COA wants DOT billed for over P2M in Duty Free items

MANILA, Philippines —The Commission on Audit said Duty Free Philippines Corp. should bill the Department of Tourism for more than P2 million in merchandise taken out of its stocks.

In its 2017 annual audit report, COA said that the DOT withdrew 277 items of merchandise amounting to US $6,938.35 or P346,446.80 from Duty Free in 2017. These goods were authorized by DOT officials to be delivered to their respective offices and charged to the "trust liability-DOT account."

The P346,000 merchandise withdrawn by the DOT was separate from the US $43,091.13 or P2,174,150.08 goods that were recorded in the books, duly receipted by the Office of the DOT Secretary, which was then held by Wanda Tulfo-Teo.

"The withdrawn merchandise consisted of toiletries, kitchen wares, beddings, appliances, canned goods, branded bags, luxury brand cosmetics, chocolates and others," the audit observations and recommendations of COA read.

The financial audit of the COA also said the 277 items withdrawn under various gate pass slips during the period of May to September 2017 were not recorded in Duty Free's books as of Dec. 31, 2017.

COA said Duty Free understated the receivable account and overstated the merchandise inventory.

COA recommended the management of Duty Free to require the accounting department to record the items withdrawn by the DOT in the company's book of accounts and bill the Tourism department.

State auditors also took note of DOT's expenditures for consultancy fees and expenses for shipment of donations worth P1.6 million and P22,893, respectively. These fees were deducted from the DOT's share in Duty Free's net profits.

 The COA said the deduction is contrary to the provisions of Republic Act No. 9593 or the Tourism Act of 2009.

'Duty Free, consessionaires also flagged for luxurious giveaways'

Meanwhile, the COA also flagged Duty Free and its concessionaires for the withdrawals of merchandise totalling to $125,000 or P6.253 million, and $267,000 or P13.360 million, respectively.

The COA said these were considered not compliant with guidelines for the prevention of disallowance of irregular, unnecessary, excessive, extravagant and unconscionable expenditures.

It cited that the withdrawn merchandise "were used as corporate giveaways, gifts [despite] costing from US$1,600 to US$4,150, which were considered extravagant and unconscionable expenditures."

The items include LED television sets, signatures bags and shoes, inverter refrigerators, coffee machines, kitchen appliances, wines and food items.

The auditors added that they requested the list of recipients for the corporate gifts and corporate giveaways as well as sponsorships for such events as golf tournaments, inaugurations, company anniversaries, family day, club activities and sports fest.

However, they were only given a copy of the list of recipients for advertising and promotions.

The COA's transmittal letter of the annual audit report was received by Duty Free Philippines Corporation Chief Operating Officer Vicente Pelagio Angala on June 19.

Duty Free is a state-owned attached agency of the DOT. It sells tax-free luxury items and is tasked to augment the service facilities for tourists and to generate foreign exchange and revenue for the government as mandated by the Executive Order No. 46, which created the corporation.

Last April, the COA also questioned the P60 payment made by the state-run People’s Television Network to Bitag Media Unlimited Inc. (BMUI) for airing the DOT’s advertisements due to lack of supporting documents.

READ: P60M for DOT ads on Ben Tulfo's show above board, PTV says

The tourism advertisements were carried by  program “Kilos Pronto” run by PTV-4’s blocktimer, BMUI. BMUI is owned by Teo’s brother Ben Tulfo, while the program is co-hosted by Ben, and another brother, Erwin, as well as broadcaster Alex Santos.

Teo resigned early May amid the controversial deal.