EXECUTIVE SUMMARY

A. Introduction

The Housing and Land Use Regulatory Board (HLURB), formerly the Human
Settlements Regulatory Commission (HSRC), was created through the issuance of
Executive Order (EO) No. 648 on February 7, 1981. The agency is mandated as the
planning, regulatory and quasi-judicial body for land use development. Under E.O.
No. 90 dated December 17, 1986, HLURB was designated as the sole regulatory
body for housing and land development whose function pursuant to Republic Act
(RA) No. 8763 was expanded to include regulatory supervision over homeowners
associations.

Pursuant to EO No. 648, the agency was vested with quasi-judicial power
through its nine-man Commission referred to as the Board of Commissioners which
shall set and promulgate HLURB policies and steer its operations. The Board of
Commissioners is composed of the Chairman, Housing and Urban Development
Coordinating Council (HUDCC) at the helm, as ex-officio Chairman, four full-time
Commissioners appointed by the President with one designated as the Chief
Executive Officer, and four ex-officio Commissioners, namely: the
Undersecretaries of the Department of Justice, Interior and Local Governments,
and Public Works and Highways, and the Deputy Director-General of the National
Economic and Development Authority.

In 2010, HLURB implemented its rationalization plan which was approved by

the Department of Budget and Management (DBM) on July 16, 2009, pursuant to
EO No. 366 dated October 4, 2004. One significant change in the organizational
structure of the agency was the clustering of its 16 regional field offices (RFOs)
into nine field offices (FOs), as follows.

Field Office Coverage

NCR NCR
Northern Luzon (NL) CAR, ROs I and II
Northern Tagalog (NT) RO III
Southern Tagalog (ST) ROs IV-A and IV-B
Bicol RO V
Western Visayas (WV) RO VI
Central Visayas (CV) ROs VII and VIII
Northern Mindanao (NM) ROs IX, X and XIII
Southern Mindanao (SM) ROs XI and XII

HLURB’s personnel complement in Central Office (CO) and nine FOs totaled
609 as of year-end, consisting of 392 permanent, 10 temporary, four presidential

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 appointees with fixed term, and 203 contractuals hired under regular and special
projects.

B. Financial Highlights

The comparative financial condition, result of operations and the sources and
application of funds for Calendar Years (CYs) 2013 and 2012 are as follows:

Increase/
Particulars 2013 2012
(Decrease)
Financial Position
Total Assets 280,650,749.73 251,941,334.89 28,709,414.84
Total Liabilities 50,123,514.23 33,544,442.35 16,579,071.88
Total Equity 230,527,235.50 218,396,892.54 12,130,342.96
Result of Operations
Total Income 737,851,764.60 544,307.321.51 193,544,443.09
Total Expenses 367,031,014.65 383,303,243.18 (16,272,228.53)
Excess of Income
Over Expenses 370,820,749.95 161,004,078.33 209,816,671.62
Sources/Uses of Funds
Appropriations 278,947,654.00 461,602,250.97 (182,654,596.97)
Allotments 278,947,654.00 459,852,216.00 (180,904,562.00)
Continuing
Appropriations - 1,750,034.97 (1,750,034.97)
Obligations Incurred 274,808,834.24 459,250,081.78 (184,441,247.54)
Unobligated Balance 4,138,819.76 2,352,169.19 1,786,650.57

The Statement of Appropriations, Allotments, Obligations, Disbursements and

Balances is shown as Annex A.

C. Operational Highlights

Below are the agency’s operational highlights and reported

accomplishments for CY 2013:

Performance
Major Final Output/Key
Physical % of
program Accomplishment
Target Accomplishment
MFO 1 – Policy Formulation,
Dissemination,
Implementation and
Monitoring Services on Land
Use Planning, Zoning
Administration and Real
Estate Project Development

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 Performance
Major Final Output/Key
Physical % of
program Accomplishment
Target Accomplishment
1. Formulation/updating of 12 10 83
standards, guidelines,
rules and regulations on
land use planning, zoning
and other land
development control,
housing and real estate
development projects and
HOAs.
2. Conduct of researches and
related studies.
- No. of legal researches 365 806 220
conducted
- No. of legal opinions 245 1,076 439
rendered

3. Operational requirements 34 74 217

for the implementation of
programs and projects
including special/ad-hoc
projects.

4. Technical support to 12 17 141

management on program
conceptualization and
development
implementation/coordinati
on and monitoring
MFO 2 – Capability Building
and Technical Assistance
Services on Land Use
Planning, Zoning
Administration and Real
Estate Project Development

5. Provision of technical 125 1,266 1,012

assistance to LGUs in the
formulation/updating of
CLUP and ZOs.

6. Review/evaluation of 12 18 150
CLUPs of HUCs, ICCs,
Metro Manila cities and

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 Performance
Major Final Output/Key
Physical % of
program Accomplishment
Target Accomplishment
municipalities and PPFPs
of provinces

7. Training and consultation 550 2,155 391

services to LGUs on
comprehensive land use
planning, zoning
administration, CLUP
review and approval and
processing/evaluation of
subdivision plans and
HOAs
MFO 3 – Regulatory Services
on the Development and Sale
of Subdivision, Condominium
and Other Real Estate
Project, Brokers, Salesmen,
Dealers and HOAs

8. Processing of applications
for permits, clearances,
licenses, registration
certificates and other
issuances pertaining to
development and sale of
subdivision/condominium
and other real estate
projects

- Number of Licenses to 1,050 691 66

Sell (LS) issued
- No of other permits, 9,050 7,601 84
clearances, registration
certificates and certificate
on non-coverage
approved and issued

9. Registration of real estate 3,050 930 31

brokers, salesmen and
dealers

10. Registration and 1,020 720 71

supervision of HOAs and

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 Performance
Major Final Output/Key
Physical % of
program Accomplishment
Target Accomplishment
other related activities

11. Monitoring of HOAs and

subdivision and 23,000 40,489 176
condominium projects
issued permits and
licenses
MFO 4 – Adjudication
Services on
Complaints/Cases/Appeals
relative to Land Use/Zoning,
Housing and Real Estate
Development and HOAs

12. Hearing/resolution of 1,340 1,120 84

complaints/cases arising
from the implementation
of laws, rules and
regulations on zoning and
subdivision/ condominium
development and HOAs

13. Adjudication of appealed 700 252 36

cases on decisions/actions
of regional offices/arbiters
and zoning bodies of local
government units.

D. Scope of Audit

The audit covered the accounts and operations of the HLURB CO and its FOs for
CY 2013. The objective of the audit was to ascertain the fairness of the presentation of
its financial position and results of operation and cash flows, and to determine
compliance of the agency with the prescribed rules and regulations.

E. Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of HLURB as of December 31, 2013 considering that the following
deficiencies constituted 16.15 percent of the total assets as shown in the matrix on the

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Analysis of the Effect on the Misstatements on the Financial Statement marked as
Annex B.

 Understated Cash account by P36,303,776.77 due to non-recording of

unreleased checks and the failure of the Chief Accountant to record bank
accounts maintained;

 Unreliable balance of Inventories amounting to P1,204,082.20 due to the

non-inclusion of undetermined amount of Accountable Forms on hand
and on stock at the HLURB-CO and the failure of the Supply Officer of
Southern Mindanao Field Office (SMFO) to conduct the required
physical count and/or prepare the Report on the Physical Count of
Inventory (RPCI); and

 Unreliable balance of Property Plant and Equipment (PPE) due to failure

of SMFO to conduct inventory and prepare the required Report on the
Physical Count of PPE (RPCPPE) with a total cost of P7,829,640.39.

F. Summary of Significant Observations and Recommendations

The following are other significant audit observations and corresponding

recommendations, which were discussed with Management officials concerned
during the exit conference details of which are discussed in the report.
Management views and comments were incorporated in the report, where
appropriate.

1. Despite the full payment on the purchase of a lot inclusive of the Old NHA
Property Building with a total area of 4,897 square meters (sq.m.) costing
P177,913,500.00 from the NHA recorded in the books of accounts of HLURB,
the Transfer Certificate Title (TCT) evidencing ownership thereof was not yet
available as of December 31, 2013.

We recommended that Management observe adherence with the provisions of

Section 4(6) PD No. 1445 and COA Circular No. 2004-008 dated September 20,
2004. Exert effort to process the TCT covering the lot purchased from NHA
and furnish a copy to the Office of the Auditor for perusal.

2. The recorded Other Payables account of P36,607,025.24 as of December 31,

2013 in the books of accounts of which 99.81 percent or P36,535,695.73 was
not reconciled with the status of pending cases and appeals at the Appeals
Review Group (ARG) and Monitoring and Adjudication Division (MAD) of the
Regional Field Offices (RFOs).

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 We recommended and Management agreed to:

 Require the Accounting Division to reconcile the recorded Other

Payables account with the records of Appeals and Review Group
(ARG) and the respective Monitoring and Adjudication Division
(MAD) of the different RFOs;

 Monitor/conduct an inventory of pending cases and require the ARG

and the MADs of the RFOs to fast track its litigations and review; and

 Refund the consignation fees to the concerned parties in instances

where cases were already resolved.

3. Of the total Training Expenses account of P30,288,026.51 for CY 2013,

P6,286,154.88 or 21 percent representing catering services were supported with
incomplete/defective documentation, not covered with an Annual Procurement
Plan (APP), and some were not posted at PhilGeps contrary to the provisions of
COA Circular No. 2012-001 dated June 14, 2012.

We recommended that Management observe adherence with the provisions of

Sec. 4(6) of PD No. 1445 and COA Circular No. 2012-001 dated June 14, 2012
and RA No. 9184. Ensure that training activities conducted are included in the
APP and Disbursement Vouchers (DVs) representing claims for training
expenses are supported with complete documentation.

G. Implementation of Prior Year’s Audit Recommendations

Of the 29 audit recommendations embodied in the 2012 Annual Audit Report,

21 were implemented and eight were partially implemented by Management. The
details are presented in Part III of this report.

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