Talisay City’s bills exceed funds

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Wednesday, April 30, 2014

CEBU - After less than a year in office, Talisay City Mayor Johnny de los Reyes has to sort out his administration’s first financial pitfall.

The Commission on Audit (COA) called his attention after finding out that the City had less in its general and trust funds last year than its liabilities.

In a four-page Audit Observation Memorandum, State Auditor Maria Daisy Bercede said that the Talisay City Government’s cash balance of P89.23 million was insufficient to meet the City’s current and prior year’s obligations, payables and trust liabilities.


These amounted, she said, to P137.15 million, meaning the City had a deficit in 2013 of about P47.92 million.

City Hall, the memorandum said, failed to remit some P8.4 million in taxes deducted from its employees and suppliers, as well as nearly P3 million in contributions for the workers’ mandated benefits.

Passed on

Bercede also found that some cash intended to pay various creditors, national government agencies, local government and government-owned and controlled corporations were used for other purposes.

City officials explained that some of the unpaid accounts COA cited dated back to the time of former Talisay City Mayor Socrates Fernandez. Fernandez’s term as mayor ended last June 30, 2013, and he now serves in the City Council.

Interviewed separately, Fernandez said that his successor should be obligated to pay those dues, regardless if these were incurred by the previous administration.

De los Reyes and the city’s department heads were informed of Bercede’s findings during an exit conference last week.

The audit memo revealed that revenues placed in trust funds were used to pay other obligations. This violated Section 305 (e) and 337 of the Local Government Code and Government Accounting and Auditing Manual (GAAM).

Money intended to pay for the City’s current and prior year’s obligations were used for some other purpose, resulting to unpaid commitments of P105.28 million and a cash reserve without cash back-up totaling P31.86 million.


Based on the law, trust funds may be spent only for the specific purpose for which the trust was created.

Section 337 of Republic Act 7160 also sets limits on disbursements where a local government is allowed to spend more than the amount in the approved annual budget.

The audit memo revealed that the City has outstanding payables to the Bureau of Internal Revenue (BIR), Government Service Insurance System (GSIS), Home Development Mutual Fund (HDMF) and the Philippine Health Insurance Corp. (Philhealth), representing P2.78 million in contributions withheld from its employees’ salaries.

It also failed to remit taxes deducted from employees and suppliers totaling to about P8.40 million.

Bercede revealed that the City has unpaid obligations to other local and national government agencies totaling P57.98 million, for “various financial assistance” received.

At the time of the report, it also owed the barangays around P49.11 million, their shares of real property tax collections.

Cut costs

State auditors recommended that the City Government adopt an austerity program, such as by hiring fewer job-order employees, and fixing and maintaining vehicles and heavy equipment.

They also recommended that the City prioritize its outstanding payables to BIR, GSIS, Pag-ibig and Philhealth to avoid penalties, and in order for employees to avail themselves of their benefits.

State auditors also encouraged department heads to submit revenue-generating programs.

“They should review the City’s programs/projects and implement only those that are critical, urgent and necessary,” Bercede added.

In a separate interview yesterday, Talisay City Administrator John Yre de los Reyes said that in compliance with the memorandum, the City has started enforcing austerity measures.


He mentioned the reduction of job-order quotas of members of the City Council, including Vice Mayor Romeo Villarante.

He added that some of the outstanding payables were only inherited by his father’s administration and were incurred when Fernandez was still mayor. (De los Reyes’s term as mayor began last June 30, 2013.)

While he admitted that he had incurred some obligations during his time, Fernandez said it is the obligation of the present administration to immediately deal with it.

Fernandez recalled that when he first assumed as mayor, his administration also had to pay for some obligations incurred by former Talisay City Mayor Eduardo Gullas.

For her part, Talisay City Accountant Viluzminda Villarante denied COA’s finding that the City failed to remit mandatory contributions to national agencies.

Villarante said that the City religiously remitted its obligations every tenth day of the month, as they wanted to avoid penalties for non-remittance, particularly with the BIR.

Published in the Sun.Star Cebu newspaper on May 01, 2014.

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