CoA flags P187 billion surplus overstatement by Philippine National Railways

The Commission on Audit found that the Philippine National Railways overstated its revaluation surplus by P186.98 billion in 2025. Auditors could not verify billions of pesos worth of land and equipment, and issued an adverse opinion on PNR's financial statements for 2024 and 2025.

The Commission on Audit (CoA) has found that the Philippine National Railways (PNR) overstated its revaluation surplus by P186.98 billion in 2025, while auditors could not verify billions of pesos worth of land and equipment. The CoA issued an adverse opinion on PNR's financial statements for the years ended 31 Dec 2025 and 2024.

“The revaluation surplus account with balances of P186.98 billion and P43.38 billion as of Dec. 31, 2025 and 2024, respectively, was overstated, and accumulated surplus/(deficit) was understated both by P186.98 billion,” the CoA said. Auditors also found discrepancies involving 10.61 million square metres of land valued at P64.76 billion between PNR's recorded balances and its summary of PNR real estate properties. The CoA said it could not verify the land's existence, completeness and valuation through alternative audit procedures.

PNR recognised appraised land values as revaluation surplus instead of deemed costs, which auditors said should have been used because reliable historical acquisition costs were unavailable. The agency also failed to remove P544.34 million worth of sold or donated land from its books. At least 133 land titles covering 9.78 million square metres were not in PNR's custody, while another 1.99 million square metres of titled land with undetermined value was not recorded.

The audit found P13.13 billion worth of missing, nonexistent or unserviceable property, plant and equipment (PPE), excluding land and construction in progress. The account had carrying values of P13.51 billion in 2025 and P13.6 billion in 2024. Auditors also identified PPE items with negative balances totalling P4.387 billion because of excessive accumulated depreciation. Correcting the depreciation would have increased the PPE balance by P3.496 billion. PNR had another P175.49 million worth of assets at its stations that were not recorded in its books.

The audit also questioned P329.72 million in construction-in-progress (CIP) balances because PNR lacked supporting documents. The account totalled P3.44 billion as of 31 Dec 2025. “Due to lack of supporting documents, we were unable to determine the appropriate adjustments in respect of the balance of the CIP account as at reporting dates,” the CoA said.

Auditors recommended that PNR establish an updated central registry of land assets, reconcile property records, investigate missing equipment and obtain supporting documents for questionable construction expenses. They also directed PNR to prepare a PPE policy in accordance with International Public Sector Accounting Standards 17 and reclassify the P187-billion revaluation surplus balance to accumulated surplus/(deficit). PNR still had P73.5 million in audit disallowances, P139.26 million in audit charges and P58,727 in audit suspensions unsettled as of 31 Dec 2025.