protections (like workers' compensation) from the GSIS, thus reducing the funds
available disaster preparedness, mitigations, response and recovery.
5.10 This observation is communicated through Audit Observation Memorandum
(AOM) No. 2025-06(24) dated April 8, 2025.
5.11 We recommended and Management agreed that the LDRRMO adhere to
the provisions outlined in NDRRMC-MC NO. 64, s. 2021 on the protection
of ACDVs so that the LDRRMF would only be used for its intended purpose.
Waterworks System operating at a loss over a three-year period
6. The Waterworks System’s operations incurred losses over the three year period
ending December 31, 2024 amounting to ₱1,024,411.69, ₱536,465.56 and
₱3,245,152.41, respectively, which runs counter with Section 17(a) of RA 7160 and
Section 6.6.3 of the DBM Manual for the Setting Up and Operation of Local
Economic Enterprises (LEE Manual).
6.1 Consistent with Section 17(a) of RA No. 7160 which partly provides that LGUs
shall “exercise such other powers and discharge such other functions and
responsibilities as are necessary, appropriate, or incidental to efficient and
effective provision of the basic services and facilities,” the City has been
operating two LEEs, namely, the public market and waterworks system.
6.2 Relative to the operations of LEEs, DBM developed the LEE Manual, as
prescribed under Local Budget Circular (LBC) No. 111 dated June 10, 2016. The
said Manual defines LEEs as “ventures wholly or partially owned by LGUs that
generate revenue/income through the sale of services and goods to meet a
perceived constituency demand.”
6.3 Section 6.6.3 of the Manual, provides that the LEE is expected to be self-
sufficient (or 100 per cent cost recovery). The operations of a financially self-
sufficient LEE shall be funded out of its sources rather than from the General
Fund. Further, an LEE is considered self-sufficient if all the costs of operating
the LEE are recovered 100 per cent. The costs of operating the LEE include
personnel services PS, MOOE, and finance charges (interest expense).
6.4 The Audit Team reviewed the Statement of Financial Performance (SFP) of the
Operation of the Waterworks System of the City for the three-year period ending
December 31, 2024. The purpose of the review was to assess the self-sufficiency
of the LEE. However, it was found that the operation of the Waterworks System
(WWS) incurred losses for the three consecutive years. The details of the loss
are shown on the next page:
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