The Commission on Audit found two Compostela municipal buildings completed in 2023 for P9 million were unusable, nonfunctional, and deteriorating after a March 2026 inspection.
COA cited poor pre-construction planning, unfunded subsequent phases, and standards non-compliance for the idleness, recommending the municipal engineer explain why Phase 1 was not independently functional.
Improper accounting for the nonfunctional structures led to a P269,891.93 overstatement of 2025 depreciation expenses, prompting COA to issue a qualified opinion on municipal property accounts.
TWO buildings that the Compostela Municipal Government reported as completed in 2023, at a combined cost of nearly P9 million remained unusable at the end of 2025, the Commission on Audit (COA) said.
State auditors said in their 2025 report that the projects — a multipurpose building in Barangay Guiwanon and classrooms for a community college — were built only up to Phase 1.
The Guiwanon building cost P2,998,000 and was reported completed on April 3, 2023, using funds from the Local Government Support Fund. The community college classrooms cost P5,998,397.95 and were reported completed on Dec. 31, 2023, using funds from the Provincial Government.
COA said it inspected the structures on March 12, 2026, and found them unusable, nonfunctional and in poor, deteriorating condition.
Phased construction
COA said phased construction is allowed under procurement rules, but each phase must be clearly defined, usable and structurally sound. It cited Section 7 and Item 4 of Annex A of the 2016 Revised Implementing Rules and Regulations of Republic Act 9184, or the Government Procurement Reform Act.
State auditors said the buildings’ continued idleness shows that Phase 1 of each project was not built to work on its own, without the later phases. It said this meant public funds were not used efficiently or effectively.
The municipal engineer told auditors that the remaining phases had not been built because funding was unavailable.
Planning and design issues
The engineer said the Guiwanon building was originally programmed for completion only up to the ground floor. During construction, however, the site was found to require a higher elevation, prompting a variation order, a written agreement that modifies an existing contract.
The Office of the Mayor, through the municipal engineer, would notify barangay officials to allocate funds to complete the project, the engineer said.
For the community college classrooms, the engineer said an inspection by Cebu Normal University found that the facility did not meet required standards because the land area was too small. Municipal management proposed converting the building into a day care center for Barangay Poblacion.
COA rejected these explanations, saying the need for a variation order and the subsequent discovery that the college facility failed to meet standards pointed to weaknesses in project planning and approval before construction began. The proposed change of use also suggested that the original objectives had not been achieved, problems that proper feasibility studies and compliance with design standards could have prevented.
It recommended that the municipal engineer explain why the projects were not designed so that each phase could function independently.
Accounting misstatements
COA also flagged how the municipality recorded the buildings in its books. It said the projects should have stayed under the construction in progress account, since neither structure could yet be used for its intended purpose. Instead, the Municipality recorded them as buildings and charged depreciation for two years.
This treatment overstated depreciation expense by P269,891.93 in 2025 and misstated property accounts by P8,996,397.95, according to the audit report.
COA recommended that the Municipality make a journal entry to transfer the full project cost back to construction in progress and reverse the depreciation charges.
The accounting treatment was among the reasons COA issued a qualified opinion on the municipality’s property, plant and equipment. A qualified opinion means COA found the municipality’s financial statements mostly accurate, except for specific problems.
In a separate finding, COA listed the two structures among municipal properties without insurance coverage from the Government Service Insurance System.
The municipal treasurer told auditors that some buildings, including the community college facility, were not yet operational. The Municipality would reassess whether to insure them, the treasurer said. / KAL