THE Commission on Audit has ordered the Presidential Commission on Good Government (PCGG) to submit an inventory of all abandoned, surrendered, or recovered shares of stocks in various companies with total value listed at P15.47 billion, as well as 122 pieces of artworks that were found unrecorded in the agency’s books.
In the 2021 audit of the agency released last June 8, government auditors found as unreliable the agency’s reported balance of the “Abandoned/Surrendered Property/Assets account” after they discovered unrecorded stock certificates, inactive investments that should be written off, unreconciled variance between recorded shares and actual inventory, and uncollected dividends due.
The audit said it traced 76 stock certificates (STCs) kept in the PCGG Library and others in the safekeeping of the IRC Group of Companies surrendered by the late businessman Jose Yao Campos equivalent to 772,594,488 shares worth P54.61 million.
The COA likewise recommended the writing off of inactive investments contained in 77 stock certificates or 774,569,298 shares worth P54.13 million on the ground that the issuing companies are no longer operating for many years.
Among these were shares in Landoil Resources Corp which stopped commercial operations in 1984, Earthcore Resources Corporation and Philippine Oil and Geothermal Energy Inc. whose registrations were revoked by the Securities and Exchange Commission (SEC) in 2003, and Marinduque Mining and Industrial Corporation which ceased operations in 1999.
On the other hand, inventory conducted by auditors on December 15, 2020 found discrepancies in the shares of stocks surrendered to the government by former close associates of the late dictator Ferdinand Marcos, father and namesake of President-elect Ferdinand “Bongbong” Marcos Jr.
Per agency books, there were 505,050,826 shares with valuation pegged at P906.05 million.
However, actual inventory of stock certificates witnessed by the audit team showed only 63,885,351 shares, which were valued to be substantially higher at P1.036 billion or a difference of P338.38 million.
“The shares of stocks amounting to P906,048,929.76 recorded in the books as of December 31, 2021 represent investments of the IRC and other shares of stocks of 17 corporations, including those surrendered by various Marcos cronies turned-over to the PCGG through compromise agreements executed as early as 1986,” the COA said.
Government auditors noted that the PCGG have been repeatedly told to reconcile the variance in the number of shares and valuation in its books but the P338.38 million discrepancy “remained unresolved.”
The COA also scolded the PCGG for “laxity in the monitoring and recovery” of dividends due from various surrendered, recovered, and sequestered shares of stocks.
“Out of the 269 surrendered, recovered, sequestered and not sequestered/ surrendered STCs equivalent to 925,496,541 shares, the PCGG only received dividends from 13 STCs or 13,273,060 shares from 1987-2004 and none was received since 2005,” the COA pointed out.
As of December 31, 2021, the audit team said dividends received by the PCGG totaled P1.859 billion covering the years from 1987 to 2004.
It said the unrealized revenues could have gone to the Marcos cronies since the PCGG failed to transfer the ownership of shares in favor of the Republic of the Philippines.
“The titles were not transferred to the government since 1986, hence, any returns for that matter may have been credited to the original registered owners to the disadvantage of the government,” the COA said.
In reaction, the PCGG management said it will “institute appropriate measures to monitor and ensure collection of dividends.”
As an initial step, the PCGG said it will compel sequestered and surrendered corporations to divulge how much dividends should have been due and “make necessary collections if warranted.”
At the same time, it clarified that for corporations with shares still under litigation, the PCGG does not receive dividends unless the courts order that these funds be placed in an escrow account, citing the case of the Eastern Telecommunications Philippines Inc. (ETPI) as an example.
The COA said the Surrendered Assets Group (SurAG) of the Asset Management Department of the PCGG should verify the accuracy of the inventory of 122 pieces of art that have remained off the books of the agency.
It also urged a new appraisal of the collection for proper accounting in the commission’s books.
Among the items found were 34 paintings, 22 lithographs, 18 wood carvings, 13 collage works, 10 jars, and four ceramic potteries.
These were located at the premises of the PCGG, the Independent Realty Corporation, and Bataan Shipyard and Engineering Co. Inc.
In reply, the PCGG said it has made an inventory of the said artworks on July 12, 2019.
It also clarified that ownerships of at least nine paintings are being disputed in court and presently under litigation.
Appraisals of surrendered artworks placed their value at P28.38 million while the sequestered pieces were assigned a price tag of P315,000. Both assessments were made by Salcedo Auctions Inc.
