Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. IV-B (MIMAROPA)
Local Government Sector-B Oriental Mindoro
Audit Team No. R4B-02
2F Confil Building, Lumangbayan, Calapan City

AOM No. Victoria-17-002 (16)

Date: May 8, 2017

AUDIT OBSERVATION MEMORANDUM (AOM)

For: Hon. JOSELITO C. MALABANAN

Municipal Mayor
Municipal Government of Victoria
Victoria, Oriental Mindoro

Attention: The Municipal Accountant

The BAC Chairman

We have audited the accounts of the Municipal Government of Victoria for Calendar Year
(CY) 2016, and observed the following deficiency/error:

The Municipality of Victoria procured 38 sacks of rice from supplier other than the
National Food Authority (NFA) amounting to 79,800.00, contrary to Section 1 of
Executive Order (EO) No. 51 dated December 22, 1998. Hence, payment made in the
procurement was price of commercial rate.

Section 1 of EO No. 51, dated December 22, 1988 expressly provides that the National
Food Authority shall be the primary supplier or source of rice of government entities who
either grant rice as a form of incentive or benefit to their employees or use rice in connection
with their functions. Only upon issuance of an NFA waiver can these government entities
source elsewhere. (Emphasis Ours)

The Municipality of Victoria procured 38 sacks of rice thru shopping totaling 79,800.00
for calendar year 2016. The procurement of rice were intended as donation given to various
barangays as relief goods and under indigenous people development program as meals, as shown
in Table 1.
 Table 1

Check
Date Payee Amount No. of Sacks
No.
5/26/2016 1117352 L.G. Torres Commercial 31,500.00 15
6/13/2016 1117490 L.G. Torres Commercial 2,100.00 1
6/13/2016 1117491 Lardizabal Farm Commercial 4,200.00 2
6/21/2016 1117552 Lardizabal Farm Commercial 42,000.00 20
Total 79,800.00 38

As can be gleaned from the table, 38 sacks were purchased from rice retailers other than
NFA. Perusal on the paid disbursement voucher revealed that no waiver from the NFA allowing
the procurement of rice from other retailers, contrary on the above-mentioned provision. Hence,
payment made in the procurement was price of commercial rate.

The Municipality of Victoria could have saved money or increase the quantity of rice if it
had been acquired from NFA since it is normally priced at a reasonable level far lower than the
price of commercial rice of comparable quality.

We recommend that:

a. The BAC Chairman explain the procurement of rice from supplier other than NFA
without securing waiver from the NFA; and

b. Henceforth, Management resort to NFA as primary supplier or source of rice in all its
procurements.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.

MA. VANESSA ROSSAN I. MADAYAG

State Auditor III/OIC-Audit Team Leader

MARISSA ORCULLO BAYOT

Supervising Auditor