EXECUTIVE SUMMARY

A. Introduction

Navotas was once part of the Municipality of Malabon until January 16, 1906, when it
became independent through the enforcement of the Philippine Commission Act No.
142. It became a highly urbanized city on June 24, 2007, through Republic Act No.
9387 dated March 10, 2007, or an Act converting the Municipality of Navotas into a
highly urbanized city to be known as the City of Navotas. It is part of Metropolitan
Manila, particularly of the National Capital Region, together with the other 15 cities
and one municipality (Pateros), and of the informal sub-region called CAMANAVA.
This sub-region, represents the cities of Caloocan, Malabon, Navotas and Valenzuela.

Navotas City is best known for its seafood products, with a land area distinctly
surrounded by bodies of water. In Metro Manila, Navotas is the only city where the
fishport is located, thus it is known as the Fishing Capital of the Philippines. The City
has the third largest fish port in Asia and the largest in the Southeast Asia.

According to the 2015 census, it has a population of 249,463 people (Source:

Philippine Statistics Authority) and current population for Calendar Year (CY) 2020 of
267,429 people (Source: City Planning and Development Office). Navotas has a total
land area of 10.69 square kilometers. It i s geographically located on the extreme
northwestern shore of Metro Manila and is politically subdivided into two districts
with a total of 18 barangays, 11 of which are located along its coast. The mission of
the City is to harness all resources to serve the needs of its constituency towards
industrialization through dedicated and accountable public officials and an empowered
citizenry.

The City is governed by Mayor Tobias Reynald “Toby” M. Tiangco who was elected
in the May 2019 mid-term elections; together with Vice Mayor Clint Nicholas B.
Geronimo, who is also the Presiding Officer of the Sangguniang Panlungsod; and the
12 regular Sanggunian members, and two ex-officio members from the President of
the City Chapter of the Liga ng mga Barangay and the President of the Panlungsod na
Pederasyon ng mga Sangguniang Kabataan. The City is represented by Congressman
John Reynald M. Tiangco in its lone congressional district seat in the House of
Representatives of the Philippines.

As of December 31, 2020, the City has a total personnel complement of 2,384
consisting of:

Elective Officials 16
Permanent 443
Co-Terminous 82
Casual 11
Job Order/Contract of Service 1,831
Consultant 1
Total 2,384

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B. Financial Highlights

For CY 2020, the City’s assets, liabilities and equity for the year were P4.585 billion,
P1.121 billion and P3.463 billion, respectively. The said accounts have increased by
P0.405 billion, P0.123 billion and P0.282 billion, respectively in CY 2020, details as
follows:

2020 2019 Increase (Decrease)

Assets 4,584,651,899.99 4,179,863,042.14 404,788,857.85
Liabilities 1,121,255,035.08 998,689,759.15 122,565,275.93
Equity 3,463,396,864.91 3,181,173,282.99 282,223,581.92
Revenue 1,878,606,861.42 1,684,331,624.68 194,275,236.74
Expenses 1,603,504,138.34 1,438,055,629.97 165,448,508.37
Net Income 275,102,723.08 246,275,994.71 28,826,728.37

For CY 2020, the appropriations of Navotas City for the General Fund and Special
Education Fund totaled P2.797 billion, as shown below:

Fund Appropriations Budget Obligations

General Fund 2,591,347,525 1,444,880,444
Special Education Fund 206,528,268 125,884,633
Total 2,797,875,793 1,570,765,077

C. Operational Highlights

Among the most significant accomplishments reported by the City for CY 2020 are as
follows:

1. The City Social Welfare and Development Office has spearheaded the Social
Services One Stop Shop (SSOSS) which facilitated the issuance of referrals for
Medical Assistance. The office received 1,294 referrals for financial/medical
assistance and 2,765 case studies for certificates of indigency.

2. A module-based method of instruction in 21 Day Care Centers was adopted in the

implementation of the Child Development Services Program of the City.

3. Programs, projects and activities, such as Social Amelioration Program, were

undertaken by CSWDO to address the socioeconomic impacts of the pandemic.
An emergency subsidy of P8,000.00 a month for two months, was provided to
qualified beneficiaries.

4. Livelihood Assistance Grant through DSWD Memorandum Circular No. 09,

series of 2020, was implemented, which provided five hundred Navoteno families
with a monetary grant.

5. Food packs were distributed, during the Enhanced Community Quarantine, to

more than seventy thousand families.
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6. The City Engineering Office has spearheaded the conduct of necessary
renovations of Navotas Polytechnic College and Navotas National High School
to make it suitable to be the City’s community isolation facilities.

7. The Sangguniang Panlungsod passed 172 resolutions and 52 ordinances, most of

which are focused on the COVID-19 response and prevention.

8. The City Human Resource and Development Office has implemented the
COVID-19 Employee’s Assistance Program and the COVID-19 Angat Navotas
Service Recognition Incentive pursuant to City Appropriation Ordinance
No. 2020-33 and 2020-39. Likewise, the office facilitated the released of the
COVID-19 Pandemic Financial Assistance to all qualified and registered
Barangay Health Emergency Response Team (BHERT) of the City.

9. Approximately 6,000 tons of waste were collected from the regular clean-up
activities, in compliance with the directives of the Supreme Court. The City
generated P39,000,000.00 with the operations of the Navotas Sanitary Landfill.

10. The City of Navotas was recognized as the top performing LGU in the NCR in
terms of the compliance with the Manila Bay Clean-Up, Rehabilitation and
Preservation Program.

11. To safeguard the health of the residents and businessman and to control the spread
of the virus, the Business One Stop Shop has been implemented by the City, which
helped the taxpayers in securing business permits with more convenience and
lesser risks.

12. As of December 31, 2020, the total number of cumulative cases for Navotas City
were 5,456 with 96 percent or 5,245 recoveries.

13. The City established the Navotas Mega Swabbing Facility, and conducted around
34,371 swab tests to 12.78% of the population. Also, Contact Tracing Team was
formed which was headed by the Philippihne National Police to carry out a
complete tracing or tracking of close contacts of identified COVID-19 positive
patients.

14. The City Health Department, through its Family Program Unit, continued its pre-
marriage counseling by utilizing social media. It also launched the Maintenance
Mo Deliver Ko, wherein a total of 13,781 maintenance medicines were delivered
to senior citizens enrolled in the anti-hypertensive and anti-diabetic program of
the health centers.

15. E-Konsulta was launched to provide an avenue for the consultation services of the
City and a total of 13,141 teleconsultations were done by all the health centers of
the City.

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16. The researchers from the Navotas SDO were selected to participate in the 3rd
International Multidisciplinary Research Conference. In addition, the SDO shared
Basic Education Learning Continuity Program and Teaching and Learning
Experiences during the COVID-19 Pandemic to the Education and Culture
Attache Office of the Embassy of the Republic of Indonesia.

17. The Navotaas City Hanapbuhay Center (NHC) implemented the Palengke in
Wheels / Kadiwa on Wheels which provided the residents an easy access to fresh
vegetables, fruits, meat, poultry products and other essential products during the
community quarantine.

18. Order Mo, Deliver Ko was also implemented to help online sellers and drivers
whose livelihoods have been greatly affected by the lockdowns.

19. NavoHatid, IwasCovid project assisted 825 online sellers to deliver their products
to 1,680 customers within the City.

20. The City, in cooperation with the Department of Trade and Industry (DTI),
implemented the Pangkabuhayan sa Pagbangon at Ginhawa (PBG) program
where P8,000.00 livelihood starting capital were given to 40 Navotenos.

21. Free Bisikleta (FreeBis) Service helped 22 delivery riders, as beneficiaries and
recipient of bicycle units with complete accessories.

22. E-Angat Platform was established to provide Navotenos online seller with an
exclusive eCommerce platform to promote their local business in the City.

23. The City, through its City Disaster Risk Reduction and Management Office,
provided relief and cash assistance and assisted in the rescue operations in the
Municipality of Tulunan, Municipality of Mabini, Marikina City, Cagayan
Province and Provinces of Batangas and Cavite which were heavily affected by
natural calamities. Also, it assisted in the pre-emptive evacuation for Super
Typhoon Rolly and Typhoon Ulyssess.

24. The Navotas City Fire Station generated P4,882,466.65 on fire code fees. It also
rolled-out the electronic Fire Safety Inspection Certificate (eFSIC) and Fire Safety
Webinar Sessions to streamline the services and decrease the risk of their clients
in contracting COVID-19.

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 For CY 2020, the City received the following awards and citations:

 The City Government passed the 2019 Good Financial Housekeeping standards of
the Department of the Interior and Local Government;

 Navotas Vocational Training and Assessment (NAVOTAAS) Institute received the

Regional Kabalikat Award from the Technical Education and Skills Development
Authority (TESDA). The TESDA Kabalikat Awards is one of the primary reward
mechanisms of TESDA that give due recognition and honor to outstanding partners
from various sectors, such as Local Government Unit (LGU), on their contribution
in the promotion and development of the Technical Vocational Education and
Training (TVET). Navotas was selected based on its progressive and sustainable
initiatives which resulted in additional tech-voc courses and increasing number of
graduates every year;

 The Navotas SDO division-initiated Project GLACE (Global Learning through

Active Citizenship) was selected as the Best Project during the 20th Anniversary
Commemoration of UNESCO-APCEIU; and

 Unmodified Opinion as embodied in the Independent Auditor’s Report of the

Annual Audit Report for CY 2019 - Commission on Audit (COA).

D. Scope and Objective of Audit

The audit covered the accounts and operations of the City of Navotas for the period
January to December 31, 2020. The objectives of the audit are to: (a) be able to lend
credence to Management’s assertions on the financial statements; (b) recommend
agency improvement opportunities; (c) determine compliance with existing laws,
rules and regulations; and (d) determine the extent of implementation of prior years’
audit recommendations.

E. Auditor’s Opinion on the Financial Statements

The Auditor rendered an unmodified opinion on the fairness of presentation of the

financial statements of the City of Navotas for CY 2020.

F. Summary of Other Significant Audit Observations and Recommendations

1. The existence and accuracy of the reported balance of the Inventories and
corresponding expense accounts aggregating to P153.797 million and
P199.648 million, respectively, as at year-end were doubtful due to: (a)
unreconciled variance between the books of accounts and the Report on Physical
Count of Inventory (RPCI) in the amount of P121.302 million; and (b) outright

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 recognition as expenses upon procurement of supplies and materials amounting to
P147.200 million, contrary to the perpetual inventory method of recording
Inventories.

We recommended that Management:

a. Reconcile inventory records between the City Accounting Office (CAO) and
General Service Office (GSO); and

b. Prepare the necessary adjusting entries based on the result of reconciliation.

2. The reliability and accuracy of the reported Business Income-Hospital Fees in the
amount of P63.141 million as at year-end could not be ascertained due to:
(a) cash-basis recognition of revenues earned, resulting in understatement of
revenues and professional fees during CY 2020 by P1.832 million and
P15.668 million, respectively; (b) income loss due to non-application of the claims
for reimbursement in the amount of P0.416 million for Hospital Fees and
P0.304 million for Professional Fees; and (c) non-recognition of receivables as of
December 31, 2020, from various claims for reimbursements from
GOCCs/NGAs/LGUs and other concerned offices which granted financial
assistance, resulting in understatement of Receivables-Hospital Fees from various
institutions and Receivables-Professional Fees from PhilHealth as of
December 31, 2020 by P62.249 million and P16.151 million, contrary to the
pertinent provisions of the Government Accounting Manual (GAM) for Local
Government Units, Vol. 1, COA Circular No. 2020-004 dated January 31, 2020 and
IPSAS 9.

We recommended that Management make the necessary adjusting entries in the

books in the ensuing year to reflect the correct amount of Hospital Fees (thru
Government Equity) earned by the Navotas City Hospital and City Health Office,
as well as those Professional Fees of medical and non-medical professionals, which
is not limited only to cash collections for the year.

3. Unreliable balances of assets accounts - Real Property Tax (RPT) and Special
Education Tax (SET) Receivables amounting to P90.367 million and
P59.208 million, respectively, as well as the corresponding liability accounts -
Deferred RPT and Deferred SET accounts with the same amounts, due to:
(a) variances between the books of the CAO and the City Treasurer’s Office (CTO)
on the RPT Receivables/Deferred RPT and SET Receivables/Deferred SET in the
amounts of P0.546 million and P1.103 million, respectively. This is a reiteration of
prior year's audit finding under Paragraph no. 1, Part II of AAR 2019 on Navotas
City; (b) the propriety of the tax exempt properties in the City’s Assessment Roll
with fair market values (FMVs) totaling P1.676 billion for the 4,178 real property
units (RPUs) could not be ascertained due to lack of sufficient supporting
documents as required under Section 206 of the Local Government Code (LGC) of
1991. This is a reiteration of prior year's audit finding under Paragraph No. 1, Part

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 II of AAR 2019 on Navotas City;(c) the propriety of the tax exempt properties in
the “List of Exempted Properties" with total market value of P1.732 billion for the
4,206 RPUs, could not be relied upon because it includes property owners who are
not exempt from RPT as provided under Section 234 of the LGC; (d) all exempted
properties totaling 4,940 units with a total market value of P14.507 million in the
City’s 2020 Assessment Roll were replaced with “Registration Date” without
conducting assessments/reassessments on the said properties which is required in
the proper determination of the effectivity date for RPT, as provided in Section 6.E
of the Manual on Real Property Appraisal and Assessment Operations (MRPAAO),
hence, their original date of registration could not be readily determined;
and (e) non-compliance with the format of Assessment Roll deprives the City of
collecting proper and accurate amount of real property taxes.

We recommended that Management:

a. Reconcile the variances between the CTO and CAO books;

b. Prepare necessary adjusting entries to effect the reconciling items;

c. Require the submission/filing of sufficient documentary evidence from the

owners/administrators of industrial, commercial and residential properties that
were listed as exempted from taxes for the proper determination of their
assessed values and appropriate application of assessment levels;

d. Through the City Assessor re-assess the property and update the record to
determine the grantee of beneficial use of the properties under the name of the
government agencies exempted from taxation under the category of residential,
commercial and industrial, and impose the corresponding tax level and tax rate
for RPT and SET;

e. Revert to the respective original dates of registration and/or if there would be

changes in the dates, these should be based on the date when the actual
reassessment of the property was made;

f. Strictly comply with the format prescribed in the MRPAAO and other standard
operations and procedures in the classification, appraisal and assessment of real
property; and

g. Indicate in every property/tax declaration/assessment roll the appropriate use

codes for property/structure/machinery.

4. On-going projects with contract costs totaling P69.106 million were not recorded
in the Construction in Progress (CIP) account and completed projects with contract
costs totaling P11.022 million were not recorded in the appropriate PPE account.

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 We recommended that CAO –

a. Record under the CIP account the on-going projects with contract costs
totaling P69.106 million;

b. Record under the appropriate PPE accounts the completed infrastructure

projects with contract costs totaling P11.022 million; and

c. Henceforth, the City Engineering Office maintain a complete record/list of all

on-going infrastructure projects of the City as of the period and submit to the
CAO the said report for proper adjusting entries in the books.

The aforementioned observations together with the corresponding recommendations

were discussed with Management officials concerned during the exit conference on
July 7, 2021. Management views and comments were incorporated in the report, where
appropriate.

G. Status of Audit of Suspensions, Disallowance and Charges

There were no suspensions, disallowances, and charges as of year-end as stated in the

Statement of Audit Suspensions, Disallowances and Charges as of December 31, 2020.

H. Status of Implementation of Prior Years’ Audit Recommendation

Of the 66 audit recommendations embodied in the CYs 2019 and previous years’
Annual Audit Reports disclosed that, 27 or 40.91 percent were fully implemented,
29 or 43.94 percent were partially implemented and 10 or 15.15 percent were not acted
upon.

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