CEBU CITY -- The City Government’s use of some P45 million from its Local Development Fund (LDF) last year has caught the attention of the Commission on Audit (COA).

State auditors said the amount was used to fund “non-development projects”, contrary to the guidelines set by the Department of Budget and Management (DBM) and the Department of Interior and Local Government (DILG) on the use of the LDF.

The LDF, which pays for projects and programs under the Annual Investment Plan, is 20 percent of the City’s annual Internal Revenue Allotment (IRA) share.

The projects funded by the LDF are approved by the City Development Council (CDC) and endorsed to the City Council, also for their approval.

In a three-page audit observation memorandum obtained by Sun.Star Cebu, State Auditor IV and Audit Team Leader Ma. Daisy Bercede said the “non-development” projects funded by the LDF include the renovation of multi-purpose buildings in Barangays Pulangbato (P5 million) and Sapangdaku (P3 million).


These also include the construction of a two-storey City Hall network office building (P16 million) and the completion of the Center for Local Governance building in the mountain barangay of Taptap (P13.5 million).

Other projects that COA questioned were the improvement of a multi-purpose hall in Barangay Sudlon I (P2.86 million) and the construction of Barangay Binaliw’s community building and barangay hall (P5 million).

All the projects were implemented by the City in January last year and completed last December.

According to Bercede, the construction, renovation and improvement of administrative offices and buildings of the barangays are not projects or programs that can be charged to the LDF, per a joint memorandum circular from the DBM and DILG in 2011.

Be viable

“Because of the deviation, the objective of improving the socio-economic condition of the local constituents was hindered or not attained at all, thus defeating the objectives of the establishment of the fund,” she said.

Bercede said that the projects that can be covered by the LDF are those that will contribute to “the desirable socio-economic development of the city and its constituents” and environmental development projects.

Bercede then asked the City to limit the use of the LDF to “viable and sustainable” programs and projects that will directly create jobs and livelihood opportunities for its constituents.

Sun.Star Cebu tried to get a comment from Mayor Michael Rama about COA’s observations last night but he had yet to answer calls as of press time.

However, the mayor has been reiterating in his previous interviews that what is important for him is that there was no corruption and that the City’s funds were used to implement projects.

Oscar Abordo of the CDC said they are already preparing a reply to the state auditor’s observations.


Abordo, who is also the project evaluation officer of the City Planning and Development Office, told Sun.Star Cebu that the construction of multi-purpose buildings is already allowed under the LDF, because the DBM-DILG circular cited by COA has already been amended.

Abordo said the amended circular will be attached to their answer to COA.

Asked about the state auditor’s observations, Councilor Margarita Osmeña, chairperson of the council’s committee on budget and finance, said it is a lesson learned.

Being a member of the CDC, Osmeña said she will personally make sure that when the CDC approves projects next time, it will already comply with the guidelines on the use of the LDF.

“Many times, the agenda (for CDC) is given to us on the same day, so when there are projects, hala sige, approve na lang. I am guilty of that. But there is always a lesson to be learned,” she said.

COA has already asked the City to submit its reply to their observations within 15 days after receiving them.