PITC violates gov’t auditing code by keeping P1-B interest income

Senate Minority Leader Franklin M. Drilon said that small state trading firm Philippine International Trading Center (PITC) short-changed the government by a staggering amount of P1 billion in interest income that it should have remitted to the national coffers pursuant to Presidential Decree No. 1445 or the Government Auditing Code of the Philippines.

Drilon, who exposed the parked P33 billion in PITC’s bank accounts, explained that the PITC’s earnings from interest income on fund transfers from various source agencies for the period 2016 to 2019 reached P1,406,727,544.

However, only 28 percent of which or P392,575,316, were remitted to the government covering the same period, Drilon pointed out, “which is a clear violation of Section 65 of PD 1445.”

“Pursuant to Section 65 of Presidential Decree No. 1445, or the Government Auditing Code of the Philippines, all interest earning of the fund transfers must be remitted to the national treasury,” Drilon said, adding: “But PITC, out of sheer greed or negligence, is holding on to the huge sum of public funds that could be used by the government for more urgent needs such as Covid-19 and calamity response,” said the former executive and justice secretary.”

Citing the Commission on Audit (COA) findings, Drilon said interest earnings on fund transfers from various source agencies invested in Money Market Placement were recorded as income of PITC, instead of remitting the same to the National Treasury which is not in accordance with Section 65 of Presidential Decree (PD) No. 1445 and Department of Finance (DOF) Circular No. 01-2017.

“It’s a devious scheme. They remit funds to make it appear they are compliant but, in reality, what they remit is ‘loose change’ compared to the amount that they are holding back from the government,” Drilon said.

“To me, PITC is acting more like a network marketing and a money remittance agency ‘taking’ money from across the bureaucracy rather than a trading corporation, which is its primary mandate,” Drilon added.

“Niloloko tayo at niluluto tayo sa sarili nating mantika. Barya-barya lang po ang ibinabalik sa gobyerno kumpara sa nakokolekta nilang bilyun-bilyong piso,” he added.

Drilon said another scheme being committed by PITC is recording its interest earnings as its own corporate income, which the senator called “illegal, not to mention disadvantageous to the national coffers, that should be stopped.”

“PITC’s charter is very clear- it may invest its own corporate funds. But these are not PITC corporation funds, these are deposits from source agencies, transferred to it for a very specific purpose – for the sole purpose of purchasing various products authorized under the appropriations law,” Drilon said.

COA also categorically stated that “these funds are only held in trust therefore, any benefit derived therefrom (i.e. interest from money market placements and investments) technically accrues to the fund owners”, he noted.

“This is not the money of the PITC but of the different agencies. PITC does not have the authority or right nor the power to retain any portion of the interest income,” Drilon stressed.

As of December 2019, the PITC’s consumer deposits, held in various trusts and money market instruments, as reported by COA, have reached over P33 billion.