COA flags PHP 218.6M unreleased barangay tax shares in Iloilo City

ILOILO CITY — The Commission on Audit (COA) has urged the Iloilo City government to fast-track an electronic payment system after finding that PHP 218.559 million in barangay shares from real property tax (RPT) collections remained unreleased at the end of 2025.

In its 2025 audit report, COA said delays in releasing the statutory 30% share of the city’s 180 component barangays deprived them of funds meant for basic public services and community development projects.

The city government’s “Due to LGUs-Barangays” account carried an outstanding balance of PHP 220.457 million at year-end.

Of this amount, PHP 218.559 million, or 99.14%, represented unreleased basic RPT proceeds belonging to the city’s 180 barangays.

Under Section 271 of Republic Act No. 7160, or the Local Government Code of 1991, 70% of basic RPT proceeds go to the city’s general fund, while the remaining 30% must be distributed directly to component barangays.

The law mandates that the 30% share be released quarterly, within five days after the end of each quarter, directly to barangay treasurers without any lien, holdback, or administrative deduction.

The barangay share comes only from the basic RPT. The separate Special Education Fund levy on real property goes to the local school board and is not shared with barangays.

COA said its examination of the city’s subsidiary ledgers showed that while accounting entries were recorded monthly, actual cash availability and releases lagged far behind statutory deadlines throughout 2025.

The first-quarter share was released on May 7, 2025, 31 days past the deadline. The second-quarter allocation was released on Aug. 5, 2025, 30 days late, and the third-quarter share on Nov. 11, 2025, 37 days late.

The fourth-quarter share was scheduled for release by Jan. 5, 2026, but remained unreleased and unavailable when the report was prepared.

The City Treasurer’s Office (CTO) said internal verification procedures and check preparation protocols before issuance contributed to the delays.

The CTO also disclosed that 79 checks representing barangay RPT shares for the second and third quarters of 2025 had been prepared and made available but remained unclaimed by barangay treasurers at City Hall.

COA, however, argued that relying on manual check pickups and cumbersome pre-issuance steps creates artificial bottlenecks that defeat the purpose of timely fund transfers.

“The timely release of the 30% share of barangays from RPT collections is essential to ensure the availability of funds for the delivery of basic services and the implementation of local programs at the barangay level. Delays in release and the accumulation of unclaimed or idle balances defeat the intent of the law, which deprived barangays of resources rightfully due them,” it said.

“This underscores the need for more efficient disbursement mechanisms and improved coordination with barangays to ensure the timely release and utilization of funds,” it added.

Mandatory e-payment shift

To clear the paper-based disbursement backlog, COA ordered the CTO to expedite the adoption of government e-payment systems that credit funds directly to barangay bank accounts, eliminating paper checks and manual claims.

COA made a similar recommendation in its 2024 audit report, urging the city to adopt electronic fund transfers.

COA also told the CTO to issue formal written notices and follow-ups to punong barangays (village chiefs) and barangay treasurers on unclaimed checks held at the treasury.

The city government told COA that, as of Aug. 27, 2026, it had fully implemented the written-notice recommendation by setting up a monitoring matrix for available checks and issuing notices to barangay officials.

The shift to electronic payments, however, remained only partially implemented.

According to the report, the city government had coordinated with its authorized government depository banks and prepared a draft memorandum of agreement with the Land Bank of the Philippines, which was still under administrative review, to set up direct electronic fund transfers for future barangay tax allocations.