Finding No. 2 COA Annual Audit Report 2005

July 25, 2008

The BRCI TOMATO PASTE PROCESSING PLANT acquired by the Agency thru an auction in May 2002 at a total cost of P37,344,240.00, including the buyer’s premium of P2,766,240.00, remained idle for over three (3) years, inconsistent with the provision in Section 2 of PD 1445; thus, exposing the assets to loss due to the action of the elements and pilferages.

Section 2 of PD 1445 provides that: “It is the declared policy of the State that all resources of the government shall be managed, expended or utilized in accordance with law and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of the government.”

Extant records of our office disclosed that the Agency acquired in May 2002 a number of the plant and machinery assets of BRCI TOMATO PASTE PROCESSING PLANT (the Plant, for brevity) located at Manolo Fortich, Bukidnon, in an auction at an aggregate price of P37,344,240.00, which funds came from its reverted appropriations for Livelihood Projects. The acquisition of the Plant was moved by the Agency’s desire to boost the agro-industry development in the province, encourage its constituent-farmers to venture into the production of high value crops particularly tomatoes, and to generate employment opportunities for its constituents. All these noble intentions of the present leadership are manifested in the letter dated March 18, 2002 of Honorable Governor addressed to the Local Sangguniang Panlalawigan, and formed part of the preamble to Resolution No. 2002-128, series of 2002, of the 8th SP of the province.

In our visit to the Plant, we observed that it has remained idle despite the lapse of considerable time from its date of purchase or over three (3) years from its date of acquisition. We further observed that the ideal room temperature required in the main control panel building has not been maintained due to the absence of operational air-conditioning units. Moreover, the CATERPILLAR 30 DIESEL FORKLIFT with deflated tires, costing P420,000.00 and forming part of the accessories to the Plant acquired by the Agency, is also deteriorating.

Another kind of loss that can be imputed to the costs of the Plant is in the nature of foregone interest income which, at conservative estimates, amounts to P6 Million [P37,344,240 x 5.5% x 3.66 years (May 2, 2002 to December 31, 2005)], net of 20% withholding tax.

In brief, the continued idleness of the Plant is costing the local government not only the rapid deterioration of the Plant occasioned by action of the undesirable elements and its non-use or losses thru theft; but, also in terms of foregone interest income which could have been earned had the money been invested in time deposit placements. Beside, the inhabitants have been denied the employment opportunities so dreamed of by the present leadership.

Recommendation:

We recommend that management rehabilitate and put the Plant into its immediate use; conduct intensive campaign and convince the farmers to plant and produce tomatoes and other raw agricultural products sufficient for the requirements of the Plant thru contract growing, if feasible; and, establish product marketing networks.

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Written by admin · Filed Under Bukidnon, Commission on Audit