BAGUIO CITY — City Treasurer Alex Cabarrubias informed the Baguio City Council that the city’s funds, initially amounting to P4.4 billion and placed in time deposits, had significantly decreased to P1.1 billion in compliance with Audit Observation Memorandum (AOM) No. 2024-006.
During the city council’s regular session on January 27, 2025, Cabarrubias told the members of the city council that the issue had long been addressed and that he was unsure why the matter had resurfaced publicly.
He explained that 75% of these accounts in time Deposits had been terminated and returned to the current accounts.
He described the termination as a missed opportunity as there would no longer be interests to be generated for public welfare.
In his response letter to the Commission on Audit dated April 22, 2024, Cabarrubias explained that he was tempted to place the funds in time deposits to take advantage of the high interest rates which resulted in the city earning P322.73 million in interest income from 2018 to 2023.
Despite placing the funds in time deposits, Cabarrubias stated that the city government remained financially stable, ensuring that obligations were paid on time and no payments were delayed to these deposits.
He also underscored that the time deposits were limited to 180 days or six months which was shorter than the average duration of government projects.
He assured the COA that the city would comply with the audit recommendations but appealed that the terminations or closure of the time deposit accounts occur only upon their maturity to avoid financial losses.
He further said in his letter that the city had already instructed the banks to terminate the time deposit accounts once they mature.
Cabarrubias told the city council members that COA had not responded or provided a dissenting opinion to his letter.
Given the absence of a dissenting opinion, Councilor Jose Molintas suggested that COA might have accepted Cabarrubias’ justification.
The city treasurer stressed that the funds placed in time deposits were not savings but allocations intended to cover specific projects.
He said delays in implementation had led to these funds being idle, prompting the use of time deposits to earn interest.
Cabarrubias justified that the city government remained financially stable, ensuring that all obligations were paid on time and no payments were delayed due to these deposits.
He also underscored that the time deposits were limited to 180 days or six months which was shorter than the average duration of government projects.
Vice Mayor Faustino Olowan said instead of criticism, the efforts to maximize idle funds through time deposits should be commended.
Olowan urged the City Treasury Office and the City Budget Office to explain this situation to the public, especially since the issue had resurfaced despite resolutions being sought in 2024.
The COA Audit Report informed the city government of its non-adherence to COA Circular 92-382.
It showed “discrepancies” in the city’s management of funds, particularly concerning the placement of idle funds in time deposits or high yield savings accounts (HYSA).
According to the report, the city government had placed a total amount of P4.4 billion from the city’s general fund into time deposit/HYSA accounts as of December 31, 2023, surpassing the specified limit of P695,005,426.93 or the amount of the idle fund under the General Fund allowed to be invested under time deposit for the first semester of 2024.
The audit report recommended unloading the excessive investment in time deposits to address financial imbalances.
It also emphasized the need for strict compliance with COA circulars and the adoption of a comprehensive investment policy by the city council to ensure prudent financial management and internal controls.
Under City Council Resolution 282-2001 approved in 2001, the city treasurer is authorized to deposit identified idle funds in time deposit accounts, subject to conditions such as maintaining a minimum interest rate of 7.5%.
However the audit report revealed that the interest rates on the time deposits were below the minimum agreed rate of 7.5% as per the resolution.
Councilor Betty Lourdes Tabanda, in two separate council sessions (April 15, 2024 and January 27, 2025), questioned why there is a significant amount of unimplemented projects leading to excess funds in the bank.
During the session on April 15, 2024, Tabanda said this indicated “poor” management since funds were not being utilized as intended.
Cabarrubias enumerated the following reasons for non-implementation:
- failure of bidding,
- right-of-way issues, and
- required clearances from other government agencies.
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