By: Doris C. Bongcac, Jose Santino S. Bunachita May 20,2016 - 10:39 PM

city hall

Just ‘tip of the iceberg:’ Transition team uncovers ‘millions of pesos’ in unaccounted for disbursements

Describing Cebu City’s finances as being in “disarray,” the team led by Acting City Mayor Margot Osmeña is now tracking millions of pesos funneled into what they believed were questionable disbursements authorized by suspended Mayor Michael Rama.

Initially, the team found that millions of pesos that were allotted as burial assistance, intelligence and discretionary funds could not be accounted for; that alleged irregularities attended the bidding of government contracts; and that millions of pesos were released as cash advances to even unqualified employees, revealed team member Ralph Sevilla.

Moreover, the city would have been in deep financial trouble, or even end up bankrupt, if not for the P8.3 billion generated by the controversial sale of city-owned lots at the South Road Properties, according to Osmeña.

Osmeña said the daily cash report released by the City Treasurer’s Office (CTO) showed that as of May 5, the city’s total cash deposits amounted to P8.4 billion, already including the P8.3 billion proceeds from the sale of SRP lots to the SM-Ayala consortium and to real estate developer Filinvest Land Inc. (FLI).

“What we have is from the SRP. Without that we have no money,” Ms Osmeña told Cebu Daily News yesterday.

Sevilla, a lawyer and member of the transition team of Mayor-elect Tomas Osmeña, added they were now in the process of accounting all the cash disbursements made during the year.

“There are two things that we wanted to know. First, the extent of use of City Hall funds, and second, how the money was spent? For now, we do not know the answers because we still do not have the data that we need. But one thing’s for sure, the city is in disarray now,” Sevilla told CDN by phone.

Sevilla noted that seeing a clear picture of the city’s finances would help incoming Mayor Osmeña to decide if his administration should still push through with his plan to rescind the sale of SRP lots. The Rama administration sold 26 hectares of SRP land to the SM-Ayala consortium and 19 hectares to FLI.

Sevilla said that if the city rescinds the sale, they would have to return the P8.3 billion in partial payment for the lots and pay a 12 percent interest per annum.

“But based on what we have seen so far, they city’s finances is bad and we are just seeing the tip of the iceberg,” he added.


On Ms Osmeña’s request, state auditors yesterday began a review of the city’s finances to give her a clearer picture of how much money the city actually has.

The CTO cash report showed that of the P8.4 billion in available funds, P7.6 billion was placed under the general fund, P598 million was under the city’s trust fund account, 238 million as Special Education Fund and P16 million as “ barrio fund.”

Transition team members found during their two-day meeting with department heads that cash advances running to millions of pesos were granted to employees who are not bonded. With disbursements not properly documented, Sevilla said he would not be able to say exactly how much cash advances were released, except to say that “this runs by the millions (of pesos).”

Last Tuesday, a day after she was appointed as acting mayor, Ms Osmeña wrote City Auditor Ma. Daisy Bercede requesting for a cash audit of the city’s disbursing and special disbursing officers in the “interest of public transparency and accountability.” The cash audit started yesterday.

Ms Osmeña, the city’s number one councilor, was appointed acting mayor on Tuesday after the Department of Interior and Local Government in Central Visayas (DILG 7) served the suspension of Rama, Vice Mayor Edgardo Labella and 12 city councilors for authorizing the release of P20,000 in calamity aid to each city employee and official in December 2013 that was later disallowed by the Commission on Audit (COA).

Sevilla said the members of the transition teams created by Acting Mayor Osmeña and her husband, the incoming mayor, decided early on to do an actual money count.

The transition team members — Sevilla, former councilor Augustus Pe Jr., former city legal officer Joseph Bernaldez and city registrar and lawyer Evangeline Abatayo — sat down yesterday with City Treasurer Diwa Cuevas, Budget Officer Marietta Gumia and City Accountant Mark Salomon.

During their discussions, Sevilla said they found that P48 million in Pagcor (Philippine Amusement and Gaming Corp.) fund was placed on time deposit with Banco de Oro.

Sevilla said this was questionable as the P4 million received each month by City Hall from Pagcor was supposed to be used for the city’s peace and order and environmental preservation initiatives, subject to monthly liquidation report submitted to Pagcor.

Sevilla recalled that when Tomas was mayor from 2004 to 2010, they kept a logbook that listed down all disbursements charged to the Pagcor fund.

The logbook system was discontinued by the Rama administration, said Sevilla, who was legal officer and Human Resource Management Office head during the Osmeña administration.


As to the burial fund, the city has been allotting at least P30 million a year for this project, which grants P10,000 in burial aid to families of departed city residents. The city would replenish the burial fund via a supplemental appropriation if it would get depleted before the year ended.

Sevilla said they were still trying to find out how much were Rama’s intelligence and discretionary funds because “when we asked who are the accountable officers, nobody can answer us.”

Cuevas, Sevilla said, also told the transition team that only Rama’s office knew how the intelligence and discretionary funds were used.

Sevilla feared that government money might have again been misappropriated or, worse, used by City Hall loan sharks.

In 2013, the Supreme Court Second Division upheld the conviction of former city assessor Eustaquio Cesa, former city administrator Allan Gaviola, former city accountant Edna Jaca and former City Hall chief cashier Benilda Bacasmas and ordered them to refund the P18.5 million that was embezzled from 1995 to 1998 by then city paymaster-turned-loan-shark Rosalina Badana.


Sevilla said they met with members of the city’s Bids and Awards Committee (BAC) on Thursday and also discovered anomalies in the bidding of contracts.

He said that the BAC members admitted there were instances when they proceeded with bidding out contracts even in the absence of an Approved Budget Contract (ABC).

When asked how they dealt with contracts that were awarded minus the corresponding appropriation, City Accountant Mark Salomon, who was in the meeting, told the transition team that they would just cancel the contract.

Sevilla said Salomon also revealed they would also return the payment that winning contractors spent to purchase bid documents.

“Grabeha na gyud sa City Hall violations. Mura ra gyud og ilang balay. Mura og ilang kabtangan (The violations are appalling. They treated City Hall like it’s their house; like they own its assets),” Sevilla said.

Also present in the meeting were Department of Social Welfare and Services (DSWS) head Ester Concha, Government Services Office (GSO) and BAC head Rolando Ardosa; and BAC members City Assessor Ferdinand Cañete, Cebu City Transportation Office (CCTO) head Rey Gealon, Office of the Building Officials (OBO) and Department of Engineering and Public Works (DEPW) head Jose Marie Poblete and Department of Public Services (DPS) head Dionisio Gualiza.

Cuevas yesterday maintained her office has nothing to hide.

“I am not afraid. Number one, I trust my DOs (disbursing officers),” she said in a phone interview.

Cuevas said she found no problem with cash audits as it is usually done ever year by the COA and more so this time when City Hall is preparing for the assumption of a new mayor.

As to the state of the city’s finances, Cuevas affirmed that if Osmeña would decide to withhold the use of the entire P8.3 billion that was paid as down payment by the SM-Ayala consortium and the FLI, then the city would really go bankrupt.

Cuevas admitted they began using the proceeds from the sale of SRP lots soon after they received the P8.3 billion in August last year, and even during the time when a case questioning the validity of the sale was brought against the city government in September.

Cuevas said P4.5 billion of the SRP down payment was the source of the city’s annual budget this year. The remaining money was placed under a time deposit account, she said.

Former Councilor Jose Daluz III, who headed the Committee on Awards, a special body created by Rama to handle the sale of SRP lots, insisted auditors have no business looking onto the sale of SRP lots as it was done via public bidding and both the sale and disposition of its proceeds were done within legal bounds.

“The SRP sale was aboveboard. We were the ones who received the money. We received the money from the buyers. I think the special audit doesn’t cover that. The special audit is about disbursement,” Daluz said.

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TAGS: bankrupt, bankruptcy, Cebu, Cebu City, Diwa Cuevas, finance, Funds, Margot Osmeña, Mike Rama, money

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