EXECUTIVE SUMMARY

Introduction

Tagaytay became a chartered City on June 21, 1938 by virtue of Commonwealth Act No. 338,
a bill introduced by then Congressman Justiniano S. Montano. President Quezon appointed
Colonel Arsenio Natividad, his senior aide, as acting Mayor of Tagaytay City.

The City is now classified as a second class Component City of the Province of Cavite and is
politically subdivided into 34 barangays composed of 213 puroks distributed over a land area
of 6,500 hectares. Economic pillars of the City are predominantly anchored on tourism and
agriculture.

The City is also known for its invigorating climate and breath-taking view of Taal Lake and
Volcano and is now considered as the tourism center in the CALABARZON region.

Just like every Local Government Unit (LGU) in the country, Tagaytay City seeks to improve
the socio-economic condition of its population through sustainable development and
responsive management of its resources in active partnership with all concerned sectors.

The City was envisioned to be a resort, retirement haven and character City with a government
geared towards excellence and supported by disciplined, honest, God-centered, healthy and
united community.

The personnel compliment of the City in Calendar Year (CY) 2021 totaled 1,128 composed of
the following:

Elected 14
Permanent 386
Co-Terminus 27
Casual 392
Consultant 12
Job Order 297
Total 1,128

Financial Highlights

The total assets, liabilities, government equity, income and expenses for CY 2021 are shown
below.
Increase/
CY 2021 CY 2020
(Decrease)

Assets P 7,297,805,474.38 P 6,679,898,156.73 P 617,907,317.65

Liabilities 1,875,473,378.73 1,764,264,036.73 111,209,342.00
Equity 5,422,332,095.65 4,915,634,120.00 506,697,975.65
Income 1,292,505,497.74 1,270,453,684.95 22,051,812.79
Personal Services 282,706,892.35 270,747,021.17 11,959,871.18
Maintenance and Other Operating Services 452,097,354.48 768,104,185.11 (316,006,830.63)
Financial Expenses 6,095,740.13 8,490,172.05 (2,394,431.92)
Non-Cash Expenses 224,397,258.25 202,212,876.03 22,184,382.22
Subsidy to Other Local Government Units (4,420,000.00) (4,420,000.00) 0.00
Transfer of Unspent Current Year DRRM
Funds to the Trust Funds (18,916,599.81) (23,789,414.45) 4,872,814.64
Surplus (Deficit) 303,871,652.72 (7,309,983.86) 311,181,636.58

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Scope and Objectives of Audit

The audit covered the accounts and operations of the City for the period January 1 to
December 31, 2021. The objectives of the audit are: (a) determine the level of assurance that
may be placed on Management’s assertions on the financial statements; (b) verify the
propriety of financial transactions and on a limited extent, determine the level of compliance
with applicable laws, rules and regulations; (c) recommend agency improvement
opportunities; and (d) determine the extent of implementation of prior year’s audit
recommendations.

Audit Opinion on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation of the financial
statements of the City due to the following:

1. The existence, reliability and accuracy of the Property, Plant and Equipment (PPE)
account with a net book value of P4,663,413,285.27 as of December 31, 2021 could not
be ascertained due to non-compliance of the City with the guidelines and procedures in
the conduct of physical count of PPE and maintenance and reconciliation of property
records provided under Sections 13 and 124 of the Manual on New Government
Accounting System (MNGAS) for Local Government Units (LGUs).

2. The existence and correctness of the Inventory Held for Distribution and Consumption
accounts totalling P42,878,823.50 as of December 31, 2021 could not be ascertained due
to non-conduct and non-submission of the Report on the Physical Count of Inventories
(RPCI), contrary to Section 124 of the MNGAS for LGUs, Volume I.

For the exceptions cited above, we recommended that the:

1. City Mayor reconstitute the Inventory Committee ensuring that it is composed of adequate
number of members to be able to complete the physical inventory of the PPE in three
months or less, and who shall be temporarily relieved of all their regular duties to devote
their full time in the conduct of the physical inventory taking until the same is completed, in
compliance with COA Circular No. 2020-006 dated January 31, 2020. After which, it is
recommended that the City Mayor direct the:

a. Inventory Committee to prepare a Physical Inventory Plan and accordingly

conduct a comprehensive physical inventory of all PPE of the City and prepare the
corresponding Report on the Physical Count of Property, Plant and Equipment
(RPCPPE) following the guidelines set forth in said COA Circular; and

b. General Services Officer to update the General Services Office’s property records
based on the RPCPPE and reconcile them with accounting records to come up
with the reconciled balances of PPE accounts to be considered as the correct
balance of the agency’s PPEs.

2. City Mayor direct all City Department Heads and their respective Supply Officers to conduct
a physical count of all unissued, undistributed or unconsumed supplies and materials in
their custody as of year-end and correspondingly prepare RPCI and submit the same to
General Services Office (GSO) for consolidation and to the City Accountant for adjustment
of the inventory account in the books of account, if warranted.

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In addition, the following are the significant observations and recommendations:

1. The City-owned Character and Sunflower hotels and slaughterhouse amounting to

P21,727,520.00 and P1,452,428.00, respectively, were erroneously classified in the
Statement of Financial Position as Buildings and Markets instead of Hostels and
Dormitories and Slaughterhouses accounts, contrary to Commission on Audit (COA)
Circular No. 2015-09, thus resulted in the overstatement of the former and understatement
of the latter accounts by the same amounts.

We recommended that the City Mayor instruct the Municipal Accountant to draw a Journal
Entry Voucher (JEV) debiting Hostels and Dormitories and Slaughterhouses and crediting
Buildings and Markets accounts by P21,727,520.00 and P1,452,428.00, respectively,
together with the corresponding Accumulated Depreciations.

2. Accounts Payable amounting to P3,199,199.96, which had been outstanding for more
than two years due to absence of supporting documents, were not reverted to the
unappropriated surplus of the general fund, contrary to Section 40, Book 6 of the 1987
Administrative Code of the Philippines and Sections 4(6) and 98 of Presidential Decree
(PD) No. 1445, thus casted doubt on the validity and correctness of the said account as
of December 31, 2021.

We recommended that the City Mayor require the City Accountant to cause the immediate
reversion to the unappropriated surplus of the general fund of the accounts payables
which have been outstanding for at least two years against which no actual claim,
administrative or judicial, has been filed and those which are not supported with complete
documentation.

3. PPE costing P3,668,656,212.21 were not insured with the General Insurance Fund (GIF)
of the Government Service Insurance System (GSIS), contrary to Republic Act (RA) No.
656, as amended, and the COA Circular No. 2018-002, thus deprived the City with
adequate and reliable financial protection against any damage to or loss of its properties
due to fire, earthquake, storm, or other fortuitous events.

We recommended that the City Mayor direct the City General Services Officer to prepare
the Property Inventory Form listing all the insurable properties of the City and submit the
same to the Office of the Auditor and GIF, GSIS not later than April 30 of each year, and
insure subject assets with the GSIS in compliance with the foregoing laws, rules and
regulations.

4. Payments for the procurement of 11 parcels of lot totaling P104,578,000.00 were

processed and approved despite incomplete supporting documents, contrary to Section
4(6) of PD No. 1445 and Item 13.1 of COA Circular No. 2012-001, thereby complete
auditorial review and technical evaluation to establish the validity of the transactions and
reasonableness of the prices of the property could not proceeded.

We recommended that the City Mayor direct the City Accountant and other concerned
officials to submit to the Audit Team the lacking documents to facilitate the timely auditorial
review and technical evaluation of the contracts for the purchase of the 11 lots.

5. Due to inability of the City to implement the audit recommendations made in CY 2021, 48
per cent or 87 of the 180 motor vehicles owned by the City still bear private or green plates

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 as they could not be registered by the City due to broken or unusable conditions and
incomplete documents, contrary to Item e.3, Section 361 of the Government Accounting
and Auditing Manual (GAAM), Volume I, thus making it difficult to regulate and monitor
their uses.

Likewise, unserviceable motor vehicles with acquisition cost totaling P4,440,000.00 were
not disposed, contrary to Section 79 of PD No. 1445 and Sections 165 and 166 of COA
Circular No. 92–386, thus exposing the property to further deterioration and reduction of
economic value.

We reiterated our previous year’s recommendation that the City Mayor direct the GSO
and other concerned officials to make a study or analysis of the costs and benefits of
disposing or repairing the defective vehicles. For vehicles determined or which could be
established to be beyond repair, we recommended that their disposal be immediately
initiated by the City in accordance with existing rules and regulations on disposal of
unserviceable properties.

For serviceable vehicles and those which could still be reasonably repaired, we again
recommended that the City Mayor require the GSO to exert more effort to find the relevant
Deeds of Sale, Certificate of Registration and other necessary documents and to
immediately comply with other Land Transportation Office’s requirements to facilitate the
vehicles’ registration in the City’s name.

6. Collections and fund transfers from National Government Agencies (NGAs) amounting to
P2,105,617.36 that had been dormant for more than five years and/or the intended
purposes of which had already been served were not reverted back to the National
Treasury, contrary to Executive Order No. 431, thus depriving the national government of
funds that could have been used for other priority projects/programs.

We recommended that the City Mayor instruct the City Accountant to return to the Bureau
of Treasury the balances of the funds transfers from various NGAs that had been dormant
for more than five years or the purpose of which had already been achieved by the City.

7. Due to restrictions posed by the Corona Virus Disease 2019 (COVID-19) pandemic, the
project “Construction of Tenement Housing Project Building II” amounting to
P100,881,090.00, P60,735,483.20 of which was funded out of the 20 per cent
Development Fund was not completed, contrary to Sections 3.2.3 and 4.0 of the
Department of Budget and Management (DBM), Department of Finance (DOF) and the
Department of the Interior and Local Government (DILG) and the Joint Memorandum
Circular No. 2020-1 dated November 4, 2020, thus the desired socio-economic
development and environmental outcomes from the project were not fully attained during
the year.

We recommended that the City Mayor require the City Planning and Development
Coordinator and City Engineer to prepare a catch-up plan for the immediate completion of
the project “Construction of Tenement Housing Project Building II”.

8. The unexpended balance of the Local Disaster Risk Reduction and Management Fund
(LDRRMF) from years 2016 to 2020 totalling P40,988,573.69 was not reprogrammed and
included in the City’s 2021 LDRRMF Investment Plan (LDRRMFIP), contrary to the COA

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 Circular No. 2012-002, thus the basis of the appropriation for the LDRRMF and the
subsequent utilization of the fund could not be established.

Moreover, of the total current year and prior years’ appropriation of P103,728,554.49, only
39 per cent or P40,129,423.99 was utilized, thereby the purpose for which the Fund was
established was not fully achieved by the City.

We recommended that the City Mayor direct:

a. the City Disaster Risk Reduction Management Council (CDRRMC) to identify and
incorporate, under a separate caption, in the correct format of LDRRMFIP, the
specific projects and activities to be charged against the unexpended previous
years’ LDRRMF;

b. the CDRRMC to ensure that supplemental budget or any revision in the LDRRMF
budget is supported by a revised Annual Investment Plan (AIP)/LDRRMFIP
approved by the Sanggunian Panlungsod and City Mayor and which should,
thereafter, be the basis for the release and utilization of the LDRRMF for the
identified new expenditure items; and

c. all concerned officials to ensure that all projects and programs in the LDRRMFIP
are fully implemented.

9. Gender analysis was not conducted using the Harmonized Gender and Development
Guidelines (HGDG) tool due to lack of knowledge or training thereon, contrary to Section
C.4 of the Philippine Commission on Women (PCW), DILG, DBM and National Economic
and Development Authority (NEDA) Joint Memorandum (JMC) Circular No. 2013-01,
hence casted doubt on the gender responsiveness of the City’s Gender and Development
Projects, Programs and Activities (PPAs).

We recommended that the City Mayor direct all members of the GAD Focal Point System
to undergo trainings on HGDG to build their competence in the conduct of gender analysis
of programs and projects for purposes of GAD budget attribution.

10. The appropriate project signboards and/or public notices for government projects
undertaken in CY 2021 with total contract amount of P158,591,700.00 were not displayed
at the project location, contrary to the requirements of the COA Circular No. 2013-004,
hence good governance through transparency and accountability, public participation and
the right of the people to information on matters of public concern were not enhanced.

We recommended that the City Mayor require the City Engineer and other concerned
officials to ensure that the required project signboards and/or public notices are displayed
at the project location and that a report of the City’s compliance with the posting
requirement is submitted to the COA Audit Team within 10 days after the award of the
infrastructure project or before the start of the activity in adherence to the provisions of
COA Circular No. 2013-004.

11. The City disbursed a total of P18,750,412.94 for the emergency purchase of goods and
services for COVID-19 related activities through Shopping or Small Value Procurement
instead of the Emergency Procurement modality provided under Government

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 Procurement Policy Board (GPPB) Circular No. 01-2021, thus procurement during
COVID-19 pandemic was not expedited.

We recommended that the City Mayor require the Bids and Awards Committee (BAC) to
undertake the procurement of the COVID-19 related goods using the emergency
procurement (Negotiated Procurement) modality required under GPPB Circular No. 01-
2020 to ensure prompt deliveries of goods to beneficiaries.

12. The regularity of the financial assistance released to COVID-19 affected households
amounting to P295,000.00 could not be established due to various deficiencies such as
(a) non-submission of proof of identities of beneficiaries, (b) no signature or proof of receipt
thereof by the beneficiaries; (c) some beneficiaries appeared to have similar signatures
as others; (d) payments were received by Punong Barangays or Barangay Kagawad,
Barangay Health Worker, Barangay Nutrition Scholar, Barangay Treasurer and by Purok
Social Worker without authorization from the payees, contrary to the MNGAS for LGUs.

We recommended that the City Mayor require the City Social Worker Development Officer
(CSWDO) and City Treasurer to provide the Audit Team with proof that the financial
assistance intended for the 126 households from the six barangays of the City amounting
to P295,000.00 were actually received by the intended beneficiaries, otherwise, the
amount must be returned by the concerned barangays and consequently be returned by
the City to the source agency.

13. Forty-four disbursement vouchers and supporting documents from January to December
2021 with total amount of P84,396,602.26 were not yet submitted to the Audit Team to
date, contrary to Section 7.2 of the 2009 COA Rules and Regulations on the Settlement
of Accounts (RRSA) of the COA prescribed for use by COA Circular No. 2009-006 dated
September 15, 2009, thereby precluding the Auditors from conducting timely audit thereof
and from promptly informing the City of the deficiencies thereon, if any.

We recommended that the City Mayor direct the City Accountant to submit the 44
disbursement vouchers and their supporting documents with an aggregate amount of
P84,396,602.26 to the COA Audit Team to facilitate their audit, otherwise the
corresponding transactions will be suspended in audit.

Henceforth, it is recommended that the City Accountant be instructed to submit to the

Audit Team within the first ten days of the ensuing month all paid vouchers and supporting
documents pursuant to Section 7.2 of the 2009 RRSA of COA.

Status of Implementation of Prior Year’s Audit Recommendations

Of the 19 audit recommendations contained in the 2020 Annual Audit Report (AAR), 15 were
fully implemented, three were partially implemented and one was not implemented by the City.

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