Iloilo Capitol: no missing funds as COA flags PRDP delays

ILOILO CITY — The Iloilo Provincial Government said there are no missing funds or unlawful disbursements in its projects under the Philippine Rural Development Project (PRDP), even as state auditors flagged delays, lapsed grants, and idle facilities.

Provincial Administrator Raul Banias made the assurance at a press conference on Oct. 16, addressing findings in the Commission on Audit (COA) 2025 audit report.

“The audit observations on our PRDP projects are centered on sustainability, post-completion operational maintenance, market linkages, and compliance timelines, not missing funds or illegal disbursements,” he said.

Banias added that corrective action and sustainability measures are already in place following the audit report.

He said the Provincial Agriculture Office (PAO), the Provincial Planning and Development Office, and partner enterprise groups would work to strengthen market linkages, ensure regular maintenance of completed access roads and processing facilities, and maximize the benefits of investments for farmer-beneficiaries.

Banias also said the PRDP is subject to strict procurement and transparency requirements, with projects undergoing technical, social, and environmental assessments.

The COA report showed that delayed construction, lapsed grant funding, and non-operational facilities have marred several multimillion-peso rural infrastructure and agricultural enterprise projects of the provincial government.

Auditors found terminated contracts, millions in lapsed World Bank and national grants, persistent delays that threaten loan withdrawals, unrecorded financial entries, and idle or deteriorating agricultural facilities across several towns.

COA raised five PRDP observations, and provincial officials agreed to all of its recommendations, according to the report.

Auditors warned that poor project performance could disqualify the province from other PRDP projects, and that weak operations and maintenance could lead to suspended fund releases or disqualification from future Department of Agriculture (DA) projects.

PRDP is a national agricultural and rural development initiative implemented by the DA in partnership with the World Bank and participating local government units, such as the Iloilo Provincial Government.

The program has supported rural development nationwide since 2014, according to the World Bank.

The initiative aims to establish climate-resilient rural infrastructure and expand market-oriented agri-fishery enterprises to boost rural incomes and strengthen regional value chains.

Under a memorandum of agreement with the DA, the PRDP fund is kept in a separate set of books.

The provincial government implemented 17 PRDP projects with a combined allocation of PHP 1.079 billion.

Among the major components of PRDP are I-BUILD, or the Intensified Building-Up of Infrastructure and Logistics for Development, which covers infrastructure development, and I-REAP, which supports enterprise development.

In Iloilo, the program covers seven I-REAP projects and 10 infrastructure projects, of which nine fall under I-BUILD and one under PRDP Scale Up.

I-BUILD projects focus on climate-resilient rural infrastructure, including farm-to-market roads (FMRs), bridges, water systems, and municipal slaughterhouses.

In Iloilo, the infrastructure projects flagged by auditors include abattoirs in Concepcion, Santa Barbara, and Oton; the PHP 12.845 million Danao-Danao Island solar-powered potable water system in Concepcion; and the PHP 209.925 million Bongol-Tambal-Quipot FMR with bridges in Janiuay.

I-REAP supports agri-fishery enterprises managed by local proponent groups.

Among the projects flagged by COA are the PHP 18.799 million Panay Native Chicken Enterprise (PaNCE) facilities in Barotac Viejo and Ajuy; the PHP 8.379 million Iloilo Integrated Swine Enterprise in Tigbauan and Oton; and the PHP 999,250 Production and Marketing of Vermicompost Enterprise managed by the Bingawan Organics & Natural Farming Advocates Association (BONFAA).

Concepcion abattoir contract terminated

The PHP 29.95 million Concepcion abattoir in Barangay Loong, funded under an 80:10:10 cost-sharing agreement among the World Bank, the DA, and the Province of Iloilo, was terminated in October 2025 after chronic delays and negative slippages of up to 24%.

The contract was set for 325 days, from Oct. 23, 2023, to Sept. 11, 2024.

A groundbreaking ceremony for the project was held on March 8, 2024.

The facility was designed to process up to 50 hogs and eight cattle daily and to comply with National Meat Inspection Service standards.

COA said that despite 70 days of work suspensions and 105 days of time extensions, which moved the deadline to March 5, 2025, the contractor achieved only 61.9% physical accomplishment, equivalent to PHP 18.535 million.

COA noted that the project was only 67.4% complete on March 5, 2025. The Provincial Engineer’s Office (PEO) said that figure came from an initial assessment, and that a joint inspection with DA regional and project support offices on July 31, 2025, found 61.9% because of defective, incomplete, and damaged works and equipment.

Auditors said the contractor was behind schedule from the start, reaching a negative slippage of 24% in October 2024. The limit is 15%, beyond which contract termination is a ground.

COA said three warnings had been issued by April 2024, but the contract was not terminated until October 2025, after the funds had lapsed.

The PEO said notices to terminate the contract were issued under its “Three-Strike Rule” but were rescinded after the contractor committed to fix the delays, which it blamed on late deliveries of materials and equipment.

The provincial engineer told auditors that the contractor kept assuring officials in contract management meetings that the delays would be addressed and the project finished on time.

The PEO said it held 11 coordination and contract management meetings with the contractor and DA offices from August 2024 to July 2025, and that the contractor repeatedly failed to deploy enough manpower and resources.

On why the contract was not terminated when slippage hit 24% in October 2024, the PEO cited procurement constraints: a minimum 60-day rebidding process and a limited pool of PRDP-qualified contractors.

The funds’ validity, extended to July 31, 2025, expired before the project was completed.

Of the PHP 23.96 million World Bank and PHP 2.995 million DA counterpart funds, only PHP 13.558 million and PHP 1.695 million were released.

The unused PHP 10.402 million in World Bank funds and PHP 1.3 million in DA funds could no longer be drawn, forcing the provincial government to shoulder all remaining unfinished works and contractor claims using local funds.

The provincial engineer said the province did not ask for additional funds because required documents, such as test reports, were not ready in time.

COA also found that several financial items were left unrecorded in provincial ledgers as of Dec. 31, 2025, misstating project asset accounts.

These included PHP 3.205 million in remaining unclaimed accomplishment, unrecouped advance payments of PHP 1.618 million, retention money of PHP 320,492.42, and assessed liquidated damages of PHP 1.443 million.

The provincial accountant’s office said it was not informed of the termination because supporting documents were not submitted.

The PEO said the contractor did not submit documents to support a claim for the remaining work and ignored its demand letters.

The province also demanded the refund of the unrecouped advance payment and notified the contractor and its surety company, Insurance and Surety Corporation, that the surety bond for the advance payment was forfeited.

The PEO told COA that the remaining works were re-awarded to REFTEC Industrial Construction & Services on May 19, 2026, with completion targeted for Sept. 27, 2026.

Santa Barbara abattoir delay risks

COA warned that the PHP 94.476 million Santa Barbara abattoir faces severe execution risks because of continuous negative slippages.

The project is funded by the World Bank at PHP 75.581 million, the DA at PHP 9.448 million, and provincial equity at PHP 9.448 million.

It falls under PRDP Scale Up, which builds on the original program with additional World Bank funding approved in 2023.

The project was contracted for 266 calendar days, from Aug. 4, 2025, to April 26, 2026.

As of Dec. 31, 2025, the project had recorded only 11.3% physical accomplishment against a 19.8% schedule, with negative slippage reaching 8.59% because of insufficient site equipment and limited material deliveries.

The contractor has posted negative slippage every month since the start, even after submitting a catch-up plan, COA said.

COA emphasized that under the PRDP Scale Up Operations Manual, negative slippage reaching 15% triggers the formal process for the withdrawal of World Bank loan proceeds and national counterpart funding, which would leave the provincial government solely liable for completing the facility.

Auditors warned that the project repeats the Concepcion pattern, and that loan proceeds and counterpart funds may no longer be available for work finished late.

In response, the PEO acknowledged the continuing negative slippage, said it is closely monitoring the contractor, and committed to enforcing strict catch-up plans and administrative sanctions to keep slippage below the 15% threshold.

The provincial engineer agreed that COA’s recommendation on the Concepcion project applies to future projects, especially the Santa Barbara abattoir.

Idle and deteriorating facilities

Of the province’s 17 PRDP sub-projects, 14 are complete, according to COA.

A physical inspection of nine selected sub-projects showed that five were non-operational or had stopped functioning, five had structural or technical defects, and two were still awaiting completion. The categories overlap, according to the report.

Among those flagged were facilities under the PHP 18.799 million PaNCE project in Barotac Viejo and Ajuy.

In Barangay Rizal in Barotac Viejo, breeding facilities were completely unused, unmaintained, and overgrown with vegetation.

In Barangay Silagon in Ajuy, operations declined sharply as market demand fell, and idle equipment was left exposed to weather damage.

Operations at both sites were temporarily suspended from the fourth quarter of 2025 because of management issues and disease, including an outbreak of infectious coryza that severely affected breeder stocks.

The provincial government said the PAO had scheduled rehabilitation and catch-up measures for the facilities in 2026.

The PHP 8.379 million swine production and marketing enterprise, covering facilities in Tigbauan and Oton, also faced operational problems.

The Tigbauan facility remained non-operational because of ongoing design modifications, incomplete waste disposal systems, biosecurity concerns, design flaws, and structural damage caused by seismic activity.

The Oton facility was reported to be operating, though it was still completing final project requirements.

Across both sites, the enterprise faced delays from the African Swine Fever (ASF) outbreak.

The PAO moved the target completion of the project and the delivery of breeder stocks and feeds from December 2025 to December 2026.

The PHP 12.845 million solar-powered potable water system on Danao-Danao Island in Concepcion stopped operating after only seven months because of damage to a system component.

The PEO reported that restoration works were underway, with operations initially targeted to resume on March 11, 2026.

The available audit response did not establish whether the system had resumed operations by that date.

Meanwhile, the Bongol-Tambal-Quipot FMR with bridges in Janiuay remained operational, but some sections are highly vulnerable to flooding and landslides and need slope protection.

Unliquidated funds, returned grants

COA also flagged unresolved financial obligations involving agricultural enterprise grants.

A fund transfer balance of PHP 104,753.74 to BONFAA for the vermicompost enterprise remained unliquidated, although the project was declared complete in 2019.

The balance stems from PHP 799,000 released to the group in 2017 and 2018.

The province sent a demand letter on March 28, 2023, for PHP 135,609.94. The group agreed to pay but cited financial difficulties for not settling the remainder.

The outstanding balance prevented the formal closure of project books and the submission of the final completion report.

The provincial government said BONFAA made an initial payment of PHP 5,000 in June 2026, with the remaining PHP 99,753.74 scheduled for settlement by September 2026.

COA also reported that PHP 4.837 million in unused national grant funds for earlier I-REAP projects had to be returned to the National Treasury because the projects were not completed within their funding validity periods.

The provincial government was consequently required to use PHP 11.4 million in local funds to complete unfinished facilities.

The provincial government attributed some implementation delays to restrictions during the COVID-19 pandemic and ASF-related biosecurity protocols.