Metro Manila (CNN Philippines, February 5) — The Department of Information and Communications Technology (DICT) denied misusing the agency's confidential and intelligence fund as flagged by state auditors, saying the money was 'legally used' to boost cyber security.

In a statement issued Wednesday — three days after the issue came to light following Undersecretary Eliseo Rio, Jr.'s decision to resign from his post — the agency said the ₱300 million cash advance from the special lump-sum fund was "legitimately used."

A copy of a memorandum from the Commission on Audit (COA) obtained by CNN Philippines showed that the amount was released in three tranches worth ₱100 million each on in a span of six weeks from November to December last year as "cash advance for confidential expenses in connection with cybersecurity activities" for Secretary Gringo Honasan.

The department received ₱400 million earmarked for "confidential, intelligence and extraordinary expenses" in 2019 — an amount which Honasan supposedly included to the agency's budget when he was still a senator, Rio said — which doubled to ₱800 million this year, data from the Department of Budget and Management (DBM) showed.

DICT said the money was used to boost defenses against cyber threats, which have rose "at an alarming rate," it added. Citing data from private security firm Kaspersky, the Philippines is said to be the seventh most attacked by cyber threats online.

"This increasing problem in cybersecurity needs to be addressed immediately and effectively. To do this, the expenditure of the funds, allocated as it was by Congress for that purpose, was both necessary and indispensable," the DICT said.

Among the reasons Rio cited for his resignation is the need for DICT to have its own intelligence and surveillance funds — something which should be left in the hands of military and police, he said. However, DICT said a key component of keeping the Philippines' cyber space safe is to conduct information gathering to aid law enforcement.

"The information systems in our country needs continuous monitoring so that both domestic and foreign cyber threats and cyber-attacks can be identified, addressed, and promptly neutralized to protect the safety and security of our nation," the agency said, adding that these activities are in line with DICT's role in the National Security Council.

DICT went on to deny that state auditors ruled the transactions as illegal, instead saying that the problems raised were "procedural" and that these have been addressed.

The COA flagged that the fund releases did not come with a notice of cash allocation from DBM, saying it "cast doubts on the regularity, validity and propriety of the disbursement." Auditors added that existing rules prohibit using cash advances to reimburse expenses that will be charged to the confidential fund.

DICT was created by a law signed in May 2016 as the main agency that will craft and promote the national development agenda on telecommunications and information technology, taking the function away from the older Department of Transportation and Communications.

After the news, Senate President Vicente "Tito" Sotto III and Senate Committee on National Defense and Security Chairman Panfilo "Ping" Lacson said they are seeking to look into allegations of fund misuse at the DICT by creating an oversight body that will review the usage of intelligence funds held by state agencies.

RELATED: Probe on Honasan possible as Senate seeks oversight of intel funds

Under their resolution filed Monday, the Senate Select Oversight Committee on Intelligence and Confidential Funds will conduct hearings and investigations, and receive testimonies and reports relevant to its mandate.

CNN Philippines' Eimor Santos contributed to this report.