executive summary a. introduction...i executive summary a. introduction the national museum was...

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EXECUTIVE SUMMARY

A. Introduction

The National Museum was established in Manila on October 29, 1901 as the

“Insular Museum of Ethnology, National History and Commerce under the

Department of Public Instruction by Virtue of Act No. 284 passed by the Philippine

Commission. It has changed names since then, transferred and merged with other

offices, abolished, recreated and organized until finally being established as an

independent institution under Republic Act (RA) No. 8492.

This RA, entitled “An Act Establishing a National Museum System, Providing

for its Permanent Home and For Other Purposes” and otherwise known as the

“National Museum Act of 1998” was enacted/approved by Congress on February 12,

1998.

As provided in the RA, the whole Executive House Building also known as

the old Congress Building, the Department of Finance (DOF) building and

Department of Tourism (DOT) building on Agrifina Circle shall be the permanent

and exclusive site of the Museum. They shall be known as the National Museum

Complex. Thus, the National Museum was established and by the name “National

Museum” shall be known and have perpetual succession with the power, limitations,

and restrictions specified in the law.

The Department of Tourism building is the subject of a massive retrofitting

project covered by five separate contracts/agreements which commenced in

December, 2013 and still on-going as of this writing at a cost of P1.5 Billion.

Henceforth, it will be named the “National Museum of Natural History (NMNH)”.

Housed in the Old Congress building, the Museum is mandated to preserve

the former Senate Session Hall in the said building as a tribute to the legacy of the

great men and women of the Philippine Senate and their invaluable contributions to

the Filipino people, and as a relic where democracy and freedom reigned and events

of national significance transpired.

The site and land selected for the building for the Museum shall be deemed

appropriated to the Museum, and the record of the description of such site and land,

or a copy thereof, certified by the Chairman and Secretary of the Board of Trustees,

shall be received as evidence in all courts of the extent and boundaries of the land

appropriated to the Museum.

Under Section 2 of the Act, it was declared that the State shall pursue and

support the cultural development of the Filipino people, through the preservation,

enrichment and dynamic evolution of Filipino national culture, based on the principle

of unity in diversity in a climate of free artistic and intellectual expression.

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To implement the foregoing state policy, and to ensure its independence and

autonomy, the present National Museum (Museum for brevity) was converted into a

trust of the government. The Museum was thus detached from the Department of

Education, Culture and Sports and from the National Commission of Culture and the

Arts but was placed instead under the Office of the President. At present, the National

Museum is an attached agency under the Department of Education.

The Museum is envisioned to be a permanent institution in the service of the

community and its development, accessible to the public, and not intended for profit.

It shall obtain, keep, study and present material evidence of man and his environment.

The National Museum shall inform the general public about these activities for the

purpose of study, education and entertainment. Its mission is to acquire documents,

preserve, exhibit, and foster scholarly study and appreciation of works of the art

specimens and cultural and historical artifacts.

The Museum is governed by a Board of Trustees (BOT), composed of seven

representatives representing different stake-holders from the government and private

sectors which include a distinguished Filipino Artist, a Scientist, and Historian, as

regular members, with the Chairmen of the Senate and House Committees on

Education, National Commission on Culture and Arts (NCCA), and the Director of

the National Museum, as ex-officio members. The BOT is composed of the following

Trustees:

Name Position Remarks

1. Mr. Ramon R. del Rosario, Jr. Chairman Effective March 18, 2011

2. Senator Pia S. Cayetano Trustee:

3. Rep. Kimi Cojuangco Trustee:

4. Mr. Jeremy R. Barns Trustee- Ex-Officio

5. Mr. Felipe de Leon, Jr. Trustee- Ex-Officio

6. Ms. Marinella K. Fabella Trustee Effective March 18, 2011 to expire

March 24, 2014

7. Ms. Felice P. Sta. Maria Trustee Effective March 18, 2011 to March

24, 2012; and May 3, 2012 to

March 24, 2014 (2 terms)

8. Ms. Maria Isabel G. Ongpin Trustee Effective March 18, 2011 to March

24, 2012; and May 3, 2012 to


9. Mr. Augusto F. Villalon Trustee Effective May 3, 2012 to March 24,

2013; and October 8, 2014 to March

24, 2017 (2 terms)

10. Mr. Fernando Zobel de Ayala Trustee Effective May 3, 2012 to March 24,

2014; and October 8, 2014 to March

24, 2018 (2 terms)

11. Mr. Rene Pio S. Javellana Trustee Effective March 18, 2011 to March

24, 2014; and October 8, 2014 to


12. Mr. Benito S. Vergara Trustee Effective March 18, 2011 to March

24, 2014; and October 8, 2014 to


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Three of the BOT members whose terms expired in March of 2014 were no

longer re-appointed. The appointments of Mesdames Maria Isabel G. Ongpin, Felice

P. Sta. Maria and Marinela K. Fabella expired in March, 2014. One Trustee, Dr.

Benito S. Vergara died on October 24, 2015. To date, there were no replacements for

the aforementioned vacancies in the Board of Trustees. The Board is currently

chaired by Mr. Ramon R. del Rosario, Jr.

The management team in 2015 is still headed by Director Jeremy R. Barns as

the Chief Executive Officer, and he is assisted by two Assistant Directors namely:

Ana Maria Theresa P. Labrador and Angel P. Bautista, for Administration and

Operations, respectively and a Chief of Division for each of the 12 areas of discipline

as follows:

Division/Department Name of Chief of the Division

1. Anthropology Ms. Marites P. Tauro 2. Archaeology Mr. Mary Loiuse Bologna 3. Arts Ms. Ana Maria Teresa P. Labrador 4. Geology Mr. Roberto S.P. de Ocampo 5. Museum Education Ms. Elenita D.V. Alba 6. Cultural Properties Ms. Angel Bautista 7. Planetarium Ms. Maria Belen Pabunan 8. Zoology Mr. Marivin Santos 9. Botany Mr. Luisito Evangelista 10. Restoration and Engineering AR. Arnulfo F. Dado 11. Chemistry and Conservation Engr. Jainab Aimee T. Atillero

12. Archaeological Sites and Branch Museums Mr. Dionisio O. Pangilinan

13. Finance and Administration Mr. Linricon A. Absuelo

The Archaeological Sites and Branch Museums have 19 branches and sites

nationwide. The Finance and Administrative Department (FAD) provide support

services to its personnel and other administrative functions.

The Museum has 313 plantilla of positions with filled up manpower

complement of 264 officials and employees for Calendar Year (CY) 2015 composed

of 254 permanent employees, two with co-terminus positions, seven on temporary

status and one on appeal with the Civil Service Commission. The employees’

distribution is shown below:

Division/Office Permanent Co-terminus/

Temporary Total

Director’s Office 3 2 (CT) 5

Finance and Administrative 39 39

Zoology 14 1 (temp.) 15

Botany 10 1 (temp.) 11

Geology 9 9

Anthropology 16 1 (temp.) 17

Archaeology 35 3 (temp.) 38

Museum Education 15 1 (on appeal at CSC 16

Planetarium 7 7

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Division/Office Permanent Co-terminus/

Temporary Total

Arts 4 4

Cultural Properties 12 12

Restoration and Engineering 20 20

Archaeological Sites and Branch Museum 60 1 (temp.) 61

Chemistry and Conservation Laboratory 10 10

TOTAL 254 10 264

B. Operational Highlights

For the year 2015, the National Museum reported the following

accomplishments under each Program/Activity/Project (P/A/P):

Major Programs / Projects UACS

Code Targets

Accomplish-

ments Variance

Part A

I. Operations MFO - 1 Museum Displays and

Educational Services 301010000

Performance Indicator (Set 1) QUANTITY:

Number of visitors to the museums

under management

550,000 976,446 +426,446 Number of persons serviced

through training and workshop

days

5,500 9,957 +4,457 QUALITY:

% of visitors who rate museums as

good or better

76.00% 100.00% +24.00%

% of training and workshop

attendees who rate the

presentations of museum staff as

good or better

76.00% 76.00% -

TIMELINESS:

Average % of year for which

museums are open to the public

during normal business hours

75.00% 75.00% -

% of training programs conducted

according to schedule

75.00% 75.00% -

MFO 2 - Cultural properties protection

and preservation services

302010000

Performance Indicator (Set 2)

QUANTITY:

Number of cultural properties

under protection and preservation

15 57 +42

QUALITY:

% of protected and preserved

properties open for public viewing

100.00% 100% -

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Major Programs / Projects UACS

Code Targets

Accomplish-

ments Variance

% of visitors who rate the quality

of preservation as good or better

76.00% 76.00% -

TIMELINESS:


protected and preserved properties

are

75.00% 75.00% -

Part B

Tourism Development Plan

KRA No. 3 - Rapid, Inclusive and Sustained

Economic Growth

Program Budgeting

MFO - 1 Museum Displays and Education

Services

301010000


QUANTITY:

Number of visitors to the museums

under management

550,000 976,446 +426,446

Number of persons serviced

through training and workshop

days

5,500 9,957 +4,457

QUALITY:

% of visitors who rate museums as

good or better

76.00% 76.00% -

% of training and workshop

attendees who rate the

presentations of museum staff as

good or better

75.00% 75.00% -

TIMELINESS:




75.00% 75.00% -

% of training programs conducted

according to schedule

75.00% 75.00% -

MFO 2 - Cultural properties protection

and preservation services

302010000


QUANTITY:

Number of cultural properties

under protection and preservation

15 57 +42

QUALITY:

% of protected and preserved

properties open for public viewing

100.00% 100.00% -

% of visitors who rate the quality

of preservation as good or better

76.00% 76.00% -

TIMELINESS:




75.00% 75.00% -

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C. Financial Highlights

The National Museum is a trust of the government, and is placed solely for

budgetary purposes under the Department of Education, pursuant to Executive Order

No. 610 issued on March 13, 2007.

For CY 2015, the NM has total appropriations of P1,969,701,185.85 which

includes the regular budget of P1,652,793,000.00, automatic appropriations of

P7,091,000.00 and special purpose funds of P10,658,680.00 as provided for in the

General Appropriations Act (GAA) for Fiscal Year (FY) 2015 otherwise known as

Republic Act (RA) No. 10651, and Prior Year’s Continuing Appropriation of

P299,158,505.85. Total obligations incurred during the year amounted to

P1,131,708,410.05, leaving an unobligated balance of P837,992,775.80 as at year-end.

Of the total cash allocations received of P2,450,963,136.00, total

disbursements of P788,809,044.56 were incurred leaving an unexpended cash balance

of P1,662,154,091.44 as at year-end. Details of the distribution of sources and

application of funds are shown as follows:

Appropriations, Obligations Incurred and Unobligated Balances:

Sources of Funds Appropriations Obligations Unobligated

Balance Current Year’s Appropriation

Personal Services 83,468,750.00 83,358,745.65 110,004.35 MOOE 190,824,250.00 76,658,187.92 114,166,062.08 Capital Outlay 1,378,500,000.00 713,551,638.67 664,948,361.33

Sub-total 1,652,793,000.00 873,568,572.24 779,224,427.76 Automatic Appropriations

Retirement & Life

Insurance Premium 7,091,000.00 7,064,182.66 26,817,34

Special Purpose Funds 10,658,680.00 10,392,363.06 266,316.94 Continuing Appropriations 299,158,505.85 240,683,292.09 58,475,213.76

Total 1,969,701,185.85 1,131,708,410.05 837,992,775.80

NCAs Received, Utilized and Unexpended:

Sources of Funds Cash Allocations Disbursements Unutilized Cash

Allocations

Current Year’s Appropriation

Personal Services 101,122,054.86 101,025,679.72 96,375.14

MOOE 264,845,000.00 106,131,327.92 158,713,672.08

Capital Outlay 2,084,899,706.00 581,555,661.78 1,503,344,044.22

Total 2,450,866,760.86 788,712,669.42 1,662,154,091.44

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The financial highlights of the Museum for CYs 2014 to 2015 are as follows:

Financial Position:

Particulars 2015 2014

Assets 3,515,031,459.69 2,863,492,867.26

Liabilities 179,661,776.82 201,006,823.79

Accumulated Surplus (Deficit) 3,335,369,682.87 2,662,486,043.47

Sources and Application of Funds:

Particulars 2015 2014

Sources:

Net Subsidy Income From National

Government

834,349,610.90 482,842,675.71

Revenue from Regular NM Operation 11,491,116.87 10,057,064.71

Miscellaneous Income/Other Gains 1,378,580.00 1,286,229.60

Total 847,219,307.77 494,185,970.02

Application of Funds:

Personal Services 101,122,054.86 100,035,228.69

MOOE 106,130,607.92 104,901,433.14

Financial Expenses-Bank charges 720.00 1,300.00

Non-Cash Expenses 10,024,225.48 7,018,823.65

Capital Outlay

Total 217,277,608.26 211,956,785.48

Excess of Income Over Expenses 629,941,699.51 282,229,184.54

D. Scope of Audit

The audit covered the accounts and operations of the National Museum for the

year-ended December 31, 2015. The audit was conducted to: (a) verify the level of

assurance that may be placed on management’s assertions on the financial statements;

(b) recommend agency improvement opportunities; and (c) determine the extent of

implementations of prior years’ audit recommendations.

E. Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of National Museum for the year ended December 31, 2015 due

to effects of the noted deficiencies on the unrecorded and unaccounted Museum

Endowment Fund (MEF), unreliable presentation of the Property, Plant and

Equipment (PPE) and Liability accounts, as discussed in detail in Part II of the report.

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F. Significant Audit Observations and Recommendations

Presented hereunder are the significant observations and recommendation in

the audit of the National Museum for the year 2015, details of which are discussed in

Part II of this report:

1. Out of the P3.026 billion allotted for capital expenditures, P2.2 billion of which

was utilized for the restoration of the National Museum (NM) facilities and

museum branches which were not substantially provided with valid documents to

establish the extent of the damage of the cultural property that will serve as a

guide to accomplish effective and efficient implementation of the restoration and

retrofitting activities, thus, there was no assurance of achieving the purpose of

preserving the properties into its original form/status and preventing therefrom

further deterioration. The deficiencies noted were: a) absence of preliminary

technical investigation/evaluation reports and feasibility studies and duly

approved over-all plans of the projects; b) lack of the required project monitoring

reports provided by technical personnel/experts assigned to monitor and supervise

the projects’ compliance with the approved agency program of works (POW);

c) lack of official records and/or turn-over documents to determine the actual

ownership of the facilities subject of restorations/renovations; and d) lack of

approval from the National Commission for Culture and the Arts (NCCA) on the

methods and materials used for the restorations to adhere to international

standards of conservation. (Observation No. 1)

We recommended that the NM Management:

a. properly coordinate with the appropriate agencies such as the NCCA and

the DPWH prior to the actual implementation of the projects;

b. see to it that the NM Projects shall be implemented only in accordance

with the appropriate standards and specifications for planning, survey,

design and construction of the project as prescribed by the DPWH;

c. secure the technical services of DPWH, the engineering arm of the

government, to assist/provide services for evaluation of compliance with

the technical requirements in the implementation of the NM projects;

d. equip the agency with a licensed civil engineer (structural) position to be

assigned at the Restoration and Engineering Division (RED) who will

handle NM projects; and

e. require the Chief of RED to submit the following:

preliminary/technical investigation/evaluation reports and feasibility

studies together with the approved over-all plan of the project that

will determine/guide the management the extent and the necessity of

the restoration/retrofitting activities of the identified Museum

properties and that will determine the reasonableness of the projects;

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copies of NM Board Resolutions (BRs) on the approval of the

contracts covering the identified projects being implemented by the

NM;

monitoring reports from technical personnel that will identify

compliance with the provisions set by the DPWH and the NCCA; and

official records and/or turn-over documents that will determine the

actual ownership of the assets that are subjects of restoration/

renovation.

2. The on-going conversion of the DOT Building into a National Museum of Natural

History (NMNH) and its restoration activities since 2013 has been implemented

in the absence of prior approvals from the National Commission for Culture and

the Arts (NCCA) and from the National Historical Commission of the Philippines

(NHCP) as provided under Sections 18 and 25 of RA No. 10066; non-registration

to declare it as an Important Cultural Property to conform with Section 17 of same

RA; and the absence of the duly approved information on the over-all plan of the

entire building and its updated cost/details and the preliminary technical

evaluation reports that will determine the reasonableness of the P1.5 billion total

restoration cost of the project. (Observation No. 2)

We recommended that the NM Management initiate compliance with the

provisions of RA No. 10066 and solicit assistance and proper coordination

with the NCCA, NHCP and such other cultural agencies that are responsible

for conservation and protection of the identified heritage assets on a holistic

manner, as follows:

a. secure the necessary permit/authority on the DOT restoration activities,

any modifications and/or changes that will destroy the property’s

authenticity and dignity, and on the re-naming of the DOT Building into

NMNH, to comply with the requirements of Sections 17, 18 and 25 of RA

10066;

b. see to it that all declared cultural properties and their restoration/

conversion be approved by the NM Board of Trustees pursuant to

Sections 8 and 11, RA No. 8492 and Section 5(t) of RA No. 9184; and

c. institute linkage with the DPWH being responsible in undertaking major

infrastructure projects specifically in the planning, design, construction,

and maintenance thereof that would impact on heritage structures or

aspects of heritage conservation as provided under Sections 34 and 35,

RA No. 10066.

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Also, to determine the necessity, legality and the reasonableness of the

implementation of the P1.5 billion DOT project cost, we recommended the

submission of the:

a. required preliminary evaluation/analysis and technical evaluation reports

and the status of accomplishments of the DOT restoration project since

CY 2013;

b. complete detailed breakdown of estimates of quantities for each project

(with unit cost analysis/derivation for each work item expressed in

volume/area/lump sum/lot of the P1.5 billion DOT project, including the

additional P200.0 million;

c. records/list of technical personnel responsible/involved in the planning,

design, actual construction and supervision as well as the required

monitoring reports and the status of accomplishment of the DOT

restoration project since CY 2013 and technical personnel involved in the

monitoring and supervision in the actual implementation of the project;

and

d. authority of the Executive Director from the NM Board of Trustees to

sign the five contracts in behalf of the NM BOT.

3. The failure of the NM and the Philippine National Museum Foundation, Inc.

(PNMFI) to account the donations received by the PNMFI from third party

benefactors which were acknowledged by five resolutions issued by the NM

Board of Trustees and the donated technical services provided by private

contractors (e.g. DCCD, Galicia Architects, etc.) violates Section 63, Chapter 3 of

PD No. 1445 that requires the accounting for moneys and properties received by

public officials. These unaccounted donations could have been recognized and

capitalized as additional costs of the DOT project, in addition to the P1.5 billion

originally released by the National Government from CYs 2013 to 2015.

(Observation No. 3)


a. require the NM BOT to comply with Section 63, Chapter 3 of PD

No. 1445 with the end in view at accounting for all the moneys and

properties received from the PNMFI;

b. determine the total value of all donations received by PNMFI in

behalf of the NM for the NMNH Project and make the necessary

accounting entries to recognize and fully account for the added costs

to the project;

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c. submit all sponsorship contracts by third party benefactors and the

contracts of PNMFI with technical service contractors in the

implementation of the project by the following:

Technical Service Contractors Provided

by PNMFI

Sponsorship Contracts

From Third Party Benefactors

Dominic Galicia Ayala Group

DCCD Engineering Corporation

Ove Arup & Partners Hong Kong

(Philippines) Branch)

Hyundai

Pilipinas Shell

Cultural Solutions

Trans Asia Construction Development

Corporation

Periquet Galicia, Inc.

PNS Advanced Steel Technology, Inc.

Green Rating System Accreditation

MP Elevators

4. The hiring by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA)

of Lourel Design and Construction for P19.9 million and the consequent

assignment by the National Museum of Art Conservators (NMAC), all for the

purpose of restoring and preserving in accordance with international standards of

conservation and restoration, the ten-panel Botong Mural owned by the City of

Manila, cast doubts on the integrity of fulfilling the objective of the restoration

project due to the following deficiencies:

a) absence of a written agreement between the LGU of Manila and NM

Management, as well as necessary clearance on the transfer of the Mural from

the Manila City Hall to the NM Gallery in CY 2013;

b) failure to submit the necessary preliminary technical evaluation report and

other proper documentation for review and validation that will

identify/validate the appropriateness and the necessity of the restoration of the

mural;

c) actual conservation/restoration works of Lourel, a licensed general

construction contractor, was supervised by the NMAC from the Chemistry

and Laboratory Division, who were identified to be part of Lourel’s

workforce; and

d) suspension of the restoration and conservation works that remained/kept in the

restricted area at the NM Gallery since April 30, 2014. (Observation No. 4)


a. take the lead in taking necessary measures to prevent further

damage to the Botong Mural, which might incur further costs on

the part of the government. This includes the following:

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assess the physical condition of the Botong Mural that was

abandoned, left unattended and stored inside the NM Gallery

based on the monitoring report by NMAC for CYs 2013 and

2014;

secure copy of NM declaration that the Mural was declared as

“National Cultural Property” pursuant to PD No. 374, thus,

the restoration of such property is under the mandate of the

NM, as primary responsible for this project;

coordinate with City of Manila and TIEZA to investigate what

caused the suspension of the restoration works that resulted in

the abandonment of the Mural inside the NM Gallery since

April 30, 2014;

b. take the necessary action and/or investigation for the possible

double compensation and conflict of interest, and to initiate

appropriate proceedings of the NM Management and personnel

involved in the Botong restoration project;

c. submit copies of the following:

Terms of Reference (TOR) on the agreement between the NM and

Lourel for a period of one year starting May 2013 up to April 2014;

Board Resolutions issued by the NM BOT authorizing the NM

Executive Director to enter into contract with Lourel;

Monitoring Reports on the restoration activities since the transfer on

January 29, 2013 until the conservation activities was suspended on

April 30, 2014;

contract and/or agreement between the LGU of Manila and the NM

Management including the necessary clearance and proper

documentation on the restoration and transfer of the mural from the

city hall to the NM Gallery duly approved by the Sangguniang

Panglungsod of Manila;

specific authority of the NM personnel to be involved in the

restoration project and to access the restricted work area; and

other records and/or documents that will identify NM officials/

personnel involved in the restoration project.

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G. Status of Suspensions, Disallowances and Charges

Audit suspensions, disallowances and charges totaling P119,682,584.07,

P1,818,118.91 and P66,750.00, respectively, remained unsettled at the end of year

2015.

H. Implementation of Prior Years’ Audit Recommendations

The status of implementation of Prior Years’ Audit Recommendations is

summarized in the table below, the details of which is shown in Part III of this report.

Status of Implementation No. of

Recommendations Percentage (%)

Fully Implemented - -

Partially Implemented 5 36 Not Implemented 9 64

Total 14 100

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