NOTES TO FINANCIAL STATEMENTS

(All Amounts in Philippine Peso unless otherwise stated)

Note 1. General/Agency Profile

On December 8, 1999 House Bill No. 8868 entitled an “Act Converting the
Municipality of Malabon into a Highly Urbanized City to be known as the “City
Of Malabon” approved by the House of Representatives and on January 21, 2001
the same Bill No. 8868 was approved by the Senate. This bill was signed into
law known as Republic Act. No. 9019 entitled “Charter of the City of Malabon”
by the President of the Republic of the Philippines, Her Excellency Gloria
Macapagal Arroyo on March 5, 2001.

In line with Malabon City’s Mission to “Magbigay Ng Angkop at Sapat na

Paglilingkod Mula sa Puso Para sa Lahat. #PROMISE!”, and towards the
attainment of Malabon’s Vision to the “Mapagkalingang Pamahalaan sa
Maginhawa at Masayang Malabonian”, the City will continue to pursue
strategies on Poverty Reduction, improving Organizational Attainment,
providing sufficient Infrastructure Scheme, and addressing Environmental
concerns.

The City Malabon was a recipient of the 2018 Seal of Good Financial
Housekeeping and 2018 Seal of Good Local Governance by the Department of
the Interior and Local Government (DILG) as an outcome of its tenacious and
steadfast commitment to public service.

Note 2. The financial statements of the City have been prepared in accordance with and
comply with the International Public Sector Accounting Standards (IPSAS). The
financial reports are represented in pesos, which is the functional and reporting
currency of the LGU and all values are rounded to nearest thousand (P000). The
accounting policies have been applied starting in the year 2015.

Note 3. Summary of significant accounting policies.

3.1 Basis of Accounting

The financial statements are prepared on an accrual basis in accordance with

the International Public Sector Accounting Standards (IPSAS) issued by the

11
 Commission on Audit per COA Resolution No. 2014-003 dated January 24,
2014.

The financial statements have been prepared on the basis of historical cost,
unless stated otherwise. All expenses are recognized when incurred and
reported in financial statements in the period to which they relate. The
Statement of Cash Flows is prepared using the direct method.

3.2 Consolidation

The City maintains a General Fund (GF) for monies and resources received
and disbursed from the Local Treasury, a Special Education Fund (SEF)
which are shares in the proceeds of additional tax on real properties for
purposes of operation and maintenance of public schools, and Trust Fund
(TF) for specific purposes.

The City’s GF also maintains funds for its special account such as the City
of Malabon University (CMU). It is to be noted that CMU was created by
virtue of City Ordinance No. 06-2003 otherwise known as the Ordinance
converting the Malabon City College to City of Malabon University. From
its humble beginning in the year 1994 when it was formerly known as the
Malabon Community College with approximately 200 students temporarily
housed at the Panghulo National High School, the school population has
grown to about 5,000 students in its permanent home in Maya-Maya St.
Barangay Longos, Malabon.

The City likewise SEF for the supplementary annual budgetary needs for the
operation and maintenance of public schools within the City through the
Annual SEF Budget. The formulation, approval and utilization of the SEF
Budget are the responsibility of the Local School Board (LSB) of the City.

TF is made up of private and public monies which have officially come into
the possession of our local government for the fulfillment of specific
obligations. These transfers from other government agencies are funds
received for specific projects undertaken by the city for specific purposes.
Under the City’s TF accounts are special accounts which consist of newly
established accounts for Ospital ng Malabon (ONM) and Barangay Health
Centers (BHC) both for transactions involving Professional Fees and Health
Care Institution Charges. These are in addition with the stable TF accounts
of Special Local Road Fund (SLRF), Botika ng Lungsod (BNL) and the
Early Childhood Care & Development (ECCD).

12
 The City maintains special accounts under the GF for the following public
utilities and other economic enterprises, loans, and other contributions for
specific purposes; and development projects funded from the share of the
local government concerned from the internal revenue collections and
development of national wealth and such other special accounts which may
be created by law or ordinance, to wit:

1. GF Proper
2. Market Operation
3. Slaughterhouse Operation
4. ONM
5. Pagamutang Bayan ng Malabon (PBM Hospital)
6. City of Malabon Polytechnic Institute (CMPI)
7. CMU
8. Oreta Sports Center
9. Medium Rise Housing (MRH) Projects
10. Malabon Parking Space
11. Operation of Malabon Cemetery
12. 20% Development Fund
13. Loans

3.3 Revenue Recognition

Revenue from non-exchange transactions

Taxes, fees and fines

The City recognizes revenues from taxes and fines when the event occurs
and the asset recognition criteria are met. To the extent that there is a related
condition attached that would give rise to a liability to repay the amount
liability is recognized instead of revenue. Other non-exchange revenues are
recognized when it is improbable that the future economic benefit or service
potential associated with the asset will flow to the entity and the fair value
of the asset can be measured reliably.
Revenue from exchange transactions

Interest income

Interest income is accrued using the effective yield method. The effective
yield discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount. The method applies

13
 this yield to the principal outstanding to determine interest income each
period.

Rental income

Rental income arising from operating leases on investment properties is

accounted for on a straight-line basis over the lease terms and included in
revenue.

Rental income comes from use of government properties/facilities, such as

rent/lease of MRH stalls, city function rooms/buildings, fees on storage,
warehousing, use of heavy equipment of other government agencies, and
receipt of contingent rent. Contingent rent are additional rent income on top
of the agreed rate as provided in the lease agreement. Rental income is
recorded/accounted under the GF and emanates from the following
economic enterprises:

a. Malabon City Hall Building

b. Penthouse
c. Malabon City Hall Lobby
d. Oreta Sports Center
e. Malabon Amphitheater
f. MRH

3.4 Property, plant and equipment

All property, plant and equipment (PPE) are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the items. When significant parts of
property, plant and equipment are required to be replaced at intervals, the
City recognizes such parts as individual assets with specific useful lives and
depreciates them accordingly. All other repair and maintenance costs are
recognized in surplus or deficit as incurred. Where an asset is acquired in a
non-exchange transaction for nil or nominal consideration the asset is
initially measured at its fair market value.

Depreciation on assets is charged on a straight-line basis over the useful life

of the asset, as prescribed by COA.

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3.5 Leases

City as a lessor

Leases in which the City does not transfer substantially all the risk and
benefits of ownership of an asset are classified as operating leases.

Rent received from an operating lease is recognized as income.

3.6 Financial instruments

Financial assets

Initial recognition and measurement

Financial assets are classified as financial assets at fair value through surplus
or deficit, loans and receivables, held-to-maturity investments or available-
for-sale financial assets, as appropriate. The City determines the
classification of its financial assets at initial recognition at transaction cost.

The City’s financial assets include: cash and short-term deposits; trade and
other receivables; loans and other receivables.

Subsequent measurement

The subsequent measurement of financial assets depends on their

classification.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. Losses
arising from impairment are recognized in the surplus or deficit.

Derecognition

The City derecognizes a financial asset or where applicable, a part of a

financial asset or part of a group of similar assets when:

a. The rights to receive cash flows from the asset have expired or is
waived; and
15
b. The City has transferred its rights to receive cash flows from the asset or
has assumed an obligation to pay the received cash flows in full without
material delay to a third party and either: (a) the City has transferred
substantially all the risks and rewards of the asset; or (b) the City has
neither transferred nor retained substantially all the risks and rewards of
the assets, but has transferred control of the asset.

Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IPSAS 29 are classified as financial

liabilities at fair value through surplus or deficit or loans and borrowings, as
appropriate. The City determines the classification of its financial liabilities
at initial recognition.

All financial liabilities are recognized initially at fair value and, in case of
loans and borrowings, plus directly attributable transaction costs.

The City’s financial liabilities include trade and other payables, loans and
borrowings.

Subsequent measurement

The measurement of financial liabilities depends on their classification.

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are

subsequently measured at amortized cost using the effective interest method.
Gains and losses are recognized in surplus or deficit when the liabilities are
derecognized as well as through the effective interest method amortization
process.

Derecognition

16
 A financial liability is derecognized when the obligation under the liability
is discharged or cancelled or expires.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount
reported in the consolidated statement of financial position if, and only if,
there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the assets and
settle the liabilities simultaneously.

3.7 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash at bank, deposits
on call and highly liquid investments with an original maturity of three
months or less, which are readily convertible to known amounts of cash and
are subject to insignificant risk of changes in value. For the purpose of the
consolidated statement of cash flows, cash and cash equivalents consist of
cash and short-term deposits.

3.8 Inventories

Inventory is measured at cost upon initial recognition. Inventories are

recognized as an expense when deployed for utilization or consumption in
the ordinary course of operations of the City.

3.9 Changes in accounting policies and estimates

The City recognizes the effects of changes in accounting policy

retrospectively. The addition of impairment, recognition and measurement
and disclosure policy provides additional information

The City recognizes the effects of changes in accounting estimates

prospectively by including in surplus or deficit.

3.10 Budget information

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 The Annual Budget is prepared on the accrual basis, that is, all planned costs
and income are presented in a single statement to determine the needs of the
City. As a result of the adoption of the accrual basis for budgeting purposes,
there are no basis, timing or entity differences that would require
reconciliation between the actual comparable amounts and the amounts
presented as a separate additional financial statement in the statement of
comparison of budget and actual amounts. Explanatory comments are
provided in the notes to the annual financial statements.

3.11 Significant judgments and sources of estimation uncertainty

Judgments

In the process of applying the City’s accounting policies, Management has

made judgments, which have the most significant effect on the amounts
recognized in the consolidated financial statements.

Operating lease commitments – City as lessor

The City has entered into property leases of certain of its properties. The
City has determined, based on an evaluation of the terms and condition of
the arrangements, that it retains all the significant risks and rewards of
ownership of the properties and accounts for the contract as operating
leases.

Estimates and assumptions

The City based its assumptions and estimates on parameters available when
the consolidated financial statements were prepared. However, existing
circumstances and assumptions about future developments may change due
to market changes or circumstances arising beyond the control of the City
Government. Such changes are reflected in the assumptions when they
occur.

Useful lives and residual values

The useful lives and residual values of assets are assessed using the
following indicators to inform potential future use and value from disposal:
a. The condition of the asset based on the assessment of experts employed
by the city;

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 b. The nature of the asset, its susceptibility and adaptability to changes in
technology and processes;
c. The nature of the processes in which the asset is deployed; and
d. Changes in the market in relation to the asset.

Note 4. Cash and Cash Equivalents

2018 2017
Cash on Hand
Cash- Local Treasury 29,717,421 43,082,915
Petty Cash - 240,560
Cash In Bank-Local Currency
Cash in Bank - Local Currency,
Current Account 673,154,315 888,815,948
Cash in Bank - Local Currency, 96,86 102,98
Time Deposit 6 8
Total 702,968,602 932,242,412

The Cash and Cash Equivalent consists of undeposited collection, unliquidated

cash advance and various deposits held in trust consisting of Barangay shares,
proceeds from sales of medicines- BNL, transfer of fund from Early Childhood
Care Council, PhilHealth, Department of Health (DOH), Philippine Charity and
Sweepstakes Office (PCSO) share/ Endowment fund, unutilized calamity fund-
Malabon Disaster Risk Reduction and Management (DRRM) and other trust
deposits.

Cash Local Treasury represents undeposited collection as of the end of the year.
These are proceeds of income and other receipts on the last working day of the
calendar year and will be deposited on the first working day of the next calendar
period.

Petty Cash represents unliquidated cash advances granted for payment of other
expenses.

Cash in Bank– Local Currency represents tax and other collections deposited
and interest earned based on the prevailing bank deposit rates. Short-term
deposits are made for varying periods, depending on the immediate cash
requirements of the city and earn interest at the respective short-term deposit
rate. The SEF bank balance amounting to P162,142,092 is inclusive of advance
collection.

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 The decrease in Cash in Bank was due to the additional investment made by the
management. The “free cash” of the city was deposited as high yield savings
account/time deposits as per City Resolution No. 12-2018.

Note 5. Investments

2018 2017
Investments
Cash in Bank - LCCA-Time Deposits 558,853,109 1,497,215
Total 558,853,109 1,497,215

Investment was previously classified as non-current assets for previous years.

However, to comply with IPSAS, the account was reclassified as current which
mature within 120 days.

The investments of the City were made in compliance with SP Resolution

12-2018 and met the investment requirements for High Yield Savings Account
(HYSA) as a peso account wherein funds of a specific amount are given pre-
determined competitive rates for a fixed term. Passbook also serves as a proof
of deposit. HYSA account is offered to institutional clients only such as the city
government by Land Bank of the Philippines (LBP).
HYSA Accounts Amounts
HYSA VI Account # xxxxxxx117 1,509,370
HYSA I Acct Nos. xxxx-xxx8-16, 24, 32, 40, 59, 67, 75, 83, 91 & xxx-xxx9-05 50,358,149
HYSA 3 Acct Nos. xxxx-xxx2- 78, 86, 94, / xxxx-xxx3-08, 16 50,354,627
HYSA 3 Acct Nos. xxxx-xxx2-27, 35, 43, 51, 60 dated 6/30/2018 25,160,288
HYSA 4 Acct Nos. xxxx-xxx3-59, 67, 75, 83, 91, / xxxx-xxx4-05, 13, 21, 30, 48 50,320,465
HYSA 5 Acct Nos. xxxx-xxx5-02, 10, 29, 37, 45, 53, 61, 70, 88, 96 50,322,923
HYSA 6 Acct Nos. xxxx-xxx6-77, 85, 93 /xxxx-xxx7-07, 15, 23, 31, 40, 58 & 66 50,283,032
HYSA 7 Acct Nos. xxxx-xxx8-98 / xxxx-xxx9-01, 10, 28, 36 & 44. 30,149,418
HYSA 8 Acct Nos. xxxx-xxx8-98 / xxxx-xxx1-01, 10, 28, 36, 44, 52, 60, 79 & 87 50,178,755
HYSA 9 Acct Nos. xxxx-xxx2-33 50,176,415
HYSA10 Acct Nos. xxxx-xxx5-00 50,039,667
HYSA11 transfer from account # xxxx-xxx9-92 100,000,000
GF HYSA 558,853,109

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 The City limits its exposure to credit risk by investing with only reputable
financial institutions that have a sound credit rating, which are within the
specific guidelines set in accordance with the City Finance Committee and the
Sanggunian approved investment policy. Consequently the City does not
consider there any significant exposure to credit risk.

Note 6. Receivables

2018 2017
Loans and Receivables Accounts
Accounts Receivable 12,090 1,725
150,121,81
Real Property Tax Receivable 61,907,893 3
24,457,06 78,291,78
Special Education Tax Receivable 5 5
86,377,04 228,415,32
Total 8 3

The Accounts Receivable represents returned checks due to missing signature

and overpayment to a Job Order Personnel (Watchman). Special Education Tax
(SET) Receivable represents unrealized estimated real property tax receivables.

Real Property Tax Receivable represents unrealized estimated real property tax
(RPT) receivables. The setting-up of RPT Receivables is based on Tax Rules
Report from the Assessor’s Office Collections.

The decrease in RPT Receivable was due to the implementation of City

Ordinance No. 18-2017 which grants 20% discount to those who will pay their
taxes early.

2018 2017
Inter-Agency Receivables
Due from National Government Agencies 374,747 2,972,170
Total 374,747 2,972,170

Due from National Government Agencies includes balances taken from the net
difference of over taxes withheld from heads and employees for 2018, which is
remitted already to the Bureau of Internal Revenue (BIR) amounting to P117,744

21
and CMU’s over remittance to BIR of tax withheld for prior year and remitted
this year, 2018 thru Electronic Tax Payment System (ETPS) to BIR amounting
to P226,045. It also includes unsettled amount of P23,400 from Division of City
School-Malabon and double remittance on value added tax withheld from
suppliers and contractors.

The Due from NGA’s represents the doubles remittance of withholding taxes last
year. This amount was deducted to the remittances of withholding taxes this CY
2018.

Net of reciprocal accounts – Intra Agency Receivable account

2018 2017
Intra - Agency Receivables
Due from Other Funds 11,506 (132,776)
Total 11,506 (132,776)

The Due from Other Funds is a reciprocal account of Due to Other Funds
reflected under the Intra-Agency Payables. This also includes amount of interest
earned by Trust Fund regarding late deliveries charged from various contractors
from 2016 to 2018 amounting to P126,317 and P474,061, respectively.

2018 2017
Intra - Agency Receivables
Due from Other Funds 1,033,864 125,244
Intra- Agency Payables
Due to Other Funds (1,022,358) (258,020)
Total 11,506 (132,776)

2018 2017
Advances
Advances to Special Disbursing Officer 12,310,505 45,486,142
Total 12,310,505 45,486,142

The amount of P4,722,000 (GF) in Advances to Special Disbursing Officer is the

remaining advances from Cash Advance granted for expenses related to
educational support, financial assistance to legal heir of senior citizens, barangay
year end assembly, infant and child feeding program and senior pedestrian
patroller wages subject for liquidation.

The decrease in advances to SDO was due to the effort of the management to
implement the immediate liquidation of all cash advances.

22
 2018 2017
Other Receivables
Receivables - Disallowances/Charges 11,086,980 11,086,980
Due from Officers and Employees 9,381,782 9,358,953
Other Receivables 1,636,462 1,308,672
Total 22,105,224 21,754,605
Receivables – Disallowances/Charges are disallowances that become final and
executory, which includes the amount of P10,327,000 derived from payroll
padding. The City Legal Department has made an appropriate action and filed
the case in court.

Due from Officers and Employees are overdue unliquidated cash advances of
various accountable officers (AO) with cases filed in court. This includes
overpayment of salaries and unsettled cash advances totaling P836,588 and
unreturned cash of P121,160 from AO who absconded in December, 1999.

Other Receivables consists of old dishonored checks amounting to P383,678

which are yet to be written off and also includes amount to be collected from
CMU Students who have availed of the CHED- Financial Assistance Program. It
also consists of Livelihood Projects Funds, overpaid bail bond and tax deficiency
on wages earned for the calendar years 2015 and 2016.

As at December 31, 2018, the aging analysis of current receivables is as follows:

Neither Past due but not impaired

Receivable Account Total past due or
impaired < 30 30-60 days > 60 days
days
Accounts Receivable 12,090.09 - 10,059.36 - 2,030.73
Real Property Tax 61,907,8 61,907,89
Receivable 92.60 - - - 2.60
Special Education Tax 24,457,0 24,457,06
Receivable 64.74 - - - 4.74
Due from National 374, 374,74
Government Agencies 746.76 - - - 6.76
Due from Other Funds 1,033,864.08 - - - 1,033,864.08
Advances to Special 12,310, 4,300 8,010,50
Disbursing Officers 505.00 - ,000.00 - 5.00
Receivables - 11,086, 11,086,9
Disallowances/Charges 980.10 - - - 80.10
Due from Officers and 9,381,7 9,381,78
Employees 82.42 - - - 2.42
Other Receivables 1,636,461.89 - 327,790.00 - 1,308,671.89
Total 122,201,387.68 - 4,637,849.36 - 117,563,538.32

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Note 7. Inventories

2018 2017
Inventory Held for Distribution
Medical, Dental and Lab Supplies for 146,880 146,880
Distribution
Inventory Held for Consumption
Office Supplies Inventory 802,990 1,036,228
Accountable Forms, Plates and Stickers 1,874,466 2,416,100
Non - Accountable Forms Inventory 1,297,773 285,475
Food Supplies Inventory 3,458,800 -
Drugs and Medicines Inventory 2,783,076 52,726
Medical, Dental and Laboratory Supplies 10,838,656 6,477,805
Inventory
Agricultural and Marine Supplies 215,840 -
Inventory
Textbooks and Instructional Materials 119,480 119,480
Inventory
Other Supplies and Materials Inventory 6,351,814 958,415
Total 27,889,774 11,493,108

The increase in Medical, Dental and Laboratory Supplies Inventory was due to
the purchase of supplies for Ospital ng Malabon (ONM).

Medical, Dental and Laboratory Supplies for distribution consist of unused

measuring inventories for healthy food on Operation Timbang of City Health
Department (CHD).

Office Supplies Inventory includes supplies purchased for use by various city
departments/ offices purchased in the last quarter of CY 2018.

Accountable Forms, Plates and Stickers consist of official forms purchased from
National Printing Office (NPO) and BIR for use of Treasury Department. This is
in addition to commercial checkbooks acquired for LBP bank accounts of the
City.

24
 Non - Accountable Forms Inventory consists of Application Forms for
New/Renewal of Mayor's Permit, Quarterly Billing, Tax Order of Payment,
Occupational ID of Business Permit and Licensing Office (BPLO) and Form
No. 7 of Local Civil Registry (LCR).

Food Supplies Inventory represents the food stocks in storage box to disaster
victims (Stockpile) ready for provision by City Social Welfare and Development
Department (CSWDD).

Drugs and Medicines Inventory represents stockpile of drugs and medicines for
disaster preparedness and emergency response readiness of the CHD and health
centers.

Agricultural and Marine Supplies Inventory includes supplies for environment

protection/preservations such as the implementation of greening, beautification
and landscaping of parks and vicinity of government buildings, City landmarks
and the like.

Textbooks and Instructional Materials Inventory consist of textbooks and

instructional materials including flipcharts, video clips/slides, and the like,
purchased/received for use in the City library operation.

Other Supplies and Materials Inventory in mainly pertains to supplies purchased

for the emergency operation materials and last quarter supplies for disaster and
general services purposes, respectively.

The increase was due to purchase of other supplies of various offices.

Note 8. Prepayments and Deferred Charges

2018 2017
Prepayments
Advances to Contractors 4,420,872 -
Deferred Charges
Discount on Advance Payments 45,525,159 24,132,851
Total 49,946,031 24,132,851

Advances to Contractors consist of amount released as 15% Mobilization Fee for

construction of three-storey government building with deck in F. Sevilla
Boulevard Barangay San Agustin as authorized by law.

25
 Discount on Advance Payments consist of RPT basic advance payment and SET
payments received for CY 2019 with 20 percent assistance per City Ordinance
No. 18-2017.

Note 9. Property, Plant and Equipment

Carrying Carrying
Amount (CA) as Amount as of
2018
Account Title of Net Adjustments Additions December 31,
Depreciation
December 31, 2018
2017
Land 88,487,987 - - - 88,487,987
Other Land
Improvements 167,562,908 - 11,835,802 27,710,034 151,688,677
Road Networks 128,222,250 - 21,879,365 6,059,274 144,042,340
Flood Control
System 14,379,976 - 1,868,380 555,142 15,693,213
Sewer Systems 275,791 - - 10,299 265,492
Parks, Plazas and
Monuments 1,252,224 - 6,332,514 212,707 7,372,031
Other Infrastructure
Assets 85,592,549 - 107,384,788 23,043,920 169,933,417
Buildings 331,312,248 - 4,420,651 24,113,622 311,619,276
School Buildings 130,636,883 (224,168) 3,297,169 7,684,495 126,473,725
Hospitals and Health
Centers 49,434,085 - 8,606,826 2,689,022 55,351,889
Other Structures 45,933,199 - 5,933,481 8,196,975 43,669,704
Machinery - 19,085 - 19,085
Office Equipment 13,451,236 (536,052) 4,034,935 4,627,612 13,394,611
Information &
Communication
Technology Equipt. 41,402,176 (146,624) 8,945,693 19,106,187 31,388,306
Agricultural and
Forestry Equipment - - 210,880 1,575 209,305
Communication
Equipment 26,614,541 (229,941) 28,276,050 6,194,908 48,925,624
Disaster Response
and Rescue
Equipment 55,146,973 6,850,081 - 3,800,438 44,496,455
Military, Police and
Security Equipment 1,065,977 - - 199,125 866,852
Medical Equipment 114,250,170 34,766,005 - 10,796,932 68,687,233
Sports Equipment 1,947,664 - 272,590 185,238 2,035,017
Technical and
Scientific
Equipment 85,078 - 387,037 15,984 456,131
Other Machinery
3,155,716 (45,809) 1,972,229 1,395,601 3,778,153

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 Carrying Carrying
Amount (CA) as 2018 Amount as of
Account Title Net Adjustments Additions
of Depreciation December 31,
December 31, 2018
and Equipment 2017
Motor Vehicles 49,319,558 - 19,879,687 14,741,227 54,458,018
Watercrafts 1,693,093 - - 239,940 1,453,153
Other Transportation
Equipment 315,381 - 4,773,000 107,870 4,980,511
Furniture and
Fixtures 29,128,966 (478,977) 1,247,934 3,417,899 27,437,978
Books 281,507 - 2,319,929 9,448 2,591,988
Construction in
Progress-
Infrastructure Assets - - 21,151,850 - 21,151,850
Construction in
Progress-Bldgs &
Other Structures 99,484,660 87,870,461 - - 11,614,198
Other Property,
Plant and Equipment 136,042,859 (67,501) 121,159 5,854,700 130,376,819
Total 1,616,475,656 127,757,474 265,171,035 170,970,176 1,582,919,040

All Property, Plant and Equipment (PPE) are stated at cost less accumulated
depreciation. Cost includes expenditure that is directly attributable to the
acquisition of the items. Depreciation on assets is charged on a straight-line
basis over the useful life of the asset.
Adjustments for Prior Year 2017 carrying amount balances were made
amounting to P56,091,292.

The adjustment of P87,870,461 pertains to the closing of Construction in

Progress - New Pagamutang Bayan ng Malabon.

Note 10. Intangible Assets

2018 2017
Intangible Assets
Computer Software 10,950,000 6,297,500
Total 10,950,000 6,297,500

Additions to Computer Software consist of installation of Executive

Information System & Order of Payment System Update, Revenue Generating
& Financial Management System Enhancement and Upgrade Project,
Enhancement & Upgrading of Hospital Management Information System of
Ospital ng Malabon.

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Note 11. Liabilities

2018 2017
Current
Financial Liabilities
Payables
Accounts Payable 214,286,742 126,762,110
Due to Officers and Employees 2,707,462 4,021,298
Bills/Bonds/Loans Payable
Loans Payable - Domestic 9,702,032 21,536,683
Provisions
Other Payables - 41,364,567
Total Financial Liabilities 226,696,236 193,684,658

2018 2017
Non-Current
Financial Liabilities
Bills/Bonds/Loans Payable
Loans Payable - Domestic 42,982,157 48,229,909
Total Financial Liabilities 42,982,157 48,229,909

Accounts Payables are year-end liabilities and obligated amount for payment to
various suppliers/contractors upon receipt of goods or services amounting to
P166,757,459 in GF.

Due to Officers and Employees consist of year end unclaimed salaries, wages,
honoraria, tax refund of various officials/ employees and year-end payables on
personal services amounting to P1,779,395 in GF.

Loans Payables- Domestic are loans covered by new term loan agreement with
the LBP to the City Government of Malabon relative to the following:

Date of Amount of
Lending Agency Maturity Purpose
Approval Loan
LBP Malabon 12/23/2009 12/23/2019 3,454,444 Various infrastructure
Branch projects

-do- 08/17/2017 08/16/2024 31,949,464 Hospital equipment of

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 Date of Amount of
Lending Agency Maturity Purpose
Approval Loan
Ospital ng Malabon
-do- 08/17/2017 11/17/2024 7,875,000 Bahay Pag-Asa
Building Project

-do- 12/20/2017 12/20/2024 4,951,000 Upgrading and

Rehabilitation of
Banragay Hulong
Duhat Library
-do- 10/30/2018 12/20/2027 4,454,280 Construction of Three
Storey Government
Building with Deck
Total 52,684,188

2018 2017
Inter - Agency Payables
Due to BIR 10,086,120 11,103,519
Due to GSIS 1,968,451 6,635,309
Due to Pag – IBIG 1,300,143 1,516,287
Due to PhilHealth 50,759 488,456
Due to NGAs 95,745,564 179,448,039
Due to GOCCs 71,984,000 71,984,000
Due to LGUs 25,373,668 5,205,218
Total 206,508,705 276,380,828

Due to BIR consist of amounts withheld from suppliers and contractors. Due to
GSIS, Due to Pag-IBIG and Due to PhilHealth are unremitted contributions
withheld from officials/employees and members for premiums, loans and
contributions. Delay in remittance of Pag-IBIG membership contributions
and/or loan amortization was due to lack of RTN and/or Pag-IBIG Membership
Identification (MID) Number of members. Overall the remaining balances on
the first four accounts are remittances deducted from salaries of officials and
employees due to their respective government agencies to be remitted on the
month following the month for which these were deducted.

Included in the Due to NGAs are share from building permit fees collections
subject for remittance to the Bureau of Treasury. It also consists of financial
assistance, transferred fund and receipt from various NGAs subject for
liquidation upon completion of the project reconciliation with Treasury
Department and Barangay.

Due to LGUs represents 30 percent RPT- Barangay Share or Community Tax

Certificate (CTC) share and Anti Littering Fees subject for transfer the

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following month. It also consists of Barangay CTC collection subject for
reconciliation with the Treasury Department and Barangay.

2018 2017
Intra- Agency Payables
Due to Other Funds 1,022,358 258,020
Total 1,022,358 258,020

Due to Other Funds are collections of Trust Fund deposited to General Fund
account. It also comprises of market collections which are paid under protest,
bank interest of various TF LBP and PNB accounts. The account is a reciprocal
account of Due from Other Funds.
See Note 11 for the elimination of reciprocal accounts.

2018 2017
Trust Liabilities
Trust Liabilities 48,377,974 113,736,974
Bail Bonds Payable 224,490 -
Guaranty/ Security Deposits Payable 9,291,679 4,196,667
Customers' Deposits Payable 171,000 181,000
Total 58,065,143 118,114,641

Trust Liabilities are the receipt of amount held in trust for specific purpose
wherein the balance is the net result for payment or settlement of the liability
or compliance of condition.

Bail Bonds Payable arises from the receipt of cash bond from a person who is
in the custody of the law to guaranty his appearance in court at the appointed
day and time or the compliance with the conditions of the bond, net of refund
or forfeiture of the bond.

Guaranty deposits payable are retention fees to guaranty performance by the

contractor of the terms of the contract. Customers’ Deposits Payables consist
of rental/security deposit for space lease in the City.

Customers’ Deposits are the receipt of cash deposits from customers for
goods/services to be delivered and property to be leased wherein upon
application of the deposit to the cost of the goods/services delivered and of the
damages to the leased property.

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 2018 2017
Deferred Credits/ Unearned Income
Deferred Real Property Tax 61,907,893 150,121,813
Deferred Special Education Tax 24,457,065 78,291,785
Other Deferred Credits 227,815,466 121,577,460
Total 314,180,424 349,991,058

The Other Deferred Credits amounting to P227,815,466 are tax credits on RPT
derived from advance payments of RPT, Tax Credits from Business Taxes and
SEF and RPT Paid Under Protest.

2018 2017
Provisions
Other Payables
Current 37,759,604 -
Non-Current 4,149,454 11,239,357
Total 41,909,059 11,239,357

Other Payables are amounts withheld from officials and employees for loan
contribution due to Malabon City Government Employees Multi-Purpose
Cooperative (MCGEMPC) and will be remitted immediately on the month
following the month for which these were deducted. It also consist of RPT
payment under protest by Globe Telecommunication amounting to P5,235,250,
RPT payment for redemption price of P919,282, purchase price on auction sale
held last November, 2014 of P5,486,786, bid bond deposit and MRH cash
bond deposit and Botika ng Lungsod collections.

Note 12. Tax Revenue

2018 2017
Tax Revenue - Individual and
Corporation
Professional Tax 324,925 328,225
Community Tax 12,164,436 11,037,580
Tax Revenue - Property
Real Property Tax - Basic 169,407,976 169,727,031
Discount on Real Property Tax - Basic (15,906,838) (23,554,583)

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 2018 2017
Special Education Tax 136,639,534 140,064,137
Discount on Special Education Tax (12,317,612) (18,442,756)
Real Property Transfer Tax 18,996,642 14,803,170
Tax Revenue - Goods and Services
Business Tax 299,425,761 261,804,129
Tax on Delivery Trucks and Vans 2,540,360 1,912,173
Franchise Tax 21,380,488 18,688,456
Tax Revenue - Fines and Penalties
Tax Revenue - Fines and Penalties - 16,402,528 19,048,505
Property Taxes
Tax Revenue - Fines and Penalties - 13,620,009 10,413,857
Taxes on Goods and Services
Tax Revenue - Fines and Penalties - - 4,872
Other Taxes
Sub-total 662,678,208 605,834,796
Share from National Taxes
Share from Internal Revenue 762,824,864 710,939,060
Collection
Sub-total 762,824,864 710,939,060
Other Share from National Taxes
Other Share from National Taxes 3,026,730 -
Sub-total 3,026,730 -
Total 1,428,529,803 1,316,773,856

Real Property Tax – Basic for the year consists of amount provided by the
general revisions made in City Ordinance A09-2016 dated November 14, 2016.
This is an addition to amount covering RPT and discounts directly from the
implementation of City Ordinance No. 18-2017 which grant 20% discount to
those who will pay their taxes early. In addition, the increase in Business Tax
was due to the amendments of the Revenue Ordinance effectively increasing the
Tax base.

Note 13. Service & Business Income

2018 2017
Service Income
Permit Fees 85,574,440 75,015,244
Registration Fees 1,141,660 939,640
Registration Plates, Tags and Stickers 731,300 590,185
Fees
Clearance and Certification Fees 26,284,239 17,377,475
Supervision and Regulation 24,945,934 13,134,992
Enforcement Fees
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 2018 2017
Inspection Fees 4,555,350 3,864,584
Verification and Authentication Fees 1,425,415 1,511,219
Processing Fees 3,837,665 2,035,990
Fees for Sealing and Licensing of 257,939 236,542
Weights and Measures
Fines and Penalties- Service Income 970 400
Other Service Income 29,431 34,975
Sub-total 148,784,343 114,741,246
Business Income
School Fees 48,553,044 36,396,218
Affiliation Fees 1,320 3,945
Rent/Lease Income 2,466,245 2,682,253
Seaport System Fees 132,713 128,000
Parking Fees 117,600 64,800
Receipt from Market Operations 6,467,400 6,513,136
Receipts from Cemetery Operations 1,536,779 1,358,669
Garbage Fees 21,478,623 15,678,320
Hospital Fees 19,421,177 9,356,021
Interest Income 3,986,606 1,540,536
Other Business Income 507,321 508,535
Sub-total 104,668,828 74,230,433
Total 253,453,171 188,971,679

Note 14. Share, Grants and Donation

2018 2017
Share
Share from PCSO 3,544,963 3,094,594
Grants and Donations
Grants and Donations in Cash 4,671 17,809
Total 3,549,634 3,112,403

Note 15. Miscellaneous Income

2018 2017
Other Income
Miscellaneous Income 1,155,848 392,877
1,155,848 392,877

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Note 16. Employee Costs

2018 2017
Personnel Services
Salaries and Wages - Regular 227,867,127 203,628,442
Salaries and Wages - Casual/Contractual 42,759,899 36,990,035
Other Compensation
Personal Economic Relief Allowance 24,710,612 23,342,522
(PERA)
Representation Allowance (RA) 4,305,750 4,489,550
Transportation Allowance (TA) 4,245,750 4,415,050
Clothing/Uniform Allowance 6,174,000 4,882,500
Subsistence Allowance 2,307,752 2,123,850
Laundry Allowance 320,551 293,937
Honoraria 3,336,075 11,758,146
Hazard Pay 2,564,170 2,351,499
Overtime and Night Pay 1,299,573 1,052,290
Year End Bonus 22,471,138 37,921,046
Cash Gift 5,157,000 4,932,827
Other Bonuses and Allowances 21,706,149 2,186,248
Personnel Benefit Contributions
Retirement and Life Insurance Premiums 31,888,974 28,663,071
Pag - IBIG Contributions 1,229,800 1,164,138
PhilHealth Contributions 3,122,270 2,443,006
Employees Compensation Insurance 1,230,300 1,162,695
Premiums
Other Personnel Benefits
Terminal Leave Benefits 19,150,707 19,950,965
Total 425,847,596 393,751,816

Note 17. Maintenance and Other Operating Expenses

2018 2017
Traveling Expenses
Traveling Expenses - Local 1,243,021 1,570,901
Training and Scholarship Expenses
Training Expenses 9,910,950 28,927,940
Scholarship Grants/Expenses 5,356,460 6,901,200
Supplies and Materials Expenses

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 2018 2017
Office Supplies Expenses 5,624,382 8,096,966
Accountable Forms Expenses 653,500 892,358
Non-Accountable Forms Expenses 2,333,752 905,377
Food Supplies Expenses 18,307,204 6,905,338
Welfare Goods Expenses 5,679,077 6,152,069
Drugs and Medicines Expenses 8,263,379 11,109,212
Medical, Dental and Laboratory 1,944,471 9,871,045
Supplies Expenses
Fuel, Oil and Lubricants Expenses 8,750,302 6,161,423
Agricultural and Marine Supplies 78,064 367,381
Expenses
Textbooks and Instructional Materials 298,620 140,165
Expenses
Other Supplies and Materials Expenses 32,700,725 35,219,478
Utility Expenses
Water Expenses 6,620,806 6,664,184
Electricity Expenses 57,007,122 45,047,233
Communication Expenses
Postage and Courier Services 638,388 472,134
Telephone Expenses 2,349,176 2,110,800
Internet Subscription Expenses 2,206,742 1,463,823
Cable, Satellite, Telegraph and Radio 16,380 16,38
Expenses 0
Awards / Rewards and Prizes
Prizes 78,500 140,368
Survey, Research, Exploration and Development
Expenses
Research, Exploration and Development 49,513,939 42,397,723
Expenses
Confidential, Intelligence and Extraordinary Expenses
Extraordinary and Miscellaneous 1,008,799 398,660
Expenses
Total 220,583,760 221,932,157

Note 18. Contracted Services

2018 2017
Professional Services
Auditing Services - 4,287
Consultancy Services 3,046,000 1,415,500
Other Professional Services 31,046,630 28,747,030

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 2018 2017
General Services
Environment/ Sanitary Services 118,069,734 116,991,326
Janitorial Services 5,472,083 4,315,970
Security Services 33,007,642 25,491,702
Other General Services 62,112,030 48,933,154
Total 252,754,119 225,898,970

Note 19. Repair and Maintenance

2018 2017
Repairs and Maintenance - Land Improvements - 1,843,000
Repairs and Maintenance - Infrastructure Assets 31,463,169 2,571,072
Repairs and Maintenance - Buildings and Other 36,589,376 11,607,328
Structures
Repairs and Maintenance - Machinery and Equipment 1,108,274 2,709,526
Repairs and Maintenance - Transportation Equipment 1,555,759 3,081,156
Repairs and Maintenance - Furniture and Fixtures - 10,000
Repairs and Maintenance - Other Property, Plant and 15,944 101,798
Equipment
Total 70,732,523 21,923,880

Note 20. Taxes, Insurance Premiums and Other Fees

2018 2017
Taxes, Duties and Licenses 1,000,979 664,269
Fidelity Bond Premiums 516,341
668,829
Insurance Expenses 3,921,575 2,774,941
Total 5,438,895 4,108,039

Note 21. Other Maintenance and Operating Expenses

2018 2017
Advertising Expenses 1,889,095 2,249,060
Printing and Publication Expenses 911,501 1,596,727
Representation Expenses 8,928,875 16,636,292
Rent/ Lease Expenses 131,537 477,385
Membership Dues and Contributions to
Organizations 326,008 601,228
Subscription Expenses 319,262 355,358

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 2018 2017
Donations 22,074,300 11,745,109
Other Maintenance and Operating Expenses 196,425,944 72,990,293
Total 231,006,521 106,651,452
Note 22. Non-Cash Expenses

2018 2017
Depreciation
Depreciation - Land Improvements 27,710,034 26,836,403
Depreciation - Infrastructure Assets 29,881,343 13,513,521
Depreciation - Buildings and Other Structures 42,684,116 28,639,725
Depreciation - Machinery and Equipment 46,323,600 37,731,332
Depreciation - Transportation Equipment 15,089,037 6,597,986
Depreciation - Furniture, Fixtures and Books 3,427,346 2,493,409
Depreciation - Other Property, Plant and 5,854,700 3,608,098
Equipment
Total 170,970,176 119,420,474

Note 23. Financial Expenses

2018 2017
Interest Expenses 3,340,165 5,423,743
Bank Charges 13,800 259,730
Other Financial Charges 33,408 -
Total 3,387,373 5,683,473

Note 24. Transfers, Assistance and Subsidy

2018 2017
Assistance and Subsidy
Subsidy from Other Funds 19,070,622 16,363,904
Total 19,070,622 16,363,904

Subsidy from Other Funds is mainly made up of collection & deposit for April
4, 2016, and receipt of transfer from GF amounting P10,000,000 to SEF under
OR No. 3305227 dated April 4, 2016.

Note 25. Financial Assistance/ Subsidy

2018 2017

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 Subsidy to NGAs 23,834,000 18,393,000
Subsidy to Other Local Government Units 3,531,500 3,727,500
Subsidy to Other Funds 36,678,653 28,107,982
Total 64,044,153 50,228,482
Note 26. Reconciliation of Net Cash Flows from Operating Activities

2018 2017
Surplus (Deficit) 260,993,962 376,015,976
Adjustment of net prior year ’ s withheld taxes - (121,417)
Non-cash transactions
Depreciation 170,970,176 119,420,474
(Decrease) Increase in Payables 144,866,473 (68,490,883)
(Increase) Decrease in net assets (125,685,211) 85,166,214
(Increase) Decrease in receivables 183,873,127 164,904,436
Net Cash from Operating Activities 635,018,526 676,894,800

Note 27. Reconciliation Statement of Comparison of Budget and Actual and the
Statement of Financial Performance

Personnel Financial Capital

Income MOOE
Services Expenses Outlay
Comparison Statement of 1,705,759,0 425,847, 951,485, 3,387,3 134,448,
Budget and Actual 77 596 993. 73 884
Basis Difference
Receipts not considered as (19,070,622
income )
Non-Cash Expenses
Depreciation 170,970,176)
(140,407,879
Capital Expenditures )
Timing Differences
Prepayments charged to
current appropriations 5,958,995
Per Statement of Financial 1,686,688,4 425,847, 780,515, 3,387,3
Performance 55 596 817 73 -

38