Republic Of The Philippines

DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT

Region X Northern Mindanao

April 24, 2017

MR. PEDRO Y. LASMARIAS

Chairman, Bids and Awards Committee (BAC)
Tangub City, Misamis Occidental

THRU: PABLIO L. BENITEZ, JR., CESE

Provincial Director, DILG Misamis Occidental

This refers to your letter dated 6 April 2017 which was indorsed by Mr. Pablio
Benitez , DILG Provincial Director of Misamis Occidental , requesting for clarification or an
opinion as to whether or not the purchase of hybrid corn seed and fertilizers can be
charged to 20% Local Development Fund.

In reply to your query, may we invite your attention to Section 3.2 of DBM-DILG
JMC 2017- 1 dated 22 February 2017 which enumerates the allowable Economic
Development Projects chargeable against the 20% Development Fund:

3.2 Economic Development

3.2.1 Construction or rehabilitation of communal irrigation or water

impounding system;
3.2.2 Purchase or lease of post-harvest facilities, such as farm or hand
tractor with trailer, thresher and mechanical driers;
3.2.3 Construction or rehabilitation of local roads or bridges, including
purchase of appropriate engineering equipment, such as dump
trucks, graders and pay loaders;
3.2.4 Capital expenditures related to the implementation of livelihood or
entrepreneurship/local economic development projects;
3.2.5 Development of alternative power or energy sources, such as, but
not limited to, renewable energy power plants; and
 Republic Of The Philippines
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT
Region X Northern Mindanao

3.2.6 Amortization of loans used to finance development projects cited in

this JMC, subject to the 20% debt service cap prescribed under
Section 324 (b) of RA No. 7160.

Although the purchase of hybrid corn seed and fertilizers can be considered as a
livelihood or entrepreneurship project , sec 3.2.5 stated above applies only to capital
expenditures.

As defined by the Department of Budget and Management, Capital expenditures

refer to expenditures for capital goods or durable goods which are used for productive
purposes such as the construction of roads and bridges, dams, power and irrigation works,
schools and hospitals. It is also known as capital outlays, referring to the purchase of
equipment and fixed assets, the benefits of which extend beyond the budget year and
which add to the assets of the government.

For the reasons stated above, we are of the view that the purchase of corn hybrid
seeds and fertilizers cannot be charged to 20% Local Development Fund.

We hope to have enlightened you on the matter.

Truly yours,

ARNEL M. AGABE, CESO IV

Regional Director
 Republic Of The Philippines
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT
Region X Northern Mindanao