--itember Acquisition Date Floor

gureau of TreasuryNovember 13, 1980August 19, 1981

2nd, 3rd and 4th% of the Ground Floor

lntramuros Admin istration January 30, 1981 5th

Office of the President August 20, 1981% of the Ground Floot,7th and 8th

3.4. However, veriflcation of titles on the above sales disclosed the following:

a. CCT per unit of lhe building

. CCT No. 3142 dated October 27, 1982 for 1/4 of the ground floor, whichcancelled previous CCT No. 1580 covering the whole ground floor' is stillregistered in the name ol the LBRDC; while there is no presented n€w CCT torthe remaining 3/4 of the ground floor; and

. CCT Nos. 1581, 1582 and 1583 for the 2d, 3'd, and 4h floors,respectively, all dated November 12, 1980 and issued in the name of LBRDC'are presented as the current existing CCTS for the said floors.

TCT of the land

. CCT Nos. '1580, 1581, 1582 and 1583, as menlioned above, remained

the latest annotations in the TCT of the land for their covered floors; and

r Annotations of CCT Nos. 1584, 1585, 1586 and 1587, all in the name ofLBRDC, covering the 5e. 6h, 7rh and 8th floors, respectively, are still not cancelleddespite the registration of these floors in the name of the Philippine Govemmentthru new CCT No. 1828 on April 21, 1981; No. 8988 on April 19' 1989; and Nos.

3137 and 3136 on Qctober 27, 1982.

3.5. The deficiencies noted in the registration of the ccTs and the annotations in the

TCTs of the land, place risk on proving ownership in the acquired condominium units by

its members, BTr, lA, and OP. The Deeds of Absolute Sale should be accompanied by

dufy registered ccTs and annotated TCTs of the land lor every unit owned by lhe

memoeis. Likewise, it restraints the members on the applicability and/or enforceability of

lhe condominium Acl on matters related to the govemance of the PDGCC operations.

3.6. We recommended and Management agreed to conform with the provisiong

of the condominium Act in $tablishing membelship in the PDGCC by assistingits members (BTr, lA and OP) to file witlr the Registry of Deed3 of tho City otilanila, the following:

a. CCTs of the ground, second, third and fourth floors of ihe buildingtegistered in the name of the govemment; and

b. Annotations of CCTs in the TCT of the land for tho eight floor$ soldto the governmenl.

3.7. Management commented that the Administrative Committee, with the help of theFacilities Administrator, will work out with the Registry of Deeds the transfer of titles fromthe LBRDC to the Philippine Government.

4. Certificate of Registration (GOR) issued by the Bureau of Internal Revenue(BlR) in 1994 prior to tbe enactment of the National Internal Revenue Code (NaRC)

ot 1997, needs to be updated to identify and clarify appropriate tax€s that lhePDGCC is required to file returns andlor pay amount due thereon.

4-1. Paragraph A, Section 236 of NIRC dated December 11,1997 effeclive January1, 1998 prescribes lhe present BIR Form 2303 to be used in the regislration of allbusines$ entities,

4.2. Section I of BIR Revenue Regulations (RR) No. 7-2012 dated April 2,2412enumerates the lypes of taxes that must be tegistered as follows:

"Generally, registration of tax types by a business entity consists of butnot limited to the following internal revenue taxesffees:

1. lncome tax;2. VAT and/or percentage tax;3. Withholding tax on compensataon;4. Creditable withholding tax at source on certain income payments;5. Final withholding tax on certain income payments;6. Documentary Stamp Tax;7, Excise Tax; and8. Annual Registration Fee

The nature of the business to which the taxpayer belongs shall be takeninto consideralion in determining the type of taxes that must be

reg istered."

4.3. However, we noted that the COR ofthe PDGCC with Control No. 94-330{03639used the old BIR Form 1556 issued by the Revenue District Office (RDO) No. 33 inIntramuros, Manila on June 30, 1994, three (3) yearc prior to the enactment ot the NIRC

in '1997. This old COR showed only three tax types; Value Added Tax, Excise Tax and

Withholding Tax and did not disclose other types of taxes as follows:

a. Income Tax,b. Percentage Tax,c. Documentary Stamp Tax, andd. Annual Registration Fee.

4.4. The COR needs to be updated to determine the tax types applicable to PDGCC

in accordance with the NIRC and be re-issued for uploading to the BIR Registration

System Database as provided in Section 11 and 14 of the BIR RR No. 7-2012 dated, Aptil2,20'12.

31

I +5. lYo r!c6n|n nded .rd tt nagdng|t rg3cd b.pdy nor an upd$d CORutfli iOu RDO lo furatliit and cl8rify $o fpeg d hbrna0 r€venu? !.nr apClcebleto PDECC .rd 6v€ntu rly ffle pturnr andbr py trxm due tte*wn b aceordrncswf$ &o lllRC .nd BIR RR l{o. ?.2fi2 dabd Aprll 2, 2012. Ihlr complementrPDGCCI prwlo{E Fqtr€st l€tlor! to the BlR.

4,6. The Management comment€d that PDGCC rhall inguir€ from the BIR on theupdating of the COR in view of the requirernents of ths new 9lR Revenue R€gulaliorand in compliance with lhe Tax Rgform Acceleralion and lndusion fiRAIN) Lav torcrtlcct th6 chang€ in the tax profile ae Non-Tax, Non-Proflt, Non-VAT enlity.

I

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I

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PART III.

STATUS OF IMPLEMENTATION OF

PRIOR YEARS' AUDIT RECOMilIEIIIDAT|ONS

STATUS OF IMPLEMENTATION OF PRIOR YEARS'AUD'T REGOTISENDAT]ONS

Out of the 1 1 audit recommendations, three were fully implemented, five were partially

implemented and three w€re not impiemented. The following were therecommendations with partial or no implementation at all:

OBSERVATIONS ANDREGOIUilIENDATIONS

ACTIONS TAKEN'COIIIIiIENTS

2916

1. The PDGCC did not recognizerevenues ol P191.A12 million and theconesponding expenses of P196.169million incurred from CY 2013 to CY2016 for the beneficial services rendeaedto condominium owners contrary to therelevant provisions of the ConceptualFramework for Financial Reporting andPhilippine Accounting Standards (PAS) 1

and 18. The non-recognition ot the saidrevenues and expenses resulted in theoverstatement of Due fromBTr/OP/IA/COMELEC/Pag-lBlG and theunderstatement of Defened Tax Assetaccounts by P3.834 million and theconsequent understatement of lncomeTax Payable by P3.713 million and thetotal Equity by P5.036 million for thesame period.

We recommended that Managementfollow-up for the response of the BIR on

their letter dated September 3, 2015relative to their clarification on thetaxability of the membership fees andother assessment charges collected bythe condominium corpotations from itsmembers and tenants.

2015

2. PDGCC Management did notsubmiufile the reports/returns required byconcemed regulatory/oversight agenclesof the government thereby subiecting theCorporation to the payment of penaltiesand interests.

Partially implemented

Management sent a letter addre$ed lothe Honorable Cesar DulaY, BIRCommissioner, dated December 7, 2017reiterating their letter daled March 20'2017 seeking clarification if PDGCC iswithin the ambit of BIR RMC 65'2012issued on Aclober 31, 2012.

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OBSERVATIONS ANDRECOMilENDATIONS ACTIONS TAKEN/COIIMENTS

We recommended and Managementagreed to:

Biligently submit/file all required Partiatlyimplernentedreports/returns to the concernedoversighrregulatory agencies of the All required submissions were compliedgovernment; and except that with the Securities and

Exchange Commission (SEC).

b. Require the persons responsible Not implementedfor the failure to submit and file therequired reports/returns lo pay the Management requested on March 8, 2018penalties and interests to be charged by for waiver from the SEC not to chargethe concerned regulatory bodies. penalties and interests for failure to submit

and file the required reports/retums.

3. The year-end benefits granted bythe Board of Directors to the PDGCCofficials and employees exceeded theamount authorized by the President ofthe Philippines by P0.375 million inviolauon of Section 3 (b) (5) of ExecutiveOrder (EO) No. 24 dated February 11,2A'n.

We recommended that Managementfumish the Audit Team with the priorapproval of the President of thePhilippines for the granting of the year-end cash gift of P20,000.00 as well asthe Christmas Grocery Allowancegranted to the members of the Board ofDirectors, members of the AdministrativeCommittee, the PDGCC staff andcontracted personnel io avoiddisallowance.

2014

4. PDGCC did not allocate funds forthe implementation of Gender andDevelopment (GAD) activities and hasnot prepared the Annual GAD Plancontrary to Executive Order No. 273 andRepublic Act No. 9710, Magna Carta ofWomen requiring the incorporation of theGAD Plan and Budget.

Not implemented

Management did not submit approval ofthe OP for the granting of the Year endCash Gift of P20,000 and ChristmasGrocery of P5,000 to support CY 2015claim because the requesl is no longerfeasible since the adivity is already done.

For issuance of Notice of Disallowance.

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OBSERVATIONS ANDRECOMMENDATIONS

ACTIONS TAKEN/COMI'ENTS

We recommended {hat Managementallocale funds for GAD activities,prepare the Annual GAD Plan, andincorporate in its COB in compliancewith EO No. 273, RA No. 9710 and theGAA and submit to PCW forendorsement lo DBM.

2013

5. PDGCC Management tailed tocollect and recover from its formeremployee the undeposited collections ofP72,050 and overpayment of salariesand allowances amounting to P12,000despite the demand letter served on himinCY 2012.

We recommended that Management:

a. Institute appropriate legal actionagainst the erring employee who failedto remit and deposit the rentalcof lections of P72,O5O and

b. To exhaust all means to collect theoverpayment on his salaries amountingto P12,000.

6- Expired lease agreements

We recommended that Managementrequire the Office of the President forthe Renewal of their Lease Agreementsincluding the lerms and conditions onthe use by COMELEC of the GroundFloor - Quadrant D, 7th and 8th floorsof the PDGCC building.

Partially implemented

Management tried to submit the GADPlan and Budget for CYs 2014 to 2018.However, the PCW is accepting GADPlan and Budget for two years prior tothe intended year. Thus, only GAD Planand Budget for CYs 2019 and onwardsare currently accepted by the PCW.

Partially implemented

An estafa case was already filed againstthe erring employee but unfortunately,the Office of the City Prosecutor ofManila dismissed the case on May 5,

2014.

For issuance of Notices of Charge.

Not implemented-

For issuance of Notices of Disallowance.

Partially implemented

Preparation of draft Lease Agreement ison-going and in the process ofnegotiation wilh the lessee.

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