Mandaue fund cited over lack of project details

CEBU, Philippines — P193.59 million in appropriations under Mandaue City’s 20 percent Development Fund for 2025 is being questioned by the Commission on Audit (COA), saying the allocations lacked sufficient project details to establish that they were ready for procurement and implementation.

In its audit report, COA said the city’s appropriations were generally described through broad expenditure categories, supplies, equipment, and activities without specifying essential information such as project titles, locations, scope, implementation schedules, and estimated costs for individual undertakings.

The audit observation covered P193,594,864 allocated for 16 programs, projects, and activities (PPAs) under the city’s 2025 Annual Investment Program.

These included P52.5 million for poverty alleviation programs and Assistance to Individuals in Crisis Situations (AICS), P25 million for LED streetlights under the Kahayag Kontra Krimen program, and P22 million for six brand-new six-wheel garbage compactors.

The allocations also included P19.62 million and P19.61 million under separate appropriations for road maintenance supplies, P17.47 million for road and drainage improvements, and P16 million for street poles.

Other appropriations covered P9.95 million for consultancy services, P4 million for a brand-new mini dump truck, and P3.9 million for aggregate supplies. Separate allocations were also made for other aggregate supplies, road maintenance supplies, and drainage maintenance supplies.

COA said the way these appropriations were presented made them appear largely as lump-sum allocations rather than clearly defined development projects included in the city’s approved local development and investment plans.

The state auditors noted that the absence of project-specific information made it difficult to determine whether the necessary preparatory activities, including project identification, feasibility assessments, detailed planning, costing, and other pre-implementation requirements, had been completed.

Under Section 287 of Republic Act 7160, or the Local Government Code, local government units are required to allocate at least 20 percent of their annual National Tax Allotment for development projects.

The law also requires local government units to formulate a comprehensive, multisectoral development plan through their local development councils, subject to approval by their respective sanggunians.

COA cited the implementing rules and regulations of the Local Government Code, which require disbursements from the special accounts of the general fund to be based on itemized budget appropriations for specific development projects or activities embodied in approved local development plans or public investment programs.

It also cited the joint memorandum circular issued by the Department of Budget and Management, Department of Finance, and Department of the Interior and Local Government on November 4, 2020, which requires local government units to ensure that projects funded through the 20 percent Development Fund are well-planned and ready for procurement and implementation.

According to COA, appropriating substantial amounts under broad expenditure categories limits the ability of stakeholders to identify the specific projects intended for implementation and monitor whether public funds are being used for their intended purposes.

The audit agency added that such a budgeting approach could allow greater administrative discretion in identifying projects after the appropriations have already been approved, affecting transparency and accountability in the use of the development fund.

COA said the lack of clearly defined and readily executable projects also affected budget integrity because the appropriations were not sufficiently anchored on specific projects that could proceed to implementation.

To address the findings, COA recommended strengthening the city’s planning and budgeting processes for its 20 percent Local Development Fund to ensure that funded projects are properly planned and ready for procurement and implementation.

The recommendation was coursed through the City Planning and Development Coordinator, City Budget Office, and other concerned offices, committees, and councils.

COA said the city management agreed to the recommendation.

City explains

In an interview on October 9, 2026, Mandaue City Administrator Atty. Gonzalo Malig-on acknowledged that some projects were not yet ready for implementation.

However, Malig-on said the city government was “more happy” with the current situation, noting that in previous years, the utilization rate of Mandaue City’s Development Fund was only zero to six percent before Mayor Thadeo Jovito Ouano assumed office.

“Karon, at least P193 million nga dili pa implementation-ready, but that’s a big improvement sa previous nga mga tuig,” Malig-on said.

He said the city is improving its preliminary planning processes to ensure that development projects would be better prepared for implementation.

Malig-on added that the city had established a monitoring team to track the status of its development projects.

He said these measures had helped improve the city’s performance in project implementation.

“Imagine sa previous years, zero percent and six percent. Kasayang sa kwarta sa gobyerno, wala magamit para sa angay gamitan. At least karon, we have substantially improved. Naa pay kinahanglan i-improve, but we will do much better as the years unfold,” Malig-on said.

Malig-on also explained that some projects could not be implemented immediately because of several factors, including projects that required access through private properties that still needed to be negotiated or secured.

“For example sa drainage, inig actual naa diay mo-claim, naa pa diay portion nga wala ma-document ang donation and usufruct agreement pero naggamit na for so long. So kung gamitan na og pondo sa gobyerno, mostrikto naman ta ana kay pangayoan man gyud nato og legal papers…dinha na mo-arise ang problema,” he explained.

For flood control projects, he said there were instances when the city needed permission to allow heavy equipment, such as backhoes, to pass through certain roads or properties.

“Gusto magdali ang city, for example, kining drainage improvement, pero muagi pa og warehouse, muagi og fence. Unya dili man sad na pwede nga dili na planohan ug aksyunan kutob sa mahimo, so naa gyud usahay nga dili ma-implement dayon within the year,” Malig-on said.

He added that since the projects were classified as capital outlay, their implementation could be carried over to the following year. — (FREEMAN)