beginning balance in the initial

implementation of the Electronic NGAS.

� The DOE-OSEC has P837.10 million that included P665.48 million or 79.50

percent was accounted under the Special Account in the General Fund 171,

Electric Cooperative System Loss Reduction Project, of which P490.46 million

was the Guarantee Reserve Account with PNB and P171.04 million was the

interest earned from that account.

•••• Receivables – P996.94 billion

The NG Receivables at year-end rose to P996.94 billion, net of P3.10 billion

Allowance for Doubtful Accounts, was more by P156.38 billion or 18.60 percent from

P840.56 billion in previous year. It accounted for 60.77 percent of the total current assets.

The growth was due to the increases in the three major components: Receivable Accounts

by 21.03 percent, Inter-Agency Receivables by 19.11 percent and Intra-Agency Receivables

by 11.82 percent and was partly offset by 7.83 percent decrease in Other Receivables.

Details of the Receivables by accounts are shown in Table V.1-6.

69

Table V.1-6 Details of Receivables by Account

Particulars


Percent 2012 2011 Increase

(Decrease)

Receivable Accounts 296,799.75 245,226.42 51,573.33 21.03 Accounts Receivable, Net 15,799.82 6,354.55 9,445.28 148.64

Notes Receivable 137,081.74 137,106.00 (24.26) (0.02)

Loans Receivable - GOCCs 120,854.35 79,914.80 40,939.55 51.23

Loans Receivable - LGUs 3,700.14 3,329.40 370.74 11.14

Loans Receivable - Others 9,604.01 8,356.47 1,247.55 14.93

Interest Receivable 3,021.97 2,925.37 96.61 3.30

Advances to Officers and

Employees

6,033.83

6,450.43

(416.60)

(6.46)

Due from Officers and

Employees

703.88

789.41

(85.53)

(10.84)

Inter-Agency Receivables 645,872.12 542,264.89 103,607.23 19.11 Due from National Treasury 91,420.94 32,937.38 58,483.55 177.56

Due from GOCCs 475,166.87 447,413.98 27,752.89 6.20

Due from NGAs 47,724.00 33,331.91 14,392.09 43.18

Due from LGUs 24,225.87 19,649.90 4,575.97 23.29

Due from NGOs/POs 7,334.45 8,931.72 (1,597.27) (17.88)

Intra-Agency Receivables 30,498.19 27,273.33 3,224.85 11.82

Due from Central Office 1,769.68 1,203.52 566.16 47.04

Due from Regional Offices/

Staff Bureaus

2,803.03

2,102.92

700.11

33.29

Due from Operating Units 3,259.61 2,645.89 613.73 23.20

Due from Other Funds 22,665.86 21,321.00 1,344.86 6.31

Other Receivables 23,772.20 25,792.24 (2,020.04) (7.83)

Receivables-Disallowances/

Charges

5,250.98

4,981.42

269.56

5.41

Other Receivables 18,521.22 20,810.82 (2,289.60) (11.00)

Total 996,942.25 840,556.88 156,385.37 18.60


� Accounts Receivables (Net) balance of P15.80 billion exhibited a significant increase

of P9.44 billion or 148.64 percent compared to P6.35 billion in the previous year. The

DOF-BTr-GOP accounted P7.02 billion or 44.48 percent of the total reported in the

LBP administered/managed Agrarian Reform Fund 158. The other five agencies that

reported more than P500 million accounts receivable, net of allowance for doubtful

accounts, were: DOE – OSEC – P1.98 billion, DOH-OSEC – P1.52 billion, DOTC-

OSEC – P967.89 million, DENR – National Water Resources Board – P620.46 million,

and SUC- University of the Philippines – P608.64 million. Schedule 10, Volume I-B

enumerates the departments/offices with Net Accounts Receivables.

� Notes Receivables of P137.08 billion represented 13.75 percent of the total NG

receivables, of which the DOF-BTr-GOP reported P137.01 billion or 99.95 percent

pertaining to the Promissory Note issued by the Central Bank-Board of Liquidators

(CB-BOL) in favor of the Treasurer of the Philippines in substitution for the

frozen/retained deposits in the CB-BOL.

� Loans Receivable – GOCCs P120.85 billion showing a significant P40.94 million or

51.23 percent increase from P79.91 billion last year. It accounted for 40.72 percent of

the total receivable group of accounts. The DOF-BTr-GOP reported P117.61 billion or

70

97.32 percent of the total loans receivable consisting of cash and constructive cash loan

outlays to GOCCs. Also included were dormant accounts Investments-Interest Bearing

Loans to GOCCs and Other Interest Bearing Loans amounting to P73.17 million and

P37.59 million, respectively. Details of Loans Receivables by GOCCs, by the Bureau

of the Treasury-GOP are presented in Schedule 11, Volume I-B.

� Loans Receivable – LGUs of P3.70 billion, increased by P370.74 million or 11.14

percent over last year’s P3.33 billion. Of the total P3.42 billion or 92.32 percent was

reported by the DOF-MDFO. The other three agencies that reported balances to this

account were: DA-OSEC - P271.64 million representing 7.34 percent; the ARMM-

Office of the Regional Governor - P8 million; and the Bureau of Local Government

Finance - P4.40 million.

� Loans Receivable – Others of P9.60 billion, up by P1.25 billion or 14.93 percent from

P8.36 billion in 2011. As in the previous year, the DA –OSEC reported the highest

balance of P5.95 billion representing 61.97 percent of the total. This included the P3.86

billion loans granted by OSEC to various beneficiaries for implementation of the

Agricultural Competitiveness Enhancement Fund (ACEF) and the P11.22 million loans

accounted by RFU Region VI granted to farmers in the form of Shallow Tube Wells

and Farm Equipment payable in 10 equal installments for 5 years; and loans granted

under the WV “in life” Program in the form of 10 heads of swine per recipient payable

in 36 months from delivery. The Agricultural Credit and Policy Council and the

National Agricultural and Fishery Council, both under the DA, shared P570.09 million

or 5.94 percent and P123.61 million or 1.29 percent, respectively. The

departments/Offices with balances to this account were as follows:


(in million pesos)

Percent-

age


Finance 1,538.67 16.02


Trade and Industry 316.51 3.30






Energy 24.63 0.26

Total 9.604.01 100.00

� Interests Receivable of P3.02 billion slightly increased by P96.61 million or 3.30

percent compared to P2.95 billion of the previous year. The DOF-BTr-GOP reported

P1.60 billion representing 53 percent of the total consisting of accrued interest on

investments in Treasury Bonds from Special and Sinking Funds and Treasurer of the

Philippines (TOPs) Fixed Term Deposits in 1993 retained at CB BOL. The DOTC-

OSEC reported P713.51 million or 23.61 percent interest on late payments of MRTDC

and Greenfield Development Corporation rights based on approved

contracts/agreements. The DOF-MDFO shared P622.66 million or 20.60 percent

interest receivable from loans released to LGUs.

� Advances to Officers and Employees of P6.03 billion declined by P416.60 million or

6.46 percent from prior year’s P6.45 billion. The amount represents the unliquidated

71

cash advances granted for local and foreign travels and for special purpose/time-bound

undertakings. As in the previous, the DepEd - OSEC topped the list with P1.88 billion

corresponding to 31.18 percent of the total. This was followed by the DILG- OSEC

with P612.46 million or 10.15 percent; and 3rd was the DSWD with P544.67 million or

9.03 percent. The departments/offices that reported more than P150 million

unliquidated advances to Officers and Employees were as follows:


(in million pesos)

Percent-

age

Education 1,884.69 31.24




Justice 410.39 6.80

Commission on Elections 363.94 6.03

Office of the President 344.81 5.71

Agriculture 291.92 4.84





Total 6,033.83 100.00

Schedule 12, Volume I-B presents the complete list of departments/offices/agencies

with unliquidated Advances to Officers and Employees.

� Due from Officers and Employees of P703.88 million, reduced by P85.53 million or

10.84 percent compared to P789.41 million in the previous year. The amount consisted

of overpayment of salaries, entitlements, honoraria, cash shortages, billings of payments

made that are personal in nature, and cash advances for travel, training and seminar

expenses. As in the previous year, the top five agencies that reported more than P40

million balances to this account were: DFA OSEC – P129.93 million, DA-OSEC –

P88.04 million; DOF-BIR – P71.16 million; Supreme Court of the Philippines and

Lower Courts - P41.81 million; and DOTC-OSEC – P40.43 million. Schedule 12,

Volume I-B presents the complete list of departments/offices/agencies with account

Due from Officers and Employees.

� Inter-Agency Receivables aggregating P645.87 billion represents 64.79 percent of the

total receivables, showed an increment of P103.61 billion or 19.11 percent from

P542.26 billion in 2011. The components of this group of accounts and the

corresponding percentage shares were: Due from National Treasury –P91.42 billion or

14.15 percent, Due from GOCCs – P475.17 billion or 73.57 percent, Due from NGAs –

P47.72 billion or 7.39 percent, Due from LGUs – P24.23 billion or 3.75 percent and

Due from NGOs/POs –P7.33 billion or 1.14 percent.

• Due from National Treasury (NT) accounted P91.42 billion up by P58.48 billion

or 177.56 percent from P32.94 billion in 2011. The account pertains to collections

of income which some government agencies are authorized to use and other non-

income receipts such as performance/bail/bidders bond in cash deposited to the

National Treasury pursuant to Executive Order No. 338. The departments/Offices

with more than P1 billion balances to this account aggregating P87.71 billion or

95.94 percent of the total were as follows:

72


(in million pesos) Percent-

age

Justice 58,625.87 64.13

Finance 11,626.30 12.72

Other Executive Offices 5,166.10 5.65

National Defense 3,853.58 4.22

Interior and Local Government 2,809.09 3.07

Health 1,729.14 1.89

Office of the President 1,383.31 1.51

Science and Technology 1,272.56 1.39

Public Works and Highways 1,245.24 1.36

Other Departments/Offices 3,709.82 4.06

Total 91,420.94 100.00

� The Presidential Commission on Good Government under the DOJ reported

P58.17 billion Due from the National Treasury under escrow for the period

1986 to 2012, P56.5 billion, which are redemption proceeds of San Miguel

Corporation (SMC) Series I preferred shares remitted in October, 2012.

� Under the DOF, the Bureau of Internal Revenue –NG Books accounted for

P9.22 billion that pertains to the issuance of Tax Credit Certificates (TCC)

and Tax Debit Memo (TDM) by various BIR issuing offices and DOF-One

Stop Shop from August 2006 to December, 2012 under the Special

Revalidation Program based on TCC/TDM.

• Due from GOCCs P475.17 billion up by P27.75 billion or 6.20 percent from

P447.41 billion in 2011. Of the total, P458.87 billion or 96.57 percent was reported

by the DOF-BTr-GOP that includes among others: NG’s refinancing of BSP

advances on liabilities retained with CB-BOL – P279.30 billion, NG advances in

behalf of GOCCs/GFIs for their foreign and domestic obligations – P144.58 billion,

Guarantee fee receivable – P13.93 billion, NG advances for assumed GOCCs/GFIs

guaranteed obligations – P7.98 billion and P7.73 billion dormant accounts.

Other agencies that reported huge balances to this account were: The DA-

OSEC’s P5.38 billion that includes funds transferred to LBP for ACEF Project and

to NABCOR, Zamboanga Rubber Estate Corporation, Philippine Agricultural

Development and Commercial Corporation for implementation of PDAF and other

DA projects; the DND - Philippine Army P1.50 billion various fund transferred to

the Philippine International Trading Corporation per Agency Outsourcing Request

(AOR) which were not yet delivered nor liquidated; the DOTC-OSEC P1.26

billion, of which P1.10 billion were funds transferred to the Manila International

Airport Authority for the implementation of infrastructure projects; and the DOH –

OSEC’s P1.18 billion that includes reimbursable claims from Philhealth, guaranteed

hospitalization reimbursement from PCSO sponsored patients and Philippine

Veterans Affairs Office member-patients and transfer of funds to attached offices

classified as GOCCs for implementation of DOH programs/projects.

• Due from NGAs of P47.72 billion showed an increment of P14.39 billion or 43.18

percent from P33.33 billion in the previous year. The DA-OSEC reported the

73

highest balance P5.21 billion that includes funds transferred to other national

government agencies such as: NAFC, Philrice, BFAR, ACPC, National Anti-

Poverty Commission, National Meat Inspection Service, Department of Agriculture

and Fisheries for implementation of various DA projects; and the deposits made to

the Procurement Service for the purchase of supplies and materials. The DPWH –

OSEC followed with P5.11 billion unliquidated funds transferred to various NGAs,

unpaid equipment rental, undelivered items from DBM – Procurement Service and

unreconciled dormant accounts. The OEO – Commission on Higher Education

(CHED) ranked 3rd with P4.74 billion unliquidated funds transferred to various

SUCs for scholarship programs and under the DAP - Infrastructure and Research

projects.

• Due from LGUs of P24.23 billion increased by P4.58 billion or 23.29 percent

compared to P19.65 billion in 2011. As in the previous year, the DA-OSEC

reported the highest balance P5.77 billion or 23.82 percent consisting of funds

transferred by OSEC, RFUs and Bureaus to the LGUs for implementation of

various infrastructures projects and post-harvest facilities such as Farm to Market

Roads, Small Water Impounding Projects, farm inputs/implements and

repair/rehabilitation of existing irrigation. The other top six agencies with big

balances to this account were: the DSWD-OSEC – P3.60 billion or 14.86 percent;

the DOH-OSEC – P3.45 billion or 14.24 percent; DPWH-OSEC – P2.64 billion or

10.90 percent, the DAR – OSEC – P2.06 billion or 8.28 percent; the Metro Manila

Development Authority (MMDA) – P1.10 billion or 4.53 percent; and the OEO-

Office of the Presidential Adviser on the Peace Process – P1.01 billion or 4.16

percent. The departments/offices with more than P500 million balance to this

account were:



age


Social Welfare and Development 3,662.47 15.12

Health 3,500.82 14.45


Agrarian Reform 2,006.46 8.28


Metro Manila Development

Authority

1,097.47 4.53


Finance 717.02 2.96


Other Departments/Offices 1,648.82 6.81

Total 24,225.87 100.00

• Due from NGOs/POs of P7.33 billion reduced by P1.60 billion or 17.88 percent

from P8.93 billion in the previous year. The account pertains to funds entrusted by

NGAs to various NGOs/POs for implementation of specific government projects

which require submission of periodic/final Fund Utilization Report and Physical

Status Report pursuant to COA Circular No. 2007-001 dated October 25, 2007.

The DA-OSEC P1.78 billion accounted the highest representing 24.32 percent

of unliquidated funds transferred to NGOs/POs for the procurement of farm inputs

and farm implements for implementation of livelihood and other DA

programs/projects. The DSWD-OSEC reported P1.04 billion, of which P447.54

74

million or 42.95 percent were released by the Central Office to various NGOs in

2011 and prior years funded from the Congressional Initiative, the Congressional

Development Funds and the Priority Development Assistance Fund of various

solons. The departments/offices with huge balances to this account were:



age






Finance 421.73 5.75

Energy 324.74 4.43

Health 316.85 4.32




Total 7,334.45 100.00

Schedule 13, Volume I-B presents the departments/agencies with balances of

accounts Due from GOCCs, NGAs, LGUs, and NGOs/POs.

� Intra-Agency Receivables aggregated P30.50 billion that represents 3.06 percent of the

total receivables of NG. Compared to previous year’s level of P27.27 billion, an

increment of P3.22 billion or 11.82 percent was noted. The components of this group of

receivable accounts were: Due from Central Office – P1.77 billion or 5.80 percent, Due

from Regional Offices/Staff Bureaus – P2.80 billion or 9.19 percent, Due from

Operating Units – P3.26 billion or 10.69 percent and Due from Other Funds P22.67

billion or 74.32 percent. These accounts have corresponding reciprocal intra-agency

payable accounts that should have been reconciled and eliminated at the end of the year

upon consolidation of the department/agency accounts at the Regional/Central Office

level. In the previous year, a working paper elimination journal entry was being made

on the overall total balance for each account with intra-agency payable accounts Due to

Central Office, Due to Regional Office/Staff Bureaus, Due to Operating Units and Due

to Other Funds, which was not made this year due to lack of supporting documents.

Table V.1-7 presents the top ten departments with huge balances to this Intra-agency

Receivable group of accounts that were not reconciled and eliminated.

75

Table V.1-7 Top Ten Departments with Huge Balances to

Intra-Agency Receivable Accounts

Departments

Amounts (in million pesos)

Due from

Central

Office

Due from

Regional

Offices/Staff

Bureaus

Due from

Operating

Units

Due from

Other

Funds

Total

Finance 69.85 3.74 20,388.71 20,462.30

Education 162.03 381.98 2,012.86 20.75 2.577.61

State Universities

and Colleges

753.36

0.33

429.38

958.42

2,141.49

Foreign Affairs 535.82 267.54 46.58 14.22 864.16

Labor and

Employment

0.92

687.13

32.58

16.21

736.85

Public Works and

Highways

24.18

235.63

272.31

15.82

547.94

Environment and

Natural Resources

34.00

73.17

19.14

395.86

522.17

Health 14.71 274.40 58.96 63.50 411.57

Agriculture 37.35 207.00 26.50 54.65 325.49

National Economic

and Development

Authority

136.36

65.10

0.25

201.72

Other Offices 137.45 535.74 296.19 737.48 1,706.87

Total 1.769.68 2,803.03 3,259.61 22,665.86 30,498.18


� Other Receivables group of accounts P23.77 billion declined by P2.02 billion or 7.83

percent from P25.79 billion in 2011. The components of this category were:

Receivables - Disallowances/Charges – P5.25 billion or 22.09 percent and Other

Receivables – P18.52 billion or 77.91 percent.

• Receivables-Disallowances/Charges of P5.25 billion were audit disallowances that

have become final and executory. Compared with the previous year’s P4.98 billion,

an increment of P269.56 million or 5.41 percent was noted. As in the previous

year, the two agencies that reported the highest unsettled disallowances were:

DOF-BOC – P1.84 billion, and DPWH-OSEC – P1.09 billion.

• Other Receivables of P18.52 billion showed a reduction of P2.29 billion or 11

percent from P20.81 billion in previous year. The DOF reported P11.53 billion or

62.27 percent of the total contributed by the following agencies: BTr-GOP reported

P10.25 billion, of which P9.76 billion pertains to the receivables of the Treasurer of

the Philippines from Authorized Agent Banks (AABs) for the BIR collections per

Department Order No. 73-02 dated September 20, 2002 and the Memorandum of

Agreement between the banks, the BTr and the BIR; the BIR – P883.61 million

mostly outstanding dishonored checks, bank penalties on delayed remittance of

collections; and the BOC – P388.25 million mostly collections of customs duties,

taxes and other levies by the AABs of which P365.94 million were remitted to the

National Treasury on January, 2013.

Schedule 14, Volume I-B shows the departments/agencies with Other

Receivables accounts.

76

•••• Inventories – P28.42 billion

Inventories of NGAs aggregated P28.42 billion, posting an increment of P2.05

billion or 7.79 percent compared to P26.37 billion in the previous year. This group of

assets consisted of the following sub-groups: Supplies – P25.96 billion or 91.35 percent;

Materials – P1.72 billion or 6.04 percent; and Agricultural, Fishery and Forestry Products –

P742.44 million or 2.61 percent.

The DND reported the highest balance of inventories amounting to P8.40 billion

that includes among others Military and Police Supplies Inventory –P4.04 billion, Spare

Parts Inventory – P1.21 billion, Other Supplies Inventory – P1.18 billion, Gasoline, Oil and

Lubricants Inventory – P821.34 million and Office Supplies Inventory – P472.30 million.

The other departments that reported more than P1.00 billion inventory at year-end were:

DOH – P6.99 billion, DepEd – P2.89 billion, DA– P1.44 billion, SUCs and DILG – P1.20

billion each. Schedule 15, Volume I-B presents the Inventory accounts by

department/office/agency.

•••• Prepayments – P132.99 billion

Prepayments of P132.99 billion showed an increment of P2.93 billion or 2.25

percent over last year’s P130.06 billion. The components of this group of assets were:

Deferred Charges – P104.74 billion; Advances to Contractors – P15.69 billion; Deposit on

Letters of Credits – P8.35 billion; Other Prepaid Expenses – P3.38 billion; Prepaid Rent –

P695.79 million; Prepaid Insurance – P126.58 million; and Prepaid Interest – P2.44 million.

Schedule 16, Volume I-B presents the Prepaid Expenses by accounts by department/office.

� Deferred Charges of P104.74 billion dropped by P322.70 million from P105.06 billion

in 2011. Of the total, the DOF BTR-GOP accounted P104.56 or 99.83 percent mostly

from discounts on Bond Exchange, the issuance of Zero-Coupon Bonds and Global

bonds abroad, and premiums on investments in bonds held by Bond Sinking Fund,

Special Guaranty Fund, Security Stabilization Fund and Manila Waterworks Sewerage

System which being are amortized over the life of the bonds.

� Advances to Contractors rose to P15.69 billion, showing a growth of P4.53 billion or

40.54 percent compared to P11.17 billion of the previous year. These were advance

payments for the implementation of the foreign-assisted and locally-funded

infrastructures and other projects. The DPWH reported the highest P7.03 billion or

44.81 percent of the total advances followed by the following departments: the DOH –

P3.24 billion, the DA – P1.49 billion and the DND – P1.10 billion.

� Deposit on Letters of Credit of P8.35 billion reduced by P737.03 million or 8.11

percent from P9.09 billion in 2011. The DND accounted P6.37 billion or 76.25 percent

of the total. The account represented marginal deposits or prepayments deposited to

authorized depository banks for the supplies and delivery of ammunitions, vehicular

and communication requirements of the AFP contracted from foreign suppliers and cost

of freight forwarding and other items for modernization projects. Other departments

that reported more than P100 million balances were: the COMELEC – P753.73 million,

the DA – P664.71 million, and the DOTC – P178.99 million.

77

•••• Other Current Assets group totaling P9.09 billion increased by P1.44 billion or 18.84

percent from P7.65 billion in 2011. This group consisted of Guaranty Deposits P8.66

billion or 95.32 percent and Other Current Assets account P425.35 million or 4.68 percent.

�� Guaranty Deposits of P8.66 billion more by P1.39 billion or 19.06 percent over the

2011 level P7.27 billion. The account pertained to the cash deposits subject to refund,

which were made to secure or guaranty compliance with certain requirements in a

transaction. The DA reported the highest balance P5.51billion or 63.67 percent, of

which P5 billion represents the contributions/augmentation to the Agricultural

Guarantee Pool Fund (AGPF) for Rice Self-Sufficiency Program of the Government per

Administrative Order No. 244 dated October 23, 2008 issued by the Office of the

President. The DND shared P2.71 billion or 31.29 percent of the total guaranty

deposits.

Schedule 17, Volume I-B shows the Other Current Assets by account and by

department/office.

5.1.1.2 Investments – P1.272 trillion

NG Investments reached P1.272 trillion, representing 31.23 percent of the its total

assets by the end of 2012, substantial increase of P256.13 billion or 25.20 percent was

noted compared to P1.016 trillion in the previous year. The growth is attributed to the

increases of its two major components: Investments in Securities aggregating P340.15

billion, up by P100.72 billion or 42.07 percent from P239.43 billion in 2011; and the

Sinking Fund P932.22 billion, up by P155.41 billion or 20.01 percent from P776.81 billion

in the previous year. The composition of Investments is shown in Table V.1-8

Table V.1-8 Composition of Investments

Particulars


Percent 2012 2011

Increase/

(Decrease)

Investments in Securities 340,153.58 239,434.89 100,718.69 42.07 Investments in Treasury Bills 14,473.97 14,196.23 277.74 1.96

Investments in Stocks 170,552.92 126,390.18 44,162.75 34.94

Investments in Bonds 33,981.44 7,938.22 26,043.22 328.07

Other Investments and

Marketable Securities

121,145.25

90,910.27

30,234.98

33.26

Sinking Fund 932,220.69 776,808.70 155,411.99 20.01

Total 1,272,374.28 1,016,243.59 256,130.68 25.20 Difference between totals and sum of components is due to rounding off.

•••• Investments in Treasury Bills of P14.47 billion showed a nominal increase of P277.74

million or 1.96 percent from P14.20 billion in 2011. The DOF-MDFO accounted the

highest balance of P11.18 billion or 77.26 percent of the total. Other agencies with

investments in Treasury bills were: the DOE-OSEC – P2.72 billion or 18.78 percent, under

the DOLE - Bureau of Rural Workers with Special Concerns – P316.48 million and

TESDA – P89.77 million; Supreme Court of the Philippines and Lower Courts– P105 .68

million and SUC-University of the Philippines – P60 million.

•••• Investments in Stocks of P170.55 billion up by P44.16 billion or 34.94 percent from

P126.39 billion in 2011. The DOF-BTR-GOP accounted P169.35 billion or 99.29 percent

consisting of NG equity contributions to GOCCs – P98 billion; subscriptions to the capital

78

stocks of international financial organizations – P68.27 billion; equity in the Philippine

National Construction Corporation transferred by GFIs to NG – P1.26 billion and NG

holdings in the capital stock of the Philippine Airlines pursuant to Administrative Order No.

242 dated October 21, 1991 and Proclamation No. 50 dated December 8, 1986 – P1.82

billion. The PCGG, under DOJ, also reported P1.07 billion investments in stocks.

Schedule 18, Volume I-B presents the Investments in Stocks of the Bureau of the

Treasury – National Government Books.

•••• Investments in Bonds of P33.98 billion exhibited a significant increase of P26.04 billion

or 328.07 percent from P7.94 billion in 2011. The DOF-BTr-GOP reported P33.78 billion

or 99.40 percent of the total, that consisted of NG investments in NIA Bonds – P3.98

billion and Republic of the Philippines (ROP) Bonds – P123.23 million; and the

investments of the BTr managed/administered funds – P29.67 billion.

Other agencies with huge amount of investment in bonds were: NEDA- SRTC –

P120 million, SUC-University of the Philippines – P75.50 million, and DOF-Privatization

and Management Office (PMO) – P7.14 million.

•••• Other Investments and Marketable Securities of P121.14 billion, more by P30.23 billion

or 33.26 percent over P90.91 billion in 2011 . The DOF- BTr-GOP reported P116.33 billion

representing 96.02 percent of the total, majority of which pertains to the equity of the NG in

non-stock GOCCs amounting to P107.41 billion and investments of P7.39 billion by the

Land Bank of the Philippines (LBP) administered Agrarian Reform Fund (ARF)158.

Other agencies that reported more than P150 million balances were: National

Commission for Culture and Arts – P1.73 billion, and CHED – P354.63 million, both under

OEO; SUC-UPS – P1.02 billion; DAR-OSEC – P690.88 million; Office of the President –

P275.62 million, and DA-OSEC – P147.26 million. Schedule 19, Volume I-B shows the

Other Investments and Marketable Securities by department/office.

•••• Sinking Fund of P932.22 billion or 73.27 percent of the total NG investments, of which

P931.89 billion or 99.96 percent pertained to Sinking Fund accounts of NG-issued and NG

Guaranteed LBP, MWSS, HGC, NFA, NPC, PPA and PAG-IBIG Bonds being

administered by the BTr-GOP and the balance P326.41 million were reported in the LBP

administered ARF Fund 158.

5.1.1.3 Property, Plant and Equipment – P1.055 trillion

The aggregate value of Property, Plant and Equipment (PPE) reached P1.055

trillion, net of accumulated depreciation P155.36 billion, comprised 25.92 percent of the

total assets of NG. It posted an increase of P68.93 billion or 6.98 percent from P987.06

billion in 2011. The increment was contributed largely by the Land and Land

Improvement group of accounts and the Construction in Progress group with P25.10

billion and P42.28 billion additions, respectively. The major classification of PPE is

shown in Table V.1-9.

79

Table V.1-9 Major Classification of Property, Plant and Equipment

Particulars


Percent 2012 2011

Increase/

(Decrease)

Construction in Progress 558,729.06 533,628.73 25,100.33 4.70

Land and Land Improvements 241,058.94 198,777.36 42,281.58 21.27

Buildings 139,002.74 141,098.21 (2,095.47) (1.49)

Machineries and Equipment 50,139.05 48,352.52 1,756.53 3.63

Office Equipment, Furniture

and Fixtures

35,462.37 32,879.31 2,583.07 7.86

Transportation Equipment 24,814.08 24,859.59 (45.51) (0.18)


Equipment

6,427.97

7,081.96

(653.99)

(9.23)

Leasehold Improvements 351.22 350.68 0.53 0.15

Total 1,055,985.43 987,058.35 68,927.08 6.98 Difference between totals and sum of components is due to rounding off.

Among the components of the PPE, the Construction in Progress group of account

accounted the highest share totaling P558.73 billion or 52.91percent of the total PPE,

followed by the Land and Land Improvements group with P241.06 billion or 22.83

percent share and the Buildings group with P139 billion or 13.16 percent. Chart V.1-3

shows the percentage distribution of PPE by classification.

Chart V.1-3 Percentage Distribution of Property, Plant and

Equipment by Classification

22.83%,

13.16%

0.03%3.36%

4.75%

2.35%

0.61%

52.91%

Land and Land Improvements

Buildings

Leasehold Improvements

Office Equipment, Furniture and

Fixtures

Machineries and Equipment

Transportation Equipment


Equipment

Construction in Progress

Schedule 20, Volume I-B presents the Property Plant and Equipment by major

classification and by department/office/agency.

•••• Construction in Progress (CIP) group of PPE combined total P558.72 billion more by

P25.10 billion or 4.70 percent from P533.63 billion in the previous year. This group of

PPE consisted of CIP-Agency Assets – P 43.78 billion or 7.84 percent, and Public

Infrastructures/Reforestation Projects – P514.94 billion or 92.16 percent. Table V.1-10

presents the components of CIP group of PPE account.

�� Construction in Progress – Agency Assets account balance of P38.85 billion

posted an increment of P5.28 billion or 15.72 percent from P33.57 billion in 2010.

80

The DepEd accounted 26.66 percent amounting to P11.67 billion, the department

with the biggest balance that includes prior years completed projects not yet

reclassified to its proper accounts pending the issuance of Certificates of

Completion and Acceptance. The other departments with huge balances to this

account were: DOTC – P7.14 billion; DOH – P5.79 billion; SUCs – P4.78 billion;

DOF – P2.51 billion; P1.46 billion; DND – P2.34 billion; DA – P1.89 billion and

DPWH – P1.49 billion. Schedule 21, Volume I-B shows the CIP-Agency Assets

account by department/office/agency.

Table V.1-10 Components of Construction in Progress (CIP)

Particulars


Percent 2012 2011 Increase/

(Decrease)

Agency Assets 43,785.90 38,849.40 4,936.50 12.71

Public Infrastructure/Reforestation

Projects 514,943.16 494,779.32 20,163.84 4.08

CIP - Roads, Highways and Bridges 317,478.69 309,819.00 7,659.69 2.47

CIP - Irrigation, Canals and Laterals 81,949.81 69,324.13

12,625.68

18.21

CIP -Flood Controls 54,949.34 49,156.00 5,793.33 11.79

CIP - Other Public Infrastructures 47,406.97 54,887.59

(7.480.61)

(13.63)

CIP - Artesian Wells, Reservoirs,

Pumping Stations and Conduits

4,173.36

3,117.76

1,055.60

33.86

CIP - Ports, Lighthouses and Harbors 3,996.49 4,054.07 (57.59) (1.42)

CIP - Waterways, Aqueducts,

Seawalls, River Walls and Others

2,322.21

2,102.64

219.57

10.44

CIP - Parks, Plazas and Monuments 214.31 188.51 25.80 13.69

CIP - Reforestation Upland 2,389.66 2,085.62 304.04 14.58

CIP – Reforestation Marshland/

Swampland

62.31

44.01

18.30

41.60


�� Construction in Progress - Public Infrastructures/Reforestation Projects (PI/RP) group of accounts accumulated balance of P514.94 billion exhibited an

increase of P20.16 billion or 4.08 percent compared with P494.78 billion in 2011.

Among the components of this group of accounts CIP-Roads, Highways and

Bridges account shared the highest at P317.49 billion or 61.65 percent of the total

PI/RP, followed by the CIP-Irrigation, Canals and Laterals account P81.95 billion

or 15.91 percent, and third CIP- Flood Controls account P54.95 billion or 10.67

percent.

The DPWH accounted the highest balance amounting to P414.59 billion or

80.51 percent, majority of which were for Roads, Highways and Bridges – P311.76

billion, Flood Controls – P54.53 billion and Other Public Infrastructures – P36.29

billion. The DA followed with P79.35 billion balance, of which P75.82 billion

were for the account Irrigation, Canals and Laterals composed of direct labor and

materials, overhead, land, contracts, equipment and consultancy cost of various

foreign assisted projects implemented by NIA. Third was the DOTC P12.53 billion

that includes completed projects - airports and ports, lighthouses and harbors, with

recorded value of P6.95 billion. The completed projects lack the unbilled portions

of the contract cost and the require documentations such as the Project Completion

and Acceptance Report to facilitate the proper reclassification to proper PPE

81

account. Table V.1-11 shows the department/offices with total balances of more

than P100 million to the CIP – PI/RP accounts and Schedule 22, Volume I-B

presents the CIP-Public Infrastructures/Reforestation Projects accounts by

department/office/agency.

Table V.1-11 – Department/Office with more

than P100 million worth of Public

Infrastructures

•••• Land and Land Improvements group net accumulated value

P241.06 billion exhibited

significant an increase of P42.28

billion or 21.27 percent from

P198.78 billion in the previous

year. Among the components,

account Land had the highest

balance at P207.17 billion

representing 85.94 percent. It

increased by P46.51 billion or

28.95 percent over the previous

year’s P160.66 billion, reported

in the BTR-GOP Agrarian

Reform Fund 158 the amount of

P46.17 billion. The account

Runways/Taxiways had the least

balance at P100.78 million, showing a reduction of P109.70 million or 52.12 percent

from last year’s P210.48 million. The significant reduction was from the DOTC books -

the transfer to the recipient agency of completed projects amounting to P2.906 billion

offset by the reclassification of CIP account of various completed projects to the

Runways/Taxiways account amounting to P2.80 billion. Table V.1-12 shows the

comparative components of Land and Land Improvement accounts.

Table V.1-12 Components of Land and Land Improvements

Particulars


Percent 2012 2011

Increase/

(Decrease)

Land 207,168.79 160,657.69 46,511.10 21.27

Land Improvements 31,179.97 35,445.02 (4,265.05) (12.03)

Railways 1,951.91 1,851.91 100.00 5.40

Electrification, Power and

Energy Structures

657.49

612.26

45.23

7.39

Runways/Taxiways 100.78 210.48 (109.70) (52.12)


•••• Buildings accumulated net book value of P139.00 billion comprised 13.16 percent of

the total PPE. It registered a decrease of P2.09 billion or 1.49 percent over the 2011

level of P141.10 billion due to depreciation. Among the components of this group of

PPE, the School Buildings account shared the biggest portion at P63.19 billion or 45.46

percent, followed by Office Buildings at P43.67 billion or 31.42 percent, and Other

Structures at P23.21 billion or 16.70 percent. Table V.1-13 shows the components of

Buildings.

Department/Office

Amount

(in million

pesos)

Percen-

tage

DPWH 414,587.78 80.51

DA 79,346.96 15.41

DOTC 12,529.41 2.43

DENR 3,230.65 0.63

DAR 2,052.43 0.40

MMDA 952.30 0.18

DOH 801.09 0.16

ARMM 703.69 0.14

OEO 339.70 0.07

DOT 141.96 0.03

DND 113.46 0.02

DEpEd 108.56 0.02

Other Departments 35.13 0.01

Total 514,943.16 100.00

82

Table V.1-13 Components of Buildings

Particulars


Percent 2012 2011

Increase/

(Decrease)

School Buildings 63,185.84 60,848.55 2,337.29 3.84

Office Buildings 43,673.16 44,707.81 (1,034.65) (2.31)

Other Structures 23,214.00 27,173.38 (3,959.37) (14.57)

Hospitals and Health Centers 8,759.16 8,286.79 472.36 5.70

Markets and Slaughterhouses 170.57 81.68 88.90 108.84

Total 139,002.74 141,098.21 (2,095.47) (1.49)


The DepED reported P46.53 billion net value of buildings or 33.48 percent of

the total, the biggest among the departments of which P43.45 billion or 93.39 percent

were School buildings and P2.33 billion or 5.01 percent were Office buildings. The

amount of buildings booked up does not include the School Building Projects

implemented by the DPWH due to non-availability of documents particularly the

journal entry voucher, certificate of final completion and certificate of acceptance by

the end-users. The other departments accounted the highest accumulated net book value

of the building group of PPE accounts were: SUC – P21.18 billion or 15.24 percent;

DPWH – P20.07 billion or 14.44 percent, DND – P10.29 billion or 7.40 percent and

DOH- P7.55 billion or 5.44 percent.

Of the amount reported by the DPWH, P7.88 billion were Office Buildings,

P6.83 billion were Other Structures and P5.17 billion were School Buildings. Most

completed projects undertaken by the DPWH for DepEd and DOH were already turned-

over to the agencies but without the corresponding accounting entries to drop it from

the books of accounts of DPWH.

5.1.1.4 Other Assets – P104.93 billion

The aggregate Other Assets of the NG of P104.93 billion is 2.58 percent of the

total assets. This group of asset account declined by P4.57 billion or 4.17 percent from

last year’s P109.50 billion brought about mostly by the reduction in the Other Assets

account and the Items in Transit account by P1.75 billion and P2.84 billion, respectively.

Table V.1-14 shows the components of the Other Assets group.

Table V.1-14 Components of Other Assets Group

Particulars


Percent 2012 2011 Increase/

(Decrease)

Other Assets 96,322.64 98,074.83 (1,752.18) (1.79)

Items in Transit 7,328.24 10,164.92 (2,836.68) (27.91)

Breeding Stocks 730.02 715.63 14.39 2.01

Arts, Archeological Specimen

and Other Exhibit

413.57

414.26

(0.69)

(0.17)

Work/Other Animals 138.32 132.29 6.03 4.56

Total 104,932.79 109,501.93 (4,569.14) (4.17)


83

•••• The Other Assets account is used to record the value of serviceable assets not used

in operation and those waiting for disposal. At year-end, this account amounted to

P96.32 billion or 91.79 percent of the total Other Assets group. The DOF-BTr-GOP

reported P72.59 billion balance consisting of transferred assets under Proclamation

No. 50 wherein disposition and sale are being handled by the Privatization and

Management Office and PNPP/NPC, valued at P67.95 billion, financial assets

transferred from DBP, PNB and Philguarantee of P4.63 billion, and P2.17 million

appraised value of diamonds in the Treasury Vault deposited by various government

agencies which were escheated in favor of the Republic of the Philippines per court

order dated May 5, 1997.

5.1.2 LIABILITES – P6.019 trillion

This year’s reported liabilities of P6.019 trillion posted an increment of

P259.56 billion or 4.51 percent compared to last year’s amount of P5.760 trillion.

Of the total, P4.803 trillion or 79.80 percent pertains to Long-term Liabilities;

P1.187 trillion or 19.72 percent represents Current Liabilities; and P29.12 billion or

0.48 percent refers to Deferred Credits.

Chart V.1-4 shows the trend of liabilities of the NG for the last ten (10) years.

The chart demonstrates the trend of liabilities of the NG for the last ten years,

from FYs 2003 to 2012. It shows that the total liabilities continued to grow except

in FY 2007 where there was a slight decline due to the decrease in Long-term

Liabilities. In FY 2009, the evident increase in Current Liabilities and a

corresponding decrease in Long-term Liabilities were due to the reclassification of

the current portion of the Loans Payable – Domestic from Long-term Liabilities.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Current Liabilities 204.10 225.90 212.80 239.74 250.12 271.77 912.86 813.02 790.70 1,187.03

Long-term Liabilities 3,321.56 3,706.28 3,885.69 3,887.98 3,784.15 4,139.97 3,701.91 4,718.79 4,942.14 4,803.31

Total Liabilities 3,537.45 3,989.48 4,148.77 4,167.12 4,055.68 4,440.24 4,648.21 5,018.44 5,732.84 5,990.34

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Chart V.1-4 Trend of Liabilities(in billion pesos)

84

Likewise, for FY 2012, the significant increase in Current Liabilities which can be

highly attributed to the recognition of the current portion of the Bonds Payable –

Domestic, overshoots the decrease in Long-term Liabilities resulting to a net

increase in the total liabilities. Due to insignificance of amount, the Deferred

Credits, though forming part of the total liabilities was not included in the graphical

presentation.

5.1.2.1 Current Liabilities – P1.187 trillion

This year’s Current Liabilities posted a remarkable increase of P396.33

billion or 50.12 percent from last year’s balance of P790.70 billion. Table V.1-15

shows the components of Current Liabilities with comparative figures of 2011.

Table V.1-15 Comparative Components of Current Liabilities

Particulars

2012 2011 Increase/ (Decrease)

Amount

(in million

pesos)

Percent

Distribu-

tion

Amount

(in million

pesos)

Amount

(in million

pesos)

Percent

Payable Accounts 136,721.32 11.52 114,370.53 22,350.79 19.54

Inter-Agency Payables 227,245.46 19.14 118,488.03 108,757.43 91.79

Intra-Agency Payables 34,577.02 2.91 174,995.59 (140,418.57) (80.24)

Other Liability Accounts 148,069.68 12.47 85,466.69 62,602.99 73.25

Bonds Payables, Domestic

Current

255,649.37

21.54

-

255,649.37

-

Bonds Payables, Foreign,

Current

32,856.40

2.77

-

32,856.40

-

Loans Payable , Domestic,

Current

277,334.42

23.36

297,380.52

(20,046.10)

(6.74)

Loans Payables, Foreign, Current 74,579.41 6.28 - 74,579.41 -

Total 1,187,033.08 100.00 790,701.36 396,331.72 50.12


•••• Payable Accounts – P136.72 billion

Payable Accounts exhibited an increase of P22.35 billion or 19.54 percent

from P114.37 billion in 2011. This was due to the increase in the following

account components: Accounts Payable, Notes Payable, and Due to Officers and

Employees.

�� Accounts Payable of P107.91 billion accounted for 78.92 percent of the total

Payable Accounts. It exhibited an increase of P10.74 billion or 11.06 percent

from P97.16 billion in 2011. Table V.1-16 shows the distribution of the

Accounts Payable by department with comparative figures of 2011.

85

Table V.1-16 Top 10 Departments/Offices in Accounts Payable

Department/Office


2012 2011 Increase/ Percent

(Decrease)

Public Works and Highways 50,813.81 46,349.42 4,464.39 9.63

Finance 10,540.18 2,737.05 7,803.13 285.09

Other Executive Offices 7,328.80 542.65 6,786.15 1,250.56

Agriculture 7,198.90 6,496.99 701.91 10.80

Health 6,026.15 6,561.99 (535.84) (8.17)

Social Welfare and Development 4,476.47 7,391.61 (2,915.14) (39.44)

State Universities and Colleges 3,187.56 4,209.97 (1,022.41) (24.29)

Education 2,661.80 2,563.97 97.83 3.82

Interior and Local Government 2,437.93 1,538.66 899.27 58.45

Transportation and Communications 1,871.18 2,308.35 (437.17) (18.94)

Other Departments 11,363.48

Total 107,906.26

The top ten departments shared an aggregate P96.60 billion which

represents 89.47 percent; while the cumulative total for all the other

departments is only P11.36 billion or 10.53 percent. The table also reveals

that the increase in Accounts Payable was mainly due to the increase in the

accounts of the DOF – P7.80 billion, OEO – P6.79 billion, DPWH – P4.46

billion. However, these increases were partly offset by the decrease in the

DSWD – P2.91 billion, and SUCs – P1.02 billion.

The DPWH, reported the biggest Accounts Payable of P50.81 billion.

The amount of P49.85 billion was reported by the OSEC Central Office and

Provincial Management Offices and P882.48 million was reported by the

Regional Offices. The increase in Accounts Payable amounting to P4.46

billion was due to the net transactions arising from payment of contractors’

progress billings, payment of expropriation accounts, and payment to

suppliers and various adjustments. This does not include, though will be paid

in the ensuing year, accounts payable for the MEGA Bridges for Urban and

Rural Development Project amounting to P8.80 billion and P4.67 billion,

respectively, because withdrawal applications were not processed.

The DOF followed with P10.54 billion, P8.33 billion of which was

reported by the BTr – GOP representing past due agrarian reform loans per PD

717 – RA 6657, and P1.16 billion accounted by the BOC pertaining to

indebtedness arising from government operations.

Unlike in the previous years wherein the OEO was not among the

departments/offices with huge balance of Accounts Payable, in FY 2012, it

ranked 3rd

from the top having reported an aggregate P7.33 billion. The

abrupt increase was due to the transfer of the PRRC to the OEO which

reported in its books the amount of P6.66 billion pertaining to various

infrastructure projects which were already paid under the direct payment

86

scheme charged against the ADB loan and Belgian Super Subsidy Facility

loan but cannot be dropped from the books because of the absence of the

Notice of NCAA from the DBM.

The DA had an accumulated balance of P7.20 billion in Accounts

Payable, P6.59 billion of which represents unreleased checks for due and

demandable obligations to creditors. The OSEC reported P1.24 which

represents the accounts paid by the bank under the direct payment scheme but

remained outstanding in the books due to the non-issuance of the NCAA by

the DBM. The bulk of the balances per project pertain to the following: NIA

– P3.78 billion, RFU XIII– P267.33 million, MRDP – P143.89 million, and

BSWM – P122.99 million.

The DOH has an outstanding Accounts Payable in the amount of P6.03

billion. Of this amount, the OSEC reported P5.96 billion which pertain to

purchases of inventories and PPE on account and unpaid contracts for

services.

The DSWD’s P4.48 billion in Accounts Payable includes P3.87 billion

representing various claims of creditors and unpaid cash grants of the

beneficiaries of Pantawid Pamilyang Pilipino Program, and unreleased checks

of P605.37 million subject for reversion in the ensuing year.

The SUCs recorded a total of P3.19 billion in Accounts Payable. Of this

amount, P2.63 billion or 82.44 percent was accounted by the University of the

Philippines and the remaining P557.25 million or 17.56 percent was

distributed among 99 other SUCs; thus, 12 SUCs do not have accounts

payable or unpaid obligations as of the end of the year.

The DepEd has an accumulated balance of Accounts Payable amounting

to P2.62 billion. Of this amount, a total of P2.38 billion was reported by the

Regional Offices, and P235.92 million was recorded in the books of the

OSEC, its bureaus and attached agencies.

The DILG reported outstanding Payable Accounts totaling to P2.44

billion. The sum of P2.21 billion was accounted in the books of the PNP

where the bulk of P1.97 billion was reported as obligations/payable of NHQ.

The DOTC ranked number 10 among the departments with the highest

Accounts Payable. It reported a balance of P1.87 billion as of yearend. Per

report of the OSEC, the amount of P916.59 refers to obligations to external

creditors for goods delivered and services rendered.

�� Notes Payable with a balance of P16.73 billion represents 12.24 percent of

the total Payable Accounts. It showed a substantial increase of P9.59 billion

or 134.12 percent from the 2011 figure of P7.15 billion. The BTr – GOP

declared that P16.71 billion or 99.88 percent refers primarily to promissory

notes issued to BSP, Multilateral Investment Guaranty Agency (MIGA),

Asian Development Bank (ADB), International Monetary Fund (IMF), and

87

International Bank for Reconstruction and Development (IBRD) for payment

of subscription to the capital stock.

�� Due to Officers and Employees of P11.71 billion shared 8.57 percent of the

total Payable Accounts which increased by P2.18 billion or 22.90 percent

from P9.53 billion in 2011. It represents unpaid salaries, fringe benefits and

other emoluments, and other unpaid obligations due to officers and

employees of NGAs.

The bulk of this payable account was accounted in the books of the

following departments: DILG – P4.16 billion, DepEd – P2.45 billion, and

DND – P2.28 billion.

Under the DILG, the PNP reported P4.02 billion payable to PNP

personnel as of the end of the year, P3.89 billion or 96.77 percent of which

was reported for the NHQ.

�� Interest Payable totaling P367.31 million was reported by the BTR-GOP

representing accrued interest on over-the-counter sale of domestic bonds.

This amount registered a decrease of P160.37 million or 30.39 percent from

last year’s P527.68 million.

•••• Inter-Agency Payables – P227.25 billion

Inter-Agency Payables pertain to liabilities that subsist between NGAs,

LGUs and GOCCs as of the end of the year. This group of liability accounts

showed an increase of P108.76 billion or 91.79 percent from last year’s P118.49

billion. This was mainly due to the increase in four accounts: Due to Other

NGAs – P72.78 billion, Due to Other GOCCs – P22.65 billion, Due to National

Treasury – P11.29 billion, Due to LGUs – P1.13 billion.

�� Due to the National Treasury in the total amount of P33.57 billion is 14.77

percent of the total inter-agency payables. Main contributors to this account

are the DOF – P15.66 billion and the DOE – P14.59 billion. Specifically the

BIR reported a total of P14.52 billion which refer to balances of collections in

the prior years which are still being reconciled with the BTr. In the books of

the DOE, P14.58 billion pertains to revenues/receivables representing

government share/royalties from service/operating contracts and other

fees/charges/penalties collected. The amount was adjusted by P13.82 billion

in April, 2013.

�� Due to BIR of P3.43 billion constitutes 1.51 percent of the total inter-agency

payables. This account refers to unremitted withholding taxes from salaries of

officers and employees and from claims of suppliers, contractors, and other

creditors.

�� Due to GSIS, PHILHEALTH, and PAG-IBIG had balances of P5.19

billion, P967.11 million, and P370.24 million, respectively. These accounts

which totaled P6.53 billion represent 2.87 percent of the total inter-agency

88

payables. They represent mandatory contributions for GSIS life and

retirement insurance premiums, PHILHEALTH and PAG-IBIG premiums,

including government shares, and deductions for payment of various loans

which were unremitted as of the end of the year.

�� Due to Other NGAs in the total amount of P126.02 billion shared 55.45

percent of inter-agency payables. A remarkable increase of P72.78 billion or

136.72 percent from last year’s P53.23 billion was noted for this account.

The DOF-BTR accounted a large portion of the account amounting to P91.17

billion or 72.35 percent.

�� Due to Other GOCCs with an outstanding balance of P50.35 billion

represents 22.16 percent of the total inter-agency payables. It registered a

significant increase of P22.65 billion or 81.78 percent from P27.70 billion in

2011. The bulk of this account amounting to P45.74 billion representing

90.84 percent was reported by the DOF-BTR as follows:

The DFA also accounted in its books P2.91 billion representing 5.78

percent which includes the amounts due the Bangko Sentral ng Pilipinas

(Fiscal Agency Service) for currency remittances to various Foreign Service

Posts.

The total of P1.70 billion or 3.38 percent was shared by the other

departments/offices.

Particulars

Amount

(in million

pesos)

1. NG Subsidy and Equity to GOCCs under the Disbursement

Acceleration Program

15,547.55

2. NG Relending to PSALM for the payment of NG advances for its

IPPs Projects

12,501.54

3. NG Payable to the BSP representing IMF revaluation of the

Special Drawing Rights in Philippine Peso

9,416.98

4. Managed funds and escrow account held by the NG for Bond

Sinking Fund, DRF and other GOCCs

6,791.90

5. Collateral deposit of GOCCs under the 1992 Philippine Financing

Plan

868.17

6. Withheld tax from PDIC on its investments in government

securities pending release of SARO for tax subsidy

384.89

7. Balance of proceeds from the drawing of the US$120.0 million

Performance Bond/Irrevocable Standby Letter of Credit put up by

the Maynilad Water Services, Inc. to secure its Concession Fee

liabilities with MWSS

133.30

8. Philippine Coconut Authority collections 53.65

9. NG liability to the Social Security System relative to the accrued

interest due to delayed payment of dividends to PNB shares

43.06

Total 45,741.05


89

�� Due to LGUs of P7.35 billion constitutes 3.23 percent of the total inter-

agency payables. Of the total amount, the DOE reported P4.79 billion

equivalent to 64.99 percent which represents funds available to implement

projects under the Energy Regulatory 1-94.

The DBM also reported a huge balance of P1.22 billion which

represents the unreleased authorized share of LGUs in IRA, national wealth,

value added tax for the years 2000 to 2006. These shares were not authorized

by the DBM to be reverted per memorandum dated December 5, 2011;

however, in view of the Audit Observation Memorandum issued by the COA

Auditor on dormant accounts instructions were requested from the

Undersecretary for resolution.

The schedule of Inter-agency Payables by department/office/agency and

by account is shown in Schedule 24, Volume I-B.

•••• Intra-Agency Payables – P34.58 billion

Intra-agency payables are reciprocal accounts that subsist between the

Central Office, Regional Offices/Staff Bureaus and Operating Units, and other

funds within the agency. This group of accounts with an accumulated balance of

P34.58 billion showed a decline of P140.42 billion or 80.24 percent from last

year’s level of P175.00 billion. The decline was due to the decreases in Due to

Other Funds by P135.31 billion or 81.52 percent, Due to Operating Units by

P4.67 billion or 73.90 percent, and Due to Regional Offices by P691.07 million

or 46.28 percent.

Despite the great decline, the Due to Other Funds account has still an

outstanding balance of P30.68 billion as of yearend. The bulk was accounted in

the DOF, particularly, MDFO – P20.39 billion and BOC – P6.50 billion. The

account of the BOC includes mark-up from sale of accountable forms and interest

income from bank accounts which are due for remittance to the BTR and for

recording in the other books or funds. Furthermore, the Due to Operating Units

account has P1.65 billion balance as of the end of the year.

•••• Other Liability Accounts – P148.07 billion

The Other Liability Accounts of the NG comprised: Guaranty Deposits

Payable – P10.42 billion or 7.04 percent, Performance/Bidders/Bail Bonds

Payable – P10.58 billion or 7.14 percent, Tax Refunds Payable – P12.14 billion

or 8.20 percent, and Other Payables – P114.93 billion or 77.62 percent.

■ Guaranty Deposits Payable with a total balance of P10.42 billion decreased

by P4.62 billion or 79.61 percent from last year’s balance of P5.80 billion.

The DPWH has the biggest of this account in the amount of P4.32 billion,

P3.59 billion of which are obligations of the Regional Offices. The DOF also

reported P3.19 billion, P3.12 billion of which was reported by the BTr-GOP,

particularly referring to ARF.

90

■ Performance/Bidders/Bail Bonds Payable with an aggregate amount of

P10.58 billion showed a minimal increase of P234.26 million or 2.26 percent

from the 2011 figure of P10.34 billion.

A big portion amounting to P7.92 or 74.49 percent of the total was

reported by the Judiciary. Specifically the Supreme Court accounted a total

amount of P7.67 billion, P6.11 billion of which was reported by the Regional

Trial Courts. This pertains to cash bond received to guarantee faithful

performance of contracts with the government covering bidders bonds, bail

bonds, rental deposits, consignation, and other fiduciary fees collected.

■ Tax Refunds Payable with a balance of P12.14 billion slightly decreased by

P359.14 million or 2.87 percent from last year’s balance of P12.50 billion.

The DOF reported almost entirely the whole amount with P12.06 billion or

99.34 percent. In particular, the BIR and the BOC reported P9.34 billion and

P2.72 billion, respectively.

■ Other Payables with an accumulated balance of P114.93 billion as of the end

of the year showed a significant increase of ₱58.11 billion or 102.26 percent

from the balance of P56.82 billion in 2011.

The DOJ reported a huge amount of P59.37 billion for this account,

followed by SUCs with P15.90 billion, DOF with P15.23 billion, and DOTC

with P7.55 billion.

Under the DOJ, specifically the PCGG accounted P59.09 billion which

represents the resources in trust to PCGG pending results of the on-going

court proceedings which include the redemption proceeds of San Miguel

Corporation Series I preferred shares amounting to ₱56.5 billion remitted by

the PCGG to the BTR in October 2012.

The SUCs reported P55.90 billion, P13.05 billion belongs to the UP.

The DOF reported a total of P15.23 billion in Other Payables, P11.04

billion of which was reported by the BTr – GOP which includes among

others the following:

Particulars

Amount

(in million

Pesos)

1. Balance of Forfeited Swiss Deposits 10,531.97

2. Payment made by GOCCs for the servicing of their foreign loans 376.57

3. Payables for Emergency Guerilla Currency Notes (R.A. No. 369) 31.71

4. Payables for Backpay Rights Sinking Fund (R.A. No. 897) 22.41

5. Contributions to Foreign Financial Institutions (FFIs) 17.14

6. Payables for Backpay Rights Sinking Fund (R.A. No. 304) 1.10

7. Others 0.21

Total 10,981.11

91

The DOTC accounted P7.55 billion classified as Other Payables. The

bulk of P4.53 billion was reported by the LTO and P3.00 billion was

reported by the DOTC – OSEC.

The Other Payables accounted in the books of the LTO pertains to

collected computerization fees held in escrow on behalf of the LTO – IT

project proponent, STRADCOM Corporation. And the Other Payables of the

OSEC, includes as follows: P2.83 billion which applies to collections from

the operation of the EDSA MRT 3 to be used for the payment of

rental/equity and maintenance fee and other payments enumerated in the

agreement to build, operate and transfer; P57.96 million representing the

peso equivalent of the dollar trust fund received from MRTC for EDSA LRT

III project; and P57.49 million relating to bidding collections to be used to

pay honoraria of BAC members.

The DPWH also reported an amount of P1.10 billion as Other Payables

which includes claims of employees for reserved leaves and terminal pay,

and allowable deductions in the compensation of employees payable to

private companies, claims of public and private establishments for the refund

of cash bonds posted in securing excavation permits and deposits for sub-soil

exploration.

•••• Bonds Payable – Domestic, Current – P255.65 billion

Bonds Payable – Domestic, Current with an outstanding balance of P255.65

billion as of the end of the year represents 21.54 percent of the total Current

Liabilities of the NG. This refers to the Treasury Bonds issued domestically by

the NG, maturity of which is within one year. In FY 2011, no current portion for

this account was recorded in the books of the BTr-GOP.

•••• Bonds Payable – Foreign, Current – P32.86 billion

Bonds Payable – Foreign, Current with a balance of P32.86 billion shares

2.77 percent of the total Current Liabilities of the NG. This amount pertains to

offshore bond floatation of the ROP which is due on February 2013. In FY 2011,

no current portion for this account was recognized by the BTr – GOP.

•••• Loans Payable – Domestic, Current – P277.33 billion

Loans Payable – Domestic, Current recorded at P277.33 billion signifies

23.36 percent of total Current Liabilities. This revealed a decrease by P20.05

billion or 6.74 percent from last year’s figure of P297.38 billion. Details of this

account show that these are treasury bills issued domestically by the NG,

maturity of which is within one year.

92

•••• Loans Payable – Foreign, Current – P74.58 billion

Loans Payable – Foreign, Current with a figure of P74.58 billion is 6.28

percent of the total Current Liabilities. This represents that part of the Loans

Payable-Foreign that matures up to December 31, 2013. In FY 2011, no portion

of the Loans Payable, Foreign was recognized to mature within one year.

5.1.2.2 Long-Term Liabilities – P4.803 trillion

Total Long-Term Liabilities of P4.803 trillion is 79.80 percent of the total

liabilities though it decreased by P138.83 billion or 2.81 percent compared to the

2011 level of P4.942 trillion. The decrease could be attributed mainly by the

decrease in Loans Payable, Domestic by P297.56 billion and Loans Payable,

Foreign by P171.10 billion which surpassed the increase in Bonds Payable,

Domestic by P373.87 billion.

Long-term Payables were mostly reported by the BTr-GOP which fully

accounted for Bonds Payables – Domestic and Foreign and Loans Payables –

Domestic and Foreign. Table V.1-17 shows the components of the Long-term

Liabilities with comparative figures for 2011.

Table V.1-17 Comparative Components of Long-term Liabilities

Particulars

2012 2011 Increase/ (Decrease)

Amount

(in million

pesos)

Percent

Distribu-

tion

Amount

(in million

pesos)

Amount

(in million

pesos)

Percent

Mortgage Payable 47.31 - 26.69 20.62 77.26

Bonds Payable - Domestic 2,936,960.30 61.14 2,563,093.56 373,866.74 14.59

Bonds Payable - Foreign 1,170,199.57 24.36 1,214,221.20 (44,021.63) (03.63)

Loans Payable - Domestic 959.75 0.02 298,521.79 (297,562.04) (99.68)

Loans Payable - Foreign 695,098.71 14.47 866,200.19 (171,101.48) (19.75)

Other Long-term Liabilities 45.30 - 78.17 (32.87) (42.05)

Total 4,803,310.94 100.00 4,942,141.60 138,830.66 2.81


•••• Bonds Payable – Domestic of P2.937 trillion or 61.14 percent of the total Long-

term Liabilities represents treasury bonds issued domestically by the NG,

maturity of which is beyond one year.

•••• Bonds Payable – Foreign of P1.170 trillion or 24.36 percent of the total Long-

term liabilities corresponds to the long-term portion of offshore bond flotation of

the Republic of the Philippines.

A detailed discussion of the NG Debt reported by the DOF-BTr-GOP is

presented on pages 131-150 of this report.

93

5.1.2.3 Deferred Credits – P29.12 billion

At the end of the year, Deferred Credits amounted to P29.12 billion,

showing an increase of P2.06 billion or 7.61 percent from last year’s balance of

P27.06 billion. The departments/offices which reported substantial balances are:

DOF – P22.19 billion, OEO – P4.86 billion, and SUCs – P1.34 billion.

Under the DOF, the PMO reported P13.44 billion pertaining to the

receivable arising from installment sale of PMO’s assets transferred and

reclassified under other asset account.

The BTr also reported P6.58 billion, details of which are as follows:

Nature

Amount

(in million

pesos)

1. Premiums of issuance of bonds offshore. 4,481.75

2. Proceeds from ROP's issuance of Debt Exchange Warrants

which entitles the holders during exercise period to tender

dollar/euro bonds and receive in exchange a peso

denominated treasury bonds.

1,471.58

3. Discount on investments in Treasury and ROP Bonds held

by BSF, SGF, SSF, MWSS-SRF and NG which are being

amortized over the life of the bonds.

577.06

4. Represents contra account in setting up the receivable from

DBP and PMO.

44.61

5. Converted balance under Fund 105 which had remained

dormant for over 30 years and was already requested for

write-off.

0.56

Total 6,575.58

The OEO contributed P4.86 billion of Deferred Credits, P4.84 or 99.59

percent of which was reported by the CHED at P4.83 billion of which was

accounted in HEDF – Central Office consisting of contributions from PTA, PRC,

PAGCOR and unexpended balances of programs/projects implemented by the

HEDF which were remitted to the BTr but not yet backed up by Notice of Cash

Allocations, and P23.46 million was reported by CHED Regional Office No.V

as the credit counterpart of loans receivable from Study Now Pay Later Program.

For the SUCs, the UP and CTU contributed P492.19 million and P168.26

million, respectively.

5.3 EQUITY - (P1.946 trillion)

The equity of the NG as of December 31, 2012 with a negative balance of

P1.946 trillion is the difference between the total assets and total liabilities. It

reflected a decrease of P136.98 billion from the negative balance of P2.082 trillion in

the previous year. The equity was affected by the following accounts: results of the

94

Current Operations – P239.97 billion, Prior Years’ Adjustments – (P25.41 billion),

Public Infrastructures – P28.03 billion, Reforestation Projects – P1.30 billion, and

Current operations refer to the results of operations during the current year

considering the income generated, minus the expenses incurred.

Prior Years Adjustments pertain to corrections/adjustments made affecting the

income and expense accounts of the previous years.

Under the NGAS, public infrastructures and reforestation projects which are

intended for public use shall be transferred to the Registry of Public Infrastructures

and Registry of Reforestation Projects upon completion, as these are no longer

considered assets of the Implementing Agencies. Following this policy, the

completed projects are dropped from the books and the corresponding costs are

deducted from the Government Equity. Table V.1-18 shows the departments with

completed public infrastructures and reforestation projects during the year.

Table V.1-18 Departments/Offices/Agencies with

Completed Public Infrastructures and Reforestation Projects

(in million pesos)

Department/Office Public

Infrastructures

Reforestation

Projects

Agriculture 12,802.88 -

Public Works and Highways 8,037.12 -

Other Executive Offices 6,387.48 -

National Defense 197.72 -

Transportation and Communications 183.08 -

Autonomous Region in Muslim Mindanao 124.28 -

Interior and Local Government 62.29 -

Environment and Natural Resources 57.58 1,300.49


Agrarian Reform 39.68 -

Metro Manila Development Authority 35.88 -

Health 26.50 -

Tourism 17.37 -

National Economic and Development Authority 4.92 -

Social Welfare and Development 0.41 -

Science and Technology 0.37 -

Labor and Employment 1.32 -

Total 28,028.99 1,300.57


95

This year’s completed Public Infrastructures of P28.03 billion decreased by

P3.57 billion or 11.30 percent; while, Reforestation Projects of P1.30 billion

increased by P348.38 million or 36.59 percent from the CY 2011 of P31.60 billion

and P952.19 million, respectively.

The DENR, being the agency responsible for the conservation, management,

development, and proper use of the country’s environment and natural resources

reported P1.30 billion or 99.99 percent for reforestation projects; while, the SUCs,

accounted for P0.08 million or 0.01 percent.

96

5.2 Statement of Income and Expenses

On the whole, the continuing commitment of the Aquino Administration to increase

collection efficiency and sustain the significantly improved tax administration efforts

consequently resulted to a growth in government income/revenues of 12.83 percent

compared to last year’s growth of 12.49 percent. Thus, this year’s accelerated

government current operating expenditures at 11.81 percent were proportionately

matched by the increase in income/revenues. Clearly, the country displayed improved and

spurred economy amidst risks and uncertainties in the global less upbeat environment.

The overall performance in the income/revenue generation of the National

Government yielded P1.579 trillion while total expenses to finance government

operations, delivery of services and payment of financial expenses amounted to P1.485

trillion. The total Current Operating Expenses incurred for the year of P793.51 billion

brought in income from current operations of P785.00 billion. On the other hand, income

after subsidies of P412.04 billion resulted after deducting the total financial support to

local government units, government owned and/or controlled corporations and non-

government/peoples’ organizations of P372.95 billion. The acceleration in financial

expenses from last year’s P282.77 billion to current year’s P318.34 billion, gave rise to

the government’s net income of P239.97 billion after considering the negative net subsidy

to NGAs of P9.78 billion and net gains of P156.05 billion. The comparison of the 2012

revenue/income and expenses with 2011 data is shown in Table V.2-1.

Table V.2-1 Income/Revenue, Expenses, Subsidies and Net Loss


Percent 2012 2011

Increase

(Decrease) Income/Revenue 1,578,507.72 1,399,016.71 179,491.01 12.83

Tax Revenue 1,356,524.34 1,221,943.75 134,580.60 11.01 Non-Tax Revenue/General Income 221,983.38 177,072.96 44,910.42 25.36

Less: Current Operating Expenses 793,511.38 709,723.67 83,787.71 11.81

Personal Services 565,015.37 512,110.99 52,904.38 10.33 Maintenance and Other

Operating Expenses

228,496.01

197,612.68 30,883.34 15.63 Income from Current Operations 784,996.34 689,293.04 95,703.30 13.88

Subsidies to (372,951.88) (391,266.57) 18,314.69 (4.68)

Local Government Units (net) (301,846.12) (317,896.69) 16,050.57 (5.05)

Government Owned/Controlled Corporations

(70,484.23)

(72,842.24)

2,358.02

(3.24)

Non-Government Organizations/ Peoples’ Organizations

(621.53)

(527.64)

(93.89)

17.80

Income after Subsidies 412,044.46 298,026.47 114,017.99 38.26

Less: Financial Expenses 318,336.90 282,771.72 35,565.18 12.58 Income/(Loss) before Other

Income/Expense Items

93,707.56

15,254.75 78,452.80

514.28

Net Subsidy From/(To) NGAs (9,783.81) 2,794.30 (12,578.11) (450.13) Net Gain/(Loss) 156,048.69 (31,674.01) 187,722.70 (592.67) Net Income/(Loss) 239,972.44 (13,624.95) 253,597.39 (1,861.27)


97

5.2.1 Income/Revenue – P1.579 trillion

The total income/revenue of P1.579 trillion showed an increase of 12.83 percent

compared to last year’s P1.399 trillion. The progress in the total revenue for the year of

P179.49 billion was contributed both by the accelerated tax revenue and non-tax

revenue/general income collections with growth rate of 11.01 percent and 25.36

percent, respectively. The composition of the total income/revenue is tax revenue

collections of P1.357 trillion or 85.94 percent and non-tax revenue of P221.98 billion or

14.06 percent. The cumulative income/revenue collections is 1.15 percent higher than

the P1.560 trillion projected level for the year. (Source of data on projected

revenue/income: 2013 Budget of Expenditures and Sources of Financing)

5.2.1.1 Tax Revenue – P1.357 trillion

The main players on tax

revenue collections, namely the

Bureau of Internal Revenue (BIR)

and the Bureau of Customs

(BOC), participated to the

improvement of total tax revenue

collections of 11.01 percent. The

tax revenue performance of all tax

collecting agencies of P1.357

trillion was short by P70.90

billion or 4.97 percent of the

programmed total tax revenue of

P1.427 trillion. The projected

level for non-tax revenue of

P133.20 billion in 2012 compared

with the actual non-tax revenue

collections of P221.98 billion presents a surplus of P88.78 billion or 66.66 percent.

Chart V.2-1 presents the actual and projected revenue/income. (Source of data on

projected revenue/income: 2013 Budget of Expenditures and Sources of Financing)

The total tax revenue was contributed mainly by the: BIR – P1.058 trillion or

77.97 percent; BOC – P291.28 billion or 21.47 percent including non-cash revenue

from the Tax Expenditure Fund (TEF) of P7.48 billion and the rest by other tax

collecting agencies, namely: the DOTC – LTO, Motor Vehicle Users’ Charge

(MVUC); DOJ – BI, Immigration Tax; DENR – OSEC, Forest Charges; and OEO –

FDCP, Other Taxes.

The tax revenue represents 85.94 percent of the aggregate consisting of: Taxes

on Goods and Services – P629.68 billion or 46.42 percent; Income Taxes – P617.88

billion or 45.55 percent; Other Taxes – P55.11 billion or 4.06 percent and the

remaining 3.97 percent are shared by Import Duties – P42.39 billion or 3.12

percent; Property Taxes – P10.18 billion or 0.75 percent; and Fines and Penalties –


-

200

400

600

800

1,000

1,200

1,400

1,600

Tax Non-Tax

1,356.52

221.98

1,427.43

133.20

Chart V.2-1 Comparison of Actual and

Programmed Revenue

(in billion pesos)

Actual Programmed

98

Based on the financial reports submitted by the main tax revenue collecting

agencies, current year’s tax collections of the BIR exceeded last year’s collection of

P923.82 billion by P133.88 billion or 14.49 percent, while the BOC reported an

increase of P26.45 billion or 9.99 percent over last year’s collection of P264.83

billion.

� Taxes on Goods and Services – P629.68 billion

This year, tax collections on goods and services provided the largest share at

P629.68 billion or 46.42 percent of the total tax revenue. This is higher by P100.98

billion or 19.10 percent than last year’s P528.70 billion. This category consists of

tax collections on General Sales, Turnover or VAT; Excise Tax on Articles; Taxes

on Services and Taxes on the Use of Goods or Property or Permission to Perform

Activities. The impressive growth was fueled by the increase in Turnover or VAT

collections, as reflected in the reports submitted by the BOC and BIR. Table V.2-2

shows the comparative Taxes on Goods and Services for calendar years 2012 and

2011.

Table V.2-2 Comparative Taxes on Goods and Services, By Source

Particulars

Amount (in million pesos) Percent

2012 2011 Increase

(Decrease) General Sales, Turnover or VAT 499,995.09 422,290.97 77,704.12 18.40

Excise Tax on Articles 119,884.93 96,937.87 22,947.06 23.67 Taxes on the Use of Goods, Property,

Permission to Perform Activities

9,800.32

9,476.14

324.18 3.42 Total 629,680.34 528,704.98 100,975.35 19.10


� Taxes on Net Income and Profits – P617.88 billion

Of the total tax revenue collections, P617.88 billion represents taxes on net

income and profits. This type of tax revenue contributed the second biggest share at

45.55 percent. The increase of P60.65 billion was mainly due to the increase of final

tax, income tax on individuals and income tax on corporations and partnerships of

P31.36 billion, P22.64 billion, and P6.62 billion, respectively. Despite the total

increase for the year under this tax category, it was not sufficient for the tax

collecting agencies to meet the set target at P670.98 billion or a shortfall of P53.10

billion. (Source of set target: BESF for FY 2013) Table V.2-3 shows the

comparative Income Taxes for calendar years 2012 and 2011.

Table V.2-3 Comparative Income Taxes, By Source


Percent 2012 2011

Increase (Decrease)

Corporations 276,350.92 269,731.68 6,619.24 2.45 Individuals 179,033.03 156,394.74 22,638.29 14.48 Final Tax 162,304.09 130,948.46 31,355.63 23.95 Partnerships 189.22 156.71 32.51 20.75 Total 617,877.27 557,231.59 60,645.67 10.88 Difference between totals and sum of components is due to rounding off.

99

� Taxes on International Trade and Transactions – P42.39 billion

The collection of Import Duties, as reported by the BOC, registered further

decline of P6.42 billion or 13.15 percent from last year’s P48.80 billion to this

year’s P42.39 billion.

� Other Taxes – P55.11 billion

The main component of Other Taxes is the Documentary Stamp Tax,

amounting to P54.68 billion or 99.22 percent. This was reported mostly by the BIR

at P54.09 billion and the BOC at P584.77 million or 98.16 percent and 1.06 percent,

respectively. Other components are: Tax on Forest Products – P11.92 million or

0.02 percent as reported by DENR – OSEC; Immigration Tax – P64.45 million or

0.12 percent as reported by DOJ – Bureau of Immigration. Also included in this

category in the amount of P351.93 million is Other National Taxes which represent

the undistributed amount lumped in this account by the BTr.

� Property Taxes – P10.18 billion

Total collections on property transfers for the year amounted to P10.18 billion.

This was collected by the BIR, the lone collector of Property Taxes for the national

government. This year’s collection is 13.72 percent higher than last year’s

collection of P8.95 billion. In this tax category, Capital Gains Tax contributed the

highest at P8.96 billion or 88.04 percent. Table V.2-4 shows the comparative

components of Property Taxes.

� Fines and Penalties, National Taxes – P1.29 billion

Fines and penalties on late payment of national taxes deflated from P12.98

billion collection of the previous year, to only P1.29 billion or 90.05 percent lower.

It was collected mainly by the BIR at P1.05 billion or 81.52 percent. On the other

hand, the BOC collected P229.15 million or 17.74 percent. The remaining balance

of P9.55 million or 0.74 percent was collected by the DOTC and the DENR.

Table V.2-4 Comparative Components of Property Taxes

Particulars


2012 2011 Increase

(Decrease) Capital Gains Tax 8,964.99 8,027.17 937.82 11.68 Estate Tax 769.34 552.68 216.66 39.20 Donors Tax 448.54 374.17 74.37 19.88


100

5.2.1.2 Non-Tax Revenue (General Income) – P221.98 billion

Non-Tax Revenue/General Income collections during the year increased by

P44.91 billion or 25.36 percent compared to last year’s P177.07 billion. General

Income comprises of: Service Income – P62.50 billion or 28.15 percent; Business

Income – 45.83 billion or 20.64 percent, Permits and Licenses – P9.11 billion or

4.10 percent; and Other Income of P104.55 billion or 47.10 percent.

The registered growth of non-tax revenue was contributed mainly by the

accelerated collections for service income, other income, interest income,

miscellaneous income, registration fees, income from grants and donations, share

from PAGCOR/PCSO and tuition fees as reported by various national government

agencies; and dividend income as reported by the BTr.

� Service Income – P62.50 billion

This year, Service Income

displayed an increase of P30.47

billion or 95.12 percent bigger than

last year’s collections of P32.03

billion. Other Services Income of

P46.84 billion or 74.95 percent is the

bulk of the generated service income.

The other components that

contributed most, just like the

previous year are: Passport and Visa

Fees – P5.51 billion; Medical, Dental

and Laboratory Fees – P2.55 billion;

Processing Fees – P2.18 billion; and

Clearance and Certification Fees –

P2.02 billion.

Table V.2-5 shows the departments/ offices with substantial amount of Service

Income.

� Business Income – P45.83 billion

The sluggish growth in Business Income resulted to a minimal increase rate of

0.88 percent or P397.50 million higher than the past year’s P45.43 billion. Other

Business Income recorded by various departments/offices comprises the greater part

of this account, disclosing the amount of P33.67 billion or 73.46 percent of the total

Business Income. The other main components of the account are Tuition Fees and

Hospital Fees collected by SUCs and hospitals, respectively. Tuition Fees of P6.47

billion, which accounted for 14.12 percent of the total Business Income, posted an

increase of P960.49 million or 17.43 percent compared to last year’s P5.51 billion.

On the other hand, Hospital Fees of P3.53 billion which presented an increment of

P478.08 million or 15.68 percent from last year’s P3.05 billion was 7.69 percent of

the total Business Income. Table V.2-6 shows the components of Business Income.

Table V.2-5 Departments/Offices Which Reported Service Income

(in million pesos) Department/Office Amount

Finance 50,622.96 State Universities and Colleges 3,963.20 Health 2,291.08 The Judiciary 1,905.64 Interior and Local Government 1,825.57 Labor and Employment 469.72 Foreign Affairs 320.37 Other Executive Offices 280.21 Civil Service Commission 245.26 Education 118.53 Other Departments/Offices 452.57

Total 62,495.12 Difference between totals and sum of components is due to

rounding off.

101

� Permits and Licenses – P9.11 billion

Compared to the previous year, Permits and Licenses increased by P1.37

billion or 17.69 percent higher from last year’s P7.74 billion. The biggest

component of the account pertains to Registration Fees amounting to P3.89 billion

or 42.71 percent. Based on the Reports of Income of the Departments/Offices, the

highest contributors of Registration Fees are: DOF – P3.18 billion; DTI – P399.41

million; SUCs – P158.77 million; and DOH – P122.17 million. Table V.2-7 shows

the components of Permits and Licenses.

� Other Income – P104.55 billion

Other Income posted an increase of P12.68 billion or 13.80 percent from last

year’s figure of P91.87 billion. The aggregate Other Income includes among others:

P47.58 billion – Interest Income; P24.11 billion – Dividend Income; P15.81 billion

Table V.2-6 Components of Business Income

Particulars Amount

(in million pesos)

Percentage

Distribution

Other Business Income 33,667.05 73.46

Tuition Fees 6,472.18 14.12

Hospital Fees 3,526.37 7.69

Sales Revenue (Net) 943.38 2.06

Rent Income 545.19 1.19

Printing and Publication Income 212.39 0.46

Income from Dormitory Operations 152.54 0.33

Fines and Penalties – Business Income 141.02 0.31

Income from Canteen Operations 107.76 0.24

Income from Communication Facilities 55.07 0.12

Income from Waterworks System 3.18 0.01

Income from Markets 1.08 a

Income from Slaughterhouses 0.34 a

Income from Transportation System 0.34 a

Landing and Parking Fees 0.24 a

Total 45,828.15 100.00 a – Below 0.005 percent.


Table V.2-7 Components of Permits and Licenses

Particulars Amount

(in million pesos)

Percentage

Distribution

Registration Fees 3,890.48 42.71

Fines and Penalties 2,414.07 26.50

Other Permits and Licenses 1,980.10 21.74

Permit Fees 394.74 4.33

Franchising and Licensing Fees 371.70 4.08

Fishery Rental Fees 57.26 0.63

Fees on Weights and Measures 0.13 a

Total 9,108.48 100.00 a – Below 0.005 percent.


102

– Share from PAGCOR/PCSO; and the other components shared the balance of

P17.06 billion as shown in Table V.2-8.

• Interest Income – P47.58 billion

The account represents interest

earnings of various departments/

offices’ from loans receivables,

investments, bank deposits and NG

advances for GFIs and GOCCs’ debt

service payments. It increased from

P36.75 billion last year to P47.58

billion which gave rise to an increase

of P10.83 billion or 29.46 percent.

Interest Income of the DOF-BTr

of P46.41 billion constitutes 97.55

percent of the total Interest Income.

The departments/offices which

reported Interest Income are shown in

Table V.2-9.

• Dividend Income – P24.11 billion

For CY 2012, the national government earned Dividend Income of P24.11

billion from equity investments in GFIs and GOCCs. Dividends remitted by the

GFIs and GOCCs to the BTr decreased by P5.02 billion or 17.24 percent lower

compared to last year’s P29.13 billion.

Table V.2-8 Components of Other Income

Particulars Amount

(in million

pesos)

Percentage

Distribution

Interest Income 47,577.23 45.51 Dividend Income 24,110.34 23.06 Share from PAGCOR/PCSO 15,808.94 15.12 Miscellaneous Income 9,017.30 8.62 Income from Grants and Donations 7,067.46 6.76 Insurance Income 577.30 0.55 Internal Revenue Allotment 225.34 0.22

Other Fines and Penalties 90.80 0.09

Sale of Confiscated/Abandoned/Seized Goods

and Properties

76.75 0.07 Share from National Wealth 0.19 a ________ _ ______

Total 104,551.63 100.00

a - Below 0.005 percent Difference between totals and sum of components is due to rounding off.

Table V.2-9 Departments/Offices Which Reported Interest Income

(in million pesos)

Department/Office Amount

Finance 46,922.59 State Universities and Colleges 366.38 National Defense 74.79 Energy 74.72 Other Executive Offices 59.40 Trade and Industry 20.72 Agriculture 19.65 The Judiciary 15.47

Health 4.43 Other Departments/Offices 19.07

Total 47,577.23

103

Table V.2-10 GOCCs/GFIs with Dividend

Remitted to the DOF-BTr

GOCC/GFI

Amount

(in million

pesos)

Percentage

Distribution

Land Bank of the Philippines 5,000.00 20.74

Development Bank of the Philippines 3,754.17 15.57

Food Terminal Incorporated 3,717.65 15.42

Philippine National Oil Company 3,500.00 14.52

Civil Aviation Authority of the Philippines 1,362.98 5.65

Manila International Airport Authority 1,134.20 4.70

Philippine Ports Authority 1,122.57 4.66

Philippine Amusement and Gaming Corporation 750.00 3.11

PNOC - Exploration Corporation 749.17 3.11

Public Estate Authority 700.00 2.90

Philippine Deposit Insurance Corporation 504.71 2.09

Philippine Economic Zone Authority 366.13 1.52

South Luzon Tollway Corporation 231.56 0.96

Bases Convention Development Authority 180.00 0.75

Metropolitan Waterworks and Sewerage System 150.00 0.62

Philippine Life and Retirement Authority 148.14 0.61

BCDA - Clark Development Corporation 100.00 0.41

Livelihood Corporation 93.64 0.39

Philippine Export-Import Credit Agency 86.37 0.36

PHIVIDEC Industrial Authority 61.96 0.26

National Electrification Administration 61.42 0.25

National Development Company 50.00 0.21

Manila Tollway System Incorporated 40.00 0.17

Cebu Ports Authority 37.50 0.16

Mactan Cebu International Airport Authority 36.00 0.15

NDC – Manila Gas Corporation 32.08 0.13

Social Housing and Finance Corporation 26.88 0.11

Philippine Sugar Corporation 26.23 0.11

National Housing Authority 20.68 0.09

NDC – Alabang Sto. Tomas Development Inc. 19.69 0.08

National Home Mortgage Finance Corporation 18.00 0.07

People’s Credit and Finance Corporation 13.98 0.06

Laguna Lake Development Authority 3.72 0.02

NDC – Batangas Land Company 2.86 0.01

Philippine Fisheries Development Authority 2.32 0.01

BCDA – Management and Holding Inc. 2.13 0.01

Human Settlement Development Corporation 1.19 0.01

NDC – Pinagkaisa Realty Corporation 0.35 a

NDC – Philippine National Lines 0.30 a

Other GOCCs/GFIs 1.74 0.01

Total 24,110.34 100.00 a - Below 0.005 percent


104

Table V.2-10 shows the top ten corporations and other GOCCs which remitted

dividends to the National Treasury totaling P24.11 billion as reported by the DOF –

BTr. The Land Bank of the Philippines remitted the biggest amount of dividends at

P5.00 billion or 20.74 percent, while the Development Bank of the Philippines, the

Food Terminal, Inc. and the Philippine National Oil Company contributed P3.75

billion P3.72 billion and P3.50 billion, respectively.

• Share from PAGCOR/PCSO – P15.81 billion

National government agencies accept share from the receipts of the Philippine

Amusement and Gaming Corporation (PAGCOR) and the Philippine Charity

Sweepstakes Office (PCSO). This year, the amount received was P1.94 billion or

14 percent higher compared with last year’s P13.87 billion.

The DOF-BTr, one of the recipients, received the highest at P13.12 billion or

83 percent, followed by OEO – Presidential Management Staff at P2.02 billion or

12.77 percent and the OEO – Philippine Sports Commission at P669.07 million or

4.23 percent.

• Income from Grants and Donations – P7.07 billion

Income from Grants and Donations received in cash and in kind from foreign

and domestic sources registered a slow growth at P7.07 billion, slightly higher by

mere P729.47 million or 11.51 percent of last year’s P6.34 billion.

Table V.2-11 shows the departments/offices which received grants and

donations during the year. The DOF topped the list with P1.80 billion or 25.49

percent of the aggregate amount, followed by the DepEd with P1.41 billion and the

DSWD with P1.21 billion.

Table V.2-11 Departments with

Income from Grants and Donations


(in million pesos)

Percentage

Distribution

Finance 1,801.40 25.49

Education 1,413.17 20.00


Health 847.48 11.99



Authority 381.21 5.39




Environment and Natural Resources 53.65 0.76


Total 7,067.46 100.00


105

• Miscellaneous Income – P9.02 billion

This account posted an

increase of P4.22 billion or

87.94 percent, a fast progress

from previous year’s P4.80

billion. The DOF recorded the

highest at P7.34 billion or

81.36 percent of the total

Miscellaneous Income. Table

V.2-12 presents the

departments and offices which

reported Miscellaneous Income

in calendar year 2012.

5.2.1.3 Breakdown of Income, By Department, By Region and By Source

Income/revenues of the national government are collected by the NGAs. As

collecting agents of the NG, their income/revenue collections are remitted to the

National Treasury. For calendar year 2012, of the total income/revenue of P1.579

trillion, 97.60 percent or P1.541 trillion was recorded in the BTr GOP books

representing remittances of various NGAs. The remaining P37.86 billion or 2.40

percent was reported under RA Books pertaining to collections of various NGAs

with authority to use some of their income collections. Table V.2-13 below shows

the breakdown of income by department/office and by book (NG and RA).

Table V.2-13 Breakdown of Income, by Department/Office and by Book

Department/Office Amount (in million pesos)

Total NG Books RA Books

Congress of the Philippines 1.57 1.53 0.05

Office of the President 13.66 8.70 4.96

Office of the Vice-President 0.14 - 0.14

Agrarian Reform 41.08 18.98 22.10

Agriculture 698.17 437.59 260.57

Budget and Management 251.91 - 251.91

Education 1,648.46 44.08 1,604.38

Table V.2-12 Departments/Offices which

Reported Miscellaneous Income

(in million pesos)


Finance 7,336.76

Public Works and Highways 464.83

State Universities and Colleges 454.07

Labor and Employment 255.56

Health 229.57

National Defense 128.28

Education 42.99

Civil Service Commission 20.42

Interior and Local Government 11.72

Other Departments/Offices 73.09

Total 9,017.30

106

Continued, Table V.2-13

Department/Office Amount (in million pesos)

Total NG Books RA Books

State Universities and Colleges 14,348.15 - 14,348.15

Energy 31,749.80 31,672.81 76.99

Environment and Natural Resources 611.15 507.04 104.10

Finance 1,468,908.48 1,468,059.08 849.41

Foreign Affairs 5,513.46 5,193.08 320.39

Health 7,680.31 51.44 7,628.87

Interior and Local Government 1,930.52 30.34 1,900.19

Justice 7,465.76 7,376.99 88.77

Labor and Employment 2,525.44 1,657.96 867.48

National Defense 800.45 0.02 800.43

Public Works and Highways 1,151.54 613.58 537.96

Science and Technology 406.88 229.62 177.26

Social Welfare and Development 1,222.13 13.10 1,209.02

Tourism 121.44 51.41 70.03

Trade and Industry 775.89 323.31 452.58

Transportation and Communications 16,860.17 16,855.72 4.45

National Economic and Development Authority 1,058.67 661.47 397.20

Presidential Communications Operations Office 175.84 170.74 5.10

Other Executive Offices 9,557.68 6,372.95 3,184.73

Metropolitan Manila Development Authority 359.55 - 359.55

The Judiciary 1,929.85 0.70 1,929.14

Civil Service Commission 268.38 - 268.38

Commission on Audit 386.78 297.91 88.87

Commission on Elections 32.22 - 32.22

Office of the Ombudsman 0.09 - 0.09

Commission on Human Rights 4.19 - 4.19

Autonomous Region in Muslim Mindanao 7.89 - 7.89

Total 1,578,507.72 1,540,650.16 37,857.56 Difference between totals and sum of components is due to rounding off.

Similar to previous years, of the total income of the national government,

NCR reported a total of P1.361 trillion or 86.21 percent, followed by Region IV-A

with P78.66 billion and Region III with P53.76 billion. Table V.2-14 shows the

Regional Breakdown of Income by Source.

107

The figures presented in the table are taken from the NGAs’ Report of Income.

Details of Income/Revenue by department, by account and by region are presented

in Schedules 25 to 27, Volume I-B.

Table V.2-14 Regional Breakdown of Income by Source

Region


Total Tax

Revenue

Non-Tax

Revenue

National Capital Region 1,360,790.21 1,167,429.86 193,360.35

Region I 7,562.67 5,964.46 1,598.20

Cordillera Administrative Region 2,578.62 1,707.87 870.74

Region II 4,416.20 3,077.29 1,338.91

Region III 53,764.86 50,312.74 3,452.12

Region IV-A 78,659.21 75,520.30 3,138.91

Region IV-B 668.76 1.82 666.94

Region V 4,945.13 3,376.34 1,568.79

Region VI 6,908.85 4,369.80 2,539.06

Region VII 16,968.53 14,777.57 2,190.96

Region VIII 4,699.51 3,415.55 1,283.96

Region IX 3,147.66 2,156.26 991.40

Region X 10,930.57 9,192.05 1,738.53

Region XI 12,277.33 10,028.25 2,249.08

Region XII 3,701.31 2,735.26 966.05

Region XIII 3,092.94 2,458.92 634.02


Mindanao 263.84 - 263.84

Foreign Service Posts 3,131.52 - 3,131.52

Total 1,578,507.72 1,356,524.34 221,983.38


108

5.2.2 Expenses

Total expenses of P1.485 trillion reported by NG for the calendar yearincreased by

P101.04 billion or 7.30 percent compared to last year’s P1.384 trillion.The composition of

total expenses are Current Operating Expenses (COE) of P793.51 billion or 53.44

percent, Financial Expenses

(FE)ofP318.34 billion or 21.44

percent and Subsidy to LGUs,

GOCCs and NGOs/POs

ofP372.95 billion or 25.12

percent. The DOF reported

the highest atP408.67 billion or

27.52percent, of which


percent pertains to FE and

P70.40 billion or 17.23 percent

pertains to Subsidy to GOCCs.

The DBM followed with


percent, of which P298.56

billion or 98.08 percent

pertains to Subsidy to LGUs.

5.2.2.1 Current Operating Expenses – P793.51 billion

Total Current Operating Expenses composed of Personal Services – P565.02 billion

or 71.20 percent, and Maintenance and Other Operating Expenses – P228.50 billion or

28.80 percent, is higher byP83.79 billion or 11.81 percent than last year’sP709.72 billion.

Table V.2-15 presents the departments/offices that reported highest Current Operating

Expenses.

Of the aggregate, DepEd reported the highest at P225.90 billion or 28.47 percent,

DND and DILG ranked second and third with P119.83 billion or 15.10 percent and

P118.23 billion or 14.90 percent, respectively.

Table V.2-15 Departments/Offices With Highest Current Operating Expenses

(in million pesos)

Department/Office Amount Percentage

Education 225,901.18 28.47 National Defense 119,826.67 15.10 Interior and Local Government 118,226.38 14.90 Social Welfare and Development 42,384.87 5.34 StateUniversities and Colleges 40,844.53 5.15 Public Works and Highways 27,368.07 3.45 Health 26,454.93 3.33 Finance 20,320.32 2.56 The Judiciary 19,603.24 2.47 Transportation and Communications 15,641.10 1.97 Other Departments/Offices 136,940.08 17.26 Total 793,511.38 100.00 Difference between sum and totals of components is due to rounding off.

109

5.2.2.1.1 Personal Services – P565.02 billion

During the year, Personal Services rose toP565.02 billion,posting an increase

of P52.90 billion or 10.33 percent from last year’s figure ofP512.11 billion. This is

due principally to the implementation of the 3rd and 4th tranches of the modified

Salary Schedule for civilian personnel and the modified Base Pay Schedule for

military and uniformed personnel both provided under the Senate and House of

Representatives Joint Resolution No. 4, series of 2009, approved on June 17, 2009,

and as mandated under Executive Order No. 900, issued on June 23, 2010.

The main components of Personal Services are: Salaries and Wages – P303.23

billion or 53.67 percent, Other Compensation – P122.91 billion or 21.75 percent,

Other Personnel Benefits – P100.90 billion or 17.86 percent and Personnel Benefits

Contributions – P37.98 billion or 6.72 percent. The comparisons of eachcomponent

are shown in Table V.2-16.

As presented in Table V.2-17, DepEdtopped the list of the departments/offices

with huge amount for Personal Services with P203.10 billion or 35.95 percent,

followedby DILG and DND with P106.70 billion or 18.88 percent and P100.19

billion or 17.73 percent, respectively.

Table V.2-16 Comparative Components of Personal Services (in million pesos)

Particulars

Amount Perce

nt

2012 2011

Increase

(Decrease)

Salaries and Wages 303,227.18 271,370.75 31,856.43 11.74 Other Compensation 122,913.47 116,234.46 6,679.01 5.75 Personnel Benefit Contributions 37,978.89 31,319.26 6,659.63 21.26 Other Personnel Benefits 100,895.84 93,186.52 7,709.31 8.27

Total 565,015.37 512,110.99 52,904.38 10.33


Table V.2-17 Departments/Offices With Big Expenses for Personal Services

(in million pesos)


Education 203,095.35 35.95 Interior and Local Government 106,700.28 18.88 National Defense 100,189.85 17.73 StateUniversities and Colleges 28,961.97 5.13 The Judiciary 16,344.11 2.89 Health 11,589.39 2.05 Public Works and Highways 9,369.81 1.66 Autonomous Region in Muslim Mindanao 8,837.10 1.56 Justice 8,187.74 1.45 Finance 6,535.63 1.16 Other Departments/Offices 65,204.13 11.54 Total 565,015.37 100.00 Difference between sum and totals of components is due to rounding off.

110

5.2.2.1.2 Maintenance and Other Operating Expenses – P228.50 billion

For this year, total MOOE posted an increase of P30.88billion or 15.63

percent from previous year’s P197.61 billion. Donations of P47.45 billion or 20.76

percent recorded by various departments/offices comprises the bulk of this

category.The other main components are: Supplies and Materials Expenses –

P35.78 billion or 15.66 percent, Repairs and Maintenance– P24.22 billion or 10.60

percent, Professional Services – P20.28 billion or 8.87 percent, and Other

Maintenance and Operating Expenses – P19.62 billion or 8.59 percent.

Table V.2-18 shows the comparative details of Maintenance and Other

Operating Expensesfor calendar years 2012 and 2011.

Table V.2-18 Comparative Details of Maintenance and Other Operating Expenses

(in million pesos)

Particulars Amount

Percent 2012 2011

Increase

(Decrease) Donations 47,446.54 38,783.01 8,663.52 22.34

Supplies and Materials Expenses 35,778.18 32,367.28 3,410.89 10.54 Repairs and Maintenance 24,220.50 16,933.40 7,287.10 43.03

Professional Services 20,277.94 19,092.89 1,185.05 6.21

Other Maintenance and Operating Expenses 19,618.89 20,503.60 (884.71) (4.31) Taxes, Insurance Premiums and Other Fees 13,712.49 14,326.55 (614.06) (4.29) Training and Scholarship Expenses 12,673.84 7,978.96 4,694.88 58.84 Utility Expenses 11,156.83 9,898.36 1,258.47 12.71

Traveling Expenses 9,079.48 7,381.86 1,697.62 23.00

Rent Expenses 3,751.99 3,403.14 348.85 10.25

Communication Expenses 3,036.09 2,716.50 319.59 11.76

Confidential, Intelligence, Extraordinary and Miscellaneous Expenses 2,523.92 1,617.85 906.08 56.01 Representation Expenses 2,311.36 1,954.49 356.87 18.26

Printing and Binding Expenses 1,622.08 1,178.62 443.46 37.63 Membership Dues and Contributions to Organizations 1,516.81 2,965.09 (1,448.28) (48.84) Survey Expenses 1,446.61 635.52 811.09 127.63 Others 2,361.21 1,884.25 476.96 25.31

Sub-Total 212,534.75 183,621.36 28,913.39 15.75

Non-Cash Expenses _15,961.27 _13,991.31 _1,969.95 14.08

Depreciation 15,762.19 13,922.69 1,839.51 13.21

Bad Debts 179.16 50.27 128.89 256.38

Obsolescence 19.92 18.36 1.56 8.51

Total 228,496.01 197,612.68 30,883.34 15.63 Difference between totals and sum of components is due to rounding off

111

Among the departments/offices, the DSWD reported the highest figure for

MOOE atP41.25 billion or 18.05 percent, and is higher by P8.88 billion or 27.45

percent compared to its previous year’s level of P32.36 billion. Table V.2-19 presents

the departments/offices with big amounts of MOOE.

� Donations – P47.45 billion

This year’s total Donations of P47.45 billion granted to various

government agencies, private institutions, cooperatives, foundations,

associations and individuals posted an increment ofP8.66 billion or 22.34

percent compared to last year’s P38.78 billion. Of the total, DSWD reported

P34.94 billion or 73.64 percent principally for the implementation of

PantawidPamilyang Pilipino Program (4Ps), KapitBisig Laban saKahirapan –

Comprehensive and Integrated Delivery of Social Services: Kapangyarihan at

Kaunlaransa Barangay (KALAHI-CIDSS:KKB), Social Pension for Indigent

Senior Citizens, other various community driven development projects and

livelihood programs as well as financial assistance and goods given to victims of

disasters, typhoons and calamities.

Other departments/offices with huge amounts of Donations are: DepEd –

P4.86 billion, DA – P3.00 billion and OEO – P1.42 billion.

� Supplies and Materials Expenses - P35.78 billion

Supplies and Materials Expenses which registered an increase of P3.41

billion or 10.54 percent than last year’s P32.37 billion got the second highest

share in the total MOOE. The highest amount of increasesare for: Office

Supplies – P7.53 billion or 21.04 percent, Gasoline, Oil and Lubricants – P6.50

billion or 18.17 percent,Other Supplies – P6.46 billion or 18.04 percent, Food

Supplies – P3.79 billion or 10.59 percent, and Medical, Dental and Laboratory

Supplies – P3.07 billion or 8.57 percent while, the highest percentage increases

are accounted for Military and Police Supplies Expenses and Agricultural

Supplies Expenses at 70.47 percent and 36.97 percent, respectively.

Table V.2-19 Departments/Offices With Big Maintenance and Other Operating Expenses

(in million pesos)


Social Welfare and Development 41,245.31 18.05 Education 22,805.85 9.98 National Defense 19,636.82 8.59 Public Works and Highways 17,998.26 7.88 Health 14,865.54 6.51 Finance 13,784.69 6.03 StateUniversities and Colleges 11,882.56 5.20 Interior and Local Government 11,526.10 5.04 Agriculture 11,389.88 4.98 Transportation and Communications 10,581.67 4.63 Other Departments/Offices 52,779.36 23.10 Total 228,496.01 100.00 Difference between totals and sum of components is due to rounding off.

112

The following departments/offices remained as topfive consumers: DND

– P7.66 billion or 21.41 percent, DILG – P5.65 billion or 15.79 percent, DOH –

P4.49 billion or 12.56 percent, DepEd – P4.45 billion or 12.44 percent and

SUCs – P2.10 billion or 5.87 percent. Table V.2-20 shows the comparative

consumption of supplies and materials by top departments/offices for calendar

years 2012 and 2011.

Table V.2-20 Comparative Consumption of Supplies and Materials By Top Departments/Offices

(in million pesos)

Particulars Amount

Percent 2012 2011

Increase

(Decrease) National Defense 7,659.25 6,176.29 1,482.96 24.01 Interior and Local Government

5,647.72 5,385.19 262.53 4.88

Health 4,494.43 4,083.75 410.68 10.06 Education 4,451.22 3,838.57 612.65 15.96 State Universities and Colleges 2,100.76 2,122.51 (21.75) (1.02) Agriculture 1,988.27 1,495.49 492.78 32.95 Foreign Affairs 1,867.70 1,941.14 (73.45) (3.78) Public Works and Highways 1,081.56 1,004.76 76.80 7.64 Justice 1,062.61 1,215.11 (152.50) (12.55)

Other Departments/Offices 5,424.66 5,104.47 320.19 6.27

Total 35,778.18 32,367.28 3,410.89 10.54


The main components of the total supplies and materials consumed by

DND are: Gasoline, Oil and Lubricants – P2.87 billion or 37.50 percent,

Military and Police Supplies – P1.57 billion or 20.55 percent and Other Supplies

– P1.29 billion or 16.87 percent. For DILG, the main consumptions consists of:

Food Supplies – P1.71 billion or 30.20 percent, Office Supplies – P1.26 billion

or 22.31 percent, Other Supplies – P1.05 billion or 18.64 percent, and Gasoline,

Oil and Lubricants – P483.99million or 17.42 percent.

� Repairs and Maintenance – P24.22 billion

Total Repairs and Maintenance of P24.22 billion for this year is the third

largest category of MOOE. This is higher by P7.29 billion or 43.03 percent

compared to P16.93 billion in 2011. Of the aggregate, P14.52 billion or 59.95

percent was reported by DPWH. The DND, DepED and DILG shared P2.77

billion or 11.43 percent, P1.87 billion or 7.72 percent, and P1.08 billion or 4.46

percent, respectively.

Table V.2-21 shows the comparative components of Repairs and

Maintenancefor calendar years 2012 and 2011.Of the components, P14.26

billion or 58.87 percent was expended for the Repairs and Maintenance of

Public Infrastructures. This year’s cost of repairs and maintenance posted an

incrementofP5.98 billion or 72.27 percent over the previous year’s level of

P8.28 billion. Of the total, P12.82 billion or 89.89 percent was for the Repairs

and Maintenance of Roads, Highways and Bridges and P1.35 billion or

113

9.46percent was for Flood Control. The remaining P93.05 million or 0.65

percent was shared by all other public infrastructures.

Table V.2-21 Comparative Components of Repairs and Maintenance Expenses (in million pesos)

Particulars Amount

Percent 2012 2011

Increase

(Decrease) Public Infrastructures 14,257.83 8,276.44 5,981.39 72.27 Buildings 4,646.44 4,536.94 109.50 2.41 Transportation Equipment 2,951.96 2,179.46 772.50 35.44 Office Equipment, Furniture and Fixtures 1,042.81 897.53 145.28 16.19 Machineries and Equipment 1,012.68 786.61 226.07 28.74 Reforestation Projects 127.67 69.19 58.48 84.52

Land Improvements 83.79 101.84 (18.05) (17.73) Other Property, Plant and Equipment 61.70 58.90 2.81 4.77 Leasehold Improvements 35.61 26.49 9.12 34.42

Total 24,220.50 16,933.40 7,287.10 43.03


Repairs and maintenance of buildings constitutedfor 19.18 percent of the

total, the details are: School Buildings – P1.57 billion or 33.81 percent, Office

Buildings – P1.57 billion or 33.73 percent, Other Structures – P1.11 billion or

23.98 and Hospital and Health Centers – P394.28 million or 8.49 percent.

Repairs and maintenance of transportation equipment amounting to P2.95

billion comprised 12.19 percent of the total. This year’s costis higher by

P772.50 million or 35.44 percent compared to P2.18 billion spent in 2011.

Repairs and maintenance of transportation equipment consists of: Motor

Vehicles – P1.36 billion or 45.98 percent, Aircrafts and Aircraft Ground

Equipment – P1.01 billion or 34.27 percent, Watercrafts – P574.03 million or

19.45 percent, and Other Transportation Equipment– P9.01 million or 0.31

percent.

� Professional Services – P20.28 billion

This year’s expenses for Professional Services registeredan incrementof

P1.19 billion or 6.21 percent fromP19.09 billion in 2011. The highest

percentage increase was registered in Legal Services, 112.65 percentwhile, the

highest amount of increase was reported for General Services – P646.31 million.

The DSWD topped the departments/offices with the biggest expenses for

Professional Services, P3.04 billion or 15.01 percent. The DOH and SUCs

ranked second and third with P2.30 billion or 11.34 percent andP2.29 billion or

11.28 percent, respectively.

114

� Other Maintenance and Operating Expenses – P19.62 billion

Other Maintenance and Operating Expenses of P19.62 billion accounted

for 8.59 percent of the total expenses under MOOE. From the previous

year’slevel of P20.50 billion, it droppedbyP884.71 million or 4.31 percent

during the current year.

The departments/offices that reported huge amount to this account were:

DOTC – P5.27 billion or 26.88 percent, COP – P2.49 billion or 12.70

percent,DepED– P2.40 billion or 12.25 percent, DA – P1.37 billion or 6.96

percent, DOH – P1.25 billion or 6.39 percent and SUCs – P1.10 billion or 5.59

percent.

5.2.2.2 Subsidy to LGUs, GOCCs and NGOs/POs - P372.95billion

The aggregate Subsidy to LGUs, GOCCs and NGOs/POs of the NG this year stood

atP372.95billion, exhibiting a reduction ofP18.31billion or 4.68 percent fromP391.27

billion in 2011. The breakdown is as follows: LGUs (net) – P301.85 billion or 80.93

percent, GOCCs – P70.48 billion or 18.90 percent, and NGOs/POs – P621.53 million or

0.17 percent.

The comparison of the 2012subsidy with 2011 data is shown in Table V.2-22.

Table V.2-22 Comparative Details of Subsidy To

LGUs, GOCCs and NGOs/POs

Particulars


2012 2011 Increase

(Decrease) Subsidy to LGUs (304,043.79) (320,001.98) 15,958.18 (4.99) Subsidy from Other LGUs 2,197.68 2,105.29 92.38 4.39 Net Subsidy From/(To) LGUs (301,846.12) (317,896.69) 16,050.57 (5.05) Subsidy to GOCCs (70,484.23) (72,842.24) 2,358.02 (3.24) Subsidy to NGOs/POs (621.53) (527.64) (93,89) 17.80

Total (372,951.88) (391,266.57) 18,314.69 (4.68) Difference between totals and sum of components is due to rounding off.

5.2.2.2.1 Net Subsidy to LGUs – P301.85 billion

Net Subsidy to LGUs of P301.85 billion is the excess of NG’s Subsidy

overSubsidy from LGUs of P304.04 billion and P2.20 billion, respectively. This

year’s amount decreased byP16.05 billion or 5.05 percent compared to previous

year’s level of P317.90. Subsidy to LGUs dropped by P15.96 billion or 4.99

percent and Subsidy from LGUs increased byP92.38 million or 4.39 percent,

respectively.

The DBM,being the Administrator of the Funds for LGUs reported total

Subsidy to LGUs of P298.56billion, lower by P18.66 billion or 5.88 percent than

last year’sP317.22 billion. Of the amount,P279.08 billion or 93.48 percent was

funded from IRA, while P19.48billion or 6.52 percent was sourced from regular and

various Special Purpose Funds of the current and prior years’ appropriations.Table

V.2-23 shows the breakdown of Subsidy to LGUs for calendar years 2012,2011 and

2010 as reported by the Central and Regional Offices of the DBM.

115

Table V.2-23 Breakdown of Subsidy to LGUs as Reported by DBM CO and ROs

(in million pesos)

CO/RO 2012 2011 2010 TOTAL Percentage of

Distribution

CO 7,171.64 7,055.80 6,388.93 20,616.37 2.30 NCR 17,056.82 19,057.54 17,424.47 53,538.83 5.97 I 20,304.31 22,386.06 17,160.41 59,850.78 6.67 CAR 9,524.61 9,790.92 8,404.93 27,720.46 3.09 II 14,593.72 15,433.58 13,640.36 43,667.66 4.87 III 27,463.42 29,165.75 26,393.40 83,022.57 9.25 IV-A 31,022.24 33,254.17 28,859.35 93,135.76 10.38 IV-B 12,177.01 13,377.38 11,842.27 37,396.66 4.17 V 17,664.33 19,234.94 17,352.10 54,251.37 6.05 VI 23,996.45 25,895.98 22,934.81 72,827.24 8.12 VII 20,347.45 21,065.28 19,126.95 60,539.68 6.75 VIII 18,218.96 18,239.51 16,548.90 53,007.37 5.91 IX 17,419.09 18,499.73 16,883.53 52,802.35 5.88 X 15,210.49 16,437.13 14,816.85 46,464.47 5.18 XI 13,454.95 14,388.27 12,821.52 40,664.74 4.53 XII 21,218.70 22,778.99 20,562.03 64,559.72 7.19 XIII 11,720.58 11,160.21 10,348.45 33,229.24 3.70 TOTAL 298,564.76 317,221.23 281,509.25 897,295.27 100.00

The subsidy reported by the Regional Offices IX and XII, includes subsidy for LGUs of ARMM.


The biggest amount of subsidies were released to LGUs under Region IV-A –

P93.14 billion or 10.38 percent, Region III –P83.02 billion or 9.25 percent and

Region VI –P72.83 billion or 8.12 percent.

Of the total current year’s Subsidies to LGUs reported by DBM Central

Office, P4.95 billion represents payment of prior years’ unprogrammed IRA of

provinces, cities, municipalities and barangays under the Monetization of IRA

Collection for Local Government Empowerment (MIRACLE) Program.

5.2.2.2.2 Subsidy To GOCCs – P70.48 billion

Subsidy to GOCCsgiven by the NG in the form of tax subsidy, equity

contributions and other subsidies totaledP70.48 billion, lesser byP2.36 billion or

3.24 percent fromlast year’s P72.84 billion. Of the aggregate amount, P70.40 billion

or 99.89 percent was reported by the DOF-BTr, P31.79 billion of which was for tax

subsidy, conversion of advances and offsetting of guarantee fee.

During the year, the biggest subsidy was given to Power Sector Assets and

Liabilities Management Corporation,P16.55 billion or 23.50 percent. From CY

2010 to CY 2012, the NFA received the highest cumulative amount at P61.18

billion or 30.58 percent, while PHIC and NHAgotP24.21 billion and P22.10 billion,

respectively.

Table V.2-24 shows the Breakdown of Subsidy to GOCCs for calendar years

2012,2011 and 2010 as reported by DOF-BTr.

116

Table V.2-24 Breakdown of Subsidy to GOCCs as Reported by DOF-BTr

(in million pesos)

CO/RO 2012 2011 2010 TOTAL Percentageof

Distribution

National Food Authority 13,542.17 9,214.26 38,420.09 61,176.51 30.58

Philippine Health Insurance

Corporation

14,068.08 6,639.81 3,506.10 24,213.99 12.10

National Housing Authority 2,399.75 16,196.70 3,500.00 22,096.44 11.05

Power Sector Assets and

Liabilities Management

Corporation

16,545.14

-

-

16,545.14

8.27

National Power Corporation - 14,092.08 - 14,092.08 7.04

Philippine Deposit Insurance

Corporation

4,320.17

4,183.36

4,403.27 12,906.80 6.45

Land Bank of the Philippines - 7,932.22 - 7,932.22 3.97

National Electrification

Administration

4,954.71

1,670.33

10.14 6,635.18 3.32

National Irrigation

Administration

2,810.52

450.00

- 3,260.52 1.63

National Livelihood

Development Corporation

370.00

1,437.36

1,299.18 3,106.54 1.55

Philippine Coconut Authority 1,182.76 542.70 585.00 2,310.46 1.15

National Transmission

Corporation

864.13

-

1,024.56 1,888.69 0.94

Light Rail Transit Authority - 1,867.51 - 1,867.51 0.93

Manila Waterworks and

Sewerage System

1,826.01

-

- 1,826.01 0.91

Government Service

Insurance System

1,500.00

-

- 1,500.00 0.75

National Home Mortgage

Finance Corporation

500.00

1,000.00 -

1,500.00 0.75

Philippine Children’s

Medical Center

483.05

647.03

259.65 1,389.73

0.69

Philippine Heart Center 414.53 640.31 294.79 1,349.63 0.67

Philippine Postal Corporation 600.54 460.87 281.28 1,342.68 0.67

Philippine Rice Research

Institute

340.90

496.00

418.00 1,254.90 0.63

Bases Conversion


15.29

423.99

781.19 1,220.47 0.61

National Kidney and

Transplant Institute

440.23

346.07

297.59 1,083.89 0.54

Philippine National Railways 117.94 712.93 163.97 994.84 0.50

Lung Center of the

Philippines

277.92

296.10

180.38 754.40 0.38

Tourism Promotions Board 750.00 - - 750.00 0.37

Philippine Institute for

Development Studies

33.00

685.30

19.20 737.50 0.37

North Luzon Railways

Corporation

221.28

-

499.06 720.33 0.36

National Dairy Authority 170.47 315.02 52.20 537.69 0.27

National Resources

Development Corporation

-

426.50

80.00 506.50 0.25

Philippine Fisheries


-

500.00

- 500.00 0.25

Cultural Center of the

Philippines

195.00

195.00

100.00 490.00 0.24

Philippine Crop Insurance

Corporation

233.77

113.77

113.77 461.31 0.23

Local Water Utilities

Administration

320.87

55.50 - 376.37 0.19

117

Table V.2-24 Breakdown of Subsidy to GOCCs as Reported by DOF-BTr

(in million pesos)

CO/RO 2012 2011 2010 TOTAL Percentageof

Distribution

Technology Livelihood

Resource Center

-

336.00 - 336.00 0.17

Center for International

Trade Expositions and

Missions

179.51

79.69

73.75 332.94 0.17

Development Academy of

the Philippines

48.20

216.12

20.00 284.32 0.14

AFP Commissary Exchange

System

-

-

248.58 248.58 0.12

National Development

Company

226.37

- - 226.37 0.11

Aurora Pacific Economic

Zone and Freeport Authority

55.00

67.50

22.50 145.00 0.07

Philippine Convention and

Visitors Corporation

-

65.00

65.00 130.00 0.06

Development Bank of the

Philippines

117.87

11.83 - 129.70 0.06

Zamboanga City Special

Economic Zone Authority

49.10 49.10 30.00 128.20 0.06

Philippine Institute of

Traditional and Alternative

Health Care

40.00 37.00 50.00 127.00 0.06

Southern Philippines


28.39

59.00

30.00

117.39

0.06

Laguna Lake Development

Authority

-

117.00

-

117.00

0.06

National Tobacco

Administration

-

-

70.00 70.00 0.03

Philippine Forest Corporation 63.00 - - 63.00 0.03

Credit Information

Corporation

28.41 17.50 - 45.91 0.02

People’s Televisions Network

Inc.

-

41.61

4.04 45.65 0.02

Social Security System 45.28 - - 45.28 0.02

Philippine Center for

Economic Development

14.50

-

29.75 44.25 0.02

Food Terminal Incorporated - - 40.90 40.90 0.02

Cottage Industry Technology

Center

9.41 8.00 12.52 29.93 0.01

National Agribusiness

Corporation

.-

.-

.20.00 .20.00 0.01

Total 70,403.25 72,646.08 57,006.45 200,055.78 100.00 Difference between totals and sum of components is due to rounding off.

5.2.2.2.3 Subsidy To NGOs/POs – P621.53 million

Subsidy to NGOs/POs registered an increment of P93.89 million or 17.80

percent from previous year’s P527.64 million. The following departments/offices

reported substantial amount to this account: ARMM – P117.94 million or 18.98

percent, OEOs – P116.41 million or 18.73 percent and DepED– P114.08 million or

18.36 percent.

118

5.2.2.3 Financial Expenses – P318.34 billion

Total Financial Expenses of P318.34 billion for the calendar year grew by P35.57

billion or 12.58 percent compared to P282.77 billion of the previous year. Of the

aggregate, the DOF accounted for P317.93 billion or 99.87 percent, of which

P317.75billion or 99.94 percent was reported by the BTr-GOP in the payment of foreign

and domestic loans and bonds and notes payable.

As exhibited in Table V.2-25, Interest Expenses rose by P38.09 billion or 13.94

percent while Documentary Stamp Expenses and Other Financial Charges dropped by

P2.18 billion or 28.33 percent and P401.35 million or 32.13 percent, respectively.

Table V.2-25 Comparative Components of Financial Expenses


Percent 2012 2011

Increase

(Decrease) Interest Expenses 311,298.74 273,205.27 38,093.48 13.94 Documentary Stamp Expenses 5,520.97 7,703.84 (2,182.87) (28.33) Other Financial Charges 847.95 1,249.30 (401.35) (32.13) Bank Charges 344.97 280.72 64.25 22.89 Commitment Fees 324.28 332.60 (8.32) (2.50)


5.2.2.4 Regional Breakdown of Expenses

Since almost all of the Central Offices are situated in Metro Manila, the NCR

continued to account for the highest amount of expenses totaling P764.53 billion or 55.25

percent. Regions IV, III and VI followed with P93.15 billion or 6.73 percent, P63.63

billion or 4.60 percent and P55.40 billion or 4.00 percent, respectively. On the other

hand, the Foreign Service Posts of DFA reported total expenses of P4.84 billion as

presented in Table V.2-26

The breakdown of expenses by department/office and by region is shown in

Schedule 28, Volume I-B, while the details of expenses, by account and by region are

presented in Schedule 29, Volume I-B.

Table V.2-26 Regional Breakdown of Expenses and Subsidies

(in million pesos)

Region PS MOOE FE Subsidies TOTAL Percentage Distribution

NCR 296,710.19 131,822.22 318,240.15 93,652.95 840,425.51 56.60 I 18,056.22 5,959.05 0.35 20,428.48 44,444.10 2.99 CAR 8,945.21 3,922.27 1.49 9,828.24 22,697.21 1.53 II 13,838.90 5,241.35 2.03 14,748.74 33,831.02 2.28 III 28,181.23 10,388.59 5.91 27,803.43 66,379.17 4.47 IV-A 26,743.95 12,205.24 7.45 31,185.81 70,142.44 4.72 IV-B 9,968.42 3,632.56 0.36 12,326.41 25,927.75 1.75 V 20,711.33 6,346.78 1.94 17,991.27 45,051.32 3.03 VI 25,468.14 7,320.73 28.17 24,357.32 57,174.36 3.85 VII 19,335.32 6,700.95 0.60 20,607.01 46,643.88 3.14 VIII 17,787.58 5,521.65 3.24 18,463.75 41,776.22 2.81 IX 13,440.68 4,866.53 1.11 17,530.38 35,838.70 2.41

119

Region PS MOOE FE Subsidies TOTAL Percentage Distribution

X 15,075.09 5,787.45 0.65 15,444.64 36,307.82 2.44 XI 13,661.26 6,979.95 0.19 13,813.24 34,454.64 2.32 XII 12,013.91 4,572.01 1.20 22,523.79 39,110.91 2.63 XIII 9,311.55 3,804.66 1.78 12,058.55 25,176.54 1.70 ARMM 12,173.22 2,192.83 0.29 187.87 14,554.22 0.98 FSPs 3,593.16 1,231.19 39.98 . - 4,864.33 0.33 Total 565,015.37 228,496.01 318,336.90 372,951.88 1,484,800.16 100.00 Difference between totals and sum of components is due to rounding off.

5.2.3 Other Income/Expense Items

5.2.3.1 Net Subsidy From/(To) National Government Agencies – (P9.78 billion)

Net Subsidy to NGAs of P9.78 billion is the difference between total Subsidy from

NGAs of P1.301 trillion and total Subsidy to NGAs of P1.311 trillion. This year’s

negative subsidywas the result of the increase in Net Subsidy to NGAs of P12.58 billion

or more than four times over the previous year’s Net Subsidy from NGAs of

P2.79billion.Table V.2-27 shows the Comparative Details of Subsidy From/(To) National

Government Agencies.

Table V.2-27 Comparative Details of Subsidy From/(To) National Government Agencies

Particulars


2012 2011 Increase

(Decrease)

Subsidy Income from National

Government

1,269,254.99

1,163,711.09

105,543.89

9.07 Subsidy from Central Office/

Home Office

24,525.31

18,800.64

5,724.67

30.45 Subsidy from Regional

Offices/Staff Bureaus

2,806.16

1,288.93

1,517.23

117.71 Subsidy from Operating Units 2,023.50 31.44 1,992.07 6,336.85 Subsidy from Other Funds 886.75 329.19 557.57 169.38 Subsidy Income from Other

NGAs

1,494.88

452.17

1,042.72

230.60 Total Subsidy from NGAs 1,300,991.59 1,184,613.45 116,378.14 9.82

Less: Subsidy to National

Government Agencies

1,277,475.36

1,161,043.82

116,431.54

10.03 Subsidy to Regional

Offices/Staff Bureaus

17,448.52

14,542.85

2,905.66

19.98 Subsidy to Operating Units 15,473.31 5,923.93 9,549.38 161.20

Subsidy to Other Funds 378.22 308.55 69.67 22.58

Total Subsidy to NGAs 1,310,775.40 1,181,819.15 128,956.25 10.91

Net Subsidy From/(To) NGAs (9,783.81) 2,794.30 (12,578.11) (450.13) Difference between totals and sum of components is due to rounding off.

120

5.2.3.1.1 Subsidy from National Government Agencies – P1.301 trillion

The main component of Subsidy from NG is the Subsidy Income from National

Government, which accounted for P1.269 trillion or 97.56 percent. This account is

credited for receipt of NCA, NCAA, Working Fund and constructive receipt of CDC

by Foreign Service Posts of the DFA. Likewise, it is also credited for Tax Remittance

Advices (TRAs) issued to BIR and for tax subsidies by the NG to the GOCCs. On the

other hand, it is debited for remittances to the National Treasury of collections from

refunds of current year’s excess of cash advances and working fund, and refunds of

current year’s overpayments of expenses and disallowances; reversion of

unused/lapsed NCAs; and closing of the account at year-end to Income and Expense

Summary account.

This year’s level is higher by P105.54 billion or 9.07 percent compared to the

P1.164 trillion in calendar year 2011. As the administrator of funds for NGs subsidies

to LGUs, the DBM reported the highest amount of P304.61 billion, accounting for

24.00 percent of the total, followed byDepEd – P237.41 billion or 18.70 percent,

DPWH – P135.68 billion or 10.69 percent,DND – P122.71 billion or 9.67 percent,

and DILG – P121.73 billion or 9.59 percent.

5.2.3.1.2 Subsidy to National Government Agencies – P1.311 trillion

The main component of this category is the account Subsidy to NGAs as

reported in theDOF-BTrGOP Books totaling P1.276 trillion or accounting for 99.89

percent. This account is debited for replenishments to AGSBs for negotiated MDS

checks and other payments on accounts of NGAs; constructive issuance of NCAA for

advanced payments made by foreign creditors and donors; constructive issuance of

CDC to Foreign Service Posts based on their submitted Report of Income; Working

Fund deposited to the foreign currency accounts of implementing NGAs for FAPs;

TRAs issued to BIR; and for tax subsidies by NG to GOCCs. It is credited at year-end

for the closing of the account to the Income and Expense Summary account.

This year’s Subsidy to NGAs reported in theDOF-BTrGOPBooks grew by

P115.52 billion or 9.95 percent than previous year’s level of P1.161 trillion. The

Comparative Details of Subsidy to NGAs for calendar years 2012 and 2011 is

presentedin Table V.2-28.

Table V.2-28 Comparative Details of Subsidy to NGAs as Reported byBTr

Particulars


Percent

2012 2011

Increase

(Decrease)

Replenishment of negotiated

MDS account

1,203,951.82

1,070,326.25

133,625.56

12.48

Tax Remittance Advices 44,286.57 33,884.51 10,402.06 30.70

Working Fund 11,225.59 9,617.00 1,608.59 16.73

Constructive Cash (NCAA) 9,854.89 18,363.49 (8,508.60) (46.33)

Customs Duties/Other Taxes per

JC 2-91

4,742.99

25,831.39

(21,088.40)

(81.64)

Contributions to International

Organizations

1,895.99

2,530.62

(634.63)

(25.08)

Non-Cash Availment

Authority – Grant

117.11

.4.49

.112.62

2,508.24

Total 1,276,074.95 1,160,557.76 115,517.19 9.95 Difference between totals and sum of components is due to rounding off.

121

5.2.3.2 Net Gain– P156.05 billion

From a Net Loss of P31.67 billion in the previous year, a substantial Net Gain of

P156.05 billion was reported for the year ended 2012. This isbrought about by the

gainsin Foreign Exchange and on Sale of Securities ofP157.66 billion and P1.50

billion,respectively. Total Gain on FOREX due to the appreciation of the peso against

foreign currencies reported by DOF-BTrGOPBooks reached P157.86 billion. The DFA

and OP contributed with P46.19 million and P17.55 thousand, respectively. This was

partially offset by the Loss on FOREX totaling P227.91 million recorded by the following

departments/offices: DSWD – P143.14 million, DOLE – P21.47 million, DA – P18.25

million, DENR – P17.21 million, DepED – P7.45 million, DOH – P7.43 million, DAR –

P5.00 million, SUCs (mainly by the University of the Philippines) – P4.94 million and

Others – P3.02 million.

The Loss on Guaranty of P2.86 billion was for the payment of foreign exchange risk

cover claims for NG guaranteed obligations of GFIs (LBP, DBP and Small Business

Corporations, formerly SBGFC).Table V.2-29 shows the Comparative Details of

Gains/(Losses) for calendar years 2012 and 2011.

Table V.2-29 Comparative Details of Gains/(Losses)

Particulars


2012 2011 Increase

(Decrease)

Gain/(Loss) on Foreign Exchange 157,658.20 (28,471.38) 186,129.58 (653.74)

Loss on Guaranty (2,861.32) (3,157.04) 295.71 (9.37)

Loss of Assets (108.24) (38.69) (69.55) 179.75

Gain/(Loss) on Sale of Disposed Assets (142.16) (49.96) (92.19) 184.53

Gain/(Loss) on Sale of Securities 1,502.21 43.06 1,459.15 3,388.47 Net Gain/(Loss) 156,048.69 (31,674.01) 187,722.70 (592.67) Difference between totals and sum of components is due to rounding off.

5.2.4 Net Income– P239.97 billion

The NG’s operations for the year ended, resulted to a Net Income of P239.97

billion. This was attributed mainly to the extraordinary Net Gain during the year of

P157.66 billion against the Net Loss of P28.47 billion in Foreign Exchange last year.

The other factor that contributed most is the remarkable increase in excess of

Revenue/Income over Expenses of P78.45 billion or more than five times the previous

year’s level of P15.25 billion. Table V.2–30 shows the Comparative Condensed

Statement of Income and Expenses.

Table V.2-30 Comparative Condensed Statement of Income and Expenses

Particulars


Percent 2012 2011

Increase

(Decrease)

Revenue/Income 1,578,507.72 1,399,016.71 179,491.01 12.83

Less: Expenses 1,484,800.16 1,383,761.96 101,038.21 7.30

Income/(Loss) Before Other

Income/Expense Items 93,707.56 15,254.75 78,452.80 514.28

Other Income/Expense Items

Net Subsidy From/(To) NGAs (9,783.81) 2,794.30 (12,578.11) (450.13)

Net Gain/(Loss) 156,048.69 (31,674.01) 187,722.70 (592.67) Net Income/(Loss) 239,972.44 (13,624.95) 253,597.39 (1,861.27) Difference between totals and sum of components is due to rounding off.

122

5.3 Statement of Cash Flows

The consolidated SCF, prepared using the Direct Method imparts the sources and

uses of cash during the year, which is summarized into operating, investing and

financing activities.

Operating activities includes cash generated from revenues and the cost incurred

excluding those associated with long-term investment on capital items or investment in

securities. Investing activities include cash paid for acquiring capital assets and cash

received from disposals of the same classes of assets, cash invested in stocks, as well as

the proceeds from the subsequent sale of the stock. Financing activities include cash

received from debt holders and any principal payments made back to those debt holders.

At yearend, the cash balance of the NG as shown in the SCF on page 49 of this

report was recorded at P643.3 billion, which is 102.58 percent or P325.75 billion higher

than last year.

Chart V.3-1 shows the segments of cash flows by activity. Total cash inflows

under operating, investing and financing activities was posted at P4.745 trillion, while

total cash outflows amounted to P4.420 trillion, resulting to the increase in cash balance

by P324.81 billion.

Chart V.3-1 Segments of Cash Flows

(in billion pesos)


-1,000

0

1,000

2,000

3,000

4,000

5,000

Inflows 3,064.19 170.85 1,509.67 4,744.70

Outflows 2,688.57 515.84 1,215.49 4,419.90

Net Cash Provided by

(Used in)

375.63 (345.00) 294.18 324.81

Operating Investing Financing Total

123

5.3.1 Cash Inflows – P4.745 trillion

This year’s cash generation summed up to P4.745 trillion, P3.064 trillion or

64.58 percent of which is sourced from Operating Activities, P1.51 trillion or 31.82

percent from Financing Activities and P170.85 billion or 3.60 percent from Investing

Activities.

5.3.1.1 Operating Activities – P3.064 trillion

Total cash inflows derived from Operating Activities for the year reached

P3.064 trillion. This came mainly from the collection of revenue/income of

P1.471 trillion. Of the total collections, P947.53 billion was reported by the BIR

as remittance from various taxes, which is P109.75 billion or 13.10 percent

higher than last year’s P837.79 billion. Table V.3-1 shows the collection

generated by principal revenue collecting agencies for the last two years.

Table V.3-1 - Comparative Revenue Generated, by Agency

(in million pesos)

Department/Agency 2012 2011

Increase (Decrease)

Amount Percent

Bureau of Internal Revenue 947,534.42 837,788.42 109,746.00 13.10

Bureau of Customs 282,170.52 253,812.53 28,357.99 11.17

DOE-OSEC 31,751.26 35,425.78 (3,674.52) (10.37)

DOTC-OSEC 14,939.48 14,466.03 473.45 3.27

DOH-OSEC 7,808.50 5,870.95 1,937.55 33.00

DFA-OSEC 5,465.02 5,244.71 220.30 4.20

Land Registration Authority 5,287.81 4,566.89 720.92 15.79

National Telecommunications Commission 4,850.81 4,528.26 322.56 7.12

Procurement Service 4,789.14 3,305.92 1,483.22 44.87

University of the Philippines 3,448.78 2,257.37 1,191.41 52.78

Bureau of Immigration 2,759.39 2,338.24 421.15 18.01

Other Agencies 160,115.12 178,507.97 (18,392.84) (10.30)

Total 1,470,920. 26 1,348,113.05 122,807.21 9.11


The second largest source of cash flows from operating activities totaling

P1.283 trillion are receipt of NCA for regular operations – P1.246 trillion, receipt of

NTCA – P35.57 billion and receipt of NCA for trust and other receipts – P1.16

billion. Among the departments/offices, the DBM accounted for the highest receipt at

P305.05 billion or 23.77 percent of the total. The receipt of NCA, by

department/office is listed in Table V.3-2.

124

Table V.3-2 Receipt of NCA, by Department*

Department/Office

Amount

(in million

pesos)

Percent

to Total

Budget and Management 305,046.74 23.77

Education 225,698.74 17.59



The Interior and Local Government 118,475.85 9.23



Health 34,589.59 2.70

State Universities and Colleges 31,883.03 2.48

Finance 17,786.39 1.39

Other Departments 163,778.57 12.76

Total 1,283,101.36 100.00

* Net of reversion of unused NCA

Contributing to the sources of funds of NGAs are inter-agency and intra-

agency fund transfers which amounted to P174.32 billion and P34.54 billion,

respectively. These comprises cash for the account of NGAs/LGUs/GOCCs, funds

transferred from one government agency to another for implementation of projects

and operating funds received by Regional Offices from the Central Offices, and by

Operating Units from the Regional Offices.

Collection of receivables such as accounts receivables, inter-agency and intra-

agency receivables, receivables from audit disallowances and other receivables

amounted to P31.04 billion. This is higher by P18.66 billion or 150.75 percent over

last year’s amount of P12.38 billion.

Other receipts falling under Operating Activities are shown in Table V.3-3.

Table V.3-3 Breakdown of Other Receipts

(in million pesos)

Particulars Amount

Refund of Overpayment of Personal Services 13,919.20

Collection of Trust Receipts from NGAs/LGUs 6,944.52

Receipt of Performance/Bidders/Bail/Cash Bonds 6,796.85

Collection of trust receipts from entities other than

NGAs/LGUs/GOCCs 4,095.52

Other miscellaneous receipts 23,023.15

Total 54,779.24

125

Adjustments which resulted to the increase in cash balance include gain

on foreign exchange – P5.05 billion, restoration of cash for unreleased checks –

P4.46 billion, restoration of cash for cancelled/lost/stale checks – P2.11

billionand other adjustments – P3.18 billion.

5.3.1.2 Investing Activities – P170.85 billion

Inflows of NG from this activity came from sale of investment securities

– P103.96 billion, proceeds from matured investments – P56.23 billion, sale of

assets – P8.54 billion and collection of long-term loans – P2.11 billion.

Of the aggregate cash generated from investing transactions of P170.85

billion, 88.33 percent was recorded by the BTr-GOP at P150.9 billion, the

breakdown of which is shown in Table V.3-4.

Table V.3-4 Breakdown of Inflows from Investing

(in million pesos)

Particulars Amount

Redemption of Investments

Sinking Fund – Securities 52,185.69

Investments in Bonds 571.00

Proceeds from sale of T-bills, stocks and bonds 96,830.75

Repayment of long-term loans by GOCCs/GFIs 1,152.97

Proceeds from sale of PPE 164.33

Total 150,904.74 Source: SCF – BTr-GOP

5.3.1.3 Financing Activities – P1.365 trillion

Activities which had

impact on the long-term

liabilities and equity of the

NG are listed in the financing

activities section of the SCF.

Domestic and foreign

borrowings reached P1.509

trillion. This amount was

mainly accounted for by the

BTr-GOP which is engaged in

financing activities and a

minimal amount of P69.25

million was reported by State

Universities and Colleges.

Table V.3-5 - Breakdown of Borrowings

(in million pesos)

Particulars Amount

Bonds Payable - Domestic 818,077.53

Bonds Payable - Foreign 65,974.62

Loans Payable - Domestic 568,306.05

Loans Payable - Foreign 49,488.64

Interest Payable 1,992.50

Withholding Tax Payable 1,202.25

Premium on T-Bonds 3,792.00

Total 1,508,833.60

Source: SCF – BTr-GOP

126

5.3.2 Cash Outflows – P4.420 trillion

This year’s disbursements at P4.420 trillion comprised of Operating Activities –

P2.689 trillion or 60.83 percent, Financing Activities – P1.215 trillion or 27.5 percent

and Investing Activities – P515.84 billion or 11.67 percent.

5.3.2.1 Operating Activities – P2.689 trillion

All income collected by the agencies which are not authorized to be

used by them are required to be remitted to the National Treasury. This year’s

total remittances to the NT was posted at P1.315 trillion. Table V.3-6 shows

the remittances made by top collecting agencies.

Table V.3-6 Remittances to NT, by Agency

(in million pesos)

Department/Agency Total NG Books RA

Books

Bureau of Internal Revenue 940,955.39 940,871.96 83.43

Bureau of Customs 282,160.52 282,160.52 0.00

DOE-OSEC 31,728.57 31,717.04 11.53

DOTC-OSEC 15,076.79 14,901.47 175.32

Privatization and

Management Office 7,836.92 0.00 7,836.92

Land Registration Authority 5,292.24 3,931.01 1,361.23

National Telecommunications

Commission 4,852.72 4,852.71 0.01

Bureau of Immigration 2,773.98 2,740.71 33.27

Securities and Exchange

Commission 2,621.37 2,598.35 23.03

DPWH-OSEC 2,392.06 613.90 1,778.16

DFA-OSEC 2,220.28 2,061.90 158.38

Other Agencies 16,624.65 9,495.95 7,128.69

Total 1,314,535.49 1,295,945.51

18,589.98

Difference between total and sum of components is due to rounding off.

Another cash outflow item that took the most part of operating outflow

activities is DOF-BTr’s replenishment of negotiated MDS checks amounting

to P1.204 trillion.

The government also utilizes a large portion of its cash on payment of

operating expenses at P620 billion, which is P37.08 billion or 5.23 percent

lower than last year’s P658.08 billion. Among the departments/offices, DepEd

incurred the highest disbursement on operating expenses at P176.51 billion or

28.42 percent of the total. Payment of operating expenses, by department is

shown in Table V.3-7.

127

Table V.3-7 Payment of Operating Expenses,

by Department


(in million pesos)Percent to total

Education 176,511.74 28.42


The Interior and Local Government 73,967.49 11.91



State Universities and Colleges 31,701.29 5.10


Health 24,927.65 4.01

The Judiciary 15,741.67 2.53

Foreign Affairs 11,195.90 1.80

Other Departments 102,732.85 16.54

Total 620,995.47 100.00

Subsidies and cash donations of P346.15 billion is another

component of cash outflows under Operating Activities. Subsidy to LGUs

amounting to P298.8 billion was released through the DBM while Subsidy

to GOCCs amounting to P38.61 billion was released through the BTr-

GOP. Table V.3-8 shows subsidies and donations granted by departments

to other NGAs, LGUs, NGOs/POs and other levels of

government/institutions to implement their programs and projects.

Table V.3-8 Subsidies and Donations to Other

NGAs/LGUs, NGOs/POs

(in million pesos)


Budget and Management 298,802.42

Finance 38,670.34

Education 4,104.75

Social Welfare and Development 1,583.36

Other Executive Offices 927.54

Science and Technology 892.37

Autonomous Regions in Muslim Mindanao 547.93

The Interior and Local Government 255.82

State Universities and Colleges 222.95

The Judiciary 60.00

Other departments 84.84

Total 346,152.33

Release of inter-agency and intra-agency fund transfers amounted to

P61.43 billion and P109.29 billion, respectively.

Other key use of cash under operating outflow includes – remittance of

personnel benefit contributions and mandatory deductions – P167.32 billion,

128

settlement of accounts payable – P61.98 billion, grant of cash advances for

travel and for special purpose or time-bound undertaking – P23.61 billion

purchase of inventories – P13.84 billion, and other disbursements – P47.29

billion.

Transactions which reduced the cash balance at year end pertains to loss

on foreign exchange – P9.3 billion, reversion of unreleased checks in previous

year – P3.04 billion, adjustment for dishonored checks – P134.62 million,

adjustment for cash shortage – P41.43 million and other adjustments – P1.57

billion.

5.3.2.2 Investing Activities – P515.84 billion

Cash outflow from investing transactions summed up to P515.84 billion.

Included in this group of transactions are Investments in securities of P398.52

billion, purchase of capital assets of P116.51 billion and grant of loans of

P812.64 million.

Table V.3.8 presents the departments/offices which used their cash on

investments in stocks, bonds and other forms of securities.

Table V.3.9 Investments in Stock, Bonds and Other Securities

By Department/Office

Department/Office Total

Investments

in Stocks/

Bonds/Mark

e- table

Securities

Investments

in GOCCs/

GFIs

Other

Long-Term

Investments

Finance 391,620.73 370,280.50 21,340.23

Energy 3,851.18 3,851.18

Other Executive Offices 1,694.85 1,694.85



Colleges

369.15 254.63 114.53

The Judiciary 105.12 105.12


Health 23.87 23.87




7.00 7.00

Total 398,518.14 376,234.15 21,340.23 943.76

Cash paid for capital expenditures amounted to P116.51 billion. This is a

prime necessity for ensuring the proper maintenance of, and additions to, the

NG’s physical assets to support its efficient operation. The DPWH, the agency

tasked to provide and manage quality infrastructure facilities and services,

topped the list of departments with disbursement on capital expenditures at

P88.71 billion or 76.14 percent of the total.

129

5.3.2.3 Financing Activities – P1.215 trillion

Debt and equity transactions dominated this category. Payment of long-

term liabilities amounted to P1.215 trillion, of which P1.213 trillion or 99.79

percent represents BTr-GOP’s loan repayments and redemptions.

Interest payment of P269 billions is another part of financing outflow.

Of this amount P268.75 billion was paid by the BTr-GOP.

The components of financing outflows are presented in Table V.3-10.

Table V.3-10 Composition of Financing Outflows

(in million pesos)

Particulars Amount

Loan Repayments and Redemptions 943,103.61

DOF-BTr-GOP 940,467.36

Bonds Payable - Domestic 196,643.83

Bonds Payable - Foreign 35.14

Loans Payable - Domestic 593,346.36

Loans Payable - Foreign 61,467.24

Due from GOCCs/Loans Receivables-GOCC 88,974.79

Other departments/offices 2,636.25

Interest Payments 269,004.96

DOF-BTr-GOP 268,752.47

Other departments/offices 252.48

Loss on Guaranty 2,861.32

Commitment Charges 293.18

Other Financial Charges 226.66

Total 1,215,489.73

Source: SCF-BTr-GOP, except for data on other departments/offices

5.3.3 Net Cash Provided by (Used in) Operating, Investing and Financing Activities –

P324.81 billion

During the year, the net cash provided went up to a P324.81 billion. This is due

to the increase of cash in operating activities by 119.15 percent and proceeds from

financing activities by 405.50 percent.

Chart V.3-2 shows the net cash provided by (used in) operations by the NG from

FYs 2003 to 2012. This year’s net result on operating, investing and financing activities

is the highest in ten years.

130

Chart V.3-2 Trend of Net Cash Provided by (Used in)

Operating, Investing and Financing Activities

CY 2003-2012

(in billion pesos)

5.3.4 Cash Balances

5.3.4.1 Beginning Balance, January 1, 2012

The consolidated beginning balance of cash as of January 1, 2011 of

P318.49 billion differs with the ending balance reported in the FY 2011

SCF. The difference represents cash balances of reports not submitted

either in FYs 2011 or 2012.

5.3.4.2 Ending Balance, December 31, 2012

The SCF at the end of the year shows total cash balance of P643.3

billion, higher by P170.16 billion compared to the cash balance reflected

in the Balance Sheet. The difference represents sinking fund cash accounts

of P170.16 billion lodged under Investments in the books of the BTR-GOP

and of the unsubmitted SCF (NG Books) of MARINA-R9 under DOTC

with a minimal amount of P345 thousand.

324.81

63.3927.16

(33.28)42.56

66.95

95.08

29.31

(63.69)(56.89)

-70

-20

30

80

130

180

230

280

330

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

VI. NATIONAL

GOVERNMENT DEBT

131

NATIONAL GOVERNMENT DEBT

6.1 Introduction

The National Budget for CY 2012 banked on improved collection efficiency

through better tax administration and widened tax base, coupled with the strategic

management of our debt. To attain these, the National Government (NG)

strengthened and provided funding support to the existing tax administration

measures and policy reforms implemented by the two major collecting agencies,

the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). The

medium-term debt strategy adopted by the NG was focused on reducing the NG’s

foreign currency denominated debt, meeting the government’s financing

requirement at minimal cost consistent with an acceptable level of risk and further

supporting the development of the domestic capital and debt market.

The debt strategy was pursued through reducing foreign exchange risk

exposure by increasing domestic borrowing and reducing foreign currency

denominated debt within the portfolio; mitigating the refinancing or roll-over risk

by lengthening the maturity of NG debt through bond exchange; and supporting

the development of domestic capital and securities market, among others. The debt

profile was improved by extending the maturities of current debt and

redenominated the external debt through the issuance of peso- denominated bonds

in the international market. To reduce the country’s vulnerability to external

shocks, the NG redefined the foreign-to-domestic borrowing mix to 36:64.

Although national revenue has increased over the last three years, it is still

insufficient to back up the capital programs and projects of the government. Thus,

the government has resorted to borrowings to finance its developmental programs.

This section of the AFR gives us a view on the total NG direct loans, GOCCs

loans that were assumed by the NG and those loans contracted by the NG but were

relent to GOCCs.

6.2 Definition of Terms

Public Debt – includes the total indebtedness of the National Government,

local government and government corporations or financial institutions

from industries, corporations or financial institutions, whether private or

government, foreign or domestic, which are fully supported and guaranteed

by NG. (2013 BESF Glossary of Terms)

Foreign Debt – Indebtedness covered by loan agreements entered into by

and between the NG and foreign lending institutions availed of by

NGAs/GOCCs and bonds issued by the NG in foreign countries such as

Global Bonds, Euro Bonds and Japanese Bonds.

132

Domestic Debt – bonds, notes, certificates of indebtedness, bills and other

direct obligations issued by the government on the domestic market.

(DMFAS Glossary of Terms)

Government Securities – evidences of indebtedness of the Republic of the

Philippines or its instrumentalities, government-owned and/or controlled

corporations, or the Central Bank and must be freely negotiable and

regularly serviced. (2013 BESF Glossary of Terms)

Treasury Bills – Short-term debt instruments issued by the NG. (2013

BESF Glossary of Terms)

Fixed Rate Treasury Bonds – direct and unconditional obligations of the

NG, interest bearing and carry a term of more than one year and can be

traded in the secondary market before maturity.

Treasury Bonds/Notes – certificates of indebtedness issued by the National

Government, the maturity of which extends beyond one year. (2013 BESF

Glossary of Terms)

Retail Treasury Bonds – direct and unconditional obligations of the NG

which primarily caters to the retail market or the end-users. They are

interest bearing and carry a term of more than one year and can be traded in

the secondary market before maturity.

Multi-Currency Retail Treasury Bonds – denominated in two or more

currencies and issued in scripless or, at the option of the Republic, in

certificated form, each of which, if issued in certificated form, shall be duly

executed and delivered by the Republic. (BTr website)

Special Purpose Treasury Bonds – exclusively issued to finance the

Comprehensive Agrarian Reform Program (CARP)-related expenditures as

alternative compliance with the agrarian reform credit requirement under

Sec. 4 (a) of P. D. No. 717, and as eligible reserve for trust duties. (BSP

Circular No. 301s 2001)

Zero Coupon Bonds (also called a discount bond or deep discount bond) –

a bond bought at a price lower than its face value, with the face value

repaid at the time of maturity. It does not make periodic interest payments,

or have so-called "coupons", hence the term zero-coupon bond. When the

bond reaches maturity, its investor receives its par (or face) value.

133

Onshore Foreign Currency Treasury Bonds – bonds denominated in

Foreign Currency and issued in scripless form. (BTr website)

Benchmark Bonds – bonds that are more liquid and are, therefore, intended

to trade more efficiently in the secondary market. (BTr website)

Loan Availments/Proceeds – amount drawn, in cash or in kind, against

existing or new loan commitments. (2013 BESF Glossary of Terms)

Loan Repayments – payment made by the debtor to the creditor to cover

principal reimbursement due in accordance with the amortization schedule.

Domestic Issuances – securities in the form of bonds, bills and notes issued

by the government on the domestic market.

Domestic Redemptions – maturing securities on domestic market redeemed

by the government.

Foreign Assisted Projects – government projects which are wholly or partly

financed by foreign loans and/or foreign grants. (2013 BESF Glossary of

Terms)

6.3 Authority and Limits to Borrowings

Under Section 20, Article 7 of the 1987 Philippine Constitution, the President

may contract or guarantee foreign loans on behalf of the Philippines with the prior

concurrence of the Monetary Board, and subject to such limitations as may be

provided by law.

The foreign borrowings are also governed by laws and regulations,

specifically R.A. No. 4860 dated August 8, 1966, as amended by P.D. No. 139

dated June 27, 1984. The amendment increased foreign debt limit to an amount not

exceeding US$10 billion or its equivalent in other foreign currencies at the

exchange rate prevailing at the time the loans, credits or indebtedness are incurred

at terms of payment of not less than ten (10) years except those contracted in the

interest of national security and rehabilitation resulting from natural calamities. The

recent law on foreign borrowings is R.A. No. 8182, approved by Congress on June

11, 1996, excluding the Official Development Assistance (ODA) loans from the

foreign debt limit of US$10 billion in order to facilitate the absorption and optimize

the utilization of ODA resources.

Domestic borrowings are contracted in accordance with R.A. No. 245 dated

June 12, 1948, as amended by P.D. No. 142 on March 2, 1973, which authorizes

the Secretary of Finance with the approval of the President, after consultation with

the Monetary Board to borrow in order to meet public expenditures authorized by

law. Republic Act No. 1000 approved on June 12, 1954 authorizes the President of

the Philippines to issue bonds to finance public works and projects for economic

development authorized by law.

134

The level of borrowings for the year is determined by the Development

Budget Coordination Committee (DBCC) which is composed of the Secretary of

Budget and Management, Director-General of National Economic Development

Authority, the Executive Secretary, Secretary of Finance and the Governor of the

Central Bank of the Philippines. To ensure that borrowings are supportive of

national economic objectives, a benchmark on the amount to be borrowed

equivalent to a percentage of the Gross Domestic Product as defined in the Five

Year Development Plan is set every year.

6.4 Borrowing Program

6.4.1 Approved Program – P704.26 billion

The approved program of borrowing for CY 2012 is P704.26 billion

to be sourced from domestic creditors – P529.49 billion and foreign

creditors – P174.77 billion.

Of the domestic borrowings of P529.49 billion, Fixed Rate Treasury

Bonds is P470.49 billion and Treasury Bills is P59 billion. Foreign

borrowings consist of Bonds and Other Inflows – P97.88 billion, Program

Loans – P47.85 billion and Project Loans – P29.04 billion.

The amount to be borrowed is intended for financing government

operations and for the redemption and repayment of domestic and foreign

loans amounting to P339.62 billion and P65.84 billion, respectively. Table

VI-1 presents the NG financing for calendar year 2012.

Table VI-1 National Government Financing

Calendar Year 2012

(in million pesos)

Particulars Actual 1

Approved

Program 2

Variance Percent

Domestic Borrowings 798,527.00 529,493.00 269,034.00 33.69

Treasury Bills (20,180.00) 59,000.00 (79,180.00) 392.37

Gross Flotation 143,694.00 638,963.00 (495,269.00) (344.67)

Redemption 163,874.00 579,963.00 (416,089.00) (253.91)

Fixed Rate Treasury Bonds 430,454.00 470,493.00 (40,039.00 (9.30)

On Shore Dollar Bonds 20,457.00 - 20,457.00 100.00

Retail Treasury Bonds 367,796.00 - 367,796.00 100.00

Foreign Borrowings 156,621.00 174,767.00 (18,146.00) (11.59)

Program Loans

Project Loans

41,636.00 47,850.00 (6,214.00) (14.92)

18,150.00 29,042.00 (10,892.00) (60.01)

Bonds and Other Inflows 96,835.00 97,875.00 (1,040.00) (1.07)

Gross Borrowings 955,148.00 704,260.00 250,888.00 26.27

Less: Amortization 416,975.00 405,464.00 11,511.00 2.76

Domestic 330,401.00 339,619.00 (9,218.00) (2.79)

Foreign 86,574.00 65,845.00 20,729.00 23.94

Net Borrowings/Financing 538,172.00 298,795.00 239,377.00 44.48

Domestic 468,126.00 189,874.00 278,252.00 59.44

Foreign 70,047.00 108,922.00 (38,875.00) (55.50)

Difference between totals and sum of components is due to rounding off. 1 Breakdown of Financing, Jan. – Dec. 2012 2 BESF-Table D.1 (NG Financing 2010-2012)

135

6.4.2 Actual Borrowings – P955.15 billion

The actual amount borrowed reached P955.15 billion consisting of

Domestic – P798.53 billion and Foreign – P156.62 billion. Domestic

borrowings exceeded the programmed amount of P529.49 billion by

P269.03 billion. The BTr has favored the issuance of Retail Treasury bonds

of P367.80 billion and On Shore Dollar Bonds of P20.46 billion due to its

long-term maturities and lower interest rate. Treasury Bills floatation and

Fixed Rate Treasury Bonds issuance on the other hand is lesser by P495.27

billion and P40.04 billion, respectively. Redemptions made on Treasury

Bills of P163.87 billion are likewise smaller than the programmed amount

of P579.96 billion.

The foreign borrowings of P156.62 billion consisting of loans and

bond issuances is down by P18.15 billion compared to the program level of

P174.77 billion.

6.5 Status of NG Debt

6.5.1 Outstanding Balance – P5.435 trillion

From the outstanding balance of P4.940 trillion as reported in the CY

2011 Status of Loans and Bonds Payable submitted by the NGDAD, BTr,

the balance, which formed part of the beginning balance for CY 2012 was

adjusted to P4.943 trillion due to adjustments for CY 2011 effected by the

NGDAD in CY 2012. Presented below is the adjusted balance of

outstanding NG debt as of December 31, 2011.

Table VI-2 Adjusted Balance of Outstanding NG Debt

(in million pesos)

Particulars

Outstanding

as of

12/31/11

Adjustments

2011

Adjusted

Outstanding as

of 12/31/11

Domestic 2,860,442.11 156.63 2,860,598.74

Bonds Payable 2,563,061.59 0.23 2,563,061.82

Loans Payables 297,380.52 156.40 297,536.92

Foreign 2,079,965.84 2,321.99 2,082,287.83

Bonds Payable 1,214,221.20 - 1,214,221.20

Loans Payables 865,744.64 2,321.99 868,066.63

Total NG Debt 4,940,407.95 2,478.62 4,942,886.57 Difference between totals and sum of components is due to rounding off.

The nature of the adjustments totaling P2.48 billion is summarized as

follows: understatement in recording availments – P2.91 billion;

overstatement in recording availments – P176.36 million; understatement in

recording repayments – P28.48 million; overstatement in recording

136

repayments – P45.41 million; understatement in outstanding balance –

P27.15 million; overstatement in outstanding balance – P327.77 million;

adjustments of fully settled loans – P130.63 million; understatement in

recording bills and bonds – P156.63 million.

The balance of NG debt at year-end representing unpaid principal

amount and do not include accrued interest payable reached P5.435 trillion

broken down into: domestic – P3.463 trillion or 63.71 percent and foreign –

P1.972 trillion or 36.29 percent. The bulk of the outstanding domestic debt

of P3.185 trillion or 91.99 percent is in the form of Treasury Bonds while

the amount of P277.34 billion or 8.01 percent is in Treasury Bills. The

foreign debt is dominated by the bonds issued of P1.203 trillion or 60.99

percent and loans contracted by the NG of P769.26 billion or 39.01 percent.

The outstanding balance do not also include contingent liabilities of

the NG amounting to P502.06 billion as reported at the DMAD broken

down as follows:

The amount of P502.06 billion is exclusive of the contingent

liabilities of the NG under the build-operate-transfer and/or build-lease-

transfer projects and the guarantees extended by the government financial

institutions. Below is the CY 2012 NG debt outstanding.

Table VI-3 Outstanding NG Debt

Calendar Year 2012

(in million pesos)

Particulars

Outstanding

as of

01/01/2012

Current Year

Adjustments

Outstanding

as of

12/12/2012 Availments Repayments

Domestic 2,860,598.74 1,391,969.32 790,126.23 378.63 3,462,820.46

Treasury Bonds 2,563,061.82 818,707.02 196,661.43 378.63 3,185,486.04

Treasury Bills 297,536.92 573,262.30 593,464.80 - 277,334.42 -

Foreign 2,082,287.83 156,376.29 92,184.45 (174,159.24) 1,972,320.43

Bonds 1,214,221.20 96,834.50 25,937.63 (82,062.10) 1,203,055.97

Loans 868,066.63 59,541.79 66,246.83 (92,097.14) 769,264.46

Direct and Relent 868,055.70 59,541.79 66,237.58 (92,097.14) 769,262.78

Assumed 10.93 - 9.25 - 1.68

Total NG Debt 4,942,886.57 1,548,345.61 882,310.68 (173,780.61) 5,435,140.89


Source: National Government Debt Accounting Division, BTr

Particulars Total Foreign Domestic

NG Direct Guarantee on GOCC Loans P 498.41 P 354.36 P 144.04

GFI Guarantee Assumed by NG per

Proclamation 50 3.66 3.52 0.14

Total P 502.06 P 357.88 P 144.18

137

The adjustments made during the year of P173.78 billion correspond

to foreign currency revaluation for bonds and loans of P175.49 billion and

reimbursement of redemption on Agrarian Reform bonds of P1.71 billion.

Shown in Chart VI-1 is the NG Debt by Source.

Of the P3.185 trillion outstanding bonds issued, the Fixed Rate

Treasury Bonds constitute the bulk of P1.431 trillion or 44.92 percent. The

Benchmark Bonds of P910.57 billion and Retail Treasury Bonds of

P745.92 billion constitute 28.58 percent and 23.42 percent, respectively.

The Fixed Rate Onshore Dollar Bonds of P20.46 billion is the new type of

bonds issued during the year. Treasury Bills outstanding of P275.02 billion

represent 99.17 percent of loans payable. Included in the Loans Payable

account is amount pertaining to CB-BOL of P174.57 billion, Development

Bank of the Philippines (DBP) Assumed loans of P2.29 billion, Treasury

Bills-Certificated of P11.65 million and Treasury Notes of P5.89 million.

The DBP Assumed loans exist by virtue of Proclamation No. 50 issued in

1986.

The outstanding foreign debt of P1.972 trillion is in the nature of

bonds issued and loans contracted. The bonds consist of Global Bonds –

P1.129 trillion; Japanese Yen Bonds – P47.38 billion and Euro Bonds –

P27.11 billion. The loans contracted by the NG from foreign creditors

reached P769.26 billion.

138

The outstanding balance of NG debt for CY 2012 increased by

P492.25 billion or 9.96 percent compared to last year. Shown in Table VI-

4 is the comparative outstanding NG debt for 2011 and 2012.

Table VI-4 Comparative Outstanding NG Debt

(in million pesos)

Particulars 2012 2011 Increase

(Decrease) Percent

Domestic 3,462,820.46 2,860,598.74 602,221.72 21.05

Bonds Payable 3,185,486.04 2,563,061.82 622,424.22 24.28

Fixed Rate Treasury Bonds 1,431,018.56 1,046,527.54 384,491.02 36.74

Benchmark Bonds 910,573.94 990,896.26 (80,322.32) (8.11)

Retail Treasury Bonds 745,923.99 435,844.23 310,079.76 71.14

Treasury Bonds – CB-BOL 50,000.00 50,000.00 - -

Multi-Currency RTB (OFW) 20,497.00 21,830.93 (1,333.93) (6.11)

Fixed Rate Onshore Dollar Bonds 20,457.00 - 20,457.00 -

Special Purpose Treasury

Bonds (CARP) 7,000.00 9,815.00 (2,815.00) (28.68)

Certificated Treasury Bonds 15.55 16.24 (0.71) (4.38)

Zero Coupon Treasury Bonds - 8,131.60 (8,131.60) (100.00)

Loans Payable 277,334.42 297,536.92 (20,202.50) (6.79)

Treasury Bills - CB-BOL 174,568.30 174,568.30 - -

Treasury Bills 100,454.40 120,656.90 (20,202.50) (16.74)

DBP Assumed Loans 2,294.17 2,294.17 - -

Treasury Bills-Certificated 11.65 11.65 - -

Treasury Notes 5.89 5.89 - -

Foreign 1,972,320.43 2,082,287.83 (109,967.40) (5.28)

Bonds Payable 1,203,055.97 1,214,221.20 (11,165.23) (0.92)

Global Bonds 1,128,575.40 1,128,717.49 (142.10) (0.01)

Japanese Yen Bonds 47,375.26 57,081.52 (9,706.27) (17.00)

Euro Bonds 27,105.32 28,422.18 (1,316.86) (4.63)

Loans Payable 769,264.46 868,066.63 (98,802.17) (11.38)

NG Direct/Relent 769,262.78 868,055.70 (98,792.93) (11.38)

NG-assumed (Proc. 50) 1.68 10.93 (9.25) (84.63)

Total 5,435,140.89 4,942,886.57 492,254.32 9.96



Domestic debt grew by P602.22 billion or 21.05 percent brought

about by the increase in issuance of Fixed Rate Treasury Bonds – P384.49

billion and Retail Treasury Bonds – P310.08 billion. It was also during the

year when a new type of bonds, the Fixed Rate Onshore Dollar Bonds

amounting to P20.48 billion was issued. On the other hand, the Treasury

139

Bills and other types of bonds issued such as Benchmark Bonds, Zero

Coupon Bonds and Multi Currency Retail Treasury Bonds decreased during

the year. The issuance of Fixed Rate and Retail Treasury Bonds is favored

because of longer maturity date which extends up to 25 years following the

issue date and with fixed rate of interest.

The balance of foreign debt of P1.972 trillion decreased by P109.97

billion or 5.28 percent compared to CY 2011. This is due to the NG’s

policy of redefining foreign-to-domestic borrowing mix to 36:64 to reduce

the economy’s vulnerability to external shocks. The maturities of current

debt were also extended and external debts were redenominated through the

issuance of peso-denominated bonds in the international market.

The legal sources of domestic debt of P3.463 trillion are as follows:

R.A. No. 245 – P3.453 trillion or 99.73 percent; R.A. No. 6657 – P7 billion

or 0.20 percent; Proclamation No. 50 – P2.29 billion or 0.07 percent and

R.A. No. 1000 – P97.05 million or 0.003 percent.

The outstanding foreign debt of P1.972 trillion is sourced from the

following laws: R.A. No. 245 – P1.203 trillion or 61 percent; R.A. No.

8182 – P622.10 billion or 31.54 percent; R.A. No. 4860 – P147.16 billion

or 7.46 percent and Proclamation No. 50 – P1.68 million or 0.0001 percent.

Domestic Debt

Current Year Issuances – P1.392 trillion

Domestic debt incurred during the year of P1.392 trillion are in the form

of issued Treasury Bonds – P818.71 billion or 58.82 percent and Treasury Bills

– P573.26 billion or 41.18 percent. The bonds floated of P818.71 billion, with

a redemption period of four to 25 years, consist of Fixed Rate Treasury Bonds –

P422.41 billion or 51.60 percent; Retail Treasury Bonds – P367.80 billion or

44.92 percent; Onshore Bonds – P20.46 billion or 2.50 percent; and Benchmark

Bonds – P8.04 billion or 0.98 percent. Treasury Bills issuance, showing

redemption period from 1 – 91days up to 364 days, include the amount of

P429.57 billion intended for the rehabilitation of the then Central Bank of the

Philippines. The BSP is purchasing the Treasury Bills issued by the BTr with

the proceeds deposited in the BSP under the account of the Treasurer of the

Philippines (TOP) to be used by the BTr for the redemption of maturing

securities issued. The amount forms part of the advances made by the NG to

the BSP.

140

Table VI-5 shows the amount of domestic issuances with the

corresponding maturity period.

Table VI-5 Composition of Domestic Issuances

(in million pesos)

Particulars Totals 1-91 days 92-181

days

182-364

days

Treasury Bills 573,262.30 288,030.00 164,904.00 120,328.30

CB-BOL 429,568.30 260,000.00 120,000.00 49,568.30

Regular 143,694.00 28,030.00 44,904.00 70,760.00

Totals 4-10 years 15-20 years 25 years

Treasury Bonds 818,707.02 362,819.50 247,300.12 208,587.40

Fixed Rate Treasury Bonds 422,413.70 334,322.40 67,503.90 20,587.40

Retail Treasury Bonds 367,796.22 - 179,796.22 188,000.00

Onshore Bonds 20,457.00 20,457.00 - -

Benchmark Bonds 8,040.10 8,040.10 - -

Grand Total 1,391,969.32



Treasury Bills worth P288.03 billion that will mature in 91 days is

equivalent to 50.24 percent of the total issuances. Those with maturity period

of 92-181 days of P164.90 billion and 182-364 days of P120.33 billion

correspond to 28.77 percent and 20.99 percent of the total issuances,

respectively. The maturity dates of the Treasury Bonds floated follows:

P362.82 billion or 44.32 percent – 4-10 years; P247.30 billion or 30.21 percent

– 15-20 years and P208.59 billion or 25.48 percent – 25 years.

Redemptions – P790.13 billion

The amount of treasury bills and bonds redeemed reached P790.13 billion

broken down into: Treasury Bills – P593.46 billion or 75.11 percent and Bonds

– P196.66 billion or 24.89 percent. Of the amount of treasury bills redeemed,

P429.57 billion or 72.38 percent is for Central Bank–Board of Liquidator (CB-

BOL).

Bonds redeemed of P196.66 billion consist of Benchmark Bonds – P88.36

billion or 44.93 percent; Retail Treasury Bonds – P57.72 billion or 29.35

percent; Fixed Rate Treasury Bonds – P37.92 billion or 19.28 percent; Zero

Coupon Bonds – P8.13 billion or 4.13 percent; Special Purpose Treasury Bonds

(SPTB) –CARP – P2.82 billion or 1.43 percent and Agrarian Reform Bonds –


141

Foreign Debt

Availments – P156.38 billion

The availments during the year of P156.38 billion are lesser by P46.41

billion or 22.89 percent compared to last year’s P202.78 billion. This was

sourced through flotation of bonds – P96.83 billion or 61.92 percent and

contracting by the NG of direct and relent loans of P59.54 billion or 38.08

percent. Table VI-6 shows the availments made by the NG during the year.

Table VI-6 Foreign Debt Availments

(in million pesos)

Particulars Amount Percent

to Total

Global Bonds 96,834.50 61.92

Direct/Relent Loans 59,541.79 38.08

Cash Availment 48,940.68 31.30

Asian Development Bank 31,332.37 20.04

International Bank for Reconstruction and

Development

11,236.45

7.19

Japan Bank for International Cooperation 5,852.84 3.74

International Fund for Agricultural Development 306.18 0.20

Organization of the Petroleum Exporting Countries 118.83 0.08

Kreditanstalt für Wiederaufbau 94.03 0.06

Constructive Receipts of Cash 10,601.11 6.78

BNP Paribas 4,643.58 2.97

Japan Bank for International Cooperation 3,181.78 2.03

Eximbank of Korea 867.67 0.55

Eximbank of China 795.68 0.51

International Bank for Reconstruction and

Development

453.76

0.29

Bank of Austria 306.57 0.20

Asian Development Bank 254.10 0.16

Deutsche Bank 65.45 0.04

Instituto de Credito Oficial 20.75 0.01

Saudi Fund for Development 8.95 0.01

Kreditanstalt für Wiederaufbau 2.82 0.00

Total 156,376.29 100.00



142

Of the Global Bonds of P96.83 billion, P66.03 billion or 68.19 percent are

denominated in US$ while the amount of P30.80 billion are peso denominated.

The direct and relent loans contracted by the NG from external creditors

include cash availments of P48.94 billion while the amount of P10.60 billion

was a constructive receipt of cash. The constructive cash includes the

capitalized interest, commitment fees and other financial charges of P7.09

billion The bulk of availments of P56.95 billion representing 95.66 percent of

direct and relent loans were provided by the following creditors: ADB – P31.59

billion; IBRD – P11.69 billion; JBIC – P9.03 billion and BNP PARIBAS –

P4.64 billion

Repayments/Redemptions – P92.18 billion

Repayments/Redemptions of P92.18 billion consist of direct, relent and

assumed loans of P66.25 billion and bonds payable of P25.94 billion.

Compared to last year’s amount of P65.56 billion, this year’s amount is higher

by P0.69 billion or 1.05 percent. Shown in Table VI-7 are the creditors where

foreign loan repayments are made.

Table VI-7 Repayments by Creditor

(in million pesos)

Creditor Direct Relent Assumed Total

JBIC 22,539.56 5,748.93 28,288.49

ADB 13,103.49 364.31 13,467.79

IBRD 5,096.81 5,096.81

JEXIM 4,914.86 4,914.86

Deutsche Bank 3,301.09 3,301.09

BNP Paribas 2,168.24 2,168.24

USPL 771.46 771.46

Bank of Austria 617.14 617.14

CEXIM 692.24 1,898.35 2,590.59

Other Creditors 4,781.48 239.64 9.25 5,030.37

Total 57,986.35 8,251.22 9.25 66,246.83



The biggest amount paid of P28.29 billion or 42.70 percent went to JBIC,

a bilateral creditor. The ADB and IBRD, both multilateral creditors accounted

for P13.47 billion or 20.33 percent and P5.10 billion or 7.69 percent,

respectively.

Redemptions of matured U.S denominated Global Bonds reached P25.94

billion during the year.

143

6.6 NG Debt Growth

Outstanding debt grew by an average of P213.36 billion for the last ten years.

The biggest growth occurred this year at P492.25 billion or 9.96 percent. It was in

CY 2007 when a decrease of P99.39 billion or 2.56 percent was noted. Presented

in Table VI-8 is the growth of NG debt from 2003 to 2012.

Table VI-8 Growth of Outstanding NG Debt

2003 to 2012

(in billion pesos)

Year

NG Domestic Foreign

Amount Annual

Growth

Annual

Growth

Rate

Amount Annual

Growth

Annual

Growth

Rate

Amount Annual

Growth

Annual

Growth

Rate

2003 3,301.52 - - 1,739.95 - - 1,561.57 - -

2004 3,699.81 398.29 12.06 2,002.19 262.24 15.07 1,697.62 136.05 8.71

2005 3,878.70 178.89 4.84 2,183.58 181.39 9.06 1,695.12 (2.50) (0.15)

2006 3,880.87 2.17 0.06 2,172.73 (10.85) (0.50) 1,708.14 13.02 0.77

2007 3,781.48 (99.39) (2.56) 2,218.82 46.09 2.12 1,562.66 (145.48) (8.52)

2008 4,138.00 356.52 9.43 2,440.90 222.08 10.01 1,697.10 134.44 8.60

2009 4,348.08 210.08 5.08 2,480.83 39.93 1.64 1,867.25 170.15 10.03

2010 4,701.14 353.06 8.12 2,704.42 223.59 9.01 1,996.72 129.47 6.93

2011

2012

4,942.89

5,435.14

241.75

492.25

5.14

9.96

2,860.60

3,462.82

156.18

602.22

5.77

21.05

2,082.29

1,972.32

85.57

(109.97)

4.29

(5.28)

Ave. 4,210.76 213.36 5.21 2,426.68 172.29 7.32 1,784.08 41.08 2.54

Domestic debt grew by an average of P172.29 billion or 7.32 percent. This

year’s growth of P602.22 billion or 21.05 percent is the highest for the last ten

years. The NG is banking on domestic debts to reduce its vulnerability to interest

risk because of the strong peso. On the other hand, the average growth of foreign

debt is P41.08 billion or 2.54 percent, with the highest growth of P170.15 billion or

10.03 percent seen in 2009. A negative growth of P109.97 billion or 5.28 percent

was registered during the year. Chart VI-2 shows the growth of domestic and

foreign debt from 2003-2012.

1,739.95 2,002.19 2,183.58 2,172.73 2,218.82 2,440.90 2,480.83

2,704.42 2,860.60

3,462.82

1,561.57 1,697.62 1,695.12 1,708.14 1,562.66 1,697.10 1,867.25 1,996.72 2,082.29 1,972.32

-

1,000.00

2,000.00

3,000.00

4,000.00

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Chart VI-2 NG Debt Growth

(in billion pesos)

Domestic Foreign

144

6.7 Debt Service Expenditures

The total debt service of P1.203 trillion was utilized for the following

expenditures: repayments of principal – P882.31 billion or 73.36 percent; interests

– P310.83 billion or 25.84 percent and other financial expenses – P9.60 billion or

0.80 percent. Presented in Chart VI-3 is the actual debt service of the NG.

Of the amount of principal paid, P790.13 billion is for domestic debt while

P92.18 billion is for foreign. Payment of interest of P310.83 billion is broken down

into domestic – P202.82 billion and foreign – P108.01 billion. Compared to the

2011 level of debt service expenditures of P1.780 trillion, this year’s amount is

lower by P577.18 billion or 32.43 percent. During the year, principal repayments

for both domestic and foreign loans are down by P556.73 billion or 41.34 percent

and P58.66 billion or 38.89 percent, respectively.

Principal – P882.31 billion

Principal repayments of P882.31 billion consist of Domestic – P790.13

billion or 89.55 percent and Foreign – P92.18 billion or 10.45 percent.

145

Of the amount paid for domestic obligations, P593.46 billion or 75.11

percent is for the redemption of Treasury bills. The payment for foreign

obligations of P66.25 billion or 71.86 percent pertains to direct/relent and

assumed loans of the NG while redemption of foreign bonds issued of P25.94

billion represents 28.14 percent of foreign loan repayments.

Interest – P 310.83 billion

Compared to the 2011 amount of P272.89 billion, interest payment went up

by P37.94 billion or 13.90 percent. Table VI-9 shows the comparative amount of

interest paid by the NG for domestic and foreign loans.

Table VI-9 Comparative Interest Payments of the NG

Particulars Amount (in million pesos) Increase

(Decrease) Percent

2012 2011

Domestic 202,821.27 169,951.03 32,870.24 19.34

Bonds 197,231.53 164,313.62 32,917.91 20.03 T-Bills, Notes and

Loans

5,589.74 5,637.41 (47.67) (0.85)

Foreign 108,009.48 102,943.71 5,065.77 4.92

Global Bond 91,402.98 86,351.91 5,051.07 5.85 Direct/Relent 16,606.41 16,591.34 15.07 0.09 Assumed 0.09 0.46 (0.37) (80.43) Total 310,830.75 272,894.74 37,936.01 13.90



Interest paid for domestic debt of P202.82 billion went up by P32.87 billion

or 19.34 percent. The biggest increase of P32.92 billion or 20.03 percent is for

bonds issuance which is offset by the slight decrease on interest payment for

treasury bills and notes of P47.67 million.

Interest paid for foreign loans of P108.01 billion showed an increase of

P5.07 billion or 4.92 percent compared to the previous year’s amount of P102.94

billion. The bulk of the increase of P5.05 billion or 5.85 percent pertains to the

amount paid for Global bonds of P91.40 billion. Payments made for direct/relent

loans amounting to P16.61 billion also showed an increase of P15.07 million or

0.09 percent.

146

Other Financial Expenses – P9.60 billion

The breakdown of Other Financial Expenses of P9.60 billion follows:

domestic – P5.66 billion or 58.91 percent and foreign – P3.94 billion or 41.09

percent. Table VI-10 shows the comparative other financial expenses paid by the

NG.

Table VI-10 Comparative Other Financial Expenses of the NG

Particulars


Percent 2012 2011

(Increase

(Decrease)

Domestic 5,657.42 7,291.40 (1,633.98) (22.41)

Documentary Stamp Tax 5,189.33 7,091.29 (1,901.96) (26.82)

Other Financial Charges 468.09 200.11 267.98 133.92

Foreign 3,945.34 5,199.08 (1,253.74) (24.11)

Loss on Guaranty 2,861.32 3,156.76 (295.43) (9.36)

Other Financial Charges 377.32 1,047.26 (669.94) (63.97)

Documentary Stamp Tax 330.17 611.17 (281.00) (45.98)

Commitment Fees 323.18 330.89 (7.72) (2.33)

Bank Charges 53.35 52.99 0.35 0.67

Total 9,602.75 12,490.47 (2,887.72) (23.12)



The financial expenses of P5.66 billion incurred for domestic debt

transactions decreased by P1.63 billion or 22.41 percent. Documentary stamp tax

of P5.19 billion also decreased by P1.90 billion or 26.82 percent while other

financial charges of P468.09 million incurred in relation to retail treasury bonds

issuances increased by P267.98 million or 133.92 percent.

Financial expenses paid for foreign debt of P3.94 billion decreased by

P1.25 billion or 24.11 percent compared to last year’s amount of P5.20 billion.

The loss on guaranty of P2.86 billion, which decreased by P295.43 million

pertains to foreign exchange risk cover on foreign currency fluctuations for loans

of GOCCs guaranteed by the NG. Of the amount, P2.03 billion is for the account

of the DBP; P789.12 million for LBP and P39.86 million for SBGFC. The five

departments which accounted for the bulk of commitment fees paid are: DAR –

P97.62 million, DOTC – P81.96 million, DPWH – P57.51 million, DENR –

P39.80 million and DSWD – P21.49 million. Among the creditors which charged

commitment fees, BNP PARIBAS showed the huge amount of P204.34 million.

Presented under pages 431 and 432, Volume I-B of this report, are the schedules

of Commitment Fees paid by the departments and the creditors which charged the

147

commitment fees. Other Financial charges of P377.32 million include the

following: capitalized service charge of P16.14 million imposed by JBIC and

ADB; front-end fee of P5.11 million paid to IBRD; and other charges of P226.78

million.

6.8 Appropriations, Allotments and Balances

6.8.1 Foreign-Assisted Projects

6.8.1.1 Appropriations – P32.86 billion

The CY 2012 GAA reflects appropriations of P32.86 billion provided

under the regular or built-in appropriations of the implementing departments

concerned and in the Unprogrammed Fund, a Special Purpose Fund. Of the

amount, P23.35 billion was funded through loans while the balance of P9.52

billion was sourced from a counterpart fund provided by the NG.

Table VI-11 shows the appropriations per department for Foreign-

Assisted Projects showing the source of appropriations and allotment class:

Table VI-11 Appropriations for Foreign-Assisted Projects by

Department/Agency

(in million pesos)

Department Appropriations

PS MOOE CO Total

Regular 42.40 5,469.82 26,127.40 31,639.62

DPWH - - 15,680.44 15,680.44

DA 1.66 1,306.88 5,126.21 6,434.75

DAR 27.70 1,163.03 2,173.38 3,364.11

DOF - 23.57 2,378.94 2,402.51

DSWD - 1,299.02 26.11 1,325.13

DOE - 623.64 53.15 676.79

ARMM 13.03 279.21 365.90 658.14

DENR - 470.20 82.65 552.85

DOTC - - 240.63 240.63

DOST - 136.48 - 136.48

DOH - 131.05 - 131.05

DTI - 36.76 - 36.76

Unprogrammed Fund - 200.06 1,024.73 1,224.79

Unallocated - 200.06 205.73 405.79

DOTC - - 800.00 800.00

DPWH - - 19.00 19.00

Total 42.40 5,669.88 27,152.13 32,864.41


148

As in the past years, the bulk of the appropriations are lodged in the

DPWH, an infrastructure agency. Shown under Schedule 32, Volume I-B of

this report is the appropriations by department/agency/project for foreign-

assisted projects.

6.8.1.2 Allotments – P31.15 billion

Of the amount appropriated, P31.15 billion or 94.79 percent was allotted

to the concerned departments under the following allotment class: PS – P42.40

million, MOOE – P5.44 billion and CO – P25.67 billion. Shown in Table VI-12

is the release of allotments by department.

Table VI-12 Allotments for Foreign-Assisted Projects

by Department/Agency

(in million pesos)

Department Allotments

PS MOOE CO Total

Regular 42.40 5,438.50 24,851.18 30,332.08

DPWH - - 15,680.44 15,680.44

DA 1.66 1,275.56 3,849.98 5,127.21

DAR 27.70 1,163.03 2,173.38 3,364.11

DOF - 23.57 2,378.94 2,402.51

DSWD - 1,299.02 26.11 1,325.13

DOE - 623.64 53.15 676.79

ARMM 13.03 279.21 365.90 658.14

DENR - 470.20 82.65 552.85

DOTC - - 240.63 240.63

DOST - 136.48 - 136.48

DOH - 131.05 - 131.05

DTI - 36.76 - 36.76

Unprogrammed Fund - - 819.00 819.00

DOTC - - 800.00 800.00

DPWH - - 19.00 19.00

Total 42.40 5,438.50 25,670.18 31,151.08


The Appropriations, Allotments and Balances for Foreign-Assisted

Projects by department/agency are presented in Schedule 33, Volume I-B of

this report.

149

6.8.1.3 Unreleased Appropriations – P1.71 billion

The unreleased balance of appropriations amounted to P1.71 billion

broken down as follows: MOOE – P231.38 million and CO – P1.48 billion. Of

the balance, the DA accounted for P1.31 billion or 76.32 percent while the

Unprogrammed Fund shared P405.79 million or 23.68 percent.

6.8.2 Debt Service

Pursuant to Section 26, Chapter IV, Book VI of E.O. No. 292 entitled

“Instituting the Administrative Code of 1987”; Section 31 of P.D. No. 1177, the

Budget Reform Decree; and R.A. No. 4860 as amended, the Foreign Borrowings

Act, the appropriations for servicing domestic and foreign debts are automatically

appropriated. During the year, Special Allotment Release Orders released by the

DBM to the BTr for debt service expenditures shows data as follows:

Particulars

Appropriations/Allotments

(in million pesos)

Domestic Foreign Total

Principal 311,135.90 87,177.90 398,313.81

Interest 202,821.27 101,545.62 304,366.89

Documentary Stamps Tax 5,364.33 330.17 5,694.50

Loss on Guaranty - 2,861.32 2,861.32

Other Financial Charges - 250.77 250.77

Commitment Fess - 293.18 293.18

Bank Charges - 53.35 53.35

Total 519,321.50 192,512.31 711,833.81

The allotments is intended for servicing domestic and foreign debt of

P519.32 billion or 72.96 percent and P192.51 billion or 27.04 percent,

respectively. Of the amount, P398.31 billion or 55.96 percent is for principal

repayment; P304.37 billion or 42.76 percent is for interest and the balance of

P9.15 billion or 1.29 percent is for documentary stamps tax, foreign exchange

risk cover, commitment fees, bank charges and other financial charges.

The released allotments of P711.83 billion are lesser than the amount of

debt service expenditures recorded at the BTr of P1.203 trillion. The

explanations given by the BTr on the discrepancies are as follows:

150

Reconciliation of SARO Releases and Actual Debt Service Expenditures

Particulars


Explanations DBM

SARO

Releases

BTr – FS Difference

Principal Payment 398,313.81 882,310.68 (483,996.87)

Domestic 311,135.90 790,126.23 (478,990.32) The amount of SARO releases is the

contribution to the sinking fund for the

year. The actual payment/redemption of

the government securities came from the

sinking fund.

Foreign 87,177.90 92,184.45 (5,006.55) The payment made for the relent loans

were not included in the request for

SARO releases since these were

considered receivable of the NG from

GOCCs and payments are expected for

the amount advanced.

Total Interest and Other

Charges

307,825.50 314,914.00 (7,088.50)

Interest 304,366.89 310,830.75 (6,463.86) Capitalized interest and amortization of

interest expense on global bonds/notes

issued by the NG.

Bank Charges 53.35 53.35 -

Other Financial Charges 250.77 845.41 (594.64) Capitalized other financial charges.

Commitment Fees 293.18 323.18 (30.00) Capitalized commitment fees.

Loss on Guaranty

2,861.32 2,861.32 -

Documentary Stamp Tax 5,694.50 5,519.50 175.00 Unobligated balance of allotment

Total 711,833.81 1,202,744.18 (490,910.37)

VII. SPECIAL ACCOUNTS IN

THE GENERAL FUND

151

SPECIAL ACCOUNT IN THE GENERAL FUND

7.1 Introduction

The General Appropriations Act (GAA) includes general and specific provisions

on Special Account in the General Fund (SAGF) intended for various specific purposes

which are sourced from grants and donations, collections of specific fees, charges,

premiums, among others. Excluded from these are donations for specific purposes with

a term not exceeding one (1) year and which shall be treated as trust receipts pursuant to

Section 12 of Republic Act No.10155, the 2012 GAA.

7.1.1 Legal Basis/Purpose

Presidential Decree No. 1234 dated November 8, 1977 provides that the

establishment of Special and Fiduciary Funds has been authorized from time to

time in order to facilitate the funding of priority activities of Government

including those undertaken by GOCCs. This decree contains the following

provisions quoted as follows:

“Section 1. All income and collections for Special or Fiduciary Funds

authorized by law shall be remitted to the Treasury and treated as SAGF xxx

corporations.

Section 2. The amounts collected and accruing to Special or Fiduciary Funds

shall be considered as being automatically appropriated for the purposes

authorized by law creating the said Funds, except as may be otherwise

provided in the General Appropriations decree.

Section 3. The amounts collected under Special or Fiduciary Funds shall be

released to the implementing agencies subject to the approval of the President

and to Special Budget under Section 40 of P.D. No. 1177: PROVIDED, That

funds needed for regular operations or other duly authorized purposes may be

automatically released under such conditions as may be approved by the

President.

Section 4. The funds once released shall be administered by the government

agency or corporations concerned and shall be utilized only for the purposes

authorized in the law creating the said Special or Fiduciary Funds. “

7.1.2 Existing Accounting Procedures

The New Government Accounting System (NGAS) adopts the one fund

concept and provides that separate accounting shall be done only when

specifically required by law or by a donor agency or when otherwise necessitated

by circumstances subject to prior approval of the Commission.

152

PD No. 1234 authorized the creation of the SAGF, thus, departments and

agencies maintain separate books of accounts for these funds. However, upon

implementation of the NGAS, some departments/agencies integrated the SAGF

transactions with the General Fund 101. The list of departments/agencies with

SAGF is presented in Annex A of Volume I-B of this Report.

Income of government agencies which was constituted as SAGF was

remitted to the National Treasury and disbursed by means of separate MDS check

series and subject to the issuance of SAROs and NCAs by DBM, except those

authorized to maintain bank accounts with government depository banks and/or

exempted from the provisions of Executive Order No. 338.

7.2 Financial Data

The financial data contained in this report were derived from the consolidation of

the balances of the accounts reflected in 70 SAGF/Special Fund trial balances as of

December 31, 2012, which were submitted by 18 departments/agencies, while the

budgetary data were based on the consolidated statement of appropriations, allotments

and obligations prepared by this Sector. The data also includes income accruing to

SAGF which were collected by various NGAs and remitted to the National Treasury.

However, balances of accounts pertaining to CARP Fund 158 were excluded as these

are presented in a separate chapter of this report. Likewise, those accounts pertaining to

the receipt and utilization of the SAGF, for which no books of accounts were separately

maintained, were excluded but were instead integrated in the respective agency’s

consolidated trial balances.

7.2.1 Appropriations, Allotments and Obligations

For the calendar year 2012, the total appropriations for SAGF, net of CARP,

totalled P33.64 billion, of which P33.52 billion was released, leaving a balance of

P0.12 billion. The total obligations incurred amounted to P12.43 billion as shown

in Table VII-1 below.

Table VII-1 Appropriations, Allotments and Obligations

Special Account in the General Fund (Net of CARP)

(in million pesos)

Department Appropriations Allotments Obligations

National Defense 13,599.40 13,599.40 1,053.80

Public Works and Highways 12,652.17 12,652.17 6,374.48

Finance 1,539.58 1,539.58 1,427.98

Other Executive Offices 1,512.94 1,434.92 1,248.56

Interior and Local Government 742.37 742.37 6.70

Health 651.09 651.09 422.07

Transportation and Communication 557.95 557.95 413.71

Agriculture 461.28 461.28 362.29

Energy 430.86 430.86 316.42

Social Welfare and Development 307.17 307.17 133.13

Science and Technology 267.87 267.87 4.70

Justice 253.70 253.70 233.78

153

Chart VII-1 Total Assets, Liabilities and Equity By Department


(in billion pesos)

Table VII-1 continued

Department Appropriations Allotments Obligations

Budget and Management 242.39 242.39 192.29

Office of the President 117.54 117.54 107.39

Labor and Employment 110.96 110.96 80.56


Authority 82.34 82.34 12.96

Environment and Natural Resources 76.82 41.82 19.09

Trade and Industry 28.16 28.16 21.72

Office of the Ombudsman 3.17 3.17 -

Totals 33,637.75 33,524.74 12,431.63

7.2.2 Assets, Liabilities and Equity

As of December 31, 2012, the total assets, liabilities and equity of the SAGF

excluding CARP Fund 158 amounted to P39.39 billion, P7.65 billion and P31.73

billion, respectively. These do not include remittance by various national

government agencies to the National Treasury which were constituted as SAGF.

As shown in Chart VII-1 below, the top five departments with the biggest

SAGF assets are the DND – P19.03 billion, OEO – P9.24 billion, DILG – P3.22

billion, DPWH – P2.00 billion and DOE – P1.93 billion. Substantial amount of

the SAGF asset of DND, OEO, DILG, DPWH and DOE accrue to the AFP

Modernization Trust Fund, Higher Education Development Fund, BFP 151, Road

Board, and Special Fund for energy resource development and exploration

programs and projects, respectively.

154

The Other Executive Offices had the biggest SAGF liabilities followed by

the DND, DOF, DPWH and DOE with P5.25 billion, P0.75 billion, P0.49 billion,

P0.38 billion and P0.29 billion, respectively. Consequently, the DND has the

biggest share in SAGF equity with P18.28 billion, followed by OEO, DILG, DOE

and DPWH with P3.98 billion, P3.22 billion, P1.64 billion and P1.62 billion,

respectively.

7.2.3 Income and Expenses

For calendar year 2012, the total SAGF income amounted to P3.50 billion,

58.95 percent of which or P2.06 billion pertains to Other Income and 41.05

percent or P1.43 billion pertains to various service income. The bulk of the Other

Income amounting to P1.83 billion pertains to Grants and Donations recorded by

various NGAs including those remitted directly to the National Treasury and

recorded in the Bureau of the Treasury. Shown in Chart No. VII-2, below is the

composition of the total SAGF income, net of CARP.

Chart VII-2 Income by Department


Based on the certified income remitted to the National Treasury, the

departments/agencies utilize the fund by requesting allotments and NCAs.

During the calendar year 2012, agencies maintaining SAGF incurred

expenses totaling P13.06 billion. Of the expenses of DPWH amounting to P10.39

billion, 84% or P10.2 billion was incurred by the DPWH for the repair and

maintenance of roads, highways and bridges. Most of the expenses of the OEO

and DND pertain to donations/financial assistance to students/scholarship grants

and depreciation of various property, plant and equipment, respectively.

155

Shown in Table VII-2 below is the total SAGF expenses amounting to

P13.06 billion with breakdown as to PS, MOOE and FE for each department.

Table VII-2 Expenses by Department/Office


(in million pesos)

Department Total PS MOOE FE

Public Works and Highways 10,386.97 27.66 10,359.31 0.00

Other Executive Offices 908.77 16.61 892.11 0.05

National Defense 605.05 - 605.05 0.00

Finance 296.11 - 295.88 0.22

Justice 251.46 2.95 248.52 -

Energy 235.01 0.10 234.92 -

Environment and Natural Resources 106.20 0.02 106.15 0.03

Agriculture 86.83 30.00 56.83 -

Labor and Employment 73.90 - 73.41 0.49

Social Welfare and Development 53.27 - 53.27 0.00

Office of the President 32.36 2.92 29.44 0.00

Trade and Industry 14.61 0.88 13.73 -

Science and Technology 4.46 - 4.46 -

Interior and Local Government 2.88 - 2.87 0.02

Total 13.057.88 81.13 12,975.93 0.82


VIII. COMPREHENSIVE

AGRARIAN REFORM

PROGRAM

156

COMPREHENSIVE AGRARIAN REFORM PROGRAM

8.1 Introduction

The Comprehensive Agrarian Reform Program (CARP) created under Republic

Act No. 6657 dated June 10, 1988 was established to protect the rights of farmers,

farmworkers, and landowners, as well as cooperatives, and other independent farmers.

From its initial ten-year life, from 1988 to 1998, it was extended up to June 30, 2014

through the enactment of Republic Act Nos. 8532 and 9700 to be able to pursue some

of the specific objectives/thrusts of the agrarian reform program namely: (a) to

complete land acquisition and distributions within the indicative timeframe of the

CARP on its second decade of implementation; and (b) to fast track delivery of agrarian

reform justice relative to judicial, quasi-judicial, non-judicial and mediation of cases.

To ensure the timely and effective delivery of services to the beneficiaries and to

manage and direct the CARP at the national level, the Presidential Agrarian Reform

Council (PARC) was created under Section 18 of Executive Order No. 229 and Section

41 of R.A. No. 6657. The Council is chaired by the President and supported by the

Secretaries/Heads of implementing agencies. Also established pursuant to Section 43 of

R.A. No 6657 was the PARC Secretariat, which is tasked to organize and harmonize

inter-agency linkages and evaluate CARP projects. At the grassroots level, the

Provincial Reform Coordinating Committee coordinates the delivery of agrarian reform

activities to the people. The Agrarian Reform Fund (ARF), which serves as the funding

source of the program and committees is utilized under the supervision of the PARC

Executive Committee.

8.2 Major Components of CARP and its Implementing Agencies

The implementation of CARP is concentrated on three major components namely:

(1) Land Tenure Improvement (LTI). This component seeks to secure the tenurial status

of the farmers and farm workers in the lands they till. It is operationalized either

through land acquisition and distribution (LAD) or leasehold operations; (2) Program

Beneficiaries Development (PBD) is the support services delivery component of the

agrarian reform program. It aims to capacitate the Agrarian Reform Beneficiaries

(ARBs) and provide them access to the necessary support services to make their lands

more productive, enable them to venture in income generating livelihood projects and

actively participate in community governance; and (3) Agrarian Justice Delivery (AJD)

– aims to provide agrarian legal assistance and the adjudication of cases to ensure

appropriate and timely resolution of agrarian reform issues.

The Department of Agrarian Reform (DAR) is in-charged with the main

responsibility in the implementation of the CARP. It is supported by other government

agencies/office which act as implementing agencies of the CARP. Their roles and

responsibilities are as follows: (a) Department of Environment and Natural Resources

(DENR) – in-charge of land surveys and distribution of free patents and stewardship

contracts to beneficiaries of public and alienable and disposable lands suitable to

agriculture and agro-forestry areas; (b) Department of Agriculture (DA) – responsible

for agricultural extension services; (c) Land Bank of the Philippines (LBP) – land

evaluation, collection of land amortization from farmer-beneficiaries and provision of

157

credit facilities and other technical assistance to both farmer-beneficiaries and

landowners; (d) Land Registration Authority (LRA) – registration of land titles; (e)

National Irrigation Administration (NIA) – mobilization and development of vital

farm-related infrastructures, such as irrigation systems, small impounding dam, access

trails, rural roads, ports and other basic facilities; (f) Department of Public Works and

Highways (DPWH) – construction of farm-related infrastructure facilities, including

roads; (g) Department of Trade and Industry (DTI) – rural industrialization; (h)

Department of Labor and Employment (DOLE) – in-charge of farm workers’

organizations; and (i) Municipal Development Fund Office (MDFO) – managed the

loan proceeds for civil works under the rural infrastructure of the Second Agrarian

Reform Communities Project.

8.3 Funding Sources for CARP

For this fiscal year, a total of P17.9 billion was appropriated in the General

Appropriations Act, R.A. No. 10155 for the implementation of land acquisition and

distribution and agrarian justice delivery activities, program beneficiaries development

activities, including funding requirements for operational support. The budget was

broken down as follows: Personal Services – P4.47 billion, Maintenance and Other

Operating Expenses – P9.90 billion and Capital Outlays – P3.53 billion. Table VIII-1

shows the allocation of appropriations to the implementing agencies (IAs).

Table VIII-1 Appropriations for CARP

(in million pesos)

Implementing

Agency Total PS MOOE CO

DAR 14,126.60 4,195.31 6,547.02 3,384.26

DOF-LBP 2,500.00 - 2,500.00 -

DENR 730.28 85.62 644.67 -

DA-NIA 235.90 67.84 18.06 150.00

DOJ-LRA 234.50 73.19 161.30 -

DTI 75.94 49.46 26.48 -

Total 17,903.22 4,471.42 9,897.53 3,534.26


8.4 Appropriations, Allotments and Obligations

This year’s total CARP appropriations rose to P21.13 billion as shown in the

Statement of Appropriations, Allotments, Obligations and Balances. An increment of

P7.32 billion compared to last year’s amount of P13.81 billion was noted. This consists

of Current Year’s Appropriations – P16.61 billion, Allotted Continuing Appropriations

– P3.46 billion and Unreleased Continuing Appropriations – P1.06 billion.

Total allotments received by implementing agencies during the year reached

P20.97 billion while obligations incurred amounted to P14.67 billion. The obligations

this year are as follows: Personal Services – P5.57 billion, Maintenance and Operating

Expenses – P6.13 billion and Capital Outlays – P2.97 billion. Presented in Table VIII-2

is the Statement of Appropriations, Allotments, Obligations and Balances by IAs.

158

Table VIII-2 Statement of Appropriations, Allotments, Obligations and Balances

(in million pesos)

Implementing

Agency Appropriations Allotments Obligations Unobligated

Balance

Unreleased

Appropriations

DAR 18,520.60 18,518.24 12,400.67 6,117.57 2.36

DOF-MDFO 1,210.88 1,210.88 1,210.88 - -

DENR 819.47 819.47 628.25 191.22 -

DA-NIA 265.62 265.62 259.12 6.50 -

DOJ-LRA 236.29 82.86 96.16 (13.30) 153.42

DTI 76.43 76.43 70.94 5.49 -

DPWH - - - - -

Total 21,129.29 20,973.51 14,666.03 6,307.48 155.78 Difference between totals and sum of components is due to rounding off.

Of the total allotments of P20.97 billion and obligations of P14.67 billion, the

DAR reported 87.65 percent or P18.52 billion and 84.55 percent or P12.4 billion,

respectively. The DOF-MDFO with both allotments and obligations of P1.21 billion,

ranked second. The allotment transferred to DOF-MDFO, which was fully obligated,

was provided in DAR Special Provision No. 3 for CY GAA to cover the loan proceeds

for civil works under the rural infrastructure of the Second Agrarian Reform

Communities Project.

On the other hand, the DOF-LBP with appropriation of P2.5 billion and released

during the year was withdrawn by the DBM pursuant to NBC No. 541 dated July 18,

2012 for the adoption of operational efficiency measure.

8.5 Financial Highlights

8.5.1 Balance Sheet

As of December 31, 2012, the total Assets of the CARP amounted to P101.31

billion comprising of Current Assets of P22.74 billion and Non-Current Assets of

P78.57 billion as presented in Table VIII-3. Of the total Current Assets, P17.93 billion

or 78.85 percent comprise of Receivables, the bulk of which pertains to Accounts

Receivables (Net) – P7.04 billion, Due from GOCCs – P3.92 billion, Due from Local

Government Units – P2.06 billion, Loans Receivables-Others – P1.65 billion, and Due

from NGAs – P1.63 billion.

The Non-Current Assets of P78.57 billion consisted mainly of Property, Plant and

Equipment (PPE) – P68.8 billion and Investments – P9.49 billion. The total PPE

comprised primarily of Land and Land Improvements of P62.65 billion, the bulk of

which was reported by DOF-LBP – P46.17 billion and PCGG – P15.29 billion.

Table VIII-3 Balance Sheet

(in million pesos)

Particulars DAR DA-NIA DENR DOJ-

LRA DPWH DTI

DOJ -

PCGG

DOF -

LBP Total

Total Assets 13,896.91 3,107.55 306.66 17.35 1,867.79 31.27 16,535.20 65,542.80 101,305.53

Current Assets 9,844.13 871.36 107.11 1.02 108.72 27.54 137.50 11,641.01 22,738.39

Cash 3,942.62 389.10 22.52 0.10 9.69 3.67 - - 4,367.70

Receivables 5,746.51 407.60 27.54 0.15 98.80 22.15 - 11,628.88 17,931.62

Inventories 142.36 49.97 42.08 0.77 0.22 1.21 137.50 12.13 386.23

159

Particulars DAR DA-NIA DENR DOJ-

LRA DPWH DTI

DOJ -

PCGG

DOF -

LBP Total

Prepayments 5.77 24.70 13.78 - 0.02 0.51 - - 44.77

Other Current

Assets 6.87 - 1.19 - - 0.01 - - 8.07

Non–Current

Assets

4,052.79

2,236.19

199.55

16.33

1,759.07

3.73

16,397.70

53,901.79

78,567.14

Investments 618.60 111.64 - - - - 1,040.04 7,720.49 9,490.76

Property, Plant

and Equipment 3,307.31 1,996.46 188.17 12.95 1,759.05 3.62 15,357.66 46,179.20 68,804.40

Other Assets 126.88 128.10 11.38 3.38 0.02 0.12 - 2.10 271.98

Total Liabilities 1,734.55 736.57 65.13 0.18 13.84 3.48 - 20,809.99 23,363.74 Current

Liabilities

1,716.54

736.57

65.13

0.18 13.84 3.48 - 11,562.65 14,098.38 Long-Term

Liabilities 0.12 - - - - - - 7,123.44 7,123.56 Deferred Credits 17.89 - - - - - - 2,123.91 2,141.80

Equity 12,162.37 2,370.99 241.53 17.18 1,853.95 27.78 16,535.20 44,732.80 77,941.79 Total Liabilities

and Equity 13,896.91 3,107.55 306.66 17.35 1,867.79 31.27 16,535.20 65,542.80 101,305.53


The total Liabilities of P23.36 billion comprised of the following: Current

Liabilities – P14.10 billion; Long-term Liabilities – P7.12 billion; and Deferred Credits

– P2.14 billion. The entire amount of Long-term Liabilities pertains to Bonds Payable-

Domestic.

On the other hand, the bulk of the Current Liabilities of P14.10 billion includes

Accounts Payable – P8.79 billion, Guaranty Deposits Payable – P3.14 billion, Other

Payables – P540.9 million, Performance/Bidders/Bail Bonds Payable – P468.83 million,

and Due to Other NGAs – P376.99 million.

8.5.2 Statement of Income and Expenses

The Consolidated Statement of Income and Expenses of the IAs for fiscal year

2012, showed a total Subsidy Income of P13.44 billion reduced by Subsidy to RO/OU

of P1.21 billion resulting to a Net Subsidy of P12.23 billion.

To ensure availability of funds to finance the nationwide implementation of the

CARP, the Department of Budget and Management released Notice of Cash Allocations

amounting to P12.24 billion broken down as follows: DAR – P11.17 billion, DENR –

P651.43 million, DA-NIA – P234.95 million, DOJ-LRA – P105.1 million, DTI –

P72.25 million, and DPWH – P12.03 million, .

The total expenses incurred during the year reached P9.86 billion, the biggest

portions of which were reported by DAR and DOF-LBP with P8.80 billion and P539.99

million, respectively. The bulk of the total expenses was primarily spent for the

following: Salaries and Wages – P3.53 billion, Other Compensation – P973.44 million,

Survey Expenses – P678.54 million, Travelling Expenses – P667.13 million, Other

Personal Benefits – P637.4 million Professional Expenses – P549.22 million, Other

MOOE – P354.47 million, Supplies and Materials Expenses – P381.49 million,

Training and Scholarship – P371.84 million, Taxes, Insurance, Premium and Other

160

Expenses – P172 million, and Repairs and Maintenance – P165.37 million. Shown in

Table VIII-4 is the Statement of Income and Expenses by IAs.

Table VIII-4 Statement of Income and Expenses

(in million pesos)

Implementing

Agencies

Net

Subsidy Income Total Expenses

Net Income/

(Loss)

DAR 11,156.86 16.57 11,173.44 8,797.80 2,375.64

DA-NIA 234.95 0.05 234.99 80.83 154.16

DENR 651.43 0.40 651.83 539.99 111.84

DOJ-LRA 105.10 - 105.10 98.18 6.93

DPWH 7.33 - 7.33 0.76 6.58

DTI 72.84 - 72.84 68.17 4.67

DOJ-PCGG - - - 1.96 (1.96)

DOF-LBP - 172.16 172.16 268.27 (96.11)

Total 12,228.52 189.18 12,417.70 9,855.96 2,561.74 Difference between totals and sum of components is due to rounding off.

8.6 OPERATIONAL HIGHLIGHTS

The accomplishments of the CARP implementing agencies are presented below:

8.6.1 DAR

Program/Project/Activity Target Accomplish-

ments Percent

MFO 1 – LAND TENURE INSTRUMENTS AWARDED TO LANDLESS FARMERS AND

LANDOWNERS COMPENSATION FACILITATED

I. Land Tenure Improvement (LTI)

A. Land acquisition and distribution

1. Land Title Distribution

a. Area Processed 180,000 139,798 78

b. Area Distributed in hectares - 118,265 - b.1 Net area distributed with EP/CLOA - 104,069 - b.2 Non-CARPable - 14,196 -

2. Pipelining of Landholdings for Distribution

a. Area processed for pipelining 118,698 90,180 76

3. Survey Returns Transmitted and Approved by

DENR-LMS

a. Area of lands with approved survey plans (ASPs)

in hectares.

180,000

107,573

60

b. Area Moduled (in hectares) - 120,438 -

c. Field Work Completed (in hectares) - 97,856 -

B. Leasehold Operations

1. Preparation, registration and implementation of

leasehold agreements/contracts

1.1 Area under leasehold agreements (in hectares) 17,254 15,022 87

1.2 Number of ARBs involved - 6,533 -

161


ments Percent

C. Other Land Tenure Improvement Services

1. Subdivision and redocumentation of Collective Land

Owners Awards (CLOAs) into individual titles

1.1 Area covered for subdivided CLOAs (in

hectares)

85,000 42,699 50

2. Installation of Uninstalled ARBs

2.1 Number of ARBs installed 8,981 2,128 24

2.2 Area in hectares - 2,497 -

MFO 2 – LEGAL INTERVENTION PROVIDED TO THE AGRARIAN REFORM

BENEFECIARIES AND LANDOWNERS

II. Agrarian Justice Delivery (AJD)

A. Adjudication of Agrarian Reform Cases

1. Case Resolution

a. Number of Cases Resolved 20,144 23,420 116

2. Post Judgment

a. Number of post judgment order/resolution issued/

promulgated 8,275

8,289 100

B. Agrarian Legal Assistance

1. ARB Representation in Court and Adjudication Cases

a. Judicial Courts and Prosecutors Office

a.1 Number of cases disposed/submitted for

resolution

1,390 2,097 151

b. Quasi-Judicial (PARAD/RARAD/DARAB)

b.1 Number of cases disposed/submitted for

resolution

14,429 16,930 117

2. Resolution of Agrarian Law Implementation (ALI)

Cases

a. Legal proceeding of administrative cases

a.1 Number of cases processed/disposed/resolved 52,075 57,531 110

3. Conduct of Conciliation/Mediation to assist ARBs

a. Number of disputes settled/disposed 41,586 44,707 108

MFO 3 – SUPPORT SERVICES IMPLEMENTED/FACILIATED AND COORDINATED

FOR DELIVERY TO PROGRAM BENEFICIARIES

III. Program Beneficiaries Development (PBD)

A. Support Services to ARBs

1. Agrarian Reform Assessment (ALDA)Communities

(ARCs) Level of Development

a. Number of ARCs assessed 2,052 2,051 100

b. Number of organizations assessed 4,982 4,765 96

2. Social Infrastructure and Local Capability Building

(SILCAB)

a. Community Mapping and Assessment

a.1 Number of barangays assessed 685 1,130 165

a.2 Number of ARBOs profiled 875 1,061 121

b. Institutional Development Intervention

b.1 Number of ARCs established/confirmed 23 11 48

b.2 Number of ARBs covered 7,546 5,578 74

b.3 Number of new ARCs with development

plans

39

153

392

162


ments Percent

b.4 Number of development plans mainstreamed

in the development plans of the LGUs

239

222

93

c. Gender-Responsive Capacity Development of

ARBs/ARB Organization and ARCs

c.1 Gender-Responsive ARB Training

c.1.1 Number of ARBs trained in ARCs and

Non- ARCs

200,946

273,049

136

c.2 ARB Membership in Organization

c.2.1 Number of New ARB members in

Organization

54,540

58

58,073

106

c.2.2 Number of ARB organizations (coops,

Fas, IAs, women’s group, etc.)

assisted

4,982

6,141

123

3. Sustainable Agribusiness and Rural Enterprise

Development(SARED)

a. ARCCESS Activities

a.1 Number of Business Development Service

(BDS) identified

679

178

26

a.2 Number of Common Service Facilities

(CSFs) identified

4,742

1,015

21

b. ARC Cluster

b.1 Number of ARC Clusters documented 26 121 465

b.2 Number of ARC Clusters confirmed 27 10 37

c. Development of Gender-Responsive Agri and

Non-agri Enterprises

c.1 Number of products and services developed 199 518 260

c.2 Number of products launched in commercial

markets

106

264

249

d. WASH-focus Rural And Livelihood Enterprises

d.1 Number of operational rural and livelihood

enterprises

14

113

807

e. Provision of Marketing Assistance

e.1 Marketing contracts facilitated with

agribusiness buyers

439

1,532

349

e.2 Number of organizations involved 341 681 200

f. Provision of Gender-Responsive and Socialized

Credit/

Microfinance Assistance

f.1 Number of organizations provided with credit 955 1,090 114

f.2 Number of ARBs involved 46,938 59,910 128

f.3 Number of ARBs provided with micro-

finance services

65,461

93,435

143

f.4 Number of funded projects/enterprises 27,103 62,919 232

f.5 Amount of loan availed to finance these

projects (in million pesos)

270.95

1,927.70

711

g. Job Generation

g.1 Number of jobs generated - 99,452 -

4. Access Facilitation and Access Enhancement

Services (AFAE)

163


ments Percent

a. Provision of Access to Physical Infrastructure

(both Locally-Funded and Foreign-Assisted

Projects)

a.1 Irrigation Projects

a.1.1 Number of projects completed 58 166 286

a.1.2 Service area covered (in hectares) 8,119 9,817 121

a.2 Farm-to-Market Roads


a.2.2 Total Length (in kilometers) 930 1,551 167

a.3 Post-Harvest Facilities

a.3.1 Number of Projects - 115 -

a.3.2 Number of units provided 426 1,129 265

a.4 Multi-Purpose Pavements


a.4.2 Total Area (in square meters) 11,700 26,545 227

a.5 Bridges

a.5.1 Number of projects completed - 78 -

a.5.2 Total length (in linear meter) - 1,784

b. Provision of Basic Social Services

b.1 Barangay Health Stations and Health Care

Stations

b.1.1 Number of barangay health units

constructed/rehabilitated

-

88

-

b.1.2 Total number of households involved - 19,973 -

b.2 Power Supply

b.2.1 Number of projects - 68 -

b.2.2 Number of households involved - 1,883 -

b.3 School classrooms

b.3.1 Number of classrooms constructed/

facilitated

-

129

-

b.3.2 Number of households involved - 7,905 -

b.3 ARBs enrolled in health insurance

enrolled in PhilHealth and other social

protection/health care providers

111,473

150,790

135 Source: DAR – Agency Performance Report, January to December 2012

8.6.2 DTI


ments Percent

A. Micro, Small and Medium Enterprises (MSMEs)

1. Investments generated (in million) P 899.42 P1,127.65 125

2. Sales generated (in million) P1,756.19 P2,408.75 137

3. Jobs generated 45,526 68,498 150

4. Entrepreneurs developed 1,745 1,734 99

5. ARCs assisted 716 799 112

6. Non-ARCs assisted 98 180 184

7. Development of new MSMEs

7.1 MSMEs developed

686

1,298

189

164


ments Percent

7.2 FBs served 7,925 16,398 207

7.3 LOs served 38 183 482

7.4 ARCs served 236 186 79

7.5 Sales Generated (in million) P53.36 P66.66 125

8. Assistance to MSMEs

8.1 MSMEs assisted

8.2 FBs served

8.3 LOs served

8.4 ARCs served

8.5 Monitored Sales Impact (in million)

2,771

52,940

127

697

P1,210.45

2,311

466,342

1,496

752

P1,718.65

83

881

1,178

108

142

B. Trainings and Seminars Conducted

1. Entrepreneurial Training

1.1 Trainings conducted

1.2 FBs served

1.3 LOs served

1.4 ARCs served

508

9,304

105

403

714

14,656

427

270

141

158

407

67

2. Skills Training


2.2 FBs served

2.3 LOs served

2.4 ARCs served

509

9,748

57

431

732

15,188

259

199

144

156

454

46

3. Productivity Improvement


3.2 FBs served

3.3 LOs served

3.4 ARCs served

263

5,483

74

249

279

5,902

109

85

106

108

147

34

C. Project Feasibility Studies

1. Number of Studies

1.1 Studies completed 288 491 170

1.2 FBs served 13,599 51,759 381

1.3 LOs served 105 70 67

1.4 ARCs served 268 158 59

2. Technology Missions

2.1 Missions conducted 82 117 143

2.2 FBs served 1,072 1,067 99.5

2.3 LOs served 17 47 276

2.4 ARCs served 95 68 72

D. Market and Development Activities

1. Market Matching

1.1 Matching conducted

1.2 FBs served

1.3 LOs served

1.4 ARCs served

1.5 Sales (cash and booked, in million)

2,214

39,802

50

501

P402.84

3,154

72,860

706

338

P537.41

142

183

1,412

67

133

2. Selling Missions

2.1 Missions conducted 17 76 447

2.2 FBs served 625 955 153

2.3 LOs served 6 1 17

2.4 ARCs served 36 30 83

2.5 Sales (cash and booked, in million) P2.95 P14.65 497

165


ments Percent

3. Trade Fairs

3.1 Trade Fairs conducted 340 432 127 3.2 FBs served 26,370 36,038 137 3.3 LOs served 70 177 253 3.4 ARCs served 472 251 53

3.5 Sales (cash and booked, in million) P75.10 P71.37 95 4. Promo Collaterals

4.1 Promo conducted 405 419 103 4.2 FBs served 20,314 27,853 137 4.3 LOs served 27 52 193 4.4 ARCs served 332 143 43

E. Product Development Activities

1. Development activities done 335 442 132

2. Products design developed

3. Prototype executed

4. Packaging and labels developed

5. FBs served

6. LOs served

7. ARCs served

586

466

259

13,815

69

340

1,145

1,280

544

15,143

284

146

195

275

210

110

412

43

F. Consultancy Services

1.1 Man-months extended

1.2 FBs served

1.3 LOs served

1.4 ARCs served

125

16,305

314

344

112

50,851

339

241

90

312

108

70

G. Number of CARP Personnel 111 98 88

H. Number of Staff Development

Activities

66

81

123 Source: DTI CARP Summary of Accomplishments, For the Year 2012

8.6.3 DOLE

Program/Project /Activity Accomplishments

MFO I – Capacity Building and Strengthening of ARB Organizations

A. Conducted trainings/seminars to increase the knowledge, attitude and skills of the members of

ARB Organizations on the following: organizational strengthening, enterprise/livelihood

project development and financial management

Region No. of Trainings No. of Participants

1. Region VI 35 1,492

2. Region X 16 568

3. Region XI 22 715

3. Region XIII 18 706

Total 91 3,481

MFO II – ARC Alliance/Partnership Building A. Partner-agencies such as DAR, DTI, DA LBP and other academic institutions (particularly in

Negros Occidental) provided technical assistance in the conduct of the aforesaid trainings

B. The Community Facilitators (CFs) were able to facilitate 19 convergence planning and

assessment workshops and as a result, the cooperatives were able to access 67 trainings and 28

economic/welfare projects.

166

Program/Project /Activity Accomplishments

MFO III – Sustainable Agri-business Development and Management

A. There were 16 agri-business improvement plans that were prepared and 103 consultancy

services provided.

MFO IV – Entrepreneurship and Rural Livelihood and Enterprise Development

Name of Cooperative/Region/Project

A. San Rafael ARC MPC, Murcia, Negros Occidental (Region VI)

A.1 Bio-Intensive Gardening (which includes Swine Breeding and Fattening; Bio-gas

production and vermin-composing components

A.2 Organic Red Rice Production demo farm

A.3 Sugarcane Production(in coop collective farm

A.4 Food processing (such as banana chips, flavored pulvoron making, and peanut butter) for

the women’s group of the coop as its beneficiaries

B. Bulanon Farmers ARB Cooperative, Sagay City (Region VI)

B.1 Basic Commodity and Agri-Inputs Store was established with funding source from the

coop fund

B.2 Food Lot Module Technology Demo Farm - established through the assistance of the

DA-Sagay, in which the coop was able to access organic fertilizers and vegetables seeds

B.3 Dried Fish Processing/ Production and Iron Works (welding)

C. Umagos-Banglay Agrarian Reform Community, Lagonglong, Misamis Oriental

(Region X)

C.1 Banana Production and Trading – the cooperative was a recipient of the P590,000 DOLE

DILP-CED grant assistance to enhance banana production and marketing. The Local

Government of Lagonglong provided additional P100,000 as its counterpart.

C.2 Abaca, Nito, Coconut Mid-ribs and Romblon Weaving Projects – the DOLE-Region 10

gave P250,000 additional assistance with the following breakdown: P100,000 for

Banglay and P150,000 for Umangos.

D. JORDAS Agrarian Reform Community, Sta Cruz, Davao del Sur (Region XI)

D.1 Bread Muti-purpose Coop, Barangay Darong – implemented the Bahalina (Coconut

Wine) and Coco-Vinegar Production; Vermi-composing and backyard organic vegetable

gardening and a recipient of the P500,000 grant assistance from the DOLE under the

DILP-CED for the upgrading of the aforementioned projects.

D.2 JORIFA and Sibulan Upland Farmers Association – implemented the Abaca Production

and Native/Black Coffee Production and became recipients of the TCP funds amounting

to P150,000 for the acquisition of abaca stripping and twinning machines, and P100,000

for native/black coffee production.

D.3 Graveland Sand Quarrying Project operated by the coop ensures that 20% of the total

proceeds is directly paid to LBP as payment for their land amortization while the other

20% is divided among the ARBs for their family needs. The remaining 60% is the share

of the contractor.

E. PASCOFBEC, Las Nieves, Agusan del Norte (Caraga )

E.1 Consumers’ Store – funded by the coop itself

E.2 Coconut trading – with funding assistance of P500,000 from LBP-Butuan City

E.3 Coco-Rehab and Fertilizer Distribution – with funding support from PCA

E.4 Post Harvest Facility (PHF thresher from DAR

E.5 Coco-Charcoal Production –funded by the coop

E.6 Swine Production (with meat processing), dressmaking and tailoring, broiler (chicken)

raising, lemon grass production and panggasius (fish) production for the women group

E.7 Rehabilitation/reconstruction of the Coop Building thru the income generated from their

catering services Source: DOLE SRO-CARP CY Terminal Report 2010-2012

167

8.6.4 LRA

Program/Project/Activity Target Accomplishments Percent

I. Registration and Titling

1. Emancipation Patent (EP)

1.1 Number of Titles 2,826 2,165 77

1.2 Number of Farmer Beneficiaries 2,502 1,991 80

1.3 Number of Areas (has.) 3,080 2,732 89

2. Certificate of Land Ownership

2.1 Number of Titles 33,811 29,214 86

2.2 Number of Farmer Beneficiaries 47,943 39,459 82

2.3 Number of Areas (has.) 82,997 73,997 89

II. Patent Registration

1. Free Patent Registration

1.1 Number of Titles 56,921 56,921 100

1.2 Number of Areas (has.) - 32,054 -

2. Free Patent Distribution

2.1 Number of Titles 93,701 31,350 -

2.2 Number of Areas (has.) - 19,315 -

III. Other CARP Related Activities Accomplishments

A. Central Office No. of Titles No. of Hectares

1. DAR (Status Verification)

1.1 No. of Certificates Issued 824 3,905.43

1.2 Letters to RTDs 574 1,027.04

1.3 No. of Certified True Copies 236 548.62

1.4 Letter Returned to DAR 49 259.76

2. LBP (Status Verification)

2.1 No. of Certificates Issued 69 428.40

2.2 Letters to RTDs 38 390.30

3. Reconstitution of CARP Titles

3.1 No. of Reconstituted CARP Titles 257 -

3.2 No. of Letter Request to petitioner 128 -

No. of Entry No. of Hectares

B. Registry of Deeds

1. Segregation of Mother CLOA 16,608 23,034.22

2. Transfer Action (EP/CLOA) 747 1,340.52

3. Issuance of RP Titles 744 -

4. Deeds of Transfer 137 -

5. Voluntary Land Transfer 3,972 -

6. Deeds of Partition 3,442 -

7. No. of Certification Issued 39,680 -

8. No. of Certified True Copies 156,072 -

9. Cancellation of Outstanding Balance/

Amortization Mortgage

7,143

-

10. Verification/Research 13,009 -

11. Other Assistance to DAR and Farmer

Beneficiaries

29,857 -

Source: LRA CARP Accomplishment Report - CY 2012

168

8.6.5 NIA

Particulars Accomplishments

1st Qtr. 2

nd Qtr. 3

rd Qtr. 4

th Qtr. Total

A. Engineering Activities

1. No. of Projects 7 5 7 5 24

2. Area Accomplished (in has.) 422 958 513 332 2,225

3. Generated 140 315 222 120 797

4. Restored 282 643 291 212 1,428

5. No. of FB’s Benefited 533 1,703 952 807 3,995

B. Institutional Development Program 1. IA Organization

1.1 No. of Organization - - - - 43

1.2 IA Strengthening - - - - 1.3 IA Members Organization - - - - 1.4 IA Members Strengthening - - - - 5,231

2. IA Development 2.1 No. of Batches - - - - 19 2.2 No. of Participants - - - - 575

3. Staff Development Training 3.1 No. of Batches - - - - 5 3.2 No. of Participants - - - - 65

Source: NIA Executive Summary Report, Accomplishment : CY 2012

8.6.6 DENR

Particulars Annual Accomplishments

Target 1st Qtr. 2

nd Qtr. 3

rd Qtr. 4

th Qtr. Total

1. Inspection, Verification and

Approval of Survey

1.1 No. of surveys

1.2 Areas covered (has.)

-

369,574

17,509

30,487

22,970

39,493

21,608

25,240

29,864

43,848

91,951

139,069

2. Public Land Survey (has.) 100,000 10,039 9,325 11,462 31,813 62,639

3. Patent Processing and Issuance

3.1 No. of Patents 113,636 6,425 15,961 28,576 66,031 116,993

3.2 Areas covered (has.) 100,000 4,463 13,173 20,263 57,315 95,214 Source: Status of DENR-CARP Activities as of December, CY 2012

8.6.7 LBP

Program Type

Accomplishments

PD27/

EO 228

RA 6657/

EO 229 Total

Beginning Inventory No. of Claims 15 4,717 4,732

Area (Has.) 306.35 73,101.73 73,408.09

Recipients from DAR

No. of Claims 165 1,233 1,398

Area (Has.) 811.05 15,248.05 16,059.10

Total Claims on Hand

No. of Claims 180 5,950 6,130

Area (Has.) 1,117.41 88,349.78 89,467.19

169

Program Type

Accomplishments

PD27/

EO 228

RA 6657/

EO 229 Total

Returns to DAR

No. of Claims

Area (Has.)

19

111.04

180

2,411.13

199

2,522.17

Excluded Portion

Area (Has.)

42

315.79

358.21

Suspended ARMM Claims

No. of Claims

Area (Has.)

7

113.64

4,345

68,573.89

4,352

68,687.53

Net Processable Claims

No. of Claims

Area (Has.)

154

850.31

1,425

17,048.97

1,579

17,899.27

Approved for Payment with COD

No. of Claims 151 1,298 1,449

Area (Has.) 811.37 14,586.96 15,398.32

No. of LOs 119 811 930 No. of FBs 641 11,959 12,600 Land Value (P Mn) 36.80 2,004.71 2,041.51 Ending Inventory

No. of Claims

Area (Has.)

3

38.94

127

2,462.01

130

2,500.95 Source: LBP Summary of CARP Accomplishment, YTD, as of December 2012

8.6.8 DPWH

Particulars

Physical Length

(in kms)

Project Cost

Target Actual

CARP - Pump Priming Program

Construction of Cabra Circumferential Road

Located at Lubang, Occidental Mindoro 0.588 0.092 1,000,000

Farm Beneficiaries 59 59

Job Generation 10 10

Barangay Served 1 1

Started Date - 12/14/11

Target Completion Date - 01/12/12

Percentage of Completion - 100% Source: Status of DPWH CARP-Pump Priming Program as of January 2012

IX. SIGNIFICANT AND

COMMON AUDIT

OBSERVATIONS AND

RECOMMENDATIONS

170

SIGNIFICANT AND COMMON AUDIT OBSERVATIONS

AND RECOMMENDATIONS

9.1 Overview

Pursuant to Section 2, Article IX-D of the Philippine Constitution, the Commission

on Audit regularly conducts audit of accounts of all NGAs. The audit is conducted in

accordance with the generally accepted state auditing standards and the results are

communicated and discussed in the Annual Audit Reports (AARs) and in the

Management Letters (MLs) submitted to the audited agency, the Office of the President,

the Congress and other stakeholders.

9.2 Audit Opinions

The AAR sets forth the audit opinion regarding the entity’s financial

statements. The auditor’s opinion, depending on the result of the audit, reflects only one

of the following opinions:

9.2.1 Unqualified Opinion. It states that the financial statements present fairly, in all

material respects, the financial position, results of operations and cash flows of

the audited agency in conformity with generally accepted accounting principles

(GAAP). This is equivalent to a Clean Opinion.

9.2.2 Qualified Opinion. It states that the financial statements present fairly the

entity’s financial position, results of operations and cash flows in conformity

with the GAAP except for the matter of qualifications. Normally, qualified

opinions are issued when there are: (1)limitations on the scope of the auditor’s

examination on one or more areas of the financial statements, and although they

could not be verified, the rest of the financial statements were audited and

complied with GAAP or (2) single deviation/departure from GAAP exists.

9.2.3 Adverse Opinion. When issuing this opinion, the Auditor concludes that the

financial statements do not present fairly the audited agency’s financial

position, results of operations and cash flows in conformity with the generally

accepted state accounting principles. This type of opinion is issued when the

financial statements contain very material departures from GAAP.

9.2.4 Disclaimer of Opinion. A disclaimer of opinion is issued when the

auditor is unable to form an opinion (no opinion) on an entity’s financial

statements. A disclaimer is issued in case when: (1) material scope limitation

exists, or (2) significant uncertainty exists.

171

9.3 Results of Audit

The audit opinions shown in the transmitted CY 2012 CAARs and AARS of 191

NGAs, including the Stand-Alone Agencies at the Regions, as of 31 August 2013, are

broken down as follows: 32 unqualified/clean or 17 percent, 152 qualified or 80

percent, 6 adverse or 3 percent, and one disclaimer. The audit opinions excluded audited

agencies with AARs not yet transmitted as of given date and/or only management

letters were issued. Presented in the graph below is the Summary of Audit Opinions for

CY 2012.

Thirty-two agencies were given unqualified or clean audit opinion on the financial

statements, namely:

1. Office of the Vice-President (OVP)

2. Presidential Broadcast Staff (PBS)

3. Presidential Legislative Liaison Office (PLLO)

4. Technical Cooperation Council of the Philippines (TCCP)

5. Presidential Management Staff (PMS)

6. Film Development Council of the Philippines (FDCP)

7. National Intelligence Coordinating Agency (NICA)

8. Central Board of Assessment Appeals (CBAA)

9. Anti-Money Laundering Council (AMLC)

10. Government Procurement Policy Board – Technical Support Office

(GPPB-TSO)

Summary of Audit Opinions

Calendar Year 2012

172

11. Legislative-Executive Development Advisory Council (LEDAC)

12. Philippine National Volunteer Service Coordinating Agency (PNVSCA)

13. Public-Private Partnership Center of the Philippines (PPPCP)

14. Court of Tax Appeals (CTA)

15. Sandiganbayan (SB)

16. Local Government Academy (LGA)

17. Office of Transportation Cooperatives (OTC)

18. Philippine Trade Training Center (PTTC)

19. Ifugao State University (IfSU)

20. Mountain Province State Polytechnic College (MPSPC)

21. Regional Development Council (RDC)

22. Marcos Mariano State University (MMSU)

23. Cavite State University (CvSU)

24. Dr. Emilio B. Espinosa, Sr. Memorial State College of Agriculture and

Technology (DEBESMSCAT)

25. West Visayas State University (WVSU)

26. Capiz State University (CAPSU)

27. Cebu Technological University (CTU)

28. Cebu Normal University (CNU)

29. Bukidnon Forests, Incorporated (BFI)

30. Camiguin Polytechnic State College (CPSC)

31. Mindanao University of Science and Technology (MUST)

32. Mindanao State University –Gen San City

Adverse audit opinions were issued to six (6) NGAs such as Land Registration

Authority (LRA), Philippine State College of Aeronautics (PhilSCA), Philippine

Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), Toll

Regulatory Board (TRB), National Agricultural and Fishery Council (NAFC) and

National Meat Inspection Service (NMIS).

The common reason for the adverse opinions is material effects of the

misstatement of accounts, particularly the following audit observations, among others:

1. Unreconciled or inaccurate cash balances due to material differences between

the book and bank balances, aggravated by non-preparation or delayed

submission of the Bank Reconciliation Statements (BRSs);

2. Cash advances, in material amounts, remain unliquidated for over two years

and the General and Subsidiary Ledgers were not reconciled due to

mispostings or errors in recording;

3. Unreliable Inventory accounts balances due to failure of Accounting and

Property Section to conduct regular/periodic reconciliation of records,

misclassification or erroneous recording of accounts and/or delayed

submission of supporting documents;

173

4. Accuracy of the Property, Plant and Equipment accounts balances cannot be

ascertained due to failure of management to undertake physical inventory of

the assets, there was no periodic reconciliation of records of the Accounting

and Property Section, property cards were not maintained by the Property

Officer and unserviceable properties were not reclassified to Other Assets.

The Telecommunication Office (TELOF) was issued with a disclaimer of opinion

due to failure of management to maintain subsidiary ledgers for forwarded balances of

major controlling accounts in CY 2011 and no alternative audit procedures can be

undertaken to determine the accuracy and validity of the account balances since the

agency’s records were inadequate hence, the scope of audit work was not sufficient to

enable the auditors to render an opinion on the agency’s financial statements. Details of

the Summary of Audit Opinions is shown in Annex B.

174

9.4 Significant Audit Observations and Recommendations

Presented below are the significant audit observations and recommendations on the

audit of national government agencies submitted by auditors of the National Government

Sector and Regional Offices of this Commission.

AUDIT OBSERVATIONS

9.4.1 Office of the Vice-President (OVP)

Unsettled disallowances amounting to P100

million of the defunct Office of the Prime

Minister (OPM) in 1986 and below, under

the administration of the late Vice-

President Laurel during the period 1987-

1992 remain outstanding. These were

requested for write-off but denied per COA

Decision No. 2011-100 dated 13 December

2011. The amount has been dormant for

over ten years.

9.4.2 Games and Amusement Board

(GAB)

The absence of a more authoritative

specific guidelines/policies for the

accounting and monitoring of unclaimed

dividends resulted in non-collection, non-

recording and non-remittance to the

National Treasury of more than P33.95

million and undetermined balance of

previous years unclaimed dividends from

the Manila Jockey Club, Inc. (MJCI).

Likewise, the non-inclusion in the Monthly

Report on the Distribution of Wager Funds

of the actual claimed and unclaimed

dividends in every racing events, pursuant

to Section 11, RA No. 309 allowed MJCI to

claim it as corporate earnings.

RECOMMENDATIONS

Appeal for reconsideration on the denied

request for write-off by supporting and

citing in detail the actions taken and the

reasons why they cannot enforce settlement

thereof.

Prioritize the request for a Declaratory

Relief from the Department of Justice

(DOJ), for an authoritative opinion on the

nature of the unclaimed dividends, if public

or private funds, to compel or not MJCI to

remit said dividend to the National

Treasury; coordinate with proper agencies

on the promulgation of monitoring

guidelines and policies for the unclaimed

dividends for their eventual collection and

recording in the books of accounts and

remittance to the National Treasury, if

opined as public funds by DOJ.

Require the Chief of Sports and Games

Regulation Office (SGRO) to perform its

audit functions and specify in their Monthly

Report on Distribution of Wager Funds the

actual claimed and unclaimed dividends

175

AUDIT OBSERVATIONS

9.4.3 Housing and Urban Development

Coordinating Council (HUDCC)

The assurance that funds transferred to

various implementing agencies (IAs) for the

land survey cost totaling P20.94 million

were properly utilized cannot be

conclusively established nor the objectives/

purpose as agreed upon in the MOA were

achieved due to continuous disregard/

inaction by the IAs to submit the required

reports for the settlement of their accounts

pursuant to COA Circular No. 94-013 and

the MOA.

9.4.4 National Commission for Culture

and the Arts (NCCA)

The accumulation of the contribution to the

National Endowment Fund for Culture and

RECOMMENDATIONS

paid on each racing events; enforce the

Racing Clubs to immediately remit the

remaining balance of the unclaimed

dividends and henceforth, all unclaimed

dividends of future racing events be

remitted to the National Treasury.

Require the submission to the COA of all

disbursement vouchers (DVs)/withdrawals

for review and evaluation; and require the

MJCI to submit evidence of payment of

taxes to the BIR for the previous

years’unclaimed dividends which it claimed

as corporate savings.

Require all Accountants of the IAs to

evaluate all outstanding accounts and

submit justifications for the delayed/non-

submission of survey reports; strictly

enforce the periodic submission of Fund

Utilization Reports with special attention to

defaulting IAs.

Establish a Monitoring Team and design a

tool to be used in the conduct of

monitoring, inspection and evaluation of all

the projects; identify the problems

encountered and make final evaluation and

assessment of the status of the project to

determine the appropriate action; and

formulate alternative measures to effect the

immediate submission of the liquidation

reports of the partner LGUs in order to

ascertain that the funds released were

properly utilized in accordance with the

provisions stated in the MOA.

Seek the exemption on the provisions of EO

No. 338 from the Permanent Committee,

176

AUDIT OBSERVATIONS

the Arts or Fund amounting to P1.727

billion as of 31 December 2012 was placed

in an investment Management account

contrary to Executive Order No. 338,

s.1996, thus, resulting in the huge amount

of idle fund instead of helping the

government in maximizing the use of its

resources.

9.4.5 Philippine Racing Commission

(PRC)

Unclaimed dividends of winning bettors in

the hands of the racing clubs totaling

P33.95 million and undetermined balance

of previous years’ from the MJCI were not

collected, recorded nor remitted to the

Bureau of the Treasury (BTr) due to the

absence of Declaratory Relief from the

Department of Justice (DOJ) that will

resolve the issue on its nature. As a result,

the government was deprived of potential

income to finance its priority projects.

Likewise, the withdrawals from PRCI and

its disbursements totaling P17.36 million

were not recorded in the books precluding

its review and evaluation.

9.4.6 Philippine Sports Commission

(PSC)

Financial Assistance (FA) granted to

various National Sports Associations

(NSAs) and funds entrusted to three

Southeast Asian Games Organizing

Committees totaling P124.15 million as of

31 December 2012 (or approximately 45

per cent of last year’s Due from NGOs/POs

account balance) remain unliquidated

contrary to COA Circular No. 2007-001

dated 25 October 2007 and PSC Board

Resolution No. 316-2010 dated 28

September 2010.

RECOMMENDATIONS

otherwise, deposit the said amount to the

Bureau of the Treasury pursuant to EO No.

338 following the guidelines set forth in

COA-DBM-DOF Joint Circular No. 1-97

dated 02 January 1997.

Prioritize the request for a Declaratory

Relief from DOJ to resolve the issue on the

nature of unclaimed dividends; require the

racing clubs to remit the remaining balance

of the unclaimed dividends and henceforth,

all unclaimed dividends of future racing

events to BTr; require the submission of

all disbursement vouchers/withdrawals to

the Office of the Auditor for review and

evaluation; and require MJCI to submit

evidence of payment of taxes to the Bureau

of Internal Revenue (BIR) for the previous

years’s unclaimed dividends which it

claimed as corporate earnings.

(a) Demand the NSAs to submit the

required Final Fund Utilization Report as

provided in COA Circular No. 2007-001

dated 25 October 2007; (b) Maintain and

strictly implement its policy that NSAs

with unliquidated FAs should not be

granted/released additional financial

assistance; (c) require the 49 NSAs and the

three organizing committees to render full

accounting or submit liquidation documents

of the amount received from PSC and if

necessary, institute appropriate legal action

to enforce liquidation.

177

AUDIT OBSERVATIONS

9.4.7 Anti - Money Laundering Council

(AMLC)

The implementation of the E-Government

Project entitled “Transaction Monitoring

and Analysis System (TMAS) with a fund

balance of P40.92 million as of 31

December 2012 was delayed by at least

four years from its original completion date

in 2008 thus, the purpose and target users

of the project are not fully served.

9.4.8 Sandiganbayan

The Sandiganbayan still adopts the

traditional manual payroll system of paying

employee’s salaries and other personnel

benefits in cash instead of the automated

payroll-thru-bank system thus, exposing

payroll money to risk of losses either thru

theft or robbery.

9.4.9 Presidential Commission on Good

Government (PCGG)

Proceeds from the sale of three surrendered

properties amounting to P230.07 million

intended for Comprehensive Agrarian

Reform Program (CARP) were not remitted

by the Independent Realty Corporation

(IRC) to PCGG thus, were not also

remitted to the BTr, contrary to Section 69

of PD No. 1445, EO No. 338 and Special

Provision in the GAA. Furthermore, income

collected from sequestered properties

totalling P1.62 million were also not

remitted promptly to the escrow account in

the BTr.

9.4.10 Philippine State College of

Aeronautics (PhilsCA)

9.4.10.1 Failure of management to work

on the titling of land with a zonal value

RECOMMENDATIONS

Endeavor to complete the project as soon as

possible to facilitate the accomplishment of

its intended goal.

(a) Adopt the payroll-thru-bank system; and

(b) Coordinate with a government servicing

bank near the Sandiganbayan office and

initiate arrangements for the installation of

automated teller machine (ATM) facilities

within the Sandiganbayan.

(1) Vigorously pursue the collection of all

proceeds from the sale of real properties

and thereafter immediately remit to the BTr

for the CARP fund or to the trust/escrow

account of PCGG with the BTr pending

resolution of any court case or

encumbrances pursuant to regulations;

(2) Immediately remit the collection from

the Galeria de Magallanes to the BTr

pursuant to Section 69 of PD No. 1445 and

effect the immediate closure of the

Banahaw Broadcasting Corporation (BBC)

account which is no longer operational and

remit the balance to the escrow account

with the BTr.

1) Make urgent representation with the

BCDA to facilitate the transfer of the land

178

AUDIT OBSERVATIONS

of P255 million and document the final

acceptance of building/structures covered

by the land swapping arrangement among

PhilsCA, BCDA and Megaworld rendered

the Property, Plant and Equipment account

balance at year-end unreliable since said

transactions were not reflected in the

financial statements.

9.4.10.2 Two Tampico trainer planes

costing P16.13 million have remained

grounded or unutilized since 2008 because

of the failure of management to secure from

the Civil Aviation Authority of the

Philippines (CAAP) the Certificate of

Airworthiness Directive (CAD) and

Aviation Training Organization Certificate

(ATOC), as requirements to operate a

Flying School, resulting in the non-

achievement of the College's mandate to

provide advance level of instructions in the

field of aeronautics.

9.4.11 Department of Health (DOH)

9.4.11.1 Low disbursements rate due to

inadequate planning; delayed procurement

process; not actively engaging the various

parties into an agreement to fast track the

implementation of projects; and

reorganization and change of project

officers, among others, resulted in the

reversion of cash allocation of P3.379

billion; incurrence of commitment fees

amounting to P3.802 million; and non-

accomplishment of targeted activities and

delayed delivery of health services.

RECOMMENDATIONS

title of the relocation site in the name of

PhilsCA and determine the zonal or

appraised value of the property; (2) Seek

the services of an independent property

appraiser to ascertain the structural

soundness of the buildings/structures and to

identify defects, if any, to fast track

issuance of Certificate of Acceptance by

management and Certificate of Occupancy;

and (3) Request from Megaworld for the

pertinent data/documents to determine the

actual cost/proper valuation of all their

deliverables to the PhilsCA for recording in

the books.

1) Secure Aviation Training Organization

Certificate from CAAP; 2) Comply with

the requirements of the CAAP by

upgrading the airworthiness condition of

the two Tampico trainer planes; 3)

Consider the two trainer planes for sale if

upgrading the same is not practicable and

too costly for the government and make

representation with the Office of the

President and the DBM for the inclusion of

budget for the procurement of new trainer

planes.

Direct the concerned Heads/

Directors/Chiefs of the CO, Bureaus,

CHDs and Hospitals to: (a) improve the

planning and procurement processes in

order to implement and complete the

projects on time and within the

implementation schedule of projects; (b)

actively engage the various parties into an

agreement to determine the most effective

and efficient strategies on how to fast track

the disbursements and implementation of

projects; and (c) closely monitor the

status/progress of the projects to ascertain

179

AUDIT OBSERVATIONS

9.4.11.2 Drugs and medicines as well as

medical supplies acquired in current and

prior years amounting to P17.505 million

have either expired or remained unutilized

due to receipt of drugs with near-expiry

dates and purchases of medicines and

medical supplies exceeding the normal

three-month requirements despite the

absence of specific recipients; and lack of

proper planning, monitoring and control on

utilization/distribution.

9.4.11.3 Deficiencies in planning,

engineering designs, and program of

works, inefficiencies in carrying out

detailed engineering surveys and designs,

inability to compel contractors to comply

with contract terms and conditions, lack of

monitoring/timelines for project

completion, delays in the preparation and

approval of design revisions and other

project documentations were among the

reasons for not meeting the timeframe for

completion of hospital projects amounting

to P387.20 million which resulted in the

deprivation of prompt use of the projects

and availment of healthcare services by the

intended users.

RECOMMENDATIONS

that the strategies adopted are responsive

to the needs of the projects.

Direct the concerned Heads/ Chiefs of

Bureau and Hospitals to: (a) fast track the

distribution of drugs and medicines to

intended beneficiaries; (b) observe the

normal three-month requirements in their

purchases of drugs and medicines and

medical supplies in accordance with

Section 428 of the GAAM, Volume I; and

(c) coordinate and plan the timing of

procurement taking into consideration the

need and expiration of the drugs and

medicines.

Instruct the Directors/Chiefs of Hospitals

to: (a) closely coordinate with the Head of

the Infrastructure Unit in the review and

evaluation of the Program of Works prior

to bidding to ensure that the desired design

and estimates including changes in

specifications were properly considered to

minimize variations and change orders and

time extensions that may result in the

incurrence of additional cost, negative

slippages and delayed completion of the

project; (b) compel the contractors to

comply with contract terms and conditions,

complete the projects and impose

corresponding liquidated damages, if

warranted; (c) provide adequate funds

and/or request for release of funds from

DBM for the completion of projects; and

(d) ensure that the activities contained in

the Program of Work are implemented

with minimal changes - any necessary and

unavoidable changes in the activities be

satisfactorily explained, undertaken on

time and that the new activities are aligned

and contributory to the desired/expected

outcomes of the project.

180

AUDIT OBSERVATIONS

9.4.11.4 Hospital buildings, facilities and

equipment amounting to P443.957 million

were idle and/or unutilized, as intended,

due to gaps in planning or assessments of

needs, lack of coordination among offices

concerned, insufficient funding for

operation and/or preventive maintenance,

lack of trained operators/users, unavailable

spare parts, among others; thereby

depriving the patients of efficient, quality

health care services, and the hospital, of

income that may be derived from the use

and operation of these facilities and

equipment.

9.4.11.5 The slow implementation of

project activities for the P41.20 million

allotted for the Provision for Potable Water

Supply resulted in only 30.47 percent or

P12.552 million fund utilization and

ultimately the non-attainment of the

objectives of the program and deprived

intended beneficiaries the prompt availment

of the benefits of the program.

RECOMMENDATIONS

(a) Ensure that projects planned and

budgeted out of the agency’s appropriation

shall be used only for the purpose it was

appropriated; (b) Refrain from procuring

equipment or implementing projects which

are not urgently necessary and be guided

by a pre-determined need; and (c) Direct

the Chief of Hospitals to undertake

corrective measures to maximize the use of

equipment and other facilities by (i)

adopting preventive maintenance program

for equipment; (ii) providing sufficient

funding for operation and/or preventive

maintenance; and (iii) ensuring availability

of spare parts and adequately trained

persons to operate the equipment.

Direct the CDH-Caraga Director to: (a)

determine the causes for the slow/delayed

implementation of the projects and the

kind of assistance needed by the LGU-

partners of the Program - to facilitate the

completion, improve disbursements and

performance rates; (b) coordinate with

DOH CO and follow up the project

proposals that were submitted for approval

and instruct the personnel involved to

prepare implementation timelines or

phasing of project activities which shall

serve as a guide in monitoring status of

project administration and program

management; and (c) enhance monitoring

activities in order to effect prompt delivery

of the program activities and ensure

prompt attainment of the program

objectives.

181

AUDIT OBSERVATIONS

9.4.12 Department of Social Welfare and

Development (DSWD)

9.4.12.1 Double entries in the 4Ps database/

payroll in CY 2012 totaling P17.436

million, resulted in excess transfer of

payroll funds and, consequently,

overpayment of grants of P8.718 million,

undisbursed grants not refunded on time,

incurrence of additional service fees of

P0.184 million in the distribution of grants

and cast doubts on the reliability/integrity

of the data stored in the database.

9.4.12.2 Payments of P29.030 million in

Conditional Cash Transfers (CCT) grants

to 4Ps beneficiaries for July and August

2012 were made on the basis of the

DSWD-approved Force Majeure

Declaration in lieu of the required

conditionalities of the program, resulting in

the payment of grants not in accordance

with the 4Ps Manual.

RECOMMENDATIONS

Require: a) Pantawid Pamilya National

Project Management Office (NPMO) to

evaluate and test corrective procedures

adopted in the selection process and

detection of similar incidence of double

entry of household (HH)/beneficiaries to

prevent overpayment of grants;

b) City/Municipal Links to conduct

periodic validation on 4Ps HH to facilitate

the reporting of changes on the status or

condition of any member of the

beneficiary HH while under the program

and to monitor the cash grant;

c) Provincial and Municipal Links to

coordinate closely with local government

officials for the determination,

identification and prompt reporting of 4Ps

duplicate HH beneficiaries in order to

generate an accurate input on the database;

and, d) NPMO to offset the overpaid

grants as a reduction from subsequent

grants to beneficiaries.

Ensure that succeeding payments of grants

are widely disseminated by posting the list

of beneficiary per LGU in the official

website of DSWD for transparency,

pursuant to the Special Provisions of the

2012 GAA.

Require: (i) the City/ Municipal Links to

go over the Compliance Verification

Forms (CVF) of beneficiaries in DSWD-

IOM approved calamity areas and those

without CVF for the same period and

submit to the Regional Technology

Information Officer (RTIO)/Regional

Focal Person to effect adjustments/offset

grants from succeeding payouts; and, (ii)

the NPMO to dutifully adhere to the Loan

Agreement with WB/ADB and the

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AUDIT OBSERVATIONS

9.4.12.3 Grants and service fees of P50.151

million were paid to 7,782 HH beneficiaries

which could not be found in the List of

Validated and Registered HH Beneficiaries

of the National Household Targeting Office

(NHTO) contrary to Special Provisions

No. 5 of CY 2012 GAA, thus, may be

considered irregular and further resulting in

additional cost to the government in the

distribution of CCT.

9.4.12.4 Funds transferred to LGUs/

advances to SDOs for the immediate

implementation of the Social Pension

Program for Indigent Senior Citizens,

without the databank of verified/approved

beneficiaries, resulted in payments of

stipends amounting P1.901 million to

unqualified social pensioners and P7.705

million to replacement social pensioners

without complete documents. Moreover,

allowing subsequent releases despite non-

liquidation of previous fund transfers

resulted in the accumulation of unliquidated

funds of P170.237 million in five DSWD

FOs, contrary to Section 2 of PD 1445 and

DSWD AO Nos. 03 and 04.

RECOMMENDATIONS

Borrower on Project Implementation,

specifically on the approval of subsequent

changes to the Project Administration

Manual by both parties.

Pantawid Pamilya NPMO Project Manager

to: (i) require the RTIO to explain the

reasons for the deletion of the 4Ps

beneficiaries and their reactivation; and the

inclusion of beneficiaries with doubtful data

pursuant to the comment of NHTO-CO;

(ii) immediately delist unregistered/

unvalidated payroll-beneficiaries from the

Payroll System, if found to be with

unauthorized HH ID, and cause their

replacement of qualified beneficiaries to the

Program; and, (iii) source the 4Ps database

directly from the NHTO data to avoid

unauthorized grants to unregistered/

unvalidated HH beneficiaries of the

program.

Concerned FOs Management to:

(a) conduct the necessary verification,

identification and monitoring of

beneficiaries in close coordination with the

Municipal/City Links and LGUs so that the

release of cash grants to eligible senior

citizens can be efficiently undertaken; (b)

ensure that funds transferred to each LGU

are based on the updated and approved list

of verified beneficiaries for the quarter;

and, (c) adhere strictly to the provisions

embodied in COA Circular No. 97-002 and

impose appropriate administrative/legal

sanctions and/or cause the filing of

malversation/criminal charges to those

officers and employees who failed to

liquidate immediately their cash advances.

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AUDIT OBSERVATIONS

9.4.12.5 Funds amounting to P110.896

million were released without the covering

project proposals and master list of

beneficiaries, thus the readiness and

capabilities of LGUs/POs were not

considered, which resulted in the delayed

implementation of the Supplemental

Feeding Program (SFP), consequently

delaying the attainment of the goal to

improve and sustain the nutrition of

targeted children in the day care centers.

Further, the FOS’ failure to monitor the

utilization and liquidation of SFP funds in

accordance with the MOA and COA

Circular No. 2012-001 resulted in

unliquidated fund transfers to LGUs of

P889.993 million.

9.4.12.6 Self - Employment Assistance –

Kaunlaran (SEA-K) Loans amounting

P177.671 million remained unpaid for one

to 17 years for failure to ascertain the

viability of project proposals as well as

poor monitoring and delayed project

evaluation resulting in the increased

number of inactive SKAs thus, collections

are remote and low. This affected the

sustainability of the program for financing

livelihood endeavors’ to enhance the

socio-economic skills of the poor families

to establish and self-manage a sustainable

community-based micro-credit organization

for entrepreneurial development.

RECOMMENDATIONS

Require the FOs concerned to ensure that:

(i) all funds transferred are duly supported

with required project proposals and master

list of beneficiaries as basis for supervision

and monitoring of program

implementation; (ii) previous fund

transfers to LGUs/POs are fully liquidated

and accounted for before subsequent

releases are allowed to prevent

accumulation of unliquidated accounts;

and (iii) require the SFP Focal person to

coordinate closely with LGUs and social

worker counterparts to clarify and resolve

issues, problems and concerns as well as to

follow up submission of monthly physical

accomplishment and financial reports on

the utilization of funds.

Exert extra effort to collect from active

SKAs and revisit the DSWD AO to

include appropriate sanctions against

erring beneficiaries. Specifically, ensure

that:

a. For loans released within two years

(2010-2012): (i) FOs’ SLP Units regularly

send demand letters to delinquent SKAs to

settle their monthly return of the

capital/financial assistance per agreement

to avoid accumulation of receivables; and,

(ii) FOs’ focal person conduct regular

monitoring and assessment of all SKAs so

that problems could be attended to and

addressed at the earliest time to prevent, if

not totally eliminate, instances of non-

payment or to intensify collection of

amounts due the government; and,

b. For loans released beyond two years

(2010 and below): (i)FOs’ focal person

review the composition of active SKAs for

possible identification of inactive and

disbanded SKAs with outstanding loan

availments which may have joined a

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AUDIT OBSERVATIONS

9.4.12.7 Deficiencies were noted in the

utilization of the KALAHI-AF investment

Sub – Projects (SPs) grants, such as: (a) low

SPs community grants utilization of 53.23

percent or unimplemented/unutilized

community grants amounting to P 845.582

million; (b) Technical Assistance Funds to

various SPs overpaid by P1.530 million;

and (c) previously approved SPs of P14.529

million financed, but not included in the

2012 WFP and/or appropriation of the

agency, contrary to NBC No. 535.

9.4.12.8 Validation of 131 KALAHI-

CIDSS (KC) SPs amounting to P162.471

million revealed: (a) seven SPs worth

P 16.395 million were incomplete/not fully

functional due to failure of the BSPMC

and concerned officials to adequately

monitor implementation; (b) absence of

RECOMMENDATIONS

newly-organized or active SKA for possible

recovery of unpaid loans, otherwise,

consider the disqualification of members

with delinquent accounts; and, (ii) after

careful review of each account balance and

exhaustion of efforts to collect accounts

which have been outstanding for over five

years, request from COA authority to

write-off these accounts in accordance with

COA Circular No. 97-001.

i) Require the Barangay Sub – Project

Management Committee to fast track

submission of requirements as provided in

the Community Based Procurement

Manual (CBPM) to ensure timely release

of community grants; (ii) accelerate/

maximize the utilization of loan proceeds

for the implementation of SPs to avoid

incurrence of commitment fees for the

undisbursed amount of the loan; (iii) adopt

efficient and timely procurement

procedures in accordance with the CBPM;

and (iv) perform resurvey of or update the

project design/ specifications/scope of

work before the procurement/bidding in

order to avoid additional works and/or

several variation orders during project

implementation; and v) make

representation with the local officials

concerned for the immediate allocation/

appropriation of the counterpart fund and

the timely and opportune release thereof to

ensure timely completion of projects.

Direct the RPMO and the Area

Coordinating Team (ACT) to require the

BSPMC to: (i) issue variation orders for

changes made in the projects and its

reassessment regarding environmental

safeguard of the area; (ii) complete the

requirements of the project to achieve

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AUDIT OBSERVATIONS

proper turnover of completed SPs of

P19.991 million as required in the CBIM;

and (c) non-maintenance of separate books

and deposit accounts for KC-AF and

KC-PAMANA of P11.438 million.

9.4.12.9 The non-availability of data on the

operational status of completed PODER

projects in FO XIII amounting to

P27.649 million; failure to adequately

prepare the community for the project

operations and maintenance consistent with

DSWD AO No. 13, s. 2009; and non-

compliance with the KALAHI Operations

Manual on the monitoring aspect after their

turnover have raised doubt on the existence

and sustainability of these projects.

9.4.13 Metro Manila Development

Authority (MMDA)

9.4.13.1 Inefficient implementation due to

inadequate planning of 49 Flood Control

Projects (FCPs) - P322M

9.4.13.2 Incurrence of P20.9 million

could have been avoided had there been

consistent use of the DPWH prescribed

rates in the computation of Overhead,

Contingencies and Miscellaneous (OCM)

RECOMMENDATIONS

proper turn-over of the SPs and provide

copies to COA thru RPMO;

and, (iii) maintain separate records for the

KC-AF and KC-PAMANA to properly

monitor the balances as well as the

utilization of each fund and turn-over

excess funds to the source agency duly

supported with BSPMC resolution

pursuant to KALAHI-CIDSS manual.

(i) Revisit the provisions of existing

mutual partnership agreement with the

LGU to ensure that operation and

maintenance (O & M) upon turnover of

projects are clearly assigned to the LGU;

and (ii) direct the RPMO to strengthen the

O&M functions of the DSWD, especially

on areas with non-functional projects.

Revisit the strategies and practices in the

implementation of FCPs given that time is

of the essence vis-a-vis the weather patterns

of the Philippines, specifically: a)

Formulate the Annual Procurement Plan

supported by Project Procurement

Management Plan in strict compliance with

Section 7 of the Implementing Rules and

Regulations of RA 9184; b) Undertake the

procurement activities as early as February

of the year to ensure completion of FCP

before the onset of the rainy season which

normally starts in the months of June and

onward.

Require the Engineers at the FCSMO, to

whom the preparation of the ABC are

assigned, to strictly comply with the

provisions of existing DPWH Department

Order No. 29 dated 16 May 2011

186

AUDIT OBSERVATIONS

and Profit components of the Approved

Budget for the Contract (ABC).

9.4.13.3 Low physical delivery rate of

15 per cent or only two of 13 footbridge

projects were completed as planned.

9.4.13.4 Deficiencies in processes and

procedures of solid wastes operations

impact on the validity and reasonableness

of P1.2 billion disbursements:

1) Inadequate documentation/information

to support payment of tipping fees;

2) A total of 90 dump trucks accredited

by LGUs and used in waste disposal

operations were registered as

government-owned, of which 81 were

sampled to have been utilized in actual

collection of garbage by private

contractors without corresponding

reduction in payment of tipping fees

and thus, entailed additional fuel and

maintenance expenses to the

disadvantage of the Government.

Moreover, 20 of the accredited dump

trucks were found to be unregistered

with the LTO.

RECOMMENDATIONS

particularly on the percentages for OCM

and Profit and any amendments thereto.

Ensure strict implementation of footbridge

projects as planned/targeted over those

requests received from private individuals

and various LGUs; and take immediate

action to address the issues/problems which

caused delays in the construction of the

uncompleted/on-hold footbridges.

a) Conduct thorough review of existing

contracts with LGUs and consider possible

amendments to include sufficient

information/documents necessary for

technical review and the provision for the

reduction of tipping fees in consideration of

the expenses incurred by LGUs using

government trucks in the collection of

garbage; b) Coordinate with concerned

LGUs for the proper documentation of

disbursements for tipping fees to establish

its correctness and validity as deemed

appropriate by specific standards of internal

control. Also, require uniform daily trip

tickets for all contractors certified by the

LGUs and MMDA with all relevant

information such as the specific routes, time

and distance travelled from collection to

disposal area, volume of wastes and the

names of drivers and collectors; c) Include

in the MOA with the LGUs a provision

requiring, among others, registration of

dump trucks used in waste disposal

operations. The list of accredited dump

trucks including the nature, class/category

and capacity should be made integral part of

the MOA; d) Conduct regular verification

of records with the LTO, at least once a

year, to determine compliance with LTO

registration regulations; and e) Require the

LGUs concerned to submit proper

documents for the sampled trips showing

the specific locations travelled by the

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AUDIT OBSERVATIONS

3) Variance of P141 million in the use of

conversion factor in the Solid Waste

Management Facility Agreement.

9.4.14 Toll Regulatory Board (TRB)

The appropriateness and necessity of

recording the TRB’s liability pertaining to

the acquisition of the right-of-way (ROW)

for the Manila-Cavite Toll Expressway

Project amounting to P4.66 billion in its

books of accounts could not be determined

due to lack of coordination and non-

reconciliation of records between TRB and

Philippine Reclamation Authority (PRA),

Moreover, no guidelines on the proper

recording and offsetting of accounts have

been issued.

9.4.15 Department of Energy (DOE)

9.4.15.1 Full payment to Dumalag

Corporation in the amount of P22.047

million for the “Procurement of Goods

and Installation for the Household

Electrification Program (HEP) Project”

was made despite reported deficiencies

and defective components of the Solar

Home Systems (SHS) delivered/installed in

Tablas Island, Province of Romblon

Province of Romblon (Municipalities of

RECOMMENDATIONS

haulers, the distance in terms of kilometers

and the time duration from area of

collection to the dumping sites.

Re-evaluate in coordination with the QC

government and apply correspondingly on

its basis the computation of payment for

waste disposal service to the facility

operator, and proper amendment to the

agreement should be made as a result.

Coordinate with PRA and request for

documents/records regarding the FCDU

loan amounting to US$68.56 million;

inquire from DOF the amount recognized

for debt servicing and the status of the loan

repayments made on the FCDU loan to

facilitate reconciliation of records between

the agency and PRA; and follow-up with

the focal person or Committee formed by

representatives from the DOF, DBM and

COA with regards to the propriety and

necessity of recording the liabilities and the

procured ROW properties, including the

offsetting of accounts of the concerned

agencies, considering the information that

will be obtained.

Submit the signed/approved Budgetary

Requirements of the HEP Project as

required by the COA - TAS for

contract review and project evaluation;

submit documentary evidence(s) that

technical trainings of Sitio Power

Associations and 2,750 household

beneficiaries on the basics of Solar

Photovoltaic along with basic

trouble shooting and maintenance were

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AUDIT OBSERVATIONS

Calatrava, San Agustin, and Odiongan,

Province of Romblon).

9.4.15.2 The transfer of funds aggregating

P118.268 million from the Cash National

Treasury-MDS Account maintained at the

Land Bank of the Philippines (LBP), to the

Cash in Bank – LCSA maintained at the

Bank of the Philippine Islands (BPI), for

credit to BPI-FAO DOE-PTAP Pantawid

Pasada Account for the loading/reloading of

a total of 96,902 PTA cards, cannot be fully

evaluated/validated due to non-submission

of requested reports relative to the

Program’s implementation.

9.4.15.3 The distribution of the 3.6 million

Compact Fluorescent Lamps (CFLs), an

activity under the National Residential

Lighting Program (Component 1.2) of the

Philippine Energy Efficiency Project

(PEEP) with a total cost of P310.896

million, could not be fully accounted due to

non-submission of status, detailed

distribution, and inventory reports.

Further, the disposal of 1.4 million

Incandescent Bulbs (IBs) which is part of

the P17.51 million contract dated

September 2009 with GRM International,

Inc. remained unimplemented as at year

end.

9.4.15.4 After three years of

implementation and just six months to

closing date, the PEEP's physical delivery

rate based on overall accomplishments and

financial utilization rate based on

cumulative disbursements from project

RECOMMENDATIONS

actually conducted and that same were

validated by the DOE Project technical

personnel; and validate reported

replacement of defective components and

rectifications by the DOE Project’s

Technical personnel to assure compliance

by the Contractor of the Project

deliverables as per Contract.

Submit the requested reports relative to the

implementation of PTAP for audit

evaluation/validation.

Fully account the distribution of the 3.6

million CFLs and submit to COA the

corresponding reports for audit evaluation.

Explain/justify the overall physical delivery

and financial utilization rates of below 50%

considering that the Project’s closing date is

only six (6) months away; submit

justifications for the delays incurred in

the procurement activities of the PEEP; and

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AUDIT OBSERVATIONS

inception to 31 December 2012 were

computed at 49.25 percent and 39.86

percent, respectively, indicating that project

implementation is behind schedule.

Moreover, ten planned activities worth

P440.810 million representing 21.07

percent of the total PEEP cost of

P2.092 billion, programmed to be

implemented during the year, were not

accomplished due to slow/delayed

procurement process.

9.4.16 Pasig River Rehabilitation

Commission (PRRC)

Of the ten planned Materials Recovery

Facilities (MRFs) to be constructed, only

four were fully completed, one operational

and three non-operational totalling P1.91

million.

Forty-seven equipment amounting to P5.54

million purchased for the MRF projects

remained unutilized/idle and found to be

physically deteriorated due to non-

completion/operation of the MRFs.

9.4.17 National Mapping and Resource

Information Authority (NAMRIA)

The expected completion date of the

implementation of the Philippine Reference

System of 1992 (PRS 92) Project by the

DENR Regional Offices, MGB and LMB

costing P204.37 million was delayed by

two years due to slow recovery of reference

monuments to be used in the

transformation.

9.4.18 Fertilizer and Pesticide Authority

(FPA)

Laboratory pesticide equipment and

accessories totaling P11.28 million were

RECOMMENDATIONS

accelerate the procurement process to

ensure the timely implementation of

targeted activities in the work plans.

(a) Rehabilitate the three non-operational

MRFs and pursue construction of the

remaining six; and

(b) Coordinate with proper officials of

DENR and other locations where MRF

equipment are stored for a more secured

and protected storage area.

NAMRIA to assist the regional offices in

the conduct of another round of recovery of

the monuments; strengthen collaboration

with concerned DENR officials to promptly

address and settle issues and closely

monitor accomplishments of DENR ROs,

MGB & LMB.

Request for budget from the DBM for the

completion of the pesticide facility and for

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AUDIT OBSERVATIONS

not fully utilized and were left idle due to

the non-completion of the laboratory

pesticide facility as of year-end.

9.4.19 Construction Industry Authority

of the Philippines (CIAP)

The Philippine Contractors Accreditation

Board (PCAB) has not yet established a

monitoring mechanism to keep track of

licensed and unlicensed Contractors/

Construction Companies which are engaged

in construction business contrary to RA No.

4566 thus, there were at least 14

contractors who are in construction services

even without licenses.

9.4.20 Livestock Development Council

(LDC)

In CY 2012 alone, the LDC transferred

funds to Non-Governmental Organizations/

People's Organization (NGOs/POs)

totalling P5.28 million for projects and

activities the purposes of which were not

aligned and within the scope of the mandate

of the Council as stated in Section 3 of PD

No. 914 dated 29 March 1976.

RECOMMENDATIONS

additional plantilla for technical personnel

to man the Laboratory Services Division to

make the pesticide laboratory fully

operational so that the unutilized/idle

equipment can also be used and serve their

purpose.

a) Set-up monitoring mechanisms to keep

track/determine which among the

Contractors/Construction Companies which

are engaged in construction business are not

registered; or if registered, failed to renew

their licenses on the subsequent year before

engaging in a specific undertaking/project;

(b) Post at CIAP PCAB website the list of

the names and addresses of registered

contractors, with issued, suspended or

revoked licenses; and

(c) Institute disciplinary action allowed

under Section 3.3 of RA No. 4566 against

non-compliant contractors/ construction

companies corresponding to the violation/s

committed.

Before entering into an undertaking, give

due considerations to the parameters of the

mandate of the LDC to ensure that only

legitimate projects and activities are

undertaken/funded by the agency.

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AUDIT OBSERVATIONS

9.4.21 National Agricultural and Fishery

Council (NAFC)

9.4.21.1 The NAFC, using the Priority

Development Assistance Fund (PDAF)

received from DA-OSEC, the recipient of

funds from the Department of Budget and

Management (DBM) and the key

implementing agency of PDAF projects,

transferred the amount of P116.752

million to various Non-Government

Organizations (NGOs)/ Peoples

Organizations (POs) for the implementation

of various livelihood projects and integrated

livelihood development programs. Per

MOA executed by and between the NAFC -

DA-OSEC and NAFC – NGOs/POs, the

NAFC became the key/primary

implementing agency instead of DA-OSEC.

The implementation of these kinds of

projects is not however, within the ambit of

its mandate as provided for under Executive

Order No. 116 dated January 30, 1987 and

the Implementing Rules and Regulations

(IRR) of RA No. 8435, the Agriculture and

Fisheries Modernization Act (AFMA) of

1997.

9.4.21.2 The Guaranty Fund deposit

amounting to P431.262 million for the

implementation of the Special Vehicle Loan

Fund (SVLF) Program with the Philippine

National Bank (PNB) was in excess of its

purpose, to secure the outstanding loans of

P0.705 million as of December 31, 2012.

9.4.22 National Meat Inspection Service

(NMIS)

The National Livestock Program (NLP)

funds totaling P28.76 million intended

for the construction/rehabilitation of

RECOMMENDATIONS

Request the DA to discontinue transferring

funds to NAFC for the implementation of

various livelihood projects and integrated

livelihood development programs funded

by PDAF since these activities are not

aligned or within the mandate of the

Council; and henceforth, before entering

into any undertaking, give due

consideration to the parameters of the

mandate of the NAFC

Determine the required amount of Guaranty

Fund which should be proportionate to the

amount of outstanding or anticipated loans;

any excess be remitted to the BTr pursuant

to Section 4 of RA No. 10155

Ensure that (i) the implementation of the

NLP program is in accordance with the

approved budget and WFP to guarantee

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AUDIT OBSERVATIONS

slaughterhouses were utilized for the

procurement of meat delivery vehicles and

mobile laboratory bus without the approval

of the DBM for re-alignment of funds

hence, reducing the funds available for the

slaughterhouse projects. Moreover, the

checks for the payment of the said

procurement were prepared in the absence

of complete documentation which was not

in accord with Section 4 of PD No. 1445.

9.4.23 Board of Investments (BOI)

As of year-end or 366 days from its

contracted project duration, the required

deliverables from the application system

and web portal enhancement from Info-

Alchemy Corporation, with contract price

of P11.998 million, were not yet

fully/completely delivered which deprived

the BOI the benefit from the system for the

improvement of its operations. The BOI

had not instituted any measures for the

collection of liquidated damages from the

service provider and/or initiated to rescind

the contract as provided for under Section

VI of the Service Contract.

RECOMMENDATIONS

that the objectives thereof are attained; and

(ii) any modifications thereto are approved

by the proper authorities; signatories of

transactions and the accounting officials

and staff ensure that the pertinent laws and

regulations in the disbursement of

government funds are strictly complied

with; the Cashier cancel the two unreleased

checks and report the cancellation thereof;

upon receipt of the report of the

cancellation of the check from the Cashier,

the Accountant make the necessary entries

to adjust the balance/total of the accounts

affected.

Submit amendment of the Service Contract,

if any; require Info-Alchemy Corporation to

deliver the remaining deliverables of the

contract; and require the service provider

to pay the liquidated damages

corresponding to the period of delay in the

delivery of the required deliverables.

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AUDIT OBSERVATIONS

9.4.24 Don Mariano Marcos Memorial

State University (DMMMSU)

(RO 1)

Unexpended subsidy for CY 2012 of

NLUC, MLUC and SLUC from the Central

Administration totalling P30.06 million

was treated as a Liability account at year-

end and remitted to the Central

Administration at the second month of the

ensuing year. Said amount was eventually

re-issued to the campus through sub-

allotment and the receipt of which was

credited to “Subsidy from Central

Administration” resulting in misleading

financial information and erroneous

presentation of the accounts in the


9.4.25 Philippine Carabao Center (PCC)

(RO 3)

Management failed to request for relief of

accountability for 301 dead breeding

stocks/animals as of December 31, 2012

amounting to P42.54 million casting doubt

on the accuracy of the reported balance of

Breeding Stock account.

9.4.26 Ramon Magsaysay Technological

University (RMTU)

Funds from PS MDS, Trust MDS and

Auxiliary accounts amounting to P6.69

million, P3.06 million and P0.12 million,

respectively were transferred to other Trust

accounts to avoid reversion of the unused or

unutilized Notice of Cash Allocation

(NCA) and to cover up the anticipated bank

overdraft in violation of Section 3.9,

National Budget Circular No. 535 dated 29

December 2011, Section 4 (3), PD No.

RECOMMENDATIONS

Close the unutilized portion of the subsidy

to the Government Equity Account and

should not be treated as a liability since

there is no actual liability, for fair

presentation of the financial statements.

Ensure requests for relief of accountability

are filed properly and promptly by

accountable officers concerned.

Discontinue the practice of transferring

funds from PS MDS to other Trust account;

likewise, cease transferring the Trust MDS

account such as PDAF for scholarship

program, to other Trust account in

adherence to Sec. 3.9.1.3, Par. 3,NBC No.

535; use the trust fund to pay obligations

for the purpose for which said fund was

created; stop immediately the practice of

borrowing funds to cover up anticipated

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AUDIT OBSERVATIONS

1445 and Sections 13, 69 and 184, and

NGAS, Volume 3 for National

Government Agencies resulting in juggling

of funds.

9.4.27 Phividec Industrial Authority

(PIA), Tagoloan, Misamis Oriental

(RO 10)

9.4.27.1 PIA has not exercised its right to

renegotiate concession fees despite the

significant positive variance between the

Operator’s projected and actual revenue,

hence, PIA may be deprived of incremental

concession fees resulting from the growth

of MCT operations.

9.4.27.2 PIA’s proposed repayment scheme

for its foreign loan with JBIC guaranteed by

the Government may not be the best option

as it has paid P54.948 million during the

year as default charges pursuant to Section

1.06 of Article 1 of the Subsidiary Loan

Agreement.

RECOMMENDATIONS

cash overdraft in other accounts; strictly

adhere to the fundamental principles in the

disbursement of funds as prescribed under

Sections 4(5) and 4 (6), PD No. 1445.

a) Direct the Port Revenue Division to

collate all pertinent records such as the

comparison of projected and actual cargo

volumes from 2008 to 2012 as basis for the

renegotiation of concession fees; b) Create

an Audit Committee to conduct

examination and verification of the

Operator’s books of accounts such as

record of revenue and all documents used in

the collections of port revenue; c) Exert all

efforts to renegotiate the Concession Fees

based on mutual agreement that are most

beneficial and advantageous to both

contracting parties; d) Regularly avail of

the option to exercise the rights provided

under the 2nd

paragraph, Section 9.2 of

Article 9 of the concession contract

whenever it has reached or exceeded the

limits provided therein without awaiting the

five year period to renegotiate the

concession fees; and e) Reduce into writing

all agreements made by the parties in

connection with Section 9.2, Article 9 of

the Concession Contract, approved by

PIA’s Board of Directors.

Re-evaluate the best moves either: a) to

continuously pursue the proposed scheme

of repayment, and b) to comply with the

terms and conditions of the Agreement.

The first option is favorable to the BTr as it

will continue to collect default charges

pursuant to the concluded Agreement

prejudicial to the interest of PIA.

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AUDIT OBSERVATIONS

9.4.27.3 Cash on hand and short term

investments pertaining to MCT operations

were not all deposited with the Philippine

Veterans Bank (PVB) thus, about more or

less P112 million was deposited and/or

placed in a short term investment with the

Land Bank of the Philippines (LBP),

Cagayan de Oro and Puerto Branch. The

reporting procedure used is not within the

purview of Section 111 of PD 1445.

9.4.27.4 PIA has not yet remitted to the

Bureau of the Treasury (BTr) equivalent to

50 per cent of its reported net earnings of

P86.658M pursuant to Section 7,

Implementing Rules and Regulations of RA

No. 7656, thus contributing to the shortfall

of collections of the National Government

9.4.27.5 PIA collections from MICTSI for

variable and fixed concession fees were

understated by P 6.869 million because of

non-compliance by the latter of Article 9.1

and Annex C of Article 1 of the

Concession Contract.

RECOMMENDATIONS

In the second option, default charges could

be minimized. PIA’s savings from default

charges under second option could be

utilized to more tangible Projects including

its aggressive expansion project of MCT

operations.

a) Continue and fast track the establishment

of the cash account of MCT operations

from April 2004 to 24 April 2008 and cause

the immediate transfer to the PVB;

b) Immediately transfer the amount of

P112M more or less to the PVB based on

the data as shown above; and c) Deposit

only those collections and disburse/

withdraw fund from the PVB accounts

pertaining to the MCT operations for

Calendar Year 2013 and onwards.

Remit immediately to the Bureau of the

Treasury the fifty percent net

earnings or the amount of P43.329

million and the balance after any

adjustments within seven days after

the issuance of the COA Annual

Audit Report pursuant to Section 7, IRR

of RA No. 7656; and see to it that in the

ensuing year and every year thereafter the

fifty percent (50%) shall be remitted every

30 April following the dividend year.

Strictly enforce the provision of Article 9.1

as provided in Annex C of the Contract

regarding payment by MICTSI on fixed and

variable concession fees; enforce

collections from MICTSI with respect to

the uncollected variable fees resulting from

196

AUDIT OBSERVATIONS

9.4.27.6 PIA has not exercised its

visitorial authority vested to them under

Article 11 and failed to require the

Operator to comply with Article 10.2 of

the Concession Contract, thus, there may

be a risk that PIA is not receiving fully the

variable concession fees.

9.4.28 Mindanao University of Science

and Technology (MUST),

Lapasan Cagayan de Oro City

Contract for drainage project rescinded in

August 2008 or over four years with 45.33

percent accomplishment remained not

re-contracted leaving the installed

structures/equipment involving P2.6 million

RECOMMENDATIONS

the sales discounts deducted and other

income (rental & miscellaneous) excluded

in the computation of gross income in the

amount of P4.369 million; and enforce

collections from MICTSI for the unpaid

fixed concession fees in 2012 amounting to

P2.5 million.

a) Revisit Article 11 of the Contract and

conduct a regular inspection and

verification of the MICTSI books of

accounts related to revenue to ensure that

the reported gross revenue reflects the

Operator’s financial report; b) Strictly

require MICTSI to comply with Article

10.2 on monthly submission of operational

reports as a management tool for

calculating the variable concession fees

collectible from the Operator; and

c) Before any renegotiation shall commence

as provided under Article 9.2 of the

Contract, PIA i) must undertake complete

and thorough audit, inspection and

examination of the Operator’s books of

accounts and records of revenues except

interest income; ii) assess and bill the

Operator for variable concession fees for

understatement of the reported gross

revenue found during audit; and iii) ensure

within 24 hours that the Operator shall pay

the under remittance of variable concession

fees as billed.

Require the Accountant to book up the

Drainage System Phase 1 works with a

completion percentage of 58.97 percent

valued at P2.933 million; and assign

people to coordinate with the Department

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AUDIT OBSERVATIONS

exposed to weather conditions, as flooding

of the university’s campus continued

unabated during heavy rainfall causing

damage to several government properties,

declaring suspension of classes and

incurring higher cost for the completion of

flood mitigation control project.

9.4.29 Northern Mindanao State College

of Science and Technology

(NMSCST), Tangub City

Properties owned by the College amounting

to P18.572 million were not

covered/insured contrary to Section 3.1 of

the National Budget Circular No. 342 and

COA Circular No. 81-160 dated 21 April

1981, thereby depriving the college of the

opportunity to recover indemnity in case of

loss or damage.

RECOMMENDATIONS

of Public Works and Highways for the

completion of the Campus Drainage

System.

Adhere strictly to the provision of Section

3.1 of the National Budget Circular No. 342

and COA Circular No. 81-160 dated 21

April 1981 by securing insurance coverage

for all properties of the college to assure

recovery of the cost of assets in case of loss

or damage.

198

9.5 Consolidated Common Audit Observations and Recommendations from the

Annual Audit Reports for National Government Agencies (NGAs) for

Calendar Year 2012

9.5.1 Cash

The audit of the cash accounts in the books of National Government

Agencies (NGAs) disclosed non - compliance with existing laws, rules

and regulations as well as deviations from required accounting

procedures as follows:

9.5.1.1 Unreconciled differences between the book and bank balances figures

were reported from 18 audited agencies amounting to P521.59 million

affecting the reliability of the cash account balance, primarily due to

the non-preparation or delayed submission of the bank reconciliation

statements (BRS) and/or deficiencies in the maintenance of cash

records of said agencies.

9.5.1.2 Cash collected by collecting/accountable officers totalling P11.26

million in 10 NGAs was not remitted/deposited intact within the

prescribed time with authorized government depository banks hence,

exposing the assets to risk of misuse and loss.

9.5.1.3 Unused and/or dormant cash balances of 11 NGAs amounting to

P345.60 million were not remitted to the Bureau of the Treasury (BTr)

resulting in huge balances of idle and unutilized funds in Authorized

Government Depository Banks (AGDBs) which should have been used

by the National Government.

9.5.1.4 Cash advances issued to Cash-Disbursing Officers for payroll fund

or petty cash fund of six audited agencies totalling P58.50 million

remain unliquidated at year-end due to non-compliance with the

provisions of Sections 5.1.2, 5.7 and 5.8 of COA Circular No. 97-002

and Section 89, P.D. No.1445, opening possible risks of misuse or

malversation. (A1)

9.5.1.5 Cash shortages were incurred in three audited agencies amounting to

P1.70 million due to lapses/weaknesses in internal control on

collections like depositing intact of all collections daily with an AGDB

as provided in Section 21, Volume 1, Manual on the New Government

Accounting System (MNGAS).

9.5.1.6 Under assessment/collection of supervision and regulation fees or

monthly rentals in three NGAs totaling P15.38 million due to non-

imposition of said fees or incorrect assessment resulted in collection

inefficiency and lesser government revenues.

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9.5.1.7 Unrecorded bank accounts or dormant funds were reported in five

NGAs totaling P36.96 million contrary to GAFMIS Circular Letter No.

2002-001 dated 16 December 2002 and Section 4 (B) MNGAS.

9.5.1.8 Erroneous or delayed recording of cash transactions in 13 NGAs

totalling P208.81 million resulted in unreliable Cash account balances

at year-end affecting the fair presentation of the amounts in the


9.5.1.9 Cash deposited in banks by four NGAs totalling P115.19 million was

without authority contrary to Executive Order No. 338, series 1996.

9.5.1.10 Unreleased/stale checks of eight NGAs amounting to P77.63 million

were not restored to cash balances thus, understating said balances at

year-end.

9.5.1.11 Unused funds of three NGAs amounting P1.74 million was not

remitted back to the donor/source agency after project completion

which was not in accord with Section 4.9, COA Circular No. 94-013

dated 13 December 1994 and MOA provisions.

9.5.1.12 Cash deposits/cash transfers totalling P4.57 million of three NGAs

were made thru private banks in violation of the Special Provisions of

Republic Act No. 10155, General Appropriations Act of CY 2012.

One NGA in Zamboanga City has obtained an authority from the BSP

to deposit its collections with a private bank.

9.5.1.13 Non-preparation of the BRS or delayed submission of BRS and

recording of the reconciling items rendered the cash account balances

of 12 NGAs of doubtful validity.

9.5.1.14 Collecting Officers/Accountable Officers of 10 NGAs were not

covered by fidelity bond contrary to the provisions of Treasury

Circular No. 02-2009 dated 06 August 2009.

Recommendations

9.5.1.15 Prepare the monthly reconciliation statements of all bank accounts

every end of the month in accordance with Section 74 of P.D. No.

1445, take up reconciling items and adjust the books to correct the

errors, if any, to reflect the correct balance of the cash account in the


9.5.1.16 Verify and analyze cash transactions and come up with a

reconciled general ledger and subsidiary ledger balances to ascertain

the correctness of the balance of Cash in Bank – Local Currency,

Current Account as appearing in the books.

200

9.5.1.17 Closely monitor and supervise the prompt remittance of collections

in consonance with Section 69, P.D. No. 1445 to safeguard

government funds from misappropriation, loss or misuse. Ensure

collections are deposited intact with authorized government depository

bank as prescribed in the Manual on the New Government Accounting

System (MNGAS).

9.5.1.18 Remit to the BTr all existing balances of trust receipts in compliance to

Executive Order No. 338 dated 17 May 1996, COA-DBM-DOF Joint

Circular No. 9-81 dated 19 October 1981 and COA-DBM-DOF Joint

Circular No. 1-97 dated 02 January 1997. Collections should be

remitted/deposited intact daily and regularly as required under Section

21, Volume II of the MNGAS for National Government Agencies

(NGAs).

9.5.1.19 Return to the source agency the unused funds for the completed

projects, pursuant to COA Circular No. 94-013 dated 13 December

1994.

9.5.1.20 Cash advances for payroll fund and petty cash fund should be

liquidated within the prescribed period in compliance with Sections

5.1.2, 5.7 and 5.8 of COA Circular No. 97-002 and Section 89, PD

No. 1445.

9.5.1.21 Record bank accounts maintained for special purpose in compliance

with the provisions of GAFMIS Circular Letter No. 2002-001 dated

16 December 2002 and Section 74 of PD 1445.

9.5.2 Receivables

9 5.2.1 Cash advances to Officers and Employees of 50 audited agencies for

travel, special time bound undertakings and other activities totaling

P1.98 billion were not liquidated within the specified period and

remained outstanding for years due to the non-implementation of the

prescribed controls on the grant and liquidation of cash advances.

9.5.2.2 Funds transferred by 31 NGAs to other NGAs, Local Government

Units (LGUs), Government - Owned and Controlled Corporations

(GOCCs) and Non-Governmental Organizations (NGOs)/ People’s

Organizations (POs) for the implementation of projects with an

aggregate amount of P13.76 billion, remain unliquidated for several

years due to the following factors:

a. Failure of the source agencies to monitor transferred funds and to

enforce submission of liquidation reports after completion of the

project;

201

b. Failure of the implementing/recipient agencies to regularly submit

liquidation reports and refund unused balances to the source

agencies after completion of the projects; and

c. Lack of` periodic reconciliation of accounting records between the

source agencies and implementing agencies.

9.5.2.3 Dormant/unsupported receivables were reported in 39 NGAs amounting

to P670.90 million primarily due to insufficient or lack of supporting

documents, failure of management to retrieve the records for analysis,

absence of established/updated individual subsidiary ledgers contrary

to Section 111, PD No. 1445, reciprocal accounts were not reconciled,

necessary schedules required under Section 75, MNGAS were not

prepared, erroneous recording of transactions, and flawed aging

schedules thereby leading to a remote possibility of collection of these

receivables.

9.5.2.4 Unrecorded receivables of 13 NGAs amounting to P74.85 million

due to failure of management to recognize as receivable the uncollected

tuition and other miscellaneous fees, stall rental fees, canteen sales on

credit, among others, resulted in the understatement of the agencies’

receivable accounts balances.

9.5.2.5 Ten NGAs reported an uncollected or unsettled receivables totalling

P232.04 million attributed to failure of schools to collect repayments

on students’ interest free loan assistance, reneging scholars who failed

to complete their courses within the prescribed period stipulated in the

Memorandum of Agreement (MOA), long outstanding loan receivables

from cooperative banks and cooperatives which had either closed shop

or in deep financial distress, and failure of an agency to monitor and

control sales on credit contrary to Section 60, 61 and 64, GAAM,

Volume I.

9.5.2.6 Three NGAs had not set-up an allowance for doubtful accounts

for its receivable accounts as required under Section 66,

MNGAS.

Recommendations

9.5.2.7 To ensure collection of receivables and liquidation of cash advances,

the following measures are recommended:

a. Prepare and maintain a complete and up-to-date subsidiary records

and aging schedule that are reconciled with the General Ledger

balances.

b. Adhere strictly to pertinent regulations on the grant, utilization and

liquidation of cash advances which include, among others:

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Full liquidation of outstanding cash advances of accountable

officers before new cash advances are granted as provided in

Section 89 of P.D. No. 1445; and

Full settlement of all cash advances at year-end so that

appropriate expense accounts will be recognized in the books,

and instruct the concerned accountable officers and employees

to deposit or return immediately to the cashier/collecting officer

any unused portion of their cash advances.

c. Strict implementation of the provision of Section 5.8 of COA

Circular No. 97-002 which requires the settlement/liquidation of

cash advances within the prescribed period.

9.5.2.8 All possible legal measures/remedies should be enforced in collecting

receivables, which include, among others: a) sending out demand

letters to debtors/officers and employees, b) withholding of salaries or

any claim due them after sufficient notice have been served and

c) other legal means.

9.5.2.9 Verify the status of long outstanding accounts and assess accounts

receivables which are no longer collectible. Consider the possible

write-off of these accounts after exerting diligent efforts to collect,

instituting appropriate action and exhausting all the remedies available.

9.5.2.10 To prevent the accumulation of long outstanding unliquidated fund

transfers, the following are recommended:

a. Transfer the fund directly to the implementing agency of a

project/program instead of having it coursed thru an intermediary

agency by indicating this provision in the LA/Memorandum of

Agreement (MOA); require the timeliness of the project

implementation in the LA/MOA;

b. Strictly implement the provisions of COA Circular Nos. 94-013,

96-003 and 2007-001 and the provisions of the MOA by requiring

the implementing agency to immediately submit the required

liquidation reports and refund any unutilized balances including

interest, if any; and

c. Refrain from granting additional fund releases to

NGAs/LGUs/GOCCs/NGOs/POs with unliquidated balances to

prevent accumulation of amounts.

9.5.2.11 Provide an allowance for doubtful accounts in compliance with Section

66, MNGAS.

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9.5.3 Inventories

9.5.3.1 Delayed delivery of items procured and already paid by three audited

agencies costing P46.64 million from the Department of Budget and

Management (DBM)- Procurement Service (PS) defeated the good

intention to facilitate the procurement process and resulted in the

accumulation of undelivered items.

9.5.3.2 Unreconciled difference totalling P267.54 million between the

Accounting and Property records/inventory reports of 26 agencies

brought about mainly by:

a. Non-submission of Report of Supplies and Materials Issued

(RSMI), and Report on the Physical Count of Inventories (RPCI),

among others required reports or incomplete physical count

report, as bases in recording the expenses to the Accounting Unit;

b. Absence of periodic reconciliation between Accounting and

Supply records as required in Section 43, Volume I of the

MNGAs;

c. Inventories which were already issued and/or consumed but were

still reflected in the financial statements or delayed recording of

receipts and issuances of inventories;

d. Non-maintenance of supplies ledger cards (SLCs) or unupdated

stock cards; and

e. Erroneous entries in the recording of inventory transactions or

misclassification of inventory purchases.

f. In one agency, the RSMI was prepared and recorded in the books

even when supplies and materials were not totally issued resulting

in the understatement of year-end inventory balances.

9.5.3.3 Unreconciled difference between the General Ledger (GL) and

Subsidiary Ledgers (SLs) were reported for five NGAs amounting to

P6.90 billion hence, accuracy and validity of the Inventory account

balances cannot be ascertained.

9.5.3.4 Overstatement of inventory account balances of 17 NGAs totaling

P93.10 million mainly due to the non-submission of the Report of

Supplies and Material Issued (RSMI) by the supply officer to the

Accounting Unit contrary to Section 43, MNGAS, Volume I and

Section 62, MNGAS, Volume II.

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9.5.3.5 Inventory accounts balances of 10 audited agencies amounting to

P708.01 million were doubtful due to failure of these agencies to

conduct physical inventory/count of supplies and materials resulting in

the unreconciled balances between the Accounting and Property

records.

Recommendations

9.5.3.6 Coordinate with the DBM-PS regarding the settlement of undelivered

supplies which were already paid by the agencies.

9.5.3.7 Require the Accountant and Property/Supply Officer to reconcile

the difference between the Accounting and Property records/

inventory report by: (a) identifying the causes of the discrepancies in

the GL and SLs, and (b) analyzing items recorded in the GL/SLs and

reconciling the same with the data appearing in the RPCI in

compliance with the provisions of Section 43, Volume I and Section

62, Volume II of the MNGAS for NGAs.

9.5.3.8 Require the Accountant to maintain the Supplies Ledger Card

(SLC) in accordance with Sections 12, Volume II of the MNGAS,

undertake regular reconciliation of the SLC with the GL and

prepare the necessary adjustments.

9.5.3.9 Require the Supply Officer to submit regularly the Report of

Supplies and Materials Issued (RSMI) and other required inventory

reports to the Accounting Unit to support the recording of

consumption/issuances of supplies and materials or mortality in case

of livestock. Likewise, prepare the necessary adjustment to

record expenses, unrecorded deliveries and various accounting

errors.

9.5.3.10 Direct the Supply Officer and other concerned personnel to adhere

strictly to the established rules and regulations prescribed in Section

65, Volume II of the MNGAS relative to the conduct of physical

count of inventory items and maintain an updated inventory records

in accordance with Section 41, Volume II of the MNGAS.

9.5.3.11 Record all purchases of supplies and materials following the

perpetual inventory record and maintain supplies ledger cards for

each item in accordance to Section 43 of MNGAS, Volume I.

9.5.3.12 Observe the Asset Method of Accounting for Supplies and Materials by

recording the items to the appropriate expense account only upon its

issuance pursuant to Section 43, MNGAS.

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9.5.4 Property, Plant and Equipment

9.5.4.1 Unrecorded Property, Plant and Equipment (PPE) totalling P2.89

billion was reported by auditors for 19 NGAs due to lack of appropriate

supporting documents and/or basis of the cost, in violation of Section

63 of Presidential Decree (PD) No. 1445 requiring that government

property shall be taken up in the books of the agency concerned at

acquisition cost or at appraised value, thereby understating the affected

PPE accounts.

9.5.4.2 Unserviceable/obsolete properties of 36 audited agencies costing

P462.05 million remained in the books of 132 audited agencies

contrary to Section 4.p, MNGAS Volume I, Section 143, MNGAS,

Volume III and Section 79 of PD No. 1445 requiring the disposal of

unserviceable properties.

9.5.4.3 Idle/unutilized properties and equipment were reported from nine

NGAs totalling P678.50 million such as abandoned/uncompleted

building projects costing P41.29 million, two school buildings worth

P24.12 million completed in 2002 and 1996, Furnitures, Fixtures and

Equipment items totalling P49.99 million acquired in 2010 and

scientific equipment amounting to P51.12 million, among others, which

defeat the purpose for which these properties were acquired, and cause

a waste of government funds given the possibility of incurring losses

due to deterioration/destruction or misuse of the properties.

9.5.4.4 Unreconciled records of Accounting and Property Units of 69 audited

agencies rendering the reported balances totalling P30.03 billion at

yearend doubtful due to failure to maintain Property, Plant and

Equipment (PPE) ledger and property cards, failure to conduct physical

count, failure to transfer completed projects from Construction-in-

Progress to PPE and the failure of the Accounting Section to maintain

Property, Plant and Equipment Ledger Cards in violation of Section

490 of the GAAM Volume I, among others. These deviations mainly

contributed to the unreconciled PPE account balances between the

accounting and property records.

9.5.4.5 Ten audited agencies failed to insure their property, plant and

equipment amounting to P1.24 billion with the General Insurance

Fund and/or Property Replacement Fund of the Government Service

Insurance System (GSIS) contrary to Section 489, GAAM, Volume I,

COA Circular No. 92-390, Administrative Order No. 141 dated 12

August 1994 and Section 5 of R.A. No. 656, otherwise known as the

Property Insurance Law, thereby, exposing the agencies’ assets to

unnecessary losses in case of fire, calamities and other fortuitous

events.

9.5.4.6 Fifty two (52) agencies failed to conduct a physical inventory of their

property, plant and equipment contrary to COA Circular No. 80-124,

Section 490, GAAM and Section 58, PD No. 1445 hence, the validity,

206

existence and correctness of the reported balances at the end of CY

2012 totalling P16.49 million cannot be determined.

9.5.4.7 Twenty-four NGAs failed to recognize the depreciation of the PPEs at

the end of each month contrary to Sections 67-68, Volume I, MNGAS

thereby, affecting accuracy of the PPE and expense accounts balances.

Recommendations

9.5.4.8 Require the Property Officer to submit to the Accounting Unit the

necessary supporting documents for the recording of the PPE in the

books of accounts and the Accountant to: (a) record the costs of all

assets/PPE items in books, and (b) obtain complete documentation of

PPE, particularly those items acquired through grants or donations.

9.5.4.9 Require the Accountant to reclassify the unserviceable properties to

Other Assets account, based on the list submitted by the Property

Officer, prior to the disposal of said properties, in accordance with

Section 143, MNGAS, Volume III, prepare the accounting entries to

drop the disposed properties from the books of accounts by the

Accounting Unit upon the disposal of unserviceable properties in

accordance with Section 79 of PD No. 1445, Section 4.p MNGAS,

Volume I, COA Circular No. 2004-008 dated 20 September 2004, and

Section 143, MNGAS, Volume I. Direct the Property Officer to: (a)

prepare the Inventory and Inspection Report of Unserviceable

Properties (IIRUP), (b) prepare the necessary documents for the

disposal of properties through public bidding or other modes of

disposal to prevent their further deterioration; and/or for the preparation

of the accounting entries to drop the disposed properties from the books

of accounts by the Accounting Unit.

9.5.4.10 Agencies should plan/study carefully the acquisition/construction

of PPE, make consultation with the stakeholders, settle gray areas of

the project like ownership of the prospective land area, among others,

before pursuing the implementation of said project to prevent

unnecessary expenditures in the future and waste of government funds

in such cases as the idle and unutilized buildings constructed in prior

years and procured furnitures, fixtures, and equipment. Further,

require the Management to undertake various remedial actions to

ensure optimum utilization of the idle/unutilized PPE and ensure

proper maintenance of these assets to avoid wastage of government

resources.

9.5.4.11 Require the Accountant to prepare and maintain Property, Plant and

Equipment Ledger Card (PPELC) and reconcile it with the property

records/inventory reports on a regular basis as well as ensure that the

PPELC is always reconciled with the GL to comply with Sec. 43,

paragraphs 3 and 4 of MNGAS, Volume 1 and Section 490 (a and b) of

GAAM, Volume 1.

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9.5.4.12 Require the agencies to insure all its insurable physical assets

with the General Insurance Fund and/or Property Replacement Fund of

the Government Service Insurance System (GSIS) in accordance with

Section 5 of R. A. No. 656 and Administrative Order No. 141 dated

August 12, 1994 to protect its interests in case of fortuitous events.

9.5.4.13 Conduct a complete physical inventory of all assets at least once a

year pursuant to Section 58, PD No. 1445, Section 490, GAAM,

Volume I, and COA Circular No. 80-124 and prepare the Report of the

Physical Count of PPE (RPCPPE). Any discrepancies between

physical count and inventories per books must be analyzed,

investigated and a corresponding course of action be taken up

immediately.

9.5.4.14 The Accountant should ensure that depreciation expenses for all

PPE accounts are recorded at the end of each month. Further, a review

of the PPELC should be done to correct errors posted in the estimated

useful life of the asset to coincide with the prescribed estimated useful

life under COA Circular No. 2003-007. Record the recommended

audit adjustments to correct accumulated depreciation.

9.5.5 Liabilities

9.5.5.1 The recorded liabilities totalling P204.94 million of 14 audited

agencies were without valid claims and/or not supported by record or

documents to establish their validity and existence.

9.5.5.2 Nine NGAs were reported to have an unbooked or erroneously

recorded payables totaling P4.80 billion which contributed to the

understatement/overstatement of the Liabilities account balances.

Recommendations

To establish the validity and accuracy of current year’s balances and to present

a more reliable figure of payables in the succeeding years’ financial

statements, the following procedures are recommended:

9.5.5.3 Review all outstanding payables and revert those which are

undocumented/not supported with valid claims and those aged two

years or more.

9.5.5.4 Strictly enforce the submission of supporting documents prior to the

recording of transactions to minimize payables with no claimants.

9.5.5.5 Prepare journal entries to correct the unrecorded payables and adjust

errors in recording the fund transferred to reflect the correct balances.

9.5.5.6 Maintain and update SLs for each payable account to support their

existence and validate accuracy of records. Amounts that have no

breakdown, not supported with complete documentation and not

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reconciled with SLs cast further doubt on the reliability of the account

balances.

9.5.6 Revenues

9.5.7.1 Six audited agencies’ reports disclosed their failure to accrue

income amounting to P22.69 million.

Recommendation

9.5.7.2 Instruct the Accountants to: (1) effect the recording of unrecorded

collections, (2) prepare reclassification entries on accounts

erroneously credited instead of the income account, and (3) adopt/

use the accrual method of accounting for income already earned.

9.5.7 Expenses

9.5.7.1 Unnecessary expenses were reported in 48 NGAs totalling P125.73

million while two agencies have excessive contracts amounting to

P1.92 million. Unauthorized/illegal/irregular expenses were noted in

22 agencies totalling P98.28 million.

. Recommendations

To preclude incurrence of unauthorized/illegal/excessive expenditures

and the misuse of government funds including erroneous recording thereof, we

recommend the following:

9.5.7.2 Require the agency heads to explain in writing and submit legal basis

that would justify the granting of Collective Negotiation Agreement

(CNA), incentives, representation allowance and transportation

allowance (RATA), additional bonuses and other allowances, otherwise

the amount should be refunded. Henceforth, management should

strictly adhere to the provisions of Administrative Order No. 135 dated

December 27, 2005, DBM Budget Circular No. 2006-001dated

February 1, 2006, Presidential Decree No. 1597, Section 4 of

Presidential Decree No. 1445 and other issuances relevant to said

transactions.

9.5.7.3 Ensure that funds are used in accordance with the purpose for which

these are intended. To avert misuse of funds, install policies and

controls on the proper use of funds; prepare a program of expenditures

or a Work and Financial Plan and require submission of audited

Statement of Utilization or report on the completion of the project or

trip with accompanying details of transaction.

9.5.7.4 Direct the Accountant to adhere strictly to the provisions of Section 4

(6) of Presidential Decree No. 1445, the Omnibus Rules Implementing

Book V of E.O. No. 292 and other Civil Service Laws, Executive

Order No. 298 dated March 23, 2004, Department of Budget and

Management Circular No. 2006-001 dated February 1, 2006,

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Department of Budget and Management Circular No. 2010-3, and other

directives, requiring completeness of supporting documents to claims

before payments.

9.5.8 Compliance

Submission of reports/documents

9.5.8.1 Delayed in the submission of copies of year-end/monthly financial

reports, disbursements vouchers (DVs) and supporting documents

(SDs) and other required reports of 48 NGAs beyond the reglementary

period as required under COA Circular No. 89-299-A, Section 6, COA

Circular No. 95-006 dated 18 May 1995, Sections 3.1.1 and 3.2.1,

COA Circular No. 2009-001 dated 12 February 2009, Section 7.2.1 (a),

COA Circular No. 2009-006 dated 15 September 2009, Section 71,

MNGAS, Volume I, Sections 4, 41, 100, 107, and 122, PD No. 1445,

causing delay in the inspection of projects and purchases, as well as

analysis and review/evaluation of the accounts/contracts and

subsequently, delay in informing management of the deficiencies noted

therein.

Recommendations

9.5.8.2 Strictly comply with the submission of reports by the concerned

personnel within the prescribed period to facilitate the recording of

transactions in the agency books of accounts and provide timely and

accurate information for management’s decision/action as well as for

eventual post-audit of the agency’s financial transactions by the

Commission on Audit as required under Sections 100 and 122 of

Presidential Decree No. 1445 and Section 7.2.1(a) of COA Circular

No. 2009-006 dated September 15, 2009. Enjoin the accountable

officers to submit on time accountable reports for recording in the

books of accounts;

9.5.8.3 Require the concerned personnel to submit the contracts/purchase

orders and the supporting documents to COA within the prescribed

period in accordance with COA Circular No. 87-278 and COA

Memorandum No. 2005-027, restated with amendments under COA

Circular No. 2009-001 dated February 12, 2009; and

9.5.8.4 Require the Accounting Unit to evaluate the transactions as to

completeness of supporting documents and such are properly

accomplished particularly the signatures of authorized officials and

employees on each and every document attached to the claim.

Procurement

9.5.8.5 Procurement of various goods and services totaling P539.15 million

reported by 31 audited agencies was made without complying with the

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applicable provisions of RA 9184, otherwise known as the

"Government Procurement Reform Act". These deficiencies include

the following, among others:

a. Procurements, in material amounts were made without public

competitive bidding contrary to Sections 48.2, 52.1 and 53.9,

Implementing Rules and Regulations (IRR) of RA No. 9184;

b. Failure to prepare the Annual Procurement Plan (APP) which is

not in accordance with Section 7, Revised IRR, RA No. 9184;

c. Procurement activities were not posted in the PHILGEPS

contrary to Sections 54.2 and 54.3, RA No. 9184;

d. Splitting of purchase orders in violation of Administrative Order

No. 17 and Section 54.1, RA No. 9184;

e. Use of reimbursement as a mode of procurement;

f. Non-observance of the guidelines on shopping, as a mode of

procurement;

g. Non-imposition of the required ten (10) percent retention money;

and

h. Indication of brand names in the request of quotation.

Recommendation

9.5.8.6 Comply with the Annual Procurement Plan (APP) and observe

Competitive Bidding and/or Alternative Modes of Procurement in

accordance with the provisions of Republic Act No. 9184 and its

implementing rules and regulations (IRR).

Other Relevant Audit Observations and Recommendations

9.5.8.7 Twenty-nine NGAs failed to settle their audit disallowances totalling

P110.44 million while seven audited agencies have unsettled

suspensions amounting to P108.46 million as of year-end.

9.5.8.8 Various non-compliance with existing accounting and auditing

rules and regulations were reported in 21 audited agencies such as:

(a) non- usage of the updated books of accounts as required by

Sections 2, 11 and 12, MNGAS, Volume II; (b) failure to implement

the required simplified accounting forms and registers in

reporting/monitoring financial transactions as provided in COA

Circular Nos. 2003-006 and 2004-003 dated 02 December 2003 and

24 June 2004; lack of supporting documents; individual accounts do

not reconcile with the financial statements, use of customized

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computer generated official receipts without securing an authority

with COA, among others.

9.5.8.9 Delay in program/project implementation in five NGAs totalling

P386.47 million thus, the delivery of a more improved and quality

services/benefits to the constituents/stakeholders were adversely

affected.

9.5.8.10 Failure to remit the taxes withheld were noted in 18 audited agencies

amounting to P44.58 million contrary to Executive Order No. 651,

Sections 114 and 272, RA No. 8424 (National Internal Revenue

Code). On the other hand, 16 NGAs have fully complied with the

remittance of their taxes withheld totalling to P198.30 million.

9.5.8.11 Two agencies granted incentives to its officials and employees totalling

to P30.66 million without any legal basis.

9.5.8.12 Seventeen agencies showed lapses/weakness in their internal control

systems such as controls not in place for recording of transactions,

designation of personnel, disbursement system; and in handling of

collections like failure to issue official receipts.

9.5.8.13 Absence of Internal Audit Service unit in three NGAs contrary to RA

No. 3456, as amended by RA No. 4177 and DBM Circular Letter No.

2008-5 dated 14 April 2008.

9.5.8.14 No fund allocation for senior citizens and person with disabilities

were made by 27 NGAs contrary to Section 29, RA No. 10155,

General Appropriations Act of CY 2012 thus, depriving the

stakeholders of their rights and privileges under the law.

9.5.8.15 Forty-four agencies failed to implement the Gender and Development

(GAD) provisions as required in Section 28, RA No. 10155 and Joint

DBM-NEDA-NCRFW Circular 2004-1 thus, hindering the

implementation of activities designed to address gender issues and

promote women empowerment and gender equality.

Recommendations

9.5.8.16 Enforce the settlement of the audit suspensions and disallowances

within the prescribed period in accordance with Sections 9.4 and 10.4

of the 2009 Rules and Regulations on the Settlement of Accounts.

9.5.8.17 Strictly observe the provisionsof RA No. 10155 and the subsequent

General Appropriations Act, RA No. 4177, RA No. 8424 and the

various COA Circulars on accounting and auditing rules and

regulations.

Documents

Annual Financial Report · Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City 2012 Annual Financial Report National Government Agencies Volume I - A