Malacañang fails to liquidate P10M of federalism fund

MANILA, Philippines – The Commission on Audit (COA) is further examining how Malacañang spent its funds for the federalism campaign, after auditors discovered unliquidated P10 million for activities and overspending on the hiring of staff worth P3.6 million.

These were revealed in the 2018 audit reports of the Department of the Interior and Local Government (DILG) and the Presidential Legislative and Liaison Office (PLLO).

President Rodrigo Duterte’s administration launched a nationwide campaign for a proposed transition to federalism, a cornerstone of his presidency and a major campaign promise. But in June 2019, Duterte said the shift to federalism would not happen “in my generation” and pushed for charter change instead. (READ: [ANALYSIS] Why Duterte’s federalism endangers government’s finances)


The President’s change of heart notwithstanding, the taxpayers’ money spent on the campaign has to be accounted for, as COA finds an unliquidated P10 million in federalism funds, which was transferred from the DILG to the Presidential Communications Operations Office (PCOO).

Verification of the Subsidiary Ledger showed that no monthly reports were submitted by the PCOO to show the progress of work or projects undertaken and to liquidate all related expenses incurred as required under the Memorandum of Agreement (MOA),” said COA in its 2018 audit report of the DILG.

The DILG was the main agency to carry out the federalism information campaign, for which it tapped other agencies, such as the PCOO, which produced the highly-criticized lewd federalism video courtesy of its infamous former assistant secretary, Mocha Uson.

The COA said bulk of the activities of the PCOO should have been completed as early as the first quarter of 2019 because the agreement between DILG and PCOO lasted only until May 31, 2019.

“Nevertheless, all the required liquidation and progress reports have yet to be submitted as of this writing,” said auditors.

The DILG said it sent a demand letter to PCOO on April 30, asking for a refund of “any unexpended/unused amount.”


Over at the PLLO, auditors found that the office hired additional 19 contractual staff for 2018, or more than 90% of its 2017 workforce, even though “there was no significant change in the mandate or function and activities and programs of the agency” for 2018.

“The agency hired 19 additional COS (contract of service) personnel or equivalent to 90 percent more than that hired in CY 2017 with no significant change in the agency’s activities and programs, resulting in the incurrence of additional expenses of ₱3,643,826.48 charged under (Maintenance and Other Operating Expenses) MOOE due to lack of proper planning of the agency’s staffing pattern,” said COA in its 2018 audit report of the PLLO.

In COA’s notes of PLLO’s financial statements, auditors said that the advocacy campaign on federalism “enormously added to the usual functions and representations of PLLO from the previous years.”

In 2017, PLLO’s representation expenses increased from P2.8 million to P18.5 million “because of the implementation of the PLLO’s project entitled ‘The Philippine Federalism Index’” on top of its regular functions.

“Further, in 2017, the agency was able to implement all activities and programs, including the implementation of the PLLO’s project entitled ‘The Philippine Federalism Index’ with only 21 COS personnel. There was no significant change in the mandate or function and activities and programs of the agency for the current year to augment its workforce and yet the agency hired additional 19 COS personnel,” said COA.

The hiring of additional contractual staff, mostly executive assistants and administrative sssistants, was done even though the PLLO still had available plantilla positions.

On the overstaffing issue, COA said the PLLO must review its staffing pattern and request more plantilla positions from the Department of Budget and Management if needed, instead of hiring contractual staff.

But COA reminded PLLO that if it would hire plantilla staff, it must do it properly, as auditors noted that the current available plantilla positions are not published as required by Republic Act 7041. PLLO's management agreed to the recommendations of COA.

PLLO’s traveling expenses also ballooned from only P1.9 million in 2017 to P7.4 million in 2018, again because of the federalism campaign.

“The increase in Traveling Expenses account was attributed to the strengthened advocacy campaign on Federalism headed by PLLO in 2018, which resulted in numerous local travels to provide a nationwide Information Education and Communication to the Filipino people,” said COA. –

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email or tweet @lianbuan.