PART II - OBSERVATIONS AND RECOMMENDATIONS

A. FINANCIAL AUDIT

Accounting Errors and Improper Accounting Treatment of Transactions

1. Of the total misstatements amounting to P32,554,688.47 found in audit due to

accounting errors and improper accounting treatment of transactions that are
considered departure from the International Public Sector Accounting
Standards (IPSASs), the total amount of P29,949,096.73 had been adjusted,
thus, the amount of P2,605,591.74 remained uncorrected as at year-end.
However, the uncorrected misstatements are considered not material to affect
the fairness of presentation of the financial statements as at December 31, 2022
of MMDA.

1.1 Paragraph 27 of International Public Sector Accounting Standards (IPSAS) 1 and

Section 7, Chapter 19 of the Government Accounting Manual (GAM) Volume 1
require that financial statements shall present fairly the financial position, financial
performance, and cash flows of an entity. Fair representation requires the faithful
presentation of the effects of transactions, other events, and conditions in accordance
with the definitions and recognition criteria for assets, liabilities, revenue, and
expenses set out in the IPSASs. The application of IPSASs, with additional
disclosures, when necessary, is presumed to result in financial statements that
achieve a fair presentation.

1.2 Audit of the financial statements of MMDA disclosed accounting errors and improper
accounting treatment aggregating P32,554,688.47, of which, the total amount of
P29,949,096.73 was adjusted in the books of accounts, leaving total uncorrected
misstatements of P2,605,591.74 pertaining to the Other Payables account as reflected
in Annex A and discussed in detail in the succeeding paragraphs:

Non-reversion of long outstanding obligations aged two years and beyond

1.3 Section 3.2(a) of COA Circular No. 99-004 dated August 17, 1999 provides that “all
obligations shall be supported by valid claims”. Moreover, Section 1 of Executive
Order (EO) No. 87 dated August 19, 2019 states that “All documented accounts
payable for fiscal year 2016 and years prior thereto shall be reverted to the
Accumulated Surplus or Deficit of the General Fund, or the Cumulative Result of
Operations of the National Government. Henceforth, all documented accounts
payable which remain outstanding for at least two years, for which no actual
administrative or judicial claim has been filed, shall be subject to automatic
reversion.” Section 2 of the same EO, provides that “All accounts payable which are
undocumented or not covered by perfected contracts on record, regardless of the year
in which they were incurred, shall automatically be reverted.”

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 1.4 Analysis of the Other Payables account revealed that the balance of P2,605,591.74
had not been moving in the books for two (2) to seven (7) years but which has not
been reverted to the Accumulated Surplus, contrary to the above regulations.

1.5 Verification disclosed that the balance cannot be validated since credits to the
individual Subsidiary Ledger accounts have no supporting documents or have
documents but not sufficient to substantiate the validity of the claims.

1.6 The presence of these dormant/inactive balances casts doubt over the existence and
accuracy of the recorded liabilities of the Agency.

1.7 We recommended and Management agreed to direct the Chief Accountant to

analyze carefully the transactions included in the Other Payables account and
make the necessary adjusting entries to facilitate the appropriate reversion of
the balances without actual valid claims to the Accumulated Surplus (Deficit)
pursuant to Section 1 of Executive Order No. 87 dated August 19, 2019.

Accounting Deficiencies Affecting Reliability of Account Balances

2. Accounting deficiencies were noted due to inability of the agency officials

concerned to implement the controls required under existing rules and
regulations in the reconciliation and validation of account balances. On the basis
of the possible/potential effects of these deficiencies, the reported balances of the
affected accounts could not be relied upon.

2.1 Section 6, Chapter 19, Volume I of the GAM for NGAS on Qualitative
Characteristics of Financial Reporting states that an entity shall present information
including accounting policies in a manner that meets reliable information which is
free from material error and bias, and can be depended on by users to represent
faithfully that which it purports to represent or could reasonably be expected to
represent.

2.2 Audit disclosed that there were accounting deficiencies in the financial accounts
requiring further analysis, reconciliation, physical count, verification, coordination
and future corrective actions as these have possible effects on the accuracy and
reliability of the reported account balances in the aggregate amount of
P1,147,428,052.72. The accounts with corresponding amounts affected and
deficiencies noted are as follows:
Table 1. Accounting deficiencies affecting account balances
Gross Balance* as at
Amount Affected
Account December 31, 2022 Deficiencies Noted
(In PhP)
(In PhP)
PPE (excluding CIP) 23,584,520,447.86 a. Unreconciled PPE balances 1,510,328.30
between Accounting and
Property records (RPCPPE) due
to non-conduct of periodic

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 Gross Balance* as at
Amount Affected
Account December 31, 2022 Deficiencies Noted
(In PhP)
(In PhP)
reconciliation of accounting and
property records

Receivables 1,153,174,711.12 b. Dormant accounts (including 1,074,670,199.49

unreconciled difference between
MMDA records and per
confirmation of
P1,009,174,752.82)
Other Current Assets 322,745,569.61 c. Dormant Accounts 18,131,206.20
Financial Liabilities 1,410,278,526.74 53,116,318.73
Total 26,470,719,255.33 Total 1,147,428,052.72
*Before any accumulated depreciation or impairment allowances

a. Unreconciled PPE balances between Accounting and Property records

(RPCPPE) due to non-conduct of periodic reconciliation - P1,510,328.30

2.3 Item No. 5.12 of COA Circular No. 2020-006 re: Guidelines and procedures in the
Conduct of Physical Count of PPE states that “Property records shall be updated
based on the results of the physical inventory and reconciled with the accounting
records to come up with the reconciled balances of PPE accounts to be considered
as the correct balance of the agency’s PPEs”.

2.4 Section 42, Chapter 10 of the GAM for NGAs Volume I requires the Accounting
Unit to maintain the Property Plant and Equipment Ledger Card (PPELC) for each
category of PPE. For check and balance, the Property and Supply Office/Unit shall
likewise maintain Property Card (PC) for PPE in their custody to account for the
receipt and disposition of the same. The balance per PC shall be reconciled with
PPELC maintained by the Accounting Division/Unit.

2.5 Section 38 of the same Chapter of the Manual likewise provides that the entity shall
have a periodic physical count of PPE, which shall be done annually and presented
in the RPCPPE as at December 31 of each year.

2.6 The gross amount of the PPE account as recorded in the books amounted to
P23,584,520,447.86 as at December 31, 2022, while the RPCPPE reflects a balance
of P23,584,552,070.92. Summary of PPE accounts with variances noted are shown
below:
Table 2. Unreconciled Balances per Accounting Record and RPCPPE
Balance as at December 31, 2022
Per Accounting Variance
PPE Account Per RPCPPE
Records
Amount (In PhP)
Office Equipment 52,302,552.88 53,034,265.62 (731,712.74)
Other Equipment 207,962,042.95 207,961,695.85 347.10

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 Balance as at December 31, 2022
Per Accounting Variance
PPE Account Per RPCPPE
Records
Amount (In PhP)
Motor Vehicles 306,852,157.89 306,853,407.89 (1,250.00)
Furniture and Fixtures 12,918,960.34 12,179,954.82 739,005.52
Other Property, Plant
80,251,851.23 80,289,864.17 (38,012.94)
and Equipment
Total 660,287,565.29 660,319,188.35 1,510,328.30*
*Sum of absolute values

2.7 The non-reconciliation of the accounting and property records has been a recurring
audit observation. For CY 2022, the Accounting Division and the Supply and
Property Division (SPD) facilitated the reconciliation of balances per books and per
RPCPPE and were able to reconcile almost 99 percent of the accounts leaving an
unreconciled variance of only P1,510,328.30. This amount is subject to continuous
analysis and reconciliation by the Accounting Division and the SPD.

2.8 Per inquiry with SPD, time constraint and lack of manpower were the reasons why
reconciliation was not completed as SPD is currently focused on migration to the
new MMDA building where there are simultaneous physical count of deliveries and
property tagging of furniture, fixtures and equipment. The SPD also disclosed that it
has coordinated with the Accounting Division on how to facilitate the one-time
cleansing of PPE which is expected to commence in July 2023.

2.9 The non-reconciliation between the balance per books and per RPCPPE is contrary
to Item No. 5.12 of COA Circular No. 2020-006, Sections 38 and 42 of Chapter 10
of the Government Accounting Manual for National Government Agencies Volume
1, thus, affecting the accuracy and reliability of the account balance as of December
31, 2022.

2.10 We recommended and Management agreed to direct the Chief Accountant and
Property Officer to:

a. Continuously exert efforts to facilitate the reconciliation of current year

additions and disposals of Property, Plant and Equipment, continue to
investigate the causes of prior years’ discrepancies between the accounting
and property records and effect the necessary adjustments; and

b. Facilitate the one-time cleansing of Property, Plant and Equipment for items
that are found non-existing/missing pursuant to COA Circular No. 2020-
006.

b. Unreconciled Due from LGUs account – P1,009,174,752.82

2.11 Section 111 of the Presidential Decree (PD) No. 1445 states that: “The accounts of
an agency shall be kept in such detail as is necessary to meet the needs of the agency

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 and at the same time be adequate to furnish the information needed by fiscal or
control agencies of the government.”

2.12 The account balance of Due from LGUs pertains to the accumulated outstanding
obligations of the Local Government Units (LGUs) in the National Capital Region
to the then Metro Manila Commission (MMC)/Metro Manila Authority (MMA) and
MMDA since 1997 pursuant to PD No. 824, PD No. 921 and RA No. 7924
representing the five (5) percent yearly contributions of LGUs to the MMDA. Of the
17 Confirmation Letters (CL) sent to various LGUs in January 2023 to ascertain the
correctness of the individual balances, only 12 or 70.59 percent have replied to the
CL. Examination and verification of the confirmation replies received and the
balances reflected in the SLs of the Due from LGUs account as at December 31, 2022
disclosed variances as follows:

Table 3. Unreconciled Balances per books and per confirmation

Difference in Amount
SL Balance CL Reply
No. Unit (SL - CL Reply)

Amount (In PhP)

1 Taguig 7,190,998.83 0.00 7,190,998.83
2 Pasay 34,791,830.29 0.00 34,791,830.29
3 Mandaluyong 55,439,543.82 3,731,400.00 51,708,143.82
4 Pasig 28,309,585.10 0.00 28,309,585.10
5 Malabon 34,019,840.89 0.00 34,019,840.89
6 Navotas 3,340,713.26 0.00 3,340,713.26
7 Parañaque 143,679,582.74 27,477.48 143,652,105.26
8 Pateros 2,874,608.42 81,686.86 2,792,921.56
9 Makati 88,328,911.33 0.00 88,328,911.33
10 Marikina 10,411,479.32 0.00 10,411,479.32
11 Quezon City 264,914,663.20 0.00 264,914,663.20
12 San Juan 37,208,665.70 0.00 37,208,665.70
13 Caloocan 63,213,218.77 No reply 63,213,218.77
14 Las Piñas 131,238,559.51 No reply 131,238,559.51
15 Manila 64,308,161.08 No reply 64,308,161.08
16 Muntinlupa 6,671,567.28 No reply 6,671,567.28
17 Valenzuela 37,073,387.62 No reply 37,073,387.62
Total 1,013,015,317.16 3,840,564.34 1,009,174,752.82

2.13 Verification revealed that no transactions occurred in CY 2022 with regard to the SL
outstanding balances. The LGUs of Navotas, Paranaque and Pasay requested for the
breakdown and corresponding supporting documents to serve as basis of the claim.
The LGUs of Malabon, San Juan and Quezon City reiterated their confirmation that
no outstanding balances are due to the agency while the LGUs of Mandaluyong and
Manila are still waiting for verification from their respective Accounting offices. The
Accounting Division disclosed that they are faced with difficulty in justifying the
basis of claims due to the absence of documents.

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 2.14 The existence of unreconciled balances resulted in unreliable presentation of the
receivables in the Agency books as against LGU records.

2.15 We recommended and Management agreed to direct the Chief Accountant to

closely facilitate the analysis and reconciliation of the noted variances and effect
the necessary adjustments to correct the account balances.

c. Dormant Accounts – P1,145,917,724.42

2.16 Item III.B of COA Circular No. 97-001 dated February 5, 1997 provides that dormant
accounts in an active fund shall be reviewed, analyzed and reconciled together with
the other related accounts in the trial balance, after which, the Chief Accountant shall
effect adjusting journal entries and determine the proper disposition of reconciled
and validated accounts. If analysis/review of the accounts is not possible due to the
absence of records and documents, the agency head concerned should request for
write-off and/or adjustment of account balances from COA, supported by the
required documents.

2.17 Section 5.4 of COA Circular No. 2016-005 dated December 19, 2016 defines
dormant receivable accounts as balances which remained inactive or non-moving in
the books for 10 years or more and where settlement or collectability could no longer
be ascertained. Furthermore, Section 7.1 of said Circular provide that the Accountant
shall conduct regular and periodic verification, analysis and validation of the
existence of the receivables, unliquidated cash advances and fund transfers.

2.18 Verification of the assets and liabilities accounts as at December 31, 2022 disclosed
that the amount of P1,145,917,724.42 remained non-moving/dormant over two (2)
to 37 years which were not analyzed, reviewed and applied for write-off in
accordance with Item III.B of COA Circular No. 97-001 and Section 5.4 of COA
Circular No. 2016-005. Of this total amount, P1,092,801,405.69 and P53,116,318.73
pertain to inactive/dormant assets and liabilities, respectively. These dormant
accounts remained existing in the books though collectability or expected economic
benefits to the Authority could no longer be ascertained. The summary of dormant
assets and liabilities is summarized in the table presented in the next page:

Table 4. Summary of Dormant Assets and Liabilities

Amount No. of years
Accounts Remarks
(In PhP) Inactive/Dormant
Due from National 11,133,636.51 Receivable from Pasig River Rehabilitation Over 15 years
Government Agencies Commission (PRRC) relating to fund transfer
(NGAs) involving the installation of floating garbage
conveyors and boom traps constructed in CY
2006, along with the repairs of barges and
tugboats in various locations.

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 Amount No. of years
Accounts Remarks
(In PhP) Inactive/Dormant
Due from Government-Owned 16,933,723.99 This balance was reclassified from Due to Pag- Over 17 years
and/or Controlled IBIG to Due from GOCCs in CY 2020, due to
Corporations (GOCCs) the abnormal balance of the account. Appears as
over-remittance of Pag-IBIG contributions of
MMDA made through special remittances in the
years 1998 to 2000.

Due from Local Government 1,013,015,317.16 Pertains to the five (5) percent share of MMDA Over 8 to 12 years
Units (LGUs) on the total annual gross revenue of LGUs
pursuant to RA No. 7924.
Due from Officers and 64,608.38 Collectibles from officers and employees. Over 2 to 7 years
Employees
Other Receivables 33,522,913.45 Claims from debtors who were either retired, Over 4 to 7 years
deceased or with unknown whereabouts. The
balance includes:
(a) GSIS old Salary Loan (unsettled balance of
employees’ loans from GSIS which were offset
from the sale of land by the MMDA to GSIS); (b)
loss of Traffic Violation Receipt; and (c) initial
deposits to the PNB accounts of employees.
Advances to Officers and 419,126.04 Unliquidated cash advances for travel and other Over 7 years
Employees special time-bound undertakings of accountable
officers who were either retired, deceased or with
unknown whereabouts.
Advances to Special 3,785,504.67 Unliquidated cash advances for travel and other Over 7 years
Disbursing Officers (SDO) special time-bound undertakings of accountable
officers who were either retired, deceased or with
unknown whereabouts.
Advances for Payroll 1,561,916.50 The amount is part of the balance of Cash - Over 22 years
Disbursing Officers account which was
reclassified to Payroll Fund.
Advances to Contractors 12,364,658.99 Unrecouped balances of advance payment to Over 10 years
contractor.
Subtotal, Dormant Assets 1,092,801,405.69
Loans Payable-(Domestic) 53,116,318.73 Loans from the Development Bank of the Over 37 years
Philippines (DBP) in 1982 originally intended for
the conversion of Makati Hotel into Regional
Hospital which is now the existing MMDA
building and payable annually for 15 years at 16
percent interest.
Subtotal, Dormant 53,116,318.73
Liabilities
Total, Dormant Assets and 1,145,917,724.42
Liabilities

2.19 The dormancy and inactivity of the above accounts cast doubt as to the existence,
validity and collectability of the receivables.

2.20 Likewise, the existence of long outstanding accounts hampers the reliable
presentation of the liabilities and an indication of lack of control and analysis on the
transactions of the Agency resulting in accumulation of unsettled obligations.

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

a. Trace the custody of records and history of balances of all dormant Due from
National Government Agencies, Government-owned and Controlled
Corporations, and Local Government Units, Due from Officers and
Employees, Other Receivables accounts and all unliquidated cash advances
and unrecouped Advances to Contractors and exert extra efforts to locate
the pertinent documents to establish the correctness and accuracy of the long
outstanding balances;

b. Send new/updated demand/collection letters for the dormant receivable

accounts and furnish the Audit Team with copies thereof including all
supporting documents;

c. Follow the guidelines prescribed under COA Circular No. 97-001 and COA
Circular No. 2016-005 on the proper review, analysis, reconciliation and
disposition/closure thereof, and if in the analysis/review of the accounts, it
was determined that there was absence of records and documents, the
agency head concerned should request for write-off and/or adjustment of
account balances from COA;

d. Henceforth, closely monitor the status of prior year projects in order to

identify those projects which were stopped/terminated/non-moving and take
immediate appropriate action to collect unrecouped balance recorded under
Advances to Contractors account; and

e. Make a strong representation with the Department of Finance, Development

Bank of the Philippines and Privatization Management Office for the
redemption of properties and settlement of the loan with the end view of
reducing/waiving the interest, penalties and other charges and facilitate the
implementation of proposed action plan for settlement of the loan.

Management Comments:

2.22 For Advances to Contractors account, the Management sent demand letters in CY
2019 to the contractors/suppliers with dormant unrecouped/advances of which no
reply has been received as at December 31, 2022. The Management issued new
demand letters on March 31, 2023 but no responses were received. Also, coordinated
with the Legal and Legislative Affairs Staff (LLAS) for further legal actions in case
the contractor/suppliers still fail to act on the demand letters.

2.23 Based on the analysis of the account and examination of available documents, it was
determined that the receivable from the PRRC amounted to P1,596,784.51 only.
However, confirmation from the Audit Team Leader of the Department of
Environment and Natural Resources – Central Office (DENR-CO) revealed that it

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 has a receivable from MMDA amounting to P122,623.72. The Accounting Division
will assign a staff to undertake reconciliation of the Due from PRRC account as
reported in the books of MMDA with PRRC’s accounting records and make the
necessary adjusting entry.

2.24 A confirmation letter dated April 28, 2023 has been sent to Pag-IBIG for the dormant
receivable account balance as at December 31, 2022 and reconciliation will be done
upon receipt of the reply.

2.25 Also, the Management will be sending collection letters to the LGUs concerned.
However, supporting documents cannot be provided since the balances appearing in
the account of the LGUs concerned are the forwarded beginning balances in 2004 e-
NGAS implementation. Management has exerted efforts to locate the documents but
to no avail. Lack of formal turn-over by the personnel previously in charge of the
transactions who ceased to be connected with MMDA was cited as one of the reasons

2.26 Further, the Accounting Division has requested from the Administrative Service to
furnish the status of the employees concerned including their last known addresses
to facilitate the sending of demand/collection letters. Receivables from employees
who are already retired, deceased and no longer connected to the Agency which was
recorded under the Due from Officers and Employees account were already
reclassified to Other Receivables account with corresponding allowance provided.

2.27 The Management will communicate with the government offices concerned to settle
whatever liabilities are due and will respectfully request for the waiver of any
penalties and charges. The Accounting Division already forwarded the documents
related to the loan to the official in-charge in facilitating the request of waiver to the
office concerned.

B. COMPLIANCE AUDIT

3. Proprietors, lessees or theater operators incurred delays ranging from 38 to 543

days in remitting the amusement taxes they collected for the Metro Manila Film
Festival (MMFF) years 2017-2021 while the Executive Committee was not able to
enforce Section 4 of the Metro Manila Commission (MMC) EO No. 86-09
requiring remittance of taxes within 20 days after the last day of the festival at the
expense of identified beneficiaries.

3.1 In accordance with the International Standards of Supreme Audit Institutions (ISSAI
4000) - Compliance Auditing Standards, a compliance audit was conducted to assess
MMDA’s compliance with the provision of Section 4 of the MMC EO No. 86-09 in
relation to the timely collection of MMFF amusement taxes for MMFF years 2017-
2020.

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3.2 Section 4 of the MMC EO states that “Amusement taxes referred to in Section 3
hereof shall be paid by the proprietor, lessee, or theater operator concerned directly
to the Executive Committee not later than twenty (20) days after the last day of the
festival”.

3.3 The compliance audit focused on the timely collection of MMFF amusement taxes
for MMFF years 2017-2020. The significant delays ranging from 38 to 543 days in
the collection of Amusement Taxes were noted, resulting to shortfall in the collection
of the same, contrary to Section 4 of the MMC EO No. 86-09 requiring remittance
of taxes within 20 days after the last day of the festival.

3.4 Based on the audit work performed, the collection of amusement taxes pertaining to
the MMFF for the period January 1, 2018 to December 31, 2021 is not in compliance,
in all material respects, with Section 4 of MMC EO No. 86-009 dated August 13,
1986.

3.5 We recommended and Management agreed that the Metro Manila Film Festival
Executive Committee, in coordination with the Playdate & Sales Monitoring
Committee and the Finance & Budget Committee, implement a detailed Action
Plan/Strategies to address the delay in billing, and collection of amusement taxes
in compliance with Metro Manila Commission Executive Order No. 86-09 dated
August 13, 1986.

3.6 The entrance conference for the compliance audit of MMFF for years 2017-2021 was
held concurrently with the entrance conference for the financial audit on August 25,
2022. This was followed by the exit conference on November 8, 2022 and the
Management Letter on the Compliance Audit was transmitted on February 9, 2023.

Management Comments:

3.7 As part of the Action Plan/Strategies to address the delay in billing, collection and
disbursement of waived amusement taxes in compliance with the law, the Committee
has agreed to require the cinema operators to remit the waived amusement taxes to
MMFF based on their own computation every 20th day of the month following the
end of each month without the need of billing from the MMFF. Hence, since the
festival period covers December 25 to January 7, payments for the period December
25 to December 31 are due on or before January 20, and the payments for the period
January 1 to January 7 are due on or before February 20. Within the same period, the
MMFF shall prepare its own computation based on the checkers' report submitted by
the movie producers.

3.8 Moreover, for MMFF 2022, PSMC coordinated with the theater association to
observe the revised process on remittance of amusement taxes to MMFF. In addition,
a Billing and Collection Committee was constituted by virtue of Special Order No.
27 Series of 2022 to implement the revised strategies on billing and collection of
amusement taxes.

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C. OTHER AREAS

Unutilized appropriations/unobligated allotments/unused budget/fund - P1,120,609,185.42

4. Of the total authorized budget of P11,565,528,057.74 received by MMDA in CY

2022 from current and continuing appropriations, the amount of
P10,444,918,872.32 or 90.31 percent was obligated leaving an
unobligated/unutilized balance of P1,120,609,185.42. Of the total obligated
amount, only P7,447,369,029.72 or 64.39 percent of the total allotments and
71.30 percent of the total obligations incurred was disbursed as at December 31,
2022. Thus, the utilization of the Agency’s budget was not fully maximized in
view of delays, suspensions and non-implementation of projects. Moreover, of
the total cash allocations received amounting to P4,977,068,459.66, the amount
of P4,975,634,006.47 or 99.97 percent was utilized resulting in the automatic
reversion of the balance amounting to P1,434,453.19 or 0.03 percent of total the
cash allocations.

4.1 Section 2 of Presidential Decree (PD) No. 1445 states that “It is the declared policy
of the State that all resources of the government shall be managed, expended or
utilized in accordance with the law and regulations, and safeguard against loss or
wastage through illegal or improper disposition, with a view to ensuring efficiency,
economy, and effectiveness in the operations of government. The responsibility to
take care that such policy is faithfully adhered to rests directly with the chief or head
of the government agency concerned.”

4.2 Section 3.3 of National Budget Circular (NBC) No. 587 dated January 03, 2022,
Guidelines on the Release of Funds for Fiscal Year (FY) 2022, provides that all
appropriations authorized under the FY 2022 General Appropriations Act (GAA),
including budgetary support to GOCC and other Special Purpose Funds (SPFs), shall
be available for release, obligation and disbursement for the purpose specified, and
under the same General and Special Provisions of said GAA applicable thereto until
December 31, 2022 for Personnel Services; and until December 31, 2023 for
Maintenance and Other Operating Expenses (MOOE) and Capital Outlays (CO),
including construction of infrastructure projects, delivery of goods and services,
inspection and payment.

4.3 For CY 2022, the MMDA had a total budget of P11,565,528,057.74, sourced from
its current and continuing appropriations, out of which the amount of
P10,444,918,872.32 or 90.31 percent was obligated, while only P7,447,369,029.72
or 64.39 percent of the total allotments and 71.30 percent of the total obligations
incurred was disbursed as at December 31, 2022. Detailed analysis of the Agency’s
budget utilization is presented as follows:

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 Table 5. Overall Budget Utilization for CY 2022
Obligations Unobligated Allotments Disbursements
Source of Appropriations Allotments
Incurred Total Reverted Extended Made
Funds
Amount (In PhP)
A. CURRENT YEAR
I. General Appropriations Act FY 2022
PS 58,941,000.00 58,941,000.00 58,941,000.00 0.00 0.00 0.00 58,740,114.00

MOOE 2,929,299,000.00 2,929,299,000.00 2,904,753,338.00 24,545,662.00 0.00 24,545,662.00 2,343,070,248.00

CO 2,683,798,000.00 2,683,798,000.00 1,924,082,172.00 759,715,828.00 0.00 759,715,828.00 885,810,665.00

Subtotal 5,672,038,000.00 5,672,038,000.00 4,887,776,510.00 784,261,490.00 0.00 784,261,490.00 3,287,621,027.00

II. Automatic Appropriations
5,448,000.00 5,448,000.00
RLIP – PS 5,306,591.00 141,409.00 141,409.00 0.00 5,289,125.00

Subtotal 5,448,000.00 5,448,000.00 5,306,591.00 141,409.00 141,409.00 0.00 5,289,125.00

III. Local Funds
PS 1,955,019,746.55 1,955,019,746.55 1,910,659,558.82 44,360,187.73 0.00 44,360,187.73 1,829,395,028.05
MOOE 1,962,508,253.45 1,962,508,253.45 1,887,855,849.35 74,652,404.10 0.00 74,652,404.10 1,774,736,452.03
CO 456,928,000.00 456,928,000.00 395,933,101.88 60,994,898.12 0.00 60,994,898.12 93,846,005.81
Subtotal 4,374,456,000.00 4,374,456,000.00 4,194,448,510.05 180,007,489.95 0.00 180,007,489.95 3,697,977,485.89
Total
Current 10,051,942,000.00 10,051,942,000.00 9,087,531,611.05 964,410,388.95 141,409.00 964,268,979.95 6,990,887,637.89
Year
B. PRIOR YEARS (CONTINUING)
I. General Appropriations Act FY 2021
MOOE 109,437,395.00 109,437,395.00 104,534,416.00 4,902,979.00 4,902,979.00 0.00 55,527,783.00
CO 617,747,422.00 617,747,422.00 471,353,169.00 146,394,253.00 146,394,253.00 0.00 48,628,211.00
Subtotal 727,184,817.00 727,184,817.00 575,887,585.00 151,297,232.00 151,297,232.00 0.00 104,155,994.00
II. Local Funds
MOOE 395,934,928.62 395,934,928.62 391,033,364.15 4,901,564.47 0.00 4,901,564.47 215,373,692.98
CO 390,466,312.12 390,466,312.12 390,466,312.12 0.00 0.00 0.00 136,951,704.85
Subtotal 786,401,240.74 786,401,240.74 781,499,676.27 4,901,564.47 0.00 4,901,564.47 352,325,397.83
Total Prior
1,513,586,057.74 1,513,586,057.74 1,357,387,261.27 156,198,796.47 151,297,232.00 4,901,564.47 456,481,391.83
Year
TOTAL 11,565,528,057.74 11,565,528,057.74 10,444,918,872.32 1,120,609,185.42 151,438,641.00 969,170,544.42 7,447,369,029.72
Percentage to total allotment 90.31% 9.69% 64.39%
PS: Personnel Services
MOOE: Maintenance and Other Operating Expenses
CO: Capital Outlay
RLIP: Retirement and Life Insurance Premiums

4.4 The budget utilization per object of expenditures is summarized as follows:

Table 6. Budget Utilization per Object of Expenditures CY 2022

Obligation Disbursement
Obligations
Object of Allotments over Disbursements Over Over
Incurred
Expenditure allotment allotment obligation
Amount (In PhP) % Amount (In PhP) %
PS 2,019,408,746.55 1,974,907,149.82 97.80 1,893,424,267.05 93.76 95.87
MOOE 5,397,179,577.07 5,288,176,967.50 97.98 4,388,708,176.01 81.31 82.99
CO 4,148,939,734.12 3,181,834,755.00 76.69 1,165,236,586.66 28.09 36.62
Total 11,565,528,057.74 10,444,918,872.32 90.31 7,447,369,029.72 64.39 71.30

4.5 Analysis of the table above showed that the Agency has the lowest rates on both
obligation and disbursement for CO with total obligated amount of

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 P3,181,834,755.00 or 76.69 percent and disbursements of only P1,165,236,586.66 or
28.09 percent over allotment and 36.62 percent over obligation.

4.6 Further, summary of allotments, obligations and disbursements for locally-funded

and foreign-assisted projects and the rates of disbursement of their funds are as
follows and discussed in detail below:
Table 7. Allotments, Obligations and Disbursement per Project
Obligation Disbursement
Obligations
Allotments over Disbursements Over Over
Programs Incurred
allotment allotment obligation
Amount (In PhP) % Amount (In PhP) %
I. GAA Current and Continuing - Locally-Funded Projects
Traffic Management
977,440,196.00 861,776,416.00 88.17 71,096,463.00 7.27 8.25
Projects
Flood Control
1,083,956,935.00 1,060,278,820.00 97.82 773,187,266.00 71.33 72.92
Projects
Subtotal 2,061,397,131.00 1,922,055,236.00 93.24 844,283,729.00 40.96 43.93
II. GAA Current and Continuing - Foreign-Assisted Project
Metro Manila Flood 1,240,148,291.00 473,380,105.00 38.17 90,155,147.00 7.27 19.04
Management Project
Phase 1 Component
2: Minimizing Solid
Waste in Waterways
and Component 4
Project Management
and Coordination
Total 3,301,545,422.00 2,395,435,341.00 72.55 934,438,876.00 28.30 39.01

• Traffic Management Projects (TMP)

4.7 The low budget utilization of the programmed projects under the TMP is attributable
to:

➢ The allotment for Supply and Installation of Fiber Optic Communication

Network project which was not obligated due to failure of bidding.

➢ The low disbursement rate for the awarded projects due to the issuance of
suspension orders (SOs) which halted the implementation of the projects. The
reasons cited for the issuance of these SOs included - the non-cooperation from
private companies in relation to implementation of the projects, limitations due
to COVID-19 pandemic, removal of obstruction on site like concrete barrier,
office plant boxes, etc, and issuance of variation orders due to revised plans.

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• Flood Control Projects

4.8 Majority of the flood control projects implemented by Flood Control and Sewerage
Management Office (FCSMO) posted high disbursement rate for CY 2022.
However, 12 projects were noted with zero disbursement rate, of which three (3)
were completed, eight (8) were on-going, and one (1) was not yet awarded as at
December 31, 2022. For the completed projects, the preparation of billing documents
and processing of disbursement vouchers is ongoing, thus were not paid as at year-
end. Other reasons of low disbursement of budget were related to the delayed project
implementation such as late/pending issuance of clearance from LGUs, barangays,
communities and other agencies concerned, resistance or refusal to relocate of the
informal settlers, overlapping projects with the Department of Public Works and
Highways (DPWH), bad weather conditions, temporary suspension of excavation
activities, and suspension due to right-of-way issues.

• Metro Manila Flood Management Project Phase 1 (MMFMP1)

4.9 The Project Manager of MMFMP1 explained that the low disbursement rate was
attributable to the following:

a. For CY 2022, the Project Management Office (PMO) has prioritized all pending
procurement activities lined up for CY 2021 to fully utilize the Continuing
Appropriation. However, one of the big-ticket procurement items, the
Consultancy Services for the Community-Based Solid Waste Management
Program (CBSWMP) Year 2 did not push through due to the World Bank’s
conflicting advice which may have been due to the change of task team
leadership. Consequently, the procurement for the Consultancy Services for
CBSWMP Year 3 (with approved purchase request and earmark), also did not
push through pending the resolution of the issue on the procurement of CBSWMP
Year 2.

b. For CY 2021 Continuing Appropriations, payments of obligated funds were

affected mainly by the continuous granting of extensions of delivery to service
providers and long delivery periods of purchased goods. The Procurement team
of the PMO, in coordination with SPD – Bids and Awards Committee (BAC)
Technical Working Group (TWG) and the End-user has agreed to shorten the
delivery period of procured goods and lessen the granting of extensions of
delivery period. On the other hand, the Community Development Specialist,
together with the focal personnel of Solid Waste Management Office (SWMO),
are in close coordination with the barangays concerned, CBSWMO Year 1
consultants, LGUS, and other stakeholders to ensure that the activities on the
ground will continue as planned.

4.10 The foregoing conditions manifested inadequacy of strategies to implement planned

programs/projects for which funding/budget was approved, hence depriving the
target beneficiaries covered under these programs/projects. While the budget for CY

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 2022 for CO and MOOE may be carried over until December 31, 2023, the Agency
is encouraged to maximize the utilization of its obligations for timely and efficient
implementation of programs and projects.

4.11 The existence of unobligated and undisbursed allotments reflects Management's

inability to maximize the use of its authorized budget and inadequacy to properly
plan for realistic cash requirements to achieve the full potential and benefits that
could be derived from the allotments and cash allocations provided by the
government.

4.12 We reiterated our previous year’s recommendations that Management:

a. Endeavor to maximize the use of allotments received for timely

implementation and delivery of the Agency’s programs and projects so as
to preclude the accumulation of unobligated allotments and/or reversion
thereof;

b. Prepare a consolidated strategic plan with corresponding timelines to

improve the processes from planning to execution of the subsequent
programs and projects and ensure strict observance of implementation and
completion thereof that will in turn improve overall budget utilization; and

c. Set a realistic and attainable forecast of budget and cash requirements for
the year to prevent accumulation of unobligated and undisbursed funds.

Management Comments:

4.13 The Procurement Contract Monitoring and Acceptance Group (PCMAG) will be
activated to strictly monitor the implementation of programs/activities/projects of the
Authority from pre-procurement until final acceptance.

4.14 On the other hand, the MMFMP1 Project Manager provided the Audit Team with a
list of strategies it will be implementing to address the deficiencies noted in the
utilization of budget for the projects and a catch-up plan is being developed. For the
upcoming project extension, the Divisions concerned are all committed to complete
all pending procurements lined up for CY 2022 and onwards.

Auditor’s Rejoinder:

4.15 The Audit Team will monitor the implementation of the foregoing Management’s
action plans in CY 2023.

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Delay/Non-submission of required monthly/quarterly/annual financial reports/schedules,
DVs, ORs, BRSs, etc. within the prescribed timeline

5. MMDA is not fully compliant with the submission of financial reports/records

with supporting transaction documents, contracts/purchase orders and
notices/certificates of acceptance of deliveries, contrary to laws, rules and
regulations, which prevented the Audit Team from the systematic and effective
review of the documents for the timely communication of relevant audit results
with the personnel concerned.

5.1 The following table shows the delays in the submission of financial reports/records
and other documents and the reasons thereof:

Table 8. Delays in the Submission of Reports to the Audit Team

Financial Reports/Records No. of days
Deadlines/Basis Reason/s for Delay
and Other Documents delayed
1. Financial Reports
o Monthly Trial Balances Ten (10) days after end of each 29-120 days Lack of manpower to
(TBs) and Supporting quarter prepare the financial
Schedules (SSs) reports and records.
Section 60, Chapter 19 of the
GAM for NGAs, Volume I
o Quarterly TBs, Financial (10 days after the end of each Unsubmitted;
Statements (FSs) and SSs month) delay of at least
265 days
2. Bank Reconciliation Twenty (20) days after receipt 2 to 99 days
Statements of the monthly Bank
Statement

Section 7, Chapter 21 of the

GAM for NGAs, Volume I
3. Journal Entry Vouchers Ten (10) days after the end of 4-222 days
each month

Appendix 36, page 100-101 of

the GAM for NGAs, Volume
II

4. Reports of Checks Issued 4-222 days Unsubmitted vouchers

(RCIs) with due to checks still
Disbursement Vouchers unclaimed by payees
(DVs) i.e. MMDA employees,
contractors and
Within the first 10 days of the
suppliers.
ensuing month
5. Reports of 3-103 days Partial transmittal of
Disbursements (RDs) documents from
Section 7.2.1 (a) of COA
with Payrolls and different MMDA
Circular No. 2009-006 dated
Liquidation Reports offices.
September 15, 2009
(LRs)
6. Reports of Collections 24-155 days
and Deposits (RCDs)
with Official Receipts
with (ORs)

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 Financial Reports/Records No. of days
Deadlines/Basis Reason/s for Delay
and Other Documents delayed
7. Budget and Financial
Accountability Reports
o SAAODB, Section 32, Chapter 3 of the 4 to 110 days Necessary information
SAAODBOE, List of GAM for NGAs Volume I needed from different
Allotments/Sub- (Within 30 days after the end offices takes time to be
Allotments, SABUDB, of each quarter) collated and finalized.
SABUDBOE, QRROR (Within 30 days after the
o Monthly Report following month covered) 4 to 79 days
Disbursements (MRD)

5.2 Validation by the Audit Team revealed that the following conditions need to be
properly addressed by the Management:

• the monthly submission of trial balance has no accompanying supporting

schedules as required in the above-cited provision of GAM for NGAs and
there are no quarterly FSs submitted; and
• adjusting and closing entry vouchers for CY 2022 have no supporting
documents.

5.3 The delayed or non-submission of the financial reports/records with supporting

transaction documents prevented the Audit Team from having a systematic and
effective review of the documents for the timely communication of relevant audit
results to the personnel concerned.

5.4 We reiterated our previous year’s recommendation that Management require

all agency officials/personnel concerned to strictly comply with the pertinent
rules and regulations on the submission of the monthly/quarterly financial
reports/schedules, Disbursement Vouchers, Official Receipts, Bank
Reconciliation Statements including all supporting documents thereof within
the prescribed deadlines.

Management Comments:

5.5 Management acknowledged that there are still reports and documents that are yet to
be submitted. Management committed to strengthen its monitoring and compliance
with existing rules and regulations in the submission of financial reports/records and
related documents.

Auditor’s Rejoinder:

5.6 The Audit Team will monitor the implementation of the foregoing Management’s
commitment in CY 2023.

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Non-submission of copies of contracts/POs/JOs, MOAs and IARs within set timeline and
other violations of COA Circular No. 2009-001

6. MMDA is not fully compliant with the timely submission of contracts/purchase

orders and notices/certificates of acceptance of deliveries contrary to laws, rules
and regulations, which prevented the Audit Team from the systematic and
effective review of the documents in order to communicate the relevant audit
results in a timely manner with the personnel concerned.

6.1 The following table shows the delays in the submission of financial reports/records
and other documents and the reasons thereof:

Table 9. Delay in Submission of Contracts, POs, and Notices of Delivery (NODs)

Financial Reports/Records No. of days
Deadlines/Basis Reason/s for delay
and Other Documents delayed
Contracts, Purchase Orders Within five (5) working days 1 to 48 days Inability to establish a
(PO) and all the documents from the execution of a reliable monitoring of
forming part thereof contract/PO all contracts submitted.

Paragraph 3.1.1 of COA

Circular No. 2009-001 dated Documents were not
February 12, 2009 immediately returned
Notice of Delivery Within twenty-four (24) hours 1 to 80 days by suppliers/
from such acceptance contractors.

Paragraph 6.06 of COA

Circular No. 95-006 dated May
18, 1995

6.2 The delayed or non-submission of contracts/purchase orders and notices/certificates

of acceptance of deliveries prevented the Audit Team from having a systematic and
effective review of the documents for the timely communication of relevant audit
results to the personnel concerned

6.3 We reiterated our previous year’s recommendation that Management require

all agency officials/personnel concerned to strictly comply with the pertinent
rules and regulations on the submission of copies of all contracts, purchase
orders, notices of deliveries including all supporting documents thereof within
the prescribed deadlines.

Management Comments:

6.4 Management acknowledged that there are still reports and documents that are yet to
be submitted. Management committed to strengthen its monitoring and compliance
with existing rules and regulations in the submission of financial reports/records and
related documents.

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Auditor’s Rejoinder:

6.5 The Audit Team will monitor the implementation of the foregoing Management’s
commitment in CY 2023.

Lapses in the Implementation of Infrastructure Projects

7. Lapses in the implementation of forty-two (42) infrastructure projects

programmed for CY 2022, with a total cost of P2,210,242,880.58 were noted,
such as: a) delayed or long procurement process; and b) inadequate planning
and weak coordination mechanism with Local Government Units (LGUs),
communities concerned and other government agencies, which resulted in the
delay of project completion/implementation.

7.1 Section 3 of Republic Act No. 7924 provides the scope of services of MMDA.
Metro-wide services under the jurisdiction of the MMDA are those services which
have metro-wide impact and transcend local political boundaries or entail huge
expenditures such that it would not be viable for said services to be provided by the
individual local government units (LGUs) comprising Metropolitan Manila. These
services shall include flood control and sewerage management implemented by the
Flood Control and Sewerage Management Office (FCSMO); transport and traffic
management implemented by Traffic Engineering Center (TEC), Metrobase and
Pasig River Ferry Service (PRFS); health and sanitation, urban protection and
pollution control implemented by Health and Environment Protection Office
(HEPO) and Solid waste disposal and management implemented by Solid Waste
Management Office (SWMO). Meanwhile, the Management Information System
Staff (MISS) establish and operationalize a computer- based information network/
system that shall provide work station-based information access among the various
units of the MMDA.

a) Delayed/long procurement process - P2,210,242,880.58

7.2 The General Provisions of RA No. 11639 or the General Appropriations Act (GAA)
of Fiscal Year (FY) 2022 provides:

Section 20. Early Procurement Activities. Notwithstanding the mandatory

procurement timelines under R.A. No. 9184 and its Implementing Rules and
Regulations (IRR), agencies are authorized to undertake early procurement
activities as soon as the proposed national budget is submitted to Congress.
However, agencies may only proceed with the issuance of notice of award of
contract upon approval or enactment of their respective appropriations and
issuance of budget authorization document and based on the amount authorized
therein.

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7.3 Meanwhile, RA No. 9184 or the Government Procurement Reform Act and its
RIRR provides for the following:

Section 37.1.2. Within a period not exceeding fifteen (15) calendar days from the
determination by the BAC of the bidder with the LCRB, HRRB, SCRB, or SRRB,
and the recommendation to award the contract, the Head of Procuring Entity or
his duly authorized representative shall approve or disapprove the said
recommendation.

Section 32.4. The entire evaluation process for the procurement of Goods and
Infrastructure Projects shall be completed within seven (7) calendar days from the
deadline for receipt of proposals.

Section 37.2.1. The winning bidder shall post the required Performance Security
and enter into contract with the Procuring Entity within ten (10) calendar days
from receipt by the winning bidder of the Notice of Award.

Section 37.2.2. The Procuring Entity shall enter into contract with the winning
bidder within the same ten (10) day period provided that all the documentary
requirements are complied with.

Section 38.2 and Annex C. The recommended earliest possible time for the
procurement of Infrastructure Projects is 26 calendar days and the maximum
period allowed is 156 days.
7.4 Of the 131 infrastructure projects programmed for CY 2022, 89 or 67.93 percent
were completed, 26 or 19.85 percent were on-going, eight (8) or 6.11 percent were
not yet started and eight (8) or 6.11 percent were for perfection of the contract as at
December 31, 2022

7.5 Moreover, out of the 26 ongoing projects, six (6) projects with a total contract cost
of P403,472,200.70 were awarded and started only on the second semester of CY
2022. This is an indication of Management’s non-observance of the conduct of early
procurement activities contrary to Section 20 of the General Provisions of RA No.
11639.

Table 10. Status of Projects Programmed for CY 2022

Number
Actual Project Percentage
Status of Projects Allocation of
Cost as to No.
Projects
of Projects
On-going 1,225,988,198.08 1,218,691,514.70 26 19.85%
FCSMO - 16
TEC - 5
Metrobase - 1
MISS - 1
HEPO - 3
For implementation/not yet 624,474,185.86 621,113,249.44 8 6.11%
started but awarded
FCSMO - 1

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 Number
Actual Project Percentage
Status of Projects Allocation of
Cost as to No.
Projects
of Projects
TEC - 1
Metrobase - 1
SWMO - 1
HEPO - 4
For perfection of contract/ 359,780,496.64 N/A 8 6.11%
awaiting for SARO
FCSMO - 1
SWMO - 1
HEPO - 6
Subtotal - Projects Not 2,210,242,880.58 1,839,804,764.14 42 32.07%
completed
Completed 952,813,681.88 944,549,821.13 89 67.93%
FCSMO - 84
HEPO - 5
Total 3,163,056,562.46 2,784,354,585.27 131 100.00%

7.6 Further analysis disclosed that the significant delays were caused by the delay in
the period of action on specific procurement activities, particularly on the issuance
of Notice of Award (NOA), in the conduct of bid evaluation, Pre-Procurement
Conference to the issuance of Notice to Proceed (NTP), and signing of contract.
7.7 Prior communication with Management disclosed that the procurement process was
also greatly hampered due to lack of manpower to conduct voluminous
procurement activities and discharge of administrative functions in the BAC
Secretariat. With the proposed detailing/hiring of additional personnel from the
implementing agencies, the BAC Secretariat may be able to observe the required
procurement timelines.

7.8 The foregoing conditions manifested inadequacy of strategies to adhere to the

planned procurement activities as contained in the Annual Procurement Plan (APP)
which resulted in non-implementation of projects within the target period depriving
the target beneficiaries covered under the said programs/projects.

7.9 We reiterated our prior years’ recommendations, and Management agreed to:

a) Require Bids and Awards Committee to faithfully comply with the

procurement timelines/period prescribed under Sections 37.1.2, 32.4,
37.2.1, 38.2 and Annex C of Republic Act No. 9184 and its Revised
Implementing Rules and Regulations; and

b) Conduct timely assessment of Annual Procurement Plan to ensure that the

Government commitment for an efficient and economic procurement
process will be attained.

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 Management Comment:

7.10 To address the non-adherence to early procurement activities, Management

informed the Audit Team that they have instructed the BAC to require all end-user
offices to submit their respective Project Procurement Management Plans (PPMPs)
at an earlier date. The BAC promptly issued a Memorandum and a succeeding
reiteration letter to the end-user units to this effect to ensure that the APP is timely
prepared to provide allowance for proper review and scrutiny.

Auditor’s Rejoinder:

7.11 The Audit Team will monitor the implementation of the foregoing Management’s
actions in CY 2023.

b) Inadequate planning and lack of coordination mechanism with the LGUs,

communities and other agencies concerned – P1,010,241,281.84

7.12 The primary consideration of the government for entering into a contract is the
timely completion of the infrastructure projects so that the intended benefits may
be achieved. Consequently, the contracting parties are bound to adhere faithfully to
agreed terms and conditions of the contract.

7.13 The RIRR of RA No. 9184 requires the conduct of detailed engineering for the
procurement of infrastructure projects. Section 1 of Annex “A” thereof states that
“detailed engineering shall proceed only on the basis of the feasibility or
preliminary engineering study made which establishes the technical viability of the
project and conformance to land use and zoning guidelines prescribed by existing
laws.” Section 2 enumerates the detailed engineering activities which include,
among others, survey and site investigation, preparation of site or right-of-way
acquisition plans and resettlement action plans, and preparation of utility relocation
plans.

7.14 Section 10, Annex E of the said RIRR provides the detailed guidelines on the
suspension of work for infrastructure projects while Section 11.4 thereof provides
that, “No extension of contract time shall be granted when the reason given to
support the request for extension was already considered in the determination of
the original contract time during the conduct of detailed engineering and in the
preparation of the contract documents as agreed upon by the parties before
contract perfection.”

7.15 In the evaluation of the status of projects being implemented by the MMDA, it was
noted that 28 projects with a total contract cost of P1,010,241,281.84 were already
beyond the specific contract time and remained not completed thus, incurring
continuous delays ranging from 6 days up to 1,384 days as at December 31, 2022.

7.16 In addition, the Report of the Publicized Government Projects/Programs/Activities

(GPPAs) as at December 31, 2022 disclosed material gap between the original and
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 revised target completion for 68 FCSMO, TEC, Metrobase, MISS, HEPO and
PRFS projects, as summarized below:

Table 11. Summary of Projects with Revised Target Completion Date

Significant Gap between
Actual Project No. of
Year Started Allocated Budget Original and Revised
Cost Projects
Target Completion Date
2022 566,146,625.71 564,154,090.33 25 12 to 157 days
2021 1,064,389,021.00 1,043,045,778.00 29 40 to 326 days
2020 201,446,248.40 200,000,549.42 8 77 to 628 days
2019 359,524,348.83 359,137,562.46 4 588 to 805 days
2018 248,499,583.41 245,927,152.91 2 103 to 1,332 days
Total 2,440,005,827.35 2,412,265,133.12 68

7.17 Of the 68 projects noted in the above table, nine (9) projects have revised
completion dates of over one (1) year from its original target date, with details as
follows:

Table 12. Projects with Revised Target Completion Dates of More than One (1) Year
Number of
Original Revised Days from
Implementing Contract Cost
Project Target Target original to
Office (In PhP)
Completion Completion revised target
completion
FCSMO Drainage Improvement and 13,362,871.39 December 01, December 29, 393
Concreting at Brgy. Bagong 2021 2022
Silangan, District II, Quezon
City
Drainage Improvement along 8,081,739.71 November 02, November 03, 366
Kamachile St. and Vicinity 2020 2021
(Phase III), Brgy. Malanday,
District I, Marikina City
Construction of Communal 9,890,923.14 February 05, September 23, 595
Septic Tank and Sewer Lines 2021 2022
at Brgy. East Rembo, Makati
City
Construction of Drainage 19,805,719.99 February 14, January 15, 701
along Dela Paz St. Brgy. 2020 2022
Fortune District II, Marikina
City
Riprapping / Dredging of 7,454,518.57 February 14, April 29, 2022 805
Champaca Creek Phase IV, 2020
Brgy. Fortune, District II,
Marikina City
PFRS Construction of 3 Interim
Ferry Station – (Quinta,
11,922,927.90 3/26/2020 12/31/2021 645
Circuit and Kalawaan
Stations)
Supply and Installation of
Equipment of Safe City
Metrobase 117,719,334.90 11/18/2021 8/8/2023 628
Infrastructure of Metro
Manila

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 Number of
Original Revised Days from
Implementing Contract Cost
Project Target Target original to
Office (In PhP)
Completion Completion revised target
completion
Procurement and Installation
of CCTV Cameras for
319,954,396.00 11/1/2021 6/12/2023 588
MMDA’s No Contact
Apprehension Program
Supply and Installation of
132,037,280.26 5/25/2019 1/16/2023 1,332
Road Safety Devices

7.18 The Quarterly Publicized GPPAs Report as at December 31, 2022 submitted by
Management to the Audit Team disclosed that significant delays in the completion
and consequently in the implementation of the projects were due to:

• Late/pending issuance of clearance from LGUs, barangays, community and

other agencies concerned;
• Resistance or refusal to relocate the informal settlers;
• Overlapping projects with other agencies;
• Inclement weather conditions;
• Temporary suspension of excavation activities;
• Suspension due to right-of-way issues;
• Indefinite suspension due to terminated project;
• Non-cooperation from private companies in relation to implementation of the
projects;
• Limitations set by the government due to COVID-19 virus;
• Removal of obstruction on site like concrete barrier, offices plant boxes, etc; and
• Issuance of variation orders due to revised plans.

7.19 The above-cited causes are also the common reasons for issuance of suspension
orders which affected the timely implementation and completion of projects
including restrictions on operations brought about by the COVID-19 pandemic. The
significant number of days suspended affected the timely implementation of the
projects. This reflects poor planning and lack of appropriate action from the MMDA
offices concerned to resolve the recurring causes of suspension of the projects
which resulted in delayed implementation of said projects.

7.20 Admittedly, some of the causes of delay may have been outside the control of the
MMDA such as typhoon/unfavorable weather condition and imposition of
lockdown due to COVID-19 pandemic for which a time extension may be approved
by the Authority. However, other issues including the need for coordination with
the LGUs, DPWH and other agencies concerned and private entities are factors
which are unintentional but procedural and consequential that affect the timely
completion of the projects. Indeed, Management may have undertaken coordination
with LGUs and private utility companies prior to the project implementation but

107
 still delays in the implementation were noted signifying that coordination
mechanism still needs improvement.

7.21 The foregoing conditions manifested inadequacy of strategies to implement

planned activities for which funding/budget was approved for, and comprehensive
and technical evaluation undertaken, to establish the viability of the projects thus,
depriving the target communities of the immediate benefit/use of flood control
projects.

7.22 We reiterated our prior year’s audit recommendations and Management

agreed to:

a) Ensure that the cause/s or factors of delay which are controllable by the
Agency are properly addressed prior to project implementation;

b) Improve the coordination mechanism with Department of Public Works

and Highways and the Local Government Units, among others, as well as
the community, for a more effective and synchronized planning of
programs and projects; and

c) Closely monitor the status/progress of projects to ascertain that the

strategies adopted are responsive to fast track the implementation of the
projects.

Management Comments:

7.23 For flood control projects, constant coordination with the DPWH and LGUs was
observed prior and during the implementation of the programmed projects.
However, changes in the schedule and plans of other implementing agencies are
outside their control, affecting the timely completion of projects. The copy of letters
forwarded to DPWH and LGUs informing them of the programmed flood control
projects of MMDA were submitted. In addition, courtesy calls to the said agencies
were also conducted. Management continuously aims to improve the delivery of
services for the succeeding year in terms of implementing and completing the flood
control projects within their contract duration.

7.24 As for the implementation of Payroll Management System (PMS), Management in

its reply dated May 4, 2023 assured that they are committed and already in the
process of addressing the delay through the review of the contractor's schedule and
ensure contractor's commitment to complete the PMS which will be not later than
July 16, 2023 as reflected in the Catch-up Plan and updated Notice of Suspension
signed by the Director of MISS.

7.25 For the project “Traffic Signalization System to cover 205 Signalized Intersections
and 100 CCTV Sites”, remaining works cannot be completed due to termination of

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 Traffic Signalization Phase III for which the Agency is currently pursuing legal
actions to obtain claims from the bonding company and the defaulting contractor.

7.26 The project “Integration to the Existing Traffic Signal Control including the
Installation of LED Lightings in the Intersections” is indefinitely suspended
pending the delivery and installation of SMART Center and transfer to the New
MMDA Building.

Auditor’s Rejoinder:

7.27 The Audit Team will monitor the implementation of the foregoing Management’s
actions in CY 2023.

Unimplemented/Partially Implemented/Delayed Implementation of MMFMP1 and

Incurrence of Commitment Fees

8. Thirty-three (33) out of 47 projects and programs with a total budget of

P825,381,718.37 were not yet fully implemented as at December 31, 2022 due to
delay/non-compliance with documentary requirements, delays in procurement
activities and poor strategies in the monitoring and implementation of programs
and projects. Moreover, the government incurred a total of P27,426,563.17
commitment fees for CYs 2018-2022 in relation to the MMDA loan components of
the Metro Manila Flood Management Project Phase 1(MMFMPP1) attributable
to the delayed implementation of the project.

a. Unimplemented/Partially Implemented/Delayed Implementation of MMFMP 1

8.1 Section 20 of the General Provisions of RA No. 11639 provides that agencies are
authorized to undertake early procurement activities as soon as the proposed national
budget is submitted to the Congress, notwithstanding the mandatory procurement
timelines under RA No. 9184 and its IRR.

8.2 Perusal of the Report of Publicized GPPAs for MMFMPP1 submitted by

Management disclosed that 33 out of 47 programs and projects with a total budget of
P825,381,718.37 remained incomplete as at December 31, 2022. Status of the
projects and programs are summarized as follows:

Table 13. Summary of Status of MMFMP Phase 1 Projects as at December 31, 2022
Type of No. of Projects Total No. of
Programs/Projects Implemented On-going For Implementation Projects
Procurement of Goods and 12 0 19 31
Other Services
Consultancy Services 2 1 8 11
Infrastructure Projects 0 3 2 5
Total 14 4 29 47

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8.3 As can be gleaned above, only 14 out of 47 or 29.79 percent of projects/programs
were completed while four (4) or 8.51 percent and 29 or 61.70 percent are on-going
and still for implementation, respectively, as at December 31, 2022.

8.4 Review of the GPPAs as at December 31, 2022 also disclosed the following common
causes in the delay of the full implementation of projects:

• Supplier’s request for extension of deliveries;

• Change in procurement specifications;
• Delays in the procurement activities;
• Revision of contract cost or contract duration;
• Non-compliance of consultants in the documentary requirements; and
• Relocation of site or project re-design.

8.5 Furthermore, analysis of the implementation of projects/programs for MMFMP on a

procurement level cannot be effectively conducted since there is no breakdown of
projects/procurement that will tie-up to the total allocation per GAA.

8.6 Inquiry with PMO disclosed that most operating expenses were not included in the
submitted status of GPPAs. However, the Audit Team was not provided with the
necessary documents to determine which operating expenses were excluded in the
submitted status of GPPAs. Thus, detailed reconciliation of all reports shall be
provided to account the total appropriation per GAA, including the reconciliation of
GAA to the Annual Work Plan and Budget (AWPB).

8.7 The PMO, upon request of the Audit Team, submitted a document relating the
projects reported in the status of PPAs with those programmed in the AWPB.
However, the total budgeted amount between the two reports remained unreconciled.
Thus, the Audit Team was precluded to conduct a more detailed analysis and review
of the budget utilization of the MMFMP.

8.8 The foregoing observations indicate non-observance by the Agency of the conduct
of early procurement activities. It also manifested the Project Management Office’s
(PMO) inadequacy of strategies to strictly implement the planned programs/projects
and closely monitor the project implementation. The Agency must expedite the
implementation of programs and projects as this will also improve the quality of
services rendered to the public.

8.9 We recommended and Management agreed to:

a. Assess the programmed projects and activities per Annual Work Plan and
Budget of Metro Manila Flood Management Project Phase 1 to ensure that
the government’s commitment for an efficient and economic procurement
process will be attained;

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 b. Reconcile the projects programmed under General Appropriations Act,
Annual Work Plan and Budget and the quarterly status of Government
Publicized Projects, Programs and Activities for consistency and reliability
of information contained therein;

c. Address immediately all perceived project procurement/implementation

issues/hindrances to avoid non-accomplishment of the planned activities;
and

d. Require Project Management Office to strengthen its functions in closely

monitoring the status/progress of the projects and activities to ascertain
that the strategies adopted are responsive to fast track the completion and
implementation of the projects.

Management Comments:

8.10 The PMO acknowledges the fact that the project did not fare well in CY 2022 in
terms of budget utilization and disbursement. This was mainly due to the following:

• PMO prioritized remaining procurement items and utilized continuing funds

from the previous years before expiration at the end of the current year;

• Procurement of Consultancy Services for the Planning and Demonstration

of CBSWMP Year 2 amounting to P151 million was halted and
consequently affected the CBSWMP Year 3; and

• Changes in the administration both in the Agency and the Bank affected the
procurement and other processes that require management approval. The
low disbursement rate of the Project is mainly attributed to the delay in the
procurement of the subprojects, long delivery periods and multiple
extensions of deliveries for the awarded contracts, and suspension of work
for infrastructure projects due to land utilization issues.

8.11 As to the unreconciled reports, Management provided that the AWPB for CY 2022
includes ongoing activities which were originally in the prior year’s AWPB but was
just procured during 2021 and was delivered/completed in CY 2022 such as the
CCTV, Warehouse for SWG Tools & etc. These were presented in the AWPB &
GPPA reconciliation which was provided to the Audit Team on April 14, 2023 as
well as the Quarterly Interim Unaudited Financial Reports which were submitted on
April 19, 2023 for the actual disbursement of the operating expenses.

8.12 As for the project implementation, 14 projects were completed, 25 projects are on-
going and eight (8) are still for procurement. The PMO will be implementing the
following strategies:

• Adopt early procurement method to maximize budget utilization;

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 • Close monitoring of all project deliverables to ensure that all projects were
implemented within the set deadline; and
• Development of multi-year plan and budget that will ensure an efficient and
economic procurement process.

8.13 Status of projects not yet awarded in CY 2022 and comments to address the
deficiencies noted on project inspection were also submitted.

Auditor’s Rejoinder:

8.14 As the original term for the loan is nearing expiration, PMO shall prepare a
comprehensive report to account the entire budget for MMFMP1 as approved by
DBM on August 31, 2017.

b. Incurrence of Commitment Fees - P27,426,563.17

8.15 Section 2.04, Article II of the Loan Agreement for the Metro Manila Flood
Management Project dated December 19, 2017 provides that, “The Commitment
Charge is equal to one quarter of one percent (0.25%) per annum on the
Unwithdrawn Loan Balance.”

8.16 Review of the documents from the Bureau of Treasury (BTr) disclosed that the
government incurred commitment fees of approximately P27,426,563.17 for CYs
2018-2022 in relation to the loan components of the MMFMP Phase 1 implemented
by MMDA. Details are as follows:

Table 14. Commitment Fees for MMFMP1 as at December 31, 2022

Commitment fee (In PhP) Total
Year
IBRD* AIIB** (In PhP)
2018 2,200,879.18 2,180,912.63 4,381,791.81
2019 3,040,147.47 3,045,038.05 6,085,185.52
2020 2,810,142.25 2,814,037.39 5,624,179.64
2021 2,737,396.29 2,738,071.97 5,475,468.26
2022 2,929,497.36 2,930,440.58 5,859,937.94
Total 13,718,062.55 13,708,500.62 27,426,563.17
*International Bank for Reconstruction and Development
**Asian Infrastructure Investment Bank

8.17 Review of the disbursements out of the loan proceeds of the MMDA components of
MMFMP Phase 1 disclosed that of the total P1,146,208,000.00 current and
continuing appropriations for CY 2022, only 5.90 percent or P67,666,856.00 has
been disbursed as at December 31, 2022 as shown below:

Table 15. Utilization of the Loan Proceeds of MMFMP1 as at December 31, 2022
Obligations Disbursements
Source of Funds Appropriations Allotments
Incurred Made
Loan Proceeds
Current Appropriation 643,069,000.00 643,069,000.00 41,526,936.00 41,526,936.00

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 Obligations Disbursements
Source of Funds Appropriations Allotments
Incurred Made
Continuing 503,139,000.00 503,139,000.00 409,364,878.00 26,139,920.00
Appropriation
Total 1,146,208,000.00 1,146,208,000.00 450,891,814.00 67,666,856.00

8.18 As stated in Section 2.04 Article II of the Loan Agreement, commitment fee is based
on the unwithdrawn balance of the loan. Thus, the slow availment/low utilization of
loan proceeds caused the incurrence of higher commitment fees which could have
been used by the government on other priority programs and projects.

8.19 We reiterated our prior year’s audit recommendation that Management,

through the Project Management Office of the Metro Manila Flood
Management Project Phase I, accelerate/maximize the utilization of loan
proceeds and fast track implementation of projects by adopting efficient and
remedial measures in accordance with the existing guidelines and loan
agreements of International Bank for Reconstruction and Development and
Asian Infrastructure Investment Bank to avoid incurrence of unnecessary
commitment fees.

Management Comments:

8.20 The PMO accepts the fact that due to the slow disbursement of loan proceeds, the
Philippine government incurred a huge amount of commitment fees on this Project.
With the strategies crafted and improved pace of implementation this year and in the
coming years, together with DPWH as their implementing partner, Management
believes that they will maximize loan drawdowns and fast track deliveries of
procured services, goods, machineries and equipment.

Auditor’s Rejoinder:

8.21 The Audit Team will monitor the implementation of the foregoing Management’s
actions in CY 2023.

Unrecouped advance payments of terminated or abandoned projects–P29,585,205.17

9. Advance payments amounting to P29,585,205.17 were not recouped from the

contractors whose projects were already terminated or abandoned as at
December 31, 2022, contrary to paragraph 4.3 and 5.3 of Annex “E” of Republic
Act (RA) No. 9184 and its Revised Implementing Rules and Regulations (RIRR).

9.1 Pertinent provisions of Annex “E” of RA No. 9184 and its RIRR provides that:

Section 4.3 - “The advance payment shall be repaid by the contractor

by deducting fifteen percent (15%) from his periodic progress payments
a percentage equal to the percentage of the total contract price used for
the advance payment.”
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 Section 5.3 – “The procuring entity shall deduct the following from the
certified gross amounts to be paid to the contractor as progress payment:
a) Cumulative value of the work previously certified and paid
for;
b) Portion of the advance payment to be recouped;
c) Retention money in accordance with the condition of contract;
d) Amount to cover third party liabilities; and
e) Amount to cover uncorrected discovered defects in the works”

9.2 The reported balance of Advances to Contractors account amounting to

P291,932,771.93 as at December 31, 2022, includes unrecouped balances totaling
P29,585,205.17 pertinent to seven (7) infrastructure projects which were already
terminated, abandoned or non-moving for 2-14 years. Details are as follows:

Table 16. List of Projects with Unrecouped Advances

Unrecouped Advances
Project Remarks
(In PhP)
1. Upgrading of Traffic Signal System at 14,456,625.28 The project with a contract
155 signalized intersections including cost of P390,392,962.00
integration to the Traffic Signal was terminated on
Control System at the New Command February 17, 2020. On
Center (Phase III) March 04, 2021, a
Memorandum was issued
by MMDA requesting for
the collection and
settlement of liabilities of
the contractor including the
unrecouped advances.
2. Development of North Transport 10,522,582.26 The amount pertains to
Terminal A Component of Greater mobilization fee paid to the
Manila Area contractor in September
2003 for the project that
was not implemented due
to issuance by the Quezon
City Regional Trial Court
of a cease-and-desist order
to the contractor.
3. Bikeway Development of Pasig River 2,856,244.47 The project was
Ferry Service Along The 54 Kilometer programmed in CY 2019 to
Pasig River Easement From C-6 To cover the 54 kilometer
R10 Pasig River Easement
along C6 to R10 posting a
physical completion of 60
percent. On December 09,
2021, a Notice to
Terminate and a Demand to
Pay were issued for the
termination of the project.
The contractor provided its
reply on December 27,
2021 that due to operational
restrictions during

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 Unrecouped Advances
Project Remarks
(In PhP)
pandemic, it is requesting
for reconsideration.
4. Design & Installation of Lighting 855,579.95 Project was stopped in CY
System, Layag Islas Monument at 2020 due to demolition of
NAIA Terminal 3, Pasay City Layag Islas Monument in
relation to the construction
of the expressway at the
location.
5. Supply & Installation of Cat's Eye in 670,689.93 Advance was paid in 2010
Private Lane along EDSA and remains unrecouped as
at December 31, 2022.
6. Structural works for the development 184,483.28 Advance was paid in CY
of Commonwealth Ave. under package 2006 and remains
11-F unrecouped as at December
31, 2022.
7. Relocation Survey of Commonwealth 39,000.00 Advances were paid in CY
Ave. 2006 and had been dormant
since 2008. Previously, the
Office of Assistant General
Manager for Planning
(OAGMP)/General
Administrative Services
Division (GASD)
confirmed that the project
has already been
terminated since the
contractor failed to show
up.
Total 29,585,205.17

9.3 Management was unable to either demand from the contractors the immediate refund
of the unrecouped advances or forfeit the performance/surety bond posted by the
contractors concerned on account of the contractor’s default and/or upon termination
of the contracts. In view thereof, the contractors had taken advantage of the interest-
free use of the funds/advances for purposes other than the contracted works pending
resolution of the problems/issues. If no legal action is filed against the contractors,
the government will eventually lose the aforementioned resources.

9.4 We recommended and Management agreed to:

a) Direct the Legal and Legislative Affairs Staff to immediately undertake

the appropriate legal actions to demand from the contractors the
immediate refund of the unrecouped advances, as well the liquidated
damages and other amount due to the Agency in relation to non-
completion of the projects, or forfeit the corresponding irrevocable
standby letters of credit or performance/surety bonds posted by the
contractors;

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 b) Institute remedial measures/actions to collect the unrecouped amounts,
including initiating appropriate legal or administrative sanctions against
the contractors and/or agency personnel who are found negligent in their
obligations/responsibilities which resulted in non-recoupment of
advances, if warranted; and

c) Consider the creation of a new committee who will be responsible for the
collection of the money value of forfeited performance/surety bonds and
recoupment of outstanding balance of advance payments for all
terminated and rescinded contracts.

Management Comments:

9.5 To ensure the collection of the money value of forfeited performance/surety bonds
and recoupment of outstanding balance for on-going projects or terminated projects
with supporting documents, the SPD in coordination with the implementing units,
will provide a schedule/summary of advance payment bonds posted for proper
monitoring and update status of those projects.

9.6 On a letter dated April 25, 2023, Management requested from the Philippine
Contractors Accreditation Board (PCAB) for the license’s renewal status and list of
current and on-going government contracts of the six (6) contractors who have
dormant/unrecouped advances as at December 31, 2022. PCAB replied on May 12,
2023 certifying that three (3) are included in the PCAB list of registered/licensed
contractors for CY 2022 to 2023, one (1) was registered until CY 2026, one (1) had
been delisted since June 30, 2001 and one (1) was not included in the PCAB list of
registered/licensed contractors.

9.7 As per LLAS, they are preparing the appropriate pleadings, judicial affidavits of
witnesses, documentary exhibits and other documents for legal action/s in relation to
non-completion of Phase III of Traffic Signalization Project. For the Development
of North Transport Terminal – A Greater Component of Greater Manila Area, the
LLAS has recommended to legally pursue and file a Petition for Declaration of
Nullity of a Void Contract, corollary, to recover the mobilization fee paid to the
contractor. For Bikeway Development Project, the LLAS has already advised the
Head of Procuring Entity for the termination of the project.

Auditor’s Rejoinder:

9.8 The Audit Team will monitor the implementation of the foregoing Management’s
actions in CY 2023.

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Deficiencies in the grant, utilization and liquidation of cash advances

10. Non-compliance with the rules and regulations in the granting, utilization and
liquidation of cash advances (CAs) resulted in: (a) the Bond Premium paid for the
three (3) Accountable Officers (AOs) which were in excess of the rate prescribed
under the Revised Schedule of Premium Rates under Annex C of the Treasury
Circular No. 02-2009 dated August 06, 2009; (b) the fidelity bonds of seven (7)
AOs which already expired and not renewed by the Agency despite of the existing
balance of CAs as at December 31, 2022; and (c) the amount of CA granted to 24
petty cash custodians which were in excess of the recurring expenses of the Agency
for one (1) month, contrary to Section 4.3.1 of the COA Circular No. 97-002 dated
February 10, 1997.

a. Bond Premium payments in excess of the rate prescribed

10.1 Section 5 of Treasury Circular No. 02-2009 dated August 06, 2009 laid down the
basis of the amount of bond and determination of premium. Further, Annex C of the
same Circular provides the revised schedule of premium rates.

10.2 Review of the List of Bonded Employees revealed that the Bond Premium paid for
the three (3) AOs were in excess of the prescribed amount under Annex C of the
above-mentioned Circular.

Table 17. AOs with Bond Premium Paid in Excess of Prescribed Amount
Annex C of Treasury Cir.
Payment Made
Amount 02-2009
SDO
Granted Maximum Maximum
Bond No. Premium Premium
Accountability Accountability
1 50,000.00 D3E-20-1382R 1,125.00 100,000.00 562.50 50,000.00
2 30,000.00 13D3-2022-02478N 562.50 50,000.00 337.50 30,000.00
3 200,000.00 13D3-2022-02978R 2,064.04 500,000.00 1,500.00 250,000.00
Total 3,751.54 2,400.00

10.3 Although the difference of the bond premiums paid and the prescribed amount were
immaterial, it indicates lapses in the existing internal control of the Agency in its
payment of premium not in accordance with the rate prescribed under Annex C of
Treasury Circular No. 02-2009 dated August 06, 2009.

10.4 We recommended and Management agreed to ensure that the payment of bond
premium shall be in accordance with the prescribed rate under Annex C of
Treasury Circular No. 02-2009 dated August 06, 2009.

Management Comments:

10.5 Management informed that the amounts of premiums of the three (3) AOs were based
on the rates provided under Annex C of Treasury Circular No. 02-2019 dated April

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 25, 2019. Further, Treasury Circular No. 01-2022 dated May 30, 2022 provides for
the Supplemental Guidelines on the Revised Omnibus Regulations Governing the
Fidelity Bonding of Accountable Public Officers (Sections 313-335, Chapter 15,
Revised Administrative Code of 1917). Based on the provisions of the said Circular,
the premiums would now be computed using the formula: Accountability x 1.5%, in
case of cash and property accountability. The Treasury Division is currently
complying with this Circular.

Auditor’s Rejoinder:

10.6 While it is true that Treasury Circular No. 02-2019 dated April 25, 2019 revised
Treasury Circular No. 02-2009 dated August 06, 2009, the table of computation for
bond premium is still the same except that the former added two (2) more rows or a
maximum cash accountability of up to P1,000,000,000.00 from P100,000,000.00.
The excess bond premiums paid resulted from the mis-determination of the
maximum cash accountability of the AOs.

b. Expired fidelity bond not renewed despite of the existing balance of CAs

10.7 Section 7.2 of the Treasury Circular No. 02-2009 dated August 06, 2009 states that
the fidelity bond of an accountable public officer shall be renewed before the
expiration of the bond.

10.8 Section 101 of PD No. 1445 states that “(1) Every officer of any government agency
whose duties permit or require the possession or custody of government funds or
property shall be accountable therefor and for the safekeeping thereof in conformity
with law. (2) Every accountable officer shall be properly bonded in accordance with
law.”

10.9 Review of the List of Bonded Employees revealed that the fidelity bonds of seven
(7) AOs have already expired for a period ranging from one (1) month to one (1) year
and 10 months but were not yet renewed as at December 31, 2022.

10.10 Non-renewal of the fidelity bonds of AOs exposes the government to risk that it may
not be indemnified in case of shortages and defalcations, among others, resulting to
possible loss of government funds.

10.11 We recommended and Management agreed to strictly monitor that all fidelity
bonds of Accountable Officers are timely renewed pursuant to Section 7.2 of
Treasury Circular No. 02-2009 dated August 6, 2009 in order for the
government to be appropriately insured against losses.

Management Comments:

10.12 The status of the seven (7) AOs whose bonds have expired and not renewed by the
Agency are: one (1) AO is processing the renewal of the fidelity bond; one (1) AO is

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 deceased already and the unliquidated balance will be deducted from her terminal
leave benefits; one (1) AO was replaced as PCF custodian and refunded the
unliquidated balance through OR Nos. 4391057 and 4391208; one (1) AO submitted
liquidation report pending compliance of suspensions by accounting; one (1) AO will
be issued again demand letter through his residential address; and two (2) AOs have
already liquidated through OR Nos. 4391857 and 4718251 dated January 25, 2023
and March 31, 2023, respectively.

10.13 Management is currently requiring a Finance Clearance to ensure that the assigned
AOs are properly bonded and has no existing CAs. In addition, the Accounting
Division issued quarterly demand letters to ensure that the CAs are liquidated as soon
as the purpose for which it was granted has been completed.

10.14 Moving forward, the Accounting Division will require a copy of bond confirmation
letter from BTR, as additional supporting document on the replenishment/liquidation
of PCFs to ensure that the concerned PCF custodian is covered by fidelity bond.

c. CA in excess of the recurring expenses of the agency for one (1) month

10.15 Section 4.3.1 of COA Circular No. 97-002 dated February 10, 1997 provides that for
petty operating expenses “The cash advance shall be sufficient for the recurring
expenses of the agency for one month. The AO may request replenishment of the cash
advance when the disbursements reach at least 75%, or as the need requires, by
submitting a replenishment voucher with all supporting documents duly summarized
in a report of disbursements.”

10.16 Validation of current year liquidations and replenishments of the PCF revealed that
there were 24 petty cash custodians whose accountabilities were in excess of the one-
month recurring expenses of the office. These PCF accounts had balances ranging
from P11,934.90 to P298,785.50 as at December 31, 2022. It was also noted that
there was a low frequency of replenishment/liquidation made during the year with an
average of 1.73 times only.

10.17 Furthermore, nine (9) of the PCF custodians with CAs ranging from P50,000.00 to
P500,000.00 incurred no expenses and there were no liquidations/replenishments
made during CY 2022. Aggregate CAs of these PCF custodians amounted to
P1,180,000.00.

10.18 The balances per books as at December 31, 2022 of the CAs of the above AOs were
not equal to the amount of CAs initially granted to them even if no expenses were
replenished/liquidated during the year.

10.19 The grant of PCF in excess of the monthly requirements of the office may pose
various risks to the Agency, such that funds may be misused and/or remain
unutilized. Also, the absence of PCF transactions for the year is an indication that the
maintenance of CA for the office is no longer necessary.

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10.20 We recommended and Management agreed to:

a. Review the amount of Petty Cash Fund and to grant only what is
sufficient for the recurring expenses for one (1) month and may request
for replenishment when the disbursements reach at least 75 percent, or
as the need requires, in compliance with Section 4.3.1 of COA Circular
No. 97-002 dated February 10, 1997; and

b. Direct the Petty Cash Fund custodians concerned to liquidate/refund

immediately the Petty Cash Fund which remain non-moving or without
transaction during the year.

Management Comments:

10.21 The Accounting Division has prepared a schedule to show that there was a
replenishment made by the PCF custodians. However, there were instances when
replenishments were made months after the grant of the CA which is not in
accordance with the provision of COA Circular No. 97-002.

10.22 In the case of the three (3) PCF custodians who have no disbursements from the time
the funds were granted, the Accounting Division will issue a demand letter for the
immediate refund of the unused PCF.

10.23 Management duly acknowledged the audit recommendation and will issue a
memorandum to all PCF custodians reiterating our previous memorandum dated
May 02, 2022 on delayed submission of replenishment/liquidation documents of PCF
and CA.

Auditor’s Rejoinder:

10.24 The Audit Team will monitor the implementation of the foregoing Management’s
actions in CY 2023.

Deficiencies pertaining to registration and issuance of motor vehicles

11. Non-compliance by the Authority with Sections 3, 5 and 8 of Republic Act (RA)
No. 4136 was noted as: a) 71 vehicles were not registered in CY 2022 due to the
inability to comply with Land Transportation Office (LTO) inspection pending
repairs/rehabilitation; and b) 29 vehicles registered under the name of previous
owners were issued to end-users. Moreover, late registration of vehicles and
inability to adhere with the schedule for LTO inspection resulted in the incurrence
of unnecessary penalties totaling P18,197.00.

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11.1 RA No. 4136, an act on the laws relative to land transportation and traffic rules
requires, among others, the following:

Section 3. Words and phrases defined. – As used in this Act:

(f) “Owner” shall mean the actual legal owner of a motor vehicle, in whose
name such vehicle is duly registered with the Land Transportation Commission.

Section 5. All motor vehicles and other vehicles must be registered.

(a) No motor vehicle shall be used or operated on or upon any public highway
of the Philippines unless the same is properly registered for the current year
in accordance with the provisions of this Act.

(b) Any registration of motor vehicles not renewed on or before the date fixed
for different classifications, as provided hereunder shall become delinquent
and invalid. xxx

Section 8. Schedule of registration fees. - Except as otherwise specifically

provided in this Act, each application for renewal of registration of motor
vehicles shall be accompanied by an annual registration fee.

11.2 Joint Administrative Order No. 2014-01 provided the revised schedule of fines and
penalties for violation of laws, rules and regulations governing LTO.

11.3 Verification of pertinent records/data disclosed the following deficiencies:

a. Non-registration/non-renewal of registration of motor vehicles in CY 2022

11.4 One of the functions of the Transport Division (TD) is to register all vehicles owned
by MMDA. Available records obtained from the TD disclosed that 71 out of 572
units of the total motor vehicles were unregistered with LTO.

11.5 Prior communication with the TD Unit disclosed that not all vehicles were regularly
renewed/registered with LTO due to: i) various vehicles which did not pass the
LTO’s Inspection; ii) vehicles were under repair during the renewal month; iii)
lacking/incomplete documents required for the renewal of LTO registration; and
iv) non-coordination of some end-users with TD for the LTO’s inspection.

11.6 Aging of motor vehicles owned by MMDA revealed that a significant number of
these had already exceeded the seven-year useful life as shown in the table
presented in the next page:

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 Table 18. Acquisition Year of Motor Vehicles
Dump Trucks,
Service Percentage
Particulars Motorcycles Fire Truck and Total Remarks
Vehicles (%)
Others
Acquired in 172 103 81 356 62.24
CY 2016-2022
Acquired in 58 92 66 216 37.76 Used by the
CY 1994-2015 MMDA for
more than its
estimated
useful life of
seven (7) years
Total 230 195 147 572 100

11.7 As can be gleaned from the above table, 216 out of 572 or 37.76% of MMDA’s
vehicles had already exceeded their useful lives raising doubts as to their
roadworthiness thus, may result to failing in LTO inspections and consequently,
non-registration of the vehicles.

11.8 Monitoring of compliance to our previous years’ audit recommendations, the

Authority had issued various Memoranda aimed to avoid the late and non-renewal
of registration of MMDA vehicles.

11.9 Also, MMDA, in cooperation with LTO, had conducted two-day registration
caravan on February 15-16, 2022 to cater to the renewal of unregistered MMDA
vehicles.

11.10 Despite the above actions taken by Management, there were 71 MMDA owned
vehicles not registered with LTO. According to Management, the following are the
status of the said unregistered vehicles:
Table 19. Status of Unregistered Vehicles
Status No. of Vehicles
Newly Acquired 11
Three (3)-year registered 8
Non-operational/ For repair 18
Additional Off-road vehicles 24
For Disposal 3
No records found 7
Total 71

11.11 The TD has yet to submit to the Audit Team the supporting documents for the eight
(8) vehicles which were already registered with the LTO in 2022.

11.12 It is worth-mentioning that the actions taken by Management significantly

decreased the number of unregistered vehicles compared to the prior years.
However, as one of the implementing agencies for Traffic Enforcement, MMDA
should act as a role model for the public in strictly following the rules and
regulations prescribed by LTO for motor vehicle renewal/registration.

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 b. Various vehicles still registered under the name of previous owners

11.13 Furthermore, it was disclosed that there were 31 vehicles issued to end-users which
were still registered under the name of previous owners in CY 2022 contrary to
Section 3 of RA No. 4136 or the Land Transportation and Traffic Code. Until the
transfer of ownership is registered in the name of the new owner, the previous
owner is still considered the registered owner of the motor vehicle.

11.14 Of the 31 vehicles not registered under the name of the MMDA, 27 were already
noted from prior year’s audit. A document submitted by TD provides that the causes
for the non-transfer of the vehicles under the name of MMDA include non-passing
of the LTO inspection and lack of original documents such as OR/CR, Deed of
Donations, necessary IDs from the donor and Secretary’s certificate.

11.15 The TD Head informed the Audit Team of the status of registration of the 31
vehicles under the name of the previous owners: eight (8) were already registered
under the name of MMDA, three (3) were for disposal, two (2) currently have no
files for transfer of ownership, 16 were registered under the ownership of DPWH
and two (2) were from private companies and other government agencies. LTO
requires the following for the transfer of ownership:

a. Deed of Donation indicating the individual description of the vehicle;

b. Board Resolution about the Donation; and
c. Secretary Certificate plus Photocopy of valid ID with signature.

11.16 The Agency is yet to secure the required documents from the previous owners.
Thus, the transfer of ownership was not yet accomplished.

c. Incurrence of penalties due to late registration

11.17 In CY 2022, P18,197.00 were incurred as penalties for late registration/renewal of

motor vehicles and were paid out of petty cash fund and cash advances.

11.18 In a Memorandum dated November 5, 2020 from the MMDA Chairman, it was
instructed that the Directors or Division Chiefs shall be held responsible for
penalties incurred on the late registration of vehicles. Relatively, no penalties on
LTO registration/renewal shall be paid out of the MMDA funds.

11.19 Prior inquiry with the TD Unit Head informed that the late registration of vehicles
was brought about by various causes, among others:

• Vehicles which need engine major repair;

• Old and dilapidated vehicles that need body repair and repainting;
• Electrical parts and accessories that needs to be repaired or replaced such as
headlight, break light and tail light;
• Broken windshield; and

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 • Unprintable different engine number and/or chassis number during “stencil”
process.

11.20 The foregoing indicates that MMDA’s mandate on Transport and Traffic
Management which includes the administration and implementation of all traffic
enforcement operations such as imposition of penalties for unregistered vehicles is
not fully attained. This situation may also result in wastage of government funds
due to the unnecessary penalties from late registration of motor vehicles.

11.21 We recommended and Management agreed to instruct the Transport Division

to:

a. Hold the responsible persons accountable on the incurrence of penalties

in CY 2022 in accordance with MMDA Internal Memorandum dated
November 5, 2020;

b. Ensure that all MMDA-owned motor vehicles are promptly registered

with Land Transportation Office as government vehicles under the name
of MMDA; and

c. Renew the registration of all serviceable motor vehicles within the period
prescribed to avoid incurrence of penalties.

Management Comments:

11.22 Per additional schedule submitted by Transport Division, P16,047.00 of the

penalties noted were paid during the LTO Caravan at MMDA, P2,100.00 was
indicated on the OR issued by LTO as overpayment to be credited on the next
registration while the remaining P50.00 was a penalty from inspection receipt. The
Transport Division has already issued memoranda to end-users concerned to
demand the payment of registration penalties.

Auditor’s Rejoinder:

11.23 Management action demanding payment from the end-users of the penalties
incurred was duly noted and will be monitored. The penalties should be borne by
the faulting officers/employee and not by the Government.

Land and other properties which are not yet titled/transferred to MMDA - at least
P6,192,708.25

12. Ownership of the land acquired in 2007 costing P6,192,708.25 has not yet been
transferred to MMDA from the previous owner, contrary to Sections 39(2) and
101(1) of Presidential Decree (PD) No. 1445. Further, at least 78 properties
being maintained by MMDA have likewise no Transfer Certificate of Title

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 (TCT) and other relevant documents when transfer of functions on flood
control and traffic engineering center to MMDA by Department of Public
Works and Highways (DPWH) in CYs 2002 and 2003, respectively, was
effected, thereby exposing the Agency to the risk of having no legal claims over
the properties.

12.1 A land title is the final proof of property ownership. It is the evidence of the owner’s
right or extent of interest, by which one can maintain control and as a rule assert
the right to exclusive possession and enjoyment of property. The primary purpose
of transferring land title is to safeguard one’s ownership rights.

12.2 Section 39 (2) of PD No. 1445, otherwise known as the Government Auditing Code
of the Philippines, provides:

xxx

(2) In the case of deeds to property purchased by any government agency, the
Commission shall require a certificate of title entered in favor of the
government or other evidence satisfactory to it that the title is in the
government.

xxx

12.3 Section 101(1) of the same PD expressed that “Every officer of any government
agency whose duties permit or require the possession or custody of government
funds or property shall be accountable therefor and for the safekeeping thereof in
conformity with law.”

12.4 As at December 31, 2022, the recorded balance of Land account in the books and
per Report on the Physical Count of Property, Plant and Equipment (RPCPPE)
pertaining to six (6) parcels of land tied-up in the amount of P61,425,558.44. Details
are as follows:

Table 20. Recorded Land in the Financial Statement as at December 31, 2022
Area Acquisition
Location Date Acquired
(sq. mtrs.) Cost (In PhP)
Guadalupe, Nuevo, 6,911 July 07, 1977 9,370,066.46
Makati City
Barrio Kalayugan, 538,984 June 06, 2002 5,063,324.00
Municipality of
Carmona, Cavite
Barrio San Isidro, 26,010 September 25, 1995 13,005,000.00
Municipality of
Antipolo, Rizal
District of Tondo, City 652.30 December 04, 2007 6,192,708.25
of Manila
Barrio Ugong, Pasig 5,832 July 08, 1985 3,499,200.00
City

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 Area Acquisition
Location Date Acquired
(sq. mtrs.) Cost (In PhP)
Barrio. Rosario 13,085 January 05, 1977 24,295,259.73
Manggahan, Pasig City
Total 61,425,558.44

12.5 Out of the six (6) parcels of land presented above, one (1) was not titled in the name
of MMDA. Verification of records/data disclosed that the Transfer Certificate of
Title (TCT) of land acquired on December 04, 2007 amounting to P6,192,708.25,
located in the District of Tondo, City of Manila, is still not transferred to MMDA.

12.6 FCSMO requested from the Registry of Deeds (RD) for the original copy/certified
true copy of the TCT of the previous owner of the said land but the RD suggested
that a reconstitution of the title be instituted by the Agency through filing a Petition
in the Regional Trial Court (RTC) of Manila using as basis the owner’s duplicate
copy of the said TCT.

12.7 A request for legal assistance was initiated by FCSMO with the Legal and
Legislative Affairs Staff (LLAS) but LLAS emphasized that it is necessary to
acquire the original Deed of Sale and the owner’s duplicate copy of TCT to be able
to process the titling of the property. Unfortunately, Supply and Property Division
(SPD) provided that such documents are no longer available, instead, it furnished
LLAS the photocopies of all related documents available to facilitate the legal
action on the titling of the said property. As at date, LLAS has yet to submit updated
status on the said matter.

12.8 Moreover, at least 78 properties maintained by MMDA with a total land area of at
least 118,058.56 square meters and a floor area of 20,777.41 square meters were
still not supported by land titles. These properties which are disclosed in the Notes
to Financial Statements as at December 31, 2022 include lands where Pumping
Stations, Floodgates, Effective Flood Control Operation System (EFCOS) and
Traffic Academy Building including the land where these are located, as
summarized below:

Table 21. Untitled Land with MMDA

Floor Area
MMDA Properties Land area (in sq.m.)
(in sq.m.)
76 Pumping Stations and other flood control 118,058.56 20,777.41
structures
Traffic Academy Building No data provided No data
EFCOS provided

12.9 In a letter dated June 19, 2020, the Director of the FCSMO stated that their office
has neither documents nor proof of ownership of the lots being occupied by the
pumping stations. It was also disclosed that when the flood control function was
transferred by the DPWH to the MMDA in 2002, no such documents were turned
over. Even the flood control facilities that were constructed and turned over by the

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 DPWH after 2002, as well as those constructed by the MMDA, have likewise no
land titles considering that most of the facilities located were along easement and
reclaimed areas near waterways of Pasig River, San Juan River, Laguna Bay and
Manila Bay. The identified reasons that made it difficult in the titling of the
properties were also reiterated by FCSMO in its letter to the Audit Team dated
March 01, 2023. FCSMO further disclosed that no new land was acquired by
MMDA in CY 2022 except the newly turned-over Malacañang Pumping Station
from DPWH. However, there was no mention of the Land in which the pumping
station was located since only the operation, facilities and equipment were turned-
over to MMDA.

12.10 In a letter dated March 08, 2021, the Director of Traffic Engineering Center
informed the Audit Team that their office provided/furnished copies of the turned-
over properties to the Accounting Department and SPD. However, the Accounting
Division personnel informed that the list included mostly computers, printers,
CCTV and inventory items which are fully depreciated and some have no amounts.
No appraisal of land properties and other related documents were submitted to the
Audit Team as at date. Moreover, per query with SPD, the Audit Team was
informed that the latter will inquire and endorse the titling of the Traffic Academy
to LLAS.

12.11 Due to the foregoing, the Agency might face legal issues in the future due to having
no proof of legal ownership over the land properties especially for pumping stations
and other structures that are constructed therein. Likewise, the non-recording of the
land properties by an undetermined amount affects the reliability of the PPE
account balance in the financial statements.

12.12 We recommended and Management agreed to:

a) Direct the Supply and Property Division to ensure that properties

acquired, whether through purchase or donation, are all titled and free
from legal issues, and devise an action plan, in coordination with the offices
concerned, for immediate resolution on the issues of untitled properties;
and

b) Require the Legal and Legislative Affairs Staff, in coordination with

Supply and Property Division, Flood Control and Sewerage Management
Office and Traffic Engineering Center, for immediate legal actions
pertaining to the titling of land in Tondo, Manila and all the other 78
untitled properties in order to facilitate the subsequent transfer of title and
full ownership of the properties in favor of MMDA.

Management Comments:

12.13 For the titled land in the District of Tondo, City of Manila, where Abucay Pumping
Station is situated, it was confirmed with LLAS that communication with the

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 Registry of Deeds was re-initiated to acquire an original copy of the TCT of the
land. If confirmed that said document is not available in the Registry of Deeds, a
petition will be filed in the Regional Trial Court of Manila for the reconstitution of
the title. Once the title is reconstituted, process for the transfer of TCT in the name
of MMDA will commence.

12.14 As for the other flood control facilities situated on land properties without TCTs,
MMDA has requested the legal assistance of the LLAS in devising courses of action
to prove legal ownership of said land properties in the absence of TCTs since said
facilities are located within the easement of waterways. Likewise, updated
inventory report of pumping stations and Effective Flood Control Operation System
(EFCOS) stations as at December 2022 was already forwarded to the SPD for their
reference.

12.15 Given that there is a need for each land and/or property per list to be properly
determined (i.e. ownership, possession, condition, mode of acquisition, etc.) before
any legal action can be taken, the LLAS will look into the inventory reports and
provide the necessary assessment on how this matter may be legally resolved.

Auditor’s Rejoinder:

12.16 Management still needs to create a concrete action plan with corresponding
timelines for the titling/transfer of title to show full ownership of all the noted
properties in favor of MMDA. As all other legal actions are pending, LLAS shall
communicate its position as to the propriety of titling the properties and/or fast track
the necessary legal actions relative to titling of the noted properties in the name of
MMDA.

12.17 The Management planned actions were duly noted and will be monitored in CY
2023.

Loss of service income from accreditation and registration fees of towing companies –
P24,500.00

13. Loss of Service Income amounting to P24,500.00 due to lapses in controls from
accreditation and registration of towing companies contrary to Sections 4, 5.4
and 12 of the Metro Manila Council (MMC) Guidelines on Towing and
Impounding Operations in Metro Manila.

13.1 The authority of the MMDA to impound stalled vehicles and take such other
measures or actions as may be necessary to minimize traffic congestion in Metro
Manila was first prescribed through Metro Manila Commission (MMC) Ordinance
No. 78-03 and was amended by MMDA Ordinance No. 3, series of 1992 and
MMDA Regulation No. 96-003.

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13.2 Section 4 of MMC Guidelines on Towing and Impounding Operations in Metro
Manila provides that “All towing services must be registered with the Authority
annually. The Authority shall issue number stickers to tow trucks and a registration
fee of P500.00 per sticker shall be paid by the applicant”. In addition, Section 5.4
thereof provides that “Towing companies/agencies shall be required to pay
P5,000.00 annual accreditation fee for the first two tow trucks and P2,000.00 for
every additional unit in excess of two when securing accreditation from MMDA”.
Section 12 thereof further provides that “MMDA Traffic Operations Center shall
be in charge of the towing operations and shall supervise the proper
implementation of the guidelines”.

13.3 Currently, MMDA has 36 accredited towing companies with a total of 149 tow
trucks and 35 registered towing companies with a total of 149 tow trucks.
Accredited tow trucks are those that are allowed to tow in all major thoroughfares
in Metro Manila except in areas under the jurisdiction of LGUs while registered
tow trucks can tow only client-vehicles from the garage of its owners, any private
place or from designated MMDA impounding area.
13.4 Accreditation of the towing companies and tow trucks are under the supervision of
Impounding & Inspectorate Division (or Impounding Unit) that verify the
compliance of towing companies on accreditation/registration pursuant to the
MMC Guidelines on Towing and Impounding. The documentary requirements
presented by the towing companies and their tow trucks to comply with the
standards are verified by the Impounding Unit. If compliant on all requirements,
they will issue order of payment for the towing companies to process their payment
in the MMDA Main Office. After payment, original receipts together with the
Certificate of No Pending Case secured in the MMDA Legal Department will be
presented to the Impounding Unit for verification. After verification, Impounding
Unit will recommend the issuance of Certificate of Provisional Authority (CPA) for
signature of appropriate officials. Signatories are the Head of the Impounding &
Inspectorate Division, Assistant General Manager for Operations and MMDA
Chairman. Whereas, payment of the required fees is necessary prior to towing
companies’ accreditation and/or registration made official by the issuance of CPA.

13.5 In our review of the Masterlist of Private/Registered/Accredited Towing

Companies with List of Tow Trucks as at December 31, 2022, as submitted by the
Impounding and Inspectorate Division, we noted that compared against the
collected accreditation and registration fees for the year, there were
accredited/registered towing companies/trucks with no corresponding
collection/payment of accreditation and registration fees as follows:

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Table 22. Accredited/registered towing companies/trucks without accreditation and registration fees
Required Fees (Amount in Php)
Collected
Additional
No. of accreditation Registration Variance
Towing Registration Accreditation fee of
Tow and Fees (Under
Company Validity Fee on the P2,000/truck
Trucks registration (P500 per collection)
first 2 trucks in excess of
fee truck)
two
1 01-01-2022 2 -0- 5,000 -0- 1,000 6,000
to 12-31-
2022
2 01-01-2022 7 -0- 5,000 10,000 3,500 18,500
to 12-31-
2022
Total 9 -0- 10,000 10,000 4,500 24,500

13.6 Inquiry from the Impounding Unit disclosed that the accreditation of the two (2)
towing companies were processed on February 03, 2022 on the basis of fraudulent
ORs presented. Summary of the information follows:

Table 23. Details of OR for Accreditation

Towing Amount
Purpose OR Number OR Date
Company (In PhP)
1 4129424 February 03, 2022 5,000.00
Accreditation Fee
2 4129421 February 03, 2022 15,000.00
1 4129423 February 03, 2022 1,000.00
Registration Fee
2 4129422 February 03, 2022 3,500.00
Total 24,500.00

13.7 However, upon confirmation with Treasury Division in their Certification, the
above ORs were issued for different purposes and not for the accreditation or
registration of the concerned towing companies, and these were forged replication
of the original ORs. Moreover, Impounding Unit’s ORs were countered by the
Certification issued by the Treasury saying that another towing company made the
payments under ORs 4129422 and 4129423, and processed their accreditation on
January 10, 2022 per ORs 3827111 and 3827112. Both ORs, as certified by the
Treasury, were tampered on the dates.

13.8 As discussed above, such conditions appear that the towing companies were given
authority to operate towing services without actual payment of the necessary
accreditation/registration fees. These deficiencies resulted from the alleged
falsification/tampering of official documents committed by the towing companies.
The Impounding Unit was not able to strictly validate the documents presented by
the towing companies to secure their accreditation nor regularly monitor and
reconcile records with Treasury Division for payments received relative to
accreditation and registration of towing companies. Moreover, these conditions are
red flags for fraud involving collection of accreditation and registration fees.

13.9 The foregoing conditions did not only imply loss of service income from towing
accreditation and registration fees but an indication of significantly weak controls
over grant of accreditation and registration of towing companies.

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13.10 We recommended and Management agreed to:

a) Investigate and verify the above noted transactions which resulted in loss
of service income from towing accreditation and registration fees and
provide the Audit Team with the investigation results with supporting
documents;

b) Henceforth, impose the necessary legal/corrective actions on the

officials/employees concerned found liable for the lapses in their functions;
and to strictly observe the Metro Manila Council Guidelines on
accreditation/registration of towing companies and likewise, effect the
necessary legal action/blacklisting of the towing companies found guilty of
falsification/tampering of official documents;

c) Formulate written policy over verification, monitoring and reconciliation

of records and transactions covering payment of accreditation and
registration fees collected from the towing companies to strengthen
controls in strict observance of accreditation requirements per Metro
Manila Council Guidelines on Towing and Impounding Operations in
Metro Manila; and

d) Conduct immediate reconciliation of all payments of accreditation and

registration fees against the number of accredited and registered towing
companies/tow trucks and facilitate immediate collection of under
payments and furnish the Audit Team copy thereof with all the supporting
documents.

Management Comments:

13.11 Towing and Impounding Group facilitated the investigation on the matter and
communicated through Memorandum letter dated March 20, 2023 addressed to the
Towing Company. The latter, however, did not provide their response on the matter.
Towing and Impounding Group recommended to the Director of TEC the
revocation of the CPA of the concerned towing companies. Treasury Division will
endorse to the Legal and Legislative Affairs Staff (LLAS) to seek legal recourse
against the owner/proprietor of the towing companies for replicating a
falsified/forged copy of the original OR issued by the Treasury Division.

13.12 Coordination meeting with Towing and Impounding Group and Treasury Division
to develop improved measures to be implemented in order to circumvent the
omission of a fraudulent act of the tow truck companies by replicating forged copies
of the original official receipts.

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Auditor’s Rejoinder:

13.13 Management shall submit the official revocation of the CPA of the concerned
towing companies since only the recommendation by the Head of Towing and
Impounding Group was submitted. Moreover, Management shall officially issue a
formal written policy to include the identified control measures on their process
flow to ensure strict compliance and improve controls over grant of accreditation
and registration of towing companies.

Compliance with Gender and Development (GAD) requirements under the GAA and other
pertinent laws

14. The Agency substantially complied with Gender and Development (GAD) related
laws, rules and regulations signifying notable improvement and commitment to
address gender issues and support gender mainstreaming within the Agency.
However, GAD programs/projects/activities were not fully implemented as at
year-end due to identification of impractical targets and non-monitoring of the
implementation of programs and activities to achieve the overall GAD objectives.
Moreover, Responsibility Centers (RC) were not assigned for the GAD Focal
Point System (GFPS) resulting to inability to strictly account, monitor and report
GAD expenses and other GAD-related financial transactions contrary to Sections
4.2 to 4.8 of COA Circular No. 2021-008.

i. Compliance with other GAD related laws, rules and regulations

14.1 The guidelines and corresponding Management compliance/actions on various

GAD-related issuances for CY 2022 are summarized as follows:

Table 24. Compliance on Other GAD-Related Issuances

Status of
Audit Issues Criteria Remarks
Compliance
Timely Section 1.2.5.3 of PCW Complied The GPB was submitted to the
submission of Memorandum Circular No. AT on March 30, 2022.
GAD reports 2021-04 which provides that
“Agencies shall also furnish PCW endorsement is March
their respective Commission 23, 2022.
on Audit (COA) Audit Team
(AT) a copy of their signed No delay (within five (5)
GPB within 5 working days working days from
from its endorsement by endorsement).
PCW.”
First time that the Agency
timely complied in the
submission of GBP.

Section 3.1 of PCW Initially Advance copy of GAD

Memorandum Circular No. Complied Accomplishment Report (AR)
2022-07 which provides that was submitted on March 06,
“Agencies shall print the 2023 to facilitate timely audit

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 Status of
Audit Issues Criteria Remarks
Compliance
returned GAD ARs remarks, of GAD since PCW reviewed
and submit the signed GAD GAD AR will be
ARs to the PCW and to COA delayed/inconsistent with the
Audit Team.” audit report deadline of COA.
Creation of Section 4 of PCW Complied Office Order (OO) No. 447
GFPS under the Memorandum Circular No. Series of 2018 as to the
Manga Carta of 2011-01 which provides that creation of GAD Focal Point
Women (MCW) “The heads of agencies shall Committee.
issue appropriate directives to
institutionalize the creation of Moreover, subsequent OOs are
the GFPS in their respective issued for every change in the
agencies.” composition of GAD Focal
Point Committee.

GAD Budget at Section 1.2.2.2 of PCW Complied GAD budget for CY 2022 is
least 5% of total Memorandum Circular No. P706,506,333.35 or 12.46
appropriations 2021-04 which provides that percent of the total agency
“the GAD budget, which is the budget (GAA) for CY 2022 of
cost of implementing GAD P5,672,038,000.
programs, activities and
projects (PAPs), shall be at
least five percent (5%) of the
agency’s total budget
appropriations.”

Establishment Section 4.4 of PCW-NEDA- Complied Facilitated surveys from unit

and DBM Joint Circular No. 2012- offices to gather sex-
Maintenance of 01 which provides that “The disaggregated data, on-going
GAD Database agency shall develop or encoding of data in the GAD
integrate in its existing Database including use of
database GAD information to Human Resource Information
include gender statistics and System (HRIS) to gather
sex-disaggregated data that gender statistics and sex-
have been systematically disaggregated data as basis for
produced or gathered as inputs planning, budgeting and policy
or bases for planning, formulation of GAD.
budgeting, programming, and
policy formulation.”

Conduct of Part 3.4 of the PCW-NEDA- Complied Submitted copies of HGDG

Gender Analysis DBM Joint Circular 2012-001 Checklist, project background
provides that “To aid gender and gathered sex-
mainstreaming, agencies shall disaggregated data/project
perform gender analysis using beneficiaries, among others,
existing tools, such as the signifying conduct of gender
Harmonized Gender and analysis of programs and
Development Guidelines projects included in CY 2022
(HGDG) to ensure that the GPB.
different concerns of women
and men are addressed equally
and equitably in their PAPs.”

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 Status of
Audit Issues Criteria Remarks
Compliance
Establishment of Annex A of PCW-NEDA- Complied Existence of VAW
Women’s Desk DBM Joint Circular 2012-001 Complaint’s Desk and
or the Guidelines in GAD Plan submission of sample
and Budget which includes complaint received. GFPS also
Violence Against Women provided that complaints
(VAW) Desk as activities received are appropriately
related to the establishment endorsed to Legal.
and strengthening of enabling
mechanisms that support the
GAD efforts of agencies.

Submission of Section 5.1 of PCW-NEDA- Complied Management submitted a copy

GAD Agenda DBM Joint Circular 2012-001 of GAD Agenda for year 2020-
which provides that “This GAD 2025 incorporating GAD
agenda shall be the basis for Mission, Vision and Goals.
the annual formulation of
PAPs to be included in the
GPB of the department and its
attached agencies, bureaus,
regional offices and units.”

14.2 Management actions as provided above show significant improvement in

compliance with various GAD laws, rules and regulations compared in the prior
years and likewise, it signifies that the Agency is committed to address gender
issues within its mandate including strengthened GFPS to support and accelerate
gender mainstreaming within the Agency.

14.3 We appreciated Management’s efforts in compliance with other various

Gender and Development laws, rules and regulations signifying notable
improvement and commitment to address gender issues and in support gender
mainstreaming within the Agency.

ii. Non-implementation of seven (7) out of 14 GAD programs/projects/activities.

14.4 Section 34 of the General Provisions of RA No. 11639 or the GAA for CY 2022
provides that “Programs and Projects Related to Gender and Development. All
agencies of the government shall formulate a GAD Plan designed to address gender
issues within their concerned sectors or mandate and implement the applicable
provisions under RA No. 9710 or the Magna Carta of Women, Convention on the
Elimination of All Forms of Discrimination Against Women, the Beijing Platform
for Action, the Philippine Plan for Gender-Responsive Development (1995-2025)
and the Philippine Development Plan (2017-2022).

14.5 The GAD Plan shall be integrated in the regular activities of the agencies, which
shall be at least five percent (5%) of their budgets. For this purpose, activities
currently being undertaken by agencies which relate to GAD or those that
contribute to poverty alleviation, economic empowerment especially of

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 marginalized women, protection, promotion, and fulfilment of women's human
rights, and practice of gender-responsive governance are considered sufficient
compliance with said requirement. Utilization of GAD budget shall be evaluated
based on the GAD performance indicators identified by said agencies.”

14.6 Validation of the submitted GAD AR for CY 2022 revealed that seven (7) out of
14 GAD projects/programs were not fully implemented/partially accomplished due
to inability to meet the required number of target participants/beneficiaries for
GAD-related seminars/trainings/workshops and number of distributed Information,
Education and Communication (IEC) materials. Moreover, the implementation of
construction of comfort rooms in Metro Parkway Clearing Group (MPCG) field
offices was on hold due to the re-greening project along EDSA, while Flood Control
also encountered delays in the implementation of flood mitigating infrastructure
projects. The GAD Secretariat also disclosed that the establishment of the day care
center, breastfeeding area and Persons with Disability (PWDs) facilities have been
pending completion and for transition to the new MMDA building. The inability to
establish practical targets, as well as strictly monitor the implementation of GAD
projects, contributed to the non-achievement of the overall GAD objectives at year-
end. As such, each implementing offices in the submission of their annual GAD
targets to the GAD Secretariat, carefully consider the factors that can affect the
achievement of the overall GAD objectives such as practicality and attainability of
the projects/programs/activities within the set timeline among others.

14.7 The foregoing conditions manifested inadequacy of strategies to implement

planned GAD activities for which funding/budget was approved; as well a lack of
monitoring and evaluation of the projects thus, resulted in inability to completely
address the gender issues within MMDA’s mandate depriving the target
communities of the immediate benefit/use of the GAD projects.

14.8 We recommended and Management agreed to:

a) Re-assess the identified Gender and Development issues and/or specific

targets or performance indicators, to include practical
programs/projects/activities that are doable within the available timelines;
and

b) Ensure that Gender and Development programs, projects and activities are
strictly monitored and implemented as planned to attain the overall Gender
and Development objectives.

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 iii. Non-assignment of Responsibility Centers (RC) for the GAD Focal Point
System (GFPS)

14.9 COA Circular No. 2021-008 dated September 06, 2021 provides:

Section 4.2. Government entities shall establish their own responsibility accounting
by creating or assigning Responsibility Centers (RCs) and RC codes.

Section 4.4. A separate RC and RC code for the GAD Focal Point System (GFPS)
assigned by the entity concerned shall serve as the RC for GAD-related expenses.

Section 4.6. The RC code assigned for GFPS shall be reflected in the enhanced
Electronic National Government Accounting System (eNGAs) and Electronic
Budget (eBudget) System or any computerized or manual accounting system
implemented by the government entity concerned.

Section 4.8. The GAD-related reports shall be generated from eNGAs, eBudget
System or any computerized or manual accounting system using the RC code
assigned for the GFPS.

14.10 For CY 2022, Budget and Accounting Divisions was not able to establish and assign
RC codes for GAD-related expenses and transactions. As a result, the budget and
actual expenditures related to GAD as presented in the GPB and GAD AR are those
that are manually gathered from the implementing offices. Thus, the regular
expenses of those offices were accounted for in the books and not specifically
assigned/allocated to GAD as provided in COA Circular No. 2021-008. Likewise,
as at date, no GAD-related reports can be generated from the eNGAS and eBudget
System.

14.11 Accounting Division further disclosed that they are already coordinating with the
Budget Division to establish and assign RC codes to account GAD-related
expenditures starting FY 2023. The GFPS, having the main responsibility to
oversee compliance on all GAD-related issuances, should be updated on recent
laws, rules and regulations affecting GAD and shall have initiated the dissemination
of important GAD issuances to other offices concerned.

14.12 Non-compliance with COA Circular No. 2021-008 resulted in the inability to
facilitate the generation of reports through the eNGAS and eBudget System as a
means to properly account and monitor GAD-related expenses and other GAD-
related financial transactions.

14.13 We recommended and Management agreed to:

a) Direct the Budget and Accounting Divisions to establish and assign separate
Responsibility Center and Responsibility Center code for the Gender and
Development (GAD) Focal Point System to facilitate generation of all reports
pertaining to GAD-related expenses and other GAD-related financial

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 transactions as a means to monitor and properly account for the GAD funds
pursuant to COA Circular No. 2021-008; and

b) Require the Gender and Development Focal Point System to ensure that all
units concerned are updated on all issuances related to GAD by timely
dissemination of information.

Management Comments:

14.14 The Agency was not able to assign a separate RC and RC code for GAD Focal Point
System since the National Expenditure Program (NEP) for FY 2022 Budget was
released on the 3rd quarter of CY 2021 and was still undergoing deliberation
subsequent to the release of COA Circular No. 2021-008 on September 06, 2021.
With the foregoing circumstances, the reports pertaining to GAD related expenses
and other GAD related financial transactions were not properly accounted under
the GAD funds to comply to said Circular. However, effective FY 2023, and in
coordination with the Accounting Division, a Sub-Responsibility Center pertaining
to GAD Focal Point System will now be set-up.

Auditor’s Rejoinder:

14.15 The issuance of the NEP for CY 2022 should not preclude the Agency from
assigning RCs and RC Codes for GAD since GAD is also included in the budget
planning as part of the integrated budget and from the regular activities of the
Agency for CY 2022. Moreover, the Budget and Accounting Division can easily
update the RCs and RC codes in their records under the budget and expenditures of
the regular activities to which the GAD-related expenses are integrated. In view of
this, the Audit Team will continue to monitor the planned implementation of
assigning sub-responsibility center for GAD in the subsequent audit period.

Non-compliance with provisions under the Senior Citizen's Act/Persons with Disabilities
(PWDs)

15. Non-preparation of plans, programs and projects for CY 2022 to address the
concerns of Senior Citizens (SC) and Persons with Disabilities (PWD) which is
contrary to Section 35 of the General Provisions of the General Appropriations
Act (GAA) for FY 2022.

15.1 Section 35 of the General Provisions of the GAA for FY 2022 or Republic Act (RA)
No. 11639 states that “All agencies of the government shall formulate plans,
programs and projects intended to address the concerns of senior citizens and
persons with disability, insofar as it relates to their mandated functions, and
integrate the same in their regular activities. Moreover, all government
infrastructures and facilities shall provide architectural or structural features,
designs and facilities that will reasonably enhance the mobility, safety and welfare

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 of persons with disability pursuant to Batas Pambansa Blg. 344 and RA No. 7277,
as amended.”

15.2 Verification disclosed that Management has not prepared plans, programs or
projects for FY 2022 that would address the concerns of SCs and PWDs. Despite
the non-formulation of Plans and Budget for FY 2022, the SC/PWD Focal Point
Committee (FPC) was able to submit the FY 2022 Accomplishment Report, as
summarized below:

a) Initial meeting of FPC and its members on March 07, 2022;

b) Series of meetings conducted from March 24 to June 06, 2022;
c) Meetings of FPC core group on May 25, 2022 and April 06, 2022 to discuss the
recommendation for the conduct of Strategic Planning Workshop;
d) Commemoration of the 44th National Disability Prevention and Rehabilitation
week;
e) Strategic planning workshop conducted on August 10 to 11, 2022;
f) Commemoration of the Elderly Week 2022 on October 01 to 17, 2022; and
g) Preparation of SC/PWD FPC Plan and Budget for FY 2023.

15.3 The budget utilization for the Strategic Planning totaled P347,730.62, while other
activities entailed no cost at all and through donations.

15.4 Management provided that the non-preparation of plans, programs and projects for
FY 2022 is due to the belated appointment of the FPC Chairperson, Co-chairperson
and Members on December 14, 2021. They have requested for the pertinent records
from the former Committee; however, the said records did not provide an
appropriate system to guide the newly-assigned FPC.

15.5 Management’s non-preparation of SC/PWD plans, programs and projects for FY

2022 is contrary to Section 35 of the General Provisions of the GAA for FY 2022,
that would address the concerns of SCs and PWDs, insofar as it relates to the
agency’s mandated functions, and integrate the same in their regular activities.

15.6 We recommended and Management agreed to timely formulate and submit

the Plans, Programs and Projects and the Accomplishment Report pursuant
to Section 35 of the General Provision of the General Appropriations Act.

Compliance with BIR provisions on remittance of taxes withheld for CY 2022

16. The Agency withheld taxes from employee’s compensation, payments to

contractors and suppliers for infrastructure and from purchase of goods and
services amounting to P618.479 million and remitted the total amount of P507.093
million leaving unremitted balance of P111.386 million at year-end. Subsequent
remittances thereof on January to March 2023 amounted to P111.849 million
resulting in an over-remittance of P0.463 million. Moreover, of the remittances,
the amount of P70.873 million was remitted beyond the prescribed period which

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 may impede the flow of funds for government operations and likewise, may result
in imposition of penalties from Bureau of Internal Revenue (BIR).

16.1 DOF-DBM-COA Joint Circular No. 1-2000 and 1-2000A dated January 03, 2000
and July 31, 2001, respectively, require the remittance of taxes withheld from
employees and government suppliers.

16.2 BIR Revenue Regulation (RR) No. 1-2013 dated January 23, 2013 provides that
“all tax returns must be electronically filed (e-filed) following due dates prescribed
in the tax under this Section. Payment of tax due must also be made on the same
day the return is e-filed by accomplishing online the Tax Remittance Advice (TRA)”.

16.3 Further, Section 7 of the same BIR RR provides that the filing of tax returns using
the electronic Tax Remittance Advice (eTRA) is on or before the 10th day
following the month in which the withholding was made, except for the taxes
withheld in December of each year, which shall be filed/remitted on or before
January 15 of the following year.

a) Unremitted taxes amounting to P111,385,755.77 as at year-end

16.4 Analysis of the account balances and validation of payments made revealed that
MMDA withheld taxes from employees’ compensation, payments to contractors
and suppliers for CY 2022 amounting to P618,479,367.34 and remitted an amount
of P507,093,611.57 leaving an unremitted balance of P111,385,755.77 at year-end.
Details are as follows:
Table 25. Summary of Tax Withheld and Paid for CY 2022
Particulars Amount (In PhP)
Beginning Balance of Unremitted Taxes 91,831,200.41
Collections/Withheld in CY 2022 526,648,166.93
Total Withheld 618,479,367.34
Remittances 507,093,611.57
Unremitted Balance
111,385,755.77
as at December 31, 2022

16.5 Of the unremitted taxes withheld as at December 31, 2022, the amount of
P111,849,182.24 was remitted on January to March 2023 resulting in over
remittance of P463,426.47 for CY 2022, as shown in the following table.
Table 26. Subsequent Remittances – Due to BIR
Balance as at Subsequent Unremitted
December 31, Remittances as Balance/ (Over
Particulars
2022 at March 2023 remittance)
(Per SLs) Amount (In PhP)
EWT (1%, 2%, 5%) 28,314,614.06 28,567,515.04 (252,900.98)
VAT (3%, 6%, 8.5%) 73,320,619.02 73,965,039.18 (644,420.16)
IWHT 9,729,778.30 9,295,883.63 433,894.67
Franchise Tax (2%) 20,744.39 20,744.39 0.00
Total 111,385,755.77 111,849,182.24 (463,426.47)

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16.6 Inquiry from Accounting Division disclosed that the over remittance of EWT and
VAT is due to revision of amounts in the disbursement vouchers. These over
remittances will be deducted from the tax payable on the next filing. Meanwhile,
the unremitted balance pertaining to IWHT amounting to P433,894.67 pertains to
supplemental and differential payrolls of job order personnel and consultants which
is scheduled for remittance on April 10, 2023.

b) Non-compliance with the prescribed period in tax remittance - P70,873,049.94

16.7 Not all taxes withheld as at December 31, 2022 were remitted within the prescribed
deadline which may impede the flow of funds to the government for its operations
and thus, may expose the Agency to audit and incurrence of penalties for late
remittances. Details of remittances and delays incurred are as follows:
Table 27. Summary of Taxes Remitted Beyond the Prescribed Deadlines
Amount of Taxes
Month Date of Remittance Days Delayed
Remitted (In PhP)
69,542,023.68 February 9, 2023 25 days
December 2022
1,331,026.26 March 10, 2023 54 days
Total 70,873,049.94

16.8 Prior inquiry from the Accounting Division revealed that not all taxes withheld
were remitted in the subsequent month due to delayed submission of the
disbursement vouchers and other supporting documents for the issuance of the
necessary TRA, as well as late recording of payable transactions, thus balance
remains unremitted at year-end and to be taken up in the succeeding months.

16.9 The delay on e-filing and payment of taxes withheld may subject the Agency to the
incurrence of interest, penalties and/or surcharges and inability to remit the taxes
withheld can be an exposure for non-compliance with BIR rules and regulations. In
addition, since taxes are life blood of the government operations, delay in
collections also impedes the flow of funds to the government and thus, affect its
operations.

16.10 We recommended and Management agreed to direct the Chief Accountant to:

a) Immediately undertake analysis and review of tax withheld and remitted in

order to determine the causes of unremitted balances and over remittance of
taxes;

b) Facilitate the immediate settlement/payment of all taxes as at year-end that

remains unremitted to the Bureau of Internal Revenue; and

c) Strictly adhere with the prescribed deadlines on remittances of taxes withheld

to avoid incurrence of penalties and other charges.

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Management Comments:

16.11 The unremitted balance as at December 31, 2022 amounting to P111,385,755.77

were remitted in 2023, broken down as follows:
a) January 10, 2023 – P40,976,132.30
b) February 9, 2023 – P69,542,023.68
c) March 10, 2023 – P1,331,026.26
d) April 10, 2023 – (P463,426.47)
16.12 Management, in its effort to recognize all agency’s payables from completed
projects, delivered goods and services rendered including the corresponding taxes
at year-end (accrual basis), precludes the remittance of withheld taxes of those
payables recorded beyond January 10, 2023 (due date).

16.13 Management will instruct the Accounting Division to strictly adhere to existing
guidelines on the timely remittance of withholding taxes.

Auditor’s Rejoinder:

16.14 Copies of remittances were submitted on April 2023, from which it was indicated
that the over-remittance of P463,426.47 was deducted from the total taxes paid for
that month. Thus, for taxes withheld in CY 2022, there are no more unremitted or
over-remitted balance.

Compliance with Government Service Insurance System (GSIS) Remittances for CY 2022

17. As at December 31, 2022, the Agency was able to deduct and withhold
Government Service Insurance System (GSIS) premiums and loan amortizations
of P493,484,130.41 from prior and current year’s transactions, net of adjustments,
of which, the total amount of P423,478,547.00 was remitted in CY 2022, leaving a
balance of P70,005,583.41 as at year-end.

17.1 Section 14 of the IRR of RA No. 8291, otherwise known as the GSIS Act of 1997
provides, among others, that “Each government agency shall remit strictly to the
GSIS the employees’ and government agency’s contributions including loan
amortizations (consolidated loans, policy loan, emergency loan, housing loan, and
other loans), premium payments (optional, pre-need and other non-life insurance)
and other amounts due the GSIS within the first ten (10) days of the calendar month
following the month to which the contributions apply.”

17.2 The Due to GSIS account showed a total of P493,484,130.41, composed of

beginning balance of P62,942,720.96 and actual collection for CY 2022 of
P430,541,409.45, premium contributions and payments withheld from the regular
employee’s salaries including its government share during the period, of which
P423,478,547.00 was remitted to the GSIS leaving an unremitted balance
amounting to P70,005,583.41 as at December 31, 2022.
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17.3 Of the P70,005,583.41 unremitted balance of Due to GSIS at year-end,
P33,815,318.17 was remitted in January 2023, with remaining
unremitted/unaccounted balance of P36,190,265.24.

17.4 Analysis of schedule submitted by the Remittance Section provides that of the
unremitted/unaccounted balance of P36,190,265.24, the amount of P2,964,483.47
was due to unresolved issues on GSIS clarificatory items or the variance between
the Agency’s remittance file as against the GSIS database upon their validation
including but not limited to the unmatched employee payment details, over
deductions due to non-updating of employee loans and unmatched premiums
resulting in non-acceptance of the remittances by GSIS. The remaining balance is
still subject for reconciliation and verification of Accounting Division.

17.5 These conditions were also noted in the prior years’ audit and still persists thus,
affected the processing of remittances in CY 2022.

17.6 Existence of unremitted or unreconciled amounts of contributions/collections

affects the accuracy and reliability of the total balance of liabilities in the financial
statements. Moreover, unremitted contributions and premiums may result in
deprivation by employees of their benefits/privileges as GSIS members.

17.7 We recommended and Management agreed to:

a) Direct the Accounting Division to provide detailed explanation for the

remaining unremitted balance of Due to GSIS and submit to the Audit Team
supporting documents such as proof of remittances and other pertinent
schedules;

b) Initiate efforts to reconcile Government Service Insurance System database

with that of the Agency records to resolve issues such as unmatched payment
details, outdated employee loans information, unmatched premiums, among
others, which result to non-remittance of contributions/premiums and loan
payments; and

c) Comply faithfully with the Government Service Insurance System (GSIS) Act
of 1997 in withholding and remittance of GSIS contributions and payments to
avoid delayed remittances of premium contributions and deductions withheld.

Management Comments:

17.8 Management informed that the unremitted balance was caused by mismatched data
between the GSIS and the Authority. The Administrative Service had already
implemented control procedures and began updating its Agency Remittance Advice
(ARA)-GSIS Portal where the authorized administrative personnel are in charge of
encoding employee-related data. The Accounting Division, specifically the
Remittance Group, is continuously exerting its best effort to resolve issues on

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 unmatched payment details and premiums and outdated employee’s loan
information by sending/forwarding weekly notice to the Personnel Benefits
Division a list of GSIS Loan Borrowers for payroll deduction.

Non-compliance with Home Development Mutual Fund (HDMF) Remittances for CY 2022

18. As at December 31, 2022, the Agency was able to deduct and withhold Pag-IBIG
contributions and loan amortizations amounting to P37,608,402.88, from prior
and current year’s transactions, net of adjustments, of which, the total amount of
P30,599,167.30 was remitted in CY 2022, leaving a balance of P7,009,235.58 as at
year-end. Moreover, Pag-IBIG contributions and loan amortizations amounting
to P238,523.50 were remitted beyond the prescribed period, incurring delays of
10 to 113 days which may result to imposition of penalty and may deprive the
employees of their benefits/privileges as Pag-IBIG members.

18.1 Part E (Par. 4) of HDMF Circular No. 275 issued on January 22, 2010 states that
employers shall remit the required monthly employer and employee contributions
to the nearest Pag-IBIG branch or its authorized collecting banks, together with the
duly accomplished Membership Contribution Remittance Form (MCRF), in
accordance with the following remittance schedule:

Table 28. Due Date of Remittances to HDMF

First Letter of
Due date
employer’s name
A-D 10th to the 14th day of the month following the period covered
E-L 15th to the 19th day of the month following the period covered
M-Q 20th to the 24th day of the month following the period covered
R to Z, Numeral 25th to the end of the month following the period covered

18.2 The Due to Pag-IBIG account includes beginning balance of P8,134,938.25 and
recorded collection from premium contributions and payments withheld from the
regular employee’s salaries including its government share for CY 2022 of
P29,473,464.63, during the period, of which P30,599,167.30 was remitted to the
Pag-IBIG leaving an unremitted balance amounting to P7,009,235.58 as at
December 31, 2022.

18.3 Of the P7,009,235.58 balance of Due to Pag-IBIG as at year-end, P2,941,308.27

were remitted in January to March 2023. Details of remittances are as follows:
Table 29. Details of subsequent remittances to Pag-IBIG
Unremitted/
Amount
OR Number OR Date Unaccounted
Remitted
Balance
Balance as at 12/31/2022 7,009,235.58
P-15113217 01/17/2023 1,147,800.00
P-15112590 01/10/2023 30,610.00
P-15112589 01/10/2023 15,200.00
P-15113216 01/17/2023 118,450.00

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 Unremitted/
Amount
OR Number OR Date Unaccounted
Remitted
Balance
P-15113215 01/17/2023 4,000.00
P-15112588 01/10/2023 1,334,186.06
P-15112587 01/10/2023 8,433.30
P-15112585 01/10/2023 98,525.67
P-15112586 01/10/2023 541.61
P-14917245 01/09/2023 53,061.63
P-15856001 03/17/2023 130,500.00
Less: Total Subsequent Remittances as at March 2023 2,941,308.27
Unremitted/Unaccounted Balance 4,067,927.31

18.4 In the schedule provided by Accounting Division, the amount of P64,646.84 out of
the total above was unremitted by HDMF due to invalid/absence of employees MID
Numbers and amount of P554,620.19 was determined for refund while the
remaining unaccounted/unremitted balance of P3,448,660.28 is still for analysis
and reconciliation.

18.5 Moreover, delays ranging from 10 to 113 days were noted in the remittance of CY
2022 contributions and premiums amounting to P238,523.50.

18.6 It is also worth mentioning that subsequent remittance under OR No. P-15856001
dated March 14, 2023 included an amount pertaining to deprived dividends of
P13,058.55 covering the period December 2017 to December 2021. This amount
refers to the foregone dividend earnings of the monthly mandatory savings of the
employees with the HDMF due to non-remittance of the contributions.

18.7 Existence of unremitted or unreconciled amounts of contributions/collections

affects the total balance of liabilities and thus, affects the accuracy and reliability
of the financial statements. Moreover, delay in remittances of contributions and
premiums may result in imposition of penalty and may deprive the employees of
their benefits/privileges as HDMF members.

18.8 We recommended and Management agreed to:

a) Direct the Accounting Division to provide detailed explanation for the

remaining unremitted balance of Due to Pag-IBIG and submit to the Audit
Team supporting documents such as proof of remittances and other pertinent
schedules; and

b) Require all employees, in coordination with the Admin Division, to secure or

correct their profiles regarding remittances to Pag-IBIG in order to prevent
the accumulation of unremitted premiums and enforce corrective actions for
non-compliant employees; and

c) Comply faithfully with the Home Development Mutual Fund (HDMF) Law of
2009 in withholding and remittance of HDMF contributions and payments to
avoid delayed remittances of premium contributions and deductions withheld.

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Management Comments:

18.9 Management informed that the unremitted balance was caused by discrepancies in
the employee’s information that needs to be updated. Accounting Division is
undertaking a reconciliation of prior year’s transactions.

Non-compliance with PhilHealth Remittances for CY 2022

19. As at December 31, 2022, the Agency was able to deduct and withhold PhilHealth
contributions amounting to P53,352,938.89 from prior and current year’s
transactions, net of adjustments, of which, the total amount of P42,684,236.05 was
remitted in CY 2022, leaving a balance of P10,668,702.84 as at year-end.
Moreover, PhilHealth contributions and loan amortizations amounting to
P10,380,840.01 were remitted beyond the prescribed period, incurring delays of
12-203 days which may result to imposition of penalty and may deprive the
employees of their benefits/privileges as PhilHealth members. Moreover, the
Agency was not able to apply the correct PhilHealth contribution rates to compute
for employees’ monthly contributions pursuant to PhilHealth Circular No. 2020-
005 thereby understating the contributions collected from employees and remitted
to PhilHealth for the year.

19.1 The Due to PhilHealth account includes beginning balance of P2,231,273.21 and
recorded collection from premium contributions and payments withheld from the
regular employee’s salaries including its government share for CY 2022 of
P51,121,665.68, during the period, of which P42,684,236.05 was remitted to the
PhilHealth leaving an unremitted balance amounting to P10,668,702.84 as at
December 31, 2022.

19.2 Of the P10,668,702.84 balance of Due to PhilHealth as at year-end, P5,272,052.86

were remitted in January 2023. Details of remittances are as follows:
Table 30. Subsequent Remittances – Due to PHIC
Unremitted/
Amount
OR Number OR Date Unaccounted
Remitted
Balance
Balance as at
10,668,702.84
December 31, 2022
325522752 01/20/2023 3,520,630.88
547886 01/10/2023 318,344.44
547887 01/10/2023 9,073.84
547885 01/10/2023 121,591.98
547889 01/10/2023 1,302,411.72
Less: Total Subsequent Remittances as at March 2023 5,272,052.86
Unremitted/Unaccounted Balance 5,396,649.98

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19.3 On a schedule provided by Accounting Division, the amount of P1,275,794.16 was
identified as unremitted primarily due to absence of PhilHealth numbers, whereas,
the remaining unaccounted/unremitted balance is still for analysis and
reconciliation.

19.4 Moreover, delays of 12 to 204 days were noted in the remittance of contributions
and premiums amounting to P9,865,140.01.

19.5 The existence of unremitted or unreconciled amounts of contributions/collections

affects the accuracy and reliability of the total balance of liabilities presented in the
financial statements. Moreover, delay in remittances of contributions and premiums
may result in imposition of penalty and may deprive the employees of their
benefits/privileges as PhilHealth members.

19.6 Moreover, a re-computation was made from the copy of payroll submitted by
Administrative Service on the sample of regular and casual employees with salary
range of P10,000.01 to P80,000.00, new rates and the maximum premium of
P3,200.00. As a result of conducted audit procedures, it was revealed that there
were some employees whose salaries were deducted with the rates ranging from
2.23 percent to 3.97 percent instead of the 4 percent updated premium rates as
prescribed by PhilHealth Circular No. 2020-005 and in the same provision under
Universal Health Care Act Implementing Rules and Regulations.

19.7 Without justifiable reason or explanation, this finding may have resulted in
understatement of contributions for PhilHealth collected from the employees for
CY 2022 until present and thus, understating the amount remitted to PhilHealth.

19.8 We recommended and Management agreed to:

a) Direct the Accounting Division to provide detailed explanation for the

remaining unremitted balance of Due to PhilHealth and submit to the Audit
Team supporting documents such as proof of remittances and other pertinent
schedules;

b) Require all employees, in coordination with the Administrative Division, to

secure or correct their profiles regarding remittances to PhilHealth in order
to prevent the accumulation of unremitted premiums and enforce corrective
actions for non-compliant employees;

c) Comply faithfully with the National Health Insurance Act of 2013 in

withholding and remittance of PhilHealth contributions and payments to
avoid delayed remittances of premium contributions and deductions withheld;

d) Direct the Administrative Service, in coordination with the Accounting

Division, to submit explanation/justification on the variances noted on the rate
for PhilHealth contributions in CY 2022; and

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 e) Instruct the Administrative Service and Accounting Division to comply with
the updated and prescribed premium rates for PhilHealth Contribution in
accordance with PhilHealth Circular No. 2020-005 and other related
issuances.

Management Comments:

19.9 Management informed that the unremitted balance consists of premium

contributions for supplemental payrolls which also includes premiums of Job Order
personnel who have errors in their PhilHealth ID numbers and other employee-
related information. A Memorandum dated May 02, 2023 was issued directing all
concerned personnel to submit a photocopy of their PhilHealth ID to facilitate
remittance of their contributions.

19.10 Regarding the use of incorrect rates for PhilHealth contribution, Management
provided that the new premium rate of 4 percent for CY 2022 was implemented
starting the month of July 2022. The corresponding 1 percent differential from
January to June 2022 was included in the July to December 2022 payrolls on top of
the 4 percent new premium rate. However, the 4 percent contribution was computed
based on the actual salary earned after deducting leave out pay, absences, tardiness
and undertime.

Auditor’s Rejoinder

19.11 Monthly Basic Salary (MBS) is defined under PhilHealth Circular No. 2020-005 as
the “the fixed basic pay of an employee which shall not include sales commissions,
overtime pay, allowances, thirteenth month pay, bonuses or other gratuity
payments. Further to this, those deductions to the employee’s pay due to tardiness,
leaves without pay, absences or other similar circumstances are also excluded in
the computation.” Thus, there was an under-remittance of PhilHealth contributions
in relation to the deducted absences without pay.

Compliance with Rules and Regulations governing Contract of Service (COS) and Job
Order (JO) Workers

20. Job Order workers were hired to perform functions similar to the job descriptions
of the Agency’s existing regular employees, contrary to COA and Department of
Budget and Management (DBM) Joint Circular No. 2, s. 2020 dated October 20,
2020.

20.1 As at December 2022, the MMDA has a total of 2,563 JO personnel assigned to
different offices of MMDA as follows:

Table 31. Summary of Job Order Personnel of MMDA

Office Number of JOs
Office of the Chairman/Deputy Chairman 86

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 Office Number of JOs
Office of the General Manager 15
Office of the Assistant General Manager for 130
Finance and Administration
Office of the Assistant General Manager for 35
Planning
Office of the Assistant General Manager for 2,297
Operations
Total 2,563

20.2 Analysis for CY 2022 disclosed that there are at least 44 positions (excluding those
relative to carpentry, plumbing, painting, electrical and the like) held by 378 JO
workers which are similar to positions of the Agency’s regular employees. It is also
worth-noting that there are 69 vacant positions relative to this which are not yet
filled-up as at December 31, 2022.

20.3 Prior inquiry with Personnel Transactions Division disclosed that JO workers and
regular employees sharing similar positions mostly performs the same functions
and that the hiring of JOs are to augment the regular workforce of the Agency. This
is an indication that the hiring of JO workers was not limited to emergency or
intermittent work, other trades and crafts, and manual tasks which are not part of
the regular functions of the Agency, contrary to paragraph 7.2 of the COA-DBM
Joint Circular No. 1, s. 2020 dated October 20, 2020.

20.4 In a letter dated February 7, 2022, the Director of the Administrative Service
informed the Audit Team that in March 2000, when the DBM approved the MMDA
Notice of Organization, Staffing and Compensation Action (NOSCA), it abolished
and downgraded some of the MMDA Offices which consequently decreased the
number of permanent employees, notwithstanding the Agency’s explanation that it
cannot properly and fully implement its programs, projects and activities relative to
the seven (7) mandates of the MMDA under RA No. 7924 (The Law Creating the
MMDA) which is to be implemented over the 17 local government units of Metro
Manila with only the dearth of permanent employees. Thus, JO workers were hired
to augment the manpower requirements of the Agency.

20.5 Nevertheless, Management has sent a total of 10 letters on various dates in

CYs 2010 to 2020 to the DBM regarding the insufficiency of permanent positions
in the Agency.

20.6 In addition, the Casualization Program was also implemented by the Office of the
Assistant General Manager for Finance and Administration (OAGMFA) as its
initial step to reduce the number of JO personnel by promoting their employment
status into casual positions.

20.7 Moreover, per inquiry with Personnel Transactions Division, a Corporate Planning
was held on March 30 to April 01, 2022 suggesting the creation of Committee on
Reorganization to focus on the review and assessment of the current manpower of
MMDA and the same is still undergoing discussion as at date.

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20.8 However, despite the efforts of Management, the lack of permanent positions to
perform regular functions necessary in the operations of the Agency still exists
which resulted in the hiring of JO workers to perform such functions which is
contrary to COA-DBM Joint Circular No. 1, s. 2020 dated October 20, 2020.

20.9 We reiterated our prior years’ recommendation that Management follow-up

the submitted proposal with Department of Budget and Management (DBM)
for the creation of new permanent positions that will perform the regular
functions necessary in the operations of the Agency and to continue its efforts
in coordination with its Department Heads to evaluate the current plantilla to
fully comply with COA-DBM Joint Circular No. 1, s. 2020 dated October 20,
2020.

Management comments:

20.10 The MMDA has undertaken the following steps as part of its program to gradually
comply with the COA-DBM Joint Circular No. 2 s. 2020 dated October 20, 2020,
to wit:

• The Administrative Service work hand to hand with the Management to

properly judiciously evaluate the qualifications and performance of our
eligible job order workers who can be consider for appointment to vacant
permanent positions with the Authority.
• Follow up to DBM on submitted proposals for the creation of new
permanent positions, but still no action taken.
• As per DBM advice, it is possible for the MMDA to create permanent
position or new organizational structure, provided that it will be funded by
the Agency.
• At present, a created Committee on Reorganization assigned to focus on
review and assessment of the current manpower requirements of the
Authority.

20.11 The Administrative Service, together with the Management, will do its best to
minimize if not totally remove the Job Order Workers of the Authority so that
eventually it can comply with COA Rules and Regulations on Job Order Workers.

Non-compliance with Property Insurance Law

21. Insurable properties amounting to at least P9.043 billion were not insured with
the General Insurance Fund (GIF), as required under Sections 2, 5 and 11 of
Republic Act (RA) No. 656, thus, leaving its properties at risk of loss without right
of indemnification. Further, three (3) unserviceable/disposed properties were
subjected to insurance coverage for CY 2022 while 10 vehicles were insured twice
for a Compulsory Third-Party Liability (CTPL) coverage in CY 2021 thereby,
incurring unnecessary expenses totaling P37,740.71.
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21.1 The RA No. 656, otherwise known as the Property Insurance Law, provides that:

Section 2. In order to indemnify or compensate the Government as defined in this

Act for any damage to, or loss of, its properties due to fire, earthquake, storm or
other casualty there is established the “Property Insurance Fund”, which shall
consist of all moneys resulting from the liquidation of the insurance constituted in
section three hundred forty of the Revised Administrative Code and from premiums
and other incomes.

Section 5. Every Government, except a municipal government below first class, is

hereby required to insure its properties, with the Fund against any insurable risk
herein provided and pay the premiums thereon, which, however, shall not exceed
the premiums charged by private insurance companies. Provided, however, that the
system reserves the right to disapprove the whole or a portion of the amount of
insurance applied for. Provided, further, that such property or part thereof as may
not be insurable or acceptable for insurance may be insured with any private
insurance company. xxx

Section 11. Each government as defined herein shall include in its annual
appropriation the amount necessary to cover the premiums for the insurance of its
properties during each fiscal period and remit the same immediately to the System
as provided in Section 10 hereof.”

21.2 There is an increasing risk of loss of or damage to MMDA’s properties due to fire,
earthquake, storm or other casualty as the atmospheric and geophysical conditions
of the Philippines have drastically changed. Typhoons and floods continue to
ravage in many areas in Metro Manila and become more frequent while earthquake
is also a risk considering the country is situated in the Pacific Ring of Fire and
vulnerable to seismic disasters. Non-coverage of insurance of properties exposes
the Agency to unnecessary losses due to non-indemnification in the event of
damage of its properties caused by the said fortuitous events.

21.3 Verification of the insurance coverage of buildings and other insurable properties
of the Agency revealed that various properties totaling P9,042,883,642.07 were not
insured with the GIF of the GSIS while properties totaling P836,788,551.16 were
insured, as shown below:
Table 32. Total Cost of Insured and Uninsured Properties for CY 2022
Insured Not Insured
Properties Qty. Qty.
(In PhP) (In PhP)
Buildings including its 6 407,416,798.39 4 183,929,643.35
contents such as machinery,
office equipment and
furniture and fixture
Pumping Stations and - 0.00 77 8,473,554,824.72
Floodgates
Ferry Office Stations - 0.00 13 204,172,272.94

Ferry Boats 8 87,390,000.00 - 0.00

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 Insured Not Insured
Properties Qty. Qty.
(In PhP) (In PhP)
Service Vehicles 186 170,018,267.75 2 3,598,000.00
Motorcycles 202 81,829,906.00 43 8,435,900.00
Construction and Other 96 72,903,900.00 42 165,294,657.06
Heavy Equipment

Disaster Risk and Response 23 17,229,679.02 3 3,898,344.00

Equipment (DRRE)

Total 521 836,788,551.16 184 9,042,883,642.07

21.4 Further verification of the records/data made available to the Audit Team relative
to the uninsured properties above disclosed the following:

a. Buildings, Pumping Stations and Ferry Stations were not subjected to insurance
coverage

21.5 In CY 2022, Management insured the MMDA main building and its contents with
the General Insurance Fund.

21.6 As shown in the table above, 77 structures consisting of Pumping Stations and
Floodgates amounting to P8,473,554,824.72, 13 Ferry Office Stations amounting
to P204,172,272.94, as well as Traffic Academy at Sta. Mesa, Manila, Effective
Flood Control Operation System (EFCOS) Office, newly-constructed Flood
Control and Sewerage Management Office (FCSMO) Equipment Management
Satellite Office and Emergency Quarters and the Traffic Engineering Division
(TED) with a total amount of P183,929,643.35 remained uninsured in CY 2022.

21.7 Inquiry with the Management disclosed that the amount of insurance coverage is
exorbitant in which the Authority cannot afford following the non-approval of
previous request for additional budget allocation for insurance. Finance Division
also disclosed that the insurance that can be availed from the GSIS is more
expensive than the insurance by private companies. In addition, Chief of SPD
disclosed that the non-insurance of the Pumping and Ferry Stations was due to lack
of land titles, as requirement in availing property insurance.

21.8 Due to the foregoing, the said uninsured properties are not protected from risks or
losses in which the Agency may not be indemnified in the event of damage of its
properties caused by the calamities such as earthquake, storm, flood, theft and other
causes.

b. Various motor vehicles and heavy equipment were not adequately insured

21.9 Validation of all insured and uninsured motor vehicles, construction and other
heavy equipment and DRRE revealed that a total of 319 properties are adequately
insured under Comprehensive Insurance, 188 properties are only insured with
Compulsory Third-Party Liability (CTPL), while 90 properties were not insured at
all with GSIS. Summary is presented in the next page:

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 Table 33. Number of motor vehicles insured and uninsured with GSIS for CY 2022
No. of vehicles
Insured under
Insured under
Particulars Comprehensive
CTPL with Uninsured Total
Insurance with
GSIS
GSIS
Service Vehicles 113 73 2 188
Motorcycles 160 42 43 245
Construction and Heavy 38 58 42 138
Equipment
DRRE 8 15 3 26
Total 319 188 90 597

21.10 Inquiry with Transport Division (TD) disclosed that service vehicles and equipment
were insured with TPL coverage only because this was the policy adopted by the
former MMDA Chairman, and was continued by succeeding administrations. In
this policy, the driver of the vehicle/equipment was made responsible for damages
incurred due to their negligence, however, based on the audit recommendations of
prior years’, Management had started acquiring comprehensive insurance coverage
for newly acquired vehicles. TD also disclosed that those properties were uninsured
due to lacking or incomplete documents necessary in availing insurance, are only
acquired in the current year and/or are properties that are overlooked in their records
and thus, was not able to include it in the properties that are assessed for insurance.
Detailed breakdown as to the reason for non-insurance of the vehicles and other
properties are as follows:

Table 34. Reason for Non-insurance

Particulars Status
Uninsured Motor 38 are acquired in 2022 with OR/CR from supplier and five
Vehicles (5) are insured in 2023
Uninsured Service one (1) acquired in 2022 insured in 2023 and one (1) is
Vehicles insured under a government plate
Uninsured Construction 33 are off-road, four are acquired in 2022 insured in 2023,
and Heavy Equipment four have missing files and one is insured in 2023
Uninsured Disaster Risk One (1) is insured in 2023, one (1) has missing files and one
and Response Equipment (1) is still for validation if based on the nature of the
property isinsurable or otherwise.

21.11 The lack of comprehensive insurance coverage for all equipment may result in loss
or damage due to other hazards not covered by the insurance. With mere CTPL
insurance coverage, the MMDA cannot be indemnified in the event of loss of the
vehicle due to theft/car napping or even against damages sustained from floods and
other reasons beyond the CTPL coverage. In addition, consistent with the Agency’s
mandate to provide immediate response in times of emergencies and calamities, its
trucks and other heavy equipment used in emergency response situations are
inevitably exposed to greater risks of damage/loss due to huge flood water, fire and
other perils brought about by calamities/disasters.

21.12 Moreover, it is in our view that even though some properties are acquired only in
CY 2022, it shall be adequately insured with the GSIS from the time it was acquired
since the validity of insurance is one (1) year from the date of availing the insurance

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 coverage, otherwise, those properties that are not insured at all may expose the
government to unnecessary losses in the event of damage or loss caused by
calamities such as earthquake, storm, flood, theft and other causes beyond the
insurance limits. Further, TD shall strictly review their records and likewise,
coordinate to SPD as to the serviceability of properties so that all insurable
properties will be availed adequate insurance.

21.13 Due to the foregoing, the absence or inadequacy of insurance coverage over real
and other properties not only deprived the MMDA of adequate and reliable
protection against any damage to their properties but ultimately exposes it to
unnecessary losses due to non-indemnification in the event of damage or loss
caused by calamities such as earthquake, storm, flood, theft and other causes
beyond the insurance limits.

c. Disposed/unserviceable properties subjected to unnecessary insurance coverage

21.14 For CY 2022, analysis of the list of properties insured by the Agency to GSIS
revealed that there were three (3) unserviceable/disposed properties which were still
covered with insurance, thereby incurring unnecessary expenses in the amount of
P33,322.24 as shown below.
Table 35. Unserviceable properties still insured with GSIS
Sum Premium Paid,
No. of
Particulars Insured exclusive of VAT
vehicles
(In PhP) (In PhP)
Service Vehicle 1 100,000.00 447.11
Construction and Heavy Equipment 2 4,389,500.00 32,875.13
Total 3 4,489,500.00 33,322.24

21.15 Moreover, as reported in CY 2021, there were 10 vehicles insured twice for CTPL
coverage thereby incurring unnecessary expenses in the amount P4,418.47. On
January 11, 2023, the Audit Team requested with Management on their action taken
relative to the said overpayment. As responded by TD, they disclosed that they are
still coordinating with GSIS in order to help in verifying the records of the latter
and secure a documentation or proof that that the noted properties were not insured
twice for CTPL and the said double insurance was a result of GSIS system error.
Pending such documentation and/or proof, the deficiency noted on prior year’s
audit still stands which brings the total unnecessary expenses to P37,740.71.

21.16 We recommended and Management agreed to:

a) Submit justification and/or take appropriate action to refund the availment of

insurance pertaining to unserviceable and disposed properties in CY 2022
amounting to P33,322.24 and for the double payment of insurance premium
for Compulsory Third Party Liability coverage for 10 vehicles in CY 2021
amounting to P4,418.47;

b) Request funding from Department of Budget and Management and insure all
buildings, pumping stations and ferry stations owned by MMDA;

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 c) Facilitate the insurance of all the properties noted that are not adequately
insured with Government Service Insurance System;

d) Continuously acquire comprehensive insurance coverage for all its vehicles

especially the newly acquired assets and insurable properties in compliance
with Republic Act No. 656; and

e) Establish proper coordination between the end user, Supply and Property
Division and Transport Division and come up with updated masterlist of the
actual status of the vehicles in order to avoid payment and availment of
insurance coverage for unserviceable properties.

Management Comments:

21.17 Management furnished the Audit Team copy of Memorandum dated April 18, 2023
issued to Unit Heads regarding the result of audit of property insurance of MMDA
for CY 2022. Incorporated in that Memorandum is that in order to address the issue,
SPD requested the Transport Group, GASD, FCSMO and PRFS to take necessary
steps to ensure that all buildings, improvements, service vehicles, motorcycles,
heavy equipment and DRRE of the Agency are adequately covered/insured with
the GIF of the GSIS. This includes conducting a thorough inventory of all insurable
properties and reviewing existing insurance policies thereof to ensure that they are
updated and compliant with the said law.

21.18 For vehicles which were insured twice, there was an error in the system and a
certification was secured from GSIS that there is no double payment which
happened during that time. As for the insured unserviceable/disposed vehicles and
equipment, TD and SPD are coordinating to verify the records of the noted vehicles
and properties.

21.19 Moreover, Management already requested to GSIS the assessment of the insurance
premium to be paid for the uninsured properties of MMDA per letter dated May 9,
2023, which will be the basis for requesting appropriate funding to DBM.

Auditor’s Rejoinder:

21.20 As for the double insurance, the Certification provided by GSIS pertains to a
different insurance policy, thus, cannot be validated that no double payment was
made. Moreover, as for unserviceable properties, Management should submit
additional documents for validation of the Audit Team.

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Compliance with Procurement of Common-Use Supplies and Equipment from the
Procurement Service of the Department of Budget and Management (PS-DBM)

22. The MMDA has complied with Section 53.5 of the 2016 Revised Implementing
Rules and Regulations (IRR) of Republic Act (RA) No. 9184 by regularly
procuring common-use supplies for its day-to-day operations through
Procurement Service of the Department of Budget and Management (PS-DBM).

22.1 Section 53.5 of the 2016 RIRR of RA No. 9184 requires procurement of common
used goods by government agencies through PS-DBM under agency-to-agency
mode of negotiated procurement, to wit:

"Procurement of Goods, Infrastructure Projects and Consulting Services

from another of the GoP: such as the DBM-PS, which is tasked with a
centralized procurement of Common-Use Supplies for the GoP in
accordance with Letters of Instruction No. 755 and E.O. 359, s. 1989."

22.2 Verification of records disclosed that MMDA was able to deposit the amount of
P15,880,673.66 to PS-DBM for commonly used supplies, including a beginning
balance of P6,277,147.86, while deliveries were made during the year amounted to
P9,717,043.28, leaving a balance of P6,163,630.38.

22.3 The MMDA's practice of regular procurement of common-use supplies and other
services offered by PS-DBM supports the government of enjoying the benefits of
bulk procurement.

22.4 We valued Management's effort by complying with Section 53.5 of Revised

Implementing Rules and Regulations of Republic Act No. 9184 by regularly
procuring common-use supplies for its day-to-day operations through the
Procurement Service of the Department of Budget and Management.

Status of Enforcement of Audit Suspensions, Disallowances and Charges

23. Audit suspensions and disallowances as at December 31, 2022 amounted to

P205,803,114.85, and P860,153,808.11, respectively. Disallowances issued
prior to the effectivity of the Rules and Regulations on the Settlement of
Accounts (RRSA) in the amount of P37,476,816.43 remained unsettled.

23.1 Section 7.1.1 of the COA Circular No. 2009-006 dated September 15, 2009
provides that the Head of the Agency shall ensure that the settlement of
disallowances and charges is made within the prescribed period and that the
requirements of transactions suspended in audit are complied with.

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 23.2 Section 28.3 thereof further provides that the suspension, disallowances, and
charges existing at the effectivity of these Rules shall continue to be monitored and
enforced by the Commission.

23.3 The total audit suspensions and disallowances as at December 31, 2022, are
summarized in the following table:

Table 36. Summary of unsettled suspensions and disallowances as at year-end

This period January 1, 2022 to
Ending Balance as Ending Balance as at
December 31, 2022
Audit Action at January 1, 2022 December 31, 2022
NS/ND/NC NSSDC
(In PhP)
Notice of Suspension 54,395,067.03 203,486,489.38 52,078,441.56 205,803,114.85
Notice of Disallowance 860,567,099.79 0.00 413,291.68 860,153,808.11
Total 914,962,166.82 203,486,489.38 52,491,733.24 1,065,956,922.96

23.4 In addition to the above, 24 disallowances amounting to P37,476,816.43 issued

prior to the effectivity of the 2009 RRSA are still unsettled and shall continue to be
enforced in accordance with the Rules as provided under the above cited COA
regulation.

23.5 We reiterated our prior year’s audit recommendations and Management

agreed to:

a. Enforce the immediate settlement of the audit suspensions and the

disallowances which are already final and executory, in accordance with
the 2009 Rules and Regulations on the Settlement of Accounts under COA
Circular No. 2009-006 dated September 15, 2009; and

b. As authorized by the payees, consider requesting COA for authority to pay

the disallowance in an installment basis.

National Risk Reduction and Management Fund (NDRRMF), Priority Development Assistance
Fund (PDAF) and Disbursement Acceleration Program (DAP), Marawi Rehabilitation Funds
and National Task Force to End Local Communists Armed Conflict (NTF-ELCAC)

24. In CY 2022, MMDA did not receive allotments for National Risk Reduction and
Management Fund (NDRRMF), Priority Development Assistance Fund (PDAF)
and Disbursement Acceleration Program (DAP), Marawi Rehabilitation Funds
and National Task Force to End Local Communists Armed Conflict (NTF-
ELCAC).

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