COA RED FLAGS DEAL

OVP bought P94.7M goods from supplies trader

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The Office of the Vice President (OVP) acquired P94.7 million worth of relief goods from a company licensed to engage in the trading of office supplies since 2011, according to state auditors.

“Whenever a calamity occurred, the OVP tapped the services of the supplier by entering into a negotiated contract for the supply and delivery of various essential goods such as noodles, sardines, biscuits among others,” an audit report by the Commission on Audit said.

“Verification of the business/mayor’s permit of one of the top suppliers of the OVP revealed that the authority covered by his permit pertains to supply of non-essential goods instead of essential goods such as canned goods, noodles, among others,” the report further said.

The barangay (village) clearance of the supplier, who/which was not identified in the audit report, showed that he was engaged in the trading of office supplies considered to be non-essential, according to the auditors.


“During the ocular inspection of the business address of the supplier, the only commodities displayed and for sale were office supplies, which is consistent with the business permit issued by the City of Makati.  However, the supplier’s transactions with the OVP were contrary to the business permit when the delivered goods were essential commodities,” they said.

Based on the audit report, the same supplier began transacting business with the OVP “since CY [Calendar Year] 2011 to present” with total transactions of P19,960,925 in 2011, P28,524,091.25 in 2012, P19,732,380 in 2013 and P26,500,000 in 2014 for a total of P94,717,396.25.

“Transactions by the OVP with a supplier without the required business permit to engage in the supply and delivery of essential goods was contrary to Section 4A Article A Chapter IV of the Revised Makati Revenue Code, which was enacted on October 27, 2005 (City Ordinance No. 2004-A-025),” the auditors said.

The auditors explained that a person who desires to engage in more than one kind of business or trade is required to pay the permit fee and license tax imposed on each separate or different business or trade even if he may conduct or operate all such distinct businesses in one establishment only.

“Management [the OVP]admitted that it overlooked the details on the requisite business permit where the authority was for non-essential items only. Further, management reasoned out that despite the non-compliance with the requisite business permit, the supplier met all the purchase orders placed by the OVP,” the audit report stated.

“The premise relied upon by the OVP is contrary to public policy where non-compliance [with]  any regulations issued by any competent authority, in this case the local government of Makati, would constitute an illegal act,” the auditors said.

They then recommended the OVP to discontinue transacting business to supplier(s) without the proper business/mayor’s permit to engage in the supply and delivery of needed goods.

Also, the auditors recommended to the OVP to “[i]nvestigate and hold liable persons responsible for entering into a negotiated contract for the supply and delivery of essential goods without the required business license/mayor’s permit.”

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3 Comments

  1. 94.7 million worth of food supplied by a company that deals in office supplies? I wonder where they stack up those foods?