REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
REGIONAL OFFICE NO. VIII
LGAS C –Leyte II and Biliran Province
New Ormoc City Hall
Ormoc City, Leyte

Team R8-03, Abuyog, Leyte

AOM No.: 2023-007

Date : May 19, 2023

AUDIT OBSERVATION MEMORANDUM (AOM)

HON. OCTAVIO J. TRAYA, JR.

Municipal Mayor
Abuyog, Leyte

Attention: MICHELLE L. EFREN

Municipal Accountant

NIMROD R. BOBO
Municipal Engineer

RODULFO M. CABIAS
Municipal Planning Development Coordinator

We have audited the compliance of the Municipality of Abuyog 20%

Development Fund (DF) as of December 31, 2022 and observed the following:

1. The 20% Development Fund of the Municipality for CY 2022 totaling

₱79,470,918.20 were appropriated and utilized solely for developmental
projects which are compliant with Section 3.2.5 of the DBM-DOF-DILG
Joint Memorandum Circular No. 1, dated November 4, 2020, thus, attaining
the intended purpose and objectives of the fund.

1.1 Section 287 of the Republic Act 7160, otherwise known as Local Government
Code of 1994, requires each Local Government Unit (LGU) to appropriate in the
annual budget no less than 20% of its Internal Revenue Allotment (IRA) for
development projects.

1.2 Likewise, DILG-DBM Joint Memorandum Circular No. 2017-1 as revised by

DBM-DOF-DILG Joint Memorandum Circular No. 1, dated November 4, 2020
provides guidelines on the Appropriation and Utilization of the Twenty Percent
AOM NO. 2023-007 -20% Development Fund-Abuyog, Leyte Page 1 of 6
 (20%) of the Annual Internal Revenue Allotment (IRA) for Development Projects
that the 20% Development Fund (DF) shall be utilized to finance LGU’s priority
development projects, as embodied in its duly approved local development plans
and Annual Investment Plan (AIP), which should be directly supportive of the
Philippine Development Plan and Public Investment Program.

1.3 As part of the General Policies prescribed in Section 3 thereof, the JMC
emphasizes that it is the responsibility of every LGU to ensure that development
projects under the 20% DF are necessary, appropriate, or incidental to efficient
and effective local governance, essential to the promotion of the general welfare
of the people. Further, the identified projects should be well-planned and
procurement-and-implementation ready.

1.4 To implement this policy, section 3.2.5 of the said JMC itemizes the expenditure
items not allowed to be charged against the 20% DF, to wit:

3.2.5.1 Personal Services expenditures, such as salaries, wages,

overtime pay, and other personnel benefits;
3.2.5.2 Administrative expenses, such as supplies, meals,
representation, communication, water and electricity, petroleum
products, and the like;
3.2.5.3 Traveling expenses, whether domestic or foreign;
3.2.5.4 Registration fees and other expenses related to the conduct of
and participation to trainings, seminars, conferences or
conventions;
3.2.5.5 Purchase, maintenance or repair of administrative office'
furniture, fixtures, equipment or appliances; and
3.2.5.6 Purchase, maintenance or repair of motor vehicles used for
administrative purposes.

1.5 For CY 2022, the Municipality of Abuyog, Leyte received its Internal Revenue
Allotment (IRA) or National Tax Allocation (NTA) amounting to
₱397,354,591.00 where it appropriated ₱79,470,918.20 for the identified priority
development programs, projects and activities under its 20% DF as contained in
their Annual Investment Plan.

1.6 The audit team conducted validation of the identified programs, projects and
activities by the Municipality under the 20% DF in CY 2022, pursuant to Section
1 of the Memorandum on Audit Instructions issued last January 26, 2023 which
streamlined the subject matter for the conduct of compliance audit, to determine
whether these projects were among the prohibited disbursements itemized in
Section 3.2.5 of DBM-DOF-DILG Joint Memorandum Circular No. 1, dated
November 4, 2020. These projects are enumerated in Table 1.

AOM NO. 2023-007 -20% Development Fund-Abuyog, Leyte Page 2 of 6

 Table 1. Priority Development Projects in CY 2022
No. Program/Projects/Activities Appropriation
Annual Investment Plan (AIP)/Current Appropriations
Overlaying of Concrete Pavement and Construction of 5,000,000.0
1 Drainage Canal along Pancho Villa Street, Brgy. Nalibunan, 0
Abuyog, Leyte
Construction of Drainage Canal, Brgy. Sta. Fe, Abuyog, 3,000,000.0
2
Leyte 0
Concrete Paving of Municipal Road (Portion along Juan 4,000,000.0
3
Luna Street) Brgy. Bito, Abuyog, Leyte 0
Construction of Drainage Canal (Portion along Real Street, 8,021,513.0
4 From Corner Liberation Street to National Highway) Brgy. 0
Guintagbucan, Abuyog, Leyte
Concrete Paving of Municipal Road (Portion along Real 3,298,487.0
5 Street, From Corner Liberation Street to National Highway) 0
Brgy. Guintagbucan, Abuyog, Leyte
Construction of Drainage Canal (Portion along Liberation 2,700,000.0
6 Street from Corner Avenida Rizal to Real Street) Brgy. 0
Guintagbucan, Abuyog, Leyte
Concrete Paving/ Landscaping of Portion Municipal 100,000.0
7
Grounds, Brgy. Loyonsawang, Abuyog, Leyte 0
Opening/ Backfilling of Municipal Road (Portion along Juan 4,000,000.0
8
Luna Street), Brgy. Bito, Abuyog, Leyte 0
Repair/ Rehabilitaion of Brgy. Road, Sitio Malangto, Brgy. 600,000.0
9
Pagsang-an, Abuyog, Leyte 0
Repair/ Rehabilitation of Road, Brgy. Matagnao, Abuyog, 2,510,350.0
10
Leyte 8
Construction of Additional Vaults/ Niches for Abuyog 2,448,914.1
11
Cemetery, Phase VIII, Brgy. Bito, Abuyog, Leyte 2
Construction of Municipal Road (Resurfacing and Base 10,000,000.0
12
Preparation) Brgy. Libertad, Abuyog, Leyte 0
13 Construction of Municipal Road (Resurfacing and Base 6,832,000.0
Preparation) Brgy. Old Taligue, Abuyog, Leyte 0
14 Construction/Installation of 36' Diameter RCPC Cross 686,000.0
Drainage, Brgy. Old Taligue, Abuyog, Leyte 0
15 Construction/Installation of 24' Diameter RCPC Cross 880,000.0
Drainage, Brgy. Old Taligue, Abuyog, Leyte 0
16 Construction/Installation of 12' Diameter RCPC Cross 220,000.0
Drainage, Brgy. Old Taligue, Abuyog, Leyte 0
Concrete Paving of Municipal Road, Brgy. Libertad, 10,000,000.0
17
Abuyog, Leyte 0
Concrete Paving of Municipal Road, Brgy. Old Taligue, 9,830,000.0
18
Abuyog, Leyte 0
Concstruction of Single Barrel Box Culvert, Tigbawan 788,654.0
19
Creek, Brgy. Libertad, Abuyog, Leyte 0
AOM NO. 2023-007 -20% Development Fund-Abuyog, Leyte Page 3 of 6
 No. Program/Projects/Activities Appropriation
Construction of Single Barrel Box Culvert, Sitio Kaba-kaba, 365,000.0
20
Brgy. Libertad, Abuyog, Leyte 0
Construction of Double Barrel Box Culvert, Tigbawan 1,650,000.0
21
Creek, Brgy. Libertad, Abuyog, Leyte 0
22 Repair/ Rehabilitation of Single Barrel Box Culvert, Sitio 210,000.0
Kaba-kaba, Brgy. Libertad, Abuyog, Leyte 0
23 Repair/ Rehabilitation of Three (3) Units Single Barrel Box 2,330,000.0
Culvert, Sitio Abad, Brgy. Libertad, Abuyog, Leyte 0
Total 79,470,918.20

1.7 Verification of the Record of Appropriations and Obligations (RAO) as

of ,December 31, 2022 and disbursement vouchers revealed that a total of
₱70,249,086.29 was utilized for the realization of identified priority development
projects of the Municipality in CY 2022, as presented in Table 2.

Table 2. Utilization of the 20% Development Fund

Check
Projects Date Amount Total
No.
Current Appropriations        
Overlaying of Concrete Pavement and 2,490,000.0
4613359 03/07/2022
Construction of Drainage Canal along 0 4,980,000.0
Pancho Villa St. Brgy. Nalibunan 2,490,000.0 0
4835823 06/20/2022
Abuyog, Leyte 0
Repair/ Rehabilitation of Municipal Road 2,485,246.5 2,485,246.5
4613272 02/28/2022
Brgy. Matagnao 8 8
1,198,560.0
4613357 03/07/2022
Opening/ Backfilling of Municipal Road 0 3,995,200.0
(Portion along Juan Luna St.) Brgy. Bito 2,796,640.0 0
4835830 06/20/2022
0
3,196,400.0
4613334 03/04/2022
Concrete Paving of Municipal Road 0 3,995,500.0
(Portion along Juan Luna St.) Brgy. Bito 799,100.0 0
4835832 06/20/2022
0
Repair/ Rehabilitation of Barangay Road
588,000.0
Sitio Malangto Brgy. Pagsang-an, 4613358 03/07/2022 588,000.00
0
Abuyog, Leyte
Repair/ Rehabilitation of 3 units Single
2,327,500.0 2,327,500.0
Barrel Box Culvert Sitio Abad, Brgy. 4836073 7/14/22
0 0
Libertad
Construction of Drainage Canal (Portion 3,970,648.9
4613423 03/17/2022
along Real St. from Corner Liberation St. 4 7,941,297.8
to National Highway) Brgy. 3,970,648.9 7
4835826 06/20/2022
Guintagbucan Abuyog, Leyte 3
1,492,500.0
Construction of Municipal Road 4613424 03/18/2022
0 9,950,000.0
(Resurfacing and Base Preparation) Brgy.
8,457,500.0 0
Libertad Abuyog, Leyte 4835982 07/07/2022
0
AOM NO. 2023-007 -20% Development Fund-Abuyog, Leyte Page 4 of 6
 Check
Projects Date Amount Total
No.
Concrete Paving of Municipal Road
(Portion along Real St. from Corner 3,265,502.0 3,265,502.0
4836182 7/28/22
Liberation St. to National Highway) 0 0
Brgy. Guintagbucan
2,040,600.0
Construction of Municipal Road 4613493 3/24/22
0 6,802,000.0
(Resurfacing and Base Preparation) Brgy.
4,761,400.0 0
Old Taligue Abuyog, Leyte 4836345 8/18/22
0
Construction of Single Barrel Box 787,154.0
4613905 5/23/22 787,154.00
Culvert, Tinago Creek Brgy. Libertad 0
1,919,948.6
Construction of Additional Vaults/ 4835981 07/07/2022
7 2,399,935.8
Niches for Abuyog Cemetery Phase VIII,
479,987.1 4
Brgy Bito 4836270 08/08/2022
7
247,050.0
4836474 09/05/2022
Construction of Double Barrel Box 0 1,647,000.0
Culvert, Tigbawan Creek Brgy. LIbertad 1,399,950.0 0
4837075 11/11/2022
0
2,156,000.0
Construction of Drainage Canal (Portion 4836697 9/23/22
0 2,695,000.0
along Liberation St. from Corner Avenida
539,000.0 0
Rizal to Real St.) Brgy. Guintagbucan 4836841 10/14/22
0
Concrete Paving of Municipal Road, 4,907,250.0 4,907,250.0
4836977 11/03/2022
Brgy. Old Taligue 0 0
4,992,500.0
4836436 8/30/22
Concrete Paving of Municipal Road, 0 9,985,000.0
Brgy. Libertad 4,992,500.0 0
4837057 11/10/2022
0
Construction of Drainage Canal, Brgy. 1,497,500.0 1,497,500.0
4837530 12/27/22
Sta. Fe 0 0
Total 70,249,086.29

1.8 Analysis showed that the above PPAs are eligible to be charged under the 20%
Development Fund. The Development Plan did not include any expenditure items
that are not allowed to be charged against the Fund such as personal services,
administrative expenses, traveling expenses, training expenses, purchase,
maintenance or repair of administrative office’ equipment and motor vehicles for
administrative purposes.

1.9 Meanwhile, vouching of disbursements revealed that all transactions charged

against 20% Development Fund did not fall under items not allowed under
Section 3.2.5 of the JMC, hence, considered eligible PPAs to be charged under
the 20% Development Fund.

1.10 Since the planned and implemented development projects under the 20%
Development Fund in CY 2022 were compliant with Section 3.2.5 of DBM-DOF-

AOM NO. 2023-007 -20% Development Fund-Abuyog, Leyte Page 5 of 6

 DILG Joint Memorandum Circular No. 1, dated November 4, 2020, the LGU has
satisfactorily attained the intended purpose and objectives of the fund.

1.11 We commend the efforts made by the Management in ensuring that for CY
2022, all PPAs chargeable against the 20% Development Fund are compliant
with Section 3.2.5 of the DBM-DOF-DILG JMC No. 1 dated November 4,
2020.

1.12 We recommend that the Municipal Mayor and all personnel concerned
continuously adhere to the provisions of DBM-DOF-DILG Joint
Memorandum Circular No. 1, dated November 4, 2020 to ensure that
maximum attainment of desired socio-economic development and
environmental management outcome of the Municipality is achieved and for
the realization of the intended purpose of the 20% Development Fund.

May we have your comments on the foregoing audit observation within five (5)
calendar days from receipt hereof.

MA. SHIELA T. ELMIDO

State Auditor II
OIC- Audit Team Leader

SANTIAGO P. SEÑASE
State Auditor IV
OIC-Supervising Auditor

Proof of Receipt of AOM:

Name of Receiving
Officer Signature Date Received
Officer
Municipal Mayor
MPDC
Municipal Engineer
Municipal Accountant

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