MINISTRY OF FINANCE

COMMISSION ON AUDIT
MINISTRY OF BUDGET AND MANAGEMENT

JOINT CIRCULAR NO. 2-87

January 14, 1987

TO : The Ministers/Regional Directors of the Ministry of Public Works And Highways

(MPWH) ad the Ministry of Education and Culture and Sports (MECS); The
Director of Office of Local Government Finance (OLGF) of the Ministry of
Finance (MOF); Division/City Superintendents of Schools; Provincial Governors;
City/Municipal Mayors; Provincial/City/District Engineers; Provincial City/
Municipal Treasurers; Chief Accountants/Heads of Accounting Units; COA
Managers/Regional Directors and COA Unit Auditors; and All Others Concerned

SUBJECT : Guidelines on Funding Procedure, Implementation and Monitoring of School

Infrastructure Projects Funded by the National Government

1.0 COVERAGE

1.1 This joint circular shall apply to all local government units throughout the
country. It shall apply to GAA appropriations for School Infrastructure Projects
as defined below, under the Ministry of Education, Culture and Sports (MECS).

2.0 DEFINITION OF TERMS AND RESPONSIBILITIES

2.1 School infrastructure projects refer to the construction, replacement,

rehabilitation and completion of elementary school buildings.

2.2 Technical supervision is the supervision of the engineering and construction

aspects of school infrastructure projects. It includes, among other things, the
review and approval of project plans, specifications, and programs of work;
approval of contracts; inspection of works to see to it that they comply with the
approved plans, specifications, and programs of work; issuance of instructions
for correction of defects in the work; and approval of Statements of Work
Accomplished and Certificates of Project Completion prior to progress or final
payment as the case maybe.

Technical supervision is primarily discharge by the MPWH which has the

following responsibilities:

a. Exercise technical supervision over the school infrastructure projects.

Perform this function thru its District/City Engineers and Regional
Directors within their inherent and delegated authorities.

b. Review and approve the plans, specifications, and programs of work for
the school infrastructure projects submitted by LGU prior to
implementation.
 c. Whenever necessary, extend technical assistance to the LGU in the
preparation of project plans, specifications and programs of work.

d. Be represented in the Prequalification, Bids and Awards Committee of

the LGU insofar as the school infrastructure projects are concerned.

e. Review and approve the contracts for school infrastructure projects

entered into by the LGU prior to the commencement of work.

f. Conduct periodic inspection of school infrastructure projects and issue

instructions to the LGU for the immediate correction of defects in the
work.

g. Review and approve the Statements of Work Accomplished and

Certificates of Project Completion submitted by the LGU.

2.3 Local Government Unit (LGU) refers to the municipality or city where the school
infrastructure project is located. An LGU shall be represented by its head or his
duly authorized representative.

The LGU has the following responsibilities:

a. Prepare and submit to the MPWH for approval the schools infrastructure
project plans, specifications, and programs of work.

b. Conduct the prequalification, bidding and awarding of contracts of school

infrastructure projects in accordance with the provisions of law and
existing MPWH rules and regulations.

c. Enter into contracts for school infrastructure projects and submit these to
the MPWH for approval prior to the commencement of work.

d. Submit to the Regional Offices of the MPWH, the MLG, the National
Economic and Development Authority and the Ministry of Budget and
Management (MBM) periodic Statements of Work Accomplished on the
school infrastructure projects for monitoring purposes.

e. Issue and submit to the District/City Engineer Statements of Work

Accomplished (Annex A) for approval prior to progress payments; and in
case of final payment, a certificate of completion (Annex C) and a
certificate of acceptance (Annex D) shall be required.

f. Effect immediately correction of defects in the work noted by MPWH

prior to payments.

3.0 PRE-CONDITIONS TO RELEASE OF FUNDS

3.1 The MPWH shall prepare and submit to the MBM the work and financial plan for
each school infrastructure project as basis for release of funds.

The work and financial plan shall indicate the following information:
 a. Description of the specific project to be undertaken;
b. Specific location of project
c. Number of units or classrooms;
d. Total estimated cost of the project; and
e. Schedule of quarterly obligation/disbursement.

3.2 Upon receipt of the work and financial plan, the MBM, particularly the Budget
Operations Office, shall prepare the corresponding Advice of Allotment (AA) for
the total cost of the project and the corresponding Cash Disbursement Ceiling
(CDC).

3.3 The AA/CDC so prepared shall be forwarded for further review of the specifically
designated MBM official, who shall immediately thereafter direct the preparation
of the corresponding treasury warrant (TW).

3.4 The Minister, MBM, shall approve the AA/CDC, and countersign the TW.

4.0 PROCEDURES IN THE RELEASE OF FUNDS

4.1 TWs shall be drawn in favor of the City or Municipal Treasurer where the
projects are located. The TW shall be supported with a listing of projects to be
undertaken in such city or municipality.

4.2 The amount of the TW shall be equivalent to 97% of the total cost of the project.
The remaining 3% shall be releases by the MBM to the MPWH to cover
engineering and administrative cost. No other charges of any kind whatsoever
shall be imposed on the amount released to the LGU.

4.3 The recipient City or Municipal Treasurer shall account for the funds received as
Trust Fund in the Trust Fund books of accounts, and shall maintain
corresponding subsidiary records/ledgers for the purpose, as provided for under
Section 9 hereof.

5.0 PRE-CONDITIONS TO IMPLEMENTATION

The respective Local Government Units (LGUs) shall, with the technical
assistance of the District/City Engineers Office, MPWH, prepare and submit the
Program of Work of individual projects to the Regional Director, MPWH for approval
prior to the implementation of the project. The Program of Work shall include, among
others, the following information:

a. How the project will be undertaken (either by administration, contract, labor-

pacquiao, etc.)

b. Description of project (construction, replacement, rehabilitation or completion)

c. Time Frame (starting and completion dates of the project)

d. Estimated number of workers to be employed or man-days to be generated,

period of employment, and cost of labor.
6.0 REALIGNMENT OF FUNDS/PROJECTS

6.1 The LGU head may request for realignment of funds/projects should he deem it
desirable to better serve the needs of the LGU. The request shall be approved
by the district/city engineer upon prior recommendation of the division/city
superintendent of schools. However, realignment shall be limited to the
construction, replacement and completion of school buildings within the
municipality and prioritized according to necessity.

Copies of the approved realignment shall be submitted to the National

Accounting and Finance (NAF), MBM and to the MBM Regional/Sub-Regional
Office concerned.

7.0 PROJECT COMPLETION

7.1 Upon completion of the project, the following documents shall be submitted by
the City or Municipal Mayor concerned to MBM/NEDA/MLG through their
respective regional/field/offices:

a. Statement of Work Accomplished by the City or Municipal Mayor in the

case of projects undertaken by administration or labor pacquiao; or by
the contractor in the case of projects undertaken by contract; and
approved by the District or City Engineer or his authorized representative
(ANNEX A).

b. Certificate of Disbursements by the local treasurer, approved by the City

or Municipal Mayor, and verified by the Provincial/City Auditor concerned
(ANNEX B).

c. Certificate of Project Completion (ANNEX C).

d. Certificate of Project Acceptance (ANNEX D).

8.0 REFUND OF UNEXPENDED BALANCE OF FUND

8.1 Any unexpended balance in the fund upon completion of the project shall be
reverted to the National Treasury. Accordingly, the local treasurers concerned
shall remit the amount to the Treasurer of the Philippines covering the amount
expended balance within two weeks after completion of the project, and subject
to the usual accounting and auditing rules and usual regulations.

8.2 The local treasurer shall likewise inform the Bureau B-Accounting and Finance
on Local Governments, MBM, of the amount reverted to the National Treasury,
indicating the date and number of check issued in favor of the National
Treasurer. This report to the MBM shall be submitted on the day following the
issuance of the check to the National Treasurer.

9.0 ACCOUNTING REQUIREMENTS

9.1 Transactions relating to the funds releases to the LGUs shall be recorded in
 accordance with the illustrative journal entries shown in ANNEX E hereof.

10.0 MONITORING

10.1 The monitoring of projects shall be in accordance with the joint monitoring
guidelines of the MBM/NEDA, with the involvement of non-governmental
organizations.

10.2 Local treasurers shall render periodic reports on the status of funds as may be
required by the Minister of Finance.

11.0 REPEALING CLAUSE

The provisions of Joint Circular No. 8-86 dated October 3, 1986 are hereby
modified or superseded insofar as they are inconsistent with this Circular.

12.0 EFFECTIVITY

12.1 This Circular shall take effect immediately.

(SGD.) TEOFISTO T. GUINGONA, JR. (SGD.) JAIME V. ONGPIN

Chairman, Commission on Audit Minister of Finance

(SGD.) ALBERTO G. ROMULO

Minister of the Budget