Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. X
Cagayan de Oro City

CONCRETING OF SITIO CLAVERIA-ROSARIO

Farm-to-Market Road
Balingasag, Misamis Oriental

A CITIZEN PARTICIPATORY AUDIT REPORT

March, 2016
 Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. X
Cagayan de Oro City

March 22, 2016

Hon. Yevgeny Vincente B. Emano

Provincial Governor
Province of Misamis Oriental
Provincial Capitol Compound, Cagayan de Oro City

Dear Governor Emano:

Pursuant to Section 2, Article IX-D of the Philippine Constitution of the

Philippines and Section 43 of Presidential Decree No. 1445 otherwise known as the
Government Auditing Code of the Philippines, the audit team created under
Commission on Audit (COA) Office Order No. 2015-X-115 dated November 13, 2015
conducted a performance audit of the selected Farm-to-Market Road (FMR) projects
implemented by the Local Government Units in the Province of Misamis Oriental for
Calendar Year 2014.

For the said undertaking, we adopted the Citizen Participatory Audit (CPA)
technique in line with COA’s response to the call of the President of the Philippines for
increased transparency and citizen participation in governance; and invoking COA’s
authority granted by the 1987 Constitution “to define the scope of its audit and
examination” and “to establish the techniques and methods required thereof’.

The audit observations and recommendations were communicated thru Audit

Observation Memoranda and were discussed with the concerned officials of the
provincial government in an exit conference conducted on March 21, 2016. Their
comments were incorporated in the report where appropriate. The details of the results
of the audit are embodied in our Audit Report.
 TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS

LETTER

1.0 BACKGROUND

2.0 AUDIT FOCUS

3.0 AUDIT OBJECTIVES

4.0 AUDIT CRITERIA

5.0 AUDIT SCOPE AND METHODOLOGY

6.0 AUDIT PERIOD

7.0 AUDIT RESULTS

8.0 AUDIT CONCLUSIONS

9.0 RECOMMENDATIONS FOR EXECUTIVE ACTION

10.0 MANAGEMENT’S COMMENTS

11.0 AUDITOR’S REJOINDER

12.0 ACKNOWLEDGEMENT

APPENDICES
APPENDIX 1: AUDIT PROGRAM
APPENDIX 2: COA Office Order No. 2015-X-115 dated November 13, 2015
APPENDIX 3: RESULTS FROM THE COMMUNITY SURVEY

ANNEXES
A: Memorandum of Agreement
B: Summary of Disbursements and Status of Eight FMR Projects
C: Status and Reported Accomplishments of DA Funded FMR Projects
D: Status of Sitio Claveria-Rosario FMR Project
E: Suspension Order No. 1
F: Resume Order No. 1
G: Inspections/Geo-tagging Report
1.0 Background of the Farm to Market Road (FMR) Project

The Provincial Government of Misamis Oriental was created by virtue of

Amendment Act No. 3777 dated November 28, 1939. It has a total land area of
3,575 sq. km. with a total population of 1.369 million as of census Year 2010.
It is presently classified as a first class province composed of 23 municipalities,
the highly urbanized City of Cagayan de Oro, and the component Cities of
Gingoog and El Salvador.

The major accomplishments of the provincial government include various

infrastructure projects to raise income, productivity and competitiveness in
areas wherein the greater segment of farmers and fishers are benefited to attain
inclusive growth.

The concreting of Sitio Claveria-Rosario FMR, Balingasag, Misamis Oriental,

is one of the FMR projects covered under a Memorandum of Agreement
(MOA) entered into by and between the Province of Misamis Oriental
represented by then Governor Oscar Moreno and the Department of Agriculture
(DA), Regional Field Unit (RFU)-10, Cagayan de Oro City.

The said MOA covered eight various FMR projects with a total allotment from
DA of P20 million under Special Allotment Order (SARO) No.SMB-E-13-
0002684 dated March 13, 2013 with a targeted completion period of 444.5
calendar days for the identified eight FMR projects.

The provincial government allotted P2 million counterpart for the eight FMRs
as required under the said MOA. The total allocation for the concreting of Sitio
Claveria-Rosario FMR was P3,000,000.00 from DA and P300,000.00 from the
provincial government.

The first tranche amounting to P9,850,000.00 was already released by the DA,
RFU-10 for the eight FMRs in which a total of P1,499,984.99 was already
disbursed for the concreting of Sitio Claveria-Rosario FMR.

The procurement of the project was thru public bidding and was awarded to
SCV Construction with a contract cost of P3,298,106.00 and with a contract
period of 120 calendar days to complete the 500 meters FMR. The said FMR
project was started on May 24, 2013 with a reported accomplishment of 60.28%
as of December 31, 2015.
2.0 Audit Focus

The selected Farm to Market Roads (FMRs) implemented by the Local

Government Units in the Province of Misamis Oriental for Calendar Year 2014
is the focus of the audit which include the implementation of the projects as
well as the evaluation of the project accomplishments.

3.0 Audit Objectives

The audit of FMR projects under the Citizen Participatory Audit covers the
review and evaluation of actual project accomplishments. It was aimed to:

3.1 Determine whether the general intent of the Farm-to-Market Road

(FMR) as envisioned by the LGU which is to provide market access for
agricultural/ other products in the specific locality has been attained;

3.2 Validate the effectiveness of the FMR as to whether the farmers and the
community where the farm-to-market road is located benefitted from the
project by improving their economic condition;

3.3 Validate compliance with the design standards/criteria of the Guidelines

on the Implementation of FMRs of the Department of Agriculture and of
the DPWH;

 Recommended type of pavement in concreting Pres. Directive No.

10-00085;

3.4 Validate the existence of reported project accomplishments;

3.5 Determine whether the projects were implemented in compliance with

the approved plans and specifications and in accordance within the
required time frame; and

3.6 Determine the existence of the project in the required location

4.0 Scope and Audit Criteria

The audit shall cover the evaluation of Farm to Market Road (FMR) located at
Sitio Claveria-Rosario, Balingasag, Misamis Oriental which was implemented
by the Provincial Government of Misamis Oriental. It covers the review and
evaluation of implementation of the said FMR project as well as the progress
accomplishments as to physical existence and technical aspects using the
following criteria:
 4.1 Pertinent provisions of RA 9184 or the Government Procurement Law
as to the procurement of infrastructure projects;

4.2 For Straight Contract:

Contract requirements on project scope of work and
specifications, costs, duration

4.3 For FMRs implemented By Administration:

Project requirements on scope of work and specifications, costs,
duration

4.4 Presidential Directive No. 10-00085;

4.5 DPWH Department Order No. 11 series of 2014; and

4.6 COA Circular 2012-001

5.0 Audit Methodology

In general, the Audit Team will adopt the following methodologies:

 Gather and review project documents (approved Programs of Work and

detailed estimates, approved plans and specifications, approved PERT/CPM
Network Diagram, other contract/project documents) pertaining to the
implementation of selected FMR projects to establish the Audit Criteria;
 Review of financial and physical reports to establish the Audit Condition
per management’s representation;

 Conduct project inspection using geotagging as a tool;

 Perform computations and evaluation;
 Send out questionnaires/conduct interviews;
 Develop audit observations, conclusions and recommendations.

The Audit Programs are attached as Appendix 1.

6.0 Audit Period

The CPA team created under COA Office Order No. 2015-X-115 dated
November 13, 2015 (Appendix 2) conducted the audit of four identified FMR
projects from November 16, 2015 to February 26, 2016 or a total of 69 working
days.
7.0 Audit Results

The farm to market road project in Sitio Claveria-Rosario, Balingasag

funded by the Department of Agriculture and was implemented by the
Provincial Government of Misamis Oriental since CY 2013 remained
incomplete with 60.28% reported accomplishment as of December 31, 2015.

Republic Act No. 8435 otherwise known as the Agriculture and Fisheries
Modernization Act of 1997 (AFMA), provides that the farm to market road
refers to roads linking the agriculture and fisheries production sites, coastal
landing points and post-harvest facilities to the market and arterial roads and
highways. As provided for in the 2nd paragraph of Section 52, the construction
of farm-to-market roads shall be a priority investment of the LGUs which shall
provide a counterpart of not less than ten percent (10%) of the project cost
subject to their IRA level.”

In March 22, 2013, the provincial government under the administration of then
Governor Oscar Moreno entered into a Memorandum of Agreement (MOA)
with the Department of Agriculture – Regional Field Unit No. 10 (DA-RFU 10)
for the implementation of eight Farm to Market Road (FMR) projects in the
identified barangays under the different municipalities in the province of
Misamis Oriental (Annex A).

A total funding of P20 million was allocated by the DA under SARO No. SMB-
E-13-0002684 dated March 13, 2013. The first tranche amounting to
P9,850,000.00 was released by the DA-RFU on April 1, 2013 credited under the
Trust Fund current account of the provincial government. The P9.850 million
fund release was allocated for the implementation of the identified FMRs
covered under the said MOA (Annex B). The eight FMRs are reported
incomplete as of December 31, 2015 as detailed in the Status and
Accomplishment Report of DA funded project (Annex C).

The concreting of Sitio Claveria – Rosario, Balingasag, Misamis Oriental is one

of the FMR projects identified in the said MOA wherein the DA allocated
P3,000,000.00 while the provincial government has P300,000.00 allocation.

Our review of disbursement transactions disclosed that the Sitio Claveria-

Rosario FMR was contracted by SCV Construction with a contract cost of
P3,298,106.00 for a contract period of 120 calendar days. Out of P9.85 million
first tranche released from DA, the province disbursed a total of P1,499,984.99
for Sitio Claveria-Rosario FMR (Annex D).
Per recent ocular inspection of Sitio Claveria-Rosario FMR project, the reported
work accomplishments of 60.28% was validated wherein portion of the FMR
was noted to have a gravel foundation only while there was also a half-lane
concreted area. Below is summary of the actual measurement of said FMR:

Distance Length (in meters)

STA Remarks
From To gravel Cement
0+ 337.50 337.50 2 lanes
337.51 476.90 139.40 1 lane
476.91 550.000 73.10

Our review of pertinent documents disclosed that the said FMR project was
actually started on May 24, 2013. However, due to transition period of the new
administration, a suspension order was issued to the contractor of the said FMR
on July 1, 2013 (Annex E) and a Resume Order was then issued on July 1, 2014
(Annex F).

It can be noted that the issuance of suspension order due to transition period is
not among the valid reasons for the procuring entity to suspend the work wholly
or partly as provided for in Annex E of the revised IRR of RA 9184 which in
effect attributed to the non-completion of the said FMR project.

The lapse of time from the date the FMR projects which was started in May 24,
2013 has rendered the provincial government in default as the targeted number
of days of 444.5 calendar days to complete all the eight FMR projects per
Memorandum of Agreement had already elapsed by more than 500 days as of
December 31, 2015.

Our interview with the DA personnel in charge of the FMR project fund
disclosed that their office is ready to release the second tranche of the project
fund intended for the FMRs upon submission of the required liquidation reports.

The incumbent provincial government seemed to have given less priority for the
completion of FMR projects covered under the MOA signed by then Gov.
Moreno. For the past two years, the identified FMR remained unfinished
which in effect had caused inconvenience and difficulties on the part of the
residents of Sitio Claveria-Rosario where the FMR project is located since the
construction started in CY 2013.

In addition, the non-completion of FMR projects had also deprived the farmer
residents the convenience to carry their farm products to the market at a lesser
transportation cost.
Results of Citizen Survey:

Our interview with some residents of Sitio Claverio-Rosario where the FMR
project is located expressed their grievances and disclosed that a number of
accidents were reported due to inconvenience and difficulties they have
experienced in passing the unfinished FMR. The results of the survey disclosed
that, in general, the residents are not satisfied on the said FMR project
considering that as of the time of inspection, the concreting of the said FMR is
still unfinished.

The summary of the results of the survey conducted on the level of community
satisfaction of the said FMR is shown below:

Component – Level of Community Satisfaction Yes No

1 Are you satisfied with the FMR project? 90
2 The completion of FMR project increase our income… 90

Component – Level of Satisfaction Very Somewhat Not

and Assessment of FMR Satisfied Satisfied Satisfied Satisfied
3 Level of Satisfaction 90
Assessment and rate the FMR
4 project 76 14

Component-Assessment Slightly No
of FMR benefit Excellent Good Good Effect Bad
Assessment and rate
the benefits of FMR to
5 the community 90

Results of Inspection and Geo-tagging:

During the course of inspection, the following observations were noted:

Station Observation Station Observation

0 + 011 Transversal crack 0 + 148 Pock marks
0 + 039 Transversal crack 0 + 150 – Scaling of conc.
0 + 166
0 + 051.50 Scaling of conc. 0 + 166.10 depression
0 + 065.30 Pock Marks 0 + 171 – Pock marks
0 + 189
0 + 076.50 Scaling of conc. 0 + 184.50 – Scaling of conc.
0 + 211.50
0 + 081 Scaling of conc. 0 + 200 – Edge crack
0 + 213
0 + 083 Scaling of conc. 1 + 299 Transversal crack
 Station Observation Station Observation
0 + 090 Scaling of conc. 0 + 324 Transversal crack
0 + 140.20 Transversal crack 0 + 351.50 Transversal crack
0 + 090 – Scaling of conc. 0 + 360 – Scaling of conc.
0 + 139.80 0 + 364.50

The details of the results of inspection/geo-tagging activity is shown in Annex D.

The latest progress report showed 60.28% accomplishment. Per actual
measurement of FMR, the length of 500 meters, width of 4 meters, and thickness
of .20 meters were validated and the same is in accordance with the Program of
Works.

Shown below are the geotagged photos taken during the ocular inspection of the
FMR:

FRONT BACK

LEFT RIGHT
 2. End station (Last location/point of the project)

FRONT BACK

LEFT RIGHT

Latitude:8.737234 Longitude:124.813996

8.0 Audit Conclusion

The unfinished FMR project in Sitio Claveria-Rosario, Balingasag, Misamis

Oriental had brought inconvenience and dissatisfaction to the residents. Several
accidents were reported in the site where the half-lane concreted FMR is
located. Thus, the objective of FMR to accelerate agricultural production
development and provide market access for agricultural products was not
attained.
9.0 Recommendations for Executive Action

Based on the observations noted, the following were recommended to the

provincial government:

1. We have recommended that the provincial government take appropriate

action for the immediate completion of Sitio Claveria-Rosario FMR project
on or before June 30, 2016. Consider the issuance of resumption order on or
before April 30, 2016. Submit liquidation report to DA RFU-10 and
coordinate for the release of the second tranche funding.

2. Also, we recommended that the Provincial Engineering Office initiate the

issuance of an order to be signed by the Provincial Governor to require the
concerned contractor to undertake the repair works on the identified portion
of the FMR as detailed above upon resumption of the project.

10.0 Auditee’s Comments on the Team’s Recommendation

The Acting Provincial Engineer (PE) commented and disclosed that he already
prepared the Resumption Order for signature of the Provincial Governor. The
effectivity of the said Resumption Order is April 11, 2016. Also, the Acting PE
committed to issue an order to the contractor to undertake the repair works upon
resumption of the project.

11.0 Audit Team’s Evaluation and Rejoinder

12.0 Acknowledgement

We thank the officials and staff of the Provincial Government of Misamis

Oriental, particularly the Provincial Engineer and the Acting Provincial
Agriculturist, for the cooperation extended to the audit team. We also
acknowledge the support and cooperation of the DA-RFU 10 for providing the
team with relevant information regarding the Farm-to-Market Road project.
We shall truly appreciate receiving feedback on the status of implementation of
our audit recommendations within 30 days from receipt hereof.

Our report will be made available at the COA Web site at

http://www.coa.gov.ph and at the COA Citizen Participatory Audit (CPA) Web
site at http://i-kwenta.com.

Very truly yours,

MYRNA B. OFNGOL
Supervising Auditor
Team 1 – Misamis Oriental