THE Bukidnon Forests Inc. (BFI), intended as a government model for sustainable use of forest resources, has been operating with an expired permit since December 23, 2016, has accumulated a deficit of P370.95 million, failed to pay taxes, and been abandoned by its employees for non-payment of salaries.
In the 2019 audit of the BFI released last July 3, government auditors raised questions on the “capability and sustainability for its continued existence and operation,” noting the government-owned or controlled corporation (GOCC) has seen uninterrupted losses and lacks any plan for recovery.
BFI was granted lease over 38,848 hectares of forest land by the Department of Environment and Natural Resources (DENR) under an Industrial Forest Plantation Management Agreement (IFPMA) on December 23, 1991 effective for 25 years.
The leased area sprawled over the municipalities of Malaybalay, Impasugong, Manolo Fortich, and Malitbog in the province Bukidnon.
Under the 1991 agreement, the lease was supposed to be “automatically renewable for another 25 years,” requiring only that an application for renewal be filed with the DENR six months before expiration.
While the application was filed with the DENR Region 10 to be forwarded to the DENR Central Office, the lease renewal never came.
An investigation commenced by the designated officer-in-charge of BFI in November 2019 revealed DENR Region 10 failed to give back the copy of the application document stamped “received” by the DENR Central Office. Where the foul up happened was never established.
The audit team pinned the blame on the inaction of the management of the BFI
“The agency continued its operations in the leased areas despite the expiration. The management of BFI failed to monitor the whereabouts of the IFPMA and instead just went on with its operation,” it said.
Compounding the expired permit issue was the GOCC’s failure to stop recurring losses even as it continued to pay the salaries and benefits of officials and employees in the main office while workers in the revenue earning operations have already left due to non-payment of their wages.
“As of December 31, 2019, it has reported an accumulated deficit of P370,947,420.88. In addition, salaries/wages of the employees assigned in the main office contributed a large portion of the Agency’s expenses. For CY 2018 and 2019, the salaries/wages and rental expenses comprised the 72 percent and 64 percent of the total expenses, respectively,” the Commission on Audit said.
Due to the financial problems, the BFI has also failed to remit value-added tax (VAT) to the Bureau of Internal Revenue since 2017. As of December 2019, the unpaid taxes amounted to P15.46 million.
“Inquiry with the accounting (department) disclosed that management opted to prioritize the payment of salaries and wages of its employees/workers due to the limited funds of the BFI. Agency was not able to remit the Output VAT charged in its sales of timber and logs,” the COA said.
However, from 2016 to 2019, the audit team noted that “most personnel of the agency have not been reporting” due to the fact that wages are not paid regularly.
Management appointed disbursing officers to draw cash advances in 2018 and 2019 to facilitate payment of compensation to remaining workers. The patch-up job only dug a deeper hole for the GOCC.