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REPUBLIC OF THE PHILIPPINES C¥. >1= ~
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
BUREAU OF MAINTENANCE
2nd Street, Port Area
MANILA i APR t. 42006

DEPARTMENT ORDER ) SUBJECT: Revised Guidelines in the Implementation

of DPWH Projects to be Undertaken by
No. 24
series of 200~~. ,c # ~
;
)
LGUs under the Special Local Road Fund
of R.A. 8794 or the MVUC Law
per D.O. Nos. 89, series of 2005

In order to facilitate the implementation of Special Local Road Fund (SLRF) Projects,
particularly the release and transfer of funds from the DPWH to the concerned Local
Government Units (LGUs), Section 5 of Department Order No. 89, series of 2005 is hereby
amended to read as follows:

5. RELEASE OF FUND AND DEPOSIT

5.1 Each LGU shall maintain a separate Trost Account to be known as the Road Fund
Disbursement Account by opening a Local Currency Current Account (LCCA) in any
Government Servicing Bank and provide the DPWH with the LCCA Number, copy
furnished the DILG.

5.2 Upon approval of this Memorandum of Agreement and receipt of the Sub-Allotment
Advice (SAA) from DPWH-Central Oltice, the DPWH-Regional Office (RO) shall
issue the Letter of Advice of Allotment (LM) effecting the fidl transfer of allotment
to the concerned LGU There shall be no retention for engineering and administrative
overhead for the DPWH.

5.3 Initial release of cash advance(fimding check shall be drawn equivalent to .fifty
percent (50%) of the .fimd allocation for deposit to the account of the LGU In the
event that the allotment is not .fidly supported by Notice of Cash Allocation (NCA),
the DPWH-RO shall request NCA from the DBM-Regional Olfice through the List of
Due and Demandable Accounts Payable (LDDAP), Internal Creditor.

5.4 The LGU shall deposit all monies for SLRF under the Road Fund Disbursement
Account.

5.5 The release of.fimding check shall be acknowledged through the issuance of an
olficial receipt by the LGU

5.6 The DPWH-RO shall only release the remaining .fifty percent (50%) of the SLRF
allocation within forty .five (45) days upon receipt of the Audited Liquidation Report
of the initial fimding checklcash advance issued to the LGUs.
 D 0 No. 24 S. 2006 p.2/2
5.7 Each LGU shall submit a Quarterly Audited Report of Expenditure to the
Comptrollership and Financial Management Division (CFMD) of the DPWH-RO in the
required format, shown as Attachment 1, copy furnished the DILG - Office of Project
Development Services (DILG-OPDS). Any unexpended amount after the project
completion shall be remitted to the account of the DPWH-Ro. The DPWH-RO shall
duly issue an official receipt to the LGU remittance of the unused cash balance. The
LGU shall be made duly accountable for allfunds released to it by the DPWH.

5.8 Liquidation Report of the fit/I cash advances shall be submitted by the LGU to the
DPWH-RO upon completion of the project.

This Department Order amends pertinent provisions of D.O. No. 89, series of 2005,
accordingly and other previous issuances inconsistent herewith by the adoption of the
attached revised Annex I which is the standard format for the Project Memorandum of
Agreement (MOA) between the DPWH and the concerned LOU.

This Department Order takes effect immediately.

HERMOGEN~~, JR.
Acting~eblt~

III 111111111111I1
WIN6S00425

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 Attachment: D 0 No. 24 S.2006

Annex I
Standard Format of Project MOA

MEMORANDUM OF AGREEMENT
BETWEEN THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS AND
THE PROVINCE/CITY OF
------------
FOR THE IMPLEMENTATION OF THE SPECIAL LOCAL ROAD FUND (SLRF)
UNDERR.A. 8794 OR THE MVUC LAW

KNOW ALL MEN BY THESE PRESENTS:

This Memorandum of Agreement (MOA) entered into and executed this __ day
of in the year of our Lord Two Thousand and __ by and between

The Department of Public Works and Highways (DPWH) represented herein by Assistant
.•. Regional Director for Maintenance Operations hereinafter
referred to as DPWH.

And

The Provincial/City Government of represented herein by

Governor/City Mayor, , and hereinafter referred to as Local
Government Unit (LGU).

WITNESSETH THAT:

WHEREAS, pursuant to Republic Act No. 8794, the Motor Vehicle User's Charge Law
(MVUC Law), under Section 1 which declares that "it is the policy of the State to provide for
and ensure the adequate maintenance of national and provincial roads through sufficient
funding for the purpose";

WHEREAS, Section 7 of the said Act, which states that "all monies collected under this Act
shall be earmarked solely and used exclusively (1) for road maintenance and improvement of
road drainage, (2) for the installation of adequate and efficient traffic lights and road safety
devices, and (3) for air pollution control". It further provides that 5% of all monies collected
shall be deposited in the National Treasury under the Special Local Road Fund (SLRF),
which shall be apportioned to provincial and city governments in accordance with the vehicle
population and size of the road network under their respective jurisdiction, and shall be used
exclusively for maintenance of local roads, traffic management and road safety devices. It
also directs that the Special Road Support Fund, the Special Local Road Fund and Special
Road Safety Fund shall be under the DPWH;

WHEREAS, pursuant to Sections 3 and 5 of Executive Order No. 124, dated 30 January
1987, the DPWH shall decentralize its responsibilities to the fullest extent possible; and, may
delegate to any agency it determines to have adequate technical capability, any of its powers
and functions. Consistent with this policy of decentralization, the DPWH shall assist the

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Attachment:D 0 No. 24 S. 2006

LOUs in developing the latter's capabilities by allowing them greater participation in the
local road maintenance and safety provisions;

WHEREAS, it is necessary that a Memorandum of Agreement should be entered into for the
purpose of delineating responsibilities regarding the implementation of policies, standards
and procedures at the LOU level in accordance with the pertinent provisions of the SLRF
under the MVUC Law and its IRR;

NOW, THEREFORE, for and in consideration of the foregoing premises and mutual
covenants herein set forth, the PARTIES to this Memorandum of Agreement do hereby
agree on the following terms and conditions:

Article I
COVERAGE

This agreement covers the release, utilization and liquidation of funds for the LOU eligible
projects and activities such as road maintenance, road safety devices and traffic management
funded by the Special Local Road Fund to be implemented by LOUs in accordance with the
policies, standards and procedures ofRA 8794 (MVUC Law) and its IRR.

Article II
SCOPE AND PROJECT IMPLEMENT ATION

o I. This agreement specifies the implementation of SLRF Projects along Provincial/City

roads in the Province/City of , with funding under the
-----------
MVUC Special Local Road Fund as follows:

1. Name of Pro;ect No. 1 and Allocation

2. Name of Pro;ect No.2 and Allocation
3. Name of Pro;ect No.3 and Allocation
4. Name of Pro;ect No.4 and Allocation

02. The Scope of maintenance projects and activities funded under the SLRF is limited to
any of the following outputs and categories:
..
OUTPUT WORK CATEGORY
a. Carriageway Maintenance • Pavement Maintenance
• Regravelling
• Bridge and Structure Maintenance

b. Roadside Maintenance • Shoulder Maintenance

• Drainage Maintenance
• Vegetation Control
• Traffic Services Maintenance

c. Preventive Maintenance • Pavement Resurfacing

• Concrete Reblocking
• Seal Widening
• Preventive Works

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 Attachment: D 0 No~24 S.2006

d. Rehabilitation and Improvement • Rehabilitation

• Drainage Improvement
• Rehabilitation plus Improvement

e. Emergency Reinstatement • Emergency Reinstatement

f. Road Management • Professional Services and Administration

• Safety Devices (Installation and

g. Road Safety Operation)
• Safety Projects
• Road Safety Education & Training
• Road Safety Management

OJ. The LGUs shall prepare an Annual Work Program (AWP) and Multi-Year Work
Program (MWP) to ensure an ultimately current situation with no backlog in local roads
maintenance. In preparing the AWPs and rolling MWPs, both the LGU regular funds
for road maintenance and the Special Local Road Fund shall be taken into account. As
much as possible, recurring maintenance projects shall first be sourced from the LGU
regular road maintenance fund while non-recurring (asset preservation) projects shall be
funded from the Special Local Road Fund.

04. The Annual Work Program containing eligible Work Outputs and Categories in the
required formats, shall be prepared by the Provincial/City Engineer's Office and
approved by the Governor/City Mayor. The LGUs AWPs shall be submitted, reviewed
and consolidated by the Department of the Interior and Local Government (DILG) and
fOlwarded to the DPWH-Road Program Office (DPWH-RPO).

05. The LGUs shall implement the project/s by Contract, thru competitive bidding, except
for LGUs which were determined by DPWH to have a demonstrated capability to
implement the project by itself, i.e. by Administration. Pursuant to Amendment No.3
dated 29 September 2003 of the IRR of the MVUC Law and in accordance with DPWH
Department Order No. 137 series of 1999 under Section 5, the DPWH District Engineer .•.
shall evaluate the capability ofLGU on the basis of the following criteria:

a. Maintenance condition oflocal roads under the LGUs;

b. Construction/maintenance experience or track record of the LGU relevant to
the proposed Project;
c. Organization and personnel of the LGU for the proposed Project;
d. Construction equipment of the LGU for the proposed Project; and
e. Financial and procurement management systems of the LGU.

06. The details of these evaluation criteria, including the measurable indicators thereof and
their application, are givell in !he prescribed evaluation format "Annex A", which shall
be approved by the District Engineer. .

07. The DPWH and LGU shall conduct a final inspection of each of the completed·
project(s) and shall issue a Joint Certificate of Completioll for each.

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 Attachment: D 0 No. 24 S.2006

Article III
RELEASE OF FUNDS AND DEPOSITS AND
REPORT OF EXPENDITURES

OPENING OF ROAD FUND DISBURSEMENT ACCOUNT. Each LGU shall maintain a

separate Trust Account to be known as the Road Fund Disbursement Account by opening a
Local Currency Current Account (LCCA) in any Government Servicing Bank and provide
the DPWH with the LCCA Number, copy furnished the DILG.

RELEASE/TRANSFER OF FUNDS. The following procedures shall be followed in the

transfer of funds to LGUs:

o I. Upon approval of this Memorandum of Agreement and receipt of the Sub-Allotment

Advice (SAA) from DPWH-Central Office, the DPWH-Regional Office (RO) shall
issue the Letter of Advice of Allotment (LAA) effecting the full transfer of
allotment to the concerned LGU. There shall be no retention for engineering and
administrative overhead for the DPWH.

02 .. Initial release of cash advance/funding check shall be drawn equivalent to fifty

percent (50%) of the fund allocation for deposit to the account of the LGU. In the
event that the allotment is not fully supported by Notice of Cash Allocation (NCA),
the DPWH-RO shall request NCA from the DBM-RO through the List of Due and
Demandable Accounts Payable (LDDAP), Internal Creditor

03. The LGU shall deposit all monies for SLRF under the Road Fund Disbursement
Account.

04. The release of funding check shall be acknowledged through the issuance of an
official receipt by the LGU.

05. The DPWH-RO shall only release the remaining fifty percent (50%) of the SLRF
allocation within forty five (45) days upon receipt of the Audited Liquidation Report
of the initial funding check/cash advance issued to the LGUs.

06. Liquidation Report of the full cash advances shall be submitted by the LGU to the
DPWH-RO upon completion of the project.

REPORT OF EXPENDITURES. Each LGU shall submit a Quarterly Audited Report of

Expenditure to the Comptrollership and Financial Management Division (CFMD) of the
DPWH-RO in the required format, shown as Attachment 1, copy furnished the DILG - Office
of Project Development Services (DILG-OPDS). Any unexpended amount after the project
completion shall be remitted to the account of the DPWH-RO. The DPWH-RO shall duly
issue an official receipt to the LGU remittance of the unused cash balance. The LGU shall be
made duly accountable for all funds released to it by the DPWH.

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 Attachment: D 0 No. 24 S. 2006

Article IV
WORKING ARRANGEMENTS AND PROCEDURES FOR EXECUTING THIS
AGREEMENT

For the efficient and successful execution of this Agreement, the PARTIES hereby agree to
undertake the following:

A. DUTIES AND RESPONSIBILITIES OF DPWH:

01. To advise LGU of their Annual SLRF allocation based on the payment profile
determined by the Board on its assessment of the revenues into the SLRF in
coordination with the DILG.

02. Upon the receipt of the Sub-Allotment Advice (SAA) from the DPWH-Central
Office, to transfer the fund and issue cash advance to LGU the amount approved by
the Road Board for the SLRF for the year.

03. To provide technical assistance to LGU in preparing implementation mechanisms,

standards and procedures on SLRF project implementation and provide training for
institutional capacity building in coordination with DILG.

04. To assist LGUs in installing and operating an approved budget tracking system and
to conduct an assessment of the progress and quality of funded SLRF road
maintenance, road safety and traffic management projects in coordination with the
DILG.

B. DUTIES AND RESPONSIBILITIES OF LGUs:

o I. To prepare and submit Annual Work Program (AWP) of eligible work outputs and
categories corresponding to the amount as will be advised by DILG based on the
payment profile and allocation to be approved by the Road Board. The AWP should
be prepared in the required format.

02. To open a separate Trust Account/Local Currency Current Account (LCCA) to be

•.
known as the Road Fund Disbursement Account which shall be used exclusively for
road maintenance, road safety devices and traffic management.

03. To implement the road maintenance, road safety and traffic management works in
accordance with the Approved Work Program and Maintenance' Performance
Standards and Procedures required of all LGUs, and submit to DILG a quarterly
report on the progress and quality of the funded works, copy furnished the DPWH-
DEO.

04. To establish, maintain and operate a financial management system to record details
of all expenditures from the SLRF released to the LGUs and submit a quarterly
financial report showing (I) billings for works/services completed/supplied which
has been paid; (2) billings for works/services completed which have been received •
(but not yet paid); and (3) the estimated value of works completed but not yet billed.

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 . AttacIiment: D 0 No. 24' S. 2006

05. To prepare and submit to DPWH an Annual Report in the specified format not later
than 20th of February of each year. The Annual Report shall show/describe:

• The opening balance in the Road Fund Disbursement Account at the

beginning of the financial year;
• The expenditure in cash terms for the financial year
• The works completed in sufficient detail.

06. To conduct annual Inventory of the existing Local Road Networks and their
conditions in order to update the database/statistical records of the provincial/city
roads assets and submit to DILG Central Office for updating of the National
Inventory of Local Roads.

07. To assign Engineers to monitor the SLRF projects thru periodic inspection,
verification and measurement of work accomplished to ensure that the approved
maintenance standards are being followed.

Article V
EFFECTIVITY

This Agreement shall be effective from the date of its signing and shall continue to be in
force, unless sooner terminated by either party within thirty days (30) upon prior written
notice delivered to the other .

•.

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 Attachment:D 0 No. 24 S.2006

Article VI
SPECIAL PROVISIONS

All Annexes -and other documents attached to this Memorandum of Agreement shall be
understood as forming part of this MOA. Provisions and contents thereof are therefore
binding on both parties unless part or whole of these documents are amended and mutually
agreed upon by both parties.

IN WITNESS WHEREOF, the PARTIES have hereto affixed their signatures on the date
and place above-written.

FOR THE DPWH: FOR THE LGU:

ASSIST ANT REGIONAL DIRECTOR PROVINCIAL GOVERNOR!

FOR MAINTENANCE OPERATIONS CITY MAYOR

WITNESSES:

DISTRICT ENGINEER PROVINCIAL/CITY ENGINEER

APPROVED:

DPWH REGIONAL DIRECTOR

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 Attachment: D o No. 24 S. 2006

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

___________ ~)s.s.
x----------- x

BEFORE ME, this day of 200 at

_______ , Philippines personally appeared Honorable GOVERNOR! CITY
MAYOR with Community Tax Certificate No.
------
issued at -----------
on ------- and DPWH
ASSISTANT REGIONAL DIRECTOR _
with Community Tax Certificate No. issued at
__________ on known to me to be the same
persons who executed the foregoing instrument and they acknowledged to me that the same
is their free and voluntary act and deed and of the entities they represent.

WITNESS MY HAND AND NOTARIAL SEAL

Notary Public

Doc. No. ---

Page No. _
Book No.

',':, -: .. '
 , Attachment: D ()'No. 24 S.2006,

Annex "k'
, ,
I

EVALUATION OF CAPABILITY OF LOCAL GOVERNMENT UNIT (LGU)

TO IMPLEMENT DPWH INFRASTRUCTURE PROJECTS

Name of LGU: Date of Evaluation:

------------
Nanie of Project proposed to be implemented by LGU:
------ _

Estimated Project Cost: --------------

CRITERIA APPLICATION

1. Maintenance Condition of Local (LGU)

,Roads

The LGU must have maintained its Local Actual condition rating of Local
roads to a "fair" to "satisfactory" level, Roads as of ------
using the road condition rating of the (date): _
DPWH Bureau of Maintenance.

2. Experience or Track Record relevant to the

proposed Project '

2.1. The cost of the largest single Cost of largest project

relevant project completed by the completed by LGU: _
LGU within the last three years Versus
should be at least 50% of the 50% of estimated cost of
estimated cost of the Project. proposed Project: _

2.2. The cost of the completed largest Cost of largest project managed ;.

single relevant project managed by key LGU personnel: _

within the last three' years by the Versus
key LGU personnel to be assigned 50% of estimat':!d cost of
to the Project (Project Manager to proposed Project: .•.
Foreman) should be at least 50% of
the estimated cost of the Project. ,
r
3. Organization and Personnel for the Project

The LGU must have the required key Yes I No

Personnel from its Engineering Office who
are available to undertake, supervise, and
manage the Project by administration.

4. Construct,lon Equipment for the Project Yes I No

The LGU must own and commit for the •

,Project the required minimum owned
equipment. .
 , " , '

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Attachment:PONo.44:~.,2o.q.?':~,
·"no •• _'_ c. - ..,.. .__-J. •• , '~~', __ ~•.• ~ __ • '_'
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CRITERIA
APPLICATION

5 .. Financlal and Procurement. Management Yes I No

r •

. 5.1. The LGU must have satisfactory

financial .. and ' procurement
.managemenl systems as Indicated'
by the absence of adverse flndlrigs'
fn.the latest COA audit report Yes I No
5.2~ The LGU must have fully liquidated
its previous cash advances from
t~e DPWH.

CONCLUSION:. Based on thIs evaluation, the LGU ,Is lis not (please encircle) capable of
·Implementlho the subject Project by administration. '

Approved by:

DPWH District Engineer '

•.

•.

",
 Attachment: D d NO'. 24 S. 2006

A ITACHMENT 1

SPECIAL LOCAL ROAD FUND (fund 152)

Statement of Expenditures
For the PeriO'd of _

PrO'vince/City:
Address:
Telephone Number:

Name of Project:
SARO No./Date:
SAA NO'./Date:
LAA No.jDate:

Total Cash Advance xxxxxx

Less: Previous liquidation XXXXXX
Balance XXXXXX
Less: This Liquidation XXXXXX
Unliquidated Amount XXXXXX

Name of Date of Check Check No. Amount Paid

Payee/Creditor

I I
I

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L
TOTA ..L
IP x;",c,,",x .• 1
I

Prepared by: Certified Con eel:

(Chief Aceow1tant)

Approved: Verified and Found Correct:

Governor/City Mayor (COA Resident Auditor)

...•