EXECUTIVE SUMMARY

A. Introduction

Creation and Mandate

Under Executive Order (EO) No. 710 dated July 27, 1981, the existing Ministries
of Public Works and Public Highways were abolished, and thereby, created the Ministry
of Public Works and Highways for a more effective and sustained implementation of
infrastructure projects. By virtue of EO No. 124 dated January 30, 1987, the agency was
renamed as the Department of Public Works and Highways (DPWH).

The DPWH functions as the engineering and construction arm of the Government
tasked to continuously develop its technology for the purpose of ensuring the safety of all
infrastructure facilities and securing for all public works and highways the highest
efficiency and quality in construction. It is currently responsible for the planning, design,
construction and maintenance of infrastructure, especially the national highways, flood
control and water resources development system, and other public works in accordance
with national development objectives.

Organizational Set-up and Personnel Complement

Under the restructured/updated organizational set-up, the DPWH is composed of

nine (9) Service Offices, six (6) Bureaus, and five (5) Clusters under the Unified Project
Management Offices (UPMO) at the Central Office, 16 Regional Offices (RO) and 189
District Engineering Offices (DEO). It is presently headed by Secretary Manuel M.
Bonoan, who is assisted by eight (8) Undersecretaries and seven (7) Assistant Secretaries.

The Department’s total personnel complement as at December 31, 2022 is 72,023,

distributed as follows:

Co-Terminus Co- Contractual/

Contract
with the Build, Terminus Charged to
Category Regular of Service/ Total
Build, Build with the Maintenance
Job-Order
Program Incumbent Fund
Department Proper (OSEC) 86 0 15 20 77 198
Pooled Field Positions 379 0 0 0 0 379
Services 616 0 141 0 513 1,270
Bureaus 479 0 67 0 471 1,017
UPMO 650 0 0 0 887 1,537
Sub-total 2,210 0 223 20 1,948 4,401
Field Office (Class A Regions) 7,935 1,112 746 2 28,757 38,552
Field Office (Class B Regions) 6,366 817 505 1 21,381 29,070
Total 16,511 1,929 1,474 23 52,086 72,023

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B. Financial Highlights

In Calendar Year (CY) 2022, the DPWH has total appropriations of

P898,644,726,472.90 consisting of the current year budget/appropriation and prior year
appropriation of the total amount of P820,824,225,768.00 and P77,820,500,704.90,
respectively. During the year, the DPWH received total allotments of
P898,105,704,783.90, of which the amount of P856,524,659,043.84 or 95.37 percent was
obligated leaving an unobligated allotment of P41,581,045,740.06 or 4.63 percent. Details
are shown hereunder:

Unobligated
Appropriations Allotments Obligations
Particulars Balance
In Philippine Peso (In PhP)
I. Current Year Budget/
820,824,225,768.00 820,285,204,079.00 788,984,951,286.08 31,300,252,792.92
Appropriation (RA No. 11639)
A. Agency Specific Budget 796,758,056,000.00 796,219,034,311.00 767,449,653,772.67 28,769,380,538.33
Personal Services 10,323,828,088.14 10,323,828,088.14 10,302,696,437.25 21,131,650.89
Maintenance and Other
4,720,342,911.86 4,720,342,911.86 4,160,879,543.00 559,463,368.86
Operating Expenses (MOOE)
Capital Outlay 781,713,885,000.00 781,174,863,311.00 752,986,077,792.42 28,188,785,518.58
B. Automatic Appropriation 1,376,475,192.00 1,376,475,192.00 1,233,476,673.56 142,998,518.44
Retirement and Life Insurance
1,021,988,420.00 1,021,988,420.00 1,006,703,467.47 15,284,952.53
Premiums
Customs, Duties and Taxes 292,055,464.00 292,055,464.00 193,562,772.25 98,492,691.75
Grant-Japan Fund for Poverty
1,218,620.00 1,218,620.00 1,218,620.00 0.00
Reduction (JFPR)
Grant-Japan International
61,212,688.00 61,212,688.00 31,991,813.84 29,220,874.16
Cooperation Agency (JICA)
C. Special Purpose Fund (SPF) 6,425,540,874.00 6,425,540,874.00 5,195,385,578.43 1,230,155,295.57
Miscellaneous Personnel
1,192,951,409.00 1,192,951,409.00 1,190,774,805.98 2,176,603.02
Benefits Fund
Pension and Gratuity Fund 70,546,395.00 70,546,395.00 70,362,888.41 183,506.59
Capital Outlay-National Disaster
Risk Reduction and Management 5,089,572,000.00 5,089,572,000.00 3,934,247,884.04 1,155,324,115.96
Fund (NDRRMF)
Capital Outlay-Contingent Fund 72,471,070.00 72,471,070.00 0.00 72,471,070.00
D. Unprogrammed Fund 16,264,153,702.00 16,264,153,702.00 15,106,435,261.42 1,157,718,440.58
Payment of Personnel Benefits 819,346,352.00 819,346,352.00 812,185,872.47 7,160,479.53
Support to FAPs 15,444,807,350.00 15,444,807,350.00 14,294,249,388.95 1,150,557,961.05
II. Prior Year Appropriation 77,820,500,704.90 77,820,500,704.90 67,539,707,757.76 10,280,792,947.14
A. Continuing Appropriation 40,442,341,380.00 40,442,341,380.00 38,605,803,708.11 1,836,537,671.89
MOOE 1,585,211,492.00 1,585,211,492.00 1,582,581,952.10 2,629,539.90
Capital Outlay-Regular 38,825,478,888.00 38,825,478,888.00 36,992,452,309.65 1,833,026,578.35
SPF-Capital Outlay-NDRRMF 31,651,000.00 31,651,000.00 30,769,446.36 881,553.64
B. Extended Appropriation 37,378,159,324.90 37,378,159,324.90 28,933,904,049.65 8,444,255,275.25
MOOE 3,797,422,154.84 3,797,422,154.84 3,534,250,777.11 263,171,377.73
Capital Outlay-Regular 32,500,714,799.71 32,500,714,799.71 24,374,231,871.41 8,126,482,928.30
SPF-Capital Outlay-NDRRMF 1,080,022,370.35 1,080,022,370.35 1,025,421,401.13 54,600,969.22
Total 898,644,726,472.90 898,105,704,783.90 856,524,659,043.84 41,581,045,740.06

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 The DPWH’s statements of financial position and performance for CY 2022, with
comparative restated figures for CY 2021, are summarized below:

CY 2021 Increase/
CY 2022
Particulars (Restated) (Decrease) Percentage
(In PhP)
Financial Position
Assets 3,103,213,016,055.06 2,733,077,168,780.77 370,135,847,274.28 13.54%
Liabilities 125,093,200,491.07 100,195,619,317.95 24,897,581,173.12 24.85%
Net Assets/Equity 2,978,119,815,563.99 2,632,881,549,462.83 345,238,266,101.16 13.11%
Financial Performance
Revenue 1,535,395,703.36 1,559,945,325.65 (24,549,622.29) (1.57)%
Current Operating Expenses 125,964,513,088.06 118,814,243,887.02 7,150,269,201.04 6.02%
Surplus (Deficit) from
(124,429,117,384.70) (117,254,298,561.37) (7,174,818,823.33) 6.12%
Current Operations
Net Financial
778,802,338,195.50 667,671,381,352.31 111,130,956,843.19 16.64%
Assistance/Subsidy
Miscellaneous Income 259,159,863.63 387,588,953.06 (128,429,089.43) (33.14)%
Gains 245,470,166.27 25,336,329.94 220,133,836.33 868.85%
Losses 88,294,581.29 8,407,554.25 79,887,027.04 950.18%
Surplus/(Deficit) for the
654,789,556,259.41 550,821,600,519.69 103,967,955,739.72 18.88%
Period

The significant increase in Gains and Losses for CY 2022 was attributed primarily
on Gains and Losses on Foreign Exchange (FOREX) amounting to P233,164,974.08 and
P84,616,017.60, respectively, which resulted from the revaluation of foreign denominated
assets and liabilities including actual gain/loss incurred in the conversion of foreign
currency to local currency at the balance sheet date. The remaining balances pertained to
the gains/losses on sale of property, plant and equipment, unserviceable properties, and
other gains, and loss of assets.

C. Operational Highlights

The DPWH’s reported targets and actual accomplishments measured in terms of its
organizational outcomes/performance indicators are as follows:

Physical Physical Accomplishments

Performance Indicator Variance
Target Completed Ongoing Total
Ensure Safe and Reliable National Road System
Asset Preservation Program
1. Length (km) of Maintained Roads 751.68 666.78 130.81 797.59 45.91
2. Length (km) of Rehabilitated/Reconstructed/
160.00 138.42 49.18 187.60 27.60
Upgraded Roads
3. % of Projects Completed in accordance with
100.00 64.25 0.00 64.25 (35.75)
Plans and Specifications
Network Development Program
1. Length (km) of Newly Constructed Roads 796.57 58.83 97.04 155.87 (640.70)
2. Length (km) of Widened Roads 455.83 112.64 117.62 230.26 (225.57)
3. % of Projects Completed in accordance with
100.00 63.50 0.00 63.50 (36.50)
Plans and Specifications

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 Physical Physical Accomplishments
Performance Indicator Variance
Target Completed Ongoing Total
Bridge Program
1. Total Length (lm) of New and Replacement
23,299.50 877.53 1,609.04 2,486.57 (20,812.93)
Constructed Bridges
2. Total Area (m2) of New and Replacement
215,278.40 8,389.24 15,382.40 23,771.64 (191,506.76)
Constructed Bridges
3. No. of Maintained and Rehabilitated Bridges 199 236 165 401 202
4. % of Projects Completed in accordance with
100.00 89.50 0.00 89.50 (10.50)
Plans and Specifications
Protect Lives and Properties Against Major Floods
Flood Management Program
1. No. of Constructed Flood Mitigation
628 370 975 1,345 717
Structures and Drainage Systems
2. No. of Constructed/Rehabilitated Flood
Mitigation Structures with Major River 306 142 531 673 367
Basins and Principal Rivers
3. % of Projects Completed in accordance with
100.00 95.75 0.00 95.75 (4.25)
Plans and Specifications
Local Program
1. No. of Projects (School Buildings, Multi-
purpose Buildings, Health Facilities, Water 154 65 228 293 139
Supply Systems, Farm-to-Market Roads, etc)
2. % of Projects Completed in accordance with
100.00 63.50 0.00 63.50 (36.50)
Plans and Specifications
Convergence and Special Support Program
1. % of Projects Completed and Accepted 100.00 48.75 0.00 48.75 (51.25)
2. Length of Access Roads Leading to Airports 22.74 0.86 1.07 1.93 (20.81)
3. Length of Access Roads Leading to Seaports 31.10 3.47 1.19 4.66 (26.44)
4. Length of Access Roads Leading to Tourist 258.49 85.14 45.34 130.48 (128.01)
5. Length of Access Roads Leading to
133.00 54.16 28.39 82.55 (50.45)
Industries
6. Length of Access Roads Leading to Railway
2.27 0.19 0.11 0.30 (1.97)
Stations
7. Improvement of Provincial Bridges along
10.00 3.00 14.00 17.00 7.00
Provincial Roads
8. Various Infrastructure in Support to National
4.70 2.62 0.48 3.10 (1.60)
Roads (km)
9. Other Infrastructures (No. of Units) 120 36 222 258 138

The negative variances as shown in the preceding table indicate that the physical
targeted performance indicators/organizational outcomes were not fully attained due to the
following reasons:

1. DPWH has projects categorized “For Later Release (FLR)”;

2. Delays in the conduct, commencement and/or completion of feasibility studies

and detailed engineering designs;

3. Modification of plans, design and program of works;

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 4. Prolonged process of application and approval of loan agreements, and delays
in the review, approval, concurrence of bidding documents by the lending
institutions;

5. Delays in the approval of the revised/updated Multi-Year Contractual Authority

from DBM prior to project procurement;

6. Failure of biddings/procurement, suspended and unimplemented projects;

7. Unreleased/late releases of funds/allotments for projects and insufficiency of

appropriation to cover the projects’ funding requirement; and

8. Problems/issues encountered in project sites such as unresolved road right-of-

way, inaccessible project site for heavy equipment, awaiting issuance of permits
and clearance from concerned government agencies/units, unfavorable weather
condition, relocation of utilities and communication facilities, presence of
obstructions/existing structures for relocation/demolition, and the like.

D. Scope and Objectives of Audit

The audit covered the accounts and operations of the DPWH for CY 2022. The
objectives of the audit were to: (a) verify the level of assurance that may be placed on
Management’s assertions on the financial statements; (b) determine the propriety of
transactions, as well as the extent of compliance with pertinent laws, rules and regulations;
(c) recommend agency improvement opportunities; and (d) determine the extent of
implementation of prior year’s audit recommendations.

E. Independent Auditor’s Report

A qualified opinion was rendered on the fairness of presentation of the financial

statements of the DPWH as at December 31, 2022 due to aggregate uncorrected
misstatements of P36,654,168,584.36 as presented in Part I – Independent Auditor’s
Report and discussed in Part II – Observations and Recommendations of this Report.

F. Summary of Other Significant Observations and Recommendations

Hereunder are the other significant audit observations noted during the year and the
corresponding recommendations, which are discussed in Part II of this Report:

1. DPWH was able to obligate P856,524,659,043.84 or 95.37 percent of the total

allotments of P898,105,704,783.90 received in CY 2022, leaving an
unobligated/unutilized balance of P41,581,045,740.06 or 4.63 percent. Of the total
obligated amount, only 64.13 percent or P549,296,331,625.31 was disbursed, leaving

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 an undisbursed balance of P307,228,327,418.53 or 35.87 percent as at year-end. Thus,
utilization of DPWH’s budget was not fully maximized in view of the delays,
suspensions and non-implementation of projects which resulted in the expiration of
the validity of corresponding unutilized allotments/programmed funds, and deferment
of the intended benefits and lost opportunities that could be derived therefrom.
(Observation No. 7)

We recommended and Management agreed to perform the following in order to avoid

any adverse effects on their future budget levels:

a. Conduct proper planning, and adopt adequate procedures and strategies to

implement the targets responsive to programs/projects realities and actual
conditions;

b. Facilitate the procurement activities, processes and evaluation, and fast-track the
implementation and completion of projects to fully maximize the use of allotments
received, timely delivery of benefits that can be derived therefrom, preclude the
expiration/accumulation of unutilized allotments, and improve the absorptive and
spending capacity of the Agency in terms of the obligated allotments and disbursed
funds; and

c. Require the contractors and consultants concerned to timely submit their claims
for progress and final billings duly supported with complete documentary
requirements.

2. Funds transferred to various implementing agencies/offices (IA/IO) for the

implementation of programs and projects in the aggregate amount of
P2,805,620,311.78 remained unliquidated in the books for over one (1) to over five
(5) years contrary to pertinent provisions of COA Circular Nos. 94-013 and 2007-001
dated December 13, 1994 and October 25, 2007, respectively, resulting in the
accumulation of long outstanding receivables. (Observation No. 10)

We reiterated our previous year’s recommendations that Management of DPWH

offices concerned:

a. Conduct periodic monitoring, analysis and reconciliation of the funds transferred

between the books of the DPWH and the recipient/implementing agencies;

b. Refrain from releasing/granting additional fund transfers until the previous funds
were fully liquidated to prevent the accumulation of unliquidated balances;

c. Continuously send demand letters, and make strong representations with the
implementing agencies/offices concerned to enforce/demand performance of their
obligation on the liquidation/settlement of the funds transferred and immediate
refund/return of the unutilized balance, if any, pursuant to the pertinent provisions
of COA rules and regulations, and covenants of the MOA; and

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 d. Perform comprehensive review, analysis and evaluation of the inactive and
dormant/non-moving accounts, and subsequently file a request for authority to
write-off in accordance with COA Circular No. 2016-005.

3. Fund transfers received by DPWH offices for the implementation of programs and
projects in the aggregate amount of at least P786,278,252.94 remained unliquidated
despite the projects or purpose for which the same were granted were already
completed or terminated contrary to pertinent provisions of COA Circular Nos. 94-
013 and 2007-001 dated December 13, 1994 and October 25, 2007, respectively,
resulting in the accumulation of long outstanding payables. (Observation No. 11)

We recommended and Management of DPWH offices concerned agreed to coordinate

with the contractors to file their claims for final payments, and direct the Accountants,
in coordination with the implementing offices/unit, to facilitate the preparation and
submission of the required Liquidation Reports, duly supported with documentary
requirements, for the timely and proper recording of assets and expenses, and
refund/remit any unutilized funds to Source Agencies (SAs) or Bureau of the Treasury
(BTr), as the case may be.

4. Advance payments amounting to P1,146,550,651.29 were not recouped from the

contractors whose projects were already completed, terminated/rescinded or awaiting
contract termination as at year-end contrary to Item 4.3, Annex “E” of the Revised
IRR of RA No. 9184, which may result to possible loss of government funds if the
same will not be recovered from the contractors concerned. (Observation No. 12)

We reiterated our previous year’s recommendations and Management of DPWH

offices concerned agreed to:

a. Demand for the immediate refund of the unrecouped advances or forfeit the
corresponding irrevocable standby letters of credit or guarantee payment bonds
posted by the contractors;

b. Initiate legal action to those who refuse to refund the unrecouped advances, if
warranted. Henceforth, the Agency officials should strictly comply with the
provisions of existing issuances regarding the granting and recoupment of advance
payments made to the contractors;

c. Require the office or personnel concerned to facilitate the issuance of Certificates

of Completion for completed projects and submit the same to the Accounting
Division in order to recognize the amounts of payables as well as the recoupment
of advances to the contractors;

d. Consider other remedial measures/actions to collect the unrecouped amounts such

as inclusion of provisions in the contracts’ bid documents, terms and conditions or
special conditions that in case of termination of projects, the contractors authorize

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 the DPWH offices to deduct the amount from any unpaid claims and from other
projects undertaken by the same contractors, if warranted, in case the contractors
failed to immediately return the advances granted for mobilization; and

e. Henceforth, strictly comply with Paragraph 4.3 of Annex E of the Revised IRR of
RA No. 9184 and impose administrative sanctions against erring personnel who
failed to recoup the advances from the progress billings and/or surety bond of the
contractors concerned, as warranted.

5. The balance of Guaranty Security/Deposits Payable accounts of DPWH as at year-end

includes unreleased retention money for completed projects, unutilized
restoration/excavation fees, and unclaimed warranty securities in the total amount of
P220,099,615.19, which remained outstanding for more than two (2) years and were
not reverted to the unappropriated surplus in the General Fund contrary to Section 98
of PD No. 1445. Moreover, retention money from 26 on-going infrastructure projects
with costs totaling P35,032,860.29 of Bukidnon 1st DEO in Region X were released
to contractors prior to the completion and/or final acceptance of the projects, contrary
to Item 6, Annex “E” of the Revised IRR of RA No. 9184. (Observation No. 13)

We reiterated our previous year’s recommendations and Management of DPWH

offices concerned agreed to:

a. Direct the Quality Assurance Unit and Implementing Office: (i) to monitor the
completed projects during the warranty period and coordinate with the contractors
concerned to expedite rectification works necessary for the issuance of Certificate
of Acceptance, and if warranted, forfeit retention money/guaranteed fees in favor
of the Government to cover the uncorrected discovered defects and third party
liabilities; and (ii) to inspect the restoration works covered by the long outstanding
restoration fees, if satisfactorily completed and upon issuance of Certificate of
Completion and Certificate of Acceptance, release the restoration deposit to the
office/individual concerned. Otherwise, require them to execute a waiver of their
right to claim the restoration fees for reversion to the unappropriated surplus of the
general fund;

b. Require the Accounting Division, in coordination with the IO, to notify the
contractors concerned to file their claims for the immediate release of the retention
money to avoid accumulation of the account balances in the books; and

c. Refrain from releasing retention money prior to final acceptance of the projects,
which are neither implemented/completed on schedule or satisfactorily undertaken
in accordance with Item 6.2, Annex “E” of RA No. 9184 and its Revised IRR.

6. Several DPWH offices were not able to efficiently implement 2,395 locally-funded
projects with aggregate cost of P96,218,894,354.02 due to inadequate planning,
detailed engineering, supervision and monitoring, which resulted in delayed
completion and non-implementation thereof contrary to pertinent provisions of the

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 Revised IRR of RA No. 9184, and the agreed terms and conditions of the contract.
(Observation No. 14)

We recommended and Management of DPWH offices concerned agreed to:

a. Ensure full coordination with other government agencies, among others, the LGUs
and DENR, including the community and private utilities, to achieve effective and
more synchronized planning and implementation of programs and projects;

b. Consider the disqualification and/or blacklisting of contractors involved, and

initiate the immediate take-over process of terminated projects to facilitate
completion of the projects within the project timeframe; and

c. Minimize/avoid further delays in project implementation by:

i. Conscientiously carrying out the detailed engineering to ensure that issues

such as relocation of informal settlers and viability of the project sites are
properly addressed during the feasibility or preliminary engineering study
prior to project implementation;

ii. Thoroughly reviewing and evaluating the Program of Works to ensure that
project designs and estimates are properly prepared and that all phases of the
projects are covered to minimize variation orders and time extensions which
often resulted in the increase of project cost and delayed completion;

iii. Directing the BAC to properly verify and evaluate during post-qualification
the operating conditions of equipment and other construction requirements,
among others, to ensure adequacy, availability and suitability of the
contractor’s technical capability; and

iv. Strict monitoring and supervision of the status/progress of projects

implemented by different DPWH offices.

7. Inadequate planning and monitoring in the implementation of 14 FAPs with aggregate

cost of P63,384,658,955.22 as evidenced by negative slippages ranging from 0.99 to
43.93 percent, increased in project costs totaling P943,639,921.35, and/or extended
implementation period ranging from 61 to 1,273 days resulted in the loan restructuring
of four (4) projects during the year, thereby depriving the intended beneficiaries of the
immediate use and benefits that could be derived therefrom had these projects were
timely completed. Moreover, DPWH sustained commitment fees totaling
P7,655,510.83 due to the delayed implementation of the Central Luzon Link
Expressway (CLLEX) Project that could have been avoided had the project been
completed on time as planned. (Observation No. 15)

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 We recommended and Management agreed to:

a. Ensure that cause/s or factors of delay/non-implementation controllable by the

Agency are properly addressed prior to project implementation, particularly issues
on RROW acquisition and viability of the project sites during the feasibility or
preliminary engineering study;

b. Strengthen the monitoring of the status/progress of each FAP to ascertain that the
strategies adopted are responsive to fast track the implementation of the projects
and to avoid further delays; and

c. Accelerate/maximize the utilization of loan proceeds by adopting efficient and

remedial procedures in accordance with the guidelines of the foreign lending
institutions, the loan agreements/contracts and DPWH DO No. 193 to lessen
delays thereby minimizing incurrence of commitment fees.

8. Liquidated damages were not imposed, collected or deducted from the payments made
to the contractors and suppliers who incurred delays ranging from one (1) to 691 days
between the target schedule and actual dates of completion of projects and delivery of
goods with total contract amount of P7,914,703,939.18 contrary to Item 3.1, Annex
“D”, and Item 9.1, Annex “E” of the Revised IRR of RA No. 9184. Moreover,
liquidated damages collected amounting to P4,021,269.57 in 13 projects of three (3)
DPWH offices were found lower by P3,249,195.91 than the COA validated/evaluated
amount of P7,270,465.48. (Observation No. 16)

We reiterated our previous year’s recommendation and Management of DPWH

offices concerned agreed to impose the corresponding liquidated damages, and deduct
the same from the progress billings/claims, retention money, or other securities posted
by the contractors and suppliers who incurred delays in the completion of
infrastructure projects and delivery of goods.

We also recommended and Management of DPWH offices concerned agreed to re-

evaluate/re-assess the computation made on the liquidated damages on the delays of
contractors concerned to ensure that the correct amounts are collected and/or deducted
from their claims; and subsequently collect the additional sum on the deficient amount
involved, if any.

9. Due to lack of proper monitoring and supervision, 653 infrastructure projects with a
total contract cost of P20,718,336,041.82 undertaken by various DPWH offices were
not executed in accordance with the provisions stipulated in the respective Contract
Agreement resulting in various technical defects equivalent to a total cost of
deficiencies of at least P369,172,665.73. (Observation No. 17)

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 We reiterated our previous year’s recommendations and Management of DPWH
offices concerned agreed to:

a. Require the contractors concerned to immediately repair, rectify or correct the

noted defects and deficiencies, and deliver the required items of works necessary
in the implementation of infrastructure projects to conform with the terms and
specifications provided for in the contracts; otherwise, forfeit the performance
securities of the defaulting contractors, and consider them for blacklisting, if
warranted; and

b. Direct the Inspectorate Teams to conduct regular and periodic monitoring and
supervision to ensure that all projects are implemented/executed in accordance
with the approved program of works of the contracts.

We also recommended and Management of Lanao del Norte 1st DEO and Sorsogon
1st DEO agreed to conduct rectification and rehabilitation of roads, bridges and
asphalt pavements with noted technical defects, and ensure proper and effective
planning and design study in constructing/implementing roads and bridges projects
suitable to actual condition of the project sites to minimize repeated retrofitting of
bridges and rehabilitation of roads.

10. Several DPWH offices were not fully compliant with pertinent provisions of RA No.
9184 and its Revised IRR which prevented transparency, competitiveness, equity,
efficiency and economy in the process of procurement as well as during the
implementation of various infrastructure projects. (Observation No. 18)

We reiterated our previous year’s recommendations and Management of DPWH

offices concerned agreed, through the BAC, Procurement Units, and the Offices
concerned, to strictly conform with the provisions of RA No. 9184 and its Revised
IRR in all stages and activities of the procurement being conducted, and ensure that
mandatory timelines/schedules were monitored and complied with for the timely
completion of the entire procurement process, including careful bid evaluation and
post-qualification of bidders to preclude any issues that may arise upon
implementation of the projects.

11. Disbursements in the total amount of P109,309,830.76 considered not compliant with
pertinent provisions of existing laws, rules and regulations and/or deviated from
proper standards and procedural guidelines, which rendered the validity, regularity
and propriety of transactions doubtful contrary to Section 2 of PD No. 1445.
(Observation No. 19)

We recommended and Management of DPWH offices concerned agreed to evaluate

and investigate the deficiencies of the foregoing transactions in order to facilitate the
immediate submission of required document, justification and requirements necessary
to establish and support the validity, propriety and regularity of the disbursements to
preclude eventual suspension or disallowance of the same pursuant to COA Circular

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 No. 2012-03, and henceforth, strictly adhere with the provisions of existing laws, rules
and regulations governing its operations and transactions.

12. Various infrastructure projects with aggregate cost of P4,276,503,569.26 were

declared as 100 percent complete on the Report on Publicized Government Programs,
Projects and Activities (RPGPPA), and project status monitoring reports of DPWH
implementing offices despite the deficiencies/defects noted upon actual inspection and
validation thereof, thereby infringing transparency on reporting of government
transactions, and precluding the imposition of liquidated damages contrary to the
DPWH Quality Policy, COA Circular No. 2013-004 dated January 30, 2013, and RA
No. 9184 and its Revised IRR. (Observation No. 23)

We reiterated our previous year’s recommendations and Management of DPWH

offices concerned agreed to:

a. Instruct the Project/Resident Engineers concerned to closely monitor and

supervise the implementation of infrastructure projects, including the immediate
rectification of deficiencies/defects noted, and completion of remaining
unimplemented/unfinished work items, for the timely and accurate reporting of
projects’ actual physical status and accomplishments in the PCMA and RPGPPA;
and

b. Inform the contractors concerned regarding the delays noted in the completion of
projects, and determine and impose the corresponding liquidated damages, if any,
by directing the Accountants concerned to deduct the same from the contractors’
claims.

13. Claims on the acquisition of ROW in the aggregate amount of P26,678,095.18 for the
implementation of 34 infrastructure projects of Bukidnon 1st DEO, Bukidnon 2nd
DEO and Butuan City DEO remained unsettled/unpaid contrary to Section 17.6 of the
Revised IRR of RA No. 9184 and Section 6 of RA No. 10752. (Observation No. 24)

We recommended and Management of DPWH offices concerned agreed to:

a. Make representation with their respective Regional Offices (ROs) to facilitate the
release of funding, and expedite the evaluation and approval of documents for the
timely processing and settlement of claims; and

b. Henceforth, strictly comply with the provisions of the Revised IRR of RA No.
9184, and RA No. 10752 to ensure that detailed engineering investigations,
surveys and designs are properly conducted, and avoid Right-of-Way (ROW)
issues that may arise during the implementation of the projects.

14. Unserviceable/obsolete properties and equipment of different DPWH offices with

total carrying amount of at least P13,139,408.62 were not disposed of contrary to
Section 79 of PD No. 1445, and thereby entailed additional costs for storage and

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 maintenance, and exposed to further deterioration susceptible to fire and health
hazards. (Observation No. 27)

We reiterated our previous year’s recommendation and Management of DPWH

offices concerned agreed to direct the Property Officers/Custodian to prepare the
updated and duly accomplished Inventory and Inspection Report of Unserviceable
Properties (IIRUP) together with its relevant supporting documents necessary to
facilitate the disposal of the unserviceable properties and equipment.

15. Insurable properties and equipment of various DPWH offices with carrying amount
of at least P22,010,839,812.88 are not insured with the General Insurance Fund (GIF)
of the Government Service Insurance System (GSIS), as required under Sections 2
and 5 of RA No. 656 or the Property Insurance Law; thus, exposing the Agency to the
risk of non-recovery and/or non-indemnification in case of damage to, destruction or
loss of properties due to fire, earthquake, storm or other casualties.
(Observation No. 30)

We reiterated our previous year’s recommendations and Management of DPWH

offices concerned agreed to:

a. In coordination with the DPWH ROs and DEOs, prepare a consolidated and
updated Property Inventory Forms (PIFs) as basis for the centralized payment of
insurance premiums of all DPWH property, plant and equipment located
nationwide; and

b. Ensure that all of its insurable assets are timely insured with the Government
Insurance Fund (GIF) of the GSIS in accordance with RA No. 656 and COA
Circular No. 2018-002, so that the government will be properly indemnified for
any damage or loss of properties in case of calamities, fortuitous events and
casualties.

16. The unsettled audit suspensions, disallowances and charges as at December 31, 2022
accumulated to P17,252,457,657.50, P5,318,192,286.05 and P18,011,890.21,
respectively, due to Management’s inability to enforce settlements from the persons
held responsible/liable contrary to pertinent provisions of COA Circular No. 2009-
006 dated September 15, 2009, which prescribes the COA Rules and Regulations on
Settlement of Accounts (RRSA). (Observation No. 36)

We reiterated our previous year’s recommendations and Management agreed to:

a. Strictly monitor the immediate settlement of the suspensions to prevent the same
from maturing into disallowances/charges;

b. Enforce the settlement of the audit disallowances/charges against the liable

persons particularly those which were already final and executory; and

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 c. Henceforth, comply with the applicable and relevant laws, rules and regulations in
government transactions to avoid the issuance of suspensions, disallowances, and
charges in audit.

The foregoing findings and recommendations were discussed with Management

officials concerned in an exit conference conducted on June 14, 2023, and their comments
were incorporated in this Report, where appropriate.

G. Summary of Total Suspensions, Disallowances and Charges

The DPWH’s unsettled audit suspensions, disallowances and charges as at

December 31, 2022 accumulated to P17,252,837,136.52, P5,318,192,286.05 and
P18,011,890.21, respectively. Details are shown in Part II of this Report.

H. Status of Implementation of Prior Year’s Audit Recommendations

Of the 94 outstanding prior year’s audit recommendations as at January 01, 2022,

53 or 56.38 percent were implemented. The other 41 or 43.62 percent of the
recommendations were reiterated/restated in Part II of this Report. The details on the results
of validation of the 53 implemented and 41 not implemented recommendations are
presented in Part III of this Report.

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