EXECUTIVE SUMMARY

Introduction

The Philippine Institute of Traditional and Alternative Health Care (PITAHC) was created
under Republic Act (RA) 8423 otherwise known as the Traditional and Alternative Medicine
Act (TAMA) of 1997 authored by Senator Juan Flavier and approved on December 9, 1997.
It became a turning point in the history of the Philippine Traditional Medicine that the herbal
plants became a priority. Henceforth, the ten priority plants namely: Lagundi, Ulasimang
Bato, Bayabas, Bawang, Yerba Buena, Sambong, Ampalaya, Niyug-niyogan, Tsaang-gubat
and Akapulko are now being promoted.

The PITAHC is a government owned and controlled corporation attached to the Department
of Health (DOH). Its mission is to uphold the right of every Filipino for better health through
the provision of safe, effective and affordable traditional and alternative health care
products, services and technologies.

At present, the PITAHC has four commercial scale plants as follows:

1. The Cotabato Herbal Pharmaceuticals Processing Manufacturing and Research

Plant (CHPPMRP) located at the compound of Cotabato Regional and Medical
Center (CRMC), Sinsuat Avenue, Cotabato City, is the first commercial scale
government facility established for the production of medicinal plants in dosage
forms. The Plant was inaugurated on November 15, 1988 by President Corazon C.
Aquino. The CHPPMRP facility consists of buildings, machineries and equipment for
drying and processing raw materials, dosage manufacturing, quality control and
animal pharmacological studies. At present, the Plant has the capacity to produce
15,000 pieces of soap per month such as Bayabas Soap, Carrot Soap, Akapulko
Soap, Labanos Soap, and Papaya Soap.

2. The Davao Herbal Research and Processing Plant (DHRPP) is located inside the
DOH compound in Bajada, Davao City. The Plant became operational in March
1983 and has a plant capacity to produce one million Sambong Tablet (250 gms.)
and Tsaang Gubat per month.

3. The Tacloban Herbal Pharmaceutical Processing and Manufacturing Plant

(THPPMP) opened in July 1989 in Barangay Bagacay, Tacloban City. The Plant has
a land area of 22 hectares, 11 of which are planted with first batch of the five priority
plants to supply the Plant with raw materials specifically sambong and lagundi plants.
The land was donated to PITAHC by DOH on August 7, 2003. Its present plant
capacity is 2.7 million Sambong Tablets (250 mg.) and Lagundi Tablets (300 mg.)
per month.

4. The Cagayan Valley Herbal Processing Plant (CVHPP) located in a 1.6 hectare lot
owned by the Plant at Carig, Tuguegarao City, was opened in July 1991. At present,
CVHPP is capable of manufacturing about 2.4 million Lagundi tablets per month.

On September 13, 2012, the Governance Commission for Government Owned and/or
Controlled Corporations (GCG) issued Memorandum Order No. 2012-10 classifying the
PITAHC as a research institution with the primary purpose and objective of gathering

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information for the education of all people for the specific field of traditional and alternative
health care.

The Institute has a total manpower of 78 filled positions, distributed as follows:

PITAHC – Head Office 27

Cagayan Valley Herbal Processing Plant (CVHPP) 18
Cotabato Herbal Pharmaceuticals Processing Manufacturing
And Research Plant (CHPPMRP) 6
Davao Herbal Research and Processing Plant (DHRPP) 14
Tacloban Herbal Pharmaceutical Processing and Manufacturing
Plant (THPPMP) 13
Total 78

PITAHC is managed by a Board of Trustees, composed of the following members as of

December 31, 2016:

Board of Trustees:

Chairman

Dr. Paulyn Jean B. Rosell-Ubial - Secretary of the Department of Health

Members:

Dr. Jaime C. Montoya - Department of Science and Technology

Dr. Vivencio R. Mamaril
Dr. Ella Cecilia Naliponguit
Dr. Leonida S. Calagui
Dr. Theresa Mundita S. Lim
Dr. Angel C. Alcala
Ms. Bernadette E. Arellano
Dr. Martin DG. Camara
Dr. Fabian M. Dayrit
Dr. Warren David Sarmiento
Dr. Francis Vicente S. Ras
- Department of Agriculture
- Department of Education
- Director IV, NCR - Commission on Higher Education
- Department of Environment and Natural Resources
- representative of environmental sector organization
- representative of natural/organic food industry sector
- physician, practitioner of traditional and alternative
health care
- representative of academe and research institution
sector
- President, Sta. Lucia Health Care Center
Allopathic/Western Medical Practitioner
- OIC, Director General

The Institute’s Central Office is located at PITAHC Building, East Avenue Medical Center
Compound, Matapang St., Barangay Central, Quezon City.

Financial Highlights

2015 Increase
Particulars 2016
(As Restated) (Decrease)
Assets P 366,276,230 P 372,193,010 P (5,916,780)
Liabilities 23,486,334 30,359,863 (6,873,529)
Equity P 342,789,896 P 341,833,147 P 956,749

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Sources of Revenue:

2016
Particulars 2015
Amount Per cent
Subsidy from National Government P 55,646,000 63.18 P 50,000,000
Sales (net) 26,496,211 30.08 44,257,936
Service and Business Income 5,909,653 6.71 0
Gains on Sale of Property, Plant and 24,000 0.03 0
Equipment
Other Income 0 0 6,880,318
Total 88,075,864 100.00 101,138,254

Expenses:

2016
Particulars 2015
Amount Per cent
Personal Services P 54,887,451 48.41 P 51,184,937
Maintenance and Other Operating Expenses 28,843,945 25.44 28,298,235
Direct Costs 21,486,254 18.95 30,922,972
Financial Expenses 64,249 0.06 10,386
Non-Cash Expenses 8,097,889 7.14 6,033,963
Total P 113,379,788 100.00 P 85,527,521

2016 Approved Corporate Operating Budget (COB) vs. Actual Expenditures:

Actual
Particulars Per COB Variance
Expenditures
Personal Services P 70,482,000 P 54,887,451 P 15,594,549
Maintenance and Other Operating Expenses 93,432,000 28,843,945 64,588,055
Capital Outlay 23,264,000 3,557,541 19,706,459
Total P 187,178,000 P 87,288,937 P 99,889,063

SCOPE OF AUDIT

The audit covered the examination, on a test basis, of the accounts, transactions and
operations of PITAHC for CY 2016 in accordance with Philippine Public Sector Standards
on Auditing (PPSSA). It was also aimed at expressing an opinion on the fairness of
presentation of PITAHC’s financial position, results of operations and cash flows in
accordance with PPSSA and at determining its compliance with laws, rules and regulations.

STATE AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS

The Auditor rendered an unmodified opinion on the fairness of the presentation of the
financial statements of the PITAHC for the year 2016.

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SUMMARY OF SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

Below is the summary of the significant audit findings and recommendations for CY 2016
details of which are discussed in Part II of the Report.

1. The balance of Plant and Equipment (PPE) in the total amount of P51.914 million, could
not be relied due to non-submission of physical inventory report and non-maintenance of
Property Cards (PCs) for each class of PPE.
We recommended that Management:

a. Conduct the annual physical count/inventory-taking and submit the Inventory Report
and comply with the provisions of COA Circular No. 80-124; and

b. Prepare and maintain the Property Cards for each class or category of property as
prescribed in Sections 43 of MNGAS Volume I to facilitate reconciliation of the
recorded PPE balances at the Finance Division.

2. The balance of accrued liabilities amounting to P3.871 million consisted of accounts

payable that remained outstanding and unclaimed by creditors for two (2) years and
more which is not in conformity with the prescribed rules and procedures under COA-
DBM Joint Circular No. 99-6.

We recommended that Management review and analyze the recorded payable accounts
and revert all accounts payable outstanding for two years or more to CROU pursuant to
the rules and procedures provided under COA-DBM Joint Circular No. 99-6.

SUMMARY OF TOTAL SUSPENSIONS, DISALLOWANCES AND CHARGES

As of December 31, 2016 PITAHC has an unsettled disallowance in the amount of P2.176
million under Notice of Disallowance (ND) No. 2009-001 dated January 5, 2009 representing
claim for Cost of Living Allowance (COLA) back pay.

STATUS OF IMPLEMENTATION OF PRIOR YEAR’S RECOMMENDATIONS

Of the 43 audit recommendations embodied in the previous year’s Annual Audit Report, 24
were fully implemented, 15 were partially implemented and four were not implemented.

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