Manila suffers from unliquidated cash advances, low collection of real property taxes — COA

Published November 5, 2020, 10:27 PM

by Ben Rosario

Manila Mayor Francisco “Isko Moreno” Domagoso inherited from previous city executives a ton of headaches that include nearly P200 million in unliquidated cash advances, inadequately protected lease contracts and under-assessed real property units that resulted in foregone realty taxes, the Commission on Audit (COA) has revealed.

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However during the exit conference with COA audit examiners, Domagoso’s office revealed that state auditors have merely scratched the surface of irregularities committed by past city administrators.

The current city administration said billions of pesos in real estate property taxes have not been collected by past city mayors.  

Worse, his predecessors failed to take appropriate action available to the city government in order to collect the correct taxes from property owners in the city.

In the 2019 annual audit report for Manila, COA found 670 sample real property units to have been under-assessed resulting “in foregone realty tax of about P9.686 million” merely for the said year.

COA said that based on data they collected, the city government underperformed last year in the collection of real property taxes.  Domagoso started his administration in Manila on June 30, 2019.

State auditors said gross RPT and Special Education Taxes collections from 2014 to 2019 averaged P5.138 billion annually and peaked in 2017 at P5.660 billion.

“The city has not regained yet this peak level at the end of 2019 as collections amounted to P5.424 billion or P236 million short of the high level.

“Based on this data, the city underperformed in 2019,” COA said as it directed the city government to improve the RPT collection for both current and delinquent categories.

During the exit conference, the city treasurer vowed to levy and auction off real property units of delinquent taxpayers as soon as all the necessary actions had been taken by the city.

According to the incumbent city administration, billions of pesos have not been collected prior to Domagoso’s term as city executive.

“The city had not settled cash advances totaling P203.440 million, P198.791 million or 97.7 percent of which were drawn by and are accountabilities of the past city administrations,” COA also reported.

State auditors disclosed that P133.79 million in cash advances have remained unaccounted for more than one year while other cash advances remained accountabilities way back in 1995 when the money was withdrawn from the city coffers.

Past city officials were also blamed for the poor management of lease contracts that resulted in the inadequate protection of city interest in connection with properties it leased.

The city government has leased a total 427 real property units that include residential lots, real estate and office spaces and underpass stalls.

Of these leased units, 416 are not covered by “valid contracts/agreements”.

On the other hand, lease contracts entered into by the city government and lessees did not provide for standard penalty clause that should have guaranteed timely payment of rent.

Audit examiners have also observed “inordinate delay in the payment of rent.”

“Notably Oceanville Hotel and Spa Corp. has not paid any rent since January, 2014, the date of the execution of the contract of lease,” the audit report revealed.

“Evaluation of the city’s lease contract management revealed that it had been poorly handled by the past city administrations,” COA stated.

The city general services office said it had started implementing a system of reporting and periodic reconciliation of lease records.  Further, it has also issued notices of delinquencies to delinquent lessees.