EXECUTIVE SUMMARY

A. Introduction

The Municipality of San Juan, formerly a village of the town of Rosario, was officially
recognized as a separate Municipality in 1848. It was created by virtue of Republic Act
No. 2390 dated February 28, 1914.

Considered as the 2nd largest municipality in the Province of Batangas, it has a total land
area of 27,340 hectares predominantly devoted to agriculture. By virtue of Department of
Finance Memorandum No. 01-M (35) dated January 31, 2006, it was reclassified from a
second class to first class Municipality effective July of 2005. It has 42 barangays under its
general supervision, 4 urban and 38 rural barangays with a reported total population of
116,386 based on the latest NEDA survey of 2018.

The Municipality is envisioned to be the premier tourist destination and industrial center in
the country, providing its empowered citizenry with adequate infrastructure facilities to boost
industrialization and economic opportunities in an ecologically- balanced environment under
a transparent and responsible leadership of incumbent elected officials.

The organizational structure of the Municipality of San Juan, Batangas is as follows:

Key Officials

Municipal Mayor Ildebrando D. Salud

Municipal Vice-Mayor Octavio Antonio L. Marasigan

Members of the Sanggunian

Alvin John O. Samonte
Rowena M. Magadia
Rodello A. de Chavez
Angelo Luis T. Marasigan
Meynardo V. Robles
Grenalyn V. Virtusio
Melchor C. Ayap
Ernino A. Llana
Wivin R. Llana (ABC President)
Joel S. Rey Jr. (SK Federation President)

Municipal Budget Officer Marissa G. Quijano

Municipal Treasurer Manolo I. de Torres

Municipal Accountant Arlene G. Sayat

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 As of December 31, 2021, the personnel complement of the municipal is as follows:

Permanent 215
Elected 12
Casual 62
Coterminous 5
Job Orders 144
Total 438

B. Financial Highlights (in Totals)

For the Calendar Year (CY) 2021, the Municipal Government of San Juan, Batangas
generated revenue of ₱446,995,125.96, sourced from local taxes, permits and licenses,
service and business income and internal revenue allotment. Total appropriations/allotments
was ₱970,611,869.72 of which ₱407,171,820.45 or 41.95 percent was obligated during the
year, thus leaving an unexpended balance of ₱563,440,049.27 or 58.05 percent.

The total assets, liabilities, equity, income and expenses of the Municipality for CYs 2021
and 2020 are as follows:

2021 2020 Increase/(Decrease)

Assets ₱1,035,727,306.41 ₱888,024,559.64 ₱147,702,746.77
Liabilities 157,444,039.25 116,937,000.17 40,507,039.08
Equity 878,283,267.16 771,087,559.47 107,195,707.69
Income 446,995,125.96 527,484,244.43 (80,489,118.47)
Expenses 341,791,472.54 431,318,667.12 (94,394,287.92)
Surplus 105,203,653.42 91,298,483.97 13,905,169.45

C. Scope and Audit Objectives of Audit

The audit covered the accounts and operations of the Municipality Government of San Juan
for the period CY 2021. The objectives of the audit are to (a) verify the assurance that may
be placed on Management’s assertions on the financial statements; (b) recommend agency
improvement opportunities; (c) determine compliance with existing laws, rules, and
regulations; and (d) determine the extent of implementation of prior year’s audit
recommendations

D. Auditor’s Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the financial
statements of the Municipality of San Juan as of December 31,2021 due to the following:

1. The properties of the Municipality totalling P881,091,960.36, gross, were not the
subject of the periodic physical inventory in CY 2021 while the physical count results on
Property, Plant and Equipment – Other Machinery and Equipment showed discrepancy
amounting to P398,871.33 compared to stated amount in the financial statements, thus,
cast doubt on their reliability, completeness and existence; and

The increases of Property, Plant and Equipment in CY 2021 totaling P145,837,927.79

did not tally with the total investment of P143,939,694.38 in the Statement of Cash Flows

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 and the transferred property, plant and equipment from Trust Fund of P31,874,847.40.

2. Statement of Financial Position, Statement of Changes in Net Assets/Equity, Statement

of Cash Flows, Statement of Comparison of Budget and Actual Amounts and Notes to
the Financial Statements of the Municipality for CY 2021 were found to have
inconsistencies, discrepancies and deficiencies, thus, the reliability of these statements
doubtful and making them less useful to the intended users for accountability and
decision-making purposes.

3. Fund transfers received from Local Government Support Fund totaling P35,891,292.00
were accounted as Inter-Agency Payables and not Trust Liabilities, thus, the releases
were not properly accounted.

4. The accounting and reporting guidelines of COA Circular No. 2012-002 were not strictly
observed, thus, unexpended/unobligated balance of Quick Response Fund and Local
Disaster Risk Reduction Management Fund (LDRRMF) – Maintenance and Other
Operating Expenses for CY 2021 totaling P4,190,178.94 was not yet transferred to the
Special Trust Fund in the Trust Fund Books that overstated cash and understated
expenses.

For the exceptions cited above, the Audit Team recommended that the Municipal Mayor
direct the:

1. a. The Municipality conduct the complete periodic physical count of its properties and
reconcile the results with the property and accounting records. Also, adhere to the
prescribed format or Annex C of COA Circular No. 2015-008 dated November 23,
2015 in reporting the results of the physical count of Property, Plant and Equipment
– Local Road Networks; and

b. The General Services Officer maintain the subsidiary records for each class of
property, plant and equipment or the property cards prescribed in the accounting
manual and COA Circular No. 2015-008 dated November 23, 2015 and reconcile the
property cards with the Report on the Physical Count of Property, Plant and
Equipment (RPCPPE) and Report on the Physical Count of Local Road Network
(RPCLRN).

2. Also, we recommended that the Municipality observe strictly the guidelines set forth in
Paragraph 29 of International Public Sector Accounting Standard (IPSAS) 1 -
Presentation of Financial Statements, of the Handbook of International Public Sector
Accounting Pronouncements, 2020 Edition, Volume I for the fair presentation of its
financial statements and for providing useful information to the users for accountability
purposes and decision making purposes.

3. We recommended that the Municipal Accountant account funds transfers in accordance

with the guidelines provided by the granting agency particularly Local Budget Circulars
issued by the Department of Budget and Management (DBM) as well as Memorandum
Circular issued by the Department of the Interior and Local Government.

4. We recommended that the Municipality observe strictly the rules and regulations of COA
Circular No. 2012-002 dated September 12, 2012:

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 d. Transfer the unexpended/unobligated balance of Quick Response Fund and
Local Disaster Risk Reduction Management Fund (LDRRMF) – Maintenance and
Other Operating Expenses for CY 2021 totaling P4,190,178.94 to the Special
Trust Fund in the Trust Fund Books.

The other significant observations and recommendations in the audit of the Municipality of
San Juan for CY2021 are summarized as follows:

1. The posting requirements in connection with the Municipality’s procurement through

public bidding was not satisfactorily complied with, thus, governing principles of
transparency and accountability in local government procurement have been ignored in
the system.

Also, unutilized balance of fund transferred to Municipality of P100,000.00 was not yet
returned to the Bureau of the Treasury and deprived the national government of the
scarce resource for its operations.

We recommended that the Municipality observe strictly the provisions of the

Implementing Rules and Regulations of RA 7160; Section 3.15 of Local Budget Circular
No. 122 dated January 31, 2020 of the Department of Budget and Management (DBM);
Section 3.7 of Local Budget Circular No. 134, dated January 20, 2021 of the Department
of Budget and Management (DBM); Section 6.4.2 of Memorandum Circular No. 2020-
088 dated May 21, 2020 of the Department of the Interior and Local Government;
Special Provisions No. 1 (A) (4) (e) (i) and (ii) of Republic Act No. 11465 or General
Appropriations Act Fiscal Year 2020 – Assistance to Municipalities Volume I – B and
Section 28, Chapter 4, Book VI of E.O. No. 292, s. 1987:

a. The Bids and Awards Committee (BAC) comply with the posting requirement in the
procurement of goods and infrastructures of the Municipality under the competitive
bidding; and

b. The Municipal Treasurer return to the Bureau of the Treasury the

undisbursed/unexpended fund transfer pursuant to Section 28, Chapter 4, Book VI of
E.O. No. 292, s. 1987.

2. The Trust Fund in CY 2021 incurred shortfall in cash totaling P6,343,766.37, thus, funds
were no longer available to settle its short-term obligations.

We recommended that the Municipality always adhere to the provisions of Sections 4(3)
and 4(8) of P.D. No. 1445 that trust fund be utilized for the specific purpose it was
intended and exercise sound fiscal administration in the local government operations
provided not contravening to existing laws and regulations.

3. a. The 20 percent Development Fund of the Municipality for CY 2021 totaling

P80,726,304.12 had been entirely utilized but 21 different development projects were at
various stages of completion or its status of work was ongoing, thus, the desired socio-
economic development and environmental management outcomes for the benefits of the
constituents have yet to be fully realized.

b. Reverted Current Legislative Appropriations of 20 percent Development Fund totaling

P2,076,456.99 was source of fund for Supplemental Budget No. 01, series 2021.

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 c. The Annual Investment Program (AIP) of the development fund in CY 2021 was not
the annual slice of the Local Development Investment Program (LDIP) for CY 2021, as a
consequence, the programmed programs/projects/activities did not reflect those which
should be prioritized by the LGU for funding according to the comprehensive
development plan.

Furthermore, the municipal Annual Investment Program and Annual Budget showed the
programs/projects/activities of the development fund in lump sum amounts or not
itemized. Likewise, estimated costs presented in the Annual Investment Program were
excessive or not observant to the provisions of local government budgeting manual and
instructive memorandum of oversight agencies.

We recommended that the Municipal Mayor and other concerned municipal officials
ensure the effective utilization of the 20 percent Development Fund which is primarily
intended to fund projects that shall contribute to the attainment of desirable socio-
economic development and environmental management outcomes. Delays in the
completion of development projects definitely had an adverse impact to the community
development or realization of development objectives.

We also recommended that the development programs/projects/activities contained in

the Municipality’s Local Development Investment Program (LDIP) be also those
programs/projects/activities in its Annual Investment Program that shall be the ones to
be budgeted and implemented as defined in Section 3.2 of Joint Memorandum Circular
No. 1 Series of 2007 dated March 8, 2007 of Department of the Interior and Local
Government, National Economic and Development Authority, Department of Budget and
Management and Department of Finance. And the development projects/activities shall
be shown in itemized appropriations in the municipal Annual Investment Program and
municipal Annual Budget and that Annual Investment Program be filled out according to
the existing guidelines to provide an accurate and useful data.

We further recommended that the Municipality implement changes in its Annual Budget
pursuant to Article 418 of the Implementing Rules and Regulations of RA No. 7160.

4. a. The Local Disaster Risk Reduction Management Fund Investment Plan

(LDRRMFIP) did not prioritize disaster response as well as early rehabilitation and
recovery, thus, against the risk reduction and management objectives of achieving safer,
adaptive and disaster resilient Filipino communities towards sustainable development.

b. Also, the Municipal or Local Disaster Risk Reduction Management Plan (LDRRMP)
CY 2021 did not mention corona virus disease 2019 in its risk profile but the Local
Disaster Risk Reduction Management Fund (LDRRMF) programming in CY 2021
included programs/projects/activities related to corona virus disease 2019 contrary to
Sections 12 (c) (6) and (c) (7) of RA 10121.

We recommended that the Municipality observe strictly the provisions of Republic Act
No. 10121 and rules and regulations of COA Circular No. 2012-002 dated September
12, 2012:

a. Prioritize disaster response and early rehabilitation and recovery when the area is
declared under the state of calamity;

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 b. Prepare the annual Local Disaster Risk Reduction Management Fund Investment
Plan (LDRRMFIP) according to the Local Disaster Risk Reduction Management Plan
(LDRRMP);

c. Prepare the Report on Sources and Utilization of LDRRMF as prescribed in the COA
Circular No. 2012-002 disclosing all the sources of the fund and their utilization;

5. The Municipality’s Solid Waste Management Accomplishment Report CY 2021 failed to

provide status report of the scheduled solid waste management activities for the period,
thus, the Municipality failed to meet its solid waste management targets in CY 2021.

We recommended that the Municipality fully implement the approved Municipal Solid
Waste Management Plan covering the period CY 2015 to 2025 in compliance with
declared policy of the State to adopt a systematic, comprehensive and ecological solid
waste management program and knowing that the LGUs are primarily responsible for
the implementation and enforcement of the provisions of the Ecological Solid Waste
Management Act.

6. The Special Education Fund (SEF) Annual Budget for CY 2021 of the Municipality
included budget for San Juan District totaling P666,976.00, thus, the special fund budget
was not properly formulated, prepared and allocated as prescribed.

Also, the submitted School Improvement Plan (SIP) did not include certificate of
acceptance and approval issued by the Schools Division Superintendent, hence, the
document was doubtful if it did contain the strategic prioritization policies in the allocation
of SEF to the schools.

We recommended that the Local School Board, adhere strictly to the provisions of
Section 272 of RA No. 7160; Joint Circular No. 1, s. 2017 of the Department of
Education (DepEd), Department of Budget and Management (DBM) and Department of
the Interior and Local Government (DILG) and the two addenda of the Joint Circular in
the appropriation of Special Education Fund (SEF) that the beneficiaries of the special
purpose fund are the elementary and secondary schools of the District of the
Municipality of San Juan
.
We further recommended that the copy of School Improvement Plan (SIP) submitted for
audit include the certification of acceptance and approval issued by the Schools Division
Superintendent to show that the document does contain strategic prioritization policies in
the allocation of SEF to the schools.

7. Five (5) gender issues or GAD mandates with total allocation of P2,500,000.00 in CY
2021 Gender and Development (GAD) Plan and Budget were not implemented while
total GAD expenditures of P12,034,339.00 were only 45% of the intended GAD fund
utilization, thus, it was doubtful if the gender and development concerns of the locality
had been fully addressed by the LGU.

We recommended that the Municipality stringently observe guidelines provided in

Sections C.1 (5) and C.3 (1) of Joint Memorandum Circular No. 2013-01 of the
Philippine Commission on Women (PCW), Department of the Interior and Local
Government (DILG), the Department of Budget and Management (DBM), and the
National Economic and Development Authority (NEDA), to effectively plan and

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 implement GAD PPAs of the LGU and that five percent (5 percent) GAD budget shall
endeavor to influence the remaining 95 percent of the LGU budget toward gender-
responsiveness.

The foregoing observations and recommendations were discussed by the Audit Team with
the concerned Municipality’s officials and staff during the exit conference conducted on May
27, 2022, as discussed in detail in Part II of this report. Management comments and
justifications were incorporated in the report, where appropriate.

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

Of the 33 audit recommendations embodied in the 2020 Annual Audit Report, 23 were fully
implemented while the remaining 10 were partially implemented by the Municipality.

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