COA: Manila Has P3.5-B Liabilities

14 August 2012

Despite having thousands of business and commercial establishments within its jurisdiction, the city of Manila is still in financial crisis with current liabilities amounting to P3.553 billion and available cash of only P1.006 billion.

This was bared by the Commission on Audit (COA) in its 2011 audit report released to media yesterday.

Under this bleak scenario, COA officials expressed fear that benefits due city government employees would be adversely affected because of non-payment of taxes and contributions to the Bureau of Internal Revenue, the Government Service Insurance System, Home Development Mutual Fund (Pag-IBIG) and the Philippine Health Insurance Corp. (Philhealth).

As gathered by government auditors, the city's unpaid taxes to BIR stood at P237.826 million while withheld contributions that were not remitted to GSIS, Pag-IBIG and Philhealth amounted to P97.664 million, P0.172 million and P20.794 million, respectively.

"The above amounts include taxes and contributions deducted from salaries and wages of personnel and claims of contractors/suppliers of the City for the months of November and earlier but remained unremitted to the respective government agencies at year-end," COA stated.

"The funds withheld for the BIR, GSIS, PAG-IBIG and PhilHealth were not remitted on time which in effect, may cause forfeiture of claims/benefits due the members/employees of the City and deprive the agencies concerned of the timely use of the funds due them," it warned.

COA said it has advised City officials, particularly the City Accountant and the City Treasurer, to "immediately remit all the withheld funds" and was assured that its recommendation will be implemented fast.

COA pointed to the City Government's bloated payroll as the biggest source of its problem noting that Manila has been forced to cough up money for salaries of its employees that was way beyond its capacity to earn.

"The City of Manila appropriated and incurred expenses for Personal Services in excess of the 45 per cent of the total annual income from regular sources realized in the next preceding fiscal year limitation by P1.092 billion and P966.243 million, respectively," the audit report noted.

Based on its calculations, Manila could only afford to pay personal service of only P2,457,972,363.96 out of its 2011 income of P5,462,160,808.79 but it appropriated P3.55 billion and actually disbursed P3,424,215,320.51 in salary payments including retirement and terminal benefits.

The situation was further worsened by the grant of "financial assistance" to city officials and employees amounting to P1.404 billion in the last three years - P556.69 million in 2009, P585.96 million in 2010 and P260.95 million in 2011.

Although the money effectively served as additional allowances, auditors found the said item inserted in the city's "Maintenance and other Operating expenses" account.

"Despite the fact that financial assistance was not provided in the City's Annual Executive Budget, it was noted that the transactions relative thereto were recorded under MOOE-Other Maintenance and Operating Expenses instead of Personal Services," COA noted.

When asked for an explanation, the City Accountant justified the grant as assistance in light of "the present economic conditions or financial crisis which have adversely affected their livelihood and to help them buttress the effects of the tremendous increase in the cost of living in the City."

The City Accountant added that the same is released only upon the approval of the Mayor when the finances of the City allow or contingent upon the availability of cash as certified by the City Treasurer," the COA said.