Duterte's Socio-Economic Agenda & BLGF's Role

17-20 October 2017

Hotel Jen, Manila

Conducted by the:

Assessors and Treasurers Association of Metropolitan

Manila (ASTRAMM ) in coordination with the

Bureau of Local Government Finance

1

Proposed 10 Point Socio Economic Agenda of President Duterte

1

Continue and maintain current macroeconomic policies, including fiscal, monetary, and trade policies .


2

Institute progressive tax reform and more effective tax collection, indexing taxes to inflation. A tax reform package will be submitted to Congress by September 2016.


3

Increase competitiveness and the ease of doing business. This effort will draw upon successful models used to attract business to local cities (e.g., Davao) and pursue the relaxation of the Constitutional restrictions on foreign ownership, except as regards land ownership, in order to attract foreign direct investment;


4

Accelerate annual infrastructure spending to account for 5% of

GDP, with Public-Private

Partnerships playing a key role.


5

Promote rural and value chain development toward increasing agricultural and rural enterprise productivity and rural tourism.


6

Ensure security of land tenure to encourage investments, and address bottlenecks in land management and titling agencies.


7

Invest in human capital development, including health and education systems, and match skills and training to meet the demand of businesses and the private sector.


8

Promote science, technology, and the creative arts to enhance innovation and creative capacity towards self-sustaining, inclusive development.


9

Improve social protection programs, including the government’s Conditional

Cash Transfer program, to protect the poor against instability and economic shocks.


10

Strengthen implementation of the

Responsible Parenthood and

Reproductive Health Law to enable especially poor couples to make informed choices on financial and family planning.

BLGF’s ROLE

IN THE

ADMINISTRATIVE GOVERNANCE OF

LOCAL TREASURY OPERATIONS

Legal Basis:

Executive Order No. 127

“REORGANIZING THE MINISTRY OF FINANCE”


"INSTITUTING THE ADMINISTRATIVE CODE OF 1987“

January 30, 1987

July 25, 1987

The Bureau of Local Government Finance is the arm of the

Department of Finance responsible for the formulation and execution of policies to uphold the financial viability of local government units.

• It focuses on the function of assisting the local government sector improve their fiscal status.

• Under a decentralized environment, BLGF promotes fiscal autonomy and effective financial management in the LGUs .

Vision /Mission

BLGF

of the Department of Finance is the focal agency and an authority in local finance that aims to be at the forefront of local economic growth leading the way towards national development .

GOALS

• To support national development programs and priorities.

• To provide administrative and technical support to local treasury

and assessment offices.

GOALS

•

To provide consultative/technical assistance to local government units for them to attain financial stability and growth.

•

To enable LGUs to deliver essential services more efficiently and effectively.

GOALS

•

To continuously develop effective and responsive organizational internal processes.

•

To sustainably empower BLGF employees

.

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BLGF STRATEGY MAP

VISION

BLGF of the Department of Finance is the focal agency and an authority in local finance that aims to be at the forefront of local economic growth leading the way towards national development.

Outcome: LGU Fiscal Sustainability

MFO : Regulation of LGU Financial Management

KRAs : Policy Development Technical Assistance LGU Financial Performance M&E

Treasury and

Assessment

Policy

Reforms and

Services

LGU Revenue

Generation and Resource

Mobilization

Programs

Capacity

Development and

Professionalization of the Treasury and

Assessment Services

Compliance

Reviews

Accountability and

Discipline

INSTITUTIONAL STRENGTHENING

Organizational Development, HR Systems , IT Systems, Knowledge Management,

Performance Management, Rewards and Recognition, Good Governance

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LGU Financial

Performance

Monitoring and

Evaluation

Policy

Development

LGU Fiscal

Sustainability

Regulation of LGU Financial

Management

Technical

Assistance

Attaining LGU Fiscal Sustainability

M

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Organizational Structure

Office of the

Executive Director

Administrative, Financial and

Management Service

Financial and Management

Division

Administrative Division

Information Systems

Management Division

Plantilla of Personnel

No. of Filled Positions:

No. of Unfilled Positions:

No. of Itemized Positions:

Legal Service

Legal Division

Internal Affairs

Division

Local Fiscal Policy

Service

Policy, Planning,

Programming and

Standards Division

Local Financial Data

Analysis Division

LGU Debt Monitoring &

Evaluation Division

Local Government Units

Operations Service

Local Assessment

Operations Division

Local Treasury Operations

Division

Project Execution and

Management Division

15 Regional

Offices

Capacity Building Division

269

166

435

Based on the 2014 Approved RatPlan

Professionalization of Treasurers

• Adoption of 3-level certification system : SEAL Program (Standardized

Examination and Assessment for Local

Treasury Operations)

• Level 1 – Basic Competency

• Level 2 – Intermediate Competency

• Level 3 – Advanced Competency

• Aims to improve DOF/BLGF selection and appointment process to ensure high level of competency/fitness of treasurers

• Minimize undue political pressure to the Secretary of Finance as appointing authority

• Exam administration by CSC

Level

Level 3

Level 2

Level 1

Results of the 2015 Level 1 Exams

No. of Examinees 2,994

Highest Score

Lowest Score

141

17

Cut-Off/Passing

Score

BCLTE Certified

Mun City

1 st Class Special Cities, 1 st

Class, HUCs

2 nd - 3 rd Class LGUs

1 st

Prov

Class

Entry point for all LGUs regardless of income classification; Must for 4 th -6 th Class

LGUs; Basis for all designation and appointment

95

494 or 16.5%

Needs Improvement 2,500 or 83.5%

Professionalization of Treasurers

• Performance Standards of

Local Treasurers and

Assistant Treasurers (DO

No. 06-2015)

• Sets the operational and competency benchmarks to institutionalize performancebased culture in local treasury operations

• Performance appraisal system for local treasurers/assistants

• Basis for personnel action

• Harmonization with the BLGF-

SPMS

• Provision of focused trainings by BLGF; partnership with

HEIs

Weight

70%

30%

Indicators

Local collection efficiency

Stable and reliable local revenue growth

Optimum fund management

Institution of administrative and judicial remedies

Reportorial compliance with DOF requirements

Compliance with COA rules and regulations

Cost effective local revenue collection

Code of conduct and ethical standards

Capacity building and professional development

Professional recognitions and achievements

Office management tools and support system/s

Use of non-traditional collection strategies

Continuing Professional Development of Assessors

• BLGF is accredited by PRC as ‘Institutional Continuing

Professional Education Provider’

• BLGF provides technical trainings that are creditable as CPE units for renewal of Real Estate Appraiser’s license, pursuant to RA No.

9646 (Real Estate Service Act)

• Trainings include:

• Philippine Valuation Standards

• Mass Appraisal

• Real Property Tax Administration

• SMV Updating and General Revision of Property Assessments, etc.

Authority of the Secretary of Finance to Appoint Local

Treasurer and Assistant Treasurer

A.

The appointment of a Treasurer shall be mandatory for Provincial, City and Municipal Governments

(Sec. 470 (c), LGC) while the appointment of an Assistant Treasurer shall be optional for provincial, city and municipal governments

(Sec. 471(b), LGC)

B. The Treasurer shall be appointed by the Secretary of Finance from a list of at least three (3) ranking, eligible recommendees of the Governor or Mayor, as the case may be, subject to civil service law, rules and regulations

(Sec. 470 (a)LGC)

Authority of the Secretary of Finance to Appoint Local

Treasurer and Assistant Treasurer.

x x x

C. No person shall be appointed in the career service of the local government if he is related within the fourth civil degree of consanguinity or affinity to the appointing or recommending authority.

(Sec. 79, LGC)

D. The Secretary of Finance may delegate the appointing authority over

Provincial, City and Municipal Treasurers and their Assistants, with the exception of Treasurers and Assistant Treasurers in Metro Manila.

Authority of the Local Chief Executive (LCE) over the Local

Treasurer and Assistant Treasurer

The Treasurer shall be under the administrative supervision of the Governor or Mayor, as the case may be, to whom he shall report regularly on the tax collection efforts in the LGU.

( Sec. 470 (b)(c), LGC).

Qualifications of a Local Treasurer and Assistant Treasurer

A. No person shall be appointed Treasurer unless, he/she possess the following qualifications:

1. A citizen of the Philippines (dual citizenship not allowed, CSC

MC 23 s.2016

);

2. A resident of the LGU concerned;

3. Of good moral character;

4. A holder of a college degree preferably in commerce, public administration or law from a recognized college or university;

Qualifications of a Local Treasurer and Assistant

Treasurer

5. A first grade civil service eligible or its equivalent; and

6. Must have acquired experience in treasury or accounting service for at least five (5) years in the case of the City or

Provincial Treasurer, and three (3) years in the case of

Municipal Treasurer.

(Sec. 470 (c) and 471(b), LGC)

B.

The Secretary of Finance, in the exercise of his/her appointing power, may institute additional competency standards as criteria in the selection process subject to civil service rules and regulations.

Automatic Succession of the Assistant

Provincial/City/Municipal Treasurer as Acting/OIC/ICO

Provincial/City/Municipal Treasurer.

A. In case of the absence or disability of the head of a bureau or office, his duties shall be performed by the assistant head. When there are two or more assistant heads, the

Secretary shall make the designation. In the absence of an assistant head, the Secretary may designate any officer or employee of the bureau or office as acting head without additional compensation .(Sec.32, Chapter 6, Book IV. E.O.

292)


Provincial/City/Municipal Treasurer as Acting/OIC/ICO

Provincial/City/Municipal Treasurer.

B. The regularly appointed Assistant Provincial/City/Municipal

Treasurer who automatically assumes as Acting or OIC-

Provincial/City/Municipal Treasurer shall within 24 hours notify directly the BLGF Regional Director concerned of the absence, sickness, death or any other reason of incapacity of the regular incumbent to discharge his/her functions, and of the date of his/her assumption.


Provincial/City/Municipal Treasurer as

Acting/OIC/ICOProvincial/City/Municipal Treasurer.

C. Within 48 hours after receipt of the notice, the BLGF Regional

Director shall issue the Order of Designation of the Assistant

Provincial/City/Municipal Treasurer, subject to the confirmation of the Secretary of Finance.

D. It shall be the duty of the BLGF Regional Director concerned to ensure that impending vacancies are properly monitored and immediately acted upon.

Designation in the Absence of an Assistant Treasurer

In cases where there is no regularly appointed Assistant

Provincial/City/Municipal Treasurer, the next ranking and qualified personnel of the Local Treasury Office, who is duly bonded, may be designated as Acting or OIC Provincial/City/Municipal Treasurer, as the case may be. If other ranking and qualified personnel of other offices outside of the Local Treasury Office of the local government unit concerned, who is duly bonded, is considered due to dearth of qualified and competent personnel within the local treasury office, he/she may be designated as Acting or OIC Provincial/City/Municipal Treasurer.

Detail or Temporary Assignment of Local Treasurers and

Assistant Local Treasurers

A. A detail is the movement of an employee from one department or agency to another, which is temporary in nature and does not involve a reduction in rank, status or salary and does not require the issuance of another appointment.

B. The employee detailed receives his/her salary only from his/her mother unit/agency.


Assistant Local Treasurers.

C. Guidelines to be observed regarding the detail or temporary assignment of

Local Treasurers and Assistant Local Treasurers:

1.

The LCE requesting the detail or temporary assignment shall submit a written request to the Secretary of Finance. The request shall state the name of the employee to be detailed, the period of detail and the reasons for the detail.

2.

In case of detail or temporary assignment from one LGU to another

LGU, the request for such detail or temporary assignment shall be approved only upon the concurrence in writing by the LCE of the LGU where the Local Treasurer or Assistant Local Treasurer sought to be detailed is permanently appointed or stationed. (DOF Department

Personnel Order No. 335-03, October 1, 2003)


Assistant Local Treasurers.

3. No detail or reassignment shall be made within three (3) months before any election. (Sec. 5, Rule

XVIII; Omnibus Rules Implementing Book V of E.

O. No. 292 and Other Pertinent Civil Service Laws)

Powers and Duties of Local Treasurer and Assistant Treasurer

The Local Treasurer shall take charge of the Local Treasury Office and perform the following duties and functions: a) Collect all local taxes, fees and charges directly or through their duly authorized deputies (Sec. 170, LGC ); b) Advise the Governor or Mayor, as the case may be, the “sanggunian”, and other local government and national officials concerned regarding disposition of local government funds, and on such other matters relative to public finance; c) Take custody of and exercise proper management of the funds of the LGU concerned; d) Take charge of the disbursement of all local government funds and such other funds the custody of which may be entrusted to him/her by law or other competent authority;

Powers and Duties of Local Treasurer and Assistant Treasurer x x x e) Inspect private commercial and industrial establishments within the jurisdiction of the local government unit concerned in relation to the implementation of tax ordinances, pursuant to the provisions under Book

II of the LGC; f) Maintain and update the tax information system of the LGU; g) In the case of the Provincial Treasurer, exercise technical supervision over all treasury offices of component cities and municipalities; and h) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance.

Powers and Duties of Local Treasurer and Assistant Treasurer k) Specific Functions:

1. Certify as to the Availability of Funds

2. Implement Tax Collection and Enforcement Program

3. Prepare and Submit Reports

4. Certify RPT Delinquencies Remaining Uncollected

5. Examine the Books of Accounts and Pertinent Records of

Businessmen

6. Submit Certified Statement Covering Income and Expenditures

7. Issue a Certified Statement Covering Actual Income

Powers and Duties of Local Treasurer and Assistant Treasurer x x x k) Specific Functions:

8. Keep full sets of secondary standards for use in the Testing of

Weights and Measures

9. Register in a Book All Branded and Counter Branded Animals

10.

See to it that Payment of Taxes of a Business is not Avoided

Through Simulation of the Retirement thereof and Recommend to the Mayor for the Disapproval of the Application for the

Termination or Retirement of the Business


11. Attend Sessions of the Sanggunian

12. Exercise Such Other Powers and Functions and Perform Such

Other Duties and Responsibilities

12.1 Remit of the Bureau of Internal Revenue (BIR); the

Government Service Insurance System (GSIS); Pag-ibig;

Philhealth obligations and share of Metro Manila

Development Authority (MMDA) for LGUs in Metro Manila.

12.2 Deputies of the National Government Alien Registration

Fees.


12.3 Member of the following Local Committees and Boards: i.

Local Finance Committee ii. Local School Boards iii. Appraisal Committee (for purposes of expropriation and purchase of real property)

12.4

Duties and functions under the omnibus Election Code

Administrative and Technical Supervision of BLGF a) The Bureau of Local Government Finance (BLGF) shall exercise administrative and technical supervision and coordination over the treasury and assessment operations of local governments (Sec. 43 (b), E.O. No. 127 ). It shall provide consultative services and technical assistance to local treasurers in the implementation of programs, policies and regulations on local fiscal matters such as local taxation, local revenue mobilization, and real property assessment as well as administrative matters on the recruitment, selection and appointment of Local Treasurers and Assistant Local

Treasurers.

Administrative and Technical Supervision of BLGF b) Administrative Supervision-

1. Act on Personnel movement of the local treasurers and assistant treasurer in terms of promotion, designation, detail, secondment , transfer, retirement, extension of service

2. Act on leave of absence filed

3. Issuance of Travel Authority (Official or Personal)

4. Disciplinary action –act on complaints, investigate, file a formal charge

5. Conduct training programs, seminars, workshops and other allied activities for the improvement of the administrative skills in the local treasury offices

Administrative and Technical Supervision of BLGF c) Technical Supervision

1. Supervise and coordinate the conduct of Local Treasury and

Assessment Operations of Provinces, Cities and Municipalities within the region for the proper implementation of laws, decrees, rules, regulations and administrative issuances of the DOF;

2. Coordinate the plans, programs and activities of local treasury and assessment offices in the conduct of tax collection drives and tax information and education campaigns;

3. Conduct regional training programs, seminars, workshops and other allied activities for the improvement of the technical skills in the local treasury offices;

Administrative and Technical Supervision of BLGF

4.

Monitor and determine the efficiency and effectiveness of the internal control system of the office of the Provincial/City/Municipal Treasurer;

5.

Monitor the performance of revenue generation in RPT, Business Tax and nontax revenues;

6.

Conduct revenue and treasury operations evaluation to determine the compliance by Local Treasurers with applicable laws, rules and regulations;

7.

Monitor the implementation by LGUs of national and local tax ordinances and tax measures;

8.

Review, evaluate, and monitor the timely and accurate submission of LGU financial and fiscal reports for the purpose of target-setting and policy formulation

Conduct of Local Treasury Operations Evaluation

The conduct of the local treasury operations evaluation is governed by the enhanced Manual for the Evaluation of Local Treasury

Operations (MELTO) to provide a more systematic and uniform set of evaluation procedures that are supported and justified by existing laws, rules and regulations.

MELTO is a basic reference of the BLGF and its Regional Offices and the Provinces in the conduct of the evaluation of treasury operations of local governments within their respective jurisdictions.

The BLGF Central Office shall conduct local treasury operations evaluation within Metro Manila.

BASICS OF LOCAL FINANCE AND

TAXATION

Constitutional Provision

A. Each Local Government Unit (LGU) shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy.

Such taxes, fees, and charges shall accrue exclusively to the local governments.

LGUs shall have a just share , as determined by law , in the national taxes which shall be automatically released to them. (Article X, Secs.

4-6, Phil. Constitution)

Constitutional Provision

 The Constitution vests on local governments the power to create their own sources of revenue and to levy taxes, fees, and charges

 Through the exercise of governmental powers LGUs can levy taxes and regulatory fees

 Through the exercise of corporate /proprietary powers LGUs can impose charges for services rendered, establish economic enterprises, and enter into contracts

Power of LGUs to Create Sources of Revenue

Each local government unit shall exercise its power to create its own sources of revenues and to levy taxes, fees and charges subject to the provisions of the Local

Government Code of 1991, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the local government units.

(Sec. 129, LGC)

Power of LGUs to Create Sources of Revenue

The power to impose a tax, fee or charge or to generate revenue under the Local Government

Code of 1991 shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.

(Sec. 132, LGC)

Legal Framework of LGU Taxing Powers

CONSTITUTION

LOCAL GOVERNMENT

CODE

LOCAL ORDINANCE

General Principle on Local Finance

The financial affairs, transactions, and operations of LGUs shall be governed by the following fundamental principles and policies, to wit:

1. No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law;(Sec. 305 (a),

LGC);

General Principle on Local Finance

2. Provincial, city and municipal treasurers shall open and maintain in the name of their respective local government units separate depository accounts for each fund only with government financial institutions (GFIs) that have universal bank license and CAMELS rating of at least “3”.(DOF Circular No.

001-2015, dated June 1, 2015);

General Principles on Local Finance

3. Local government funds and monies shall be spent solely for public purposes(Sec . 305 (b), LGC);

4. Local revenue is generated only from sources expressly authorized by law or ordinance , and collection thereof shall at all times be acknowledged properly Sec. 305 (c),

LGC);


5. For every payment received, the collecting officer shall immediately issue an official receipt in acknowledgment thereof. The receipt may be in the form of cash tickets and the like, or officially numbered receipts subject to proper custody, accountability and audit (Sec. 4,

COA Circular No. 92-382 dated. July 3, 1992);

6. All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds , unless otherwise provided by law(Sec. 305 (d), LGC);


7.

Provinces, cities and municipalities shall maintain a General Fund which shall be used to account for such monies and resources as may be received by and disbursed from the local treasury.

The General Fund shall consist of monies and resources of the local government which are available for the payment of expenditures, obligations or purposes not specifically declared by law as accruing and chargeable to, or payable from, any other fund (Sec. 1, COA Circular No. 92-382 dated July 3,

1992; Sec. 308, LGC);

8.

There shall also be maintained in every Provincial, City or Municipal

Treasury the following special funds:

• Special Education Fund(SEF)

• Trust Funds(TF)

• Special Accounts in the General Fund


9.

Receipts, transfers, and expenditures involving the foregoing special accounts shall be properly taken up thereunder(Sec.

313, LGC);

10. Profits or income derived from the operation of public utilities and other economic enterprises, after deduction for the cost of improvement, repair and other related expenses of the public utility or economic enterprise concerned, shall first be applied for the return of the advances or loans made therefor. Any excess shall form part of the general fund of the local government unit concerned.(Sec.

313, LGC);


(Sec. 130, LGC)

11. Every officer of the local government unit whose duties permit or require the possession or custody of local funds shall be properly bonded , and such officer shall be accountable and responsible for said funds and for the safekeeping thereof in conformity with the provisions of law(Sec. 305 (f), LGC); and

12. Local governments shall formulate sound financial plans, and local budgets shall be based on functions, activities, and projects, in terms of expected results. (Sec. 305 (g),

LGC)

Fundamental Principles in Local Taxation

(Sec. 130, LGC)

1. Taxation shall be uniform in each local government unit

2. Taxes, fees, charges and other impositions shall: a. Be equitable and based as far as practicable on the taxpayer’s ability to pay b. Be levied and collected only for public purposes c. Not be unjust, excessive, oppressive, or confiscatory d. Not be contrary to law, public policy, national economic policy, or in restraint of trade

Fundamental Principles in Local Taxation

(Sec. 130, LGC)

3. The collection of local taxes, fees. Chargers and other impositions shall in no case be let to any private person.

4. The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of and be subject to disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein;

5. Each local government unit, shall, as far as practicable, evolve a progressive system of taxation.

Common Limitations on the Taxing Powers of LGUs

(Sec. 133, LGC)

Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities and barangays shall not extend to the levy of the following: a. Income tax, except when levied on banks, and other financial institutions; b. Documentary stamp tax; c. Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein;


(Sec. 133, LGC) d. Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of custom fees, charges and dues, except wharfage on wharves constructed and maintained by the local government unit concerned Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein; e. Taxes, fees and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise;


(Sec. 133, LGC) f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen; g) Taxes on business enterprise certified to by the Board of

Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively, from the date of registration; h) Excise tax on articles enumerated under the National Internal

Revenue Code, as amended, and taxes, fees or charges on petroleum products;


(Sec. 133, LGC) i) Percentage or value-added tax (VAT) on sales, barters or exchange or similar transactions on goods or services, except as otherwise provided herein; j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in LGC of 1991; k) Taxes on premiums paid by reinsurance or retrocession;


(Sec. 133, LGC) l) The insurance is allocated among insurance companies sec.

The insurance cannot be accomodated only by the insurance company; m) Taxes, fees or charges for the registration of motor vehicle and for the issuance of all kinds of licences or permits for the driving thereof, except tricycles; n) Taxes , fees, or other charges on Philippine products actually exported. Except as otherwise provided herein;


(Sec. 133, LGC) o) Taxes, fees or charges, on Countryside and barangay

Business Enterprises and cooperatives duly registered under

R.A. No. 6810 and R.A. No. 6938 otherwise known as the

“Cooperatives Code of the Philippines” respectively; and; p) Taxes, fees or charges of any kind on the National

Government, its agencies and instrumentalities and local government units;

Withdrawal of Tax Exemption Privileges or Incentives

(Art. 283, IRR, LGC)

Unless otherwise provided for in this Rule, beginning January 1,

1992, local tax exemption privileges or incentives granted to and presently enjoyed by any person, whether natural or juridical, including government-owned or controlled corporations, are considered withdrawn, except the following: a. Local Water Districts; b. Cooperatives duly registered under R.A. No. 6938 (Cooperative

Code of the Philippines); c. Non-stock and non-profit hospitals and educational institutions;


(Art. 283, IRR, LGC) d. Business enterprises certified to by the Board of Investments (BOI) as pioneer or non-pioneer for the period of six (6) or four (4) years respectively, from the date of registration; e. Business entity, association, or cooperatives registered under R.A.

6810, otherwise known as the Magna Carta for Countryside and

Barangay Business Enterprises or Kalakalan 20; and f.

Printer and/or publisher of books or other reading materials prescribed by the Department of Education, Culture and Sports (DECS) as School texts or reference, insofar as receipts from the printing and/or publishing thereof are concerned.


(Art. 283, IRR, LGC)

Unless otherwise repealed by law, business and economic enterprises operating within export processing zones administered by the Export Processing Zone Authority shall continue to enjoy the tax incentives and tax exemption privileges enjoyed under the provisions of PD 66, as amended.

The Revenue Sources of LGUs Have differing

Purposes

• Taxes – enforced contributions made for purposes of revenue generation and redistribution

• Fees – imposed collections as a system of recovery for delivery of service by a public officer; purpose is regulation and service delivery

• Charges – pecuniary liability as rents against persons or property

Basic Formula for the Computation of Tax

Standard formula:

Tax Due = Tax base x Tax rate + penalty/discounts

Basic Elements of a Tax

3 basic elements of a tax:

• Tax subject - the object to be taxed land? business? professional?

• Tax base – characteristic of object where tax is indexed

(For land) zonal value? assessed value? market value?

(For business) gross receipts? capitalization?

• Tax rate – fixed? percentage of tax base? combination?

Increasing Local Income of LGUs Depends on the

Willingness and Ability to Use Their Taxing Powers

• Constitution grants the powers to LGUs

• Code sets the operating framework

• BUT, provisions not self-executory.

Decisions must be made by the Sanggunian, and enacted through an ordinance, implemented by the Local Chief Executive though the different departments, with the local treasurer leading the way in generating revenues for the LGU…

RESPONSIBILITIES

and

ACCOUNTABILITIES

of

LOCAL TREASURERS

and

OTHER ACCOUNTABLE OFFICERS

RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OF

LOCAL TREASURERS AND OTHER ACCOUNTABLE OFFICERS

INTRODUCTION

CONSTITUTIONAL PROVISIONS

ON ACCOUNTABILITY OF

PUBLIC OFFICERS

ART. II Sec. 1.

Declaration of Principles and

State Policies

“The Philippines is a democratic and republican State. Sovereignty resides in the people and all government authority emanates from them.

”



INTRODUCTION



PUBLIC OFFICERS

ART. XI, Sec. 1. Accountability of Public Officers

“Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.

”



INTRODUCTION



PUBLIC OFFICERS

ART. XI, Sec. 15.

The right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches, or estoppel.



INTRODUCTION

CONSTITUTIONAL PROVISIONS ON ACCOUNTABILITY OF PUBLIC

OFFICERS

ART. XI, Sec. 17.

“A public officer or employee shall, upon assumption of office and as often thereafter as may be required by law, submit a declaration under oath of his assets, liabilities, and net worth. In the case of the President, the Vice-

President, the members of the Cabinet, the Congress, the Supreme Court, the Constitutional Commissions and other constitutional offices, and officers of the armed forces with general or flag rank, the declaration shall be disclosed to the public in the manner provided by law.

”



INTRODUCTION

ART. XI, Sec. 18.

“Public officers and employees owe the State and this Constitution allegiance at all times, and any public officer or employee who seeks to change his citizenship or acquire the status of an immigrant of another country during his tenure shall be dealt with by law.

”



Responsibility, Accountability and Liability .

 Responsibility the obligation to prudently exercise assigned or imputed authority attaching to the assigned or imputed role of an individual or group participating in organizational activities or decision. (Section 108(l)

LTOM)




 Responsibility of a Local Treasurer

Immediately and primarily responsible for all government funds and properties under his/her custody

 Responsibility of Treasury Employees

Local treasury personnel directly entrusted with custody/possession of funds or property shall be immediately responsible to the Local

Treasurer without prejudice to the liability of either party to the LGU




 Accountability - answerability of every public officer whose duties permit or require the possession or custody of government funds or property and who shall be accountable therefor and for the safekeeping thereof in conformity with law, otherwise he shall be liable for the loss thereof. (Section 108(a) LTOM)



Responsibility, Accountability and Liability.

 Accountability of Local Treasurer over Government Funds and Properties.

• Take custody and exercise proper management of funds of the city and take charge of the disbursement of all local government funds and such other funds the custody of which may be entrusted to the office by law or other competent authority

(Section 470 of LGC)




 Accountability of Local Treasurer over Government Funds and Properties.

• Take custody of and be accountable for all properties, real or personal, owned by the local government unit and those granted to it in the form of donation, reparation, assistance and counterpart of joint projects (Section 490 of LGC)

• In case the LGU failed to create the position of a General

Services Officer (GSO)




 Accountability of Local Treasurer over Documents

• Custodianship of accountable forms. - The treasurer shall be the custodian of all accountable forms requisitioned by the local government unit. He shall maintain a complete record of the receipt, issue and transfer of accountable forms (Sec. 24 of COA

CIRCULAR NO. 92-382, July 3, 1992 )



Primary and Secondary Responsibility (Sec. 102, P.D. 1445)

1. The head of any agency of the government is immediately and primarily responsible for all government funds and property pertaining to his agency;

2. Persons entrusted with the possession or custody of the funds or property under the agency head shall be immediately responsible to him, without prejudice to the liability of either party to the government.



ACCOUNTABLE OFFICERS

– the officer of any government agency whose duties permit or require the possession or custody of government funds and property (such as the Local

Treasurer, Collecting Officer, Disbursing Officer, Cashier, Paymaster, and Property

Officer), who is required by law to render account to the Commission on Audit.

(LTOM)

– Every officer of any government agency whose duties permit or require the possession or custody of government funds or property shall be accountable therefor and for the safekeeping thereof in conformity with law. (P.D. 1445)

– Every accountable officer shall be properly bonded in accordance with law .



Liability of Accountable Officers.

 Liability – a personal obligation arising from an audit disallowance or charge in the course of post audit of a transaction or examination of the cash and accounts of an accountable officer, which may be satisfied through payment or restitution as determined by competent authority and in accordance with law.

(Sec. 105, PD 1445)



Liability of Accountable Officers

• Accountable officers for government property shall be liable for its money value.

• Accountable officers for government funds shall be liable for all losses attributed to negligence in the safekeeping of funds.

• Local Treasurer shall exercise the “diligence of a good father of a family” over accountable officers under his/her supervision, otherwise, the treasurer shall be jointly liable with them.

17



Liability for Acts Done Upon Direction of Superior Officer, or

Upon Participation of Other Department Heads or Officers of

Equivalent Rank

 The local treasurer or other accountable officer in the Local

Treasury Office shall not be relieved of liability for illegal or improper use or application or deposit of government funds or property by reason of his/her having acted upon the direction of a superior officer, elective or appointive, or upon participation of other department heads or officers of equivalent rank , unless objection in writing is registered.

(Sec. 342, LGC)



Period of Accountability

 As a general rule, the accountability of a Provincial, City or

Municipal Treasurer for government funds and property shall begin at the time he/she actually assumes control of the transactions connected therewith and ends at the time he/she actually ceases to have such control.

 Control refers to the actual and complete turnover of the accountabilities.



Prerequisite to accepting new accountabilities

• Turnover of accountabilities from the outgoing treasurer to the incoming treasurer shall be done.

Advice of Retirement, Transfer and Settlement of

Accounts

• Treasurers shall advise in advance the Resident Auditor concerned of the date of retirement, resignation, or other modes of separation of service



Closing of Book Preparatory to Transfer of

Accountabilities a. All the books and accounts shall be completely written and up to date.

b. Cashbooks shall be totaled and closed as of the date of transfer, certified by the outgoing treasurer showing the balance per books.

The successor shall certify acknowledging the amount actually received.

c. All cash and cash items, checks, certificate of time deposits shall be counted and inventoried showing the amount, serial numbers and kind of investment.



Preparation of Invoice Receipts during Turnover of

Accountabilities

• Invoice-receipts of accountability shall be prepared in four (4) copies

• Acknowledgement Receipt for Equipment (ARE)

• Consolidated Report of Accountability and Accountable Forms

(CRAAF) with RAAF of accountable officers.



Death or Incapacity of a Local Treasurer or

Accountable Officer

• The Secretary of Finance shall designate a custodian to take charge of the funds and/or property until a qualified successor shall have been appointed.

• The LCE may designate a committee to count the cash and take an inventory of the properties for which the officer was accountable and to determine the liability for any shortage.



Liability of Accountable Officers

For Loss Of Government Funds/Property :

An officer who fails to notify and apply for relief from cash accountability within the prescribed time, in time of loss, shall not be relieved of liability or allowed credit for any such loss in settlement of his accounts.

(Sec. 73, P. D. No. 1445)



Basic Requirements for

Request for Relief from Accountability

 Notice of Loss

 Request for Relief from Accountability

 Written explanation or reason for delay in filing the notice of Loss and

Request for Relief.

 Progress or Final Investigation Report

 Affidavit or Sworn Statement of the Treasurer or Accountable Officer

 Affidavit of two disinterested persons who have personal knowledge of the fact of loss.

 Comment and/or recommendation of the LCE/Treasurer

 Memorandum Receipt of the property



Basic Requirements for

Request for Relief from Accountability

 When to File : Within 30 days from the date of occurrence of loss

 Who shall File: The Accountable Officer

 Where to File : COA Auditor of the LGU

 What to File : Notice of Loss and Request for Relief from

Accountability (and other requirements)

 For other specific occurrences such as Fire, Theft, Robbery/Hold-up,

Force Majeure (Earthquake, Typhoons, etc.)

-- There are other requirements under COA MC 92-751 dated Feb.

24, 1992

ADMINISTRATIVE, CIVIL AND CRIMINAL

LIABILITIES

OF

LOCAL TREASURERS AND OTHER

GOVERNMENT EMPLOYEES

27

ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL

TREASURERS IN THE ADMINISTRATION OF LOCAL TAXES, FEES

AND CHARGES

Code of Conduct and Ethical Standards of Public Officials and

Employees (Republic Act No. 6713)

Standards of personal conduct –

•The Code of Conduct and Ethical Standards for Public Officials and Employees, declares the policy of the State to promote a high standard of ethics in the public service.

•Under the Code, every public official and employee shall observe the declared norms as standards of personal conduct in the discharge and execution of official duties.



AND CHARGES


Employees (Republic Act No. 6713)

Incentives and rewards shall be granted to officials and employees who have demonstrated exemplary service and conduct on the basis of their observance of the norms of conduct , namely: a.

Commitment to public interest

 Public officials and employees shall always uphold the public interest over and above personal interest.

 All government resources and powers of their respective offices must be employed and use efficiently, effectively, honestly and economically, particularly to avoid wastage in public funds and revenues.



AND CHARGES


Employees (Republic Act No. 6713) b.

Professionalism

 They shall perform and discharge their duties with the highest degree of excellence, professionalism, intelligence and skill.

 They shall enter public service with utmost devotion and dedication to duty.

 They shall endeavor to discourage wrong perceptions of their roles as dispensers or peddlers of undue patronage.

ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL TREASURERS IN

THE ADMINISTRATION OF LOCAL TAXES, FEES AND CHARGES


Employees (Republic Act No. 6713) c.

Justness and sincerity

 They shall remain true to the people at all times.

 They must act with justness and sincerity and shall not discriminate against anyone, especially the poor and the underprivileged.

 They shall at all times respect the rights of others, and shall refrain from doing acts contrary to the law, good morals, good customs, public policy, public order, public safety and public interest.

 They shall not dispense or extend undue favors on account of their office to their relatives whether by consanguinity or affinity except appointments of relatives to positions considered strictly confidential or personal staff whose terms are coterminous

ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL TREASURERS IN

THE ADMINISTRATION OF LOCAL TAXES, FEES AND CHARGES


Employees (Republic Act No. 6713) d. Political neutrality



They shall provide service to everyone without unfair discrimination and regardless of party affiliation or preference.

e. Responsiveness to the public



They shall extend prompt, courteous, and adequate service to the public.

 Provide information on their policies and procedures in clear and understandable language;

 Ensure openness of information, public consultations and hearings whenever appropriate, encourage suggestions, simplify and systematize policy, rules and procedures;

 Avoid red tape;



Develop an understanding and appreciation of the socio-economic conditions prevailing in the country, especially in the depressed rural and urban areas.



AND CHARGES


Employees (Republic Act No. 6713) f. Nationalism and patriotism

 They shall at all times be loyal to the Republic and to the Filipino people, promote the use of locally-produced goods, resources and technology and encourage appreciation and pride of country and people.

 They shall endeavor to maintain and defend Philippines sovereignty against foreign intrusion.

g. Commitment to democracy



They shall commit themselves to the democratic way of life and values, maintain the principle of public accountability, and manifest by deeds the supremacy of civilian authority over the military.

 They shall at all times uphold the Constitution, and put loyalty to country above loyalty to persons or party.



AND CHARGES


Employees (Republic Act No. 6713) h. Simple living

 They and their family shall lead modest lives appropriate to their positions and income.

 They shall not indulge in extravagant or ostentatious display of wealth in any form.

Basically, modest and simple living means maintaining standard of living within the public official’s or employee’s visible means of income as correctly disclosed in his income tax returns, annual statement of assets, liabilities and net worth and other documents relating to financial and business interest and connections.



AND CHARGES

I. CIVIL LIABILITY

• GENERALLY

– A public officer is NOT LIABLE for damages which a person may suffer from the just performance of his OFFICIAL DUTIES and within the SCOPE of ASSIGNED TASKS.

– Thus, MISTAKES concededly committed are not actionable,

ABSENT CLEAR SHOWING OF MALICE OR NEGLIGENCE

AMOUNTING TO BAD FAITH.



AND CHARGES

I. CIVIL LIABILITY

• WHAT IS “GOOD FAITH?”

– It consists of an honest intention to abstain from taking unconscionable and unscrupulous advantage of another.

• THE DOCTRINE OF : “ OMNIA PRAESUMUNTUR RITE ET SOLEMNITER

ESSE ACTA ”

– Public officers are presumed to have regularly performed their duties.

– All things are presumed to be correctly and solemnly done.

– It is upon him who alleges the contrary that the burden of proof lies .

Article 27 and Article 32, Civil Code

• Article 27

– Persons suffering from material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform official duty may file for damages.

• Article 32

– Public officer or employee is liable if directly or indirectly obstructs, defeats, violates or any manner impedes the exercise of constitutional rights.

LIABILITY ARISING FROM BAD FAITH

• GENERAL RULE

– A public official is not immune from damages in his personal capacity for acts done in bad faith. A different rule would sanction the use of public office as a “tool of oppression”.

• BAD FAITH

– Not simply bad judgment or negligence;

– Imputes dishonest purpose or some moral obliquity and a conscious doing of wrong, a breach of sworn duty through some evil motive or intent or ill-will.



AND CHARGES

I. ADMINISTRATIVE LIABILITY

•

CSC Rules;

•

Ombudsman Cases;

•

BLGF and other Quasi Judicial Cases

•

Section 38 and 39, Book I of the Administrative Code of 1987;

Section 38 and 39, Book I of the Administrative Code of 1987

• LIABILITY OF SUPERIOR OFFICERS (SEC. 38)

– A public officer shall not be civilly liable in performance of duty unless there’s a clear showing of bad faith, malice, and gross negligence;

– Neglects to perform a duty within the period fixed;

– Superior not liable for acts of subordinates unless actually authorized by written order.

Section 38 and 39, Book I of the Administrative Code of 1987

• LIABILITY OF SUBORDINATE OFFICERS (SEC. 39)

– Not liable if done in good faith;

– Liable for willful, negligent acts which are contrary to law, morals, public policy even if ordered or instructed by superior.

LIABILITY ARISING FROM ULTRA VIRES ACTS AND

CRIMES

• GENERAL RULE

– Contracts executed within the scope of authority and in compliance with the rules are valid and binding upon the State.

• EXCEPTIONS:

-- Public officers are personally liable if:

 No authority on the part of the officer;

 Did not comply with the mandatory requirements.

LIABILITY ARISING FROM WRONGFUL

DISBURSEMENT OF FUNDS

NO MONEY SHALL BE DISBURSED UNLESS:

1.

Local Budget Officer certifies to the existence of appropriation that has been legally made for the purpose;

2.

Local Accountant has obligated said appropriation;

3.

Local Treasurer certifies to the availability of funds for the purpose;

4.

Vouchers and payrolls shall be certified to and approved by the head of the department or office who has administrative control of the fund concerned, as to validity, propriety, and legality of the claim involved;

5.

Approval by the Local Chief Executive

CONSEQUENCES OF BREACH

– Expenditures of government funds or uses of government property in violation of law or regulation shall be a personal liability of the official or employee found to be directly responsible therefor[Section 103, Government Auditing Code]

LIABILITY FOR UNEXPLAINED WEALTH

• R.A. No. 3019

– Public official or employee acquired during incumbency an amount of property which is manifestly out of proportion to his salary and to his other lawful income;

– Property is deemed prima facie to have been unlawfully acquired

– Coverage: including properties in the name of the spouse and dependents, bank deposits, excessive expenditures, ostentatious display of wealth, including frequent travels abroad

– Properties will be forfeited in favor of the Government

Anti-Graft and Corrupt Practices Act

• Section 3(a)

– Persuading and inducing another public official to violate rules and regulations or an offense in connection with official duties;

OR the public official allowing himself to be persuaded.

• Section 3(b)

– Directly or indirectly requesting or receiving any gift, benefit, percentage for himself or another person in connection with a transaction upon which the official has to intervene in official capacity


• Section 3(c)

– Directly or indirectly requesting or receiving any gift or benefit for himself or another for whom the public officer has secured or will secure any Government permit or license in consideration of the gift given.

• Section 3(d)

– Acceptance or having a family member accept employment in a private enterprise which has a pending official business with him during the pendency thereof or within one year after


• Section 3(e)

– Causing undue injury to any party, including the

Government, or giving any private party any unwarranted benefit or preference in the discharge of official functions through manifest partiality, evident bad faith or gross inexcusable negligence.


• Section 3(f)

– Neglecting or refusing, after due demand or request, without sufficient cause, to act within reasonable time, on any matter pending before him or her for the purpose of obtaining from any person interested in the matter some pecuniary or material benefit, or to favor his own interest or giving undue advantage to another.


• Section 3(g)

– Entering, on behalf of Government, any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby.

• Section 3(h)

– Directly or indirectly having financial or pecuniary interest in any business or transaction upon which he intervenes in official capacity, or in which he is prohibited, by law or the

Constitution, from having any interest.


• Section 3(i)

– Becoming interested, for personal gain, or having material interest in any transaction requiring the approval of a board which he is a member and where exercise of discretion in its approval is required, even if he votes against the same or does not participate in the action of the board.

• Section 3(j)

– Knowingly approving or granting any license, permit or privilege in favor of a person not qualified for or not entitled to said license or of a mere representative or dummy of one not qualified.


• Section 3(k)

– Divulging valuable information of a confidential character acquired by his office or by him on account of his official position to unauthorized persons, or releasing such information in advance of its authorized release date.


• PENALTIES

– Violation of Section 3, 4, 5, and 6 of the Act shall be punished with an imprisonment of not less than SIX YEARS and ONE

MONTH nor more than FIFTEEN YEARS;

– Perpetual Disqualification from public office;

– Confiscation of forfeiture in favor of Government of any prohibited interest and unexplained wealth manifestly out of proportion to his salary and other lawful income

CRIMINAL LIABILTY

CRIMINAL LIABILTY of ACCOUNTABLE OFFICERS in GENERAL:

– There are a number of crimes peculiar only to public officers and employees in the sense that one of the indispensable elements should be that the offenders is a public officer or employee;

– or the offense cannot exist without the public office;

– and perpetrated while the officer is in the performance of his office.

CRIMINAL LIABILITY ARISING FROM STATUTES

• Revise Penal Code

• Republic Act No. 3019, as amended [“Anti-Graft and Corrupt

Practices Act”]

• Republic Act No. 7080, as amended by Republic Act No. 7659

[“Plunder”]

• Republic Act No. 6713 [Code of Conduct and Ethical Standards for

Public Officials]

• Presidential Decree No. 46

• Republic Act No. 1379

• Presidential Decree No. 1445

• Republic Act No. 7160 [“Local Government Code”]

Revised Penal Code

• Direct Bribery (Art. 210)

• Indirect Bribery (Art. 211)

• Corruption of Public Officials (Art. 212)

• Frauds against the Public Treasury and Similar Offenses (Art.

213)

• Other Frauds (Art. 214)

• Possession of Prohibited Interest (Art. 216)

Revised Penal Code

• Malversation of Public Funds or Property (Art. 217)

• Failure of Accountable Officer to Render Account (Art. 218)

• Failure to Render Account Before Leaving the Country (Art.

219)

• Illegal Use of Public Funds or Property [Technical

Malversation] (Art. 220)

• Failure to Make Delivery of Public Funds or Property (Art.

221)

Shortage, Overage and Malversation

 Any public officer who, by reason of the duties of his/her office, is accountable for public funds or property, shall appropriate the same, or shall take or misappropriate or shall consent, or through abandonment or negligence, shall permit any other person to take such public funds or property, wholly or partially, or shall otherwise be guilty of the misappropriation or malversation of such funds or property, shall suffer the corresponding penalties prescribed by law.

Crime of Plunder

• Any public officer, by himself or in connivance with members of his family, relatives by affinity and consanguinity, business associate or other amasses, accumulates, or acquires illgotten wealth through a combination or series of criminal acts in the aggregate amount of SEVENTY FIVE MILLION

PESOS (P75,000,000.00) shall be guilty of PLUNDER and shall be punished by RECLUSION PERPETUA TO DEATH.

Presidential Decree No. 46

• Punishes public officials who receives and also punishes private persons who give or offer to give any gift or present on any occasion, INCLUDING CHRISTMAS, when such gift is given by reason of official position, regardless of whether the gift is for past or future favors.

• Throwing of parties and entertainment for the public official or immediate relatives is also included.

• PENALTY: Imprisonment of NOT LESS THAN ONE YEAR or more than FIVE YEARS and Perpetual Disqualification from public office.

Presidential Decree No. 1445

•

Violation of the provisions of Sec. 67, 68, 89, 106 and

108 P.D. No. 1445 or any regulation issued by the

Commission on Audit implementing said sections, shall be punished a FINE not exceeding ONE

THOUSAND PESOS or of imprisonment NOT

EXCEEDING SIX (6) MONTHS, or both.

ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL

TREASURERS IN THE ADMINISTRATION OF LOCAL TAXES, FEES AND

CHARGES

Under R.A. No. 7160 or the Local Government Code of 1991

 Prohibited Acts Related to Award of Contracts (Sec. 520)

 Engaging in Prohibited Business Transactions or Possession of Illegal

Interest (Sec. 514)

 Failure to Post and Publish the Itemized Monthly Collections and

Disbursements (Sec. 153)

 Failure to Dispose of Delinquent Real Property at Public Auction (Sec.

519)



CHARGES

Under R.A. No. 7160 or the Local Government Code of 1991

 Failure to Collect Tax Due on Real Property (Sec. 247 LGC)

 Omission to Make Property Assessments or Tax Rolls

(Sec. 517);

 Failure to Issue and Execute Warrant (Sec. 177);

 Attempt to Enforce Void or Suspended Tax Ordinances and

Revenue Measurers (Sec. 190);



CHARGES

References

 Local Treasury Operations Manual

 Local Government Code

 Republic Act No. 7160

 Revised Penal Code

 Anti-Graft and Corrupt Practices Act

 Excerpts from “The Law on Public Officers and Election Law” by

Dean De Leon, Jr. (1997)

FUNDAMENTALS

OF

REAL PROPERTY TAXATION

REAL PROPERTY TAXES

•

Direct taxes imposed on the

privilege to use

real property such as land, building, machinery and other improvements, unless specifically exempted.

• Province of Nueva Ecija v. Imperial Mining Co., Inc., GR No.

59463, November 19, 1982

Actual use – refers to the purpose for which the property is principally or predominantly utilized by the person in possession thereof. (Sec. 199(b), LGC)

ILLUSTRATION 1

•

Pedro owns a shop in the business district of

Magalang City . His family migrated to Hawaii in

2013. When they left, he allowed his best friend Jose to use the shop. In January 2014, Jose went to the

City Treasurer’s Office purposely to pay his local taxes.

The City Treasurer however, refused to receive his payment for the Real Property Tax of the shop for the reason that the property was registered to Pedro and not to Jose. Is this right?

ANSWER TO ILLUSTRATION 1

• Section 217, Local Government Code

– Real property shall be classified, valued, and assessed on the basis of its actual use regardless of where located, whoever owns it and whoever uses it.

• Testate Estate of Lim v. City of Manila, GR No. 90639,

February 21, 1990

– Unpaid realty taxes attach to the property and are chargeable against the person who had actual or beneficial use and possession of it regardless of whether or not he is the owner.

ILLUSTRATION 2

•

In January 2013, Jose bought a piece of land from

Pedro. Pedro did not pay his real property taxes from

2010 to 2012. Jose went to Pedro and asked the latter to pay his Real Property Tax for 2010 to 2012.

Pedro refused, saying that it is now Jose’s responsibility as the new owner. Is this right?


• Testate Estate of Lim v. City of Manila, GR No. 90639,

February 21, 1990

– Unpaid realty taxes attach to the property and are chargeable against the person who had actual or beneficial use or possession of it regardless of whether or not he is the owner.

To impose the real property tax on the subsequent owner which was neither the owner nor the beneficial user of the property during the designated periods would not only be contrary to law but also unjust.

FUNDAMENTAL PRINCIPLES GOVERNING

REAL PROPERTY TAXATION

(Sec. 198, LGC) a) Real property taxes shall be appraised at its current and fair market value;

– Fair market value – the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy. (Sec.

199 (l), LGC) b) Real property shall be classified for assessment purposes on the basis of its actual use.

– For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special. (Sec. 215,

LGC) c) Real property shall be assessed o the basis of a uniform classification within each local government unit; d) The appraisal, assessment, levy, and collection of real property tax shall not be left to any private persons; and e) The appraisal and assessment of real property shall be equitable.

ILLUSTRATION 3

A city hired a private computer firm to take charge of the collection of real property taxes on the ground that the private computer firm would be more capable of efficient and sound collection. Is this proper?


• Section 198 (d), Local Government Code

– The appraisal, assessment, levy and collection of real property tax shall not be let to any private persons.

ILLUSTRATION 4

Anton has real properties in various locations in the entire country. When he went to pay for the real property tax of his property in Magalang City, he questioned the treasurer, saying that he will not pay the tax as it is way higher than the tax he paid in

Koronadal City for a property of the same classification and measurements. Is Anton’s contention valid?


• Sec. 198 (c), Local Government Code

– Real property shall be assessed on the basis of uniform classification within each local government unit.

• Sec. 233, Local Government Code

– A province or city or municipality within the Metropolitan Manila Area shall fix a uniform rate of basic real property tax applicable to their respective localities.

• Sta. Lucia Realty & Dev’t., Inc. v. City of Pasig, GR No. 166838, June

15, 2011

– While a local government unit is authorized under several laws to collect real estate tax on properties falling under its jurisdiction, it is imperative to first show that these properties are unquestionably within its geographical boundaries.

ADMINISTRATION OF REAL PROPERTY TAXES

(Sec. 200, LGC)

The provinces , cities , including the municipalities within the

Metropolitan Manila Area , shall be primarily responsible for the proper, efficient, and effective administration of the real property tax.

HOW?

• Sec. 232 and 233, LGC; and Sec 323, LGC IRR (paraphrased)

– By way of an ordinance, the sanggunian of a province or a city or a municipality in within the Metropolitan Manila Area may levy and fix a uniform rate of an annual ad valorem tax on real property within their locality.

TAXABLE PROPERTIES

REAL PROPERTY, such as:

• Land

• Building

• Machinery

• Other improvements not specifically exempted

NOTE : Basic Real Property Tax and the Special Levy for the Special Education cover all of the above properties; while the Special Levy on Idle Lands and

Special Levy on Public Works cover only lands.

ILLUSTRATION 5

The Province of Mabuti has a duly enacted ordinance imposing a special levy on properties benefited by the construction of a new paved road.

The assessor assessed the subject properties, including the buildings and the improvements on the lands subject of the new ordinance. Is this proper?


• Sec. 240, Local Government Code

– A province, city, or municipality may impose a special levy on the lands comprised within its territorial jurisdiction specially benefited by public works projects or improvements funded by the local government unit concerned…

REAL PROPERTY

(IMMOVABLE PROPERTIES, SEC.

415, CIVIL CODE)

1.

Land, buildings, roads and construction of all kinds adhered to the soil;

2.

Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;

3.

Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object;

4.

Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements;

5.

Machinery, receptacles, instruments, or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works;

REAL PROPERTY

(IMMOVABLE PROPERTIES, SEC.

415, CIVIL CODE)

6. Animal houses, pigeon-houses, beehives, fishponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in this places are included;

7. Fertilizer actually used on a piece of land;

8. Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;

9. Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake or coast;

10. Contracts for public works, and servitudes and other real rights over immovable property.

Exemptions from Real Property Tax

(Sec. 234,

LGC)

1.

Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted for consideration or otherwise, to a taxable person;

2.

Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious , charitable or educational purposes;

3.

All machineries and equipment that are actually, directly, and exclusively used by local water districts and government-owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power ;

4.

All real property owned by duly registered cooperatives as provided for under RA6938;

5.

Machinery and equipment used for pollution control and environment protection .

CONDONATION OR REDUCTION OF RPT AND

INTEREST

By the Sanggunian upon recommendation of the Local

Disaster Risk Reduction and Management Council, in case of

• A general failure of crops, or

• Substantial decrease in the price of agricultural or agri-based products, or

• Calamity in the province, city, or municipality (Sec. 276, LGC)

By the president of the Philippines when public safety so requires (Sec. 277, LGC)

TYPES OF REAL PROPERTY TAX

1. BASIC

2. SPECIAL LEVIES

1. Special Education Fund

2. Additional Ad Valorem on Idle Lands

3. For Public Works (Special Assessments)

BASIC REAL PROPERTY TAX

Sec. 233, Local Government Code

LGU

PROVINCE

CITY

RATE

Not exceeding 1% of assessed value


MUNICIPALITY WITHIN METRO

MANILA


Assessed Value – the fair market value of the property multiplied by the assessment level (Sec. 199 (h), Local Government Code).

Assessment Level – the percentage applied to the fair market value to determine the taxable value of the property (Sec. 199 (g), Local Government

Code)

BASIC REAL PROPERTY TAX FORMULA

TAX DUE=(ASSESSED VALUE)x (TAX RATE)

Where:

ASSESSED VALUE = Fair Market Value x Assessment Level

ILLUSTRATION 6

• Pepito owns a farm in located her municipality. The farm currently has an assessed value of P345,000.00. The province imposes a 1% basic real property tax rate. How much is the real property tax due?

•

ANSWER:

TAX DUE=ASSESSED VALUE x TAX RATE

= p345,000.00 x 1%

=P3,450.00

SPECIAL EDUCATION TAX

(Sec. 235, LGC)

A province or city or municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax . The proceeds thereof shall exclusively accrue to the

Special Education Fund.

RA 5447 created the Special Education Fund for specified activities with its fund to be derived from additional tax on real property and a certain portion of the taxes on Virginia-type cigarettes and duties on imported leaf tobacco.

Sec. 272, Local Government Code

…the proceeds shall be allocated for the operation maintenance of public schools , construction and repair of school buildings, facilities and equipment , educational research , purchase of books and periodicals , and sports development as determined by the Local School Board.

ILLUSTRATION 7

• Pepita has a farm in her municipality. The farm currently has an assessed value of P345,000.00.

The province imposes a 1% basic real property tax and 1% SEF. How much is the real property tax due?

•

ANSWER:

– TOTAL TAX DUE = BASIC + SEF

= 1%(345,000) + 1%(345,0000

= 3,450 + 3,450

= 6,900.00

ADDITIONAL AD VALOREM ON IDLE LANDS

(Sec. 236, LGC)

A province or city or a municipality within the

Metropolitan Manila Area, may levy an

annual tax on idle lands

at the rate not exceeding

five percent (5%)of the assessed value of the property

which shall be in

addition to the basic real property tax.

IDLE LANDS

(Sec. 237, LGC)

INCLUDES a) AGRICULTURAL LANDS

• More than one hectare in area

•

• Suitable for cultivation, dairying, inland fishery, and other agricultural uses

One-half remain unutilized or unimproved

EXCLUDES

– Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare

– Lands actually used for grazing purposes b) Lands, other than agricultural

•

• Located in a city or municipality

More than one thousand square meters in area

• One-half of which remain unutilized or unimproved

INCLUDES

– Residential Lots in subdivisions duly approved by proper authorities

IDLE LANDS EXEMPT FROM TAX

(Sec. 238, LGC)

A province or city or a municipality within the

Metropolitan Manila Area may exempt idle lands from the additional levy by reason of

force majeure

,

civil disturbance

,

natural calamity

, or

any cause or circumstance which physically or legally prevents the owner or the property or person having legal interest therein from improving, utilizing or cultivating the same.

SPECIAL LEVY BY LOCAL GOVERNMENT

UNITS

(Sec. 240)

A province or a city or a municipality may impose a special levy on the lands comprised within its territorial jurisdiction specially benefited by public works projects or improvements funded by the local government units..

– Special levy shall not exceed 60% of the actual cost of such project or infrastructure.

• Collected over a period of 5 to 10 years (Sec. 241, Local Government Code)

– DOES NOT APPLY TO:

• Lands exempt from basic real property tax

• Remainder of the land portions of which have been donated to the local government unit concerned for the construction or such projects or improvements

SPECIAL LEVY IMPOSED BY OTHER LAWS

•

Socialized Housing Tax (RA 7279, Urban Development and Housing Act of 1992)

– LGUs are authorized to impose an additional one-half percent on the assessed value of all lands in urban areas in excess of P50,000.00

except those specifically exempted.

PAYMENT AND COLLECTION OF TAX

Accrual of tax

Time and Manner of

Payment

Interest for late

Payment (Sec. 255,

LGC)

For Advance Payment

For Prompt Payment

January 1 st of every year and such will constitute a lien superior to any other lien/mortgage/encumbrance of any kind (Sec. 246, LGC)

1. Basic and SEF

• One time payment on or before March 31

• 4 equal instalments (on or before March 31/ June 30/ September

30/December 31

2. Other Special Levies – governed by the ordinance imposing them

2% of each month on unpaid amount until the delinquent amount is paid provided in case shall the total interest exceed 36 months

Discount not exceeding 20 % of the annual tax (Sec. 251, LGC)

Discount not exceeding 10%of annual tax due (Art. 342, IRR of LGC)

ILLUSTRATION 8

•

Ana has a farm with an assessed value of

P345,000.00. The province imposes a 1% basic real property tax rate. In 2013, she left the country without paying her current Real Property Tax. She only paid all of her Real Property Tax obligations when she came back on March 1, 2016. How much RPT

(Basic) should she pay?


RPT (basic)

Interest

Discount

TOTAL

2013

3,450

2,484

0

5,939

2014

GRAND TOTAL = 18,704.00

3,450

1,794

0

5,244

2015

3,450

966

0

4,416

2016

3,450

0

345

3,105

ILLUSTRATION 9

•

Relative to the previous illustration about Ana, the farm currently has an assessed value of P345,000.00.

The province imposes a 1% basic real property tax rate. In 2013, she left the country without paying her current Real Property Tax. She only paid all of her

Real Property tax obligations when she came back on

March 5, 2016 including her tax due for the year

2017. How much did she pay ?


RPT (basic)

Interest

Discount

TOTAL

2013

3,450

2,484

0

5,939

2014

3,450

1,794

0

5,244

2015

3,450

966

0

4,416

2016

3,450

0

345

3,105

2017

3,450

0

690

2,760

GRAND TOTAL = 21,464.00

PROVINCE

CITY

• BASIC

MUNICPALITY

WITHIN METRO

MANILA

DISTRIBUTION OF PROCEEDS

(Sec. 271 & 272, LGC)

• SEF

DISTRIBUTION DISTRIBUTION

Province: 35%

Municipality: 40%

Barangay: 25%

City: 50%

Barangays: 50%

• 50%- location

• 50%-shared by all

MMDA: 35%

Municipality:35%

Barangay: 30%

• 50%-location

• 50%-shared by all

PROVINCE

CITY

MUNICPALITY

WITHIN METRO

MANILA

Province: 50%

Municipality: 50%

City School Board

Municipal School Board

TAX REMEDIES


I.

ADMINISTRATIVE

1.

Lien (Sec. 257, LGC)

The basic real property tax and any other tax levied under this title shall constitute a lien on the property subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor thereof, enforceable by administrative or judicial action, and may only be extinguished upon payment of the tax and the related interests and expenses .

2.

Levy on Real Property (Sec. 258-252,

LGC)

II.

JUDICIAL

I.

Civil action (Sec. 266, LGC)

• Regular courts

TAXPAYER

I.

ADMINISTRATIVE

1.

Protest (Sec. 252, LGC)

2.

Claim for Refund or Credit (Sec. 253,

LGC)

3.

Redemption of Real Property (Sec.

261, LGC)

II.

JUDICIAL

1.

Question of Legality (Sec. 187, LGC)

2.

Court Action

1.

2.

Appeal to CTA en banc within 15 days from receipt of adverse CBAA decision.

Appeal by certiorari with the Supreme

Court within 15 days from notice of adverse CTA decision

3.

Suit Assailing the validity of the tax sale (Sec. 267, LGC)

ILLUSTRATION 10

•

Imelda owns a piece of lot. She mortgage it to the bank. Because of her failure to pay her loan, the bank foreclosed the property. What will happen with her delinquent taxes?


• Her delinquent taxes stays. It is attached to the property.

• Sec. 257, Local Government Code

– The basic real property tax and any other tax levied under this title shall constitute a lien on the property subject to tax , superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor thereof, enforceable by administrative or judicial action, and may only be extinguished upon payment of the tax and the related interests and expenses.

LEVY

(Sec. 258-262, LGC)

The LGU Treasurer will issue the warrant on or before or simultaneously with the institution of the civil action for collection of delinquent tax.

Delinquency

Issuance of

Warrant and

Written

Notice to the Assessor

&ROD

The Assessor and the

ROD shall annottate the levy to the tax declaration and the certificate of title respectively

Within 30 days after the service of warrant by posting and publication.

Advertise sale or auction

Sale

Within 30 days after sale

Report Sale to

Sanggunian

Preparation of

Certificate of Sale

Issuance of final deed of sale

Upon failure of the delinquent taxpayer to redeem the property within one year from date of sale

PROTEST

1. By any owner or person having legal interest on the property or who is not satisfied with the action of the assessor in the assessment of his property; OR

2. By any owner of real property affected by a special levy or any person having legal interest by the filing of an appeal before the Local Board of Assessment Appeals within 60 days from receipt of notice of the assessment.

PROCEDURE FOR PROTEST

Pay the tax under protest

File written protest with

Local treasurer within 30 days from payment of tax

• Within 30 days from payment of tax

Treasurer decides within 60 days from receipt of protest

• If approved, refund or credit.

If Denied, appeal to the LBAA

• Appeal to the

LBAA too, in case if inaction of treasurer after the lapse of 60 days.

Appeal with the CBAA within 30 days from receipt of adverse decision

ILLUSTRATION 11

•

Enzo made a sworn declaration of his property to have a value of P5,000 per square meter. The City

Assessor assessed the said property at P2,000 per square meter. What is the remedy of Enzo if he would like to maintain his declared value. Explain briefly.

ANSWER: PROTEST

CLAIM FOR REFUND OR CREDIT

This is the remedy when an assessment is found to be illegal or erroneous and the tax is accordingly reduced or adjusted. (Sec. 253, LGC)

When an assessment is found to be illegal or erroneous and the tax is accordingly reduced or adjusted. (Sec.

253, Local

Government Code)

Taxpayer files written claim for refund

• Within two years from the date the taxpayer is entitles to such reduction or adjustment.

Treasurer decides within 60 days from receipt of the claim

In case of denial, appeal to the LBAA within 30 days as in protest cases

ILLUSTRATION 12

For failure to pay delinquent real property taxes, the local government resorted to the administrative remedy of levy upon real property. Whereupon, the real property was sold at a public auction. The real owner questioned the legality of the sale, contending that he was not notified thereof. The reason for this was that he failed to transfer the tax declaration in his own name. Is the auction sale valid?


• GR No. 120974 Estate of the late Mercedes, et. al. vs. CA

– The notification thereof to the right person is an indispensable requirement of the law, noncompliance of which renders the auction sale void. Failure on the part of the registered owner to transfer the tax declaration in his name may not be used as a basis of not informing the registered owner.

The Local

Government Code directs the local assessor to declare the property in the name of the defaulting owner, if known, or against the unknown owner as the case may be, and to assess the property to assess the property for taxation.

DYNAMICS OF BUSINESS TAX and OTHER

LOCAL TAXES

Resource Speaker: Mr. Marloun C. Gumbao

City Treasurer of Koronadal

Legal Foundation of LGU’s

Power to Tax

• Section 5, Article X, 1987 Constitution

Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments.

• Section 129, Local Government Code (RA7160)

Each Local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy.

Such taxes, fees and charges shall accrue exclusively to the local government units.

Nature of the Taxing Power of LGU

• Not inherent, but a direct grant

– Though not inherent, it is not a mere delegation by the legislative body but a direct grant from the constitution

• Limited

– Neither plenary nor absolute; subject to the guidelines provided by

Congress

• Legislative

– May be exercised only by the Sanggunian

• Territorial

– Can only be exercised within the territorial jurisdiction of the LGU

Taxation powers of LGUs

Common Revenue –Raising Powers

• Reasonable fees and charges for services rendered (Sec. 153, LGC)

• Public Utility Charges (Sec. 154, LGC)

• Toll fees

• Exceptions: 1) Officers & enlisted men of the AFP; 2)PNP members on mission; 3) post office personnel delivering mail; 4) physically handicapped and disabled citizens who are 65 years old or older;

Specific Power of LGUs to impose taxes (Business-Related LGU Taxing Powers)

Power to Levy Community Tax

Powers under the miscellaneous provisions

Tax on transfer of real property ownership (Sec. 135, LGC)

Tax on business of printing and publication (Sec. 136, LGC)

Franchise Tax (Sec. 137, LGC)

Tax on sand, gravel and other quarry resources (Sec. 138, LGC)

Professional Tax (Sec. 139, LGC)

Amusement Tax (Sec. 140, LGC)

Annual fixed tax on delivery trucks and vans (Sec. 141, LGC)

BUSINESS-RELATED TAXING POWERS OF

PROVINCES

Tax on Transfer of Real Property Ownership (Sec. 135,

LGC)

Transaction taxed

• Sale, donation, barter, or any other mode of transferring ownership or title of real property

Tax rate

• Province: not more than

50% of 1%

• City: not more than 75% of

1%

Tax base :

• The total consideration involved or fair market value in case the consideration is not substantial, whichever is higher.

Exception :

• Transfer or disposition pursuant to RA6657

(CARP)

Person liable to pay :

• Seller, donor, transferor, executor, or administrator

Time of payment :

• Within 60days from the date of execution of the deed or from the date of the decedent’s death

Tax on Business of Printing and Publication


• Business of printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature

Exception

• Printing of

DEPED/CHED/TESDA prescribed texts or references

Tax rate

• Business

• OLD

• NEWLY STARTED

ProvinceCity

50% of 1%

1/20 of 1%

75% of 1%

3/20 of 1%

Tax base

• OLD: gross annual receipt for the preceding year

• NEWLY STARTED: Capital

Investment

Franchise Tax


• Enjoyment of a franchise

Tax rate

• Business

• OLD

• NEWLY STARTED

Franchise defined

• A right or privilege affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as government and its political subdivisions may impose in the interest of public safety, security, and safety. (Sec. 131(m), LGC)

ProvinceCity

50% of 1%

1/20 of 1%

75% of 1%

3/20 of 1%

Tax base

• OLD: gross annual receipt for the preceding year

• NEWLY STARTED: investment capital

Tax on Sand, Gravel, and Other Quarry Resources


• Extraction of ordinary stones, gravel, sand, earth, and other quarry resources from PUBLIC LANDS or from the beds of seas, lakes, rivers, streams, creeks, and other PUBLIC

WATERS within its territorial jurisdiction.

Tax rate

• Province: not more than 10%

• City: not more than 15%

Who issues permit?

:

• Exclusively by the Provincial

Governor pursuant to an ordinance of the Sanggunian.

Distribution of Tax Proceeds :

•

• PROV

• MUN

• CITY

• BRGY

PROV CITY

30%

-

30%

60%

40% 40%

Tax base :

• Fair market value in the locality per cubic meter of the subject

NOTE :

• Extractions from PRIVATE LANDS are within the taxing authority of the

Bureau of Internal Revenue.

Professional Tax


• Exercise or practice of profession requiring government licensure examination

Exception :

• Professionals exclusively employed by the government

Tax rate

• Not to exceed P300.00

Tax base :

• Reasonable classification by the Sanggunian

Place of Payment

• Province where profession is practiced or where principal office is located

Time of payment :

• Annually, on or before

January 31 or before beginning the practice of the profession

Amusement Tax


• Ownership, lease or operation of theaters, cinemas, concert halls, circuses, boxing stadium, and other places of amusement

• Pop, rock, or similar concerts

• Exception to exception (CIR v. SM

Prime Holdings Inc., GR No.

183505, February 26, 2010

Tax rate

• Not more than 10%

• As amended by RA 9640 (An Act

Amending Sec. 140(A) of the LGC,

May 21, 2009)

Tax base :

• Gross receipt from admission fees

Exception (not taxable) :

• Operas, concerts, dramas, recitals, painting, and art exhibitions, flower shows, musical programs, literary and oratorical presentations

• PBA games (PBA v. CA, GR No.

119122, August 8, 2000)

Under the NIRC :

• Cockpits

• Cabarets

• Night or day clubs

• Boxing exhibitions

• Professional basketball games

• Jai alai

• Racetracks (Sec. 125, NIRC)

Distribution of Proceeds :

• Shared equally between the province and the municipality where such amusement places are located.

Annual Fixed Tax for Delivery Trucks or Vans


• Use by manufacturer, producers, wholesaler, dealers, retailers of truck, van, vehicle in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigar, and cigarettes, and other products, determined by the Sangguniang Panlalawigan, to sale outlets or consumers, whether directly or indirectly

Tax rate

• Not exceeding P500.00

Tax base

• Every truck, van, or vehicle

Exemption

• Exempt from tax on peddlers imposed by municipalities


MUNICIPALITIES

Taxing Powers of Municipalities

Taxes, fees, and charges not otherwise levied by the province. (Sec. 142, LGC)

Tax on Business (Sec. 143, LGC)

Municipality’s Tax on Business

Manufacturers, assemblers, re packers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature. (g)

Wholesalers, distributers, or dealers in any article of commerce of whatever kind or nature. (g)

Exporters, and manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities

• Rice and corn

• Wheat or cassava flour, meat, dairy products, locally manufactured, processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products, whether in their original state or not

• Cooking oil and cooking gas

• Laundry soaps, detergents, and medicine

• Agricultural implements, equipment, and post-harvest facilities, fertilizers, pesticides, herbicides and other farm inputs

• Poultry feeds and other animal feeds

• School supplies and

• cement

Municipality’s Tax on Business

Retailers

• 400,000 or less Annual Gross Receipt – not exceeding 2% of the GR for the preceding

• More than 400,000 AGR – 1%

Contractors and other independent contractors (g)

Banks and other financial institutions

• 50% of 1% on the gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from sale or exchange of property, insurance premiums.

Peddlers engaged in any merchandize or article of commerce

• Not exceeding P50.00 per peddler annually

Any business not otherwise specified in the above enumeration

• Provided, businesses subject to NIRC excise, vat, or percentage tax – not exceeding 2%gr

The cities may levy the taxes, fees, and charges which the province or municipality may impose and may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.


CITIES

BARANGAY IMPOSITIONS

Taxes – on stores or retailers with gross sales or receipts of the preceding calendar year of ₱50,000 or less in the case of cities and ₱30,000 or less in the case of municipalities.

Service Fees and Charges – They may collect reasonable fees or charges for services rendered

Barangay Clearance – no city or municipality may issue any license or permit unless a clearance is first obtained from the barangay at reasonable rate.

Other fess and Charges – reasonable fees and charges.

Business taxes

•

Those imposed by the local government unit on the privilege of engaging in business, occupation, and other activities within its territorial jurisdiction.

•

The proceeds of these taxes accrue exclusively to local government unit that imposes them, or may be shared with other local government units when provided by law.

Gross Sales or Receipts

• Under Sec. 131(n) of the LGC :

“Gross Sales or Receipts” – the total amount of money or its equivalent representing the contract price, compensation or service fee , including the amount charged or materials supplied with the services , and the deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person. “Gross Sales or Receipts” exclude discounts that can be determined at the time of sales, sales returns and the excise taxes and value-added tax (VAT) .

Gross Sales or Receipt

Contract price, compensation or service fee

INCLUDING

• Amount charged for materials supplied with the services

• Deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to performed for another person

EXCLUDING

• Discounts, if determinable, at the time of sale

• Sales returns

• Excise tax

• Value added tax

BASIC STEPS IN COMPUTING BUSINESS TAX

Step 1. Classify the business

• Critical in determining business tax to be imposed

• Graduated

• Fixed tax

• Percentage tax

Step 2. Determine gross Receipts

Step 3. Determine tax due

• - locate tax due on the tax schedule OR

• - compute:

• tax due = tax base x tax rate + surcharge/interest

Guidelines for business classification:

Avoid misclassification on 8 clusters

• leads to lost revenues or excessive exaction

• take extra care defining “essential commodities” in ordinance

Segregate taxable components

• some businesses allowed to file separate gross receipts

• monitor properly or a source of tax avoidance

Apply Graduated Fixed Tax on

Manufacturers, assemblers, re packers, processors, brewers, distillers, rectifiers and compounders of liquors, distilled spirits, wines and any articles of commerce of whatever kind

Wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature

Exporters, manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities

Contractors and other independent contractors

Apply Fixed Tax on:

Peddlers engaged in sale of any merchandise or article of commerce

•P50.00 per peddler annually

Apply percentage tax on:

Retailers

Banks and other financial institutions, such as

• lending investors

• finance and investment companies

• Pawnshops

• money shops

• insurance companies

• stock markets

• stock brokers

• dealers in securities and foreign exchange

Any business not otherwise specified in the above enumerations

Apply graduated fixed tax or percentage tax on

• Other businesses not in the Code

• At the rate or schedule that the Sanggunian may prescribe

– But must not exceed the rates provided in Section 143 of the

LGC

• For businesses subject to excise, value-added or percentage tax under National Internal Revenue Code, rate shall not exceed:

– for cities: 3%

– for municipalities: 2%

– of gross sales or receipts

Tax structure and rates for business taxes

•

Combination of fixed and percentage rates, based on gross receipts & business classification

• structured as a graduated fixed tax, with each business classification falling under own tax schedule

• becomes a percentage tax after highest level is reached

•

Cities may impose rates 50% higher than rates allowed municipalities

Collection of Business Taxes

TAX PERIOD

• the calendar year

MANNER OF PAYMENT

• Annual or in equal quarterly instalments

ACCRUAL

• On the 1 st day of January

• On the first day of the quarter next following the effectivity of the ordinance (new)

TIME OF PAYMENT

• Within the 1 st 20 days of January

• 1 st 20 days of the quarter following the effectivity of the ordinance (new)

• For justifiable reasons, the sanggunian may extend the time for payment without surcharges or penalties for a period not exceeding 6 months

SITUS OF MUNICIPAL TAXATION

Definition of Terms

PRINCIPAL

• The main or head office of the business appearing in the pertinent documents submitted to the SEC, DTI, or other appropriate agencies as the case may be

• Official address in AI or registration papers considered as situs for tax purposes

BRANCH

• A fixed place in a locality which conducts the operations of the business as an extension of the principal office

• Display offices even if allowed to take orders are not considered branches

WAREHOUSE

• a building used for storage of goods; if it accepts orders and issue sales invoices, treated as sales office

PLANTATION

• A tract of agricultural land planted to trees or seedlings…

• Includes inland fishing

EXPERIMENTAL FARMS

• Used for studies, tests, researches or experiments

Situs Illustration 1

MTREAS Company is a duly registered company with an office in Baguio City. Its branch in Bauang, La Union made a total sales of P4million in 2016. Where will

MTREAS Company pay the business tax of the P4million sales?

Answer to Situs Illustration 1

Sec. 150(a), Local Government Code

For purposes of collection of taxes on business, assemblers, repackers, brewers, distillers, rectifiers and compounders of liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers, contractors, banks and other financial institutions, and other businesses, maintaining or operating a branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction , and the tax thereon shall accrue and shall be paid to the municipality where such branch or sales outlet is located . In cases where there is no such branch or sales outlet in the city or municipality where the sale or transaction is made, the sale shall be duly recorded in the principal office and the taxes due shall accrue and be paid in such city or municipality.

To simplify:

•

Where there is a branch or sales office or warehouse

– sales recorded at branch and tax accrues to LGU where branch is located

• No branch

• sales recorded at principal office for taxation purposes and the tax shall accrue to the municipality where that principal office is located


•

MTREAS Company is a duly registered company engaged in agricultural business with principal office at Baguio City. The company has a huge vegetable plantation in Atok, Benguet. In the 2016, MTREAS

Company recorded a total sales of P10million. Where will MTREAS pay the business tax of the P10million sales?

Answer to Situs Illustration 2

Section 150 (b), Local Government Code (summarized)

Where there is a factory, project office, plant, or plantation in pursuit of business:

– 30% of all sales recorded in the principal office - taxable by the city or municipality where located

– 70% of all sales recorded in the sales office – taxable by the city or municipality where the factory, project office, plant or plantation is located.


• MTREAS Company is a duly registered company engaged in agricultural business with principal office at Baguio

City. The company has a huge vegetable plantation in

Atok, Benguet. In the 2016, MTREAS Company recorded a total sales of P10million for its canned vegetables processed in its factory in Bauang, La Union. Where will

MTREAS pay the business tax of the P10million sales?

Answer to Situs Illustration 3

Section 150 (b), Local Government Code (summarized)

Where there is a factory, project office, plant, or plantation in pursuit of business:

– 30% of all sales recorded in the principal office - taxable by the city or municipality where located

– 70% of all sales recorded in the sales office – taxable by the city or municipality where the factory, project office, plant or plantation is located.

– The 70% will further be divided as follows:

• 60% to the city/municipality where the factory is located

• 40% to city or municipality where the plantation is located

Situs Illustration 4

• MTREAS Company is a duly registered company engaged in agricultural business with principal office at Baguio City.

The company has a huge vegetable plantation in Atok, Benguet. In the

2016, MTREAS Company recorded a total sales of P10million for its canned vegetables, P6million of which were canned cucumbers processed in its factory in Bauang, La Union and the P4million from broccoli preserves made by their plant in Tuba, Benguet.

Where will MTREAS pay the business tax of the P10million sales?

Answer to Situs Illustration 4

Part of Section 150 (b), Local Government Code (summarized)

Where there are 2 or more factories, project offices, plants or plantations, located in different localities the 70% will be pro-rated among the localities where the factories, project offices, plants, and plantations are located in proportion to their respective volumes of production during the period for which the tax is due

Rules on Situs (summary)

• With branch, sales office or warehouse

– Where located

• No branch, sales office or warehouse

– Sales recorded in principal office and taxes accrue to such city or municipality

• With factory, project office, plant or plantation in pursuit of business

– 30% - principal office

– 70% - where factory, project office, plant or plantation is located

• The 70% will be divided as follows:

– 60% to where the factory is located

– 40% to where the plant is located

• With 2 or more factories, project offices, plants or plantation in different localities

– PRORATE in proportion to volume of production

CONDITIONS OF PAYMENT MUST BE CLEAR TO ALL

Tax is payable for every separate or distinct establishment or place where business is conducted

One line of business does not become exempt because it is conducted together with some other business for which tax has been paid

Tax on business must be paid by person conducting same

When person conducts two or more businesses subject to same rate of imposition, tax shall be computed on combined total of gross sales or receipts

When person conducts two or more businesses subject to different rates of imposition, taxable gross sales or receipts of each business are reported independently and tax is computed on basis of pertinent schedule

Requirements for New Businesses

•

Any person starting or establishing a business covered by tax ordinance of LGU must first get Mayor’s permit and pay the fee.

•

Business tax for new businesses is then imposed.

Issuance and Posting of Official Receipt

• Treasurer issues an official receipt for business tax.

Official receipt does not exempt taxpayer from any other requirements imposed by other LGU departments

• Official Receipt must be displayed conspicuously at place of business. If person has no fixed place or office, he must keep OR on his person.

• Official Receipt must be presented upon demand by

Mayor, Treasurer or their duly authorized reps.

Invoices or Receipts

•

Person subject to business taxes shall issue a commercial invoice or receipt for every sale, transfer of merchandise, or for service rendered

•

Receipts must be serially numbered in duplicate, showing names or styles and business address.

•

Original is given to customer. Duplicate kept in place of business for 5 years.

•

Receipts or invoices issued in compliance of BIR requirements are OK.

Sworn Statement of Gross Receipts or Sales

•

For new business subject to tax, operator submits sworn statement of capital investment before start of business

• For existing business, operator submits sworn statement of gross sales/receipts of the preceding calendar year or quarter in manner or form prescribed by Treasurer.

• Failure to submit sworn statement of gross sales due to lack of books of accounts or records will cause Treasurer or rep to assess gross sales on basis of best available evidence on which tax will be based.

Submission of Certified Income Tax Return Copy

Annually, operators must submit a certified photocopy of their ITR on or before April 30.

Deficiency in business tax arising from differences in gross receipts between LGU documents and ITR shall be payable on or before May 20 with interest at rate of

10%

.

Payments of deficiency tax made after May 20 will be subject to

25%

surcharge

and 2%

interest for every month, counting from Jan up to month payment is made.

ISSUANCE OF CERTIFICATION BY TREASURER

•

Treasurer may issue certification that business tax has been paid, in case original Official Receipt is lost/stolen/destroyed

•

Certification must include Official Receipt number and amount paid.

TRANSFER OF BUSINESS TO ANOTHER LOCATION

• There is no payment of additional tax for period for which payment of a tax has been paid if:

-- business transfers to other site within territorial limits of LGU, and

-- local business tax has been paid

RETIREMENT OF BUSINESS

•

Upon termination of business, sworn statement of gross sales for calendar year must be submitted within 30 days from closure.

•

Tax due must be paid first before business is fully terminated

•

Termination is

complete stop

in operations.

•

Termination

is not

change in ownership, management, or name of business

RETIREMENT OF BUSINESS: VERIFICATION

Treasurer ensures no tax avoidance occurs through false claims of termination:

– Assigns inspector to verify stop in operations

– If findings show only a change in ownership, management, application of termination

– Business continues to be liable for payment of taxes, fees,

– In case business transferred to a new owner, new owner is

OFFICIAL RETIREMENT OF BUSINESS

•

If termination is legitimate, and tax due paid for current year is less than tax due for current year, tax difference must be paid before business is officially retired.

•

Business permit is surrendered to Treasurer who cancels same and records cancellation in books

OTHER LOCAL TAX – COMMUNITY TAX

Tax on Individual

Tax on Corporations

Basic

Additional

Not to Exceed

Basic

Additional

P 5.00

P 1.00 per P1,000.00 income

P 5,000.00

P 500.00

P 2.00 per P5,000.00 income

P 5,000.00

Not to Exceed

Date of accrual: accrues on Jan 1 every year; payable w/o penalty until Feb 28

Individuals Liable to pay Community Tax

• Every inhabitant of the Philippines 18 years of age or over who has been regularly employed on a wage or salary basis for at least 30 consecutive working days during any calendar year

• An individual who is engaged in business or occupation

• An individual who owns real property with an aggregate assessed value of P1,000.00

or more

• An individual who is required by law to file an income tax

OTHER LOCAL TAX – COMMUNITY TAX

• Exemptions:

-- Diplomatic and consular representatives

-- Transient visitors when their stay in the Philippines does not exceed three (3) months.

• How collected and shared:

-- Collected by City or Municipal Treasurer;

-- Barangay Treasurer may be deputized if trained and bonded

-- Proceeds collected by city/municipality not shared w/ barangay

-- Proceeds collected by barangay shared 50-50 with city/municipality

Occasions when CTC is required to be presented

(Section 163, of the LGC)

• An individual subject to community tax acknowledges any documents before a notary public

• Takes the oath of office upon appointment or election to any position in the government service

• Receives any license, certificate, or permit from any public authority

• Pays any tax or fees

• Receives any money from any public fund

• Transacts other official business

• Receives any salary or wage from any person or corporation

Other Business-Related Impositions

Charges - pecuniary liabilities, as rents or fees against persons or property. (Sec. 131 (g)

Fee - a charge fixed by law or ordinance for the regulation or inspection of a business or activity (Sec. 131(l), LGC).

- It shall also include charges fixed by law or agency for the services of a public officer in the discharge of his official duties. (Art. 220(I), IRR).

Fees and Charges are Reflections of your Dual

Powers.

Fees and charges are reflections of the dual powers of

LGUs.

Corporate power

Police power

TYPE

Distinctions of the

3 Types of Non-Tax Revenues

PRIMARY PURPOSE

REGULATORY OR PERMIT FEES regulation or inspection of business or activities

BASE OF

IMPOSITION cost of regulation and surveillance

SERVICE FEES AND USER

CHARGES for services rendered or conveniences provided by LGU amount commensurate to such services and ensure continuing delivery

RECEIPTS FROM ECONOMIC

ENTERPRISES operation of public enterprises full cost recovery

Regulatory fees imposed by LGUs

IMPOSITION REGULATORY FUNCTION PERFORMED

Business permit Ascertain whether business activities do not violate ordinance

BASE

Cost of issuing permit and regulating activity based on size and type of business

Building permit Inspect whether building structure conforms with plan, zoning, etc.

Cost of issuing permit and surveillance based on National Building Code

Demolition permit

Inspect whether adequate safeguards are installed to ensure protection of people or other structures

Cost of issuing the permit and inspection

Dog license fee Inspect whether dog has been vaccinated

Permit for cockfighting

Ascertain whether cockpit and personnel have necessary permits

Cost of impounding and feeding based on size of animal

Cost of issuing permit and surveillance based on type of cockfight held

Service fees cover services or conveniences provided by the LGU

• Guiding principle to setting rates

Pass fees to beneficiaries:

-- at full cost

-- at amounts “commensurate” to services

• May use any or a combination of:

-- fixed rates

-- graduated fixed rates

• Use balanced judgment in setting rates

Bureau of Local Government Finance

OTHER REVENUE SOURCES AND

FUND TRANSFERS TO LGUs

INCOME FROM OTHER REVENUES (EXTERNAL SOURCES)

Internal Revenue Allotment (IRA).

The Internal Revenue Allotment (IRA) refers to the shares of LGUs from the national internal revenue taxes (NIRT) equivalent to 40% of the total annual revenue collection of the 3 rd year preceding the current fiscal year.

(Section 284, RA No. 7160, Article 378 [c], IRR of RA No. 7160)

National internal revenue taxes include the following:

• Income tax

• Estate tax and donor’s tax

• Value-added tax

• Other percentage taxes

• Taxes imposed by special laws, such as travel tax.



The allocation of the share of each LGU shall be released directly, without need of any further action, to the provincial, city, municipal or barangay treasurer, as the case may be. The IRA shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose.

(Section 286, RA

No. 7160; Article No. 383 [c], IRR of RA No. 7160)

Beginning FY 2007, the IRA is not only automatically released but treated as an automatic appropriation (Section 4 RA No.

9358, FY 2006 Supplemental

Appropriations).

This means that the IRA need not pass through congressional approval before it is released to LGUs. This provision of the law makes the release of IRA shares more predictable and allows LGUs to plan/program the use of their IRA fund more effectively.



Local government units shall have a share in the national internal revenue taxes based on the collection of the third fiscal year preceding the current fiscal year as follows:

1. On the first year of the effectivity of the Local Government Code of

1991, Thirty Percent (30%)

2. On the second year, Thirty-Five Percent (35%) and

3. On the third year and thereafter, Forty Percent (40%)(Sec. 284, LGC)



1st Year 2nd Year 3rd YR and thereafter

30%

35%

40%



In the event that an unmanageable public sector deficit is incurred by the national government, the Secretary of Finance, the Secretary of the Interior and Local Government and the Secretary of Budget and Management shall submit to the President of the Philippines, a joint recommendation that will institute necessary adjustments in the IRA of LGUs.

x x x

the President of the Philippines shall authorize the necessary adjustments of the total IRA to be distributed among the LGUs for the given year, provided that in no case shall the adjusted amount be less than thirty percent (30%) of the national internal revenue tax collections of the third fiscal year preceding the current fiscal year during which the reduction is to be made.



Allocation to Local Government Units. –The total annual IRA due the LGUs shall be allocated among provinces, cities, municipalities and barangays as follows:

1. General Allocation. – Distribution of Shares

1.1 Share of All Provinces -Twenty-Three Percent (23%)

1.2 Share of All Cities - Twenty-Three Percent (23%)

1.3 Share of All Municipalities - Thirty-Four Percent (34%)

1.4 Share of All Barangays - Twenty Percent (20%)



IRA share per LGU level

Barangays

20%

Provinces

23%

Municipalities

34%

Cities

23%



2. Share of Each Province, City and Municipality.

– The share of each province, city, and municipality shall be determined on the basis of the following distribution formula:

2.1 Population - Fifty Percent (50%)

2.2 Land Area - Twenty-Five Percent (25%)

2.3 Equal Sharing -Twenty-Five Percent (25%)



Computation of IRA based on Indicative Factors

Land Area

25%

Population

50%

Equal Sharing

25% Cities

23%

Internal Revenue Allotment (IRA).

3. Share of each Barangay .

–

3.1 Every barangay with a population of not less than one hundred

(100) inhabitants shall be entitled to an IRA of not less than

Eighty Thousand Pesos (₱80,000.00) per annum chargeable against the twenty percent (20%) share of the barangay from the total IRA.

Section 286 of R.A. 7160 provides that the share of each LGU in the IRA shall be automatically released without need of any further action and without lien or holdback



The IRA share based on population is computed using the population data from a census of population conducted by the National Statistics Office (NSO) every10 years as contained in a Presidential Proclamation Order.

(UBOM 2008 Edition)

The IRA share based on land area in computed using the consolidated master’s list of land area prepared by the Land Management Bureau (LMB) of the

Department of Environment and Natural Resources (DENR) every three (3) years.

The allocation of the individual share in the case of barangays, shall be

P80,000 for each barangay with a population of not less than 100 inhabitants.

The balance to be distributed shall be based on population (60%) and equal sharing.

Internal Revenue Allotment (IRA)

Use of the Fund

• Pursuant to Section 17 of RA No. 7160, the fund shall be used to provide for basic services and facilities, particularly those which have been devolved by the National Government.

• Section 287, RA No. 7160, and Article 383 (b), IRR of RA No. 7160 direct LGUs to set aside no less than 20% of their IRA to fund development projects as identified in the LGUs’ development plans.

• The DBM-DILG Joint Memorandum Circular No. 2011-1 dated April 13, 2011, prescribes the specific use of the 20% Development Fund for the following development projects:



Devolved Personal Services

In the first year of effectivity of the Code, LGU shall receive the amount equivalent to the cost of the devolved personal services.

Such amount shall be in addition to the 30% IRA.

Basic Services and Facilities

Affected NGAs

• DA

• DPWH

• DECS

• DSWD

• DENR

• DOT

• DOH

• DOTC


Use of the Fund – (Social Development)

 Construction or rehabilitation of health centers, rural health units or hospitals, and purchase of medical equipment;

 Construction or rehabilitation of local government-owned potable water supply system;

 Establishment or rehabilitation of Manpower Development Centers;

 Construction or rehabilitation of evacuation centers;

 Purchase or repair of area-wide calamity related alarm or warning system;

 Rehabilitation of cultural/historical sites;

 Purchase or repair of appropriate calamity-related rescue operations equipment such as inflatable boats, breathing apparatus, extraction tools, safe line rescue ropes, fire extinguishers, chainsaws, two (2) way handheld radios and the like;

 Purchase and development of land for the relocation of informal settlers and relocation of victims of calamities;

 Construction or rehabilitation of facilities such as multi-purpose hall intended to cater out-ofschool youths, women, senior citizens, minors, displaced families, indigenous people and differently-abled persons; and

 Installation and maintenance of street lighting system except payment of electric bills.


Use of the Fund – (Economic Development)

 Construction or rehabilitation of communal irrigation or water impounding system and purchase of post-harvest facilities such as farm or hand tractor with trailer, thresher and mechanical driers;

 Construction or rehabilitation of local roads or bridges and purchase of appropriate engineering equipment such as dump trucks, graders and pay loaders;

 Capital expenditures related to the implementation of livelihood or entrepreneurship/local economic development projects; and

 Amortization of loans used to finance development projects cited in this Joint

Circular, subject to the 20% debt service cap.


Use of the Fund – (Environmental Management)

 Reforestation and urban greening;

 Construction or rehabilitation of sanitary landfills, material recovery facilities and purchase of garbage trucks and related equipment;

 Implementation of flood and erosion control projects such as rehabilitation and construction of drainage systems, de-silting of rivers, de-clogging of canals; and

 Other environmental management projects that promote air and water quality, as well as productivity of the coastal or freshwater habitat, agricultural land and forest land.


Use of the Fund – (Expenditure Items Not Covered )

The following expense items that are not related to and/or not connected with the implementation of development projects, programs and activities shall not be paid out of the 20% development fund:

 Administrative expenses such as cash gifts, bonuses, food allowance, medical assistance, uniforms, supplies, meetings, communication, water and light, petroleum products and the like;

 Salaries, wages or overtime pay;

 Traveling expenses, whether domestic or foreign;

 Registration or participation fees in training, seminars, conferences or conventions;

 Construction, repair or refinishing of administrative offices;

 Purchase of administrative office furniture, fixtures, equipment or appliances; and

 Purchase, maintenance or repair of motor vehicles or motor cycles.

Fund Release Procedures

The release of LGU share from the IRA follows these procedures:

For budget preparation purposes, the BIR submits to DBM a certification of the LGU share from NIRT equivalent to 40% of the total annual revenue collection of the 3rd year preceding the current fiscal year, as reconciled with the BTr.

The DBM programs the equivalent amount of IRA in the National Expenditure Program.

Based on the BIR certification and codal formula, the DBM computes the individual share of each LGU, and informs the beneficiary LGUs of their respective IRA shares through a Local

Budget Memorandum issued not later than June 15 of the preceding year for the purpose.

At the beginning of the year, the DBM prepares and releases comprehensively the corresponding release documents to the Bureau of the Treasury (BTr).

The BTr, in turn, downloads the fund through the issuance of Authority to Debit Account to the Authorized Government Servicing Banks (AGSBs), which credits the shares of the beneficiary LGUs to their respective accounts.


Share in the Proceeds of the Tobacco Excise Tax

(R. A. No. 7171) . a) The national government shall extend special support to the farmers of the Virginia tobacco-producing provinces in terms of financial assistance for developmental projects to be implemented by the local governments of the provinces concerned.

b) The special support to the Virginia tobacco-producing provinces shall be utilized to advance the self-reliance of the tobacco farmers through:

1.

Cooperative projects that will enhance better quality of products, increase productivity, guarantee the market and as a whole increase farmers' income;



(R. A. No. 7171) .

2 .

Livelihood projects particularly the development of alternative farming systems to enhance farmers' income;

3. Agro industrial projects that will enable tobacco farmers in the Virginia tobacco-producing provinces to be involved in the management and subsequent ownership of these projects such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization; and

4. Infrastructure projects such as farm-to-market roads .

c) The financial support given by the national government for the beneficiary provinces shall be constituted and collected from the proceeds of fifteen percent ( 15%) of the excise taxes on locally manufactured Virginia-type of cigarettes.



(R. A. No. 7171) . d) The funds allotted shall be divided among the beneficiary provinces pro rata according to the volume of Virginia tobacco production.

e) Provinces producing Virginia tobacco shall be the beneficiary provinces:

Provided, however, That, to qualify as beneficiary, a province must have an average annual production of Virginia leaf tobacco in an amount not less than one million kilos: Provided, further, That the Department of

Budget and Management shall each year determine the beneficiary provinces and their computed share of the funds, referring to the National

Tobacco Administration (NTA) records of tobacco acceptances, at the tobacco trading centers for the immediate past year.


Share in the Proceeds from the Development and Utilization of the National

Wealth a) Local government units shall have an equitable share in the proceeds derived from the utilization and development of the national wealth within their respective areas, including sharing the same with the inhabitants by way of direct benefits. (Sec. 289, LGC) b) The term national wealth shall mean all natural resources situated within the Philippine territorial jurisdiction including lands of public domain, waters, minerals, coal, petroleum, mineral oils, potential energy forces, gas and oil deposits, forest products, wildlife, flora and fauna, fishery and aquatic resources and all quarry products. (Art. 386, IRR implementing

Sec. 289, LGC)



Wealth c) Amount of Share of Local Government Units.

– LGUs shall, in addition to the IRA, have a share of forty percent (40%) of the gross collection derived by the national government from the preceding fiscal year from the following:

1. Mining taxes, royalties, forestry and fishery charges, and such other taxes, fees, or charges, including related surcharges, interests, or fine, and from its share in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction.



Wealth

2.

Administrative charges enumerated herein accruing to the National

Government whether collected by the National Government collecting agencies or, in certain cases, by LGUs.

3.

Proceeds from the development and utilization of national wealth where the local government actually collects and automatically retains its share of at least forty percent (40%) of such proceeds shall not form part of the revenue base in the computation of the forty percent (40%) share.

(Art. 387, IRR implementing Sec. 290, LGC)



Wealth d) Share of Local Government Units from any Government Agency or Government-

Owned or Controlled Corporation.

–Local government units shall have a share based on the preceding fiscal year from the proceeds derived by any government agency or government-owned or controlled-corporation engaged in the utilization and development of the national wealth based on the following formula whichever will produce a higher share for the local government unit:

1.

One percent (1%) of the gross sales or receipts of the preceding calendar year; or

2.

Forty percent (40%) of the mining taxes, royalties, forestry and fishery charges and such other taxes, fees or charges, including related surcharges, interests, or fines the government agency or government-owned or controlled-corporation would have paid if it were not otherwise exempt. (Sec. 291, LGC)


Shares from National Wealth

In addition to the internal revenue allotment, LGUs are also entitled to 40% of the gross collection by the national government from the preceding fiscal year out of the proceeds derived from the utilization and development of national wealth within the LGUs’ respective areas

(Section 289 and 290, RA No. 7160 and Articles

386 and 387, IRR of RA No.7160).

The following are the four (4) types of national wealth with the corresponding collecting agency:

Particulars

Forest Charges

Collecting Agency

Department of Environment and Natural

Resources (DENR) – OSEC

Royalties and Mineral Reservation DENR – Mines and Geo-Sciences Bureau

Energy Production Resources

Mining Taxes

Department of Energy

Bureau of Internal Revenue



LGUs shall also have a share from proceeds derived by any government agency or government-owned or controlled corporation engaged in the utilization and development of the national wealth based on the following formula whichever will produce a higher share for the LGU:

• One percent (1%) of the gross sales or receipts of the preceding calendar year; or

• Forty percent (40%) of the mining taxes, royalties, forestry, energy resources production, and such other taxes, fees and charges, including interests and fines the government agency or government owned or controlled corporation would have paid if it were not otherwise exempt (Section 291, RA No. 7160; Article

388, IRR of RA No. 7160).



Allocation of Shares.

–The share in the resources of local government units from any government agency or government-owned or controlled-corporations shall be distributed in the following manner:

(Where the natural resources are located in the province)

Province – Twenty Percent (20%)

Component City/Municipality – Forty-Five Percent (45%)

Barangay – Thirty-Five Percent (35%)

(Where the natural resources are located in a highly urbanized or independent component city)

City – Sixty-Five Percent (65%)

Barangay – Thirty-Five Percent (35%)

However, where natural resources are located in two(2) or more cities, the allocation of shares shall be computed on the basis of population (70%) and land area (30%)

Distribution of Shares

Distribution of Shares from National Wealth

(where the natural resources are located in the province)

Provinces

20%

Barangays

35%

Component City or Municipality

45%

City

65%

Distribution of Shares

Distribution of Shares from National Wealth

(Where the natural resources are located in a highly urbanized or independent component city)

Barangay

35%



Wealth f) Computation and Remittance of Shares of Local Government Units in the

Utilization and Development of National Wealth. –The computation and remittance of the shares of LGUs from the utilization and development of national wealth shall be in accordance with the following procedures:

1. The computation of the forty percent ( 40% ) share of each LGU in the proceeds from the development and utilization of national wealth from the preceding year, indicating the corresponding share of each province, city, municipality and barangay where the national wealth is being developed and/or utilized, shall be submitted by the revenue collecting agencies to the DBM not later than March 15 of each ensuing year.

Share in the Proceeds from the Development and Utilization of the

National Wealth

2. The allotment representing the share of each LGU shall be released without need of any further action, directly to the provincial, city, municipal, or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government.

(Art. 390 (a) and (h), IRR implementing Sec. 293, LGC)



Wealth g) Remittance of the Share of Local Government Units from Government

Agencies and Government-Owned or Controlled Corporations.

–Share of

LGUs from the proceeds derived by any government agency or GOCC engaged in the utilization and development of national wealth shall be directly remitted by such corporations to the provincial, city, municipal or barangay treasurer concerned within five (5) days after the end of each quarter. Within three (3) days from the date of remittance, the agency or GOCC concerned shall furnish the Treasurer of the Philippines with a copy of the remittance advice. (Art. 390 (c), IRR implementing Sec. 293, LGC)



Wealth h) Mandatory Appropriation for Local Development and Livelihood Projects.

–

The proceeds from the share of local government units from the utilization and development of national wealth shall be appropriated by their respective sanggunian to finance local development and livelihood projects: Provided, however, That at least eighty percent (80%) of the proceeds derived from the development and utilization of hydrothermal, geothermal, and other sources of energy shall be applied solely to lower the cost of electricity in the local government where such a source of energy is located. (Sec. 294, LGC)



Use of the Fund:

LGU share from proceeds of national wealth shall be used to finance local development and livelihood projects of the recipient LGU.

In the case of proceeds derived from the development and utilization of hydrothermal, geothermal and other sources of energy, 80% of the proceeds shall be applied solely to lower the cost of electricity in the LGU where such source of energy is located.

(Section 294, RA No. 7160; Article 391, IRR of RA No. 7160)

In the case of any government agency or government-owned or controlled corporations engaged in the utilization and development of the national wealth, such share shall be directly remitted by the government agency/governmentowned or controlled corporation concerned to the provincial, city, municipal, or barangay treasurer within five (5) days after the end of each quarter.

(Section 293,

RA No. 7160; Article 390 [b], IRR of RA No. 7160)




DBM-DOF-DOE Joint Circular (JC) No. 2006-1 dated February 13, 2006, DOF-

DBM-DILG-DENR JC No. 2009-1 dated March 31, 2009, DENR-DOF-DBM-DILG

JC No. 2010-1 dated June 25, 2010, and DOF-DBM JC 2016-1 dated January 4,

2016 prescribe the guidelines and procedures for the release of LGU shares in the proceeds from the utilization and development of national wealth, summarized hereunder:

• Forest Charges

• Royalties from Mineral Reservation

• Mining Taxes, and

• Energy Source Production


Fund Release Procedures of LGU Shares in the proceeds from Forest Charges, Royalties from

Mineral Reservation, Mining Taxes, and Energy Source Production

The collecting agencies, i.e., Bureau of Internal Revenue (BIR), the Department of Environment and

Natural Resources (DENR), DENR-Mines and Geosciences Bureau (MGB), and the Department of

Energy submit to DBM a certification of the projected total shares of LGUs based on the immediately preceding year’s collections as basis for provision of appropriations cover.

During budget execution, the collecting agencies and the BTr submit to DBM a reconciled certification on actual collections and actual remittances from the immediately preceding year.

Based on the reconciled certification/s submitted the collecting agencies and BTr, the DBM prepares and releases the corresponding release documents to the BTr

The BTr, in turn, downloads the fund through the issuance of Authority to Debit Account to the AGSBs, which credits the shares of the beneficiary LGUs to their respective accounts.

Other Special Shares of Local Government Units from National

Taxes

Share in Special Economic Zones

 Share in Special Economic Zones.

– Businesses and enterprises in

Special Economic Zones shall pay gross income tax of five percent (5%) in lieu of all national and local taxes. The equivalent of three percent (3%) shall accrue to the national government and one percent (1%) to the host local government unit. The remaining equivalent of one percent (1%) is to be distributed to the areas contiguous to the economic zone. (R.A. No.

7227)


Taxes


 Local government units within the Cagayan Special Economic Zone

(CSEZ) are entitled to a share in the five percent (5%) final tax on Gross

Income Earned (GIE) paid by registered enterprises within the CSEZ, as follows:

• One percent (1%) to the Province of Cagayan; and

• One-half percent (1/2%) to be shared by the municipalities affected by the declaration of the Zone in proportion to their income from business activities within the Zone

• The other shares of LGUs in ECOZONEs [such as those under RA No.

7227] are already remitted to the benificiary LGUs pursuant to RA No.

9400


Taxes


Use of the Fund

The shares of LGUs from the final tax on GIE paid by registered enterprises within the CSEZ shall be used for local development projects.


The following procedures are applied in releasing the shares of LGUs in the gross income taxes paid by all businesses and enterprises within the ECOZONES:

For budget preparation purposes, the BIR submits to the DBM on or before March 15 of every year a certification on the total computed LGU shares based on the actual revenue collections corresponding to thirty percent (30%) of the total final tax collected on GIE for the base year, which is two (2) years immediately preceding the current year.

During budget execution, the BIR and BTr submit reconciled certification/s of actual collections and remittances to the DBM.

Based on the reconciled certification/s submitted by the BIR and BTr, the DBM prepares and releases the corresponding release documents to the BTr

The BTr, in turn, downloads the fund through the issuance of Authority to Debit Account to the AGSBs, which credits the shares of the beneficiary LGUs to their respective accounts.


Taxes

 Share from Excess Collection in Value Added Tax (VAT).

–(a) In addition to the Internal Revenue Allotment, fifty percent (50%) of the national taxes collected by the Bureau of Internal Revenue (BIR) under Sections 106 and 108 of the National Internal Revenue Code (NIRC) of 1997 (formerly

Sections 100, 101 and 102 of the NIRC of 1977) in excess of the increase in collection for the immediately preceding year shall be distributed as follows: a) Twenty percent ( 20%) shall accrue to the city or municipality where such taxes are collected and shall be allocated in accordance with Section 150 of R. A. No.

7160 or the Local Government Code of 1991; and b) Eighty percent ( 80%) shall accrue to the national government .

Other Special Shares of Local Government Units from

National Taxes c) Local Government Units' share in the Incremental Collection from VAT pursuant to R. A. No. 7643, shall be allocated among local government units entitled to such share in accordance with

Section 150 of the Local Government Code of 1991, to wit:

1. If VAT is paid by manufacturers, producers without branch or sales outlets: One hundred percent (100%) to the city or municipality where the business is located;


Taxes

2. If VAT is paid by manufacturers, producers, with factories, project offices, plantations and plants:

2.1 Thirty percent (30%) to the city or municipality where the principal office is located;

2.2 Seventy percent (70%) to the city or municipality where the factory, project offices, plant or plantation is located.


Taxes

If VAT is paid by manufacturers, producers with factories, project offices, plantations and plants

70% to the city or municipality where the factory, project offices, plant or plantation is located;

70%

30%

30% to the cityto the city or municipality where the principal office is located;

Other Special Shares of Local Government Units from

National Taxes

3.

If VAT is paid by manufacturers, producers, exporters where the plantation is located at a place other than the place where the factory is located:


3.2 Forty two percent (42%) to the city or municipality where the factory is located;

.

3.3 Twenty eight percent (28%) to the city or municipality where the plantation is located.


Taxes

If VAT is paid by manufacturers, producers, exporters where the plantation is located at a place other than the place where the factory is located

28% to the city or municipality where the plantation is located

28% 30%

30% to the city or municipality where the principal office is located;

42%

42% to the city or municipality where the factory is located


Taxes

4. If VAT is paid by the manufacturers, producers, exporters and has two (2) or more factories, plants, and plantations:


.

4.2 Seventy percent (70%) shall be prorated among the localities where the factories, project offices, plants, and plantations are located.


Taxes

If VAT is paid by the manufacturers, producers, exporters and has two (2) or more factories, plants, and plantations

30% to the city or municipality where the principal office is located

30%

70%

70% shall be prorated among the localities where the factories, project offices, plants, and plantations are located


Taxes d) The LGUs' share shall be released directly to the LGUs concerned subject to the approval of special budget pursuant to

Section 35, Chapter 5, Book VI of E. O. No. 292 duly supported by the certification of actual VAT collections and remittances under Sections 106 and 108 of the NIRC of 1997 by the BIR.

(Sec. 2, R. A. No. 7643, implemented by DBM-DOF-DILG Joint

Circular No. 1-02, February 6, 2002).

Extraordinary Receipts from External Sources a) Collections derived from the repayment of loans and advances made by the government as well as from other non-recurring sources. b) Income which does not regularly accrue to the government, the collection for which is indefinite or does not depend entirely on the authority of the government.

c) Foreign and domestic aid or grant provided for the LGU in the form of money and/or materials d) Extraordinary Receipts such as donations, grants, aids, loans and borrowings.

FUND TRANSFERS

Transfer of Funds to Implementing Agencies

Fund transfers should be properly taken up in the books of both agencies, used only for the purpose intended, and properly accounted and reported (COA Circular No. 90-013 dated December

13, 1994)

FUND TRANSFERS

Documentary Requirements

Transfer

Source Agency:

• Copy of MOA/Trust Agreement

• Copy of Approved Program of Work (for infrastructure project)

• Approved Project Expenditures or Estimated Expenses indicating the project objective and expected output (for other projects)

• For GOCCs, Board Resolution ratifying the MOA in case of transfers not incorporated in the Corporate Operating Budget and/or beyond the signing authority of the Agency Head

FUND TRANSFERS


• For LGUs, as clarified under COA Memorandum No. 2010-014 dated April 22,

2010, authorization by local sanggunian for the Local Chief Executive to enter into contract in case of the following: o In the case of a re-enacted budget:

- For new contracts entered into by the local chief executive for contractual obligations included in the previous year’s annual and supplemental budget o In the case of the regularly enacted budget:

- For projects described in generic terms, such as infrastructure projects, intermunicipal waterworks, drainage and sewerage, flood control, irrigation system projects, reclamation projects or roads and bridges for purchase of goods and services which are neither specified nor encompassed within the regular personal services and maintenance operating expense

FUND TRANSFERS


• Certification by the Accountant that funds previously transferred to the Implementing Agency (IA) has been liquidated, post audited and accounted for in the books

• Copy of the OR issued by the IA to the Source Agency acknowledging receipt of funds transferred (for post-audit activities)

FUND TRANSFERS

Implementation and Liquidation

Implementing Agency:

• Necessary supporting documents depending on the nature of transactions

• Copy of MOA/Trust Agreement

• Copy of OR upon receipt of finds transferred

• Copy of OR issued by the Source Agency evidencing refund of unexpended/unutilized balance of fund transfer

FUND TRANSFERS

Liquidation

Source Agency:

• Report of Checks Issued and Report of Disbursements certified correct by the Accountant, approved by the Head of the IA, and duly audited by the Auditor of the IA

• Copy of Credit Notice issued by the Auditor of the IA

• Copy of OR issued for the refund of unexpended/unutilized balance of fund transferred

MANAGEMENT AND OPERATION OF

LOCAL ECONOMIC ENTERPRISES

01

OUTLINE OF PRESENTATION

INTRODUCTION o Current Situation o Definition and Classification of LEEs

02

03

04

POLICY FRAMEWORK

PLANNING AND IMPLEMENTING

PROCEDURES FOR PROPOSED /

NEW LEEs

IMPLEMENTING PROCEDURES FOR

EXISTING LEEs

05

06

BUDGETING FOR LEEs

REVIEW AND ASSESSMENT OF

LEEs

INTRO DUCTION

o Current Situation o Definition and Classification of

LEEs

CURRENT SITUATION

IN TERMS OF POLICY: o The local government code has provisions relating to LEEs o Inadequate guidelines on how to implement the law

IN TERMS OF

IMPLEMENTATION: o Dismal track record of most LEEs per review by Castel and

Manasan

LOCAL GOVERNMENT UNITS

refers to a political subdivision of a nation or state which is constituted by law and has substantial control of local affairs (UP Law Center)

DUAL PERSONALITY

OF LGUs

1. Public – carries out governmental powers as an agent (political subdivision) of the state to promote the public welfare.

2. Private – acts in a similar category as a business (corporate entity) performing functions not strictly governmental.

LOCAL ECONOMIC ENTERPRISE

As a mode of delivering services – LEEs are ventures wholly or partially owned by LGUs that generate revenue/income through sale of services and goods to meet a perceived constituency demand.

TYPES OF LEEs

1. Public Utilities (PUs)

2. Other Economic Enterprises

(OEEs)

LOCAL ECONOMIC ENTERPRISE

PUBLIC UTILITY (PU)

PU is a type of LEE: o created by the Local Sanggunian through an ordinance; o for the purpose of providing an everyday basic necessity or service to the public at large; o which otherwise cannot be provided adequately by the private sector; and o Charges fees for the service

(Section 17(j), RA No. 7160)

LOCAL

ECONOMIC

ENTERPRISES

PUBLIC UTILITY (PU)

LGU PUs shall be limited to: o Water supply; o Power supply and distribution; o Telecommunications; o Sanitation; and o Public transportation and transport terminals.

LOCAL

ECONOMIC

ENTERPRISE

OTHER ECONOMIC ENTERPRISES (OEEs)

An OEE is: o an LGU establishment commercially operated o created by the Local Sanggunian through an ordinance o for the purpose of improving production and delivery of marketable goods or services for specific market groups.

LOCAL

ECONOMIC

ENTERPRISES

OTHER ECONOMIC ENTERPRISES

(OEEs)

OEEs may include but not limited to: o Public markets and shopping centers; o Slaughterhouses, livestock trading and animal raising; o Fish landing, ice plants and cold storage facilities; o Post harvest facilities (grain storage, drying, milling); o Commercial retail and office spaces; o Public parks, sports and recreational facilities; and o Public cemeteries.

POLICY FRAMEWORK

The parameters for the creation and operation of LEEs are laid down in the

Local Government Code and related circulars.

OPERATING PRINCIPLES


CODE

SECTION 3(b)

SECTION 3(f)

There shall be established in every LGU an accountable, efficient, and dynamic organizational structure and mechanisms that will meet the priority needs and service requirements of its communities.

Local government units may group themselves, consolidate or coordinate their efforts, services, and resources for purposes commonly beneficial to them.

SECTION 3(l)

The participation of the private sector in local governance, particularly in the delivery of basic services, shall be encouraged to ensure the viability of local autonomy as an alternative strategy for sustainability development.

OPERATING PRINCIPLES


CODE

SECTION 22(d)

SECTION 17(a)

LGUs shall enjoy full autonomy in the exercise of their proprietary functions and in the management of their economic enterprises, subject to the limitations provided in this Code (LGC) and other applicable laws.

LGUs are enjoined to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them.

RELATED CIRCULARS

ITEM 3.1

ITEM 3.2

ITEM 3.3

LOCAL BUDGET CIRCULAR NO. 100

LGU transfer/advance to LEE/PU refers to any amount transferred from the General Fund of the LGU to subsidize the financial requirements for operations of the LEE/PU.

Transfer/advance to the LEE/PU shall be subject to the rule under Section 313 of the LGC.

No amount of the LGU transfer/advance to the

LEE/PU shall be used to fund the PS requirements of the said LEE/PU.

PROPOSED /NEW LEEs

Planning and Implementing

Procedures for Proposed / New

LEEs

PROCESS FLOW FOR PROPOSED/NEW LEEs

STEP 1

Evaluate whether the LGU should engage in LEE

STEP 3

Assess Potential

Financing Sources

STEP 5

Present the FS Findings and

Recommended Financing Source to the LCE

STEP 7

Present the Proposal for the

Establishment of the LEE to the Sanggunian as Basis for the Enactment of the

Ordinance Creating the LEE

STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 6

Prepare a 5-Year

Business Plan for each LEE

STEP 8

Enact the

Ordinance

Creating the LEE


STEP 1


STEP 1:

EVALUATE WHETHER THE LGU

SHOULD ENGAGE IN LEE

RESPONSIBLE

PERSON / UNIT

4-HURDLE

CRITERIA

The LCE may assign or designate the relevant local officials who will be responsible for planning and implementing the new LEEs.

1. Satisfy the LGU economic and social objectives as reflected in the PDPFP/CDP and LDIP and AIP

2. Fill gaps and services not adequately provided by private sectors. The following points should be clearly established: a. The LGU needs to play a primary role in the provision of the proposed output to be provided by the LEE b. Output cannot be provided wholly or partly by private sector.

STEP 1:



4-HURDLE

CRITERIA

4-HURDLE

CRITERIA

3. Operate as a business enterprise with its own business plan and budget.

4. Operate with appropriate staffing complement to satisfy its operating objectives.

STEP 1:



DECISIONS

If:

1. Satisfy the LGU economic and social objectives as reflected in the PDPFP/CDP and LDIP and

AIP

2.

Fill gaps and services not adequately provided by private sectors.

Then:

1.

Good/service should not be provided by the LGU; and

2.

Provision of the good/service should be left to the private sector.

STEP 1:



DECISIONS

If:

1. Satisfy the LGU economic and social objectives as reflected in the PDPFP/CDP and LDIP and

AIP

2. Fill gaps and services not adequately provided by private sectors.

3. Operate as a business enterprise with its own business plan and budget.

4. Operate with appropriate staffing complement to satisfy its operating objectives.

STEP 1:



DECISIONS

Then:

The LGU should consider partnering with the private sector or other LGUs:

1. Contracting out - service, management, lease and concession contracts;

2. Build-operate-transfer (BOT) and its variants;

3. Joint ventures – with other LGUs, NGOs, CSOs; and

4. Inter LGU partnerships.


STEP 1


STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP2:

CONDUCT FEASIBILITY STUDY FOR

PROPOSED/NEW LEE

RESPONSIBLE

PERSON / UNIT

An FS shall be conducted by the responsible officials to determine the viability of the proposed LEE.

VALUE OF THE

FS o The FS will help in determining whether the proposed LEE is able to hurdle the 4 Hurdle Criteria for the Appropriateness of the LEE o Good reference in conducting project feasibility study: NEDA’s Project Evaluation and Development

Manual.

STEP 2: CONDUCT FEASIBILITY STUDY FOR PROPOSED/NEW LEE

5 MAJOR COMPONENTS OF A FEASIBILITY STUDY

01 02 03 04 05

MARKET

SITUATION

ANALYSIS

TECHNICAL

ANALYSIS

FINANCIAL

(ECONOMIC)

SUSTAINABILITY

ANALYSIS

ORGANIZATIONAL

ANALYSIS

REGULATORY AND

OTHER PRE-

OPERATIONAL

REQUIREMENTS o Establish the volume of demand and what the user-beneficiaries “can” and are

“willing” to pay in terms of a combination of “user fees and charges” and “taxes”

(the 2 cost recovery mechanisms for LGU projects and LEEs); o Identify competing products and services as well as potential target markets and customers; and o Position the LEE products or services against its competitors (or find a niche for the LEE products or services).

o Based on the magnitude and nature of the demand for the LEE output, properly align the project scope, design, and specifications with the market situation; o Ensure that the project scope, design, and specifications have no adverse environmental impact; and o In cases where there are potential negative environmental effects, provide for mitigation (or compensation) in the project design and costs.

o Establish financial viability in terms of adequate funds flow for the project cost and the subsequent annual operating and maintenance (O&M) costs since there is adequate cost recovery and sufficient financial

(economic) incentives for the

LEE.

o Identify the organizational structure and manpower requirements needed to operate the LEE, including positions, qualifications, descriptions.

and job o List down the necessary permits, leases, licenses, insurance, and other preoperating requirements


STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 3:

ASSESS POTENTIAL FINANCING SOURCES

SOURCES OF

FINANCING

1.

Current Available LGU Revenues

• Taxes

• Fees and charges

• Revenues from existing LEE reserves

• Surpluses

• IRA.

Transfers to LEEs shall take the form of advances or subsidy from the General Fund pursuant to LGC Section

313, subject to existing COA rules and regulations.

These advances or subsidy, however, cannot be used to finance the personnel services of LEE staff .

STEP 3:


SOURCES OF

FINANCING

2.

Borrowings o direct loans from lending institutions o bond proceeds

3.

Foreign and Local Grants o for “hard” projects - whose results are capital outlays and other infrastructure projects whose results are tangible assets) o for “soft” projects – whose results are not tangible, such as capacity building, systems improvement and the like

4.

Capital Income o derived from sales or use of existing LGU assets.

STEP 3:


SOURCES OF

FINANCING

5.

Cost Recovery o User fees and charges; and o Revenue anticipating measures like special levies, and earmarked taxation of future benefits.

LGC Section 240 allows the LGUs to impose a special levy on lands especially benefited by public works projects or improvements funded by the LGU provided that the special levy shall not exceed 60% of the actual cost of such projects and improvements.

The special levy takes the form of an additional real property tax imposed on the benefited properties. The imposition of a special levy requires the enactment of an enabling ordinance.

STEP 3:


SOURCES OF

FINANCING

6. Cost Sharing o Share the cost in operating LEEs mutually beneficial to other parties, such as with other

LGUs, the national government, or with the private sector.

7. Public Private Partnerships o BOT and its variants; o lease financing; o contractor/supplier credit; and o subject to the applicable rules and regulations set by the PPP Center.

8. Donations from public and private entities

PROCESS FLOW FOR

STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 4:

SELECT SOURCE OF FINANCING

CONSIDERATIONS o Adequacy of Funds - Are funds adequate with respect to the LEE project’s capital and pre-operating and initial operating maintenance and other operating expenses

(MOOE) requirements?

o Impact - What is the impact of the funding source or scheme on the community, including economic impact such as necessary “belt tightening” measures and the deferment or even cancellation of other projects?


STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 5



STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 5: PRESENT THE FS FINDINGS AND RECOMMENDED

FINANCING SOURCE TO THE LCE

CONSIDERATIONS o The responsible LGU czar should present to the LCE the

FS results as well as the suggested funding source for the proposed LEE.

o Should the LCE decide to proceed with the creation of the

LEE, a Business Plan should be prepared by the designated LGU personnel for the LEE.

o In case of two or more proposed LEEs to be created, each

LEE should have its own BP. The BP will spell out the implementing details of the LEE within a 5-year period.


STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 5



STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 6

Prepare a 5-Year


STEP 6: PREPARE A 5-YEAR BUSINESS PLAN

CONSIDERATIONS o A 5-Year BP for each LEE to be created should be prepared by the designated LGU personnel or external consultant.

o For new LEEs, the BP shall serve as a blueprint on how to make the operations of the LEE financially self-sufficient and eventually profitable.

o The BP is the heart and soul of the operation of an LEE and the most important document that will be required by any lending institution or potential investor.

o It is a powerful management tool that details how the LEE is going to reach its objectives and where it plans to go in relation to where it is.

STEP 6: PREPARE A 5-YEAR BUSINESS PLAN

3 MAJOR COMPONENTS OF A BUSINESS PLAN

01 02 03

LEE GOALS,

POTENTIALS AND

OUTLOOK

MARKETING

ANALYSIS AND

PLAN

MANAGEMENT

AND PERSONNEL

PLAN o Goals of the LEE based on an analysis of the industry to which the LEE belongs; consumption trends; and o Economic forecasts or outlook for the industry.

o Includes: o 1 st year of operations - detail some personnel holding permanent positions to the LEE to supervise and facilitate coordination and compliance to LGU regulatory requirements.

• profile of the target market;

• assessment of competitors;

• distinct advantages of the LEE’s o The LEE personnel hired shall be on contractual status and/or on casual or job-order status. If their performance falls below standards, these personnel can be replaced.

products or services; and

• marketing and sales strategies.

o The LEE may be exempted from paying local regulatory fees if so desired by the LGU.

However, in the course of LEE operations, the LGU and its personnel (in their official and personal capacities) shall not be exempted from paying user fees and charges in keeping with the LEE’s economic nature.


STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 5



STEP 7




STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 6

Prepare a 5-Year


STEP 7:

PRESENT THE PROPOSAL TO THE

SANGGUNIAN

CONSIDERATIONS o The LCE shall propose to the local

Sanggunian the creation of the LEE.

o All the necessary documents, particularly the FS and BP, shall support the proposal.

o The LCE may present a draft bill for consideration of the local Sanggunian.


STEP 1


STEP 3

Assess Potential

Financing Sources

STEP 5



STEP 7




STEP 2

Conduct Feasibility

Study (FS) for

Proposed/New LEE

STEP 4

Select

Financing

Source for the

LEE

STEP 6

Prepare a 5-Year


STEP 8

Enact the

Ordinance

Creating the LEE

STEP 8: ENACT THE ORDINANCE

CREATING THE LEE

CONTENTS OF

THE

ORDINANCE

The ordinance enacted by the Local

Sanggunian should contain, among others: o purpose and justification for the LEE; o capitalization; o sources of financing; o organization and staffing; o pricing policy; and o Sunset provision.

EXISTING LEEs

Implementing Procedures for

Existing LEEs


Continue LEE operations but make necessary changes to comply with the legal provisions & other requirement governing LEEs

If detailed personnel are assigned to LEE

Prepare a 5 year staffing plan and staff transition strategy

If no detailed personnel are assigned to LEE (or all LEE budget and working full-time on the LEE)

Prepare a 5 year business plan (BP) for each LEE

Prepare to LCE the 5-year BP for each LEE

STAFFING PLAN AND STAFFING TRANSITION STRATEGY

STAFFING

PLAN o Includes a transition strategy such that

LGU personnel detailed (either full time or part time) to the LEE and concurrently working in other LGU units would gradually be weaned out.

o The plan should include the hiring of full time staff in the management and operations of the LEE.

o At the end of 5 years, LEE should be staffed with full time personnel.

FIVE-YEAR BUSINESS PLAN

BUSINESS

PLAN o The assigned LGU staff or external consultant shall develop a detailed 5-year Business Plan (BP).

o For existing LEEs, a BP is mandatory to:

• implement the necessary changes to comply with the legal requirements of LEEs; and

• make the operations of the LEE financially selfsufficient and eventually profitable.

o The initial BP shall cover 5 years of operation.

o The BP is a dynamic plan and should be reviewed or revised whenever needed.

Reference: MANUAL ON THE SETTING UP

AND OPERATION OF LOCAL ECONOMIC

ENTERPRISES

THANK YOU

Excerpts from the Presentation of

DIRECTOR LEILA MAGDA G. RIVERA

LGRCB, DBM

LOCAL BUDGET PROCESS

2016 E DITION

PUBLIC FINANCIAL MANAGEMENT

AUDITING

PUBLIC REPORTING ON

PUBLIC SECTOR

FINANCIAL OPERATIONS

DEBT MANAGEMENT

BUDGETING

ACCOUNTING

REVENUE

GENERATION

CASH MANAGEMENT

BUDGET

WHAT IS A BUDGET?

“A financial plan embodying the estimates of income and expenditures for a given period of time (usually for one (1) fiscal year).”

(Section 306a, R.A. No. 7160)

Spending within our means

Investing in the right priorities

Delivering measurable results

Empowering citizens through fiscal transparency, accountability & participation

T HE L OCAL B UDGET P ROCESS


Budget Preparation is an executive function pursuant to Section 318, RA 7160 which mandates the LCE to prepare the executive budget for the ensuing fiscal year.


The Sanggunian shall enact, through an ordinance, the annual and supplemental budgets of LGUs (Sec. 319, RA 7160).


The Sanggunian shall review the AOs of component cities, municipalities and barangays as the case maybe. While the DBM Regional Offices shall review the AOs of provinces (Sec. 326, 327,

RA 7160)


The responsibility for the execution of the annual and supplemental budgets and the accountability therefor shall be vested primarily in the LCE (Sec. 320, RA 7160). The

Vice-LCE shall sign all warrants drawn on the treasury for all expenditures appropriated for the operation of the

Sanggunian (Sec. 445(a)(1), 455(a)(1), 466(a)(1), RA

7160).


The responsibility for the execution of the annual and supplemental budgets and the accountability therefor shall be vested primarily in the LCE (Sec. 320, RA 7160).

Fiscal responsibility shall be shared by all those exercising authority over the financial affairs, transactions, and operations of the local government units (Sec. 305 (l), RA 7160).

pfm

PARTICIPATORY

LOCAL BUDGETING FRAMEWORK

within our means invests in the right priorities delivers measurable results

POLICY-BASED empowers citizens

PERFORMANCE-

INFORMED

B UDGET P REPARATION o The first phase in the local budget process o Involves the cost estimation per PPA, preparation of budget proposals, executive review of budget proposals, and the preparation of the LEP and the Budget

Message o Starts with the issuance of the Budget Call, and ends with the submission of the

Executive Budget to the Sanggunian on or before October 16 of each year

B UDGET A UTHORIZATION o The second phase in the local budget process o Starts from the time the Sanggunian receives the Local Expenditure Program, and ends with the enactment of the Appropriation Ordinance and approval thereof by the Local Chief

Executive o Anchored on the fundamental principle – “No money shall be paid out of the local treasury except in pursuance of an Appropriation

Ordinance or law.

”

(Section 305 (a), RA No. 7160) legal basis issue

B UDGET R EVIEW o The third phase of the local budget process o Primary purpose is to determine whether the Appropriation Ordinance has complied with the budgetary requirements and general limitations set forth in the LGC, as well as other laws o Starts from the time the reviewing authority receives the appropriation ordinance and ends with the issuance of the review action legal basis issue

B UDGET E XECUTION o The fourth phase of the local budget process o Involves the release of allotments, the certification of available appropriations and cash, the disbursement of funds and delivery of goods in the most efficient, effective, economical and ethical way legal basis issue

B UDGET A CCOUNTABILITY o The last phase of the local budget process - accounting for the budget o Involves the use of management control techniques to assist in tracking receipts of income/revenue and controlling expenditures o Evaluation of financial and physical performance legal basis issue

PRINCIPLES and PROCEDURES

IN THE RECEIPT, REMITTANCE and

DEPOSIT OF COLLECTIONS

General Control on Collection

a) Separation of Personal Money from the Public Funds –

1.

Local Treasurers and other accountable officers shall keep personal monies separate and distinct from local public funds in their custody and shall not make profit out of public money or otherwise apply the same to any use not authorized by law or ordinance. (Sec. 312, LGC)

2. Collections shall be deposited daily and intact with the authorized depository bank.

3. Local Treasurers/Cashiers are prohibited from holding positions as treasurers or cashiers of savings and loan association or any other association or organization. (Sec. 67, Book II, Vol. I, GAAM)


b) Acknowledgement of Collections/Issuance of Official Receipts –

1. No payment of any nature shall be received by a collecting officer without immediately issuing an official receipt in acknowledgement thereof. The receipt may be in the form of cash tickets and the like, or officially numbered receipts subject to proper custody, accountability, and audit. (COA Cir. 92-382).

2. Where mechanical devices are used to acknowledge cash receipts, the Commission on Audit may approve, upon receipt, exemption from the use of accountable forms.

(Sec. 68, P.D. No. 1445)

General Control on Collection

c) Acknowledgement of collections/issuance of electronic Official

Receipt –

(COA Circular No. 2013-007 dated September 18, 2013)

1. All collections shall be acknowledged by the government agency concerned through the issuance of official receipts to establish that these have been received.

2. Receipt of collections/revenue through electronic means shall be acknowledged by an eOR. Collections through electronic system shall be accounted for in the books of the government agency concerned in accordance with existing rules and regulation for receipts and collections.


3. To ensure that transaction can be individually and safely processed using online collection system, the Local Government Unit concerned shall comply with the provisions of the Joint Department of Finance and the Department of Trade and Industry Administrative Order No. 2s

2006, on the “Guidelines Implementing R.A. No. 8792 on EPCS in

Government” or any subsequent amendments thereto.

4. The Local Government Unit shall provide read/view and print access rights to the COA Auditor in the computerized system where online collections are being processed as may be authorized.


d) Prohibition Against the Use of Temporary/Provisional

Receipts – At no instance shall temporary receipts be issued to acknowledge the receipt of public funds. (Sec. 72, Book II, Vol. I,

GAAM) e) Collections Received Through Mail and Procedures for

Handling – Collections received through mail shall be acknowledged, and remitted or deposited, and recorded just like other collections. Basic controls, shall, however, be maintained:


f) Acceptance of Checks in Payment for Taxes or Other

Indebtedness to the Government – Local Treasurers and other officers in charge with the collection of revenue or the receiving of monies payable to the government shall accept payment for taxes, dues or other indebtedness to the government in the form of checks and warrants issued in payment of government obligations, upon proper endorsement and identification of the payee or endorsee.

Checks drawn in favor of the government in payment of any such indebtedness shall likewise be accepted by the officer concerned.

(Sec. 67(l), P.D. 1445)


g) Drawing of Check Payable to the Local Government Unit.

– Checks in payment of taxes and other indebtedness to the government must be drawn by the payer himself/herself and made payable to the LGU. (Examples:

“Provincial Treasurer of Ilocos Norte; City Government of Makati”)

Under no circumstance shall the following checks be accepted :

1.

Checks drawn payable to the name of the head of the LGU or any of its officers;

2.

Checks drawn payable to “Cash”;

3.

Indorsed checks;

4.

Post-dated checks; and

5.

Stale checks


h) Issuance of Official Receipts for Payment by Checks -

1. Before issuing an official receipt, the Collecting Officer shall carefully scrutinize the check presented to him/her and make sure that it is complete and correct particularly as to date, signature or countersignature, and amount in words and figures appearing on the face of the check.

2. The treasurer shall regularly maintain a list of taxpayers with history of returned checks. The collecting officer shall advise the concerned taxpayer to pay in cash or manager’s/cashier’s check.


3. The collecting officer shall in all cases, indicate on the official receipt, the drawee bank, the number, date and amount of check as well as the complete name and address of the payer to facilitate communication with him/her, if necessary.

4. For purposes of cross reference, the number and the date of the official receipt shall also be indicated at the back of the check.


i) Non-Acceptance of check with Erasure, Alteration and/or

Deficiency –

1. Any check that shows or indicates on its face any erasure or alteration of the following: i.

date; ii. name of the payee (whether indicated as “Cash” or “Bearer” or

“Holder” or a specific name or any other word or phrase of identification; iii. amount in figures; iv. signature/s of the Drawer/s or the Drawer’s signatory/ies; v.

account name; vi. account number;


vii. check number; or viii. MICR characters regardless of any signature or initials that appear to indicate authorization of the alteration or erasure

OR

2. Any check that does not indicate the following: i.

date; ii.

payee iii.

amount payable in figures; iv.

amount payable in words, except for checks issued by banks

(Manager’s or Cashier’s Checks, Demand Drafts) using a check writer; or v.

signature of the Drawer/s shall not be eligible or acceptable for clearing.


j) Issuance of a Separate Official Receipt in Case Amount Due is

Less than the Face Value of the Check – No change shall be given to the payer in the event that the amount of the taxes or dues is less than the face value of the check in payment thereof. The difference shall be receipted for by the issuance of a separate general receipt and shall be counted for simultaneously with the collection as miscellaneous trust liabilities.

(Sec. 81, Book II, Vol. I, GAAM) k) Payment by Private Check for Goods Delivered and Services

Rendered by Government Agencies – When payment of goods or services is made by private check, no such service shall be rendered or goods delivered by the local government unit concerned unless the check in payment thereof has been honored by the drawee bank. (Sec. 82, Book II,

Vol. I, GAAM)


l) Prohibition Against the Encashment of Private Checks with Public

Funds At no instance should money in the hands of the Collecting Officer be utilized for the purpose of encashing private checks (Sec. 67(3), P.D. 1445). A private check is a check drawn by a natural or juridical person other than a government agency. (Sec. 105, Book II, Vol. I, GAAM) m) Transfer of Government Funds from One Accountable Officer to

Another -

1. Transfer of government funds from one accountable officer to another shall, except as allowed by law or regulation, be made only upon prior direction or authorization of the Commission on Audit or its representative. (Sec. 75, P.D.

1445)

2. When government funds are transferred from one accountable officer to another, or from an outgoing officer to his successor, it shall be done upon properly itemized invoice and receipt which shall invariably support the clearance to be issued to the relieved or outgoing officer subject to r egulations of the Commission on Audit. (Sec. 77, P.D. No. 1445)


n) Notification to the Auditor: Application for Relief from

Accountability for Government Funds – When loss of government funds occur while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the officer accountable therefor or having custody thereof shall immediately notify the Commission on

Audit or the auditor concerned, and within thirty (30) days or such longer period as the Commission or auditor may, in the particular case, allow, shall present his/her application for relief, with the available supporting evidence. Whenever warranted by the evidence, credit for the loss shall be allowed. An officer who fails to comply with this requirement shall not be relieved of liability or allowed credit for such loss in the settlement of his accounts. (Sec. 73, P.D. No. 1445)

Turnover and Verification of Collections

I.

Turnover of Collections .

1.

At the close of the business day at the Office –

 Collectors shall turn over all their collections intact to the Local Treasurer or

Liquidating Officer.

 Collectors accomplish the Report of Collections and Deposits (RCD) in five

(5) copies.

• Original - COA

• 2 nd copy - Treasurer

• 3 rd copy - Accountant

• 4 th copy - Liquidating Officer

• 5 th copy - retained by the collector concerned.

 Barangay Treasurers deputized to collect taxes imposed by prov/, cities/mun. shall follow the same procedure in the remittance of their collections to the Local Treasurer or Liquidating Officer concerned


2.

Collectors assigned to the field and travel time from their places of assignment to the Local Treasury Office is more than one (1) day –

 the turnover of collections shall be made at least once a week or as soon as the collections reach Five Thousand Pesos (₱5,000.00.)

 Field collectors shall remit their collections to the Cashier or designated liquidating officer of the field office of the LGU.


Treasury Field Office -

 When the distance of the field office to the local treasury may expose government fund to the risk of loss while in transit, the cashier or designated liquidating officer, upon authorization by the Treasurer, may deposit the collections in the authorized depository bank near the field office of the LGU.

 The procedures in reporting collections and deposits prescribed in this

Chapter shall be observed. (Sec. 33, NGAs)

3.

The Accountable Officer shall provide denomination of cash collections and list of checks received upon remittance of daily collections.


4. Verification of Collections and Accountable Forms –

 The Local Treasurer or Liquidating Officer shall verify the RCD as to initial balances on hand, receipts, sales and issues, and the new balances on hand;

 make a physical count of the accountable forms remaining in the custody of the Collectors; and check the same to the new balances on hand column.

 The Local Treasurer or Liquidating Officer shall indicate his/her verification by affixing his/her signature at the back of the triplicate copy of the last official receipt issued.

 He/she shall count the money turned over to him/her and sign the certification and receipt portion of all copies of the RCD.

Designation of Liquidating Officers for Collections

a) The Local Treasurer may designate Liquidating Officers from among the collectors whenever necessary. (Sec. 31,NGAS) b) In LGUs with more than one liquidating officer, each Liquidating Officer shall prepare consolidated RCD to be submitted to the supervising

Liquidating Officer, who shall prepare another consolidated RCD.

c) Collectors shall turn over their collections to their designated Liquidating

Officer, in accordance with the procedures prescribed for Daily Turnover and Verification of Collection.

The Report of Collections and Deposits shall be prepared in five (5) copies, four (4) copies to be submitted to the Liquidating Officer, the fifth copy to be retained by the Collector.

Daily Turnover and Verification of Collections

d) The Liquidating Officer shall perform the procedures for the receipt and verification of collections turned over to him/her.

e) He shall also accomplish the RCD in five (5) copies to summarize the collections turned over to him/her by the Collectors as well as his own collections f) The Liquidating Officer shall turn over intact the cash collections to the

Local Treasurer together with the original and two (2) copies of the RCD of Collectors and the duplicates of the official receipts issued.


g) The Local Treasurer shall acknowledge receipt of the cash and all accompanying documents by signing all copies of the RCD of the Liquidating Officer on the certification and receipt portion of the form.

The fourth copy of the RCD of the Liquidating Officer and the

RCD of Collectors shall be retained by the Liquidating Officer for safekeeping.


h) For LGUs with designated Liquidating Officers by authority of the Local Treasurer to deposit daily all collections to authorized depository bank, the Liquidating Officer shall attach the validated deposit slip for both checks and cash collections to the

Consolidated RCD submitted to the Local Treasurer.

i) The Local Treasurer or Liquidating Officer shall deposit all collections and prepare the Consolidated RCD for recording in the cashbook and submission to the Local Accountant, accompanied by all supporting documents

Procedures and Controls on Deposit of Collections with Authorized Depository Banks a) Depository Accounts of Local Government Units. –

Local Treasurers shall maintain depository accounts in the name of their respective local government units with banks, preferably government owned, located in or nearest to their respective areas of jurisdiction. Earnings of each depository accounts shall accrue exclusively thereto. (Sec. 311, LGC) b) Opening of Depository Accounts. –

1. Local Treasurers shall open and maintain, in the name of their respective LGUs, separate depository accounts for each fund in his custody. (Sec. 310, LGC)

Procedures and Controls on Deposit of Collections with Authorized Depository Banks

2. In the opening of LGU depository accounts the following guidelines shall be followed pursuant to Department of

Finance (DOF) Circular No. 001-2015, dated June 1, 2015

2.1.

Local government units must have deposit accounts only with Government Financial Institutions (GFIs) that have a universal bank license and a CAMELS (Capital

Adequacy, Asset Quality, Management, Earnings,

Liquidity and Sensitivity to Market Risks) rating of at least

“3”.

Procedures and Controls on Deposit of

Collections with Authorized Depository Banks

2.2. Local government units may engage the payment and collection services of a bank thru a transaction fee -based arrangement, without the need for prior approval from the BLGF, provided that all collections shall be transferred to any of the GFIs referred hereof on the next banking day counted from the collection date.


3. Bank accounts with banks other than GFIs referred hereof, may be allowed for the LGU under the following circumstances:

3.1 Where the GFIs cannot provide the necessary banking products and services;

3.2 Where there are no accessible (within the twenty (20) kilometer radius) GFIs, the LGU shall furnish the BLGF a copy of the vicinity map showing the location and distance between the LGU, the GFIs and the (proposed) bank; and,

3.3 Where security and safety are the reasons for opening and maintaining an account in a (proposed) bank, the LGU shall furnish the BLGF an Independent Report or Certification from the Philippine

National Police Provincial Office confirming the existence of the security risks.


4. A maintaining balance may be allowed for operating expenses of up to three (3) months, after having performed a cost-benefit analysis, or up to the maximum deposit insurance coverage of the

Philippine Deposit Insurance Corporation (PDIC) of ₱500,000.00, whichever is lower.

All funds deposited shall be limited to operating funds and no other deposits shall be maintained for special projects or investment purposes. Any amount in excess of the aforementioned authorized cash balance shall be transferred to any of the GFIs referred hereof.


5. Where the LGU cannot meet all of the conditions set under items

(1) (2) and (3) hereof, it shall request for prior approval from the

BLGF to open and maintain an account in the (proposed) upon compliance with the following requirements :

5.1 Letter from the Local Chief Executive or his duly designated officer requesting approval from the BLGF citing the terms of the deposit, purpose for opening and maintaining an account with the (proposed) bank and specific reasons and circumstances for not meeting the conditions;


5.2 Certification from the (proposed) bank that no elective or appointive local government official of the LGU concerned is a director, officer or stockholder of the bank, unless certified that it is the only bank operating in the territorial jurisdiction of the LGU;

5.3 Resolution of the local sanggunian concerned authorizing the LGU to deposit funds with the (proposed) bank with the approval of the Local

Chief Executive;

5.4 Certification from the Department of Interior and Local Government

(DILG) on the practice of accountability and transparency (Good

Financial Housekeeping);


5.5 Certification or Independent Report from the Philippine National

Police Provincial Office confirming the existence of the security risk, in cases where security and safety are the reasons for opening and maintaining an account in a (proposed) bank;

5.6 The (proposed) bank’s latest CAMELS rating issued by the BSP;

5.7 Vicinity map showing the location and distance between the LGU, the

GFIs referred hereof and the (proposed) bank;

5.8 Other information that the BLGF may require in the course of its evaluation.


6. In cases where the GFIs referred hereof establish or operate a branch within the territorial jurisdiction of the LGU or where the circumstances under item (3) hereof no longer prevail, the LGU shall transfer all funds and cash balances to the

GFIs within three (3) banking days from the time the exceptional circumstances no longer prevail, whichever comes first.

Procedures and Controls on Deposit of Collections with Authorized Depository Banks c) Daily Deposit of Collections with the Banks.

–

1. The Local Treasurer or Cashier shall deposit intact all collections, as well as all collections turned over by the Collectors with the authorized depository bank daily or not later than the next banking day.

All deposits shall be recorded in the Cashbook – Cash in Vault and Cashbook

– Cash in Bank.


2. Collections of field collectors shall be remitted to the

Cashier/designated Liquidating Officer of the field office of the local government unit.

When travel distance from the field office to the local treasury may expose government funds to risk such as loss in transit, the

Cashier/designated Liquidating Officer, upon authorization by the

Local Treasurer, may deposit the collections in the authorized depository bank near the field office of the local government unit.

(Sec. 26, COA Circular No. 92-382)

Procedures and Controls on Deposit of Collections with Authorized Depository Banks d) Time Deposit Account –

1. Provinces, cities, municipalities and barangays may deposit with duly authorized government depository banks , idle funds in the General Fund under time deposit accounts, upon prior authority of the sanggunian and approval of the

Local Chief Executive in accordance with the aforecited procedures in the opening of depository accounts with the bank under DOF 001-2015 dated June 1, 2015.


2.

Idle Funds refer to cash which the local government unit can freely invest in government securities and/or fixed term deposits with authorized government depository banks, after considering provisions for the coverage of regular and recurring operating expenses like salaries, wages, repairs and maintenance, inventories and supplies, debt servicing, etc., as well as programmed disbursements for capital outlays and other non recurring expenses, within the context of the cash operating cycle of the local government unit.

Unremitted collections for, and funds set aside for the payment of obligations to, other entities, government, and private, shall not form part of the idle funds.(Sec. 22 of COA Circular No. 93-382-A dated July 3,

1992)

Procedures and Controls on Deposit of Collections with Authorized Depository Banks e) Bank Statement or Snapshots –

1. Bank statements and/or snapshots of bank transactions transmitted to the Local Treasurer by the depository bank shall be forwarded to the Local Accountant who shall be responsible for the preparation of the bank reconciliation statement.

If the bank statements are sent by the bank directly to the Local

Accountant, a copy thereof should be furnished to the Local

Treasurer.


2. In case the bank statements are not readily available, a snapshot of the LGU transactions may be obtained by the Local Treasurer from the bank for updating and reconciliation purposes.

Maintenance and Use of the Cashbook by Local Treasurers,

Cashiers, Liquidating Officers, Disbursing Officers, Collectors and Other Accountable Officers a) The treasurer/cashier shall record in his/her cashbook all collections received by him/her. The treasurer shall maintain cashbooks for Cash-in-Treasury and Cash in Bank.

The Cash-in-Treasury account shall be debited with the collections received, and credited with the collections deposited with the authorized depository bank.

The Cash in Bank account shall be debited with the deposits of collections with the bank, and credited with the withdrawals from the depository account. (Sec. 29, COA Circular 92-382)

b) The Treasurer’s Cashbooks. – The Local Treasurer shall maintain the following cashbooks:

1. Cashbook-Cash in Treasury. – It shall be used by the Local

Treasurer to record the daily collections (Debit Column ) and deposits to the bank (Credit Column ) based on the Report of Collections and Deposits.

The cashbook shall be maintained by fund and shall be updated and balanced daily.

CHAPTER 3


Sec 59. Maintenance and Use of the Cashbook by Local Treasurers,

Cashiers, Liquidating Officers, Disbursing Officers, Collectors and Other and Other Accountable Officers

2. Cashbook-Cash in Bank – The Cashbook for Cash in Bank shall be used by the Local Treasurer to record all deposits of collections

(Debit Column) and withdrawals thru checks issued from the banks (Credit Column) for the day. Separate cashbook shall be maintained for each depository bank account and by fund, and shall be updated and balanced daily.

3.

Cashbook-Cash Advances.

– The Cashbook for Cash Advances shall be used by the Local Treasurer to record cash advances received (Debit Column) and payments, refunds and adjustments

(Credit Column), and the balance (Balance Column).

CHAPTER 3


Cashiers, Liquidating Officers, Disbursing Officers, Collectors c) The Liquidating Officer’s Cashbook – The Liquidating Officer’s

Cashbook shall be used by the designated Liquidating Officer to record all collections turned over to him/her by all designated revenue collectors

(Debit Column), and remittances to the Local Treasurer or Liquidating

Officer (Credit Column). Separate cashbooks shall be maintained for each fund and shall be updated and balanced daily.

d) The Collector’s Cashbook – The Collector’s Cashbook shall be maintained by all designated collecting officers including field collector’s receiving collections for the local government office. Record all daily collections received at the Debit Column and all daily remittances to the designated Liquidating Officer at the Credit Column.

CHAPTER 3


Cashiers, Liquidating Officers, Disbursing Officers, Collectors e) Daily Recording in the Cashbook – At the end of the day, all transactions shall be entered in the appropriate cashbook. For

Cashbook-Cash in Treasury, Cashbook-Cash in Bank and Cashbook-

Cash Advances, the balances obtained at the end of the day shall be reconciled with the cash on hand.

At the end of the month or when required to do so by competent authority, the month’s account and transactions shall be closed, ruled, and the accountable officers will accomplish the certificate of transactions in the respective cashbooks.

CHAPTER 3


Sec 59. Maintenance and Use of the Cashbook by Local Treasurers,

Cashiers, Liquidating Officers, Disbursing Officers, Collectors and Other and Other Accountable Officers f) Accountable Officer’s Certificate of Transactions in the Cashbook . Local

Treasurers or Cashiers entrusted by reason of their duties with collections, custody and/or disbursement of local funds shall at the end of the month, or when required to do so by proper competent authority, accomplish the following certificate:

“I HEREBY CERTIFY that the foregoing is a correct and complete record of all my cash and depository transactions had by me in my capacity as (designation) of

(Name of the LGU) , during the period from ___________, 20__ to ______________,

20___, inclusive, as indicated in the corresponding columns.

________________________

(Signature Over Printed Name)

________________________

Title

__________________. 20___”

CHAPTER 3


Cashiers, Liquidating Officers, Disbursing Officers, Collectors g) Reconciliation of Cashbook Balance.

– All accountable officers required to maintain a cashbook shall reconcile their cashbook balances every end of the month or as the need arises with the subsidiary accounting records . A certification of balances as appearing in the subsidiary accounting records shall be obtained from the Local Accountant at the end of the month or as required by competent authority.

h) Safeguarding of Cashbook At the close of office either for the noon break or at the end of the day, all cashbooks shall be locked up in fire-proof vaults or safes . This duty devolves upon the officer entrusted by law to keep such cashbooks irrespective of whether he is or not the one personally making the entries of the cash transactions which are to be recorded therein.

Forms and Reports Used by Local Treasury Officials a) Report of Collection and Deposits (RCDs). The RCD shall be prepared daily by the following:

1.

Collectors.

–

1.1 RCDs of Collectors shall reflect collections, remittances and duplicate copies of the Official Receipt issued turned-over to their designated Liquidating Officer/Local Treasurer.

1.2 It shall also contain report of accountability for accountable forms used showing the name of the forms and number, beginning balance, received, issued and ending balance.

RCD

RCD

CHAPTER 3

Forms and Reports Used by Local Treasury Officials

3. Local Treasurer

3.1 The Local Treasurer shall verify and acknowledge the submitted consolidated RCD and shall deposit “intact” all collections turnedover by the Liquidating Officer to the authorized depository banks.

3.2 For Real Property Tax payments, separate RCD shall be prepared for the collections pertaining to the Basic Tax and additional tax accruing to the Special Education Fund (SEF).

CHAPTER 3

Forms and Reports Used by Local Treasury Officials

4. Submission of Collection Reports

Collecting Officers/Treasurers shall submit daily records of receipts, together with the supporting documents, to the Chief Accountant. The official assigned to the daily recording of transaction in the books of accounts shall turn-over the receipts and supporting documents to the Auditor within ten (10) days after receipt of such records and documents. The Auditor concerned shall conduct the necessary examination and audit within thirty (30) days from receipt thereof.

(Sec. 68, GAAM Vol.1)

PROCESS OF

RECEIPT, REMITTANCE AND DEPOSIT OF COLLECTIONS

Receive payment from taxpayers/creditors and issue Official Receipt

(OR). Prepare Report of Collections and Deposits (RCD). Record in the Collector’s cashbook. Remits to the Liquidating Officer (if one is designated) or Treasurer.

Collector/Teller

Check remittances and verifies accountable forms of collectors/tellers.

Receive collections and signed in the acknowledgement portion of the RCD of collectors. Prepare consolidated RCD. Record collection received in the cashbook and remits to the Treasurer/Cashier.

Liquidating Officer

Treasurer Receive remitted collections and sign in the acknowledgment portion.

Records in the Cashbook – Cash in Treasury.

Deposit collections in the appropriate bank account per authorized depository bank. Records deposit in the Cashbook – Cash in Bank.

Forward RCD to Accountant’ Office with copies of ORs and validated deposit slips.

Treasurer

Treasurer

PROPER HANDLING

OF

ACCOUNTABLE FORMS

WHAT IS ACCOUNTABLE FORM?

•It is a special kind of form utilized to acknowledge receipt of collections or used in disbursements, for proper accounting and control of collections as well as disbursements.

CUSTODIANSHIP OF ACCOUNTABLE FORMS

The local treasurer shall be the custodian of all accountable forms requisitioned by the local government unit and shall maintain a complete record of the receipt, issue and transfer of accountable forms.

The local treasurer’s accountability for accountable forms of all kinds is determined in connection with the audit and examination of his accounts which show that each receipt is properly accounted for.

Types of Accountable Forms

Types of Accountable forms (AF) for acknowledging collections:

1. Accountable forms with money value, and

2. Accountable forms without money value

1. Accountable Forms with money value consist of the following:

(1) Cash Tickets (AF No. 55A-F)

(2) Certificate of Transfer of Large Cattle(AF No. 52)

(3) Certificate of Ownership of Large Cattle ( AF No. 53)

(4) Marriage License Certificate (AF No. 54)

Types of Accountable Forms

2. The Accountable Forms without specific money value :

(1) Official Receipt (AF No. 51)

(2) Real Property Tax Receipt (AF No. 56)

(3) Slaughter Permit Fee Receipt (AF No. 57

(4) City/Municipal Burial Permit Fee Receipt (AF No. 58)

(5) Community Tax Certificate

(BIR Form Nos. 0016 - Individuals

(BIR Form Nos. 0017 - Corporations)

(6) Checks

1. ACCOUNTABLE FORMS WITH FACE VALUE

Cash Tickets (AF No. 55 )

• This is issued for collections from the temporary use of market spaces, parking areas, and other income generating activitIes where the issuance of a regular receipt is not practicable.

Certificate of Transfer of Large Cattle (AF No. 52)

• This document evidences transfer of ownership of large cattle.

When issued, it superseded the original certificate of ownership

Certificate of Ownership of Large Cattle (AF No. 53)

• This document is an evidence on original ownership of large cattle.

Marriage License Certificate (AF No. 54)

• This is the license issued to contract marriage.

Cash Tickets

Ownership of Cattle

Marriage License

1.

ACCOUNTABLE FORMS WITH FACE VALUE

Issuance of Cash Tickets –

1.

Local government units shall devise their own system in the issuance of cash tickets to ensure proper control, accounting and audit. Control measures include but not limited to the following:

1.1 Serial numbers may be assigned or the name or logo of the city or municipality may be stamped at the back of the cash tickets before they are issued to collectors assigned in public markets, parking areas or those tasked to accept collections not acknowledged by the regular receipt or other accountable forms;

1.


1.2 The collector shall affix his initial and state the date of issuance in the cash tickets before issuance;

1.3 The market inspector shall ensure the tearing off of cash tickets to avoid possible re-issuance; and

1.4 Surprise inspection on the proper issuance of cash tickets shall be conducted by the market administrator or his authorized representative.

1.


2.

Cash tickets issued to transient vendors in the public market to acknowledge market fees shall pertain only to the vendor buying the same and shall be good only for the space or spaces of the market premises to which he/she is assigned .

If the vendor disposes of his/her merchandise by wholesale to another vendor, the latter shall purchase new tickets if he/she desires to sell the merchandise, even if done in the same place occupied by the previous vendor.

The City/Municipal treasurer’s office should adopt a systematic appropriate numbering of cash tickets for internal control purposes.

2. ACCOUNTABLE FORMS WITHOUT FACE VALUE

Official Receipt (AF No. 51)

• This is issued to acknowledge payment of taxes, licenses and other dues or fees to the government for which no special accountable forms have been authorized

Real Property Tax Receipt (AF No. 56)

• This is issued to acknowledge payment of basic real property tax and additional tax accruing to the special education fund

Slaughter Permit and Fee Receipt (AF No. 57)

• This form serves as permit, as well as an official receipt acknowledging payment of fees for the slaughtering of large cattle.

City/Municipal Burial Permit and Fee Receipt (AF No.58)

• This form serves a funeral or burial permit and official receipt for fees collected.

AF 51

AF 56

2. ACCOUNTABLE FORMS WITHOUT FACE VALUE

Community Tax Certificate (BIR Forms. 0016 & 0017)

• This is issued to acknowledge payment for community tax from:

- Individuals (BIR Form No. 0016)

- Corporate entities (BIR Form No. 0017)

Checks

• These are serially numbered forms purchased from the servicing bank for use in the disbursement of funds.

• They shall be kept in the custody of the local treasurer who shall be accountable and responsible for the proper care and use of the checks

CTC Individual

CTC Corporation

PREPARATION OF OFFICIAL RECEIPTS

Pre-numbered official receipts shall be issued in strict numerical sequence.

1.

In preparing official receipts, all copies of each receipt shall be exact copies or carbon reproductions in all respects of the original.

2.

If payment has been tendered in money order or check, the official receipt shall be prepared with the date, number, and the amount of such money order, or check together with the purpose for which the payment has been received. The address of the payor shall also be indicated on the official receipt to facilitate communication with him/her, if necessary. (Sec. 73, Book II, Vol. I, GAAM)


3.

General Guidelines on the issuance of eOR: (COA Circular No.

2013-007 dated September 18, 2013)

3.1. Receipt of collections through electronic means shall be acknowledged by an eOR.

3.2. The eOR shall have the following minimum data content: i.

Name of the agency issuing the receipt

(Department/Agency/Regional Office/Operating or Field Unit) ii.

Location and location code (place where the collection is made and its assigned code) iii.

Name of Payor (person/entity making the payments) iv.

Date and time of receipt (date and time of the collection and issuance of eOR)

PREPARATION OF OFFICIAL RECEIPTS v.

Nature of collection (such as business tax, fees and assessments, licenses etc.

vi.

Amount received, detailed as to the nature of collection coded as to their subsidiary ledger revenue classification vii. eOR Number ( a unique and sequential number generated by the system for every eOR issued) viii. Transaction Number (number generated for every transaction accepted by the system which does not necessarily pertain to the generated eOR. It may include cancellation of eOR, inquiry, etc.) ix.

Mode of payment (credit card/electronic fund transfer/ATM/G-Cash, etc.) x.

Order of Payment Slip Number or Assessment Number


3.3. All collections shall be acknowledged by the local government unit concerned through the issuance of official receipts to establish that such collections have been received.

3.4. Collections of national government agencies shall be deposited to the account of the Treasurer of the Philippines. Collections of local government units and of Government - Owned and Controlled

Corporations (GOCCs) shall be deposited to their respective accounts in designated AGDBs.

3.5. Collections through electronic system shall be accounted for in the books of the government agency concerned in accordance with existing rules and regulation for receipts and collections.


3.6. To ensure that transaction can be individually and safely processed using online collection system, the government agency concerned shall comply with the provisions of the Joint Department

Administrative Order No. 2s 2006 issued by the Department of

Finance and the Department of Trade and Industry on the “Guidelines

Implementing R.A. No. 8792 on EOCS in Government” or any subsequent amendments thereto.

3.7. The government agency shall provide read/view and print access rights to the COA Auditor in the computerized system where online collections are being processed.

CONTROL OF ACCOUNTABLE FROMS

Name of Agency on the Face of Official Receipt –

For safety and control purposes, all official receipts shall bear the name of the local government unit printed or stamped on the face thereof. (Sec. 96, Book

II, Vol. I, GAAM)

ACCOUNTABILITY FOR ACCOUNTABLE FORMS

Accountability of Official Receipts – An official receipt is an accountable form held in trust by the Local Treasurer or other person duly authorized to possess or have custody thereof.

The Accountable Officer shall be responsible for its safekeeping, the proper and authorized use or application thereof and the reporting of its use and condition, and shall be liable for loss, damage or deterioration occasioned by negligence in the keeping or use thereof. (Sec. 91, Book II,

Vol. I. GAAM)


Guidelines on the Procurement of Printing Service

1.

Pursuant to Section 29 of Republic Act (RA) 9970, procuring entities have the option to engage the services of private printers for their printing and publication expenditures, subject to public bidding in accordance with RA 9184 and pertinent accounting and auditing rules and regulations;

2.

However, printing of accountable forms and sensitive high quality/volume printing requirements shall only be undertaken by recognized government printers, namely Bangko Sentral ng Pilipinas,

National Printing Office and APO Production Unit. (Resolution No. 05-

2010, GPPB)


Inspection of Accountable Forms Received from the National

Printing Office or Accredited Printers –

1.

Upon receipt of the accountable forms from the National Printing

Office or accredited printers, the Local Treasurer shall carefully examine each book or pad.

2.

COA shall examine the book or pad of accountable forms submitted.

If found that the defects are due to error in binding and printing, COA shall make proper notations on the book or pad or on the defective sheet itself.


Use of Computer-Generated Official Receipts and Other Accountable

Forms –

The use by local government units of computer-generated official receipts and other accountable forms in lieu of the printed forms by the National

Printing Office or accredited printers shall require the prior approval of the

Commission on Audit (Sec. 68(2), P.D. No. 1445).This is to ensure that all the pertinent information and control features are substantially included on the face of the computer-generated forms.

Permanent Record Book for Accountable Forms

The Local Treasurers are accountable for receipts, stamps and other accountable forms in their possession or in the hands of deputies and other employees entrusted therewith, shall keep adequate permanent record books which should show, the whereabouts of the accountable forms with which they are charged, the name and title of the officer or the employee to whom such forms have been given, and the evidence of the receipt and subsequent sale and issuance of the same.

Upon receipt of accountable forms in the Treasury Office, the Accountable

Forms shall be verified and entered immediately in the Permanent

Record Book for Accountable Forms.


L) Content of the Permanent Record Book

1. The record book shall contain the following column headings:

1.1 Booklet Number/Quantity (in case of official receipt without money value)

1.2 Serial Number/Total Value (in case of official receipt with money value)

1.3 Name (in print) of Accountable Officer to whom issued

1.4 Signature of Accountable Officer

1.5 Date Received by Accountable Officer

1.6 Date reported totally used, sold, issued


• The columns shall be utilized for recording consecutively all accountable forms in the order they are received in the Office of the

Treasurer concerned

• In the recording for each batch of accountable forms purchased or received, the data shall be indicated as heading;

 invoice number and date

 date the accountable forms were received,

 quantity,

 inclusive serial number

 total value of the accountable forms.

Requisition of Accountable Forms by Collectors/Tellers.

• Collectors/Tellers shall file requisitions of accountable forms for their use with the treasurer through a Requisition and Issue Voucher.

• They shall be accountable for all accountable forms issued to them

• There shall be no transfer of accountable forms between collectors/tellers

• Accountable Forms shall be issued to bonded officers only in sufficient quantities not to exceed three (3) month’s use.

SUBMISSION TO COA AUDITOR OF OBSOLETE, SPOILED AND

CANCELLED ACCOUNTABLE FORMS

• Accountable Officers shall submit to the COA Unit Auditor all obsolete, spoiled, and cancelled official receipts and other accountable forms for inspection and destruction.

• Under no circumstances shall accountable officers destroy on their own accountable forms of any description, then be relieved from responsibility.

• In case of obsolete accountable forms with or without fixed money value, the accountable officer shall submit to the COA Unit Auditor an inventory in four copies



The accountable officer shall submit an affidavit in 4 copies stating:

• The denomination and total value of the forms

• The reason for the damage and the circumstance surrounding the cause of such damage or the reason for canceling the form, and the name of the officer or employee responsible



• The COA Unit Auditor or his authorized representative shall promptly inspect and destroy the accountable forms, and make a certificate of such actions below the affidavit or inventory.

• The auditor shall return the affidavit or inventory, with his certificate of destruction, to the accountable officer who will drop the accountable forms destroyed from his Monthly Report of Accountability

• The accountable officer shall attach one copy of the certified affidavit or inventory to the Monthly Report of Accountability and retain the other copy for file. The COA Unit Auditor shall keep the original copy



• In the case of spoiled or cancelled accountable forms which do not bear fixed money value, such as printed official receipts, etc. the accountable officer shall submit the cancelled original and duplicate copies with the Report of Collections and Deposit with such cancellation properly noted on the record or abstract of collections concerned.

• Where the damage or cancellation of accountable forms is due to negligence, or lack of proper care, appropriate proceedings will be instituted against those responsible as the facts in each case may warrant.

LOSS OF ACCOUNTABLE FORMS AND RELIEF FROM

ACCOUNTABILITY

• Any loss of accountable forms in the custody of collecting and property officers shall immediately be reported by the accountable officers concerned to the

Head of the agency.

• The Head of Agency shall at once issue a circular or notice of such loss for the information and guidance of all concerned to prevent the possible fraudulent use of such accountable forms


ACCOUNTABILITY

• The notice to be issued shall specify the kind, quantity and inclusive serial numbers of the lost accountable forms and the place or placed where, and approximate date or dates when the same were lost.

• The circular or notice of loss shall be issued only for accountable forms generally used in all government agencies.

• In case of accountable forms specially designed for the exclusive use of an agency, the circularization shall be confined within the agency.


ACCOUNTABILITY

• The head of an agency is not precluded from undertaking other measures which may prevent the fraudulent use of the lost accountable forms, like the publication of such loss in newspapers of general circulation.

• Compliance with the foregoing provisions shall be one of the requirements in the request for relief from accountability for the loss of accountable forms


ACCOUNTABILITY

• When a loss of government funds occur while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the officer accountable or having custody thereof shall immediately notify the Commission on Audit or the auditor concerned, and within thirty days or such longer period as the Commission or auditor may in the particular case allow, shall present his application for relief, with the available supporting evidence.

RELIEF FROM ACCOUNTABILITY

• Whenever warranted by the evidence credit for the loss shall be allowed

• An officer who fails to comply with this requirement shall not be relieved of liability or allowed credit for any such loss in the settlement of accounts. (Sec. 73, PD1445)

INVENTORY AND REPORTING OF ACCOUNTABLE FORMS

• Accountable Officers shall render a report to the COA Unit Auditor on their accountability for accountable forms at least once a month in the prescribed form.

• Such report shall also be prepared in case of transfer of office or accountability by the accountable officer.

• The report shall include, among others, the name/type, quantity and serial number and/or value of the accountable forms as of last month/period, the forms received and issued during the month/period and the balances as of end of month/period.

INVENTORY AND REPORTING OF ACCOUNTABLE FORMS

• Treasurers, collectors/tellers and other accountable officers shall render their Report of Accountability for Accountable Form (RAAF) monthly.

• The treasurer shall consolidate the RAAFs and submit a

Consolidated RAAF accompanied by the individual RAAF to concerned COA Auditor not later than the fifth day of the ensuing month. (COA Circular No. 2002-002 dated June 18, 2002)

RAAF

Local Fiscal Management and

Fund Utilization

Concept of Funds

Introduction

 In line with the increased fiscal responsibility pursuant to good governance of local funds, it is incumbent upon the Local

Treasurers and other fiscal officers to embrace and apply effective fund management practices benchmarked from the private sector in the daily operations of local government units.


Introduction

 Governance in the local context is how decisions are made and implemented at the local level and by whom.

 Good governance is viewed as the exercise of economic, political and administrative authority to manage a country's/local government's affairs at all levels.

It comprises mechanisms, processes, and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations, and mediate their differences.

 Good governance is about efficiency in the management of public funds, demanding high standards of integrity, transparency and accountability .

Thus,

Local Treasurers need to continuously update their knowledge and skills on their specific area of good governance, which is fund or cash management .


Introduction

 Fund

A sum of money or other resources set aside for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations, and constitutes an independent fiscal and accounting entity.

[

Sec. 3(1), PD1445; Sec. 2(1), Title I(B), Bk V, 1987 Adm. Code; Sec. 306(h), RA 7160

]

 Government Funds

Government funds include public moneys of every sort and other resources pertaining to any agency of the government.

[

Sec. 3(2), PD 1445; Sec. 2(2), Title I(B), Bk V, 1987 Adm. Code

]


Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445)

SECTION 305. Fundamental Principles.

- The financial affairs, transactions, and operations of local government units shall be governed by the following fundamental principles: a)No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law; b)Local government funds and monies shall be spent solely for public purposes; c)Local revenue is generated only from sources expressly authorized by law or ordinance, and collection thereof shall at all times be acknowledged properly;


Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445) d) All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds, unless otherwise provided by law; e) Trust funds in the local treasury shall not be paid out except in fulfillment of the purpose for which the trust was created or the funds received; f) Every officer of the local government unit whose duties permit or require the possession or custody of local funds shall be properly bonded, and such officer shall be accountable and responsible for said funds and for the safekeeping thereof in conformity with the provisions of law;


Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445) g. Local governments shall formulate sound financial plans, and the local budgets shall be based on functions, activities, and projects, in terms of expected results; h. Local budget plans and goals shall, as far as practicable, be harmonized with national development plans, goals, and strategies in order to optimize the utilization of resources and to avoid duplication in the use of fiscal and physical resources; i. Local budgets shall operationalize approved local development plans; j. Local government units shall ensure that their respective budgets incorporate the requirements of their component units and provide for equitable allocation of resources among these component units;


Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445) k) National planning shall be based on local planning to ensure that the needs and aspirations of the people as articulated by the local government units in their respective local development plans are considered in the formulation of budgets of national line agencies or offices l) Fiscal responsibility shall be shared by all those exercising authority over the financial affairs, transactions, and operations of the local government units ; and m) The local government unit shall endeavor to have a balanced budget in each fiscal year of operation.

Types of LGU Funds

Classification and Basic Maintenance of Funds

Government funds are generally classified into:

1. Local Funds (General Fund)

The General fund shall consist of monies and resources of the local government which are available for the payment of expenditures, obligations or purposes not specifically declared by law as accruing and chargeable to, or payable from, any other fund. (Sec. 308, RA 7160).



2. Special Funds a. Special Education Funds (SEF)

SEF shall consist of the respective shares of provinces, cities, municipalities and barangays in the proceeds of the additional tax on real property to be appropriated for purposes prescribed in Section 272 of the Local Government

Code.

b. Trust Funds

Trust funds shall consist of private and public monies which have officially come into the possession of the local government or of a local government official trustee, agent or administrator, or fulfillment of some obligation. A trust fund shall only be used for the specific purpose for which it was created or for which it came into the possession of the local government unit (Sec. 309, RA

7160).



Special Accounts in the General Fund of the Local Government Units caters to the following:

• Public utilities and other economic enterprises;

• Loans, interests, bond issues, and other contributions for specific purposes; and

• Development projects funded from the share of the local government unit concerned in the internal revenue allotment and such other special accounts which may be created by law or ordinance

Profits or income derived from the operation of public utilities and other economic enterprises, after deductions for the cost of improvement, repair and other related expenses of the public utility or economic enterprise concerned, shall first be applied for the return of the advances or loans made therefor. Any excess shall form part of the general fund of the local government unit concerned (Sec. 313, RA 7160)

Fundamental Principles Governing Utilization of Local Funds

Basic Maintenance of Funds

• Separation of Books and Depository Accounts

Local accountants and treasurers shall maintain separate books and depository accounts, respectively, for each fund in their custody or under such rules and regulations as the Commission on Audit may prescribe.

Legal Basis: (Sec. 310, LGC)



• Depository Accounts

Local treasurers shall maintain depository accounts in the of their respective local government units with banks, preferably governmentowned, located in or nearest to their respective areas of jurisdiction.

Earnings of each depository account shall accrue exclusively thereto.

Legal Basis:(Sec. 311, LGC)



• Separation of Personal Money from Public Funds.

Local treasurers and other accountable officers shall keep personal monies separate and distinct from local public funds in their custody and shall not make profit out of public money or otherwise apply the same to any use not authorized by law or ordinance.

Legal Basis:(Sec. 312, LGC)

DISBURSEMENT OF LOCAL FUNDS

General Principles Governing Fund Disbursements

 The Official Fiscal Year

The Official Fiscal Year of local government units shall be the period beginning with the first (1 st ) day of January and ending with the thirty-first (31 st ) day of December of the same year.

 Disbursements in Accordance with Annual or Supplemental

Appropriations

Disbursements shall be made in accordance with the ordinance authorizing the annual or supplemental appropriations without prior approval of the sanggunian concerned. Within 30 days after the close of each month, the local accountant shall furnish the sanggunian with such financial, statements as prescribed by the COA. In the case of the year-end statement of accounts, the period shall be 60 days after the thirty-first (31 st ) of December.



 Use of Appropriated Funds and Savings

Funds shall be available exclusively for the specific purpose for which they have been appropriated. No ordinance shall be passed authorizing any transfer of appropriations from one item to another. However, the local chief executive or the presiding officer of the sanggunian concerned may, by ordinance be authorized to augment any item in the approved annual budget for their respective offices from savings in other items within the same expense class of their respective appropriations.

 Restriction Upon Limit of Disbursements

Disbursements in accordance with appropriations in the approved annual budget may be made from any local fund in the custody of the treasurer, but the total disbursements from any local fund shall in no case exceed fifty percent (50%) of the uncollected estimated revenue accruing to such local fund in addition to the actual collections: Provided, however, That no cash overdraft in any local fund shall be incurred at the end of the fiscal year .



 Prohibitions on Disbursements:

• Advance Payments No money shall be paid on account of any contract under which no services have been rendered or goods delivered

• Expenditures for Religious or Private Purposes No public money or property shall be appropriated or applied for religious or private purposes.

• Expenses for Reception and Entertainment No money shall be appropriated, used, or paid for entertainment or reception except to the extent of the representation allowances authorized by law or for the reception of visiting dignitaries of foreign governments or foreign missions, or when expressly authorized by the President in specific cases.


Basic Requirements for Disbursements from the General Fund and Special

Funds.

 Certification in the Disbursement Voucher by the Local Accountant

 Certification in the Disbursement Voucher by the Local Treasurer

 Approval by the Local Chief Executive, except for regularly recurring administrative expenses


Basic Requirements for Disbursements from the General Fund and Special

Funds.

 The Disbursement Voucher for expenditures appropriated for the operation of the sanggunian shall be approved by the Vice-Governor or the Vice-Mayor of the province/city or municipality, as the case may be.

 The disbursements for Special Education Fund (SEF) shall be approved by the Local Chief Executive as Chairperson of the Local School Board

 Trust Funds - should be utilized strictly in compliance with the provisions of the Memorandum of Agreement (MOA), Funds Received from these sources shall be maintained in separate bank accounts and shall never be commingled with other funds of the LGU.


Modes of Disbursement

 Disbursements covered by Disbursement Vouchers and/or Payrolls are usually paid either by check or in cash. Other modes of disbursements include direct payments and/or bank transfers. Ideally cash should be handled under the general principles of the Imprest System where all payments must be made by check and only payments in small amounts may be made in cash through the petty cash fund.

(Sec. 172, Book III, Vol. I, GAAM)


Disbursement by Checks

 Upon receipt of the Disbursement Voucher for payment, the Local Treasurer shall verify the propriety of the certifications and approvals required therein. If complete, the Local Treasurer shall then draw a check in payment therefor.


Preparation and Signing of Checks

 Checks shall be prepared and signed by the Local Treasurer and countersigned by the Local Administrator (NGAs for LGUs, Sec 40 )

 In case of temporary absence or incapacity of the aforesaid officials these duties shall devolve upon their immediate assistants.

(Sec. 345, LGC; NGAs for LGUs,

Sec. 40)

 In the case of municipalities where no Administrator has been appointed, checks shall be countersigned by the Municipal Mayor. In case, however, of expenditures for the operation of the sanggunian, checks drawn thereon shall be countersigned by the provincial Vice Governor, the city Vice Mayor, as the case may be .

(Sec. 43, COA Circular No. 92-382; NGAs for LGUs, Sec. 40)


Preparation and Signing of Checks

 Checks shall always be made payable to a specific person or entity and never to “Cash” or “Bearer”. All checks shall be crossed for deposit to the payee’s account, except checks which are payable to government employees, financial assistance,

Assistance for Individual Crisis Situation (AICS), not exceeding

P15,000.00. Unused checks shall be kept in the vault, which shall be accessible only to the Local Treasurer. The signing or countersigning of blank check shall not be allowed.


Release of Checks

 The Local Treasurer shall release the check only to the payee or his duly authorized representative.

For purposes of releasing checks, the Local Treasurer shall maintain a Check Register where all checks issued shall be recorded chronologically and where the claimants shall be required to acknowledge receipt hereof.

(NGAs for

LGUs, Sec. 41)


Release of Checks

 It shall be released only when the Accountant’s Advice of Local

Check Disbursements’ has been prepared and submitted to the bank. All checks issued shall be recorded chronologically in the

Control Book of Checks Issued/Check Register. Upon release of the check, the payee shall be required to issue an Official receipt for the payment received and/or affix his signature and the date of receipt of the check on the Disbursement Voucher (Box “D”) and the Control Book of Checks Issued. The Disbursement Voucher and the supporting documents shall be stamped “PAID” by the Local

Treasurer immediately after claim is paid to prevent their possible re-use.


Reporting of Checks Issued

 Preparation of Report of Checks Issued

The checks issued including cancelled or voided checks shall be recorded chronologically in the Report of Checks Issued which shall be prepared daily for each fund in 3 copies by the Local Treasurer.

 Spoiled and Stale Checks

Checks may be cancelled when they become spoiled or stale. A check is considered spoiled when it is torn, mutilated, defaced or contains erasures/errors affecting the genuineness of material information. On the other hand, a check is considered stale when it is outstanding for over six months from date of issue, or as prescribed by the government authorized depository bank.



 Lost Checks

A check is considered lost under the following circumstances:

 When it is misplaced, waylaid or left behind inadvertently or negligently by the payee or holder in due course, or by the custodian or carrier thereof, and after diligent search cannot be found or located

 When it is lost due to fortuitous event such as fire, perils of travel, flood or typhoon or other causes due to force majeure and after diligent search, cannot be found or recovered.

 When it is lost by theft or robbery. (Sec. 187 (a), Vol. I, GAAM)



 General Guidelines in the replacement of Lost, Destroyed and Obsolete checks

If a check is lost, destroyed or become stale or obsolete the issuing agency may issue a replacement check which shall be made under such regulation in regard to issuance and payment and upon compliance with requirements, to wit:

1.

A sale and/or obsolete check shall be replaced with a new one provided the original check is presented/surrendered for cancellation.

2.

MDS/other government check found to have been fraudulently encash shall be dishonored and charge back (photocopy only to the GSB through the BTR.

(Section 190, GAAM, Vol. 1)



 Payment of lost or fraudulently encash checks

When any check is lost, stolen or destroyed, the issuing officer may issue a replacement check which shall be paid under the regulations of the Commission on Audit in regard to issuance and payment and upon execution of a bond to indemnify the issuing agency in such amount and with such security as the Commission may require.

(Section 190, GAAM, Vol. 1)


Rules and Regulations on the Granting, Utilization and Liquidation of Cash

Advances



General Principles

Ideally, cash should be handled under the general principles of the imprest system, to wit:

1.

Daily Receipts on collections must be deposited intact with the proper bank.

2.

All payments must be made by check

3.

Only payments in small amounts may be made through the petty cash fund.

Replenishment of the petty cash fund shall be equal to the total amount of expenditures mare therefrom.

In practice, however, there are certain instances when it may be very difficult, impractical or impossible to make payments by check. In such a case, payments may be made by the disbursing officer in the form of cash through his cash advance.

COA Cir. No. 90-331 May 3, 1990


Disbursements Through Cash Advances

 Regular Cash Advances

• Salaries and Wages;

• Commutable Allowances

• Honoraria and other similar payments to officials and employees; and

• Petty operating expenses (COA Circular 2012-001, 1.1.2)

 Special Cash Advances

• Confidential expenses; and/or

• Expenditures for activities of the agency undertaken in the field when it is impractical to pay by check.

(Sections 46 and 47, COA Circular No. 92-382)


GRANTING AND UTILIZATION OF CASH ADVANCES

• Only permanently appointed officials and employees shall be granted cash advances.

• Only duly appointed or designated disbursing officers may perform disbursing functions. Officers and employees who are given cash advances for foreign travel need not be designated as Disbursing

Officers.

• Only one disbursing officer shall be assigned/designated for a specific legal purpose.

Additional disbursing officers may be assigned/designated for the same purpose only when fully justified by the Agency Head.



• Transfer of cash advance from one AO to another shall not be allowed.

• The cash advance shall be used solely for the specific legal purpose for which it was granted. Under no circumstance shall it be used for encashment of checks or for liquidation of a previous cash advance.

• The Accountant shall obligate all cash advances granted. He shall see that cash advances for a particular year are not used to pay expenses of other years.


Salaries, Wages, Allowances, Honoraria and Other Similar Payments

• The cash advance shall be equal to the net amount of the payroll for a pay period.

• The cash advance shall be supported by the following documents: o Copy of designation by the Agency Head in case the AO is not a disbursing officer by appointment (Attachment to initial cash advance) o Copy of approved application for bond (attachment to initial cash advance) o Payroll or list of payees with their net payments


Petty Operating Expenses

• The cash advance shall be sufficient for the recurring expenses of the agency for one month. The AO may request replenishment of the cash advance when the disbursements reach at least 75% or as the need requires, by submitting a replenishment voucher with all supporting documents duly summarized in a report of disbursements.


Petty Operating Expenses

-

-

-

The cash advance shall not be used for payments of regular expenses, such as rentals, subscriptions, light and water and the like.

Payments out of the cash advance shall be allowed only for amounts not exceeding P5,000.00

for each transaction, except when a higher amount is allowed by law and/or specific authority by the Commission on Audit.

Splitting the transactions to avoid exceeding the ceiling shall not be allowed.

The cash advance shall be supported by the following documents:

Copy of authority by the Agency Head (attachment to initial cash advance)

Copy of approved application for bond (attachment to initial cash advance)

Estimate of expenses


Field/Activity Current Operating Expenses (COE)

• The special cash advance shall be used to pay the salaries and wages of the employees and the miscellaneous operating expenses of the activity.

Payment for each transaction shall not be subject to amount limitation. However, all payments shall be approved by the

Director/Head of field Office.

• The amount of the cash advance shall be limited to the requirements for two months. Within 5 days after the end of each month, the AO shall submit a Report of Disbursements.

Additional cash advances shall be granted on the basis of the activity budget or the requirements for two months, whichever is lower.


Field/Activity Current Operating Expenses (COE)

• The cash advance shall be supported by following documents: o Copy of authority by the Agency Head (attachment to initial cash advance) o Copy of approved application for bond (attachment to initial cash advance) o Budget for COE of the Agency field office or agency activity in the field.


Foreign Travel

The cash advance shall be supported by the following documents:

• Authority to travel

• Itinerary of travel

• Authority from the Office of the President for representation allowance

RULES & REGULATIONS ON THE GRANTING, UTILIZATION & LIQUIDATION OF CASH

ADVANCES

Liquidation of Cash Advances

1. The AO shall liquidate his cash advance as follows:

• Salaries, Wages, etc. - within 5 days after each 15 day/ end of the month pay period.

• Petty Operating Expenses and Field Operating Expenses - within 20 days after the end of the year; subject to replenishment during the year.

• Foreign Travel - within 60 days after return to the Philippines.

Failure of the AO to liquidate his cash advance within the prescribed period shall constitute a valid cause for the withholding of his salary.


ADVANCES


2.

The AO shall prepare the Report of Disbursements (using Gen. Form No.

______) in three (3) copies and submit the same with the vouchers/payrolls and supporting documents to the Accountant. For payments based on receipts and invoices only, he shall also prepare a liquidation voucher which shall be submitted with the report and the supporting documents to the Accountant. He shall ensure that receipt of the report is properly acknowledged by the

Accountant.

3.

Within 10 days after receipt of the report and supporting documents for the AO, the Accountant shall verify the report, record it in the books and submit the same with all the vouchers/payrolls and supporting documents to the Auditor.


ADVANCES


5. Within 30 days from receipt of the report and supporting documents from the Accountant, the Auditor shall complete the audit.

He shall issue the corresponding Credit Notice to the AO to inform the latter of the amount allowed in audit and any suspensions and/or disallowances made.

In case of disallowance, a copy of the Credit Notice shall be furnished the

Accountant who shall record the restoration of the cash advance for the amount disallowed.


ADVANCES


6. The AO shall submit to the Auditor the documents to settle his suspensions/disallowances.

When the documents are found in order, the Auditor shall lift the suspension and/or issue another

Credit Notice for the settled disallowance, copy furnished the

Accountant who shall draw a Journal Voucher to record the credit to the cash advance. In case of cash settlement, the AO shall present the necessary Official Receipt to the Auditor for notation.


ADVANCES


7. The Credit Notice issued by the Auditor to the AO shall be deemed sufficient compliance with the requirements of COA

Circular No. 81-156 dated January 19, 1981 (Restating the

Requirements for the Use of the Certificate of Settlement and

Balances and Providing Guidelines on its Issuance, Including the

Accounting Treatment Thereof).

8. When a cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned to or deposited immediately with the collecting officer.


ADVANCES


9. All cash advances shall be fully liquidated at the end of each year.

Except for petty cash fund, the AO shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary official receipt.

10. At the start of an ensuing year, a new cash advance may be granted, provided that a list of expenses against the previous cash advance is submitted.

However, when no liquidation of the previous cash advance is received on or before January 20, the

Accountant shall cause the withholding of the AO's salary.


ADVANCES

The following reports and documents are required to support the liquidation:

• Salaries, Wages, etc. - Report of disbursements with all duly signed payrolls and/or vouchers and all pertinent supporting documents, such as daily time records, approved leaves of absence, etc.

• Petty Operating Expenses

 Report of Disbursements with supporting documents

 Approved Requisition and Issue Voucher with the Certificate of Emergency

Purchase, if necessary

 Receipts, sales invoices

 Certificate of Acceptance/Inspection

 Duly approved trip ticket, if for gasoline

 such other supporting documents as are required by the nature of the expense


ADVANCES

The following reports and documents are required to support the liquidation:

• Current Operating Expenditures

 Same requirements as those for salaries, wages, etc. and petty operating expenses, supra

 Canvass of at least three suppliers (Not required if purchase is made while on official travel)

• Foreign Travel

 Itinerary of travel

 Certificate of travel completed

 Report on trip undertaken

 Plane, boat or bus ticket (if included in the cash advance)

 Receipts for hotel bills and incidental expenses


ADVANCES

HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK

• A newly appointed or designated AO shall start with a new cashbook,

Before discharging his duties, the new AO shall be briefed by the

Accountant and the Auditor on the proper recording of the transactions and other matters related to his work.

• The AO shall maintain separate cashbooks for salaries, wages, allowances, etc. and for petty operating expenses. The AO shall record the transactions in the prescribed cashbook daily.

He may record each invoice/receipt/voucher individually or the total disbursements for the day depending on the volume of the transactions.


ADVANCES

HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK

• The AO shall reconcile the book balance with the cash on hand daily. He shall foot and close the books at the end of each month. The AO and the

Accountant shall reconcile their books of accounts at least quarterly.

• The cashbooks shall be kept at the Office of the AO and placed inside the safe or cabinet when not in use. It may be taken from his custody only by the Auditor or an official duly authorized by the Agency Head, who shall issue the necessary receipt.

• When the AO ceases to be one, the cashbook shall submitted to the

Accountant or the Treasurer (for local government units) and shall form part of the accounting records. No clearance shall be issued to an AO if he fails to submit the cashbook as required.


ADVANCES

BONDING OF ACCOUNTABLE OFFICERS

 Each accountable officer with a total cash accountability of more than

P2,000.00 shall be bonded. The amount of the bond shall depend on the total accountability (cash and cash items) of the officer as fixed by the

Head of the Agency.

In no case shall cash advances be granted in amounts less than P2,000 each just to circumvent this requirement.

 The bonding requirements are as follows:

• Appointment and/or designation as accountable officer;

• Written character references by at least three officials of the Agency one of whom is the

Administrative and/or Legal Officer, other than the official who appointed/designated him.

• Statement of assets and liabilities as of the end of the preceding year;

The foregoing documents shall be submitted, together with the application for bond, to the auditor who shall fix and approve the amount of the bond and shall transmit the same to the Fidelity

Bond Division of the Bureau of the Treasury.


ADVANCES


 When the accountability is increased, the Accountant shall ensure that additional bond is applied for.

 When the AO ceases to be one, the Accountant shall immediately inform the Fidelity Bond Division of such cessation.

 The schedule of the bonds necessary for the cash accountability of the

AO is as follows:


ADVANCES



ADVANCES

RESPONSIBILITY OF THE AGENCY HEAD

It shall be the responsibility of the Head of the Agency to ensure proper granting, utilization and liquidation of all cash advances in accordance with these rules and regulations.


Reporting of Cash Disbursements

 To account for cash disbursements, from regular and special cash advances, the Accountable/Disbursing Officer shall prepare the Report of

Disbursements and submit the original and duplicate copy with vouchers/payrolls/petty cash vouchers to the Accountant.

 He shall ensure that the receipt of the report and supporting documents are properly acknowledged by the Accountant.

The Accountant shall verify the report including the completeness of the supporting documents, prepare the Journal Entry Voucher (JEV) and record the transaction in the Cash Disbursement Journal.

(NGAs for LGUs, Sec. 46)


Specific Guidelines on the Grant of Cash Advance for Payroll, Field Operating

Expenses and Travel

 Documentary Requirements common to all cash advances except for travels

 Payroll Fund for Salaries, Wages, Allowances, Honoraria and Other Similar

Payments

 Petty Cash Fund

 Field/Activity Current Operating Expenses(COE)

 Travelling Allowances

• General Guidelines

Travels shall cover only those that are urgent and extremely necessary, will involve the minimum expenditure and are beneficial to the agency concerned and/or country.

(EO 298, dated March 23, 2004, as amended)


Specific Guidelines on the Grant of Cash Advance for

Payroll, Field Operating Expenses and Travel

 Documentary Requirements on Official Local and Foreign Travel of Local

Treasurers and their Assistants –

• Local Travel:

 Travel Authority issued by the LCE

 Duly approved Itinerary of Travel

 Certification from the Accountant that the previous cash advance has been liquidated and accounted for in books

• Foreign Travel:

 2.2.1 Funded by LGU

 2.2.2 Funded by the National Government

 2.2.3 Funded by a Foreign Institution/Country

 2.2.4 Personal Foreign Travel



 General Guidelines . – The Accountable Officer shall liquidate each cash advance within the following periods:

• Salaries, Wages, Allowances, Honoraria and other similar payments – within 5 calendar days after the end of the pay period.

• Field Operating Expenses – within 20 calendar days after the end of the year subject to replenishment as frequently as necessary during the year.


. Liquidation of Cash Advances

 General Guidelines. – The Accountable Officer shall liquidate each cash advance within the following periods:

• Petty Cash Fund (PCF) – as soon as the disbursement reaches 75% or as needed, the PCF shall be replenished which shall be equal to the total amount of expenditures made therefrom. In case of termination, resignation, retirement or dismissal of the PCF custodian, the remaining balance shall be liquidated thereafter.

• Travelling Expenses – within 30 days after the return of the official/employee concerned to his/her official station for local travel and within 60 days after the return of the official/employee concerned to the

Philippines in the case of foreign travel.

• Special Purpose – as soon as the purpose of the cash advance has been served.



 Documentary Requirements

• Payroll Fund for Salaries, Wages, Honoraria and other similar expenses

• Petty Cash Fund

• Field/ Activity Current Operating Expenses

• Travelling Expenses

 Local Travel

 Foreign Travel

(COA Circular 2012-001, dated June 14, 2012)


Guidelines on Granting of Cash Advance for Intelligence and Confidential

Expenses

 Cash advances shall be used for specific legal purpose related to CF and/or

IF. Under no circumstance shall it be used for liquidation of the previous cash advance or be transferred from one accountable to another.

 Required documents to support DV for the grant of cash advance for CF and IF for a specific sector;

• For NGAs

• For GOCCs

• For LGUs

(COA-DBM-DILG-GOCCs-DND Joint Circular No. 2015-01 dated January 8, 2015)


Handling, Custody and Disposition of Cash Book

 A newly appointed or designated Accountable Officer shall start with a new cash book.

 Before discharging his/her duties, the new Accountable Officer shall be briefed by the Local Accountant and the Auditor on the proper recording of the transactions and other matters related to his/her work.

Sec. 181, Book III, Vol. I, GAAM)


Disbursements out of Petty Cash Fund

 Petty Cash Fund shall be maintained under the Imprest System.

 The fund should be sufficient for the non-recurring, emergency and petty expenses of the Local Government Unit for one (1) month.

 Disbursements from the Petty Cash Fund shall be through the

Petty Cash Voucher which shall be signed by the payee to acknowledge the amount received.

Government Expenditures

 Government expenditures are classified as follows:

• Current Operating Expenditures

 Personal Services

 Maintenance and Other Operating Expenses

 Financial Expenses

• Capital Outlays

UNNECESSARY

EXCESSIVE

IRREGULAR

LEGAL BASIS

COA CIRCULAR

NO. 2012-003

EXTRAVAGANT

UNCONSCIONABL

E

COA CIRCULAR NO. 2012-003

October 29, 2012

Updated Guidelines for the Prevention and

Disallowance of Irregular, Unnecessary,

Excessive, Extravagant & Unconscionable

Expenditures

IRREGULAR EXPENDITURES

• Expenditure incurred w/o adhering to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in laws

• Transaction conducted in a manner that deviates or departs from, or w/c does not comply w/ standards set

• Transaction which fails to follow or violates appropriate rules of procedure

IRREGULAR EXPENDITURES

EXAMPLES

 Grant of Christmas bonus, cash gift & other fringe benefits to consultants & members of the Board who are not salaried officials of the government (BCDA vs COA, GR No. 178160, 2/26/09)

 Loyalty service award granted to employees that have not rendered the minimum service of ten years in government (BCDA vs COA, GR No. 142760),

8/6/02)

 Grant of food allowance, rice subsidy and health care allowance, there is no law authorizing such allowance

(BFAR Employees Union, RO VII vs COA, GR No. 169815, 8/13/08; Benguet

State University vs. COA, GR No. 169637, 6/8/07)

ILLEGAL EXPENDITURES

• Transactions in violation of laws

EXAMPLES:

 For widening, repairing & improving sidewalks of a privately owned subdivision where the land it is situated has not been transferred to the government by way of donation or acquired by the government through expropriation (Albon vs

Bayani Fernando et al., GR No. 148357, 6/30/06)

 Entering into contracts w/o covering certificates of availability of funds issued by the Chief Accountant even if the contract is signed by the Accountant as witness (DOH vs CVCAA, et al., GR N0s 151373-74, 11/17/05)

UNNECESSARY EXPENDITURES

• Not supportive of the implementation of the objectives & mission of the agency relative to the nature of its operations

EXAMPLES

 Continuous repair of vehicles & equipment already considered beyond economic repair as evidenced by frequent breakdown and non-use after repair

 Hiring of consultants whose functions are redundant to the respective functions of concerned officials – hiring of procurement consultant, financial consultant, media consultant

EXCESSIVE EXPENDITURES

•

Signifies unreasonable expense or expenses incurred at an immoderate quantity or exorbitant price

•

Expenses w/c exceed what is usual or proper or unreasonably high and beyond just measure or amount

•

Expenses in excess of reasonable limits

EXCESSIVE EXPENDITURES

EXAMPLES

 Payment of repair of government equipment at a cost exceeding 30 percent of the current market price of the same or similar equipment

 Procurement of materials/items in excess of the requirements w/c eventually expired such as vaccines, medicines, seeds, fertilizer, pesticides, among others.

EXTRAVAGANT EXPENDITURES

• Expenses incurred w/o restraint, judiciousness and economy

• Expenses that exceed the bounds of propriety

• Those w/c are immoderate, prodigal, lavish, luxurious, grossly excessive and injudicious

EXAMPLES

 Purchase of wines, liquors, cigars & cigarettes except when served during state functions and government-sponsored international conferences and conventions

 Procurement and use of luxury vehicles (Administrative Order No. 3,

2/27/01)

UNCONSCIONABLE EXPENDITURES

• Unreasonable and immoderate, and which no man in his/her right sense would make, nor a fair and honest man would accept as reasonable, and those incurred in violation of ethical and moral standards.

EXAMPLES

 Grant of exorbitant & unreasonable bonuses, allowances

& fringe benefits to public officials and employees

 Live-in seminars in five-star hotels within an unreasonable period of time

LOCAL FUND MANAGEMENT AND UTILIZATION

Relevant Terms on Fund Management and Utilization:

• Accounts Payable – Obligations of government agencies, whether current year or prior years, for which services had been rendered, goods have been delivered or projects have been completed and accepted.

(COA & DBM Joint Circular No. 2013-1 dated March 15, 2013)

• Accountable Officer – the officer of any government agency whose duties permit or require the possession or custody of government funds or property,

(Local Treasurer, Collecting Officer, Disbursing Officer, Cashier,

Paymaster, Property Officer and others

(COA Circular No. 2009-006 dated September 15, 2009)



• Allotmen t – An allotment is an authorization issued by the Local Chief

Executive to a department office of the local government unit, which allows it to incur obligations for specified amounts within the appropriations ordinance

(p. 87, UBOM for LGUs), (Sec. 8, COA Cir. 2002-003 dated June 20, 2002).

The authorization is called the Allotment Release Order (ARO), which is a specific authority to incur obligations not exceeding the amount for the specific purpose indicated. (p. 88, UBOM for LGUs).

• Appropriation – refers to an authorization made by ordinance, directing the payment of goods and services from local government funds under specified conditions or for specific purposes. (Sec. 306 (b), LGC ) (Sec. 140, Book III,

Vol. I, GAAM)



• Cash – Cash means money, which is the standard medium of exchange in business transactions. Cash includes “money and other negotiable instrument that is payable in money and acceptable by the bank for deposit and immediate credit”. It includes checks, bank drafts and money orders. (3.1, Annex A, COA Resolution No. 2006-006 dated January 31,

2006, PGAS)

(Glossary of Terms of Budget of Expenditures and Sources of Financing 2014,

DBM, GAA 2014)


Relevant Terms on Fund Management and Utilization

• Cash Analysis – Cash analysis begins with a starting balance and generates an ending balance after accounting for all cash receipts and paid expenses during the period.

• Cashbook for Cash in Bank – shall be used to record deposits of collections (Debit column) and withdrawals from the bank thru the issuance of checks (Credit column). The cashbook shall be maintained by bank account and by fund and shall be updated and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 27,

MNGAS for LGUs, Vol. II).



• Cash Analysis – Cash analysis begins with a starting balance and generates an ending balance after accounting for all cash receipts and paid expenses during the period.

• Cashbook for Cash in Bank – shall be used to record deposits of collections (Debit column) and withdrawals from the bank thru the issuance of checks (Credit column). The cashbook shall be maintained by bank account and by fund and shall be updated and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook (Section 27,

MNGAS for LGUs, Vol. II).



• Cashbook for Cash in Treasury – shall be used to record collections (Debit column) and deposits to the bank (Credit column) based on the RCD. The cashbook shall be maintained by the Treasurer by fund and shall be updated and balanced daily. The accountable officer shall, at the end of the month or when required to do so by proper competent authority, rule and foot the cashbook. (Section 26, MNGAS for LGUs, Vol. II).

• Cash flow – Record of inflows and outflows of cash, representing the operating activities during a given period.

• Cash Flow Forecasting – Estimate of the timing and amounts of cash inflows and outflows over a specific period, usually one year.



• Certificate of Settlement and Balances – a written notification by the

Auditor to the agency head and the accountable officer concerned of the total suspensions, disallowances and charges found in audit, as well as the settlements thereof.

• Charge – refer to pecuniary liability, as rents or fees against persons or property. (Sec. 131 (g), LGC)

• Check – is a negotiable instrument drawn against deposited funds, to pay a specific entity a specific amount of funds on demand.



• Credit Memo – A credit memo is a contraction of the term "credit memorandum," which is a document issued by the seller of goods or services to the buyer, reducing the amount that the buyer owes to the seller under the terms of an earlier invoice. The credit memo usually includes details of exactly why the amount stated on the memo has been issued, which can be used later to aggregate information about credit memos to determine why the seller is issuing them.

• Current Assets – cash and other assets that are not earmarked for specific purposes other than the payment of a current liability or a readily marketable investment. (p. 391, Glossary of Terms for State Auditors)



• Current Liability – A current liability is an obligation that is payable within one year.

• Debit Memo – A bank creates a debit memo when it charges a fee on its bank statement, thereby reducing the balance in the checking of account.

• Disallowance – the disapproval in audit of a transaction, either in whole or in part.

• Disbursement - Disbursements constitute all payments made during a given period either in currency, by check, through bank and electronic transfers, telegraphic transfers, letters of credit, credit/debit cards and other non-conventional modes of payment.



• Equity – residual interest of the government in an agency which is the excess of the agency’s assets over its liabilities. (Sec. 3 (c), Vol 3, NGAS)

• Financial Expenses (FE) – These accounts include bank charges, interest expense, commitment charges, documentary stamp expense and other financial charges. It also includes losses incurred relative to foreign exchange transactions and debt service subsidy to GOCCs. (Sec. 7 (c), NGAS)

• Fixed Assets – fixed assets are items of property, plant and equipment and are referred to as "fixed" because of their permanent nature and because they are not subject to rapid turnover. They include equipment, furniture and fixtures, land and buildings and any other property considered tangible or long-lasting.

(pp. 273-274, Glossary of Terms for State Auditors)


Relevant Terms on Fund Management and Utilization x x x

• Fund – refers to a sum of money, or other assets convertible to cash, set aside for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations, and constitutes as independent fiscal and accounting entity. (Sec. 306 (h),

LGC)

• Fund Transfer – a transfer of money from one bank account to another, either within a single financial institution or across multiple institutions.

• Government Expenditures – include all charges against the fund of the local government unit for current operating expenditures, capital outlays and provisions for retirement of long term obligations. The charges are both the amounts actually paid and those incurred and recorded as liabilities to be paid in the future. (Sec. 154, Book 111, Vol. I, GAAM)



• Government Funds – include public moneys of every sort and other resources pertaining to any agency of the government.

(Sec. 3 (2), P.D. No. 1445)

• Head of Agency (HoA) – refers to the highest official of the NGA and LGU. In the case of GOCCs, however, and solely for purposes of this Circular, the HoA refers to the President and/or Chief Executive Officer, who is in-charge of the day to day operations of the corporation. (3.12, COA-DBM-DILG-GCG-DND

Joint Circular No. 2015-01 dated January 8, 2015)

• Intelligence and Confidential Fund Audit Unit (ICFAU) – refers to the unit created under the Office of the Chairperson of the COA in charge of the audit of CF and IF. (3.13, COA-DBM-DILG-GCG-DND Joint Circular No. 2015-01 dated January 8, 2015)



• Long Term Liability – An obligation which will not become due within a relatively short period, usually a year. (Sec. 28, Vol. III, GAAM)

• Obligations – refers to an amount committed to be paid by the local government unit for any lawful act made by an accountable officer for and in behalf of the local unit concerned. (Sec. 306 (j), LGC)

• Persons Liable – the persons determined by the auditor to be answerable for an audit disallowance or charge arising from the post-audit of transaction or examination of the cash and accounts of an accountable officer.

• Persons Responsible – the persons determined by the auditor to be answerable for compliance with the audit requirements as called for in the notice of suspension.



• Quick Assets – a holding that can be converted into cash within a short period of time. An example would be a marketable security that is immediately saleable at a quoted price in the open market. (p. 541,

Glossary of Terms for State Auditors)

• Reconsideration – the process whereby an aggrieved party requests the very officer or body who made the decision, order, or ruling to review the same with the view of its modification or reversal. This should be distinguished from "appeal" which is the process of elevating to the next higher authority a decision, order, or ruling.



• Responsibility – the obligation to prudently exercise assigned or imputed authority attaching to the assigned or imputed role of an individual or group participating in organizational activities or decision.

• Real Property Tax Receivable – an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.


Relevant Terms on Fund Management and Utilization x x x

• Receivables – represents amounts collectible from customers and other debtors arising from sale of merchandise or the performance of services on account and claims for money lent, including real property taxes due the

Local Government Units (LGUs). (4.1, PGAS 4, Annex A, Resolution No.

2006-006 dated January 31, 2006)

• Settlemen t – the process of determining the status or balance of the accountability of an accountable officer.

• Special Disbursing Officer (SDO) – refers to the HoA or a regular employee designated by the HoA to be in charge of making disbursements of CF and/or IF so received and accountable therefor. (3.29, COA-DBM-

DILG-GCG-DND Joint Circular No. 2015-01 dated January 8, 2015)



• Special Education Tax Receivable – annual tax of one percent (1%) on the assessed value of real property in addition to the basic real property tax. (Sec. 235, LGC)

• Suspensio n – the deferment of action to allow or disallow in audit a transaction pending compliance with certain requirements.

• Trust Liability – An account used to record collections, income, or receipts of agencies held in trust or guarantee for another agency and for a specific purpose. (Glossary of Terms of Budget of Expenditures and Sources of

Financing 2014, DBM, GAA 2014)

Cash Book (Cash in Treasury)

CASH BOOK


CASH BOOK


CASH BOOK

Cash Book (Cash in Bank)

CASH BOOK


CASH BOOK


CASH BOOK

Cash Book (Cash Advances)

CASH BOOK


CASH BOOK


CASH BOOK

Cash Book (Liquidating Officer)

CASH BOOK

Cash Book (Teller/Collector)

CASH BOOK

D E PA R T M E N T O F F I N A N C E

BUREAU OF LOCAL GOVERNMENT FINANCE

BASIC OPERATIONS ON LOCAL TREASURY SERVICE

TRAINING

Understanding LGU Credit

Financing and Debt

Management

Legal Framework of Credit Financing

• Sec.

296 (b): Credit lines from government or private banks and lending institutions for the purpose of stabilizing local finances


• Sec. 297 (a): Contract loans, credits, and other forms of indebtedness with any government or domestic private bank and other lending institutions to finance the construction, installation, improvement, expansion, operation, or maintenance of public facilities, infrastructure facilities, housing projects, the acquisition of real property, and the implementation of other capital investment projects.


• Sec. 297 (b): Short, Medium and Long term loans and advances from any government bank and lending institution against security of real estate or other acceptable assets for the establishment, development, or expansion of agricultural, industrial, commercial house financing and livelihood projects, and other economic enterprises.


• Sec. 298: Deferred-payment and other financial schemes- Acquire property, plant, machinery, equipment and such necessary accessories under a supplier’s credit, deferred payment plan, or other financial scheme. (except for the barangays)


• Sec. 299: Bonds and Other Long-Term

Securities- Authorized to issue bonds, debentures, securities, collaterals, notes and other obligations to finance selfliquidating, income production development or livelihood projects. (except for the barangays

)


• Sec. 300: Inter-Local Government Loans, grants and subsidies – Extend loans, grants, or subsidies to other LGUs; (except barangays)

• Sec 300: LGUs to jointly or severally contract loans, credits, and other forms of indebtedness


• Sec 301 (a): Loans from funds secured by the national government from foreign sources.

• Sec 302: Financing, construction, maintenance, operation, and management of infrastructure projects by the private sector, subject to provisions of R.A. No.

6957

Inventory of Alternative Financing Modalities

Table 1: Alternative Non-Traditional Financing Modalities for LGUs

Financing Alternatives

Borrowings

Modalities i. Direct Loans

 Government Financial Institution

 Other Government Lending Windows

 Private and International Financial Institutions

Private Sector Tie-Ups ii. Bond Issuance i. BOT and its variants ii. Supplier’s/Contractor’s Credit iii. Leasing

Credit Financing – Government Banks







BSP Circular Letter dated 14 March 2006.

DOF Department Order No. 27-05 dated 9 December 2005.

BSP Limitations specifies that:



All Provincial, City, and Municipal Treasurer, Commissioner of

BIR and BOC, Heads of attached agencies of the DOF and

Heads of all GOCCs shall deposit their funds and maintain depository accounts with

A. LBP

B. DBP

Credit Financing – Municipal Development Fund

Office

The Municipal Development Fund, a revolving fund created under PD 1914, and capitalized and funded from proceeds of foreign loans, assistance or grants made available to LGUs for specific purposes, projects components and activities as stated in international agreements from foreign governments and/ or international organizations, was reorganised under EO

41 as an Office under the DOF and renamed the MDFO.

MUNICIPAL DEVELOPMENT FUND OFFICE

Financing windows Eligible Borrowers

Municipal Development Fund Project (MDFP) All LGUs nationwide

Millennium Development Goals Fund (MDGF)

Disaster Management Assistance Fund (DMAF)

Mindanao Basic Urban Services Sector Project

(MBUSSP)

Program Lending (PROLEND)

Project Technical Assistance Contingency Fund

(PTACF)

Refinancing Facility

Municipio Fund

Philippine Water Revolving Fund- Standby Credit

All 4 th -6 th Income class Municipal LGUs

All LGUs nationwide except for cities applying for disaster prevention and mitigation

All LGUs in Region IX, X, XI, XII, CARAGA, ARMM

All Provincial Government

All LGUs except highly urbanized cities in NCR

All LGUs nationwide

All 1 st – 6 th Income Class municipalities

All LGUs nationwide

Credit Financing – Legal Limits

The BSP directive effectively limits the participation of private commercial banks in the LGU deposit business

Consequently limiting the participation of private commercial banks in the LGU lending business since the IRA account maintained by the LGUs with the government depository banks provide security to the credit accommodation.

Nonetheless, the credit market is currently witnessing the entry of private financing institutions in the LGU lending business given the right credit mechanisms and revenue benefits.

PUBLIC-PRIVATE PARTNERSHIP

DILG Guidelines for the Implementation of PPP for the People Initiative for Local

Governments (LGU P4)(DILG Memorandum Circular No. 2016-120)

DILG MC 2016-120 provides for the different modalities under LGU P4 that LGUs may adopt in undertaking P4 projects:

• Build-and-Transfer (BT);

• Build-Lease-and-Transfer (BLT);

• Build-Operate-and-Transfer (BOT);

• Build-Own-and-Operate (BOO);

• Build-Transfer-and-Operate (BTO);

• Contract-Add-and-Operate (CAO);

• Develop-Operate-and-Transfer (DOT);

• Rehabilitate-Operate-and-Transfer (ROT);

• Rehabilitate-Own-and-Operate (ROO);

• Rehabilitate-Lease-and-Transfer (RLT);

• Rehabilitate-and-Transfer (RT);

PUBLIC-PRIVATE PARTNERSHIP

(cont ’)

• Rehabilitate-Transfer-and-Operate (RTO);

• Concession;

• Joint Venture (JV);

• Lease or Affermage;

• Management Contract using LGU funds;

• Management Contract without using LGU funds;

• Service Contract using LGU funds;

• Service Contract without using LGU funds;

• Divestment or Disposition;

• Corporatizations;

• Incorporation of a Subsidiary with private sector equity;

• Onerous Donations;

• Gratuitous Donations; and

• Any other modality akin to any of the above, or features thereof, that falls under the definition of a PPP.

DOF Policies on LGU Loan Certification

• Local Finance Circular (LFC) No. 1-2000, dated 19 January

2000: issued to enhance the access of all LGUs to credits and other forms of indebtedness.

• LFC No. 01-2012: Amended the previous LFC, and released on

16 April 2012, to ensure a more accurate and appropriate evaluation of the maximum borrowing and debt servicing capacities of all LGUs.

• LFC No. 01-2014: Issued on April 22, 2014 for 171 LGUs affected by Typhoon Yolanda, from 12 to 4 requirements, and extending the validity by 1 year

Streamlined Documentary Requirements for Certification

1. Letter request from the Local Chief Executive indicating:

The lending institution where to apply for a loan;

Terms and condition of the proposed loan; and

The purpose of the loan.

2. Certification of existing of loan/s duly certified by the Local Treasurer with the following details:

• Types of loans & other obligations contracted;

• Purpose of the loans & other obligations contracted;

• Name of the lending institutions;

• Date of approval & maturity;

• Terms & conditions (interest rate & number of years to pay);

• Remaining balances of loans and other obligations; and

• Annual amortization schedules (segregating the principal from the interest) issued by the lending institution.


3. COA Annual Audit Certificate for the most recent year, which shall be supported by the year-end financial reports for the past 3 years:

• Pre-closing trial balance (general fund);

• Detailed Statement of Financial Performance

An Agency Action Plan and Status of Implementation (AAPSI) report on COA recommendations shall be required if the LGU has adverse findings; and

4. Certification issued by the lending institution stating that it shall not require

LGU deposits as compensating balance for the loan if such lending institution is not (1) not an authorized government depository bank or (2) an authorized government bank required to obtain the prior approval of the Department of Finance as provided under the DOF Department Order No. 27-05 (Banks other than LBP, DBP and MDFO);


-

LGUs affected by Natural and/or Man Made Disaster

1. Letter request from the Local Chief Executive indicating:

- The lending institution where to apply for a loan;

- Terms and condition of the proposed loan; and

- The purpose of the loan.

2. Certification of existing of loan/s duly certified by the Local Treasurer with the following details:

• Types of loans & other obligations contracted;

• Purpose of the loans & other obligations contracted;

• Name of the lending institutions;

• Date of approval & maturity;

• Terms & conditions (interest rate & number of years to pay);

• Remaining balances of loans and other obligations; and

• Annual amortization schedules (segregating the principal from the interest) issued by the lending institution.

Certified true copy of declaration.

Features of the Certificate

• Certifies the amounts pertaining to:

– Net Debt Service Ceiling (NDSC)

– Borrowing Capacity (BC)

–Terms of the loan

(period, interest, grace period, etc.)

–Name of lending institution

–Purpose of the loan

–Certificate number and date issued

–Notes on the certificate

Computing the NDSC and BC

• Debt Service Ceiling (DSC)

– 20% x Annual Regular Income (ARI)

• Where ARI is the average previous 3-year locally sourced income + other shares from national taxes based on COA data,

+ actual annual IRA based on DBM data

• Net DSC (NDSC)

– DSC – All amortizations payable during the year

• Borrowing Capacity (BC)

– NDSC x Annuity Factor

Local Government Unit (LGU)

Local Council, through a

Resolution/Ordinance, authorizes the Local Chief Executive to negotiate and contract loans and other forms of indebtedness

Submit Letter of Intent and negotiate with the lending institution

LGU Loan Application Process

Lending Institution

Pre-Evaluation/Setting of

Terms and Conditions

Submit to BLGF a written request for certification of LGU Net Debt Service Ceiling and Borrowing

Capacity, with complete supporting documents pursuant to DOF Department Order 054.2016

Submit the required additional documents

Re-negotiate with the lending institution for lower interest rate, longer tenor, or consider other lending institutions, then re-submit to BLGF

Yes

Proposed Loan Higher than BLGF Certification?

No

Submit to BSP a written request for

Monetary Board Opinion

Submit to the Lending Institutions the

BLGF Certification, MB Opinion and

Other Requirements

Record receipt of Loan Proceeds and prepare borrowing reports for submission to BLGF-RO and BSP

Approval and Signing of Loan

Agreement with the LGU

Release of Loan

Bureau of Local Government Finance (BLGF)

BLGF-RO BLGF-CO

Evaluate LGU request and supporting documentary requirements

Final computation and issuance of certificate of

NDSCBC

No

Documents

Complete/

Compliant?

Yes

Evaluate financial reports of the LGU

Compute preliminarily LGU

Net Debt Service Ceiling and

Borrowing Capacity

(NDSCBC)

Submit to BLGF-CO all documentary requirements and the preliminary computation for the issuance of certificate of

NDSCBC

Receive LGU Post Borrowing Report

Bangko Sentral ng Pilipinas

Evaluate LGU request and supporting documentary requirements

Monetary Board renders Opinion on the Monetary Balance and

Payments implications of the proposed LGU borrowing, per BSP

Circular No.926 s. 2016

Receive LGU Post Borrowing Report

Reporting Requirements of

Statement of Indebtedness,

Payments, and Balances (SIPB)

BLGF POLICY ISSUANCE

• Local Finance Circular No. 1-2012 dated 16 April

2012 requires local treasurer to submit the

Statement of Indebtedness Payment and Balances

(SIPB) setting out the details of the contracted loan;

• Objective: Access to readily and reliable LGU debt data for the formulation of economic and financial policies.

RESPONSIBILITIES for LOCAL TREASURERS (PROVICIAL,

CITY, MUNICIPAL)

1. Prepare and submit the annual SIPB on or before 28th of February of the subsequent year. For newly contracted loans, the SIPB report shall be submitted within ten (10) days after the approval of the loan.

2. Coordination with the accountant in completing the annual SIPB report by requesting data on the remaining loan balance (principal and interest). In case of bond flotation, request data on deposit to bond sinking fund and sinking fund balance to date.

3. TAKE NOTE: With or without loans, submit to the BLGF-RO the annual SIPB report.

Fiscal Year 2015

Issued Certificate of Net Debt Service Ceiling and

Borrowing Capacity for Fiscal Year 2015: CAR

LGU Name

Peñarrubia, Abra

Danglas, Abra

Income

Class

6th

5th

Loan Purpose

To finance the construction of a Multi-Purpose

Building

For the landscaping, site improvement, lighting-solar and for the improvement of Maramoy and

Malibcong/Abaquid Farm to Market Road


Borrowing Capacity for Fiscal Year 2015: Region I

LGU Name

San Ildefonso, Ilocos Sur

Income Class

5th

Loan Purpose

For the ff. Projects: 1) To reimburse the development projects for the development of the

LGUs acquired property into a market, slaughterhouse and commercial center 2) To partly finance other development projects 3) To absorb loans payable to LBP or outstanding balance as of implementation date, whichever is lower


Borrowing Capacity for Fiscal Year 2015: Region II

LGU Name

Ambaguio, Nueva Vizcaya

Luna, Isabela

Income Class

5th

5th

Loan Purpose

To finance the acquisition of the ff. heavy equipment: 1) 2 units Backhoe 2) 1 unit Grader 3)

1 unit Road Roller 4) 1 unit 6-Wheeler Forward

Dump Truck and 5) 1 unit 6-Wheeler Forward

Transit Mixer

To purchase two (2) units dump truck and one (1) unit pay loader


Borrowing Capacity for Fiscal Year 2015: Region III

LGU Name

Nampicuan, Nueva Ecija

Income Class

5th

Loan Purpose

For the const./rehab. Of the Public Market


Borrowing Capacity for Fiscal Year 2015: Region IV-

A

LGU Name

Sampaloc, Quezon

Income Class

5th

Loan Purpose

For the construction of Mamala-Taquico-Caldong

Farm-to-Market Road Sub-Project under Philippine

Rural Development Project

Fiscal Year 2016


Borrowing Capacity for Fiscal Year 2016: CAR

LGU Name

Tayum, Abra

Income Class

5th

Loan Purpose

For the repair, rehabilitation and improvement of local/barangay roads


Borrowing Capacity for Fiscal Year 2016: Region III

LGU Name

Nampicuan, Nueva Ecija

Income Class

5th

Loan Purpose

For the construction/rehabilitation of public market of Nampicuan, including the market stalls


Borrowing Capacity for Fiscal Year 2016: Region IV-

A

LGU Name

Sampaloc, Quezon

Balete, Batangas

Income Class

5th

5th

Loan Purpose

For the acquisition of two (2) units Dump Truck,

Rehabilitation and expansion of existing Water

System; and Construction of Mamala-Taquico-

Caldong farm-to-market road sub-project under

Philippine Rural Development Project (PRDP)

To finance the ff. projects: 1) Purchase of Lot 2)

Construction of Public Market and 3) Development of New Municipal Urban Center

LOCAL GOVERNMENT UNIT

INTEGRATED FINANCIAL TOOLS

(LIFT) OVERVIEW

The LIFT is an IT-based solution that provides our LGUs with a simple yet comprehensive tool to help local government plan, budget, improve revenue collection and budget execution, as well as audit.

LIFT shall serve as a tool to harmonize and complement the various performance management systems currently being implemented by the

LGU oversight agencies (DBM, DILG and DOF-BLGF).

• DBM and DOF – BLGF eSRE system was enhanced to version 3 to incorporate new modules

(Expenditure Tagging, Expenditure Forecasting, SIPB, LGU FSS), introduce data encoding improvements, modify selected existing modules.

• DILG

Linked eSRE’s Local Government Financial Performance Monitoring System

(LGFPMS) indicators to DILG’s Local Government Performance Management

System (LGPMS)

Electronic Statement of Receipts and Expenditures (eSRE)System

The LGU System allows the Treasurers, Budget Officers and Assessors to encode data needed in order to generate the SRE and QRRPA reports.

The Central System allows the Treasurers, Budget Officers and Assessors to submit the encoded data to be reviewed and processed by regional and central users.

It also runs various performance assessment

(Performance Standards, Fiscal Sustainability Scorecard, LGFPMS) and forecasting procedures

(Annual Performance Targets and Medium-Term Forecasts).

Other additional modules are for Debt Management and Data Analytics.

Legal Basis:

a) DOF Department Order No. 08-2011: Adoption of Statement of Receipts and Expenditures as the Official Reporting System on Local Government Fiscal and Financial Operations and

Providing the Rules and Financial Operations and Providing the Rules and Regulations

Threfor b) DOF Department Order No. 34-2014: Amending Sections 3,8 and 9 of the Department Order

No. 8-2011 dated 11 February 2011 c) BLGF Memorandum Circular No. 8-2015: Guidelines in the submission and reviewing of eSRE reports pursuant to the Department Order No. 034-2014 dated 26 May 2014, Amending

Sections 3, 8, and 9 11 February 2012

Legal Basis:

d) DOF Department Order No. 59-2015: Electronic Submission of the Quarterly Report on Real

Property Assessments (QRRPA) e) DILG-NEDA-DBM-DOF Joint Memorandum Circular No. 1-2016 : Updated Guidelines on the

Harmonization of Local Planning, Investment Programming, Resource Mobilization, Budgeting,

Expenditure Management , and Performance Monitoring and Coordination on Fiscal Oversight

Conformity on the Freedom of Information Bill


Operationalizing in the Executive Branch the People’s Constitutional

Right to Information and the State of Policies to Full Public

Disclosure and Transparency in the Public Service and Providing

Guidelines Therefor

BLGF HAILED BY ABS-CBN

AS ONE OF THE TEN (10) GOVERNMENT AGENCIES PROVIDING

PROMPT DATA

ON DIGITAL FORMAT FOR FREE

But there have been patches of blue in an overcast sky.

In a span of almost a year, out of the approximately 40 national and local government agencies that the ABS-CBN Investigative and Research Group dealt with, seven have stood out in upholding the people’s right to know, the DPWH, DOTC, Office of the Civil Defense-ARMM, PPPC, BSP, PSA and DOF-BLGF .

These agencies did not only provide updated and detailed data promptly, but these were also in digital format that could easily be analyzed. Best of all, they did not impose any fees for providing the service.

Unfortunately, these agencies remain the minority. In 8 out of every 10 requests for government data and information, the supposedly straight forward exercise has turned out to be a test of patience and perseverance.

Now that we have an EO on FOI, will we see significant improvement in government’s disclosure of information to citizens?

CONCEPTS AND TERMINOLOGIES ON REVENUE

PROJECTIONS

Concepts and Terminologies on Revenue Projections

Fiscal Capacity

• 3 to 6 years projection

• LGU will use this for LDIP and CDP

(outside of eSRE)

• Every

November

Performance /

Annual Targets

• 1 year projection

• Treasurers (as member of LFC) to agree

• Annual Target

Report

• Use for Treasurers’

Performance

Standards and LGU

FSS

• Every May

Income Target

Approved by LFC and LCE

•Manually encoded in the eSRE System

•1year projection

•Displayed in SRE,

SRS and BESF

Reports

•Approved by the

LFC and LCE

Cash Flow

Forecasting

• Can be used as alternative forecasting technique

• Seasonality index can be identified on a quarterly basis

• Every May


FINANCIAL PERFORMANCE

MONITORING SYSTEM

(LGFPMS)

LOCAL GOVERNMENT FINANCIAL PERFORMANCE

MONITORING SYSTEM (LGFPMS)

BASIS: BLGF Memorandum Circular No. 16-

2015 dated 19 June 2015 (Local Public Financial

Management Tools for the Electronic Statement of

Receipts and Expenditures)

BLGF implementation of the Manual for the Local

Public Financial Management Tools for the electronic

Statement of Receipts and Expenditure

Objective

 To assess individual LGU performance

 To provide active advisory to LGUs

 To support LGU credit assessment

 To support policy formulation

Category

 Revenue Indicators (Revenue Generation Capacity)

 Expenditure Indicators (Expenditures Rigidity)

 Debt Indicators (Debt Carrying Capacity of LGU)

 Overall Financial Indicators (Financial Management

Capacity)

INDICATORS

REVENUE LEVEL

Total Revenues as compared to the average value for the LGU income class to which the LGU belongs.

FORMULA: TOTAL REVENUES

Real Property Tax (General Fund + SEF) +

Tax on Business + Other Taxes + Regulatory

Fees + Service/User Charges + Receipts from

Economic Enterprises + Other Receipts +

Internal Revenue Allotment + Other Shares from National Tax Collection + Inter-Local

Transfer + Extraordinary Receipts

EXAMPLE:

LGU NAME

INCOME

CLASS

REAL PROPERTY

TAX (BASIC + SEF)

TAX ON BUSINESS OTHER TAXES

REGULATORY

FEES (PERMITS

AND LICENSE)

SERVICE/USER

CHARGES

RECEIPTS FROM

ECONOMIC

ENTERPRISES

ABRA

APAYAO

3

3

8,901,339.54

6,178,719.11

2,071,268.62

7,543,263.76

540,043.06

837,075.70

131,267.42

340,150.00

43,842,587.05

-

7,517,231.53

8,608,214.79

LGU NAME

OTHER

RECEIPTS

(OTHER

GENERAL

INCOME)

OTHER RECEIPTS

(OTHER GENERAL

INCOME)

INTEREST INCOME

INTERNAL

REVENUE

ALLOTMENT

(TOTAL)

TOTAL SHARES

FROM NATIONAL

TAX COLELCTION

INTER-LOCAL

TRANSFER

EXTRAORDINARY

RECEIPTS

TOTAL REVENUE

ABRA

APAYAO

845,777.68

1,185,681.73

421,877.68

684,800.73

634,970,609.00

569,265,199.00

23,110.11

29,425.50

-

3,152,735.38

25,773,915.42

684,743.58

717,805,726.18

604,636,631.80

BENCHMARK: LGU revenue > LGU income class average

INDICATORS

REVENUE GROWTH

The trend in revenue across time

FORMULA:

Total Revenues

Yr1

– Total Revenues

Total Revenues

Yr0

Yr0 x 100

BENCHMARK:

The average annual % increase in LGU revenues > Annual inflation rate + Annual population growth rate Philippine Statistics Authority

EXAMPLE:

LGU NAME

ABRA

APAYAO

TOTAL REVENUE

(2013)

TOTAL REVENUE (2014) REVENUE GROWTH

869,388,298.48

528,350,084.95

717,805,726.18

604,636,631.80

-17%

14%

Annual Population Growth Rate

(2014) = 1.82

Annual Inflation Rate (2014) =

3.1

INDICATORS

PER CAPITA LOCALLY

SOURCED REVENUE + SEF

Amount of revenues under LGU control and oversight on a per capita basis

FORMULA:

Locally Sourced Revenue (LSR) + SEF

Population

LSR = Real Property Tax (General Fund) + Tax on Business + Other Taxes +

Regulatory Fees + Service/User Charges + Receipts from Economic Enterprises

BENCHMARK:

EXAMPLE:

LGU NAME

INCOME

CLASS

2010 POPULATION

(SOURCE: PSA)

REAL PROPERTY

TAX (BASIC)

SPECIAL

EDUCATION FUND

(SEF)

ABRA 3

234,733.00 3,585,629.32 5,315,710.22

APAYAO 3

112,636.00 2,397,794.03 3,780,925.08

TAX ON

BUSINESS

2,071,268.62

7,543,263.76

OTHER TAXES

REGULATORY

FEES

540,043.06

131,267.42

837,075.70

340,150.00

Per capita locally sourced revenue + SEF > average for the LGU income class to which the

LGU belongs

LGU NAME

INCOME

CLASS

SERVICE/USER

CHARGES

RECEIPTS FROM

ECONOMIC

ENTERPRISES

INTERNAL REVENUE

ALLOTMENT

(CURRENT YEAR)

TOTAL SHARES

FROM NATIONAL TAX

LOCALLY SOURCED

COLELCTION

REVENUE

ABRA

APAYAO

3

3

43,842,587.05

7,517,231.53 8,608,214.79

-

634,970,609.00

566,335,997.00

23,110.11

29,425.50

50,876,603.75

26,537,921.53

LGU NAME

INCOME

CLASS

LOCALLY SOURCED

REVENUE + SEF

PER CAPITA

LOCALLY SOURCED

REVENUE

PER CAPITA

LOCALLY

SOURCED

REVENUE + SEF

ABRA

APAYAO

3

3

56,192,313.97

30,318,846.61

216.74

235.61

239.39

269.18

INDICATORS

PER CAPITA GROWTH IN

LOCALLY SOURCED REVENUE

EXAMPLE:

Growth in the amount of revenues under LGU control on a per capita basis

FORMULA:

LSR per Capita

Yr1

– LSR per Capita

Yr0

LSR per Capita

Yr0 x 100

BENCHMARK:

Growth in Locally Sourced Revenue per Capita

> average for the LGU income class to which the LGU belongs

LGU NAME

INCOME

CLASS

PER CAPITA LOCALLY

SOURCED REVENUE +

SEF (2014)

PER CAPITA LOCALLY

SOURCED REVENUE +

SEF (2013)

PER CAPITA GROWTH IN

LOCALLY SOURCED

REVENUE (LSR)

ABRA

APAYAO

3

3

239.39

269.18

149.74

181.49

45%

30%

INDICATORS

% LOCALLY SOURCED

REVENUES TO TOTAL LGU

REVENUE

The share of revenues that are under LGU control and results from local economic activity

EXAMPLE:

LGU NAME

ABRA

FORMULA:

Locally Sourced Revenues x 100

Total Revenues

BENCHMARK:

% Share of locally sourced revenue to total

LGU revenue > average share for the LGU income class to which the LGU belongs

APAYAO

INCOME

CLASS

3

3

TOTAL REVENUE

717,805,726.18

604,636,631.80

LOCALLY SOURCED

REVENUE

% LOCALLY SOURCED

REVENUES TO TOTAL

LGU REVENUE

50,876,603.75

26,537,921.53

7%

4%

INDICATORS

% ANNUAL REGULAR

INCOME (ARI) TO TOTAL

REVENUE

% Annual Regular Income to Total Revenue

ARI = Real Property Tax (General Fund) + Tax on Business + Other

Taxes + Regulatory Fees + Service/User Charges + Receipts from

Economic Enterprises + Internal Revenue Allotment (Current Year) +

Other Shares from National Tax Collection + Interest Income

EXAMPLE:

LGU NAME

ABRA

APAYAO

INCOME

CLASS

REAL PROPERTY

TAX (BASIC)

TAX ON

BUSINESS

3

3

3,585,629.32

2,397,794.03

2,071,268.62

7,543,263.76

OTHER TAXES

REGULATORY FEES

(PERMITS AND

LICENSE)

SERVICE/USER

CHARGES

RECEIPTS FROM

ECONOMIC

ENTERPRISES

540,043.06

131,267.42

837,075.70

340,150.00

43,842,587.05

7,517,231.53

-

8,608,214.79

LGU NAME

INCOME

CLASS

OTHER RECEIPTS

(OTHER GENERAL

INCOME)

INTEREST INCOME

INTERNAL

REVENUE

ALLOTMENT

(CURRENT YEAR)

TOTAL SHARES

FROM NATIONAL

TAX COLELCTION

ANNUAL

REGULAR

INCOME

TOTAL REVENUE

% ANNUAL

REGULAR INCOME

TO TOTAL REVENUE

FORMULA:

Annual Regular Income x 100

Total Revenues

ABRA

APAYAO

3

3

421,877.68

684,800.73

634,970,609.00

566,335,997.00

23,110.11

29,425.50

686,292,200.54 717,805,726.18

593,588,144.76 604,636,631.80

96%

98%

BENCHMARK:

% Share of recurring revenue to total LGU revenue > average share for the LGU income class to which the LGU belongs

INDICATORS

REAL PROPERTY TAX

ACCOMPLISHMENT RATE

(RPTAR)

% of current RPT collected within the year to the total RPT due for the year as estimated from the assessed value of taxable real properties

FORMULA:

Actual RPT Collections (GF + SEF) x 100

Targeted RPT Collections (GF + SEF)

Actual Real Property Tax Collection = Real Property Tax Collection (GF + SEF)

Targeted Real Property Tax Collection = Real Property Tax Collectibles – Net of Restriction (GF + SEF)

BENCHMARK:

80% of Total Current Collectibles and 35%

Cumulative Five-Year Delinquencies

EXAMPLE:

LGU NAME

REAL PROPERTY TAX

TARGET


(BASIC + SEF)


ACCOMPLISHMENT RATE (RPTAR)

ABRA

APAYAO

39,878,087.21

27,317,150.58

8,901,339.54

6,178,719.11

22%

23%

INDICATORS

TOTAL EXPENDITURES

PER CAPITA

Average amount spent by LGU per constituent

FORMULA:

Total Expenditures

Population

Total Expenditures = Total General Fund (GF),

Special Education Fund (SEF) and Trust Fund (TF)

Current Operating Expenditures (PS + MOOE +

FE) + Total General Fund (GF), Special Education

Fund (SEF) and Trust Fund (TF) Non-Operating

Expenditures (Capital Outlay)

BENCHMARK:

Per capita total LGU expenditures > average for the LGU income class to which the LGU belongs

EXAMPLE:

LGU NAME INCOME CLASS

2010 POPULATION

(SOURCE: PSA)

TOTAL EXPENDITURES


PER CAPITA

ABRA

APAYAO

3

3

234,733.00

112,636.00

619,885,598.75

480,557,892.74

2,640.81

4,266.47

INDICATORS

PERSONAL SERVICES

EXPENDITURES RATIO

CODAL

The ratio of LGU expenditures for personal services in the General Fund to Annual Regular Income of the LGU in the next preceding year

EXAMPLE:

LGU NAME

ABRA

INCOME CLASS

ANNUAL REGULAR INCOME

(2012)

ACTUAL PS AMOUNT

3 693,453,212.79

APAYAO 3 475,475,508.35

FORMULA:

PSE General Fund t

ARI t+1 x 100

BENCHMARK:

PSER < 45% for 1 st to 3 rd income class LGUs and 55% for 4 th or lower income class LGUs and should exhibit a decreasing trend

213,913,901.87

198,410,399.43

PERSONAL SERVICES

EXPENDITURES RATIO

CODAL (PSERC)

31%

42%

INDICATORS

TOTAL PERSONAL

SERVICES

EXPENDITURES RATIO

(TPSER)

The ratio of LGU expenditures for personal services to total LGU expenditures

EXAMPLE:

LGU NAME

ABRA

APAYAO

FORMULA:

Total Personal Services Expenditures x 100

Total Expenditures Total Personal Services Expenditures = Personal

Services Expenditures General Fund + Trust

Fund + Special Education Fund (SEF)

BENCHMARK:

PSERT < average for the LGU income class to which the LGU belongs and should be decreasing

INCOME CLASS

3

3

TOTAL

EXPENDITURES

619,885,598.75

480,557,892.74

ACTUAL PS AMOUNT

TOTAL PERSONAL

SERVICES EXPENDITURE

RATIO (PSERT)

213,913,901.87

198,410,399.43

35%

41%

INDICATORS

TOTAL DEBT SERVICE

EXPENDITURE RATIO

(DSER)

The ratio of LGU total debt service expenditures to

LGU total expenditures

EXAMPLE:

LGU NAME INCOME CLASS TOTAL EXPENDITURES

ABRA

FORMULA:

Total Debt Service Expenditures x 100

APAYAO

Total Expenditures Total Debt Service Expenditures = Debt

Service (FE) (Interest Expense & Other

Charges) + Debt Service (Principal Cost)

(GF + TF + SEF)

BENCHMARK:

DSER < average for the LGU income class to which the LGU belongs and should be decreasing

3

3

619,885,598.75

480,557,892.74

DEBT SERVICE

61,589,483.30

62,568,828.63

TOTAL DEBT SERVICE

EXPENDITURE RATION

(DSER)

10%

13%

INDICATORS

SOCIAL SERVICES

EXPENDITURE RATIO

(SSER)

The ratio of LGU social expenditures to total LGU expenditures

EXAMPLE:

LGU NAME

ABRA

FORMULA:

Social Services Expenditures x 100

APAYAO

Total Expenditures

Social Services Expenditures = Education, Culture &

Sports/Manpower Development + Health, Nutrition &

Population Control + Labor and Employment + Housing and Community Development + Social Services and

Social Welfare (GF + SEF + TF)

BENCHMARK:

SSER > average for the LGU income class to which the LGU belongs and should be increasing

INCOME

CLASS

3

3

EDUCATION,

CULTURE AND

SPORTS/

MANPOWER

DEVELOPMENT

5,101,128.00

2,611,796.09

LGU NAME

ABRA

APAYAO

3

3

HEALTH,

NUTRITION AND

POPULATION

CONTROL

LABOR AND

EMPLOYMENT

HOUSING AND

COMMUNITY

DEVELOPMENT

181,359,931.37

72,794,327.83

INCOME CLASS

-

-

SOCIAL SERVICES

EXPENDITURES

220,088,290.64

102,908,109.56

-

-

TOTAL

EXPENDITURES

619,885,598.75

480,557,892.74

SOCIAL

SERVICES AND

SOCIAL

WELFARE

33,627,231.27

27,501,985.64

SOCIAL SERVICES

EXPENDITURE

RATIO

36%

21%

INDICATORS

ECONOMIC SERVICES

EXPENDITURE RATIO

(ESER)

The ratio of LGU economic expenditures to total

LGU expenditures

EXAMPLE:

LGU NAME INCOME CLASS TOTAL EXPENDITURES ECONOMIC SERVICES

ABRA

FORMULA:

Economic Services Expenditures x 100

Total Expenditures Economic Services Expenditures = Economic

Services (GF + SEF + TF)

APAYAO

BENCHMARK:

ESER > average for the LGU income class to which the LGU belongs and should be increasing

3

3

619,885,598.75

480,557,892.74

179,589,375.41

129,727,698.65

ECONOMIC SERVICES

EXPENDITURE RATIO

29%

27%

INDICATORS

DEBT SERVICE RATIO

(DSR)

The ratio of LGU expenditures for debt service to total LGU annual regular income

EXAMPLE:

LGU NAME INCOME CLASS

FORMULA:

Debt Service Payment (GF) x 100

Annual Regular Income

Debt Service (GF) = Debt Service (FE)

(Interest Expense & Other Charges) + Debt

Service (Principal Cost) (GF)

ABRA

APAYAO

BENCHMARK:

DSR < 20% of annual regular income and ratio should at least be stable if not decreasing across time

3

3

ANNUAL REGULAR

INCOME

686,292,200.54

593,588,144.76

DEBT SERVICE

DEBT SERVICE RATIO

(DSR)

61,589,483.30

62,568,828.63

9%

11%

INDICATORS

GROSS OPERATING

SURPLUS (GF) TO DEBT

SERVICE RATIO

(GOSDSR)

The ratio of LGU operating surplus to debt service

EXAMPLE:

LGU NAME

ABRA

INCOME

CLASS

3

DEBT SERVICE (FE)

(INTEREST EXPENSE &

OTHER CHARGES)

NET OPERATING INCOME/

(LOSS) FROM CURRENT

OPERATIONS

APAYAO 3

Gross Operating Surplus/Deficit = Net Operating

Income/ (Loss) From Current Operations + Debt

Service (FE) (GF)

Operating Surplus =- Operating

Revenues

Expenditures

– Operating

FORMULA:

Gross Operating Surplus (Deficit) (GF)

LGU NAME

ABRA

Debt Service Payment (GF)

APAYAO

BENCHMARK:

GOSDSR > average for the LGU income class to which the

LGU belongs and should be increasing

INCOME

CLASS

3

3

17,474,886.86

12,516,724.26

DEBT SERVICE

61,589,483.30

62,568,828.63

238,653,995.60

222,962,920.53

416%

376%

GROSS OPRATING

SURPLUS/

DEFICIT

GROSS OPERATING SURPLUS (GF)

TO DEBT SERVICE RATIO (GF)

(GOSDSR)

256,128,882.46

235,479,644.79

INDICATORS

DEBT TO NET ASSET

RATIO (DNAR)

The ratio of an LGUs outstanding debt to its depreciated asset base

FORMULA:

Total Outstanding Debt x 100

Total Net Assets

Total Net Assets = Total Assets (Net of Depreciation

EXAMPLE:

BENCHMARK:

DNAR should be < 1 indicating that an LGU has a sufficient asset base to back up its debt.

INDICATORS

CAPITAL INVESTMENT

EXPENDITURES TO

TOTAL REVENUES RATIO

(CIETRR)

The % share of capital investment to total LGU revenues

EXAMPLE:

LGU NAME

ABRA

APAYAO

FORMULA:

Capital Investment Expendituresx 100

Total Revenues

BENCHMARK:

CIETRR > average for the LGU income class to which the LGU belongs and should be stable if not increasing

INCOME

CLASS

3

3

CAPITAL/ INVESTMENT

EXPENDITURES

TOTAL REVENUE

96,619,271.73

48,832,077.10

717,805,726.18

604,636,631.80

CAPITAL INVESTMENT

EXPENDITURES TO TOTAL

REVENUES RATIO (CIETRR)

13%

8%

INDICATORS

NET OPERATING

SURPLUS TO TOTAL LGU

REVENUE RATIO

(NOSTRR)

The ratio of LGU net operating surplus to total LGU revenues

EXAMPLE:

LGU NAME

ABRA

APAYAO

INCOME

CLASS

3

3

NET OPERATING INCOME/

(LOSS) FROM CURRENT

OPERATIONS

TOTAL REVENUE

FORMULA:

Net Operating Surplus (Deficit) x 100

Total Revenues

Net Operating Surplus/Deficit = Net

Operating Income/(Loss) from Current

Operations

BENCHMARK:

NOSTRR > average for the LGU income class to which the LGU belongs and should be increasing in case of operating surpluses and decreasing in case of operating deficits

238,653,995.60

222,962,920.53

717,805,726.18

604,636,631.80

NET OPERATING

SURPLUS TO TOTAL LGU

REVENUE RATIO

(NOSTRR)

33%

37%

INDICATORS

UNCOMMITED CASH

BALANCE TO TOTAL LGU

EXPENDITURE RATIO

(UCBTER)

The calculated figure reflects the uncommitted cash portion of government equity in the LGAS. This is roughly equivalent to a sort of an annual financial reserve

LGU NAME

ABRA

EXAMPLE:

APAYAO

FORMULA:

Uncommited Cash Balance x 100

Total Expenditures

BENCHMARK:

Uncommitted Cash Balance = Amount

Available for Appropriations/Operations

UCBTER > average for the LGU income class to which the LGU belongs and should be increasing

INCOME

CLASS

3

3

LGU NAME

ABRA

APAYAO

FUND/CASH BALANCE,

END

222,060,560.25

259,336,512.16

INCOME

CLASS

3

3

FINANCIAL COMMITMENT

Amount Available for appropriations/operations

222,060,560.25

201,252,572.47


619,885,598.75

480,557,892.74

UNCOMMITED CASH

BALANCE

0%

12%

-

58,083,939.69

UNCOMMITED CASH BALANCE

TO LOCAL LGU

EXPENDITURES RATIO

LGU Performance Typology

TYPE 1:

GOOD REVENUE

GOOD EXPENDITURE

TYPE 2:

GOOD REVENUE

POOR EXPENDITURE

TYPE 3:

POOR REVENUE

GOOD EXPENDITURE

TYPE 4:

POOR REVENUE

POOR EXPENDITURE

Summary Result : LGFPMS

SUMMARY OF RESULT - CAR

LGU NAME 2013

TAYUM, ABRA TYPE 4

LAGANGILANG, ABRA

LUBA, ABRA

TYPE 4

TYPE 3

DANGLAS, ABRA TYPE 3

SABLAN, BENGUET

LACUB, ABRA

TYPE 4

TYPE 4

2014

TYPE 4

TYPE 4

TYPE 3

TYPE 4

TYPE 2

TYPE 3 www.blgf.gov.ph


LGU NAME 2013

PENARUBBIA, ABRA TYPE 4

PILAR, ABRA

TUBLAY, BENGUET

TYPE 3

TYPE 2

BUCAY, ABRA TYPE 4

MANABO, ABRA

SAN QUINTIN, ABRA

TYPE 4

TYPE 4

2014

TYPE 4

TYPE 4

TYPE 2

TYPE 4

TYPE 4


SUMMARY OF RESULT – REGION I

LGU NAME 2013

SAN VICENTE, ILOCOS

SUR

TYPE 3

NAGBUKEL, ILOCOS SUR TYPE 3

TYPE 3 ADAMS, ILOCOS NORTE

STA. CATALINA, ILOCOS

SUR

SIGAY, ILOCOS SUR

SUGPON, ILOCOS SUR

TYPE 4

TYPE 3

TYPE 3

2014

TYPE 4

TYPE 3

TYPE 3

TYPE 2

TYPE 3



LGU NAME 2013

TYPE 3 LIDLIDDA, ILOCOS SUR

SAN ILDEFONSO, ILOCOS

SUR

TYPE 4

2014

TYPE 3


SUMMARY OF RESULT – REGION II

LGU NAME 2013

REINA MERCEDES,

ISABELA

VILLAVERDE, NUEVA

VIZCAYA

TYPE 4

TYPE 4

STA. TERESITA, CAGAYAN TYPE 2

AMBAGUIO, NUEVA

VIZCAYA

UYUGAN , BATANES

TYPE 4

TYPE 1

SABTANG, BATANES TYPE 1

2014

TYPE 4

TYPE 2

TYPE 1

TYPE 4

TYPE 2



LGU NAME 2013

SAN GUILLERMO, ISABELA TYPE 4

BASCO, BATANES

SAGUDAY, QUIRINO

TYPE 2

TYPE 4

NAGUILIAN, ISABELA TYPE 4

2014

TYPE 4

TYPE 1

TYPE 4


SUMMARY OF RESULT – REGION III

LGU NAME 2013

SANTA MARIA, BULACAN TYPE 2

BUSTOS, BULACAN

ANAO, TARLAC

TYPE 2

TYPE 4

SAN CLEMENTE, TARLAC TYPE 2

PULILAN, BULACAN

MASINLOC, ZAMBALES

TYPE 2

TYPE 1

2014

TYPE 2

TYPE 2

TYPE 2

TYPE 2

TYPE 2



LGU NAME 2013

LA PAZ, TARLAC TYPE 4

GUAGUA, PAMPANGA TYPE 2

2014

TYPE 2


SUMMARY OF RESULT – REGION IV-A

LGU NAME 2013

PAKIL, LAGUNA TYPE 4

SAMPALOC, QUEZON

BALETE, BATANGAS

TYPE 4

TYPE 4

SAN NICOLAS, BATANGAS TYPE 2

JOMALIG, QUEZON

AGDANGAN, QUEZON

TYPE 4

TYPE 2

2014

TYPE 4

TYPE 2

TYPE 4

TYPE 2

TYPE 3



LGU NAME 2013

PEREZ, QUEZON TYPE 4

ALABAT, QUEZON TYPE 2

2014

TYPE 4


SUMMARY OF RESULT – REGION IV-B

LGU NAME 2013

SAN JOSE, ROMBLON TYPE 4

MAGSAYSAY, PALAWAN TYPE 4

CAGAYANCILLO, PALAWAN TYPE 4

KALAYAAN, PALAWAN

LOOC, OCCIDENTAL

MINDORO

SANTA MARIA, ROMBLON

TYPE 4

TYPE 4

TYPE 4

2014

TYPE 4

TYPE 4

TYPE 2

TYPE 4

TYPE 4



LGU NAME 2013

LINAPACAN, PALAWAN TYPE 4

ALCANTARA, ROMBLON

AGUTAYA, PALAWAN

TYPE 4

TYPE 4

BANTON, ROMBLON TYPE 2

2014

TYPE 4

TYPE 4

TYPE 4


competence

proficiency

work ethic efficiency

integrity

sustainability accountability

honesty

DOF DEPARTMENT ORDER NO. 06-2015

PERFORMANCE STANDARDS FOR LOCAL

TREASURERS AND ASSISTANT

TREASURERS

Objectives

To orient participants about the Performance Standards for Local

Treasurers and Assistant Treasurers

To acquaint local Treasurers and Assistant Treasurers with the mechanisms and process regarding the performance evaluation

To familiarize the local Treasurers and Assistant Treasurers on the procedure relative to data gathering and validation

Presentation Outline

Rationale/Goals of the Performance Standards

Indicators and Parameters for Evaluation

Operational Performance Goals (OPGs)

Competency Performance Goals (CPGs)

Evaluation Process

Simulated Performance Ratings of Sample Treasurers

Timelines for succeeding activities

Rationale

The Secretary of Finance appoints and supervises all provincial, city and municipal treasurers and assistant treasurers

Institution of a results-oriented performance culture with high level of professionalism and excellence among local treasurers and assistant treasurers is important so that they discharge their duties and responsibilities competently and efficiently, and they contribute at all times to good local fiscal governance.

A regular, output-oriented and performance-based appraisal system is necessary towards effective supervision of local treasury operations in the local governments by the

Department.

Goals

It is the goal of the Department to regularly evaluate the level of competency, proficiency, professionalism and productivity of all local treasurers so that their knowledge and skills set, and strategies are attuned to good local government fiscal and financial management.

An integral part of the human resource management and development strategy of the BLGF to build and sustain a results-oriented performance and professional culture among local treasurers and assistant treasurers.

Goals

To be used as basis for performance evaluation for purposes of appointment and other personnel action (such as promotion, renewal of designation, and extension of service), accountability assessment, awards and recognitions, capacity building interventions, among others, pursuant to existing rules and regulations.

The policy to undertake regular performance evaluation shall apply to all provincial, city, and municipal treasurers and assistant treasurers, whether permanent or designate.

Indicators & Parameters

The Performance Standards consists of two parts:

✓

Operational Performance Goals (OPGS) - measure the outputs and outcomes of local treasurers and assistant treasurers in local revenue generation and fund management.

✓

Competency Performance Goals (CPGs) - measure the behavioral and other non-technical dimensions in the work of local treasurers and assistant treasurers.

The regular performance evaluation through the

Performance Standards shall apply to all provincial, city, and municipal treasurers and assistant treasurers, whether permanent or designate.

No.

3

4

5

1

2

6

7


70%

Operational Performance Goals (OPGS)

Indicator

Local collection efficiency

Stable and reliable local revenue growth

Optimum fund management

Institution of administrative and judicial remedies

Reportorial compliance with DOF requirements

Compliance with COA rules and regulations

Cost effective local revenue collection

Total

Points

35

20

15

10

10

5

5

100

Weighted Score

24.5

14.0

10.5

7.0

7.0

3.5

3.5

70.0

No.

3

4

1

2

5


30%

Competency Performance Goals (CPGS)

Indicator

Code of conduct and ethical standards

Capacity building and professional development

Professional recognitions and achievements

Office management tools and support system/s

Use of non-traditional collection strategies

Total

Points

40

30

15

10

5

100

Weighted Score

12.0

9.0

4.5

3.0

1.5

30

OPERATIONAL

PERFORMANCE

GOALS (OPGs) - 70%

Indicators and Parameters for Evaluation

OPG 1

Local Collection Efficiency

35 points

This indicator measures the collection of current and delinquent local revenues based on actual collections vis-à-vis the respective targets in all local revenue areas.

If the LGU is operating a local economic enterprise

Benchmark: 85% Collection of target in each local revenue source

Benchmark scoring by revenue source: ≥100% = 1; ≥95% but <100% = 0.75; ≥90% but <95% = 0.50; ≥85% but <90% = 0.25; <85% = 0

Formula: Collection Efficiency = (Collection/Target) x 100%

Computation: Formula to be applied per local revenue source; benchmark score to be summed up to get total score

Data Source: eSRE; QRRPA (for real property tax only)

Weight Distribution (Points)

Revenue Source

Real Property Tax

Province

14

Business and Other Taxes

Fees and Charges

Economic Enterprise

Total

6

10

5

35

City

12

17

3

3

35

Municipality

11

10

7

7

35

OPG 1


35 points

This indicator measures the collection of current and delinquent local revenues based on actual collections vis-à-vis the respective targets in all local revenue areas.

If the LGU is NOT operating a local economic enterprise

Benchmark: 85% Collection of target in each local revenue source

Benchmark scoring by revenue source:

≥100% = 1; ≥95% but <100% = 0.75; ≥90% but <95% = 0.50; ≥85% but <90% = 0.25; <85% = 0

Formula: Collection Efficiency = (Collection/Target) x 100%

Computation: Formula to be applied per local revenue source; benchmark score to be summed up to get total score

Data Source: eSRE; QRRPA (for real property tax only)


Revenue Source

Real Property Tax


Province

16

7

Fees and Charges

Economic Enterprise

Total

12

0

35

City

13

17

5

0

35

Municipality

13

13

9

0

35

OPG 1

Target Parameters


35 points

Real Property Tax

Collection

Target

Efficiency

RPT Current Year Collection + Prior Year (Basic) + Prior Year Penalty (Basic) + Prior Year (SEF) +

Prior Year Penalty (SEF)

(Total Current Collectibles x 80%) +

(Cumulative Five-Year Delinquencies x 35%)

Collection / Target

RPT collection shall pertain to receipts from:

1. Current Year basic real property tax

2. Prior Year basic real property tax and penalties, if any

3. Current Year Special Education Fund levy

4. Prior Year Special Education Fund levy and penalties, if any

5. Properties acquired by the local government for want of bidder.

RPT target to be based on the Quarterly Report on Real Property Assessments, as reported by the local assessors:

80% of current year collectibles + 35% of cumulative collectible delinquencies up to the last five (5) years

OPG 1


Business & Other Taxes

Collection

Target


35 points

Tax on Business (Current Year) + Other Taxes (Current Year)

Tax on Business (Prior Year) + Other taxes (Prior Year) x Incremental Factor

Efficiency Collection / Target

Regulatory Fees and Service/User Charges

Collection Regulatory Fees (Current Year) + Service/User Charges (Current Year)

Target

Efficiency

(Regulatory Fees [Prior Year] + Service/User Charges [Prior Year]) x Incremental Factor

Collection / Target

OPG 1


Economic Enterprise

Collection


35 points

Income from Economic Enterprise (Current Year)

Target

Efficiency

Income from Economic Enterprise (Prior Year) x Incremental Factor

Collection / Target

Incremental Factor : to be based on the GDP and Inflation Rate and other adjustment factors, as may be determined by the BLGF.

Issuance of Targets : No later than every May 31

Concurrence of Local Treasurers with the BLGF Targets: Upon issuance of the local revenue targets, local treasurers may request for adjustment by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance, which legally prevents the treasurer from enforcing collection.

OPG 2

Stable and Reliable

Local Revenue Growth

20 points

This indicator measures the efforts in ensuring stable and progressive growth in local revenue collections. Growth is measured based on the nominal increase in the immediately preceding fiscal year

’ s collections in all local revenue areas.

If the LGU is operating a local economic enterprise

Benchmark: > 0% growth in each local revenue source

Benchmark scoring by revenue source: ≥20% = 1; ≥10% but <20% = 0.75; ≥5% but <10% = 0.50; >0% but <5% = 0.25; ≤0% = 0

Formula: Growth = [(Current Year Collections / Previous Year Collections)

– 1] x 100%

Computation: Formula to be applied per local revenue source and to be multiplied with the corresponding weight; benchmark score to be summed up to get total score

Data Source: eSRE


Province

8

Revenue Source

Real Property Tax


Fees and Charges

Economic Enterprise

Total

4

5

3

20

City

7

9

3

1

20

Municipality

5

7

4

4

20

OPG 2

Stable and Reliable

Local Revenue Growth

20 points

This indicator measures the efforts in ensuring stable and progressive growth in local revenue collections. Growth is measured based on the nominal increase in the immediately preceding fiscal year

’ s collections in all local revenue areas.

If the LGU is NOT operating a local economic enterprise

Benchmark: > 0% growth in each local revenue source

Benchmark scoring by revenue source:

≥20% = 1; ≥10% but <20% = 0.75; ≥5% but <10% = 0.50; >0% but <5% = 0.25; ≤0% = 0

Formula: Growth = [(Current Year Collections / Previous Year Collections) – 1] x 100%

Computation: Formula to be applied per local revenue source and to be multiplied with the corresponding weight; benchmark score to be summed up to get total score

Data Source: eSRE

Revenue Source

Real Property Tax


Province

9

City

8

Municipality

7


Fees and Charges

Economic Enterprise

Total

4

7

0

20

9

3

0

20

8

5

0

20

OPG 3

Optimum Fund Management

15 points

This indicator measures the management of the cash flow for payment of obligations and in optimizing fund utilization and managing expenditures to ensure that released allotments are adequately covered by available cash and/or future collections.

This indicator, accounts for the net ending cash balance, together with the total receipts from all fund sources, less the total expenditures for the current fiscal year.

Benchmark: Fund Balance End > Current Year Expenditures (Net Surplus)

Benchmark scoring: Net Surplus = 1; Net Deficit = 0

Formula: Fund Balance End = (Cash Balance Beginning + [Total Receipts Excluding Loans, Grants & Aids]) – (Total Expenditures -

[Debt Service + Disbursement from Grants & Aids])

Computation: Multiply weight with the benchmark score

Data Source: eSRE


Indicator

Net Surplus

Net Deficit

Score

15 x 1

15 x 0

Total

15

0

OPG 4

Institution of Administrative and Judicial

Remedies

10 points

This indicator measures the treasurer

’ s practical use of the available civil remedies for the collection of any delinquent local tax, fee, charge, or other revenues within the LGU jurisdiction. Under the Local Government Code, local treasurers are mandated to institute administrative (distraint or levy) and/or judicial actions in aid of tax collection enforcement.

For the collection of delinquencies in Real Property Tax:

Benchmark: Issuance of warrant of levy OR Endorsement to the LGU legal officer for the institution of civil action

Benchmark scoring:

Warrant/s of levy issued = 1

No warrant of levy issued = 0

Formula: Score = Benchmark score x 5 points

OR

Endorsement to legal officer = 1

No endorsement to legal officer = 0

Remarks: Rating is not dependent on volume of warrants issued or endorsement/s made to the LGU legal officer.

Data Source: Certified copy of warrant/s of levy sent to taxpayer; OR Certified copy of endorsement of treasurer to the LGU legal officer

In case the local treasurer has collected already at least 90% of the total current year collectibles, the full 5 points shall be credited with or without availing of administrative or judicial remedies for RPT collection.

OPG 4

Institution of Administrative and Judicial

Remedies

10 points

This indicator measures the treasurer

’ s practical use of the available civil remedies for the collection of any delinquent local tax, fee, charge, or other revenues within the LGU jurisdiction. Under the Local Government Code, local treasurers are mandated to institute administrative (distraint or levy) and/or judicial actions in aid of tax collection enforcement.

For the collection of delinquencies in Other Local Taxes:

Benchmark: Issuance of warrant of distraint AND Endorsement to the LGU legal officer for the institution of civil action


Warrant/s of distraint issued = 0.5

No warrant of distraint issued = 0

Computation: Score = Benchmark score x 5 points

AND

Endorsement to legal officer = 0.5

No endorsement to legal officer = 0

Remarks: Sum up rating per action; Rating is not dependent on volume of warrants issued or endorsement/s made to the LGU legal officer.

Data Source: Certified copy of warrant/s of distraint sent to taxpayer AND Certified copy of endorsement of treasurer to the LGU legal officer

OPG 5

Reportorial Compliance with DOF requirements

10 points

This indicator measures compliance with reportorial duties and responsibilities, as required by the Department, namely, the SRE

(DOF DOs 08-2011 and 034-2014), the Certified List of Real Property Tax (RPT) Delinquencies (DOF DO 10-08), the Statement of

Indebtedness (DOF LFC 1-2012), and the LGU-BIR Information Sharing (EO 646 and DOF DO 9-08).

Benchmark: Complete and timely submission of reports in all areas


Report Weight (Points) Benchmark

1.

2.

SRE

Certified List of RPT Delinquencies

3.

Statement of Indebtedness

(with or without loan/s)

4.

LGU-BIR Information Sharing

Formula: Score = Benchmark score x Weight per Report

Remarks: Corresponding weighted scores to be summed up.

1

1

5

3

Complete = 1

Incomplete = 0 accountabilities.

OPG 6

Compliance with

COA Rules and Regulations

5 points

This indicator accounts for the involvement in any irregular or illegal activities of the local treasurer or assistant treasurer that could adversely affect the financial operations of LGUs and that may lead to the filing of administrative and criminal complaint/s.

This shall be based on any adverse findings of the Commission on Audit (COA) for which the local treasurer or assistant treasurer is primarily responsible.

Benchmark: No adverse finding/s from COA


No adverse findings = 1; With adverse findings = 0

Formula: Score = Benchmark score x Weight

Remarks: To be based on the Annual Audit Report (AAR) of COA. Such basis shall be the AAR immediately preceding the rating period/year or the latest available AAR of the LGU.

Data Source: BLGF copy of the COA AAR

OPG 7

Cost Effective

Local Revenue Collection

5 points

This indicator measures the ratio of total cost of collection and the actual local revenues collected to determine the cost effectiveness of the local treasurer and assistant treasurer in local revenue collection. The ratio determines whether the LGU is subsidizing the cost of collecting the tax, or the tax is contributing to the revenue coffers of the LGU.

Benchmark: Cost to Collect Ratio ≤ 20%


Ratio

≤ 10%

>10% but ≤ 15%

>15% but ≤ 20%

>20

Score

1

0.75

0.50

0

Weight

5

Total Score

5

3.75

2.5

0

Formula:

Cost to Collect Ratio = (Total Expenditures of Treasurer ’ s Office/Total Local Revenues) x 100

Total Actual Expenditures = Personal Services (PS) of the Treasurer ’ s Office + Maintenance and Other Operating Expenses (MOOE) of the Treasurer ’ s Office

Total Local Revenues = Tax Revenues + (Non-Tax Revenues – Other Receipts)

Computation: Multiply weight with the benchmark score according to the ratio.

Data Source: eSRE

OPG 7

Cost Effective

Local Revenue Collection

5 points

This indicator measures the ratio of total cost of collection and the actual local revenues collected to determine the cost effectiveness of the local treasurer and assistant treasurer in local revenue collection. The ratio determines whether the LGU is subsidizing the cost of collecting the tax, or the tax is contributing to the revenue coffers of the LGU.

Adjustments in the Expenditure Data :

The local treasurer or assistant treasurer concerned may request for adjustment in the expenditures data used in the evaluation.

Subject to validation and approval by the BLGF, MOOE expenditures may be adjusted to exclude any or all of:

1.Interest Expenses;

2.Subsidies to NGAs, LGUs, or GOCCs;

3.Insurance Expenses;

4.Fidelity Bond Premiums;

5.Election-related expenditures; and

6.Other expenditures appropriated in the Treasurer ’ s Office, but were actually used for other LGU office/s.

COMPETENCY

PERFORMANCE

GOALS (CPGs) - 30%

Indicators and Parameters for Evaluation

CPG 1

Code of Conduct and Ethical Standards

40 points

This indicator determines the compliance of local treasurers and assistant treasurers with the code of conduct and ethical standards of public officials and employees pursuant to RA6713.

Full points shall be given if no disciplinary actions/penalties, namely, (i) reprimand, (ii) fine, or (iii) suspension (final and executory) , have been meted by judicial and quasi-judicial bodies for offenses or violations of existing laws, rules and regulations.

Benchmark: Zero (0) Reprimand; Zero (0) Fine; Zero (0) Suspension


10 points

No Reprimand = 1

Reprimanded = 0 Fined = 0

Remarks : To be based on the immediately preceding year ’ s records.

Suspended = 0

Computation : Multiply weight (by area of sanction) with the benchmark score; sum up score per area to get the total score

Data Source : BLGF Central/Regional Offices

10 points

No Fine = 1

20 points

No Suspension = 1

CPG 2

Capacity Building and Professional Development

30 points

This indicator measures the capacity building and continuing professional development activities availed of or engaged in by local treasurers and assistant treasurers to improve their technical proficiency, competence, and skills from duly recognized and bona fide organizations.

Training Categories :

(i)Core Trainings or those trainings, seminars, and workshops that are directly related to fiscal and financial management (may include trainings on budget, procurement, examination of books of account, local treasury operations, etc.)

(ii)Non-Core Trainings or those conferences, conventions, workshops, and similar activities that enhance leadership, personality, management, and other skills required to improve competency.

CPG 2

Capacity Building and Professional Development

30 points

Benchmark : Core Trainings ≥ 32 hours; Non- Core Trainings ≥ 16 hours

Benchmark Scoring:

Core Trainings

– 20 points

Weight No. of Hours

≥ 80

≥ 64 but < 80

≥ 48 but < 64

≥ 32 but < 48

1

0.8

0.6

0.5

Score

20

16

12

Non-Core Trainings

– 10 points

No. of Hours

≥ 40

≥ 32 but < 40

≥ 24 but < 32

≥ 16 but < 24

Weight

1

0.8

0.6

0.5

Score

10

8

6

10 5

< 32 0 0 < 16 0

Remarks : Data to be based on the immediately preceding year ’ s certified copy of training certificates to be presented by local treasurers/assistant treasurers.

0

Computation : Multiply weight (according to the number total training hours by area) with the benchmark score.

Data Source : BLGF Central/Regional Offices

CPG 3

Professional Recognitions and Achievements

15 points

This indicator accounts for the annual recognitions, citations and other similar awards conferred to local treasurers and assistant treasurers in at least two (2) areas.

Areas/Scope of Award:

(i) LGU awards/recognitions with direct contribution of the treasurer/assistant treasurers

(ii)Awards conferred by government and legitimate private organizations relating to local treasury performance

(iii)Resource speakership or expert engagement outside the local treasury department;

(iv)Civic commendations, achievements and other honorific conferment;

(v)Individual contribution to research, published works, engagement in special project of high significance or similar endeavors involving expertise in local treasury operations.

CPG 3

Professional Recognitions and Achievements

15 points

Benchmark: Award/recognition in at least one (1) area

Indicator


Awards in two (2) award areas

Award in one (1) award area

No award in any area

Weight

1

0.5

0

Score

15

7.5

0

Remarks: Evaluation to be based on the immediately preceding year ’ s certified copy of awards/recognitions/citations submitted to BLGF;

Number of awards per area not a factor to get higher score.

Computation: Multiply applicable weight (by indicator) with the benchmark score.

Data Source: BLGF Central/Regional Offices

CPG 4

Office Management Tools and Support Systems

10 points

This indicator measures the adoption of quality management tools and other innovative support system/s that improve workplace organization, foster efficient records management, improve service delivery to clientele, enable better customer service experience to taxpayers, maintain orderliness in office affairs and transactions, among others.

Areas/Scope of Award:

(i)5s office organization method:

Sort, Straighten, Shine, Standardize & Sustain

(ii)Manual or computerized records management system

(iii)Integrated information systems

(iv)Quality management certification systems:

ISO, TUV, etc.

CPG 4

Office Management Tools and Support Systems

10 points

Benchmark : One (1) working management tool or support system, such as, but not limited to, those enumerated above.

No working support system


Indicator

Two (2) or more working systems

One (1) working system

Weight

1

0.75

0

Score

10

7.5

0

Remarks : Evaluation to be based on actual supervisory/ocular visit by the BLGF, in the case of city and provincial treasurers ’ offices

(including the lone municipality in Metro Manila), and by certification of the Provincial Treasurer, in the case of municipal treasurers ’ offices.

Computation : Multiply applicable weight (by indicator) with the benchmark score.

Data Source : BLGF Central/Regional Offices/Provincial Treasurers

CPG 5

Use of Non-Traditional Collection

Strategies

5 points

This indicator gives credit to innovative and non-traditional collection enforcement strategies of local treasurers and assistant treasurers.

Such strategies must be legal and included in the plans and programs of the local treasurer.

Strategies may include, but not limited to:

(i) Tax clearance as requirement for renewal of business permits

(ii)One-stop-shop systems

(iii)Local tax caravans

(iv)Use of social and tri-media for tax information campaign

(v)Use of electronic banking to facilitate payment

(vi)Awards/tokens for top and prompt taxpayers

(vii)Integration of local tax concepts in the education curriculum

(viii) Linkage with other local projects, etc.

CPG 5

Use of Non-Traditional Collection

Strategies

10 points

Benchmark: One (1) non-traditional collection enforcement strategy, such as, but not limited to the enumerated strategies.


Indicator

Three (3) or more working strategies

Two (2) more working strategies

One (1) more working strategy

No innovative collection strategies

Weight

1

0.75

0.5

0

Score

5

3.75

2.5

0

Remarks: Evaluation to be based on (i) submitted documentation or any evidence of implementation of such strategies by the local treasurer/assistant treasurer, (ii) through actual supervisory/ocular visit by the BLGF, in the case of city and provincial treasurers ’ offices

(including the municipality in Metro Manila), and (iii) by certification of the Provincial Treasurer, in the case of municipal treasurers ’ offices.

Computation: Multiply applicable weight (per indicator) with the benchmark score.

Data Source: BLGF Central/Regional Offices/Provincial Treasurers

Rating Scheme

Score Level

≥ 95 to 100

≥ 85 but < 95

≥ 75 but < 85

≥ 65 but < 75

5

4

3

2

Adjectival Rating /

Summary of Performance

Outstanding. Demonstrates exceptional performance in all operational and competency standards.

Very Satisfactory. Exceeds the minimum operational and competency standards.

Satisfactory. Complies with the minimum operational and competency standards.

Unsatisfactory. Fails to meet the minimum operational or competency standards.

< 65 1 Poor. Fails to deliver most or all of the operational or competency standards.

Final Rating Form

Final Rating Form

Scope of Performance Assessment

Coverage of Assessment Period

✓

Performance evaluation for local treasurers and assistant treasurers shall be undertaken annually.

✓

It shall cover one full fiscal year or from January 1 to December 31.

✓

In the event that a local treasurer or assistant treasurer has not completed one full fiscal year of service as such, the rating shall be based on at least six (6) months of service and the parameters for evaluation shall be adjusted accordingly by the BLGF.

✓

No evaluation shall be made for services rendered for less than six (6) months.

Performance Evaluation Cycle

STAGE 1

Local Revenue Target Setting

STAGE 2

Collection Enforcement and Compliance

Monitoring

STAGE 3

Data Validation and Rating

STAGE 4

Performance Results Awarding and Intervention

Planning


STAGE 1

Local Revenue Target

Setting

STAGE 2

Collection Enforcement and

Compliance Monitoring

• To be undertaken from April to May of the next preceding fiscal year prior to the start of the performance period where targets for all local revenues are determined, issued and validated with the local treasurers.

• Upon concurrence and acceptance by the concerned local treasurer and assistant treasurer, such targets shall be deemed final.

• BLGF to regularly monitor the plans and programs of local treasurers and assistant treasurers and provide the necessary technical assistance in support of local treasury administration and other

LGU-set performance goals

• BLGF to also monitor compliance with reportorial obligations, primarily the SRE, actions on the COA adverse findings (if any), progress on the institution of collection remedies, training, among others.


STAGE 3

Data Validation and Rating

• Actual performance evaluation shall begin every June and shall conclude in October.

• The BLGF Central Office shall first release the preliminary data/results of applicable OPG indicators to all

BLGF Regional Offices no later than the end of June every year.

• Local treasurers and assistant treasurers to submit the pertinent documents required in the OPG and CPG indicators that cannot be generated by the eSRE system.

• Within two (2) months after the release of SRE data, the validation and confirmation of the results of the evaluation shall be completed for approval by the BLGF.

• The BLGF may delegate only to the Provincial Treasurers the gathering and consolidation of documents required from municipal treasurers, but it shall be the sole duty of the BLGF to rate, determine, and discuss the results of the performance of all treasurers and assistant treasurers.


STAGE 4

Performance Results Awarding and and assistant treasurers, as well as to their respective local chief executives and other concerned parties, every October.

• The BLGF may award local treasurers and assistant treasurers in recognition of exceptional performance in their work.

• No other performance awards shall be given/instituted unless they are linked with the Performance

Standards.

• In addition, the BLGF shall ensure that appropriate measures and actions are enforced based on the results of the performance evaluation, including but not limited to personnel action and intervention development and planning to address weaknesses and gaps of local treasurers and assistant treasurers

Personnel Action

• The BLGF shall introduce appropriate capacity building programs and other remedial interventions based on the results of the performance evaluation, especially for treasurers and assistant treasurers who receive “ Unsatisfactory ” and “ Poor ” performance ratings.

• In the event that a local treasurer or assistant treasurer receives “ Poor ” rating in two consecutive evaluation periods , the BLGF shall institute the appropriate administrative sanction pursuant to the Revised

Rules on Administrative Cases in the Civil Service .

Timeline and Other Activities

• Planned implementation of Performance Standards in June 2015

• Administration of examination for local treasurers and assistant treasurers

• Continuing monitoring of LGU performance through the LGU Fiscal Sustainability

Scorecard

• Publication of LGU performance and key indicators

FY2009

FY2010

FY2011

FY2012

Ano’ng

Iskor ng ‘yong

Bayan?

LGU F ISCAL S USTAINABILITY S CORECARD

Financial Management Performance

Review for Local Government Units

Declining, <1% locally sourced income to GDP

0.91%

0.86%

2009 2010

0.89%

2011

0.80%

2012

Perspective

“Supervision of revenue operations of all LGUs”

“Monitor and support the implementation of policies and measures on local revenue administration”

Assessment of fiscal indicators necessary for exercise of mandate

Agency has to have a systematic, not sporadic, process for regular assessment of fiscal performance of LGUs

Protection of revenue integrity, data analytics and metrics

Closer, thorough monitoring of revenue performance of LGUs

Evidence- and policy-based performance assessment of local treasurers and assessors

General housekeeping of reports

Visit in BIR revenue regions / BOC ports /LGUs

Directives of the Secretary of Finance

Basis for Evaluation

DOF Department Order No. 08-2011:

Statement of Receipts and Expenditures

Treasurer: eSRE System in the LGUs

Assessor: Quarterly Reports on Real Property

Assessments

LGU Fiscal Performance Monitoring System

BLGF’s Local Revenue Targets

SMV Profile and Ordinances of LGUs

Local Government Unit

FISCAL SUSTAINABILITY

S C O R E C A R D

Directive of the Secretary

Baselining the LGU performance from FY2009 to FY2012

Validating the LGU data and testing the integrity of BLGF reports

Compliance monitoring on DOF directives and other relevant regulations

Publication of LGU performance

Policy setting purposes

Pass

Fail

100%

Indicators

Financial (Quantitative) - 90%

KRA 1 - Revenue Generation Capacity

KRA 2 - Local Collection Growth

KRA 3 - Expenditure Management

Non-Financial (Qualitative) - 10%

KRA 4 - 6 - Reportorial Compliance

Financial Indicators

KRA 1. Revenue Generation Capacity

Indicator

1.1 Regular income level

1.2 Local revenue level

1.3 Local revenue growth

1.4 Dependence on locally sourced income

1.5 Dependence on IRA

1.6 Dependence on Other Shares from National Tax Collection

P

Benchmark

Mean by Income Class;

Graduated

Actual Growth

Mean by LGU Type;

Graduated

Maximum Score

Initial Rating

Very Good, Good, Fair, Needing

Improvement, Poor

+YoY% or -YoY%

% Share to Annual Regular

Income

60



Indicator

1.1 Regular income level

Indicator

Parameter

Mean + 50%

Mean + 25%

Mean

Mean - 25%

Mean - 50%

Parameter

Mean + 50%

Mean + 25%

Mean

Mean - 25%

Mean - 50%

P 1.2 Local Revenue Level

Rating

Very Good

Good

Fair

Needs Improvement

Poor

Maximum Score

Rating

Very Good

Good

Fair

Needs Improvement

Poor

Maximum Score

Points

10

8

6

4

2

10

Points

5

4

3

2

1

5



Indicator

1.3 Local Revenue Growth

Parameter

Actual Growth Total Local

Collections

Rating

>20%

>10%

>5%

>0%

<0%

Maximum Score

%

Main Driver of Performance Assessment

Goal is to ensure stable or progressive collection growth

Weight

20

15

10

5

0

20



Indicator

1.4 Dependence on Locally

Souced Income

Parameter

P >=20% & C>=50%

P >=15% but <20%

C>=40% but <50%

P >=10% but <15% C>=30% but <40%

P >=5% but <10% C>=20% but <30%

P>0% but <5%

C>0% but <20%

Rating

Very Good

Good

Fair

Needs Improvement

Poor

Maximum Score

Average Dependence on LSI

Provinces: 10% - 15%

Cities: 30% - 40%

Weight

10

4

2

10

8

6



Indicator

1.5 Dependence on IRA

Parameter

P<75%

C<50%

P >=75% but <80%

C>=50% but <60%

P >=80% but <85% C>=60% but <70%

P >=85% but <90% C>=70% but <80%

P>90%

C>80%

Rating

Very Low

Low

Fair

High

Very High

Maximum Score

Average Dependence on IRA

Provinces: 80% - 85%

Cities: 60% - 70%

Weight

10

4

2

10

8

6



Indicator Parameter

<10%

1.6 Dependence on Other

Shares from National Tax

Collection

>=10% but <15%

>=15% but <30%

>30%

Type to enter text

Rating

Low

Fair

High

Very High

Maximum Score

Weight

5

4

3

2

5


KRA 2. Local Collection Growth

Indicator

2.1 Tax Revenues

2.2 Non-Tax Revenues

%

Benchmark


Collections


Collections

Rating

>20%

>10%

>5%

>0%

<0%

Maximum Score

>20%

>10%

>5%

>0%

<0%

Maximum Score

Main Driver of Performance Assessment

Goal is to ensure stable or progressive collection growth

Points

5

4

3

2

0

5

3

2

5

4

0

5


KRA 3. Expenditure Management

Indicator

3.1 Expenditure Per Capita

3.2 Use of IRA for Local Devt.

Project

3.3 Limitation on Expenditure for PS

3.4 Limitation on Debt Service

Parameter

Mean + 50%

Mean + 25%

Mean

Mean - 25%

Mean - 50%

>=20%

<20%

<= 45% (H); <= 55% (L)

>= 45% (H); >= 55% (L)

<=20%

>20%

P

Rating

Very High

High

Fair

Low

Very Low

Passed

Failed

Passed

Failed

Passed

Failed

Focusing on Actual Utilization, not Budget Appropriation

Statutory Obligations and Limitations

5

0

5

0

0

5

Weight

5

2

1

4

3

Non-Financial Indicators

KRA 4. eSRE

Indicator

Submission of Timely and

Accurate eSRE

Parameter

Timely and No Rejection

Timely with Rejection; No Rejection but not Timely

No Report Submitted

Rating

Compliant

Non-Compliant

No Report

Maximum Score

Weight

4

2

0

4

7 out of 10 Treasurers Did Not

Submit SRE on Time


KRA 5. SMV Updating

Indicator Parameter

SMV is Current & Effective

Regular Updating of SMV and

Conduct of General Revision of Property Assessments

SMV is Outdated by at Least 3 Years

Rating

Compliant

Non-Compliant

Maximum Score

15 Cities & Provinces have new SMVs effective 2014

But 130+ More Are Already DUE…

Weight

3

0

3


KRA 6. Quarterly Report on Real Property Assessments (QRRPA)

Indicator Parameter

Complete according to form

Submission of Timely and

Accurate QRRPA

Incomplete according to form

No Report Submitted

Rating

Compliant

Non-Compliant

No Report

Maximum Score

Is the assessor correctly accomplishing the QRRPA?

Are there properties with restrictions? Is the land area correct?

Weight

3

1.5

0

3

Final Rating

Quantitative

Qualitative

KRA

1. Revenue Generation Capacity

2. Local Collection Growth

3. Expenditure Management

4. Timely & Accurate eSRE Report

5. Current & Updated SMV

6. Timely & Accurate QRRPA

Max Score

90

60

4

3

3

20

10

10

Final Rating

Weighted Score Grade

>=80 A

>=70 but <80 B

>=60 but <70 C

>=50 but <60 D

>=40 but <50

<40

E

F

Rating

Excellent

Very Good

Good

Average

Remarks

All revenue and expenditure indicators are strong; full compliance with reportorial requirements

Most of the revenue and expenditure indicators are met very satisfactorily; high compliance with reportorial requirements

Most of the revenue and expenditure indicators are above average performance; minimum level of compliance with reportorial requirements

Revenue and expenditure indicators have not significantly changed and are generally on the average; minimum level of compliance with reportorial requirements

Needs Improvement

Almost all of the key revenue and expenditure indicators need to be improved and validated; minimum reportorial requirements are not complied with

Poor

All revenue and expenditure indicators are way below the benchmarks; key reportorial requirements are incomplete/not submitted and/or require further validation

Sample Preliminary Scorecard xxx

Sample Preliminary Scorecard

Summary Result : LGU FSS


LGU NAME 2010

TAYUM, ABRA NEEDS IMPROVEMENT

2011

NEEDS IMPROVEMENT

LAGANGILANG, ABRA POOR GOOD

2012

AVERAGE

POOR

NEEDS IMPROVEMENT LUBA, ABRA NEEDS IMPROVEMENT AVERAGE

DANGLAS, ABRA AVERAGE AVERAGE AVERAGE

SABLAN, BENGUET

LACUB, ABRA

GOOD

AVERAGE

NEEDS IMPROVEMENT

NEEDS IMPROVEMENT

GOOD

NEEDS IMPROVEMENT


LGU NAME 2010

PENARUBBIA, ABRA GOOD

PILAR, ABRA GOOD

TUBLAY, BENGUET NEEDS IMPROVEMENT

BUCAY, ABRA GOOD

MANABO, ABRA

SAN QUINTIN, ABRA

GOOD

POOR

2011

GOOD

GOOD

GOOD

AVERAGE

AVERAGE

GOOD

2012

GOOD

GOOD

VERY GOOD

NEEDS IMPROVEMENT

AVERAGE

NEEDS IMPROVEMENT


LGU NAME 2010

SAN VICENTE, ILOCOS SUR VERY GOOD

NAGBUKEL, ILOCOS SUR NEEDS IMPROVEMENT

2011

POOR

NEEDS IMPROVEMENT

ADAMS, ILOCOS NORTE AVERAGE POOR

STA. CATALINA, ILOCOS SUR NEEDS IMPROVEMENT POOR

SIGAY, ILOCOS SUR

SUGPON, ILOCOS SUR

GOOD

AVERAGE

POOR

AVERAGE

2012

POOR

VERY GOOD

AVERAGE

NEEDS IMPROVEMENT

POOR

NEEDS IMPROVEMENT


LGU NAME 2010

LIDLIDDA, ILOCOS SUR GOOD

2011

VERY GOOD

SAN ILDEFONSO, ILOCOS SUR NEEDS IMPROVEMENT NEEDS IMPROVEMENT

2012

NEEDS IMPROVEMENT

AVERAGE


LGU NAME 2010

REINA MERCEDES, ISABELA AVERAGE

2011

VERY GOOD

VILLAVERDE, NUEVA VIZCAYA AVERAGE POOR

STA. TERESITA, CAGAYAN GOOD AVERAGE

AMBAGUIO, NUEVA VIZCAYA POOR POOR

UYUGAN , BATANES

SABTANG, BATANES

NEEDS IMPROVEMENT

GOOD

AVERAGE

AVERAGE

2012

VERY GOOD

POOR

AVERAGE

POOR

GOOD

POOR


LGU NAME 2010

SAN GUILLERMO, ISABELA GOOD

BASCO, BATANES VERY GOOD

2011

POOR

AVERAGE

SAGUDAY, QUIRINO POOR AVERAGE

NAGUILIAN, ISABELA POOR GOOD

2012

POOR

GOOD

AVERAGE

POOR


LGU NAME 2010

SANTA MARIA, BULACAN EXCELLENT

BUSTOS, BULACAN VERY GOOD

2011

GOOD

AVERAGE

ANAO, TARLAC GOOD GOOD

SAN CLEMENTE, TARLAC NEEDS IMPROVEMENT GOOD

PULILAN, BULACAN

MASINLOC, ZAMBALES

POOR

EXCELLENT

AVERAGE

EXCELLENT

2012

VERY GOOD

AVERAGE

AVERAGE

NEEDS IMPROVEMENT

VERY GOOD

VERY GOOD


LGU NAME 2010

LA PAZ, TARLAC AVERAGE

2011

AVERAGE

GUAGUA, PAMPANGA AVERAGE NEEDS IMPROVEMENT

2012

AVERAGE

GOOD


LGU NAME 2010 2011

PAKIL, LAGUNA GOOD AVERAGE

SAMPALOC, QUEZON POOR POOR

BALETE, BATANGAS NEEDS IMPROVEMENT GOOD

SAN NICOLAS, BATANGAS NEEDS IMPROVEMENT VERY GOOD

JOMALIG, QUEZON

AGDANGAN, QUEZON

POOR

GOOD

POOR

NEEDS IMPROVEMENT

2012

AVERAGE

POOR

POOR

NEEDS IMPROVEMENT

POOR

AVERAGE


LGU NAME 2010 2011

PEREZ, QUEZON POOR POOR

ALABAT, QUEZON AVERAGE GOOD

2012

POOR

EXCELLENT


LGU NAME 2010 2011

SAN JOSE, ROMBLON GOOD POOR

MAGSAYSAY, PALAWAN POOR POOR

CAGAYANCILLO, PALAWAN POOR POOR

KALAYAAN, PALAWAN POOR POOR

LOOC, OCCIDENTAL MINDORO

SANTA MARIA, ROMBLON

GOOD

AVERAGE

POOR

NEEDS IMPROVEMENT

2012

POOR

POOR

POOR

POOR

POOR

NEEDS IMPROVEMENT


LGU NAME 2010 2011

LINAPACAN, PALAWAN POOR POOR

ALCANTARA, ROMBLON POOR POOR

AGUTAYA, PALAWAN POOR POOR

BANTON, ROMBLON POOR POOR

2012

NEEDS IMPROVEMENT

POOR

POOR

POOR

Duterte's Socio-Economic Agenda & BLGF's Role

1

2

3

4

5

6

7

8

9

10

BLGF’s ROLE

IN THE

ADMINISTRATIVE GOVERNANCE OF

LOCAL TREASURY OPERATIONS

Vision /Mission

BLGF

of the Department of Finance is the focal agency and an authority in local finance that aims to be at the forefront of local economic growth leading the way towards national development .

• To support national development programs and priorities.

• To provide administrative and technical support to local treasury

and assessment offices.

To provide consultative/technical assistance to local government units for them to attain financial stability and growth.

To enable LGUs to deliver essential services more efficiently and effectively.

To continuously develop effective and responsive organizational internal processes.

To sustainably empower BLGF employees

Organizational Structure

BASICS OF LOCAL FINANCE AND

TAXATION

The power to impose a tax, fee or charge or to generate revenue under the Local Government

Code of 1991 shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.

(Sec. 132, LGC)

The financial affairs, transactions, and operations of LGUs shall be governed by the following fundamental principles and policies, to wit:

1. No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law;(Sec. 305 (a),

LGC);

4. Local revenue is generated only from sources expressly authorized by law or ordinance , and collection thereof shall at all times be acknowledged properly Sec. 305 (c),

LGC);

Standard formula:

Tax Due = Tax base x Tax rate + penalty/discounts

RESPONSIBILITIES

ACCOUNTABILITIES

LOCAL TREASURERS

OTHER ACCOUNTABLE OFFICERS

ADMINISTRATIVE, CIVIL AND CRIMINAL

LIABILITIES

OF

LOCAL TREASURERS AND OTHER

GOVERNMENT EMPLOYEES

•

•

•

•

Anti-Graft and Corrupt Practices Act

Crime of Plunder

•

FUNDAMENTALS

OF

REAL PROPERTY TAXATION

REAL PROPERTY TAXES

•

privilege to use

ILLUSTRATION 1

•

ANSWER TO ILLUSTRATION 1

ILLUSTRATION 2

•

ANSWER TO ILLUSTRATION 2

• Testate Estate of Lim v. City of Manila, GR No. 90639,

February 21, 1990

FUNDAMENTAL PRINCIPLES GOVERNING

REAL PROPERTY TAXATION

ILLUSTRATION 3

ANSWER TO ILLUSTRATION 3

• Section 198 (d), Local Government Code

ILLUSTRATION 4

ANSWER TO ILLUSTRATION 4

ADMINISTRATION OF REAL PROPERTY TAXES

TAXABLE PROPERTIES

ILLUSTRATION 5

ANSWER TO ILLUSTRATION 5

• Sec. 240, Local Government Code