bureau of local govern112ent finance
TRANSCRIPT
LOCAL
Bureau of Local Govern112ent Finance DEPARTi\'1ENT OF FI ANCE
LOCAL
TREASURY
OPERATIONS
MANUAL
BUREAU OF LOCAL GOVERNMENT FINANCE
DEPARTMENT OF FINANCE
Manila, Philippines
October 1, 2007
Local Treasury Operations Manual Bureau of Local Government Finance Department of Finance
Copyright © Bureau of Local Government Finance, 2008 8th Floor, EDPC Bldg., BSP Complex, Roxas Blvd., Metro Manila, Philippines Telefax: 522 8770 or 73 Web: www.blgf.gov.ph E-mail: [email protected]
First Printing, 2008. PHALTRA
Review and editing of manuscript by Consolacion Q. Agcaoili. Cover design by Nifio B. Alvina.
All rights reserved. No part of this book may be reproduced in any form or by any means without express permission of the copyright owner and the publisher.
ISBN - 978-971-94098-0-9
Printed in the Philippines.
Republic of the Philippines DEPARTMENT OF FINANCE
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
MESSAGE
I strongly believe that local treasurers play one of the most challenging roles in local governance. Their awesome responsibilities include among others, their involvement in every major LOU activity and concern, membership in various local special bodies and committees addressing LOU financial commitments, custodians and distributors of election paraphernalia, including the safekeeping of ballot boxes during election period.
Their core function, however, revolves around the vital aspects of resource generation, custody and proper disbursement and management of funds, maintaining and operating the tax information system, and providing local policymakers with vital information on matters relating to public finance. On their shoulders rest the financial viability and sustainability of every LOU in this country. Their effectiveness in their jobs contributes significantly to the increase in national. income.
As a concrete demonstration of the support and commitment of the Department of Finance, particularly the Bureau of Local Government Finance (BLGF) to the improvement of the performance of local treasurers, this Local Treasury Operations
Manual has been developed and adopted. The Manual redefines and re-standardizes the existing rules, regulations and guidelines governing the procedures in local treasury operations. It embodies the key processes on tax administration, particularly the enforcement of tax collections, duties of cashiering, proper custody of funds and the institutionalization of internal controls. Likewise, this Manual discusses the organizational responsibilities and inter-office linkages that will ensure coordination and synergy in the financial teams. The local treasurers' role in credit and other fonns of nontraditional financing is defined to avoid or substantially reduce confusion and ambivalence in committing to borrowings.
Like all operating systems, this Manual has to be dynamic. Users of this Manual have as much responsibility as those who developed it for its continuing improvement and enhancement. This Manual should be a work in progress towards the migration to automation of the local treasury operations, moving the treasury processes towards minimal paper transactions with the least face to face contacts, ultimately providing faster, responsible and accessible local finance operational services. There should be a continuing evolvement of more efficient systems through the issuance of supplemental rules and regulations, and capability and capacity building of local treasurers.
l envision standards of high excellence in local treasury operations with the help of this Manual.
My congratulations to the BLGF!
Department of Finance
Republic of the Philippines
BUREAU OF LOCAL GOVERNMENT FINANCE Department of Finance
8th floor EDPC Building, Bangko Sentral ng Pilipinas Complex Roxas Boulevard, M,rnila 1004 "'Telefax Nos. 527-2780 / 527-2790
E-mail: [email protected]
MESSAGE
I take pride in the long awaited realization of the Local Treasury Operations
Manual, pai1icularly because it is the product of the meaningful partnership between Bureau of Local Government Finance (BLGF) and the Local Government Units (LGUs). The Manual is intended to serve as toolkit to local treasurers in the effective performance
of their multifaceted jobs under the local autonomy regime. lt should likewise be useful to the barangay treasurers who act as deputized agents of the local treasurers in the collection of local taxes and in tax collection campaign activities of the LGUs. It supersedes the Revised Manual of Instructions to Treasurers of 1954.
The Manual redefines and refocuses the duties and responsibilities of local treasurers from being collector of taxes and custodian of funds to the broader, more challenging role of revenue generator, resource mobilizer, and fund manager. Within this
new context, the local treasurer, as chair of the local finance team, is expected to show greater flexibility and creativity in pursuing new, non-traditional ways of raising money to support the needs of LG Us not only for its operating expenses, but for improving the delivery of basic services and undertaking development projects.
The local treasurer's job is exacting, and at times exasperating. But it could also
be exalting. As keeper of public funds, local treasurers are required to be cautious, accurate, and like Caesar's wife be beyond reproach. They bear the brunt of blame and unmerited graft charges for missing, misappropriated or mismanaged funds. Some have succumbed to the attraction of money or the rigors of accusations and investigations that public officials especially those with fiduciary functions are exposed to. It is gratifying to know, however, that majority of them have risen to the demands of their duties and responsibilities and have proven to be high perfonners, and deserving of public trust.
I look forward to seeing more local treasurers evolve as real fiscal advisers in
their respective LG Us and agents of change towards making their LGUs less dependent on the IRA and more financially capable to provide better service to the people.
Executive Director Bureau of Local Government Finance
Department of Finance
PHILIPPINE I\SSOCIATION OF LOCAL l REMURERS
AND ASSESSORS (PHI\LTRA), INC.
PHALmA BLOG, 139 MAT MIMI I< ST.. BA.RANGAYCEtmW... QUEZON cm · TEL NO 43>-094
MESSAGE
Prudent fiscal policy plays a critical role in the growth and development and peace in every local government unit nationwide.
Seen from the standpoint of social amelioration and the country's macroeconomic stability, this Treasury Manual Circa 2008 is a necessary guide for revenue agents in ensuring predictability of funds to address local development requirements more judiciously.
Why it took 50 years for us to realize the need to overhaul this Manual, is a non-issue here.. What is important is that God Almighty saw fir to give us the task to infuse new insights into fiscal management in the context of the existing realities of the new millennium.
No doubt, this Treasury Manual is a masterful amalgam of ideas and techniques attuned to the rhythms of the times that should enhance our productive capacity as "Keepers of the Purse" to collect taxes, create wealth, mobilize resources and put people's money to good use to uplift the quality of man.
Indeed, thjs is a real tribute to human efficacy for its commitment to structural reforms to insure fiscal sustainability; for which reason I laud my fellow treasurers of the Philippines Association of Local Government and Assessors (PHALTRA) and the brain trust of the Bureau of Local Government Finance (BLGF), who worked hand-in-hand together to make this manual a reality.
To be sure, this Treasury Manual ushers in broad revenue base-widening know-how in achieving robust growth, hence should be mandatory reading for all fiscal managers.
VICTOR B. END GA, Ph.D. PHAL TRA President
Quezon City Treasurer
This Local Treasury Operations Manual, while serving as a vital reference material
and guide to all local treasurers, should be considered as a work in progress towards the
development of a more comprehensive manual of instructions to treasurers.
This Manual has been developed in pursuance of item 4.6 of Joint Memorandum Circular
No. 1 , series of 2007 of the Department of the Interior and Local Government (DILG), National
Economic and Deve1opment Authority (NEDA), Department of Budget and Management
(DBM) and Department of Finance (DOF), and Article 456 of the Implementing Rules and
Regulations of Republic Act No. 7160, otherwise known as the Local Government Code of
1991, through the collaborative efforts of the Bureau of Local Government Finance (BLGF)
Central and Regional Office Directors and staff under Executive Director Ma. Presentacion R.
Montesa, Provincial, City, and Municipal Treasurers, as well as former BLGF Directors and
Local Treasury Officials, and the Philippine Association of Local Treasurers and Assessors
(PHALTRA) led by its President, Dr. Victor B. Endriga, with technical assistance from ADB TA
4556.
The support of the Honorable Secretary Margarito B. Teves and Undersecretary Roberto
B. Tan of the DOF has been invaluable in the realization of this Manual.
Bureau of Local Government Finance (BLGF) Key Officials
Central Office
Ma. Presentacion R. Montesa
Executive Director
Flosie F. Fanlo-Tayag
Deputy Director for Administration
Armi M. Advincula
Director Internal Administration Office
Jose Arnold M. Tan
!CO-Deputy Director.for Operations
Perfecta P. Stokes
Acting Director Special Projects Management Services
Regional Offices
Ricardo T. Cawed
!CO-Regional Director, CAR
Orlando L. Mina
Regional Director, Region II
Eduardo L. Del Rosario
Regional Director, Region IV-A
Veronica B. King
Regional Director, Region V
Renee T. Empaces
]CO-Regional Director, Region VII
Talib A. Tapsi
I CO-Regional Director, Region IX
Ramonita G. Cayoca
]CO-Regional Director, Region XI
Adulfo A. Llagas
!CO-Regional Director, CARA GA
Peter B. Baluyan
Regional Director, Region I
Oscar H. Micla
Regional Director, Region III
Manuel E. Leycano, Jr.
DIC-Regional Director, Region IV-B
Melba B. Sullivan
DIC-Regional Director, Region VI
George T. Roma
DIC-Regional Director, Region VIII
Carmelane G. Tugas
I CO-Regional Director, Region X
Kanguan M. Pendi
0/C-Regional Director, Region XII
LOCAL
TREASURY
OPERATIONS
MANUAL
BOOKS ONE TO SIX
ACR ADB ADP AGDB AJE AO AOM APP ARMM ARO BAC BEi BIR BLGF BLT BMBE BOO BOT BRK
BSP BT BT BTO BTR CA CAO CDF CFA CFF CHBReg CM CN
co
COA COE COMELEC CRAAF CRDReg CRF
CSB csc
CT CTC DBC
ACRONYMS
Abstract of Collection Report Asian Development Bank Authority for Debit Payment
Authorized Government Depository Banlc Adjusting Journal Entry Accountable Officer Audit Observation Memorandum Annual Procurement Plan Autonomous Region in Muslim Mindanao Allotment Release Order Bids and Awards Committee Board of Election Inspectors Bureau of Internal Revenue Bureau of Local Government Finance Build-Lease-and Transfer Barangay Micro Business Enterprises Build-Own-and Operate Build-Operate-and Transfer Barangay Record Keeper Bangko Sentral ng Pilipinas Barangay Treasurer Build-and Transfer Build-Transfer-and Operate Bureau of the Treasury Certificate of Authority Contract-Add-and Operate Cash Disbursement Forecast Cash Flow Analysis Cash Flow Forecast Cash On Hand and in Bank Register Credit Memo Credit Notice Capital Outlay Commission on Audit
Current Operating Expenses Commission on Elections Consolidated Report of Accountability for Accountable Forms Cash Receipts and Deposits Register Cash Receipts Forecast Certificate of Settlement and Balances Civil Service Commission Community Tax Community Tax Certificate Deputized Barangay Collector
DBM DBP DepEd OM DOF
DOH
DOJ DOST DOTC DV
FE GAAM GDF GF GOCC GSIS HLURB
ICO ICS IRA IRR IT IUEEU JEV
LBM LBP LCE LDP LFC LGC LGU LMB
LO LOA LR LTO
MB MDF
MDFO MMA
MMDA MOA MOOE MOU MTOP
NC
Department of Budget and Management Development Bank of the Philippines Department of Education Debit Memo Department of Finance Department of Health Department of Justice Department of Science and Technology Department of Transpo11ation and Communication Disbursement Voucher Financial Expenses Government Accounting and Auditing Manual Gender and Development Fund General Fund Government Owned and Controlled Corporation Government Service Insurance System Housing and Land Use Regulatory Board In-Charge of Office Inventory Custodian Slip Internal Revenue Allotment Implementing Rules and Regulations Itinerary of Travel Irregular, Unnecessary, Excessive, Extravagant or Unconscionable Journal Entry Voucher Local Budget Matrix Land Bank of the Philippines Local Chief Executive Local Development Plan Local Finance Committee Local Government Code Local Government Unit Land Management Bureau Liquidating Officer Letter of Authority Liquidation Report Local Treasury Operations Monetary Board Municipal Development Office Municipal Development Fund Office Metro Manila Area Metro Manila Development Authority Memorandum of Agreement Maintenance and Other Operating Expenses Memorandum of Understanding Motorized Tricycle Operators Permit Notice of Charge
NCA
ND NEDA
NGAS
NIRC
NPC
NPO
NPV
NS
NSO
ObR ODA
OIC
OR PAR
PB PCF
PCFReg
PCV PDAF
PI
PNB
PO PPE
PS
RAAF
RAAO
RAC
RATA
RCD
RCI
RIS
RMIT
ROO
ROT
RPT
RPTAR
RPTOP
SAM
SB
SCD
SC kl
SCP
SCR
SEF
SIE
Notice of Cash Allocation Notice ofDisallowance National Economic and Development Authority New Government Accounting System National Internal Revenue Code National Power Corporation National Printing Officer Net Present Value Notice of Suspension National Statistics Office Obligation Request Official Development Assistance Officer-In-Charge Official Receipt Property Acknowledgement Receipt Punong Barangay
Petty Cash Fund Petty Cash Fund Register Petty Cash Voucher Priority Development Assistance Fund Public Infrastructure Philippine National Bank Purchase Order Plant, Property and Equipment Personal Services Report of Accountability for Accountable Forms Register of Appropriation, Allotments and Obligations Registry of Appropriation and Commitments Representation and Transportation Allowance Report of Collections and Deposits Report of Checks Issued Requisition and Issue SI ip Revised Manual of Instructions to Treasurers Rehabilitate-Own-and Operate Rehabilitate-Operate-and Transfer Real Property Tax Real Property Tax Register Real Property Tax Order of .Payment State Audit Manual Sangguniang Bayon
Summary of Collections and Deposits Summary of Checks Issued Summary of Cash Payments Summary of Collections and Remittance Special Education Fund Statement of Income and Expenditures
SKF
SOE
SPL
SPPCV
SRE
SRS
TDAF
TO
UBOM
VAT
VDS
WB
Sangguniang Kabataan Fund Statement of Expenditures Special Leave Privilege Summary of Paid Petty Cash Vouchers Statement of Receipts and Expenditures Statement of Receipt Sources Tax Data and Assessment Form Travel Order Updated Budget Operations Manual Value Added Tax Validated Deposit Slip World Bank
LOCAL TREASURY OPERATIONS MANUAL
TABLE OF CONTENTS
A. Introduction 1. Title I 2. Overview 1
B. Rationale I. Major Changes in Fiscal Organization Since the RMIT was Issued 2 2. The Local Government Code of 1991-RA 7160 2 3. The Present Role of Local Treasurers 3
C. Objectives of Manual 3 D. How to Use the Manual 4 E. Relationship to Existing Laws, Issuances And Pronouncements of Other Fiscal 6
and Regulatory Agencies
BOOK ONE
FISCAL ORGANIZATION OF LOCAL GOVERNMENTS AND THE
LOCAL TREASURER
Chapter 1. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS
Sec. I. Political and Corporate Nature of Local Government Units Sec. 2. Authority to Create Local Government Units Sec. 3. Common Requirements for Creation and Conversion Sec. 4. Division and Merger Sec. 5. Requisites for Creation of a Local Government Unit Sec. 6. Division and Merger of Local Government Units Sec. 7. Abolition of Local Government Units Sec. 8. Creation, Division or Abolition of Local Government Units in the
Autonomous Region in Muslim Mindanao (ARMM)
9 9 9 9 10 13 13 14
Chapter 2. APPOINTMENT, QUALIFICATIONS, POWERS AND FUNCTIONS OF
THE LOCAL TREASURER, THE ASSISTANT TREASURER, AND THE
BARANGA Y TREASURER
Sec. 9. Sec. 10.
Appointment and Qualifications of the Local Treasurer Appointment and Qualifications of the Assistant Treasurer
15 15
Sec. 11. Delegation by the Secretary of Finance of the Appointing Authority 16 to the BLGF Executive Director.
Sec. 12. Designation of Officer-In-Charge/Tn-Charge of Office of Local 16 Treasury Offices and Acting Assistant Provincial/City/Municipal Treasurers
Sec. 13. Distinction Between Officer-In-Charge and In-Charge of Office 18 Sec. 14. Automatic Succession of the Assistant Provincial/City Treasurer 19 Sec. 15. Automatic Succession of the Assistant Municipal Treasurer 19 Sec. 16. Appointment and Qualifications of Barangay Treasurer 20 Sec. 17. Processing of the Appointments of Provincial, City and Municipal 20
Treasurers and Assistant Provincial, City and Municipal Treasurers Sec. 18. Detail or Temporary Assignment of Local Treasurers and 21
Assistant Local Treasurers Sec. 19. Salaries of Local Treasurers and Assistant Local Treasurers 22
Under Preventive Suspension Sec. 20. Salaries of Local Treasurers and Assistant Local Treasurers During 24
Attendance in Administrative, Civil or Criminal Investigation Sec. 21. Approval and Grant of Application for Leave of Absence of 25
Local Treasurers and Assistant Local Treasurers
Chapter 3. ADMINISTRATIVE AND TECHNICAL SUPERVISION BY THE BUREAU
OF LOCAL GOVERNMENT FINANCE (BLGF)
Sec. 22. Administrative and Technical Supervision
Chapter 4. THE ROLES AND RESPONSIBILITIES OF LOCAL TREASURERS
Sec. 23. Duties and Responsibilities of the Provincial, City, and Municipal Treasurer
Sec. 24. Duties and Responsibilities of the Assistant Provincial, City, and Municipal Treasurer
Chapter 5. OTHER ROLES OF THE LOCAL TREASURER
27
28
33
Sec. 25. Specific Role of the Local Treasurer in the Enactment or 33 Amendment of Revenue Ordinance of Local Government Units
Sec. 26. The Role of Local Treasurer in the Collection of Delinquent Local Taxes, 34 Fees, Charges, and Related Surcharges
Sec. 27. The Local Treasurer's Role in Other Boards and Committees Created 35 Pursuant to the Local Government Code of 1991 and Other Laws
Sec. 28. The Role of Local Treasurers in National and Local Elections Pursuant to 40
the Omnibus Election Code
Chapter 6. BOND FOR LOCAL TREASURERS AND OTHER ACCOUNT ABLE
OFFICERS OF LOCAL GOVERNMENT UNITS
Sec. 29. Guidelines on Bonding of Local Treasurers and Accountable Officers Sec. 30. Schedule of Cash Accountability and the Corresponding Bonds Sec. 31. Accountable Officers Considered Unsafe Risks Sec. 32. Cancellation of Bond Sec. 33. The Fidelity Bond Sec. 34. Validity of Fidelity Bonds Sec. 35. Adjudication of Claims Against the Fidelity Bond
BOOK TWO
42 44 45 45 45 46 46
RECEIPTS AND COLLECTION OF LOCAL INCOME, REVENUES AND
OTHER FUND SOURCES
Chapter 1. TYPES OF LOCAL INCOME AND REVENUES COLLECTED BY LOCAL
GOVERNMENT UNITS
Sec. 36. Definition of Income 48 Sec. 3 7. Power to Create Sources of Revenues 48
Sec. 38. Fundamental Principles 48 Sec. 39. Validity of Revenue Ordinance 50 Sec. 40. Local Taxing Authority 55 Sec. 41. Taxing Powers of Provinces 56 Sec. 42. Taxing Powers of Municipalities 56 Sec. 43. Taxing Powers of Cities 57 Sec. 44. Other Taxes that the Province, City and Municipality May Impose 58 Sec. 45. Taxing Powers of Barangays 58 Sec. 46. Common Limitations on the Taxing Powers of Local Government Units 59 Sec. 47. Non-Tax Revenues 60 Sec. 48. Fees and Charges 60 Sec. 49. Shares from the Proceeds of National Taxes 61 Sec. 50. The Internal Revenue Allotment (IRA) 62 Sec. 5 l . Share from Tobacco Excise Tax 64 Sec. 52. Share from the National Wealth 65 Sec. 53. Other Special Shares of Local Government Units from National Taxes 67
Sec. 54. Other Receipts 69 Sec. 55. Credit Financing 69
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Chapter 2. COLLECTION OF REVENUES AND OTHER RECEIPTS
Sec. 56. Fundamental Principles on Collection of Local Taxes, Fees, Charges and Other Receipts
Sec. 57. General Controls on Collection Sec. 58. Handling of Dishonored Checks Received as Collection Sec. 59. Control and Accountability for Official Receipts and Other Accountable
Forms Sec. 60. Daily Turnover and Verification of Collections
Sec. 61. Designation of Liquidating Officers for Collections
Sec. 62. Procedures and Controls on Deposit of Collections with Authorized Depository Banks
Sec. 63. Maintenance and Use of the Cashbook by Local Treasurers, Cashiers, Liquidating Officers, Tellers, Collectors and Other Local Accountable Officers.
Sec. 64. Forms and Reports Used by Local Treasury Officials Sec. 65. Policies, Rules and Procedures on Barangay Collections and Remittances
and Deposit Sec. 66. Direct Remittance to Barangay Bank Account Sec. 67. Recording of Receipt, Deposits and Remittances of Barangay Collections
70
70 73 76
83 83 84
87
89
91
93 94
Chapter 3. EXAMINATION OF BOOKS OF ACCOUNTS AND PERTINENT RECORDS OF BUSINESSMEN BY LOCAL TREASURERS
Sec. 68. General Provisions Sec. 69. Guidelines in the Conduct of the Examination
BOOK THREE
EXPENDITURES AND DISBURSEMENTS
Chapter 1. CONCEPT OF FUNDS
Sec. 70. Definition of Fund Sec. 71. General Classification of Funds Sec. 72. Fundamental Principles Governing Utilization of Local Funds
97 98
105
105
106
Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT, OBLIGATION AND
EXPENDITURE
Sec. 73. Definition and Types of Appropriation Sec. 74. Use of Appropriated Funds Sec. 75. The Allotments System Sec. 76. Obligation of Local Funds Sec. 77. Government Expenditures
Chapter 3. DISBURSEMENTS OF LOCAL FUNDS
Sec. 78. Definition of Disbursement Sec. 79. General Principles Governing Fund Disbursements Sec. 80. Basic Requirements on Disbursements from General Fund and SEF. Sec. 81. Basic Requirements on Disbursements from Trust Funds Sec. 82. Preparation of Disbursement Vouchers-and Payrolls Sec. 83. Modes of Disbursements
Chapter 4. BARANGAY APPROPRIATIONS, COMMITMENTS AND DISBURSEMENTS
107 108 108 109 110
116 116 118 118 119 121
Sec. 84. Policies and Procedures on Barangay Appropriations and Commitments 134 Sec. 85. Registry of Appropriations and Commitments 13 7 Sec. 86. Basic Supporting Documents for Barangay Disbursements 137 Sec. 87. Barangay Disbursement by Checks Drawn Against Barangay Funds 139
Maintained with Depository Bank
Sec. 88. Barangay Disbursement by Checks Drawn Against Barangay Funds 141 Deposited with the City or Municipal Treasury
Sec. 89. Barangay Disbursement Out of Cash Advance for Payroll Charged 142 Against Barangay Funds Maintained with Depository Bank
Sec. 90. Barangay Disbursements Out of Cash Advance from Payroll Charged 143 Against Barangay Funds Deposited with the City or Municipal Treasury
Sec. 91. Disbursement Out of Cash Advance for Travel and Special Purpose/Time- 144 Bound Undertaking
Sec. 92. Barangay Disbursement Out of the Petty Cash Fund 145
Chapter 5. SANGGUNIANG KABATAAN BUDGET
Sec. 93. General Guidelines on the Preparation of the Sangguniang Kabataan (SK) 147 Budget
Sec. 94. SK Disbursements 147
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BOOK IV
FUND MANAGEMENT PRACTICES, ACCOUNTABILITY, CASH
EXAMINATION, SHORTAGES AND SETTLEMENT OF ACCOUNTS OF
LOCAL TREASURERS, AND LIABILITIES OF LOCAL TREASURERS IN
THE ADMINISTRATION OF LOCAL TAXES, FEES, AND CHARGES
Chapter 1. FUND MANAGEMENT PRACTICES
Sec. 95. Cash Management and Programming and Cash Programming Tools 149 Sec. 96. Cash Flow Forecast 149 Sec. 97. Cash Flow Analysis 151 Sec. 98. Information Provided by the Cash Flow Forecast and Cash Flow Analysis 152 Sec. 99. Daily Cash Flow 153 Sec. 100. Number of Days' Usage in Cash 153 Sec. 101. The Administrative Process for Capital Expenditures 154 Sec. 102. Payback Period 154 Sec. 103. Discounted Cash Flow (Present Value of Cash Returns) 154 Sec. 104. Purpose and Need for Debt 158 Sec. l 05. Funding Competing Capital Projects 158 Sec. 106. Debt Management Policies 159 Sec. 107. Local Government Units Financing Modalities Manual and Debt 161
Management Manual
Chapter 2. ACCOUNTABILITY, RESPONSIBILITY, AND LIABILITY OF
LOCAL TREASURERSFORFUNDS AND PROPERTY
Sec. 108. Definition of Terms Sec. 109. Accountability of Government Funds and Property. Sec. 110. General Liability for Unlawful Expenditures. Sec. 111. Degree of Supervision Required of Primarily Responsible Officers. Sec. 112. Measure of Liability of Accountable Officers. Sec. 113. Liability for Acts Done by Direction of Superior Officer. Sec. 114. Period of Accountability Sec. 115. Advice of Retirement, Transfer and Settlement of Accounts Sec. 116. Closing of Books Preparatory to Transfer of Accountability: Sec. 117. Preparation of Invoice Receipts: Sec. 118. Photographs of Accountable Officers. Sec. 119. Final Report of Accountable Officers. Sec. 120. Clearance from Money and Property Accountability Sec. 121. Duty of Succeeding Accountable Officer to Assist in the
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161 162 163 163 163 164 164 165 165 166 167 167 167 167
Adjustment of Predecessor's Differences in His Accounts Sec. 122. Death or Incapacity of a Local Treasurer or Accountable Officer Sec. 123. Credit for Loss Occurring in Transit or Due to Casualty or Force
Majeure Sec. 124. Basic Requirements for Request for Relief from Accountability Sec. 125. Examination by the Commission on Audit Sec. 126. Service of Demand upon the Accountable Officer to Produce His Cash
and Other Accountabilities Sec. 127. Sealing of Safe Sec. 128. The Count and Inventory of Cash Sec. 129. Inspection of the Safe or Safes and Other Cash Receptacles Sec. 130. Certification of the Cash books in the Course of Cash Examination Sec. 131. Review of Transactions Sec. 132. Certification in General Form No. 74 (A) Sec. 133. Report of Cash Examination Sec. 134. Shortages and Malversation Sec. 135. Presentation of Formal Written Demand to the Accountable Officer Sec. 136. Seizure of Office by the Examining Officer Sec. 13 7. Notice to the Bureau of Local Government Finance in Case of Shortages Sec. 138. Constructive Distraint of Property of Accountable Officer Sec. 139. Withholding of Payment of Money to Accountable Officer Sec. 140. Cash Overage Sec. 141. Transcript of Auditor's Record as Evidence of Liability Sec. 142. Auditor's Certificate of Balance Sec. 143. Auditor's Notice to Accountable Officer of Balance Shown Upon
Settlement Sec. 144. Certificate of Settlement and Balances (CSB) Sec. 145. Notice of Suspension (NS) Sec. 146. Notice ofDisallowance (ND) Sec. 147. Credit Notice (CN Sec. 148. Notice of Charge (NC) Sec. 149. Audit Observation Memorandum (AOM) Sec. 150. Auditor's Order Sec. 151. Grounds for Suspension Sec. 152. Settlement of Suspensions Sec. 153. Grounds for Disallowance Sec. 154. Grounds for Charges Sec. 155. Settlement of Disallowance and Charges Sec. 156. Determination of Persons Liable for Audit Disallowances or Charges Sec. 157. Finality of the Report, Certificate of Settlement and Balances, Order or
Decision Sec. 158. Motion for Reconsideration Sec. 159. Appeal from Auditor to Director Sec. 160. Appeal from Director to Commission Proper Sec. 161. Failure of a Responsible Public Officer to Render Accounts Before
Leaving the Country
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167 168
168 171 171
171 172 172 173 173
174 174 174 175
/ 175 175 176 176 176 177 177 177
177 178 178 178 178 179 179 180
180 180 180 181 181
182 182 182 183 183
Chapter 3. ADMINISTRATIVE, CIVIL, AND CRIMINAL LIABILITIES OF LOCAL
TREASURERS IN THE ADMINISTRATION OF LOCAL TAXES, FEES,
AND CHARGES
Sec. 162. Under the Local Government Code of 1991 183 Sec. 163. Under the Revised Penal Code and the Anti-Graft and Corrupt Practices Act 184 Sec. 164. Under the Anti-Graft and Corrupt Practices Act.1 185
BOOK FIVE
DETAILED PROCEDURES ON REAL PROPERTY TAX BUSINESS TAX
FEES AND CHARGES AND OTHER RESOURCE MOBILIZATION
Chapter 1. REAL PROPERTY TAXES
Sec. 165. Power to Levy Property Tax 188 Sec. 166. Definition of Terms 188 Sec. 167. Fundamental Principles 191 Sec. 168. Administration of the Real Property Tax 192 Sec. 169. Rates of Levy 192 Sec. 170. Special Levies 192 Sec. 171. Exemption from Payment of the Real Property Tax 195 Sec. 172. Withdrawal of Exemptions from Payment of Real Property Taxes 198 Sec. 173. Accrual of the Real Property Tax 199 Sec. 174. Collection of the Real Property Tax 199 Sec. 175. Procedures for Collecting Real Property Tax 200 Sec. 176. Payment of Real Property Tax by Installments 201 Sec. 177. Tax Discount for Advanced c.,r Prompt Payment 202 Sec. 178. Payment Under Protest 203 Sec. 179. Repayment of Excessive Collections 204 Sec. 180. Interest on Delinquent Real Property Tax 204 Sec. 181. Guiding Principles in Determining Delinquency 204 Sec. 182. Procedures for Computing Taxes, Interest and Discounts For Annual 205
Interest Payment Due Sec. 183. Acceptance of Real Property Tax through Over-the-Counter Payment 206
in Accredited Banks Sec. 184. Rem�dies for the Collection of the Real Property Tax 208 Sec. 185. Condo nation or Reduction of Real Property Tax and Interest 211 Sec. 186. Pre-Auction Sale Notice of the Delinquency 211 Sec. 187. Administrative Remedy 212
1 R. A. No. 3tJ19
Sec. 188. Collection of Real Property Tax through the Courts Sec. 189. Assailing Validity of Tax Sale Sec. 190. Payment of Delinquent Taxes on Prope1iy Subject of Controversy Sec. 191. Compromise Agreement Sec. 192. Sanctions Sec. 193. Distribution of Proceeds Sec. 194. General Assessment Revision, Expenses Incident Thereto Sec. 195. Condonation or Reduction of Real Property Tax and Interest Sec. 196. Condonation or Reduction of Tax by the President of the Philippines Sec. 197. Fees in Court Actions Sec. 198. Fees in Registration of Papers or Documents on Sale of Delinquent
Real Property to Province, City or Municipality
Chapter 2. BUSINESS AND OTHER LOCAL TAXES
Sec. 199. Nature Sec. 200. Definition of Terms Sec. 201. Tax on Transfer of Real Property Ownership Sec. 202. Tax on Business of Printing and Publication Sec. 203. Franchise Tax Sec. 204. Tax on Sand, Gravel and Other Quarry Resources Sec. 205. Professional Tax Sec. 206. Amusement Tax Sec. 207. Annual Fixed Tax for Eve1y Delivery Truck or Van of Manufacturers,
Producers Wholesalers of, Dealers and Retailers in, Certain Products Sec. 208. Scope of Taxing Powers of Municipalities Sec. 209. Tax on Business Sec. 210. Business Tax on Manufacturers, Assemblers, Repackers, Processors,
Brewers, Distillers, Rectifiers, and Compounders of Liquors, Distilled Spirits, and Wines or Manufacturers of Any Article of Commerce of Whatever Kind or Nature
Sec. 211. Business Tax on Wholesalers, Distributors, or Dealers in Any Article of Commerce of Whatever Kind or Nature
Sec. 212. Business Tax on Exporters, and on Manufacturers, Millers, Producers, Wholesalers, Distributors, Dealers, or Retailers of Essential Commodities enumerated hereunder
Sec. 213. Business Tax on Retailers Sec. 214. Business Tax on Contractors and Other Independent Contractors Sec. 215. Business Tax on Banks and Other Financial Institutions Sec. 216. Business Tax on Peddlers Engaged in the Sale of Any Merchandise or
Articles of Commerce Sec. 217. Business Tax on Any Business Sec. 218. Taxing Powers of Municipalities within Metro Manila Area Sec. 219. Scope of Taxing Powers of Cities
217 218 218 218 218 219 222 222 222 222 222
223 223 228 229 230 231 232 233 234
235
235 235
236
237
238 240 242 248
248 248 249
v
Sec. 220. Professional and Amusement Tax Rates 249 Sec. 221. Sharing of Tax on Quarry Resources in Highly Urbanized Cities 249 Sec. 222. Scope of Taxing Powers of Barangays 249 Sec. 223. Related or Combined Businesses 252 Sec. 224. Situs of the Tax 252 Sec. 225. Retirement of Business 256 Sec. 226. Community Tax 257 Sec. 227. Instance When Corporation is Liable for Franchise Tax Notwithstanding 261
Exemption Granted Under its Charter Sec. 228. Variations of the "In Lieu" clause in the terms of franchise 261
Chapter 3. FEES AND CHARGES
Sec. 229. Uncollected Gross Receipts are Included in Computing Franchise Tax Sec. 230. Authority to Impose and Collect Fees and Charges Sec. 231. Definition of Terms Sec. 232. Common Revenue Raising Powers Sec. 233. Criteria in Determining the Reasonableness of Fees and Charges Sec. 234. Mayor's Permit Sec. 235. Fees for Sealing and Licensing Weights and Measures Sec. 236. Fishery Rentals, Fees and Charges Sec. 237. Fees and Charges that May Be Imposed by Barangays
Sec. 238. Fees and Charges that may be Imposed by Local Government Units
Sec. 239. Fees and Charges Collected by Local Government Units for the
National Government Sec. 240. Building Permit Sec. 241. Permit Fee for Zoning and Locational Clearance Permit
Sec. 242. Motorized Tricycle Operator's Permit Sec. 243. Registration and Transfer of Large Cattle Sec. 244. Permit Fee for Excavation on Streets Sec. 245. Permit Fee for Sealing and Licensing of Weights and Measures
Sec. 246. Permit Fee on Film-Making within the Territory of the Local Government Unit
Sec. 247. Permit Fee on Agricultural Machinery and Other Heavy Equipment
for Rent Sec. 248. Permit Fee on Occupation or Calling not Requiring Government
Examination Sec. 249. Permit Fee for the Storage of Flammable and Combustible Materials
Sec. 250. Permit Fee on Certain Types of Machineries and Engines
Sec. 251. Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios, Plaza and Playgrounds
Sec. 252. Permit Fee for the Conduct of Group Activities
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262 262 263 264 264 265 269 270 270 271 272
273 273 277 279 280 281 284
284
285
289 289 289
290
Sec. 253. Secretary's Fees 290 Sec. 254. Local Civil Registry Fees 291 Sec. 255. Police Clearance 292 Sec. 256. Sanitary Inspection Fee 292 Sec. 257. Service Fees for Health Examinations 292 Sec. 258. Dog Registration and Vaccination Fees 293 Sec. 259. Fishery Rentals, Fees and Charges 294 Sec. 260. Service Charge for Garbage Collection 296 Sec. 261. Charges for Parking · 297 Sec. 262. Cemetery Charges 297 Sec. 263. Slaughter and Corral Fees 297 Sec. 264. Toll Fees or Charges 298 Sec. 265. Permit for Cockpit Owners/Operators/Licensees/Promoters and Personnel 298
Chapter 4. GOVERNMENT ENTERPRISE OPERA TIO NS
Sec. 266. Political and Corporate Nature of Local Government Units Sec. 267. Nature of Government Enterprise Sec. 268. Ordinance Establishing and Governing the Enterprise Sec. 269. Basic Services and Facilities Sec. 270. Examples of Government Enterprises Sec. 271. Role of Treasurers in Local Government Enterprise Operations Sec. 272. Private Sector Participation in the Operation and Management of Local
Government Unit Enterprises Sec. 273. Common Modes of Contracting for Local Government Units Sec. 274. Barangay Micro-Business Enterprise Sec. 275. Registration of Barangay Micro-Business Enterprise Sec. 276. When is a Business Enterprise "Barangay-Based
Sec. 277. Meaning of Micro-Business in Nature and Scope Sec. 278. Registration of Barangay Micro-Business Enterprises Sec. 279. Exemption of Barangay Micro-Business Enterprises from Taxes and Fees Sec. 280. Submission of Documents for Registration as Barangay Micro-Business
Enterprise Sec. 281. Verification of Qualifications Sec. 282. Issuance of the Certificate of Authority Sec. 283. Registration Fee Sec. 284. List of Registered Barangay Micro-Business Enterprises to be Furnished
the Bureau of Internal Revenue Sec. 285. Periodic Evaluation by the Local Treasurer Sec. 286. Cancellation of Registration Sec. 287. Exemption of Barangay Micro-Business Enterprises from Income Tax Sec. 288. Determination of the Value of Assets of the Barangay Micro-Business
Enterprise for Income Tax Exemption Purposes Sec. 289. Procedures in Availing Tax Incentives
-
300 300 300 300 304 305 305
305 307 307 308 308 309 309 309
310 310 311 311
311 311 312 313
313
.r
Sec. 290. Filing of Annual Information Return Sec. 291. Where and When to File the Annual Information Return Sec. 292. Revocation of Income Tax Exemption Privilege
Chapter 5. CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Sec. 293. General Policy Sec. 294. Credit and Other Sources of Funds Available to Local Government Units Sec. 295. Definition of Terms Sec. 296. Duties and Responsibilities of Local Treasurers Sec. 297. Provisions for the Servicing of Contractual Obligations of Local
Government Units: Sec. 298. Enforceability of Loan Obligations Notwithstanding the Expiration of the
Terms of the Elective Contracting Officials Sec. 299. Guidelines on the Use of Funds Raised by Indebtedness Sec. 300. Tax Exemption Privileges of Local Government Units Sec. 301. Limitations on the Use of Credit Lines to Stabilize Local Finance Sec. 302. Common Requirements for Credit Financing of Local Development
Projects Sec. 303. Acceptable Collateral Sec. 304. Special Account for Loans, Interests, Bonds, and Contributions for
Specific Purposes Sec. 305. Other Requirement for Loans, Deferred Payments and Other Financial
Schemes Sec. 306. Inter-Local Government Units Loans, Grants and Subsidies Sec. 307. Joint and Several Local Government Unit Loan Arrangements Sec. 308. Loans from Funds Secured by the National Government from Foreign
Sources Sec. 309. Deferred Payments and Other Financial Schemes Sec. 310. Bonds and Other Long Term Securities Sec. 311. Private Sector Financing Under the Build-Operate-Transfer Arrangement Sec. 312. Authority to Negotiate and Secure Grants Sec. 313. Prohibited Acts Related to the Awards of Contracts Under the Provisions
on Credit Financing
BOOK SIX
314 314 314
314 315 315 319 319
320
320 321 321 322
325 325
325
325 326 326
327 327 329 332 333
LOCAL TREASURY OPERATIONS (LTO) ANNEXES AND FORMS
LTO
Annex/Form
Number
8
LOCAL TREASURY OPERA TIO NS
MANUAL
FISCAL ORGANIZATION OF LOCAL
GOVERNMENTS AND THE LOCAL
TREASURER
BOOK ONE
Chapter 1 FISCAL ORGANIZATION OF LOCAL GOVERNMENTS
Section 1. Political and Corporate Nature of Local Government Units. - Every local government unit created or recognized under R. A. No. 7160 or the Local Government Code of 1991, is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. (Sec. 15, LGC)
Section 2. Authority to Create Local Government Units. - A local government unit may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality, or any other political subdivision, or by ordinance passed by the sangguniang panlalawigan or sangguniang panlungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such limitations and requirements prescribed in R. A. No. 7160 or the Local Government Code of 1991. (Sec. 6, LGC)
Section 3. Common Requirements for Creation and Conversion. - As a general rule, the creation of a local government unit or its conversion from one level to another level shall be based on verifiable indicators of viability and projected capacity to provide services, to wit:
a. Income - it must be sufficient, based on acceptable standards, to provide for all essential government facilities and services and special functions commensurate with the size of its population, as expected of the local government unit concerned;
b. Population - it shall be determined as the number of inhabitants, within the territorial jurisdiction of the local government unit concerned; and
c. Land Area - it must be:
l) contiguous, unless it comprises two or more islands or 1s separated by a local government unit independent of the others;
2) properly identified by metes and bounds with technical descriptions; and
3) sufficient to provide for such basic services and facilities to meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to by the Department of Finance (DOF), the National Statistics Office (NSO), and the Lands Management Bureau (LMB) of the Department of Environment and National Resources (DENR). (Sec. 7, LGC)
Section 4. Division and Merger. - Division and merger of existing local government units shall comply with the same requirements prescribed for their creation: Provided, however, That such division shall not reduce the income, population, or land area of the local government unit or units concerned to less than the minimum requirements prescribed in R. A. No. 7160 or the Local Government Code of 1991: Provided, further, That the income classification of the
9
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original local government unit or units shall not fall below its current income classification prior to such division.
The income classification of local government units shall be updated within six (6) months from the effectivity of R. A. No. 7160 or the Local Government Code of 1991, to reflect the changes in their financial position resulting from the increased revenues as provided in the same code. (Sec. 8, LGC)
Section 5. Requisites for Creation of Local Government Units. - A local government unit may be created, classified, divided, merged, abolished, or their boundaries substantially altered in accordance with the criteria provided for by R. A. No. 7160 or the Local Government Code of 1991
2, as follows:
a) Creation of the Province. - A province may be created, divided, merged, abolished, or its boundary substantially altered only by an Act of Congress and subject to approval by a majority of the votes cast in a plebiscite to be conducted by the COMELEC in the local government unit or units directly affected. The plebiscite shall be held within one hundred twenty (120) days from the date of effectivity of said Act, unless otherwise provided therein. (Sec. 460, LGC)
A province may be created if it has an Average Annual Income, as certified by the Department of Finance, of not less than Twenty Million Pesos (P 20,000,000.00), for the immediately preceding two (2) consecutive years based on 1991 constant prices. The Average Annual Income shall include the income accruing to the General Fund, exclusive of special funds, trusts funds, transfers, and non recurring income. It shall further comply with either of the following requisites:
1) A contiguous territory of at least two thousand (2,000) square kilometers, as certified
by the Lands Management Bureau; or
2) A population of not less than two hundred fifty thousand (250,000) inhabitants, as certified by the National Statistics Office.
Provided, That, the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements
prescribed.
The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. (Sec. 461,
LGC)
b) Creation of the City. - A city may be created, divided, merged, abolished, or its boundary substantially altered, only by an Act of Congress, and subject to the approval by a majority of the votes cast in a plebiscite to be conducted by the COMELEC in the local government unit
1 Sec. 460, Sec. 461 and Sec. 462, for the Province; Sec 449, Sec. 450, as amended by R.A. 9009, and Sec. 451, for the CihJ; Sec. 452 and Sec. 453, for the Highly Urbanized CihJ; Sec. 441 and Sec. 442, for the Municipality; and Sec. 385 and Sec. 386, for the Barangay.
10
or units directly affected. Unless otherwise provided in such Act, the plebiscite shall be held within one hundred and twenty (120) days from the date of its effectivity. (Sec. 449, LGC)
A municipality or a cluster of barangays may be converted into a component city if it has a locally generated Average Annual Income, as certified by Department of Finance, of at least One Hundred Million Pesos (P 100,000,000.00), for the last two (2) consecutive years based on 2000 constant prices. The Average Annual Income shall include the income accruing to the General Fund, exclusive of special funds, transfers, and non-recurring income. It shall further comply with either of the following requisites:
1) A contiguous territory of at least one hundred ( 100) square kilometers, as certified by the Land Management Bureau; or
2) A population of not Jes than one hundred fifty thousand (150,000) inhabitants as certified by the National Statistics Office.
Provided, That, the creation thereof shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed.
The territorial jurisdiction of a newly created city shall be properly identified by metes and bounds. The requirements on land area shall not apply where the city proposed to be created is composed of one ( 1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (Sec. 450, LGC, as amended by R.A. 9009
3)
A city may either be component or highly urbanized: Provided, however, That the criteria established in the Local Government Code of 1991 shall not affect the classification and corporate status of existing cities.
Independent component cities are those component cities whose charters prohibit their voters from voting for provincial elective officials. Independent component cities shall be independent of the province. (Sec. 451, LGC)
c) Highly Urbanized Cities. - Cities with a minimum population of two hundred thousand (200,000) inhabitants, as certified by the National Statistics Office, and with the latest Annual Income of at least Fifty Million Pesos (P 50,000,000.00), based on 1991 constant prices, as certified by the City Treasurer, shall be classified as a highly urbanized cities.
Cities which do not meet the above requirements shall be considered component cities of the province in which they are geographically located. If a component city is located within the boundaries of two (2) or more provinces, such city shall be considered a component of the province of which it is used to be a municipality.
2 An Act Amending Section 450 of R. A. No. 7160, by Increasing the Average Annual Income Requirement for a Municipality or Cluster of Barangays to be Converted into a Component City.
11
..
Qualified voters of highly-urbanized cities shall remain excluded from voting for elective provincial officials.
Unless otherwise provided in the Constitution or the Local Government Code of 1991, qualified voters of independent component cities shall be governed by their respective charters, as amended, on the participation of voters in provincial elections.
Qualified voters of cities who acquired the right to vote for elective provincial officials prior to the classification of said cities as highly-urbanized after the ratification of the Constitution and before the effectivity of the Local Government Code of 1991, shall continue to exercise such right. (Sec. 452, LGC)
d) Creation of the Municipality. - A municipality may be created, divided, merged, abolished, or its boundary substantially altered only by an Act of Congress and subject to the approval by the majority of the votes cast in the plebiscite to be conducted by the COMELEC in the local government unit or units directly affected. Except as may otherwise be provided in the said Act, the plebiscite shall be held within one hundred twenty ( 120) days from the date of its effectivity. (Sec. 441, LGC)
The requisites for the creation of a municipality are the following:
l ) An Average Annual Income, as certified by the Provincial Treasurer, of at least Two Million Five Hundred Thousand Pesos (P 2,500,000.00) for the last two (2) consecutive years based on 1991 constant prices;
2) A population of at least twenty-five thousand (25,000) inhabitants, as certified by the National Statistics Office; and
3) A contiguous territory of at least fifty (50) square kilometers, as certified by the Lands Management Bureau.
Provided, That the creation thereof shall not reduce the land area, population or income of the original municipality or municipalities at the time of said creation to less than the minimum requirements prescribed.
The Average Annual Income shall include the income accruing to the General Fund of the municipality concerned, exclusive of special funds, transfers and non-accruing income.
The territorial jurisdiction of a newly created municipality shall be properly identified by metes and bounds. The requirement on land area shall not apply where the municipality proposed to be created is composed of one ( l ) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (Sec. 442, LGC)
e) Creation of the Barangay. - A barangay may be created, divided, merged, abolished, or its boundary substantially altered, by law or by an ordinance of the sangguniang panlalawigan or sangguniang panlungsod, subject to approval by a majority of the votes cast in a plebiscite
12
to be conducted by the COMELEC in the local government unit or units directly affected within such period of time as may be determined by the law or ordinance creating said barangay. In the case of creation of barangays by the sangguniang panlalawigan, the recommendation of the sangguniang bayan concerned shall be necessary. (Sec. 385, LGC)
A barangay may be created out of contiguous territory which has a population of at least two thousand (2,000) inhabitants, as certified by the National Statistics Office, except in cities and municipalities within Metro Manila and other metropolitan political subdivisions or in highly urbanized cities where such territory shall have a certified population of at least five thousand (5,000) inhabitants; Provided, That the creation thereof shall not reduce the population of the original barangay or barangays to less than the minimum requirement prescribed.
To enhance the delivery of the basic services in the indigenous cultural commumtles, barangays may be created in such communities by an Act of Congress, notwithstanding the above requirement.
The territorial jurisdiction of the new barangay shall be properly identified by metes and bounds or by more or less permanent natural boundaries. The territory need not be contiguous if it comprises two (2) or more islands.
The governor or city mayor may prepare a consolidation plan for barangay, based on the foregoing criteria, within his territorial jurisdiction. The plan shall be submitted to the sangguniang panlalawigan or sangguniang panlungsod concerned for appropriate action.
In the case of municipalities within the Metropolitan Manila area and other metropolitan political subdivisions, the barangay consolidation plan shall be prepared and approved by the Sanggunian Bayan concerned. (Sec. 386, LGC)
Section 6. Division and Merger of Local Government Units. - Division and merger of existing local government units shall comply with the same requirements prescribed for their creation under the Local Government Code of 1991: Provided, however, That such division shall not reduce the income, population, or land area of the local government unit or units concerned to Jess than the minimum requirements prescribed in the same Code: Provided, further, That the income classification of the original local government unit or units shall not fall below its current income classification prior to such division.
The income classification of local government units shall be updated within six (6) months from the effectivity of the Local Government Code of 1991 to reflect the changes in their financial position resulting from the increase in revenues as provided in the same Code. (Sec. 8. LGC)
Section 7. Abolition of Local Government Units. - A local government unit may be abolished when its income, population, or land area has been irreversibly reduced to less than the minimum standards prescribed for its creation under Book III of the Local Government Code of 1991, as certified by the national agencies mentioned in Section 7 of the same Code, to Congress or to the sanggunian concerned, as the case may be.
13
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The law or ordinance abolishing a local government unit shall specify the province, city, municipality, or barangay with which the local government unit sought to be abolished will be incorporated or merged. (Sec. 9, LGC)
Section 8. Creation, Division or Abolition of Local Government Units in the Autonomous Region in Muslim Mindanao (ARMM). - (a) The Regional Assembly of the Administrative Region in Muslim Mindanao (ARMM) may create, divide, merge, abolish, or substantially alter boundaries of provinces, cities, municipalities, or barangay within the region in accordance with the criteria laid down by Republic Act No. 7160, the Local Government Code of 1991, as specified in the preceding sections , subject to the approval by a majority of the votes cast in a plebiscite in the political units directly affected.
(b) The ARMM Regional Assembly may prescribe standards lower than those mandated under Republic Act No. 7160, the Local Government Code of 1991, in the creation,' division, merger, abolition, or alteration of the boundaries of provinces, cities, municipalities, or barangay. Provinces, cities, municipalities, or barangay created, divided, merged, or whose boundaries are altered without observing the standards prescribed by Republic Act No. 7160, the Local Government Code of 1991, shall not be entitled to any share of the taxes that are allotted to the local government units under the provisions of the same Code.
(c) The holding of a plebiscite to dete1mine the will of the majority of the voters of the areas affected by the creation, division, merger, or whose boundaries are being altered as required by Republic Act No. 7160, the Local Government Code of 1991, shall, however, be observed. (Sec. 19, Act. VI, R. A. No. 90543, amending R. A. No. 6734
4)
(d) The Autonomous Region in Muslim Mindanao (ARMM) 1s composed of the following provinces and cities (Sec. I (2), Art. II, R. A. No. 9054):
Provinces: Cities:
Basilan Cotabato Cotabato Dapitan Davao de! Sur Di po log Lanao de! Norte General Santos Lanao de! Sur Iligan Maguindanao Kidapawan Pala wan Marawi Sarangani Pagadian South Cotabato Puerto Princesa Sultan Kudarat Di gos Sulu Koronadal Tawi-Tawi Tacurong
3 An Act to Strengthen and Expand the Organic Act for the Autonomous Region in Muslim Mindanao, Amending for the Purpose R. A. No. 6734, as Amended.
4 An Act Providing for the Autonomous Region in Muslim Mindanao
14
Zamboanga del Norte Zamboanga Zamboanga del Sur Zamboanga Sibugay
Chapter 2 APPOINTMENT, QUALIFICATIONS, POWERS AND
FUNCTIONS OF THE LOCAL TREASURER, ASSISTANT
LOCAL TREASURER,ANDBARANGAYTREASURER
Section 9. Appointment and Qualifications of the Local Treasurer. - (a) The Local 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.
(b) The Local 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 local government unit.
(c) No person shall be appointed Local Treasurer unless he is a citizen of the Philippines, a resident of the local government unit concerned, of good moral character, a holder of a college degree preferably in commerce, public administration or law from a recognized college or university, and a first grade civil service eligible or its equivalent. He must have acquired experience in treasury or accounting service for at least five (5) years in the case of the Provincial or City Treasurer, and three (3) years in the case of the Municipal Treasurer. (Sec.
470, LGC)
( d) The position of Local Treasurer should be included in the plantilla of personnel in the local government unit concerned, properly approved by the DBM. The plantilla should show the following information:
1) Designation of Position; 2) Appropriation or Budget Item Number approved by the sanggunian
concerned; 3) Range/Salary Grade of the Position; and 4) Authorized and Actual Salary per annum including the emoluments therein.
The appointment of a Treasurer shall be mandatory for provincial, city and municipal governments. (Sec. 470, LGC)
The Secretary of Finance shall appoint only from the list of qualified recommendees nominated by the local chief executive, and if none is qualified, the Secretary of Finance must return the list of recommendees to the LCE with the reason therefor, and the LCE must give a new list of eligible qualified recommendees.
Section 10. Appointment and Qualifications of the Assistant Treasurer. - (a) An Assistant Treasurer may be appointed by the Secretary of Finance from a list of at least three (3) ranking,
15
l
eligible recommendees of the governor or mayor, subject to civil service law, rules and regulations.
(b) No person shall be appointed Assistant Treasurer unless he is a citizen of the Philippines, a resident of the local government unit concerned, of good moral character, a holder of a college degree preferably in commerce, public administration, or law from a recognized college or university, and a first grade civil service eligible or its equivalent. He must have acquired at least five (5) years experience in the treasury or accounting service in the case of the Assistant Provincial or City Treasurer, and three (3) years in the case of the Assistant Municipal Treasurer.
The appointment of an Assistant Treasurer shall be optional for the provincial, city and municipal governments. (Sec. 471, LGC)
Section 11. Delegation by the Secretary of Finance of the Appointing Authority to the BLGF Executive Director. - The Secretary of Finance delegated to the BLGF Executive Director the appointing authority over Provincial, City and Municipal Treasurers and their Assistants, except City and Municipal Treasurers of Metro Manila and their Assistants. (DOF Personnel Order No. 305-2000, October 27, 2000)
Section 12. Designation of Officer-In-Charge/In-Charge of Office of Local Treasury Offices and Acting As�istant Provincial/City/Municipal Treasurers. -
a) Authority of BLGF Regional Directors to designate subject to confirmation of the BLGF Executive Director. - Whenever a vacancy occurs in the positions of Provincial, City, and Municipal Treasurers and Assistant Provincial, City, and Municipal Treasurers, whether of a temporary or permanent nature, occasioned by the absence (official travel, training or leave); relief, retirement, transfer, resignation or promotion, illness or death, or any other form of sudden incapacity to perform official duties of the regular incumbent, the Regional Director shall designate an Officer-In-Charge/In-Charge of Office of the Office of the Provincial, City, and Municipal Treasurer from the ranks of Provincial/City/Municipal Treasurers, Assistant Provincial/City/Municipal Treasurers, or"the ranking officials/personnel of local treasury offices, Regional Offices and the Central Office, as well as Acting Assistant Provincial/City/ Municipal Treasurer, for the confirmation of the Executive Director of the BLGF.
In addition, the designation of OIC/ICO-Municipal Treasurer and Acting Assistant Provincial/City/Municipal Treasurer shall be recommended by the Provincial/City Treasurer concerned and upon written consent and/or recommendation by the Local Chief Executive and endorsed by the Provincial/City Treasurer.
b) Qualifications of the OIC/ICO-Provincial, City, and Municipal Treasurer. - The proposed designee should meet the minimum qualification requirements of the position pursuant to the provisions of Sections 4 70 and 4 71 of the Local Government Code of l 991 (R.A. 7160)6
, except the residence requirement, in case of dearth of recommendees, and must
5 See Sec. 9, this Manual
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belong to the local treasury service over which the Secretary of Finance, through the Bureau of Local Government Finance, exercises administrative and technical supervision. In the absence of qualified and ranking personnel from the local treasury service, the ranking and qualified personnel from the local accounting office and other related offices may be considered, but they must first be detailed by the appointing authority concerned with the Local Treasury Office to which the recommendee will be assigned before the designation can be effected.
c) Consent/Approval of Local Chief Executives Required. - Designations of OICProvincial/City/Municipal Treasurers to other local treasury offices shall be with the written consent/approval of the Local Chief Executives of both LGUs where the designate comes from and where said designate is being designated, particularly as regard the continued payment of the salaries and other benefits of the designate by the LGU where he/she is regularly appointed and the subsequent return to his/her regular station once deemed necessary and in the absence of any legal impediment.
d) Requirements for the Relief, Transfer or Detail of Treasurers and Assistant Treasurers.
- Designations of OIC/ICO-Provincial/City/Municipal Treasurers and Acting Assistant Provincial/City/Municipal Treasurers shall only be made under the grounds cited under Section 10 (a) of this Manual. Requests for relief, transfer, or detail of Treasurers and Assistant Treasurers shall be acted upon only for justifiable reasons and after compliance with the requisites of due process, i.e., the Treasurer consents thereto; there exists a final audit finding of cash shortage properly validated by the Regional Director and/or his duly authorized representative and the Treasurer is ordered suspended pursuant to Section 348 of R. A. 7160; and the Treasurer has been formally charged with a grave offence and the ninety (90) day preventive suspension has expired, but formal investigation has not yet been terminated.
e) Period of Designation. - The designation shall be for a period of six (6) months, unless sooner revoked, with a maximum of two (2) extensions except in case where the Assistant Treasurer is the one designated OIC/ICO-Treasurer and where the incumbent Treasurer has a pending administrative and/or criminal case. For monitoring purposes, the Order shall specifically state the effectivity and expiration dates thereof.
t) Extension of Designation. - Extension of designation need not be recommended by the Local Chief Executive, except as requested otherwise, and conditioned upon a satisfactory performance by the designate during the period of designation attested to by the immediate supervisor, and the absence of any derogatory report and/or adverse information against the designate received and verified by the Regional Office or the Local Treasury Office.
g) Processing and Submission of Designation. - Except in vacancies caused by the sudden illness, death or absconding of the incumbent, designations and extensions thereof shall be processed by the Regional Office within fifteen ( 15) days before the expected temporary or permanent vacancy and submitted to the Bureau of Local Government Finance for confirmation within ten (10) days from the issuance of the Order. Non-submission of the Order for confirmation and/or non-compliance thereof will render subject Order ineffective.
17
h) Confirmation of Designation by the BLGF Executive Director. - Designation submitted by the Regional Director for confirmation shall be acted upon by the Executive Director, Bureau of Local Government Finance within fifteen ( 15) days from receipt thereof, otherwise, subject designation is deemed approved.
i) Documentation. - Designation submitted to the BLGF for confirmation shall be accompanied by the following documents 7:
1) Regional Special Personnel Order (RSPO) issued by the BLGF Regional Director;
2) Comments/Recommendations of the BLGF Regional Director; 3) Recommendation of the Provincial/City Treasurer, in the case of the
OIC/ICO-Municipal Treasurer and Acting Assistant Provincial/City/Municipal Treasurer;
4) Written Consent and/or Recommendation of the Local Chief Executives concerned; and
5) Updated Personal Data Sheet (PDS), with passport size photo.
Section 13. Distinction between Officer-in-Charge and In-Charge of Office. -
a) Officer-in-Charge (OIC). - An Officer-in-Charge (OIC) is an official or employee designated by proper authority in a temporary capacity to discharge fully the powers and responsibilities of the head of the Local Treasury Office (Provincial, City or Municipal), with the same rights and prerogatives of the latter, except the right to receive the salary appurtenant thereto. (Sec. 7. 6, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of Finance)
An OIC-Provincial/City/Municipal Treasurer shall, for a period of ninety (90) days, continue to receive his/her salary from his/her regular station.
An OIC-Provincial/City/Municipal Treasurer, if so allowed under the Order of Designation and by the sanggunian concerned, shall receive per diems at a rate authorized under existing rules and regulations.
During the incumbency of the OIC-Provincial/City/Municipal Treasurer, he/she shall be entitled to collect the representation allowances authorized for the vacant position of Provincial/City/Municipal Treasurer. He/she shall likewise be entitled to collect the Cost of Living Allowance (COLA)8
, bonus, hazard pay, and other emoluments that may be authorized. (Section 7. 6, Local Administrative Regulations No. 1-85, Ministry o,f Finance)
b) In-Charge of Office (ICO). - An In-Charge of Office is an official or employee designated by proper authority in a temporary capacity to discharge the duties and functions of the head of the Local Treasury Office (Provincial/City/Municipal) in a caretaker capacity and with
6 DOF Personnel Order No. 335-03, October 1, 2003 7
Integrated Benefit under Sec. I 2, R.A. No. 6758 or the ''Salary Standardization law", implemented by
DBM-CCC No. I 0, effective March 16, 1999.
18
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certain limitations of the powers, authority and prerogatives normally exercised by the head of the office. (Sec. 7. 7, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of Finance)
An ICO may be authorized to collect representation allowances only in instances where his/her designation was occasioned by the temporary disability, authorized prolonged leave of absence, or due to an administrative action involving the relief or suspension of the regular incumbent.
An ICO of a Provincial/City/Municipal Treasury Office shall not have the power to appoint
subordinate officers. (Sec. 7. 7.4, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of Finance)
Section 14. Automatic Succession of the Assistant Provincial/City Treasurer. - In cases where the BLGF has not issued an Order of Designation of the OIC/ICO of the Provincial/City Treasury Office, the regularly appointed Assistant Provincial/City Treasurer shall, unless otherwise incapacitated or precluded by legal impediments, automatically assume the duties and functions of the Provincial/City Treasurer in a caretaker capacity to prevent disruption in the normal and routinary operations of the Local Treasury Office, until the return to duty of the regular incumbent, or the issuance of the Order of Designation, with the confirmation of the BLGF Executive Director.9 (Sec. 7.4, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of Finance)
The Assistant Provincial/City Treasurer who automatically assumes as ICO shall within 24 hours notify directly the BLGF Regional Director concerned of the absence, sickness, death or other incapacity of the regular incumbent and of the date of his/her assumption in a caretaker capacity.
(Sec. 7. 4.1, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of Finance)
Within 48 hours after receipt of the notice, the BLGF Regional Director shall issue the Order of Designation of the Assistant Provincial/City Treasurer or any other competent officer as ICO/OIC(Sec. 7. 4, Local Administrative Regulations No. 1-85), subject to the requirements therefor.10
Section 15. Automatic Succession of the Assistant Municipal Treasurer. - In cases where the Provincial/City Treasurer is unable or did not have the opportunity to recommend the designation of an ICO/OIC, or the BLGF Regional Director has not issued an Order for such designation, the regularly appointed Assistant Municipal Treasurer, unless otherwise incapacitated or precluded by legal impediments, shall automatically assume as !CO or in a caretaker capacity, until the return to duty of the regular incumbent, or the issuance of an Order of Designation, with the confirmation of the BLGF Executive Director.11 (Sec. 7.5, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry o.f Finance)
8 See Sec. I 2 (a), this Manual
9 See Sec. I 2, this Manual
10 See Sec. 12 (a), this Manual
A
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The Assistant Municipal Treasurer who automatically assumes as ]CO shall within 24 hours notify the BLGF Regional Director concerned, thru the Provincial Treasurer, of the absence, sickness, death or other incapacity of the regular incumbent and of the date of his/her assumption in a caretaker capacity. (Sec. 7.5.1, Local Administrative Regulations No. 1-85, Februa,y 7, 1985, Ministry of Finance)
Within 48 hours after receipt of the notice, the Regional Director shall issue the Order of Designation of the Assistant Municipal Treasurer or any other competent officer as ICO/OIC (Sec. 7.5.2, Local Administrative Regulations No. 1-85, Februa1y 7, 1985, Ministry of Finance), subject to the requirements therefor.
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Section 16. Appointment and Qualifications of Barangay Treasurer. -
a) The Barangay Treasurer shall be appointed by the punong barangay with the concurrence of the majority of all the sangguniang barangay members. The appointment of the Barangay Treasurer shall not be subject to attestation by the Civil Service Commission.
b) The Barangay Treasurer must be of legal age, a qualified voter, and an actual resident of the barangay concerned.
c) No person shall be appointed Barangay Treasurer if he is a sangguniang barangay member, a government employee, or a relative of the punong barangay within the fourth (4111) civil degree of consanguinity or affinity. (Sec. 395, LGC)
Section 17. Processing of the Appointments of Provincial, City, and Municipal Treasurers and Assistant Provincial, City, and Municipal Treasurers. - The appointments of the Provincial, City, or Municipal Treasurer shall be processed as follows:
a) Nomination of at least three ranking eligible recommendees by the Local Chief Executive;
b) Screening/evaluation of at least three recommendees by the respective Selection and Promotion Board of the Regional and Central Offices of the BLGF, to determine the best qualified candidate to the position involved;
c) The evaluation of the qualifications of the recommendees, shall be in accordance with the following criteria:
I) Performance Rating - based on the last two (2) Performance Ratings of the recommendees which should at least be Very Satisfactory.
2) Work Experience - either in the local treasury or accounting services for at least five (5) years in the case of Provincial or City Treasurer and Assistant Provincial or City Treasurer and three (3) years in the case of the Municipal Treasurer and Assistant Municipal Treasurer.
11 See Sec. 12. this Manual
20
...
3) Education - at least college degree preferably in Commerce, Public Administration or Law from a recognized college or university.
4) Eligibility - First Grade civil service eligibility or its equivalent.
5) Relevant Training - includes the successful completion of trammg_ courses, scholarships, training grants and others relevant to the duties and functions of the position to be filled-up.
6) Rank- the hierarchy of the vacant position in the organization/office/unit.
d) Submission of the following required documents:
I) Nomination Letter by the LCE 2) Personal Data Sheet (CSC Form No. 212) 3) Position Description Form (BC-CSC Form I) 4) Latest Appointment of the recommendee 5) Diploma or Transcript of Records 6) Certification of Train ing/s completed
7) Performance Ratings for the last two (2) rating periods prior to the effectivity date of appointment which should be at least Very Satisfactory (CSC MC No. 38 s. 1993)
8) Report of Civil Service (CSC) Ratings or its equivalent 9) Certification of Residency by the Barangay Chairman or the LCE I 0) Certification by the Local Accountant on the availability of funds for the position to
be filled-up 11) Certification by the LCE that the recommendee is not related to him/her within the
fourth civil degree of consanguinity or affinity 12) Copy of Publication of the vacant position 13) Certification of the BLGF Regional Director/Provincial Treasurer that there is no
pending administrative case/complaint on record filed against the proposed appointee 14) Other documents that may be required.
Section 18. Detail or Temporary Assignment of Local Treasurers and Assistant Local
Treasurers. - A detail is the movement of an employee from one department or agency to another which is temporary in nature, which does not involve a reduction in rank, status or salary and does not require the issuance of another appointment.
The employee detailed receives his salary only from his mother unit/agency.
Detail shall be allowed only for a limited period in the case of employees occupying professional, technical and scientific position. If the employee believes that there is no justification for the detail, he may appeal his case to the Civil Service Commission. Pending the appeal, the decision to detail the employee shall be executory unless otherwise ordered b
1 the
Commission. (Sec. 8, Rule VII, Omnibus Rules Implementing Book V of E. 0. No. 2921 and Other Pertinent Civil Service Laws)
12 Revised Administrative Code of 1987
21
Guidelines to be observed regarding the detail or temporary assignment of Local Treasurers and Assistant Local Treasurers:
a) The salary of an employee detailed or temporarily assigned on a part-time or full-time basis from a department, bureau or office of the National Government to an LGU particularly the Local Treasury Office, or from one LGU to another LGU shall be paid by the office requesting the detail or temporary assignment.
b) The salary of an employee detailed or temporarily assigned on a part-time or full-time basis from one LGU to another LGU shall be paid either by the LGU requesting the detail or by the mother LGU depending on the agreement mutually acceptable to both LGUs.
c) Service of an employee covered by items (a) and (b) above shall be considered service rendered to the mother LGU. (Sec. 216 (2nd par.), Vol./, GAAM)
d) The LCE requesting the detail or temporary assignment shall submit a written request to the Executive Director of the Bureau of Local Government Finance. The request shall state the name of the employee to be detailed, the period of detail and the reasons for the detail.
e) 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 of the LCE of the LGU where the Local Treasurer or Assistant Local Treasurer sought to be detailed is permanently appointed or stationed. (DOF Personnel Order No. 335-03, October 1, 2003)
f) Clearance and approval of the Civil Service Commission shall be required for details or temporary assignment requiring a period exceeding one ( 1) year and involving the performance of regular and recurring functions in the agency where the Local Treasurer or Assistant Local Treasurer is to be detailed. (Sec. 216, Vol./, GAAM)
g) 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. 0. No. 292 and Other Pertinent Civil Service Laws)
Section 19. Salaries of Local Treasurers and Assistant Local Treasurers Under
Preventive Suspension. - The proper disciplining authority may preventively suspend any subordinate officer or employee under his authority pending an investigation, if the charge against such officer or employee involves dishonesty, oppression or grave misconduct, or neglect in the performance of duty, or if there are reasons to believe that the respondent is guilty of charges which would warrant his removal from office. (Sec. 51, Title I, Subtitle A, Book V, E. 0. No. 292)
Any public officer against whom any criminal prosecution under a valid information under R. A. No. 3019 or the Anti-Graft and Corrupt Practices Act or under the provisions of the Revised Penal Code on bribery is pending in court, shall be suspended from office. Should he be convicted by final judgment, he shall lose all retirement or gratuity benefits under any law, but if
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he is acquitted, he shall be entitled to reinstatement and to the salaries and benefits which he failed to receive during suspension, unless in the meantime administrative proceedings have been filed against him. (Sec. I 3, R. A. 301914
)
The Secretary of Finance through the BLGF Ex.ecutive Director may temporarily relieve or suspend Provincial, City and Municipal Treasurers and their Assistants (DOF Order No. 305-2000, October 27, 2000, as amended by DOF Personnel Order No. 321-2000, November 17, 2000), concurrently with the Civil Service Commission (Sec. 29, Rufe XIV, Omnibus Rules Implementing Book V of E. 0. No. 292 and Other Pertinent Civil Service Laws) and the Office of the Ombudsman (Sec. 24, R. A. 677015
), pending administrative investigation.
Other provisions applicable on the salaries of Local Treasurers and Assistant Local Treasurers
under preventive suspension:
a) When the administrative case against the officer or employee under preventive suspension is not finally decided by the disciplining authority within the period of 90 days after the date of suspension of the respondent who is not a presidential appointee, the respondent shall be automatically reinstated in the service: Provided, That when the delay in the disposition of the case is due to the fault, negligence or petition of the respondent, the period of delay shall not be counted in computing the period of suspension herein provided. (Sec. 52, Bk. V, E. 0. No. 292)
b) A Local Treasurer who is reinstated after having been illegally dismissed is considered as not having left his office and should be given comparable compensation at the time of his reinstatement in an amount not exceeding five (5) years salary regardless of whether the period of illegal dismissal exceeds five (5) years. Such Treasurer cannot be faulted for his inability to work or render any service as a result of his illegal dismissal because this was not his own making or liking. If dismissal was due to bad faith or personal malice of superior officers, they (superior officers) will be held accountable for the Local Treasurer's back wages (Gabriel vs. Hon. Eufemia C. Domingo, G.R. No. 87420, Sept. 17, 1990)
c) The death of a respondent Treasurer terminates administrative proceedings against him and entitles his heirs to all the benefits due him together with his unpaid salaries from the date of his suspension to the date of his death. (411, lndorsement, CSC, March 17, 1956)
d) Claims for salaries during preventive suspension shall be supported by the following documents:
I) A certified true copy of the order of exoneration or of the court's order dismissing the criminal case against the employee or absolving him; or
2) A certified true copy of the authority granted by the department head for the payment
of salary during suspension; or
13 Anti-Graft and Corrupt Practices Act 14 Ombudsman Act of 1989
..
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3) A certified true copy of the President's order of exoneration providing for payment of salary during suspension. (Sec. 220, Vol. I, GAAM)
Section 20. Salaries of Local Treasurers and Assistant Local Treasurers During Attendance in Administrative, Civil or Criminal Investigation. - Absence of a Local Treasurer or Assistant Local Treasurer is considered service in regular course under the following circumstances:
a) Witness in a criminal case. - When a Local Treasurer or Assistant Local Treasurer is summoned by the court or is required by lawful authority to render service as a witness in a criminal case, such service shall be deemed to be of service in the regular course of employment and the Local Treasurer or Assistant Local Treasurer shall be entitled to his salary during the period of such service payable by the office to which he pertains, regardless of whether he has served for or against the prosecution in such criminal case. (Sec. 226 (a),
Vol. I, GAAM)
In case the hearing or trial is conducted outside the LGU where the Local Treasurer or Assistant Local Treasurer is stationed, he shall automatically be on official travel and shall be entitled to per diem and transportation expenses, subject to the usual accounting and auditing rules and regulations. The summons of the Court shall be sufficient evidence in lieu of a Travel Order.
b) Witness in his own behalf in a criminal or administrative proceeding. - The attendance of a Local Treasurer or Assistant Local Treasurer in his own behalf, to secure his exoneration from charges or matter alleged against him is attendance of his own benefit. If he is not under suspension, the time consumed in such attendance shall be charged to his leave, if he has any. Upon exoneration, however, when the case in which he is the accused or the respondent is the direct result of an act performed by him in connection with his official duties, his absence charged to his leave may be readjusted and his attendance in court considered as service in due course. But when the criminal charges filed are not the direct act performed by him in connection with his official duties, forced absences from duty resulting from his arrest and required attendance in court may not be considered official. He shall not in such case be entitled to salary.
c) Witness in a civil case between two private parties, and in which the Government has no interest. - A witness is not obliged to attend as such in a civil action before any court, judge, justice, or other officer out of the province in which he resides, unless the distance be less that fifty (50) kilometers from his place of residence to the place of trial by the usual course of travel. Therefore, a Local Treasurer or Assistant Local Treasurer cited to appear in a civil case between two private parties wherein the Government has no interest, in order to testify as to knowledge of fact obtained by him in his official capacity, shall not be entitled to salary for absence on account of such appearance if the distance from his place of residence to the place of trial by the usual course of travel be more than fifty (50) kilometers. If the distance involved is less than fifty (50) kilometers, and the Local Treasurer or Assistant Local Treasurer is cited as a witness in a civil case involving private persons as litigants for knowledge or fact acquired by him in his private capacity, his absence will be chargeable
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against him without prejudice to his right to seek reimbursement from the party at whose instance he testified. If such witness testifies on a case from knowledge or fact acquired by him in his official capacity, or to produce official papers or documents, and the distance between his place of residence and the place of trial is less than fifty (50) kilometers, his appearance will be considered service in due course, but in such a case the province, city or municipality to which he pertains shall collect witness' fees for his appearance under the conditions prescribed by the Rules of Court. (Sec. 226, Vol. I, GAAM)
Section 21. Approval and Grant of Application for Leave of Absence of Local
Treasurers and Assistant Local Treasurers. - The approval of application for leave of Provincial, City and Municipal Treasurers and Assistant Provincial, City and Municipal Treasurers shall be as follows:
1. All applications for leave of absence, i. e. vacation, sick, maternity/paternity, and special privilege leave and terminal leave of Provincial/City/Municipal Treasurer and Assistant Provincial/City/Municipal Treasurer shall be approved by the BLGF Regional Director, copies of which shall be furnished to the BLGF Central Office. Where the applicant intends to leave the country, the application for leave shall be approved by the Department of Finance, regardless of the duration.
2. Application for vacation leave of Assistant Provincial/City/Municipal Treasurer for a period exceeding fifteen (15) days shall be approved by the BLGF Regional Director. Application for leave for a period of fifteen (15) days and below shall be approved by the Provincial/City/Municipal Treasurer, a copy of which shall be furnished the BLGF Regional Director for proper information.
3. Application for vacation leave and sick leave of Provincial/City/Municipal Treasurer shall be supported by a request for the designation of an Officer-in-Charge or In-Charge of Office. Likewise, the LCE concerned shall recommend the approval of said application for leave.
4. Provincial/City/Municipal Treasurer and Assistant Provincial/City/Municipal Treasurer shall be entitled to special leave privileges (SPL) as mandated under existing laws (Sec. 21, Rule XVI, Omnibus Rules Implementing Book V of E.O. No. 292). Likewise, Provincial/City/Municipal Treasurer and Assistant Provincial/City/Municipal Treasurer may avail of maternity or paternity leave of not more than seven (7) days which shall be noncumulative and non-commutative, immediately before, during or after the childbirth or miscarriage of their legitimate spouse. (Sec. 20, Omnibus Rules Implementing Book V of E.O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998) The special leave privileges to which the Provincial/City/Municipal Treasurer and Assistant Provincial/City/Municipal Treasurer shall be entitled to are the following:
I. Funeral/Mourning Leave 2. Graduation Leave 3. Enrollment Leave 4. Wedding/Anniversary Leave 5. Birthday Leave
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6. Hospitalization Leave 7. Accident Leave 8. Relocation Leave 9. Government Transaction Leave 10. Calamity Leave
A maximum of three (3) days within a calendar year of any or a combination of the special leave privileges of their choice may be availed of by the Provincial/City/Municipal Treasurer and the Assistant Provincial/City/Municipal Treasurer. The SPL may be availed of by the Provincial/City/Municipal Treasurer and the Assistant Provincial/City/Municipal Treasurer when the occasion is personal to them or that of their immediate family members.
5. Whenever a Provincial/City/Municipal Treasurer or an Assistant Provincial/City/Municipal Treasurer retires, voluntarily resigns, or is allowed to resign, or is separated from the service through no fault of his own, he shall be entitled to the commutation of all accumulated vacation leave and/or sick leave to his/her credit, exclusive of Saturdays, Sundays and holidays, without limitation as to the number of days of vacation leave and sick leave that he/she may accumulate provided his/her leave benefits are not covered by special law. (Sec. 26, Rule XVI, Omnibus Rules Implementing Book V of E.O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
6. When a Provincial/City/Municipal Treasurer or an Assistant Provincial/City/Municipal Treasurer whose leave credits have been commuted following his/her separation from the service is re-employed in the Government before the expiration of the leave commuted, he/she shall no longer refund the money value of the unexpired portion of his/her leave. Insofar as his/her leave credit is concerned, he/she shall start from a zero balance in his/her new government office. (Sec.26, Rule XVI of Omnibus Rules Implementing Book V of E.O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
7. A Provincial/City/Municipal Treasurer or an Assistant Provincial/City/Municipal Treasurer who has accumulated at least fifteen (15) days vacation leave credits shall be allowed to monetize a minimum of ten (I 0) days; provided, that at least five ( 5) days are retained after monetization and, provided further, that a maximum of thirty (30) days may be monetized in a given year. (Sec. 22, Rule XVI of Omnibus Rules Implementing Book V of E. 0. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
8. A Provincial/City/Municipal Treasurer or an Assistant Provincial/City/Municipal Treasurer may be allowed to monetize fifty percent (50%) or more of his/her accumulated vacation or sick leave credits for valid and justifiable reasons such as the following:
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1) Health, medical and hospital needs of the Provincial/City/Municipal Treasurer or the Assistant Provincial/City/Municipal Treasurer or the immediate members of his/her family;
2) Financial aid or assistance brought about by force majeure events such as calamities, typhoons, fire, earthquakes and accidents;
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3) Educational needs of the Provincial/City/Municipal Treasurer or the Assistant Provincial/City/Municipal Treasurer or the immediate members of his/her family;
4) Payment for mortgages and loans entered into for the benefit of the Provincial/City/Municipal Treasurer or Assistant Provincial/City/Municipal Treasurer or the immediate members of his/her family;
5) Extreme financial needs of the Provincial/City/Municipal Treasurer or Assistant Provincial/City/Municipal Treasurer or the immediate members of his/her family to fulfill basic needs for food, shelter and clothing;
The monetization of fifty percent (50%) or more of the accumulated leave credits shall be upon the favorable recommendation of the LCE and subject to availability of funds. (Sec. 23,
Omnibus Rules Implementing Book V of E.O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998).
i) A Provincial/City/Municipal Treasurer or an Assistant Provincial/City/Municipal Treasurer with ten (10) days or more vacation leave credits shall be required to go on vacation leave whether continuous or intermittent for a minimum of five (5) working days annually. (Sec. 25, Omnibus Rules Implementing Book V of E.O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
Chapter 3 ADMINISTRATIVE AND TECHNICAL SUPERVISION BY
THE BUREAU OF LOCAL GOVERNMENT FINANCE
Section 22. Administrative and Technical Supervision. - The Bureau of Local Government Finance shall exercise administrative and technical supervision and coordination over the treasury and assessment operations of local governments (Sec. 43, 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, real property assessment as well as administrative matters on the recruitment, selection and appointment of Local Treasurers and Assistant Local Treasurers.
The BLGF Regional Offices shall perform the following administrative and technical functions involving local treasury operations:
a) 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 Department of Finance;
b) 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;
c) Conduct regional training programs, seminars, workshops and other allied activities fro the improvement of the administrative and technical skills in the local treasury offices;
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d) Undertake measures that would lead to efficient administration of local treasury operations through the following:
1) Conduct periodic supervisory visitation and inspection of the offices of the provincial, city and municipal treasurers;
2) Conduct periodic monitoring on the progress of collections of real property tax, business tax and non-tax revenues;
3) Conduct revenue audit to determine the compliance by local treasurers with applicable laws, rules and regulations;
4) Monitor the implementation by LGUs of national and local tax ordinances and tax measures;
5) Review, evaluate, and monitor LGU financial and fiscal reports for timely and accurate submission which are crucial in the target-setting of tax and revenue collections;
6) Act on administrative matters such as the authorization and regulation of travel, approval of application for leaves of absence, actions on Certificates of Settlements and Clearances from money accountabilities of Local Treasurers and Assistant Local Treasurers.
Chapter 4 ROLES, DUTIES, AND RESPONSIBILITIES OF THE LOCAL
TREASURER
Section 23. Duties and Responsibilities of the Provincial, City, and Municipal Treasurer:
a) Collection of Local Revenues. - All local taxes, fees and charges shall be collected by the provincial, city, or municipal, or barangay treasurer, or their duly authorized deputies.
The provincial, city or municipal treasurer may designate the barangay treasurer as his deputy to collect local taxes, fees or charges. ln case a bond is required for the purpose, the provincial, city or municipal government shall pay the premiums thereon in addition to the premiums of the bond that may be required under the Local Government Code of 1991. (Sec. 170, LGC)
b) Collection of Real Property Tax. - The collection of the real property tax with interest thereon and related expenses, and the enforcement of the remedies provided for in Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991 or any applicable laws, shall be the responsibility of the city or municipal treasurer concerned.
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The city or municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the barangay: Provided, That the barangay treasurer is properly
bonded for the purpose: Provided, further, That the premium on the bond shall be paid by the city or municipal government concerned. (Sec. 247, LGC)
c) Custody and Requisition 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, COA Circular No. 92-382'6
)
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. (Sec 25, COA Circular No. 92-382)
d) General Functions. - The treasurer shall take charge of the treasury office, perform the duties provided for under Book II of the Local Government Code of 1991, and shall:
1) 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 (Sec. 470 (d) (]), LGC), including amendments to local tax ordinances, identification of fiscal modalities, development of debt management strategies, identification of investment opportunities, and others;
2) Take custody and exercise proper management of the funds of the local government unit concerned (Sec. 470 (d) (2), LGC), including effective cash flow forecasting, analysis of liquidity position and management of surplus cash positions;
3) Take charge of the disbursement of all local government funds and such other funds the custody of which may be entrusted to him by law or other competent authority (Sec. 470 (d) (3), LGC), to ensure an effective and efficient management of expenditure and disbursement levels;
4) 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 Local Government Code of 1991; (Sec. 470 (d) (4)
5) Maintain and update the tax information system of the local government unit; (Sec. 470 (d) (5), LGC)
6) In the case of the provincial treasurer, exercise technical supervision over all treasury offices of component cities and municipalities; (Sec. 470 (d) (6), LGC)
1s Circular on Accounting and Auditing Rules and Regulations Designed to Implement Certain Provisions of the LGC which took effect on July 3, 1992.
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7) Exercise such other powers and perform such other duties as may be prescribed by law or ordinance. (Sec. 470 (e), LGC)
e) Specific Functions -
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1) Certify as to the Availability of Funds. - No money shall be disbursed unless the local budget officer certifies to the existence of the appropriation that has been legally made for the purpose, the local accountant has obligated said appropriation, and the local treasurer certifies the availability of funds for the purpose (Sec. 344, LGC; COA Circular No. 2006-002, January 31, 2006). It is the primary duty of the local treasurer to certify to the availability of funds prior to all disbursements from the local treasury, in conjunction with the certification of the local budget officer on the existence of an appropriation for the purpose and the certification of the local accountant on the obligation for the appropriation.
2) Implement Tax Collection and Enforcement Program. - The Local Treasurer is vested by law to collect and receive all monies accruing to their respective jurisdictions whether in the form of collectible taxes and other revenues or trust funds pertaining to other branches or units of government.
3) Prepare and Submit Reports. - The Local Treasurer shall prepare and submit daily report of collections, with the supporting documents. Likewise, the Local Treasurer shall accomplish and submit quarterly report of Statement of Income and Expenditures (SIE), and other reports in forms prescribed by the BLGF.
4) Certify RPT Delinquencies Remaining Uncollected. - The provincial, city or municipal treasurers or his deputy shall prepare a certified list of all real property tax delinquencies which remained uncollected or unpaid for at least one (I) year in his jurisdictions, and a statement of the reason for such non-collection or non-payment and shall submit the same to the sanggunian concerned on or before the thirty-first (31
st) of December of the year immediately succeeding the year in which the delinquencies were incurred, with a request for assistance in the enforcement of the remedies for collection provided in the Local Government Code of 1991. (Sec. 269, LGC).
5) Examine the Books of Accounts and Pertinent Records of Businessmen. - The provincial, city, municipal or barangay treasurer may by himself or through any of his deputies duly authorized in writing, examine the books, accounts, and other pertinent records of any person, partnership, corporation, or association subject to local taxes, fees and charges in order to ascertain, assess, and collect the correct amount of the tax, fee, or
charge. Such examination shall be made during regular business hours, only once for every tax period, and shall be certified to by the examining official. Such certificate shall be made of record in the books of accounts of the taxpayer examined.
In case the examination herein authorized is made by a duly authorized deputy of the local treasurer, the written authority of the deputy concerned shall specifically state the name, address, and business of the taxpayer whose books, accounts, and pertinent records
..
are to be examined, the date and place of such examination, and the procedure to be followed in conducting the same.
For this purpose, the records of the revenue district office of the Bureau of Internal Revenue shall be made available to the local treasurer, his deputy or duly authorized representative. (Sec. 171, LGC)
6) Submit Certified Statement Covering Income and Expenditures. - The Local Treasurer shall submit, on or before the fifteenth (15th) day of July each year, to the LCE a certified statement covering the income and expenditures of the preceding fiscal year, the actual income and expenditures of the first two (2) quarters of the current year and the estimated income and expenditures for the last two (2) quarters of the current year. All statements of income and expenditures shall be jointly certified by the Local Treasurer and the Local Accountant.
7) Issue a Certified Statement Covering Actual Income. - On or before the fifth (5th) day of September each year, the City or Municipal Treasurer, jointly with the City or Municipal Accountant, shall issue a certified statement covering the actual income of the past year and the estimates of income of the current and ensuing fiscal years from local sources, for the barangay concerned. Based on such certified statement, the barangay
treasurer shall submit, on or before the fifteenth ( 15th) day of September each year, to the punong barangay a statement covering the estimates of income and expenditures for the past, current and ensuring fiscal years. (Art. 423 (b), IRR, LGC)
Upon receipt of the statement of income and expenditures from the barangay treasurer, the punong barangay shall prepare the barangay budget for the ensuing fiscal year in the manner and within the period prescribed in the Implementing Rules and Regulations of the Local Government Code of 1991, and submit the annual barangay budget to the sangguniang barangay for enactment. (Art. 423 (c), IRR, LGC)
8) Keep Full Sets of Secondary Standards for Use in the Testing of Weights and
Measures. - On the sealing of weights and measures, Municipal Treasurers are shall keep full sets of secondary standards in their offices for use in the testing of weights and measures. These secondary standards shall be compared with the fundamental standards of the Department of Science and Technology (DOST) at least once a year. The sealing and licensing of weights and measures shall be the duty of Municipal Treasurer and their deputies. In case of violation, fraudulent practices and unlawful possession or use of instruments of weights and measures, shall settle an offense involving the commission of fraud before a case therefore is filed in court, upon payment of a compromise penalty of not less than Two Hundred Pesos (P 200.00).
9) Register in a Book All Branded and Counter Branded Animals. - On cattle registration, the Municipal Treasurer shall register in a book properly prepared and kept for the purpose, all branded and counter branded animals presented for registry, and shall enter the name and residence of the owner, and the class, color, sex, age, brand, knots of radiated hair and other marks of identification of the cattle registered. The original
31
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registry entry and the copy thereof issued as a certificate of ownership shall be signed by the owner and the Municipal Treasurer, and attested to by the Municipal Secretary (Sec. 517, Revised Administrative Code). Upon every transfer of large cattle, the Municipal Treasurer shall issue to the purchaser of the animal a certificate of transfer showing the name and residence of the owner/vendor, name and residence of the buyer, purchase price, identification marks of the animal and the reference to the original certificate of ownership by number and the name of municipality which issued the certificate. (Sec.
426, RMIT17
)
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. - The Local Treasurer shall see to it that the payment of taxes of a business is not avoided through simulation of the termination or retirement thereof. For this purpose, the Local Treasurer shall observe as follows: a) Assign every application for the termination or retirement of a business to an inspector from the Local Treasury Office who shall proceed to the address on record of the business to verify if it is no longer operating. If the inspector finds that the business is simply placed under a new name, manager and/or a new owner, the Local Treasurer concerned shall recommend to the LCE for the disapproval of the application for termination or retirement of the business. Accordingly, the business shall continue to be liable for the payment of all taxes, fees and charges imposed thereon under existing local tax ordinances; and b) In the case of a new owner to whom the business was transferred by sale or other form of conveyance, said new owner shall be liable to pay the tax or fee for the transfer to him of the business if there is an existing ordinance prescribing such transfer tax. (Notes on Sec. 145, LGC, p. 120, Philippine Law on Local
Government Taxation, Annotated, 2000 Edition, Sofronio B. Ursa!)
11) Attend Sessions of the Sanggunian. - The Local Treasurer, when required and upon prior approval of the local chief executive, shall attend the sessions of the sanggunian.
12) Exercise Such Other Powers and Functions and Perform Such Other Duties and Responsibilities. - The Local Treasure shall .exercise such other powers and functions and perform such other duties and responsibilities as may be prescribed by law or ordinance, as follows:
a) Withholding Agents of the Bureau of Internal Revenue (BIR); the Government Service Insurance System (GSIS); Pag-ibig; Philhealth, and the Metro Manila Development Authority (MMDA) for Metro Manila Local Treasurers.
b) Deputies of the National Government to collect Fire Fees and Alien Registration Fees.
c) Members of the following Local Committees and Boards:
a. Local Finance Committee (Sec. 316, LGC)
16 Revised Manual of Instructions to Treasurers
32
b. Bids and Awards Committee (BAC) (R.A. No. 9184/Sec. 364, LGC)
c. Local Prequalification, Bids and Awards Committee (Local PBAC) (Sec.
37, LGC)
d. Local School Boards (Sec. 98 (a), LGC) e. Appraisal Committee (for purposes of expropriation and purchase of real
property)
d) Duties and functions under the Omnibus Election Code18
Section 24. Duties and Responsibilities of the Assistant Provincial, City, and Municipal
Treasurer:
1. The Assistant Treasurer shall assist the Treasurer and perform such duties as the latter may assign to him/her;
ii. The Assistant Treasurer shall have authority to administer oaths concerning notices and notifications to those delinquent in the payment of the real property tax and concerning official matters relating to the accounts of the treasurer or otherwise arising in the offices of the treasurer and the assessor (Sec. 471 (c), LGC); and
iii. In case of the temporary absence of the Treasurer, the Assistant Treasurer shall automatically perform the functions of the former and shall be fully responsible therefor until the designation of an Officer-In-Charge or In-Charge of Office by the Department of Finance through the BLGF.
19
Chapter 5 OTHER ROLES OF THE LOCAL TREASURER
Section 25. Specific Role of the Local Treasurer in the Enactment or Amendment of
Revenue Ordinance of Local Government Units. - The Local Treasurer shall advise and update the local chief executive, the members of the sanggunian, and other local government and
national officials concerned regarding the disposition of local government funds and other matters relating to public finance such as those involving the sourcing and management of funds that are needed to deliver the basic services and implement developmental projects, as follows:
a. Update on the tax information system. - The Local Treasurer regularly provides updates
on local tax information system, hence, he/she must have a first-hand statistical information on the collections from local taxes, fees and charges, upon which a continuing evaluation on the adequacy of collections from said sources in relation to the programs intended to be
financed thereby and the cost of administering these taxes, fees and charges, could be made.
b. Advice on the adequacy of taxes, fees and charges. - The continuing evaluation on the
adequacy of collections will determine the need to increase or decrease the rates of taxes,
fees and charges, so that, the Local Treasurer is duty-pound to advise the sanggunian on the
17 E. 0. No. 144, March 2, 1987 18 Au tom a tic Succession by the Assistant Local Treasurer at the Provincial/City/Municipal Level under Sections 12 and 13, this Manual
33
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need to increase the rates of taxes, fees and charges to a level sufficient to cover the cost of operations and developmental programs and projects.
c. Advice on continued relevance of certain impositions. - The Local Treasurer must also be able to advise the local chief executive and the members of the sanggunian as to when local impositions should be reduced or removed, such as when the purpose of an existing imposition has ceased to exist, or if the costs sought to be recovered by the fee imposed have decreased drastically, or as a matter of strategy, the local chief executive or sanggunian wants to attract business by reducing certain local impositions.
d. Update on the adjustment of fees and charges. - While the Local Government Code of 1991, allows the rates of taxes to be adjusted only once every five (5) years, there is no prohibition for such adjustment insofar as fees and charges are concerned. The effect of inflation on collections impacts on the capability of the local government unit to implement programmed activities or to render mandated basic services. The rates of fees and charges need to be adjusted regularly to offset the effects of inflation. It is therefore the duty of the Local Treasurer to advise the local chief executive and the members of the sanggunian on the matter to effect the necessary adjustment.
e. Dissemination of tax ordinances and revenue measures. - Copies of all provincial, city, and municipal and barangay tax ordinances and revenue measures shall be furnished the respective Local Treasurer for public dissemination. It is therefore the duty of the Local Treasurer concerned to disseminate to the public all newly approved tax ordinances and revenue measures.2°
Section 26. The Role of the Local Treasurer in the Collection of Delinquent Local Taxes, Fees, Charges, and Related Surcharges:
a) Posting of Notice of Delinquency in the Payment of Real Property Tax. - When the real property tax or any other tax imposed under Title Two, Chapter 6 of the Local Government Code of 1991, becomes delinquent, the provincial, city, or municipal treasurer shall immediately cause a notice of the delinquency to be posted at the main entrance of the provincial capitol, or city or municipal hall and in a publicly accessible and conspicuous place in each barangay of the local government unit concerned. (Sec. 254, LGC)
b) Issuance of a Duly Authenticated Certificate for the Distraint of Personal Property for the Collection of Delinquent Local Taxes, Fees, or Charges, and Related Surcharges and Interest. - In the case of distraint of personal property as an administrative remedy for the collection of taxes, fees or charges, and related surcharges and interest resulting from delinquency, the local treasurer or his deputy shall issue a duly authenticated certificate based upon the records of his office showing the fact of delinquency and the amounts of the tax, fee, or charge and penalty due. Such certificate shall serve as sufficient warrant for the distraint of personal property, subject to the taxpayer's right to claim exemption under the provisions of existing laws. (Sec. 175 (a), LGC)
19 Relate to Sec. 23 (d), this Manual)
34
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l
In the case of levy on real property as an administrative remedy for the collection of taxes, fees or charges and related surcharges and interest resulting from delinquency, the provincial, city or municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the tax, fee, or charge, and the penalty due from him. Said certificate shall operate with the force of a legal execution throughout the Philippines. A written notice of the levy shall be mailed to or served upon the assessor and the Registrar of Deeds of the province or city where the property is located, and to the delinquent taxpayer. (Sec. 176, LGC)
c) Advertisement and Sale of Delinquent Property. - Within thirty (30) days after levy, the local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall cover a period of at least thirty (30) days. If the taxpayer fails to pay the taxes, fees, charges, penalties and interests, the sale shall proceed and shall be held either at the main entrance of the provincial, city, or municipal building, or on the property to be sold, or at any other place as determined by the local treasurer conducting the sale and specified in the notice of sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the sanggunian concerned, and which shall form part of his records. The local treasurer shall make and deliver to the purchaser a certificate of sale, showing the proceedings of the sale, describing the property sold, stating the name of the purchaser and setting out the exact amount of all taxes, fees, charges, and related surcharges, interests, or penalties. Any excess in the proceeds of the sale over the claim and cost of sale shall be turned over to the owner of the property. (Sec. 178, LGC)
d) Issuance of a Certified Statement of Delinquency to the Courts. - In the case of collection of real property tax or any other tax through the courts, the provincial or city treasurer, or municipal treasurer shall furnish the provincial attorney or city or municipal legal officer a certified statement of delinquency who, within fifteen ( 15) days after receipt, shall file the civil action in the name of the province, city or municipality in the proper court of competent jurisdiction. If the delinquent tax due does not exceed Ten Thousand Pesos (P 10,000.00), the competent court is the Municipal or City Trial Court, and if the amount due is in excess of Ten Thousand Pesos (fl I 0,000.00), the proper court is the Regional Trial Court. (Art. 357
(a), JRR, LGC)
Section 27. The Local Treasurer's Role in Other Boards and Committees Created Pursuant to the Local Government Code of 1991 and Other Laws -
I. Local Finance Committee:
There is hereby created in every province, city, or municipality a local finance committee to be composed of the local planning and development officer, the local budget officer, and the local treasuret. It shall exercise the following functions:
a) Determine the income reasonably projected as collectible for the ensuing fiscal year;
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b) Recommend the appropriate tax and other revenue measures or borrowings which may be appropriate to support the budget;
c) Recommend to the local chief executive concerned the level of the annual expenditures and the ceilings of spending for economic, social and general services based on the approved local development plans;
d) Recommend to the local chief executive concerned the proper allocation of expenditures for each development activity between current operating expenditures and capital outlays;
e) Recommend to the local chief executive concerned the amount to be allocated for capital outlay under each development activity or infrastructure project;
f) Assist the sangguniang panlalawigan in the review and evaluation of budget of component cities and municipalities in the case of provincial finance committee, the barangay budgets in the case of city or municipal finance committee, and recommend the appropriate action thereon;
g) Assist the sanggunian concerned in the analysis and review of annual regular and supplemental budgets of the respective local government unit to determine compliance with statutory and administrative requirements; and
h) Conduct semi-annual review and general examination of cost and accomplishments against the performance standards applied in undertaking development projects.
A copy of this report shall be furnished the local chief executive and the sanggunian concerned, and shall be posted in conspicuous and publicly accessible places in the provinces, cities, municipalities and barangays. (Sec. 316, LGC)
II. Local School Boards:
a) There shall be established 111 every provmce, city, or municipality a provincial, city, or municipal school board, respectively.
b) The composition of local school boards shall be as follows:
36
I) The provincial school board shall be composed of the governor and the division superintendent of schools as co-chairmen; the chairman of the education committee of the sangguniang panlalawigan, the provincial treasurer, the representative of the pederasyon ng mga sangguniang kabataan in the sangguniang panlalawigan, the duly elected president of the provincial federation of parents-teachers associations, the duly elected representative of the teachers' organizations in the province, and the duly elected representative of the non-academic personnel of public schools in the province, as members;
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2) The city school board shall be composed of the city mayor and the city superintendent of schools as con-chairmen; the chairman of the education committee of the sangguniang panlungsod, the city treasurer, the representative of the pederasyon ng mga sangguniang kabataan in the sangguniang panlungsod, the duly elected president of the city federation of parents-teachers associations, the duly elected representative of the teachers' organizations in the city, and the duly elected representative of the non-academic personnel of public schools in the city, as members; and
3) The municipal school board shall be composed of the municipal mayor and the district supervisor of schools as co-chairmen; the chairman of the education committee of the sangguniang bayan, the municipal treasurer, the representative of the pederasyon ng mga sangguniang kabataan in the sangguniang bayan, the duly elected president of the municipal federation of parents-teachers associations, the duly elected representative of the teachers' organizations in the municipality, and the duly elected representative of the non-academic personnel of public schools in the municipality, as members. (Sec. 98 (a) and (b), LGC)
c) The performance of the duties and responsibilities of the abovementioned officials in their respective local school boards shall not be delegated. (Sec. 98 (d), LGC)
d) The provincial, city or municipal school boards shall:
1) Determine, in accordance with the criteria set by the Department of Education, Culture and Sports (now Department of Education or DepEd), the annual supplementary budgetary needs for the operation and maintenance of public schools within the province, city, or municipality, as the case may be, and the supplementary local cost of meeting such needs, which shall be reflected in the form of an annual school board budget corresponding to its share of the proceeds of the special levy on real property constituting the Special Education Fund and such other sources of revenue as the Local Government Code of 1991, and other laws and ordinances may provide;
2) Authorize the provincial, city or municipal treasurer, as the case may be, to disburse funds from the Special Education Fund pursuant to the budget prepared and in accordance with existing rules and regulations;
3) Serve as an advisory committee to the sanggunian concerned on educational matters such as, but not limited to, the necessity and uses of local appropriations for educational purposes; and
4) Recommend changes in the names of public schools within the territorial jurisdiction of the local government unit for enactment by the sanggunian concerned. (Sec. 99,
LGC)
37
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e) The co-chairmen and members of the provincial, city or municipal school board shall perform their duties as such without compensation or remuneration. Members thereof who are not government officials or employees shall not be entitled to necessary traveling expenses and allowances chargeable against the funds of the local school board concerned, subject to existing accounting and auditing rules and regulations. (Sec. 101, LGC)
III. Bids and Awards Committee (BAC):
There shall be in every province, city or municipality a Committee on Awards to decide the winning bids and questions of awards on procurement and disposal of property.
The Committee on Awards shall be composed of the local chief executive as chairman, the local treasurer, the local accountant, the local budget officer, the general services officer, and the head of office or department for whose use the supplies are being procured, as members. In case a head of office or department would sit in a dual capacity, a member of the sanggunian elected from among its members shall sit as a member. The Committee on Awards at the barangay level shall be the sangguniang barangay. No national official shall sit as a member of the Committee on Awards. (Sec. 364, LGC)
Each municipality, city or province shall maintain a Bids and Awards Committee which shall be
composed of one ( 1) representative each from the regular offices under the Office of the Local Chief Executive such as but not limited to the following: Offices of the Administrator, the Budget Officer, the Legal Officer, the Engineering Office, and the General Services Office. The end user office shall always be represented in the BAC. The BAC members shall be at least five (5) but not more than seven (7) and who shall be personnel occupying plantilla positions of the LGU. The Local Chief Executive shall designate the members of the BAC who shall elect among themselves the Chairman and Vice-Chairman. In no case shall the LCE and /or appointing authority be the Chairman or member of the BAC. (Sec. 11.2.2, Rule V, IRR, R.A. No. 918421
)
The BAC shall have the following functions:
1. Advertise and/or post the invitations to bid; 2. Conduct pre-procurement and pre-bid conferences;
3. Determine the eligibility of prospective bidders; 4. Receive bids and conduct the evaluation of bids; 5. Undertake post-qualification proceedings;
6. Resolve motions for reconsideration; 7. Recommend award of contracts to the LCE or authorized representative.
The BAC shall also prepare the procurement monitoring report covering all procurement activities specified in the Annual Procurement Plan (APP), whether ongoing and completed,
costing � 50 million and above for goods and infrastructure projects, and P 5 million and above for consulting services. The report shall cover all activities from pre
procurement conference to the issuance of notice of award and approval of contract. The report
20 An Act Providing for the Modernization and Regulation of the Procurement Activities of the Government and for Other Purposes.
38
shall be approved by the head of the procuring entity, and submitted to the Government Procurement Policy Board (GPPB) in printed and electronic format within ten (10) working days after the end of each semester. The GPPB is an inter-agency board created under the Government Procurement Reform Act or R. A. No. 9184, chaired by the Secretary of the Department of Budget and Management to formulate and amend the IRR and the corresponding standard forms for Procurement, ensure the regular conduct by government entities of procurement training, preparation of procurement operations manual for all government agencies, and conduct annual review of the effectiveness of the Procurement Law and recommend amendments thereto as necessary.
IV. Prequalification, Bids and Awards Committee (Local PBAC):
a) There is hereby created a local prequalification, bids and awards committee in every province, city, and municipality, which shall be primarily responsible for the conduct of prequalification of contractors, bidding, evaluation of bids, and the recommendation of awards concerning local infrastructure projects. The governor or the city or municipal mayor shall act as chairman with the following as members:
1) The chairman of the appropriations committee of the sanggunian concerned;
2) A representative of the minority party in the Sanggunian concerned, if any, or if there be none, one ( 1) chosen by said Sanggunian from among its members;
3) The local treasurer;
4) Two (2) representatives of non-governmental organizations that are represented in the local development council concerned, to be chosen by the organizations themselves; and
5) Any practicing certified public accountant from the private sector, to be designated by the local chapter of the Philippine Institute of Certified Public Accountants, if any. (Sec. 3 7, LGC)
Representatives of the Commission on Audit shall observe the proceedings of such committee and shall certify that the rules and procedures for prequaliftcation, bids and awards have been complied with.
b) The agenda and other information relevant to the meetings of such committee shall be deliberated upon by the committee at least one (1) week before the holding of such meeting.
c) All meetings of the committee shall be held in the provincial capitol or the city or municipal hall. The minutes of such meetings of the committee and any decision made therein shall be duly recorded, posted at a prominent place in the provincial capitol or the city or municipal hall, and delivered by the most expedient means to elective local officials concerned.
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Section 28. Treasurer's Role in the National and Local Elections pursuant to the Omnibus Election Code. - City (not comprising at least one (1) legislative district) and Municipal Treasurers shall act as Vice-Chairman in City/Municipal Board of Canvassers which shall canvass election returns coming from the polling places within its jurisdiction. (Sec. 2 (d),
Omnibus Election Code)
Local Treasurers are mandated under the Omnibus Election Code to participate in the national and local elections in the following capacities:
1) Custodianship of Ballot Boxes and Election Paraphernalia. - The Provincial, City and Municipal Treasurer shall have custody of ballot boxes and such election paraphernalia, supplies and materials as are entrusted to him under the law or rules of the COMELEC and shall be responsible for their preservation and storage, and for any loss, destruction, impairment or damage of any election equipment, material or document in their possession furnished under the Omnibus Election Code. (Sec. 162, Art. XIII, Omnibus Election Code)
In case of destruction or disappearance of any ballot box on election day, the Board of Election Inspectors shall immediately report it to the City or Municipal Treasurer who shall furnish another box or receptacle as equally adequate as possible. The Election Registrar shall report the incident and the delivery of a new ballot box to the COMELEC and to the Provincial Election Supervisor. (Sec. 160, Art. XIII, Omnibus Election Code)
2) Preparation of Emergency Ballots. - In the event of failure to receive the official ballots on time, or where there are no sufficient ballots for all registered voters or when they are destroyed and it is impossible to provide other ballots, the City or Municipal Treasurer shall provide other ballots which shall be similar to the official ones and which shall be uniform within each polling place. The City/Municipal Treasurer shall immediately report such action to the COMELEC.
The City/Municipal Treasurer shall not undertake the preparation of emergency ballots unless the political parties, candidates and the organizations authorized by the COMELEC to designate watchers have been sufficiently notified to send their representatives and have agreed in writing to the preparation and use of emergency ballots. (Sec. 182, Art. XVI,
Omnibus Election Code)
3) Record of Quantity and Serial Numbers of Official Ballots and Election Returns.- The Provincial, City or Municipal Treasurer shall respectively keep a record of the quantity and serial numbers of official ballots and election returns furnished the various provinces, cities, municipalities and polling places, as the case may be. Legible copies of such record shall be furnished the duly authorized provincial, city or municipal representatives of the ruling party and the dominant opposition party, and the COMELEC immediately after the distribution is made of such official ballots and election returns. (Sec. 186, Art. XVI, Omnibus Election
Code)
4) Verification and Distribution of Official Ballots and Election Returns. - The Provincial, City and Municipal Treasurers, together with the respective watchers of the ruling party and
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dominant opposition party and COMELEC representatives, shall verify the contents of the boxes containing the shipment of official ballots, election returns and sample official ballots received by the said treasurers. The Provincial Treasurers shall keep a record of their receipt and distribution to each Municipal Treasurer, while the City and Municipal Treasurer shall each keep a record of their distribution to the Board of Election Inspectors. (Sec. 189, Art.
XVI, Omnibus Election Code)
5) Certification of Serial Number of Election Returns. - The Provincial, City or Municipal Treasurer shall issue a certification as to the serial number of the election return assigned to a voting precinct in the case of an election return with a separately printed serial number or which bears a different serial number from that assigned to the particular polling place. Said election return shall not be canvassed, unless the Commission shall order in writing for its canvassing, stating the reason for the variance in serial number. (Sec. 212, Art. XVIII,
Omnibus Election Code)
6) Delivery to and Preservation of Key to Ballot Box by the Provincial Treasurer. - Upon the termination of the counting of the votes, the used ballots, unused ballots, tally board or sheet, copy of the election returns and the minutes of proceedings of the Board of Election Inspectors shall be placed in the ballot box. The ballot box shall be locked with three padlocks and the keys shall be placed in separate envelopes, sealed and signed by all members of the board. Said envelopes shall be delivered by a COMELEC representative to the following: one envelope to the Provincial Treasurer, another to the Provincial Fiscal and the other to the Provincial Election Supervisor. (Sec. 217, Art. XVJJJ, Omnibus Election
Code)
The Provincial Election Supervisor, the Provincial Treasurer and the Provincial Fiscal shall keep the envelope containing the keys in their possession intact during the period of three months following the election. After this period, unless the COMELEC has ordered otherwise, the Provincial Election Supervisor and the Provincial Fiscal shall deliver to the Provincial Treasurer the envelopes containing the keys under their custody. (Sec. 219, Art.
XVIII, Omnibus Election Code)
7) Delivery, Preservation and Disposition of Ballot Boxes. - The ballot box, all supplies of the BEi and all pertinent papers and documents shall immediately be delivered by the BEi and the watchers to the City or Municipal Treasurer who shall keep his office open all night on the day of the election if necessary for the purpose, and shall provide the necessary facilities for said delivery at the expense of the city or municipality. The City or Municipal Treasurer shall on the day after the election require the members of the BEi who failed to send the objects herein referred to deliver the same to him immediately and acknowledge receipt thereof in detail. (Art. XVIII, Sec. 217, Omnibus Election Code)
The City and Municipal Treasurer shall keep the ballot boxes under their responsibility for three months and stored unopened in a secured place, unless the COMELEC orders otherwise or shall demand them sooner or shall order their preservation for a longer time in connection with any pending contest or investigation. Upon the lapse of three months and if there is no order to the contrary, the COMELEC may authorize the City and Municipal Treasurer in the
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presence of its representative to open the boxes and bum their contents, except the copy of the minutes of the voting and the election returns deposited therein which they shall keep. (Sec. 219, Art. XVJJJ, Omnibus Election Code)
8) Membership in the Municipal Board of Canvassers. - The Municipal Board of Canvassers shall be composed of the election registrar or a COMELEC epresentative, as chairman, the Municipal Treasurer, and the District Supervisor or in his absence any public school principal in the municipality and one representative from each of the ruling party and the dominant opposition political party entitled to be represented, as members.
The chairman and the members of the Board of Canvassers shall not be related within the fourth civil degree of consanguinity or affinity to any of the candidates whose votes will be canvassed by said board, or to any member of the same board. (Secs. 221-222, Art. XIX,
Omnibus Election Code)
9) Delivery and Transmittal of Election Returns. - For the City and Municipal Board of Canvassers, the copy of the election returns of a polling place intended for the City or Municipal Board of Canvassers, duly placed inside a sealed envelope signed and affixed with the imprint of the thumb of the right hand of all members of the BEI, shall be personally delivered by the members of the BEi to the City or Municipal Board of Canvassers under the proper receipt to be signed by all the members thereof. (Sec. 229, Art. XIX, Omnibus Election
Code)
10) Safekeeping of Transmitted Election Returns. - The Board of Canvassers shall keep the ballot boxes containing the election returns in a safe and secured room before and after the canvass. The door to the room must be padlocked by three (3) locks with the keys kept as follows: one with the chairman, the other with the representative of the ruling party, and the other with the representative of the dominant opposition party. (Sec. 230, Art. XIX, Omnibus
Election Code)
11) Canvass by the Board of Canvassers. - The Board of Canvassers shall meet not later than six o'clock in the afternoon of election day at the place designated by the COMELEC to receive the election returns and to immediately canvass those received. It shall meet continuously from day to day until the canvass is completed. Subject to reasonable
exceptions, the Board of Canvassers must complete their canvass within 36 hours in municipalities, 48 hours in cities and 72 hours in provinces. (Sec. 231, Art. XIX, Omnibus
Election Code). Violation hereof shall be an election offense punishable with imprisonment of not less than one year but not more than six years and shall not be subject to probation. In addition, the guilty party shall suffer disqualification to hold public office and deprivation of the right of suffrage (Sec. 264, Art. XIX, Omnibus Election Code)
Chapter 6 BONDING OF LOCAL TREASURERS AND OTHER LGU
ACCOUNTABLE OFFICERS
Section 29. Guidelines on Bonding of Local Treasurers and Accountable Officers -
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a) Bonding of Local Treasurers and Accountable Officers. - Every officer of the local government unit whose duties permit or require the custody of funds, property/accountable forms shall be covered by a fidelity bond (2.1 Bureau of the Treasury Order No. 01-95), and such officer shall be accountable and responsible for said funds a nd property/accountable forms and for the safekeeping thereof in conformity with the provisions of law. (Sec. 305 (!),
LGC; Sec. 101, P. D. No. 1445)
b) Procedure for Bonding:
Due care should be exercised in accomplishing the Request for Bonding (General Form No. 57 (A) and the Application for Bond (General Form No. 58 (A) to ensure their correctness and thus, accelerate action on them. The procedure for bonding shall be as follows:
l ) Notice to the Bureau of the Treasury. - Appointment or lawful accession by any person to a bonded or bendable position or office, shall be notified immediately by the LGU to the Fiscal Examiner IV of the Bureau of the Treasury in the province or region where the appointee is assigned. (4.1, Bureau of the Treasury Order No. 01-95)
2) General Form No. 57 (A). - Three (3) copies of General Form No. 57 (A), shall be used in the notification, request for application, increase, reduction, cancellation or transfer of a bond, duly signed by the head of agency concerned. (4.2, Bureau of the Treasury Order No. 01-95)
3) General Form No. 58 (A). - Every applicant for bond shall accomplish General Form No. 58 (A) in four (4) copies, which shall be subscribed and sworn to before any officer duly authorized by law. (4.3, Bureau of the Treasury Order No. 01-95)
4) Endorsement to the Bureau of the Treasury. - The duly accomplished General Form No. 58 (A) with three (3) photographs in 3" x 4" shall be endorsed by the head of agency or office concerned to the Fiscal Examiner IV of the Bureau of the Treasury in the province or region together with the request for bonding, General Form No. 57 (A), for approval (4.4, Bureau of the Treasury Order No. 01-95), accompanied by the following:
1. Sworn Statement of Assets and Liabilities as of the date of application and request for bonding;
11. Latest approved Appointment to bendable position; 111. If the position of the applicant is not bendable but applicant is given bondable
duties, Office Order or Designation; iv. Proof of Payment of bond premium deposited with an authorized government
depository bank. (4.5 Bureau of the Treasury Order No. 01-95)
c) Bonding for the Barangay Treasurer. - The Barangay Treasurer shall be bonded in accordance with existing laws in the amount to be determined by the Sangguniang Barangay but not to exceed Ten Thousand Pesos (¥ l 0,000.00), the premiums of which shall be paid by the barangay. He shall be bonded with the Fidelity Fund immediately upon assumption of office.
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Section 30. Schedule of Cash Accountability and the Corresponding Bonds. - The schedule of bonds for Provincial, City, and Municipal Treasurers and other accountable officers and employees shall be as follows:
A. For Cash -
Minimum Cash Maximum Cash Accountability Accountability
2,000.00 5,000.00 5,001.00 7,000.00 7,001.00 9,000.00 9,001.00 12,000.00
12,001.00 15,000.00 15,001.00 18,000.00 18,001.00 21,000.00 21,001.00 25,000.00 25,001.00 30,000.00 30,001.00 35,000.00 35.001.00 40,000.00 40,001.00 50,000.00 50,001.00 60,000.00 60,001.00 80,000.00 80,001.00 100,000.00
100,001.00 250,000.00 250,001.00 500,000.00 500,001.00 750,000.00 750,001.00 1,000,000.00
1,000,001.00 5,000,000.00 5,000,001.00 25,000,000.00
25,000,001.00 75,000,000.00 75,000,001.00 100,000,000.00
B. For Accountable Forms -
(I) Cash Tickets (2) Cattle Registration Certificates (3) Marriage Certificates
.,_
Amount of Bond Bond Premium
75% of maximum Bond Premium .,_ Cash .,_ shal I not be
Accountability � less than 9,000.00 P 100.00
11,250.00 150.00 13,500.00 168.75 16,750.00 202.50 18,900.00 251.25 22,500.00 283.50 26,250.00 337.50 30,000.00 393.75 37,500.00 450.00 45,000.00 562.50 60,000.00 675.00 75,000.00 900.00
100,000.00 1,125.00 225,000.00 1,500.00 350,250.00 3,375.00 500,000.00 5,253.75
1,500,000.00 7,500.00 3,500,000.00 22,500.00 4,000,000.00 52,500.00 5,000,000.00 60,000.00
75,000.00
10% of their total value rounded off to the nearest hundredth
An official/employee who has both money and property accountability, shall be bonded only once to cover both accountabilities, but the amount of the bond shall be in accordance with the above schedule, provided however, that the amount of bond shall not exceed Five Million Pesos
44
I
(P 5,000,000.00). (6.2, Bureau of the Treasury Order No. 1-99, amending Bureau of the
Treasury Order No. 01-95)
When the maximum amount of the bond is exceeded, the accountable officer and his immediate supervisor shall take immediate steps to have the excess accountability transferred to another official/employee who shall then be covered by another bond. (6.3, Bureau of the Treasury
Order No. 01-95)
A bond is personal and therefore not transferable. (7.9, Bureau of the Treasury Order No. 01-95)
Section 31. Accountable Officers Considered Unsafe Risks. - When a bonded official or employee or applicant for bonding is not, in the judgment, of the Fiscal Examiner IV of the Bureau of the Treasury, a safe and conservative risk, owing to character, association, or habits, such fact shall be reported to the head of the concerned LGU who shall cause the removal or relief of the official or employee from such duties requiring a bond, The decision of the Fiscal Examiner IV of the Bureau of the Treasury may be appealed to the Treasurer of the Philippines through the Regional Director of the Bureau of the Treasury whose decision shall be final. (3.1,
Bureau of the Treasury Order No. 01-95)
Section 32. Cancellation of Bond. - An accountable officer or employee who is no longer accountable by reason of retirement, separation from the service, promotion, transfer to another position or agency, suspension from office or for any other cause, shall submit immediately a request for cancellation of bond using General form No 57 (A) (items 14 to 18 only) to the Fiscal Examiner IV of the Bureau of the Treasury in the province or region of said accountable official/employee. (5.1, Bureau of the Treasury Order No. 01-95)
No bonded official or employee shall be given clearance by the LGU from money and property accountability without proof of bond cancellation as herein required. (5.2, Bureau of the
Treasury Order No. 01-95)
Section 33. The Fidelity Fund. - All bond premia collected by the Bureau of the Treasury shall constitute the Fidelity Fund.
The Fidelity Fund shall answer for defalcations, shortages and unrelieved accountability after all possible means of recovery of the amount from the accountable official or employee have been exhausted or his/her insolvency is declared by a competent court.
The Fidelity Fund shall be available for the payment of court fees incident to civil proceedings to recover the sum lost.
The Fidelity Fund shall not be used for the following:
1) To replace fines imposed on bonded officials/employees as a result of criminal conviction for violation of the Revised Penal Code or any penal law;
45
2) To answer the liability of a bonded official/employee convicted of estafa through falsification of public documents in his/her capacity as private individual, and
3) To refund the accountability of a bonded official/employee found short in accountability but not removed or relieved of the duties. (Sec. 8. 0, Bureau of the Treasury Order No. 01-95)
Section 34. Validity of Fidelity Bonds. - Approved fidelity bonds are valid for one (1) year. The bond shall be renewed by the LGU by submitting to the Bureau of the Treasury the request together with the list of bonded officials and employees subject to renewal and other attachments such as:
I) Copy of latest Bureau of the Treasury transmittal letter approvmg the original/renewed application;
2) Latest copy of Statement of Assets and Liabilities; and
3) Agency certification that applicant has no pending administrative and/or criminal case
Bonds shall be automatically cancelled at expiration date unless renewed. (7. 7, Bureau of the
Treasury Order No. 1-99, amending Bureau of the Treasury Order No. 01-95)
Section 35. Adjudication of Claims Against the Fidelity Fund. - Any and all claims against the Fidelity Fund together with all the evidences relating thereto shall be filed with the Regional Director of the Bureau of the Treasury who shall recommend appropriate action to the Treasurer of the Philippines. Approval of a claim shall constitute a legal claim against the Fidelity Fund.
Only approved claims shall be paid from the Fidelity Fund. (9. 0, Bureau of the Treasury Order No. 01-95)
46
LOCAL TREASURY OPERA TIO NS
MANUAL
RECEIPT AND COLLECTION OF
LOCAL INCOME, REVENUE AND
OTHER FUND SOURCES
BOOK TWO
47
Chapter 1 TYPES OF LOCAL INCOME AND REVENUES COLLECTED
BY LOCAL GOVERNMENT UNITS
Section 36. Definition of Income. - Income refers to all revenues and receipts collected or received forming the gross accretions of funds of the local government unit. (Sec. 306 (i), LGC)
Section 37. Power to Create Sources of Revenue. - 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 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)
Local government units do not have the inherent power to tax (Basco vs. PAGCOR, 197 SCRA 52), except such power as may be delegated to them by law (p. 401, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta), that is, the 1987 Constitution through R. A. No. 7160 or the Local Government Code of 1991
Thus, 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)
Section 38. Fundamental Principles. - The following fundamental principles shall govern the exercise of the taxing and other revenue-raising powers of local government units:
a) Taxation shall be uniform in each local government unit. (Sec. 130 (a), LGC)
Equality and uniformity in local taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate within the territorial jurisdiction of the taxing authority or local government unit and not necessarily in comparison with other units although belonging to the same political subdivision. In fine, uniformity is required only within the geographical limitation of the taxing authority21
(p. 416, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta). Thus, if the tax is a city tax, it must be uniform throughout the city; if the tax is a municipal tax, it must be uniform throughout the municipality (Notes on Sec. 130, LGC, p. 18, Philippine Law on Local Government Taxation, Annotated, 2000 Edition, Ursa!). The uniformity required is only within the territorial jurisdiction of a province, a city, a municipality or a barangay (Art. 219 (a), IRR, implementing Sec. 130 (a), LGC).
A tax is considered uniform when it operates with the same force and effect in every place where the subject may be found. Where the statute or ordinance applies equally to all persons, firms and corporations placed in similar situations, there is no infringement of the rule on equality. Inequalities which result from the singling out of one particular class, in respect to other classes, for taxation and exemption infringe no constitutional limitation (p.
416, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta).
21 Punzalan vs. City of Manila, 95 Phil. 46
48
Uniformity is not equivalent to equality in taxation (p. 18, Philippine Law on Local Government"Taxation, Annotated, 2000 Edition, Ursa/). The Supreme Court has ruled, "It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality under all circumstances, or negate the authority to classify the object of taxation. The classification made in the exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless:
1) It is based upon substantial distinctions which make the real differences;
2) These are germane to the purpose of the legislation or ordinance;
3) The classification applies, not only to present conditions, but, also, to future conditions substantially identical to those of the present; and
4) The classification applies equally to all those who belong to the same class.
These conditions are not fully met by the ordinance in question. Indeed, if its purpose were merely to levy a burden upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by dealers other than agents or consignees of producers or merchants established outside the City of Butuan should be exempt from the tax.22 (p. 417, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta)
b) Taxes, fees, charges and other impositions shall:
I) be equitable and based as far as possible on the taxpayer's ability to pay (Sec. 130 (b) (!), LGC). Equitability is characterized by equity. It means being fair to all concerned and that it is without prejudice, favor or vigor entailing undue hardship. It is the word fairness that best describes equitable. It the tax is excessive, it is not fair. When the tax discriminates, aside from violating the rule of uniformity, it is not fair. If the tax is in restraint of trade (that is, it discourages investors), it is not fair.
The taxpayer's ability to pay must be considered. It cannot be absolute or it cannot be based on a hard and fast rule. Ability to pay is more equated with the progressive system of taxation, that is, the more you earn, the more tax you pay. Taxation must be based, as far as practicable, on ability to pay. (p. 209, Local Government Code Annotated, Nolledo)
The question as to when a tax is said to be "equitable", is related to the distribution of the tax burden itself. Thus, the most equitable tax system is that which is most closely in conformity with the standards of equity in the distribution of real income. (p. 19, Philippine Law on Local Government Taxation, Annotated, 2000 Edition, Ursa/)
2) be levied and collected only for public purposes (Sec. 130, (b) (2), LGC). Public purpose requires that the proceeds of taxation are used to support the existence of the
22 Pepsi-Coln Bottling Co. vs. City of Butunn, 24 SCRA 789
49
local government or the pursuit of its governmental objectives (p. 419, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta). The tax should be designed to support the services of the Government and the recognized public needs. The tax must affect the area as a community rather than as individual (LGC Annotated by Nolledo).
3) not be unjust, excessive, oppressive, or confiscatory (Sec. 130, (b), (3), LGC). The tax must be reasonable in order not to be unjust or oppressive (LGC Annotated by Nolledo).
4) not be contrary to law, public policy, national economic policy, or in restraint of trade (Sec. 130 (b) (4), LGC). A tax is contrary to law if it is a tax beyond the authority of an LGU to impose (LGC Annotated by Nolledo). Thus, a local ordinance, to be valid, must not contravene the Constitution or any statute; not be unfair or oppressive; not be partial or discriminatory; not prohibit but may regulate trade; be general and consistent with public policy; and not unreasonable (US vs. Abendan, 24 Phil.165). A
Atax must not be in restraint of trade in that it must not deter the free flow of commerce
he country, and cause considerable increase in the price of commodities, to the udice of the consuming public ( Sec 133 (e), Annotated, Local Government
xation, Ursa!). /oV
c. The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person (Sec. 130, (c), LGC). The Supreme Court has said that entrusting the collection of the fees to a private person does not destroy the public purpose of the ordinance, stating that so long as the purpose is public, it does not matter whether the agency through which the money is dispensed is public or private. (Bagatsing vs. Ramirez, L-41631, Dec. 17, 1976)
d. The revenue collected pursuant to the provisions of the Local Government 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 in the same Code (Sec. 130 (d), LGC). In no case can the National Government share in local taxes even if provided by law. The Constitution provides that local taxes, fees and charges shall accrue exclusively to the local governments. (Sec. 5, Art. X, 1987 Constitution).
e. Each local government unit shall, as far as practicable, evolve a progressive system of taxation (Sec. 130 (e), LGC). A progressive tax is one where the tax rate increases as the tax base increases. ln the case of tax on business, manufacturers pay more taxes per annum as their gross sales or receipts for the preceding year increases (Sec. 130 (h), Annotated, Local Government Taxation, Ursa!).
Section 39. Valid Revenue Ordinance -
A. For any revenue ordinance to be valid, it must conform with the provisions of Chapter 5, Title l , Book II of R. A. No. 7160 or the Local Government Code of 1991, which define both substantive and procedural requirements therefor.
50
B. Procedural Requirements for a Valid Revenue Ordinance. - The conduct of public hearings shall be governed by the following procedure:
1) Pre-Publication or Posting. - Within ten (10) days from the filing of the proposed tax ordinance or revenue measure, the same shall first be published for three (3) consecutive days in a newspaper of local circulation or shall be posted simultaneously in at least four ( 4) conspicuous places within the territorial jurisdiction of the LGU concerned. (Art. 276
(b) (]), !RR, implementing Sec. 188, LGC)
Conspicuous places include municipal halls, plazas, barangay halls, public markets, churches and other public places where the constituents converge.
2) Written Notices to Interested or Affected Parties. - In addition to the foregoing requirement on publication or posting, the sanggunian concerned shall cause the sending of written notices of the proposed ordinance, enclosing a copy thereof, to the interested or affected parties operating or doing business within the territorial jurisdiction of the LGU concerned. (Art. 276 (b) (2), !RR, implementing Sec. 188, LGC)
Information must reach those that shall be directly affected by the imposition. For example, when the measure is on the business tax, the LGU may invite the business community in the public hearing. To ensure compliance with the requirement, sending of written notices is necessary.
The notice or notices shall specify the date or dates and venue of the public hearing or hearings. (Art. 276 (b) (3), !RR, implementing Sec. 188, LGC)
3) Public Hearing. - (a) The initial public hearing shall be held not earlier than ten (10) days from the sending out of notice or notices, or last day of publication, or date of posting thereof, whichever is later. (Art. 276 (b) (3), IRR, implementing Sec. 188, LGC)
(b) Public hearings shall be conducted prior to the enactment of the tax ordinance or revenue measure. (Sec. 187, LGC))
( c) At the public hearing or hearings, all affected or interested parties shall be accorded an opportunity to appear and present or express their views, comments and recommendations, and such public hearing or hearings shall continue until all issues have been presented and fully deliberated upon and/or a consensus is obtained, whether for or against the enactment of the proposed tax ordinance or revenue measure. (Art. 276 (b)
(4), IRR, implementing Sec. 188, LGC)
( d) The deliberations at the public hearing or hearings shall serve as inputs to the members of the sanggunian. After the sanggunian members have considered the views
and comments, they may modify, pass or suspend judgment on the issue.
51
52
( e) No tax ordinance or revenue measure shall be enacted or approved in the absence of a public hearing duly conducted in the manner herein prescribed. (Art. 276 (c), IRR, implementing Sec. 188, LGC)
4) Preparation of Minutes. - The secretary of the sangunian concerned shall prepare the minutes of such public hearing and shall attach to the minutes the position papers, memoranda, and the like submitted by those who participated. (Art. 276, (b) (5), IRR, implementing Sec. 188, LGC)
The proceedings must be properly documented, so that, the sanggunian can readily access information on the people's reaction on the proposal.
5) Approval. - (a) Every ordinance enacted by the sangguniang panlalawigan, sagguniang panlungsod, or sangguniang bayan, shall be presented to the provincial governor or city or municipal mayor, as the case may be. If the local chief executive concerned approves the same, he shall affix his signature on each and every page thereof. (Sec. 54 (a), LGC)
(b) The local chief executive may veto any ordinance of the sangguniang panlalawigan, sagguniang panlungsod, or sangguniang bayan on the ground that it is ultra vires or prejudicial to the public welfare, stating his reasons therefor in writing (Sec. 55 (a), LGC), and return the same to the sanggunian (Sec. 54 (a), LGC).
The veto shall be communicated by the local chief executive concerned to the sanggunian within fifteen (15) days in the case of a province, and ten (10) days in the case of a city or municipality; otherwise, the ordinance shall be deemed approved as if he had signed it. (Sec. 54 (b), LGC)
The local chief executive may veto an ordinance or resolution only once. (Sec. 55 (c), LGC)
( c) The sanggunian concerned may override the veto of the local chief executive by twothirds (2/3) vote of all its members, thereby making the ordinance or resolution effective for all legal intents and purposes. (Sec. 54 (a), LGC)
(e) Ordinances enacted by the sanggunian barangay shall, upon approval by the majority of all its members, be signed by the punong barangay. (Sec. 54 (c), LGC)
6) Publication of Tax Ordinances and Revenue Measures. - (a) Within ten (10) days after their approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days
in a newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places. (Sec. 188, LGC)
(b) If the tax ordinance or revenue measure contains penal provisions, the gist of such ordinance or revenue measure shall be published in a newspaper of general circulation
within the province where the local sanggunian concerned belongs. In the absence of any newspaper of general circulation within the province, posting of such ordinance or measure shall be made in accessible and conspicuous public places in all municipalities and cities of the province to which the sanggunian enacting the ordinance or revenue measure belongs. (Art. 276, IRR, implementing Sec. 188, LGC)
C. Substantive Requirements for a Valid Revenue Ordinance.23 - To be valid, a tax or
revenue ordinance must conform to the following substantive requirements:
1) It must not contravene the Constitution or any statute; 2) It must not be unfair or oppressive; 3) It must not be partial or discriminatory; 4) It must not prohibit but may regulate trade; 5) It must be generally consistent with public policy; and
6) It must not be unreasonable. (US vs. Abendan, 24 Phil.165)
D. Effectivity of Tax Ordinances or Revenue Measures. - The tax ordinances or revenue measures take effect upon compliance with the above procedural and substantive requirements.
E. Furnishing of Copies of Tax Ordinances and Revenue Measures. - Copies of all provincial, city, and municipal and barangay tax ordinances and revenue measures shall be furnished the respective Local Treasurers for public dissemination.
F. Review of Tax Ordinances or Revenue Measures. - R. A. No. 7160 or the Local Government Code of 1991, provides the following cautionary steps wherein tax ordinances or revenue measures of component cities and municipalities are reviewed by the sangguniang panlalawigan, and ordinances of barangays by the sangguniang panlungsod or sangguniang bayan:
1) Review of Component City and Municipal Ordinances or Resolutions by the Sangguniang Panlalawigan. - (a) Within three (3) days after the approval, the secretary of the sangguniang panlungsod or sangguniang bayan shall forward to the sangguniang panlalawigan for review, copies of approved revenue ordinances and resolutions. (Sec. 56 (a), LGC)
(b) Within thirty (30) days after receipt of copies of such revenue ordinances and resolutions, the sangguniang panlalawigan shall examine the documents or transmit them to the provincial attorney , or if there be none, to the provincial prosecutor for prompt examination. The provincial attorney or provincial prosecutor shall within a period of ten ( 10) days from receipt of the documents, inform the sanguniang panlalawigan in writing of his comments or recommendations, which may be considered by the sangguniang panlalawigan in making its decision. (Sec. 56 (b), LGC)
23 For a more detailed discussion of the substantive requirements of a valid revenue ordinance, re.fer to LTO Annex
2, this Manual.
53
54
( c) If the sangguniang panlalawigan finds that such an ordinance or resolution is beyond the power conferred upon the sangguniang panglunsod or sangguniang bayan concerned it shall declare such ordinance or resolution invalid in whole or in part. The sangguniang panlalawigan shall enter its action in the minutes and shall advise the corresponding city or municipal authorities of the action it has taken. (Sec. 56 (c), LGC)
( d) The review by the sangguniang panlalawigan of the component city and municipal revenue ordinances is limited to determining the legality thereof or if the same exceed the powers conferred upon by law to the sangguniang panglungsod or sangguniang bayan. Exceeding such powers is ultra vires and amounts to usurpation of the legislative functions of the city or municipal councils.
( e) The review by the sangguniang panlalawigan is in the nature of legislative check and it is a measure by which the provincial government exercises its power of general supervision over component units.
(f) If no action has been taken by the sangguniang panlalawigan within thirty (30) days after submission of such an ordinance or resolution, the s'ame shall be presumed consistent with law and therefore valid. (Sec. 56 (d), LGC)
(g) Pending review by the higher council, a revenue ordinance continues to be in force and effect.
(h) Declaration of invalidity of the revenue ordinance 1s equivalent to disapproval thereof.
(i) The signature of the governor is required in relation to the resolution adopted by the sangguniang panlalawigan, approving or disapproving the revenue ordinance or resolution enacted by the sangguniang bayan or sangguniang panlungsod.
2) Review of Barangay Ordinances by the Sangguniang Panlungsod or Sangguniang
Bayan. - (a) Within ten (10) days after its enactment, the sangguniang barangay shall furnish copies of all barangay ordinances to the sangguniang panlungsod or sangguniang bayan concerned for review as to whether the ordinance is consistent with law and city or municipal ordinances. (Sec. 57 (a), LGC)
(b) If the sangguniang panlungsod or sangguniang bayan, as the case may be, fails to take action on barangay ordinances within thirty (30) days from receipt thereof, the same shall be deemed approved. (Sec. 57 (b), LGC)
( c) If the sangguniang panlungsod or sangguniang bayan , as the case may be, finds the barangay ordinances inconsistent with law or city or municipal ordinances, the sanggunian concerned shall, within thirty (30) days from receipt thereof, return the same with its comments and recommendations to the sangguniang barangay concerned for adjustment, amendment, or modifications; in which case, the effectivity of the barangay
ordinance is suspended until such time as the revision called for is effected. (Sec. 57 (c), LGC)
G. Appeal on the Legality or Constitutionality of an Ordinance. - Appeal on the constitutionality or legality of an ordinance may be made to the Secretary of Justice or to the regular courts, as follows:
a) Appeal to the Secretary of Justice:
1) Any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein. (Sec. 187, LGC)
2) The appeal to the Secretary of Justice extends only to the determination if the ordinance is constitutional or legal. The Secretary of Justice shall neither substitute his own judgment nor replace the same with another version. This appeal to the Secretary of Justice is one of supervision and not of control.
3) The decision of the Secretary of Justice can be further appealed to the Presiden, pursuant to the principle of exhaustion of administrative remedies, in order for the courts to take cognizance of the appeal on the decision of the executive branch of the government.
b) Appeal through the Courts. - Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty (60) day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. (Sec. 187, LGC)
H. Penalties for Violation of Tax Ordinances. - The local government unit is authorized to prescribe imprisonment or fines or other penalties for violation of tax ordinances but in no case shall such fines be less than One Thousand Pesos (P 1,000.00) nor more than Five Thousand Pesos (P 5,000.00), nor shall imprisonment be less than one ( 1) month nor more than six (6) months. Such fine or other penalty, or both, shall be imposed at the discretion of the court. The sangguniang barangay may prescribe a fine of not less than One Hundred Pesos (P I 00.00) nor more than One Thousand Pesos (¥ 1,000.00). (Sec. 516, LGC)
I. Attempt to Enforce Void or Suspended Tax Ordinance or Revenue Measure. - The enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension thereof shall be sufficient ground for administrative disciplinary action against the local officials and employees responsible therefor. (Sec. 190, LGC)
Section 40. Power to Create Sources of Revenue and Local Taxing Authority. - (a) Each local government unit shall exercise its power to create its own sources of revenue and to levy
55
taxes, fees, and charges subject to the provisions of R. A. No. 7160 or 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) Local government units do not have the inherent power to tax. The power to tax inherently belongs to the State. However, the State may delegate this power through legislation which, in
this case, through the R. A. No. 7160 or the Local Government Code of 1991.
(b) As in all revenue measures, it is up to the particular local government to enact the necessary
tax ordinance that would enable it to avail of its power to impose a given tax.
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)
Section 41. Taxing Powers of Provinces.24
- Except as otherwise provided in R. A. No. 7160 or the Local Government Code of 1991, the province may levy only taxes, fees and charges specifically reserved to provinces
25, as follows: (Sec. 134, LGC)
1) Tax on Transfer of Real Property Ownership (Sec. 135, LGC); 2) Tax on Business of Printing and Publication (Sec. 136, LGC); 3) Franchise Tax (Sec. 137, LGC); 4) Tax on Sand, Gravel and Other Quarry Resources (Sec. 138, LGC); 5) Professional Tax (with required government examination) (Sec. 139, LGC); 6) Amusement Tax (Sec. 140, LGC); 7) Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in, Certain Products (Sec. 141, LGC); 8) Real Property Tax (Sec. 232, LGC); 9) Additional Levy on Real Property for the Special Education Fund (SEF) (Sec. 235, LGC); 10) Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC); 11) Special Levy on Lands Benefited by Public Works, Projects or Improvements Funded by
LGU concerned (Sec. 240, LGC); 12) Service Fees and Charges (Sec. 153, LGC); 13) Public Utility Charges (Sec. 154, LGC); and 14) Tool Fees or Charges (Sec. 155, LGC).
Section 42. Taxing Powers of Municipalities. - (a) Except as otherwise provided in the Local Government Code of 1991, municipalities may levy taxes, fees and charges not otherwise
levied by provinces26
(Sec. 142, LGC), as follows:
I) Tax on Business (Sec. 143, LGC); 2) Community Tax (Sec. 156, LGC);
24 Refer to the Local Revenue Tool Kit for Philippine LGUs shown in Annex 3, this Manual. 25 The.fi,11 discussion on the different taxes, .fees and charges and other impositions by provinces is found in Book V
of'this Manual. 26 The .fit!/ discussion of the different taxes, .fees and charges. and other impositions of' municipalities is .found in
Book V of this Manual.
56
3) Real Property Tax (municipalities within Metropolitan Manila Area) (Sec. 232, LGC); 4) Additional Levy on Real Property for the Special Education Fund (SEF) (Sec. 235, LGC);
5) Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC); 6) Special Levy on Lands Specially Benefited by Public Works, Projects or Improvements
(Sec. 240, LGC); 7) Fees and Charges on Business and Occupation (Sec. 147, LGC); 8) Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC);
9) Fishery Rentals, Fees and Charges (Sec. 149, LGC); 10) Service Fees and Charges (Sec. 153, LGC);
11) Public Utility Charges (Sec. 154, LGC); and 12) Toll Fees or Charges (Sec. 155, LGC).
27
(b) Rates of Tax within the Metro Manila Area. - The municipalities within the Metropolitan Manila Area may levy taxes at rates which shall not exceed by fifty percent (50%) the maximum rates prescribed for tax on business. (Sec. 144, LGC)
In the case of the basic real property tax, the municipality within the Metropolitan Manila Area may fix a uniform rate not exceeding two percent (2%) of the assessed value of real property. (Sec. 233 (b), LGC)
Section 43. Taxing Powers of Cities. - Except as otherwise provided in the Local Government Code of 1991, the city may levy the taxes, fees and charges which the province or municipality may impose:
28 Provided, however, That the taxes, fees and charges levied and
collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of the same Local Government Code
The rates of taxes that the city may levy 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. (Sec. 151, LGC)
The taxes, fees and charges that may therefore be levied by the cities are the following:
I) Tax on Transfer of Real Property Ownership (Sec. 135, LGC); 2) Tax on Sand, Tax on Business of Printing and Publication (Sec. 136, LGC);
3) Franchise Tax (Sec. 137, LGC); 4) Gravel and Other Quan-y Resources (Sec. 138, LGC);
5) Professional Tax (Sec. 139, LGC);
6) Amusement Tax (Sec. 140. LGC); 7) Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in, Certain Products (Sec. 141, LGC);
8) Tax on Business (Sec. 143, LGC);
9) Community Tax (Sec. 156, LGC);
27 For the description of the above taxes, see Annex 3, this Manual.
28 The full discussion of the different taxes.fees and charges, and other impositions of cities is found in Book V of this Manual.
57
10) Real Property Tax (Sec. 232, LGC); 11) Additional Levy on Real Property for the Special Education Fund (Sec. 235, LGC); 12) Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC); 13) Special Levy on Lands Specially Benefited by Public Works, Projects or Improvements
(Sec. 240, LGC); 14) Fees and Charges on Business and Occupation (Sec. 14 7, LGC); 15)Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC); 16) Fishery Rentals, Fees and Charges (Sec. 149, LGC); 17) Service Fees and Charges (Sec. 153, LGC); 18) Public utility charges (Sec. 154, LGC); and 19) Toll Fees or Charges (Sec. 155, LGC).
Section 44. Power to Levy Other Taxes, Fees, or Charges. - Local government units may
exercise the power to levy taxes, fees, and charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees and charges shall not be enacted without any prior public hearing conducted for the purpose. (Sec. 186, LGC)
Section 45. Taxing Powers of Barangays. - (a) The barangays may levy taxes, fees, and charges, as provided in Article 4, Chapter 2, Title 1, Book II of R. A. No. 7160 or the Local Government Code of 199129
, which shall exclusively accrue to them.
(b) Taxes. - On stores or retailers with fixed business establishments with gross sales or receipts of the preceding calendar year of Fifty Thousand Pesos (P 50,000.00) or less, in the case of cities and Thirty Thousand Pesos (P 30,000.00) or less, in the case of municipalities, at a rate not exceeding one percent (1 %) on such gross sales or receipts;
( c) Service Fees or Charges. - Barangays may collect reasonable fees or charges for services rendered in connection with the regulation or the use of barangay- owned properties or service facilities such as palay, copra or tobacco dryers;
(d) Barangay Clearance. - No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business is located or conducted. For such clearance, the sangguniang barangay may impose a reasonable fee. The application for clearance shall be acted upon within seven (7) working days from the filing thereof. In the event that the clearance is not issued within the said period, the city or municipality may issue the said license or permit
(e) Other Fees and Charges. -The barangay may levy reasonable fees and charges:
( 1) On commercial breeding of fighting cocks, cockfights and cockpits; (2) On places of recreation which charge admission fees; and
29 The detailed discussion of the different impositions by the barangays is found in Book V of this Manual.
58
(3) On billboards, signboards, neon signs, and outdoor advertisements. (Sec. I 52, LGC)
Section 46. Common Limitations on the Taxing Powers of Local Government Units. -Unless otherwise provided in the Local Government Code of 1991, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
1) Income tax, except when levied on banks and other financial institutions;
2) Documentary stamp tax;
3) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided in the Local Government Code of 1991;
4) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned;
5) Taxes, fees and charges and other impositions upon goods carried into or out of, 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;
6) Taxes, fees or charges on agricultural and acquatic products when sold by marginal farmers or fishermen;
7) Taxes on business enterprises certified to by the Board of Investments as pioneer of nonpioneer for a period of six ( 6) and four ( 4) years, respectively, from the date of registration;
8) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees, or charges on petroleum products;
9) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided in the Local Government Code of 1991;
10) 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 the Local Government Code of 1991;
11) Taxes on premiums paid by way or reinsurance or retrocession;
12) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles;
59
13) Taxes, fees, or charges on Philippine products actually exported, except as otherwise provided in the Local Government Code of 1991;
14) Taxes, fees, or charges on Countryside and Barangay Business Enterprises and Cooperatives duly registered under R.A. No. 681030 and R.A. No. 693831
; and
15) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units. (Sec. 133, LGC)
Section 47. Non-Tax Revenues. - Aside from revenues that they may be generated through their power of taxation, local government units have access to non-tax revenues32
from the following sources:
1) Proceeds from fees and charges that local government units may impose in the exercise of their regulatory and proprietary powers;
2) Shares of local government units from revenues of the national government, including their share in the utilization and development of the national wealth or resources within their territorial jurisdiction and other sources defined by law; and
3) Other receipts from the disposal of assets and from donations and contributions.
Section 48. Service Fees and Charges. - Local government units may impose and collect fees and service or user charges for any service rendered by it in an amount reasonably commensurate to such service: Provided, however, That no service charge shall be based on capital investments or gross sales or receipts of the person or business liable therefor. (Art. 244,
IRR, implementing Sec. 153, LGC)
In the same manner as local taxes, it is the sanggunian that is empowered to impose local fees and charges33 through appropriate ordinance or revenue measure.
A. Fees
1) Basis of Fees. - Fees are collected by a local government unit in the exercise of its police power. They are imposed in relation to the services rendered in regulating business and other activities within its jurisdiction, such as the privilege to operate an establishment or the practice of a profession. The imposition of a fee must be accompanied by the performance of corresponding regulatory function, if not, the fee is unjustified.
3o KALAKALAN Bilang 20 31 Cooperative Code of the Philippines 32
The summary of the non-tax revenues that may be levied by provinces, cities, and municipalities is shown in Annex 3 of this Manual.
33 The different fees and charges that may be levied by provinces, municipalities and cities are found in Sections 41, 42 and 43 of this Manual.
60
2) Amounts that May Be Imposed. - Fees should be imposed at rates that are considered reasonable. The reasonableness of a fee is commonly understood to mean that which should be more or less equated to the cost of issuing the permit or license and the cost of surveillance and services rendered in relation to the business or activity regulated. It is therefore important for local government units to prepare cost-computation schedules to support the rates of fees established. Business gross receipts and capitalization are not allowed as basis for determining the amount of fees, since they are unrelated to the cost of regulation.
3) Beneficiaries of Regulatory Services. - There are two general categories of regulatory services delivered by local government units:
a) Those whose beneficiaries are in mass, whose pricing therefor cannot be allocated to individuals (such as traffic enforcement); and
b) Those whose beneficiaries can be readily identified. The rates under this category can be more easily determined and, thus, set at reasonable levels. Local government units must be judicious, however, in selecting and identifying the proper subjects for service fees.
B. Charges. - Local government units can also impose charges for the use of their facilities. Many local government units own ferries, markets, slaughterhouses, hospitals, utilities, toll roads and bridges. While many such facilities and services have been assumed by the private sector, some local government units prefer to continue to operate them directly for two reasons:
1) It is strategically beneficial to the community as a whole, and/or
2) The private sector has not taken interest and prefers that these responsibilities continue to be performed by the local government units.
Section 49. Shares in the Proceeds of National Taxes. - By prov1s1on of law, local government units share from the income generated by the national government from all taxes and revenue sources, as follows:
I) Internal Revenue Allotment (IRA) (Sec. 284, LGC)
2) Tobacco Excise Tax (R. A. No. 717134)
3) Proceeds from the utilization of national wealth within their territorial jurisdiction (Sec.
289, LGC) and 4) Special shares from other national taxes, particularly on ECOZONES (R.A. 7227
35) and
on specified portions of the Value Added Tax. (Sec. 2, R. A. No. 764336
)
34 An Act to Promote the Development of the Farmers in the Virginia Tobacco Producing Provinces 35 Bases Conversion and Development Act Of 1992
36 An Act to Empower the Commissioner of Internal Revenue to Require the Payment of the Value-Added Tax Even; Month and to Allow Local Government Units to Share in VAT Revenue.
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Section 50. Internal Revenue Allotment (IRA) -
A. Allotment of Internal Revenue Taxes. - (a) 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:
62
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)
(b) 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 LG Us.
(c) Upon receipt of the joint recommendation on the Secretary of Finance, the Secretary of the Interior and Local Government and the Secretary of Budget and Management and subject to consultation with the presiding offices of both Houses of Congress and the presidents of the leagues of LGUs, 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.
Adjustments to the IRA share of LGUs shall be made only after affecting a corresponding reduction of the national government expenditures including cash and non-cash budgetary aids to government-owned or controlled corporations (GOCCs), government financial institutions (GFls) and Bangko Sentral ng Pilipinas. (Art. 379, IRR implementing the 2nd and
rd 3 paragraphs of Sec. 284, LGC)
The term "budget deficit" means a shortfall of revenues against disbursements; while "public sector" refers to the national government itself, plus the fourteen (14) major government corporations, the government financial institutions, all the local government units, the Bangko Sentral ng Pilipinas, and the social security institutions. Hence, the sum of the deficits of all these different units within the public sector is what is referred to as the "public
sector deficit". (p. 404 Philippine law on Local Government Taxation Annotated 2000 Edition, Ursa!)
Thus, public sector deficit means the shortfall of revenues against disbursements of the national government, the fourteen (14) major government corporations, the government financial institutions, all the LGUs, the Bangko Sentral ng Pilipinas, and the social security institutions.
B. 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:
a) Share of All Provinces -Twenty-Three Percent (23%) b) Share of All Cities - Twenty-Three Percent (23%) c) Share of All Municipalities -Thirty-Four Percent (34%) d) Share of All Barangays -Twenty Percent (20%)
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:
a) Population -Fifty Percent (50%) b) Land Area-Twenty-Five Percent (25%) c) Equal Sharing-Twenty-Five Percent (25%)
3) Share of Each Barangay. -(a) 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 (P 80,000.00) per annum chargeable against the twenty percent (20%) share of the barangay from the total IRA.
(b) After deducting the aggregate sum of the individual barangay share of P 80,000.00 each from the total twenty percent (20%) allocation for all barangays, the remaining balance of said twenty percent (20%) allocation shall be further distributed to the barangays on the basis of the following formula:
1) On the first year of the effectivity of the Local Government Code of 1991 (CY
1992):
Population - Forty Percent ( 40%) and 11 Equal Sharing -Sixty Percent (60%)
2) On the second year:
Population -Fifty Percent (50%) 11 Equal Sharing - Fifty Percent (50%)
3) On the third year and thereafter:
Population - Sixty Percent (60%) 11 Equal Sharing -Forty Percent ( 40%)
4) Newly created barangays -Financial requirements of barangays created by LG Us after the effectivity of the Local Government Code of 1991 shall be the
63
responsibility of the LGU concerned. (Art. 382, !RR implementing Sec.285, LGC)
C. Automatic Release of IRA Shares. - (a) The individual shares in IRA of each LGU shall be automatically released, without the need of any further action, direct to the provincial, city, municipal, or barangay treasurer, as the case may be, on a quarterly basis but not beyond five (5) days after the end of each quarter.
(b) For this purpose, the comprehensive Advice of Allotment (AA) for the IRA shares of all LG Us for the whole year shall be released by the DBM within the first ten (I 0) days of January of every year.
The corresponding Notices of Cash Allocation (NCA) and checks, however, may be released on a monthly basis but in no case shall the total amount due any LGU for each quarter be released beyond five (5) days after the end of the corresponding quarter.
(c) No local government shall receive an annual share in IRA that will be less than the total amount it actually received in 1991.(Art. 383 (a), (b) and (d), !RR implementing Sec. 286,
LGC)
D. Exemption to the Lien or Holdback of the IRA Shares. - The IRA share of LG Us shall not
be subject to any lien or holdback that may be imposed by the national government for whatever purpose unless otherwise provided in the Local Government Code of 1991 or other existing laws and loan contracts or project agreements arising from foreign loans and international commitments, such as the premium contributions of LGUs to the Government Service Insurance System and loans contracted by LGUs under foreign-assisted projects. (Article 383 (c), !RR implementing Sec. 286, LGC))
E. Mandatory Appropriation for Local Development Projects. - It shall be mandatory for each LGU to set aside in its annual budgets amounts no less than twenty percent (20%) of its IRA for the year as appropriation for local development projects that are embodied or contained in the local development plans. Copies of the development plans of LG Us shall be furnished the DILG. (Art. 384, !RR implementing Sec 287, LGC)
Section 51. Share in the Proceeds of the Tobacco Excise Tax. - (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:
64
(1) Cooperative projects that will enhance better quality of products, mcrease productivity, guarantee the market and as a whole increase farmers' income;
(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 tobaccoproducing 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.
The funds allotted shall be divided among the beneficiary provinces pro rata according to the volume of Virginia tobacco production.
Provinces producing Virgipia tob�cco shall be the beneficiary provinces: Provided, however, Th� -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. (R. A. No. 7171)
Section 52. 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)
(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 coproduction, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction.
(2) administrative charges accruing to the national government whether collected by the national government collecting agencies or in certain cases by the LGUs.
65
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)
(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 governmentowned 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:
l ) 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)
( e) Allocation of Shares. - The share in the of local government units from any government agency or government-owned or controlled-corporations shall be distributed in the following manner:
66
1) Where the natural resources are located in the province:
a) Province -Twenty Percent (20%) b) Component City/Municipality- Forty-Five Percent (45%); and c) Barangay-Thirty-Five Percent (35%)
Provided, however, That where the natural resources are located in two (2) or more provinces, or in two (2) or more component cities or municipalities or in two (2) or more barangays, their respective shares shall be computed on the basis of :
a) Population - Seventy Percent (70%); and b) Land Area -Thirty Percent (30%)
2) Where the natural resources are located m a highly urbanized or independent component city:
a) City - Sixty-Five Percent (65%); and b) Barangay-Thirty-Five Percent (35%)
Provided, however, That where the natural resources are located in such two (2) or more cities, the allocation of shares shall be based on the formula on population and land area s specified in paragraph (e) (I) of this section. (Sec 292, LGC)
(f) Computation and Remittance of Shares of Local Government Units in the 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 the 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.
(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 (b), !RR implementing Sec. 293, LGC)
(g) Remittance of the Share of Local Government Units from Government Agencies and Government-Owned or Controlled Corporations. - Share of LG Us 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), !RR implementing Sec. 293,
LGC)
(h) Mandatory Appropriation for Local Development and Livelihood Projects. - The proceeds from the share of local government units from the 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)
Section 53. Other Special Shares of Local Government Units from National Taxes. -
A. Share in Special Economic Zones. - Businesses and enterprises in Special Economic Zones
37 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 (I%) 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)
B. 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
37 ECOZONES
67
68
Internal Revenue under Sections 106 and I 08 of the National Internal Revenue Code (NIRC) of 1997 (formerly Sections 100, 101 and 102 of the NlRC of 1977) in excess of the increase in collection for the immediately preceding year shall be distributed as follows:
(1) 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
(2) eighty percent (80%) shall accrue to the national government.
(b) 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:
I ) One hundred percent (100%) to the city or municipality where the business is located;
11. If VAT is paid by manufacturers, producers, with factories, project offices, plantations and plants:
I) Thirty percent (30%) to the city or municipality where the principal office is located;
2) Seventy percent (70%) to the city or municipality where the factory, project offices, plant or plantation is located.
111. 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:
I) Thirty percent (30%) to the city or municipality where the principal office is located;
2) Forty two percent (42%) the city or municipality where the factory ts located;
3) Twenty eight percent (28%) to the city or municipality where the plantation is located.
1v. If VAT is paid by the manufacturers, producers, exporters and has two (2) or more factories, plants, and plantations:
I) Thirty percent (30%) to the city or municipality where the principal office is located;
2) Seventy percent (70%) shall be prorated among the localities where the factories, project offices, plants, and plantations are located.
(c) 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. 0. 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)
Section 54. Other Receipts. - Other common sources of LGU revenues outside taxation, fees and charges, and shares in national taxes and wealth are the following:
a) Sale of Fixed Assets - pertains to the proceeds from the sale of fixed assets like buildings, equipments, machines, lands and tangible assets.
b) Contributions - include contributions in cash from any source.
c) Sale of Waste Materials - includes the proceeds from sale of waste materials such as office records authorized to be disposed and other waste materials, except scrapped fixed assets.
d) Interest Income - pertains to interests earned by LGUs from bank deposits, and legitimate loans and investments in interest-bearing instruments.
Section 55. Credit Financing. -
A. General Policies:
I) It shall be the basic policy that any local government unit may create indebtedness, and avail the credit facilities to finance local infrastructure and other socio economic development projects in accordance with the approved local development plan and public investment program;
2) A local government unit may avail of credit lines from government or private banks and lending institutions for the purpose of stabilizing local finances; (Sec 296, LGC)
3) Subject to the rules and regulations of the Central Bank and the Securities and Exchange Commission, provinces, cities and municipalities are authorized to issue bonds, debentures, securities, collaterals, notes and other obligations to finance self-liquidating, incomeproducing development or livelihood projects pursuant to the priorities established in the approved local development plan or the public investment program. The sanggunian concerned shall, through an ordinance approved by a majority of all its members, declare and state the terms and conditions of the bonds and the purpose for which the proposed indebtedness is to be incurred. (Sec. 299, LGC)
69
B. Rationale of Credit Financing. - Credit financing enables local government units to pursue development projects and benefits now, at current prices to be paid later. Socially desirable projects generally require levels of funding that would take time to accumulate if the local government unit were to rely only on local savings. Given the pressure on local government units to constantly increase expenditures for the delivery of mandated services, it is unlikely that many of them can actually accumulate the needed funds through savings.38
Chapter 2 COLLECTION OF REVENUES AND OTHER RECEIPTS
Section 56. Fundamental Principles in the Collection of Local Taxes, Fees, Charges and
Other Receipts. - The following fundamental principles shall be applied in the collection of local taxes, fees and charges and other impositions:
a) Local revenue is generated only from sources expressly authorized by law or ordinance, and the collection thereof shall at all times be acknowledged properly (Sec. 305 (c), LGC);
b) The collection of local taxes, fees, charges and other impositions shall, in no case, be let to any private person (Sec. 130 (c), LGC);
c) 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)
d) The revenue collected pursuant to the pertinent provisions of the Local Government Code of 1991, 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 therein (Sec. 130 (d), LGC); and
e) 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 (!), LGC)
Section 57. General Controls on Collection. -
A. Separation of Personal Money from Public Funds. - (a) 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)
(b) Local Treasurers/Cashiers are prohibited from holding positions as treasurers or cashiers of savings and loan associations or any other association or organization. (Sec. 67, Book Il,
Vol. I, GAAM)
B. Acknowledgement of Collections/Issuance of Official Receipts. - (a) No payment of any nature shall be received by a collecting officer without immediately issuing an official receipt
38 The legal basis for LG Us to avail of credit financing.for local development is embodied in Title 4, Book fl of R.
A. No. 7160 or the Local Government Code of 1991, the details of which are presented in Book V of this Manual
70
in acknowledgement thereof. The receipt may be in the form of cash tickets and the like, or officially numbered receipts, proper subject to custody, accountability, and audit.
(b) Where mechanical devices are used to acknowledge cash receipts, the Commission on Audit may a�prove, upon request, exemption from the use of accountable forms. (Sec. 68, P.
D. No. 1445 9
; Sec. 44, Title I (B), Book V, E. 0. No. 292)
C. Prohibition Against the Use of Temporary Receipts. - At no instance shall temporary receipts be issued to acknowledge the receipt of public funds. (Sec. 72, Book II, Vol. I,
GAAM)
D. 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:
1) Incoming mail shall be opened by or under the supervision of a responsible officer of the Records Section of the LGU. (Sec. 75 (a), Book II. Vol. I, GAAM)
2) In addition to the usual records maintained for incoming mail, a list shall be prepared by the Records Section of all checks, money orders, warrants, or currency received, listed individually and totaled. The list shall contain spaces for information on the acknowledgement of receipt of the collection as well as its subsequent remittance or deposit with authorized depositories. The list shall be certified correct by the Chief of the Records Section. (Sec. 75 (b), Book II, Vol. I, GAAM)
3) After accomplishing the list, the Records Section shall immediately deliver the duplicate copy direct to the COA Auditor. The three (3) other copies and the collections and covering letters shall be delivered direct to the Collecting Officer who shall verify the correctness of the list, sign the acknowledgement portion on all three (3) copies, and return the last copy to the Records Section. (Sec. 75 (c), Book II, Vol. I, GAAM)
4) The Collecting Officer shall immediately issue an official receipt for each and every collection in the list. The official receipt number and the date of issue shall be recorded on the appropriate spaces of the original and triplicate copies of the list. (Sec. 75 (d),
Book II, Vol. I, GAAM)
5) Collections arising therefrom shall also be included in the Report of Collections and Deposits together with the other collections for the day. The presc!"ibed procedures in the tum-over of collections and accomplishments of the forms shall likewise be observed.
6) The Treasurer shall insure that the official receipt was correctly and properly recorded in the list. The payor's copy of the official receipt shall be forwarded to the Records Section which shall mail it to the payor with a covering letter. The Treasurer shall, however, forward to the Records Section for mailing, only the official receipts of cleared checks. In case of dishonored checks, the procedures dishonored checks in this Manual shall be followed.
39 Government Auditing Code of the Philippines
71
E. Acceptance of Checks in Payment for Taxes or Other Indebtedness to the Government. - Local Treasurers and other officers charged 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 (]), P. D. No. I 445)
F. Drawing of Checks Payable to the Local Government Unit. - Checks in payment of taxes and other indebtedness to the government must be drawn by the payor himself and made payable to the LGU or LCE or Treasurer of the LGU. In the case of the LCE or Treasurer of the LGU, only the official title or designation of the LCE or Treasurer concerned shall be stated as the payee. (Examples: "City Government of Las Pinas "; "City Mayor of Las Pinas "; "City Treasurer of Las Pinas "). 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. (Sec. 77, Book II, Vol. I, GAAM)
G. Issuance of Official Receipts for Payment by Checks. - Before issuing an official receipt, the Collecting Officer shall carefully scrutinize the check presented to him 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. The collecting officer shall, in all cases, indicate on the official receipt, the drawee bank, the number, date and amount of the check as well as the complete name and address of the payor to facilitate communication with him, if necessary. For purposes of cross reference, the number and the date of the official receipt shall also be indicated at the back of the check. (Sec. 78, Book II, Vol. I, GAAM)
H. 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 payor 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 accounted for simultaneously with the collection as miscellaneous trust liabilities. (Sec. 81, Book II, Vol. I, GAAM)
I. Payment by Private Check for Goods Delivered and Services Rendered by Government
Agencies. - When payment for 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)
J. Prohibition Against 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. No. 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)
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K. Transfer of Government Funds from One Officer to Another. - Transfer of government funds from one 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. No. 1445)
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 regulations of the Commission on Audit. (Sec. 77, P. D. No. 1445)
L. Notification to the Auditor: Application for Relief from Accountability for Government Funds. - When loss of government funds occurs 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 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 any such loss in the settlement of his accounts. (Sec. 7 3, P. D. No. 1445/0
Section 58. Handling of Dishonored Checks Received in Payment of Taxes and Other
Indebtedness to the Government. -
A. Dishonored Checks. - A check is said to be dishonored by non-payment when, upon its being duly presented for payment, such payment is refused or cannot be obtained. (Sec. 83, R. A. No. 203141
) Checks may be dishonored for the following reasons:
1) Lack or insufficiency of funds 2) Format defects, such as, lack of countersignature, amount in words not the same as
amount in figures, etc. (GAO Circular 110)
B. Non-Acceptance of Checks. - When a check drawn in favor of the government is not accepted by the drawee bank for any reason, the drawer shall continue to be liable for the sum due and all penalties resulting from delayed payment. (Sec. 67 (2), P. D. No. 1445)
C. Cancellation of Official Receipts for Dishonored Checks. - In case a check received as payment for taxes or dues is dishonored, the official receipt covering the dishonored check shall be immediately cancelled by the collecting officer and the fact of cancellation noted by him on the duplicate (if no longer in his possession, by the accountant or auditor, as the case may be) and the triplicate copies of the receipt, in the following manner:
"Cancelled, ( date of notice of dishonor)
40 The procedures to be observed and the requirements in the application for relief from accountability are
discussed under Section 123, this Manual.
41 Negotiable Instruments Law
73
Check dishonored per Bank/Treasury Debit Voucher/
Memo No. dated ����� ��� ����-
,,
The cancellation shall also be noted on all subsidiary records pertaining to the transaction. The payor shall be immediately notified by the agency head or treasurer concerned of the cancellation and dishonor by means of a "Notice of Dishonor" as required in the succeeding sections. (Sec. 84, Book II, Vol. I, GAAM)
D. Notice of Dishonor. - When a negotiable instrument has been dishonored by non-acceptance or nonpayment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged (Sec. 89, R. A. No. 2031).
It is, therefore, indispensable that the notice of dishonor be given to the drawer ( or to the indorser-payor of the government check) to protect the interest of the government. The collecting officer or Local Treasurer neglecting or failing to give the required notice of dishonor to the drawer ( or to the indorser-payor of the government check) who, as a result thereof is discharged from liability, shall be personally answerable for the resulting loss suffered by the government. (Sec. 85, Book II, Vol. I, GAAM)
E. Form of Notice of Dishonor. - Ordinarily, a dishonored check is returned by the depository bank concerned to the collecting officer or Local Treasurer who has deposited it, together with the origin.al of the debit memo. Upon receipt of the dishonored check and debit memo, the collecting officer or Local Treasurer shall, within three (3) days, accomplish the "Notice of Dishonor" and sign it in behalf of the local chief executive.
The notice of dishonor shall be prepared in five (5) copies and distributed as follows:
Original
Duplicate Triplicate
QuadruplicateQuintuplicate
to drawer, delivered personally under receipt or sent by registered mail with return card on the same day. Local Chief Executive Local Accountant for the preparation of the required Adjusting Journal Entry (AJE) COA Auditor Local Treasurer's File (Sec. 86, Book II, Vol. I, GAAM)
F. Action on Dishonored Checks. - Should the drawer of a dishonored check fail to settle his account or deposit the amount sufficient to cover the same within five (5) days from receipt of the notice of dishonor, the local chief executive upon the recommendation of the Local Treasurer, shall immediately transmit the certified copies of the dishonored check, debit memo from the bank and notice of dishonor to the city or provincial prosecutor for the institution of the necessary criminal or civil action as the circumstances may warrant.
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The aforementioned provision applies only to cases where the check has been dishonored for lack or insufficiency of funds. Where the check has been dishonored by reason of formal defects, such as lack of countersignature, the local chief executive through the Local Treasurer shall nevertheless take immediate steps to collect the taxes or dues previously paid under the dishonored check, for which the official receipt covering the check has been
subsequently cancelled and, if necessary, initiate the prompt institution of the corresponding civil action for the collection of the amount involved. (Sec. 87, Book II, Vol. I, GAAM)
G. Recording and Reporting of Dishonored Check by the Local Treasurer -
Upon receipt of the debit memo and the dishonored check(s) from the bank, the Local Treasurer shall cause the immediate photocopying of the dishonored checks and recording in the cashbook. He shall record the dishonor by a credit in the appropriate Cash in Bank cashbook with the following explanation:
"To take up the Journal Entry Voucher No. ____ __ ___ , covering dishonored Check(s) No. P , acknowledged by O.R. No.
"
dated for
dated
The dishonored checks shall be retained by the Local Treasurer who shall ensure its safekeeping.
The Local Treasurer shall forward the debit memo and the photocopy of the dishonored checks to the local accountant for the preparation of the Journal Entry Voucher (JEV) in three (3) copies. The local accountant shall furnish the Local Treasurer with a copy of the duly approved JEV for the latter's recording of the "JEV No." in the entries previously made in the appropriate Cash in Bank cashbook. The original copy of the JEV taking up the dishonored checks and its supporting documents shall be submitted to the Auditor and the duplicate copy shall be retained by the local accountant.
The dishonored check(s) and corresponding cancelled official receipt shall also be reflected in the individual taxpayer's records/index cards and other records of collections maintained by the local treasury. At the end of each month the Local Treasurer shall prepare a report of dishonored checks in four ( 4) copies to be distributed as follows:
Original Duplicate Triplicate Quadruplicate GAAM)
Local Chief Executive COA Auditor Local Accountant Local Treasurer's file (Sec. 88, Book II, Vol.I,
H. Redemption of Dishonored Checks. - The following rules shall be observed when a dishonored check is redeemed:
1) A dishonored check shall be redeemed by tendering payment in cash or by certified check to the Local Treasurer or collecting officer concerned. No other mode of payment shall be accepted. (Sec. 89 (a), Book 11, Vol. I, GAAM)
2) Upon receipt of the cash or certified check, the Local Treasurer or collecting officer shall issue an official receipt for the amount received by him. The nature of the
payment to be indicated shall be the same as that in the previous official receipt cancelled, except that the following notation shall be placed on the receipt: "Previous payment acknowledged by O.R. No. , dated , cancelled
75
on (date of notice of dishonor)." Accordingly, the redemption of the dishonored check shall be recorded in the cashbook together with other collections. (Sec. 89 (b), Book fl Vol. L GAAM)
3) If the pay or is liable for the payment of fine or penalty arising from delayed payment, the amount corresponding to the fine or penalty shall also be imposed and collected in addition to the principal tax or dues paid by him. (Sec. 89, (c), Book II, Vol. I, GAAM)
The fine or penalty to be imposed shall be in pursuance to the duly approved ordinance of the local government unit concerned.
4) Upon redemption of the dishonored check in the manner herein prescribed, the Local Treasurer or collecting officer shall not return the check to the payor concerned unless the latter first surrenders the previous official receipt therefor, provided that no case has as yet been filed. If the previous receipt is no longer available, a sworn statement to the effect that it has been lost or misplaced should be submitted by the payor. The Local Treasurer or collecting officer shall forthwith cancel the surrendered official receipt and forward it ( or the affidavit) to the accounting unit to be attached to the corresponding JEV where the cancellation was recorded. (Sec. 89 (e), Book 11, Vol. I, GAAM)
5) In the Report of Collections, an asterisk shall be placed opposite the line on which the official receipt is indicated and a corresponding footnote shall be placed on the last page of the report just below the totals as follows: "Redemption of dishonored check previously acknowledged by 0. R. No. dated , which was cancelled on (date of notice of dishonor). This footnote, together with a copy of the previous official receipt ( or affidavit) shall be the bases of the accounting unit for making the reversing entry in the proper journal. (Sec. 89 (!), Book 11, Vol. I, GAAM)
I. Custody of Dishonored Checks. - Pending their redemption, dishonored checks shall remain in the custody of the Local Treasurer, unless the court shall direct otherwise, in which case appropriate receipts should be secured from the officer authorized to take custody of the checks. The Local Treasurer shall immediately advise the auditor concerned of the transfer of custody of the checks. (Sec. 90, Book II, Vol. I, GAAM)
J. Payors with Previously Dishonored Checks. - Whenever a payor has a record of a previously dishonored private check drawn by him in payment of taxes and dues, even if such check has already been settled, any private check presented by him shall no longer be accepted. In such cases, the payor shall be required to pay only in cash or certified check.
The Local Treasurer shall make a list of payors whose checks have been dishonored and shall circularize the list to all collecting officers under his jurisdiction.
Section 59. Control and Accountability for Official Receipts and Other Accountable Forms.
A. Revenue Collection and the Use of Accountable Forms. - The Provincial, City, Municipal and Barangay Treasurers shall be responsible for the use of all accountable forms invoiced to
76
them and receipted by them in person or entrusted by them to their designated collectors for care, custody and use. A 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:
1) By taking up in the accounts the amount shown to have been collected therefrom;
2) By presenting the unissued and cancelled official receipts; and
3) By producing satisfactory evidence that they are in the hands of authorized personnel.
B. Types of Accountable Forms. - Accountable forms for acknowledging collections are of two classes: accountable forms with money value, and accountable forms without money value. (Sec. 493, Vol. JI, GAAM)
1) The Accountable Forms with money value consist of the following:
Tvoe of Form Utilization
(1) Cash Tickets, Accountable Forms No. 55 For the temporary use of market spaces, parking areas (55A-F) and other income generating activities where the
issuance of a regular receipt is not practicable
(2) Certificate of Transfer of Large Cattle, Evidence of transfer of large cattle; when issued, it Accountable Form No. 52 supersedes the original certificate of ownership
(3) Certificate of Ownership of Large Cattle, Evidence of original ownership of large cattle Accountable Form No. 53
(4) Marriage License Certificate, Issued to contract marriage Accountable Form No. 54
2) The Accountable Forms without specific money value printed on the face of each
form consist of the following:
Type of Form
(I) Official Receipt, Accountable Form No. 51
(2) Real Property Tax Receipt, Accountable Form No. 56
(3) Slaughter Permit and Fee Receipt, Accountable Form No. 57
(4) City/Municipal Burial Permit and Fee Receipt, Accountable Form No. 58
(5) Checks
Utilization
To acknowledge payment of taxes, licenses and other dues or fees to the government for which no special accountable forms have been authorized
To acknowledge payment of real property taxes
Serves as permit and official receipt for slaughtering of large cattle
Serves as funeral permit and official receipt for fees collected
Serially numbered forms purchased from the
77
servicing bank for use in disbursements charged against the account with the bank
(6) Community Tax Certificate, BIR Form Nos. 0016 and 907
For the use of individual taxpayers and corporate entities, respectively
C. Issuance of Cash Tickets. - 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) 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;
2) The collector shall affix his initial and state the date of issuance in the cash tickets before issuance;
3) The collector shall ensure the tearing off of cash tickets to avoid possible re-issuance; and
4) Surprise inspection on the proper issuance of cash tickets shall be conducted by the market administrator or his authorized representative.
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 is assigned. If the vendor disposes of his merchandise by wholesale to another vendor, the latter shall purchase new tickets if he desires to sell the merchandise, even if done in the same place occupied by the previous vendor. The name of the vendor, the place and date of issue shall be indicated at the back of the cash tickets issued to a vendor. (Sec. 74, Book II, Vol. I, GAAM)
D. Issuance of Real Property Tax Receipts. - Only one real property tax receipt shall be issued to cover the payment of basic and additional tax accruing to the Special Education Fund.
E. Name of Agency on the Face of Official Receipts. - For purposes of control, all official receipts being used by the local government unit shall bear the name of the local government unit printed or stamped on the face thereof. (Sec. 96, Book 11, Vol. I, GAAM)
F. Preparation of Official Receipts. - Pre-numbered official receipts shall be issued in strict numerical sequence.
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In preparing official receipts, all copies of each receipt shall be exact copies or carbon reproductions in all respects of the original.
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, if necessary. (Sec. 73,
Book II, Vol. I, GAAM)
G. Accountability for 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. He 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)
H. Exclusive Jurisdiction of the National Printing Office. - The National Printing Office shall have exclusive jurisdiction over the printing, binding and distribution of all standard and accountable forms of provincial, city and municipal governments (Sec. 92, Book 11, Vol. I,
GAAM).
Any requirement for printing services outside of the exclusive jurisdiction of the National Printing Office can be awarded by requiring the agency, subject to government accounting and auditing regulations, to any private printer or may be undertaken at the printing facilities of government agencies without the necessity of securing a waiver or certification covering the same from the National Printing Office.
I. Inspection of Accountable Forms Received from the National Printing Office. - Upon receipt of accountable forms from the National Printing Office, the Local Treasurer shall examine carefully each book or pad. He shall segregate any book or pad found to contain defects, such as incorrect series of numbers, or missing leaves or sheets, etc., and submit it to the auditor/audit team of the Commission on Audit together with a statement of the defects
and deficiencies noted.
The auditor/audit team of the Commission on Audit shall examine the book or pad. If he
finds that the defects are due to error in binding and printing, he shall make proper notations on the book or on the defective sheet itself. He shall also furnish immediately the Local Treasurer concerned with two (2) copies of the certification covering his action. The Local Treasurer shall use this certification in support of a credit to his account for the missing or defective form thus noted by the auditor. The Local Treasurer, through the auditor, shall send two (2) copies of the certification to the head of the National Printing Office. These copies shall contain the initials or numbers that are written on the respective card covers of the defective books or pads, or on a slip covering such information for the guidance of the National Printing Office in locating employees responsible for the error or deficiency. (Sec.
94, Book II, Vol. I, GAAM)
J. 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 shall require the prior approval of the Commission on Audit. (Sec. 68 (2), P. D. No. 1445) The reason for this
requirement is to insure that all the pertinent information and control features are substantially included on the face of the computer-generated forms.
K. Custodianship of Accountable Forms. - The Local Treasurer shall be the custodian of all
accountable forms requisitioned by the local government unit. He shall maintain a complete
79
record of the receipt, issue and transfer of accountable forms. (Sec. 24, COA Circular No.
92-382)
L. Permanent Record Book for Accountable Forms. - Local Treasurers 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, among other things, the whereabouts of the accountable forms with which they are charged, the name and title of the officer or employee to whom such forms have been given, the evidence of the receipt and subsequent sale and issuance of the same. The record books shall contain the following column headings:
1) Booklet Number/Quantity (in case of official receipt without money value)
2) Serial Number/Total Value (in case of official receipt with money value)
3) Name (in print) of Accountable Officer to whom issued
4) Signature of Accountable Officer
5) Date received by Accountable Officer
6) Date reported totally used, sold, issued
These columns shall be utilized for recording consecutively all accountable forms in the order they are received by the Accountable Officer. (Sec. 95, Book 11, Vol. I, GAAM)
M. Recording of Receipts of Accountable Forms in the Permanent Record Book. - When accountable forms are received in the Office of the Local Treasurer, these will be entered immediately after verification in the record book. The recording of each batch of accountable forms received shall be headed by data on the invoice number and date, the date the accountable forms were received, the quantity, and the inclusive serial numbers and/or total value of the accountable forms. (Sec. 95, Book 11, Vol. I, GAAM)
N. Recording of Issues of Accountable Forms in the Permanent Record Book. - In the city and municipal treasuries where accountable forms are issued directly to Barangay Treasurers, collectors/tellers or other accountable officers, it is advisable that only one unit of accountable form per denomination be recorded per line in the record book. In other words, books of real property tax or other official receipts, cattle registration certificates, burial permit receipts, etc., that are bound as such, will be recorded in the record book one line per book per stub; and unnumbered and unbound stock, as cash tickets, per quantity to each line in the record book as in the opinion of the Local Treasurer will be sufficient to meet the daily or weekly requirements of the particular Barangay Treasurers, collector/teller or other accountable officers, but with the total value per line. Recording in provincial treasuries will be in larger quantities per line per denomination, since issues will be mostly to Municipal Treasurers for their stock and the provincial collecting officers for their use.
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When the column provided for 'Date reported totally used, sold, issued' of the record book is not yet filled out, this indicates that the accountable forms are still in the stock and the Local Treasurer concerned, or the officer in charge of the same, has the said forms in his possession and is responsible for their safekeeping. When a book or stub of receipts or sheet of cash ticket or any other quantitative unit of other accountable forms in the hands of collector/teller
or other accountable officers has been partly issued and the balance is returned for any reason whatsoever, the last column of the record book, 'Date reported totally used, sold, issued', should be filled out, and the remaining unissued accountable forms returned will again be entered in a new line in the record book as a new entry, in the same way would it be entered if it were a new requisition.
0. Daily Issues of Accountable Forms. - All accountable form beginning balances, received, issued and on hand shall be reported in Box C of the Report of Collections and Deposit. The collectors/tellers should submit to the Provincial, City and Municipal Treasurer concerned, the stubs of the official receipts in their hands for verification. The Provincial, City, and Municipal Treasurer or his duly authorized representative shall indicate his verification by affixing the signature at the back of the triplicate copy of the last official receipt issued with the following notation:
"Verified here: __ __,(-=S=igi;,,n=a=tu�re'-'a=n=dc...-=D"""'a=te'-") __ _ "
P. Requisition of Accountable Forms by Collectors/Tellers. - Collectors/Tellers shall file requisitions of accountable forms for their use with the Local Treasurer through a Requisition and Issue Slip.42 They shall be accountable for all accountable forms issued to them. There shall be no transfer or borrowing of accountable forms between collectors/tellers. (Sec. 25,
COA Circular No. 92-382)
Q. Issuance of Accountable Forms to Accountable Officer. - Accountable forms shall be issued to bonded officers only in sufficient quantities based on their actual needs but not to exceed three (3) months' use. (Sec. 97, Book II, Vol. I, GAAM)
R. The Local Treasurer's Report of Accountability for Accountable Forms. -Collectors/Tellers and other accountable officers shall render their report of accountability for accountable forms in the Report of Accountability for Accountable Forms at least once a month. Such report shall also be prepared in the case of transfer of office or accountability by the accountable officer. The Local Treasurer shall summarize/consolidate these reports in the Consolidated Report of Accountability for Accountable Forms, and submit the consolidated report accompanied by the individual reports to the Unit Auditor concerned not later than the fifth day of the ensuing month. (Sec. 37, COA Circular No. 92-382)
The Barangay Treasurer shall report on his accountability for accountable forms using the Barangay Report of Accountability for Accountable Forms. The report shall be prepared at the end of each month and upon transfer of accountability of the Barangay Treasurer. All accountable forms handled by him shall be reported in the form, including under a separate caption, accountable forms issued to him for his use as a deputized Treasurer and distributed in the manner prescribed in the Barangay Accounting Manual.
S. Immediate Issuance of Notice of Loss of Accountable Forms. - Any loss of accountable forms in the custody of Accountable Officers shall immediately be reported by the Accountable Officer concerned to the Local Treasurer. The Local Treasurer shall at once
42 RIS, LTO Form 72
81
issue a circular or notice of loss for the information and guidance of all concerned to prevent the possible fraudulent use of such accountable forms. The notice to be issued shall specify
the kind, quantity, and inclusive serial numbers of the lost accountable forms and the place or places where, and approximate dates, when the same were lost.
The circular or notice of loss shall be issued only for accountable forms especially designed for the exclusive use of the local government unit.
The Local Treasurer 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. (Sec. I 00 , Book II, Vol. I, GAAM)
An accountable officer found to have caused the issuance of official receipts reported by him to have been lost in the performance of his duties, and for which the money value of the official receipts in question was not remitted, shall be liable therefor without prejudice to the filing of administrative and criminal charges against him in accordance with the provisions of civil service rules and regulations and penal laws.
T. Submission to COA Auditor of Obsolete, Spoiled, and Cancelled Accountable Forms. -Accountable officers shall submit to the 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 any accountability.
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In the case of obsolete accountable forms with or without fixed money value, the accountable
officer shall submit to the Unit Auditor an inventory in four ( 4) copies.
In the case of spoiled or damaged accountable forms which have fixed value, the accountable officer shall submit an affidavit in four (4) copies stating:
l) The denomination and the total value of the forms; and
2) The reason for the damage and the circumstance surrounding the cause of such
damage or the reason for cancelling 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 fonns, and make a certificate on such actions below the affidavit or inventory. The destruction shall be witnessed and certified to by the accountable officer or Local Treasurer. 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 (l) 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 retain the original copy.
In the case of spoiled or cancelled accountable forms which do not bear fixed money value, such as printed official receipts, Gen. Form No. 51, etc., the accountable officer shall submit the cancelled original and duplicate copies with the Report of Collections with such cancellation properly noted on the record or abstract of collection 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. (Sec. 99, Book II, Vol. L GAAM)
Section 60. Daily Turnover and Verification of Collections. -
A. Daily Turnover of Collections. - At the close of the business day, Collectors/Tellers shall tum over all their collections intact to the Local Treasurer/Cashier. They shall accomplish the Report of Collections and Deposits in four (4) copies. The original and two (2) copies, together with the duplicates of official receipts issued and the cash collected, shall be submitted to the Local Treasurer/Cashier. The fourth copy of the Report of Collections and Deposits shall be retained by the collector/teller concerned Barangay Treasurers deputized to collect taxes imposed by provinces, cities, and municipalities shall follow the same procedure in submitting their collections to the Local Treasurer/Cashier concerned.
In the case of collectors assigned to the field, where travel time from their places of assignment to the Local Treasury Office is more than one (1) day, tum over of collections shall be made at least once a week or as soon as the collections reach P 5,000.00. (Sec. 26, COA Circular No. 92-382)
B. Verification of Collections and Accountable Forms. - The Local Treasurer/Cashier shall verify the Report of Collections and Deposits 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 Collector/Teller; and check the same to the new balances on hand column. He shall indicate his verification by affixing his signature at the back of the triplicate copy of the last official receipt issued. He shall count the money turned over to him and sign the certification and receipt portion of all copies of the Report of Collections and Deposits. (Sec. 27, COA Circular No. 92-382)
Section 61. Designation of Liquidating Officers for Collections. - (a) The Local Treasurer may designate liquidating officers from among the collectors/tellers whenever necessary. (Sec.
29, COA Circular No. 92-382)
(b) Collectors/Tellers shall turn over their collections to their designated Liquidating Officer, following the procedures prescribed in Section 60 (A) hereof. The Report of Collections and Deposits shall however 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/Teller. (Sec. 31, COA Circular
No. 92-382)
( c) The Liquidating Officer shall perform the procedures for the receipt and verification of collections turned over to him, as in Sec. 60 (B) hereof. He shall also accomplish the Report of Collections and Deposits in four (4) copies to summarize the collections turned over to him by the Collectors/Tellers as well as his own collections. (Sec. 32, COA Circular No. 92-382)
83
( d) The liquidating officer shall turn over intact the cash collections to the Local Treasurer/Cashier together with the original and two (2) copies of the Report of Collections and Deposits of Collectors/Tellers and the duplicates of the official receipts issued. The Local Treasurer/Cashier shall acknowledge receipt of the cash and all accompanying documents by signing all copies of the Report of Collections and Deposits of the Liquidating Officer on the certification and receipt portion of the form. The fourth copies of the Report of Collections and Deposits of Liquidating Officer and the Report of Collections and Deposits of Collectors/Tellers shall be retained by the Liquidating Officer. (Sec. 33, COA Circular No. 92-382)
( e) The Local Treasurer/Cashier shall deposit all collections and prepare the Report of Collections and Deposits summarizing the collections and deposits for recording in his cashbook and submission to the accountant, accompanied by all supporting documents. (Sec. 34, COA
Circular No. 92-382)
Section 62. 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. - (a) 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).
(b) All Provincial, City and Municipal Treasurers shall deposit their funds and maintain depository accounts with:
(1) Land Bank of the Philippines; and
(2) Development Bank of the Philippines.
( c) By way of exception, and subject to prior approval of the Department of Finance, Provincial, City and Municipal Treasurers may likewise deposit their funds and maintain depository accounts with banks where government has shares of stocks or which are allowed by law to be government depository banks:
(1) Philippine National Bank43
(2) Philippine Postal Savings Bank44
(3) Thrift, Rural and Cooperative Banks45
43 BSP Monetary Board Resolution No. 493, dated April 26, 2007, granted PNB authorihJ to accept government deposits on a continuing basis.
44 Subsidiary of Philippine Postal Corporation, created under R. A. No. 7354 (Postal Service Act of 1992). 4s May act as official depository of local government funds pursuant to R. A. Nos. 7906 (Thrift Banks Act of 1995);
7353 (Rural Banks Act of 1992; and 6938 (Cooperative Code of the Philippines).
84
(4) Al Amanah Islamic Investment Bank of the Philippines46
(5) Philippine Veterans Bank47
In all other cases, the Provincial, City and Municipal Treasurers shall secure the pnor approval of the Department ofFinance.48
( d) Local government units requesting authority to open and maintain depository accounts with banks other than authorized government-owned depository banks shall comply and submit to the Bureau of Local Government Finance, Central Office the following documents for proper approval of the Department of Finance 49
:
( 1) A Resolution of the local sanggunian concerned, authorizing the LGU to open and maintain depository account with non-government-owned depository bank with the approval of the Local Chief executive;
(2) A Certification from the LGU concerned on the absence of any governmentowned depository bank located in or nearest its area of jurisdiction;
(3) A Certification to the effect that the Philippine Government owns shares of stocks in the proposed depository bank or is allowed by law to be a government depository bank;
( 4) An Accreditation issued by the Monetary Board of the Bangko Sentral ng Pilipinas in favor of the proposed depository bank to accept government deposits for the current year; and
(5) A Certification of the proposed depository bank that no elective or appointive local government official of the LGU concerned is a director, officer or stockholder of said bank, unless certified that it is the only bank existing therein.
(e) The barangay shall maintain only one depository account in the name of the barangay, either as a trust fund with the city/municipal treasury, or in a current account with a government-owned bank located within or nearest its area of jurisdiction or any bank accredited by the Bangko Sentral ng Pilipinas as local government depository bank. The choice of a depository bank for barangay funds shall be subject to the authorization of the Sangguniang Barangay and approval of the Punong Barangay.
C. Daily Deposit of Collections with the Banks. - (a) The Local Treasurer/Cashier shall deposit intact all his collections, as well as all collections turned over to him by the Collectors/Tellers with the authorized depository bank daily or not later than the next banking day. He shall record all deposits made in the Cashbook- Cash in Treasury and Cashbook-Cash in Bank.
46 Authorized to accept government deposits under R. A. No. 6848 (Al Amanah Islamic Bank Charter. 47 Authorized to accept government deposits under R. A. No. 7169. 48 DOF Order No. 27-05, December 9, 2005 49 BLGF Memorandum Circular No. 03-2006, dated Februan; 20, 2006
85
In the case of municipalities where travel time to the depository bank is more than one ( 1)
day, deposit of collection shall be made at least once a week, or as soon as the collections reach P 10,000.00. (Sec. 28, COA Circular No. 92-382)
(b) The Barangay Treasurer shall deposit all collections with the city or municipal treasury or in the depository account maintained in the name of the barangay within five (5) days after
receipt thereof (Sec. 334 (a), LGC). He shall likewise record all deposits in the Cashbooks maintained for Cash in Treasury and Cash in Bank.
D. Deposit of Field Collections. - 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.
E. Time Deposit Accounts. - (a) 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. (Sec. 21, COA Circular No. 92-382)
(b) Idle funds shall mean available cash which the local government unit can freely invest in government securities and/or fixed term deposits with authorized government depository
banks, after having provided or earmarked funds for regular and recurring operating expenses like salaries and wages, repairs and maintenance, inventories and supplies, debt servicing, 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 and funds set aside for the payment of obligations to other local government units, government agencies and private entities shall not form part of idle funds. (Sec. 22, COA Circular No. 92-382)
F. Bank Statements/Snapshots. - Bank statements and/or snapshots of bank transactions transmitted to the Local Treasurer by the depository bank shall be immediately 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 also be furnished immediately to the Local Treasurer. In case the bank
statements are not readily available, a snapshot of the local government unit transactions may be obtained by the Local Treasurer from the bank as basis in updating/recording of entries in
the Local Treasurer's Cashbook and for reconciliation purposes.
G. Remittance of Collections to Other Local Government Units. - Collections made by Provincial, City, or Municipal Treasurers for other government units shall be promptly
remitted to the government units concerned. At least once a week, the Accountant concerned
shall prepare the disbursement voucher covering such remittances and the supporting
statements containing the complete descriptions of the collections being remitted. The disbursement vouchers and their supporting documents, duly certified by the Accountant,
86
shall be transmitted to the Local Treasurer for certification as to availability of fund50s, and forwarded to the Local Chief Executive or the duly authorized official for approval. The disbursement vouchers and statements shall then be returned to the Local Treasurer for the preparation of the checks to cover the remittances. The checks duly approved or signed, each accompanied by a copy of the corresponding statements, shall be transmitted to the local government units concerned immediately but not beyond the period prescribed by said units. The recipient local government units/national agencies/financial institutions or their duly authorized collecting agents shall acknowledge the remittances by the issuance of official receipts. (Sec. 36, COA Circular No. 92-382)
H. Remittances of Collections to Other Local Government Units through Inter-Bank
Transfer.51
- Aside from check remittances, collections made by local government units intended for other local government units, such as the share of the municipality or province from the collections of real property taxes, may be remitted to the concerned local government unit by means of bank-to-bank transfer. This method facilitates the transfer and receipt of the local government units' corresponding shares in real property taxes and other taxes. The procedure in the inter-bank transfer shall follow the same procedure as in the remittance through check as follows:
1) Preparation of disbursement voucher with supporting documents by the accountant at least once a week;
2) Approval of the disbursement voucher by the local chief executive or duly authorized official;
3) Preparation by the Cashier/Treasurer of the Advice for Bank Transfer, duly approved by the local chief executive, authorizing the transfer of funds from the bank account of the province/city/municipality for credit to the bank account of the province/municipality/barangay.
4) Acknowledgment by the recipient local government unit of the receipt of the fund transfer by furnishing the remitting local government unit a copy of the bank credit advice/memo.
Section 63. Maintenance and Use of the Cashbook by Local Treasurers, Cashiers,
Liquidating Officers, Tellers, Collectors and Other Local Accountable Officers.
A. The Treasurer's Cashbooks. - The Treasurer shall maintain the following cashbooks:
1) Cashbook- Cash in Treasury.52
- The Cashbook for Cash in Treasury shall be used by the Local Treasurer/Cashier to record the daily collections (Debit Column) and deposits to the bank (Credit Column) based on the Report of Collections and Deposits. The
so COA Circular No. 2006-002, January 31, 2006 51
The process/low for the receipt, collection, remittance, deposit and recording of RPT is shown in LTD Annex 4 of
this Manual. s2 LTO Fann 5
87
cashbook shall be maintained by fund and shall be updated and balanced daily.(Sec. 378,
NGAS for LGUs53
)
2) Cashbook - Cash in Bank.54
- The Cashbook for Cash in Bank shall be used by the Local Treasurer/Cashier to record all deposits of collections (Debit Column) and withdrawals thru checks issued from the banks(Credit Column) for the day. Separate cashbooks shall be maintained for each depository bank account and by fund, and shall be updated and balanced daily.(Sec. 379, NGASfor LGUs)
3) Cashbook-Cash Advances.55
- The Cashbook for Cash Advances shall be used by the Local Treasurer/Cashier/Disbursing Officer to record cash advances received (Debit Column) and payments, refunds and adjustments (Credit Column), and the balance (Balance Column).(Sec. 380, NGAS for LG Us)
B. The Liquidating Officer's Cashbook.56 - The Liquidating Officer's Cashbook shall be used
by the designated Liquidating Officer to record all collections turned over to him by Tellers, Field and Market Collectors (Debit Column), and remittances to the Local Treasurer/Cashier (Credit Column). Separate cashbooks shall be maintained for each fund and shall be updated and balanced daily.
C. The Teller's/Collector's Cashbook.57 - The Teller's/Collector's Cashbook shall be
maintained by individual Tellers, Field and Market Collectors and other authorized personnel receiving collections outside of the local government office, to record all collections received (Debit Column) and all remittances to the designated Liquidating Officer (Credit Column).
D. Daily Recording in the Cashbook. - At the end of each 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.
E. Accountable Officer's Certificate of Transactions in the Cashbook. - Local Treasurers/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 m my capacity as (designation) of (Name of the LGU) , during the
53 New Government Accounting System Mnnunl for Local Government Units 54 LTO Fann 6
55 LTO Form 7
56 LTO Form 8 57 LTO Fann 9
88
period from , 200_, to __ __ _ _ _ __ , 200_, inclusive, as indicated in the corresponding columns.
(Signature Over Printed Name)
Title ----- - - --' 20_"
F. Reconciliation of Cashbook Balances. - All accountable officers required to maintain a cashbook shall reconcile his 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 Accountant at the end of the month or as required by competent authority.
G. 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.
Section 64. Forms and Reports Used by Local Treasury Officials:
A. Report of Collections and Deposits58
• - The Report of Collections and Deposits shall be prepared daily by the following:
l) Tellers/Collectors - for collections received and remittances made to the designated Liquidating Officer, if any, or to the Cashier/Local Treasurer.
2) Liquidating Officers - for collections received from Tellers/Collectors and remittances made to the Cashier/Local Treasurer.
3) Local Treasurer/Cashier - for collections received from Liquidating Officers, taxpayers and other sources, and deposits to the depository banks.
The Report of Collections and Deposits shall include a report of accountability for accountable forms showing the name of the forms and number, beginning balance, received, issued and ending. It shall also contain a summary of collections and remittances/deposits and breakdown of collections as to cash and details of checks received.
The Accountable Officer shall certify as to the correctness of the report. The Liquidating Officer/Local Treasurer shall verify the report and acknowledge receipt of collections and remittances. (Sec. 384, NGAS for LGUs) For Real Property Tax payments, separate Report of Collections and Deposits shall be prepared for collections pertaining to the Basic Tax and the Additional Tax accruing to the Special Education Fund. In case of Real Property Tax payments in municipal treasuries,
ss RCD, LTO Form 12
89
additional copies of Report of Collections and Deposits for the Basic Tax and SEF shall be prepared for submission to the Provincial Treasurer as reference in the computation of the province's share therefrom. The procedures to be followed in the filling-up the form shall be the same.
The Report of collections and Deposits shall be distributed, as follows:
Original
Duplicate Triplicate Quadruplicate Additional Copy
Auditor Local Treasurer Collecting Officer Liquidating Officer (in case one is so designated) Local Treasurer
B. Report of Accountability for Accountable Forms.59 - The Report of Accountability for
Accountable Forms shall be used to report the quantity of accountable forms received, issued or cancelled by the Accountable Officer as of the end of the month.
Collectors/Tellers and other Accountable Officers shall render this Report of Accountability for Accountable Forms at the end of the month for consolidation by the Local Treasurer. Such report shall also be prepared in case of transfer of office or accountability by the Accountable Officer. (Sec. 397, NGASfor LGUs)
C. Consolidated Report of Accountability for Accountable Forms60• - The Consolidated
Report of Accountability for Accountable Forms shall be prepared by the Local Treasurer to consolidate the Report of Accountability for Accountable Forms of Accountable Officers. The consolidated report accompanied by the individual reports shall be submitted to the Unit Auditor concerned not later than the fifth (5111) day of the ensuing month for verification.
(Sec. 398, NGASfor LGUs)
D. Other Reports/Records Required by the Bureau of Local Government Finance.61
- (a)
The following reports/records shall be prepared and submitted by the Local Treasurer to the Bureau of Local Government Finance:
Title of Report
]. Statement of Receipts and Expenditures 62
2. Statement of Receipt Sources 3. Economic Enterprises Statement of Financial Operations 4. Municipality/City Quarterly Report on Real Property Tax Collections 5. Provincial Quarterly Report on Real Property Tax Collections 6. Statement of Expenditures 7. Statement of Indebtedness, Payment and Balances 8. Ouarterlv Report of Collections on Business Tax, Fees and CharKes
59 RAAF, LTO Form 10 60 CRAAF, LTO Form 11
Frequency of Submission
Quarterly Quaiterly Quarterly Quarterly
Quarterly Quaiterly Quarterly
61 Refer to BLGF Statement of Income and Expenditures (SIE)/Statement of Receipts and Expenditures (SRE) Manual.
90
and Economic Enterprise Quarterly
(b) The following financial records, however, shall also be maintained by the Local Treasurer for monitoring and control purposes:
1) Record of General Collections. - The Record of General Collections covers the following:
1. Tax on Business 11. Regulatory Fees
111. Other Taxes 1v. Service or User Charges v. Grants and Donations v1. Loans and Borrowings
v11. Fund Transfers
2) Record of Real Property Tax Collections
3) Real Property Tax Account Register63
Section 65. Policies, Rules and Procedures on Barangay Collections, Remittances and
Deposits.
A. Basic Policies on Receipt of Barangay Collections:
(1) The Barangay Treasurer shall be responsible in handling collections of income and other receipts of the barangay and the deposit thereof with Authorized Government Depository Bank64
.
(2) All collections, either in cash or in check, shall be acknowledged by the issuance of a prenumbered Official Receipt - General Form or its equivalent like the Real Property Tax Receipts and the Community Tax Certificate,
65 subject to property custody, accountability and audit.
(3) Temporary or provisional receipts shall not be issued to acknowledge collections.
( 4) All accountable forms shall be secured from the City/Municipal Treasurer.
(5) All checks shall be in the name of the barangay.
62The detailed discussion on the preparation and submission of the Statement of Receipts and Expenditures (SRE),
formerly titled Statement of Income and Expenditures (SJE). and all supporting schedules, reports, and records is contained in the BLGF SJ EIS RE Manual. The format for the SR Es is shown in Annex 14 of this Manual.
63 RPTAR
64AGDB
65 CTC
91
(6) Endorsed checks shall not be accepted as payment of obligations to the barangay.
(7) For checks received, the Official Receipt number and date of issue shall be indicated at the back of the check for reference purposes.
(8) All particulars in the Official Receipt shall be filled out. Duplicate and Triplicate copies thereof shall be the exact carbon copy of the Original.
(9) Overages discovered during the cash count/cash examination shall be receipted and added to the accountability of the Barangay Treasurer.
(10) Cash shortages, including the loss of cash through force majeure, theft, robbery, fire, etc., shall be deducted from the total cash account of the Barangay Treasurer/ Accountable Officer and shall be held personally accountable, pending the result of the Request for Relief from Cash Accountability submitted to the Commission on Audit.
( 11) All collections by the Barangay Treasurer for the barangay shall be reported 111 the Summary of Collections and Deposits.
8. Policies and Procedures for Deposit of Barangay Collections:
92
(1) The Barangay Treasurer shall deposit all his collections including those turned over by the deputized Barangay Collectors with the Authorized Government Depository Bank intact daily or not later than the following banking day. In the case of a barangay where travel time to the depository bank is more than one ( 1) day, deposit of collections shall be made at least once a week or as soon as the collections reach P 10,000.00.
(2) In the absence of an Authorized Government-Owned Depository Bank, deposits may be made in any bank nearest the barangay and authorized by the Monetary Board (MB) of the Bangko Sentral ng Pilipinas as government depository bank.
(3) The selection of a depository bank other than the Authorized Government-Owned Depository Bank shall be covered by a resolution of the Sanggunian Barangay) and approved by the Punong Barangay). The Sanggunian Barangay Resolution shall indicate the name of the bank, the type of deposit to be maintained, whether current, savings or time deposit and the authorized signatories to the checks/fund withdrawals.
( 4) Funds earmarked for future operation which are not immediately needed may be transferred to time deposit account of the barangay. Placement in time deposits shall be duly authorized by the Sangguniang Barangay and approved by the Among Barangay. Certificate of time deposit/bank book shall be in the name of the barangay. Upon maturity, the check for the proceeds shall be issued in the name of the barangay. Pretermination of time deposit or its renewal/roll-over shall have prior authorization of the Sangguniang Barangay and approval of the Punong Barangay.
4) In case of dishonored check, Notice of Dishonor shall be immediately sent to the payor upon receipt of the Debit Memo and the dishonored check from the bank.
5) The original of the dishonored check and a copy of the bank Debit Memo shall remain with the Barangay Treasurer.
6) All deposits by the Barangay Treasurer for the barangay shall be reported m the Summary of Collections and Deposits.
C. Policies and Procedures on the Receipt and Remittance of Collections by the Barangay Treasurer as Deputized by the City/Municipal Treasurer:
(1) The City/Municipal Treasurer shall issue a written authority deputizing the Barangay Treasurer to collect Real Property Tax, Community Tax Certificate, etc., on his behalf.
(2) Collections made by the Barangay Treasurer as deputized on behalf of the City/Municipal Treasurer, shall be remitted intact daily to the City/Municipal Treasurer.
(3) For a barangay where travel time to the City/Municipal Treasurer's Office is more than one ( 1) day, remittance of collections shall be made at least once a week , or as soon as the collections reach P 5,000.00.
( 4) All remittances shall be supported by a Summary of Collections and Remittances.
(5) The Barangay Treasurer shall be accountable for all the forms received from the City/Municipal Treasurer for use in the collection.
D. Policies and Procedures on the Receipt and Remittance of Collections by the Barangay Collector as deputized by Sangguniang Bayan:
( 1) The Sangguniang Bayan shall issue a resolution deputizing the Barangay Collector to collect market fees, parking fees, community tax, etc., on behalf of the Barangay Treasurer.
(2) Collections of the deputized Barangay Collector shall be remitted daily to the Barangay Treasurer.
(3) All remittances shall be supported with Summary of Collections Report and Report of Accountability for Accountable Forms.
( 4) The deputized Barangay Collector shall be accountable for all forms received from the Barangay Treasurer.
Section 66. Direct Remittance to Barangay Bank Account. - Credit Memo received from the bank for direct remittance made by local government units or the Department of Budget and Management for the barangay share in Real Property Tax or the Intern�! Revenue Allotment,
93
respectively, shall be recorded direct to the Cash on Hand and in Bank Register and in the Cash Receipts and Deposits Register.
Section 67. Recording of Receipt, Deposits and Remittances of Barangay Collections.66
-
A. Recording in the Summaries:
(1) Summary of Collections and Deposits67
a) Collections and deposits by the Barangay Treasurer of the barangay shall be recorded in the Summary of Collections and Deposits daily or as transaction occurs.
b) Issued official receipts including those cancelled shall be recorded m correct numerical sequence.
c) Deposits shall be based on Validated Deposit Slip68 which shall be recorded as deposits are made.
d) Collections and remittances by the deputized Barangay Collector recorded in the Summary of Collections and Deposits shall be recorded in the Summary of Collections and Deposits of the Barangay Treasurer daily or as transaction occurs.
e) Collections and remittances by the deputized Barangay Collector recorded in the Summary of Collections and Remittances-Barangay Treasurer69 shall also be recorded in the Summary of Collections and Deposits.
f) The Summary of Collections and Deposits shall be sub-totaled daily.
g) The daily sub-totals of the Summary of Collections and Deposits shall be recorded in the Cash on Hand and in Bank Registers maintained by the Barangay Treasurer.
h) Weekly, the Summary of Collections and Deposits shall be totaled, balanced and ruled and submitted to the BRK supported by the duplicated copies of the official receipts issued and the original of the validated deposit slips.
i) Receipt of the certified Summary of Collections and Deposits and its supporting documents shall be acknowledged by the Barangay Record Keeper.70
66The detailed narrative.flow of procedures on the receipt, deposit and recording of barangay collections are shown in LTO Annexes 22, 23, 24, and 25.
67 SCD, LTO Form 19 68 VOS
69 SCR-BT, LTO Form 20
70 BRK
94
j) The Summary of Collections and Deposits shall serve as basis of the BRK in recording the weekly collections and deposits in the Cash Receipts and Deposits Register.
(2) Summary of Collections and Remittances71
a) Barangay Treasurer as deputized by City/Municipal Treasurer -
1. Collections of Barangay Treasurer shall be recorded daily in the Summary of Collections and Remittances-Barangay Treasurer or as a collection is made.
11. Issued Official Receipts, Community Tax Certificates, Real Property Tax Receipts including cancelled ones shall be recorded in correct numerical sequence.
m. Remittance of collection to the City/Municipal Treasurer shall be covered by a certified Summary of Collections and Remittances supported by the duplicate copies of the issued Official Receipts.
1v. Remittances shall be done daily, which shall be acknowledged by the City/Municipal Treasurer in the appropriate portion of the Summary of Collections and Remittances. For a barangay where the travel time to the city/municipality is more than one (1) day, remittance of collections shall be made at least once a week or as soon as collection reaches P 5,000.00.
b) Barangay Collector as deputized by Sangguniang Bayan -
1. Collections of deputized Barangay Collector as deputized by the Sangguniang Bayan shall be recorded daily in the Summary of Collections and Remittances-deputized Barangay Collector as collections are made.
11. Issued Official Receipts and accountable forms with money value shall be recorded in batches showing the inclusive serial numbers (if available), quantity issued and the total amount collected.
m. Remittance of collections to the Barangay Treasurer shall be covered by the certified Summary of Collections and Remittance supported by duplicate copies of the Official Receipts issued.
1v. Remittances shall be done daily which shall be acknowledged by the Barangay Treasurer in the appropriate portion of the Summary of Collections and Remittances.
B. Recording in the Registers:
71 SCR-DBC (Deputized Barangay Collector, LTO Form 21
95
1) Cash Receipts and Deposits Registe/2
a) The Barangay Record Keeper shall record weekly all receipts in the Cash Receipts and Deposits Register based on the Summary of Collections and Deposits.
b) Bank credits and interest earned shall be recorded in the Cash Receipts and Deposits Register by the Barangay Record Keeper, based on the bank Credit Memo.
c) At the end of the month, the Cash Receipts and Deposits Register shall be totaled, balanced, ruled, recapitulated and certified.
d) The certified Cash Receipts and Deposits Register together with the Summary of Collections and Deposits shall be submitted to the City/Municipal Accountant on or before the 5
th day of the following month.
2) Cash on Hand and in Bank Register73
a) The Barangay Treasurer shall record all collections and deposits in the Cash on Hand
and in Bank Register daily based on the Summary of Collections and Deposits.
b) Bank credits/charges per Debit Memo, interests earned and withholding taxes as
reflected in the bank statement/passbook shall be recorded in the Cash on Hand and in Bank Register by the Barangay Treasurer.
c) At the end of the month, the Cash on Hand and in Bank Register shall be totaled, balanced, ruled, recapitulated and certified.
d) The certified Cash on Hand and in Bank Register shall be submitted to the City/Municipal Accountant on or before the 5
th day of the following month.
e) Balance on hand and in bank shall be forwarded to the next month's Cash on Hand and in Bank Register.
3) Report of Accountability for Accountable Forms74
a) The Barangay Treasurer shall prepare the Report of Accountability for Accountable Forms for the receipts and issuances of accountable forms and the outstanding
balance under his custody.
b) The deputized Barangay Collectors shall also prepare and submit their individual Report of Accountability for Accountable Forms daily to the Barangay Treasurer to
summarize the receipts and issuances of accountable forms under their custody.
n CRD Reg, L TO Form 15 73 CHBReg, LTO Form 16 74 RAAF, LTO Form 17
96
c) The Barangay Treasurer shall consolidate the individual Report of Accountability for Accountable Forms submitted by the deputized Barangay Collectors with his own Report of Accountability for Accountable Fonns and shall submit the certified Consolidated Report of Accountability for Accountable Fonns75 to the Barangay Record Keeper.
d) The Barangay Record Keeper shall certify the Consolidated Report of Accountability for Accountable Fonns and submit to the City/Municipal Treasurer on the fifth (5th) of the following month.
Chapter 3. EXAMINATION OF BOOKS OF ACOUNTS AND PERTINENT
RECORDS OF BUSINESSES BY THE LOCAL TREASURER
Section 68. General Provisions. - The following shall govern the examination by the Local Treasurer of books of accounts and pertinent records of businessmen:
l) Examination of Books of Accounts and Pertinent Records of Businessmen by Local
Treasurer. - Only the Local Treasurer, or his duly authorized representative, of the LGU imposing the tax, fee or charge, may examine the books of accounts and pertinent records of business in order to ascertain, assess and collect the correct amount of tax, fee or charge. (Art. 259 (a), IRR, implementing Sec. 171, LGC). Consequently, no personnel in the Office of the Local Chief Executive may inspect records of business unless duly deputized in writing by the Local Treasurer concerned.
The examination of the books of accounts and pertinent records of business is an inherent function of Local Treasurers and may be perfonned or enforced without need of an executive order from the Local Chief Executive or an implementing ordinance of the sanggunian. (BLGF ls' Indorsement to the City Treasurer of Santiago City, ·May 13, 1996)
2) Authority to Conduct Examination. - The Provincial, City, Municipal or Barangay Treasurer may, by himself or through any of his deputies duly authorized in writing, conduct the examination of the books, accounts, and other pertinent records of any person, partnership, corporation, or association subject to local taxes, fees and charges (Art. 259 (b), IRR, implementing Sec. 171, GC) in order to ascertain, assess, and collect the correct amount of the tax, fee, or charge.
The Local Government Code has not specified the rank of the officials who may be deputized to examine books of accounts of business establishments. However, under P.O. No. 231, as amended76
, only the deputies duly appointed to, and occupying positions in the plantilla of personnel as Administrative Deputy, Supervising Deputy, Senior Deputy and Junior Deputy or such other similar designations as Deputy Provincial and Municipal Treasurers of the Office of the Provincial Treasurer; or the Administrative Deputy, Senior Deputy and Junior Deputy of the Office of the City Treasurer, can be duly authorized in writing by the Provincial or City Treasurer to examine the books of accounts of business
75 Consolidated RAAF, LTO Form 18
76 Local Tax Code
97
establishments in their respective jurisdictions. Accordingly, a City Treasurer may not deputize the Administrative Officer of the Sangguniang Panlungsod to examine the books of accounts of business establishments. (DOF 81h lndorsement, October 30, 1974 to the Secretary of Local Government and Community Development)
3) Written Authority to Conduct Examination. - In case the examination is made by a duly authorized deputy of the Local Treasurer, the written authority of the deputy concerned shall specifically state the name, address, and business of the taxpayer whose books, accounts and pertinent records are to be examined, the date and place of such examination, and the procedure to be followed in conducting the same. (Art. 259 (d), IRR implementing Sec. 171, LGC)
4) Time, Frequency and Certification. - The examination of the books of accounts and pertinent records of the business of the taxpayer shall be made during regular business hours, not oftener than once a year for every tax period, which shall be the year immediately preceding the examination, and shall be certified to by the examining official. Such certification shall be made of record in the books of accounts of the taxpayer examined. (Art. 259 (c), IRR implementing Sec. 171, LGC)
The tax period that may be examined by the Local Treasurer or his duly authorized representative is limited to the year immediately preceding the date of examination. The intent of the law is to remind Local Treasurers that they should examine every year the books of accounts of the businesses within their jurisdiction to ascertain the correctness of the amounts of business taxes paid. It may be implied that past years' accounts may no longer be looked into to prevent undue harassment of the business sector by examiners. (BLGF Letter, August 27, 1991 to Republic-Asahi Glass Corporation)
5) Access to the Bureau of Internal Revenue Records. - The records of the Revenue District Office of the Bureau of Internal Revenue shall be made available to the Local Treasurer, his deputy or duly authorized representative.78 (Art. 259 (e), !RR implementing Sec. 171, LGC)
Section 69. Guidelines in the Conduct of the Examination. -
A. Administrative Preparation by the Local Treasurer/Head of the Local Treasury Office. - Prior to the conduct of any examination of the books of accounts of a business establishment, the Local Treasurer or Head of the Local Treasury Office concerned shall undertake the following steps:
(1) From the list of business taxpayers, the Local Treasurer chooses the business entities that will be verified and examined based on several factors such as: complexity of the business, materiality and volume of prior years' gross sales, number of sales/distribution outlets, delinquency in payment of business taxes and other relevant factors.
(2) The Local Treasurer shall create the Examination Team to be composed of staff from the Local Treasury Office and/or deputized staff from other offices of the local government
78 Refer to E. 0. No. 646, Accessibility of Information on Taxpayers Between the BIR and the LGU for Tax Collection Purposes.
98
unit concerned. The Team shall be headed preferably by a Certified Public Accountant or one who is a holder of the degree of Bachelor of Science in Commerce major in Accounting.
(3) The Local Treasurer shall issue the Office Order, designating the Team Leader and the members of the Examining Team, copy furnished the Local Chief Executive.
(4) Preferably, a pair of deputized Examiners shall conduct the examination of the accounts of business establishments. However, in order to cover more establishments, the
examination may be done by a lone deputy.
(5) No deputized Examiner shall be assigned to the same business establishment he had examined the previous year.
(6) The Local Treasurer shall prepare the Notification Letter, addressed to the business taxpayer, informing him of the examination/inspection to be conducted by the LGU Examination Team. A formal reply from the business taxpayer should be required before the examination date will be scheduled.
(7) The Local Treasurer shall prepare the Letter of Appointment, addressed to the business taxpayer, indicating the exact date of the examination visit, documents to be examined, year to be covered by the examination, and the names and signatures of the Members of the Examining Team.
(8) The Letter of Authority/ Appointment78 shall also be prepared and signed by the Local Treasurer and shall serve as the authority of the Examining Team to conduct the examination of the business taxpayer's records, which shall be signed by the Local Treasurer and the members of the team. The Letter of Authority shall be served to the business taxpayer immediately after receipt thereof by the deputized Examiners.
(9) In case the Letter of Authority cannot be served, the deputized Examiner concerned shall report the matter to the Team Leader/Immediate Supervisor, citing the reason(s) for the inability to serve the Letter of Authority. If the reason/cause is meritorious, the Team Leader/Immediate Supervisor shall request for another business establishment to examine. All unserved Letters of Authority shall be returned within ten ( 10) days after the end ofthe examination period.
B. Responsibilities of the Examination Team:
(I) The Examination Team shall prepare the audit/examination program, detailing the objectives and procedures to be performed during the conduct of the examination, copy furnished the Local Chief Executive for his information.
78 LOA, LTO Form 26
99
(2) The designated Team Leader shall exercise close supervision over the members of the team in the conduct of the examination and shall ensure that they conduct themselves at all times with proper decorum.
(3) Deputized Examiners shall wear their prescribed uniforms, if any, when conducting the examination. They shall properly identify themselves to the owner or manager of the business establishment by presenting their official Identification Cards in serving the Letter of Authority together with the Letter of Appointment.
( 4) In case the books of accounts and other records are not available on the first visit, another appointment with the business owner/representative should be made not later than three
(3) days after serving the Letter of Authority.
(5) The books of accounts and pertinent records shall be handled with care. Deputized Examiners shall avoid making any tick marks or writings on the same, except for the certification that said books of accounts have been examined, date examined, and the signature of the Deputized Examiner after the last entry.
(6) Where the examination of the books of accounts and other records could not be accomplished in one ( 1) day, the deputized Examiner shall indicate on the Tax Data and Assessment Form, the date and time when the examination started and when terminated.
(7) If at the time of examination of a business entity, the owner or representative cannot be contacted or could not produce the pertinent records and books of accounts needed for the examination, this fact must be noted by the Examination Team in the Tax Data and Assessment Form. In case similar circumstances occur during the second and third visits, the same facts should be noted in the Tax Data and Assessment Form, indicating the time and date of each visit. The notation shall also be made in the original copy of the Letter
of Authority.79
(8) The deputized Examiners shall perform the following activities:
1. Review of pertinent records of the business establishment to be examined such as Articles of Incorporation and By-Laws, SEC/DTI Registration, minutes of board meetings, etc.;
11. Review of the working papers, if any, of the business establishment if
previously examined;
111. Submission to the Owner/President of the business establishment to be examined the Letter of Appointment/ Authority to conduct the examination; and
79 Refer to LTO A1111exes 33 and 34 for the pro-fon11a notices in case of non-prese11tatio11 of documents for exam i 11atio11
100
1v. Acceptance of the following books of accounts and documents for verification/examination:
l. Mayor's Permit for current year; 2. Business License Receipts for current year; 3. Books of Accounts such as Sales Journals/Registers, Purchase
Journals/Registers, Cash Receipts/Disbursement Journals/Registers, General Ledgers, Subsidiary Ledgers;
4. Audited or Unaudited Financial Statements (Income Statement, Balance Sheet and Cash Flow Statement);
5. Privilege Tax Receipt (PTR) 6. Community Tax Receipt 7. Official Receipts, Cash/Charge Sales Receipts/Invoices, Order Slips,
Delivery Receipts, Debit/Credit Memos, Sales Returns 8. Purchase Receipts/Invoices 9. Articles of Incorporation l 0. Quarterly non-VAT returns I I . Monthly VAT receipts 12. Others such as Beginning and Ending Merchandise Inventory Reports,
Stock Cards, and such other reports relevant to the business taxpayer's operations
C. Detailed Audit Activities:
I) For Sales Accounts -
a) Compare/Validate the amount of Gross Sales/Receipts account on the Income Statement with the sales account in the General Ledger;
b) Check posting to the General Ledger from Sales Journals/Cash Receipts Journals and other books where sales or service income are reflected;
c) Verify the entries in the Sales Journals/Cash Receipts Journals and other books of accounts from the sales invoices/delivery receipts/provisional and/or official
receipts and other documents showing the sales or receipts of income revenues (at random);
d) Confirm the income/revenues from the customers' Records of Sales/Receipts (at random); and
e) Compute the correct Gross Receipts/Sales based on the sales records examined.
2) For Purchase Accounts -
a) Verify the amount of purchases reflected 111 the Income Statement from the General Ledger;
IOI
b) Check posting to the General Ledger from Purchases/Cash Payments Journals; and
c) Verify entries in Purchases/Cash Receipts Journals with purchase documents (at random);
3) For Inventory -
a) Check beginning and ending inventory on Financial Statement with General Ledger balance;
b) Verify computation of the ending balance of the Inventory Account by comparing
it with the last physical inventory count conducted;
c) If warranted, inspect at random material items in the inventory and check against the physical inventory count; and
d) Observe the volume of customers, sales act1v1t1es and deliveries of the business entity to have a sense of daily sales volume.
4) Other Examination Activities -
a) Maintain files of the necessary examination working papers;
b) Secure a copy of the Schedule of Account Receivables/Payables for succeeding examination of the books of accounts of the business entity; and
c) Verify the amount shown on the Schedule of Account Receivables/Payables from the individual Subsidiary Ledgers.
D. Preparation of Working Papers and Tax Data and Assessment Form:
I) Tax Data Working Papers or Tax Data Sheet.so - This working paper shows the comparison between the gross receipts/sales declared per business permit application and the gross receipts/sales as appearing in the sales documents examined. The amount of the understatement or overstatement in gross receipts/sales is likewise presented in the working papers.
2) Tax Data and Assessment Form.s 1 - This shall be accomplished in triplicate and
submitted by the deputies to their immediate supervisor for every examination and inspection conducted. It contains all the pertinent information on the business concerned and the detailed findings of the deputies. This form shows the· detailed computation of the additional assessment for business tax based on the computed understatement of
so TDS, LTO Form 27
s1 TDAF, LTO Form 28
102
sales/receipts declared in the business permit application, the amount of surcharges and penalties, the interest on the deficiency tax assessed, as well as the signatures of the Examination Team and the Local Treasurer. The Tax Data and Assessment Form shall be attached to the Letter of Authority and shall be submitted to their immediate supervisor for review before submission to the Local Treasurer for approval. The original copy of the Tax Data and Assessment Form shall be given to the business taxpayer concerned.
4) Issuance of the Letter of Assessment/Assessment Notice82
(1st Notice) signed by the
Local Treasurer to the business taxpayer, showing the amount of tax deficiency inclusive of penalties, surcharges and interest resulting from the conduct of the examination. A Second Assessment Notice83 may be sent to the taxpayer in case he fails to respond to the first notice. A Third Assessment Notice
84 (a maximum of three (3) notices) may be
sent before a Final Demand for Payment85 and possible foreclosure proceedings may be issued to the taxpayer. In accordance with Section 195 of the Local Government Code of 1991, the taxpayer, within sixty (60) days from receipt of the Letter of Assessment, may file a written protest with the Local Treasurer contesting the assessment; otherwise the assessment shall become final and executory.
5) Issuance of the Letter of Confirmation86/Certificate of Confirmation87/Certificate of
Examination88 to the business taxpayer signed by the Local Treasurer to signify the
completion of the examination conducted. The original copy of the Letter of Confirmation/Certificate of Examination shall be issued to the taxpayer concerned and the duplicate copy shall be attached to the Tax Data and Assessment Form for file at the
Local Treasury Office.
6) Submission to the Local Chief Executive by the Local Treasurer of the list of final demand letters sent to business taxpayers for possible foreclosure proceedings.
82 ]st Assessment Notice, LTD Form 29
83 2"" Assessment Notice, LTD Form 30 84 3rd of Final Assessment Notice, LTD Form 31 85 Final Notice before issuance of Warrant of Distraint and Levy, LTD Form 32
86 Letter of Confirmation, LTD Form 35 87 Certificate of Confirmation, LTO Form 36 ss Certificate of Examination, LTO Form 37
103
104
LOCAL TREASURY OPERA TIO NS
MANUAL
EXPENDITURES
AND
DISBURSEMENTS
BOOK THREE
Chapter 1. CONCEPT OF FUNDS89
Section 70. Definition of Fund. - "Fund" is 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. 306 (h), LGC)
"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)
Section 71. General Classification of Funds. - Government funds are generally classified into General Fund, Special Fund and Trust Fund. Jn the Local Government Units, the classifications of funds are as follows:
A. Local Funds - Every local government unit shall maintain a General Fund which shall be used to account for each 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. 308, LGC)
Special Accounts shall be maintained in the General Fund for the following:
1. Public utilities and other economic enterprises;
11. Loans, interests, bond issues, and other contributions for specific purposes; and
111. 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.
Receipts, transfers, and expenditures involving the foregoing special accounts shall be properly taken up in the accounts of the respective Special Accounts.
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)
89 The discussion under ex pen di tu res and disbursements includes a brief but concise discussion of the concept of funds which are the very subject of expenses and disbursements, the concept of appropriations, al/ot111ents, and obligations whic/1 constitute the budgetary stages before expenditures and disbursements take place, as well as the related internal control guidelines to ensure good governance and accountability. On the other hand, the revised complete budget process for LG Us is already thoroughly discussed in the Updated Budget Operations Manual (UBOM) for LG Us promulgated by the Department of Budget and Management.
105
No separate books of accounts shall be maintained for these special accounts. Transactions pertaining thereto shall be recorded in the General Fund books. (Sec. 353, NGASfor LGUs)
B. Special Funds - There shall be maintained in every provincial, city or municipal treasury the following special funds:
1) Special Education Fund90
- (a) Special Education Fund shall consist of the respective shares of provinces, cities, municipalities and barangays in the proceeds of the additional one percent (1 %) tax on real property (Sec. 309 (a), LGC), which shall be automatically released to the local school boards. Provided, that, in case of provinces, the proceeds shall be divided equally between the provincial and municipal school boards. Provided, however, That the proceeds shall be allocated for the following purposes as determined and approved by the Local School Board:
a) operation and maintenance of public schools; b) construction and repair of school buildings, facilities and equipment; c) educational research; d) purchase of books and periodicals; and e) sports development. (Sec. 272, LGC)
The corresponding budget shall be prepared by the Local School Board, which shall authorize the Local Treasurers concerned to disburse the funds from the Special Education Fund.
2) 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 as trustee, agent or administrator, or which have been received as guaranty for the 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 (b), LGC)
Section 72. Fundamental Principles Governing Utilization of Local Funds. - The utilization of local funds 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; (Sec. 305 (a), LGC)
b) Local government funds and monies shall be spent solely for public purposes; (Sec. 305 (b),
LGC)
c) 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; (Sec. 305, (e), LGC)
d) Fiscal responsibility shall be shared by all those exercising authority over the financial affairs, transactions, and operations of the local government units; (Sec. 305 (/), LGC)
90 SEF
106
e) Claims against government funds shall be supported with complete documentation; (Sec. 138 (!), Book Ill, Vol. I, GAAM)
f) No contract involving the expenditure of public funds shall be entered into unless there is an appropriation therefor, the unexpended balance of which, free of other obligations, shall be sufficient to cover the proposed expenditure; (Sec. 85 (]), P. D. No. 1445)
g) Expenditures of government funds or uses of government property in violation of law or regulations shall be the personal liability of the official or employee found to be directly responsible therefor; (Sec. 103, P. D. No. 1445)
h) Disbursements or disposition of government funds or property shall invariably bear the approval of the proper officials; (Sec. 138 (e), Book 111, Vol. I, GAAM) and
i) All laws and regulations applicable to financial transactions shall be faithfully adhered to. (Sec. 138 (g), Book Ill, Vol. I, GAAM)
Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT AND
OBLIGATIONS/EXPENDITURES
Section 73. Definition and Types of Appropriation. - (a) "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)
(b) Generally, there are appropriations for a general purpose requiring expenditures to be made for a number of incidental purposes without specifying an exact amount for any one of the incidental purposes. There are those which go into considerable detail and limit the expenditure to certain amounts for certain very specific purposes. Specifically, appropriations may be classified, as follows: (Sec. 140, Book 111, Vol. I, GAAM)
1) Annual Appropriation. - An Annual Appropriation is an appropnatton cons1stmg of specified amounts for salaries, wages, and sundry expenses, etc., authorized by the sanggunian as necessary for the regular operations of the local government unit during any given year (Sec. 14 1 , Book 111, Vol. I, GAAM). This is also the "Annual Budget" of a local government unit which refers to a financial plan embodying the estimates of income and expenditures for one (1) fiscal year. (Sec. 306 (a), LGC)
2) Continuing Appropriation. - A Continuing Appropriation refers to an appropnatlon available to support obligations for a specified purpose or project, such as those for the construction of physical structures or for the acquisition of real property or equipment, even when these obligations are incurred beyond the budget year. (Sec. 306 (e), LGC)
3) Supplemental Appropriation - A Supplemental Appropriation is one prepared to adjust the equilibrium of the first approved budget which has been disturbed by current economic, political or social conditions, or to provide an additional amount to the original appropriation
107
which proved to be inadequate or insufficient for the particular purpose intended. (Sec. I 44, Book III, Vol. I, GAAM)
No local ordinance providing for a Supplemental Budget shall be enacted, except when supported by funds actually available as certified by the Local Treasurer or by new revenue sources.
A Supplemental Budget may also be enacted in times of public calamity by way of budgetary realignment. Such ordinance shall clearly indicate the sources of funds available for appropriations, as certified under oath by the Local Treasurer and Local Accountant and attested by the Local Chief Executive, and the various items of appropriations affected and the reasons for the change. (Sec. 321, LGC)
Section 74. Use of Appropriated Funds and Savings. - Funds shall be available exclusively for the specific purposes for which they have been appropriated. No ordinance shall be passed authorizing any transfer of appropriatior.s 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
91 from savings in
other items within the same expense class of their respective appropriations. (Sec. 336, LGC).
Section 75. The Allotment System in Local Government Units. -
A. The Local Budget - The local budget is based on estimated income and program of expenditures for a given year. It specifies annual expenditure ceilings. However, actual releases of funds and disbursements depend on the collection and receipt of funds by the local government unit.
Since funds will have to be committed and disbursed even as revenues are being collected, there is a need for a system to ensure that obligations and payments will not exceed the approved budget and the amount that will ultimately be collected is available.
Hence, we use one system of budget control which is the Allotment System to ensure that obligations incurred will not exceed appropriations or authorizations made by appropriation ordinance, directing the payment of goods and services from local government funds under specified conditions or purposes.
Under the Allotment System, obligations may be incurred as long as it is within the allotment ceiling even if the total amount of the obligation is not supported by cash in the bank at the time it is incurred. This provides flexibility in the implementation of programs and projects. (p. 87, UBOM.for LGU/2
)
B. Definition of Allotment - 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
91 For the purpose of this provision," respective offices" refer to the various departments/offices/units under either the LCE or the Local Sanggunian.
92 Updated Budget Operations Manual for Local Government Units
108
obligations for specified amounts within its appropriations (p. 87, UBOM for LG Us). The authorization is called the Allotment Release Order
93, which is a specific authority to incur
obligations not exceeding the amount for the specific purpose indicated. (p. 88, UBOM for
LG Us)
C. Control Devices Used in the Allotment System:94
I) Local Budget Matrix95
- The Local Budget Matrix is the yearly overall financial plan of the local government unit equivalent to its approved appropriation disaggregated into components or categories. The category of the expense item as reflected in the Local Budget Matrix determines the timing and magnitude of the release of allotment.
Through the Local Budget Matrix, a comprehensive authority is issued to each department/office to incur obligations not exceeding a certain amount for a specified period usually for regular/current operating expenditures. This device allows the imposition of reserves, non-release of any unprogrammed portion of the appropriation, earmarking of funds for clearance and withholding of funds for later release to provide for any shortfall in the collection of anticipated revenues.
The Local Budget Matrix classifies budgetary items under Not-Needing Clearance96,
Needing Clearance97, Reserve, Later Release, and Unprogrammed Appropriation. (p. 88,
UBOMfor LGUs)
2) Cash Program - The Cash Program must be able to facilitate the management of cash such that it is available when it is needed for payment of obligations and at the same time optimizes its utilization; ensures that released allotment are adequately covered by available cash and/or future collections; and provides information for control of expenditures and future planning of activities.98 The tools
99 used in cash programming
are the Cash Flow Forecast and the Cash Flow Analysis.
3) Physical Performance Targets - The Physical Performance Targets reflect the targeted units of work under each program/activity/project (P/ A/P) for each department/office based on the historical data of peaks and slumps of activities/tasks and the peculiar requirements of certain P/ A/Ps. The plan is prepared for the entire calendar year with quarterly/semi-annual targets for the departments/offices to achieve. (p. 95, UBOM for
LG Us)
Section 76. Obligation of Local Funds. -
93ARO 94
The detailed guidelines in the preparation of the local Budget Matrix, Cash Program and Performance Targets are contained in the UBOM for LG Us.
95 LBM
96NNC 97 NC
9s p. 91, UBOM for LG Us 99 The detailed discussion of these tools is found in Book V of this Manual.
109
A. Definition of Obligation - Obligation refers to the 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 government unit concerned. (p. 97, UBOMfor LGUs)
Obligation shall be limited to the available allotment for the purpose. Consistent with the New Government Accounting System, obligations shall be taken up in the registries100 as they are incurred. Accordingly, expenditures and obligations incurred during a fiscal year shall be taken up in the accounts of that year. (p. 98, UBOMfor LG Us)
B. Steps in the Obligation Process: 101
I) The Head of the re�uesting office in the local government unit shall prepare the Obligation Request10 and the Disbursement Voucher103 and certify on the necessity and legality of changes to appropriation and allotment under his direct supervision. He shall also certify to the validity, propriety and legality of the supporting documents (Box A of ObR);
2) The Local Budget Officer shall certify as to the existence of available appropriation that has been legally made for the purpose (Box B of ObR) and shall maintain the appropriate Registries of Appropriation, Allotments and Obligations as prescribed under the New Government Accounting System for Local Government Units; and
3) The Local Accountant shall certify the obligation of allotment and completeness of supporting documents (Box A of DV).
C. Adjustment/Corrections of Obligations - Any corrections/adjustments made after the processing of the claims but before payment is made shall be effected either through a positive entry or negative entry in the Obligations Incurred column of the Registries of Appropriations, Allotments and Obligations.
Section 77. Government Expenditures. -
A. Definition of Government Expenditures - 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 III, Vol. I, GAAM)
B. Classification of Government Expenditures - Government expenditures are classified as follows:
100 Registries of Appropriations, Allotments and Obligations (RAAOs) 101 COA Circular No. 2006-002, dated Januan; 31, 2006 102 ObR, LTO Form 40 103DV
I IO
1) Current Operating Expenditures - "Current Operating Expenditures" refer to appropriations for the purchase of goods and services for current consumption or for benefits expected to terminate within the fiscal year, including goods and services that will be used or consumed during the budget year. (Sec. 306 (!), LGC)
Current Operating Expenditures are classified into:
1. Personal Services104
; and
11. Maintenance and Other Operating Expenses 105
(Sec. 155 (a), Book Ill, Vol. I, GAAM)
2) Capital Outlays - Capital Outlays refer to appropriations for the purchase of goods and services, the benefits of which extend beyond the fiscal year and which add to the assets of local government unit concerned, including investments in public utilities such as markets and slaughterhouses. (Sec. 306 (d), LGC)
C. Liability for Unlawful Expenditures. - Expenditures of funds or use of property in violation of Title V (Local Fiscal Administration) of the Local Government Code of 1987 and other laws shall be a personal liability of the official or employee responsible therefor. (Sec. 351, LGC)
Any official or employee of the local government unit knowingly incurring any obligation, or authorizing any expenditure in violation of the provisions of the Administrative Code of 1987 (E. 0. No. 292) or taking part therein, shall be dismissed from the service, after due notice and hearing by the duly authorized appointing official. If the appointing official is other than the President and should he fail to remove such official or employee, the President may exercise the power of removal. (Sec. 43, Book VJ, E. 0. No. 292)
D. Prevention of Irregular, Unnecessary, Excessive, Extravagant or Unconscionable Expenditures.
106 - The following types of local expenditures shall not be allowed:
1) Irregular Expenditures - (a) The term "Irregular Expenditure" signifies that the expenditure incurred does not adhere to established rules, regulations, procedural guidelines, policies, principles or practices that have gained recognition in law. Irregular expenditures are incurred without conforming to prescribed usages and rules of discipline. There is no observance of an established pattern, course, mode of action, behavior, or conduct in the incurrence of an irregular expenditure. A transaction conducted in a manner that deviates or departs from, or which does not comply with standards set, is deemed irregular. An anomalous transaction which fails to follow or which violates appropriate rules of procedure is likewise irregular. Irregular expenditures are different from illegal expenditures as the latter would pertain to expenses incurred in
104 PS
105 MOOE 106 IUEEU, COA Handbook on Government Expenditures, 2002
111
112
violation of the law, while the former would pertain to violation of applicable rules and regulations other than the law. (Sec. 162, Book III, Vol. I, GAAM)
(b) The following are considered irregular expenditures:
1) Payment of claims under a contract awarded not strictly in accordance with the prescribed modes of procurement of supplies, materials and equipment.
2) Purchase of items from jobbers or middlemen in violation of a government policy to acquire the same directly from reputable manufacturers or their licensed distributors.
3) Payment of allowances and other forms of additional compensation without proper authority.
4) Payment of repair of government property or equipment undertaken by shops, mechanics or contractors not duly accredited in accordance with an existing government policy, except in places where there is no accredited shop in the locality, or where the accredited shop does not have sufficient facilities, or where the cost of services of the accredited shop is relatively high, or completion of repairs will suffer delay as certified to by the Local Chief Executive or his duly authorized representative.
5) Payment for emergency purchase, where there is no emergency. As defined under the General Appropriations Act, emergency involves the loss of, or danger to, life and/or property or that which will cause detriment to the public service.
6) Reimbursement of expenses incurred by persons other than authorized representatives of the LOU for attending conferences, meetings and other official functions.
7) Payment of salaries or wages of laborers under a labor payroll to persons other than the payees unless properly authorized by the payees.
8) Payments made on the basis of split requisitions, purchase orders, vouchers or checks, unless approved by proper authority of the LG U.
9) The use of government motor vehicles with an improperly accomplished trip ticket, or without the marking: "For Official Use Only" and the name of the office, except when appropriate exemption is secured in accordance with existing regulations.
10) Bringing home government motor vehicles after office hours by officials to whom these are assigned, except when the LOU does not have a garage that
could ensure the safety of the vehicle, or when in terms of mileage/time it is more economical for the official to park the vehicle at his residence.
11) Office equipment and property without the proper identification or inventory markings.
2) Unnecessary Expenditures - (a) The term "Unnecessary Expenditures" pertain to expenditures which could not pass the test of prudence or the obligation of a good father of a family, thereby not responsive to the exigencies of the service. Unnecessary expenditures are those not supportive of the implementation of the objectives and missions of the agency or local government unit relative to the nature of its operation. This could also include incurrence of expenditure not dictated by the demands of good government, and those the utility of which cannot be ascertained at a specific time. The mission and thrusts of the agency or local government unit incurring the expenditure must be considered in determining whether or not the expenditure is necessary. An expenditure that is not essential or that which can be dispensed with without loss or damage to property is considered unnecessary. (Sec. 163, Book Ill, Vol. I, GAAM)
(b) The fol lowing expenditures are considered unnecessary:
1) Grant of overtime pay for work that is not urgent in nature as to require completion within a specified time or that can be undertaken during regular office hours.
2) Expenses for advertisement of anniversaries, etc., in newspapers, television or radio merely for publicity or propaganda purposes except when the nature of the LGU's mission would require such expenses as in the case of promotion of trade and business.
3) Use of air conditioners when not needed, or even during the absence of the official in whose room the air conditioner is installed.
4) Use of table lamps while working in the office where the room is adequately illuminated from the ceiling lights.
3) Excessive Expenditures - (a) The term "Excessive Expenditures" signify unreasonable expense or expenses incurred at an immoderate quantity or exorbitant price. It also include expenses which exceed what is usual or proper as well as expenses which are unreasonably high, and beyond just measure or amount. They also include expenses in excess of reasonable limits. (Sec. 164, Book III, Vol. 1, GAAM)
(b) The term "Excessive Expenditures" pertains to the variables of Price and Quantity:
1. Price - The price is excessive if it is more than ten ( I 0%) allowable price variance between the price for the item bought and the price of the same item per canvass of the auditor.
113
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11. Volume Discounts - The price is deemed excessive if the discounts allowed in bulk purchases is not reflected in the price offered or in the award or in the purchase/payment document.
( c) In determining whether or not the price is excessive, the following factors may be considered:
1. Supply and Demand Forces in the Market -Where there is a shortage of supply of a particular product, such as cement or GI sheets, prices of these products may vary within a given day.
11. Government Price Quotations.
n1. Warranty of Products or Special Features -The price is not necessarily excessive when the service/item is offered with warranty or special features which are relevant to the needs of the LGU and are reflected in the offer or award.
1v. Brand of Products - Products of recognized brand coming from countries known for producing such quality products are relatively expensive. An example are Solingen scissors which are made in Germany which are more expensive than scissors which do not carry such brand are not made in Germany.
( d) The following expenditures are considered excessive:
1. Overpricing of purchases characterized by grossly exaggerated or inflated quotations, in excess of the current and prevailing market price by a ten percent (10%) variance from the purchased item.
11. Payment for repair of government equipment at a cost exceeding thirty percent (30%) of the current market price of the same or similar equipment.
iii. Expenditures for supplies and materials in quantities beyond that required and needed by the LGU for a determinable period, resulting in overstocking.
4) Extravagant Expenditures - (a) The term "Extravagant Expenditures" signifies those incurred without restraint, judiciousness and economy. Extravagant expenditures exceed the bounds of propriety. These expenditures are immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive, and injudicious. (Sec. 165, Book Ill, Vol. I, GAAM)
(b) Factors such as the nature of the LGU's operations, missions, profitability of past
operational performance, and availability of financial resources derived from income or retained earnings, must be taken into account in the matter of determining whether or not
expenditure is extravagant. The term "Extravagant Expenditure" pertains to the variables of quantity relative to the level or rank of the user and the purpose for such expenditure.
c) The following expenditures may be considered extravagant:
A. Purchase of luxurious and expensive office furnishings for office buildings (e.g. rugs, carpets, draperies, wall decors, utensils, desks, chairs, lamps), except for the Offices of the President of the Philippines; the Justices of the Supreme Court, Intermediate Appellate Court and other courts of equivalent rank; the Speaker of the House of Representatives; and the Heads and Members of the Constitutional Commissions; the Department Secretaries; Governors; Mayors; the Bureau Directors and their equivalent ranks in government corporations and other agencies, as warranted by their resources.
B. Luxurious furnishings for government buildings except those intended for showcase, trade and commerce, promotions of arts and culture, and use of dignitaries.
C. Purchase of expensive cars, except for the use of the following officials:
1) The President and the Vice-President of the Philippines; the Senate President; the Speaker of the House of Representatives; the Justices of the Supreme Court; and the Heads of Constitutional Commissions -Mercedes Benz or its equivalent brand.
2) The Members of Congress; the Members of the Constitutional Commissions; the Department Secretaries; the Heads of Agencies; Governors of Class A provinces; Mayors of Class A cities and municipalities, the Justices and the Judges of lower Courts - Heavy and Medium cars.
D. Installation of highly sophisticated outdoor signs, billboards and neon signs advertising the office, except for banks, trading corporations, hotels, or buildings used for culture and arts.
E. Purchase of wines, liquors, cigars and cigarettes, except when served to foreign dignitaries during state functions and government-sponsored international conferences and conventions.
F. Payment for rental of expensive halls or rooms in luxury hotels or restaurants used for meetings and other official functions except when such hotels or restaurants are used for government-sponsored international conventions, meetings and the like.
5) Unconscionable Expenditures - The term "Unconscionable Expenditures" signify expenses without knowledge or sense of what is right, reasonable and just and not guided
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or restrained by conscience. These are unreasonable and immoderate expenses incurred in violation of ethics and morality by one who does not have any feeling of guilt for the violation. (Sec. 166, Book Ill, Vol. I, GAAM)
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Chapter 3. DISBURSEMENTS OF LOCAL FUNDS
Section 78. Definition of 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.
Disbursement of local funds or the settlement of government payables/obligations must be made in accordance with the appropriation ordinance authorizing the annual or supplemental appropriations without the prior approval of the sanggunian concerned.
Section 79. General Principles Governing Fund Disbursements:
1\A The Official Fiscal Year. - The official fiscal year of local government units is the period
beginning with the first ( 1 51) day of January of a given year and ending with the thirty-first
(3151
) day of December of the same year.
B. Disbursements in Accordance with Annual or Supplemental Appropriations.
Disbursements of local funds shall be made in accordance with the ordinance authorizing the annual or supplemental appropriations without the prior approval of the sanggunian
concerned. (Sec. 346, LGC)
The approved budget and/or appropriation and corresponding release of allotments in the local government units shall be the basis for the disbursements of its funds for the fiscal year. The appropriations insofar as practicable, shall be in a lump sum amount set aside by programs and further subdivided into Current Operating Expenditures composed of Personal Services and Maintenance and Other Operating Expenses and Capital Outlays. Further, the object of expenditures for each allotment class should be specified to be able to properly monitor expenditures.
C. Use of Appropriated Funds and Savings.108
- Funds are available exclusively for the specific purpose for which they have been appropriated.
D. 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 Local Treasurer, but the disbursement 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.
107As a guide to the proper handling of' expenditures, the list of minimum documentary requirements for specific expense item is presented in LTO Annex 41. this Manual.
10s See Sec. 74, this Manual
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In case of emergency ansmg from typhoon, earthquake, or any other calamity, the sanggunian concerned may authorize the Local Treasurer to continue making disbursements from any local fund in his possession in excess of the limitations herein provided, but only for such purposes and amounts included in the approved annual budgets.
Any overdraft which may be incurred at the end of the year in any local fund by virtue of the provisions hereof, shall be covered with the first collections of the immediately succeeding fiscal year accruing to such local fund. (Sec. 337, LGC)
E. Prohibitions on Disbursements. - Disbursements of public funds shall be guided by the following prohibitions:
l) Advance Payments. - No money shall be paid on account of any contract under which no services have been rendered or goods delivered. (Sec. 338, LGC)
2) Expenditures for Religious or Private Purposes. - No public money or property shall be appropriated or applied for religious or private purposes. (Sec. 335, LGC)
3) 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. (Sec. 343, LGC)
4) Cash Overdrafts in the Treasury. - An overdraft existing in the accounts of a Provincial, City, Municipal or Barangay Treasurer signifies that funds belonging to other branches of Government or to private entities which have been deposited with the Local Treasurer for safekeeping or for disbursement for certain specified purposes have been used by him and diverted to purposes other than those for which they are intended, in violation of the statutory provision that trust funds shall not be paid out of any treasury except in fulfillment of the purpose for which the trust was created or fund 1eceived. (Sec. 612, RMIT)
Local Treasurers as financial officers are duty-bound to make an analysis of the
financial status of their respective local government units, which shall, from time to time, be brought to the attention of the Local Chief Executive concerned, with the end
in view of apprising him of the actual financial condition of the local government unit. This is important especially when there is imminence of overdraft in any or all of the funds of the local government unit, in order that the budgets may be readjusted or an amended program of expenditures be adopted for the remaining months of the
fiscal year. (Sec. 6 I 5, RMIT)
Any public officer who shall apply any public funds or property under his administration to any public use other than that for which such funds or property was appropriated by law or ordinance shall suffer the penalty of prision correccional in its
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minimum period or a fine ranging from one-half to the total value of the sum misapplied, if by reason of such misapplication, any damage or embarrassment shall have resulted to the public service. In either case, the offender shall also suffer the penalty of temporary special disqualification.
If no damage or embarrassment to the service has resulted, the penalty shall be a fine from5 to 50 percent of the same misapplied. (Article 220, Revised Penal Code)
Section 80. Basic Requirements on Disbursements from General Fund and Special
Education Fund. - Disbursements from the General Fund and Special Education Fund shall require the following:
l) Certification as to existence of appropriation that has been legally made for the purpose by the Local Budget Officer (Box "B" of ObR);
2) Certification as to necessity, legality, as well as to the validity, propriety and legality of supporting documents (Box "A " of ObR) by the head of the requesting department or office who has administrative control of the local fund concerned. In case of temporary absence or incapacity of the department head or chief of office, the officer next-in-rank shall
automatically perform his function and shall be fully responsible therefor. For the Special Education Fund, the Division/City School Superintendent or the District Supervisor concerned, as the case may be, shall make the certification.
3) Certification in the Disbursement Voucher (Box "A") by the Local Accountant that allotment has been obligated for the purpose and the supporting documents are completed;
4) Certification in the Disbursement Voucher (Box "B ") by the Local Treasurer that funds are available for the purpose;
5) Approval by the Local Chief Executive, except for regularly recurring administrative expenses such as: payrolls for regular or permanent employees, expenses for light, water, telephone and telegraph services, remittances to government creditor agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM and others, where the authority to approve may be delegated.
The Disbursement Voucher for expenditures appropriated for the operation of the sanggunian shall be approved by the provincial Vice-Governor, the city Vice-Mayor or the municipal Vice-Mayor, as the case may be. The disbursements for Special Education Fund shall be approved by the Local Chief Executive concerned as co-chairman of the Local School Board.
6) Necessary documents supporting the disbursement vouchers and payrolls are reviewed by the Local Accountant/Head of Accounting Unit.
Section 81. Basic Requirements on Disbursements from Trust Funds. - (a) Disbursement from the Trust Fund shall require the following:
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I) Certification by the Local Treasurer that Trust Funds are available for disbursements (Box "B" of Disbursement Voucher);
2) Certification by the Local Accountant that supporting documents are complete (Box "A" of Disbursement Voucher);
3) Approval by the Local Chief Executive/authorized representative or the administrator of the Fund (Box "C" of Disbursement Voucher); and
4) Necessary documents are attached to the disbursement vouchers/payrolls.
(b) Trust Funds maintained for projects implemented by the local government unit sourced from domestic or foreign grants/loans (local/foreign-assisted projects) should be utilized strictly in compliance with the provisions of any Memorandum of Agreement (MOA), Memorandum of Undertaking (MOU) or other agreements signed by the local government unit with other government agencies or private entities. In no case shall these trust funds be used for purposes other than what is provided in the MOA/MOU, or temporarily transferred to other funds of the local government unit, since this constitutes violation of the grant/Joan agreements of the government with the local/foreign donors. Funds received from these sources shall be maintained in separate bank accounts and shall never be commingled with other funds of the local government unit.
Section 82. Preparation of Disbursement Vouchers and Payrolls. - Disbursements in local government units shall be covered by Disbursement Vouchers or Payrolls supported with duly approved Obligation Request and adequate supporting documents. Disbursements made without the required Disbursement Voucher/Payroll shall not constitute a credit to the accountability of the accountable officer concerned.
A. Disbursement Voucher' 09 � The Disbursement Voucher shall be used for all money claims.
The following guidelines in the preparation of the Disbursement Voucher shall be observed:
I) The Disbursement Voucher shall be printed in one whole sheet of legal size bond paper. This shall be prepared in three (3) copies to be distributed as follows:
Original
Duplicate
Triplicate
Accounting Unit Cash Unit Payee
2) The Accounting Unit shall stamp the date of receipt on the face of the Disbursement Voucher and shall assign a number to the Disbursement Voucher. The Disbursement Voucher Number shall also be stamped in all pages of the supporting documents attached thereto;
3) The Number of the Obligation Request shall be indicated in the Disbursement Voucher;
109 DV, LTO Form 42
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4) The Responsibility Center (Department/Office/Unit/Project and Code) where the disbursement shall be charged should be indicated;
5) The Local Accountant or his authorized representative shall certify in Box "B" of the Disbursement Voucher, as to the obligation of allotment for the purpose as indicated, and completeness of supporting documents. The certifying officer shall affix his signature, print his name, and indicate his position and the date signed;
6) The Local Treasurer or his authorized representative shall certify in Box "C" of the Disbursement Voucher on the availability of funds. The certifying officer shall affix his signature, print his name, and indicate his position and the date signed;
7) The Local Chief Executive or his authorized representative shall approve the payment in Box "D" of the Disbursement Voucher. The approving officer shall affix his signature, print his name, and indicate his position and the date signed;
8) The claimant or his duly authorized representative shall acknowledge the payment in check/cash and indicate the date of receipt thereof in Box "E" of the Disbursement Voucher. The claimant/payee shall affix his signature on the spaces provided in the Disbursement Voucher and shall indicate the number and the date of the check, the bank where the check is drawn, and the number and the date of the Official Receipt or other relevant document issued to acknowledge the payment; and
9) The number and the date of the Journal Entry Voucher' 10 shall likewise be indicated in the Disbursement Voucher.
B. Payroll - The Payroll is used for the payment of salaries and other emoluments of government employees. It may be in the form of the General Payroll 111 or the Dai Iy Wage Payroll 112
. It shows the names of the employees, their monthly salary/emolument, the amount earned for the period, salary deductions and the net amount paid. The signatures of the employees on the payroll are the evidence of payment. All unclaimed wages within a period of fifteen ( 15) days shall be refunded to the collecting officer who shall issue an official receipt in acknowledgment thereof. Subsequent payment for the unclaimed wages must be made through individual Disbursement Vouchers and checks.
The payroll shall be prepared in four (4) copies. The original and another copy of the paid payroll shall support the Report of Disbursements to be submitted to the Chief Accountant for entry in the Journal of Disbursements. The other two (2) copies of the payroll shall be submitted to the Local Administrative Officer, one copy for his file and the other copy for the recording of payroll changes to serve as guide in the preparation of the payroll for the subsequent periods.
110 ]EV 111 GP, LTD Form 43
112 DWP, LTD Form 44
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Section 83. Modes of Disbursements. - (a) 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)
(b) Modes of disbursements:
I. Disbursements by Checks.113 - 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.
l) Preparation and Signing of Checks. - Checks shall be drawn by the Local Treasurer and countersigned by the Local Administrator.
In case of temporary absence or incapacity of the aforesaid officials these duties shall devolve upon their immediate assistants. (Sec. 345, LGC)
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, or the municipal Vice Mayor, as the case may be. (Sec.43, COA Circular No. 92-382)
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. Unused checks shall be kept in the vault, which shall be accessible only to the Local Treasurer. The signing or countersigning of blank checks shall not be allowed.
2) Release of Checks. - The Local Treasurer shall release the check only to the payee or his duly authorized representative. It shall be released only when the Accountant's Advice of Local Check Disbursements
114 has been prepared and
submitted to the bank. All checks issued shall be recorded chronologically in the Control Book of Checks Issued/Check Register115
. 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 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.
1 13 The process flow on the disbursements by checks is in Annex 4 7 and the process .flow on payroll disbursements
though banks is presented in Annex 52, both of this Manual. 114 AALCD, LTO Form 48 m CReg., L TO Form 45
121
3) Preparation of Report of Checks Issued. 116
- The checks issued including cancelled or voided checks shall be recorded chronologically in the Report of Checks Issued which shall be prepared for each fund weekly in three (3) copies by the Local Treasurer. The original and duplicate copies of the Report of Checks Issued together with the claimed vouchers/payrolls and other supporting documents shall be submitted to the Accounting Department. Unclaimed vouchers and all supporting documents shall remain with the Local Treasurer until paid and duly noted as "Unclaimed" in the Report of Checks Issued.
4) 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. A spoiled or stale check shall be marked "CANCELLED" on its face and reported, as follows:
a) For checks immediately cancelled and for which the Report of Checks Issued has not yet been prepared, the cancelled check shall be attached to the said Report of Checks Issued and reported chronologically with the other checks issued and the word "Cancelled" shall be indicated on the report.
b) For stale checks which have been unclaimed and thus, the original Disbursement Voucher and supporting documents are still with the Local Treasurer, the Disbursement Voucher shall also be marked "Cancelled." The cancelled check shall be reported and attached to the Report of Checks Issued prepared at the period of cancellation. The cancelled check shall be presented in the Report of Checks Issued after the last check issued for the period indicated in the report. The original Disbursement Voucher and supporting documents shall be returned to the Accountant who shall prepare a Journal of Entry Voucher to record the transaction as Accounts Payable.
c) For checks which became spoiled or stale in the hands of the payee and which require replacement, a new check may be issued after the stale check has been submitted by the payee to the Local Treasurer, marked "CANCELLED" and the authenticity of the claim established. A certification from the Local Accountant that the check has been outstanding as of date shall also be obtained. A certified copy of the Disbursement Voucher shall be requested from the Auditor for presentation to the Local Chief Executive or the Administrator who shall countersign the check. The replacement check shall be reported chronologically in the Report of Checks Issued and the words, "Issued in replacement of Check No. dated which has become stale"
116 RCI, LTO Form 46
122
shall be indicated in the report. The cancelled stale check shall be reported and attached to the Report of Checks Issued prepared at the period of cancellation.
5) Lost Checks. - A check is considered lost under the following circumstances:
1) 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.
2) 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.
3) When it is lost by theft or robbery. (Sec. 187 (a), Book ill, Vol. I, GAAM)
Upon submission of a sworn statement from the payee that a check issued by the local government unit is lost, the Local Treasurer shall immediately notify the bank concerned for the stoppage of payment. The Local Treasurer shall forward the sworn statement to the Local Accountant who shall prepare the Journal of Entry Voucher to cancel the payment made. A copy of the Journal of Entry Voucher shall be furnished the Local Treasurer as basis for him to debit the amount in the Cashbook - Cash in Bank.
II. Disbursements Through Cash Advances. - (a) Cash payments shall be made only on duly approved Payrolls/Disbursement Vouchers/Liquidation Vouchers out of regular cash advances or special cash advances (Sec.45, COA Circular No. 92-382).
(b) Cash advances are of two types, as follows:
1) Regular Cash Advances. - Regular Cash Advances are those granted to Cashiers, Disbursing Officers, Paymasters and/or Property/Supply Officers separately for any of the following purposes:
1. Salaries and Wages;
11. Commutable Allowances;
111. Honoraria and other similar payments to officials and employees; and
1v. Petty operating expenses (Sec. 46, COA Circular No. 92-382)
consisting of small payments for maintenance and operating expenses which cannot be paid conveniently by check or are required to be paid immediatelty. (Sec. 173 (a) (4), Book Ill, Vol. I,
GAAM)
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2) Special Cash Advances. - Special Cash Advances are those granted on the explicit authority of the Local Chief Executive only to duly designated disbursing officers or employees for other legally authorized purposes such as:
1. Confidential expenses; and/or
11. Expenditures for activities of the agency undertaken in the field when it is impractical to pay by check. (Sec. 47, COA
Circular No. 92-382)
III. General Guidelines in the Grant and Utilization of Cash Advance. - (a) No cash advance shall be granted to any local official or employee, elective or appointive, unless made in accordance with the rules and regulations as the Commission on Audit may prescribe. (Sec. 339, LGC)
(b) In the grant and utilization of cash advance, the following rules shall be observed:
1) Only permanently appointed officials and employees shall be granted cash advance (Sec. 48 (a), COA Circular No. 92-382). Elective officials may be granted cash advance only for their official traveling expenses. Local Chief Executives may be granted cash advances for intelligence and confidential expenses
2) 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. (Sec. 48 (b), COA Circular No. 92-382)
3) Only one (1) disbursing officer shall be assigned or designated for a specific legal purpose. Additional disbursing officers may be assigned or designated for the same purpose only when fully justified by the local chief executive. (Sec. 48 (c), COA
Circular No. 92-382)
4) Transfer of cash advance from one accountable officer to another shall not be allowed. (Sec. 48 (d), COA Circular No. 92-382)
5) The cash advance shall be used solely for the specific legal purpose for which it was granted (Sec. 89, P. D. No. 1445). Under no circumstance shall it be used for encashment of checks or for liquidation of a previous cash advance. (Sec. 48 (e), COA
Circular No. 92-382)
6) The accountant shall obligate all cash advances granted. Cash advances for a particular year shall not be used to pay expenses of other years. (Sec. 48 (!), COA
Circular No. 92-382)
7) The cash advance for petty operating expenses shall not be used for payment of regular expenses, such as rentals, subscriptions, light and water and the like. (Sec. 48 (i), COA Circular No. 92-382)
8) Payments out of the cash advance shall be allowed only for amounts not exceeding Fifteen Thousand Pesos (Pl 5,000.00) for each transaction, except when a higher amount is allowed by law and/or specific authority by the Commission on Audit. Splitting of transactions to avoid exceeding the ceiling shall not be allowed. (Sec. 48
0), COA Circular No. 92-382)
9) No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made. (Sec. 89, P. D. No. 1445)
10) When a cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned or deposited immediately with the collecting officer. (Sec. 48 (n), COA Circular No. 92-382)
11) All cash advances shall be fully reported on as soon as the purpose for which it was given has been served.
IV. Specific Guidelines on the Grant of Cash Advance for Payroll, Petty Operating
Expenses, Field Operating Expenses and Travel.
1) Salaries, wages, allowances, honoraria and other similar payments -
a) The cash advance for payment of salaries shall be equal to the net amount of the payroll for a pay period. (Sec. 48 (g), COA Circular No. 92-382)
b) The cash advance shall be supported by the following documents:
1. Designation by the Local Chief Executive in case the Accountable Officer is not a disbursing officer by appointment (attachment to initial cash advance).
11. Approved application for bond (attachment to initial cash advance).
111. Payroll or list of payees with their net payments
2) Petty Operating Expenses -
a) The cash advance for petty operating expenses shall be sufficient for the recurring expenses of the agency for one ( 1) month. The Accountable Officer may request replenishment of the cash advance when the disbursements reach at least seventy-five (75%), or as needed, by submitting a replenishment
125
,17COE
126
voucher with all supporting documents duly summarized m a report of disbursements. (Sec. 48 (h), COA Circular No. 92-382)
b) The cash advance shall be supported by the following documents:
1. Written authority by the Local Chief Executive for the cash advance (attachment to initial cash advance).
11. Approved application for bond (attachment to initial cash advance).
111. Estimate of expenses.
3) Field/Activity Current Operating Expenses117• -
a) 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 Head of Office.
b) The amount of the cash advance shall be limited to the requirements for two (2) months. Within five (5) days after the end of each month, the Accountable Officer shall submit a Report of Disbursements. Additional cash advance shall be granted on the basis of the activity budget or the requirements for two (2) months, whichever is lower.
c) The cash advance shall be supported by the following documents:
1. Written authority by the Local Chief Executive (attachment to initial cash advance)
11. Approved application for bond (attachment to initial cash advance)
111. Budget for Current Operating Expenses of the agency field office or agency activity in the field. (Sec. 177,
Book Ill, Vol. I, GAAM)
4) Official Travel. - Both official local and foreign travels shall be treated and accounted for as cash advances (2.1, COA Circular No. 96-004). No cash advance shall be granted to any local official or employee unless a proper accounting of the previous cash advance for travel given to him is first made or the same is first liquidated and/or settled (2.2, COA Circular No. 96-004).C ash advances granted for purposes of official travel, both local and foreign, shall not require bonding of the traveling local official or employee (2.3, COA Circular No. 96-004). The grant of
cash advance for both official local and foreign travels shall be guided by the following:
A. Official Local Travel of Local Government Officials and Personnel:
1) The cash advance voucher for official local travel shall be supported by the following:
1. Travel Order -
Travels of officials and employees of National Government Agencies for less than thirty (30) days and payment of travel expenses therefor shall be approved by the head of office/bureau or equivalent. Travels that will last thirty (30) days or more and payment of travel expenses therefor shall be approved by the Department Secretary or his equivalent. The approval of the Department Secretary concerned shall be construed as equivalent to the approval of the Secretary of Budget and Manajement. (Sec. 5, E. 0. No. 248, as amended by E. 0. No. 298
11 ).
For purposes of the Travel Order, approval of travel of officials and employees of local government units that will last for not more than one (1) calendar month shall be subject to the policies, rules and regulations that will be adopted by the Secretary of the Interior and Local Governments. (Sec. 5, 2"d par., E. 0. No. 248)
11. Itinerary of Travel, detailing the transportation expenses and travel expenses to be incurred as basis for determining the amount of cash advance. (3.1.1.1, COA Circular No. 96-004)
2) In cases where government vehicles are used in the travel, the officials and employees concerned are not entitled to the transportation expenses. (3.1.1. 7, COA Circular No. 96-004)
3) To ensure that government funds and property are used only for official purposes, no reimbursement of the cost or gasoline and oil shall be allowed when a private vehicle is used. However, the local officials and employees concerned shall be entitled to the reimbursement of the equivalent cost of the customary mode of transportation. Under no circumstances should fuel be issued to privately owned motor vehicles. (3.1.1.8, COA Circular No. 96-004)
11s Amending further Sec. 5 of E. 0. No. 248, dated May 29, 1995, as amended by E. 0. No. 248-A, dated August 14, 1995, which prescribes rules and regulations and new rates of allowances for official local and foreign travels of government personnel.
127
4) The travel expenses of government personnel regardless of rank and destination shall be in the amount of Eight Hundred Pesos (P800.00) per day which shall be apportioned as follows:
1. Fifty percent (50%)- for hotel/lodging
11. Thirty percent (30%) - for meals
iii. Twenty percent (20%) - for incidental expenses (Sec. 6, E. 0. No. 248, as amended by E. 0. No. 298)
B. Official Foreign Travel of Local Government Officials and Personnel:
l) The cash advance voucher for official foreign travel shall be supported by the following:
1. Travel Order 119
11. Itinerary of Travel detailing the transportation expenses and travel expenses including clothing and pre-departure expenses to be incurred as basis for determining the amount of cash advance. The commutable pre-departure expenses shall cover miscellaneous/incidental expenses such as passport, photographs, immunization, visa fees, taxi fare, tips, porterage and terminal fees as provided for under Section 9, E. 0. No. 248, as amended.
iii. Where applicable, the authority from the office of the President to claim Representation Expenses.
1v. Certification of the local official or employee concerned duly verified by the Local Accountant to the effect that no clothing allowance had been received during the next preceding twentyfour (24) months, if clothing allowance is being claimed. (3.2.1.1, COA Circular No. 96-004)
2) Government personnel who travel abroad shall be entitled to the Daily Subsistence Allowance
120 as provided under the United Nations
Development Program121 Index, which can be secured from the Department of Foreign Affairs. The DSA shall be apportioned as follows unless otherwise stated in the UNDP Index:
119 Same requirements on official local travel for local government officials and perso1111el. i20 DSA 121 UNDP
128
1. Fifty percent (50%)- for hotel/lodging
11. Thirty percent (30%) - for meals
iii. Twenty percent (20%) - for incidental expenses
When the country of destination is not listed in the said Index, the DSA for the nearest country shall be adopted. (Sec. 12, E. 0. No. 248, as
amended by Sec. 8, E. 0. No. 298)
3) Reimbursement of the payment of the airport terminal fee at the point of embarkation to go back to the Philippines upon completion of the official trip abroad is likewise authorized. (Sec. 9, E. 0. No. 248, as amended by sec. 6, E. 0. No. 298)
V. Liquidation of Cash Advance for Payroll, Petty Operating Expenses, Field Operating Expenses and Official Travel. - Cash advances for payroll, petty operating expenses, field operating expenses and official travel shall be liquidated in accordance with the following guidelines:
I) The cash advance shall be liquidated within the prescribed period, as follows:
a) Salaries, Wages, etc. - within five (5) days after each 15 day/end of the month pay period.
b) Petty Operating Expenses and Field Operating Expenses - within twenty (20) days after the end of the year; subject to replenishment as frequently as necessary during the year. (Sec. 48 (k), COA Circular No. 92-382)
c) Official Travel - within sixty (60) days after return to the Philippines in the case of official travel abroad, or within thirty (30) days of his return to his permanent official statior. in the case of official local travel, every local official or employee shall render an account of or liquidate the cash advance received by him (Sec. 16, E. 0. No. 248, as amended by sec. 14, E. 0. No. 298), otherwise, payment of his salary shall be suspended until he complies therewith 3.1.2. I and 3.2.2. I, COA Circular No. 96-004).
2) The Accountable Officer shall prepare the Report of Disbursements 122 in three (3) copies and submit the same with duly accomplished vouchers/payrolls and supporting documents to the Local Accountant. For payments based on receipts and invoices only, he shall also prepare a Liquidation Voucher 123
which shall be submitted with the report and supporting documents to the Local Accountant. He shall ensure that receipt of the report is properly acknowledged by the Local Accountant. The Accountable Officer shall be deemed to have complied with the
122 LTO Form 49
m L TO Form 50
129
130
requirement of proper accounting for the cash advance upon the receipt by the Local Accountant of the liquidation documents referred to above. (5.2, COA
Circular No. 97-002)
3) 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 refunded immediately to the Collecting Officer, who shall issue the necessary official receipt. (5. 7, COA Circular No. 97-
002)
4) All cash advances shall be fully liquidated at the end of each year. Except for petty cash fund, the Accountable Officer shall refund any unexpended balance to the Cashier/Collecting Officer who will issue the necessary official receipt. (5. 8,
COA Circular No. 9 7 -002)
5) At the start of the 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 Local Accountant shall cause the withholding of the Accountable Officer's salary. (5.9, COA Circular No. 97-002)
6) The following reports and documents are required to support the liquidation:
a) Salaries, Wages, etc. -
1. Report of Disbursements;
11. Duly signed Payrolls and/or Vouchers; and
iii. Pertinent supporting documents, such as Daily Time Records, approved Leaves of Absence, etc. (5.10.1, COA
Circular No. 97-002)
b) Petty Operating Expenses -
1. Report of Disbursements with supporting documents;
11. Approved Requisition and Issue Voucher with the Certificate of Emergency Purchase, if necessary;
iii. Receipts, Sales Invoices;
1v. Certificate of Acceptance/Inspection;
v. Duly approved Trip Ticket, if for gasoline; and
v1. Such other supporting documents as are required by the nature of the expense. (5.10.2, COA Circular No. 97-002)
c) Current Operating Expenses -
1. Same requirements as those for salaries, wages, etc., and petty operating expenses (supra); and
11. Canvass of at least three suppliers (not required if purchase is made while on official travel). (5.10.3, COA Circular No. 97-
002)
d) Official Travel 124 -
VI. Guidelines on Cash Advance for Intelligence and Confidential Expenses. -
I) Intelligence and/or confidential expenses represent the amount of goods and services used or consumed in connection with defense, security, peace and order, internal security or counter insurgency, usually involving cove1i or classified operations, psychological warfare and surveillance operation and other specified intelligence and confidential operations of the local government units, including Civil Security Units of local government agencies in Metro Manila. These may be in the following form:
a) Purchase of information relevant to security and peace and order.
b) Payments of rewards.
c) Rentals and other incidental expenses related to the maintenance of safe houses.
d) Purchase of supplies, materials and equipment necessary for intelligence and confidential operations and/or projects.
e) Other incidental expenses related to intelligence and confidential operation and/or projects.
f) Special projects as approved by the program director involving covert or semi-covert psychological, counter-insurgency, and peace and order activities.
2) Cash advances for intelligence and/or confidential activities shall be sourced from the annual appropriations for discretionary purposes.
124 Documents required to support the liquidation o.l cash advance for official travel. both foreign and focal, are fisted under Annex 4 /, this Manual.
131
The annual appropriations for discretionary purposes of the local chief executive shall not exceed two percent (2%) of the actual receipts derived from basic real property tax in the next preceding calendar year. Discretionary funds shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law. No amount shall be appropriated for the same purpose except as authorized herein. (Sec. 325 (h),
LGC)
3) It shall be the responsibility of the Local Chief Executive to institute internal control measures to discourage and prevent irregular, unnecessary, excessive, extravagant and unconscionable expenditures 125 in intelligence and confidential
operations by their personnel involved.
VI I. Liquidation of Cash Advance for Confidential/Intelligence Expenses. -Cash advance of the Local Chief Executive for confidential/intelligence expenses shall be liquidated, as follows:
l) All cash advances shall be liquidated within one (1) month from the date the cash advance is received.
2) Disbursements from cash advances for confidential and/or intelligence expenses shall be accounted for on the certification to be issued by the Local Chief Executive. He may also submit receipts and other evidences in support of the expenses incurred.
3) The Liquidation Voucher together with the supporting papers shall be submitted in a sealed envelope, directly to the Chairman, Commission on Audit for transactions in Metro Manila. For transactions outside Metro Manila, the Liquidation Voucher shall be submitted to the Commission on Audit Regional Directors in their respective jurisdiction.
4) The transmittal letter must be signed by the Local Chief Executive. He shall enumerate therein the type or nature of the document being submitted.
5) A copy of the transmittal letter duly acknowledged as received by the Chairman or the Regional Director of the Commission on Audit must be furnished the Accountant and the resident Auditor of the Local Government Unit concerned.
6) If the Liquidation Voucher and supporting papers are in order, the Chairman of the Commission on Audit or his authorized representative or the Regional Director, as the case may be, shall issue a Credit Advice, addressed to the Local Chief Executive, attention to the Chief Accountant through the Auditor of the Local Government Unit concerned, on the basis of which credits to the cash advance account of the accountable officer concerned shall be recorded in the books of accounts of the Local Government Unit.
125 Refer to Section 77 (D), this Mnnunl on these types of expenditures.
132
7) All Liquidation Voucher and supporting papers shall be retained by the Chairman or the Regional Director of the Commission on Audit for safekeeping in his confidential file. However, duplicate copies of all these records and documents must be retained and filed by the Local Chief Executive or the Local Government Unit concerned. (COA Circular No. 92-385)
VIII. Handling, Custody and Disposition of Cash Book for Cash Advances126• - The
following guidelines for the handling, custody, and disposition of the cashbook shall be observed:
l) A newly appointed or designated Accountable Officer shall start with a new cash book. Before discharging his 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 work.
2) The Accountable Officer shall maintain separate cashbooks for salaries, wages, allowances, etc., and for petty operating expenses. He shall record daily the transactions in the prescribed cashbook. He may record each invoice/receipt/voucher individually or the total disbursements for the day, depending upon the volume of the transactions.
3) The Accountable Officer 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 Accountable Officer and the Local Accountant shall reconcile their books of accounts at least quarterly.
4) The cashbooks shall be kept at the Office of the Accountable Officer 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.
5) When the Accountable Officer ceases to be one, the cashbook shall be submitted to the Local Accountant and shall form part of the accounting records. No clearance shall be issued to an Accountable Officer if he fails to submit the cashbook as required. (Sec. 181, Book Ill, Vol. I, GAAM)
IX. Disbursements out of Petty Cash Fund.127 - 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 Vouchcr 128 which shall be signed by the payee to acknowledge the amount received.
126 Form/or Cashbook.for Cash Advances. LTO Form 7
127 The process .flow for disbursement. liquidation and replenishment 011/ of' the Petty Cash Fund is shown in Annex
55 o,f this Manual. 12s PCV, LTO Form 53
133
Petty Cash Fund shall be set up at the beginning of the year. An Obligation Request shall be prepared for the fund, recorded in the registers and obligated as Other Expenses.
Payments out of the Petty Cash Fund shall be made through the use of Petty Cash Voucher duly supported by official receipts and other required documents. Each Petty Cash Voucher shall not exceed I! 1,000.00.
A Disbursement Voucher shall be prepared for the replenishment of the Petty Cash Fund during the year, duly supported by the Petty Cash Replenishment Report 129
, the Petty Cash Voucher and the supporting documents. An Obligation Request shall be prepared for each replenishment and recorded in the register based on the actual expenses.
At the end of the year, all balances of the Petty Cash Fund shall be returned to the Local Treasurer together with the liquidation thereof.
X. Disbursement Through Direct Payment. - The direct payment scheme may be adopted by the Local Government Unit whereby contract account/delivery of equipment is paid directly to the bank account of the contractor/supplier from the proceeds of loan or bond flotation deposited in the servicing bank of the Local Government Unit. The prior requirements for obligation of the transaction in accordance with this Manual shall be followed. A Disbursement Voucher shall be prepared for direct payment supported by all the required documents. The usual certifications by the requesting officer, the Local Budget Officer and the Local Accountant, and the approval of the Local Chief Executive on the Obligation Request and the Disbursement Voucher shall likewise be strictly followed.
Under the Direct Payment System, the Local Treasurer shall prepare an Authority for Direct Payment130
, which shall be signed by him/her and countersigned by the Local Administrator. The Local Treasurer shall forward the original copy of the Authority for Direct Payment to the depository bank of the Local Government Unit which will duly acknowledge receipt thereof. The bank shall furnish the Local Government Unit the Debit Memo/ Advice or a snapshot of bank transactions showing the direct payment made to the supplier/contractor. The Local Treasurer shall then submit the acknowledged copy of the Authority for Direct Payment, Bank Debit Memo/Advice or bank snapshot and supporting documents to the Local Accountant for recording in the Journal Entry
Voucher.
Chapter 4. BARANGA Y APPROPRIATIONS, COMMITMENTS AND
DISBURSEMENTS
Section 84. Policies and Procedures on Barangay Appropriations and Commitments. -
A. Appropriations:
129 PCRR, LTO Form 54
130 ADP
134
1) The Barangay Kagawad who is designated as Chairman of the Committee on Appropriation shall be responsible in monitoring the approved appropriations and the charges against the following funds:
a) General Fund b) 20% Development Fund c) Calamity Fund d) Sanguniang Kabataan Fund e) Gender and Development Fund
2) The Chairman of the Committee on Appropriations shall monitor the use of appropriated funds through the Registry of Appropriations and Commitments which shall be maintained by fund, class, i. e., Personal Services, Maintenance and Other Operating Expenses, Financial Expenses and Capital Outlay, with breakdown as to account classification. The Barangay Record Keeper 131 shall prepare the Registry of Appropriations and Commitments may examine/check anytime, the balance of appropriations and the recording in the registries.
B. Commitments: 132
I) Charges (deductions) against the appropriated funds shall be based on the commitments made by the barangay as shown in the Disbursement Vouchers 133
, Payrolls 134 for personal services, Contracts or Purchase Orders 135
, and Purchase Requests. 136
2) ln addition to the certification in the Disbursement Voucher/Payroll, the existence of available appropriations as reflected in the Sangguniang Bayan Resolution shall also be shown on the face of the Contracts and Purchase Orders.
3) For all procurement including infrastructure projects, the Chairman of the Committee on Appropriations shall certify the availability of funds by stamping "Funds Available" on the face of the Purchase Request and affix his signature indicating the estimated required amount on the available appropriation on the Purchase Request based on the Sangguniang Bayan Resolution, authorizing the construction/procurement, and
4) Expenses for Personal Services, Maintenance and Other Operating Expenses and Financial Expenses shall be charged against respective appropriations, while investments, purchase of Property, Plant and Equipment and construction of Public Infrastructure and Reforestation Projects shall be charged against appropriations for Capital Outlay.
131 BRK 132 "C · ,. I fib d I ·1 "Obi' . " omnutment s 10 e use .synonymous y w,t 1 1gat1011 . 133 O V-Bnrnngny, LTO Far111 56 134 Pnyrall-Bnrnngny, LTO Fom1 57 13s PO-Bnrnngny, L TO Fam, 58 136 PR-Bnrnngny, LTO I 'arm 59
135
5) Certification of the Chairman of the Committee on Appropriations on the Purchase Orders/Contracts, etc., on the "existence of available appropriations" means the availability of appropriations to cover the commitment.
6) Commitments/Charges against the appropriations for the four maJor classes of expenditures shall include, but are not limited to the following:
a) Personal Services137 -
1. Salaries and Wages (Regular) 11. Salaries and Wages (Contractual)
111. Honoraria 1v. Cash Gift
b) Maintenance and Other Operating Expenses 138 -
1) Travelling Expenses (Local) 2) Training Expenses 3) Supplies and Materials Expenses 4) Utility Expenses 5) Communication Expenses 6) Membership Dues and Contributions to Organizations 7) Rent Expenses 8) Repairs and Maintenance of Property Plant and Equipment 9) Repairs and Maintenance of Public Infrastructures 10) Taxes, Insurance Premiums and Other Fees 11) Capital Outlay:
1. Investment in Treasury Bills 11. Purchase/Construction of the following Property Plant
and Equipment139:
a) Land b) Land Improvements c) Buildings d) Leasehold Improvements e) Office Equipment f) Furniture and Fixtures g) Books h) Motor Vehicles i) Other Equipment j) Public Infrastructures k) Reforestation Projects
137 PS
138 MOOE
139 PPE
136
12) Financial Expenses 13) Interest Expenses 14) Bank Charges ( cost of checkbooks) 15) Other Financial Charges
Section 85. Registry of Appropriations and Commitments. - (a) The following registries shall be maintained by the Chairman of the Committee on Appropriations/Barangay Record Keeper for the five (5) funds of the barangay by class and by object of expenditures:
I) Registry of Appropriations and Commitments - General Fund 2) Registry of Appropriations and Commitments - Calamity Fund 3) Registry of Appropriations and Commitments - 20% Development Fund 4) Registry of Appropriations and Commitments -Sangguniang Kabataan Fund 5) Registry of Appropriations and Commitments - Gender and Development Fund
(b) Postings in the appropriations columns of the Registry of Appropriations and Commitments shal I be based on the General Appropriations Ordinance of the barangay.
(c) Posting of commitments in the Registry of Appropriations and Commitments shall be based on the amount of commitments/charges as certified in the Disbursement Voucher, Payroll, and Contract/Purchase Request.
(d) Commitments/Charges for Personnel Services, Maintenance and Other Operating Expenses, Financial Expenses and Capital Outlay shall be recorded in their respective Registry of Appropriations and Commitments for the General Fund.
(e) Commitments/Charges against the Calamity Fund, 20% Development Fund, Sangguniang Kabataan Fund and Gender and Development Fund shall be recorded in their respective Registry of Appropriations and Commitments with a detailed breakdown of expenditures.
(f) The balance of appropriations for Personal Services, Maintenance and Other Operating Expenses, Financial Expenses and Calamity Fund shall be reverted/closed at the end of the year and shall not be made available for commitments/charges after the calendar year, unless otherwise authorized to be retained as continuing appropriations, and
(g) Balance of appropriations for Capital Outlay, 20% Develoment Fund and Sanggunian Kabataan Fund, however, shall be valid until fully spent or until the project is completer. The balance, if any, shall be forwarded to the Registry of Appropriations and Commitments of the following year.
Section 86. Basic Supporting Documents for Barangay Disbursements. -
a) For Payment of Salaries/Honoraria and Other Personal Services:
1) Approved Payroll supported by Daily Time Record 140;
140 DTR
137
2) Minutes of Meeting of the Sangguniang Barangay duly signed by the members of the Sangguniang Bayan and the Barangay Secretary;
3) Approved Application for Leave141; and
4) Approved Appointment, Oath of Office, Certificate of Assumption of Office and Statement of Assets and Liabilities for newly hired employees 142
b) For Cash Advance for Payroll:
1) Net amount of approved Payroll for the period.
c) For Grant of Cash Advance for Travel:
1) Travel Order; and 2) Itinerary of Travel
d) Liquidation of Cash Advance:
I) Payroll Fund - paid Disbursement Voucher/Payroll. 2) Travel - original of the Travel Order, Plane/Bus Ticket or its equivalent, Official
Receipts, if any, Boarding Pass, Certificate of Appearance and Liquidation Report.
3) Training Expenses - Certificate of Appearance, Certificate of Training and Invitation to attend the training.
e) For Payment of Maintenance and Other Operating Expenses:
1) Membership Dues - Statement of Account/Bill of the organization. 2) Utility and Communication Expenses - Bills. 3) Repairs and Maintenance Job Orders, Invoices, Certificate of
Warranty/Guarantee, Pre-repair Inspection Report and Post-Repair Inspection Report, Inspection and Acceptance Report, Labor Payroll or Contract.
f) For Purchase of Equipment, Supplies, Materials and Other Items:
1) Purchase Request; 2) Purchase Order; 3) B.dd. D 143
1 mg ocuments; 4) Supplier's Invoice; 5) Delivery Receipt or the Receipt portion of the Supplier's Invoice duly signed; and 6) Inspection and Acceptance Report.
g) For Infrastructure and Reforestation Projects:
141 For leave with pay 142 For first claim 143 If through bidding
138
1) By Contract:
a) Bidding Documents; b) Plans and Specifications; c) Notice of Bidding; d) Contract; e) Notice to Proceed; f) Billings of Contractors; g) Inspection and Acceptance Report; h) Duly verified Contractor's Project Accomplishment/Completion Report; and i) Program of Work:
2) By Administration:
a) Supplies - Purchase Orders, Invoice, Bidding documents or equivalent, 144
Delivery Receipts and Inspection and Acceptance Report. b) Wages - Labor Payroll, Daily Time Record and Contract for Labor; and c) Plans/Programs of Work.
h) For Repairs and Maintenance of Property Plant and Equipment:
1) Pre-Repair Inspection Report; 2) Job Order/Contract; 3) Supplier's Invoice; 4) Post-Repair Inspection Report; and
5) Inspection and Acceptance Report.
Section 87. Barangay Disbursement by Checks Drawn Against Barangay Funds Maintained with Depository Bank. -
A. Policies and Procedures:
1) All disbursements shall be covered with duly processed and approved Disbursement Vouchers/Payrolls.
2) The Disbursement Vouchers/Payrolls shall be prepared by the Barangay Record Keeper.
3) The Barangay Treasurer shall be responsible for paying claims against the barangay.
4) All disbursements shall be in accordance with existing rules and regulations.
5) All claims shall be approved by the Punong Barangay and certified as to the validity, propriety and legality of the claim. In case of claim chargeable against Sangguniang
144 Depending on the mode of procu re111e11 t used
139
Kabataan Fund, the Chairman of the Sangguniang Kabataan145
shall initial under the name of the Punong Barangay.
6) Payments shall be drawn against the depository account maintained with depository bank by the barangay.
7) The check shall be issued in the name of the payee as indicated in the Disbursement Voucher/Payroll.
8) The check shall be signed by the Barangay Treasurer and countersigned by Punong Barangay.
9) All disbursements by check shall be reported in the Summary of Checks Issued.
10) In case checks are waylaid, lost through theft or force majeure, etc., the Barangay
Treasurer shall immediately notify and issue a "Stoppage of Payment" notice to the bank.
11) Stale check shal I be replaced only when the original is submitted to the Barangay Treasurer for replacement
8. Recording:
l) All checks issued including cancelled ones shall be recorded by the Barangay Treasurer in correct numerical sequence in the Summary of Checks Issued.·
146
2) Recordings shall be based on the original paid Disbursement Vouchers/Payrolls supported with carbon copy of the checks issued and other supporting documents.
3) All the checks issued shall be recorded daily by the Barangay Treasurer in the Summary of Checks issued.
4) The Summary of Checks Issued shall be sub-totaled and recorded in the Cash on Hand and in Bank Registers daily.
5) The Summary of Checks Issued shall be submitted to the Barangay Record Keeper for recording in the Check Disbursement Register weekly.
C. Reporting:
I) The Barangay Record Keeper shall record check disbursement based on the certified Summary of Checks Issued in the Check Disbursement Register 147 weekly.
145 SK
146 SCkI-Barangay, LTO Form 60
141 CDR-Barangay, LTO Form 61
140
2) At the end of the month, the Check Disbursement Register shall be totaled, balanced, ruled recapitulated and certified; and
3) The Barangay Record Keeper shall submit the Check Disbursement Register together with the Summary of Check Issued to the CittMunicipal Accountant for recording of the checks issued in the books on or before the 51 day of the following month.
Section 88. Barangay Disbursement by Checks Drawn Against Barangay Funds Deposited with the City/Municipal Treasury. - (a) The Barangay Treasurer shall prepare in four (4) copies the barangay Disbursement Voucher in the name of the payee. The Disbursement Voucher shall be certified as follows:
l ) The Barangay Treasurer certifies and approves the Disbursement Voucher or Payroll as to validity, propriety, and legality of the claim involved;
2) The Punong Barangay approves the Disbursement Voucher or Payroll; and
3) The City/Municipal Accountant certifies on the Disbursement Voucher that the disbursement is supported by documents evidencing completeness of requirements as well as other certifications that may be required by auditing and acsounting rules and regulations.
(b) A copy of the duly certified and approved barangay Disbursement Voucher shall be furnished the City/Municipal Accountant who shall prepare a city/municipal Disbursement Voucher in the name of the Barangay Treasurer for the withdrawal of the amount.
( c) The city/municipal Disbursement Voucher for the withdrawal of barangay funds shall be certified and approved in accordance with existing regulations. A check shall then be drawn by the City/M�nicipal Treasurer and countersigned by the proper city/municipal official. The check shall be in the name of the payee as appearing in the barangay Disbursement Voucher.
(d) The Barangay Treasurer shall acknowledge the receipt of the check by signing the receipt portion of the city/municipal Disbursement Voucher. He shall deliver the check to the payee who shall acknowledge the receipt of the payment by signing the receipt portion of the barangay
Disbursement Voucher and/or issuing the official receipt therefor. The Bar,mgay Treasurer shall record the transaction in his cash book as a credit to the Cash in City/Municipal Treasury columns, and transmit to the City/Municipal Accountant, under proper acknowledgement, the copies of the paid barangay Disbursement Voucher and its supporting papers for recording in the barangay books.
( e) The barangay Disbursement Voucher shall be distributed as follows:
Original
Duplicate Triplicate
- to the Local Auditor concerned, through the City/Municipal Accountant.
- to the City/Municipal Accountant. - To be attached to the city/municipal
141
Quadruplicate
Disbursement Voucher for the withdrawal of deposit.
- To the Barangay Treasurer.
(f) Disbursements by check148 shall be recorded in the barangay books.
Section 89. Barangay Disbursement Out of Cash Advance for Payroll Charged Against
Barangay Funds Maintained with Depository Bank.
A. Policies and Procedures:
l) Cash payments shall be made out of the cash advance given to the Barangay
Treasurer/ Accountable Officer.
2) The cash advance shall be used solely for payment of salaries, honoraria and other allowances due the barangay officials and employees.
3) The cash advance shall not be used for the encashment of checks or for liquidation of previous cash advance.
4) The cash advance shall be equal to the net amount of the payroll corresponding to the pay period.
5) The cash advance shall be liquidated within five (5) days after the end of the pay period. Any unclaimed honoraria/salaries/allowances shall be refunded to close the account.
6) All paid Disbursement Vouchers/Payrolls shall be recorded in the Summary of Cash Payments.
7) The Summary of Cash Payments supported by paid Disbursement Voucher/Payroll shall be accomplished to support the liquidation of the cash advance for payroll. In case the cash advance is more than the disbursements, the excess shall be refunded and an official receipt shal I be issued therefor.
8) Succeeding cash advance shall be granted only after full liquidation of the previous cash advance.
8. Recording:
l) Cash advance for payroll shall be recorded by the Barangay Record Keeper in the Cash Disbursement Registers based on the Summary of Check Issued submitted by the Barangay Treasurer;
14s The narrative flow ofproceduresfor barangay disbursements by check is shown in LTO Annex 62 of this Manual.
142
2) All payments out of cash advances for payroll shall be recorded by the Barangay Treasurer/ Accountable Officer in the Summary of Cash Payments 149 based on the paid Disbursement Vouchers/Payrolls;
3) Submission of the Summary of Cash Payments to the Barangay Record Keeper shall be supported with original paid Disbursement Vouchers/Payrolls;
4) Liquidation of cash advances shall be supported by Summary of Cash Payments and paid Disbursement Vouchers/Payrolls; and
5) The Barangay Record Keeper shall be responsible in recording transactions in the Cash Disbursement Registers.
C. Reporting:
1) The Barangay Record Keeper shall record the cash disbursement based on the certified Summary of Cash Payments in the Cash Disbursement Register.' so
2) At the end of the month, the Cash Disbursement Register shall be totaled, balanced, ruled recapitulated and certified, and
3) The Barangay Record Keeper shall submit the certified Cash Disbursement Registers to the City/Municipal Accountant for recording of the payments made in the books and postings of the transactions to the Subsidiary Ledger maintained for the Barangay Treasurer/ Accountable Officer on or before the 5
th day of the following month.
Section 90. Barangay Disbursements Out of Cash Advance from Payroll Charged Against Barangay Funds Deposited with the City/Municipal Treasury.
151 -
a) The City/Municipal Accountant shall prepare a Disbursement Voucher in the name of the Barangay Treasurer for the withdrawal of the amount of the payroll based on duly certified and approved payrolls. At the same time, he shall prepare the corresponding Debit Advice, Barangay Form No. 1.
b) The Disbursement Voucher for the withdrawal of barangay funds shall be certified and approved in accordance with existing regulations. A check in the name of the Barangay Treasurer for the amount of the withdrawal shall then be drawn by the City/Municipal Treasurer and countersigned by the proper city/municipal official.
149 SCP-Barangay, LTO Form 63 1so CDReg-Barangay, LTO Form 64 151
The narrative flow ofprocedures for barangay disbursements out of cash advances for payroll/travel is shown in Annex 66 of this Manual.
143
c) The Barangay Treasurer shall acknowledge the receipt of the check by signing the receipt portion of the city/municipal Disbursement Voucher, and shall record the transaction in the Barangay Cash Book as a debit in the Cash Advances columns.
d) When the payments on the payrolls have been made, the Barangay Treasurer shall record in the Barangay Cash Book the total amount paid as a credit in the Cash Advances columns, and transmit to the City/Municipal Accountant under proper acknowledgment, the paid payrolls and their supporting papers, for recording in the barangay books.
e) The unexpended cash from the cash advance shall be re-deposited with the City/Municipal Treasurer following the same procedures as in the full liquidation of the petty cash fund for barangay funds deposited with the city/municipal treasury.
f) Copies of the paid payrolls shall be distributed as follows:
Original
Duplicate
Triplicate
Quadruplicate
To the Local Auditor concerned, through the City/Municipal Accountant To the City/Municipal Accountant To be attached to city/municipal disbursement voucher for withdrawal of deposit To the Barangay Treasurer
Section 91. Disbursement Out of Cash Advance for Travel and Special Purpose/Time-Bound Undertaking. 152
A. Policies and Procedures:
I) For local/foreign travel, liquidation shall be done within a period of thirty/sixty ((30/60) days upon return to the personnel's workstation.
2) Cash advance for special purpose/time-bound undertaking shall be liquidated upon accomplishment of the purpose for which it was granted.
3) Excess cash advance shall be refunded and an official receipt shall be issued by the Barangay Treasurer.
4) The Liquidation Report153 with appropriate supporting documents shall be submitted to
the Barangay Record Keeper, who in turn shall submit it to the City/Municipal Accountant for recording in the books on or before the 5th day of the following month.
B. Recording:
152 The narrative.flow ofprocedurefor barangay disbursements out of cash advance.for travel is shown in Annex 66 of this Manual.
153 LR-Barangay, LTO Form 65
144
1) Liquidation of cash advances shall be supported by Liquidation Report and pertinent
documents, and
2) The Liquidation Report shall be submitted by the Accountable Officer to the City/Municipal Accountant, through the Barangay Record Keeper, to serve as basis in recording the liquidation in the books.
Section 92. Barangay Disbursement Out of the Petty Cash Fund.154
A. Policies and Procedures:
1) The Petty Cash Fund shall be maintained using the Imprest System. The balance of the Petty Cash Fund shall not be closed at the end of the year.
2) The fund shall be kept separately from the regular collections and advances granted for a particular purpose and shall not be used for payment of regular expenses.
3) The amount of the Petty Cash Fund shall be determined by the Sangguniang Bayan, but the petty cash that the Barangay Treasurer may be authorized to hold shall not exceed twenty percent (20%) of the funds available and to the credit of the barangay treasury. (Sec. 334 (b), LGC)
4) All disbursements out of Petty Cash Fund shall be covered by duly accomplished and approved Petty Cash Vouchers
155 supported by cash invoice, official receipts or other
evidence of disbursements required under applicable accounting and auditing rules and regulations.
5) All paid Petty Cash Vouchers shall be reported in the Summary of Paid Petty Cash Vouchers to be certified by the Petty Cash Fund Custodian.
6) The Petty Cash Fund shall be replenished as soon as disbursements reach seventy five percent (75%) of as needed.
7) Replenishment of the Petty Cash Fund shall be made by submitting a Disbursement Voucher for the purpose, supported by duly certified Summary of Paid Petty Cash
Vouchers, paid Petty Cash Vouchers and supporting documents.
8) In case the Petty Cash Fund Custodian resigns or ceases as custodian of the fund, full accounting/liquidation thereof shall be made. Any remaining cash shall be refunded to close the account.
9) In no case shall the remammg cash of the former Petty Cash Fund Custodian be transferred to the incoming Petty Cash Fund Custodian. For a complete accounting, the
154 The narrative .flow of procedures on the establishment. payment, replenishment and liquidation of Barangay
petty cashfund is shown in l TO Annex 70 of the Manual.
155 PCV-Barm1gay, LTO Form 67
145
account of the former Petty Cash Fund Custodian shall be closed and a new account shall be opened for the incoming Petty Cash Fund Custodian.
B. Recording:
1) Petty Cash Vouchers shall be recorded in the Summary of Paid Petty Cash Vouchers 156
which shall be prepared by the Petty Cash Fund Custodian to report all payments made out of the Petty Cash Fund.
2) Replenishment of the Petty Cash Fund shall be supported with the Summary of Paid Petty Cash Vouchers and all the paid Petty Cash Vouchers supporting the entries in the Summary of Paid Petty Cash Vouchers.
3) The submission of the Summary of Paid Petty Cash Vouchers to the Barangay Record Keeper shall be supported with original paid Petty Cash Vouchers and their supporting documents.
4) The establishment and replenishment of the Petty Cash Fund shall be recorded in the Petty Cash Fund Register.
5) The Petty Cash fund Register which shall serve as the petty cash book shall be maintained by the Barangay Treasurer/Petty Cash Fund Custodian.
6) Recording of payments in the Petty Cash Fund Register shall be based from the Summary of Paid Petty Cash Vouchers and shall be submitted to the Barangay Record Keeper for submission to the City/Municipal Accountant for recording in the books.
C. Reporting:
1) The Petty Cash Fund Custodian shall record the disbursements out of Petty Cash Fund based on the certified Summary of Paid Petty Cash Vouchers in the Petty Cash Fund
Register. 157
2) At the end of the month, the Petty Cash Fund Register shall be totaled, balanced, ruled, recapitulated, certified and submitted to the Barangay Record Keeper.
3) The Barangay Record Keeper shall submit the certified Petty Cash Fund Registers to the City/Municipal Accountant to serve as basis in posting the transaction to the subsidiary ledger of the Petty Cash Fund Custodian on or before the 5th day of the following month.
4) The Barangay Record Keeper shall submit the certified Summary of Paid Petty Cash Vouchers for the unreplenished paid Petty Cash Vouchers to the City/Municipal Accountant on or before the 5
th day of January of the following year to take up expenses which remain unrecorded in the books.
156 SPPCV-Barangay, LTO Form 68 1s7 PCFReg-Barangay, LTO Form 69
146
Chapter 5. SANGGUN/ANG KABATAANBVDGET
Section 93. General guidelines in the preparation of the Sangguniang Kabataan 158
Budget. - (a) Ten percent (10%) of the General Fund of the barangay shall be set aside for the Sanggunian Kabataan.
(b) The proceeds of fund-raising activities shall be tax-exempt and shall accrue to the General Fund of the Sanggunian Kabataan: Provided, however, That in the appropriation thereof, the specific purpose for which such activity has been held shall first be satisfied. (Sec. 426 (c), LGC)
(c) The annual budget of the Sanggunian Kabataan shall consist of two (2) parts - the income portion and the expenditure portion:
1) Income Portion. - The income portion consists of the beginning balances which are the unappropriated and/or unexpended amounts of the revenues and receipts of prior calendar years carried forward to the budget year, and estimates of income certified collectible by the City/Municipal Treasurer.
2) Expenditure Portion. - The expenditure portion consists of estimated expenditures which are the total appropriations covering Current Operating Expenditures and Capital Outlays.
(d) Sanggunian Kabataan budgeting is the same as that of the other LG Us. The major phases are:
I) Budget Preparation;
2) Budget Authorization;
3) Budget Review;
4) Budget Execution; and
5) Budget Accountability and Reporting.
Section 94. Sanggunian Kabataan Disbursements. - Sanggunian Kabataan disbursements shall conform to the procedures for barangay disbursements outlined in this Manual except that in the preparation of the Obligation Request and Disbursement Voucher, the requesting official and signatory in "Box A" of the Disbursement Voucher, respectively, shall be the Sanggunian Kabataan Chairman.
1ss SK
147
l.
LOCAL TREASURY OPERATIONS
MANUAL
FUND MANAGEMENT PRACTICES,
ACCOUNTABILITY, CASH
EXAMINATION, SHORTAGES,
SETTLEMENT OF ACCOUNTS, AND
LIABILITIES OF LOCAL TREASURERS
IN THE ADMINISTRATION OF LOCAL
TAXES, FEES AND CHARGES
BOOK FOUR
148
Chapter 1. FUND MANAGEMENT PRACTICES
In line with the increased fiscal responsibility of Local Treasurers and 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.
Governance in the local context is how decisions are made and implemented at the local level and by whom. 159
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. lt comprises mechanisms, processes, and institutions through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations, and mediate their differences. 160
Good governance is about efficiency in the management of public funds, demanding high standards of integrity, transparency and accountability. 161 Thus, Local Treasurers need to continuously update their knowledge and skills on their specific area of good governance, which is fund or cash management.
Section 95. Cash Management and Programming and Cash Programming Tools. -
A. Cash Management and Programming. - Local Treasurers must be able to manage the cash
such that it is available when it is needed for payment of obligations and at the same time optimize its utilization, ensure that released allotments are adequately covered by available cash and/or future collections, and provide information to facilitate the control of expenditures. An effective cash management may be achieved through the following:
1) Forecasting cash requirements based on the overall local development plans; 2) Determining all the possible sources of cash and the cost involved; 3) Accelerating the collection of receivables;
4) Instituting control measures over cash receipts;
5) Instituting control measures over cash disbursements thereby being assured that only legitimate obligations are paid; and
6) Investing temporarily idle cash in temporary investments to reduce the opportunity cost of capital.
B. Cash Programming Tools.162
-Cash Programming Tools that may aid the Local Treasurer in cash management and programming are the Cash Flow Forecast and the Cash Flow Analysis.
Section 96. Cash Flow Forecast.163
- (a) The Local Treasurer uses the Cash Flow Forecast as a tool in estimating projected cash flows based on certain assumptions. The Cash Flow Forecast
1s9 p. 101, East and Southeast Asia Conference on Decentralization 160 Governance for Sustainable Human Development, United Nations Development Programme (UNDP), 1997. 161 p. 33, UBOM for LG Us 162 See Sec. 75, (C), (2) of this Manual 163 CFF, LTO form 81
149
is a monthly schedule of anticipated receipts and disbursements of the local government unit for the fiscal year showing the beginning and ending cash balances of each month. The forecast is prepared at the beginning of the year and revised periodically depending upon the need of the local government unit and when circumstances require its revision. The Cash Flow Forecast enables the Local Chief Executive and the Local Treasurer to plan for an effective management and utilization of cash of the local government unit. (p. 91, UBOMfor LGUs)
(b) The Cash Flow Forecast shows the estimated cash inflows and cash outflows of the local government unit classified according to three (3) activities: operating activities, financing activities and investing activities.
I) Cash Flow from Operating Activities - pertains to the receipts from, and disbursements of cash out of, the regular and primary operations of the local government unit such as from collection of taxes, share from IRA, payment to creditors and employees, etc. This also includes payment of interest on bank loans and other loan-related charges.
2) Cash Flow from Financing Activities - includes receipt of cash from bank loans, proceeds from the flotation of bonds and receipts from other types of borrowings. This also includes payment of principal on loans and other borrowings.
3) Cash Flow from Investing Activities - pertains to receipts from the sale, acquisition or purchase of long term investments such as real estate, machinery and other Plant, Property and Equipment.
(c) The Cash Flow Forecast shall be supported by the following:
l) Cash Receipts Forecast164
- This is a schedule of all income collections and other receipts to be prepared by all collecting units of the. All receipts shall also be classified into operating, financing and investing activities.
2) Cash Disbursement Forecast 165 - This is a schedule of all expenditures to be
prepared by the local treasury personnel in charge of expenditures and disbursements. Under the Cash Disbursement Forecast, all cash outflow shall be presented according to operating, financing and investing activities of the local government unit.
(d) The preparation of the Cash Flow Forecast involves the following activities:
1. Month-to-month estimates of receipts from taxes based on actual monthly collection data and reports and historical trends on tax collection by the LGU;
11. Monthly estimate of other revenues based on past collection performances of the LGU and taking into account the irregularity and seasonality of the collection of non-tax revenues;
164 CRF, LTO form 82 16s CDF, LTO form 83
150
111. Listing of all accounts payable and outstanding obligations to determine when they will become due and demandable, that is, upon completion or rendition of services and delivery of goods. These accounts should be grouped according to the month when they will become eligible for payment;
1v. Listing of all regular and recurring expenses such as payroll, rental or lease, security and janitorial services, utilities, communication, etc.;
v. Estimates and monthly schedule of variable expenses such as travel, supplies and materials, service contracts, etc.; and
v1. Monthly estimates of payments for interest and principal on loans and borrowings, capital outlay and other material expenses. (pp. 91-92, UBOM for LG Us)
Section 97. Cash Flow Analysis.166
- (a) The Cash Flow Analysis is a cash flow monitoring tool used to guide the Local Chief Executive, the Local Treasurer, and the Local Budget Officer to control the releases of allotment depending on the collection/expenditure performance during the period. It provides information on the cash overage/surplus or cash shortage/deficit on a monthly or periodic basis, so that, timely decisions can be made for wise and prudent cash utilization.
(b) The preparation of the Cash Flow Analysis requires the following information:
1. Actual cash receipts and disbursements of the month or period;
11. Actual cash receipts and disbursements from the beginning of the year to the end of the reporting month (Year-to-Date Actual). This will become next month's beginning balance;
111. Year to date forecast or estimates which is the cumulative total of the projected cash flow from the beginning of the year to the month under analysis, as indicated in the Cash Flow Forecast;
1v. Adjusted Estimated Annual Amount167 which is computed as follows:
AEAA = Aytd + P + Anc/d - Aac/d
Where: AEAA is the adjusted estimated annual amount; Aytd is the actual year to date;
166 CFA, LTD Form 84
167 AEAA
P is the projected cash flow for remaining months;
151
Anc/d are the amounts not yet collected/disbursed but projected for previous/this month and deemed to be still collectible or payable; and
Aac/d are the amounts already collected/disbursed but projected for next months.
v. Annual Original Forecast which is the annual total amount in the Cash Flow Forecast; and
v1. Variance between the Adjusted Estimated Annual Amount and the Annual Original Forecast. The actual and adjusted figures are subtracted from the Annual Original Forecast figure. (pp. 92-93, UBOMfor LGUs)
Section 98. Information Provided by the Cash Flow Forecast and Cash Flow Analysis. -
The analysis of the Cash Flow provides the following information to the Local Chief Executive, the Sanggunian, the Local Finance Committee and other fiscal officers of the local government unit, so that, important fiscal decisions and policies could be promptly introduced and implemented:
152
a) Excess in the Collection of Taxes and Other Revenues. - This is generally good, but a regular and very substantial excess in the collection may mean an underestimated original cash collection forecast. This is particularly applicable if the to-date variance is also reflected in the annual variance. In this case, a re-evaluation of the annual forecast may be required. If there is substantial net annual excess in the receipts for whatever reason, the Local Chief Executive may decide to increase the annual budget for the succeeding year.
b) Under-Collection of Taxes and Other Revenues. - This may mean more efforts should be exerted in the collection of such taxes or generation of such revenues. A consistently big shortfall in collection should cause alarm to the Local Chief Executive and other local officials on possible problems in collection efforts or in resource mobilization operations. In this instance, estimates should be adjusted to a more realistic level. The shortfall in collection should be considered in deciding any subsequent releases of allotment.
c) Excess in the Disbursements. - This means unplanned expenditures are being paid. Consistent material disbursement excess should warn the Local Chief Executive on the possibility of imposing additional reserves, and suspension or postponement of planned activities.
d) Under-Disbursement. - This may mean savings if the annual variance resulted from the non-incurrence of certain regular expenses or project expenses costing less than the estimated amounts. Under-disbursement may also result from postponement of payments to contractors or for obligations that are not yet legally due.
Long-outstanding obligations should be investigated and proper action should be undertaken to settle them if there are valid claimants, or to revert them to surplus if there are no more valid claimants after the lapse of two (2) years. Long-outstanding obligations should also warn local officials of indiscriminate commitment or obligation of funds even without valid claimants or contracts. Sources of savings should be evaluated and determined as early as possible, so that, funds can be used or appropriated for some other purpose.
e) Large Amount of Idle Cash that may be Invested. - Idle cash is indicated by the monthly ending cash balances. If the amount is more than next month's estimated disbursements, the excess is expected to be idle for at least the succeeding month and may be invested in short-term investments. The most common investment of idle funds is the time deposit placement with LGU depository banks. Depending upon the length of time that the LGU funds are expected to be idle, that is, if funds are not expected to be disbursed in the short term, such funds should be invested in a riskfree investment with a higher interest yield. To obtain maximum benefits, the Local Treasurer should select the government depository bank with the best interest offering. (pp. 93-94, UBOM/or LGUs)
Section 99. Daily Cash Flow. - The Local Treasurer may also prepare a Daily Cash Flow Statement to show the highs and lows in cash inflows and cash outflows on a daily basis. The daily cash flows are managed to avoid embarrassment arising from the inability to meet immediate cash requirements of the local government unit, to pay suppliers on due dates, and to profitably make use of temporary idle cash balances. The Daily Cash Flow Statement may be prepared in addition to the monthly Cash Flow Forecast and the Cash Flow Analysis.
Section 100. Number of Days' Usage in Cash. - (a) A local government unit may adopt a
policy of maintaining its cash at a level equal to a certain number of days' requirement. This may be done by computing the average cash requirement per day and the number of days' usage in cash. The following formulas are used in the computations:
Operating Expenses (net of depreciation and other non-cash charges)
a) Average Cash Requirement= Number of Working Days in One Year
Cash Balances
b) Number of Days' Usage in Cash = Average Cash Requirement Per Day
The resulting Number of Days' Usage in Cash will show how many days the current cash balances of the local government unit will be able to cover current operational requirements.
(b) Capital Investment and Expenditure Assessment. - With the expanded role of the Local Treasurer as the financial adviser to the Local Chief Executive in the sourcing and management
of LGU funds and the increasing opportunity for LGUs to embark on long-term incomegenerating capital projects, it is becoming more imperative that the Local Treasurer should have
153
basic working knowledge of the different tools used in the evaluation and assessment of capital investment activities. This is so because capital projects involve the commitment of a large amount of LOU resources and funds and increase the financial risk in their operation, so much so that whatever decisions made in the present would have future material repercussions to the LGU.
Section 101. The Administrative Process for Capital Expenditures. - This involves searching for capital investment opportunities, submission of project proposals to prospective funders/underwriters, evaluation of various proposals, control of capital expenditures and follow-up of results. To be assured that capital investment proposals would be consistent with the LOU long-term plans and programs and to avoid waste of time, effort and resources, criteria for the project proposals must be established. The criteria may include the objective, relevance, suitability to the LOU, and most importantly, profitability or income-generation potential of the proposed project. To guide the Local Treasurer in the evaluation and analysis of the different project proposals, the methods discussed in the succeeding sections may be employed.
Section 102. Payback Period. - The Payback Period refers to the length of time or number of years it will take to recover the initial outlay for a project. The formula for this is as follows:
Investment Payback Period = Annual Cash Inflow from Operations
The Annual Cash Inflow from Operations is the amount of cash a project is expected to generate annually. It is equal to the cash inflows from projected sales and or service fees minus the estimated cash outflows for operational expenses. The payback period will determine the number of years of recovering the cost of the project within the economic life of the asset. The economic life of an asset is its estimated useful I ife or that length of period during which economic benefits can be derived therefrom. It is usually shorter than the physical life of the asset.
1) Payback Period is Shorter than the Economic Life of the Asset. - If the payback period is shorter than the economic life of the asset, the LOU is expected to realize profit or investment return between the payback period and the economic life.
2) Payback Period is Equal to the Economic Life of the Asset. - If the economic life is just equal to the payback period, the investment would not be bringing in any income and may even be considered a losing proposition since the time value of money is disregarded.
3) Annual Cash Inflow is Uneven. - If the annual cash inflows are uneven, the payback period is computed by adding the annual cash inflows from year to year until the accumulated amount becomes equal to the investment cost. If the asset has a scrap value, the payback period may be computed by dividing the investment (less scrap value) by the annual cash inflow from operations.
Section 103. Discounted Cash Flow (Present Value of Cash Returns). - The Discounted Cash Flow Method in the evaluation of capital investment proposals consider the time value of money.
154
Time value of money refers to the expected increase in its peso value considering the prevailing interest rates, the passage of time, and opportunity cost of capital and similar factors.
In the evaluation of capital projects, it is important to compare the present value of future cash inflows with the present value of the investment cost. The expected cash inflows of a capital project represent future values since they are to be realized yet in the future. On the other hand, the capital investment is an outlay generally made at the inception of the project, hence, it is a present value. In order to assess the viability and profitability of an investment or capital project, the present value of the expected cash inflow must therefore be determined before they are compared with the present value of investment.
To illustrate, a peso invested today must be considered greater than P 1.00 after one (1) year. An investment of P 600.00 today would be greater than P 700.00 to be collected after one (I) year if the cost of money is twenty-five percent (25%) per annum. This is because the P 600.00 of today must amount to P 750.00 after one (1) year (P 600.00 x 125%). In other words, P 1.00 of today must be P l .25 after one (1) year. Thus, the ratio of the present value based on the future value is 1:l.25 or .8 (or 8%). In the reverse, P 80.00 of today must be worth P 100.00 a year after. The present value of P 700.00 to be collected next year must be P 560.00 (P 700.00/125% or P 700.00 x .8).
Present Value of an Annuity of 1. - This refers to the total of all the present values of 1 to be received (or paid) at regular intervals in the future. Thus, the Present Value of an Annuity of 1 for three (3) years discounted at twenty-five percent (25%) is equal to the total of the present values of 1 due after one ( 1) year, after two (2) years, and after three (3) years.
168
Illustration: The present value of an annuity of P 700.00 for three (3) years discounted at twenty-five percent (25%) will be computed by using the factor under Year 3 and under twenty-five percent (25%) as shown in the Annuity Table, as follows:
P 700.00 x 1.952 = P 1,366.40
This means that an investment of P 1,366.40 today which brings
in net cash inflows of P 700.00 for three (3) consecutive years must be earning at the rate of twenty-five percent (25%) per annum.
Present Value of Uneven Cash Returns. - If the annual cash returns are uneven, their present values are computed by multiplying each annual net cash inflow by the factor for the corresponding year and adding the products.
Illustration: Assume that the net cash inflows are as follows and the cost of
money is twenty-five percent (25%):
168 The factor to be used in the computation isfound in the Annuity Table, LTO Annex 85 of this Manual.
155
Solution:
1st Year 2nd Year 3rd Year
P 2,000.00 P 3,000.00 P 3,000.00
The net cash inflow of each year is multiplied by the present value of 1 discounted at twenty-five percent (25%) for one (1) year, two (2) years, and three (3) years, as the case may be, using the Annuity Table as follows:
P 2,000.00 x .800 P 3,000.00 x .640 P 3,000.00 x .512
=
P 1,600.00 P 1,920.00 P 1,536.00 P 5,056.00
This means that an investment of P 5,065.00 is earning at twentyfive percent (25%) per annum based on the given cash returns.
Discounted Rate of Return. - The Discounted Rate of Return is the rate at which an investment is earning. It is the rate which equates the present value of cash returns with the present value of the initial investment. In other words, if the cash returns were discounted at this rate, their present value would be equal to the present value of the investment.
The Discounted Rate of Return is computed as follows:
156
1) Determine the payback period; and
2) With the payback period as the factor, locate the same in the present value of the Annuity Table taking into account the economic life of the investment.
Illustration: A machine costing P 1,366.40 has an estimated economic life of three (3) years without scrap value. Annual cash returns have been estimated at P 700.00.
Solution: The Discounted Rate of Return is computed as follows:
�: Determine the Payback Period.
Investment Payback Period
Estimated Economic Life:
Divided by: Annual Cash Returns:
Equals:
P l ,366.40
P 700.00
l .952 years
Step 2: Locate 1.952 in the present value of the Annuity Table on line "3 years", the economic life of the asset. This is found in column "25%". The Discounted Rate of Return or the rate at which the investment is earning is twenty-five percent (25%).
Net Present Value. - This represents the excess of the present value of annual cash returns ( discounted at the lowest acceptable rate) over the present value of the initial capital investment.
This method is based on the fact that with identical cash flows from two alternatives, the project that is expected to earn a higher rate of return must require a smaller amount of investment. In other words, a project which requires a smaller amount of capital must be earning at a higher rate if it will bring in the same amount of cash returns for the same number of years.
Illustration: From a proposed investment of P 1,366.40, annual returns of � 700.00 per annum are expected during its economic life of three (3) years. Management has adopted the policy of approving project proposals if the rate of return is twenty percent (20%) or higher.
Solution: The Net Present Value is computed as follows:
Present value of Annual Cash Returns discounted at 20% (P 700.00 x 2.106 169
)
Less: Present Value of Investment
Net Present Value
P 1,474.20
P 1,366.40
P 107.80
This means that a project from which annual cash returns is P 700.00 for three (3) years and earning at the rate of twenty percent (20%) must require an investment of P 1,474.20. Inasmuch as the investment requirement in the project as proposed is P 1,366.40 only or less by P I 07.80, the rate of return on the project being evaluated must be higher than twenty percent (20%). Therefore, the project should be approved based on the rate of return criterion.
Present Value (Desirability or Profitability) Index. - The Present Value Index is the ratio of the Present Value of Annual Cash Returns discounted at the lowest acceptable rate to the Present Value of the Initial Investment Cost. It may also be defined as the ratio of the required investment under the rate required by management to the investment requirement for the project under evaluation. Thus, the higher is the present value index, the higher must be the rate of return on the project under review.
169 Factor based on the Annuity Tnble under" 3 yenrs" column and under "20%" column.
157
Illustration: Using the illustration under Net Present Value above, the Present Value Index is computed as follows:
Present value of annual cash returns discounted at the lowest acceptable rate of20% (P 700.00 x 2.106)
Divided by: Present Value of Investment
Present Value Index
P 1,474.20
P 1,366.40
This means that under this method, the Present Value Index must be at least 100% for the proposed project to deserve an approval based on the rate ofreturn requirement. 170
Section 104. Purpose and Need for Debt. - The LGU normally should rely on internally generated funds or grants to finance its capital needs. However, with the enactment of R. A. No. 7160 or the Local Government Code of 1991, more and more LGUs are financing acquisition or construction of projects and capital assets through the incurrence of loans from government banks or issuance and sale of bonds. The Local Treasurer should be able to advise the Local Chief Executive on the propriety of financing capital projects through bank loans or issuance of debt instruments such as bonds. The LGU should consider long-term financing for the acquisition, maintenance and replacement or expansion of physical assets (including land) only if these assets have a useful life of at least five (5) years or if the economic enterprise would be expected to generate revenue in the near term. Long-term loans should never be used to fund regular operating expenses.
Section 105. Funding Competing Capital Projects. - It is equally important for the Local Treasurers to know which capital project to choose from several alternative projects in order to maximize the utilization of loan proceeds. In the selection of projects to be funded, a balance will be established between the projects' abilities to meet the priorities of the LOU and the financial requirements of the projects. For each project, the viability and approvability of the project and its funding from long-term debt should be assessed based on the following factors:
1) Nature of the Project and Uses of Funds. - For each project for which the loan is proposed, the nature of the project, as well as the intended use of the loan proceeds should be fully described.
2) Cost-Benefit Analysis of the Project. - The benefits of the proposed project should be defined and, when appropriate, quantified in monetary terms. The sources and uses of funds should be identified and estimated. Where revenues are part of the benefits, all
17° Full discussion on the d(fferent i11formation required to be prepared by LG Us in order for them to be able to borrow fimds, such as preparation of project proposal, financial analysis, and other relevant project data, is contained in a separate manual entitled, "Borrower Assessment and Project Evaluation Manual".
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assumptions made in deriving the revenues should be documented. The validity of the assumptions and the risk associated with the revenue flows will be assessed. The costs of the project will be estimated, with the basis of estimates documented and the risk associated with the estimates assessed. If regular funds are proposed to be utilized, the impact upon the LGU budgets will be assessed.
3) Expenditure Plan and Sources of Debt Servicing. - A detailed plan for the funds expenditure and debt repayment should be developed for each project. The plan should demonstrate the timely matching of funds availability with project expenditures and that debt service should commence with the flow of revenues needed to pay the interest and principal on the debt. The basis of the estimates for the project cost expenditure plan and the basis of revenue cash flow estimates should be documented and the risk associated with those revenue flows should be analyzed.
Section 106. Debt Management Policies. - Since the Local Treasurer is the custodian of all funds of the LGU including funds sourced from loans and other types of indebtedness, it is equally important that he should be involved in the overall debt management strategy of the LGU.
The LGU should adopt and maintain effective debt management policies that recognize the capital improvement needs of the LGU, as well as the taxpayers' ability to pay while taking into account existing legal, economic, financial and debt market considerations. The following factors relevant to the issuance of debt should be considered:
I) Legal constraints on debt capacity and various financing alternatives;
2) The urgency of the capital requirements to be met and the economic costs of delay;
3) Willingness and financial ability of the taxpayers to pay for the capital improvements;
4) Proper balance between internal and external financing;
5) Current interest rates and other market considerations;
6) The financial condition of the LGU;
7) The types, availability and stability of the revenues to be pledged for the repayment
of the debt; and
8) Type of debt to be incurred/issued.
The LGU may adopt a combination of the following debt management policies depending upon
its needs and situation:
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1) Capital projects related to economic enterprise operations should be financed solely by debt to be repaid from user fees and revenues generated from the respective economic enterprise operations.
2) Capital projects not related to economic enterprise operations shall be financed by debt to be repaid from available revenue sources earmarked for said projects.
3) Cash surpluses, to the extent available and not restricted, should be used to finance scheduled capital projects.
4) The LGU shall resort to long-term debt only for purposes of constructing or acquiring capital assets such as market, Plant, Property and Equipment, and for making major renovations to existing capital projects.
5) All capital projects financed through loans and debt instruments should be financed for a period not to exceed the useful or economic life of the project.
6) The LGU shall not construct or acquire a public facility if it is unable to adequately provide for the subsequent annual operation and maintenance costs of the facility.
7) The LGU shall, at all times, manage its debt and sustain its financial position in order to maximize its debt capacity, and seek and maintain a high credit rating.
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8) The LGU should consider coordinating with other local government entities to the fullest extent possible, so as to minimize the overlapping debt burden to citizens.
9) The LGU shall ensure that an adequate system of internal control exists so as to provide reasonable assurance as to compliance with appropriate laws, rules, regulations and covenants associated with its outstanding debts.
10) Revenue sources will only be earmarked for debt service when legally available and when there are sufficient revenue sources to fund the LGU's regular operational needs.
11) The LGU shall avail of soft loans with concessional rates of interest and long repayment terms. In case the LGU issues bonds and other debt instrumentalities, it shall market its debt through the use of competitive bidding whenever deemed feasible, cost effective and advantageous to do so.
12) The LGU shall continually monitor its outstanding debt in relation to existing conditions in the debt market, and shall refinance/restructure its debt when it is more cost effective and advantageous to do so. The LGU may also consider the pre termination or early repayment of its debt when sufficient cost savmg_s can be realized.
In case the LGU issues bonds to finance its capital projects, it should stabilize its debt service payments through the use of appropriate stabilization arrangements such as the maintenance of a Sinking Fund or the establishment of Fund Reserves.
Section 107. LGU Financing Modalities Manual and Debt Management Manual. - To enable LGUs to have a publication-ready and web-based manual that will cover the description of the financing sources and a financing formulation guide for LGUs in analyzing alternative funding sources vis-a-vis their funding requirements, and selecting the appropriate funding source or sources, the LGU Financing Modalities Manual is separately issued for use by the LGUs. Corollary to the LGU Financing Modalities Manual is the Debt Management Manual that will serve as a guidebook for the sound management of LGU debts.
Chapter 2. ACCOUNTABILITY, RESPONSIBILITY AND LIABILITY OF
LOCAL TREASURERS FOR FUNDS AND PROPERTY
Section 108. Definition of Terms. - The following terms shall be understood in the sense as hereunder defined, unless the context otherwise indicates:
a) Accountability - refers to the 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.
b) Accountable Officer - the officer of any government agency whose duties permit or require the possession or custody of government funds or 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.
c) Certificate of Settlement and Balances 171
- 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.
d) Disallowance - the disapproval in audit of a transaction, either in whole or in part.
e) 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)
f) 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 thru payment or restitution as determined by competent authority and in accordance with law.
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g) 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)
h) 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.
i) 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.
j) 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)
k) 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.
1) 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.
m) Settlement - the process of determining the status or balance of the accountability of an accountable officer.
n) Suspension- the deferment of action to allow or disallow in audit a transaction pending compliance with certain requirements.
Section 109. Accountability of Government Funds and Property. - (a) Provincial, city and municipal officers and employees whose duties permit or require the possession or custody of government funds shall be accountable and responsible therefor and for the safekeeping thereof in conformity with the provisions of the accounting law (Sec.633, E. 0. No. 292). The Treasurer of a province, city, municipality, barangay or other local political subdivision, shall be ·primarily accountable for all government funds pertaining to his province, city, municipality, barangay or other local political subdivision as the case may be. In case of local government units which have not created the General Services Office172
, the Local Treasurers shall also be primarily accountable for all government properties pertaining to the province, city, municipality, barangay or other local political subdivision, as the case may be.
(b) Primary and Secondary Responsibility:
1. The head of a local government unit is immediately and primarily responsible for all government funds and property pertaining to his agency.
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ii. Persons entrusted with the possession or custody of the funds or property under the Local Chief Executive shall be immediately responsible to him without prejudice to the liability of either party to the government. (Sec. 102, P. D. No. 1445)
In the effective discharge of the aforementioned responsibility and accountability, the Local Chief Executive should ensure that the following functions are performed:
1) Develop and install a sound internal control structure to include the internal control and environment, accounting system and procedures.
2) Maintain the internal control environment in order to safeguard assets, produce reliable
financial information and promote operational efficiency. 173
Section 110. General Liability for Unlawful Expenditures .. - 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. (Sec. 103, P. D. No.
1445)
Section 111. Degree of Supervision Required of Primarily Responsible Officers. - The head of a local government unit shall exercise the diligence of a good father of a family in supervising accountable officers under his control to prevent the incurrence of loss of government funds or property, otherwise he shall be jointly and solidarily liable with the person primarily accountable therefor. The Local Treasurer shall likewise exercise the same degree of supervision over accountable officers under his supervision, otherwise he shall be jointly and
solidarily liable with them for the loss of government funds or property under their control. (Sec.
104, P. D. No. 1445)
Section 112. Measure of Liability of Accountable Officers. - (a) Every officer accountable for government property shall be liable for its money value 174
in case of improper or unauthorized use or misapplication thereof, by himself or any person for whose acts he may be responsible. He shall likewise be liable for all losses, damages, or deterioration occasioned by negligence in the keeping or use of the property, whether or not it be at the time in his actual custody.
(b) Every officer accountable for government funds shall be liable for all losses resulting from
the unlawful deposit, use, or application thereof and for all losses attributable to negligence in the keeping of the funds. (Sec. 105, P. D. No. 1445)
173 To guide the LCE in the establishment of a good internal control system, a full discussion on the concepts,
policies and procedures on internal control structure is presented in Annex 88 of this Manual. In addition, some basic Internal Control Questionnaires (JCQ) on the proper management, handling, custody and disbursement of funds, as well as on certain types of financial transactions, are presented in Annex 89 also of this Manual.
174 "Money Value", as used herein, means the book value of the lost property taking into consideration the
depreciation thereof (COA Decision No. 742, dated Feb. 9, 1989)
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( c) 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)
Section 113. Liability for Acts Done by Direction of Superior Officer. - (a) No accountable officer shall be relieved from liability by reason of his having acted under the direction of a superior officer in paying out, applying or disposing of the funds or property with which he is chargeable, unless prior to that act, he notified the superior officer in writing of the illegality of the payment, application, or disposition. The officer directing any illegal payment or disposition of the funds or property shall be primarily liable for the loss, while the accountable officer who fai Is to serve the required notice shall be secondarily liable. (Sec. 106, P. D. No. 1445)
(b) The Local Treasurer or any accountable officer is not relieved of liability for illegal payment, application or disposition of public funds and property because such illegal acts were done under the direction of a superior officer. The superior officer is primarily liable while the Local Treasurer or any accountable officer is secondarily liable.
(c) To relieve himself of liability, the Local Treasurer or accountable officer should give a written notice to a superior officer stating his opinion on the illegality of the payment, application or disposition of public funds or property being directed by such superior officer. If the latter insists, then he is solely liable of the consequences in the event that the opinion of the accountable officer is upheld. (Handbook on Cash Management and Control System, COA, May 2004)
Section 114. Period of Accountability. - (a) As a general rule, the accountability of the General Services Officer, the Provincial, City, or Municipal Treasurer for government funds and property shall begin at the time he actually assumes control of the transactions connected therewith and ends at the time he actually ceases to have such control. As the responsibility of each incumbent must be fixed definitely, complete inventories of all liquid assets, quick assets, fixed assets, and accountable forms shall be accomplished upon each transfer of such accountability, whether temporary or permanent. These inventories shall invariably be dated as of the date of such transfer, although the taking, checking and preparation of the same may be delayed for several days. The invoice receipt shall similarly be dated but the date it is actually signed by the outgoing and incoming officer shall be clearly stated.
(b) It will, therefore, be noted that the actual signing of the invoice-receipt may be made several days after the new incumbent has assumed control of the transactions involving, funds, property and accountable forms. It will not, however, be understood that because he has not receipted for the money, property and accountable forms, he is not responsible for the interim transaction connected therewith on which he has stamped his approval. His predecessor can only be held responsible for the transactions occurring during the period of the latter accountability. Sometimes, there are transactions or expense vouchers that pertain to the period of accountability or incumbency of an outgoing officer, but which for one reason or another are not taken up in the books before the transfer is effected. Although such transactions may already bear the approval of the former Local Treasurer, the new Local Treasurer shall carefully investigate the circumstances and examine the nature of the transactions before having them
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entered in his accounts. Once these transactions are taken up in the new Local Treasurer's books, the legal presumption is that he has also approved such transactions and assumed responsibility therefor, even if the same does not bear his own approval on the face of the voucher. In order to preclude misunderstanding between the outgoing and incoming Local Treasurers, the former shall ensure that all transactions for which he is responsible shall be entered into his own accounts, prior to the assumption of the latter.
( c) No clearance shall be granted the outgoing accountable officer, in case of willful neglect of transfer of accountability. In such event, the incoming Local Treasurer or accountable officer shall inform the Local Chief Executive or his superiors, as the case maybe of such failure. Consequently, he shall request the Secretary of Finance, thru the Local Chief Executive, or his immediate superior, as the case maybe, for the creation of a committee to conduct inventory of the funds and property under the accountability of the outgoing accountable officer. A copy of such inventory shall be furnished the Local Auditor for his information and audit.
Section 115. Advice of Retirement, Transfer and Settlement of Accounts. - Local Treasurers and accountable officers shall advise the corresponding Local Auditors sufficiently in advance of the date of their relinquishment of office due to retirement, resignation, leave of absence, or transfers, so as to enable the Provincial or City Auditor to give preference to the audit of the Local Treasurer's accountabilities and to give such officers an opportunity to adjust the differences found in the settlement of accounts before actually effecting the transfer of accountability, and minimize, if not obviate, unnecessary delays and difficulties which might happen in connection with such transfer. Immediately upon cessation/transfer of office, an outgoing Local Treasurer or accountable officer shall settle any outstanding differences still existing in his accountabilities, so as to clear the said differences therefrom.
Section 116. Closing of Books Preparatory to Transfer of Accountability. -
a) Before the transfer of accountability is effected, all the books and accounts shall be completely written up to date, including reports on accountable forms and cashbooks as well as supplies adjustment sheets.
b) The cashbooks shall then be totaled and closed as of the date of the transfer, ruled, and certified by the outgoing Local Treasurer, showing the balance per book and the amount transferred to his successor. The successor shall also certify therein, acknowledging the amount actually received by him from his predecessor.
c) All cash and cash items, checks, certificates of time deposit, stock certificates shall be counted and listed in an inventory showing the denomination and amount of each cash and cash item.
d) The inventory of checks shall also show the serial numbers, dates, amounts and names of payees and of the banks on which drawn.
e) Investment certificates like time deposits, treasury bills and stock certificates shall be inventoried showing their serial numbers, amounts and type of investments.
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f) The inventory of cash and cash items shall be compared with the cashbook balances, the ledger balances and other records. (BLGF Memorandum Circular No. 03-2007)
Section 117. Preparation of Invoice Receipts:
a) The outgoing officer shall prepare invoice-receipts in quadruplicate covering his entire accountability for money, property, unused accountable forms, and unissued blank checks. These invoice receipts shall then be submitted to the Provincial/City Auditor for verification. One duly verified set of invoice-receipt shall be given to the incoming officer; the original set shall be submitted to the Provincial/City Auditor, one set shall be placed in the files of the treasury; and the remaining set shall be retained by the outgoing officer. Each invoice-receipt shall bear the following certificate at the bottom of each sheet:
"I hereby certify that I have this ___ day of __ _ _ ___ _ , transferred to my successor, Mr./Ms. the items described above, as of
, the date of transfer of accountabilities. ---------
Outgoing Local Treasurer "
Date
"I hereby certify that I have this day of _ ___ ___ , actually received from my predecessor, Mr./Ms. ____________ all the items described above, as of __________ , the date of transfer of accountability, except ________________ _
Incoming Local Treasurer
Date"
b) In case of property, complete detailed inventories shall be made on the regular form prescribed therefor in the Acknowledgement Receipt for Equipment175.The inventories, appropriately worded and receipted for, shall serve as the invoice-receipts. The invoicereceipts covering accountable forms shall be made on the regular form of the Consolidated Report of Accountability for Accountable Forms. The various accountable forms in the hands of other accountable officers, which cannot actually be counted by the incoming Local Treasurer, shall also be transferred to him, supported by the corresponding Report of Accountability for Accountable Forms held by the Accountable Officer, which were last submitted, duly signed by them.
c) All other important documents such as stock certificates, certificate of time deposits, treasury bills, duplicate combination of safe, etc., pertaining to the office, which are not
175 ARE
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included in the inventory aforementioned must also be listed and invoiced by the outgoing Local Treasurer and receipted for by the incoming Local Treasurer. (BLGF Memorandum
Circular No.003-2007)
Section 118. Photographs of Accountable Officers. - The Commission on Audit shall be furnished with the most recent photographs of duly appointed Local Treasurers, collecting and/or disbursing officers upon filing and renewal of application for bond with the Fidelity Fund of the Bureau of the Treasury on General Forms Nos. 57(A) and 58(A). A copy of such photographs submitted by the accountable officer shall be furnished by the Unit Auditor to the Commission on Audit Director concerned, upon proper receipt who shall keep a permanent confidential and systematic file thereof, in a locked cabinet. No photograph shall be withdrawn from the file without the prior approval of the Commission on Audit Director.
Section 119. Final Report of Accountable Officers. - (a) An accountable officer, upon ceasing to act in his official capacity as such, shall submit to the Auditor of the agency concerned a report of his accountability.
(b) Any remaining balance of such accountability shall be deposited in the proper treasury without unnecessary delay. (Sec. 80, P. D. No. 1445)
Section 120. Clearance from Money and Property Accountability. - No Local Treasurer or officer accountable for government funds and property shall relinquish their office due to resignation, leave of absence, transfer or retirement until he shall have secured a clearance from money and property accountability from the local government unit concerned. In case of death, such clearance shall nevertheless be secured by his lawful heirs.
No clearance shall be issued to the Local Treasurer or accountable officer concerned without the outstanding differences in their accountabilities settled.
Section 121. Duty of Succeeding Accountable Officer to Assist in the Adjustment of Predecessor's Differences in His Accounts. - Whenever by force of circumstances, a Provincial, City, Municipal or Barangay Treasurer, or any other accountable officer whose accounts are subject to audit dies, or is transferred or retires from office, it shall be the duty of the succeeding officer to assist in the adjustment or settlement thereof through the provision of available information and documents and/or creation of linkages with appropriate offices to facilitate retrieval of information related thereto.
Section 122. Death or Incapacity of a Local Treasurer or Accountable Officer. - When a Local Treasurer or officer accountable for government funds or property absconds with them, dies, or becomes incapacitated in the performance of his duties, the Secretary of Finance, in the case of funds and property of the province, city and municipality, shall designate a custodian to take charge of the funds or property until a successor shall have been appointed and qualified. In the case of barangays, the Barangay Chairman shall designate the custodian. The Local Chief Executive may appoint a committee to count the cash and take an inventory of the property for which the officer was accountable and to determine the responsibility for any shortage therein. One copy of the inventory duly certified shall be filed with the Commission on Audit or its duly
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authorized representative but the findings of the committee shall not be conclusive until approved by the latter.
If the absconding, deceased, incapacitated, or superseded officer is responsible to another who is accountable, the latter may himself designate the committee or take other lawful measures for the protection of his interest.
Section 123. Credit for Loss Occurring in Transit or Due to Casualty or Force Majeure. -When a loss of government funds or property occurs 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 on Audit or auditor may in the particular case allow, shall present his 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 any loss in the settlement of his accounts. (Sec. 73 (]), P. D. No. 1445)
Section 124. Basic Requirements for Request for Relief from Accountability. - The following documeuts shall constitute the basic requirements for request for relief from money or property accountability including accountability for accountable forms with money value:
A. To be submitted by the Accountable Officer c�ncerned:
1) The basic Notice of Loss to be filed immediately after the discovery of the loss and the Request for Relief from Accountability which should be filed by the proper accountable officer within the reglementary period of thirty (30) days from the occurrence of the loss, with the auditor concerned or the Commission on Audit;
2) In case of delay in the filing of the aforesaid notice and request, satisfactory explanation or the reasons for such delay should be submitted after which the reason or explanation given should be verified or confirmed by the auditor concerned;
3) If the occurrence of the loss has also been reported to other police agencies, like the National Bureau of Investigation (NBI), the progress or Final Investigation Report thereon should be submitted;
4) Affidavit or Sworn Statement of the Local Treasurer or the proper accountable officer on the facts and circumstances surrounding the said loss, supported by the Affidavit of two (2) disinterested persons who have personal knowledge of such fact of loss. Affidavit executed by the accountable officer should state the following facts:
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1. Exact or accurate amount of government cash , book value of the property and money value of accountable forms, subject for request for relief;
11. Actual date on which the loss was first noted;
111. Manner of disappearance;
1v. Efforts put forth to recover the same;
v. Provisions made to safeguard the cash, property or accountable forms; and
vi. Date when the loss was reported to the auditor and the police authorities
In case it is not possible to obtain the statement of two disinterested persons and only one is available, or none at all, such fact should be set forth in the Affidavit of the person requesting relief, giving the reasons therefor;
5) Comment and/or recommendation of the Local Chief Executive or the Local Treasurer concerned on the request;
6) Memorandum Receipts covering the properties subject of the request, if any; and
7) In case of accountable forms with money value, evidence of the immediate issuance of the Notice of Loss of accountable forms as required under Commission on Audit Circular No. 83-233, dated August 24, 1984.
B. To be prepared and submitted by the COA Auditor concerned:
1 J Copy of the Investigation, Inventory and Inspection Report of the proper COA personnel on the facts and circumstances surrounding the loss;
2) Comment and/or recommendation of the COA Director/OIC and/or Unit Head on the propriety of the request, together with the full statement of the material facts. This should contain a categorical determination by the COA Director/ Auditor concerned on the absence of fault or negligence on the part of the accountable officer in the handling/safekeeping; and
3) In addition to the basic requirements, the following documents are required for specific occurrences:
a) Fire -
1. Final Report of the local Police/Fire Department or Station on the incident.
11. List or inventory of burned or destroyed properties, as well as those properties retrieved after the fire, stating thereon the acquisition cost/book value of each item, duly verified by the auditor concerned.
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u1. Authenticated pictures showing the site/office or government properties razed by the fire.
1v. Fire Insurance Policy, if any, covering the subject property. If the property is insured, information as to whether or not the agency concerned has already been paid the proceeds of the said insurance policy, shall be discussed. If in the affirmative, evidence to this effect should be submitted. If the property has not been insured, reasons to this effect shall be submitted.
b) Theft Robbery/Hold-up -
1. Final Police Report on the theft or robbery case.
11. In case of theft or robbery with force upon things ( destruction of padlocks, doors, window jalousies, etc.), information as to whether or not the premises of the government agency or office concerned are manned by security guards. If so, the respective Sworn Statements or Affidavits of the guards respecting the incident should be obtained and submitted.
iii. A certified copy of the Contract of Security Services entered into by and between the government office and the security agency should also be submitted.
1v. If the security guards are found to be negligent in the premises, a recommendation to the agency head should be made that appropriate action be instituted to enforce the civil liability of the security guard and/or security agency concerned.
v. In cases of theft or robbery/hold-up of government cash/funds to be deposited with or withdrawn from a depository bank, information as to whether or not the proper accountable officer was escorted by a policeman or security guard, should also be submitted. In the negative, explanation to this effect should be submitted.
v1. Detailed list of government properties lost or destroyed, as well as those properties retrieved after the robbery incident, disclosing the book value of each item or exact amount of government money/cash involved, duly verified by the auditor concerned.
v11. Authenticated picture(s) taken relative to the robbery or theft incident.
c) Force Majeure (Earthquake, Typhoons, etc.) -
1. Detailed list/inventory of lost or destroyed government properties or lost cash, as well as those properties retrieved after the calamity, verified by the auditor concerned.
11. Certification of the proper official of the local P AGASA or other similar government agency on the actual occurrence of the calamity specifying therein the approximate or exact time the incident happened and the areas or places affected thereby.
d) Death of Large Cattle and Other Livestock -
1. Certificate of Death of the large cattle issued by the proper official, duly verified by the auditor concerned.
11. Autopsy Report of the proper Veterinarian, if any.
Section 125. Examination by the Commission on Audit. - The books, accounts, papers, and cash of all Local Treasurers and other accountable officers shall at all times be open to the inspection and examination of the Commission on Audit or its duly authorized representatives.
Section 126. Service of Demand Upon the Accountable Officer to Produce His Cash and Other Accountabilities. - All Local Treasurers and accountable officers shall produce all cash, cash items and accountable forms in his possession upon service of demand or cash production notice by the auditor as incorporated in General Form No. 74 (A). Failure on the part of the Local Treasurer and other accountable officers to produce all the funds and property in his charge, on demand of any officer authorized to examine such person or treasury, shall be deemed to be primafacie evidence that such missing funds or property have been put to personal use.
Section 127. Sealing of Safe. - The sealing of safe and other cash receptacles shall be resorted to by the examining officer only in exceptional cases, such as:
a) The absence or non-appearance of the accountable officer for the count specially when the intention of the auditor to examine the former has become obvious or made known to other employees;
b) When the accountable officer refuses to submit himself to cash examination;
c) An interruption or the non-completion of the count during the day or the necessity of controlling cash, cash items and records; and
d) In cases of deceased, incapacitated or absconding accountable officer pending the cash count to be conducted by a committee created to make an inventory of his cash, cash items and other accountabilities.
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Section 128. The Count and Inventory of Cash. - (a) All cash, cash items and accountable forms shall be counted in the presence of the accountable officer who produced the same.
(b) Cash shall be counted from the highest to the lowest denomination. Mutilated bills must be examined for acceptability. Cash items such as, cash in pay envelopes, checks, treasury warrants, money orders, paid voucher, partially paid payrolls, etc., shall be segregated by groups. ( c) The following shall be disallowed as credit to accountable officer's accountability:
1. Post-dated Checks and Treasury Warrants;
11. Staled Treasury Warrants, Checks and Money Orders;
111. Chits, IO Us, Vales or other forms of Promissory Notes;
1v. Private Checks not made payable to the agency or the official title or designation of the agency head, as well as accommodated Private Checks;
v. Demonetized Bills and Coins; and
v1. Unacceptable Mutilated Bills.
(d) No accountable officer or employee may leave the desk while the count is in progress until his own particular accountability has been counted, determined as to correctness, and recorded by the examiner. Nor shall any one be permitted to approach the desk while this count is going on. If for any reason, the cash cannot be counted without interruption, immediately upon arrival of the examiner, the safe or safes, drawers, and other possible cash receptacles in the office of the accountable officer shall be sealed securely, so that when counted, the contents of the same will be in the same condition as when the examining officer arrives.
( e) At the end of the count, the grand total of all cash, checks, warrants, and cash items, as well as accountable forms presented will be taken and immediately the cash count inventory and inventory of accountable forms will be certified and signed by the accountable officer or employee concerned regardless of whether the grand total tallies or not with the balance of accountability shown in the cash book of the accountable officer.
( d) The signature of the accountable officer concerned shall be witnessed by at least two (2) witnesses.
Section 129. Inspection of the Safe or Safes and Other Cash Receptacles. - Prior to or simultaneous with the inventory of cash and accountable forms, the Local Treasurer and/or
accountable officer shall permit the auditors to inspect and examine minutely the total contents of the safe or safes, drawers, boxes, and other possible cash receptacles in the office of said accountable officer. If there are envelopes or bound packages inside the safes or drawers or other containers in the office, the same shall be opened and the contents inspected. Money or valuables found in a government safe and claimed by an officer or employee as his own private property
shall be segregated and marked as such.
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Section 130. Certification of the Cashbooks in the Course of Cash Examination. - (a) When the inventories of cash and cash items, and accountable forms have been made and certified, the Local Treasurer shall update the recording of his accountabilities in his cashbooks. As soon as all collections and remittances and all paid vouchers will have been entered in the cashbook as of the date of examination and before the daily balances and daily totals thereof are actually verified by the examiner, the accountable officer keeping the same will be required to foot, balance and rule it in ink and to make the following certification on the line immediately below the last balance to ascertain from him that the transactions therein recorded are true and correct:
"I hereby certify on my official oath that all cash and depository transactions had by me in my capacity as of
at the time of examination, showing a
balance of (P have
been correctly and completely recorded in this cashbook.
(Date) (Signature)"
(b) If after verification of the entries in the cashbook, errors or omissions are found therein, the accountable officer shall be required to effect the adjusting/correcting entries and then to foot, balance and rule the cashbook. The aforementioned certification above shall likewise be required after the last entry.
( c) After the completion of the cash examination, the following certification shall be made by the auditor/examiner on the cashbook below the accountable officer1s certification:
"Examined and verified this and arrived at an -----�- -- �
audited balance of P , of which the amount of P was actually found on hand, consisting of P m currency and P in cash items, thereby showing ___ ________ difference/cash shortage/overage.
(Signature)
(Title)"
Section 131. Review of Transactions. - Review of transactions by the COA Auditor/Examiner shall be from the date of last cash examination to the date of current examination. Verification shall be limited to determining/establishing that disbursement vouchers, as entered in the cashbook, are properly certified, approved and payments duly acknowledged; that all cash advances, cash receipts, remittances/deposits and adjusting entries are properly and correctly recorded; and that all cash balances as of date of examination are reconciled with accounting and related records.
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Section 132. Certification in General Form No. 74 (A). - After the balance of accountability of the accountable officer has been finally determined, the auditor shall compare such balance to the inventory of cash and/or allowed cash items to ascertain shortage or overage, if any. The following certification shall then be executed by the Accountable officer at the back of General Form No. 74 (A), as follows:
"I HEREBY CERTIFY that my accountability for the above funds of (state the name of the agency at the time of
examination on (date) , 1s correctly stated above totaling (amount in words) (P
(Signature of Accountable Office) (Designation)
- - - - - -�
(Agency/Station)"
The Auditor/Examiner, on the other hand shall execute the following certification:
"I HEREBY CERTIFY that the preceding is true and correct Report of Examination of the cash and accounts of (name of accountable offlcer) (designation) (agency/station)
(Signature of Examiner)
Section 133. Report of Cash Examination. - After the cash examination is completed, the auditor shall prepare and submit a final narrative report, whether there is a shortage or not. The report shall contain all the important details, data and information disclosed in the examination and usually consists of three (3) parts, namely, the introduction, the findings and the recommendations. It shall be supported with documentations prescribed by the Commission on Audit.
Section 134. Shortages and Malversation. -
a) Any public officer who, by reason of the duties of his 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.
b) The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use. (Art. 217, Revised Penal Code)
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c) The term public officer as used in the law is with reference to a person who, by direct provision of the law, popular election or appointment by competent authority, shall take part in the performance of public functions in the government, or shall perform in said government or in any of its branches public duties as an employee, agent, or subordinate official, of any rank or class. (Art. 203, Revised Penal Code)
d) The relative importance of the office or employment held by an officer is not the controlling factor; the nature of duties which he performs - the fact that, as part of his duties, he receives public money or property for which he is bound to account - is that which determines whether or not he is an accountable officer. (U.S. vs. Velazquez, 32 Phil. 157)
Section 135. Presentation of Formal Written Demand to the Accountable Officer. - (a) The examining officer shall always make a formal written demand, in case of shortage, upon the defaulting officer to produce the missing funds, immediately upon the discovery of the same.
(b) The demand shall be addressed to the defaulting officer in person; shall give his title; shall notify him of the discovery and the amount of the shortage in the examination of his cash, books, and account; shall specify by whom, when, and where the examination was performed; shall fix the time and place for restituting the amount of the shortage; and shall require him to submit within the same period of time a written explanation why criminal prosecution should not be filed against him in view of the shortage.
(c) Receipt of the letter of demand served upon the defaulter shall be acknowledged by him in writing, stating in such acknowledgment at what time and on what date it was received by him.
Section 136. Seizure of Office by the Examining Officer. -The books, accounts, papers, and cash of Local Treasurer or other accountable officer shall at all times be open for inspection of the COA or its duly authorized representative.
In case an examination of the accounts of a Local Treasurer discloses a shortage in cash which should be on hand, it shall be the duty of the examining officer to seize the office and its contents, notify the COA, the Local Chief Executive concerned ,and the Local Accountant. Thereupon, the examining officer shall immediately tum over to the accountable officer next-inrank in the local treasury service, unless the said officer is likewise under investigation, the office of the treasurer and its contents, and close and render his accounts on the date of turnover. In case the accountable officer next in rank is under investigation, the auditor shall take full possession of the office and its contents, close and render his accounts on the date of taking possession, and temporarily continue the public business of such office until such time that the Local Treasurer is restored or a successor has been duly designated. The Local Treasurer or accountable officer found with such shortage shall be automatically suspended from office. (Sec.
348, LGC)
Section 137. Notice to the BLGF in Case of Shortages. - Immediately upon the discovery of a shortage in the cash and accounts of a Provincial, City and Municipal Treasurer, the COA Auditor shall notify the Executive Director of the Bureau of Local Government Finance (BLGF) of the Department of Finance, thru the appropriate channels, of the fact, for their information and
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appropriate action. The notice shall include information on the amount of shortage and the easels filed with the Office of the Ombudsman or the proper Courts, if any.
Section 138. Constructive Distraint of Property of Accountable Officer. - (a) Upon discovery in audit of a shortage in the accounts of any accountable officer and upon finding of a prima facie case of malversation of public funds or property against him, in order to safeguard the interest of the Government, the Commission on Audit or its duly authorized representative/s may place upon constructive distraint personal property of the accountable officer concerned where there is reasonable ground to believe that the said officer is retiring from the government service or intends to leave the Philippines or remove his property therefrom or hide or conceal his property.
(b) The constructive distraint shall be effected by requiring the accountable officer concerned or any other person having possession or control of the property to accomplish a receipt in the form prescribed by the Commission on Audit, covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of it in any manner whatsoever without the express authority of the Commission on Audit.
( c) In case the said accountable officer or other person having the possession and control of the property sought to be placed under constructive distraint refuses or fails to accomplish the receipt herein referred to, the representative of the Commission on Audit effecting the constructive distraint shall proceed to prepare a list of such property and in the presence of two (2) witnesses leaves a copy thereof in the premises where the property distrained is located, after which the said property shall be deemed to have been placed under constructive distraint.
Section 139. Withholding of Payment of Money to Accountable Officer. - The auditor may direct the proper officer to withhold the payment of any money except retirement pay or gratuities, due the defaulting accountable officer once his cash shortage is finally ascertained. The withholding order shall be signed by the auditor in the following manner:
"By Authority of the Chairman, Commission on Audit"
Auditor
The amount withheld shall be applied to the satisfaction of the accountable officer's indebtedness to the Government arising from the cash shortage pursuant to Section 37 of P. D. No. 1445.
The withholding order shall be reported promptly to the Chairman of the Commission on Audit by the auditor concerned.
Section 140. Cash Overage. - In case of cash overage, satisfactory explanation shall be submitted by the accountable officer to the auditor/examiner. If the overage cannot be satisfactorily explained by the accountable officer, the amount shall be forfeited in favor of the government and an official receipt issued therefor by the collecting officer.
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Examinations shall be extended, if necessary, for the purpose of ascertaining the cause of the overage and any underlying irregularity.
Section 141. Transcript of Auditor's Record as Evidence of Liability. - (a) In any criminal or civil proceeding against an officer for the embezzlement or misappropriation of government funds or property, or to recover an amount due the government from an accountable officer, it shall be sufficient, for the purpose of showing a balance against him, to produce the working papers of the auditor concerned
A showing in this manner of any balance against the officer shall be prima facie evidence of the misappropriation of the funds or property unaccounted for or of civil liability of the officer as the case maybe.
The existence or contents of bonds, contracts, or other papers relating to or connected with the settlement of any account may be proved by the production of certified copies thereof, but the court may require the production of the original when this appears to be necessary for the attainment of justice.
Section 142. Auditor's Certificate of Balance. - Auditors of all government agencies shall certify the balances arising in the accounts settled by them to the Commission on Audit and to the proper Local Treasurer, Collecting Officer, or Disbursing Officer, in such form as the Commission on Audit may prescribe, within sixty (60) days from the date of receipt of those accounts from the Local Treasurer, Collecting Officer, or Disbursing Officer concerned.
Section 143. Auditor's Notice to Accountable Officer of Balance Shown Upon Settlement.
- The Auditor concerned shall, at convenient intervals, send a written notice, under a certificate of settlement to each officer whose accounts have been audited and settled in whole or in part by him, stating the balances found due thereon and certified, and the charges or difference arising from the settlement by reason of disallowances, charges, or suspensions.
The certificate shall be properly itemized and shall state the reasons for the disallowance, charge, or suspension of credit.
A charge of suspension which is not satisfactorily explained within ninety (90) days after receipt of the certificate or notice by the accountable officer concerned shall become a disallowance, unless the Commission on Audit or auditor concerned shall, in writing and for good cause, have extended the time to answer beyond ninety (90) days.
Section 144. Certificate of Settlement and Balances.176
- (a) The Certificate of Settlement and Balances shall be issued by the auditor to the agency head and the concerned accountable officers of the audited agencies for all transactions duly post-audited. The certificate summarizes all suspensions, disallowances and charges found in audit, including the settlements thereof as of a given date.
176 CSB
177
(b) It shall be issued within ten (10) days after the end of each quarter, for every accountable officer and for each fund. The Auditor is not, however, precluded from issuing the Certificate of Settlement and Balances as often as he deems it practicable.
(c) The Certificate of Settlement and Balances shall be supported by the Summary of Suspensions, Disallowances and Charges; Summary of Suspensions Maturing into Disallowance and Charge; and Summary of Settlements of Suspensions, Disallowances and Charges, all of which shall form integral parts of the Certificate of Settlement and Balances.
Section 145. Notice of Suspensions.177 - The Notice of Suspensions shall be issued as often as
suspensions are made by the auditor for the purpose of notifying the agency head and the accountable officer concerned on the suspended transactions.
The Notice of Suspension shall indicate the amount suspended, the reason/s for the suspensions and the requirement/s to be complied with in order to lift the suspension.
The date of receipt of the Notice of Suspesion by the agency head and responsible officer concerned or their authorized representative shall be the reckoning date for purposes of counting the ninety (90) day period after which, the suspension shall mature into disallowance.
Section 146. Notice of Disallowance. 178 - The Notice of Disallowance shall be used and
issued as often as disallowance are made by the auditor in order to notify the agency head, the accountable officers concerned, and the other persons liable for the disallowed transaction.
The date of receipt of the Notice of Disallowance by the agency head and the persons liable therefor or their authorized representative, shall be the reckoning date for the purpose of counting the period of appeal after which, the disallowance becomes final and executory.
Section 147. Credit Notice.179
- The Credit Notice is issued by the auditor to the accountable officer concerned within thirty (30) days from receipt of the report of disbursements for liquidation of cash advances, to inform the latter of the amount allowed in audit and any suspensions and/or disallowance 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. The amount allowed in audit by the auditor as contained in the Credit Notice shall be deemed to have been settled.
Section 148. Notice of Charge.180
- The Notice of Charge shall be used and issued as often as charges are made by the auditor to notify the agency head, accountable officer concerned and other persons liable for the deficiencies noted in the audit of revenues and receipts. The amount charged shall be indicated, as well as the reasons therefor.
177 NS
178 ND
179 CN
1so NC
178
The date of receipt of the Notice of Charge by the Local Chief Executive and the persons liable therefor or their authorized representative, shall be the reckoning date for the purpose of counting the period of appeal after which, the charge becomes final and executory.
Section 149. Audit Observation Memorandum.181
- The Audit Observation Memorandum shall be issued to the agency head and/or other officials concerned relative to the findings/observations/other deficiencies noted in the audit of accounts/transactions and requiring comment/reply thereto within the period specified therein.
Section 150. Auditor's Order. -
a) The Auditor's Order shall be used by the auditor to enforce the settlement of audit disallowances and charges, whenever the persons liable therefor refuse or fail to voluntarily settle the disallowances and charges after the decision has become final and executory.
b) The auditor shall, through the agency head, order the Cashier/Treasurer/Disbursing Officer to withhold the payment of any money due the person found to be liable therefor, if no payment/refund is so far made.
c) In case the person liable is an employee/official of another government agency, the auditor concerned, thru his Director, shall request the auditor of the other government agency to order the Cashier/Treasurer/Disbursing Officer thereof, to withhold such claim or so much amount as may be necessary to satisfy the obligation of the person concerned.
d) The auditor shall send at least two (2) memoranda (five days apart), requiring the Cashier/Disbursing Officer/Treasurer to comply with the Auditors' Order.
e) After the lapse of five ( 5) days from receipt of the second memorandum without complying with the Auditor's Order, the auditor shall submit a report of such non-compliance to the Director of the Commission on Audit concerned together with the necessary supporting documents.
f) The concerned Director of the Commission on Audit, after evaluation of the Auditor's Report, shall call the attention of the local government unit head within the level of his rank and within his audit jurisdiction regarding the non-compliance to the Auditor's Order.
g) If still no action is taken thereon within a reasonable time, the Director shall report to the Chairman of the Commission on Audit the inaction of local government officials on the Auditor's Order.
h) The Chairman of the Commission on Audit, based on the report of the auditor and the recommendation of the Director, is expected to communicate to the Local Chief Executive and request that the persons liable be required to settle the disallowance and charge, and to take such actions as are deemed necessary under the circumstances. A copy of this
1s1 AOM
179
communication shall be furnished the auditor thru the concerned Director of the Commission on Audit.
i) In case the Local Chef Executive fails to enforce the settlement within thirty (30) days from the request of the Chairman of the Commission on Audit, the auditor shall submit a report to the Chairman, thru the Director concerned. Thereafter, the Chairman thru the Legal Office may cause the filing of the necessary administrative and/or criminal complaint with the Civil Service Commission, Office of the Ombudsman or other appropriate agencies concerned on the basis of the evidences/documents presented.
Section 151. Grounds for Suspension. - The Auditor's Notice of Suspension is issued for: 1) Transactions or accounts which could otherwise have been settled for some
documentary or technical requirements, like lack of supporting documents or proper signatures.
2) Transactions or accounts the legality/propriety/regularity of which the auditor doubts, but which may possibly be allowed in audit after satisfactory explanation or valid justification by the parties concerned.
The auditor shall issue the Notice of Disallowance or Notice of Charge on the amount of the transaction suspended if he is not satisfied with the explanation or justification submitted, in which case, said disallowance or charge shall be reflected in the subsequent Certificate of Settlement and Balances, even if the ninety (90) day period has not elapsed.
Section 152. Settlement of Suspensions. - (a) Suspensions are deemed settled when the requirements of the auditor, as contained in the Notice of Suspension are complied with. Such settlement shall be reflected in the next Certificate of Settlement and Balances.
(b) The auditor may, however, issue a separate memorandum notifying the local government unit head and the accountable officer concerned of the settlement of the suspensions prior to the issuance of the next Certificate of Settlement and Balance.
(c) A suspension which is not settled within ninety (90) days from receipt of the Notice of Suspension, or within such extended period as may be authorized by the auditor shall become a disallowance/charge.
(d) Consequently, the auditor shall issue the corresponding Notice of Disallowance/Charge on the matured suspensions.
Section 153. Grounds for Disallowance. - All transactions which are irregular, unnecessary, excessive and extravagant and those which are illegal and unconscionable shall be disallowed in audit. 182
Section 154. Grounds for Charges. - In the determination of what constitutes an audit charge in relation to the audit of revenues and receipts, the following shall be observed:
182 The description of these types of expenditures is found in Book III of this Manual.
180
1) When there is error in the assessment which resulted in under collection, the corresponding Notice of Charge shall be issued to the assessing or appraising officer concerned. Instances of over-collection shall be taken up in the books as payable to the payor or proper party, and the corresponding Auditor's Observation Memorandum shall be issued.
2) When there is error in the computation of the amount due the payor which may either be over collection or under collection, the under collection shall be a proper charge against the collecting officer, while the over collection shall be taken up in the books as payable to the payor or proper party and the corresponding Auditor's Observation Memorandum shall be issued.
If the amount collected is less than what is due for the period, the difference shall constitute a charge against the collecting officer.
Section 155. Settlement of Disallowance and Charges. - Disallowances and charges shall be settled through submission of the required explanation/justification and/or documentation by the person or persons determined by the auditor to be liable therefor; or by payment of the amount disallowed in audit; or by such other applicable modes of extinguishment of obligation as provided for by law.
Section 156. Determination of Persons Liable for Audit Disallowances or Charges. -
A. The liability of public officers and other persons for audit disallowances shall be determined on the basis of the:
1) nature of the disallowance; 2) duties, responsibilities or obligations of the officers/persons concerned; 3) extent of their participation or involvement in the disallowed transaction; and 4) amount oflosses or damages suffered by the government thereby.
B. The liability for audit charges shall be measured by the individual participation or involvement of persons in the charged transaction; i.e., public officers whose duties require the appraisal/assessment/collection of government revenues and receipts shall be liable for under-appraisal, under-assessment, and under-collection thereof.
Illustrative Cases:
1) Public officers who are custodians of government funds and/or property shall be liable for their failure to ensure that such funds and properties are safeguarded against loss or damage; that they are expended, utilized, disposed of or transferred in accordance with law and regulations, and on the basis of prescribed documents and necessary records.
2) Public officers who ce1iify to the necessity, legality and availability of funds/budgetary allotments, adequacy of documents, etc., involving the expenditure of funds or uses of government property shall be liable according to their respective certifications.
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3) Public officers who approve or authorize transactions involving expenditure of government funds and uses of government properties shall be liable for all losses arising out of their negligence or failure to exercise the diligence of a good father of a family.
4) Public officers and other persons who confederated and conspired in a transaction which is disadvantageous or prejudicial to the government, shall be held liable jointly and severally, including those who benefited therefrom.
5) The payee/claimant of an expenditure shall be personally liable for the disallowance where the ground thereof is his failure to submit the required documents, and the auditor is convinced that the event relative to the disallowed transaction did not occur, or has no basis in fact.
Section 157. Finality of the Report, Certificate of Settlement and Balances, Order or Decision. - Unless a request for reconsideration is filed or an appeal is taken, the Report, Certificate of Settlement and Balances, Order or Decision of the auditor shall become final upon the expiration of six ( 6) months after notice thereof to the parties concerned.
Section 158. Motion for Reconsideration. - The auditor shall entertain only one (1) Motion for Reconsideration. If the auditor reconsiders or modifies his original decision, disallowing a transaction, the same shall be automatically reviewed by the concerned Director of the Commission on Audit. In this event, the auditor shall, within ten (10) days, certify the case and elevate the entire record to the Director for review.
Section 159. Appeal from Auditor to Director. - (a) An aggrieved party may appeal from an order or decision or ruling rendered by the auditor embodied in a report, memorandum, letter, Notice of Disallowances and Charges, and Certificate of Settlement and Balances, to the Director of the Commission on Audit who has jurisdiction over the agency under audit.
(b) The appeal maybe taken to the Director of the Commission on Audit within six (6) months after notification to the party of the report, Notice of Disallowance and Charges, Certificate of Settlement and Balances, order or decision complained of, by filing with the auditor a Notice of Appeal. The appellant shall file an appeal memorandum within twenty (20) days from the receipt of the order of the Director requiring the same.
(c) The Director may reverse, modify, alter, or affirm the decision or ruling of the auditor. However, should the Director render a decision reversing, modifying or altering the decision or ruling of the auditor, the Director shall, within ten ( 10) days, certify the case and elevate the entire record to the Commission on Audit proper for review and approval.
( d) Only one ( 1) Motion for Reconsideration of the order or decision of the Director shall be entertained. The receipt of the auditor of the Notice of Appeal and/or Motion for Reconsideration shall stop the running of the six ( 6) months period of appeal to the Commission on Audit proper and shall resume upon receipt by the Appellant of the final decision of the Director.
182
Section 160. Appeal from the Decision of the Director to Commission on Audit Proper. -(a) The party aggrieved by a final order or decision of the Director may appeal to the Commission on Audit Proper by filing a petition for review in seven (7) legible copies with the Commission Secretariat, a copy of which shall be served to the Director.
(b) The appeal shall be taken within the time remaining of the six ( 6) months period, taking into account the suspension of the running thereof.
Section 161. Failure of a Responsible Public Officer to Render Accounts before Leaving the Country. - Any public officer who unlawfully leaves or attempts to leave the country without securing a certificate from the auditor showing that his accounts have been finally settled, shall be penalized under Article 219 of the Revised Penal Code of the Philippines.
Chapter 3. ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES
OF LOCAL TREASURERS IN THE ADMINISTRATION OF
LOCAL TAXES, FEES AND CHARGES
Section 162. Under R. A. No. 7160 or the Local Government Code of 1991:
1) Penalty for Failure to Issue and Execute Warrant. - Without prejudice to criminal prosecution under the Revised Penal Code and other applicable laws, any Local Treasurer who fails to issue or execute the warrant of distraint or levy after the expiration of the time prescribed, or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the service after due notice and hearing. (Sec. 177,
LGC)
2) Attempt to Enforce Void or Suspended Tax Ordinances and Revenue Measures. - The enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension thereof shall be sufficient ground for administrative disciplinary action against the local officials and employees responsible therefore. (Sec. 190, LGC)
3) Penalty for Failure to Issue and Execute Warrant. - Without prejudice to criminal prosecution under the Revised Penal Code and other applicable laws, any Local Treasurer or his deputy who fails to issue or execute the warrant of levy within one (1) year from the time the tax becomes delinquent or within thirty (30) days from the date of the issuance thereof, or who is found guilty of abusing the exercise thereof in an administrative or judicial proceeding shall be dismissed from the service. (Sec. 259, LGC)
4) Failure to Post and Publish the Itemized Monthly Collections and Disbursements. -Failure by the Local Treasurer or the Local Chief Accountant to post the itemized monthly collections and disbursements of the local government unit concerned within ten ( l 0) days following the end of every month and for at least two (2) consecutive weeks at prominent places in the main office building of the local government unit concerned, its plaza and main street, and to publish said itemization in a newspaper of general circulation, where available, in the territorial jurisdiction of such unit, shall be punished by a fine not exceeding Five
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Hundred Pesos (P 500.00) or by imprisonment not exceeding one (1) month, or both, at the discretion of the court. (Sec. 513, LGC)
5) Failure to Collect Tax Due on Real Property. - Any officer charged with the duty of collecting the tax due on real property who willfully or negligently fails to collect the tax and institute the necessary proceedings for the collection of the same shall be punished by a fine of not less than One Thousand Pesos (P 1,000.00) nor more than Five Thousand Pesos (P 5,000.00), or by imprisonment of not less than one (1) month nor more than six (6) months, or both such fine and imprisonment, at the discretion of the court. (Sec. 517 2
nd par.,
LGC)
6) Failure to Dispose of Delinquent Real Property at Public Auction. - The Local Treasurer concerned who fails to dispose of delinquent real property at public auction in compliance with pertinent provisions of the Local Government Code of 1991, and any other local government official whose acts hinder the prompt disposition of delinquent real property at public auction shall, upon conviction, be subject to a fine of not less than One Thousand Pesos (P 1,000.00) nor more than Five Thousand Pesos (P 5,000.00), or imprisonment of not less than one (1) month nor more than six ( 6) months, or both, at the discretion of the court. (Sec. 519, LGC)
Section 163. Under the Revised Penal Code:
A. Frauds Against the Public Treasury and Similar Offenses. - The penalty of prision correcciona/ in its minimum period, or a fine ranging from Two Thousand Pesos (P 200.00) to Ten Thousand Pesos (P 10,000.00), or both, shall be imposed upon any public officer who being entrusted with the collection of taxes, licenses, fees and other imposts, shall be guilty of any of the following acts or omissions:
1) Demanding, directly or indirectly, the payment of sums different from or larger than those authorized by law.
2) Failing voluntarily to issue a receipt, as provided by law, for any sum of money collected by him officially.
3) Collecting or receiving, directly or indirectly, by way of payment or otherwise, things or objects of nature different from that provided by law. (Art. 213,
Revised Penal Code)
B. Malversation/Embezzlement of Public Funds or Property. Presumption of Malversation. - Any public officer who, by reason of the duties of his 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:
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1) The penalty of prision correccional in its minimum and medium periods, if the amount involved is more than Two Hundred Pesos (P 200.00) but does not exceed Two Thousand Pesos (P 2,000.00).
2) The penalty of prision mayor in its maximum and medium periods, if the amount involved is more than Two Thousand Pesos (P 2,000.00) but does not exceed Six Thousand Pesos (P 6,000.00). s
3) The penalty of prision mayor in its maximum period to reclusion temporal in its minimum period, if the amount involved is more than Six Thousand Pesos (P 6,000.00) but is less than Twelve Thousand Pesos (P 12,000.00).
4) The penalty of reclusion temporal in its medium and maximum periods, if the amount involved is more than Twelve Thousand Pesos (P 12,000.00) but is less than Twenty-Two Thousand Pesos (P 22,000.00). If the amount exceeds the latter, the penalty shall be reclusion temporal in its maximum period to reclusion perpetua.
In all cases, persons guilty of malversation shall also suffer the penalty of perpetual special disqualification and a fine equal to the amount of the funds malversed or equal to the value of the property embezzled.
The failure of a public officer to have duly forthcoming any public funds or property with which he is chargeable, upon demand by any duly authorized officer, shall be prima facie evidence that he has put such missing funds or property to personal use. (Art. 217, Revised Penal Code)
Section 164. Under the Anti-Graft and Corrupt Practices Act.183 - The following shall
constitute corrupt practices of any public officer:
1) Persuading, inducing or influencing another public officer to perform an act constituting a violation of rules and regulations duly promulgated by competent authority or an offense in connection with the official duties of the latter, or allowing himself to be persuaded, induced or influenced to commit such violation or offense.
2) Directly or indirectly requesting any gift, present, share, percentage, or benefit, for himself or for any other person, in connection with any contract or transaction between the local government unit and any other party, wherein the public officer in his official capacity has to intervene under the law.
3) Directly or indirectly requesting or receiving any gift, present or other pecuniary or material benefit for himself or for another, from any person from whom the public officer, in any manner or capacity, has secured or obtained, or will secure or obtain, any local government unit permit or license, in consideration for the help given or to be given.
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4) Causing any undue injury to any party, including the local government unit, or giving any private party any unwarranted benefits, advantage, or preference in the discharge of his official administrative or judicial functions through manifest partially, evident bad faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices charged with the grant of licenses and permits or other concessions.
5) Neglecting or refusing, after due demand or request, without sufficient justification, to act within a reasonable time on any matter pending before him for the purpose of obtaining, directly or indirectly, from any person interested in the matter some pecuniary or material benefit or advantage, or for the purpose of favoring his own interest or giving undue advantage in favor of or discriminating against any other interested party.
6) Entering, in behalf of the local government unit, into any contract or transaction manifestly and grossly disadvantageous to the local government unit, whether or not the public officer profited or will profit thereby.
7) Directly or indirectly having financial or pecuniary interest in any business contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the constitution or by any law from having any interest.
8) Directly or indirectly becoming interested, for personal gain, or having a material interest in any transaction or act requiring the approval of a board, panel or group of which he is a member, and which exercises discretion in such approval even if he votes against the same or does not participate in the action of the board, committee, panel or group.
186
LOCAL TREASURY OPERA TIO NS
MANUAL
DETAILED PROCEDURES, REPORTS AND
FORMS ON REAL PROPERTY TAX,
BUSINESS TAX, FEES AND CHARGES AND
OTHER FUND SOURCES
BOOK FIVE
I� - -- J
Chapter 1. REAL PROPERTY TAXATION
Section 165. Power to Levy Real Property Tax. - A province or city or a municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land, buildings, machinery, and other improvements not specifically exempted under the law. (Sec. 232, LGC)
The power to levy the ad valorem tax on real property is exercised through the sanggunian of the local government unit concerned by way of an ordinance. (Art. 323, IRR, implementing Sec. 232, LGC)
Section 166. Definition of Terms:
a) Acquisition Cost for newly acquired machinery not yet depreciated and appraised within the year of its purchase, refers to the actual cost of the machinery to its present owner, plus the cost of transportation, handling, and installation at the present site. (Sec. 199 (a), LGC)
b) Actual use refers to the principal purpose for which the property is principally or predominantly utilized by the person in possession thereof. (Sec. 199 (b), LGC)
c) Ad Valorem Tax is a levy on real property determined on the basis of a fixed proportion of the value of the real property. (Sec. 199 (c), LGC)
d) Agricultural Land is land devoted principally to the planting of trees, raising of crops, livestock and poultry, dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural activities, and is not classified as mineral, timber, residential, commercial or industrial land. (Sec. 199 (d), LGC)
e) Appraisal is the act or process of determining the value of property as of a specific date for a specific purpose. (Sec. 199 (e), LGC
f) Assessment is the act or process of determining the value of a property, or proportion thereof subject to tax, including the discovery, listing, classification, and appraisal of properties. (Sec. 199 (/), LGC)
g) Assessment Level is the percentage applied to the fair market value to determine the taxable value of the property. (Sec. 199 (g), LGC)
h) Assessed Value 184 is the fair market value of the real property multiplied by the assessment level. It is synonymous to taxable value. (Sec. 199 (h), LGC)
i) Commercial Land is land devoted principally for the object of profit and is not classified as agricultural, industrial, mineral, timber, or residential land. (Sec. 199 (i), LGC)
184 AV
188
j) Depreciated Value is the value remaining after deducting depreciation from the acquisition cost. (Sec. 199 0), LGC)
k) Economic Life is the estimated period over which it is anticipated that a piece of machinery or equipment may be profitably utilized. (Sec. 199 (k), LGC)
l) Fair Market Value185 is 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 (/), LGC)
Market value is the highest price estimated in terms of money which a property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used.
m) Idle Lands for purposes of real property taxation shall include the following:
1) Agricultural lands, more than one ( 1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural uses, one-half (1/2) of which remains uncultivated or unimproved by the owner of the property or person having legal interest therein.
Agricultural lands planted to permanent or perennial crops, with at least fifty (50) trees to a hectare shall not be considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.
2) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area, one-half (1/2) of which remains unutilized or unimproved by the owner of the property or person having legal interest therein.
3) Residential lots in subdivisions duly approved by proper authorities, regardless of land area, the ownership of which has been transferred to individual owners, who shall be liable for the additional tax: Provided, however, That individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall be subject to the additional tax payable by subdivision owner or operator. (Sec. 237, LGC)
n) Improvement is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further purposes. (Sec. 199 (m), LGC)
Illustrative Case:
1) The anti-pollution tailing dam structure of the Benguet Corporation-Dizon Copper Gold Operations is an improvement used in the operation of the corporation and, therefore,
1ss FMV
189
taxable under the provisions of the Local Government Code of 1991. The subject dam falls within the definition of an improvement because it is permanent in character and it enhances both the value and utility of the mine. (DOF Opinion, February 3, 1994)
o) Industrial Land is land devoted principally to industrial activity as capital investment and is not classified as agricultural, commercial, timber, mineral, or residential land. (Sec. 199 (n), LGC)
p) Machinery embraces machines, equipment, mechanical contrivances, instruments, appliances, or apparatus which may or may not be attached, permanently or temporarily, to the real property. It includes physical facilities for production, the installations and appurtenant service facilities, those which are mobile, self-powered, or self-propelled, and those not permanently attached to the real property which are actually, directly, and exclusively used to meet the needs of the particular industry, business, or activity and which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial, or agricultural purposes. (Sec. 199 (o), LGC)
Illustrative Cases:
1) Thus, underground tanks, elevated tanks, elevated water tanks, gasoline and computing pumps, car washers, car and tire hoists, air compressors and tireflatros in gasoline stations are considered as machinery or improvement. (G. R. No. L-50466, May 31, 1982)
2) On the other hand, gas turbine barges owned by the National Power Corporation, although these are mobile, self-powered and self-propelled, for practical reasons, could not be considered as real property in the same manner that other mobile machineries/equipment such as trucks, buses, ships, airlines, and the like, which require registration with the proper agency of government, could not be considered as real property subject to real property tax. (BLGF 1'51 lndorsement, May 20, 1996)
190
3) Machinery which are of general purpose use including but not limited to office equipment, typewriters, telephone equipment, breakable or easily damaged containers (glass or cartons), micro computers, facsimile machines, telex machines, cash dispensers, furniture and fixtures, freezers, refrigerators, display cases or racks, fruit juice or beverage automatic dispensing machines which are not directly and exclusively used to meet the needs of a particular industry, business or activity shall not be considered within the definition of machinery under this rule.
Residential machinery shall include machines, equipment, appliances, or apparatus permanently attached to residential land and improvements or those immovable by destination.
When machineries are no longer used for its purpose by reason of closure or cessation of production, the same should be transferred from the taxable roll to the exempt roll and not subject to the payment of real property taxes during the period of non-use. (BLGF 9
1h
Indorsement, May 26, 1999)
I
I
q) Mineral Lands are lands in which minerals, metallic or non metallic, exist in sufficient quantity or grade to justify the necessary expenditures to extract and utilized such materials. (Sec. 199 (p), LGC)
r) Re-assessment is the assigning of new assessed values to property, particularly real estate, as the result of general, partial, or individual reappraisal of the property. (Sec. 199 (q), LGC)
s) Remaining Economic Life is the period of time expressed in years from the date of appraisal to the date when the machinery becomes valueless. (Sec. 199 (r), LGC)
t) Remaining Value the value corresponding to the remaining useful life of the machinery. (Sec. 199 (s), LGC)
u) Replacement or Reproduction Cost is the cost that would be incurred on the basis of current prices, in acquiring an equally desirable substitute property, or the cost of reproducing a new replica of the property on the basis of current prices with the same or closely similar material. (Sec. 199 (t), LGC)
v) Residential Land is land principally devoted to habitation. (Sec. 199 (u), LGC)
w) Special Classes of Real Property are lands, buildings, and other improvements thereon actually, directly, and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts and government-owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power. (p. 9, Manual on Real Property Appraisal and Assessment Operations, BLGF)
Section 167. Fundamental Principles. - The appraisal, assessment, levy and collection of real property tax shall be guided by the following fundamental principles:
l) Real property shall be appraised at its current and fair market value. (Sec. 198 ( a), LGC)
All real property, whether taxable or exempt, shall be appraised at the current and fair market value prevailing in the locality where the property is situated. The Department of Finance shall promulgate the necessary rules and regulations for the classification, appraisal, and assessment of real property pursuant to the provisions of R. A. No. 7160 or the Local
Government Code of 1991. (Sec. 201, LGC)
2) Real prope1iy shall be classified for assessment purposes on the basis of its actual use. (Sec. 198 (b), LGC)
3) Real property shall be assessed on the basis of a uniform classification within each local
government unit. (Sec. 198 (c), LGC)
191
To this end, Provincial, City, and the Municipal Assessors of the municipalities within Metropolitan Manila Area shall prepare a Schedule of Fair Market Values186 for the different classes of real property situated within their respective local government units for enactment of ordinance of the sanggunian concerned. (Sec 212, LGC)
4) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person. (Sec. 198 (d), LGC)
5) The appraisal and assessment of real property shall be equitable. (Sec. 198 (e), LGC)
Section 168. Administration of the Real Property Tax. - The provinces and 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, subject to the rules and regulations governing the classification, appraisal and assessment of real property issued by the Department of Finance.
Accordingly, the Department of Finance and the provincial governments shall exercise the authority to review and examine on a continuing basis, property assessment and real property tax records to ensure the proper implementation hereof and determine compliance with existing laws and regulations (Art. 291, IRR, implementing Sec. 200, LGC))
Illustrative Case:
1) Municipalities outside Metro Manila Area have no power to enact an ordinance levying real property tax, as sucb power and authority is vested only upon their respective provinces. (BLGF Opinion, May 5, 1994)
Section 169. Rates of Levy. - (a) A province or city or municipality within Metropolitan Manila Area shall fix a uniform rate of basic real prope1ty tax applicable to their respective jurisdiction as follows:
1) For provinces - not exceeding one percent (I%) of the Assessed Value.
2) For cities, or municipalities of Metropolitan Manila Area - not exceeding two percent (2%) of the Assessed Value.
(b) No public hearing shall be required before the enactment of a local tax ordinance levying the basic real property tax. (Art. 324, IRR, implementing Sec. 233, LGC))
Section 170. Special Levies. - Provinces, cities and the municipalities within the Metropolitan Manila Area may also levy and collect the following special levies on real properties within their jurisdiction:
ts6 SMV
192
A. Additional Levy on Real Property for the Special Education Fund.187 - A province or
city, or a municipality within 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. (Sec. 235, LGC)
Illustrative Cases:
1) The total three percent (3%) rate (2% basic and 1% SEF) of real property taxes imposed by Calbayog City is in accordance with the provisions of R. A. No. 7160. (BLGF Letter, May 22, 1998 to the National Food Authority)
2) Further, on the authority of local government units to impose the Special Education Fund, a province or city, or a municipality within Metropolitan Manila Area may levy and collect an annual tax of one percent (1 %) on the assessed value of the real property for the Special Education Fund in addition to the basic real propetty tax.
However, the following rules apply to a municipality not located within the Metropolitan Manila Area:
1. It is the province and not the municipality, that has the authority to impose the additional SEF tax;
11. The rate of the SEF tax shall not exceed one percent (1 %) of the assessed value of the subject property; and
iii. While the SEF tax is imposed by the province, Municipal Treasurers are authorized to collect the said tax. (BLGF F1
lndorsement, March 18, 1996)
B. Additional Ad Valorem Tax on Idle Lands. - 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. (Sec. 236, LGC)
For this additional tax on idle lands, the following should be observed:
1) Listing of Idle Lands by the Assessor. - The Provincial, City or Municipal Assessor shall make and keep an updated record of all idle lands located within his area of jurisdiction. For purposes of collection, the Provincial, City or Municipal Assessor shall furnish a copy thereof to the Provincial or City Treasurer who shall notify, on the basis of such record, the owner of the property or person having legal interest therein of the imposition of the additional tax. (Sec.
239, LGC); and
is1 SEF
193
2) In the case of subdivision lots:
1. Individual buyers shall be liable for the additional tax if the ownership of the property has been transferred to them.
11. Subdivision owners or operators shall be liable for the additional tax on lots whose ownership has not been transferred to individual buyers, these lots being considered still part of the subdivision. (Sec. 237,
LGC)
iii. A province or city or a municipality within the Metropolitan Manila Area may exempt idle lands from additional levy by reason of force
majeure, civil disturbance, natural calamity or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving,
utilizing or cultivating the same. (Sec. 238, LGC)
C. Special Levy by Local Government Units - A province, city or municipality may impose a special levy on the lands comprised within its ten-itorial jurisdiction specially benefited by public works projects or improvements funded by the local government unit concerned.
194
The following provisions apply in the case of this special levy:
1) The special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements, including the costs of acquiring land and such other
property in connection therewith.
2) The special levy shall not apply to lands exempt from basic real property tax and the remainder of land portions of which have been donated to the local government unit concerned for the construction of such projects and improvements. (Sec. 240, LGC)
3) The tax ordinance imposing the special levy shall:
1. describe with reasonable accuracy the nature, extent, and location of the public works projects or improvements to be undertaken;
11. state the estimated cost of the public works projects or improvements;
iii. specify the metes and bounds by monuments and lines; and
I I
1v. specify the number of annual installments for the payment of the
special levy which in no case shall be less than five (5) years nor more
than ten (10) years.
4) The sanggunian concerned shall not be obliged, in the apportionment and
computation of the special levy, to establish a uniform percentage of all lands
subject to the payment of the tax for the entire district, but it may fix different
rates for different parts or sections thereof, depending on whether such land is
more or less benefited by the proposed work. (Sec. 241, LGC)
5) Prior to the enactment of an ordinance imposing a special levy, the sanggunian
concerned shal I:
1. conduct a public hearing thereon; and
11. notify in writing the owners of the real property to be affected or the
persons having legal interest therein as to the date and place thereof
and afford the latter the opportunity to express their positions or
objections relative to the proposed ordinance. (Sec 242, LGC)
6) The special levy shall accrue on the first ( I 51) day of the quarter next following the
effectivity of the ordinance imposing such levy. (Sec. 245, LGC)
Section 171. Exemption from Real Property Tax. - The following are exempted from
payment of the real property tax:
a) 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. (Sec. 234 (a), LGC)
Political subdivisions of the Republic of the Philippines are the autonomous regions,
provinces, sub-provinces, cities, municipalities and barangays (Sec. 4, Book 1, E. 0. No.
292). Government-Owned or Controlled Corporations188 are not considered political
subdivisions.
I 11 ustrati ve Cases:
I) An installment purchaser of land and building within a housing project of the GSIS is
liable to pay real estate taxes from the time possession of such property was transfeJTed to
him, although pending full payment of the purchase price, the seller GSIS retains
ownership and title over the property (G.R. No. L-29772. September 18, 1980).
Moreover, the exemption of the GSIS from the payment of all taxes, assessments, fees,
188 GOCCs
195
charges and duties of all kinds under Section 33 of its Charter has not been superseded by
the Local Government Code of 1991. (DOJ Letter, December 18, 1994 to GSIS)
2) ECO ZONE operators are exempt from real property tax by virtue of Section 24 of R. A.
No. 7916, otherwise known as the Special Economic Zone Act of 1995, creating the
EPZA, later renamed as PEZA, which states: " .... no taxes, local and national, shall be
imposed on business establishments operating within the ECOZONE. In lieu of paying
taxes, five percent (5%) of the gross income earned by all businesses and enterprises
within the ECOZONE shall be remitted to the National Government." This exemption
only applies to enterprises under PEZA. Thus, with the enactment of R. A. No. 7160, or
the Local Government Code of 1991, it is believed that PEZA is no longer exempt from
payment of realty taxes. (DOJ Letter, September 6, 1999 to PEZA, Pasay City)
b) Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques, non
profit or religions cemeteries and all lands, buildings, and improvements actually, directly
and exclusively used for religious, charitable or educational purposes. (Sec. 234 (b), LGC)
Charitable institutions are those whose principal aim is to give of its material substance or
time to benefit those who are in need of such assistance, or will be benefited by such gift or
expenditure in some other way than simply by an improvement of morals. Generally, the
exemption of charitable institutions is expressly or impliedly limited to property devoted to
charitable purposes and does not include property belonging to such institutions not used for
secular or non-charitable purposes, such as property used to create revenue. (DOF Assessment Regulations No. 3-75, February 10, 1975)
Illustrative Cases:
1) Real properties actually, directly, and exclusively used for educational purposes are
exempt from payment of real property taxes. (BLGF 5'" lndorsement, January 23, /997 to the Provincial Assessor of Romblon)
2) Lands, buildings and improvements owned by the Development Academy of the
Philippines (OAP) in Tagaytay City which are actually, directly and exclusively used for
educational purposes are exempt from real property taxes. However, said exemption does
not include machineries owned by OAP even if these are actually, directly and
exclusively used for educational purposes. (BLGF 2nd Indorsement, July 30, 1998 to the City Treasurer ofTagaytay City)
3) Further, the tax exemption granted to OAP properties in Tagaytay City cannot be applied
to OAP properties in Pasig City for the reason that, as submitted by the City Assessor, the
properties are not actually, directly, and exclusively used for educational purposes.
(BLGF 3rd Indorsement, February 9, 1999 to the City Assessor of Pasig City)
c) 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
196
distribution of water and/or generation and transmission of electric power. (Sec. 234 (c),
LGC)
Illustrative Case:
1) Compression/Compressor House, Sub-Station Building, and Sub-Station Switchboard and Steel Tower owned by the National Power Corporation (NAPOCOR) may be considered exempt from the payment of real property taxes, provided the same are actually, directly and exclusively used in the generation and supply of electric power. (BLGF 3
rd Indorsement, February 25, 1997 to the Provincial Assessor of Batanes)
2) Machineries declared in the name of the Bauang Private Power Corporation (BPPC) are subject to real property tax, although engaged in the generation of electric power, as the company is a private corporation and does not fall under the category of a governmentowned and controlled corporation. (BLGF th Indorsement, July 16, J 998 to the
Provincial Assessor of La Union)
d) All real properties owned by duly registered cooperatives as provided under R. A. No. 6938189
. (Sec. 234 (d). LGC)
Illustrative Case:
1) All real properties owned by cooperatives duly registered with the Cooperatives Development Authority (CDA), with minimum accumulated reserves and undivided net savings of Ten Million Pesos (P 10,000,000.00) are exempt from payment of real property taxes in view of the specific provisions of R. A. No. 6938, known as the Cooperative Code of the Philippines. Also covered by this exemption are electric cooperatives which are duly registered with the CDA pursuant to R. A. No. 6938. (BLGF
Letter dated February 26, 1993 to the Municipal Secretary of Pagudpud, !locos Norte)
e) Machinery and equipment used for pollution control and environmental protection. (Sec. 234
(e), LGC)
Illustrative Case:
The claim for exemption of DTGITEL from payment of real property taxes on properties which are used in the operation of its business under its franchise is meritorious. (BLGF 2"d Indorsement, January 4, 1999 to the Provincial Assessor of Batangas)
f) Except as provided herein, any exemption from payment of real. property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of R. A. No. 7160 or the Local Government Code of 1991. (Sec. 234 (last par.), LGC)
189 Cooperative Code of the Philippines
197
The foregoing enumeration of exemptions from real property tax is clearly exclusive considering the provisions of the immediately preceding paragraph. (p. 322, The Local Government Code
Annotated by Nolledo)
Section 172. Withdrawal of Exemptions from Payment of Real Property Taxes. - Unless otherwise provided in R. A. No. 7160 or the Local Government Code of 1991, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are withdrawn upon the effectivity of R. A. No. 7160. (.')ec. 193, LGC)
Illustrative Cases:
l) The phrase, "Unless otherwise provided in R. A. No. 7160 or the Local Government Code of 1991" refers to Section 133 of the same code which exempts, among others, national government instrumentalities from the taxing powers of local government units. (DOJ Letter,
May 13, 1993 to Duty Free Philippine)
Instrumentality refers to any agency of National Government, not integrated within the department framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate powers, administering special funds, and enjoying autonomy, usually through a charter. The term includes regulatory agencies, chartered institutions and government owned or controlled corporations. (Sec. 2 (I 0), Introductory Provisions,
Administrative Code of 1987)
2) Local governments do not have the authority to grant exemptions from real property taxes to those which are not expressly exempted by the Local Government Code of 1991, otherwise, they will be exercising the power of amending laws or acts enacted by Congress. (BLGF 3
rd
lndorsement, May 27, 1998)
3) McArthur Park and Beach Resort, although a subsidiary of the Philippine Tourism Authority, a government-owned or controlled corporation, is subject to the payment of real property and other local taxes. (BLGF 3
rd lndorsement, April 11, 1997 to the Provincial Assessor of
Tacloban City)
4) Section 234 of the Local Government Code of 1991, evidently withdrew the tax exemption privileges granted to GOCCs like the Land Bank of the Philippines (LBP) and the Government Service Insurance System (GSIS). Accordingly, the subject properties of the LBP and the GSIS are liable for the payment of real property tax effective January l , 1992. (BLGF 211d lndorsement, Februa,y 22, 1993; BLGF r
1
lndorsement, April 26, 1994; and
BLGF ls, Jndorsement, October. 5, 1998)
5) Real properties of Philippine Telegraph and Telephone Corporation (PT &T) shall be liable for the payment of real property taxes beginning January 1, 1992. However, commencing
198
January 1, 1993, the year after the franchise of SMART took effect, real properties of PT&T which are directly used in the operation of its franchise are exempt from payment of real property taxes in view of the equality of treatment clause found in Section 14 of its franchise. R. A. Nos. 7294 190
, 7692 191 and 7678192 granted SMART, Bell Telecommunications Philippines, Inc, and DIGITEL the privilege to enjoy real prope1iy tax exemptions on their real properties used in connection with the operation of their franchises. All other properties of these companies shall remain taxable. (BLGF t'' Indorsement, Februmy 14, 1995; and
BLGF 2nd Indorsement, January 4, 1999)
6) The withdrawal of exemptions by the Local Government Code of 1991 did not, however, affect the status of real property owned by embassies, consulates, and other diplomatic offices. These are deemed part of the territory of the country they represent and, therefore, are exempt from any national or local taxes based on the generally accepted principle that the tax laws of one country are not applicable in another. (BLGF 2
nd Indorsement, February 10,
1993 to the Municipal Treasurer of Makati)
Section 173. Date of Accrual of Real Property Tax. - The real property tax for any year shall accrue on the first (1st) day of January and from that date it shall constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be extinguished only upon the payment of the delinquent tax. (Sec. 246, LGC)
Section 174. Collection of Real Property Tax:
a) Responsibility of Local Treasurers to Collect. - The collection of the real property tax with interest thereon and related expenses, and the enforcement of the remedies provided for in Title l 1 93
, Book lI of R. A. No. 7160 or the Local Government Code of 1991, or any applicable rules and regulations shall be the responsibility of the City or Municipal Treasurer concerned. (Sec. 247 (t�1 par.), LGC)
Illustrative Case:
1) There is no need for the Sangguniang Bayan to enact a resolution for the purpose (411,
lndorsement, June 2, 1994), and Municipal Treasurers of municipalities outside Metro
Manila Area, but within a province are delegated the authority to collect realty tax pursuant to Section 247 of the Local Government Code of 1991 (DOF Opinion, July 28,
199R).
190 An Act Granting Smart Information Technologies, Inc. (SMART), a Franchise to Establish, Install, Maintain,
lease, and Operate Integrated Telecommunications/Computer/Electronic Services. 191
An Act Granting to Bell Telecommunications Philippines, Inc., a Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines and for other Purposes.
192 An Act Granting the Digitel Telecommunications Philippines, Inc., a Franchise to Install, Operate and Maintain Telecommunications Systems Throughout the Philippines and for Other Purposes.
193 Real Property Taxation
199
b) Deputization of Barangay Treasurers. -The City or Municipal Treasurer may deputize the Barangay Treasurer to collect all taxes on real property located in the barangay: Provided,
That the Barangay Treasurer is properly bonded for the purpose. Provided, further, That the premium on the bond shall be paid by the city or municipal government concerned. 194
(Sec.
247 (rd par.), LGC)
c) Assessor to Furnish Local Treasurer with Assessment Roll. - The Provincial, City or Municipal Assessor shall prepare and submit to the Treasurer of the local government unit, on or before the thirty-first (31st) day of December of each year, an assessment roll containing a list of all persons whose real properties have been newly assessed or re-assessed and the values of such properties. (Sec. 248, LGC)
Section 175. Procedures for Collection of Real Property Tax. - The City and Municipal Treasurers shall adopt the following procedures in the collection of real property taxes:
A. Posting of Collection Notices -
1) For Current Year: Notice of Time for Collection of Tax. -The City or Municipal Treasurer shall, on or before the thirty first (31 sr) day of January each year, in the case of the basic real property tax and the additional tax for the SEF or on any other date to be prescribed by the sanggunian concerned in the case of any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, post the notice of the dates when the tax may be paid without interest at a conspicuous and publicly accessible place at the city or municipal hall. Said notice shall likewise be published in a newspaper of general circulation in the locality once a week for two (2) consecutive weeks. (Sec. 249, LGC)
2) For Previous Year: Notice of Delinquency in Payment of Real Property Tax. -When the real property tax or any other tax imposed under Title 2, Book TI of R. A. No. 7160 or the Local Government Code of 1991, becomes delinquent, the Provincial, City or Municipal Treasurer shall immediately cause a notice of the delinquency to be posted at the main entrance of the provincial capitol, or city or municipal hall, and in a publicly accessible and conspicuous place in each barangay
of the local government unit concerned. The notice of delinquency shall also be published once a week for two (2) consecutive weeks, in a newspaper of general circulation in the province, city or municipality. 195
(Sec. 254 (a), LGC)
B. Issuance of Notice to the Taxpayer or the Real Property Tax Bill. - The Local Treasurer concerned shall reflect in the Real Property Tax Bill 196 to be sent to the taxpayer the real
194The appropriate mechanisms and safeguards regarding collections, remittances and other accountabilities of deputized Barangay Treasurers are discussed in full in Chapter 2, Book II of this Manual, consistent with the provisions of the Systems and Procedures Manual on the Management of Barangay Funds and Property issued by the Commission on Audit.
195 See Sec. 184, this Manual 196 RPTB, LTO Form 89
200
property tax due for his property for the current year and the delinquent taxes due for the previous year or years.
C. Where Real Property Taxes May Be Paid. - Real property taxes shall be paid to the Office of the City or Municipal Treasurer of the city or municipality where the real property is located. Property owners, however, at their option or convenience, may pay their real property taxes to the Office of the Provincial Treasurer of the province to which the municipality where the property is located, belongs. (Art. 338, IRR, implementing Sec. 247,
LGC)
Real property taxes for properties located in a city or a municipality within the Metropolitan Manila Area, shall be paid with the Office of the City or Municipal Treasurer concerned.
Real property taxes may also be paid to the Barangay Treasurer deputized to collect the same for properties located within the barangay concerned in accordance with Section 247 of R. A. No. 7160 or the Local Government Code of 1991. 197
Section 176. Payment of Real Property Taxes in Installments. - (a) The owner of the real property or the person having legal interest therein may pay the basic real property tax and the additional tax for Special Education Fund (SEF) due thereon, without interest, in four (4) equal installments, to be due and payable as follows:
1st Installment on or before the thirty-first (31st) of March
2"d Installment on or before the thirtieth (30th) of June
3rd Installment on or before the thirtieth (30th) of September
4th Installment on or before the thirty-first (31st) of December
(b) In the implementation of the installment scheme in the collection of real property taxes, the following shall be observed:
1. Payments of real property taxes shall first be applied to prior years' delinquencies, interests and penalties, if any and only after said delinquencies are settled may tax payments be credited for the current year.
11. The date for the payment without interest of any other tax imposed under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991 shall be prescribed by the sanggunian concerned.
iii. Excluded from the above schedule of payments is the special levy on properties benefited by development, the payments of which shall be governed by the schedule
197 See Section 174 (b), this Manual
201
specified in the enabling ordinance enacted by the sanggunian concerned. (Sec. 250,
LGC)
Illustrative Case:
1) The payment of quarterly installments having been fixed by law, cannot be extended by way of a local ordinance. (BLGF rd lndorsement, June 14, 1994 to the Treasurer of Jloilo City)
Section 177. Tax Discount for Advanced Prompt Payment. - (a) If the basic real property tax and the additional tax accruing to the SEF are paid on time or in advance in accordance with the prescribed schedule of payment as provided in Section 250 of R. A. No. 7160 or the Local Government Code of 1991, 198 the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due.
(b) For purposes of this section, prompt payments may be given a discount of ten percent (10%), while advanced payments may be entitled to the maximum discount of twenty percent (20%). (Art. 342, IRR, implemenhng Sec. 251, LGC]
( c) The tax discount rates shall be specified in an appropriate ordinance enacted by the sanggunian of the local government unit concerned. ln the absence of an appropriate ordinance, the discounts shall not be granted.
(d) Advanced Payment as distinguished from Prompt Payment. - To be entitled to tax discount, the basic real property tax and additional SEF tax must be paid on or before the deadlines provided under Section 250 of R. A. No. 7160 or the Local Government Code of 1991. Under Section 246 of the same code, the real property tax for any year accrues on the first (151)
day of January, although the tax due for that year may be paid without interest or penalty on or before March 31 si, or in four ( 4) quarterly installments starting from the said date. This situation is not a case of "advanced payment" but simply prompt payment". Technically, advanced payment of taxes refer to those made before the accrual of the tax where the collections therefrom are required under existing COA regulations to be taken up in the books of accounts of local governments as Real Property Tax Receivable and Deferred Real Property Tax; whereas taxes collected after they have accrued but made on or before the statutory installment deadlines are to be taken up as Real Property Tax Income. (Notes on Section 25 !, LGC. Local Government
Taxation, Ursa!)
Illustrative Cases:
l) The grant of discounts should be effected only if the same are provided for in a duly enacted ordinance of the Sangguniang Pan!ungsod. (BLGF 1st Jndorsement, January 26, 1994 to the
Cify Treasurer ofAnge/es City)
198 See Sec. 176, this Manual
202
2) In granting discounts, the basic real property tax and the SEF tax should be treated separately and independent of each other. (BLGF 3rd Indorsement, August 12, 1997 to the Municipal
Treasurer of Valenzuela, Metro Manila)
Section 178. Payment Under Protest:
a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipt the words, "paid under protest".
b) The protest shall be in writing and must be filed within thirty (30) days from payment of the tax to the Provincial, City Treasurer, or Municipal Treasurer in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from receipt. (Sec. 252 (a), LGC)
c) The tax or a portion thereof paid under protest shall be held in trust by the Local Treasurer concerned (Sec. 252 (b), LGC). However, fifty percent (50%) of the tax paid under protest shall be distributed in accordance with Sec. 271 of R. A. No. 7160 or the Local Government Code of 1991, on the distribution of proceeds. (Art. 343 (b), IRR, implementing Sec. 252 (b),
LGC)
d) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against his existing or future tax liability (Sec. 252 (c), LGC). A cash refund is applicable only if the taxpayer has no tax liability on the subject property.
e) In the event that the protest is denied or upon the lapse of the sixty (60)-day period prescribed in sub-paragraph (a) of Section 252 of R. A. No. 7160 or the Local Government Code of 1991 199
, the taxpayer may avail of the remedies as provided for in Chapter 3, Title 2, Book Il of the same code. (Sec. 252, LGC)
Illustrative Case:
l) Concerned parties entered into a Memorandum of Agreement (MOA) covering the conditional and partial payment of Mirant amounting to ¥ 400M, pending resolution of its appeal with the Court of Tax Appeals.
Under the aforementioned MOA, the amount of ¥ 400M was considered as partial payment under protest which as per the provisions of pars. (b) and ( c) of Section 252 of R. A. No. 7160, otherwise known as the Local Government Code of 1991200
, should be accounted for in the Trust Fund, so that,. in the event that the protest is resolved with finality in favor of Mirant, the same shall be ready for refund or for application as tax credit against any existing or future tax liability thereof.
199 See Sec. 178 (b), this Manual
200 See Sec. 178 (c) and (d), this Manual
203
Applying the provisions of Article 343, IRR of the Local Government Code of 1991, to the query at hand, 50% of the realty taxes paid under protest shall be held in trust and the remaining 50% shall be distributed in accordance with the sharing or distribution of proceeds of real property taxes specified under Section 271201 of the same code as implemented by par. (a), Art. 362 of the same IRR. (BLGF r1 lndorsement, February 13,
2006 to the Municipal Treasurer of Pagbilao, Quezon)
Section 179. Repayment of Excessive Collections. - (a) When an assessment of the basic real
property tax, or any other tax levied under the Title 2, Book II of R. A. No. 7160 or the Local
Government Code of 1991, is found to be illegal or erroneous and the tax is accordingly reduced
or adjusted, the taxpayer may file a written claim for refund or credit for taxes and interests with the Provincial or City Treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment.
(b) The Provincial or City Treasurer, shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title 2, Book II of R. A. No. 7160 or the
Local Government Code of 1991. (Sec. 253, LGC)
( c) In case of tax credit, a Certificate of Tax Credit202 shall be issued to the property owner or
to the person having legal interest therein.
Illustrative Case:
1) In one instance, there was merit in the request of the Asian Terminals, Inc., for the re
computation of its real property tax and any excess payment should be treated as tax credit against the future real property tax liabilities of the said company. (BLGF Letter, February
24, 1997 to the City Treasurer of Manila)
Section 180. Interest on Delinquent Real Property Tax. - In case of failure to pay the basic real property tax or any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local
Government Code of 1991, upon the expiration of the periods as provided in Section 250 of the
same code203, or when due, as the case may be, shall subject the taxpayer to the payment of
interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid: Provided, however, That in no case shall the total interest on the unpaid tax or portion thereof exceed thirty six (36) months. (Sec. 255, LGC)
Section 181. Guiding Principles in Determining Delinquency:
201 See Sec. 193, this Manual
202 LTO Form 101
203 See Sec. 176, this Manual
204
l) The accrual of the tax means that it has become due and payable. The words, "due and
demandable" can merely denote the existence of a simple indebtedness without reference to the time of payment; they do not necessarily have to refer to the time limit or the date on which taxes must be paid. (Commissioner of Internal Revenue v. Visayan Electric Co., May 27, 1968)
2) A taxpayer is delinquent if he fails to pay his taxes within the period fixed by statute or
executive order. (US. v. Estavillo, 19 Phil. 478)
3) Tax delinquencies incurred before the effectivity ofR. A. No. 7160 or the Local Government
Code of 1991, shall be governed by the provisions of applicable laws then in force; the
computation of penalties for delinquent real property taxes for CY s 1992 to 1994 should be based on the provisions of Section 255 of the Local Government Code of 1991, providing for
a 2% interest rate per month on the unpaid amount but in no case to exceed thirty-six (36)
months. (BLGF 211d Indorsement, October 30, 1995 to the Provincial Treasurer of South Cotabato)
Section 182. Procedures in Computing Taxes, Interest and Discounts. - The formulas to be
used in computing the payments due for taxes are as follows:
A. Computation of the Basic Tax and SEF. - In computing the basic real property tax and the
tax accruing to the Special Education Fund, the following basic components should be noted:
1. The Assessed Value of the real property shall be taken from the Assessment
Roll submitted by the Local Assessor concerned.
11. The applicable Tax Rate shall be the rate fixed for the subject property by the
approved tax ordinance of the local government unit concerned.
Following are the formulas for the Basic Tax and SEF:
1) For the Basic Tax:
TAXDUE = (Assessed Value) x (Applicable Tax Rate)
2) For the Special Education Fund Tax:
SEFDUE = (Assessed Value) x (Applicable Tax Rate)
B. Computation of the Tax Discount for Advanced and Prompt Payment. - The fo1mula for
the tax discount is as follows:
TAXDISCOUNT = (Tax Due) x (Applicable Tax Discount Rate/s)
205
C. Computation of the Interests Due on Unpaid Taxes. - The following formula shall guide
the computation of interests to be paid on delinquent real property taxes:
1) For Real Property Taxes Delinquent for Any Period Up to Thirty-Six (36) Months:
INTEREST PAYMENT DUE FOR EACH MONTH OF DELINQUENCY =
(Tax Due) x (Interest Rate) x (Number of Months Delinquent)
2) For Real Property Taxes Delinquent for Any Period up to More than Thirty-Six (36)
Months:
INTEREST = (Tax or Taxes Due) x (2%) x (36 Months)
3) For Annual Interest Payment Due:
ANNUAL INTEREST PAYMENT DUE = Sum oflnterest
Payments Due for Months Delinquent
During the Year
4) For Total Real Property Taxes and Interest to be Paid:
TOTAL TAX AND INTEREST J)UE = (Total of Unpaid Taxes
Due) + (Interest on
Unpaid Taxes Due)
Section 183. Acceptance of Real Property Tax Through Over-the-Counter Payment in Accredited Banks
A. R. A. No. 8792. - With the effectivity of R. A. No. 8792204 (E-Commerce Law), the
government has recognized the use of electronic data messages or documents in facilitating
and effecting its commercial and non-commercial transactions. Ever since the government
institutionalized the present system of collecting internal revenue taxes and customs duties
through the banking facilities of authorized agent banks, it is expected that local government
units, in the acceptance of local tax payments by selected depository banks, would eventually
follow the same system.205
B. Guidelines in the Acceptance of Real Property Tax Payments Through Accredited
Banks:
204 An Act Providing.for the Recognition and Use of Electronic Commercial and Non-Commercial Transactions, Penalties.for Unlawfi.tl Use there<�t: and Other P111poses.
205 Quezon City has pioneered the system of acceptance of Real Property Tax through the Over-the-Counter payment in accredited banks.
206
a) Enactment of Ordinance. - The sanggunian shall enact the appropriate local ordinance, authorizing the Local Treasurer to accept, as an alternate mode of tax collection, over-the-counter payments by taxpayers in accredited government depository banks of local government units.
b) Accreditation of Authorized Agent Bank. - The banking institution shall seek accreditation from the local government unit to deliver the required services provided in the local ordinance. The local government unit shall consider the stability and soundness of the bank, as well as its efficiency in the collection of taxes and promptness in the remittance of collections to the local government unit. Only authorized government depository banks or banks authorized by the Monetary Board of the Bangko Sentral ng Pilipinas shall be allowed to participate in the collection scheme.
c) Memorandum of Agreement. - The local government unit shall enter into a Memorandum of Agreement with the accredited bank which will be selected based on the terms and conditions that would be most advantageous to the latter. The Memorandum of Agreement shall set forth in detail the responsibilities of the bank in the receipt of tax payments, custody of the funds and the prompt and proper turnover and remittance of tax collections to the local government unit. The Memorandum of Agreement shall also provide a holding-period or the number of days that the collected funds shall remain with the bank before its remittance to the local government unit, and the related costs and charges, if any.
C. Procedures in the Acceptance of Real Property Taxes Through Over-the-Counter
Payments in Accredited Banks Which are Referred to as the Acceptee Bank:
I) Only real property taxes for the current year shall be eligible for Over-the-Counter Payment206 in the Acceptee Bank. All delinquent accounts shall continue to be paid directly to the cashiers/tellers of the Local Government Unit.
2) The Local Government Unit shall send the Real Property Tax Bill to the taxpayer either through the mail or courier, or through personal delivery, which shall be the basis for the Over-the-Counter Payment to the Acceptee Bank. The Real Property Tax Bill may be obtained by the taxpayer or his duly authorized representative directly from the Local Government Unit.
3) The Bills Payment Slip207 issued by the Acceptee Bank shall be duly accomplished by the taxpayer for all payments to be made. The Bills Payment Slip shall indicate the taxpayer's name, the specific tax to be paid, the taxable year and the amount of tax. The Bills Payment Slip shall also contain the bank account number of the Local Government
Unit to which all tax payments shall be credited.
206 OCP
201 BPS
207
4) The taxpayer shall pay the real property tax to the teller of the Acceptee Bank, supported by the Real Property Tax Bill and the duly accomplished Bills Payment Slip.
5) The teller of the Acceptee Bank shall accept the tax payment and shall validate the Real
Property Tax Bill and the Bills Payment Slip. The validated Real Property Tax Bill and
the Bills Payment Slip shall be returned to the taxpayer.
6) The following banking day, the Acceptee Bank shall generate and send to the Local
Government Unit an Abstract of Collection Report208 of the day's transactions via e-mail or FTP.
7) The Local Government Unit may then view and/or print the Abstract of Collection Report.
8) The Local Government Unit may also be provided by the Acceptee Bank with an on-line banking facility which can be used to view and download the Local Government Unit's Statement of Account209 to enable the Local Government Unit to have real-time data on all Real Prope1ty Tax collections made by the Acceptee Bank.
Section 184. Remedies for the Collection of Real Property Tax:
A. Administrative· and Judicial Remedies. - For the collection of the basic real property tax
and any other tax levied under Title 2, Book 11 of R. A. No. 7160 or the Local Government
Code of 1991, the local government unit concerned may avail of the remedies by
administrative action through levy on real property or by judicial action. (Sec. 256, LGC)
B. Local Government's Lien. - The basic real property tax and any other tax levied under Title
2, Book 11 of R. A. No. 7160 or the Local Government Code of 1991, constitutes 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. (Sec. 257, LGC)
C. Certification of Delinquencies Remaining Uncollected. - The Provincial, City or
Municipal Treasurer or their deputies shall prepare a Certified List of All Real Property Tax Delinquencies210 which remained uncollected or unpaid for at least one (I) year in his
jurisdiction, and a statement of the reason or reasons for such non-collection or non-payment,
and shall submit the same to the sanggunian concerned on or before the thirty-first (31st) of
December of the year immediately succeeding the year in which the delinquencies were
incurred, with a request for assistance in the enforcement of the remedies for collection
provided herein. (Sec. 269, LGC)
20s ACR
209 SOA
210 LTO Form 90
208
D. Availment of Remedies. - When the real property tax and any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, becomes delinquent upon the expiration of the one (I) year period from the time the tax becomes due and payable, the local government unit concerned, through the Office of the Provincial or City Treasurer, or the Municipal Treasurer of a municipality within Metropolitan Manila Area, may avail of remedies by administrative or judicial action.
1) The Administrative Remedies which are summary in nature are:
Levy on Real Property; and 11 Sale of Real Property at Public Auction
2) The judicial remedy is availed of in the court of appropriate jurisdiction.
The foregoing remedies are cumulative, simultaneous and unconditional, that is, any or all of them or a combination thereof may be resorted to and the use of one remedy shall not be a bar against the institution of the other. Formal demand for the payment of the delinquent taxes and penalties due is not a prerequisite to such remedies. The Notice of Delinquency required under Section 254 ofR. A. No. 7160 or the Local Government Code of 1991211 shalJ be sufficient for the purpose. (Art. 347, IRR, implementing Sec. 256, LGC)
E. Periods Within Which to Collect Real Property Taxes. - The basic real prope11y tax and any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, shall be collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial· shall be instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment.
The period of prescription within which to collect shall be suspended for the time during which:
1) The Local Treasurer i.s legally prevented from collecting the tax;
2) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of the period within which to collect; and
3) The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located. (Sec. 270, LGC)
Illustrative Cases:
211 See Sec. 186 (}), this Manual
209
l) Providing a prescriptive period is beneficial to the taxing authority since Local Treasurers are compelled to collect taxes promptly. However, the Local Government Code of 1991 does not clearly provide as to when the Local Treasurer can perfonn his/her function in order to say that he/she collects promptly. 212
2) If the Local Treasurer sends notice of delinquency and/or demand letter for the payment of the delinquent taxes in observance of due process preparatory to the application of the administrative remedies in the collection of delinquent taxes provided in the law, the prescriptive period of five (5) years for the collection of taxes shall not start to run. It is only when the Local Treasurer concerned neglected to perform his mandated duties that he shall be faulted, giving rise to said prescriptive period under the law. Otherwise, taxpayers may circumvent the law by not paying their taxes until the collection of the same prescribes. (BLGF 211d Indorsement, October 16, 1997 to the Provincial Treasurer
of Bataan)
3) BLGF has clarified and stressed in several opinions that the five-year prescriptive period was provided only to enforce the collection of real property taxes within a specific period of time. Thus, Local Treasurers cannot execute administrative or judicial remedi.es after the lapse of the five-year period, but it does not mean that Local Treasurers can no longer collect delinquent taxes accruing for the period. (BLGF F' lndorsement, March 12, 1996
to the Provincial Treasurer ofZamboanga def Sur,· and BLGF 3rd Indorsement, January
26, 1998 to the Treasurer of Cebu City)
4) Delinquent real property taxes prior to the effectivity of R. A. No. 7160 or the Local Government Code of 1991 were imprescriptible because Section 270 thereof is prospective in application. Hence, the collection of real property taxes that accrued prior to the effectivity on Janua1y 1, 1992 of the Local Government Code of 1991, shall be governed by the Real Property Tax Code or P. D. No. 464, as amended. (BLGF 4'h Indorsement, June 2, 1994 to the Provincial Treasurer of Pampanga)
5) It is clear, explicit and mandatory from the provisions of Section 270 that real property tax shall be collected within five (5) years from the date they become due. No action for the collection of the tax, that is, administrative action and/or civil action shall be instituted after the expiration of such period. Accordingly, failure to collect the real property tax within 5 years from the date it becomes due will bar the collection thereof even by administrative or judicial means, unless the 5-year prescriptive period was suspended under the circumstances specified.
In the event of fraud or intent to evade payment of real property tax, however, the 3rd
sentence of Section 270 provides that the action for the collection of the tax may be instituted within ten (10) years from the date of the discove1y of such fraud or intent to
212 p. 6, Implications of Section 270 of the Local Government Code (LGC) Re: Periods within which to Collect Real Property Taxes, March IO. 2005, study by the National Tax Research Center (NTRC), DOF.
210
evade payment, unless the period is suspended also under the circumstances specified. The action for the collection of the tax refers to administrative and civil actions. Tersely
stated, if fraud or intent to evade payment exists, the real property tax may be collected within the 10-year period by means of administrative action and/or civil action. Please
take into account that fraud is a question of fact that must be alleged and proved. It is a
serious charge and, to be sustained, it must be supported by clear and convincing proof.
(BLGF Letter, May 22, 2007 to the T1:easurer o.f Quezon City)
F. Cost of Collection. - The Local Treasurer may, by ordinance duly approved, advance an
amount sufficient to defray the costs of collection through the remedies provided in Title 2, Book II of R. A. No. 7160 of the Local Government Code of 1991213
, including the expenses
of advertisement and sale. (Sec. 260, LGC)
The cost of collections, however, shall be recovered by the local government unit from the
proceeds of the sale or auction of the properties levied.214
Section 185. Condonation or Reduction of Real Property Tax and Interest. - In case of a
general failure of crops or substantial decrease in the price of agricultural or agri-based products,
or calamity in any province, city, or municipality, the sanggunian concerned, by ordinance
passed prior to the first day of January of any year and upon recommendation of the Local
Disaster Coordinating Council, may condone or reduce, wholly or partially, the taxes and interest
thereon for the succeeding year or years in the city or municipality affected by the calamity.
(Sec. 276, LGC)
Section 186. Pre-Auction Sale Notice of the Delinquency. - When the real property tax or
any other tax under Title 2, Book I I of R. A. No. 7160 or the Local Government Code of 1991,
becomes delinquent, the Provincial, City or Municipal Treasurer shall:
I) Notice of Delinquency. - Immediately cause a Notice of Realty Tax Delinquency,215
specifying as follows:
1. Description, location, and owner of the real property subject to delinquent
tax;
11. Date upon which the tax became delinquent;
iii. That personal property may be distrained to effect payment of the
delinquent tax;
1v. That anytime before the distraint of personal property, payment of the
delinquent tax with surcharges, interests and penalties may be made in
213 See Sec. 187 and Sec. 188, this Manual 214 Expenses of sale are included in the determination of the auction price and the redemption price. 215 LTO Form 93
211
accordance with Section 255 of R. A. No. 7160 or the Local Government Code of 1991;216and
v. That unless the tax, surcharges and penalties are paid before the expiration of the year for which the tax is due the delinquent real property will be sold at public auction, except when the notice of assessment or special levy is contested administratively or judicially pursuant to the provisions of Chapter 3, Title 2, Book II ofR. A. No. 7160 or the Local Government Code of 1991; and the title to the property will be vested in the purchaser, subject, however, to the right of the delinquent owner of the property or any person having legal interest therein to redeem the property within one (]) year from the date of sale.
2) Posting of the Notice of Realty Tax Delinquency. - Post the Notice of Realty Tax Delinquency at the main entrance of the provincial capitol, city or municipal hall and in a publicly accessible and conspicuous place in each barangay of the local government unit concerned.
3) Publication of the Notice of Realty Tax Delinquency. - Publish the Notice of Realty Tax Delinquency once a week for two (2) consecutive weeks, in a newspaper of general circulation in the province, city, or municipality within Metropolitan Manila Area. (Sec. 254, LGC)
4) Service of the Notice of Realty Tax Delinquency. - A copy of the Notice of Realty Tax Delinquency shall be mailed to or served personally to the delinquent real property owner-taxpayer or any person having legal interest therein.
5) The Local Treasurer may continue to communicate with the delinquen� real property owner-taxpayer on the possibility of a compromise agreement by virtue �of an ordinance duly enacted for the purpose.217
Section 187. Administrative Remedy:
A. Levy on Real Property. - (a) After the expiration of the time required to pay the basic real property tax or any other tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, real property subject to such tax may be levied upon through the issuance of a warrant on or before, or simultaneously with, the institution of the civil action for the collection of the delinquent tax.
(b) Levy on real property shall be made in the manner herein set forth:
216 See Sec. 180, this Manual 217 Judicial and Administrative Remedies in the Collection of Delinquent Real Property Tax Pursuant to R. A. No.
7160 or the Local Government Code of 1991, Renee Tan Empaces, Assistant Regional Director and ICORegional Director, BLGF Regional Office No. VII, Cebu City.
212
1) Warrant of Levy. - The Provincial or City Treasurer, or Treasurer of a municipality
within the Metropolitan Manila Area when issuing a Warrant of Levy218 shall
prepare the duly authenticated certificate showing:
1. The name of the delinquent property owner or person having legal interest
therein;
11. The description of the real property; and
iii. The amount of the tax due and the interest thereon.
6) Service of Warrant of Levy. - The Warrant of Levy shall be mailed to or served upon
the delinquent real property owner or person having legal interest therein, or in case
he is out of the country or cannot be located, to the administrator or occupant of the
property.
7) Notice of Levy to the Local Assessor and the Registrar of Deeds. - At the same time,
written Notice of Levy219 with the attached copy of the Warrant of Levy shall be
mailed to or served upon the Local Assessor and the Registrar of Deeds of the
province, city or a municipality within the Metropolitan Manila Area where the
property is located, who shall annotate the levy on the Tax Declaration and the
Certificate of Title to the property, respectively. (Sec. 258 r' par., LGC)
8) Report on the Levy to the Sanggunian. - The levying officer shall submit a report on
the levy to the sanggunian concerned within ten ( 10) days after the receipt of the
Warrant of Levy by the owner of the property or person having legal interest therein.
(Sec. 258 2nd, LGC)
B. Advertisement of Sale. - Within thirty (30) days after service of the Warrant of Levy, the
Local Treasurer shall proceed to publicly advertise for sale or auction the property or a
usable portion thereof as may be necessary to satisfy the tax delinquency and expenses of
sale which shall be effected by the issuance of a Notice of Sale and the posting and
publication thereof.
6) Notice of Sale. - The Notice of Sale shall be issued by the Local Treasurer,
specifying therein the following:
1. amount of the delinquent tax and interest due thereon;
11. expenses of sale;
218 LTO Form 92
219 LTO Form 93
213
111. date and place of sale;
1v. name of the owner of the delinquent real property tax or any person having legal interest therein; and
v. description of the property to be sold.
9) Posting of Notice of Sale. - The Notice of Sale shall be posted at the main entrance of the provincial capitol, city or municipal hall, and in a publicly accessible and conspicuous place in the barangay where the real property is located; and
10) Publication of Notice of Sale. - The Notice of Sale shall be published once a week for two (2) weeks in a newspaper of general circulation in the province, city or municipality where the property is located.
11) Notice of Publication and Sale. - A Notice of Publication and Auction Sale220 shall
be issued to the delinquent real property owner/taxpayer concerned, informing him which newspaper of general circulation the Notice of Sale was published; the dates of such publication; and the time, date and place where the public auction will be conducted.
I2)Proof of Service. - The officer serving the Warrant of Levy, Notice of Levy, and Notice of Publication and Sale shall accomplish a Proof of Service
22 1 thereon and submit the same to the Local Treasurer concerned.
13) Certificate of Release. - At any time before the date fixed for the sale, the owner of the real property or person having legal interest therein may stay the proceedings by paying the delinquent tax, the interest due thereon and the expenses of sale (Sec. 260
(F' par.), LGC). A Certificate of Release shall be issued thereby by the Local Treasurer concerned, together with the official receipt and tax clearance which shall in effect extinguish the tax lien on the property.222
C. Sale. -
I4)Auction Sale. - If no payment is made, the delinquent property shall be auctioned at the appointed date, time and place. The property shall be sold to the highest cash bidder whose bid is sufficient to pay the delinquent real property tax, the accrued interest, and the cost of the sale, the total of which shall be the floor price for accepting any bid.
220 LTO Form 94 221 LTO Form 95 222 Judicial and Administrative Remedies in the Collection of Delinquent Real Property Tax Pursuant to R. A. No.
7160 or the Local Government Code of 1991, Renee Tan Empaces, Assistant Regional Director and lCORegional Director, BLGF Regional Office No. VII, Cebu City.
214
I
I
The sale shall be conducted in accordance with the following details specified in the Notice of Sale:
a) Date of Sale. - The sale by auction shall be held after the Warrant of Levy shall have been served to the delinquent owner of the real property or any person having legal interest therein or to the administrator or occupant thereof; and after the advertisement of the sale shall have been complied with.
b) Place of Sale. - The sale shall be held either at the main entrance of the provincial capitol, city or municipal hall, or on the property to be sold, or at any other place as specified in the Notice of Sale. (Sec. 260 (I'�' par.), LGC)
15) Report of the Sale to the Sanggunian. - Within thirty (30) days after the sale, the Local Treasurer or his deputy shall make a report of the sale to the sanggunian concerned, which shall form part of his records. (Sec. 260 (2nd par.), LGC)
16) Certificate of Sale. - The Local Treasurer shall likewise prepare and deliver to the purchaser a Certificate of Sale of Delinquent Property
223 which shall contain the name of the purchaser, a description of the property sold, the amount of the delinquent tax, the interest due thereon, the expenses of sale and a brief description of the proceedings. (Sec. 260 (2'"1 par.), LGC)
17) Remittance of nxcess Payment. - Proceeds of the sale in excess of the delinquent tax, the interest due, and the expenses of sale shall be remitted to the owner of the real property or person having legal interest therein. (Sec. 260 (211d par.), LGC)
D. Redemption of Property Sold. -
18) Certifl.cate of Redemption. - Within one (1) year from date of sale, the owner of the delinquent property or person having legal interest therein, or his representative, shall have the right to redeem the property upon payment to the Local Treasurer of the amount of the delinquent tax, including the interest due thereon and the expenses of the sale from the date of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the date of sale to the date of redemption. Such payment shall invalidate the Certificate of Sale issued to the purchaser and the owner of the delinquent real property or person having legal interest therein shall be entitled to a Certificate of Redemption
224 which shall be issued by the Local Treasurer or his deputy.
From the date of sale until the expiration of the period of redemption, the delinquent real property shall remain in the possession of the owner or person having legal
223 LTO Form 96
224 LTO Form 97
!. -
215
interest therein, who shall be entitled to the income and other fruits thereof. (Sec. 261
F' and 211d pars., LGC)
19) Notice of Redemption. - Upon redemption of the delinquent real property by the owner or person having legal interest therein, the Local Treasurer or his deputy shall issue to the purchaser the Notice of Redemption225 to inform him of such redemption and request him to return the Certificate of Sale that had been issued.
The Local Treasurer or his deputy, upon receipt from the purchaser of the Certificate of Sale, shall forthwith return to the latter the entire amount paid by him plus interest of not more than two percent (2%) per month. Thereafter, the property shall be free from the lien of such delinquent tax, interest due, and expenses of sale. (Sec. 261
3rd
par., LGC)
E. Final Deed to Purchaser. -
20) Final Deed of Sale. - In case the owner or person having legal interest therein fails to redeem the delinquent property, the Local Treasurer shall execute a Final Deed of
Sale,226 conveying to the purchaser said property, free from lien of the delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity of the sale rests. (Sec. 262, LGC)
The steps in executing the deed of conveyance of the property shall be as follows:
I) The Local Treasurer concerned shall request the owner of the auctioned property to surrender the delinquent property and the owner's duplicate copy of Title and the Tax Declaration.
2) The owner's duplicate copy of Title and the Tax Declaration shall be attached to the Final Deed of Sale
3) The above documents shall be submitted to the Registrar of Deeds for the consolidation of the title, after which the Local Assessor shall issue a new Tax Declaration in the name of the new owner.
F. Purchase of Property by the Local Government Units for Want of Bidder. - (a) In case there is no bidder for the real property advertised for sale as provided herein, or where the highest bid is for an amount insufficient to pay the real property tax and the related interest and costs of sale, the Local Treasurer conducting the sale shall purchase the property in behalf of the local government unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his office.
225 LTO Form 98
226 LTO Form 99
216
I
(b) It shall be the duty of the Registrar of Deeds concerned, upon registration with his office
of any such declaration of forfeiture to transfer the title of the forfeited property to the local
government unit concerned without the necessity of an order from a competent court. (Sec. 263 ]
st par., LGC)
(c) Within one (1) year from the date of such forfeiture, the taxpayer or any of his
representative, may redeem the property by paying to the Local Treasurer the full amount of
the real property tax and the related interest and costs of the sale.
If the property is not redeemed as provided herein, the ownership shall be fully vested on the
local government unit concerned. (Sec. 263 2nd par., LGC)
G. Resale of Real Estate Taken for Taxes, Fees or Charges. -The sanggunian concerned
may, by ordinance duly approved, and upon notice of not less than twenty (20) days, sell and
dispose of the real property acquired under Section 263 of R. A. No. 7160 or the Local
Government Code of 1991227
at public auction. The proceeds of the sale shall accrue to the
General Fund of the local government unit concerned. (Sec. 264, LGC)
H. Further Distraint or Levy. - Levy may be repeated if necessa1y until the full amount due,
including all expenses, is collected. (Sec. 265, LGC)
I. Effect of Warrant of Levy. -The Warrant of Levy issued in accordance with Section 258 of
R. A. No. 7160 or the Local Government Code of 1991,228 shall operate with the force of a
legal execution throughout the province, city or municipality within the Metropolitan Manila
Area. (Sec. 258, F1 par., LGC)
Section 188. Collection of Real Property Tax Through the Courts. - (a) The local
government unit concerned may enforce the collection of the basic real property tax or any other
tax levied under Title 2, Book II of R. A. No. 7160 or the Local Government Code of 1991, by
civil action in any court of competent jurisdiction. The civil action shall be filed by the Local
Treasurer within the period prescribed in Section 270 of the same Code.229 (Sec. 266, LGC)
(b) The delinquent basic real property tax or any other tax levied under Title 2, Book II of R. A.
No. 7160 or the Local Government Code of 1991, shall constitute indebtedness of the taxpayer to
the LGU, hence, collection of such indebtedness can be enforced through civil action in any
court of competent jurisdiction, observing the following:
l ) The Provincial or City Treasurer, or Municipal Treasurer of a municipality of
Metropolitan Manila shall furnish the Provincial Attorney or City or Municipal Legal
Officer a certified statement of delinquency who, within fifteen ( 15) days after receipt,
227 See Sec. 187 (F), this Manual
228 See Sec. 187 (A) (b) (1), this Manual 229 See Sec. 184 (E), this Manual
217
shall file the civil action in the name of the province, city or municipality in the proper
court of competent jurisdiction. The jurisdiction of the court is detennined by the amount
sought to be recovered exclusive of interests and costs.
2) The Provincial or City Treasurer, or Municipal Treasurer of a municipality of
Metropolitan Manila Area shall furnish the Provincial Attorney or the City or Municipal
Legal Officer concerned the complete address of the defendant where he may be served
with summons. (Art. 357, IRR implementing Sec. 266, LGC)
Section 189. Action Assailing Validity of Tax Sale. - No court shall entertain any action
assailing the validity of any sale at public auction of real property or rights therein under Title 2,
Book II of R. A. No. 7160 or the Local Government Code of 1991, until the taxpayer shall have
deposited with the court the amount for which the real property was sold, together with interest
of two percent (2%) per month from the date of sale to the time of the institution of the action.
The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared
invalid but it shall be returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction invalid by reason of irregularities or
informalities in the proceedings unless the substantive rights of the delinquent owner of the real
property or the person having legal interest therein have been impaired. (Sec. 267, LGC)
Section 190. Payment of Delinquent Taxes on Property Subject of Controversy. - In any
action involving the ownership or possession of, or succession to, real property, the court may,
motu propio or upon representation of the Provincial, City or Municipal Treasurer or his deputy,
award such ownership, possession, or succession to any party to the action upon payment to the
court of the taxes with interest due on the property and all other costs that may have accrued,
subject to the final outcome of the action. (Sec. 268, LGC)
Section 191. Compromise Agreement. - In case the Local Treasurer finds that a Compromise
Agreement230 on the collection of the delinquent real property tax is warranted, representations
may be made to the sanggunian for the purpose of issuing a resolution or enacting an ordinance,
authorizing the Local Treasurer to enter into such agreement.
Section 192. Sanctions:
1) Failure to Dispose of Delinquent Real Property at Public Auction. - The Local
Treasurer concerned who fails to dispose of delinquent real property at public auction in
compliance with the pertinent provisions of R. A. No. 7160 or the Local Government
Code of 199 l , and any other local government official whose acts hinder the prompt
disposition of delinquent real property at public auction shall, upon conviction, be subject
to a fine of not less than One Thousand Pesos (P 1,000.00) nor more than Five Thousand
Pesos (I! 5,000.00), or imprisonment of not less than one (I) month nor more than six (6)
23° CA, LTO Form JOO
218
months, or both such fine and imprisonment, at the discretion of the court. (Sec. 519,
LGC)
2) Penalty for Failure to Issue and Execute Warrant - Without prejudice to criminal
prosecution under the Revised Penal Code and other applicable .Jaws, any Local Treasurer
or his deputy who fails to issue or execute the Warrant of Levy within one ( l) year from
the time the tax becomes delinquent or within thirty (30) days from the date of issuance
thereof, or who is found guilty of abusing the exercise thereof in an administrative or
judicial proceeding shall be dismissed from the service. (Sec. 259, LGC)
Section 193. Distribution of Proceeds. -
A. The proceeds of the basic real property tax, including interest thereon, and proceeds from the
use, lease or disposition, sale or redemption of property acquired by public auction, in
accordance with the provisions of Title 2 , Book II of R. A. No. 7160 or the Local
Government Code of 1991, by the province or city or a municipality within the Metropolitan
Manila Area shall be distributed as follows:
a) In the case of Provinces -
1) Province: Thirty-five percent (35%) shall accrue to the General Fund of the
province;
2) Municipality: Forty percent (40%) shall accrue to the General Fund of the
municipality where the property is located; and
3) Barangay: Twenty-five percent (25%) shall accrue to the barangay where the
property is located.
b) In the case of Cities -
I) City: Seventy percent (70%) shall accrue to the General Fund of
the city; and
2 ) Barangay: Thirty percent (30%) shall be distributed among the component
barangays of the cities where the property is located in the
following manner:
i) Fifty percent (50%) shall accrue to the barangay where the
property is located;
ii) Fifty percent (50%) shall accrue equally to all component
barangays of the city.
c) In the case of Municipality within the Metropolitan Manila Area -
219
1) Metropolitan Manila Authority: Thirty-five percent (35%) shall accrue to the
General Fund of the Authority;
2) Municipality: Thirty-five percent (35%) shall accrue to the General Fund
of the municipality where the property is located;
3) Barangay: Thirty percent (30%) shall be distributed among the component
barangays of the municipality where the property is located in the
following manner:
i) Fifty percent (50%) shall accrue to the barangay where the
property is located; and
ii) Fifty percent (50%) shall accrue equally to all component
barangays of the municipality. (Sec. 271, LGC)
B. Release of Barangay Share. - The share of each barangay shall be released, without need of
any further action, directly to the Barangay Treasurer on a quarterly basis within five (5)
days after the end of each quarter and shall not be subject to any lien or holdback for
whatever purpose (Sec. 271 (d), LGC) and to such rules as may be prescribed by the
Commission on Audit for this purpose (Art. 362, IRR implementing Sec. 271 (d), LGC).
220
Illustrative Case:
1) The sharing or distribution of proceeds of real property taxes should be applied in
accord with the provisions of Section 235 (Additional Levy on Real Property Tax for
SEF) and Section 272 (Application of Proceeds of the Additional 1% SEF Tax) of the
Local Government Code of 1991, as implemented under Article 326 and Article 363,
IRR.
Correspondingly, the P 400M partially paid under protest by Mirant shall be recorded
and distributed, as follows:
For the first 50% of P 400M or P 200M ------------- to the Trust Fund of
the Province of
Quezon
For the remaining 50% of P 400M or P 200M ------ it shall be accounted
for, viz:
Divide:
P200M
-----=2 (represents the 1 % basic tax plus 1 % SEF tax)
P lOOM
Thus:
Less:
P200M
P I OOM ------ to the SEF which shall be divided equally
between the Provincial and Municipal
School Boards of Quezon and Pagbilao,
Respectively.
P lOOM ------- to the General Fund of the concerned LGUs
in the following percentage distribution:
35% of P lOOM or P 35M ------ to the Province of Quezon
40% of P 1 OOM or P 40M ------ to the Municipality of
Pagbilao
25% of P lOOM or P 25M ------ to Barangay Ibabang Polo
(BLGF 1st lndorsement, February 13, 2006 to the Municipal
Treasurer of Pagbilao, Quezon)
C. Application of Proceeds of the Additional One Percent SEF Tax. - The proceeds from the
additional one percent (1 %) tax on real property accruing to the SEF shall be automatically
released to the local school boards; Provided, That in case of provinces, the proceeds shall be
divided equally between the provincial and municipal school boards, Provided, however,
That the proceeds shall be allocated for the following as determined and approved by the
local school board:
1) operation and maintenance of public schools;
2) construction and repair of school buildings, facilities and equipment;
3) educational research;
4) purchase of books and periodicals; and
5) sports development. 231 (Sec. 272, LGC)
D. Proceeds of the Tax on Idle Lands. - The proceeds of the additional real property tax on
idle lands shall accrue to the respective General Fund of the province or city where the land
is located. In the case of a municipality within the Metropolitan Manila Area, the proceeds
shall accrue equally to the Metropolitan Manila Authority and the municipality where the
land is located. (Sec. 273, LGC)
Accordingly, the proceeds of this tax shall be treated in the income account as revenue from
taxation. (Art. 364, IRR implementing Sec. 273, LGC)
231 See illustrative case under Sec. 193 (B), this Manual.
221
E. Proceeds of the Special Levy. - The proceeds of the special levy on lands benefited by public works, project and other improvements shall accrue to the General Fund of the local government unit which financed such public works, projects or other improvements. (Sec.
274, LGC)
Accordingly, all income derived from this special levy shall be treated in the income account as revenue from taxation. (Art. 365, IRR implementing Sec. 274, LGC)
Section 194. General Assessment Revision, Expenses Incident Thereto. - The sanggunian
of provinces, cities and municipalities within the Metro Manila Area shall provide the necessary appropriations to defray the expenses incident to the general revision of real prope1iy assessment.
All expenses incident to a general revision of real property assessments shall, by ordinance of the sangguniang panlalawigan, be apportioned between the province and the municipality on the basis of the taxable area of the municipality concerned. (Sec. 275, LGC)
The barangays may be required by the sanggunian of the city or municipality to share in the expenses to be incurred for the conduct of a general revision of real prope1iy assessment. (Art.
366 (c), IRR implementing Sec. 275, LGC)
Section 195. Condonation or Reduction of Real Property Tax and Interest. - In case of a general failure of crops or substantial decrease in the price of agricultural or agri-based products, or calamity in any province, city, or municipality, the sanggunian concerned, by ordinance passed prior to the first (1 st) day of January of any year and upon recommendation of the Local Disaster Coordinating Council, may condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the city or municipality affected by the calamity. (Sec. 276, LGC)
Section 196. Condonation or Reduction of Tax by the President of the Philippines. - The President of the Philippines may, when public interest so requires, condone or reduce the real property tax and interest for any year in any province or city or municipality within the Metropolitan Manila Area. (Sec. 277. LGC)
Section 197. Fees in Court Actions. - All comi actions, criminal or civil, instituted at the instance of the Provincial, City or Municipality Treasurer or Assessor under the provisions of R. A. No. 7160 or the Local Government Code of 1991, shall be exempt from the payment of court and sheriff's fees. (Sec. 280, LGC)
Section 198. Fees in Registration of Papers or Documents on Sale of Delinquent Real
Property to Province, City or Municipality. - All certificates, documents, and papers covering the sale of delinquent prope1iy to the province, city or municipality, if registered in the Registry of Property, shall be exempt from the documentary stamp tax and registration fees. (Sec. 281,
LGC)
222
CHAPTER 2. BUSINESS AND OTHER LOCAL TAXES
Section 199. Nature. - Business taxes232 are those imposed by a local government unit on the privilege of engaging in business, occupation and other activities within its territorial jurisdiction.233 The proceeds of these taxes accrue exclusively to the local government unit that imposes them, or when provided by law, may be shared with other local government units.
Section 200. Definition of Terms. - The following terms as used in this Manual shall mean:
a) Agricultural Product - includes the yield of the soil, such as com, rice, wheat, rye, hay, coconuts, sugarcane, tobacco, root crops, vegetables, fruits, flowers and their by-products; ordinary salt; all kinds of fish; poultry; and livestock and animal products, whether in their original form or not.
The phrase "whether in their original form or not" refers to the transformation of said products by the farmer, fisherman, producer or owner through the application of processes to preserve or otherwise to prepare the said products for the market such as freezing, drying, salting, smoking, or stripping for purposes of preserving or otherwise preparing the said products for the market. (Sec. 131 (a), LGC)
To be considered an agricultural product whether in its original form or not, its transformation must have been undertaken by the farmer, fisherman, producer or owner.
Agricultural products as defined include those that have undergone not only simple but even sophisticated processes employing advanced technological means in packaging like dressed chicken or ground coffee in plastic bags or styropor or other packaging materials intended to process and prepare the products for the market.
The term "by-products" shall mean those materials which in the cultivation or processing of an article remain over, and which are still of value and marketable, like copra cake from copra or molasses from sugar cane. (Art. 220 (a), !RR, implementing Sec. 131 (a), LGC)
b) Amusement - a pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, pastime, or fun. (Sec. 131 (b), LGC)
c) Amusement Places - include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performance. (Sec. 131 (c), LGC)
d) Business - mean trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit. (Sec. 131 (d), LGC
232 Pertains to other local taxes imposed by LG Us other than real property and business taxes as uthorized by law.
233 See Sec. 3 7 3rd par., this Manual
223
e) Banks and other financial institutions - include non-bank financial intermediaries, lending investors, finance and investment companies, pawnshops, money shops, insurance companies, stock markets, stock brokers and dealers in securities and foreign exchange, as defined under applicable law, or rules and regulations thereunder. (Sec. 131 (e), LGC)
Illustrative Case:
1) Credit card companies fall within the purview of banks and other financial institutions as contemplated under Section 143 (t) of R. A. No. 7160 or the Local Government Code of 1991. (BLG Letter, March 15, 1999 to Picazo Buyco Tan Fider & Santos Law Offices)
t) Capital Investment - is the capital which a person employs in any undertaking, or which he contributes to the capital of a partnership, corporation, or any other juridical entity or association in a particular taxing jurisdiction. (Sec. 131 (!), LGC)
g) Charges - refer to pecuniary liability, as rents or fees against persons or property. (Sec. 131
(g), LGC)
h) Contractor - includes persons, natural or juridical, not subject to professional tax under Section 139 of R. A. No. 7160 or the Local Government Code of 1991234
, whose activity consists essentially of the sale of all kinds of services for a fee, regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of the contractor or his employees.
As used herein, the term "contractor" shall include the following:
1) general engineering; general building and specialty contractors as defined under applicable laws;
2) filling demolition and salvage works contractors;
3) proprietors or operators of mine drilling apparatus;
4) proprietors or operators of dockyards;
5) persons engaged in the installation of water system, gas or electric light, heat, or power;
6) proprietors or operators of smelting plants;
7) engraving, plating, and plastic lamination; establishments;
234 See Sec. 205, this Manual
224
8) proprietors or operators of establishments for repamng, repainting, upholstering, washing or greasing of vehicles, and heavy equipment, vulcanizing, recapping and battery charging;
9) proprietors or operators of furniture shops and establishments for planning or surfacing and re-cutting of lumber, and sawmills under contract to saw or cut logs belonging to others;
10) proprietors or operators of dry-cleaning or dyeing establishments, steam laundries, and laundries using washing machines;
11) proprietors or owners of shops for the repair of any kind of mechanical and electrical devices, instruments, apparatus, or furniture and shoe repairing by machine or any mechanical contrivance;
12) proprietors or operators of establishments or lots for parking purposes;
13) proprietors or operators of tailor shops, dress shops, milliners, and hatters, beauty parlors, barbershops, massage clinics, sauna, Turkish and Swedish baths, slenderizing and body-building saloons and similar establishments;
14) photographic studios;
15) funeral parlors;
16) proprietors or operators of hotels, motels, and lodging houses;
17) proprietors or operators of arrastre and stevedoring warehousing, or forwarding establishments, master plumbers, smiths, and house or sign painters;
18) printers, bookbinders, lithographers;
19) publishers except those engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements;
20) business agents, private detective or watchman agencies, commercial and immigration brokers, cinematographic film owners, lessors and distributors. (Sec. 131 (h), LGC)
i) Corporation - includes partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations or insurance companies, but does not include the following:
225
1) general professional partnerships which are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business; and
2) a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal, and other energy operations or consortium agreement under a service contract with the government.
The term "resident foreign" when applied to a corporation means a foreign corporation not otherwise organized under the laws of the Philippines but engaged in trade or business within the Philippines. (Sec. 131 (i), LGC)
j) Countryside and Barangay Business Enterprise - refers to any business entity, association, or cooperative registered under the provisions of R.A. No. 6810, otherwise known as "Magna Carta for Countryside and Barangay Business Enterprises (Kalakalan
20)". (Sec. 131 0), LGC)
k) Dealer - means one whose business is to buy and sell merchandise, goods, and chattels as a merchant. He stands immediately between the producer or manufacturer and the consumer and depends for his profit not upon the labor he bestows upon his commodities but upon the skill and foresight with which he watches the market. (Sec. 131 (k), LGC)
1) Fee - means a charge fixed by law or ordinance for the regulation or inspection of a business or activity (Sec. 131 (!), LGC). It shall also includes charges fixed by law or agency for the services of a public officer in the discharge of his official duties (Art. 220 (!), IRR,
implementing Sec. 131 (!), LGC)
m) Franchise - is a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of public welfare, security, and safety. (Sec.
131 (m), LGC)
n) Gross Sales or Receipts - included 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, excluding discounts if determinable at the time of sale, sales return, excise tax, and \he value-added tax (VAT). Sec. 131 (n), LGC)
226
Illustrative Case:
1) In consonance with the above provision of the IRR, it was further clarified that the term "gross receipts" as applied to contractors, is the total amount of service fees, including the advance payments or deposits actually or constructively received during the taxable year. The tax base should exclude payments or deposits which were not actually or constructively received by the contractor during the taxable year and
materials or equipment that do not form part of the things to be constructed - even if they were supplied during the said year. (BLGF 151
Indorsement, March 4, 1994;and
BLGF 151
Indorsement, August 10, 1998)
o) Manufacturer - includes the following:
1) every person who, by physical or chemical process, alters the exterior texture or form or inner substance of any raw material or manufactured or partially manufactured product in such manner as to prepare it for special use or uses to which it could not have been put in its original condition,
1) or who by any such process, alters the quality of any such raw material or manufactured or partially manufactured products so as to reduce it to marketable shape or prepare it for any of the use of industry,
2) or who by any such process, combines any such raw material or manufactured or partially manufactured products with other materials or products of the same or of different kinds and in such manner that the finished products of such process or manufacture can be put to a special use or uses to which such raw material or manufactured or partially manufactured in their original condition could not have been put, and
3) who, in addition, alters such raw material or manufactured or partially manufactured products, or combines the same to produce such finished products for the purpose of their sale or distribution to others and not for his own use or consumption. (Art. 220 (o), IRR, implementing Sec. 131 (o), LGC)
p) Marginal Farmer or Fisherman - refers to an individual engaged in subsistence farming or fishing which shall be limited to the sale, barter or exchange of agricultural or marine products produced by himself and his immediate family (Sec. 131 (p),LGC), and whose annual net income from such farming or fishing does not exceed Fifty Thousand Pesos (� 50,0000.00) or the poverty line established by NEDA for the particular region or locality, whichever is higher. (Art. 220 (p), IRR, implementing Sec. 131 (p), LGC)
q) Motor Vehicle - means any vehicle propelled by any power other than muscular power using the public roads, but excluding road rollers, trolley cars, street sweepers, sprinklers, lawn mowers, bulldozers, graders, forklifts, amphibian trucks, and cranes if not used on public roads, vehicles which run only on rails or tracks, and tractors, trailers, and traction engines of all kinds used exclusively for agricultural purposes. (Sec. 131 (q), LGC)
r) Municipal Waters - include not only streams, lakes and tidal waters within the municipality, not being the subject of private ownership and not comprised within the national parks, public forest, timber lands, forest reserves or fishery reserves, but also marine waters included between two lines drawn perpendicularly to the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen ( 15) kilometers from it. Where two (2)
227
municipalities are so situated on the opposite shores that there is less than fifteen (15) kilometers of marine waters between them, the third line shall be equally distant from opposite shores of the respective municipalities. (Sec. 131 (r), LGC)
s) Operator - includes the owner, manager, administrator, or any other person who operates or is responsible for the operation of a business establishment or undertaking. (Sec. 131 (s),
LGC)
t) Peddler - means any person who, either for himself or on commission, travels from place to place and sells his goods or offers to sell and deliver the same. Whether a peddler is a wholesale peddler or a retail peddler of a particular commodity shdl be determined from the definition of wholesale dealer or retail dealer as provided in Title 1, Book 2 of R. A. No. 7160 or the Local Government Code of 1991. (Sec. 131 (t), LGC)
u) Persons - every natural or juridical being, susceptible of rights and obligations or of being the subject of legal relations. (Sec. 131 (u), LGC)
v) Residents - refer to natural persons who have their habitual residence in the province, city, or municipality where they exercise their civil rights and fulfill their civil obligations, and to juridical persons for which the law or any other provisions creating or recognizing them fixes their residence in a particular province, city or municipality. In the absence of such law, juridical persons are residents of the province, city, or municipality where they have their legal residence or principal place of business or where they conduct their principal business or occupation. (Sec. 131 (v ), LGC)
w) Retail - means a sale where the purchaser buys the commodity for his own consumption irrespective of the quantity of the commodity sold. (Sec. 131 (w), LGC)
x) Vessel - includes every type of boat, craft, or other artificial contrivance used, or capable of being used, as a means of transportation on water. (Sec. 131 (x), LGC)
y) Wharfage - means a fee assessed against the cargo of a vessel engaged in foreign or domestic trade based on quantity, weight, or measure received and/or discharged by vessel. (Sec. 131 (y), LGC) and
z) Wholesale - means a sale where the purchaser buys or imports the commodities for resale to persons other than the end user regardless of the quantity of the transaction. (Sec. 131 (z),
LGC
A. TAXING POWERS OF PROVINCES
Section 201. Tax on Transfer of Real Property Ownership. - (a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not be more than fifty percent (50%) of one percent (1 %) of the total consideration involved in the acquisition of the property, or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. (Sec. 135
(a), LGC)
228
(b) The fair market value as used herein shall be that reflected in the prevailing schedule of fair market values enacted by the sanggunian concerned. (Art. 224 (a), !RR, implementing Sec. 135
(a), LGC)
(c) For this purpose, the Register of Deeds of the province concerned shall, before registering any deed, require the presentation of the evidence of payment of this tax. The Provincial Assessor shall likewise make the same requirement before canceling an old tax declaration and issuing a new one in place thereof. Notaries Public shall furnish the Provincial Treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization.
( d) It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the fate of the execution of the deed or from the date
of the decedent's death. (Sec. 135 (b), LGC)
(e) The sale, transfer or other disposition of real property pursuant to R.A. No. 665?235
shall be exempt from this tax (Sec. 135 (a), LGC). However, transfer of ownership over a land pending issuance of a free patent under Commonwealth Act No. 141
236, as amended by the Bureau of
Lands is subject to this tax.
Private sector entities and individuals engaged in developing socialized housing projects under R. A. No. 7279,237 for the benefit of the underprivileged and homeless are exempted from payment of transfer tax for both raw and completed projects. (Sec. 20, RA 7279)
Section 202. Tax on Business of Printing and Publication. - The province may impose a tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature, at a rate not exceeding fifty percent (50%) of one percent (1 %) of the gross annual receipts for the preceding calendar year.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one
percent (1 %) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar
year, or any fraction thereof, as provided herein.
The receipts from the printing and/or publishing of books or other reading materials prescribed by the Department of Education, Culture and Sports as school texts or references shall be exempt
from the tax herein imposed. (Sec. 136, LGC)
Illustrative Case:
235 An Act Instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization
Providing the Mechanism for its Implementation and for Other Purposes. 236 Public Land Act 237 Socialized Housing Act
229
1) The business of printing newspapers and magazines is included in the clause "and others of similar nature" and therefore subject to this local tax. (BLGF r1 Indorsement, February 19,
1996)
Section 203. Franchise Tax.238 - Notwithstanding any exemption granted by any law or other
special law, the province may impose a tax on businesses enjoying a franchise. (Sec. 137, LGC)
The administration and collection of franchise tax shall be governed by the following:
a) Tax Rate and Base of Franchise Tax. - The rate of franchise tax shall not exceed fifty percent (50%) of one percent (1 %) of the gross annual receipts which shall include both cash sales and sales on account realized during the preceding calendar year within its territorial jurisdiction, excluding the territorial limits of any city located within the province. (Art. 226 (a), IRR, implementing Sec. 137, LGC)
b) Limitation of the Province to Impose Franchise Tax. - The province, however, shall not impose the tax on businesses enjoying franchise operating within the territorial jurisdiction of any highly-urbanized or component city located within the province. (Art. 226 (b), IRR,
implementing Sec. 13 7, LGC)
c) Exemption of Public Utility Vehicle Operators with Certification of Public
Convenience. - The term "businesses enjoying franchise" shall not include holders of certificates of public convenience for the operation of public utility vehicles for reason that such certificates are not considered as franchise. (Art. 226 (c), IRR, implementing Sec. 137, LGC)
d) Tax Rate and Base of Franchise Tax for Newly Started Business. - In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1 %) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereof. (Art. 226 (d), IRR, implementing Sec. 137, LGC)
e) Capital Investment as Basis of the Franchise Tax of a Newly Started Business. - The capital investment to be used as basis of the tax of a newly started business as herein provided shall be determined in the following manner:
1) In the locality where the principal office of the business is located, the paid-up capital stated in the Articles of Incorporation, in case of corporations, or in any similar document in case of other types of business organizations or enterprises, shall be considered as the capital investment.
2) Where there is a branch or sales office which commences business operations during the same year as the principal office but which is located in another province or in a city outside the province, the paid-up capital referred to above shall be reduced by the
238 Actual and specific applications of authority to tax franchises are illustrated in Secs. 227 and 228, this Manual.
230
amount of the capital investment made for the said branch of sales office which shall be taxable instead by the province or city where it is located.
3) Where the newly-started business is a branch or sales office commencing business operations at a year later than that of the principal office, the capital investment shall mean the total funds invested in the branch or sales office. (Art. 226 (d), IRR, implementing Sec. 13 7, LGC)
Section 204. Tax on Sand, Gravel and Other Quarry Resources. - (a) The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, such as but not limited to marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction. (Art. 227 (a), IRR, implementing Sec. 138, LGC)
(b) The following shall govern the administration and collection of this tax:
1) Authority to Grant Permit to Extract. -The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the provincial governor, pursuant to the ordinance of the sangguniang panlalawigan. (Art. 227 (b), IRR, implementing Sec. 138, LGC)
2) Distribution of Proceeds of the Tax. -the proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows:
1. Province -Thirty percent (30%);
11. Component City or Municipality where the sand, gravel and other quarry resources are extracted -Thirty percent (30%); and
iii. Barangay where the sand, gravel and other quarry resources are extracted - Forty percent (40%). (Art. 227 (c), IRR, implementing Sec. 138, LGC)
3) Non-taxability of Quarry Resources Extracted from Private Lands. - Only quarry resources extracted from public lands are subject to local taxes. Quarry resources extracted from private lands are not within the taxing power of the local government.
Illustrative Case:
l ) The fair market value shall be the market value of the minerals as extracted in site and not when delivered to the end users. The assessment of the tax is done on or before extraction of said materials and not upon the sale thereof to end users. (BLGF F1
Indorsement, March 24, 1993)
231
Section 205. Professional Tax. - (a) The province may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination at such amount and reasonable classification as the sangguniang panlalawigan may determine but shall in no case exceed Three Hundred Pesos (P 300.00). (Sec. 139 (a), LGC)
(b) The collection and administration of the professional tax shall be guided by the following:
1) Persons Liable to Pay Professional Tax. - The professionals subject to tax herein imposed are only those who have passed the bar examinations, or any board or other examinations conducted by the Professional Regulation Commission (PRC). (Art. 228 (/), !RR implementing Sec. 139, LGC)
2) Place of Payment of Professional Tax. - Every person legally authorized to practice his profession shall pay the professional tax to the province where he practices his profession or where he maintains his principal office in case he practices his profession in several places: Provided, however, That such person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the Philippines without being subjected to any other national or local tax, license, or fee for the practice of such profession. (Sec. 139 (b), LGC)
3) Time of Payment of Profession Tax. - The professional tax shall be payable annually, on or before the thirty-first (31 st) day of January. Any person first beginning to practice a profession after the month of January must, however, pay the full tax before engaging therein. (Sec. 139 (d), LGC)
4) Responsibility of Employers in Ensuring Payment of Professional Tax. - Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his profession before employment and annually thereafter. (Sec 139 (c), LGC)
5) Tax is Due for Each Profession Practiced - A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid. (Sec. 139 (d), LGC). For example, a lawyer who is also a Certified Public Accountant (CPA) must pay the professional tax imposed on lawyers and that fixed for CP As, if he is to practice both professions. (Art. 228 (/), IRR implementing Sec. 139, LGC)
6) Exemption of Professional Exclusively Employed in the Government - Professional exclusively employed in the government shall be exempt from the payment of this tax. (Sec. 139 (d), LGC)
7) Documentation Requirements:
232
a) Upon Payment of Tax. - For purposes of collecting the tax, the Provincial Treasurer or his duly authorized representative shall require from such professionals their current annual registration cards issued by the competent authority before accepting payment of their professional tax for the current year. The PRC shall likewise require the
professionals' presentation of proof of payment before registration of professionals or renewal of their licenses. (Art. 228 (!), IRR implementing Sec. 139, LGC)
b) On Transaction Documents of Practicing Professionals. - Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of accounts, plans and designs, surveys and maps, as the case may be, the number of the official receipts issued to him. (Sec 139 (e), LGC)
Section 206. Amusement Tax. - The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement. (Sec. 140 (a), LGC)
The collection and administration of the amusement tax shall be guided by the following:
1) Rate and Base of Amusement Tax. - The rate of amusement tax shall not be more than thirty percent (30%) of the gross receipts from admission fees. (Sec. 140 (a), LGC)
2) Procedure for Determining Amusement Tax Payable by Proprietors, Lessees, or Operators and Distributors of Cinematographic Films. - In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to the Provincial Treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of the cinematographic films. (Sec. 140 (b), LGC)
3) Exemption from Payment of Amusement Tax. - The holding of operas, concerts, dramas, recitals, paintings, and art exhibitions, flowers shows, musical programs, literary and oratorical presentations, except pop, rock or similar concerts shall be exempt from the payment of the amusement tax, subject to guidelines issued by the DOF. (Art. 229 (c), IRR implementing Sec. 140 (c), LGC)
4) Procedures in Payment of Amusement Tax. - The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax including the issuance by the proprietor, lessee, or operator of the theater or amusement place of admission tickets. In case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interests, and penalties as it may deem appropriate. (Art. 229 (d), IRR implementing Sec. 140 (d), LGC)
5) Distribution of Proceeds of Amusement Tax. - The proceeds of the amusement tax shall be shared equally by the province and the municipality where such amusement places are located. (Sec. 140 (e), LGC)
6) "Other Places of Amusement" Construed. - Not only theaters and cinema houses, but all "places of amusement" such as night clubs, cockpits, and the like, are subject to the amusement tax on admission if any amount is charged as entrance fee to the patrons. (p. 77,
Philippine Law on Local Government Taxation, Annotated. 2000 edition, Ursa!)
233
7) For the Effective Administration of the Amusement Tax, an Administrative Provision may be Provided in the Tax Ordinance, Requiring Proprietors, Lessees or Operators Liable to the Amusement Tax on Admission to:
1. Number the admission tickets consecutively and serially;
11. Reflect in the admission tickets the name of the amusement place and the fee charged for admission;
111. Register ticket rolls or booklets with the Provincial/City Treasurer of the locality where the amusement place is located before issuing the tickets;
1v. Tear admission tickets into halves, once issued, the first half to be given by the gatekeepers to the customer or patron and the other half to be deposited in a ticket box to be made available for inspection by the Local Treasurer or his deputy; and
v. Provide a strong and safe ticket box to contain the admission ticket halves, which boxes will be secured with a separate padlock, the only key to which shall be deposited with the Local Treasurer concerned.
Illustrative Case:
1) Amusement tax is not collectible from business establishments that operate token and coinoperated video and similar machines that do not charge admission fees. The purchase of token is for the purpose of playing games on or operating the machines installed in the amusement place, not to gain admission to the premises, and therefore does not constitute the payment of admission fees on which an amusement tax may be levied and collected. A person may enter the place without paying anything and leave without operating any machine, in which case, he does not even have to purchase tokens.
However, the operator of the said business establishment shall be taxable under Sec. 143 (h) of the Local Government Code of 1991, on the basis of the gross receipts from the sale of tokens. (BLGF 151 Indorsement, February 27, 1996 to the City Treasurer of Manila.)
Section 207. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers, Producers Wholesalers of, Dealers and Retailers in, Certain Products. - The province may levy an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly, within the province in an amount not exceeding Five Hundred Pesos (P 500.00).
The manufacturers, producers, wholesalers, dealers, and retailers referred to in the immediately foregoing paragraph shall be exempt from tax on f:eddlers referred to in Section 143 (g) of R. A. No. 7160 or the Local Government Code of 1991. 39 (Sec. 141, LGC)
239 See Sec. 216, this Manual
234
..
The annual fixed tax is applicable per province. If the same truck is used to deliver goods in several provinces, the owner of the truck is liable to pay the said tax to each province where he/she delivers goods. Provided, That the province concerned has enacted the ordinance necessary to impose the tax.
B. TAXING POWERS OF MUNICIPALITIES
Section 208. Scope of Taxing Powers of Municipalities. - Except as otherwise provided in R. A. No. 7160 or the Local Government Code of 1991, municipalities may levy taxes, fees, and charges not otherwise levied by the provinces. (Sec. 142, LGC)
Section 209. Tax on Business. - The municipality may impose the taxes on the following businesses operating within its jurisdiction:
1) Manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature (Sec. 143 (a), LGC);
2) Wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature (Sec. 143 (b), LGC);
3) Exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers, or retailers of essential commodities. (Sec. 143 (c), LGC);
4) Retailers (Sec. 143 (d), LGC);
5) Contractors and other independent contractors (Sec. 143 (e), LGC);
6) Banks and other financial institutions (Sec.143, LGC);
7) Peddlers engaged in the sale of any merchandise or article of commerce (Sec. 143 (g), LGC);
8) Any business not otherwise specified in the above enumeration (Sec. 143 (h), LGC)
Section 210. Business Tax on Manufacturers, Assemblers, Repackers, Processors,
Brewers, Distillers, Rectifiers, and Compounders of Liquors, Distilled Spirits, and Wines or Manufacturers of Any Article of Commerce of Whatever Kind or Nature - in accordance with the following schedule:
With Gross Sales or Receipts for the Preceding
Calendar Year in the Amount of (Pesos):
Less than 10,000.00 10,000.00 or more but not less than 15,000.00 or more but not less than
5,000.00 20,000.00
Amount of Tax,
Per Annum (Pesos):
165.00 220.00 302.00
235
20,000.00 or more but not less than 30,000.00 440.00 30,000.00 or more but not less than 40,000.00 660.00 40,000.00 or more but not less than 50,000.00 825.00 50,000.00 or more but not less than 75,000.00 1,320.00 75,000.00 or more but not less than 100,000.00 1,650.00
100,000.00 or more but not less than 150,000.00 2,200.00 150,000.00 or more but not less than 200,000.00 2,750.00 200,000.00 or more but not less than 300,000.00 3,850.00 300,000.00 or more but not less than 500,000.00 5,500.00 500,000.00 or more but not less than 750,000.00 8,000.00 750,000.00 or more but not less than 1,000,000.00 10,000.00
1,000,000.00 or more but not less than 2,000,000.00 13,750.00 2,000,000.00 or more but not less than 3,000,000.00 16,500.00 3,000,000.00 or more but not less than 4,000.000.00 19,800.00 4,000,000.00 or more but not less than 5,000,000.00 23,100.00 5,000,000.00 or more but not less than 6,500,000.00 24,375.00 6,500,000.00 or more at a rate not exceeding thirty-
seven and a half percent (37-1/2%) of one percent (1%). (Sec. 143 (a), LGC)
The preceding rates shall apply only to amount of domestic sales of manufacturers, assemblers repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature other than those enumerated in Section 143 (a) of R. A. No. 7160 or the Local Government Code of 1991. (Art. 232 (a, IRR implementing Sec. 143 (a), LGC)
Section 211. Business Tax on Wholesalers, Distributors, or Dealers in Any Article of Commerce of Whatever Kind or Nature - in accordance with the following schedule:
With Gross Sales or Receipts for the Preceding Amount of Tax Calendar Year in the Amount of (Pesos) Per Annum (Pesos)
Less than 1,000.00 18.00 1,000.00 or more but not less than 2,000.00 33.00 2,000.00 or more but not less than 3,000.00 50.00 3,000.00 or more but not less than 4,000.00 72.00 4,000.00 or more but not less than 5,000.00 100.00 5,000.00 or more but not less than 6,000.00 121.00 6,000.00 or more but not less than 7,000.00 143.00 7,000.00 or more but not less than 8,000.00 165.00 8,000.00 or more but not less than 10,000.00 187.00
10,000.00 or more but not less than 15,000.00 220.00 15,000.00 or more but not less than 20,000.00 275.00 20,000.00 or more but not less than 30,000.00 330.00 30,000.00 or more but not less than 40,000.00 440.00
236
40,000.00 or more but not less than 50,000.00 660.00 50,000.00 or more but not less than 75,000.00 990.00 75,000.00 or more but not less than 100,000.00 1,320.00
100,000.00 or more but not less than 150,000.00 1,870.00 150,000.00 or more but not less than 200,000.00 2,420.00 200,000.00 or more but not less than 300,000.00 3,300.00 300,000.00 or more but not less than 500,000.00 4,400.00 500,000.00 or more but not less than 750,000.00 6,600.00 750,000.00 or more but not less than 1,000,000.00 8,800.00
1,000,000.00 or more but not less than 2,000,000.00 10,000.00 2,000,000.00 or more at a rate not exceeding fifty
percent (50%) of one percent (1%). (Sec. 143 (b), LGC)
The business enumerated in Section 143 (a) ofR. A. No. 7160 or the Local Government Code of 1991240
shall no longer be subject to the tax on wholesalers, distributors, or dealers herein provided for. (Art. 232 (b), IRR implementing Sec. 143 (b), LGC)
Section 212. Business Tax on Exporters, and on Manufacturers, Millers, Producers, Wholesalers, Distributors, Dealers, or Retailers of Essential Commodities enumerated hereunder at a rate not exceeding one-half (1/2) of the rates prescribed under Section 143 (a), (b) and (d) ofR. A. No. 7160 or the Local Government Code of 1991241:
1) Rice and corn;
2) 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;
3) Cooking oil and cooking gas;
4) Laundry soap, detergents and medicine;
5) Agricultural implements, equipment and post-harvest facilities, fertilizers, pesticides, insecticides, herbicides and other farm inputs;
6) Poultry feeds and other animal feeds;
7) School supplies; and
8) Cement. (Sec. 143 (c), LGC)
For purposes of this provision, the term "exporters" shall refer to those who are principally engaged in the business of exporting goods and merchandise, as well as manufacturers and
240 See Sec. 210, this Manual
241 See Sec. 2 J O,Sec. 211 and Sec. 213, this Manual
237
producers whose goods or products are both sold domestically and abroad. (Art. 232 (c), IRR implementing Sec. 143 (c), LGC)
Exporters shall be subject to the business tax as follows:
1. The gross sales or receipts on goods or products sold domestically shall be subject to the business tax at rates prescribed under Section 143 (a) (b) (d), LGC;
ii. Taxable export sales shall be subject to the business tax at a rate not exceeding one half (Yz) of the rates of domestic sales; and
m. The amount of export sales shall be excluded and declared separately from the total sales and shall be subject to the rates prescribed in Section 143 eflected in Section 205 of this Chapter. Failure to make this separate declaration of export sales shall subject the total sales to the rates prescribed in Section 204 under this Chapter. (Local Finance Circular 4-93, Department of Finance)
Illustrative Case:
1) For the purpose of imposing the business tax, the gross receipts of rice and com millers shall be the total fees paid to the miller by the owners of palay or com without deducting the cost of labor and other maintenance and operating expenses.
Mill operators who also buy palay or com grains and then sell these after milling, are also subject to the tax for engaging in other business such as dealers. The gross receipts shall be the actual sale of rice or com without deducting the cost of palay, labor and other maintenance and operating expenses. The gross sales or receipts for each business shall be separately reported for purposes of computing the business taxes due from each business. (BLGF 1st lndorsement, March 24, 1995 to the Municipal Treasurer of Cabacan, North Cotabato)
Section 213. Business Tax on Retailers. - The following guidelines shall govern the administration and collection of the business tax on retailers:
1) Rate of Tax. - Except for the taxes to be imposed exclusively by barangays as provided in subsection (2) hereinbelow, the taxes to be imposed on retailers by municipalities shall be as follows:
238
a) The rate of two percent (2%) per annum shall be imposed on sales not exceeding Four Hundred Thousand Pesos (P 400,000.00); and
b) The rate of one percent ( 1 % ) per annum shall be imposed on sales in excess of the first Four Hundred Thousand Pesos (P 400,000.00).
2) Imposition by Barangay of Business Tax on Retailers - Barangays shall have the exclusive power to levy taxes, as provided under Section 152 of R. A. No. 7160 or the Local Government Code of 1991242
, on gross sales or receipts of the preceding calendar year of Fifty Thousand Pesos (P 50,000.00) or less in the case of cities, and Thirty Thousand Pesos (P 30,000.00) or less in the case of municipalities. (Art. 232 (d), !RR implementing Sec. 143 (d), LGC)
The barangays shall impose such taxes based on the following guidelines:
a) Stores or retailers with fixed business establishments in a barangay within a city whose gross sales or receipts for the preceding year do not exceed P 50,000.00 shall be taxable exclusively by the barangay. Those whose gross sales or receipts exceed P 50,000.00 shall be taxable by the city.
b) Stores or retailers with fixed business establishments in a barangay within a municipality whose gross sales or receipts for the preceding year do not exceed P 30,000.00 shall be taxable exclusively by the barangay. Those whose gross sales or receipts exceed P 30,000.00 shall be taxable by the municipality.
c) The barangay shall have the power to collect the business tax on retailers only if it had levied the tax pursuant to an ordinance duly enacted by its sanggunian. Otherwise, the tax shall be collected by the municipality or city where the barangay is located, provided they have enacted the required ordinance levying the tax.
3) Determination of Business Tax of Retailer Selling both Essential and Non-Essential Commodities. - The following rules shall apply to a retailer of both essential and nonessential commodities:
a) A retailer who sells essential and non-essential commodities shall segregate his sales accordingly;
b) The gross sales from essential commodities of the preceding year shall be subject to the tax provided under Section 143 ( c) of R. A. No. 7160 or the Local Government Code of 1991243
;
c) The gross sales on non-essential commodities of the preceding year shall be subject to the retailer's tax provided under Section 143 (d) of R. A. No. 7160 or the Local Government Code of 1991244
. (Philippine Law on Local Government Taxation, Annotated, 2000 edition, Ursa!)
4) Determination of Taxes Payable by a Retailer Who is Also a Wholesaler, Dealing Both in Essential and Non-Essential Commodities. - The following rules shall apply in the case
242 See Sec. 222, this Manual
243 See Sec. 212, this Manual
244 See Sec. 213, this Manual
239
of a retailer who is also a wholesaler dealing both m essential and non-essential commodities:
a) A wholesaler who is at the same time a retailer and who deals in both essential commodities and non-essential commodities shall segregate his sales accordingly;
b) The gross sales from essential commodities shall be subject to the tax reflected in Section 143 (c) ofR. A. No. 7160 or the Local Government Code ofl991; and
c) If the wholesaler who is at the same time a retailer fails to keep a separate account for the different sales or receipts, he/she shall be liable as a wholesaler at the rates reflected under Section 143 (b)
245 and (d) of R. A. No. 7160 or the Local
Government Code of 1991, as a wholesaler and retailer, respectively. (Philippine Law on Local Government Taxation, Annotated, 2000 edition, Ursa!)
Section 214. Business Tax on Contractors and Other Independent Contractors - m accordance with the following schedule:
A. Graduated Schedule of Tax -
With Gross Sales or Receipts for the Preceding Amount of Tax
Calendar Year in the Amount of (Pesos) Per Annum (Pesos)
Less than 5,000.00 27.50 5,000.00 or more but not less than 10,000.00 61.60
10,000.00 or more but not less than 15,000.00 104.50 15,000.00 or more but not less than 20,000.00 165.00 20,000.00 or more but not less than 30,000.00 275.00
30,000.00 or more but not less than 40,000.00 385.00 40,000.00 or more but not less than 50,000.00 550.00 50,000.00 or more but not less than 75,000.00 880.00 75,000.00 or more but not less than 100,000.00 1,320.00
100,000.00 or more but not less than 150,000.00 1,980.00
150,000.00 or more but not less than 200,000.00 2,640.00 200,000.00 or more but not less than 250,000.00 3,630.00
250,000.00 or more but not less than 300,000.00 4,620.00 300,000.00 or more but not less than 400,000.00 6,160.00
400,000.00 or more but not less than 500,000.00 8,250.00 500,000.00 or more but not less than 750,000.00 9,250.00
750,000.00 or more but not less than 1,000,000.00 10,250.00 1,000,000.00 or more but not less than 2,000,000.00 11,500.00
2,000,000.00 or more at a rate not exceeding fifty percent (50%) of one percent
(1%). (Sec. 143 (e), LGC)
245 See Sec. 211, this Manual
240
B. Taxable Gross Receipts of Construction Contractors -
a) The taxable gross receipts shall be the amounts received by the principal contractor as the total contract price less the amount paid to sub-contractors under sub-contract arrangements, if there are any. (The gross receipts of subcontractors are in turn subject to the same business tax as construction contractors.)
b) The taxable gross sales or receipts include the total amount of money or its equivalent actually or constructively received during the taxable quarter for the services performed or to be performed, consisting of the following:
1. The contract price;
11. The compensation or service fee, including the amount charged for materials installed or used in conjunction with the services, and
iii. Deposits or advance payments
c) Taxable gross receipts exclude discounts that can be determined at the time of sales, sales returns, and the excise taxes and value added tax (VAT) paid by the contractor. (Local Finance Circular No. 3-95, Department of Finance)
Illustrative Case:
1) Local governments may impose business tax on contractors and independent contractors (BLGF P1 lndorsement, August 10, 1998). However, subcontractors shall not be liable for business tax if the total contract price for the project is embodied in the contract between the primary contractor and the client. On the other hand, if the cost of the portion of the project that is sub-contracted is paid directly by the client to the sub-contractor, the subcontractor becomes an independent contractor subject to the same business tax. (BLGF J51
Indorsement, July 13, 199 3).
C. Situs or Place of Payment of Business Tax on Construction Contractors. - For the purpose of collection of the business tax on construction contractors, the following rules shall apply:
1) On Domestic Construction Projects -. For projects bidded out and implemented within the territorial jurisdiction of the Philippines:
a) All gross receipts realized from domestic projects or contracts undertaken by the branch office shall be recorded in the said branch office and the tax thereon shall be payable to the city or municipality where the said branch is located;
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b) In cases where there is no branch office, the gross receipts from domestic projects or contracts shall be recorded in the Head/Principal Office and the same shall be allocated as follows:
1. Thirty percent (30%) of the gross receipts shall be taxable by the city or municipality where the principal office is located; and
11. Seventy percent (70%) of the gross receipts shall be taxable by the city or municipality where the project office is located.
2) On Overseas Construction Projects. - For construction projects undertaken by a Philippine-based construction contractor outside the territorial boundaries of the Philippines, as well as construction contracts involving fabrication works with attendant installation works outside the Philippines, which are paid for in accepted freely convertible foreign currency:
a) In the case of overseas construction projects, the construction contractors shall declare separately the gross receipts realized therefrom, which shall not be subject to the business tax.
b) In the case of pre-fabricated works which are paid for in accepted freely convertible foreign currency with attendant installation works outside the Philippines, the gross receipts realized therefrom shall be subject to not more than one half (1/2) of the rate prescribed in Sec. 143 (e) ofR. A. No. 7160 or the Local Government Code of 1991.
c) In case there is transfer or relocation of the Head/Principal Office or of any branch to another city or municipality, the construction contractor shall give due notice of such transfer or relocation to the cities or municipalities concerned at least fifteen (15) days before such transfer or relocation is effected. (Local Finance Circular No. 3-95, Department of Finance)
Section 215. Business Tax on Banks and Other Financial Institutions. -
A. Rate and Base of Tax - Banks and other financial institutions are subject to a business tax at a rate not exceeding fifty percent (50%) of one percent (1 %) on the gross receipts of the preceding calendar year derived from interests, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium (Sec. 143 (!), LGC). All other income and receipts of banks and financial institutions not otherwise enumerated above shall be excluded from the computation of this tax. (Art. 232 (!), 1RR implementing Sec. 143 (!), LGC)
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The taxes imposed on banks, insurance companies, and financing companies accruing the local government units shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be, unless otherwise fixed in the corresponding local tax ordinance. (Local Finance Circular Nos. 1-93; 2-93; and 3-93, Department of Finance)
B. Guidelines Applicable to Banks -
1) Gross Receipts of Banks Subject to Tax. - For the purpose of imposing the tax on gross receipts of banks, the term "gross receipts" shall only include the following:
a) Interest from loans and discounts - represents interest earned and actually collected on loans and discounts such as:
1. Discounts earned and actually collected m advance on bills discounted;
11. Interest earned and actually collected on demand loans;
111. Interest earned and actually collected on time loans, including the earned portions of interest collected in advance;
1v. Interest earned and actually collected on mortgage contracts receivables; and
v. Interest earned and actually collected on inter-bank loans.
b) Rental of property - represents the following rental income:
1. Earned portion of rental collected in advance from lessees of safe deposit boxes; and
11. Rental earned and actually collected from lessees of bank premises and equipment.
c) Income earned and actually collected from acquired assets.
d) Income from sale or exchange or assets and property.
e) Cash dividends earned and received on equity investments.
f) Bank commissions from lending activities.
g) Income component of rentals from financial leasing.
2) Income and Receipts of Banks Not Subject to Tax. - All other incomes and receipts of banks and banking institutions not enumerated above shall be excluded from the t::i.xing authority of local government units such as:
a) Interest earned under the expanded foreign currency deposit system;
243
b) Interest accumulated by lending institutions on mortgages insured under R. A. No. 580, as amended, otherwise known as the Home Financing Act; and
c) Receipts from filing fees, service and other administrative charges. (Local Finance Circular No. 1-93, Department of Finance)
3) Situs or Place of Payment of Tax on Banks. - The situs of tax on banks shall be in accordance with the following:
a) All transactions filed with or negotiated in a branch shall be recorded in the same branch and the gross receipts derived from these transactions shall be applied to:
1. Transactions negotiated with and approved by the Branch Manager under his own authority.
11. Transactions filed and negotiated in the branch, but being beyond the approving authority of the Branch Manager are forwarded to the Head Office for final approval.
iii. The gross receipts derived from transactions made by the Head Office, except gross receipts recorded in the branches shall be taxable by the city or municipality where that Head Office is located.
1v. In case of transfer or relocation of the Head Office or of any branch to another city or municipality, the bank shall give due notice of such transfer or relocation to the Local Chief Executives of the cities or municipalities concerned within fifteen (15) days after transfer or relocation is effected.
C. Guidelines Applicable to Insurance Companies -
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l) Gross Receipts of Insurance Companies Subject to Tax. - For the purpose of imposing the tax on gross receipts of insurance companies, the term "gross receipts" shall include only the following:
a) Insurance premiums actually collected, except the following tax exempt premiums which must be recorded and declared separately:
1. premiums collected before the effectivity of the ordinance imposing the tax;
11. two percent (2%) of all premiums for the sale of fire, earthquake, and explosion hazard insurance pursuant to the Fire Code of the Philippines (P.D. No. 1185);
m. Premiums refunded within six ( 6) months after payment of the account;
1v. Premiums collected or received by any branch of a domestic corporation, firm, or association doing business outside the Philippines on account of a life insurance of the insured who is non-resident;
v. Premiums collected or received on account of any re-insurance, if the risk insured against covers property located outside the Philippines, or the insured, in case of personal insurance, resides outside the foreign country where the original insurance has been issued or perfected;
v1. Portions of the premiums collected or received by msurance companies pertaining to variable contracts; and
vii. The excess of the amount necessary to insure the lives of variable contracts.
b) Interest earnings on loans and discounts actually collected.
c) Rentals actually collected from property owned by insurance companies.
d) Income actually collected from acquired assets.
e) Cash dividends received on equity investments. (Local Finance Circular No. 2-93, Department of Finance)
2) Income and Receipts of Insurance Companies Not Subject to Tax. - All other incomes and receipts of insurance premiums not enumerated in the preceding paragraph shall be excluded from the taxing authority of local government units, such as service fees received from fire, earthquake, and explosion pre-insurance adjustment business directly to agents, pursuant to the Fire Code of the Phiippines (P.D. No. 1185). (Local Finance Circular No. 2-93, Department of Finance)
3) Situs or Place of Payment of Tax on Insurance Companies. - The situs of tax on insurance companies shall be in accordance with the following:
a) Insurance contracts or policies shall be recorded in the issuing Head Office or branch, However, the taxes shall be collected by the city or municipality where the office or branch to which the premiums or gross receipts were actually paid is located. This rule shall be applied irrespective of whether the insurance contracts/policies were solicited or negotiated by insurance agents or brokers who are not residents of the city or municipality where the branch is located, or who are not affiliated with or assigned to such branch.
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b) The offices of an insurance agent or broker shall not be considered a branch and shall not be subject to the situs of taxation rule.
c) All insurance premiums and/or gross receipts from transactions not recorded in the branches or the insurance companies shall be recorded in the Head Office and taxable by the city or municipality where the said Head Office is located.
d) In case there is transfer or relocation of the Head Office or of any branch to another city or municipality, the insurance company shall give due notice to the chief executives of the cities or municipalities concerned within 15 days after such transfer or relocation is effected. (Local Finance Circular 2-93, Department of Finance)
D. Guidelines Applicable to Financing Companies -
246
I) Definition of Financing Companies - The term "financing companies" shall refer to corporations or partnerships, except those regulated by the Central Bank of the Philippines, the Insurance Commission, and the Cooperatives Development Authority, which are primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial or agricultural enterprises, either by discounting or factoring commercial papers or account receivables, or by buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by leasing of motor vehicles, heavy equipment and industrial machinery, business and office machines and equipment, appliances and other movable property.
2) Gross Receipts of Financing Companies Subject to Tax. - For the purpose of imposing the tax on gross receipts of financing companies, the term gross receipts shall include only the following:
a) Interest from loans and discounts - represents interest earned and actually collected on loans and discounts; viz:
1. discounts earned and actually collected m advance on bills discounted;
11. interest earned and actually collected on demand loans;
m. interest earned and actually collected on time loans, including the earned portions of interest collected in advance; and
1v. interest earned and actually collected on mortgage contract receivables.
b) Interest earned and actually collected on inter-bank loans.
c) Rental of property - represents the following rental income:
1. earned portion of rental collected in advance from lessees of safe deposit boxes; and
11. rental earned and actually collected from lessees of bank premises and equipment.
d) Income earned and actually collected from acquired assets.
e) Income from sale or exchange of assets and property.
f) Cash dividends earned and received on equity investments.
g) Income component of rentals from financial leasing
3) Income and Receipts of Financing Companies Not Subject to Tax. - All other income and receipts of financing companies not enumerated in the preceding paragraph shall be excluded from the taxing authority of local government units.
4) Situs or Place of Payment of Tax on Financing Companies - The situs of tax on financing companies shall be in accordance with the following:
a) All transactions filed with or negotiated in the branch shall be recorded in said branch and the gross receipts derived from said transactions shall be applied to:
1. Transactions negotiated with and approved by the Branch Manager under his own authority; or
ii. Transactions filed and negotiated in the branch but being beyond the approving authority of the Branch Manager, are forwarded to the Head Office for final approval.
b) The gross receipt derived from transactions made by the Head Office, except gross receipts recorded in the branches, shall be taxable by the city or municipality where said Head Office is located.
c) In case of transfer or relocation of the Head Office or of any branch to another city or municipality, the insurance company shall give due notice to the Local Chief Executives of the cities or municipalities concerned within fifteen ( 15) days after transfer or relocation is effected.
E. Guidelines Applicable to Credit Card Companies. -
Illustrative Case:
247
1) Credit card companies fall within the purview of banks and other financial institutions contemplated under Section 143 (f) of R. A. No. 716 or the Local Government Code of 1991, and therefore may be subject to business taxes at the rate of 50% of 1 % on the gross receipts upon enactment of the appropriate ordinance by the local government unit concerned. (ELG Letter, March 15, 1999 to Picazo Buyco Tan Fider & Santos Law Offices)
Section 216. Business Tax on Peddlers Engaged in the Sale of Any Merchandise or Articles of Commerce. - Peddlers shall be taxed at a rate not exceeding Fifty Pesos (P 50.00) per peddler annually (Sec. 143 (g), LGC). Delivery trucks, vans or motor vehicles used by manufacturers, producers, wholesalers, dealers or retailers enumerated in Section 141 of R. A. No. 7160 or the Local Government Code of 1991246
, shall be exempt from the peddler's tax herein (Art. 232 (g), IRR implementing Sec. 143 (g), LGC).
Section 217. Business Tax on Any Business. - Municipalities may also impose taxes on any business not otherwise specified in the preceding paragraphs which the sanggunian concerned may deem proper to tax (Sec. 143 (h), LGC), provided:
1) The rate of tax on any business subject to the excise, value added or percentage tax under the National Internal Revenue Code, as amended, shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year (Sec. 143 (h), LGC), and provided further that in line with the existing national policy, any business engaged in the production, manufacture, refining, distribution or sale of oil, gasoline and other petroleum products shall not be subject to any local tax imposed under this provision (Art. 232 (h), IRR implementing Sec. 143, (h), LGC).
2) The sanggunian concerned may prescribe a schedule of graduated tax rates but in no case to exceed the rates prescribed under Section 143 (a), (b), (c), (d), (e), (f) and (g) of R. A. No. 7160 or the Local Government Code of 1991.247
Section 218. Taxing Powers of Municipalities within Metro Manila Area. - The municipalities within the Metropolitan Manila Area may levy taxes on businesses enumerated under Sections 210, 211, 212, 213, 214, 215, and 216 of this Manual at rates which shall not exceed by fifty percent (50%) the maximum rates prescribed for said businesses. (Art. 236 (a), IRR implementing Sec. 144, LGC)
Said municipalities within the Metro Manila Area, pursuant to Article 274 of the IRR of R. A. No. 7160 or the Local Government Code of 1991, implementing Section 186 thereof, may levy and collect the taxes which may be imposed by the province under Sections 135, 136, 137, 138, 139, 140, and 141 of the same Code24
, implemented by Articles 224, 225, 226, 227, 228, 229, and 230 of the same IRR, at rates not exceeding those prescribed therein. (Art. 236 (b), IRR implementing Sec. 144, LGC)
246 See Sec. 207, this Manual
247 See Secs. 210, 211, 212, 213, 214, 215 and 216, this Manual
248 See Secs. 201, 202, 203, 204, 205, 206 and 207, this Manual
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C. TAXING POWERS OF CITIES
Section 219. Scope of Taxing Powers of Cities. - Except as otherwise provided in this Code, the city may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees, and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of R. A. No. 7160 or the Local Government Code of 1991.
The rates of taxes that the city may levy 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 tax.
The city may levy and collect a percentage tax on any business not otherwise specified under paragraphs (a) to (g) of Section 143 ofR. A No. 7160 or the Local Government Code of 1991,249
at rates not exceeding three percent (3%) of the gross sales or receipts of the preceding calendar year. ( Art. 2 3 7, IRR implementing Sec. I 5 I, LGC)
Section 220. Professional and Amusement Tax Rates. - The rates of the following taxes shall be uniform for the city and the province:
a) Professional Tax under Section 139 of R. A. No. 7160 or the Local Government Code of 1991,250 shall not exceed Three Hundred Pesos (P 300.00); and
b) Amusement tax on paid admission under Section 140 of R. A. No. 7160 or the Local Government Code of 1991,251 shall not be more than thirty percent (30%) of the gross receipts from admission fees. (Art. 238, IRR, LGC)
Section 221. Sharing of Tax on Quarry Resources in Highly Urbanized Cities. - The proceeds of the tax on sand, gravel, and other quarry in highly urbanized cities shall be distributed as follows:
1) Highly Urbanized City
2) Barangay where the sand, gravel, and other quarry resources are extracted -(Art. 239, IRR, LGC)
D. TAXING POWERS OF BARANGAYS
Sixty percent (60%)
Forty percent (40%)
Section 222. Scope of Taxing Powers of Barangays. - The barangays may levy taxes, fees, and charges as provided in Article Four of R. A. No. 7160 or the Local Government Code of 1991,252 which shall accrue exclusively to them:
249 See Secs. 210, 211, 212, 213, 214, 215 and 216, this Manual 250 See Sec. 205, this Manual 251 See Sec. 206, this Manual 252 Taxing Powers of Barangays
249
a) Taxes -on stores or retailers with fixed business establishments with gross sales or receipts of the preceding calendar year of Fifty Thousand Pesos (P 50,000.00) or less, in the case of a barangay within a city, and Thirty Thousand Pesos (P 30,000.00) or less, in the case of a barangay within a municipality, at rates not exceeding one percent (1 %) on such gross sales or receipts. (Arts. 232 (d) and 240, IRR implementing Secs. 143 (d) and 152, LGC, respectively)
The following guidelines shall be observed m the imposition by the barangays of the business tax on retailers:
1) Stores or retailers with fixed business establishments in a barangay or a city whose gross sales or receipts for the preceding year do not exceed Fifty Thousand Pesos (P 50,000) shall be taxable exclusively by the barangay. Those whose gross sales or receipts exceed Fifty Thousand Pesos (P 50,000.00) shall be taxable by the city.
2) Stores or retailers with fixed business establishments in a barangay or a municipality whose gross sales or receipts for the preceding year do not exceed Thirty Thousand Pesos (P 30,000.00) shall be taxable exclusively by the barangay. Those whose gross sales or receipts exceed Thirty Thousand Pesos (P 30,000.00) shall be taxable by the municipality.
3) The barangay shall have the power to collect the business tax on retailers only if it had levied the tax pursuant to an ordinance duly enacted by its sanggunian. Otherwise, the tax shall be collected by the municipality or city where the barangay
is located, provided that they have enacted the required ordinance levying the tax. (Local Finance Circular No. 1-94, Department of Finance)
b) Service Fees or Charges - barangays may collect reasonable fees or charges for services rendered in connection with the regulation or use of barangay-owned properties or service facilities such as palay, copra, or tobacco dryers.
c) Barangay Clearance Fee - no city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. The application for clearance shall be acted within seven (7) working days from the filing thereof. In the event that a clearance is not issued or the application is denied within the said period, the city or municipality may issue the license or permit to the applicant.
d) Other Fees and Charges - the barangay may levy reasonable fees and charges on:
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1) Commercial breeding fighting cocks. For purposes of imposing barangay fees and charges on the commercial breeding of fighting cocks, commercial breeding shall mean an annual sale of more than five ( 5) fighting cocks of a duly registered breeder;-
2) Cockfights and cockpits;
3) Places of recreation which charge admission fees. Places of recreation shall include places of amusement where one seeks admission to entertain himself by seeing or viewing the show or performance or those where one amuses himself by direct participation;
4) Billboards, signboards, neon signs, and outdoor advertisements at rates not less than the following
1. Billboards or signboards for advertisement of business, per square meter or fraction thereof:
aa. Single-Faced Ten Pesos (P 10.00)
bb. Double-Faced Twenty Pesos (P 20.00)
n. Billboards or signs for professionals, per square meter or fraction thereof: Eight Pesos (P 8.00).
m. Billboards, signs, or advertisements for business and professions painted on any building or structures or otherwise separated or detached therefrom, per square meter thereof: Nine Pesos (P 9.00).
IV. Advertisement for business or professions movies payable by the advertisers: One (P 100.00).
by means of slides in
Hundred Pesos
v. Advertisement by means of vehicles, balloons, kites, etc.
• Per day or fraction thereof • Per week or fraction thereof -• Per month or fraction thereof -
Forty Pesos (P 40.00)
Sixty Pesos (P 60.00)
Eighty Pesos (P 80.00)
• For use of electric or neon lights in billboards under items (i) to (iv) hereof, the amount of Ten Pesos (P 10.00) per square meter or fraction thereof shall be imposed in addition to the above prescribed rates.
v1. Signs, signboards, billboards, advertisements including stick-outs, streamers, lighted signs and other electronic media, posters, store signs, placards, price strips, buntings, and the like, belonging to manufacturers or producers or professionals, but displayed at the place where a business or profession is conducted, or displayed on delivery or other service and public utility vehicles, shall be exempt from such
fees or charges provided in paragraphs (i) to (v) hereof and other impositions that may be imposed by the barangay.
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vn. Privilege panels shall be subject to one half (1/2) of the rates herein prescribed.
v111. For purposes of this Section, the new rates to be adopted by the barangays shall apply only to billboards, privilege panels, signs, and outdoor advertisements which shall be constructed or installed after the effectivity of the Code. (Art. 240, IRR implementing Sec. 152, LGC)
E. GENERAL GUIDELINES ON THE APPLICATION OF BUSINESS AND
OTHER LOCAL TAXES
Section 223. Related or Combined Businesses. - (a) The taxes imposed under Section 143 of R. A. No. 7160 or the Local Government Code of 1991,253 shall be payable for every separate or distinct establishment or place where business subject to tax is conducted and one line of business does not become exempt by being conducted with some other businesses for which such tax has been paid. The tax on business must be paid by the person conducting the same (Sec. 146, LGC). The conduct or operation of two or more related businesses by any one person, natural or juridical, shall require the issuance of a separate permit or license to each business. (Art. 242 (a), IRR implementing Sec. 146 (a), LGC)
(b) In cases where a person conducts or operates two (2) or more of the businesses mentioned in Section 143 of the Local Government Code of 1991, which are subject to the same rate of imposition, the tax shall be computed on the basis of the combined total gross sales or receipts of the said two (2) or more related businesses. (Sec. 146 (b), LGC)
(c) In cases where a person conducts or operates two (2) or more businesses mentioned in Section 143 of the Local Government Code of 1991, which are subject to different rates of tax, the gross sales or receipts of each business shall be separately reported for the purpose of computing the tax due from each business. (Sec. 146 (c) LGC)
Section 224. Situs of the Tax. - For purposes of collection of taxes under Section 143 of R. A. No. 7160 or the Local Government Code of 1991, manufacturers, 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 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 shall be paid to such city or municipality. (Sec. 150, LGC)
A. Definition of Terms:
253 Secs. 210, 211, 212, 213, 214, 215 and 216, this Manual
252
Principal Office - the main or head office of the business appearing in the pertinent documents submitted to the Securities and Exchange Commission, or the Department of Trade and Industry, or other appropriate agencies as the case may be.
The city or municipality specifically mentioned in the Articles of Incorporation or official registration papers as being the official address of said principal office shall be considered the situs for tax purposes.
In case there is a transfer or relocation of the principal office to another city or municipality, it shall be the duty of the owner, operator or manager or the business to give due notice of such transfer or relocation to the local chief executives of the cities or municipalities concerned within fifteen (15) days after such transfer or relocation is effected.(Art. 243 (a) (]), IRR implementing Sec. 15 0, LGC)
Branch or Sales Office - a fixed place in a locality which conducts the operations of the business as an extension of the principal office. However, offices used only as display areas of the products where no stocks or items are stored for sale, although orders for the products may be received thereat, are not branch or sales offices as herein contemplated. A warehouse which accepts orders and/or issues sales invoices independent of a branch with sales office shall be considered as a sales office. (Art. 243 (a) (2), IRR implementing Sec. 150, LGC)
Warehouse - a building utilized for the storage of products for sale and from which goods or merchandise are withdrawn for delivery to customers or dealers, or by persons acting in behalf of the business. A warehouse that does not accept orders and/or issue sales invoices as aforementioned, shall not be considered a branch or sales office.
Illustrative Case:
I) A warehouse that does not accept orders, and/or does not issue sales invoices independently of a branch or sales office, shall not be considered a branch or sales office.
Provincial depots where products are stored for sale are considered warehouses. (BLGF Letter, August 26, 1993 to Republic-Asahi Glass Corp.)
Plantation - a tract of agricultural land planted to trees or seedlings, whether fruit bearing or not, uniformly spaced or seeded by broadcast methods or normally arranged to allow highest production. For this purpose, inland fishing grounds shall be considered as plantation. (Art. 243 (a) (4), IRR implementing Sec. 150, LGC)
Experimental Farms - agricultural lands utilized by a business or corporation to conduct studies, test, researches or experiments involving agricultural, agri-business, marine or aquatic, livestock, poultry, dairy and other similar products for the purpose of improving the quality and quantity of goods or products.
253
B. Sales Allocation. - The following sales allocation shall apply to manufacturers, assemblers, contractors, producers, and exporters with factories, project offices, plants, and plantations in the pursuit of their business: (Sec. 150 (b), LGC)
a) Recording of Sales in Branches or Sales Offices, Warehouses, Plantations, etc.:
254
1) All sales made in a locality where there is a branch or sales office or warehouse shall be recorded in said branch or sales office or warehouse and the tax shall be payable to the city or municipality where it is located. (Art. 243 (b) (]), IRR implementing Sec. 150 (b), LGC)
2) In cases where there is no such branch, sales office or warehouse in the locality where the sale is made, the sale shall be recorded in the principal office along with the sales made by said principal office and the tax shall accrue to the city or municipality where said principal office is located. (Art. 243 (b) (2), IRR implementing Sec. 150 (b), LGC)
3) In cases where there is a factory, project office, plant or plantation in pursuit of business:
1. Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located,
11. Seventy percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant or plantation is located.
iii. LGUs where only experimental farms are located shall not be entitled to the sales allocation herein provided. (Art. 243 (b) (3), IRR implementing Sec. 150 (b), LGC)
However, on-site sales of commercial quantity made in experimental farms shall be similarly imposed the corresponding tax under Sec. 143 of R. A. No. 7160 or the Local Government Code of 1991, and allocated as herein provided. (Art. 243 (a) (5), IRR implementing Sec. 150, LGC)
The foregoing sales allocation shall be applied irrespective of whether or not sales are made in the locality where the factory, project office, plant or plantation is located. (Art. 243 (b) (6), IRR implementing Sec. 150 (e), LGC)
4) In the case of a plantation located in a locality other than that where the factory is located, said seventy percent (70%) sales allocation mentioned in item (ii) under sub-paragraph (3) above shall be divided as follows:
1. Sixty percent ( 60%) to the city or municipality where the factory is located; and
11. Forty percent (40%) to the city or municipality where the plantation is located. (Sec. 150 (c), LGC)
5) In cases where a manufacturer, assembler, producer, exporter or contractor has two (2) or more factories, project offices, plant, or plantations located in different localities, the seventy percent (70%) the sales allocation mentioned in item (ii) under sub-paragraph (3) above shall 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. (Sec. 150 (d), LGC) In the case of project offices of service and other independent contractors, the term "production" shall refer to the cost of projects actually undertaken during the tax period. (Art. 243 (b) (5), IRR implementing Sec. 150 (d), LGC)
6) In the case of manufacturers or producers which engage the services of an independent contractor to produce or manufacture some of their products, the rules on situs of taxation shall apply as clarified under Article 243, IRR, implementing Section 150 of R. A. No. 7160 or the Local Government Code of 1991, which are provided herein, except that the factory or plant and warehouse of the contractor utilized for the production and storage of the manufacturers' products shall be considered as the factory or plant and warehouse of the manufacturer. (Art. 243 (b) (7), IRR implementing Sec. 150, LGC)
7) In the case of sales made by the factory, project office, plant or plantation, the sale shall be covered by paragraphs (1) and (2) above. (Art. 243 (b) (6), IRR implementing Sec. 150 (e), LGC)
C. Port of Loading - the city or municipality where the port of loading is located shall not levy and collect tax imposable under Section 143 of R. A. No. 7160 or the Local Government Code of 1991, unless the exporter maintains in said city or municipality its principal office, a branch, sales office or warehouse, factory, plant, or plantation in which case the foregoing rules on the matter shall apply accordingly. ((Art. 243 (c), IRR implementing Sec. 150, LGC)
D. Sales Made by Route Trucks, Vans or Vehicles - The following guidelines shall apply to route sales:
1) For route sales made in the locality where a manufacturer, producer, wholesaler, retailer or dealer has a branch or sales office or warehouse, the sales shall be recorded in that branch, sales office or warehouse and the tax due paid to the LGU where such branch, sales office or warehouse is located.
2) For route sales made in a locality where a manufacturer, producer, wholesaler, retailer or dealer has no branch, sales office or warehouse, the sales shall be recorded in the
255
branch, sales office or warehouse from where the route trucks withdraw their products for sale, and the tax due on such sales is paid to the LGU where such branch, sales office or warehouse is located.
3) Based on the foregoing, LGUs where route trucks deliver merchandise cannot impose any tax on said trucks except the annual fixed tax authorized to be imposed by the province under Section 141 of R. A. No. 7160 or the Local Government Code of 1991254
, which cities may likewise impose under Section 151 of the same Code, 255 on every delivery truck or van or any vehicles used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, softdrinks, cigars and cigarettes, and other products as may be determined by the sangguniang panlalawigan.
4) In addition to this annual fixed tax, cities may also collect from same manufacturers, producers, wholesalers, retailers, and dealers using route trucks a mayor's permit fee which shall be imposed in a local tax ordinance pursuant to Section 14 7 in relation to Section 151, both of R. A. No. 7160 or the Local Government Code of 1991. (Art. 243 (d), !RR implementing Sec. 150, LGC)
Section 225. Retirement of Business. - (a) A business subject to tax pursuant to the preceding sections shall, upon termination thereof, submit a sworn statement of its gross sales or receipts for the current year. If the tax paid during the year be less than the tax due on said gross sales or receipts of the current year, the difference shall be paid before the business is considered officially retired. (Sec. 145, LGC)
(b) Termination of Business Construed. - For purposes hereof, termination shall mean that business operations are stopped completely. Any change in ownership, management and/or name of the business shall not constitute termination as herein contemplated. Unless stated otherwise, the assumption of the business by any new owner or manager or re-registration of the same business under a new name will be considered by the LGU concerned only for record purposes in the course of the renewal of the permit or license to operate the business.
Illustrative Case: 1) A transfer in ownership does not mean the retirement or termination of a business. The
retirement of business, as contemplated by law, means a complete cessation or stoppage of business operations. In a change of ownership, the business continues under the stewardship of another set of owners. (BLGF Opinion, August 12, 1993)
( c) Confirmation of Retirement of Business and Taxation. - The Local Treasurer concerned shall see to it that the payment of taxes of a business is not avoided by simulating the termination or retirement thereof. For this purpose, the following procedural guidelines shall be strictly followed:
254 See Sec. 207, this Manual
255 See Sec. 219, this Manual
256
1) The Local Treasurer shall assign every application for the termination or retirement of business to an inspector in his office who shall go to the address of the business on record to verify if it is really no longer operating. If the inspector finds that the business is simply placed under a new name, manager and/or new owner, the Local Treasurer shall recommend to the Mayor the disapproval of the application for the termination or retirement of said business;
2) Accordingly, the business shall continue to be liable for the payment of all the taxes, fees and charges imposed on it under existing local tax ordinances;
3) In addition, in the case of a new owner to whom the business was transferred by sale or other form of conveyance, said new owner shall be liable to pay the tax or fee for the transfer of the business to him if there is an existing ordinance prescribing such a transfer tax.
( d) In case it is found that the retirement or termination of the business is found to be legitimate, and the tax due from therefrom be less than the tax due for the current year based on the gross sales or receipts, the difference in the amount of the tax shall be paid before the business is considered officially retired or terminated.
( e) The permit issued to a business retiring or terminating its operations shall be surrendered to the Local Treasurer who shall forthwith cancel the same and record the cancellation in his books. (Art. 241, IRR implementing Sec. 145, LGC)
F. THE COMMUNITY TAX
Section 226. Community Tax. - Cities or municipalities may levy a ommunity ta n lieu of the former§@ence tayevied and collected under Section 38 of P. � No. 2 , as amended. Accordingly, all cities and municipalities shall enact, for the purpose, a local tax ordinance to take effect January 1, 1992.
For purposes of enacting a local tax ordinance levying the community tax, the conduct of a public hearing provided for under Section 186 of R. A. No. 7160 or the Local Government Code of 1991, shall be dispensed with. (Art. 245, IRR implementing Sec. 156, LGC)
1) Imposition of Community Tax. - The levy or imposition of community tax by a city or municipality shall be governed by the following rules and procedural guidelines:
a) Individuals liable for the payment of the Community Tax:
1. Every inhabitant of the Philippines eighteen ( 18) years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30) consecutive working days during any calendar year;
11. An individual who is engaged in business or occupation;
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iii. An individual who owns real property with an aggregate assessed value of One Thousand Pesos (P 1,000.00) or more; and
iv. An individual who is required by law to file an income tax return. (Art. 246 (a), /RR, implementing Sec. 157, LGC)
b) Rate of Community Tax Payable by Individuals:
1. The rate of the annual community tax that may be levied and collected from said individuals shall be Five Pesos (P 5.00) plus an annual additional tax of One Peso (P 1.00) for every One Thousand Pesos (P 1,000.00) of income regardless of whether from business, exercise of profession, or from property but which in no case shall exceed Five Thousand Pesos (P 5,000.00).
11. In case of husband and wife, each of them shall be liable to pay the basic annual tax of Five Pesos (P 5.00), but the additional tax imposable on the husband and wife shall be One Peso (P 1.00) for every One Thousand Pesos (P 1,000.00) of income from the total property owned by them and/or the total gross receipts or earnings derived by them. (Art. 246 (b), /RR implementing Sec. 157, LGC)
c) Juridical Persons Liable for the Payment of the Community Tax. - Every corporation, no matter how created or organized, whether domestic or resident foreign, engaged in or doing business in the Philippines shall pay an annual community tax of Five Hundred Pesos (P 500.00) and an annual additional tax, which, in no case, shall exceed Ten Thousand Pesos (P 10,000.00) in accordance with the following schedule:
1. For every Five Thousand Pesos (P 5,000.00) worth of real property in the Philippines, owned by the juridical entity during the preceding year, based on the assessed value used for the payment of the real property tax under existing laws -Two Pesos (P 2.00); and
11. For every Five Thousand Pesos (P 5,000.00) of gross receipts or earnings derived from the business in the Philippines during the preceding year -Two Pesos (P 2.00).
The dividends received by a corporation from another corporation shall, for the purpose of the additional tax, be considered as part of the gross receipts or earnings of said corporation. (Art. 246 (c), /RR implementing Sec. 158, LGC)
2) Exemptions. -The following are exempt from the community tax:
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a) Diplomatic and consular representatives; and
b) Transient visitors when their stay in the Philippines does not exceed three (3) months. (Sec. 159, LGC)
3) Place of Payment. - The community tax shall be paid in the place of residence of the individual, or in the place where the principal office of the juridical entity is located (Sec. 160, LGC).
The following are the guidelines for the place of payment of the community tax:
a) The community tax shall be paid in the city or municipality where the residence of the individual is located, or in the city or municipality where the principal office of the juridical entity is located (Art. 246 (e) (1), !RR implementing Sec. 160, LGC). Thus, a sales office or branch office is not liable to pay community tax in the city of municipality where it is located (Sec. 2, BLGF Memorandum Circular No. 153).
b) It shall be unlawful for any City or Municipal Treasurer to collect the community tax outside the territorial jurisdiction of the city or the municipality. (Art. 246 (e) (2), !RR implementing Sec. 160, LGC)
c) In case of branch, sales office or warehouse where sales are made and recorded, the corresponding community tax shall be paid to the LGU where such branch, sales office or warehouse is located. (Art. 246 (e) (3), !RR implementing Sec. 160, LGC)
d) Any person, natural or juridical, who pays the annual community tax to a city or municipality other than the city or municipality where his residence, or principal office in the case of juridical persons, is located shall remain liable to pay the tax to the city or municipality concerned. (Art. 246 (e) (4), !RR implementing Sec. 160, LGC)
4) Time of Payment; Delinquency. -Guidelines as to when the community tax shall be paid:
a) The community tax shall accrue on the first (l st) day of January of each year and shall be paid not later than the last day of February of each year.
b) If a person reaches the age of eighteen (18) years or otherwise loses the benefit of exemption on or before the last day of June, he shall be liable for the community tax on the day he reaches such age or upon the day the exemption ends. However, if a person reaches the age of eighteen (18) years or loses the benefit of exemption on or before the last day of March, he shall have twenty (20) days to pay the community tax without becoming delinquent.
c) Persons who come to reside in the Philippines or reach the age of eighteen (18) years on or after the first (1st) day of July of any year, or who cease to belong to an exempt class on or after the same date, shall not be subject to the community tax for that year.
d) Corporations established and organized on or before the last day of June shall be liable for the community tax for that year. But corporations established and organized
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on or before the last day of March shall have twenty (20) days within which to pay the community tax without becoming delinquent. Corporations established and organized on or after the first day of July shall not be subject to the community tax for that year. (Sec. 161, LGC)
5) Penalties for late payment. - If the tax is not paid within the time prescribed above, there shall be added to the unpaid amount and interest of twenty-four percent (24%) per annum from the due date until it is paid. (Sec. 161, LGC)
6) Issuance of Community Tax Certificate. - A community tax certificate shall be issued to every person or corporation upon payment of the community tax. A community tax certificate may also be issued to any person or corporation not subject to the community tax 256 upon payment of One Peso (P 1.00) (Sec. 162, LGC)
7) Printing of Community Tax Certificate. - The Bureau of Internal Revenue (BIR) shall cause the printing of community tax certificates and distribute the same to the cities and municipalities through the City and Municipal Treasurers in accordance with prescribed regulations. However, in order to facilitate distribution, the BIR may send on consignment to the Provincial Treasurers blank forms of the community tax certificates and the Municipal Treasurers of the province shall secure through the Provincial Treasurer, their respective requirements. The City or Municipal Treasurer concerned shall remit to the National Treasurer, for the account of the BIR, the cost of printing and distribution, within ten (10) days after the end of each quarter. In cases where the certificates were secured or requisitioned from the Provincial Treasurer, the Municipal Treasurer shall remit payments to the Provincial Treasurer who shall, in turn, effect the remittance to the National Treasurer as required. (Art. 249, IRR implementing Sec. 164 (a), LGC)
8) Collection of the Community Tax by Barangay Treasurers. - The tax ordinance levying the community tax shall authorize the City or Municipal Treasurer to deputize the Barangay
Treasurers to collect the community tax in their respective jurisdictions. Said deputation, however, shall be limited to the community tax payable by individual taxpayers and shall be extended only to Barangay Treasurers who are properly bonded in accordance with existing laws. (Art. 250, IRR implementing Sec. 164 (b), LGC)
9) Allocation of Proceeds of the Community Tax. - The proceeds of the community tax actually and directly collected by the City or Municipal Treasurer shall accrue entirely to the General Fund of the city or municipality concerned. However, proceeds of the community tax collected through the Barangay Treasurers shall be apportioned as follows:
a) Fifty percent (50%) shall accrue to the General Fund of the city or municipality concerned; and
b) Fifty percent (50%) shall accrue to the barangay where the tax is collected. (Art. 251, IRR implementing Sec. 164 (c), LGC)
256 See Sec. 226 (2), this Manual
260
G. SPECIFIC APPLICATIONS
FRANCHISES
OF AUTHORITY TO TAX
Section 227. Instance When Corporation is Liable for Franchise Tax Nothwithstanding
Exemption Granted Under its Charter.
The National Power Corporation (NPC), a government corporation, maintains that it does not fall within the purview of business enjoying a franchise since its operation is not for profit but for public service, and further, that it is exempt from all forms of taxes under its Charter, P.D. No. 938.
Section 137 of R. A. No. 7160 or the Local Government Code of 1991, clearly and specifically declares that notwithstanding any exemption granted by law or other special law, the province may impose a tax on business enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1 %) of the gross annual receipts for the preceding calendar year based on the incoming receipts realized within its territorial jurisdiction.
As to the conflict between the provisions of the Local Government Code of 1991, a general law, and the NPC Charter, a special law, it was held that while admittedly the established jurisprudence is that if a general law is enacted after the special law, the special law nevertheless remains, this admits of exceptions. One such exception is the cited case of Compania General vs. Collector of Customs, 46 Phil. 8, in which it was ruled that when there is a clear, necessary and irreconcilable conflict between the general and special law, the general law shall prevail. (BLGF Letter, September 4, 1995 to National Power Corp., Baguio City)
Section 228. Variations of the "In Lieu" clause in the terms of franchise. - It devolves upon Provincial and City Treasurers to examine the terms of franchise holders operating in their respective jurisdictions, inasmuch as the terms of franchises vary such that while some admit of the local impost, others do not.
Illustrative Cases:
Franchises which are subject to franchise tax:
1) In one case, the franchise proviso stipulates that, "This (national government franchise) tax shall be in lieu of all other taxes on all properties except real property, used by the grantee under this franchise". Accordingly, it was opined that such exemption "is limited to the taxes on personal property ( e.g. poles, wires, insulators, transformers, conductors, x x x) used by the grantee, and does not confer a blanket exemption" (Opinion No. 89, s. 1974, Secretary of Justice). Such type of franchise proviso does not exempt the holder from the franchise tax which a city may impose (Opinion No. 116, S. 1974, Secretary of Justice).
Franchise not subject to franchise tax:
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2) Where the franchise terms provide that, "it shall be in lieu of all other taxes and assessments of whatever nature and by whatever authority upon the privilege, earnings, income franchise x x x", it was held to be not subject to the local franchise tax. (DOF Letter, March 19, 1975 to Messrs. Quimzon, De Guzman, Makalintal and Veneracion, Greenhills, Rizal)
3) In another case, the franchise provides that, "Such annual x x x payments shall be in lieu of all taxes of every name and nature - municipal, province or central upon the capital stock, franchises, right of way, earnings and all other property owned or operated by the grantee x x x". Clearly this may not be subject to the additional provincial franchise tax. Thus, business establishments with franchises containing the "in lieu of all taxes" proviso are not subject to the said local tax, such as those of the Radio Communications of the Phil., Inc. (RCPI), the Manila Electric Co (Meralco ), and the Philippine Long Distance Telephone Co. (PLDT). (Local Tax Regulations No. 3-75, Department of Finance)
Section 229. Uncollected Gross Receipts are Included in Computing Franchise Tax. - The uncollected amounts due from customers should be included in computing the franchise tax payable, which is based on gross receipts. The terms "gross receipts" means "gross earnings". A person may have earned his salary but may not have collected it, thereby showing that "to collect" is a different act from "to earn". Consequently, the uncollected "gross receipts" which should be construed as meaning the same thing as "gross earnings" should be subject to the franchise tax. (Escudero Electric Service vis. Tabios, 33 SCRA 547)
Chapter 3. FEES AND CHARGES
Section 230. Authority to Impose and Collect Fees and Charges. - (a) Every local government unit created or recognized under R. A. No. 7160 or the Local Government Code of 1991, is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. (Sec. 15, LGC)
(b) Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental to its efficient and effective governance, and those which are essential to the promotion of the general welfare. (Sec. 16, LGC)
(c) Local government units shall have the power and authority, among others:
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1) To create their own sources of revenue and to levy taxes, fees and charges which shall accrue exclusively for their use and disposition and which shall be retained by them.
2) To have an equitable share in the proceeds from the utilization and development of the national wealth and resources within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct benefits.
3) To acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions.
(Sec. 18, LGC)
Illustrative Cases:
1) In the exercise of their governmental functions, local government units are endowed with police powers, under which they may regulate and inspect businesses and their activities and the practice of any profession or calling, and collect fees commensurate to the cost of regulation, inspection, and licensing. Police powers are defined as the power to prescribe regulations to promote the health, morals, peace, education , good order or safety and general welfare of the people. (Sangalang, et al., vs. !AC, 176 SCRA 179)
2) Local government units are also authorized to levy and collect charges in the exercise of their proprietary functions. Proprietary functions are exercised not for regulatory purposes but for the peculiar benefit and advantage of citizens. (City of Pueblo vs. Weed, Colo. App. 570 p.2d 15, 18)
Section 231. Definition of Terms:
a) Charges - pecuniary liability, as rents or fees against persons or property. (Sec. 131 (g), LGC)
b) 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 (!), !RR
implementing Sec. 131 (!), LGC)
c) Franchise - a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of public welfare, security, and safety. (Sec. 131 (m),
LGC)
d) 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 deposits or advance payments actually or constructively
received during the taxable quarter for the services performed or to be performed for another
person excluding discounts if determinable at the time of sales, sales returns, excise tax, and value-added tax (VAT). (Sec. 131-n, LGC)
e) Permit Fee - the allowable local government imposition intended to cover the cost of regulation, inspection, and surveillance of a business or occupation. (p. 126, Philippine Law
on Local Government Taxation, Annotated, 2000 edition, Ursa!)
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f) Police Power - the power to prescribe regulations to promote the health, morals, peace, education, good order or safety and general welfare of the people. (Sangalang, et al., vs. IA C, 176 SCRA 179)
g) Service Charges - impositions for services rendered by local governments, or for conveniences furnished. (p. 126, Philippine Law on Local Government Taxation, Annotated, 2000 edition, Ursa/)
h) Toll fee - a sum of money for the use of something, generally applied to the consideration which is paid for the use of a road, bridge, or the like, of a public nature. (Sec. 14, Cooley on Taxation i
h ed)
i) User's Charges - prices charged by local governments for the use of public utilities.
Section 232. Common Revenue Raising Powers. -Local government units have common revenue raising powers that allow them to impose the following: a) Service Fees and Charges. - Local government units may impose and collect such
reasonable fees and charges for services rendered. (Sec. 153, LGC)
b) Public Utility Charges - Local government units may fix the rates for the operation of public utilities owned, operated and maintained by them within their jurisdiction. (Sec. 154, LGC)
c) Toll Fees or Charges - The sanggunian concerned may prescribe the terms and conditions and fix the rates for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.
When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use. (Sec. 155, LGC)
Section 233. Criteria in Determining the Reasonableness of Fees and Charges. - The power to impose a tax, fee, or charge or to generate revenue under R. A. No. 7160 or 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)
Fees and charges shall be reasonable and commensurate with the cost of regulation, inspection and licensing. In fixing the amount of fees and charges the following shall be considered:
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l ) In the absence of special authority to impose a tax to raise revenues, the fee for regulation of useful occupations may only be of an amount sufficient to cover the expenses of issuing the license (permit fee) and the cost of the necessary inspection or
police surveillance, taking into account not only the expense of direct regulation but also all other incidental consequences.
2) While local government units are allowed much wider discretion in fixing the amount of license fees in the case of non-useful occupations, fees and charges must not be unreasonable, oppressive, or tyrannical.
Section 234. Mayor's Permit. - All businesses are required to obtain Mayor's Permit before they engage in any business within a city or municipality. This permit allows them the privilege of conducting their business within the jurisdiction of the city or municipality.
The following procedures shall be observed in securing Mayor's Permit for business:
1) Application for Mayors' Permit. - An application for a Mayor's Permit shall be filed with the Office of the City/Municipal Mayor. The form for the purpose shall be issued by the Mayor's Office and shall set forth the requisite information, including the name and residence of the applicant, the description of business or undertaking that is to be conducted, and such other data or information as may be required. (Local Tax Regulation No. 1-77, Department of Finance; p. 138, Philippine Law on Local Government Taxation, Annotate, 2000 edition, Ursa!)
2) Documentation Requirements. - The following documents may be required, if applicable:
A. For a newly started business:
a) Location sketch of the new business
b) Department of Trade and Industry (DTI) Registration Certificate with approved Application Form, in case of single proprietorship
c) Securities and Exchange Commission (SEC) Registration and Articles of Incorporation and By-Laws, in case of partnership or corporation
d) A certificate attesting to the tax exemption if the business is tax exempt
e) Certification from the officer in charge of the zoning that the location of the new business is in accordance with zoning regulations
f) Tax Clearance showing that the operator has paid all tax obligations in the city/municipality
g) Barangay Clearance/proof of filing (In case of non-issuance of barangay clearance within seven (7) working days from the date of filing, the City/Municipality may issue the permit to the applicant257
257 See Sec. 222 (c), this Manual
265
h) Three (3) passport size pictures of the owner or operator or in cases of a partnership or corporation the pictures of the senior or managing partners and that of the President or General Manager
i) Health Certificate for all food handlers, and those required under the provisions of a duly-enacted revenue code
j) Community Tax Certificate
k) Contract of Lease, if renting
B. For renewal of existing business permit:
a) Mayor's Permit for the previous year
b) Copies of the annual or quarterly tax payments
c) Copies of all receipts showing payment of all regulatory fees as provided for in the Code
d) Certificate of Tax Exemption from local taxes or fees, if exempt
e) Audited Financial Statement with a gross income prescribed by the BIR for the next preceding year
f) BIR registration certificate and annual registration fee payment
g) Barangay Clearance
h) Declaration of previous year's gross sales/receipts
3) Inspection and other Requirements. - Upon submission of the application, it shall be the duty of the proper authorities to verify if other city/municipal requirements regarding the operation of the business or activity such as sanitary requirements, installation or power and light requirements, as well as other safety requirements are complied with. The permit to operate shall be issued only upon compliance with such safety requirements and after the payment of the corresponding inspection fees and other impositions required by the Revenue Code and other city/municipal tax ordinances.
4) Time and Manner of Payment. - The fee for the issuance of a Mayor's Permit shall be paid to the City/Municipal Treasurer upon application, before any business or undertaking can be lawfully begun or pursued, and within the first twenty (20) days of January of each year in case of renewal of the permit.
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5) Issuance of Permit - A Mayor's Permit shall be secured for every separate or distinct establishment or place where business is conducted (Art. 242 (a), !RR implementing Sec. 146, LGC). The following are the guidelines for the issuance of Mayor's Permit:
a) The Mayor's Permit shall be issued by the City/Municipal Mayor's Office upon submission of official receipt issued by the City/Municipal Treasurer for the payment of the business tax.
b) Every permit issued by the Mayor shall reflect the name and residence of the applicant, his nationality and marital status; nature of the organization (whether the business is a sole proprietorship, corporation or partnership, etc); location of the business; date of issue and expiration of the permit; and other information as may be necessary.
c) The City/Municipality shall, upon submission of satisfactory proof that the original of the permit has been lost, stolen or destroyed, issue a duplicate of the permit upon the payment of a fee prescribed by ordinance.
6) Posting of Permit. - Every business owner shall keep his permit conspicuously posted at all times in his place of business or office or if he has no place of business or office, he shall keep the permit on his person. The permit shall be immediately produced upon demand by the City/Municipal Mayor, the City/Municipal Treasurer or any of their duly authorized representatives.
7) Duration of Permit and Renewal. - The Mayor's Permit shall be valid for a period of not more than one (1) year and shall expire on the thirty-first (3151
) of December following the date of issuance, unless revoked or surrendered earlier. Every permit shall cease to be in force upon revocation or surrender thereof. The permit issued shall be renewed within the first twenty (20) days of January. It shall have a continuing validity only upon renewal and payment of the corresponding fee.
8) Revocation of Permit. - The Mayor's Permit may be revoked on the following grounds:
a) When a person doing business under the provisions of the revenue code of the city or municipality violates any of its provisions.
b) When the person refuses to pay any indebtedness or liability to the city/municipality.
c) When the person abuses his privilege to do business to the injury of the public moral or peace.
d) When such business is being conducted in a disorderly or unlawful manner, is a nuisance or allows its premises to be used as a resort for disorderly characters, criminal or women of ill-repute.
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Such revocation shall operate to:
1. forfeit all sums which may been paid in respect to said privilege, in addition to the fines and imprisonment that may be imposed by the court or any provision of an enabling ordinance governing the establishment and maintenance of business; and
11. prohibit the exercise of the business by the person whose privilege is revoked, until restored.
9) Sanctions. - Any business establishments operating without Mayor's Permit shall be subjected to penalties provided by law or ordinance.
a) Any false statement deliberately made by the applicant shall constitute ground from denying or revoking the permit issued by the Mayor, and the applicant or licensee may be prosecuted in accordance with the penalties provided by ordinance.
b) A Mayor's Permit shall not be issued to the following persons:
1. Any person who previously violated any ordinance or regulation governing permits granted.
11. Any person whose business establishment or undertaking does not conform with zoning regulations, and safety, health and other requirements of the city/municipality.
iii. Any person who has unsettled tax obligation, debt or other liability to the government.
1v. Any person who is disqualified under any prov1s1on of law or ordinance to establish or operate the business applied for.
v. Any person or applicant for a business who declares an amount or gross sales or receipts that are manifestly below industry standards or the Presumptive Income Level of gross sales or receipts as established in the city/municipality for the same or a closely similar type of activity or business.
10) Computation of Fee for Mayor's Permit. -
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a) The rates of Mayor's Permit fees shall not be based on cafital investment or gross sales or receipts of the person or business. (Art. 233 2
11
' par., IRR implementing
Sec. 147, LGC)
b) The Mayor's Permit fee may be based on various schemes, as follows:
1. Fixed rates for each kind of business activity;
11. A schedule of graduated fixed rates for each kind of business activity;
iii. Grouping similar businesses or occupations and assigning a fixed rate of permit fee for each group;
1v. Fixing or graduating the permit fee based on the number of employees of business establishments. (A variation of schemes (a) and (b)); and
v. Graduated rate based on the area being used by the business.
c) For a newly started business or activity that starts to operate after January 20, the fee shall be reckoned from the beginning of the calendar quarter.
d) When the business or activity is abandoned, the fee shall not be exacted for a period longer than the end of the calendar or quarter. If the fee has been paid for a period longer than the current quarter and the business activity is abandoned, no refund of the fee corresponding to the unexpired quarter or quarters shall be made.
Section 235. Fees for Sealing and Licensing Weights and Measures. - (a) The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan. (Sec. 148 (a), LGC) Cities are similarly empowered to levy such fees. (Sec. 151, LGC)
(b) The sanggunian concerned shall prescribe the necessary regulations for the use of such weights and measures, subject to the guidelines prescribed by the Department of Science and Technology. The sanggunian concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of instruments of weights and measures and prescribed the criminal penalty in accordance with the provisions of R. A. No. 7160 or the Local Government Code of 1991. However, the sanggunian may authorize the Local Treasurer to settle an offense not involving the commission of fraud before a case is filed in court, upon payment of a compromise penalty of not less than Two Hundred Pesos (P 200.00). (Sec. 148 (b), LGC)
( c) The ordinance of the sangguniang bayan may also embody such sanctions as may deem appropriate as regards the use of any weight or measure not properly sealed or license in accordance with the foregoing provisions, such as the confiscation of said illegal weight and measure, or the revocation of the permit or license of the business, and/or the filing of appropriate charges against the owner or operator of the business. (Art. 234 (c), IRR implementing Sec. 148, LGC)
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Section 236. Fishery Rentals, Fees and Charges. - (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rentals, fees or charges therefor in accordance with the provisions of this section (Sec. 149 (a), LGC). Cities are similarly authorized to grant such privileges and impose such rentals, fees or charges. (Sec 151, LGC)
(b) Such rentals, fees and charges shall be imposed in accordance with the following provisions:
A. Fishery Privileges. - The sangguniang bayan may grant fishery privileges to erect fish corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a definite zone of the municipal waters, as it may determine:
1) Provided, further, That duly registered organizations and cooperatives of marginal fisherman shall have the preferential right to such fishery privileges;
2) Provided, however, That the sangguniang bayan may require a public bidding in conformity with and pursuant to an ordinance for the grant of such privileges; and
3) Provided, finally, That in the absence of such organizations and cooperatives or their failure to exercise their preferential right, other parties may participate in the public bidding in conformity with the above cited provisions. (Sec. 149 (b) (]), LGC)
B. Fishing Privileges for Marginal Fisherman. - The sangguniang bayan may grant the privilege to gather, take or catch bangus fry, prawn fry, or kawag-kawag or fry of other species and fish from the municipal waters by nets, traps, or other fishing gears to marginal fisherman free from any rental, fee, charge or any other impositions whatsoever. (Sec. 149 (b) (2), LGC)
C. Licensing of Fishing Vessels. - The sangguniang bayan may issue licenses for the operation of fishing vessels of three (3) tons or less for which purpose it shall promulgate rules and regulations regarding the issuances of such licenses to qualified applicants under existing laws.
D. Illegal Activities. - Provided, however, That the sangguniang bayan concerned shall, by appropriate ordinance, penalize the use of explosives, noxious or poisonous substances, electricity, muro-ami, and other deleterious methods of fishing and prescribe a criminal penalty therefor in accordance with the provisions of R. A. No. 7160 or the Local Government Code of 1991. Provided, finally, That the sanggunian bayan concerned shall, have the authority to prosecute any violation of the provisions of applicable fishery laws. (Sec. 149 (b) (3), LGC)
Section 237. Fees and Charges that May Be Imposed by Barangays. - Barangays may levy fees and charges which shall accrue exclusively to them (Sec. 152, LGC), as follows:
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1) Service Fees or Charges. - Barangays may collect reasonable fees or charges for services rendered in connection with the regulation or use of barangay-owned properties or service facilities such as palay, copra, or tobacco dyers. (Sec. 152 (b), LGC)
2) Barangay Clearance. - No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. For such clearance, the sanggunian barangay may impose a reasonable fee. The application for clearance shall be acted upon within seven (7) working days from filing thereof. In the event that the clearance is not issued within the said period, the city or municipality may issue the said license or permit. (Sec. 152 (c), LGC)
3) Other Fees and Charges. -The barangay may also levy reasonable fees and charges:
1. On commercial breeding of fighting cocks, cockfights and cockpits;
11. Places of recreation which charge admission fees; and
iii. Billboards, signboards, neon signs, and outdoor advertisements. (Sec. 152 (d), LGC)
Section 238. Fees and Charges that may be Imposed by Local Government Units. - The following are some of the fees and charges that may be imposed by local government units:258
1) Registration and Transfer of Large Cattle 2) Permit Fee for Excavations on Streets 3) Fee for the Sealing and Licensing of Weights and Measures 4) Permit Fee on Film Making Within LGUs Territory 5) Permit Fee for Agricultural Machinery and Other Heavy Equipment for Rent 6) Permit Fee on Occupations/Callings Not Requiring Government Examination 7) Permit Fee for the Storage of Flammable and Combustible Materials 8) Permit Fee on Certain Types of Machinery and Engines 9) Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios 10) Secretary's Fees 11) Local Civil Registry Fees 12) Police Clearance Fees 13) Sanitary Inspection Fees 14) Service Fees for Health Examinations 15) Dog Registration and Vaccination Fees 16) Fishery Rentals, Fees and Charges 17) Service Charge for Garbage Collection 18) Charges for Parking 19) Cemetery Charges 20) Slaughter and Corral Fees
258Typical approaches in imposing and administering the fees and charges aforementioned are presented under
Chapter 3, Book V of this Manual.
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21) Toll Fees or Charges 22) Permit Fee for Cockpit Owner/Operators/Licensees/Promoters and Cockpit Personnel 23) Permit Fee for the Conduct of Group Activities
Section 239. Fees and Charges Collected by Local Government Units for the National Government. - Certain fees and charges imposed by the National Government on businesses and activities are collected on its behalf by the local government units. It is the duty of the Local Treasurer concerned to collect fees and charges and to remit collections promptly in accordance with law or issuance, authorizing the local government unit to undertake the collection.
A. Fire Safety Inspection Fee -
1) The Fire Safety Inspection Certificate shall be issued upon payment by the applicant of a fee equivalent to ten percent (10%) of all fees charged by the building official, government agencies concerned in the granting of pertinent permits or licenses. (Sec.
I, 206, P.D. No. 1185259
)
2) The Annual Fire Inspection Fee should not exceed the amount equivalent to one tenth percent (0.01 %) of the assessed value of the building or structure. To partially provide for the funding of the Fire Service, the following taxes and fees are imposed: (Sec. 13-b, P. D. No. 1185)
1. One-tenth of one per centum (0.01 %) of the verified estimated value of buildings or structures to be erected, to be collected from the owner, but not to exceed Fifty Thousand Pesos (P 50,000.00), one half (1/2) to be paid prior to the issuance of the Building Permit, and the balance after final inspection and prior to the issuance of the Use and Occupancy Permit.
11. One-hundredth of one per centum (0.01 %) of the assessed value of buildings or structures annually payable upon payment of the real estate tax, except on structures used as single family dwellings.260
B. Fees and Charges for National Meat Inspection Commission Services. -The fees and charges for services rendered by the National Meat Inspection Commission (NMIC) are subject to the rates prescribed under Article 17 (d) ofR. A. No. 7394261 , on the following:
1) Ante-Mortem Inspection Fees; 2) Post-Mortem Inspection Fees; 3) Accreditation Fees of Slaughterhouses, Poultry Dressing Plants, Meat
Processing Plants, Meat Cold Storage and Meat Delivery Van; 4) Meat Import and Export Clearance and Inspection Fees; 5) Fees for the Issuance of License to Meat Handlers; and
259 Fire Code of the Philippines 260
Cited in BLGF 3rd Jndorsement, June 15, 1995 to the Municipal Treasurer of !pi/, Zamboanga de/ Sur) 261 The Consumer Act of the Philippines
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6) Laboratory Fees for the Examination of Meat and Meat Products:
a) Pathological Examination b) Parasitological Examination c) Microbiological Examination d) Chemical Examination e) Oranoleptic Examination
Section 240. Building Permit. - No person, firm or corporation, including any agency or instrumentality of the government, shall erect, construct, alter, repair, move, convert, or demolish any building or structure or cause the same to be done without first obtaining a building permit from the building official assigned in the place where the subject building is located or the building work is to be done. (Sec. 301, P. D. No., 1096
262)
A. Payment of Related Fees and Charges. - The corresponding fees and charges shall be collected for services rendered in connection with the processing and issuance of building permit fees, signboard permit fee, plumbing inspection permit fee, sanitary inspection fees, mechanical installation and inspection fees and such other impositions as may be prescribed by the Department of Public Works and Highways from persons, firms and corporations before they are allowed to erect, construct, alter, move, convert or demolish any public or private building or structure within the city/municipality in the exercise of regulatory powers over public buildings and structures.
B. Issuing Official. - The City/Municipal Engineer shall be responsible for the issuance of building and other permits and the computation of the correct regulatory fees. Payments shall be paid at the Treasurer's Office.
Section 241. Permit Fee for Zoning and Locational Clearance Permit. - (a) There shall be collected a Mayor's Permit Fee for Zoning/Locational Clearance for all structures to be constructed in the city/municipality in accordance with existing ordinances and Housing and Land Use Regulatory Board (HLURB) guiding rates.
(b) Time and Manner of Payment. - The fees shall be paid by the applicant or his
representatives to the City/Municipal Treasurer when zoning/locational clearance is granted.
( c) Administrative Provisions - The City/Municipal Mayor shall administer the provision of existing ordinances, executive orders, laws relating to and governing zoning/locational clearance.
( d) Coverage. - The following developments and activities are covered:
A. Zoning/Local Clearance:
a) Residential structure, single or detached other than apartments/townhouses, dormitories, and subdivisions/condominium projects
b) Apartments
262 National Building Code
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c) Dormitories d) Institutions e) Commercial, industrial, agro-industrial projects t) Special uses/special projects g) Alterations/Expansions (affected areas/cost of expansion only)
B. Subdivisions and Condominium Projects/Activities (P. D. No. 957263):
a) Approval of Subdivision Plan (including Townhouse):
1) Preliminary Approval and Locational Clearance - for every additional hectare or a fraction thereof
2) Final Approval and Development Permit - additional fee on floor area of houses/building sold with the lot
3) Inspection Fee 4) Alteration of Plans (affected areas only) 5) Certificate of Registration and License to Sell (per saleable lot) 6) Additional fee on floor area of house/buildings sold with the lot; and 7) Certificate of Completion (per hectare)
b) Approval of Condominium Project (under P.O. No. 957):
1) Preliminary Approval and Locational Clearance (PA/LC): • Land Area • Building
2) Final Approval & Development Permit:
• Per square meter of the total land area • Additional cost on the area of the building
3) Inspection Fee 4) Alteration (affected areas only) 5) Conversion (affected areas only) 6) Certificate of Registration and License to Sell:
• Residential (per square meter of saleable area) • Commercial/office (per square meter of saleable area)
7) Certificate of Completion
c) Projects under B.P. Big. 220264:
1) Subdivision:
a) Preliminary Approval and Locational Clearance: • Socialized Housing
• Economic Housing
263 An Act Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties/or Violation Thereof
264 An Act Authorizing the Ministry of Human Settlements to Establish cind Promulgate Different Levels of Standards and Technical Requirements for Economic and Socialized Housing Projects in Urban and Rural Areas from those Provided under P. D. Nos. 957, 1216, 1096 and 1185
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b) For every additional hectare or a fraction thereof: • Socialized Housing • Economic Housing
c) Final Approval & Development Permit d) Inspection Fee:
• Socialized Housing • Economic Housing
e) Alteration of Plan (affected areas only) t) Building Permit (per square meter of floor area of housing unit) g) Certificate of Registration & License to Sell:
• Socialized Housing • Economic Housing
h) Certificate of Completion (per hectare or a fraction of land area) i) Certificate of Occupancy (per square meter of floor area of the housing
unit)
2) Simple Subdivision:
a) Approval b) Inspection Fee
3) Condominium:
a) Preliminary Approval & Locational Clearance b) Final Approval & Development Permit:
• Per square meter of total land area • Additional cost per square meter of housing unit
c) Inspection fee (per square meter of total saleable floor area) d) Alteration of Plan (affected areas only) e) Building permit (per square meter of housing unit) t) Certificate of Registration & License to Sell g) Certificate of Completion h) Certificate of Occupancy
d) Approval of Industrial Subdivision:
1) Preliminary Approval and Locational Clearance: a) First five (5) hectares b) Every additional hectare or a fraction thereof
2) Final Approval & Development Permit of location Inspection Fee: a) Alteration of Plan (affected areas only) b) Certificate of Registration & License to Sell c) Certificate of Completion
e) Approval of Commercial Subdivision:
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1) Preliminary Approval and Locational Clearance:
• First two (2) hectares
• Every additional hectare or fraction thereof 2) Final Approval and Development Permit 3) Inspection Fee 4) Alteration of Plan (affected areas only) 5) Certificate of Registration & License to Sell 6) Certificate of Completion
f) Approval of Farmlot Subdivision:
1) Preliminary Approval and Locational Clearance:
• First five (5) hectares
• Every additional hectare 2) Final Approval and Development Permit 3) Inspection Fee 4) Alteration of Plan (affected areas only) 5) Certificate of Registration & License to Sell 6) Certificate of Completion
g) Approval of Memorial Park/Cemetery Project:
1) Preliminary Approval and Locational Clearance:
• Memorial Projects
• Cemeteries 2) Every additional hectares or a fraction thereof:
• Memorial Project
• Cemeteries 3) Final Approval & Development Permit:
• Memorial Projects
• Cemeteries 4) Inspection Fees:
• Memorial Projects
• Cemeteries 5) Alteration of Plan (affected areas only) 6) Certificate of Registration and License to Sell (per saleable plot):
• Memorial Projects
• Cemeteries 7) Certificate of Completion:
• Memorial Projects
• Cemeteries
C. Other Transactions/Certifications:
a) Application/Request for:
1) Advertisement Approval 2) Cancellation/Reduction of Performance Bond 3) Lifting of Suspension of License to Sell 4) Extension of Time to Complete Development 5) Exemption from Cease and Desist Order 6) Clearance to Mortgage 7) Lifting of Cease and Desist Order 8) Change of Name/Ownership 9) Voluntary Cancellation of CR/LS 10) Revalidation/Renewal of Permit ( condominium)
D. Other Certifications:
a) Zoning Certifications b) Certificate of Town Plan/Zoning Ordinance Approval c) Certificate of New Rights/Sales d) Certificate of Locational Viability e) Certificate of Registration and License to Sell (form) f) Others to include:
• Availability of records/public request of copies/research works • Certificate of no records on file • Certificate of with or without CR/LS • Certified true copies of documents
E. Registration of Dealers/Brokers/Salesmen:
a) Dealers/Brokers b) Salesmen/ Agent
Section 242. Motorized Tricycle Operator's Permit. - The sangguniang bayan or panlungsod shall, subject to the guidelines prescribed by the Department of Transportation and Communications (DOTC), regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the municipality or city. (Sec. 447 a) (3) (vi), LGC)
The issuance of licenses to tricycle drivers and charging of fees for the registrations of tricycles are under the jurisdiction of the Land Transportation Office (LTO).
a) Definition of Terms. - The following terms as used in relation to the regulation of the operation of motorized tricycles shall refer to:
1) Motorized Tricycle - a motor vehicle propelled other than by muscular power, composed of a motorcycle fitted with a single wheel sidecar or a motorcycle with
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a two-wheeled cab, the former having a total of four ( 4) wheels, otherwise known as the motorela.
2) Tricycle Operators - persons engaged in the business of operating tricycle.
3) Tricycle-for-Hire - a motorized tricycle operated to render transport services to the general public for a fee.
4) Motorized Tricycle Operator's Permit.265 - a document granting franchise or
license to a person, natural or juridical, allowing to operate tricycle-for-hire over specified zones.
5) Zone - a contiguous land area or block, such as a subdivision or barangay, where tricycle-for-hire may operate without a fixed origin and destination.
b) Annual Franchise Fee. - The city or municipality may, through a duly approved ordinance, fix, impose and collect an annual franchise fee for the operation of motorized tricycle-forhire.
c) Other Fees on Motorized Tricycle Operations. - In addition to the annual franchise fee, the city or municipality may, also by passing the appropriate legislation, fix and collect other fees on motorized tricycle-for-hire operations, such as but not limited to the following: 1) Filing fee (when applying for franchise) 2) Fare adjustment fee for fare increase 3) Filing fee for amendment ofMTOP
d) Guidelines in the Payment of Fees:
1) Prospective operators of tricycle should first secure MTO P from the sanggunian;
2) The fee shall be paid to the City/Municipal Treasurer upon application or renewal of the permit;
3) The filing fee shall be paid upon application for an MTOP based on the number of units;
4) Filing fee for amendment of MTOP shall be paid upon application for transfer to another zone, change of ownership of unit or transfer of MTOP.
e) Scope of Franchising Power of the Sanggunian. - The sanggunian of the city/municipality shall:
1) Issue, amend, revise renew, suspend, or cancel the MTOP;
2) Prescribe the appropriate terms and conditions of the MTOP;
265 MTOP
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3) Prescribe and regulate zones of service in coordination with the barangay;
4) After public hearing, determine, fix, prescribe or periodically adjust fares or rates for the service provided in a zone;
5) Fix, impose and collect, and periodically review and adjust but not oftener than once every three (3) years, reasonable fees and other related charges in the regulation of tricycle for hire and;
6) Establish and prescribe the conditions and qualifications of service.
t) Other Provisions. - In the exercise of the regulatory powers of the sanggunian, the following additional provisions are to be observed:
1) Fares. - The sanggunian shall establish a fare structure that will provide the operator a reasonable return or profit and still be affordable to the general public:
a) The fare structure may either be flat (single fare regardless of distance) or a
minimum amount plus a basic rate per kilometer;
b) The official rate to be initially adopted shall be minimum fee fixed by way of an ordinance;
c) Operators of tricycle-for-hire are required to post in a conspicuous part of the tricycle the schedule of fares.
2) Zoning and Coding. - The sanggunian may impose a common color for tricycles-for-hire in the same zone. Each tricycle shall be assigned and bear an identification number, aside from its license plate number issued by the Land Transportation Office.
Any zone must be set within the boundaries of the city/municipality. Existing zones that extend beyond the territorial limits of the city/municipality to other adjoining municipalities or cities shall be maintained, provided, the operator serving the said zone secures the MTOPs that may be required by the sharing municipalities.
4) Registry of Operators. - The City/Municipal Treasurer shall keep a registry of all tricycle operators which shall, among others, include the name and address of the operators and the number and brand of tricycles owned and operated by the said operators.
5) Regulatory Board. - A City/Municipal Tricycle Operator's Permit Regulatory Board shall be constituted, the membership of which shall be determined by the sanggunian.
Section 243. Registration and Tran sf er of Large Cattle. -
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A. Registration Requirements:
1) Certificate of Ownership. - The owner of large cattle is hereby required to register ownership of said cattle with the City/Municipal Treasurer for which a Certificate of Ownership shall be issued to the owner upon payment of a registration fee fixed by an ordinance.
2) Certificate of Transfer. - When large cattle is sold or its ownership is transferred to another person, the sale or transfer shall be registered with the City/Municipal Treasurer, for which a Certificate of Transfer shall be issued to the purchaser or new owner upon payment of a transfer certificate fee in an amount fixed by ordinance.
3) Registration of Owner's Brand. - The owner of large cattle shall register his owner's brand with the City/Municipal Treasurer and pay the brand registration fee provided by ordinance.
B. Guidelines in the Registration of Large Cattle:
1) Large cattle shall be registered with the Office of the City/Municipal Treasurer upon reaching the age of two (2) years.
2) The ownership of large cattle or its sale or transfer of ownership to another person shall be registered with the Office of the City/Municipal Treasurer. All branded and counterbranded large cattle presented to the City/Municipal Treasurer shall be registered in a book showing among others, the name and residence of the owner, the consideration or purchase price of the animal in cases of sale or transfer, and the class, color, sex, brands and other identification marks of the cattle. These data shall also be stated in the certificate of ownership issued to the owner of the large cattle.
3) The transfer of the large cattle, regardless of its age, shall be entered in the registry book setting forth, among others, the names and the residences of the owners and the purchaser, the consideration or purchase price of the animal for sale or transfer, class, sex, brands and other identifying marks of the animals; and a reference by number to the original Certificate of Ownership with the name of the city/municipality who issued it.
4) No entries of transfer shall be made or certificate of transfer shall be issued by the City/Municipal Treasurer except upon the production of the original Certificate of Ownership and Certificate of Transfer and such other documents showing title to the owner.
5) All other matters relating to the registration of large cattle shall be governed by the
pertinent provisions of the Revised Administrative Code and other applicable laws, ordinances and rules and regulations.
Section 244. Permit Fee for Excavation on Streets. -
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A. General Provision. - There shall be collected a fee on every person who shall make or cause to be made any excavation on public or private streets within the city/municipality, such as:
1) For crossing streets with concrete pavement. 2) For crossing streets with asphalt pavement. 3) For crossing streets with gravel pavement. 4) For crossing existing curbs and gutters resulting in damage. 5) Additional fee for every delay in excess of excavation period provided in the
Mayor's Permit.
B. Guidelines for Excavation on Public or Private Streets:
1) No person shall undertake or cause to undertake any digging or excavation, on any part or portion of the municipal streets unless a permit shall have been first secured from the Office of the City/Municipal Mayor, specifying the duration of the excavation.
2) The City/Municipal Engineer/Building Official shall supervise the digging and excavation and shall determine the necessary width of the streets to be dug or excavated. Said official shall likewise inform the City/Municipal Treasurer of any delay in the completion of the excavation work for purposes of collection of the additional fee.
3) In order to protect the public from any danger, appropriate signs must be placed in the area where work is being done.
Section 245. Permit Fee for Sealing and Licensing of Weights and Measures. -
A. General Provision. - Every person before using instruments of weights and measures for business, service, commercial, or other transactions with the public within the city/municipality, shall first have them sealed and pay the corresponding fee, fixed under an ordinance, to the City/Municipal Treasurer.
B. Instruments Usually Covered - Sealing shall include the following instruments:
1) linear metric measures. 2) metric measures of capacity. 3) metric instruments of weights. 4) apothecary balances of precision. 5) scales or balances with complete set of weights.
For each and every re-testing and re-sealing of weights and measuring instruments including gasoline pumps outside the office upon request of the owner or operator, an additional service charge to be fixed by ordinance for each instrument shall be collected.
C. Exemptions:
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1) All instruments for weights and measures used in government work or maintained for public use by any instrumentality of the government shall be tested and sealed free.
2) Dealers of weights and measuring instruments intended for sale.
D. Administrative Provisions:
1) Unless otherwise provided by ordinance, law or other valid order, the official receipt for the fee issued for the sealing of weight or measure shall serve as a license to use such instrument for one (1) year from the date of sealing, unless deterioration or damage renders the weight or measure inaccurate within the period.
Unless otherwise provided, the license shall be preserved by the month of the year following its original issuance. Such license shall be preserved by the owner and together with the weight or measure covered by the license shall be presented ( exhibited) on demand by the City/Municipal Treasurer or his deputies.
2) The City/Municipal Treasurer is hereby required to keep full sets of secondary standards which shall be compared with the fundamental standards in the Department of Science and Technology annually. When found to be within accepted tolerances, the secondary standards shall be distinguished by label, tag or seal and shall be accompanied by a certificate showing the degree of their variation from the fundamental standards. If the variation is of sufficient magnitude to impair the utility of instrument, it shall be destroyed at the Department of Science and Technology.
3) The City/Municipal Treasurer or his deputies shall conduct periodic physical inspection and test of weights and measures instruments within the locality.
4) Instruments of weights and measures found to be defective beyond repair shall be confiscated in favor of the government and shall be destroyed by the City/Municipal Treasurer in the presence of the City/Provincial Auditor or his representative.
E. Fraudulent Practices and Corresponding Penalties:
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1) Fraudulent practices relative to weights and measures. - It shall be considered a fraudulent practice for any person other than the official sealer of weights and measures to:
a) Place an official tag or seal upon any instrument of weights and measures or attach it thereto.
b) Fraudulently imitate any mark, stamp or brand, tag or other characteristic sign used to indicate that the weights and measures have been officially sealed.
c) Alter in any way the certificate given by the sealer as an acknowledgement that the weights and measures mentioned therein have been duly sealed.
d) Make or knowingly sell or use any false or counterfeit stamps, tag, certificate, license, or any dye for printing or making stamps, tags, certificates, or licenses which is an imitation of or purports to be a lawful stamp, tag, certificate or license required.
e) Alter the written or printed figures or letters on any stamp, tag, certificate of license used or issued.
f) Have in his possession any such false, counterfeit restored or altered stamp, tag, certificate, or license for the purpose of using or re-using the same in payment of fees or charges.
g) Procure the commission of any such offense by another.
A person who commits any of the offences above shall, for each offense, be fined an amount or imprisoned or, at the discretion of the court, both fined and imprisoned in accordance with the amounts and terms imposed under an ordinance duly enacted by the sanggunian of the local government unit.
h) Any person with fraudulent intent, alters any scale or balance, weight or measure after it is officially sealed or who knowingly uses any false scale or balance, weight or measure, whether sealed or not shall be punished by a fine of an amount fixed in the ordinance or by imprisonment for a period prescribed therein, or both, at the discretion of the court.
i) Any person who fraudulently gives short weight or measure in the making of a sale, or who fraudulently takes excessive weight or measure in the making of a purchase, or who, assuming to determine truly the weight or measure of any article bought or sold by weight or measure, fraudulently misrepresents the weights or measures thereof shall be punished by a fine of an amount fixed by an ordinance or by imprisonment for a period prescribed therein, or both at the discretion of the court.
2) Unlawful possession or use of instrument not sealed before using and not sealed
within the period prescribed. - Any person with the practice of buying or selling goods by weights and/or measures, or of furnishing services the value of which is estimated by weight or measure who has in his possession, without permit, any unsealed scale, balance, weight or measure, and any person who uses in any purchase or sale or in estimating the value of any service furnished, any instrument of weight or measure that has not been officially sealed, or if previously sealed, the license therefor has expired and has not been renewed in due time shall be punished by a fine of an amount imposed in the ordinance or by imprisonment for a period prescribed therein, or both at the discretion of the court. If, however, such scale , balance, weight or measure, has been officially sealed at some previous time and the seal and tag officially affixed thereto remain intact and in the same position and condition in which they were placed by the official sealer, and the instrument is found not to have been altered or rendered inaccurate but still to be
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sufficiently accurate to warrant its being sealed without repairs or alterations such instruments shall, if presented for sealing promptly on demand of an authorized sealer or inspector of weights and measures, be sealed, and the owner, possessor, or user of the same shall be subject to no penalty except a surcharge to be fixed by ordinance plus the regular fee fixed by law for the sealing of an instrument of its class, this surcharge to be collected and accounted for by the City/Municipal Treasurer in the same manner as the regular fees for sealing such instruments.
3) Administrative Penalties:
a) Any person with the practice of buying or selling by weight and measure using unsealed and/or unregistered instrument shall be penalized an amount fixed in an ordinance:
1. When correct 11. When incorrect, but within tolerable allowance of defect or short measure
b) Failure to produce weight and measure tag or license or certificate upon demand, but the instrument is duly registered:
1. When correct 11. When incorrect, but within tolerable allowance of defect or short measure
c) Any person found violating any of the above two (2) provisions for the second time shall be fined twice the above penalty.
d) Recommendation shall be made to the Mayor for the closure of business establishments using fraudulent weights and measures.
Section 246. Permit Fee on Film-Making within the Territory of the Local Government Unit. - There shall be collected a permit fee from any person who shall go on location-filming within the territorial jurisdiction of the city/municipality, such as:
a) Commercial movies b) Commercial advertisements c) Documentary film d) Videotape coverage
Section 247. Permit Fee on Agricultural Machinery and Other Heavy Equipment for Rent. - There shall be collected an annual fee for each agricultural machinery or heavy equipment from operators of said machinery, renting out said equipment in the city/municipality such as but not limited to the following:
a) Hand Tractors b) Light Tractors c) Heavy Tractors
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d) Bulldozers e) Forklifts f) Heavy Graders g) Light Graders h) Mechanized Threshers i) Manual Threshers j) Cargo Trucks k) Dump Trucks l) Payloaders m) Prime Movers/Flatbeds n) Backhoes o) Rock Crushers p) Batching Plants q) Transit/Mixer Trucks r) Cranes s) Other Agricultural Machinery and Heavy Equipment
Section 248. Permit Fee on Occupation or Calling not Requiring Government Examination.
A. General Provision. - There shall be collected an annual fee for the issuance of Mayor's Permit to every person who shall be engaged in the practice of occupation or calling not requiring government examination.
B. Common Occupations or Callings. - The application of these fees generally are applied but need not cover, nor are limited to the following common classifications or groups of occupations and callings:
1) Employees and workers m generally considered "offensive and dangerous business establishments".
2) Employees and workers in commercial establishments who cater or attend to the daily needs of the inquiring or paying public.
3) Employees and workers in food or eatery establishments.
4) Employees and workers in night or night and day establishments.
5) All occupations or callings subject to periodic inspection, surveillance and/or regulations by the City/Municipal Mayor, such as, animal trainer; auctioneer; barber; bartender; beautician; bondsman; bookkeeper; butcher; blacksmith; criminologist; electrician; electronic technician; club/floor manager; forensic electronic expert; fortune teller; guest relations officer; hair stylist; handwriting expert; hospital attendant; lifeguard; magician; make-up artist; manicurist; masonry worker; masseur attendant; mechanic; certified hilot;
painter; musician; pianist; photographer (itinerant); professional boxer; private ballistic
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expert; rig driver ( cochero ); taxi driver; stage-performer; salesgirl; sculptor; waiter or waitress; and welder and other occupation/calling.
C. Exemptions. - All professionals who are subject to the city/provincial tax imposition pursuant to Section 139 of R. A. No. 7160 or the Local Government Code of 1991,266
and government employees are exempted from payment of this fee
D. Persons Usually Covered: The following workers or employees whether working on temporary or permanent basis, shall secure the individual's Mayor's Permit prescribed under the ordinance.
l ) Employees or workers in generally considered offensive and dangerous business establishments such as but not limited to the following:
a) Employees or workers in industrial or manufacturing establishment such as aerated water and soft drink factories; air rifle and pellets manufacturing; battery charging shops; blacksmith; breweries; candy and confectionery factories; canning factories; coffee, cocoa and tea factories; cosmetics and toiletries factories; cigar and cigarette factories; construction and/or repair shops of motor vehicles; carpentry shop; drug manufacturing; distillers; edible oil or lard factories; electric bulbs or neon lights factories; electric plant; electronics manufacturing; oxidizing plants; food and flour· mills; fish curing and drying shops; footwear factories; foundry shops; furniture manufacturing; garments manufacturing; general building and other construction jobs during the period of construction; glass and glassware factories; handicraft manufacturing; hollow block and tile factories; ice plants; milk, ice cream and other allied products factories; metal closure manufacturing; iron steel plants; leather and leatherette factories;, machine shops; match factories; paints and
allied products manufacturing; plastic products factories; perfume factories; plating establishment; pharmaceutical laboratories; repair shops of whatever kind and nature; rope and twine factories; sash factories; smelting plants; tanneries; textile and knitting mills; upholstery shops; vulcanizing shops and welding shops.
b) Employees and workers in commercial establishments, cinematography film storage, cold storage or refrigerating plants, delivery and messengerial services, elevator and escalator services, funeral parlors, janitorial services, junk shops, hardwares, pest control services, printing and publishing houses, service stations, slaughterhouses, textile stores, warehouses and parking lots.
c) Employees and workers on other industrial and manufacturing firms or
commercial establishments who are normally exposed to excessive heat, light, . noise, cold and other environmental factors which endanger their physical and health well-being.
266 See Sec. 205, this Manual
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2) Employees and workers in commercial establishment who generally enter or attend to the daily needs of the general public such as but not limited to the following: Employees and workers in drugstores, department stores, groceries supermarkets, beauty saloons, tailor shops, dress shop, bank teller, receptionist, receiving clerk in paying outlets of public utilities corporation except transportation companies, and other commercial establishment whose employees and workers attend to the daily needs of the inquiring or paying public.
3) Employees and workers in food or eatery establishments such as but not limited to the following:
a) Employees and workers in canteen, carinderia, catering services, bakeries, ice cream or ice milk factories, refreshment parlor, restaurants, sari-sari stores, and soda fountains.
b) Stallholders, employees and workers in public markets.
c) Peddlers of cooked or uncooked food.
d) All other food peddlers, including peddlers of seasonal merchandise.
4) Employees or workers in night or night and day establishments such as but not limited to the following:
a) Workers or employees in bars, boxing stadium, bowling alleys, billiards and pool halls, cinema houses, cabarets and dance halls, cocktails lounges, circusses, carnivals and the like, day clubs and night clubs, golf clubs, massage clinics, sauna baths, or similar establishments, hotels, motels, horse racing clubs, pelota courts, polo clubs, private detective or watchman security agencies, supper clubs and all other business establishments whose business activities are performed and consumed during night time.
b) Provided, That in the case of night and day clubs, night clubs, day clubs, cocktail lounges, bars, cabarets, sauna bath houses and other similar places of amusements, they shall under no circumstances allow hostesses, waitresses, waiters, entertainers, or hospitality girls below 18 years of age to work as such. Workers who shall secure the individual Mayor's Permit on their 181h
birth year, shall present their baptismal or birth certificate duly issued by the local civil registrar concerned.
5) All other employees and persons who exercise their profession, occupation or calling within the jurisdiction limits of the city/municipality aside from those above mentioned.
E. Surcharge for Late Payment. - Failure to pay the fee within the time prescribed shall subject a taxpayer to a surcharge of twenty-five percent (25%) of the original amount of the fee due, such surcharge shall be paid at the same time and in the same manner as the tax due.
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F. Other Provisions:
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1) In the case of single proprietorships, if the business changes ownership or relocates from one city/municipality to another, it shall be the duty of the new owner, agent or manager of such business to secure a new permit as required and pay the corresponding permit fee as though it were new business
2) Newly hired workers and/or employees employed in the covered occupations shall secure their individual Mayor's Permit from the moment they are actually accepted by the management of any business or individual establishments to start working.
3) The Treasurer shall keep a record of persons engaged in occupation and/or calling not requiring government examination and the corresponding payment of fees required under personal data for reference purpose.
Section 249. Permit Fee for the Storage of Flammable and Combustible Materials. -
A. Basic Provisions. - There shall be collected an annual permit fee for the storage of combustible materials at the rates fixed by an ordinance on the following:
1) Storage of gasoline, diesel, fuel, kerosene and similar products. 2) Storage of cinematographic film. 3) Storage of celluloid. 4) Storage of calcium carbide. 5) Storage of tar, resin, �nd similar materials. 6) Storage of coal deposits. 7) Storage of combustible, flammable or explosive substance not mentioned above.
No person shall keep or store at his place of business any of the above cited flammable, combustible or explosive substance without securing a permit therefor.
B. Exemption. - Gasoline or naptha not exceeding the quantity of one hundred (100) gallons, kept in and used by launches or motor vehicles, shall be exempt from the permit fee herein required.
C. Monitoring/Compliance. - The Mayor shall promulgate regulations for the proper storing of said substances and shall designate the proper official who shall be in charge of ensuring compliance with the provisions of the ordinance.
Section 250. Permit Fee on Certain Types of Machineries and Engines. - There shall be imposed an annual fee fixed by an ordinance on the following but not limited to:
1) Internal combustion engines 2) Other stationary engines or machines 3) Electrical generators
The basis for the fee generally is the need to regulate machinery and equipment that may be considered pollutive, or hazardous when operated without care or in certain locations or under certain conditions, or that may create a nuisance (e.g., noise, vibrations). Other reasonable bases for regulation may also be considered.
Section 251. Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios, Plaza and Playgrounds.
a) General Provision. - Any person who shall temporarily use and/or occupy a street, sidewalk, or alley or portion thereof in the city/municipality in connection with their construction works and other purposes, shall first secure a permit from the Mayor and pay a fee in accordance with the ordinance.
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b) Exemptions. - For wakes and other charitable, religious and educations purposes, use and/or occupancy is exempted from the payment of permit fee provided the proper permit is secured before such use and/or occupancy.
Section 252. Permit Fee for the Conduct of Group Activities.
A. General Provision. - Every person who shall conduct or hold any program or activity involving the grouping of people within the jurisdiction of the city/municipality shall obtain Mayor's Permit for every occasion and pay to the City/Municipal Treasurer the corresponding fee imposed under an ordinance:
1) Conference, meetings, rallies and demonstrations in outdoor, in parks, plazas, roads/streets
2) ·Dances 3) Coronation and ball 4) Premiere showing 5) Pop/rock concerts 6) Promotional sales 7) Other Group Activities
B. Exemptions. - Programs or activities conducted by educational, charitable, religious and governmental institutions free to the public shall be exempt from the payment of the fee herein imposed: Provided, That the appropriate Mayor's Permit shall be secured beforehand. However, programs or activities requiring admission fees for attendance shall be subject to the fees herein imposed even if they are conducted by exempt entities.
Section 253. Secretary's Fees. -
A. General Provision. - There shall be collected the fees fixed in an Ordinance from every person requesting for copies of official records and documents from the offices of the city/municipality.
B. Usual Coverage:
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1) For every page or fraction thereof, typewritten (not including the certification and notation):
a) Typewritten
b) Computerized print-out
2) For each certificate of correctness (with seal of office) written on the copy or attached thereto:
1) For certifying the official act of the City/Municipal Judge or other judicial certificate with seal.
2) For certified copies of any papers, records, decrees, judgment or entry of which any person is entitled to demand and received a copy (in connection with judicial proceeding) for each page.
3) Photocopy or any other copy produced by copying machine, per page.
C. Exemption. - The fees imposed shall not be collected for copies furnished to other offices and branches of the government for official business, except for those copies required by the court at the request of the litigant, in which case, charges shall be in accordance with the prescribed rates under an ordinance.
Section 254. Local Civil Registry Fees. -
A. General Provision. - There shall be collected for services rendered by the Local Civil Registrar of the city/municipality the fees, fixed under an ordinance, on the following:
1) Marriage Fees:
a) Application for Marriage License; b) Marriage License Fee; and c) Marriage Solemnization Fee.
2) For registration of the following:
a. Legitimation; b. Adoption; c. Annulment of Marriage; d. Divorce/Legal Separation; e. Naturalization; f. Change of Name; and g. Other legal documentation for record purposes.
3) For certified copies of any document in the register, for each page.
4) Burial Fees
a) Burial Permit Fee or transfer of cadaver b) Fee for exhumation of cadaver c) Fee for removal of cadaver
B. Exemption. - The fee herein imposed shall not be collected in the following cases:
l) Issuance of certified copies of documents for official use at the request of a competent court or other government agency, except those copies required by the courts at the request of litigants, in which case the fee should be collected.
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2) Issuance of Birth Certificates of children reaching school age when such certificates are required for admission to the primary grades in a public school.
3) Burial Permit of a pauper, per recommendation of the City/Municipal Mayor.
Section 255. Police Clearance. -
1) Purpose. - Fees shall be fixed by ordinance and paid for each Police Clearance Certificate obtained from the Station Commander of the Philippine National Police (PNP) of the city/municipality for the following purposes:
a) Change of name b) Application for Filipino citizenship c) Passport or visa application d) Firearms permit application e) PLEB clearance f) Employment, scholarship, study grant and other purposes specified by ordinance
2) Collection of Fees. - The fees shall be collected by the City/Municipal Treasurer.
Section 256. Sanitary Inspection Fee. -
1) Provision. - There shall be collected an annual fee from each business establishment and house for rent in the city/municipality, for the purpose of supervision and enforcement of existing rules and regulations on sanitation and safety of the public:
a) For house for rent b) For each business, industrial, and agricultural establishment
2) Provisions on Inspection and Payment:
a) The City/Municipal Health Officer or his duly authorized representative shall conduct an annual inspection of all establishments and buildings, and accessories and houses for rent, in order to determine their adequacy of ventilation, general sanitary conditions and propriety for habitation.
b) The City/Municipal Health Officer shall require evidence of payment of the fee imposed herein before he issues the sanitary inspection certificate.
Section 257. Service Fees for Health Examinations. -
A. Provisions. - There shall be collected a fee from any person who is given a physical examination by the City/Municipal Health Officer or his duly authorized representative, as required by existing ordinances.
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B. Usual Coverage. - Individuals engaged in an occupation or working in the following establishments, are hereby required to undergo physical and medical examination before they can be employed and once every six (6) months thereafter.
1) Food establishments - where food or drinks are manufactured, processed, stored, sold, or served.
2) Public swimming or bathing places.
3) Dance schools, dance halls and nightclubs - include dance instructors, hostess, cooks, bartenders, waitresses, etc.
4) Tonsorial and beauty establishments - include employees of barber shops, beauty parlors, hairdressing and manicuring establishments, exercise gyms and figure slenderizing saloons, facial centers, aromatherapy establishments etc.
5) Massage clinics and sauna bath establishments - include masseurs, massage clinic/bath attendants, etc.
6) Hotels, motels and apartments, lodging, boarding, or tenement houses, and condominiums.
C. Responsibility of Employers. - Owners, managers or operators of the establishment shall see to it that employees who are required to undergo physical and medical examination have been issued the necessary medical certificates.
Section 258. Dog Registration and Vaccination Fees. -
A. General Provision. - There shall be collected/imposed from every owner of a dog a vaccination fee imposed under the ordinance for every dog vaccinated within the territorial jurisdiction of the city/municipality.
B. Specific Provision on Vaccination Against Rabies:
1) "Vaccination" means the inoculation of a dog with rabies vaccine licensed for the species by the Bureau of Animal Industry (BAI), Department of Agriculture.
2) Such vaccination must be performed by trained individual from the BAI, the City/Municipal Veterinarian Office, and the City/Municipal Agriculture Office.
3) The dog owners shall be provided with a copy of the vaccination certificate. The veterinarian/vaccinator will retain one copy for the duration of the vaccination. A durable metal or plastic tag, serially numbered issued by the veterinarian/vaccinator, shall be securely attached to the collar of the dog.
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The above provision may not apply in a mass vaccination program. During a free mass vaccination, the cost shall be borne by the owner after the scheduled date.
C. Specific Provision on Dog Registration or Licensing. - Every dog shall be registered by its owner upon reaching the age of three (3) months and every year thereafter. Unvaccinated dogs registered after reaching the age of three (3) months and dogs three (3) months old and above not previously registered shall be vaccinated upon registration. The dog owner shall pay such registration fee as may be determined by the sanggunian. The registration officer shall provide a Certificate of Registration of the dog and affix to a distinguished collar tag as proof of registration.
D. Specific Provision on Responsibility for Enforcement. - It shall be the responsibility of the City/Municipal Rabies Control Authority to administer the ordinance and to promulgate the necessary rules and regulations for its implementation. Enforcement shall be the responsibility of the City/Municipal Rabies Control Authority.
E. Other Provisions:
1) Elimination of Unregistered Dog. - Unregistered dogs over the age of four (4) months shall be seized and humanely exterminated under the supervision of a licensed veterinarian or the City/Municipal Rabies Control Authority or vaccinated under the above provision.
2) Reporting of Biting Incidents. - The owner of a dog which has bitten any person and the person who has been bitten shall, within twenty-four (24) hours from the occurrence, report the incident to the City/Municipal Rabies Control Authority, a health care worker or a police officer. On receiving such information, the health care worker or police officer shall immediately transmit it to the City/Municipal Rabies Control Authority for investigation.
Section 259. Fishery Rentals, Fees and Charges. -
A. Purpose - The purpose of this ordinance is to enable the City/Municipality to exercise its exclusive rights to grant certain fishery privileges within its municipal waters.
B. Definition of Terms:
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1) Marginal Fisherman - refers to an individual engaged in subsistence fishing which shall be limited to the sale, barter or exchange of marine products produced by himself and his immediate family, and whose annual net income from fishing does not exceed Fifty Thousand Pesos (P 50,000.00) or the poverty line established by NEDA for the particular region or locality whichever is higher. (Art. 220 (p), IRR implementing Sec. 131 (p), LGC)
2) Municipal Waters include the following:
a) Streams, lakes, and tidal waters within the municipality, not being the subject of private ownership and not comprised within national parks, public forest, timber lands, forest reserves, or fishery reserves;
b) Marine waters included between two (2) lines drawn perpendicularly to the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen (15) kilometers from it.
c) Where two (2) municipalities are so situated on the opposite shores that there is less than fifteen (15) kilometers of marine waters between them, the third line shall be equally distant from opposite shores of the respective municipalities. (Sec 131 (r), LGC)
3) Vessel includes every type of boat, craft or other artificial contrivance used, or capable of being used as a means of transportation on water. (Sec. 131 (x), LGC)
C. Coverage. - The municipality shall have the exclusive authority to grant the following fishery privileges within its municipal waters and impose rentals, fees or charges therefor: (Sec. 149, LGC)
1) To erect fish corals, oyster, mussel, or other aquatic beds or bangus fry areas.
2) To gather, take or catch bangus fry, prawn or kawag-kawag or fry of other species and fish from municipal waters by nets, traps or other fishing gears. However, marginal fishermen shall be exempt from any rentals, charge or any other imposition whatsoever.
3) Duly registered organizations and cooperatives of marginal fishermen shall have the preferential right to such fishery privileges without being required to undergo public bidding. In the absence of such organizations and cooperatives or upon failure to exercise their preferential right, other parties may participate in the said public bidding.
D. Public Bidding Committee. - For this purpose, there is hereby created a committee to be determined by the sanggunian to conduct the public auction.
1) Membership:
a) The Mayor or his duly authorized representative as Chairman; b) Three (3) members of the sanggunian to be designated by said body; and a) The Municipal Treasurer
2) The Public Bidding Committee shall advertise the call for sealed bids for the leasing of a zone or zones of municipal waters in public auction for two (2) consecutive weeks in the bulletin board of the city/municipal hall. If no bids are received within two (2) weeks, such notice shall be posted for another two (2) weeks. If after said two (2) notices for the grant of exclusive fishery rights through public auction, there are no interested bidders,
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the sanggunian shall grant the rights within the definite area or portion of the municipal waters to any interested individual upon payment of a license fee fixed by an ordinance.
3) The notice advertising the call for bids shall indicate the date and time when such bids shall be filed with the City/Municipal Treasurer.
4) An application to participate in the public bidding shall be submitted to the City/Municipal Mayor in a form prescribed therefor. Upon submitting a sealed bid, a person shall accompany such bid with a deposit of an amount fixed by an ordinance which shall be deducted from the first rental of the person should the bid be awarded to him.
5) At the time and place designated in the notice, the Committee sitting en bane shall open all the bids and award the lease to the qualified bidder offering the highest bid. The lease shall be executed within ten ( 10) days after the award is made by a committee and if the successful bidder refuses to accept, or fails or neglects to execute the lease within such time, his deposit shall be forfeited in favor of the city/municipal government in such a case another bidding shall be held in the manner provided above.
6) The deposits of the unsuccessful bidders shall be returned upon the execution of the Lease Contract by the successful bidder or before the calling of another bid.
E. Duration of Lease. - The grant of fishery rights through public auction shall be for a period prescribed by an ordinance.
F. Zoning of Municipal Waters. - The municipal waters of the municipality are divided and classified into zones for purposes of granting a lease or exclusive fishery rights through public auction as prescribed in the ordinance.
G. Privilege of Residents to Take Fish in Municipal Waters. - Any person who is not a grantee of license or privilege to engage in commercial fishing is hereby allowed to fish for domestic use, in every municipal water, for as long as no commercial fishery therein is yet established. Provided, That such fishing shall not take place within Two Hundred (200) meters from a fish corral licensed by the city/municipality; and that such fish caught under this privilege shall not be sold. Furthermore, no rental fee, charge, or any other imposition whatsoever shall be collected from marginal fishermen (Sec. 149 (b) (2), LGC.
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H. Applicability of Pertinent Provisions of Laws. - All existing Jaws, rules and regulations governing municipal waters and municipal fisheries are hereby adopted.
Section 260. Service Charge for Garbage Collection. - There shall be collected from every owner or operator of a business establishment an annual garbage fee fixed in an ordinance on the following:
1) Manufacturers, Millers, Assemblers, Processors, and similar businesses.
184 See Sec. 236 (BJ. this Manual
296
2) Hotels, Apartments, Motels and Lodging Houses. 3) Restaurants, Day and Night Clubs, Cafes' and Eateries. 4) Hospitals, Clinics, Laboratories and similar businesses. 5) Movie Houses and Retailers. 6) Other Businesses not mentioned above. 7) Residential. Establishments
Section 261. Charges for Parking. -
A. Provision for Charges. - There shall be collected fees for the use of city/municipality owned parking areas or designated streets for pay parking in accordance with the following:
1) Day Parking Rates for the following types of vehicles:
a) Tricycles; b) Private Cars and Service Vehicles; c) Passenger Jeepneys; d) Cargo Truck/Delivery Vans; e) Passenger Buses; and f) Other Vehicles
2) Overnight Parking Rates/Night Parking Rates for all types of vehicles.
3) Towing fee and impounding fee fixed under an ordinance shall be collected from owners of vehicles who shall violate the rules/regulations on parking.
B. Time and Manner of Payment. - The fees fixed by an ordinance shall be paid to the City/Municipal Treasurer or his duly authorized representative upon parking thereat.
Section 262. Cemetery Charges. - There shall be collected rentals for the city/municipal cemetery lots at the rates prescribed by an ordinance.
Section 263. Slaughter and Corral Fees. -
A. General Provision. - Before any animal is slaughtered for public consumption, a permit therefor shall be secured from the Office of the City/Municipal Veterinarian/Health Officer or his duly authorized representative who will determine whether the animal is fit for human consumption, through the City/Municipal Treasurer upon payment of the corresponding fee, prescribed by an ordinance on the following animals:
1) Large cattle 2) Hog Goats 3) Sheep 4) All Others
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B. Slaughter Fee. - The fee fixed by an ordinance shall be paid to cover the cost of service in the slaughter of animals at the city/municipal slaughterhouse.
C. Corral Fee - The fee fixed by an ordinance, may be collected for the animals to be slaughtered which are deposited and kept in a corral owned by the local government. (Sec. 31, P. D. No. 231/85
D. Condemned Animals. - No permit to slaughter shall be granted nor the corresponding fee collected on any animals condemned by the City/Municipal Veterinarian.
Section 264. Toll Fees or Charges. -\
A. Nature and Purpose of Tolls. - There shall be collected fees or charges for the use of certain utilities owned and operated by the city/municipality as a means to recover parts of the public investments to construct/acquire them, to cover maintenance or operating costs, and for similar reasonable purposes. Piers, ferries, bridges and roads are only some examples of utilities that may be subject to toll charges.
B. Exemptions - No such tolls or fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, ambulances, post office personnel deliverin� mails, physically handicapped and disabled citizens who are sixty five (65) years or older. 18
Section 265. Permit for Cockpit Owners/Operators/Licensees/Promoters and Personnel. -
A. Powers and Relevant Provisions of Law. - The provisions of P. D. No. 449187, P. D. No.
1802 188, and such other pertinent laws shall apply to all matters regarding the operation of
cockpits and the holding of cockfighting in the city/municipality. The power to authorize the establishment, operation and maintenance of cockpits and to regulate cockfighting has been lodged with the city/munic�al government even before R. A. No. 7160 or the Local Government Code of 1991. (GAB1 9-0pinion unnumbered, February 3, 1995). Considering that the functions of the Philippine Gamefowl Commission190 have been devolved to the cities and municipalities, there is no need to issue the rules governing the Commission. The power to regulate the importation of gamefowls shall be left to the local government units subject to quarantine laws and regulations (OC Resolution No. 95-05, May 19, 199 5). Although regulation of cockfighting has been devolved to local governments, a municipal government cannot issue a permit to a promoter to hold cockfights in places other than a licensed cockpit since this would violate said law (DILG Opinion Nos. 296-1993, 31-1194 and PNP Opinion OLSILO No. 352-1994, March 22, 1994).
185 Enacting a Local Tax Code for Provinces, Cities, Municipalities and Barrios 186
See Sec. 232 (c), this Manual 187 Cockfighting Law of 1974 188 Law Creating the Philippine Game/owl Commission 189 Game and Amusement Board 190 PGC
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B. Application, Payment and Issuance of Mayor's Permit.
a) The application/filing fee is payable to the City/Municipal Treasurer upon application for a permit or license to operate and maintain cockpits.
b) The cockpit registration fee is also payable upon application for a permit before a cockpit can operate and within the first twenty (20) days of January of each year in case of renewal thereof.
c) The permit fees on cockpit personnel shall be paid before they participate in a cockfight and shall be paid annually upon renewal of the permit on the birth month of the permitee.
d) Upon payment of the fees imposed, the corresponding Mayor's Permit shall be issued.
C. Ownership, Operation and Management of a Cockpit. - Only Filipino citizens not otherwise inhibited by existing ordinances or laws shall be allowed to own, manage and operate cockpits. Cooperative capitalization is encouraged.
D. Establishment of a Cockpit. - The sanggunian concerned shall determine the number of cockpits to be allowed in the city/municipality.
E. Cockpit Size and Construction. - Cockpits shall be constructed and operated within the appropriate areas as prescribed in the zoning law or ordinance. In the absence of such law or ordinance, the City/Municipal Mayor shall see to it that no cockpits are constructed within or near existing residential or commercial areas, hospitals, school buildings, churches or other public buildings. Owners, lessees, or operators of cockpits which are now in existence and do not conform to this requirement are required to comply with these provisions within a period to be specified by the City/Municipal Mayor. The City/Municipal Engineer shall approve and issue building permits for the construction of cockpit in accordance with the existing ordinance, laws and practices.
F. Cockfighting Officials. - Gaffers, referees, bet-managers, bet-takers, cashiers, pit referees, and promoters shall not act as such in any cockfight in the city/municipality without first securing a license renewable every year on their birth month from the city/municipality where such cockfights are held. Only gaffers, referees, bet-takers, or promoters licensed by the city/municipality shall officiate in all kinds of cockfighting authorized. No operator or owner of a cockpit shall employ or allow any of the mentioned personnel to participate in a cockfight unless they have registered and paid the imposed fee.
G. Cockfighting for Entertainment of Tourists or for Charitable Purposes. - Subject to the preceding sub-section hereof, the holding of cockfights may also be allowed for the entertainment of foreign dignitaries or for tourists, or for returning Filipinos, commonly known as Balikbayans or for the support of national fund-raising campaigns for charitable purpose as may be authorized upon resolution of the sanggunian, in licensed cockpits, or in playgrounds or parks. This privilege shall be extended for only one (1) time for a period not exceeding three (3) days, within a year.
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Chapter 4. GOVERNMENT ENTERPRISE OPERA TIO NS
Section 266. Political and Corporate Nature of Local Government Units. - Every local government unit created or recognized under R. A. No. 7160 or the Local Government Code of 1991, is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. (Sec. 15, LGC)
Local government units shall enjoy full autonomy in the exercise of their proprietary functions and in the management of their economic enterprise, subject to the limitations provided in the Local Government Code of 1991, and other applicable laws.
Section 267. Nature of Government Enterprise. - A government enterprise is a project or undertaking of the government that is more or less permanent in nature, with the objective of promoting public health, safety, morals, general welfare, security, prosperity and contentment of the inhabitants. (Black's Law Dictionary)
Section 268. Ordinance Establishing and Governing the Enterprise. - (a) An enterprise may only be established and operated by virtue of an ordinance duly enacted by the sanggunian.
(b) In relation to the imposition and collection of fees and charges, the ordinance shall include provisions on the following:
1) Public utility charges/rates for the operation of public utilities owned, operated and maintained by the local government units within their jurisdiction. ( Sec. 154, LGC);
2) Toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunications systems, etc. (Sec. 155, LGC and Sec. 47, Vol. I, GAAM);
3) Officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physicallyhandicapped, and disabled citizens who are 65 years or older shall not be collected the toll fees or charges. (Sec. 155, LGC);
4) When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use. (Sec. 155, LGC)
Section 269. Basic Services and Facilities. - (a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them They shall also discharge the functions and responsibilities of national agencies and offices devolved to them pursuant to R. A. No. 7160 or the Local Government Code of 1991. Local government units shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein. (Sec. 17 (a), LGC)
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(b) Such basic services and facilities include, but are not limited to the following:
1) For a Barangay -
a) Agricultural support services which include planting materials, distribution system and operation of farm produce collection buying stations;
b) Health and social welfare services which include maintenance of barangay health center and day-care center;
c) Services and facilities related to general hygiene and sanitation, beautification, and solid waste collection;
d) Maintenance of katarungang pambarangay;
e) Maintenance of barangay roads and bridges and water supply systems;
f) Infrastructure facilities such as multi-purpose hall, multi-purpose pavement, plaza, sports center, and other facilities;
g) Information and reading center; and
h) Satellite or public market, where viable
2) For a Municipality -
a) Extension and on-site research services and facilities related to agriculture and fishery activities which include dispersal livestock and poultry, fingerlings, and other seeding materials for aquaculture, palay, corn, and vegetable seed farms, medicinal plant gardens, fruit trees, coconut, and other kinds of seedling nurseries, demonstration farms; quality control of copra and improvement and development of local distribution channels preferably through cooperatives; interbarangay irrigation system, water and soil resources utilization and conservation projects; and enforcement of fishery laws in municipal waters including the conservation of mangroves;
b) Pursuant to national policies and subject to supervision, control and review of the Department of Environment and Natural Resources (DENR), implementation of community-based forestry projects which include integrated forestry programs and similar projects, management and control of communal forests with an area not exceeding fifty (50) square kilometers, establishment of tree parks, and similar forest development projects;
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c) Subject to the relevant provisions of Title 5, Book I of R. A. No. 7160 or the Local Government Code of 1991,184 health services which include the implementation of programs and projects on primary health care, maternal and child care, and communicable and non-communicable disease control services access to secondary and tertiary health services; purchase of medicines, medical supplies, and equipment needed to carry out the services herein enumerated;
d) Social welfare services which include programs and projects on child and youth welfare, family and community welfare, women's welfare, welfare of the elderly and disabled persons, community-based rehabilitation programs for vagrants, beggars, street children, scavengers, juvenile delinquents, and victims of drug abuse, livelihood and other pro-poor projects, nutrition services and family planning services;
e) Information services which include investments and job placement information systems, tax and marketing information systems, and maintenance of a public library;
f) Solid waste disposal system or environmental management system and services or facilities related to general hygiene and sanitation;
g) Municipal buildings, cultural centers, public parks including freedom parks, playgrounds, and sports facilities and equipment, and other similar facilities;
h) Infrastructure facilities intended primarily to service the needs of the residents of the municipality and which are funded out of municipal funds including, but not limited to municipal roads and bridges, school buildings and other facilities for public elementary and secondary schools, clinics, health centers and other health facilities necessary to carry out health services, communal irrigation, small water impounding projects and other similar projects, fish ports, artesian wells, spring development, rain water collectors and water supply systems, seawalls, dikes, drainage and sewerage, and flood control, traffic signals and road signs and similar facilities;
i) Public markets, slaughterhouses and other municipal enterprises;
j) Public cemetery;
k) Tourism facilities and other tourist attractions, including the acqms1t10n of equipment, regulation and supervision of business concessions and security services for such facilities; and
1) Sites for police and fire stations and sub-stations and the municipal jail
3) For a Province -
184 Local Health Boards
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a) Agricultural extension and on-site research services and facilities which include the prevention and control of plant and animal pests and diseases, dairy farms, livestock markets, animal breeding stations, and artificial insemination centers, and assistance in the organization of farmers' and fishermen's cooperatives and other collective organizations, as well as the transfer of appropriate technology;
b) Industrial research and development services, as well as the transfer of appropriate technology;
c) Pursuant to national policies and subject to supervision, control and review of the DENR, enforcement of forestry laws limited to community-based forestry projects, pollution control law, small-scale mining law, and other laws on the protection of the environment, and mini-hydro-electric projects for local purposes;
d) Subject to the provisions of Title 5, Book 1 of R. A. No. 7160 or the Local Government Code of 1991, health services which include hospitals and other tertiary health services;
e) Social welfare services which include programs and projects on rebel returnees and evacuees, relief operations and population development services;
f) Provincial buildings, provincial jails, freedom parks and other public assembly areas, and other similar facilities;
g) Infrastructure facilities intended to service the needs of the residents of the province and which are funded out of provincial funds including, but not limited to, provincial roads and bridges, inter-municipal water-works, drainage and sewerage, flood control, and irrigation systems, reclamation projects and similar facilities;
h) Programs and projects for low-cost housing and other mass dwellings, except those funded by the Social Security System (SSS), Government Service Insurance System (GSIS), and the Home Development Mutual Fund (HDMF): Provided,
That national funds for these programs and projects shall be equitably allocated among the regions in proportion to the ratio of the homeless to the population;
i) Investment support services, including access to credit financing;
j) Upgrading and modernization of tax information and collection services through the use of computer hardware and software and other means;
k) Inter-municipal telecommunications services, subject to national policy guidelines; and
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l) Tourism development and promotion programs.
4) For a City. - All the services and facilities of the municipality and province, and in addition thereto are the following:
a) Adequate communication and transportation facilities; and
b) Support for education, police and fire services and facilities; Sec. 17 (b), LGC)
(c) Notwithstanding the provisions of sub-section (b) hereof, public works and infrastructure projects and other facilities, programs and services funded by the National Government under the annual General Appropriations Act (GAA), other special laws, pertinent executive orders, and those wholly or partially funded from foreign sources, are not covered under this section, except in those cases where the local government unit concerned is duly designated as the implementing agency for such projects, facilities, programs and services. Sec. 17 (c),
LGC)
( d) The designs, plans, specifications, testing of materials, and the procurement of equipment and materials from both foreign and local sources necessary for the provision of the foregoing services and facilities shall be undertaken by the local government unit concerned, based on national policies, standards and guidelines. (Sec. 17, LGC)
Section 270. Examples of Government Enterprises. - Among the government enterprises known to have been established and operated by local government units are the following:
a) Beach Houses b) Coliseums c) Cold Storage Plants d) Communication and Transportation Facilities e) Cultural Centers f) Electric Power Plants g) Ferries h) Food Terminal Markets i) Health Resorts j) Hospitals k) Irrigation Systems 1) Lease of Equipment and Machinery m) Low-Cost Housing and Other Dwelling Projects n) Markets o) Multi-Purpose Hall, Multi-Purpose Pavements and Plazas p) Public Cemeteries q) Radio Stations r) Sports Complexes and Sports Facilities ' s) Telephone Systems t) Toll Roads & Bridges u) Tourism Facilities and Other Tourist Attractions
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v) Waterworks Systems w) Wharves x) Water Supply Systems
Section 271. Role of Treasurers in Local Government Enterprise Operations. - The Treasurer of the local government unit operating a public enterprise shall have the following functions in its establishment and operations:
a) Advise the local chief executive, the sanggunian, and the management of the public enterprise on its financing aspects.
b) Advise the sanggunian in the enactment of ordinances on public enterprises, especially in relation to their financial management.
c) Take charge of the collections and take custody of funds of all government enterprises.
d) Ensure that payments are made on duly certified and approved disbursement vouchers.
e) Advise the local chief executive of delinquencies of government enterprise clientele for purposes of enforcing sanctions and taking the necessary remedial measures.
f) Recommend qualified persons for designation as collectors.
g) Maintain records of payments of market stall holders and of other government enterprise's lessors.
h) Prepare periodic financial reports for each government enterprise as required by BLGF rules and regulations.
Section 272. Private Sector Participation in the Operation and Management of Local
Government Unit Enterprises. - 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 sustainable development. (Sec. 3 (!), LGC)
To ensure the active participation of the private sector in local governance, local government units may, by ordinance, sell, lease, encumber, or otherwise dispose of public economic enterprises owned by them in their proprietary capacity. (Sec. 17 0), LGC)
Section 273. Common Modes of Contracting for Local Government Units. - (a) The local chief executive may be authorized through a sanggunian resolution to enter into a contract with the private sector for the management and operation of government enterprise.
(b) The Local Treasurer shall advise the local chief executive and sanggunian on the relative advantages and propriety of the following, as well as other common modes of contracting by which local government units might engage the private sector:
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1) Service Contract. - This is appropriate when the LGU requires the assistance of a private entity to perform specific tasks.
a) The contract is generally short-term (usually less than one year, and not more than 2 years);
b) The responsibility for fixed investment fund and working capital remains in the LGU;
c) The contractor is assured of a fixed fee from the LGU budget or from the revenues of the enterprise; and
d) This scheme provides an avenue for tapping private sector expertise for the performance of specialized, particular tasks.
2) Management Contract. - In this type of contract, the LGU transfers the entire management, including the operation and maintenance of the facility, to the private operator. The contract may have a duration of three (3) to five (5) years, but the LGU should provide for earlier termination, in case this is needed to protect its interests.
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The following are the features of a management contract:
a) Fixed investments continue to be borne by the LGU, but the working capital is often but not always provided by the private proponent; and
b) To encourage efficiency, the payment for services in management contracts is often a combination of a fixed fee and a success fee.
The success fee is based primarily on the performance of the enterprise in relation to profit targets, although other factors may also be used as part of the criteria. The fixed fee may come from the LGU budget or from the enterprise revenues. The success fee, which is contingent in nature, invariably comes from enterprise revenues.
3) Lease Contract. - Under this type of arrangement, the private firm leases an asset of an LGU for a fixed lease payment, and assumes the responsibility for operating, maintaining, and managing the asset, aside from the commercial risks of the operations. It effectively buys the rights to the income stream of the leased asset.
The features of a lease contract are as follows:
a) Lease contracts are generally long-term, usually eight (8) to fifteen (15) years;
b) Lease arrangements are appropriate for government enterprises whose operations have a wide latitude for improving efficiency; and
c) The ownership of the asset and the improvements made generally revert to the LGU at the end of the lease.
4) Concession Agreement. - Under this type of contract, a private sector proponent is allowed to manage, operate, maintain, and introduce investments on the assets of the contracting government entity. The concession agreement has the following features:
a) The concession agreement generally involves large government enterprises and long-term contracts typically lasting twenty (20) to thirty (30) years;
b) The concession contract specifies the performance targets, mechanisms for setting and adjusting tariffs, schedule of concession fees, income sharing, etc.;
c) Since the responsibility for putting new investments in concessions is with the private operator, the government does not need to raise financing;
d) The government can generally expect greater efficiency and improved service since the commercial risks are borne by the concessionaire; and
e) Any improvements or additional assets brought in by the proponent accrue to the government when the contract ends.
Concessions involve large enterprises and long-term contract that often are related to the delivery of important services to the public. They generally confer monopolistic powers on concessionaire. For these reasons, it is essential for responsibilities and accountabilities to be carefully defined, and for the LGU to set into place, as an integral feature of the arrangements, a well-designed, effective regulatory framework that will protect the public from possible predatory practices and poor services.
Section 274. Barangay Micro-Business Enterprise.185
- Section 2 of R. A. No. 9178,
otherwise known as the Barangay Micro Business Enterprise Act of 2002, provides that it is the policy of the State to hasten the country's economic development by encouraging the formation and growth of barangay micro-business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, active intervention of the government specially in the local level, and granting incentives and benefits to generate muchneeded employment and alleviate poverty. (Sec. I, Rule I, DOF Order No. 17-04186
)
Section 275. Registration of Barangay Micro-Business Enterprise. - Any business entity or enterprise falling under the following conditions, whether operated as a sole proprietorship or a corporation, partnership, cooperative or association, organized/incorporated and existing under Philippine laws can 1cgister as a Barangay Micro-Business Enterprise:
iRs BMBE 186 Providing/or Guidelines in the Registration of BMBEs and the Availment of Tax Incentives under the BMBE Act
o/2002.
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a) Those engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, and which activities are barangay-based and micro-business in nature and scope: Provided, That, "services" shall exclude those rendered by the following:
1) Natural persons who are duly licensed by the government after having passed a
government licensure examination in connection with the exercise of one's profession; and
2) Juridical persons such as partnerships or corporations engaged in consultancy, advisory and similar activities where the performance of such services are essentially carried out through licensed professionals;
b) Those whose total assets, real or personal, inclusive of those ansmg from loans, but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (F 3,000,000.00) or as may be adjusted by the Small and Medium Enterprises Development187 Council as mandated under R. A. No. 697? 188
, as amended by R. A. No. 8289 189: Provided, that for the purpose of registering as a
Barangay Micro-Business Enterprise, the assets must be owned and used for the conduct of its business as such enterprise.
Section 276. When is a Business Enterprise "Barangay-Based". - A business enterprise shall be considered barangay-based under the following conditions:
a) The majority of its employees are residents of the municipality where its principal place of
business is located; or
b) Its principal activity consists in the application/use of a particular skill peculiar to the locality or of raw materials predominantly sourced from the area; or
c) Its business operations are confined within the territorial jurisdiction of the municipality or local government unit in which its principal place of business is located: Provided, however, that the enterprise may establish warehouses, buying stations, sales outlets, and booking or administrative offices anywhere in the Philippines, subject to pertinent rules and registration requirements of the concerned local government units and other government agencies where such warehouses, outlets, stations or offices are established.
Section 277. Meaning of Micro-Business in Nature and Scope. - A business is considered a micro-business in nature and scope when:
187 SMED
188 An Act to Promote, Develop and Assist SMED Council, and the Rationalization of Government Assistance Program and Agencies Concerned with the Development of Small and Medium Enterprises and for Other Purposes, or the Magna Carta for Small Enterprises.
189 An Act to Strengthen the Promotion and Development of, and Assistance to Small and Medium Scale Enterprises, Amending for that Purpose R. A. No. 6977, and for Other Purposes.
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a) Its principal activity is primarily for livelihood or determined by the Small and Medium Enterprises Development Council or the Department of Trade and Industry as a priority area for development or government assistance;
b) The enterprise is not a branch, subsidiary, division or office of a large enterprise; and
c) Its policies and business modus operandi are not determined by a large scale enterprise or by persons who are not owners or employees of the enterprise.
Section 278. Registration of Barangay Micro-Business Enterprises. - The Office of the Treasurer of each city or municipality shall register Barangay Micro-Business Enterprises and issue a Certificate of Authority to enable the Barangay Micro-Business Enterprises to avail of incentives under Barangay Micro-Business Enterprise Act of 2002: Provided, That only one Certificate of Authority shall be issued for each Barangay Micro-Business Enterprise and only by the Office of the Treasurer of the city or municipality that has jurisdiction over the principal place of business of the Barangay Micro-Business Enterprise. (Sec. 2, IRR, R. A. No. 9178)
Section 279. Exemption of Barangay Micro-Business Enterprises from Taxes and Fees. -All Barangay Micro-Business Enterprises shall be exempt from income tax for income arising from the operation of the enterprise.
Interests, commissions, and discounts derived from loans by the Land Bank of the Philippines, Development Bank of the Philippines, People's Credit and Finance Corporation and Small Business Guarantee and Finance Corporation granted to Barangay Micro-Business Enterprises, as well as loans extended by the GSIS and SSS to their respective member-employees under the Barangay Micro-Business Enterprise Act of 2002 shall be exempt from gross receipts tax.190
(Sec. 9, IRR, R. A. No. 9178)
Section 280. Submission of Documents for Registration as Barangay Micro-Business Enterprise. - The application for registration as Barangay Micro-Business Enterprise shall be processed by the Office of the Local Treasurer upon submission of all of the following documentary requirements:
A. For new applicant:
1) Application for Registration; 191
2) Registration as a business entity or enterprise from the appropriate government agency, such as the following:
190 GRT
a) Securities and Exchange Commission, m the case of corporations, partnerships or associations;
b) Cooperatives Development Authority, in the case of cooperatives; and
191 BMBE Form OJ
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c) Department of Trade and Industry, in the case of sole proprietorship;
3) Tax Identification Number192;
2) Certificate of Registration from the Bureau of Internal Revenue;
3) Mayor's Permit or City/Municipal Business Permit;
4) Sworn Affidavit executed by the sole proprietor or the president of the enterprise, as the case may be, that the enterprise is barangay-based and micro-business in nature and scope;
5) Sworn Statement of Assets and Liabilities, showing the value of the assets owned and to be used in the conduct of business which shall be supported by pertinent information such as the date of acquisition, acquisition cost and depreciated value. In the case of assets acquired in the year of registration, it shall be supported by either the invoice or official receipt or the contract document or deed;
6) Pictures of the place of business and its assets, other than cash, receivables and intangibles;
7) Copy of loan contracts, if any, and duly-notarized certification of amortization payments on the loan; and
8) Income Tax Return193 with proof that it has been filed with the Bureau of Internal Revenue, including attachments, if any (for existing business only).
'-
B. For renewal of registration:
1) Documents listed under (A) (1) to (A) ( 9) above, inclusive; and
2) Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the Bureau oflnternal Revenue, together with attachments.
Section 281. Verification of Qualifications. - The City or Municipal Treasurer must conduct a verification of the physical existence of the business and the true amount of its assets. A sworn certification shall be executed by the Local Treasurer that such verification has been conducted, and which shall form part of the records of the application for registration.
Section 282. Issuance of the Certificate of Authority. - After determining the eligibility of the business enterprise, the Office of the City or Municipal Treasurer shall register the business entity as a Barangay Micro-Business Enterprise and issue a Certificate of Authority. 194 The
192 TIN
193 ITR 194
BMBE Form 02
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Certificate of Authority shall be effective for a period of two (2) years and renewable for a period of two (2) years for every renewal. The Local Treasurer shall indicate in the Certificate of Authority the date when the registration of the Barangay Micro-Business Enterprise commences.
Section 283. Registration Fee. - The Office of the Local Treasurer shall issue the Certificate of Authority promptly and free of charge, unless a fee therefor, not exceeding One Thousand Pesos (P 1,000) is imposed by the local government unit through a properly enacted ordinance.
Section 284. List of Registered Barangay Micro-Business Enterprises to be Furnished the Bureau of Internal Revenue. - The Office of the City/ Municipal Treasurer shall furnish the Revenue District Officer of the Bureau of Internal Revenue in the locality concerned on a quarterly basis, the list of all registered Barangay Micro-Business Enterprises of good standing. Said list of registered Barangay Micro-Business Enterprises shall be one of the bases of the Bureau of Internal Revenue in granting the income tax exemption to the said enterprise.
Section 285. Periodic Evaluation by the Local Treasurer. - The Office of the City/Municipal Treasurer shall conduct an evaluation and verification of the Barangay MicroBusiness Enterprise's financial status, including the amount and condition of its assets within thirty (30) days from the close of the year after a Barangay Micro-Business Enterprise's initial registration, and within thirty (30) days from the close of each year thereafter. The Local Treasury official(s) conducting the verification must be authorized in writing by the City/Municipal Treasurer. The written authority should include the name of the official(s) who will conduct the verification, the address of the place of business to be verified, and the duration of the written authority which should not exceed a period of one ( 1) week from its issuance.
Section 286. Cancellation of Registration. - The Office of the City/Municipal Treasurer shall cancel the registration of a Barangay Micro-Business Enterprise under the following circumstances:
a) When the Barangay Micro-Business Enterprise transfers its place of business to another locality;
b) When the value of its total assets as determined exceeds Three Million Pesos (P 3,000,000.00);
c) When the Barangay Micro-Business Enterprise voluntarily surrenders its Certificate of Authority to the Office of the City/Municipal Treasurer;
d) In case of death of the registered individual owner of the Barangay Micro-Business Enterpr-ise, in the case of a sole proprietorship;
e) In case of violation or non-compliance with the provisions of R. A. No. 9178 and its Implementing Rules and Regulations, as well as DOF Order No. 17-04;
f) In case of merger or consolidation with an entity which is not eligible to be a Barangay
Micro-Business Enterprise;
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g) In case of sale or transfer of the Barangay Micro-Business Enterprise, if it is a sole proprietorship, without prejudice to the transferee applying for registration should it be qualified under the provisions hereof;
h) Submission of fake, false or falsified documents;
i) In case of retirement from business or cessation/suspension of operations for one (1) year; and
j.) Making false or omitting required declarations or statements.
In circumstances ( e ), (h) and (j) above, the City/Municipal Treasurer should initiate the filing of appropriate criminal complaints before the Office of the Public Prosecutor.
In the cancellation of registration, the Barangay Micro-Business Enterprise shall surrender its Certificate of Authority to the Local Treasurer. The Local Treasurer shall immediately notify the Bureau of Internal Revenue of any cancellation of registration of a Barangay Micro-Business Enterprise.
Section 287. Exemption of Barangay Micro-Business Enterprises from Income Tax. - All duly registered Barangay Micro-Business Enterprises shall be exempt from income tax arising purely from their operations as such enterprise: Provided, That such exemption shall not apply to the following:
a) Interest, including those from any currency bank deposit and yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements;
b) Royalties;
c) Prizes and other winnings;
d) Cash and/or property dividends;
e) Capital gains from the sale of shares of stock not traded through the stock exchange;
f) Capital gains from the sale or other disposition of real property;
g) The share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium;
h) The share of an individual in the distributable net income after tax of a taxable partnership of which he is a partner;
i) Income from the practice of profession received directly from the clients or from the professional partnership of which the individual is a partner;
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j) Compensation; and
k) All other forms of passive income and income from revenues not effectively connected with or arising from operations of the Barangay Micro-Business Enterprises as such.
Section 288. Determination of the Value of Assets of the Barangay Micro-Business Enterprise for Income Tax Exemption Purposes. - For the purpose of exemption from income tax, the following conditions shall be met:
a) The total assets of the Barangay Micro-Business Enterprise, which shall not exceed Three Million Pesos (P 3,000,000.00), shall include all kinds of properties, both personal properties and real properties (but excluding land on which the particular business entity's office, plant and equipment are situated) that are owned and used/to be used, or even if not owned but used/to be used, by the Barangay Micro-Business Enterprise and/or its affiliates for the conduct of its/their business/es.
b) Provided, That the term, "affiliate" shall refer to any person or business enterprise/entity that, directly or indirectly through one (l ) or more intermediaries, controls or is controlled by, or is under common control with, the Barangay Micro-Business Enterprise concerned.
Section 289. Procedures in Availing Tax Incentives. - For purposes of availing the tax incentives, the Barangay Micro-Business Enterprise shall register as such Barangay MicroBusiness Enterprise with the Revenue District Office of the Bureau of Internal Revenue where the principal office or place of business of the Barangay Micro-Business Enterprise is located.
Its application for registration shall be supported by the following documents:
a) Copy of the Certificate of Authority of the Barangay Micro-Business Enterprise duly authenticated by the Office of the City/Municipal Treasurer;
b) Sworn Statement of the Values of the Assets owned and/or used/to be used by the Barangay
Micro-Business Enterprise and/or its affiliates reflecting the current values thereof. The sworn statement shall be supported by the following:
1) Acquisition cost, date of acquisition and depreciated value for existing assets;
2) Invoices and/or official receipts for newly-acquired assets not yet depreciated;
3) Duly-notarized copy of the Contract of Lease for assets used in the conduct of business covered by lease agreement; and
4) Copy of Loan Contract/s, if any, and duly notarized Certification of Amortization Payments on the Loan.
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c) Certified list of branches, sales outlets, places of production, warehouse and storage places, or such other facility owned and/or operated by the Barangay Micro-Business Enterprise, indicating their respective addresses, whether located in the same municipality or city where the principal place of business is located, or elsewhere;
d) Certified list of affiliates, indicating addresses, line of business and responsible officers thereof; and
e) Latest Audited Financial Statements, or Account Information Form or its equivalent, containing data lifted from the audited financial statements.
Section 290. Filing of Annual Information Return. - Every Barangay Micro-Business Enterprise entitled to full income tax exemption is required to file an Annual Information Return, together with an Account Information Form, or its equivalent, containing data lifted from the audited financial statements and a sworn statement of assets owned and/or used in the business.
Section 291. Where and When to File the Annual Information Return. - Except in cases where the Bureau of Internal Revenue Commissioner otherwise permits, the Annual Information Return shall be filed with the Revenue District Officer or the Revenue Collection Officer or the duly authorized Treasurer of the city or municipality in which the Barangay Micro-Business Enterprise has its princif al place of business. The Annual Information Return shall be filed on or before the fifteenth (15t ) day of the fourth (4th) month following the close of the taxable year.
Section 292. Revocation of Income Tax Exemption Privilege. - (a) The Bureau of Internal Revenue shall revoke the income tax exemption privilege of a Barangay Micro-Business Enterprise for any of the causes set forth in Section 286 of this Manual on the cancellation of registration of a Barangay Micro-Business Enterprise.
(b) The Bureau of Internal Revenue shall notify the Barangay Micro-Business Enterprise in writing of its findings and require the Barangay Micro-Business Enterprise to pay the corresponding income tax, without prejudice to the filing of administrative or criminal complaints, if warranted.
( c) The Bureau of Internal Revenue shall also notify the Office of the City/Municipal Treasurer concerned of its action, whereupon the City/Municipal Treasurer shall make a determination within fifteen (15) days from receipt of the Bureau of Internal Revenue's notice, whether or not the Barangay Micro-Business Enterprise's Certificate of Registration issued by the Local Treasurer must likewise be cancelled.
Chapter 5. CREDIT FINANCING AND ALTERNATIVE SOURCES OF
FUNDS
Section 293-. General Policy. - (a) It shall be the basic policy that any local government unit may create indebtedness, and avail of credit facilities to finance local infrastructure and other socio-economic development projects in accordance with the approved local development plan and public investment program.
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(b) A local government unit may also avail of credit lines from government or private banks and lending institutions for the purpose of stabilizing local finances. (Sec. 296, LGC)
Section 294. Credit and Other Sources of Funds Available to Local Government Units. -Local government units may avail of the following credit financing, indebtedness and other financing mechanisms for the purposes under, and in accordance with, the provisions of R. A. No. 71 60 or the Local Government Code of 1991, as well as other relevant laws:
a) Loans, credit, and other forms of indebtedness; (Sec. 297, LGC) b) Deferred payment and other financial schemes; (Sec. 298, LGC) c) Loans, grants and subsidies to other Local Government Units; (Sec. 300, LGC) d) Joint and several loans with other Local Government Units; (Sec. 300, LGC) e) Loans from funds secured by the National Government from foreign sources; (Sec. 301,
LGC) f) Bonds and other long-term securities; (Sec. 299, LGC) g) Private sector financing, construction, maintenance operations, and management of
infrastructure projects under Build Operate Transfer arrangement; and h) Grants
Section 295. Definition of Terms:
1) Assignment - a transfer or making over to another of the whole of any property, real or personal, in possession or in action, of any estate or right therein. It includes transfers of all kinds of property (Higgins V. Morckton, 28 Cal. AfP· 2d 723, 83 P. 2d 516, 519), including negotiable instruments (Black's Law Dictionary, 51 ei., (1979).
2) Bond - a certificate or evidence of a debt on which the issuing company or governmental body promises to pay the bondholders a specified amount of interest for a specified length of time, and to repay the loan on the expiration date. In every case, a bond represents debt. (Philippine Law Dictionary, 3rd edition, Federico B. Moreno)
3) Build-Operate-and Transfer -strictly construed, Build-Operate-Transfer195 is a contractual arrangement under which the project proponent is authorized to finance, construct, and subsequently operate and maintain an infrastructure facility. However, the term is often also used to refer to other types of private participation in the financing and management of public sector projects. (Sec. 302, LGC)
Under the Build-Operate-Transfer, in its original sense, ownership of the facility is vested in the project sponsor, but the project proponent operates the facility for a contractually set fixed term during which it is allowed to charge facility users tolls, fees, rentals, or other appropriate charges based on the approved contract. These charges are the means by which the project proponent recovers its investments, covers the costs of maintenance and operation of the project, and realizes a reasonable return. At the end of the contracted period, which by
i9s BOT
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law should not exceed fifty (50) years, the project proponent transfers the facility to the sponsor agency or local government unit.
Also classified as Build-Operate-Transfer are supply-and-operate contracts under which the government finds it in its interest to allow the supplier of equipment and machinery for a given facility to operate these: Provided, That the process involves technology transfer and training of Filipino nationals.
4) Other Build-Operate Transfer Arrangements - Build-Operate-Transfer arrangements entail various degrees of involvement of the private sector in the financing, construction and management of public infrastructure and facilities. Among the arrangements referred to as Build-Operate-Transfer, although they have some features that are different from those described in (3) above, are the following:
a) Build-and-Transfer: 196
1. A contractual arrangement under which the project proponent finances and constructs an infrastructure or facility and after its completion turns it over to the government agency or local government unit concerned.
11. The local government unit shall pay the proponent on an agreed schedule its total investment plus a reasonable rate of return.
iii. This arrangement is most suitable for the construction of any infrastructure or development project, including sensitive facilities with security or strategic implications that the Government opts to operate directly.
b) Build-Lease-and Transfer: 197
1. A contractual arrangement under which project proponent finances and constructs an infrastructure or facility and upon its completion turns it over to the sponsor agency or local government unit on a lease arrangement.
11. The terms and fixed period of the lease enable the proponent to recover its investments and make a reasonable profit.
iii. The title of the facility is transferred to the sponsor agency or local government unit at the end of the contracted lease period.
c) Build-Own-and-Operate: 198
196 BT
197 BLT i9s
BOO
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1. A contractual arrangement under which a project proponent is authorized to finance, construct, own, operate and maintain an infrastructure or development facility.
11. The proponent, which in this case owns the assets, is allowed to recover its total investment, the costs of maintaining and operating the facility and a reasonable return, by collecting tolls, fees, rentals or other charges from facility users.
iii. Under this scheme, the proponent, as project owner, may assign its operation and maintenance to a facility operator.
d) Build-Transfer-and-Operate: 199
1. A contractual arrangement under which the sponsor government agency or local government unit contracts a private entity to build an infrastructure facility on a tum-key basis.
11. The contractor assumes cost over-runs, delays, and specified performance risks.
iii. The title is transferred to the project sponsor as soon as the facility is commissioned satisfactorily, but the private entity operates the facility on its behalf under an agreement.
e) Contract-Add-and-Operate:200
1. A contractual arrangement under which the project proponent is authorized to add to any existing infrastructure facility which it is renting from the government and to operate the expanded project over an agreed franchise period.
11 Any transfer arrangement as regards the added facility depends on the specific agreements and approved contractual arrangements.
f) Rehabilitate-Operate-and-Transfer20 1 - A contractual arrangement which an existing
facility is turned over to the private sector to refurbish, operate and maintain for a franchise period, at the expiry of which it is turned to the Government.
g) Rehabilitate-Own-and-Operate202 - A contractual arrangement under which an existing
facility is turned over to the private sector to refurbish and operate with no time
199 BTO 200 CAO 201 ROT 202 ROO
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limitation imposed on ownership. As long as the operator is not in violation of its franchise, it can continue to operate the facility in perpetuity.
5) Collateral - property pledged as security for a debt. It is additional security for performance of principal obligations.
6) Construction - refers to new construction, rehabilitation, improvement, expansion, alteration and related works and activities. The term includes the necessary supply of services and labor, equipment, materials, and related items needed to build or rehabilitate an infrastructure or development facility.
7) Credit Line - in banking and commerce, the amount of money or merchandise which a banker or supplier agrees to supply to a person on credit, which is generally agreed to in advance. Thus, it also refers to the agreed limit of the money which may be borrowed or of the value of merchandise that may be purchased on credit. (Philippine Law Dictionary, 3
rd
edition, Federico B. Moreno)
8) Deferred Payment - payments or principal or interest postponed to and scheduled for a future time; installment payments.
9) Development Programs - usually, the term refers to the plans and programs included in the Medium-Term Philippine Development Plan, the Regional Development Plans and Local Development Plans. It may, however, also refer to other plans and programs not included in these.
10) Investment - the placing of capital or laying out of money in a w';(' intended to secure income or profit from its employment. (Philippine Law Dictionary, 3,. edition, Federico B. Moreno)
11) Loan - in reference to money, is a contract under which one of the parties delivers to another a sum of money on the condition that the same amount shall be paid (Art. 1933, Civil Code of the Philippines). It involves the delivery by one party and the receipt by the other party of a given sum of money, upon an agreement, express or implied, that the recipient will repay the same sum, with or without interest (People v. Concepcion, 44 Phil 129).
12) Mortgage - the conveyance of an estate or pledge of property as security for the payment of money or the performance of some other act, and conditioned to become void upon such payment or performance.
a) Real Estate Mortgage - refers to mortgage on land or other real property.
b) Chattel Mortgage - refers to mortgage on personal property which is recorded in the chattel mortgage register.
13) Regular Income - comprises all recurring income from local sources or revenues plus regular share of local government units in the proceeds of national taxes.
318
14) Securities - evidences of debts or property, of obligations to pay money, or of rights to participate in earnings and distribution of corporate, trust and other property.
15) Sinking Fund - assets and their earnings earmarked for the retirement of bonds or other long-term obligations. Most commonly set aside from income ofrevenue-earning property.
Section 296. Duties and Responsibilities of Local Treasurers. - Local Treasurers have the following duties and responsibilities that relate to the powers of LGUs to use credit financing, indebtedness and alternative sources of funds:
1) Act as the custodian of all funds directly released to the LGU from the proceeds of grants and from loans, credits and other forms of indebtedness, as well as income and express profits derived from the operations of the projects financed from them. He shall deposit these funds in a separate depository account in the name of the LGU with banks, preferably government owned, located in or nearest to the area of jurisdiction of the LGU;
2) Prepare the required reports of checks issued, disbursements and other accountabilities;
3) In coordination with other LGU official concerned, ensure that the debt servicing for the LGU credit does not exceed twenty percent (20%) of its annual regular income for each year until the loan is fully paid. (Sec. 324 (b), LGC);
4) Pay or amortize loans, including all interests incurred, as appropriate from the income of the projects or services and/or from the regular income of the LG Us until fully paid; and
5) Upon authorization of the sanggunian concerned, Local Treasurers shall:
a) Establish a Sinking Fund for the re-payment of bond issues or maintain Trust Funds for the purpose;
b) Maintain special accounts in the General Fund for loans, interest, bond issues, receipts arising from Build Operate Transfer transactions, such as toll fees, charges, and other mandatory contributions for specific purposes. (Sec. 313, LGC);
c) Maintain separate records of funds received for projects financed by proceeds of loans, credits, grants, and other forms of financing to keep track of the cash flow of the project fund;
d) If required, provide financial data about the LGU that may be needed in relation to its availment of the funding sources and mechanisms described in this Chapter.
Section 297. Provisions for the Servicing of Contractual Obligations of Local Government Units:
319
a) Using Portion of IRA Shares as Payment to Contractual Obligations. - Any LGU, through its Local Chief Executive and upon authorization by the sanggunian concerned, may authorized the National Government to deduct or withhold a portion of its IRA share for the payment of its contractual obligation, subject to the limitations defined in the succeeding paragraph (c) hereof. (Article 401, IRR implementing Sec. 303, LGC)
b) Mandatory Appropriations for Re-payment of Loans. - Local government units shall appropriate in their respective annual budgets such amounts as are sufficient to pay the loans and other indebtedness incurred or redeem or retire bonds, debentures, securities, notes and other contracted obligations issued under this Chapter as they become payable until the total obligations shall have been paid in full. Provided, That failure to provide the appropriations herein shall render their annual budgets inoperative. (Sec. 303, LGC)
c) Mandatory Requirements and Limitations on Debt Service. - Local government units shall make full provision for all statutory and contractual obligations: Provided, however, That the amount of appropriations for debt servicing shall not exceed twenty percent (20%) of the regular income of the local government unit concerned. (Sec. 324 (b), LGC)
d) Regular Income shall refer to revenues and receipts realized by provinces, cities and municipalities from regular sources of the local General Fund including the Internal Revenue Allotment and other shares provided for under R. A. No. 7160 or the Local Government Code of 1991, but exclusive of non-recurring receipts such as other national aids, grants, financial assistance, loan proceeds, sale of fixed assets and other similar receipts.
Section 298. Enforceability of Loan Obligations Notwithstanding the Expiration of the Terms of the Elective Contracting Officials. - Loan obligations contracted by local government units will subsist and remain binding and enforceable notwithstanding the expiration of the terms of the elective local officials who contracted the same. The corporate existence of the local government unit is not co-terminus with the term of its officials who merely are its agents. The sanggunian which authorized the contracting of loan obligations binds the succeeding sanggunian of the local government unit which is separate and distinct from the personality of its officials. (DOJ Opinion No. 160, series of 1994)
Section 299. Guidelines on the Use of Funds Raised by Indebtedness:
a) A local government unit may contract loans, credits, and other forms of indebtedness with any government or domestic private bank and other lending institutions to finance the:
320
1) construction, installation, improvement, expansion, operation, or maintenance of public facilities, infrastructure facilities, housing projects;
2) acquisition of real property; and
3) implementation of other capital investment projects, subject to such terms and conditions as may be agreed upon by the local government unit and the lender. (Sec. 297 (a), LGC)
b) A local government unit may likewise secure from any government bank and lending institution short, medium, and long term loans and advances 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. 297 (b), LGC)
c) Government financial and other lending institutions are authorized to grant loans, credits, and other forms of indebtedness out of their loanable funds to local government units for purposes specified above. (Sec. 297, LGC)
Section 300. Tax Exemption Privileges of Local Government Units. - Local government units shall be exempt from payment of duties and taxes for the importation of heavy equipment or machinery which shall be used for the construction, improvement, repair and maintenance of roads, bridges, and other infrastructure projects, as well as garbage trucks, fire trucks, and other similar equipment: Provided, That such equipment or machinery shall not be disposed of, either by public auction or negotiated sale, within five (5) years from their importation.
To avail of the incentives and for expeditious processing of request for duty and tax exemption, the following specific requirements are prescribed:
a) A letter application signed by the Local Chief Executive (Governor, City Mayor or Municipal Mayor) or his duly authorized representative, attaching therewith the pertinent Board Resolution, authorizing the Local Chief Executive to import/accept donation;
b) The usual import-documents such as:
1) Bill of Lading, Airway Bill, Parcel Post Notice or other shipping documents; 2) Commercial Invoice and Packing List; and 3) Other relevant documents covering the shipment.
c) Sworn Statement that the imported articles are not for sale, hire or barter; and
d) An undertaking from the local government unit that, upon release and physical possession of the machinery and equipment, the notice, "ENTERED DUTY/TAX-FREE UNDER THE NEW LOCAL GOVERNMENT CODE" shall be printed in a conspicuous space on the machinery and equipment which was accorded duty-and-tax-free release. (Sec. 5,
Department Order No. 21.92, Department of Finance)
Section 301. Limitations on the Use of Credit Lines to Stabilize Local Finance. - In the use of credit lines for the purpose of stabilizing local finances as provided in Section 296 of R. A. No. 7160 or the Local Government Code of 1991203
, local government units shall observe the following guidelines:
a) Availment must be approved by the concerned sanggunian;
203 See Sec. 293, this Manual
321
b) Funds availed through credit for this purpose shall be spent and disbursed solely to finance expenditures covered by appropriations authorized in the duly approved local government budget for the current year.
Section 302. Common Requirements for Credit Financing of Local Development Projects. - Local government units shall observe the following common requirements in the use of credit financing for their development projects:
a) Inclusion of the proposed project in the approved local development plan and public investment program. (Sec. 296 (a), LGC)
b) Sanggunian resolution authorizing the Local Chief Executive to secure/negotiate and/or enter into an agreement, which may include the following:
1) endorsing the proposed project. 2) identifying the forms/types of financing the projects. 3) authorizing the mode/form of financing the projects.
c) Sworn statement of the Local Treasurer and Accountant on the following outstanding debts and obligations of the local government unit, if any:
1) kinds of loans. 2) purpose of loans and other obligations. 3) lending agencies/institutions. 4) dates approved/granted and maturities. 5) terms and conditions. 6) annual amortizations (segregate/specify principal and interest); 7) remaining balances (principal and interest):
• current • arrears
8) assignments/collaterals.
d) Current year budget together with the twenty percent (20%) development fund program.
e) Financial data on the financial and other operations of the local government unit, as well as the socio-economic climate within its territory. The more common financial data are shown in the following table.204
204 Other.financial data are also contained in the Statement of Receipts and Expenditures (SRE) shown in LTO Form 14 of this Manual.
322
TABLE ON LGU FINANCIAL DATA COMMONLY REQUIRED WHEN AVAILING
OF INDEBTEDNESS AND OTHER FINANCING MECHANISMS205
LGUINCOME
Local Sources:
Tax Revenue Real Property Taxes Business Taxes and Licenses Other Taxes
Non Tax Revenue:
Operations of Economic Enterprises Regulatory Fees Service/Users Charges Other Receipts Shares from National Tax Collections/ Grants/ Aids Internal Revenue Allotment (IRA) Share in National Wealth Share in Tobacco Excise Tax
Grants: Domestic Foreign National Aid
Loans, Borrowing, and Transfers: Loans Transfers Inter-Local Transfers
LGU EXPENDITURES
2.1 By Function:
General Public Services Education, Culture and Sports Labor and Employment Housing and Community Development
Social Security/Social Services & Welfare Economic Services Debt Servicing Other Purposes Special Education Fund Education, Culture and Sports/Manpower
Development
2.2 By Sector:
Economic Services Social Services General Public Services Debt Burden
2.3 By Object:
Personnel Services (PS) Maintenance and Other Operating Services
(MOOE) Capital Outlay 20% Development Fund Other Capital Outlay Liabilities Being Serviced
3.0TAXBASE
3.1 Potential Collection 3 .2 Actual Collection
4.0 VALUE ASSETS
4.1 Equipment 4.2 Buildings 4.3 Land
5.0 PROJECTIONS OF INCOME AND EXPENDITURES
6.0 ECONOMIC ENTERPRISES
205 Other credit worthiness documentary requirements and farther credit analysis to be done by the Bureau of Local
Government Finance are discussed in a separate manual entitled, "Creditworthiness Rating Manual".
323
324
6.1 Service/Commodity 6.2 Capacity 6.3 Summary of Operations
Section 303. Acceptable Collateral. - The most common securities or collaterals which local government units may offer for loans to satisfy the requirements of lending institutions are any one or a combination of the following:
a) Assignment of a portion of the share from the Internal Revenue Allotment of the local government unit concerned. Any local government unit through its local chief executive and upon authorization by way of a resolution of the sanggunian concerned, may authorize the National Government to deduct or withhold a portion of its Internal Revenue Allotment share for the payment of its contractual obligations, subject to the limitations under Sec, 324 (b) of R. A. No. 7160 or the Local Government Code of 1991. 184
The resolution of the sanggunian shall clearly state the name of the creditor, the nature of indebtedness, the amount to be withheld, and the period and term that such withholding of the Internal Revenue Allotment shares shall be made;
b) Chattel Mortgage of equipment financed by the loan;
c) Real Estate Mortgage of the patrimonial property of the local government unit; and
d) Net profit from the project financed by the credit.
Section 304. Special Account for Loans, Interests, Bonds, and Contributions for Specific Purposes. - Local government units shall maintain Special Accounts in their General Fund for the following:
a) Public utilities and other economic enterprises; b) Loans, interests, bond issues, and other contributions for specific purposes; c) Development projects funded from the Internal Revenue Allotment; and d) Such other special accounts which may be created by law or ordinance.
Section 305. Other Requirement for Loans, Deferred Payments and Other Financial Schemes. - The officials of local government units contracting loans and other forms of indebtedness under the provisions of this Chapter shall also comply with the following:
a) Any other provisions of R. A. No. 7160 or the Local Government Code of 1991, or other laws that may be relevant to a particular project or the transactions necessary to realized it;
b) The rules and regulations on property and supply management, which shall be applied in the acquisition of equipment or machinery under the loans, deferred payment and other financial schemes; and
c) All applicable accounting and auditing policies and regulations;
Section 306. Inter-Local Government Units Loans, Grants and Subsidies. - Provinces, cities and municipalities may, upon approval of the majority of all members of the sanggunian
184 See Sec. 297 (c), this Manual
325
concerned and in amounts not exceeding their surplus funds, extend loans, grants, or subsidies to other local government units under such terms and conditions as may be agreed upon by the contracting parties. (Sec. 300 1
s1
par., LGC)
There are no standard terms and conditions for loans under this scheme. However, the creditor LGU and the borrower LGU have to negotiate, come to an agreement, and observe the following processes:
a) Enactment by the lending and the borrowing LGUs of the required resolutions and/or ordinances duly signed/approved by the majority of all the members of their respective sanggunian, stipulating the terms and conditions that shall include the following:
I) repayment scheme and grace period; 2) interest lending/borrowing rate; 3) security/collateral; 4) benefits to both the lending and the borrowing LGUs; and 5) automatic budget allocation of the necessary amount for repayment
b) Ratification of the loan contract by the sanggunian of both contracting LGUs/parties, which is needed for the loan agreement to- become valid and enforceable.
c) Certification by the Local Treasurer of the lending LGU, attested to by its Auditor, of the accumulated surpluses eligible for lending, grants or subsidies.
Section 307. Joint and Several Local Government Unit Loan Arrangements. - Local government units may, upon approval of their respective sanggunian, jointly and severally contract loans, credits, and other forms of indebtedness for purposes mutually beneficial to them. (Sec. 300 211d par., LGC)
Section 308. Loans from Funds Secured by the National Government from Foreign Sources. - The President or his duly authorized representative may, through any government financial or other lending institution, re-lend to any province, city, municipality, or barangay, the proceeds of loans contracted with foreign financial institutions or other international funding agencies.
A. Guidelines:
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l) The loans shall be used for the purpose of:
a. financing the construction, installation, improvement, expansion, operation or maintenance of public facilities, infrastructure facilities, or housing projects;
11. acquiring real property; and
111. implementing other capital investment projects.
2) Such loans shall be subject to the terms and conditions agreed upon by the President and the local government unit. The proceeds from such loans shall accrue directly to the local government unit. (Sec. 301 (a), LGC)
3) The President may likewise authorize the re-lending to local government units the proceeds of grants secured from foreign sources, subject to the provisions of existing laws and the applicable grant agreements. (Sec. 301 (b), LGC)
4) Re-payment or amortization of loans, including their accrued interest thereon, may be financed partly from the income of the projects or services and from the regular income of the local government unit, which must be provided for and appropriated regularly in its annual budget until the loan and interest thereon shall have been fully paid. (Sec. 301 (c), LGC)
B. The Municipal Development Fund as Conduit. - The Municipal Development Fund, 185
created under P. D. No. No. 1914, operates for the above purposes with the Department of Finance as administrator. Provinces, cities and municipalities may tap the Municipal Development Fund for loans throufh agreements with the Department of Finance, setting the terms and conditions of the loan. 18 (Sec. 1, P. D. 1914)
Section 309. Deferred Payments and Other Financial Schemes. - Provincial, city and municipal governments may acquire property, plant, machinery, equipment, and such necessary accessories under a supplier's credit, deferred payments plan, or other financial schemes (Sec. 298, LGC) under the following conditions:
a) That the acquisition of such equipment, machinery, and their accessories shall be governed by the pertinent provisions of the Implementing Rules and Regulations of R. A. No. 7160 or the Local Government Code of 1991, on "Local Government Supply and Property Management", whether such items are to be supplied or purchased from a local or foreign supplier; and
b) That the Local Chief Executive, through a sanggunian resolution, is authorized to negotiate the contract executed under the deferred payment scheme. (Art. 396, IRR implementing Sec. 298, LGC)
Section 310. Bonds and Other Long Term Securities. - Subject to the rules and regulations of the Bangko Sentral ng Pilipinas and the Securities and Exchange Commission, provinces, cities and municipalities are authorized to issue bonds, debentures, securities, collaterals, notes and other obligations to finance self-liquidating, income-producing development or livelihood projects pursuant to the priorities established in the approved local development plan or the public investment program. (Sec. 299, LGC)
iss MDF 186
The different Municipal Development Fund Office's new loan !grant financing packages that may be availed of by LGUs are discussed in a separate manual on the "Proposed New MDFO Lending Programs and Products".
327
A. Debt Service Requirement and Limitations. - As debt instruments, bonds are subject to the mandatory appropriations in the respective annual budgets of local government units as provided under Section 303 of R. A. No. 7160 or the Local Government Code of 1991. 187
)
Likewise, bonds are subject to the debt service limitations rirovided for under Section 324 (b) ofR. A. No. 7160 or the Local Government Code of 1991. 88
The BLGF certification on the maximum borrowing or debt service capacity of a local government unit is part of the documentation required for the issuance of local government bonds. 189
B. Sanggunian Approval. - The sanggunian concerned shall, by way of an ordinance approved by a majority of all its members, declare and state the terms and conditions of the bonds and the purpose for which the proposed indebtedness is to be incurred. (Sec. 299, LGC)
C. National Government Guarantee. - In cases where the bond issue shall bear the guarantee of the National Government, the approval of the Secretary of Finance shall be required. (Art. 397 (b), IRR implementing Sec. 299, LGC)
D. Local Government Bond Issuances are Subject to Rules and Regulations of the Bangko
Sentral ng Pilipinas. - Whenever local government units contemplate to borrow within the Philippines, the prior opinion of the Monetary Board shall be requested in order that it may render an opinion on the probable effects of the proposed operation on monetary aggregates, the price level and the balance of payments. (Sec. 123, Art 111, R. A. No. 7653 or the Bangko Sentral ng Pilipinas Charter/90
E. Local Government Bonds are Exempt from Registration Requirements of the Securities and Exchange Commission. - Local government bonds are exempt from the registration requirements of the Securities and Exchange Commission. However, in order to maintain standards in the securities market, the Securities and Exchange Commission maintains authority and control over the underwriters and brokers of all types of securities including local government bonds.
F. Special Documentation Requirements for Local Government Bonds. - In addition to the common requirements reflected in Section 302 of this Manual, the following documentary requirements shall be complied with in the issuance of local government bonds:
1) BLGF Certification as to the Debt Service Capacity of the LGU concerned (ESP Letter, Nov 27, 2000);
187 See Sec. 297 (b). this Manual 188 See Sec. 297 (c) and (d), this Manual 189 See Sec. 302 (e), this Manual 190 Relative to Sec. 299, LGC, the Bangko Sentral ng Pilipinas has issued rules and regulations under BSP Circular
No. 41, dated August 29, 1994,for bond issuances which do not require National Government guarantee; and BSP Circular No. 44,for bond issuances which require full National Government guarantee.
328
1) DOF Certification as to the national government guarantee in case the floatation requires National Government guarantee (ESP Circular No. 44);
2) Monetary Board opinion on the probable effects of the proposed issuance of the LGU Bonds on the monetary aggregates, price levels and balance of payments (ESP Circular No. 41);
3) Sanggunian Resolution, for the following:
a) Establishment of sinking fund for the payment of retiring or maturing bonds;
b) Authorizing the Local Chief Executive to enter into and agreement with the Financial Advisor/Trustee; and
c) Certifying that the LGU will or will not seek any National Government guarantee for the bond.
4) Annual Audit Report for the immediately preceding year;
5) Budget Operation Statement/Statement of Actual Income and Expenditure for the past five (5) years duly signed by the Local Treasurer and/or Local Accountant indicating the IRA actually received for the same period.
Section 311. Private Sector Financing Under the Build-Operate-Transfer Arrangement. -Local government units may avail of the several variations of Build-Operate-Transfer arrangement to finance, construct, maintain, operate and manage infrastructure projects.
A. General Provisions:
1) Authorization. - Local government units may enter into contracts with duly prequalified individual contractor, for the financing, construction, operation, and maintenance of any financially viable infrastructure facilities, under the build-operateand-transfer agreement, subject to the applicable provisions of R. A. No. 6957, authorizing the financing, construction, operation and maintenance of infrastructure projects by the private sector and the rules and regulations issued thereunder and as such terms and conditions provided for in this section. (Sec. 302 (a), LGC)
2) Inclusion in Development Plans and Investment Programs. - Local government units shall include in their respective local development plans and public investment programs priority projects that may be financed, constructed, operated and maintained by the private sector under this section. (Sec. 302 (b), LGC)
3) Disclosure and Public Endorsement. - It shall be the duty of the local government unit concerned to disclose to the public all projects eligible for financing under this section, including official notification of duly registered contractors and publication in newspaper of general or local circulation and in conspicuous and accessible public places. Local
329
projects under the build-operate-and-transfer agreement shall be confirmed by the local development councils. (Sec. 302 (b), LGC)
4) Terms and Conditions. - Projects implemented under the provisions of this section shall be subject to the following terms and conditions:
330
a) The provincial, city or municipal engineer, as the case may be, upon formal request in writing by the local chief executive, shall prepare the plans and specifications for the proposed project, which shall be submitted to the sanggunian for approval. (Sec. 302 (c) (I), LGC)
b) Upon approval by the sanggunian of the project plans and specifications, the provincial, city or municipal engineer shall, as the case may be, cause to be published once every week for two (2) consecutive weeks in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to be implemented, a notice inviting all duly qualified contractors to participate in public bidding for the projects so approved. The conduct of public bidding and award of contracts for local government projects under this section shall be in accordance with R. A. No. 7160 or the Local Government Code of 1991, and other applicable laws, rules and regulations. (Sec. 302 (c) (2) F1 par., LGC)
c) In the case of a build-operate-and-transfer agreement, the contract shall be awarded to the lowest complying bidder whose offer is deemed most advantageous to the local government and based on the present value of its proposed tolls, fees, rentals, and charges over a fixed term for the facility to be prescribed minimum design and performance standards, plans and specifications. For this purpose, the winning contractor shall be automatically granted by the local government unit concerned the franchise to operate and maintain the facility, including the collection of tolls, fees, rentals, and charges, in accordance with sub-section (c) (4) hereof. (Sec. 302 (c) (2) 2nd par., LGC)
d) In the case of a build-operate-and-transfer agreement, the contract shall be awarded to the lowest complying bidder based on the present value of its proposed schedule of amortization payments for the facility to be constructed according to the prescribed minimum designs and performance standards, plans and specifications. (Sec. 302 (c) (2) 3rd par., LGC)
e) Any contractor who shall undertake the prosecution of any project under this section shall post the required bonds to protect the interest of the province, city, or municipality, in such amounts as may fixed by the sanggunian concerned. (Sec. 302 (c) (3), LGC)
f) The provincial, city or municipal engineer shall, as the case may be, not allow any projects under this section unless such contractor presents proof or evidence that he has posted the required bond. (Sec. 302 (c) (3), LGC)
g) The contractor shall be entitled to a reasonable return of its investment in accordance with its bid proposal as accepted by the local government unit concerned
In the case of build-operate-and-transfer agreement, repayment shall be made by authorizing the contractor to charge and collect reasonable tolls, fees, rentals, and charges for the use of the project facility not exceeding those proposed in the bid and incorporated in the contract:
1. Provided, That the local government unit concerned shall, based on reasonableness and equity, approve the tolls, fees, rentals and charges;
11. Provided, further, That the imposition and collection of tolls, fees, rentals and charges shall be for a fixed period as proposed in the bid and incorporated in the contract which shall in no case exceed fifty (50) years;
iii. Provided, finally, That during the lifetime of the contract, the contractor shall undertake the necessary maintenance and repair of the facility in accordance with standards prescribed in the bidding documents in the contract. (Sec. 302 (c) (4) ;
st and
2nd pars., LGC)
h) In the case of build-operate-and-transfer agreement, the repayment shall be made through amortization payments in accordance with the schedule proposed in the bid and incorporated in the contract:
1. In the case of land reclamation or construction of industrial estates, the repayment plan may consist of the grant of a portion or percentage of the reclaimed land or the industrial estate constructed. (Sec. 302 (c) (4) 3rd
and 4th pars., LGC)
i) Every infrastructure project undertaken under this section shall be constructed, operated, and maintained by the contractor under the technical supervision of the local government unit and in accordance with the plans, specifications, standards, and costs approved by it. (Sec. 302 (c) (5), LGC)
5) Review of Contracts. - The provincial, city or municipal legal officer shall, as the case may be, review the contracts executed pursuant to this section to determine their legality, validity, enforceability and correctness of form. (Sec. 302 (d), LGC)
6) Build-Operate-Transfer Project Formulation and Proponent Selection. - The existing Build-Operate-Transfer legal framework based on R. A. No. 7718
191 recognizes
191 BOT Law
331
two (2) modes for identifying projects and selecting proponents, which affect the processes involved in the early phases of the Build-Operate-Tansfer project. These modes are as follows:
a) Solicited Proposals. - These are the priority projects identified by the sponsor agency or local government unit. The sponsor formulates the project based on its objectives and studies, and then invites ("solicits") the private sector to participate in its realization.
b) Unsolicited Proposals. - These are Build-Operate-Transfer project proposals of private proponent to prospective sponsor agencies/local government units. An unsolicited project may be accepted if it addresses existing priorities or needs that may or may not have been previously realized by the prospective sponsor. The agency/local government unit may accept an unsolicited proposal on a negotiated basis if the project meets certain conditions.
Section 312. Authority to Negotiate and Secure Grants. - Local chief executives may, upon authority of the sanggunian, negotiate and secure financial grants or donations in kind, in support of the basic services or facilities enumerated under Section 17 of R. A. No. 7160 or the Local Government Code of 1991, 192 from local and foreign assistance agencies, without necessity of securing clearance or approval therefore from any department, agency, or office of the National Government or from any higher local government unit.
A. Projects with National Security Implications. - Provided, That projects financed by such grants or assistance with national security implications shall be approved by the national agency concerned: Provided, further, That when such national agency fails to act on the request for approval within thirty (30) days from receipt thereof, the request shall be deemed approved. (Sec. 23 r
1 par., LGC)
B. Required Report to Congress and the President. - The local chief executive shall, within thirty (30) days upon signing of such grant agreement or deed of donation, report the nature, amount, and terms of such assistance to both Houses of Congress and the President. (Sec. 23 2
nd par., LGC)
C. Formal Procedural Requirements. - In availing of the Official Development Assistance (ODA) facilities, the LGU needs to consider that ODA donors as a matter of procedure coordinate regularly with the National Economic Development Authority (NEDA), which in turn coordinates local government matters with the Department of the Interior and Local Government (DILG). For this reason, the following formal procedures shall be observed:
1) The LGU prepares the project proposal using the required NEDA forms in consultation with the DILG and NEDA and with other National Government Agencies (NGAs), as appropriate;
192 See Sec. 269, this Manual
332
2) The Local Development Council (LDC) evaluates the project proposal for consistency with its Local Development Plan and the Annual Investment Program;
3) Upon satisfactory evaluation of the proposal, the sanggunian authorizes the LCE to negotiate the grant;
4) NEDA checks the proposal for possible duplication with other proposed/on-going projects, and upon clearance endorses it to the ODA institution. If duplications or conflicts are found, the proposal is referred back to the LGU for review and revision;
5) The LCE endorses the project, through NEDA, to the identified ODA-granting institution;
6) The LGU submits the project proposals to the DILG which refers it to the concerned NGAs for possible security implications;
7) The concerned NGAs review the project proposal and within thirty (30) days, inform the DILG and the LGU concerned of the result of the review. As appropriate, the proposal may be approved, objected to due to security implications, or referred back for revisions;
8) LGU coordinates directly with the ODA grant funding institutions in monitoring the latter's processing of the proposal and regularly informs the DILG and the NEDA of the status of the proposal;
9) NEDA coordinates regularly with the ODA grant funding institution in facilitating the evaluation and approval of the local project proposal; and
10) An NGA or higher local or regional governmental body (i.e. PDC and RDC) evaluates the project proposals only upon express request of the ODA grant donor and the consent of the LGU(s) concerned.
Section 313. Prohibited Acts Related to the Awards of Contracts Under the Provisions on
Credit Financing. - It shall be unlawful for any public official or employee in the provincial, city, or municipal government, or their relatives within the fourth civil degree of consanguinity or affinity, to enter into or have any pecuniary interest in any contract for the construction, acquisition, operation, or maintenance of any project awarded pursuant to the provisions of Title 4, Book II of R. A. No. 7160 or the Local Government Code of 1991, 193 or for the procurement of any supplies, materials, or equipment of any kind to be used in the said project.
Any person convicted for violation of the provisions of said Title shall be removed from office and shall be punished by imprisonment of not less than one (1) month but not more than two (2) years, at the discretion of the court, without prejudice to prosecution under other laws. (Sec. 520,
LGC)
193 Chapter 5, Book V, this Manual
333
FISCAL ORGANIZATION OF LOCAL GOVERNMENT
AND THE LOCAL TREASURER
BOOK SIX
ANNEXES AND FORMS
334
LTO Annex 1
LAWS THAT HA VE HAD MAJOR INFLUENCE ON PRESENT FISCAL
ORGANIZATION IN THE PHILIPPINES
June 19, 1959 R.A. 2264 - "An act Amending the Laws Governing Local Governments by Increasing their Autonomy and Reorganizing Provincial Governments"
January 1, 1960 R.A. 2370 - "Barrio Charter"
1. Secretary of Finance reviews provincial and city budgets (Sec. 1, RA 2264).
2. Provincial Treasurer reviews municipal district budgets (Sec. 1, RA 2264)
3. Secretary of Finance reviews tax ordinances and has the authority to suspend the effectivity of the ordinance if in his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive, or confiscatory. (Sec. 2, RA 2264)
4. Appointments by provincial governors, city mayors and municipal mayors shall become effective upon the issuance of such appointments and upon attestation by the provincial treasurer of provinces, in case of appointments made by provincial governors and municipal mayors, and by the city treasurer, in case of appointments made by city mayors. Provincial treasurers of provinces, and city treasurers of chartered cities are hereby deputized by the Commissioner of Civil Service for the purpose of attesting to appointments made by provincial governors, city mayors and municipal mayors. (Sec. 8, RA 2264)
1. Ten percent of all real estate taxes collected within the barrio accrues to the barrio general fund, which sum shall be deducted in equal amounts from the respective shares of the province and municipality. Provided, that the municipal treasurer may designate the barrio lieutenant and/or the barrio treasurer as his deputy to collect the said taxes. (Sec. 15, RA 2370)
2. The barrio council with the approval of a two-thirds vote of the barrio assembly, xxx, may raise, levy, collect and/or accept monies and other contributions from the following sources
• Voluntary contributions annually from each male or female resident twenty one years of each or over
• Licenses on stores, signs, signboards and billboards displayed or maintained in any place exposed to
335
R.A. 23 70 - "Barrio Charter" (cont.)
September 12, 1967 R.A. 5185 - "Decentralization Act of 1967"
336
public view except those displayed at the place or places where profession or business advertised thereby is in whole or in part conducted
• A tax on gamecocks owned by residents of the barrio and on the cockfights conducted therein. Provided, that nothing herein shall authorize the barrio council to permit cockfights
• Monies, materials and voluntary labor for specific public works and cooperative enterprises of the barrio raised from residents landholders, produces and merchants of the barrio
• Monies from grants-in-aids, subsidies, contributions and revenues made available to barrios from municipal, provincial or national funds
• Monies from private agencies and individuals
• An additional percentage, not exceeding one fourth of one percent of the assessed valuation of the property within the barrio, collected by the municipal treasurer along with the tax on real property levied for municipal purposes by the municipality and deposited m the name of the barrio with the municipal treasurer. Provided, that no tax or license fee imposed by a barrio council shall exceed fifty per Centrum of a similar tax or fee levied, assessed or imposed by the municipal council. (Sec. 14, RA 2370
3. The Barrio treasurer collects all taxes existing (except real property taxes), fees and contributions due the barrio treasury for which he shall issue official receipts. Xxx (2"d par. Sec. 16, RA 23 70)
1. Grants local governments greater freedom and ampler means to respond to the needs of their people and promote their prosperity and happiness and to effect a more equitable and systematic distribution of governmental powers and resources. (Sec. 2,RA5185)
2. Provincial treasurers are agent of the Philippine National Bank (Sec. 11(1-d), RA 5185)
June 28, 1973
P.D. - "Local Tax code" (amended March 20, 1974 by PD 426)
May 20, 1974 P.D. 464 - "Real Property Tax Code"
3. The allotment share of provinces and cities is increased from ten to thirteen per centum and the allotment share of municipalities is increased from two to four per centum. The basis of the allotment shall be the collections during the preceding fiscal year, to be distributed among the provinces, cities, municipalities as follows: a) seventy per centum on the basis of population as shown by the latest official census, and b) thirty per centum in proportion to the land area. (Sec. 13, RA 5185)
The Secretary of Finance and the provincial treasurer or the city treasurer are given authority to review tax ordinances and to suspend the effectivity of any tax ordinances. (Provincial & city ordinances - Secretary of Finance, municipal ordinances - provincial treasurer, barrio ordinances - city treasurer. (Sec. 44 of PD 231)
1. Code governing the appraisal and assessment of real property for purposes of taxation by provmces, cities and municipalities, as well as the levy, collection and administration of the real property tax. (Sec. 1, PD 464)
2. Provides for the levy, assessment and collection in the provinces, cities, and municipalities an annual ad valorem tax on real property, such as land, buildings, machinery and other improvements affixed or attached to real property not specifically exempted. (Sec. 38, PD 464)
3. Empowers provincial, city or municipal boards or councils to fix uniform rate of real property tax applicable to their respective localities as follows:
• In the case of the province, the tax shall be fixed by ordinance of the provincial board at the rate of not less than one fourth of one percent but not more than one half of one percent of the assessed value of real property
• In the case of a city, the tax shall be fixed by ordinance of the provincial board or city council at the rate of not less than one half of one percent but not more than two percent of the assessed value of real property. (Sec. 39, PD 464)
337
Cont May 20, 1974 P.D. 464 - "Real Property Tax Code"
338
4. Imposes annual tax of one percent on real property that accrues to the Special Education fund created under R.A. No. 5447, and is in addition to the basic real property tax which local governments are authorized to levy, assess and to collect under this Code xxx (Sec. 41, PD 464)
5. Imposes an additional real property tax on idle lands at the rate of five percent per annum based on the assessed value of the property as determined by the Provincial or City Assessor of the Province or City where the property is located, or by the Municipal Assessor in the case of idle lands situated in the municipalities of Metropolitan Manila. (Sec. 42 (a), PD 464)
6. The provincial, city, municipal boards or council may, by ordinance, provide for the imposition and collection of a special levy on the lands comprised within the province, city or municipality xxx especially benefited by the laying out, opening, constructing, straightening, widening, grading, paving, curbing, walling, deepening, or otherwise establishing, repairing, enlarging, or improving public avenues, roads, streets, alleys, sidewalks, parks, plazas, bridges, landing places, wharves, piers, docks, levees, reservoirs, waterworks, water courses, esteros, canals, drains and sewers: xxx Within the meaning of this Section, all lands comprised within the district benefited, except lands exempt from the real property tax under Section forty hereof, shall be subject to the payment of the special levy. (Sec. 47, PD 464)
7. The real property tax for any year shall attach and become due and payable on the first day of January and from the same date said tax and all penalties subsequently accruing thereto shall, constitute a lien upon the property subject to such tax. Said lien shall be superior to all other liens, mortgages, or encumbrances of any kind whatsoever, shall be enforceable against the property whether in the possession of the delinquent or any subsequent owner or possessor, and shall be removable only by the payment of the delinquent taxes and penalties.
8. The real property tax on properties actually, directly and exclusively used for education purposes as provided under Presidential
Cont May 20, 1974 P.D. 464 - "Real Property Tax
Decree No. 261 shall begin to accrue on January 1, 1975. (Sec. 56, PD 464)
9. The collection of the real property tax and all penalties accruing thereto, and the enforcement of the remedies provided for in this Code or any applicable laws, shall be the responsibility of the treasurer of the province, city or municipality where the property is situated. (Sec. 57, PD 464)
10. The provincial or city assessor shall prepare and submit to the treasurer of the province, city or municipality, on or before the thirtyfirst day of December of each year, an assessment roll containing a list of all persons to whom real properties have been newly assessed or reassessed and the values of such taxable properties. (Sec 58, PD 464)
11. The provincial or city treasurer shall, on or before the thirty first of January each year, cause notice of the periods during which real property tax may be paid without penalty.
12. The notices in their respective jurisdiction shall be posted at the main entrance of the provincial building or city hall and of all municipal buildings and in a public conspicuous place in each barrio, and published in a newspaper and announced by crier at least three times.
13. The form and detail shall be prescribed by the Secretary of Finance: Provided, however, that in lieu of or in addition to such notice, the Secretary of Finance may require notification in any province, municipality, or city to be accomplished through the mailing of individual tax bills stating the amount of the annual tax due, the quarterly installments, its due date, the delinquency and the applicable penalty. (Sec. 59, PD 464)
14. Real Property taxes may, in the discretion of the taxpayer, be paid without penalty in four installments, xxx except the special levies authorized under Sections fortyseven and fifty-five of this Code which shall be governed by the local ordinance or Department Order issued by the Secretary of Finance, as the case may be.
15. Beginning with calendar year 1978 and thereafter, the President of the Philippines may, at his discretion or upon recommendation of the Secretary of Finance, authorized the grant of discounts
339
Cont May 20, 1974 P.D. 464- "Real Property Tax
June 3, 1974 P.D. 477 - "Decree on Local Fiscal Administration"
August 2, 1974 P.D. 526- "Supply Management" August 2, 1974 P.D. 526- "Supply Management
on taxes due on real property at such rates and for such periods as he may fix, if he deems that the public interest so requires. (Sec. 61, PD 464)
1. The provincial, city and municipal treasurer shall be the chief financial officer of their respective local governments and in such capacity shall provide technical and staff services to the chief executive and other local officials m budget preparation, authorization, execution and accountability (Sec. 24, PD 477)
2. Monies shall not be disbursed unless the treasurer concerned certifies that appropriations and funds are available for the purpose. (Sec. 51, PD 4 77)
3. Checks in settlement of obligation shall be drawn by the Provincial and City Treasurer, as the case may be, and shall be countersigned by the Provincial or City Auditor. (Sec. 52, PD 477)
4. Provincial or City Treasurer shall be appointed by the President of the Philippines upon recommendation of the Secretary of Finance. (Sec. 60, PD 477)
5. The provincial or city treasurer exercises direct and immediate supervision, administration and control over public markets and the personnel thereof xxx. The provincial treasurer shall exercise general supervision over municipal public markets. (Sec. 60 (e) of PD 477)
6. The Secretary of Finance reviews provincial or city budgets (Sec. 29, PD 477)
7. The provincial treasurer reviews municipal budgets. (Sec. 30, PD 477)
8. The Secretary of Finance may authorize appropriations in excess of the percentage (45% - 55%) which shall not be more than 25% of the maximum expendable amounts nor shall such exemptions be granted in case of overdrafts or imminence thereof. (Sec. 28, PD 4 77)
The local treasurer shall prepare, for the approval of the local chief executive, an annual procurement program for the ensuing fiscal year. (Sec. 19, PD 526)
June 25, 1975 Loan applications of LGUs are submitted to the P.D. 752 - "Credit Financing for Local Secretary of Finance for review and guarantee
340
Governments
November 7, 1975 P.D. 827 - "Creating the Metropolitan Manila and the Metropolitan Manila Commission"
April 12, 1976 P.D. 921 - "Providing for the Administration of Local Financial Services m Metropolitan Manila, creating Local Treasury and Assessment Districts therein"
the loans.
1. Creates a public corporation, to be known as the Metropolitan Manila, vested with powers and attributes of a corporation including the power to make contracts, sue and be sued, acquire, purchase, expropriate, hold transfer and dispose of property and such other powers as are necessary to carry out its purposes. The corporation shall be administered by a Commission created under this Decree. (Sec. 1, PD 824)
2. The Commission is given jurisdiction over the cities of Manila, Quezon, Pasay and Caloocan and the municipalities of Makati, Mandaluyong, San Juan, Las Pinas, Malabon, Navotas, Pasig, Pateros, Paranaque, Marikina, Muntinlupa and Taguig in the province of Rizal, and the municipality of Valenzuela, in the province of Bulacan, all of which together shall henceforth be known as Metropolitan Manila
3. All the city or municipal treasurers of the local government units placed under the Commission shall close their respective books of accounts for submittal to the Commission not later than December 15, 197 5. Thereafter, their functions and responsibilities shall be performed or discharged by the Commission for Finance. (Sec. 11, PD 824)
1. Division of Metropolitan Manila into Local Treasury and Assessment Districts
• First District - Manila • Second District - Quezon City,
Pasig, Marikina, Mandaluyong and San Juan
• Third District - Caloocan City, Malabon, Navotas and Valenzuela
• Fourth District - Pasay City, Makati, Paranaque, Muntinlupa, Las Pinas, Pateros and Taguig
April 12, 1976 (Sec. 1, PD 921) P.D. 921 - "Providing for the 2. Under the general direction of the Administration of Local Financial Services Commissioner for Finance of the MMC, the m Metropolitan Manila, creating Local City Treasurer of the Treasury district shall Treasury and Assessment Districts therein" exercise general supervision over the local
treasury offices of the municipalities belonging to their respective districts. (Sec.
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May 16, 1978 P.D. 1375 - "Transferring to the Budget Commission the functions of Local Government Budget Administration"
February 10, 1983
2, PD 921) 3. The power to appoint the Municipal
Treasurer, Assistant Municipal Treasurer of the municipalities within the MMA shall be vested upon the Commissioner for Finance upon recommendation of the City Treasurer. (Sec. 3, PD 921)
4. The City Treasurers of MMA shall be appointed by the President of the Philippines upon recommendation of the Secretary of Finance. (Sec. 5, PD 921)
The Budget Commission is made responsible for the review and evaluation on the annual principal and supplemental budgets and other financial statements covering all funds of local governments, and the review and formulation of recommendations on resolutions of local legislative bodies involving appropriation of local funds. These functions presently performed by the DOF, are hereby transferred to the Budget Commission. (Sec. 1, PD 1375)
1. The Sangguniang Panlalawigan reviews
Batas Pambansa 337 - "The Government Code"
Local municipal ordinances, resolutions and executive orders. (Sec. 153, BP 337)
342
2. The Municipal Treasurer is appointed by the Minister of Finance upon recommendation of the Municipal Mayor, takes charges of the municipal treasury office and acts as the chief financial officer of the municipality.
3. The City Treasurer is appointed by the President of the Philippines upon recommendation of the Minister of Finance, takes charges of the city treasury office and acts as the chief financial officer of the city. (Sec. 181, BP 337)
4. The Assistant City Treasurer is appointed by the Ministry of Finance upon recommendation of the City Mayor.
5. The Provincial Treasurer is appointed by the President of the Philippines upon recommendation of the Minister of Finance.
6. The Provincial Treasurer takes charge of the disbursement and accounting of all provincial funds and other funds the custody of which may be entrusted to him by law or other competent authority. (Sec. 212, BP 337)
7. The Assistant Provincial Treasurer is appointed by the Minister of Finance upon recommendation of the Provincial
January 9, 1990 E.O. 392 - "Constituting the Metropolitan Manila Authority"
January 1, 1992 R.A. 7160 - "The Local Government Code of 1991" of "LGC"
Governor. (Sec. 213, BP 337)
1. The Metropolitan Authority is constituted to cover the four (4) cities and thirteen (13) municipalities comprising the Metropolitan Area.
2. The Authority is given jurisdiction over the delivery of basic urban services requiring coordination in the Metropolitan Manila. Covered among the basic urban services are land use, planning and zonmg, traffic management, public safety, urban development and renewal, a management control of operations during calamities and emergencies affecting public welfare and safety, and sanitation and waste management. (Sec. 1, EO 392)
3. The authority 1s governed by the Metropolitan Manila Council composed of the Mayors of the four (4) cities and thirteen (13) municipalities of Metropolitan Manila. (Sec. 2, EO 392)
4. City and municipal treasurers of the local government units comprising Metropolitan Manila continue to collect all revenues and receipts accruing to the Metropolitan Manila Commission and remit the same to the Authority. (Sec. 7, EO 392)
5. All city and municipal treasurers, municipal assessors, their assistants, and all other officials whose appointment was vested upon the Metropolitan Manila Commission shall be appointed by the President of the Philippines, upon recommendation of the Council, subject to the civil service law, rules and regulations. (Sec. 8, EO 392)
1. Major powers, functions therefore exercised by government are devolved (Sec. 17, LGC)
and services the national
to the LGUs.
2. Provinces are given taxing powers. (Sec. 134, LGC)
3. Rates of levy are expanded and increased. 4. The LGUs sharing in the proceeds of real
property tax is increased. 5. IRA shares of LGUs are increased and the
formula for distribution to the LGUs revised.
6. The power of review of local tax ordinances by the Secretary of Finance are removed and transferred to the Sangguniang Panlalawigan.
343
March 1, 1995 R.A. 7924 - "Creating the Metropolitan Manila Development Authority" or "MMDA"
344
7. The power to appoint local treasurers 1s retained by the Secretary of Finance.
1. The affairs of Metropolitan Manila are to be administered by the Metropolitan Manila Development Authority (MMDA), which replaces the Metro Manila Authority. (MMA)
2. The MMDA continues to receive the Internal Revenue Allotment (IRA) previously allocated to the MMA (Sec. lO(b), RA 7924)
3. The MMDA is likewise empowered to levy fines, and impose fees and charges for various services rendered. (Sec. 1 O©, RA 7924)
4. Five percent of the total gross revenue of the preceding year, net of the internal revenue allotment, of each LGU covered (per Section
\
\
NOTES ON SUPREME COURT RULING ON SUBSTANTIVE REQUIREMENTS OF A VALID ORDINANCE
LTO Annex 2
In case of Magtajas Cagayan De Oro vs. Pryce Properties Corp. & PAGCOR 234 SCRA 255, the Supreme Court ruled that an ordinance in order to be valid must conform to the following substantive requirements.
1. It must not contravene the Constitution or any statute
LGUs not have the Inherent power to tax. The inherent power belongs to the State and is merely a legislative. As such, tax ordinances must always yield to a legislative act which is superior, having been enacted by the State (Bernas, The Revised Philippine Constitution, Vol. 1 1983 ed. P. 445)
The sanggunian exercises only delegated legislative powers conferred on them by Congress as the National lawmaking body. As mere agents, LGUs are vested with the power of subordinate legislation. The delegate cannot be superior to not exercise powers higher than those of the principal. Local government cannot undo acts of Congress from which they derived their powers and negate by mere ordinance the mandate of the statute (Magtajas vs. Pryce)
The constitution is a written instrument agreed upon by the people as the absolute rule of action and decision for all departments and officers of the government and in the opposition to which any act or rule of any department or officer of the government, or even of the people themselves, will altogether be void (Cooley, Constitutional Limitation 3) Underscoring supplied "It is, in other words the supreme written law of the land" (Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary, 1996)
2. It must not be unfair or oppressive
A tax ordinance is fair when it is equitable. It is equitable when it is just, reasonable, and proportionate to one's ability to pay. The progressive system of taxation is one good example of equitable taxation since it increases as the tax base increases. It is oppressive when it is unreasonably burdensome, unjustly severe, or harsh.
3. It must not be partial or discriminatory
What is being espoused is uniformity of tax application. A tax uniform when it operates with the same force and effect in every place where the subject of it is sound. The uniformity rule requires merely a geographical and not intrinsic uniformity. A tax is not unconstitutional simply because it is not intrinsically equal and uniform in its operation
upon individuals. In other words, the uniformity rule does not prohibit classification for purposes of taxation (Bernas, The Constitution of the Republic of the Philippines: A Commentary, 1988). However, the classification must be based upon real and substantial differences between the persons, property or privileges and those not taxed must bear some reasonable relation to the object or purpose of legislation or to some governmental policy of legitimate end of governmental action (See Tomas P. Matic, Taxation in the Philippines, Vol. 1 pp. 79-80).
In Pepsi Cola vs. Butuan, the Supreme Court ruled that classification is permitted if ( 1) the standards used are not arbitrary but reasonable and substantial (2) the classification is
345
germane to achieve the purpose of the legislation, (3) the classification present and future conditions, other circumstances being equal, and ( 4) the classification applies equally to all those belonging to one class;
4. It must not prohibit but only regulate trade
A provision under Section 133 (e) of the LGC prohibits LGUs from imposing taxes on goods carried in or out of the municipalities. The rationale is to allow the free flow of commerce in the country and thus, avoid causing an increase in the prices of commodities to the consuming public (DOF Provincial Circular, Unnumbered, dated 4-17-4 7 cited in Ursal, Philippine Law on Taxation, 2000 Ed.)
• In the case of Wise & Co. vs. City of Manila, G.R. No. L9957, April 25, 1958, the Court declared as invalid a tax ordinance requiring the inspection of, and charging of a fee therefore, meat coming from outside city limits.
• In Saldana vs. City of Iloilo, G.R. No. L-10470, September 27, 1957, the Court declared as a forbidden export tax an inspection fee on every hog, cattle and carabao transported to other places
• The DOF likewise had directed municipal treasurers of Palawan to desist from charging outgoing fee in the transport of rice and corn from one municipality to another, (DOF, 3
rd Indorsement dated July 7, 1987 to the Provincial Treasurer of Palawan)
5. It must be generally consistent with public policy
Public policy is defined in Black's Law Dictionary as "that principle of the law which holds that no subject can lawfully do that which has a tendency to be injurious or against the public good." The term "policy" in turn is defined as "the general principles by which government is guided in the management of public affairs, or the legislature, in its measures".
Thus, since the local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body, the ordinances they enact must be consistent with the policies declared by Congress through the measures it enacted, as well as be reconciled with the national government's policies manifested through executive orders and other administrative issuances.
346
6. It must not be unreasonable
A tax is said to be unreasonable when it is unjust, excessive, oppressive or confiscatory. It is • Unjust when it is deficient in justice and fairness • Excessive when it is characterized by whatever is notably higher than what is,
reasonable, proper, usual, necessary and equitable • Oppressive when it is unreasonably burdensome, unjustly severe, or harsh, and • Confiscatory when it amounts to undue seizure or forfeiture of private property in
favor of the public treasury (Section 3, P.D. 231)
The question of reasonableness of tax rates is open to judicial inquiry, but, much is left to the discretion of the municipal authorities in setting the tax rates. Courts in fact go slow in writing off an ordinance as unreasonable unless the amount is so excessive as to be prohibitive. As a rule, Courts consider the municipal conditions as a whole and the nature of business made subject to the imposition as factors in determining the reasonableness of tax
'
rates (Victorias Milling Co. Inc. vs. Municipality of Victorias, G.R. No. L-21183, September 27, 1969)
A tax ordinance, however, does not become oppressive simply because it carries a penal clause imposing a fine or imprisonment, neither does it become unconstitutional because it subjects the taxpayers to criminal prosecution for non-payment (Villanueva vs. City of Iloilo, G.R. No. L-262521, December 28, 1968).
347
LTOAnnex 3
LOCAL REVENUE TOOL KIT FOR PHILIPPINE LGUs
The 1992 LGC provides LGUs with powerful resource mobilization tools that can be grouped into five distinct classes of potential revenue sources. These are:
I. Land - based Tools; II. Community Activity - based Tools; III. Infrastructure - based Tools; IV. Debt-based Tools; and V. Revenue sharing Tools.
Most of these tools are being effectively used by rapidly growing LGUs in the Philippines, Thailand and Indonesia.
Under the 1992 LGC, the province, as a political and corporate unit of government serves as a dynamic mechanism for the "effective governance" and development of component cities and municipalities within its territorial jurisdiction.
I. Land-Based Tools
These are potential revenue sources that rely on the real property (land and improvements) resources ofLGUs.
348
A. Basic Real Property Tax (Sec. 232). This is a yearly ad valorem tax on real property such as land, building, machinery, and other improvements. The maximum tax is 2% of the assessed value which is a percentage of the fair market value of real property. The LGC prescribes the graduated schedule of assessment for agricultural, residential, and other real property classification. LGUs are required to prepare and update every three years a schedule of fair market values for all classes of real property.
B. Special Education Fund - SEF Real Property Tax (Sec. 235). This is an additional yearly ad valorem tax on real property. The amount of tax is 1 % of the assessed value of real property and is collected together with the basic real property tax.
C. Land Transfer Tax (Sec. 135). This tax is imposed on any mode of transferring title of ownership of real property from one person to another, such as through sale, barter or donation. The amount of tax is 75% of 1 % of the total consideration or fair market value, whichever is higher, and is payable within 60 days from the execution of the deed. Sale or transfer under the Comprehensive Agrarian Reform Program is exempt from this tax. (Applicable only to cities and provinces).
D. Idle Land Tax (Sec. 236). This is a yearly ad valorem tax on idle land and is in addition to the basic real property tax and SEF. The maximum amount of tax is 5% of the assessed value of property. Idle lands include agricultural lands more than one hectare in area, one half of which remains uncultivated or unimproved; nonagricultural lands more than 1,000 square meters in area, one-half of which remain unutilized or unimproved; and residential lots in subdivision, regardless of area. (Applicable only to cities, provinces, and Metro Manila municipalities)
E. Public Land Use Tax (Sec. 235a). An LOU may collect real property tax on government lands which are used for the private benefit of individuals or corporations. For example, concessionaires or business establishments within government properties
I I
such as the lands of the Air Transportation Office may be levied real property taxes on government lands they occupy.
F. Land Sale of Foreclosed Real Properties (Sec. 257, 258 and 260). Local taxes, fees and charges constitute a lien on real properties owned by a taxpayer. An LGU may foreclose on the properties of delinquent taxpayers and sell these properties through public auction. In the absence of bidders, or if the bids are not enough to pay the tax obligation, including interests and penalties, the LGU treasurer will purchase the property for the LGU.
G. Land Investment. An LGU may acquire and develop land using its ordinary corporate powers (Sec. 18), though purchase of foreclosed real properties (Sec. 263) or through joint ventures (Sec. 302) with the private sector, or through build-operate and transfer scheme (BOT). Such investment in land development provides direct revenues to the LGU in terms of profits upon disposition and also in terms of enhanced property value and higher property tax base.
H. Land Reclassification (Sec. 20). An LGU may reclassify at most 15% (for highly urbanized and independent component cities), 10% for component cities and first to third class municipalities, 5% for fourth to sixth class municipalities of existing agricultural lands for other uses which are deemed to have greater economic value.
I. Land Development Permit Fee (557 and 558). The regulation of land development and subdivisions is one of the devolved functions to LGUs. In the exercise of the functions, LGUs may impose development permit fees, to cover the cost service in the process of issuance of a permit. Alternatively, LGUs may base the development permit fee on the financial impact or economic benefits to be derived from such a permit.
J. Tax on Sand, Gravel and other Quarry Resources (Sec. 138). This is an ad valorem tax on ordinary stones, sand, gravel, earth and other quarry resources extracted from public lands or from beds of seas, lakes, rivers, streams, creeks, and other public waters within an LGU's territorial jurisdiction. The tax should be no more than 10% of the fair market value in the locality per cubic meter. (Applicable only to cities and provinces)
II. Community Activity-Based Tools
These are potential revenue sources that rely on the flow of economic activity within the territorial jurisdiction of an LGU.
A. Business Tax (Sec. 143). Description: This is a tax imposed on various categories of business operations (manufacturer, retailer, exporter, service, etc.). The tax follows a graduated schedule based on sales or receipts of the preceding year. The LGC prescribes the graduated schedule of tax rates for the categories of business. (Applicable only to cities and municipalities)
B. Community Tax (Sec. 156). This is a yearly tax on individuals and juridical persons. An individual who is at least 18 years old and is gainfully employed or is engaged in business or occupation or owns real property with assessed value of at least Php 1,000, pays the community tax to the LGU where he resides. The amount of tax is Php 5 plus Php J for every Php J ,000 of income from all sources, but not exceeding Php 5,000. In the case of husband and wife, the additional tax is based on their total combined properties and gross income. (Applicable only to cities and municipalities)
349
,
C. Franchise Tax (Sec. 137). This is a yearly tax imposed on a business enjoying a franchise within the territorial jurisdiction of the LGU. The amount of tax is 75% of 1 % of gross receipts realized within the territorial jurisdiction of the LGU during the preceding calendar year, payable within the first 20 days of January and quarterly thereafter. For a newly started business, the amount of tax is 1/20 of 1 % of capital investment. (Applicable only to cities and provinces)
D. Tax on Business of Printing and Publication (Sec. 136). This is a yearly tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature. The amount of tax is 50% of 1 % of the gross annual receipts of the preceding calendar year. For a newly started business, the amount of tax is 1/20 of 1 % of capital investment. (Applicable only to cities and provinces)
E. Professional Tax (Sec. 139). This tax is imposed on the practice of a profession requiring government examination. The tax is for every profession practiced, i.e., a CPA-lawyer who practices both professions must pay for two professions. Professionals working exclusively for the government are exempt. The amount of tax is Php 300 per year and may be paid to the LGU where the professional resides. (Applicable only to cities and provinces)
F. Amusement Tax (Sec. 140). This is a percentage tax on gross receipts from admissions of amusement places such as movie houses, clubs and other places of entertainment. The amount of tax should not exceed 30% of gross receipts. The time, manner, terms and conditions for payment are to be prescribed by ordinance. (Applicable only to cities and provinces)
G. Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141). This is an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of products as may be determined by the local legislative council to sales outlets or consumers whether directly or indirectly within the LGU's jurisdiction in an amount not exceeding Php 500. (Applicable only to cities and provinces)
H. Fees and Charges (Sec. 147). Municipalities and cities may impose such reasonable fees and charges on business and occupation except those reserved to the province under Sec. 139 commensurate with the cost of regulation, inspection and licensing.
I. Fees for Sealing and Licensing of Weights and Measures (Sec. 148). The local legislative council may impose may levy reasonable fees for the sealing and licensing of weights and measures. (Applicable only to cities and municipalities)
J. Fishery Rentals, Fees and Charges (Sec. 149). The local legislative council may grant fishery privileges within its territorial waters and impose rentals, fees or charges. (Applicable only to cities and municipalities)
K Service Fees and Charges (Sec. 153). LGUs may impose and collect such reasonable fees and charges for services rendered.
III. Infrastructure-Based Tools
These are potential revenue sources that are based on the "user" or "beneficiary"-pay principle that is people or entities like corporations should pay for the use of or benefits derivable from public infrastructure.
350
These tools are primarily cost recovery mechanisms for infrastructure projects. However, they can be converted to loan equivalents for purposes of raising credit finance for infrastructure projects.
A. Special Levy (Sec 250). This is a tax imposed on lands specially benefited by public works projects which are funded by the local government. Public works projects which provide benefits to adjacent lands are roads, drainage, power transmission lines, water distribution lines, telecommunication lines. Benefits include appreciation in value, increased economic/commercial activities, reduced maintenance costs of property improvements, etc. The maximum amount of tax to be generated from a special levy is 60% of the actual project costs, which include cost of land and other real properties acquired in connection with the project. The tax liability is allocated among the real properties affected by the project in proportion to the benefits to be derived. The tax may be paid in yearly installment over at least 5 years but not more than 10 years.
B. Toll Fees or Charges (Sec. 155). The local legislative body may prescribe the terms and conditions and fix the rate of toll fees or charges for the use of any public road, pier, waterway, bridge, ferry, including telecommunication systems funded and constructed by the local government unit. Toll fees should be commensurate with the economic benefits derived by users of the facilities.
C. Public Utility Charges (Sec. 155). LGUs may fix the rates for the operation of public utilities owned, operated and maintained by them within their jurisdiction.
IV. Debt-Based Tools
These are tools that allow LGUs to secure debt finance for so-called "income-generating projects" and to make investments in financial debt instruments like securities - Treasury bills, commercial papers, and shares of stocks.
A. Debt Financing (Sec. 297-302). LGUs may borrow money directly from the financial/banking system- commercial or government - or other sources or through the flotation of bonds in the financial markets to fund development projects. A-LGU may use its real property as collateral for such loans. In addition to loans, credits, deferred payment schemes, bond and security issues, and other forms of indebtedness, cities are now allowed to enter into BOT agreements with the private sector.
B. Financial Investment (Sec 18). LGUs may invest in public or private financial instruments. Excess-ortdle funds may generate additional revenues through bank time deposits.
V. Revenue Sharing-Based Tools
These are tools based on national government revenues shared with LGUs as provided for in the
1992LGC. �%
A. Share in Mining, Fish1!!J!:,4r,d Forestry Taxes (Sec. 290). In addition to its IRA, LGUs shall have a {ijfo share in the gross collection derived by the national government from the preceding fiscal year from mining taxes, royalties, forestry and fishery charges, and such other taxes, fees, or charges plus any share that may accrue to it in any co-production, joint venture or production sharing agreement in the utilization and development of the national wealth within their territorial jurisdiction.
351
B. Share in the Gross Sales or Taxes of Government-Owned and Controlled Corporations (Sec. 291). LGUs may share in the gross sales or taxes of a government-owned and controlled corporation (GOCC), if it is engaged in the development and exploitation of natural resources located in a LGU.
1. Eighty percent, however, of the proceeds derived from the development and utilization of hydropower, geothermal, and other sources of energy shall be applied solely to lower the cost of electricity in the LGU where such energy sources are located.
2. The share of the LGU is 1 % of the gross sales of the preceding year or 50% of the mining taxes, royalties, forestry and fishery charges, and such other taxes, fees and charges, including related surcharges, interests, or fines the government agency or GOCC would have paid if it were not exempt.
C. Congressional funds. Members of the House of Representatives as well as members of the Senate are allocated funds that they may allocate for development projects within their respective districts or in the case of the Senators, in any location within the country that they may so choose. Congressional funds have both "hard" and "soft" components. The infrastructure funds are for identified hard capital projects such as roads, bridges, schools, hospitals, etc. while the Priority Development Assistance Funds (PDAF) are for soft type projects such as medical expenses of indigent patients or for scholarship funds.
Table G.1. Probable Infrastructure Financing Options for Philippine LGUs
Over the Next 3 Years Next 6 Years Over 6 Years
Regular Tax Sources Concessions Additional National Revenue (Property and Business Taxes) Sharing Conveyance of Development Special Assessments Other Special Taxes and Rights Charges like congestion
charges, higher vehicle ownership fees
Debt Instruments including Development Impact Bonds Fees Tax Incentives and Government Land Readjustment Guarantees User Fees and Charges
Source: Annex G of N. R. Ramos, Investment Programming and Revenue Generation Guidelines, ADB, 2007
352
\
\ I
LTOAnnex4
PROCESS FLOW IN THE RECEIPT AND COLLECTION OF REAL PROPERTY TAX
Sequence No.
Process Person/Unit Responsible
1 Receives payment from taxpayer and verifies Collector/Teller/Deputized correctness of amount by checking against the ff. Barangay Treasurer (BT) documents presented by the taxpayer:
- RPT Order of Payment (RPTOP) - OR issued for last payment of RPT - Tax Roll from Municipal Assessor - Latest tax declaration
2 Checks computation of tax amount as to discounts Collector/Teller/Deputized
3
4
and penalties. Issues official receipt or Real Property Barangay Treasurer Tax Receipt (RPTR) to the taxpayer for the payment.
Note: ORs!RPTARs are prepared in 3 copies: Original to taxpayer, duplicate to be attached to the RCD, and triplicate for file to be posted to the individual taxpayer's Real Property Tax Register (RPTAR).
After designated cut-off time, prepares the Report of Collections and Deposits (RCD) in 5 copies to be distributed as follows:
Original -Accounting Unit 2nd copy - Treasurer/Cashier 3rd copy - Liquidating Officer 4th copy- Local Internal Control Officer 5th copy -Collector/Teller's file
Note 1: Individual collectors/tellers shall indicate in the RCD the sharing of the RPT collections: Basic Tax, SEF, Provincial Share, LGU Share and Barangay Share.
Note 2: Turns over to LO or Cashier for safekeeping all collections after cut-off time and after preparation of the RCD, supported by a list of denominations
Prepares the Summary of Collections and Remittances (SCR) in 3 copies to be distributed as follows:
Original - City/Municipal Treasurer/Cashier Duplicate -Barangay Record Keeper (BRK) Triplicate - File of BT
Collector/Teller
Deputized Barangay Treasurer
353
354
5
6
Turns over intact all collections to the Liquidating Officer (LO) supported by the RCD (all copies) and duplicate ORs.
Turns over intact all RPT collections to the City/Municipal Treasurer supported by the 1st and 2
nd copies of the SCR and duplicate ORs/RPTRs.
Collector/Teller
Deputized Barangay Treasurer
7 Posts total RPT collections and amounts remitted to Collector/Teller/Deputized the LO/City/Municipal Treasurer in his Cashbook. Barangay Treasurer
8 Gives triplicate copy of ORs/RPTRs to Subsidiary Collector/Teller/Deputized
9
10
11
12
13
14
Clerk for posting of payments to individual Barangay Treasurer taxpayer's Real Property Tax Register (RPTAR).
Receives remittances and supporting documents from collector/teller. Checks remittances against duplicate ORs and RCDs. Checks RCD for correctness of computations and distribution of RPT collections.
Acknowledges remittances of RPT collections by signing the Verification and Acknowledgment portion in all copies of RCDs of collectors/tellers. Verifies accountable forms (ORs/RPTRs) used by collectors/tellers by affixing his signature at the back of the 3rd copy of the last OR issued by the collectors/tellers. Returns one copy of signed RCD to Collector/Teller.
Receives for safekeeping RPT collections by collectors/tellers beyond cut-off time, either places them in his own safe or turns them over to the Treasurer/Cashier for safekeeping. Issues an acknowledgment slip for amounts received.
Based on RCDs of collectors/tellers, prepares RCD in 4 copies to summarize all collections and reports turned over by collectors/tellers, including his own collections, if any.
Tums over intact all collections remitted by collectors/tellers and his own collections, if any, to the Treasurer/Cashier supported with the following:
- All copies of RCDs of Liquidating Officers - Duplicate ORs - Original and 2 copies of RCDs of
collectors/tellers
Posts amount of collections remitted to the Treasurer/Cashier in his Cashbook.
Liquidating Officer
Liquidating Officer
Liquidating Officer
Liquidating Officer
Liquidating Officer
Liquidating Officer
15
16
17
18
19
20
21
22
23
Receives RPT collections and supporting documents from the LO(s). Test-checks accuracy and completeness of remittances by comparing the RCDLO to the RCDs of collectors/tellers and duplicate ORs. To insure that all collections and RCDs submitted by collectors/tellers are included in the RCD-LO, regularly confirms remittances directly from the collectors/tellers.
Receives RPT collections and supporting documents from the Deputized Barangay Treasurer(s). Examines the SCR as to completeness of supporting documents and correctness of recording of the ORs/RPTRs.
Acknowledges remittance of collections from LOs by signing the Verification and Acknowledgment portion in all copies of the RCD-LO. Returns one signed copy of RCD to Liquidating Officer.
Acknowledges remittance of collections from Deputized BT by s1gnmg the Verification and Acknowledgment portion of the SCR. Verifies the accountable forms (ORs/RPTRs) used by the Deputized BT by affixing his signature at the back of the 3rd copy of the last ORIRPTR issued. Returns 2nd
and 3rd copies of the SCR to the Deputized BT.
Posts amounts remitted by LO(s) and Deputized BT(s) to the Treasurer's Cashbook-Cash in Treasury.
After the day's cut-off time or the next banking day, prepares deposit slip in 3 copies and deposits intact collections to the LGU's depository bank. The deposit slip shall be distributed as follows:
Original - Depository Bank Duplicate - to be attached to the Report of
Collections and Deposits Triplicate - Treasurer/Cashier file
Obtain validated deposit slip from the LGU's depository bank.
Based on the bank-validated deposit slip, posts amounts deposited in the Treasurer's Cashbook-Cash in Treasury and Cashbook - Cash in Bank.
Based on the RCD-LOs and SCRs, prepares the Report of Collections and Deposits in 3 copies to consolidate all remittances of LOs and Deputized BTs as basis in the recording of total RPT collections
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
Treasurer/Cashier
355
by the Accounting Unit. 24 Submits 2 copies of the Report of Collections and
Deposits to the Accounting Unit supported by the Treasurer/Cashier following:
- Duplicate ORs - Bank-validated Deposit Slip - RCD of Liquidating Officer (s) - RCD of Collectors/Tellers - SCR of Deputized Barangay Treasurer
25 At the end of each quarter, prepares the Quarterly Report of Real Property Tax Collections for Treasurer/Cashier submission to the BLGF Regional Office.
356
LTO Form 5
CASHBOOK
LGU
CASH IN TREASURY
Date Particulars Reference Debit Credit Balance
357
CASH BOOK (Cash in Treasury)
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. LGU- name of the province/city/municipality 2. Fund- fund name/code 3. Date- date of the source documents 4. Particulars- details or nature of transactions 5. Reference - the number of Report of Collections and Deposits 6. Debit - the amount of collections based on RCD 7. Credit- the amount deposited with the banks based on the RCD's attached deposit slips 8. Balance - the difference between the Debit and Credit columns, which shall be equal to
the amount of cash in the hands of the Treasurer.
B. The Treasurer shall maintain this record to monitor the cash in treasury balance as of specific dated. All transactions for the day shall be recorded immediately
C. At the end of each day, the debit and credit shall be ruled and closed. All totals shall be written legibly in ink and the balances shall be carried forward as opening balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with the running balance column.
358
LTO Form 6
CASHBOOK
LGU
Bank Account No.:
CASHIN BANK
Date Particulars Reference Debit Credit Balance
359
CASH BOOK (Cash in Bank)
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Fund- the Fund name/code 3. Bank Account No. - the bank name and account number 4. Date - date of the source documents 5. Particulars - details or nature of transactions 6. Reference - the number of the source document 7. Debit - the amount deposited for the day based on the RCD's deposit slips and interest
income and other related transactions based on Journal Entry Vouchers (JEV) 8. Credit - the amount of checks issued for the day based on the Checks/Bank Advise and
withholding taxes/charges and other charges based on JEV 9. Balance - the difference between the Debit and Credit columns which shall be equal to
the amount of Cash in Bank.
B. The Treasurer shall maintain this record to monitor the cash in bank balance as of specific date. All transactions for the day shall be recorded immediately.
C. At the end of each day, the debit and credit shall be ruled and closed. All totals shall be written legibly in ink and the balance shall be carried forward as opening balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with the running balance column.
360
LTO Form 7
CASHBOOK
LGU
Disbursing Officer:
CASH ADVANCES
Date Particulars Reference Debit Credit Balance
'
361
CASH BOOK (Cash Advances)
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Disbursing Office - name of Disbursing Officer
3. Fund- the fund from which cash advance was made 4. Date - date of the source documents 5. Particulars - details or nature of transactions
6. Reference - the number of the Voucher Payroll
7. Debit - the amount advanced by the Disbursing Officer based on the Voucher Payroll
8. Credit- the amount disbursed out of the cash advances 9. Balance - the difference between the Debit and Credit column which shall be
equal to the amount of cash in hand of Disbursing Officers.
B. The Treasurer shall maintain this record to monitor the cash advances balance as of specific date. All transactions for the day shall be recorded immediately.
C. At the end of each day, the debit and credit shall be ruled and closed. All totals shall be written legibly in ink and the balances shall be carried forward as opening balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with the running balance column.
362
CASHBOOK LIQUIDATING
OFFICER
LGU
LTO Form 8
Liquidating Officer: __________ _:_F--=u:..:....:..;:nd: _________ _
Collections Collections Un remitted Remitted to Collections
Date Particulars Reference Received Cash ier/Treasur e�Balance or (DR) fr,R) H::inrl
363
CASHBOOK- LIQUIDATING OFFICER
INSTRUCTIONS
A. This form shall be accomplished as follows:
364
l . LGU - name of the province/city/municipality 2. Liquidating Officer - name of the designated liquidating officer 3. Date - date of the source documents 4. Particulars - details or nature of transactions 5. Reference- the number of the source document 6. Debit- collections remitted by the tellers and market/field collectors and base on RCD. 7. Credit - amounts remitted or tum-over to the treasurer/cashier supported by RCDs and
duplicate Ors of tellers/collector 8. Balance - the difference between the Debit and Credit column which shall be
equal to the amount of cash on hand not yet turned over to the treasurer/cashier.
LTO Form 9
CASHBOOK-TELLER/COLLECTOR
LGU
Teller/Collector:
Collections Collections Unremitted
Date Particulars Reference Received Remitted to Collections
(DR) Liquidating (Balance on Officer (CR) Hand)
\
365
CASH BOOK - TELLER/COLLECTOR
INSTRUCTIONS
A. This form shall be accomplished as follows:
366
1. LGU - name of the province/city/municipality 2. Teller/Collector - name of the designated teller/collector
3. Date - date of the source documents 4. Particulars - details or nature of transactions 5. Reference - the number of the source document 6. Debit - collections received by individual tellers and market/field collectors and base on
individual RCDs. 7. Credit- collections remitted to the designated liquidating officers supported by ORs/Cash
tickets 8. Balance - the difference between the Debit and Credit column which shall be
equal to the amount of cash on hand not yet remitted to the designated liquidating officer.
w
°' -.)
LTOForm 10
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS
LGU
Month of 20
Accountable Officer: Designation: Report No.:
Beginning Balance Receipt Issued Ending Balance
Name of Form & No. Inclusive Serial Nos Inclusive Serial Nos Qty.
Inclusive Serial Nos Qty.
Inclusive Serial Nos. Qty. Qty.
From To From To From To From To
CERTIFICATION:
I hereby certify that the foregoing is a true statement of all accountable forms received, issued and transferred by me
during the period above-stated and the correctness of the beginning balances.
Name and Signature of the Accountable Officer Date
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS (RAAF)
INSTRUCTIONS
A. The report shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Month -- month on which the report is made 3. Accountable Officer - name of accountable officer 4. Designation - position/designation 5. Report No. - number assigned by the Treasurer/Collectors/Accountable Officers 6. Name of Forms & No. - name of accountable forms under the custody of the
accountable officers. Indicate the corresponding code number of each form. 7. Beginning Balance - balance of the accountable forms available at the beginning of
the month. Indicate inclusive serial numbers. 8. Receipt - number of units received by the accountable officers during the month.
Indicate inclusive serial numbers. 9. Issued - number of units issued by the accountable officers during the month.
Indicate inclusive serial number. 10. Ending Balance - remaining units of the accountable forms still in the custody of
the accountable officers at the end of the month. Indicate inclusive serial number.
B. The report shall be prepared in two copies and to be distributed as follows:
Original - Treasurer 2nd copy - Accountable Officer's file
C. Treasurers, collectors/tellers and other accountable officers shall render this report of accountability for accountable forms at the end of each month for consolidation by the local treasurer.
D. The report shall be certified correct by the Treasurer/ Accountable Officers.
368
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LTO Form 11
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS
LGU
Month of 20
Treasurer: Report No.:
Beginning Balance Receipt Issued Ending Balance
NameofForm AF Inclusive Serial Nos Inclusive Serial Nos Qty.
Inclusive Serial Nos Qty.
Inclusive Serial Nos. Qty. Qty.
No. From To From To From To From To
Certified Correct:
Treasurer Date
CONSOLIDATED REPORT OF ACCOUNT ABILITY FOR ACCOUNTABLE FORMS (CRAAF)
INSTRUCTIONS
A. The report shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Month - month on which the report is made 3. Trea6urer - name of the Treasurer 4. Report No. - number assigned by the Treasurer's Office on the report 5. Name of Forms - name of accountable forms under the custody of the accountable
officers. 6. Code no. -corresponding code number of the accountable forms 7. Beginning Balance- balance of the accountable forms available at the beginning of
the month. Indicate inclusive serial numbers. 8. Receipt - number of units received by the accountable officers during the month.
Indicate inclusive serial numbers. 9. Issued - number of units issued by the accountable officers during the month.
Indicate inclusive serial number. 10. Ending Balance -remaining units of the accountable forms still in the custody of
the accountable officers at the end of the month. Indicate inclusive serial number.
B. The report shall be prepared in two copies and to be distributed as follows:
Original -COA through the Accounting Office 2
nd copy - Treasurer's file
C. The Treasurer shall render this report to consolidate the Report of Accountability for Accountable Forms
D. This consolidated report shall be accompanied by the RAAF of all accountable officers which shall be submitted to the auditor not later than the fifth day of the ensuing month
370
LTO Form 12
Page 1 of 2
REPORT OF COLLECTIONS AND DEPOSITS
LGU
Fund: Date:
Name of Accountable Officer: Report No.:
A. COLLECTIONS
1. For Collectors
Type (Form No.) Official Receipt/Serial No.
Amount From To
2. For Liquidating Officers/Treasurers
Name of Accountable Officer Report No. Amount
B. REMITTANCES/DEPOSITS
Accountable Officer/Bank Reference Amount
371
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REPORT OF COLLECTIONS AND DEPOSITS (RCD)
INSTRUCTIONS
A. The report shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Fund - Fund name/code 3. Name of Accountable Officer - the name of the accountable officer 4. Date - date of the report
5. Report No. - shall be numbered one series per year 6. COLLECTIONS -
For Collectors
a. Type (Form No.) - type of official receipts used b. Official Receipt No.(From _To_) - serial number of the Official Receipts
issued by the Treasurer/ Accountable Officer including the cancelled ones in chronological and numerical sequence
c. Amount - amount of collections received
For Liquidating Officers/Treasurers
a. Name of Accountable Officer - the name of collector/accountable officer remitting the collections
b. Report No. - the reference number of the Report of Collections and Deposits of the Collector, bearing the collector no. and the series
c. Amount - amount of collections received from collectors/liquidating officers, taxpayers and other sources
7. REMITTANCES/DEPOSITS
a. Accountable Officers/Bank - the name of the liquidating officer to whom the collections were remitted or the name of the depository bank
b. Reference - reference documents used as basis in the remittance/deposit of the collections like the RCD number/deposit slip.
c. Amount - amount of remittances/deposits
8. ACCOUNTABILITY FOR ACCOUNTABLE FORMS
a. Name of Forms & No. - the name(s) of the form(s) (checks/official receipts/etc.) for which this report is being made shall be written in the boxes provided
b. Qty. and Serial no. - the quantity and the corresponding serial numbers of the forms on hand at the start of the period; those received, and those issued or transferred during the period covered; and the balance at the end of the period shall be entered in these columns.
373
9. SUMMARY OF COLLECTIONS AND REMITTANCES/DEPOSITS - A summary shall be prepared as shown in the report.
10. Certification - shall be signed by the Accountable Officer preparing the report.
11. Verification and Acknowledgement - shall be signed by the Treasurer/Liquidating Officer receiving the RCD and corresponding remittances. In case of RCD of the Local Treasurer, this portion shall no longer be filled up. However, the validated deposit slip/remittance advice from the bank shall be attached to the report.
B. This report shall be prepared in four (4) copies and to be distributed as follows:
Original - COA thru the Accounting Division together with the duplicate copy of the OR
211d Copy - Treasurer's file
3rd Copy - Liquidating Officer's file
4111 Copy - Collector's file
C. Collections for the day should be deposited intact daily. The balance of collections not deposited during the day due to cut-off should be deposited in the next working day.
374
LTO Annex 13 Process Flow on LGU Receipts, Collections and Deposits
Area of Responsibility/Pers
on Responsible Seq. Activity
Collector/Teller 1 Receives payment from taxpayers/ creditors and issues Official Receipt (OR). Prepares Report of Collections and Deposits. Remits to the Liquidating Officer (if one is designated) or Treasurer.
Liquidating Officer 2 Checks remittances and verifies accountable forms of collectors/tellers. Consolidates collections and remits to
the Treasurer/Cashier. Prepares RCD
Receives/remits collections, consolidates the same and Treasurer 3 prepares RCD. Records in the Cashbook- Cash in
Treasury.
Deposits collections in the appropriate bank account per Treasurer/Liquidating 4 authorized depository bank. Records deposit in the
Officer Cashbook - Cash in Bank.
Treasurer 5
Forwards RCD to Accounting Unit with copies of ORs and validates deposit slips.
Prepares Journal of Entry Voucher and records in the Accountant 6 Cash Receipt Journal.
375
376
LTO Form 14
F� --,�------
siatementatRecefi>tl--and Ex�e·n-ciftufes·····-:I ..... .... . . ·· Jl?<�il:li_�_ �-- ·l Province/City/Municipality
2 Period Covered Population:
Particular 3
A
5 LOCAL S OURCES (6+10) 6 TAX REVENUE (7+8+9) 7 Real Property Tax
8 Tax on Business 9 Other Taxes
10 NON·TAXREVENUE(11+12+13+14) 11 Regulatory Fees (Permit and Licenses) 12 Service/User Charges (Service Income)
13 Income from Economic Enterprise (Business Income) 14 Other Receipts (Other General Income) 15 EXTERNAL SOURCES (16+17+18+19)
16 Internal Revenue Allotment
17 SHARES FROM NATIONAL TAX COLLECTIONS 18 INTER-LOCAL TRANSFER 19 EXTRAORDINARY RECBPTS/GRANTS/IX>NA TION/AIDS 20 TOTAL CURRENT OPERATING INCOME (5+15)
Income
Target/
Budget Appro.
B
21 LESS: CURRENT OPERATING EXPENDITURES (PS + MOOE+FE) 22 General Public Service 23 Department of 6:lucation 24 Health, Nutrition & Population Control 25 Labor & Employment 26 Housing & Corm-unity Development 27 Social Services & Welfare 28 Economic Services 29 Debt Service (FE) (interest Expenses & Other Charges) 30 Other Services 31 TOTAL CURRENT OPERATING EXPENDITURES (22 to 30)
General Fund
c
32 NET OPERATING INCOME/(LOSS) FROM CURRENT OPERATIONS(20·31)
SEF
D
% of General Total + SEF to
(C + D) Total Income •
E "F
��_l?D:NON INCO�M::c_:E::..:..REC:::::�El=:.P�T�S=-����-�� ��� l-���-+ ���--+��---l���--1�����---l 34 CA PITAL/INVESTMENT RECEIPTS (35+36+37) 35 Proceeds from Sale of Property, Rant & Equipment 36 Proceeds from Sale of Debt Securities of Other Entities 37 Collection of Loans Receivables 38 RECEIPTS FROM LOANS AND BORROWINGS (39+40) 39 Acquisition of Loans 40 Issuance of Bonds 41 TOTAL NON-INCOME RECEIPTS (34+38) 42 LESS : NON OPERATING EXPENDITURES 43 CAPITAL/INVESTMENT EXPENDITURES (44+45+46) 44 Purchase/Construct of Property Rant and Equipment (Capital Outlay) 45 Purchase of Debt Securities of Other Entities (Investment Outlay) 46 Grant/Make Loan to Other Entities (Investment Outlay) 47 DEBT S ERVICE (48+49) (Principal Cost) 48 Payment of Loan Amortization\ 49 Retirement/Redemption of Bonds/Debt Securities 50 TOTAL NON-OPERATING EXPENDITURES (43+47) 51 NET INCREAS E/(DECREAS E) IN FUNDS (32+41-50) 52 ADD: CASH BALANCE, BEGINNING 53 FUNDS AVAILABLE (51 +52) 54 Less: Payment of Prior Year Accounts Payable 55 FUND BALANCE, END (53-54)
Exhibit 1-a
Guidelines on the Preparation of the Statement of Receipts and Expenditures
Item
No. Field Instructions Source 1 Province/City/ Indicate the name of Local Government LGU
Municipality Unit. 2 Period Indicate the period covered by the report LGU
(i.e., January 1 to March 31 for the First Quarter Report, January 1 to June 30 for the Second Quarter Report; etc.)
3 Population The LGU population based on the official BLGF -CO record of the National Statistic Office (NSO) is provided by the system.
4-B Income The amount is based on the annual budget Budget Target/Budget approved by the Sanggunian. This column Office Appropriation can be used to determine the projected cash Approved
Column flow based on the approved budget. Budget
4-C General Fund These are actual receipts and expenditures SRS Actual Column lifted from the Statement of Receipt Column and
Sources (SRS) and Statement of SOE Actual
Expenditures (SOE) for the General Fund Expenditures Column
4-D SEF Column They are receipts and expenditures lifted from the Statement of Receipt Sources and Statement of Expenditures (SOE) appropriate to the Special Education Fund (SEF)
4-E Total Sum of General Fund and SEF 4-F % of General + Sum of General Fund and SEF divided by
SEF to Total Total. The sum determines the % of each Column income or expenditure category in relation
to the total. 5 Local Sources Sum of Tax Revenue and Non-Tax Revenue 6 Tax Revenue Sub-total of Real Property Tax, Tax on
Business and Other Taxes. 7 Real Property The amount should be lifted from the SRS SRS 8 Tax on Business The amount should be lifted from SRS SRS 9 Other Taxes The amount should be lifted from SRS SRS
10 Non-Tax Revenue Sum of Regulatory fees, Service/User Charges, Income from Economic Enterprise and Other Receipts
11 Regulatory Fees The amount should be lifted from SRS SRS 12 Service/User The amount should be lifted from SRS SRS
377
13 Income from The amount should be lifted from SRS. SRS Economic Enterprises
14 Other Receipts The amount should be lifted from SRS SRS 15 External Sources Sum of Internal Revenue, Shares from
Other National Tax Collections, Inter-Local Transfer and Extraordinary Receipts/Grants/ Aids/Donations
16 Internal Revenue The amount should be lifted from SRS SRS Allotment
17 Shares from Other The amount should be lifted from SRS SRS National Tax Collections
18 Inter-Local The amount should be lifted from SRS SRS Transfer
19 Extraordinary The amount should be lifted from SRS SRS Receipts/Grants/ Aids/Donations
20 Total Current Sum of Local Sources and External Sources Operating Income
22 General Public The amount should be lifted from the SOE Service General Public Services sub total of the
Statement of Expenditures (SOE) 23 Department of The amount should be lifted from the SOE
Education Department of Education sub-total of the SOE
24 Health, Nutrition The amount should be lifted from Health, SOE & Population Nutrition & Population Control sub-total of Control the SOE
25 Labor and The amount should be lifted from the Labor SOE Employment and Employment sub-total of the SOE
26 Housing and The amount should be lifted from the SOE Community Housing & Community Development sub-Development total of the SOE
27 Social Services The amount should be lifted from the Social SOE and Welfare Services and Welfare sub-total of the SOE
28 Economic The amount should be lifted from Economic SOE Services Services sub-total of the SOE
29 Debt Service The amount should be lifted from Debt SOE Service sub-total of the SOE
30 Other Services The amount should be lifted from Other SOE Services SOE
378
31 Total Current Sum of General Public Service, Department --
Operating of Education, Health, Nutrition & Expenditures Population Control, Labor and
Employment, Housing and Community Development, Social Services and Welfare, Economic Services, Debt Service and Other Services.
32 Net Operating The difference between Total Current Income (Loss) Operating Income and Total Current from Current Operating Expenditures. Operation
34 Capital/ Sub-total of Receipts from Sale of Property, Investment Plant and Equipment, Receipt from Sale of Receipts Debt Securities of Other Entities, and
Collection of Principal on Loans to Other Entities
35 Proceeds from The amount should be lifted from SRS SRS Sale of Property, Plant and Equipment
36 Proceeds from The amount should be lifted from SRS SRS Sale of Debt Securities of Other Entities
37 Collection of The amount should be lifted from SRS SRS Loans Receivables
38 Receipts from Sub-total of Acquisition of Loans and Loans and Issuance of Bonds Borrowings
39 Acquisition of The amount should be lifted from SRS SRS Loans
40 Issuance of Bonds The amount should be lifted from SRS SRS 41 Total Non- Sum of Capi tal/lnvestment Receipts and
Income Receipts Receipts from Loans and Borrowings 43 Capital/ Sub-total of Purchase/Construct of
Investment Property, Plant and Equipment (Capital Expenditures Outlay expenditures), Purchase of Debt
Securities of Other Entities, and Grant/Make Loan to Other Entities
44 Purchase/ Capital Outlay expenditures - The amount SOE Construct of should be lifted from SOE Property, Plant and Equipment
45 Purchase of Debt The amount should be lifted from SOE SOE Securities of
379
47 Debt Service Sub-total of Payment of Loan Amortization and Retirement/Redemption of Bond/Debt Securities
48 Payment of Loan The amount should be lifted from SOE SOE Amortization (Principal)
49 Retirement/Rede The amount should be lifted from SOE SOE mption of Bond/Debt Securities
50 Total Non- Sum of Capital/Investment Expenditures and Operating Debt Service Expenditures
51 Net Increase Sum of Net Operating Income, Total Non-(Decrease) in Income Receipts less Total Non-Operating Funds Expenditures
52 Cash Balance The amount is the ending cash balance per Treasurer Cash
Beginning Balance Sheet of last year (Dec. 31,) or Cash Book reconciled
Flow Statement. The ending cash balance per with Accounting
Cash cash flow is assumed to be reconciled with the Flow/Balance Cash Book maintained by the Treasurer Sheet
53 Funds Available Sum of Net Increase (Decrease) in Funds and Cash Balance Beginning
54 Payment of Prior The amount should be lifted from SOE SOE Year Accounts Payable
55 Fund Balance, Sum of Fund Balance Available less Payment End of Prior Year Accounts Payable
Fund Balance Reported at year end. The breakdown of Accounting Composition funds/cash shall be source from the Office Notes
Accounting office since this information is to Financial included in the annual report submitted to Statement at COA specifically in the Notes to Financial year-end Statements. Fund balance breakdown is not limited to the format shown in Exhibit 1 but the important information required is how
much fund/cash is available or free for
avvropriations as of the reporting date Other important information that needs to be disclosed should be made as Notes to SRE
380
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Barangay: Barangay Treasurer:
Date Particulars Ref . Receipts Deposits
LTO Form 15
CASH RECEIPTS AND DEPOSITS REGISTER
City/Municipality: CRDReg No.:
Province: Page:
Distribution of Receipts Undeposited/ Remittance Clearance Business
C/MT Unremitted Garbage Rent Misc. OTHERS (See List at the Back) Collectioo IRA RPT Market Fees & Cert. Permit
Fees Fees Fee
Income Income Account Classification Amount
Certification:
I hereby certify to the correctness of the above data. Recordings are based on the certified SCDs supported
with duplicate ORs and VDS submitted by the BT, CMs, and bank statements which are all in my file.
Barangay �ecord Keeper Date
CASH RECEIPTS AND DEPOSITS REGISTER
INSTRUCTIONS
A. This form shall be accomplished as follows: 11. Distribution of Receipts - amount
received and distributed to the
382
1. Month - the month covered by the Register
2. CDRReg No - The CDRReg shall be numbered as follows:
O
�
O O
Lb
O OOL
OO
Serial number (one series per year) Month of Issue Date of Issue
3. Page - number assigned to the sheet
4. Date - reference date of the document
5. Particulars - brief description of the collections/income received
6. Reference - the SCE, CM number and bank statement supporting and recording
7. Receipts indicated Banks
- total receipts in the SCD, CM
as and
8. Deposits - total deposits made per SCD
9. Remittances - total remittances to C/MT per SCD
10. Undeposited/Unremitted Collections -beginning balance plus receipts less deposits/remittance
appropriate income account
12. Others - collection which could not
be accommodated in the specific
Columns
Account Classification - account used Amount - amount received
B. At the end of the month, the Register
shall be totalled, balanced, ruled,
recapitulated and certified as to the
correctness. The ruling shall be made
on the line immediately after the last entry.
C. At the start of each month, the register
shall be used. In case where more than one sheet shall be utilized, each sheet
shall be totalled and the totals shall be
carried forward to the next sheet. The
succeeding sheets shall start with the totals brought forward.
D. The Register shall be certified and
Distributed as follows:
Original - City/Municipal Accountant 2nd copy -BRK
E. The certified Register shall be submitted
to the City/Municipal Accountant on or
before the 5th day of the following month supported with the certified SCDs
F. All supporting documents to the SCDs
shall remain with the BRK and shall be made available to COA representative
anvtime for examination/audit.
I
LTO Form 16
CASH ON HAND and IN BANK REGISTER
Baran gay:
Barangay Treasurer:
Date Particulars Ref
Certification:
I hereby certify to the correct,,ess of the above data. Recording
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is based on the SCDs, SCkls, Debit/Credit Memos and Bank
Statement received which are all submitted to the BRK.
Barangay Treasurer Date
City/Municipality:
Province:
Receipt
(In)
CHBReg No.:
Page No.
Cash on Hand Cash in Bank
Deposit Balance
D eposits/CM/B n kS Checks/DM/BnkS Balance
(Out) (In) (Out)
Acknowledgement:
This is to acknowledge that I have received from BT the CHBReg
supported with SCDs, SCkls, Credit/Debit Memos and Bank Statements
together with all the supporting documents.
Barangay Record Keeper Date
CASH ON HAND AND IN BANK REGISTER
A. This Register form shall be accomplished as follows:
384
1. Month - the month covered by the Register
2. CHBReg No - The CHBReg shall be numbered as follows:
00 00 0000
�
Serial number
(one series per year)
Month of Issue
Date of Issue
3. Page - number assigned to the sheet
4. Date - date of the SCD, SCkl and bank OM/CM
5. Particulars - details or nature of receipts and payments
6. Reference - reference number of the documents
7. Cash on Hand -Receipts (In) - collections per SCD shall be recorded in this column Deposit (Out) - the deposit of collection as reported in the SCD shall be recorded in this column Balance - the running balance of the cash on hand representing the undeposited collection (Beg. Balance + Receipts (In) - Deposits (Out)
8. Cash in Bank Deposit (In) - the deposit made as reported in the SCD and CM/Banks shall be recorded in this column
I I INSTRUCTIONS
Check Issued (Out) - all checks issued reported in the SCkl and bank charges per DMs as shown in the Banks shall be recorded in this column Balance - running balance of the cash in bank available for withdrawal (Beg. Balance + Deposit (In) - Checks Issued (Out)
A. Daily, the BT shall record all the receipts and deposits based on the SCD, all checks issued based on the SCkl and DM
B. At the end of the month, the amount columns shall be totalled, balanced and ruled. The balance shall be forwarded to the next month as beginning balance. The ruling shall be made on the line immediately after the last entry.
C. At the start of each month, a new sheet shall be used. In case where more than one sheet shall be utilized, for the month, each sheet shall be totalled and the totals shall be carried forward to the next sheet. The succeeding sheets shall start with the totals _brought forward.
D. The certification shall be signed by the BT and the acknowledgment shall be signed by the BRK
E. The certified report shall be distributed as follows: Original - City/Municipal Accountant
2nd copy -BT 3rd copy -BRK
F. On the 5th day of the following month, the certified report shall be distributed to the City/Municipal Accountant supported with the certified SCDs
G. All supporting documents to the SCD and SCkl shall remain with the BRK and shall be made available to GOA the COA for examination/audit
LTO Form 17
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS For the period
Barangay City/Municipality: RAAF No.
Barangay Treasurer Province
Accountable Forms Beginning Balance Receipt Issuance Ending Balance
Name of GF Face Qty
Inclusive Serial No. Qty
Inclusive Serial No. Qty
Inclusive Serial No. Qty
Inclusive Serial No.
Form Number Value From
A. WITH FACE VALUE
B. WITHOUT FACE VALUE
A. CERTIFICATION I hereby certify that the foregoing is a true statement
of all accountable forms received and issued during the perio above stated and that the beginning and ending balance are correct
Signature over Printed Name
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Baranqay Treasurer Date
To From To From To From To
B. ACKNOWLEDGEMENT C. CERTIFICATION
I hereby acknowledge receipt of the RAAF for the above stated I hereby certify that all items enumerated in the "receipt" portion are the only items issued by this office.
Signature over Printed Name Date Signature over Printed Name Date
Baranqay Record Keeper City/Municipal Treasurer
REPORT ON ACCOUNTABILITY FOR ACCOUNTABLE FORMS
INSTRUCTIONS
A This Report shall be accomplished as follows:
1 . Month/Year - month/year on which the report is made
2. RAAF No - The RAAF shall be numbered as follows:
Se1-ial number
(one series per year)
Month oflssue
Year of Issue
3. Accountable form.s - name of fo,-m, General form (GF) number and face value of accountable forms under the custody of the accountable officer
4. Beginning Balance quantity of accountable forms available at the beginning of the month (indicate inclusive serial number)
5. Receipt - number of units received during the month (indicate inclusive serial numbers)
6. Issuance - number of units received during the month ( indicate inclusive serial numbers)
7. Ending Balance accountable forms still in the custody of the accountable officers at the end of the month (indicate inclusive serial numbers)
B_ Box A Certification -to be signed by the BT C. Box B Certification -to be signed by the BRK D. Box C Acknowledgement - to be signed by the City/Municipal T,-easurer
386
E. Accountable Forms shall be grouped as follows:
• With face value • Without face value
C. This report shall be prepared in three copies to be distributed as follows: Original - city/municipal treasurer (to be attached in the consolidated RAAF) 2
11d copy -BRK
3 rd copy-BT G. This shall be prepared monthly by the BT having custody of any accountable forms
LTO Form 18
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS For the period
Baran gay City/Municipality: RAAF No. Barangay Treasurer Province
Accountable Forms Beainnino Balance Receipt Issuance Ending Balance Name of GF Face
Qty Inclusive Serial No.
Qty Inclusive Serial No.
Qty Inclusive Serial No.
Qty Inclusive Serial No.
Form Number Value From A. WITH FACE VALUE
B. WITHOUT FACE VALUE
A. CERTIFICATION I hereby certify that the foregoing is a true statement
of all accountable forms received and issued during the
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perio above stated and that the beginning and ending balance are correct
Signature over Printed Name Date Barangay Treasurer
To From To From To From To
B. ACKNOWLEDGEMENT C. CERTIFICATION I hereby acknowledge receipt of the RAAF for the above stated I hereb certify that the above
accountable form were issued by this office
Signature over Printed Name Date Signature over Printed Name Date Baranaav Record Keeper City/Municipal Treasurer
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR
ACCOUNTABILITY FORMS
INSTRUCTIONS
A This Report shall be accomplished as -follows:
1. Month/Year - month/year on which the report is made
2. RAAF No -The RAAF shall be numbered as follows:
o� Serial number
(one series per year) Month of Issue
Year of Issue
3. Accountable forms - name of form, General form (GF) number and face value of accountable forms under the custody of the accountable officer
4. Beginning Balance quantity of accountable forms available at the beginning of the month (indicate inclusive serial number)
5. Receipt - number of units received during the month (indicate inclusive serial numbers)
6. Issuance - nu1nber of units received during the month ( indicate inclusive serial numbers)
7. Ending Balance accountable forms still in the custody of the accountable officers at the end of the month (indicate inclusive serial numbers)
B. Box A Certification -to be signed by the bt C. Box B Acknowledgement - to be signed by the BRK
388
D. Box C Certification -to be signed by the City/Municipal Treasurer E. Accountable Forms shall be grouped as follows:
• With face value • Without face value
C. This report shall be prepared in three copies to be distributed as follows:
Original -City/Municipal Treasurer 2
nd copy -BT/DBC 3 rd copy- BRK
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LTO Form 19
Summary of Collections and Deposits
For the period
Barangay: City/Municipality: SCD No.:
Barangay Treasurer: Province: Bulacan Page:
Date ORJVDS/SCR No. Payor/Bank Particulars Barangay As deputized by City/Municipality
Collections Deposit Balance Collection Remittance Balance
Certification: Acknowledgment:
I hereby certify that the foregoing is the complete and correct I hereby acknowledge to have received the SCD
records of all my collections and deposits from to --·
complete with the duplicate copies of the ORs issued,
2007. The duplicate copies of the ORs issued, SCRs and the SCRs and the VDS covering deposits as reported.
originals of the VOS are hereto attached.
Barangay Treasurer Barangay Record Keeper
SUMMARY OF COLLECTIONS AND DEPOSITS INSTRUCTIONS
A. This form shall be accomplished as follows:
390
1. Period - the covering period of the report
2. SCD No. - the SCD shall be numbered as follows:
3.
4.
5.
6.
00 00 0000 L: Serial number (one series per year) Month of Issue Year of Issue
Page where the page number is indicated. In case more than one sheet is used for the week, the first page shall be numbered 1 of 3 and the next page is page 2 of 2 to fully account all the sheets used. Date - date of the receipt of the collections/deposits Reference The source documents shall support the entries to be made
• OR No. serial number of the OR issued including the cancelled ones. For collections of DBT or DBC, Ors shall be shown in batch.
• VDS No. - number of the validated deposit slip
• SCR No. - number of the SCR
Payor/Bank - name of the payor or name of DBC and the Bank. For collections of DBT or DBC, "Various" shall be used.
7. Particulars brief description of the transaction
8. Barangay - amounts of collections, deposits and balance for the barangay
• Collections amount received
• Deposits amount deposited as evidence by VDS
• Balance collections less deposits
9. As deputized by City/Municipality amounts of collections, remittances and balance of funds held by the BT • Collecions - amount
received • Remittances
amounts remitted to City/Municipal Treasurer
• Balance - collections less remittances
10. Certification to be signed by the Barangay Treasurer
11. Acknowledgement - to be signed by the BA \arangay Record Keeper
B. The daily sub-total of he SCD shall be recorded in the CHBReg by the BT and the weekly total in the CRDReg by the BRK
C. This report shall be prepared in three copies to be distributed as follows:
Original - City/Municipal Accountant
2nd
copy - BRK 3rd
copy-BT
D. Any undeposited amount shall be forwarded to the balance column of the following weekly's summary.
LTO Form 20
Summary of Collections and Remittances-BT
Date
Barangay: City/Municipality: SCR(BT) No.: Deputized Collector: Province: Page:
Date RPTR/CTC Payor
Nature of Collections Amount
No. CTC- lndv CTC-Corp. RPT Others
Certification: Acknowledgment: I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SCR
and correct record of all my collections for Jan. complete with duplicate copies of the ORs and the Duplicate copies of ORs and the remittance of remittances of are hereto attached. (P ).
Barangay Treasurer Date City/Municipal Treasurer Date
391
SUMMARY OF COLLECTIONS AND REMITTANCES-BT INSTRUCTIONS
A. This form shall be accomplished as follows:
1. SCR No. - the SCR shall be numbered as follows:
00 00 0000 L: Serial number (one series per year) Month o-flssue
Year o-flssue
2. Page - the page number per sheet
3. Date - date of receipt of collections/remittances
4. OR No. no. of OR/CTC/RPTR issued including cancelled ones. For collections of DBC, Ors, shall be shown 1n batch.
5. Payor - name of the payor. For collections of DBC, "Various" shall be used
6. Nature of Collections amount collected by nature of collections
7. Amount total amount collected
8. Certification - to be signed by the BT
9. Acknowledgement - to be signed by the City/Municipal Treasurer
B. This summary shall be prepared daily in three copies to be distributed as follows:
392
Original - City/Municipal Accountant
211d copy- BRK
3rc1 copy- BT
LTO Form 21
Summary of Collections and Remittances-DBC
Date
Barangay: City/Municipality: Deputized Collector: Province: Area:
Date
Certification:
Ticket Series
Qty Denomination
I hereby certify that the foregoing is the complete
and correct record of all my collections for __ _
The remittances of P are hereto attached.
Deputized Barangay Collector Date
Payor
SCR(DBC)No.:
Nature of Collections
Acknowledgment:
Page No.:
Amount
I hereby acknowledge receipt of the SCR complete with the remittances of ______ _
(P ___ ).
393
SUMMARY OF COLLECTIONS AND REMITTANCES -DBC INSTRUCTIONS
A. This form shall be accomplished as follows:
1. SCR No. - the SCR shall be numbered as follows:
00 00 0000 L: Serial number (one series per year) Month oflssue
'-------1�� Year of Issue
2. Page - the page number per sheet
3. Date - date of receipt of co 11 ecti ons/remi ttances
4. Ticket Series - the inclusive series of the ticket issued
5. Qty. - quantity of ticket issued based on the inclusive serial number
6. Denomination - the face value of the ticket
7. Payor - name of the payor. For accountable forms entered in batches, the term various shall be used
8. Nature of collections - brief description of the nature of collections
9. Amount - total amount
collected 10. Certification to be
signed by the DBC 11. Acknowledgement to
be signed by the BT B. This summary shall be prepared in three copies to be distributed as follows:
394
Original - BT 2nd
copy - BRK 3rd
copy - DBC
LTO Annex 22
Process Flow on the Receipt and Recordino of Collections Bv Baranoav Treasurer Area of
Responsibility/Person Seq. Activity Resoonsible
Barangay Treasurer Receives cash/check from payer representing collections of income/other receipts
2 Prepares the OR Note 1. The OR shall be prepared in three copies to be distributed as follows: Original - Payor 2"d copy - Barangay Record Keeper (BRK) to support the SCD 3rd copy - BT (retained in the booklet)
3 Issues and forwards OR to the payor to acknowledge
4
5
6
7
8
collection
Forwards the 211d copy to the Barangay Record Keeper for recording in the SCD and retains 3
rd copy for file
Counts collections ( cash and checks)
Prepares Deposits Slips Note J. The Deposits Slips shall be prepared in three copies for bank validation to be distributed as follows: Original - Bank 2"d copy - Barangay Record Keeper 3rd copy - Barangay Treasurer
Deposits collections intact with the depository bank daily or not later than the following banking day
Receives 2nd and 3rd copies of the Validated Deposit Slips from the bank and files
Barangay Record Keeper 9
10
11
12
Records the ORs issued including the cancelled ones in correct numerical sequence in the SCD. Records the deposits based on the Validated Deposits Slips. Note 1. The SCD shall be prepared in three copies to be distributed as follows: Original - City/Municipality Accountant 2"d Copy - Barangay Bookkeeper 3rd Copy - Barangay Treasurer
Records the collections and remittances reported in the Summary of Collections and Deposits
Sub-totals the columns for collections, deposits and remittance for the day
Totals and certifies the Summary of Collections and
395
j Deposits weekly
Area of Responsibility/Person Seq. Activity
Responsible Barangay Record Keeper 13 Forwards three copies of the Summary of Collections and
Deposits to the Barangay Bookkeeper together with the duplicate copies of the ORs Validated Deposits Slips and Summary of Collections and Remittances.
396
14 Receives the Summary of Collections and Deposits and checks supporting documents. Returns the 3rd copy to the BT and retains the original (for City/Municipal Accountant) and 211d copy for file
15 Retrieves the Summary of Collections and Deposits from file
16 Records m the Cash Receipts and Deposits Registers collections, deposits and remittances based on the SCD. Fills out the "Distribution of Receipts" portion in the sources of
17 collections
18
18
20
21
22
Retrieves the Credit Memo from file
Records the Credit Memo in the "Receipts and Deposits" column of the Cash Receipts and Deposits Registers
Retrieves the Bank Statement from file
Records the interest earned in gross Note 1. The Cash Receipts and Deposits Registers shall be prepared in two copies to be distributed as follows: Original - City/Municipal Accountant 2"J Copy - Barangay Bookkeeper
At month end, totals, balances and rules all the columns of the Register. Recapitulates all the entries in the "Others" column.
Certifies the Cash Receipts and Deposits Register. Submits the original together with the Summary of Collections and Deposits to City/Municipal Accountant and keeps the 2"d copy for file.
LTO Annex 23
Process Flow on the Receipt and Recording of Collections By Deputized Barangay Collectors
Area of Responsibility/Person Seq Activity
Responsible Deputized Barangay Collector A Collections
Deputized Barangay Collector
1 Receives the accountable forms from the Barangay Treasurer to be used/issued to acknowledge collections.
2 Collects fees by issuing cash tickets to market peddlers or parking fee tickets on the use of barangay pay parking lots.
3 Prepares and certifies the Summary of Collections and Remittance Note 1: The Summary of Collections and Remittance shall be prepared in three copies to be distributed as follows: Original - Barangay Bookkeeper 2"d copy - Barangay Treasurer 3rd copy - Deputized Barangay Collector
B Remittance of Collections 4 Remits collections together with three copies of duly
certified Summary of Collections and Remittance to the Barangay Treasurer
5 Receives remittance together with three copies of the Summary of Collections and Remittance
6 Reviews the Summary of Collections and Remittance and checks the completeness of data. Checks computation of accountable forms issued/sold as against the reported collections. Note 2. In cast! of discrepancy, informs the Deputized Barangay Collector immediately
7 Acknowledges the remittances by s1gnmg the acknowledgement portion of the Summary of Collections and Remittances Note 3. The Acknowledgement portion of the Summary of Collections and Remitlances shall be filled out by recording the amount received and date of receipts
8 Returns the 3rd copy of the Su.mmary of Collections and Remittances to the Deputized Barangay Collector and keeps the original and 2"d copy.
9 Receives the 3rd copy of the Summary of Collections and Remittances for his file
Records daily collections in the Summary of Collections and Remittances based on ORs issued including cancelled ones in correct numerical sequence.
397
Area of Responsibility/Person Seq Activity
Responsible Deputized Barangay Collector 10 Records the accountable forms issued in batches (showing
the denomination, quantity and sold and total amount collected)
Barangay Treasurer
Deputized Barangay Collector
Barangay Treasurer
398
Note 1. The Summary of Collections and Remittances shall be prepared in three copies to be distributed as follows: Original - Barangay Bookkeeper 2"d Copy - Barangay Treasurer 3rd copy - Deputized Barangay Collector
11 Total the amount column of the Summary of Collections and Remittances to determine the amount due for remittance
12 Tallies the cash on hand with the amount collected as reported in the Summary of Collections and Remittances
13 Certifies the Summary of Collections and Remittances
14 Attaches the duplicate copies of the ORs issued to the original Summary of Collections and Remittances to support the remittances
15 Submits the three copies of the certified Summary of Collections and Remittances complete with the supporting documents to the Barangay Treasurer for acknowledgement together with the full remittance
16 Receives the Summary of Collections and Remittances and cash collections. Checks correctness of remittance and completeness of supporting documents. Acknowledges receipt by signing the acknowledgement portion. Retains the 2"d copy and sends the original to Barangay Bookkeeper and 3rd copy to the Deputized Barangay Collector.
17 Records the Summary of Collections and Remittances in the Summary of Collections and Deposits
18 Receives the 3rd copy of the Summary of Collections and Remittances and files
19 Counts collections ( cash and checks)
20 Prepares Deposits Slips Note 1. The Deposits Slips shall be prepared in three copies for bank validation to be distributed as follows: Original - Bank 2'"1 copy - Barangay Record Keeper 3"" copy - Barangay Treasurer
Area of Responsibility/Person Seq. Activity
Responsible Barangay Treasurer 21 Deposits collections intact with the depository bank daily or
not later than the following banking day
Barangay Record Keeper
Receives 2nd and 3rd copies of the Validated Deposit Slips from the bank and files
22 Records the ORs issued including the cancelled ones in correct numerical sequence in the Summary of Collections and Deposits.
23 Records the deposits based on the Validated Deposit Slips. Note 1. The Summary of Collections and Deposits shall be prepared in three copies to be distributed as follows: Original - City/Municipality Accountant 2"d Copy - Barangay Bookkeeper 3rd Copy - Barangay Treasurer
24 Records the collections and remittances reported in the SCR
25 Sub-totals the columns for collections, deposits and remittance for the day
26 Totals and certifies the SCD weekly
27 Forwards three copies of the SCD to the Barangay Bookkeeper together with the duplicate copies of the ORs VDS and SCR
28 Receives the Summary of Collections and Deposits and checks supporting documents. Returns the 3rd copy to the BT and retains the original (for City/Municipal Accountant) and 2nd copy for file
29 Retrieves the Summary of Collections and Deposits (SCD) from file
30 Records m the Cash Receipts and Deposits Registers collections, deposits and remittances based on the SCD. Fills out the "Distribution of Receipts" portion in the sources of collections
31 Retrieves the Credit Memo from file
32 Records the Credit Memo in the "Receipts and Deposits" column of the Cash Receipts and Deposits Registers
33 Retrieves the Bank Statement from file
34 Records the interest earned in gross Note 1. The Cash Receipts and Deposits Registers shall be prepared in two copies to be distributed as follows: Original - City/Municipal Accountant
399
Area of Responsibility/Pers�n
Responsible Barangay Record Keeper
400
Seq.
35
36
Activity
At month end, totals, balances and rules all the columns of the Register. Recapitulates all the entries in the "Others" column.
Certifies the Cash Receipts and Deposits Register. Submits the original together with the Summary of Collections and Deposits to City/Municipal Accountant and keeps the 211ct
copy for file.
LTO Annex 24
Process Flow on the Receipt and Recording of Collections By Barangay Treasurer as Deoutized by the City/Municipal Treasurer
Area of Responsibility/Person Seq. Activity
Responsible A Collections
Barangay Treasurer 1 Receives the accountable forms from City/Municipal Treasurer to be used/issued to acknowledge collections
City/Municipal Treasurer
Barangay Treasurer
2 Collects Real Property Tax, Community Tax and other authorized receipts
3 Issues Real Property Tax Receipt and Community Tax Certificates to payor, retains the 2nd copy to support the Summary of Collections and Remittances and the 3rd copy for file.
4 Prepares and certifies Summary of Collections and Remittances
B 5
Remittance of Collections
Remits the collections to the City/Municipal Treasurer together with the three copies of the certified Summary of Collections and Remittances supported by the duplicate copies of the Real Property Tax Receipt/Community Tax Certificate
6 Checks con-ectness of amount received against the actual remittance in the Summary of Collections and Remittances
7 Examines the Summary of Collections and Remittances as to completeness of supporting documents and con-ectness of recording of the Real Property Tax Certificates/Community Tax Certificates issued
8 Acknowledges receipt of the Summary of Collections and Remittances and the remittance. Signs the acknowledgement portion of the Summary of Collections and Remittances
9
10
Note 1. The acknowledgement portion of the Summary of Collections and Remittances shall be filled out, indicating the amount received and date of receipt.
Returns 2nd and 3rd copies of the Summary of Collections and Remittances to the Barangay Treasurer and retains the original for file
Receives and files the Summary of Collections and Remittances
401
Area of Responsibility/Person Seq. Activity
Responsible Barangay Treasurer 11 Records daily collections in the Summary of Collections
and Remittances based on ORs, Community Tax Certificates and Real Property Tax Certificates issued in correct numerical sequence including cancelled ones.
Barangay Record Keeper
402
Note 1. The Summary of Collections and Remittances shall be prepared in three copies to be distributed as follows Original - City/Municipal Treasurer 2"d copy - Barangay Record keeper 3"1 copy - Barangay Treasurer
12 Totals the amount column to determine the amount due for remittance
13 Tallies the cash on hand with the collections as reported in the Summary of Collections and Deposits
14 Certifies the Summary of Collections and Deposits
15 Attaches duplicate copies of the ORs, Community Tax Certificates and Real Property Tax Certificates to the original Summary of Collections and Remittances to support the remittances
16 Records the Summary of Collections and Remittances m the Summary of Collections and Deposits
17 Records the ORs issued including the cancelled ones in correct numerical sequence m the SCD. Records the deposits based on the VOS. Note 1. The SCD shall be prepared in three copies to be distributed as follows: Original - City/Municipality Accountant 2"d Copy - Barangay Bookkeeper 3'·d Copy - Barangay Treasurer
18 Records the collections and remittances reported in the SCR
19 Sub-totals the columns for collections, deposits and remittance for the day
20 Totals and certifies the SCD weekly
21 Forwards three copies of the SCD to the Baran gay Bookkeeper together with the duplicate copies of the ORs VOS and SCR
22 Receives the SCD and checks supporting documents. Returns the 3
rd copy to the BT and retains the original (for City/Municipal Accountant) and 2"d copy for file
Area of Responsibility/Person
Responsible Barangay Record Keeper
Seq. Activity
23 Retrieves the Summary of Collections and Deposits (SCD) from file
24 Records m the Cash Receipts and Deposits Registers collections, deposits and remittances based on the SCD. Fills out the "Distribution of Receipts" portion in the sources of collections
25
26
27
28
29
30
Retrieves the Credit Memo from file
Records the Credit Memo in the "Receipts and Deposits" column of the Cash Receipts and Deposits Registers
Retrieves the Bank Statement from file
Records the interest earned in gross Note I. The Cash Receipts and Deposits Registers shall be prepared in two copies to be distributed as follows: Original - City/Municipal Accountant 2'"1 Copy - Barangay Bookkeeper
At month end, totals, balances and rules all the columns of the Register. Recapitulates all the entries in the "Others" column.
Certifies the Cash Receipts and Deposits Register. Submits the original together with the Summary of Collections and Deposits to City/Municipal Accountant and keeps the 2
°ct
copy for file.
403
LTO Annex 25
Process Flow on the Receipt and Recording of Bank Debit/Credit Memo and Bank Statement
Area of Responsibility/ Seq.
Person Responsible
Activity
A Receipt of Debit/Credit Memo
Barangay Treasurer
404
1) Receives the Credit Memo on the receipt of Internal Revenue Allotment/Real Property Tax due the barangay
2) Receives Debit Memo on the dishonored checks and other bank charges
3) Photocopies Debit/Credit Memo. Submits the original Debit/Credit Memo to the Barangay Record Keeper and keeps Xerox copies for file
4) Receives and files the Debit/Credit Memo
Receipt of Bank Statement
1) Receives the bank statement from the bank 2) Forwards the Bank Statement to the Barangay Record Keeper 3) Receives the Bank Statements for submission to the
City/Municipal Accountant 4) Note 1 The Barangay Record Keeper shall furnish the Barangay
Treasurer with a erox copy of the Bank Statements.
5) Records the deposits per Credit Memo received under the "Deposits (In)" column of the "Cash in Bank" section of the Cash on Hand and in Bank Registers.
6) Records the interest earned at gross in the "Deposit (In)" column of the "Cash in Bank" section of the Cash on Hand and in Bank Register and the withholding taxes under the "Check/Debit Memo/Bank Statements ( out)" column.
7) Records the disbursement of checks per Summary of Check Issued in the 'Check/Debit Memo/Bank Statement (Out)" column under the "Cash in Bank" section of the Cash on Hand and in Bank Register.
8) Totals, balances and rules the Cash on Hand and m Bank Register at the end of the month
Note 2. The difference between the totals of the "Receipts" column plus the beginning balance less the "Deposit" column shall equal the "Balance" in the "Cash on Hand" section.
Note 3. The difference between the totals of the deposits, credit memo and interest earned plus the beginning balance less checks/Debit Memo and withholding taxes shall equal the "Balance" in the "Cash in Bank" section.
Area of Responsibility/ Seq. Activity
Person Responsible
Note 4. The Cash on Hand and in Bank Register shall be prepared in three copies to be distributed as/allows: Original - City/Municipality Accountant 2'"1 copy - Barangay Treasurer 3"" copy - Barangay Record Keeper
Barangay 9) Signs the certification portion of the Cash on Hand and in
Treasurer Bank Register and forwards to the Barangay Record Keeper
I 0) Examines the Credit Memo and Bank Statement attached to it. Acknowledges the receipt of the Credit Memo and Bank
Statement.
Baran gay Record 11) Submits the certified Cash on Hand and in Bank Register to
Keeper the City/Municipality Accountant. Forwards the 2nd copy to the Barangay Treasurer and retains 3rd
copy for file
405
LTO Annex 26
Republic of the Philippines Province/City/Municipality of _________ _
Office of the Provincial/City/Municipal Treasurer
LETTER OF AUTHORITY I APPOINTMENT
No. - -- --
,20 _ _ - - - --
Sir/Madam/Gentlemen:
Pursuant to Section 171 of RA No. 7160, otherwise known as the Local Government Code of 1991, which has for its purpose the enforcement and collection of taxes, fees and charges authorized thereunder, please be advised that the bearers hereof, from this office and as deputies thereof, are hereby authorized to examine your books of accounts and other pertinent records of your business, to verify, assess and collect the true and correct amount of tax or taxes, fees and charges due from you during the period from to ________ ,20 _ __ _ _
Messrs. and whose signatures appear below, are provided with identification cards by this office and they are under instruction to properly identify themselves and present their identification cards upon demand.
As provided for in Section 171 of this Code cited above, the examination of your books of accounts and other pertinent records shall be made during regular business hours not oftener than once a year.
The examination made pursuant hereto shall be certified to by the above named deputies and such certification shall be made of record in your books of accounts.
Your cooperation in this regard will be highly appreciated.
(Signatures of Examination Team) ACKNOWLEDGMENT:
Received by: _________ _ Name and Signature
Position/Designation 406
Very truly yours
Provincial/City/Municipal Treasurer
Date:
Telephone No.
Republic of the Philippines Province/City/Municipality of _____ _ _ _ _ _
Office of the Provincial/City/Municipal Treasurer
NAME OF TAXPAYER
LETTER OF AUTHORITY NO.
Date Issued
DOCUMENTS TO BE EXAMINED
Sir/Madam::
Pursuant to Letter of Authority attached hereto, please prepare the following pertinent business records of your establishment/company, viz:
I. Business Permit to (Xerox) 2. Business License Receipts to __ (Xerox) 3. Latest Letter of Authority and Letter of Confirmation (proof of examination) issued. 4. Audited Financial Statement to (Xerox) 5. Books of Accounts to
- --
6. Purchases, Sales and Delivery Invoices 7. Value Added Tax (VAT), Percentage, Excise or Quarterly payments to Bureau of
Internal Revenue (BIR) (Xerox) 8. Business Permit and Taxes paid in other cities or municipalities if the
establishment/company has branches outside Quezon City (Xerox) 9. Schedule of Gross Sales/Receipts for every branch duly certified by an authorized
official or representative of the establishment/company 10. Articles of Incorporation/Partnership 11. Contract of Lease (if place of business is rented) 12. List of employees submitted to Social Security System (SSS) 13. Letter of Credit/Bill of Lading (for importers & expo11ers) 14. POEA license, Deployment reports (for manpower agencies) 15. DOT Accreditation (for tourist oriented and related business) 16. Contract of Agreement on Projects (for general building and engineering contractors) 17. Community Tax Certificate (Xerox)
Very truly yours
Provincial/City/Municipal Treasurer
Revenue Examiner
407
LTO Form 27
Republic of the Philippines Province/City/Municipality of _______ _ _ _
Office of the Provincial/City/Municipal Treasurer
TAX DATA SHEET
Letter of Authority No. __ _ ___ _ _ Date Examination Started
- - - -----
Date Examination Finished - - - - - - -
Period/Year Covered - -- - - - - - --
Name of Business Establishment ------- - - -�
Business Address ------------- - - -�
Owner/Licensee - --------------- - -
Citizenship- - - - ------------ --Capital Investment _ _____________ _ _
Mayor's Date of Type of Gross Sales/Receipts Gross Sales/Receipts Understatement of Overstatement of Permit No. Issue Business ner Permit per Examination Sales Sales
P AYM ENTS Kind of Business Official Receipt No. Amount Paid Annual/Semi- Date of Issue
Taxes/Fees/Charnes Annual/Quarterlv
REMARKS:
CERTIFIED CORRECT:
Names and Signature of Examination Team
408
.is. 0
LTO Form 28
Republic of the Philippines
Province/City/Municipality of __________________ _ Office of the Provincial/City/Municipal Treasurer
TAX DATA AND ASSESSMENT FORM
Name of Company President ________ _ _ _
Business Name _ _ _ _____________ _
Address __________ _ __ _______ _
LOA# ___ _________________ _
Community Tax Certificate No. _ ________ _
Particulars Actual Sales Declared Sales Year
Findings and Recommendations
Revenue Examiner
Mayor's Permit No. ________ _
Area _____ _ _ ________ _ Nature of Business _____ _ _ _ _
Date Issued ____ _ Date Examined __________ _
Date Issued _ __ _ _ Place of Issue _______ ____ _
Tax Due Tax Paid Difference Surcharqe Interest
We have examined, reviewed and evaluated the foregoing
accomplished data and assessment form concurs with the
findings and recommendations of the deputy
Sr. Revenue Examiner Approved by:
Sir:
LTO Form 29
REPUBLIC OF THE PHILIPPINES Province/City/Municipality of _____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
LETTER OF ASSESSMENT (1st Notice)
Please be advised that the report of my deputy MR. has been submitted to this office pursuant to Letter of Authority No. dated , as a result of his examination, you are hereby requested to pay the amount of Php ____ _ representing additional business tax including surcharges and penalties for the years
To avoid the inconveniences of a legal action to enforce payment of your deficiency, it is hereby required that you pay it within five (5) days from your receipt hereof.
Very truly yours
Provincial/City/Municipal Treasurer
Note: Subject to adjustment upon presentation of pertinent documents
410
LTO Form 30
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
SECOND NOTICE
Sir/Madam:
Records show that you failed to settle the remaining deficiencies discovered during the examination of your books pursuant to Letter of Authority No. dated ___ _
As per our computation you are hereby requested to pay the amount of Php __ _ covering the period of
-----
You are hereby required to pay the aforesaid amount within three (3) days from receipt hereof. Your failure to do so will constrain us to cause the institution of appropriate legal action against you.
Very truly yours,
Provincial/City/Municipal Treasurer
411
LTO Form31
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
FINAL NOTICE
Sir/Madam:
Records show that a Notice of Assessment in the amount of Php was issued by this Office, which was duly received by your company on . However, in spite of these notices, no reply or attempt to settle this obligation was made by your company.
Pursuant to Section 195 of the Local Government Code of 1991, x x x. "Within sixty (60) days from the receipt of the Notice of Assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment, otherwise the assessment shall become final and executory x x x".
In view of the foregoing and it appearing that the sixty (60) day period within which to protest the tax assessment has already prescribed, the subject assessment becomes final and executory and therefore, the immediate settlement of your tax obligation is requested, otherwise, this Office will be constrained to cancel your Mayor's Permit or effect the civil remedies provided for under Section 174 of the Code by enforcing the collection thru distraint and levy or by judicial action.
Very truly yours,
Provincial/City/Municipal Treasurer
412
LTO Form32
The President
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
FINAL NOTICE BEFORE ISSUANCE OF WARRANT OF
DISTRAINT AND LEVY
Subject: Tax Deficiency Discovered During Examination of your Books Pursuant to: Letter of Authority No.: _ ___ _ Amount: PHP _ ___ ___ _ Year:
- - - - - - - ---�
Gentlemen/Madam:
Despite several notices served and duly receipted on your business establishment and the considerable length of time that had lapsed, we have not been favored with your reply.
In this connection, we would like to inform you that we are giving you the LAST OPPURTUNITY to make the necessary settlement of your business tax liabilities within five (5) days from receipt of this NOTICE.
Pursuant to Section 195 of the Local Government Code of 1991, "x x x. Within sixty (60) days from the receipt of the Notice of Assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. xx x".
In view of the foregoing, and it appearing that the sixty (60) days period within which to protest the tax assessment has already prescribed, the subject assessment becomes final and executory and therefore, the immediate settlement of your tax obligation is requested, otherwise, this Office will be constrained to cancel your Mayor's Permit or effect the civil remedies provided for under Section 174 of the Code by enforcing thru distraint and levy or by judicial action
Very truly yours,
Provincial/City/Municipal Treasurer
413
LTO Form33
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
NON-PRESENTATION OF DOCUMENTS NPS
Sir/Madam:
Records that you failed to present for examination your books of accounts and other pertinent documents notwithstanding service to you or LETTER OF AUTHORITY No __ on
and repeated demands thereof in violation of Section 220 of the Revenue Code of
You are hereby given three (3) days from receipt hereof to present for examination your books of accounts and other pertinent documents to this Office during office hours. Your failure to do so will constrain this office to resort to the legal remedies provided by law, including action for the revocation of your business permit to effect the desired examination.
Very truly yours,
Provincial/City/Municipal Treasurer
414
LTO Form 34
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
FINAL NOTICE OF NON-PRESENTATION OF DOCUMENTS NPS
Sir/Madam:
Records show that you failed to present for examination your books of accounts and other pertinent documents notwithstanding service to you of LETTER OF AUTHORITY NO. __ _ on and repeated demands thereof in violation of Section 220 of the Revenue Code of
--- ---
You are hereby given three (3) days from receipt hereof to present for examination your books of accounts and other pertinent documents to this Office during officer hours. Your failure to do so will constrain this office to resort to the legal remedies provided by law, including action for the revocation of your business permit to effect the desired examination.
Very truly yours,
Provincial/City/Municipal Treasurer
415
LTO Form 35
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
(Date)
LETTER OF CONFIRMATION
Sir/Madam/Gentlemen:
With reference to our Letter of Authority No. dated ______ _
please be informed that the examination I investigation thereof has been terminated and the corresponding report(s) of Revenue Examiner under the supervision of Senior Revenue Examiner of this office has been submitted for the calendar year _________ _
Very truly yours,
Provincial/City/Municipal Treasurer
416
LTO Form 36
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
CERTIFICATE OF CONFIRMATION
This is to certify that on , 20_, the books, accounts and other pertinent records covering the period from , 20_ to , 20_, of the business/businesses indicated above have been examined by the undersigned whose findings and recommendations are stated herein.
A similar certification has been made in the books of same business on , 20 _. --- -
Examining Deputy I.D. No.
VERIFIED AND CONCURRED IN:
Supervisor/In Charge
NOTE:
Examining Deputy I.D. No.
This is not a collection notice. This is simply an evidence that the business indicated above has been inspected pursuant to Section 171 of R.A. 7160. Should there be any tax due as a consequence hereof, the owner/operator of the business will be advised in writing accordingly.
Original Received:
417
LTO Form37
Republic of the Philippines Province/City/Municipality of ____ _
Office of the Provincial/City/Municipal Treasurer
Date
CERTIFICATE OF EXAMINATION
TO WHOM IT MAY CONCERN:
This is to certify that according to the records , the books of accounts and other pertinent
records for the year of located
at have been examined by the
Examination Team from this Office whose signatures appear at the lower left hand corner hereof under Authority No. · dated . It is further certified that the gross sales/receipts of the above-named establishment for Calendar Year had been determined by virtue of this examination.
This certificate is issued to confirm the authenticity of the gross sales/receipts mentioned
above in the total amount of P which shall be the basis in the computation of the taxes, fees and other charges due from for the current year.
Provincial/City/Municipal Treasurer
Examined by:
Examination Team
418
LTO Form38
Republic of the Philippines Province/City/Municipality of _________ _
Office of the Provincial/City/Municipal Treasurer
ASSESSMENT NOTICE (Initial)
License Case No.
Date
Sir:
After an examination of your books of accounts and other pertinent documents for the year and a verification of your business tax payments by the examination Team duly deputized by this Office, it has been found out that you have a business tax deficiency in the amount of P including surcharges, interests and penalties, as shown on the assessment sheet hereto attached.
In view hereof, you are requested to pay the amount abovementioned within three (3) days from receipt hereof in order that a CERTIFICATE OF EXAMINATION may be issued to consider this matter settled and closed.
Your preferential attention hereof is highly appreciated.
Very truly yours,
Provincial/City/Municipal Treasurer
NOTE: Certificate of Examination will be required in the renewal of your business permit for the calendar year _ __ _ _
419
LTO Form39
Republic of the Philippines Province/City/Municipality of ___________ _
Office of the Provincial/City/Municipal Treasurer
FINAL DEMAND
License Case No. ___ _
A review of our records showed that you have neither replied to, nor paid the amount indicated in our assessment notice to you dated ___________ _
We give you again below the itemized statement of the amount due as assessed by our deputies who inspected your business establishment.
Please give this matter your preferential attention because if we do not hear from you within three (3) days from your receipt of this letter, we shall have to elevate your case to the Office of the Mayor with our recommendation for the institution of such legal action as may lie against you.
Very truly yours,
Provincial/City/Municipal. Treasurer
420
LTO Form 40
Republic of the Philippines
Name of Province/City/Municipality Address
No. OBLIGATION REQUEST
Payee
Office
Address
Responsibility Particulars F.P.P Account
Amount Center Code
Total
�Certified Licenified O Charges to appropriacion/allotment necessary, lawful Existence of available appropriation
and under my direct supervision Osupporting documents valid, proper and legal
Signature Signawrc
Printed Name
Primed Narne
Position Position Head, Requesting Office/ Authorized Representative Head, Budget Unit/ Authori�ed Reprcscmativc
Dare Dare
421
LTO Annex 41
OBLIGATION REQUEST (ObR)
INSTRUCTIONS
A. The Obligation Request shall be prepared in three copies, to be distributed as follows: Original - to be attached to the DY
Duplicate - Budget Unit
Triplicate - Accounting Unit
8. The Budget Unit shall stamp the date of receipt on the face of this form.
C. This form shall be accomplished in the following manner:
I. No. - number assigned to the Obligation Request by the Budget Unit or its equivalent. The numbering shall be as follows:
QQ - 0000 - QQ - 0000
Serial number (one series for each year) Month of Issue Year of Issue Allotment Class
2. Payee - name of payee or creditor.
3. Office - name of the office of payee or creditor
4. Address - address or location of the office of the payee or creditor
5. Responsibility Center - code of the cost center where expenses shall be charged
6. Particulars -- brief description of the obligation requested
7. F.P.P. - code for function/program/project as shown in the approved appropriation/ allotment
8. Account Code - expense/asset/liability account code where the obligation shall be charged
9. Amount - amount of obligation/ adjustment
I 0. Certified (Box A) - Certification by the Head of the Requesting Office or his authorized representative on the necessity and legality of charges to the appropriation/allotment under his direct supervision, and validity, propriety and legality of supporting documents
The certifying officer shall affix his signature, print his name, indicate his position, and the date of his signing on the spaces provided.
11. Certified (Box B) - Certification by the Head of the Budget Unit or his authorized representative on the existence of available appropriation.
The certifying officer shall affix his signature, print his name, indicate his position, and the date of his signing on the spaces provided.
D. Any correction/adjustment by the Accounting Unit which will require the corresponding adjustment in the appropriate RAAO shall be coordinated with the Budget Unit.
422
LTO Annex 41
MINIMUM DOCUMENTARY REQUIREMENT FOR SPECIFIC EXPENSE ITEM
I - PERSONNEL SERVICES (PS)
1) Salaries
a) First salary under an Original Appointment (Sec. 197, GAAM. Vol. I)
• Certified True Copy of Appointment duly approved by the appointing authority • Certified true copy of Oath of Office • Statement of Assets and Liabilities • Evidence of Service Rendered (Certificate of Service/Daily Time Record) • Certificate/Notice of Assumption to Office • Evidence or Certificate showing compliance with conditions set forth m the
approval of the appointment, if any
b) Salary under an Appointment by Transfer (Sec. 200, GAAM, Vol. I)
• Certified True Copy of Appointment duly approved by the Appointing Authority • Certified copy of oath of office • Statement of Assets and Liabilities • Evidence of Service Rendered/Daily Time Record • Certificate/Notice of Assumption to Office • Clearance from money and property accountability from previous office • Certificate of last salary received from former office • Approval of authority to transfer of employee • Certificate of last day of service from former office
c) Salary Differentials under promotional appointment (Sec. 119, GAAM, Vol. I)
• Approved Appointment/Notice of Salary Adjustments • Evidence of Service Rendered (Certificate of Service/Daily Time Record) • Certificate/Notice of Assumption to position Salaries/Wages of Temporary, Casual
or Emergency Employees (CAO Cir. 81-155, Feb. 23, 1981) Authority or basis of employment Evidence of Service Rendered/Daily Time Record
d) Salaries of Persons Employed on Contract Basis (COA Cir. 81-155, Feb. 23, 1981)
• Contract of services duly noted by DBM and CSC • Evidence of Service rendered/Daily Time Record
e) Salary upon Termination of Service
• Employee's Letter of Resignation and acceptance of Resignation • Certificate of Clearance from money and property accountability • Certificate of clearance from GSIS
423
f) Salary Due Heirs of Deceased Employees
• Death Certificate or Affidavit of attending physician • If married, marriage certificate or in its absence an affidavit of surviving spouse
supported by affidavits of two (2) disinterested persons having knowledge of the marriage relationship
• Designation of next of kin • Clearance of the deceased from money and property accountability
g) Salary Accruing Pending Suspension (Sec. 220, GAAM, Vol. I)
• Certified true copy of exoneration or of court's order dismissing the criminal case against the employee or absolving him; or Certified True Copy of authority granted by the depaitment head for payment of salary during suspension; or
• Certified true copy of the President's order of suspension providing for payment of salary during suspension.
2) Commutation of Leave of Absence
a) Vacation or Sick Leave
424
• Application for leave approved by the proper head of agency or his duly authorized representative
• Clearance certificate from money and property accountability, if absence is in excess of thirty days
• Medical certificate in case of sick leave, except where leave not exceeding five (5) days had already been enjoyed
• Statement showing the balance of leave standing to the credit of the employee
b) Entitlement of Leave Privileges
As a general rule all officers and employees who have rendered at least six (6) months of continuous service, faithful and satisfactorily service, and whose office hours as so fixed that they are on duty the number of hours required by law, are entitled to 15 days vacation and 15 days sick leave with full pay exclusive of Saturdays and Sundays and holidays without limitation as to the number of days of vacation and sick leave that they may accumulate.
c) Maternity Leave
• Approved application for leave, accompanied by a medical ce11ificate showing that the married woman is on the family way and nearing delivery, or Medical Certificate showing actual child delivery or natural abortion not covered by illegitimate union or immortality, if leave applied for its submitted after delivery or abortion
• Marriage Certificate for first maternity leave claim • Certificate of clearance from money and property accountability (Sec. 235,
GAAM, Vol. I)
Married women in the government service who have rendered two years or more of continuous service shall be entitled to maternity leave of 60 days with full pay. For those who have rendered less than two (2) years of government service at the time of the
enjoyment of maternity leave, the computation of their maternity leave shall be proportionate to their length of service (Sec. 17 Rule XVI Omnibus Rules Implementing Book V of EO No. 292)
When an employee wants to report back to duty before the expiration of her maternity leave, she may be allowed to do so without refunding the commuted money value of the unexpired portion of her maternity leave and she shall be paid the corresponding salary for the service rendered
The foregoing provision shall be subject to a certification of a physician that the subject employee is physically fit for work (Sec. 14 Rule XVI Omnibus Rules Implementing Book V of EO 292)
d) Monetization of Leave/Service Credits
• Duly approved application for monetization of leave credits. However, no inclusive dates shall be indicated except the number of days applied for
• Certification/Statement showing the balance of leave standing for the credit of employee, which shall not be less than 15 days
e) Entitlement of monetization of leave credits
Government officials and employees in the career of non-career service whether permanent, temporary of provisional or casual may be allowed to monetize a maximum of ten (10) days leave credits provided they have already accumulated at least fifteen ( 15) day vacation leave/service credits at the time of application.
f) Terminal Leave (COA Cir. 81-55, Feb. 23, 1981)
• Approved application for Terminal Leave • Complete Service Record • Clearance from Money and Property Accountability e Clearance from the Ombudsman • Statement of Assets and Liabilities • Copy of last appointment and appointment showing highest salary received if the
salary under last appointment is not the highest • Clearances from fiscal 's office, places of residence and place of last assignment • Claimant's affidavit, that there is no pending case against him (RA 3019)
g) Overtime Pay (COA Cir. 81-155, Feb. 23, 1981)
• Authority of the Department Head • Accomplishment Report • Daily Time Record
h) Payment of Overtime Compensation
Ove1time compensation by the hour shall be computed on the basis of the authorized monthly basic salary of the officer or employee authorized to render overtime services. However, as a general rule, the amount of overtime compensation, which may be allowed an employee for a given calendar year, shall not exceed fifty percent (50%) of his basic salaiy (Sec. 282(a), GAAM, Vol. I)
425
426
Meal allowance in kind at P 20.00 per meal may be granted to officials and employees who have rendered at least three (3) hours of overtime service before mealtime. However, availment of the meal allowance in kind herein authorized shall constitute a bar from collecting the overtime compensation authorized (Sec. 282, GAAM, Vol. II)
i) Officials and Employees not entitled to Overtime
The payment of overtime service shall not apply to officials occupymg positions enumerated hereunder:
• Department Secretaries • Department Undersecretaries • Department Assistant Secretaries • Bureau Directors and Regional Directors • Assistant Bureau Directors and Assistant Regional Directors • Department Service Chief and Assistant Department Service Chiefs • Positions of equivalent category as an State Universities and Government-Owned
and Controlled Corporation • Intermediate positions and created in between the above enumerated positions and
inasmuch as these positions involve coordinative and integrative functions and in some cases exercising general supervision over the line divisions and units (Sec. 284, GAAM, Vol. I)
j) Honorarium
• Authority to collect honorarium • Certification of service rendered • Copy of contract, if any, between the agency and the personnel if latter is not an
employee of the agency • Accomplishment report
k) Subsistence Allowance
• Daily Time Record/Evidence of Service Rendered • Duly approved request for commutation
l) Entitlement/Non-Entitlement to Subsistence Allowance
Subsistence allowance shall mean all allowance for meal or subsistence for an official or employee who, by the nature of his duties and responsibilities has to make his services available in his place of work even during mealtime. (Sec. 243, GAAM, Vol. II)
In all cases, officials and employees who are on maternity leave, sick or vacation leave, whether with or without pay, or on full time or part time detail with another organizational unit of same agency, another agency or special project, or attending training course/scholarship grant/seminar or any other similar activity or on official travel shall no be entitled to subsistence allowance for the duration of their official leaves, detail, attendance in a training course/scholarship grant/seminar, or any other similar activity, or official travel [Sec. 296 (e), GAAM, Vol. I]
m) Hazard or Hardship Allowance (Sec. 313, GAAM, Vol. II)
• Evidence from the department of National Defense the place of assignment/travel in a strife torn/hazardous area, or Certification from the Regional Director concerned in case of assignment in mental hospital, radiation exposed clinic and laboratories or disease infested areas, or Certification from the Philippine Institute ofVolcanology and Seismology in case of volcanic activity and/or eruption
• Duly accomplished time record of employee or travel report • Certification of the accountant that funds are available for the purpose • A copy of special order from the agency department head covering the assignment
to hazardous/difficult areas
n) Representation and Transportation Allowance (RA TA)
• Approved resolution/law authorizing grant of RA TA • Certification that recipient does not use government vehicles and that said amount
was incurred in the performance of his duties.
427
II - MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE)
1) Travel Expenses
428
a) Local Travel (E.O. No. 298, March 23, 2004)
• Travel Order or Authority to Travel approved by the Agency Head or his duly authorized representative, or by the Department Head for travel exceeding One (1) month but not less than three (3) months, or by President, if travel exceeds three (3) months.
• Approved Itinerary of Travel • Certificate of Travel Completed • Certificate of Appearance • Tickets for place, bus, ship fare or its equivalent • Receipts, in case entitled to travel representation allowance • Reimbursement Expense Receipt (RER), if necessary
For Department of Health Field Personnel
• Itinerary of Daily Activities of Field Employees (IDAFE) (which consolidates Itinerary of Travel, Certificate of Travel completed, Certificate of Appearance and Monthly Activity Report)
• Summary of Travel Expenses Claim (STEC) (COA Cir. 89-306, May 5, 1989)
For Travel in Connection with Appearance in Court
• Certificate of Attendance in court and copy of subpoena • Certificate to effect that he is a witness for the government and not a party in a
civil case • If claimant is an ex-employee, Certificate that he was cited by reason of
knowledge of the case while he was still in the service • Rates shall follow the existing authorized rates
Limitations in payment of Traveling Expenses
A full travel allowance is allowed only in cases of absence from the permanent station One ( 1) full day. For less than a full day, only the corresponding fractional part of the allowance. To determine fractional pa11, divide allowance equally into four (4) units corresponding to breakfast, lunch, dinner and lodging
b) Foreign Travel
Types of foreign travel
• Scholarship, fellowship, and training or study grants to be approved by the special committee on scholarship created for the purpose
• Conferences, special missions and other non-study trips • Assignment to Foreign service posts such as officials and employees of the
Depai1ment of Foreign Affairs, Trade and Labor Attaches etc.
Allowable travel expenses
• Scholarship, fellowship and training or study grants
living allowance and per diems transportation clothing allowance tuition and matriculation fees, books and supplies medical and dental care
msurance (Note: For further discussion of the above enumerated allowances the lecturer should refer to EO 129, S. 1968 and EO 367, 2. 1989)
• Conference, missions and other study trips (Sec. 3 51, GAAM, Vol. I)
Transportation Clothing allowance Representation expenses Daily allowance and reimbursable limit for hotel room rate Insurance
Documentary requirements
• Approval of the President for Department Secretaries/Undersecretaries/ Assistant Secretaries and other officials of equivalent rank, or of the Department Head for all other positions
• Approval of Special Committee on Scholarships - for scholarship, fellowship, training and study grant
• Travel Order • Approved Itinerary of Travel • Authority from the Office of the President for representation allowances • Certification that no clothing allowances has been received during the next
preceding twenty four (24) months for claims for clothing allowance • Certificate of Travel Completed • Tickets • Receipts, in case of pre travel expenses • For representation expenses, Certification under oath that expenses incurred were
pursuant to Title II (Conferences, Special Missions and Other Non-Study Trips) Section 17 of EO 129, as amended in accordance with prior authority obtained from the Office of the President
• Report on Travel
2) Communication Services
a) Telephone Charges
• Receipts/Invoices/Bill (Original Copy) • Certification of the Head of the agency concerned or his authorized representative
that there was no service interruption and that all telephone numbers covered are properly indicated on company's bill
429
• For long distance calls, certification of the Head of the agency that the long distance calls was strictly official in nature, exceptionally urgent and absolutely necessary
b) Telegrams, Cables and Wireless Charges (GAAM)
• Invoices/Receipts ( original copy) • Copy of messages/telegrams/radiogram/cablegrams and all other wireless
messages
c) Postage charges (SAM)
• Duly approved requisition /PO • Statement showing by denomination the balance on the date of the last purchase,
the issues since then, and the balances on the date of new purchase • Evidence of Payment/OR
3) Repairs and Maintenance of Government Facilities
430
a) By Administration
• Authority to undertake project • Program of work/detailed cost estimates approved by proper authorities
b) By Contract
• Contract signed by the parties and witnessed by Chief Accountant/Treasurer • Plans, Programs of Work, Detailed Cost Estimates approved by proper authorities • Certificate of availability of Funds, duly verified by the Auditor • Accomplishment Report • Affidavit of contractor that all bills for materials used and labor employees have
been paid as corroborated by a certificate of project engineer
Thru Public Bidding (First Payment)
• Advertisement/Call for Bids • Winning Bidders offer and Bid Tender of other participants/abstract of bids • Letter of Award Acceptance of Bid proposal • Contract Documents and Performance Bond • Plans and Specifications • Notice to Commence Work • Inspection report and Contractor's accreditation Succeeding Payment (additional) • Bill of Creditor • Progress Report of Accomplishment • Inspection Report
Final Payment (Additional)
• Certificate of Completion and Final Acceptance • Certificate of Final Inspection
• Affidavit of the contractor stating that all materials used and laborers employed have been paid
Negotiated Contract (First Payment)
• Authority to enter into negotiated contract • Contract documents and performance bond • Program of Work and Detailed Cost Estimates • Notice to Commence Work • Inspection Report and Contractor's accreditation
Succeeding Payment (Additional)
• Bill of Creditor • Progress Report of Accomplishment • Inspection Report
Final Payment (Additional)
• Certificate of completion and final acceptance • Certificate of final inspection • Affidavit of the contractor stating that all bill of materials used and laborers
employed have been paid
Payment of Change or Extra Work Order and Contract Price Adjustment
• Same as by Administration and by contract if not yet submitted • Approved change order or extra work and approval by the proper authorities of
price adjustment • Breakdown of total addition/ deduction amount involved into work items and cost
components including detailed quantity estimates of any additional work • Cost estimate showing in sufficient detail the derivation of all prime/direct cost
and overhead/indirect cost of new items of work not included in original contract • Duly approved revised plans indicating changes made
inspection report
4) Maintenance of Motor Vehicles Used for Official Travels of Officials and
Employees
a) Repair and/or servicing
• Approval request for repair and/or servicing • Pre-repair inspection (COA Cir. 89-229 A, 9/8/99) • Certificate of the Property Officer stating the vehicle belongs or is used by the
agency, and the repair is necessary and that the defects in the vehicle was incurred through normal wear and tear and not due to the fault or negligence of any official or employee
• Report of Waste Materials for replacement of spare parts • Official receipts for expenses incun-ed for repair and servicing and spare parts
431
b) In case of Major Repair
• Canvass from at least three (3) contractors, or public bidding if amount involved is more than P 50,000.00
• Certificate of Accreditation of repair shop issued by Accreditation Board • Job Order/Contract • Guaranty Certificate of Contractor • Certificate of Acceptance by Property Officer of the work or service done in
conformity with specifications of contract and accomplished within the specific period of time
5) Transportation Services
a) Hauling Services
• Contract of Service • Certificate of Receipts of Agency - consignee of articles in good order and condition
b) Shipment
• Copy of bills of lading and/or airway bill as the case may be, signed by consignee or his representative
• Certificate of Receipt of agency - consignee of articles in good condition
6) Supplies and Materials
432
a) Common to all kinds of Purchase or Contracts
• Requisition and Issue Slip (RIS) duly approved by proper authorities • Purchase/Letter Order/ Contract, duly approved by proper officials • Original copy of the dealer's/supplier's invoice duly signed by the dealer or his
representative • Inspection report or waiver of inspection • Results of tests or analysis by proper government agency if articles are subject to
test • Certificate of availability of funds • Memorandum Receipts signed by officials or employees to whom semi
expendable supplies had been issued • Stock position sheet in case any single commodity requisitioned exceeds
P 1,000.00 in value • Evidence of acceptance and receipt by the agency
Thru Public Bidding (additional)
• Copy of advertisement • Winning bidder's offer • Bid tenders of other participants • Letter of award of acceptance and • Performance bond of winning bidder
Thru Emergency Purchase (additional)
• Canvass papers from at least three (3) bonafide suppliers • Certificate of head of agency or his duly authorized representative as to the
necessity and jurisdiction for emergency purchase, and that the price paid or contracted for is reasonable and that it was the lowest obtainable at the time of purchase or order
Thru Exclusive Distributors (additional)
• Certificate of exclusive distributorship • Certificate that there are no sub dealers selling at lower prices and that no suitable
substitute are available
b) For Gasoline and Oil
7) Rents
• Driver's Trip Ticker duly accomplished and approved • Requisition and Issue Voucher • Invoices • Fuel consumption report
• Contracts of Lease • Statement of Account/official receipt
8) Interest • Authority for incurrence of obligations together with the terms and conditions for
repayment and the rates of interest charged (SAM)
9) Grants, Subsidies and Contributions
• Memo of Agreement/Authority for grants, subsidies and contributions (SAM)
10) Awards and Indemnities
• Indemnify for injuries/sickness/death
Evidence showing that death, sickness or injury as the case may be, occurred or was contracted in line of duty Certificate of Award issued by committee as Physical examination of the
· agency concerned (SAM)
• Indemnify for damages to property
Indemnity Bond, in case property being conveyed is unregistered or untitled (SAM) Deed of absolute Sale or Conveyance (SAM) Deed of Conveyance or agreement to Demolish and Remove Improvement Certificate of Title (SAM)
433
11) Water Illumination and Power Service
• Bill/Official Receipts
12) Social Security Benefits, Awards and Other Claims
• Retirement Claims
Application in writing duly endorsed to the system by the Head of Agency concerned Complete service record including statement of leave of absence without pay Clearance from money, property and legal accountability Approval of retirement by the employer or agency and adjudication by the GSIS Clearance from GSIS Fiscal's clearance - place of assignment and place of residence Affidavit of applicant that he has no pending criminal case Statement of Assets and Liabilities (COA Cir. 81-155, 2/23/81)
• Separation Pay
Copy of pertinent law/authority List of employees lay off showing the names designations and last salary received Service record of each employee duly certified by Head of Agency or his duly authorized representative Certificate of Clearance from agency concerned Certificate of Clearance from GSIS Certificate of Clearance from PAGIBIG Statement of Assets and Liabilities
13) Training and Seminar Expenses
• Purchase of supplies and materials shall be in accordance with the procurement requirement for "Supplies and Materials" particularly on emergency purchase
• Receipts for other expenses incurred
14) Extraordinary and Miscellaneous Expenses
• Receipts and/or other document evidencing disbursement
• Certificate executed by the official concerned that the expenses sought to be reimbursed have been incurred for the purpose ( in case of extraordinary and miscellaneous expenses)
15) Confidential and Intelligence Expenses
434
The confidential and intelligence funds shall be utilized for the following purposes:
• National defense, peace and order, intelligence, counter intelligence programs of the Department of National Defense and related agencies
• For specific intelligence and/or confidential operation of the National Government agencies and government owned or controlled corporations with appropriation for intelligence and/or confidential funds
• In the case of the national security fund, for undertaking national security missions, and
• For police investigation and detection activities, policies intelligence and arson investigation activities. (COA Cir. 88-293 12/12/88
Certified Xerox copy of pre-audited cash advance vouchers Certified Xerox copy of request for obligation of allotment Certified Xerox copy of allotment advice Undertaking of the summary of expense- Form No. 1
Certified Xerox copy of (face of the paid check, reverse side of paid check indicating endorsement made, itemized list of disbursement)
• Additional documents required to support ordinary disbursements For incidental expenses such as transportation and entertainment of assets/informers vouchers shall be supported by receipts, invoices, bill for board and lodging, itinerary of travel, travel order, ce1tificate of travel completed, and certificate of appearance For purchase of supplies and materials and equipment, vouchers shall be supported by purchase/letter orders, report of canvass, delivery receipts, waste material report and other pertinent documents For purchase of information or payment or reward vouchers shall be supported by documents evidencing receipt of payment
16) Advertising and Publication Expenses
• Statement of Account • Clippings of the advertisement and notices published
17) Other Services
• Repair and Maintenance Done by Private Contractor
Repairs thru negotiated contracts and public bidding same as by administration and by contract Job Order/Contract Report of Waste Materials Certificate of Property Officer that equipment belong to or is used by the agency concerned that repair is necessary through normal wear and tear and not due to the fault or negligence of an employee or official Guaranty /Warranty/Certificate of repairman Pre-repair inspection
• Subscription to Periodicals and Technical Magazines
Copy of subscription Evidence of receipt of payment
• Radiocast and Telecast, Video Coverage and Documentary Films
Contract between agency and radio or TV station specifying conditions or radio cast or telecast [SEC. 415(a), GAAM, Vol. I]
435
Evidence of receipt of payment
• Payment of Legal Expenses
Application of official or employee concerned giving the facts of offence he was charged with and approved by proper Department Head concerned and passed upon by the COA Chairman Copies of decision exonerating him from administrative or criminal liability Receipts of actual and related expenses incurred Certificate of availability of funds [SEC. 4.16(a), GAAM, Vol. 1]
• Security and Janitorial Services
Contract executed between agency and private firm Copy of bond which is equal to the cost of labor under contract
436
LTO Form42
Mode of Payment
Payee
Republic of the Philippines
Name of Province/City/Municipality Address
DISBURSEMENT VOUCHER
D Check Ocash - -
-·
TIN/Employee No.
Oothers
No.
Obligation Request No.
Responsibility Center
Address Office/Unit/Project Code
EXPLANATION AMOUNT
�Certitled .!!.:J Certified
O Allotmem obligated for the purpose as indicated above Funds Available
D Supporting documents complete
Signature Signature
Printed Date Date
Name Printed Name
Position Position Head, Accounting Unit/ Authorized Representative Treasurer/ Authorized Representative
C. jApproved for Payment D. !Received Payment
Check No. Bank Name Date Signature
Printed Date Signaiure
Name Printed NamP. Date
OR/Other Documents JEVNo. Dace Position
ARencv Head/Authorized Representative
437
DISBURSEMENT VOUCHER (DV)
INSTRUCTIONS
A. The DY shall be printed in one whole sheet of 81/2 x 11 size bond paper. This shall be prepared in three copies to be distributed as follows: Original - Accounting Unit Duplicate - Cash Unit Triplicate - Paye e
B. The Accounting Unit shall stamp the date of receipt on the face of this form. C. This form shall be accomplished m the following manner: I. DV No. - number assigned to the DY by the Accounting Unit. It shall be numbered as follows:
0000 00 0000
� YSe
erairal number ( on e seri es for each year ) Month
2. Mode of Payment - put a check 11'111 mark in the appropriate box opposite the mode of payment 3. Payee - name of the payee or creditor 4. TIN/Employee No. - Tax Identification Number (TIN) of the claimant/Identification Number assigned by the agency to the officer/employee 5. Obligation Request No. - Number of the obligation request supporting the DY 6. Address - address of the claimant 7. Responsibility Center (Office/Unit/Project
and Code) - the office/unit/project and code assigned to the cost center where the disbursement shall be charged 8. Explanation - brief description of the disbursement 9. Amount- amount of claim
438
10. Certified (Box A) - certification of the Head of Accounting Unit or his authorized representative as to obligation of allotment for the purpose as indicated and completeness of supporting documents The certifying officer shall affix his signature, print his name, indicate his position, and the date of his signing on the spaces provided.
11. Certified (Box B) - certification by the Treasurer or his Authorized Representative on the availability of fund. The certifying officer shall affix his signature, print his name, indicate his position, and the date of his signing on the spaces provided. 12. Approved for Payment (Box C) - approval by the Agency Head or his Authorized Representative on the payment covered by the DY. The approving officer shall affix his signature, print his name, indicate his position, and the date of his signing on the spaces provided. 13. Received Payment (Box D) acknowledgment by the claimant or his duly authorized representative for the receipt of the check/cash and the date of receipt. The claimant/payee shall affix his signature on the spaces provided and shall indicate the number and the date of the check, bank name and number and date of OR/other relevant documents issued to acknowledge the receipt of payment. 14. JEV No. and Date - Number and date of the Journal Entry Voucher
.I:,. w
'D
GENERAL PAYROLL
LGU
Period
We acknowledge receipt of the sum shown opposite our names as full compensation for services rendered for the perido stated:
No . N AM E ID No. Position Monthly Allowance Amount
Salary Earned
1
2
3
4
5
6
7
8
9
·10
CERTIFIED: Services have been duly rendered as stated
Name & Signatll'"e of S�rvisor
CERTIFIED: Funds available in the amount of P - ------
Name & SignattXe of Treasi.rer
Absences Life &
wlo pay Retirement
DEDUCTIONS
Withholding Medicare Pag-ibig
Tax
APPROVED FOR PAYMENT:
Name & Signature or Officer
CERTIFIED: Each employee whose name appears above has been paid the amount indicated opposite his/her name.
OisblJ'Sing Officer
LTO Form 43
Sheet ___ of __ Sheets
No.: _ ___ ___ _
Salary No. Net Amount SIGNATURE
Loan Received OF PAYEE
Date
GENERAL PAYROLL
INSTRUCTIONS
1. This form shall be used for claims for salaries of permanent/regular employees of national government agencies, local government units as well as government corporations.
2. The used of this form should indicate on its heading not only the Agency name but also the name of the office where the claimants/employees are assigned.
3. The shall be numbered as follows: 0 0 ro rooo :
Serial number ( one series per year ) Month of Issue Year oflssue Fund
4. The identification no. of the employees shall be entered in column 2. 5. The position to be shown in column 3 shall be the same as that appearing in the
employee's appointment. 6. The monthly salary shall be the amount corresponding to one-twelfth of the annual
salary stated in the appointment and shall be entered in column 4. 7. If allowance is being paid together with the salary, the amount thereof shall be entered
in the allowance column ( column 5). 8. The total amount earned (column 6) shall be the total amount of salary earned for the
stated period plus the allowance stated in column 5. 9. Absences without pay, life and retirement, withholding tax, Pag-ibig, salary loan, etc.
(column 7-14) shall be deducted from the amount earned to get the net amount to be received.
10. Employees shall affix their signatures on the last column to acknowledge receipt of the net salaries and allowances.
11. The certification that services have been rendered as stated shall be signed by the immediate supervisor/head of office.
12. The certification as to completeness and propriety of supporting documents/previous cash advance liquidated/ existence of funds held in trust shall be certified/signed by the Accountant.
13. The certification as to availability of funds shall be accomplished/signed by the Treasurer.
14. Payment shall be approved by the head of office or his authorized representative. 15. The certificate of payment shall be accomplished by the Disbursing Officer/Cashier. 16. Blank columns shall be used for other authorized salary deductions and government
shares for GSIS and PAG-IBIG.
440
.i:,. .i:,.
LGU
Number
N AME Designation of Days
Worked
1
2
3
4
5
6
7
8
9
10
11
12
13
14
TOTAL
CERTIFIED:
Each person whose name appears on this
roll had rendered services for the time stated.
Name & Signature of
DAILY WAGE PAYROLL
Project
Rate DEDUCTIONS
Per GROSS NET
Day SALARY PAY
Approved for Payment:
Name & Signature of Approving Officer
LTO Form 44
Sheet of Sheets
Period:
Community Tax Signature or
Number Date Place of
Thumbmark Issue
1
2
3
4
5
6
7
8
9
10
11
12
13
14
CERTIFIED:
Each person whose name appears on
the above roll has been paid the amount stated
opposite his name ater identifying him.
Name & Signature of Disbursing
DAILY WAGE PAYROLL
INSTRUCTIONS
1. This form shall be used for claims of laborers/casual employees and other daily wage earners.
2. It shall be accomplished in at least three copies to be distributed as follows: Original copy - to the Auditor
Duplicate copy - to the Accountant
Triplicate copy - to be retained by the Paymaster or
Disbursing Officer
3. The designation of the claimant shall be indicated under "DESIGNATION" column
(column 2). 4. The number of days worked for the stated period shall be indicated in column 3. 5. The daily rate of each worker shall be indicated in column 4. 6. The amount computed based on columns 3 and 4 shall be indicated in column 5.
7. Authorized deductions shall be indicated in columns 6-8. 8. The net pay (gross salary less deductions) shall be indicated in column 9. 9. Workers receiving payment hereon shall affix their signature or thumb mark in
column 10 to acknowledge receipt of payment. 10. The Disbursing Officer shall indicate the number, date and place of issue of the
Community Tax Certificate presented by the claimants ( columns 11, 12 and 13 ). 11. This payroll shall be certified as to services rendered by the Foreman/Supervisor. 12. The authorized official shall approve the payroll for payment. 13. The disbursing officer shall certify payment of each person indicated in the payroll.
442
LTO Form 45
CHECK REGISTER
LGU
Fund Bank Account No.
Accountable Officer Official Designation Station
CHECK Received by:
Date Number
Date Name of Payee Amount Name/
Issued Released Signature Date
For Accountable Officers' Use
443
CHECK REGISTER
INSTRUCTIONS
A. The Check Register shall be accomplished as follows:
1. LGU - name of the municipality/province/city 2. Fund- fund name/code 3. Bank Account No. - name of Bank
4. Date - date of check issued 5. Check Number - serial number of the MDS checks drawn shall be
entered in numerical sequence, including cancelled ones. 6. Check-.Date Released - date when the check is released to the payee. 7. Name of Payee- name of the payee/claimant 8. Amount- amount of check issued by the Accountable Officer. 9. Received by - name and signature of the payee/claimant and the date
received.
B. Each Disbursing Officer/Accountable Officer shall maintain this record. All transactions for the day shall be recorded immediately.
444
LTO Form 46
REPORT OF CHECK ISSUED
LGU
Bank Name/Acct Name: --
Report No.:
Sheet No:
Checks DVNo. Responsibility Center Payee J Nature of I Amount
Date I No. Payment
TOTAL�
Certified Correct: Received by:
Disbursing Officer Accounting Clerk
Date Date
445
REPORT OF CHECKS ISSUED (RCI)
INSTRUCTIIONS
The RCI shall be accomplished as follows:
1. LGU - name of the province/city/municipality 2. Period Covered- period covered by the report 3. Sheet No. - sheet number of the report 4. Report No. - number assigned by the Treasury Office on the report. It shall be
numbered as follows: 00-00-00-0000
-11 I : Series (one series ner
Month
Year
Fund
5. Bank Name/Account No. - name of the bank and the account number where the check is drawn
6. Check No. - number of the check issued covered by the report including the cancelled ones.
7. Check Date - date of the check issued covered by the report 8. DV Number- number of the reference DV 9. Responsibility Center - code assigned to each cost center 10. Payee- name of the payee 11. Nature of Payment - nature of claim paid 12. Amount - amount of the check issued 13. Certification - the report shall be certified by the Disbursing Officer on last sheet
of the report. 14. Date- date report was submitted to the Accounting Unit 15. Received by: - name and signature of the designated personnel receiving the
report 16. Date - date of receipt of the report by the Accounting Unit
Additional instructions: a. The RCI shall be prepared in three copies by the Treasurer's Office daily to be
distributed as follows: Original - COA Auditor thru the Accounting Unit together with the original
copy of the paid petty cash vouchers/payroll/replenishment of PCF
2nd copy 3
rd copy
and supporting documents - Accounting Unit
- Treasurer's file
b. One (1) RCI shall be prepared for each bank account and it shall be the basis for the preparation of Journal Entry Voucher (JEV).
This report shall be prepared chronologically including cancelled/voided check
446
LTO Annex 47
Process Flow on Disbursement By Checks
Area of Responsibility/Pers Seq. Activity
on Responsible Concerned Office Gather supporting documents, and approved ALOBS,
1 prepare DV and forward to Head of Department.
Supervisor/Head of 2 Sign Box A of DV and submit to the Accounting Unit. Department
Check completeness of documents, assign number to DV, Accounting Unit 3 sign Box B and forward to Treasurer.
Verify claim, certify cash availability (Box C) and forward Treasurer 4 to approving officer.
Note: If funds are not available, return to Accountant for recording in the books as Accounts Payable (AP). For AP, JEV shall be prepared by Accounting Unit and JEV number reflected in the DV. JEV for AP is recorded in General Journal. Accountant retains copy of D V and forwards to Treasurer
Local Chief Executive 5 Approve transaction (Box D) and forward DV to Cashier. or authorized approving officer
Treasurer 6 Prepare, sign check and forward check with DV to countersigning officer.
Administrator/ Vice- 7 Countersign check and forward to Accountant for Mayor for the Local preparation of the Accountant's Advice of Local Check Sanggunian Disbursements. Disbursements Accountant 8 Prepare Accountant's Advice of Local Check
Disbursements and submit to bank. Return DV, check and supporting documents to Cashier/Treasurer.
Treasurer 9 Record check in the Check Register and release check to claimant. Record disbursement in Cashbook - Cash in Bank. Prepare Report of Checks Issued. Forward RCI with DV and supporting documents to Accounting Unit.
Accounting Unit 10 Prepare the JEV based on individual checks/voucher; sign "Prepared By" portion (approved by Chief Accountant), and record JEV in the Check Disbursements Journal. Post monthly to the General Ledger/Subsidiary Ledgers.
Accountant 11 Forward RCI, DV, supporting documents and JEV to the Office of the Auditor.
447
LT0Form48
PROVINCE/CITY/MUNICIPALITY
ACCOUNTANT•s ADVICE OF LOCAL
CHECK DISBURSEMENT
To: The Bank Manager
ADVICE NO.
DATE:
Please be informed that the following checks were issued by this Office:
Bank Account Check
Number Number
TOTAL AMOUNT •
Amount in Words
Certified Correct:
Prov./City/Mun. Accountant
(Signature over Printed Name)
Delivered by:
448
Accountant's Representative
(Signature over Printed Name)
Date Payee Amount
Bank Representative
(Signature over Printed Name)
Date Received:
LTO Form 49
REPORT OF DISBURSEMENTS
LGU
Accountable Officer: Report No.
Designation: Sheet No.:
Date Payee Reference Amount
TOTAL�
Certified Correct: Received by:
Disbursing Officer Accounting Clerk
Date Date
449
REPORT OF DISBURSEMENTS (RD)
INSTRUCTIONS
A. This report shall be accomplished as follows: 1. LGU - name of the province/city/municipality 2. Accountable Officer- name of the Accountable Officer 3. Designation - position or designation 4. Report No. - assigned RD number which shall be as
follows: 00- 00-00-00-0000
II......_____ serial number (one series per month) month year Disbursing Officers/Paymasters' Coe Fund
5. Sheet No - page number of the report 6. Date - date of the DV /source documents 7. DV No. - assigned DV number 8. Payee - name of the person/office to whom payment is
made 9. Nature of Pay,nent - nature of claims paid
10. Responsibility Center - code assigned to each cost center
1 1. A,nount - amount of disbursement covered in the DV or supporting documents
12. Certified by - name and signature of Disbursing Officer/Paymaster
13. Received by - name and signature of the designated Accounting personnel who will acknowledge the report
B. The Disbursing Officer/Paymaster shall prepare this report to liquidate his/her cash advance for each nature of cash advance such as cash advance for salaries and field operating expenses and petty cash fund (at end of year)
C. This report shall be prepared in three (3) copies and to be distributed as follows:
450
Original - COA thru the Accounting Unit together with the original copy of the paid
vouchers/payroll and supporting documents
211d copy - Accounting Unit
LTO Form 50
LIQUIDATION REPORT No.:
Date:
LGU Responsibility Center
PARTICULARS AMOUNT
Itinerary of Travel:
TOTAL AMOUNT SPENT .....
AMOUNT OF CASH ADVANCE PER DY NO. OTO. ..... - -
AMOUNT REFUNDED PER 0.R. NO. OTO .....
AMOUNT TO BE REIMBURSED .....
Submitted by: Received by:
Accounting Unit
Date
452
LIQUIDATION REPORT (LR)
INSTRUCTIONS
A. This report shall be accomplished as follows:
l. LGU - name of the province/city/municipality 2. No. - number assigned by the Accounting Office
which shall be as follows: 00-00-00-0000
-- I I
Series (one series per year)
Month
Year
Fund
3. Date - date of the preparation of the report 4. Responsibility Center - code assigned to each cost
center 5. Particulars and Aniount - brief description of what
has transpired of the travel and corresponding costs 6. Total Aniount Spent - actual amount spent 7. Aniount of Cash Advance - amount of cash
advanced for the travel 8. Aniount Refunded- excess amount on the cash
advanced less expenses incurred 9. Aniount to be Reinibursed- a1nount of cash
advanced less expenses incurred in the travel l 0. Certi.fied by: - signature of the employees/officer
who made the cash advance 1 1. Received by: - naine and signature of the designated
personnel in the Accounting Office receiving the report
12. Date - date of receipt of the report by the Accounting Unit
B. This report shall prepared by the employees/officers who made the cash advance. It shall be prepared in three copies:
Original - COA Auditor thru the Accounting Officer
Duplicate - Accounting Officer Triplicate - employees/officer concerned
LTO Annex 51
Process Flow on Cash Disbursement Area of
Responsibility/Pers Seq. Activity on Responsible Concerned offices I Processing of Payrolls to be paid by cash is the same as that
of steps (a) to ( e) for check disbursements.
Office of the Treasurer 2 Gather duly certified and approved payrolls to be paid out of cash advance. Prepare DV for cash advance corresponding to the net amount of payroll/s. Sign Box A of DV and submit to the Accounting Unit.
Accounting Unit 2 Check completeness of documents/ previous cash advance liquidated, assign number to DV, sign Box B and forward to Approving Officer.
Local Chief Executive 4 Approves DV and forward to Treasurer for preparation of checks.
Treasurer 5 Prepare and sign check, and forward check with DV to countersigning officer.
Administrator 6 Countersign check and forward to Accountant for preparation of Advice.
Accountant 7 Prepare Accountant's Advice of Local Check Disbursements and return DV, check and supporting documents to Cashier/Treasurer.
Treasurer/ Disbursing 8 Encash check and pay claimants. Record disbursement in Officer Cashbook - Cash Advances.
Note: Employees/payee shall sign on the received portion CJ{ the payro/1/D V to acknowledge receipt of payment.
Disbursing Officer 9 If there are unclaimed salaries, return unused cash to the Treasurer/ Cashier. An official receipt (OR) shall be issued by the Treasurer/Cashier to acknowledge the return of unused cash and indicate check no. of cash advance granted on the face of OR. Record the refund as credit to cash advance and attach OR to the Cashbook - Cash Advances.
Disbursing Officer 10 Prepare Report of Disbursement, attach paid payrolls/ supporting documents and copy of OR for unused cash advance returned to Treasurer/Cashier. Sign "Certified CmTect" portion of Report of Disbursement and submit to Accounting Unit.
Note: The RD shall serve as the liquidation report of the cash advance granted to the Disbursing Officer. The RD shall be distributed as follows:
453
Original - Accountant together with the original of the paid
DVs/Payro/1 and supporting documents
Copy 2-File
Accountant 11 Prepare JEV to record the liquidation of cash advance. Record JEV in the Cash Disbursements Journal (CDJ). Post monthly to the General Ledger/ Subsidiaty Ledger.
Accountant 12 Forward Report of Disbursement and supporting documents including JEV to the Office of the Auditor.
454
-
LTO Annex 52
Process Flow on Disbursements Through Bank - Payroll Payment
Area of Responsibility/Pers Seq. Activity
on Responsible Cash Unit/Cash Staff 1 Receive the approved check, DV and Following Months
Payroll (FMP), sign the logbook of the releasing office, and forward the documents to the Cashier.
Cash Unit/Cash Staff 2 Deposit the check to the Bank Payroll Account together
with the original of the Summary of Employees Net Earnings (SENE) received from Accounting Unit. File temporary copies 1-2 of FMP, copy 2 of the check, and copies 1-3 of DV for the preparation o RCI.
Note: The payee of the check is the Servicing Bank whose authorized representative shall acknowledge receipt of the check by signing on the original of the DV
455
LTOForm 53
PETTY CASH VOUCHER No.:
LGU Date:
Payee/Office : Responsibility Center:
Address
I. To be filled up upon request II. To be filled up upon liquidation
Particulars Amount
Total Amount Granted
Total Amount Paid per OR No.
Amount Refunded/ (Reimbursed)
� Requested by: __:_J I I Received Refund
Name of Requestor I I Reimbursement Paid
Approved by:
Immediate Supervisor Disbursing Officer
B I Paid by: D I I I Liquidation Submitted:
Disbursing Officer I I Reimbursement Received by:
Cash Received by:
Signature over Printed Name of Payee Signature of Payee
Date: Date:
456
PETTY CASH VOUCHER (PCV)
INS TRUCTJONS
A. The fonn shall be accomplished as follows: l. LGU - name of the agency 2.No. number and date
assigned to the PCV by the Accounting Section/Unit, it shall be numbered m the following manner:
00 -r T- 000
�i;:����;:�: n1.onth year
.._�������Fund 3. Date - date of the preparation
ofPCV. 4.Payee/Of.fice & Address -
name/office/ address of payee requesting for petty cash advance.
5. Responsibility Center - code of the requesting office as assigned by the COA.
I. To be filled up upon request
6. Particulars - purpose of the petty cash advance request.
?.Amount - amount of petty cash requested.
8. Box A - Requested by - shall be signed by the requestor.
9. Box A - Approved by - shall be signed by the Immediate Supervisor of the Requestor.
10. Box B - Paid by - shall be signed by the Disbursing Officer (DO).
11. Box B - Cash Received by -shall be signed by the recipient of cash.
11. To be filled liquidation
up upon
12. Total Amount Granted - the amount of cash received by the claimant.
13. Total Amount Paid Per OR No. __ - the total amount paid as shown in the invoice presented .
14. Amount Refunded/Reimbursed -the difference between the total amount granted less amount spent.
15. Box C - the DO shall check the appropriate box and affix his signature.
16. Box D - the payee shall check the appropriate box and affix his signature.
B. Part I shall be filled up upon request of the petty cash advance and Part II shall be filled up upon liquidation.
C. The PCV shall be prepared m two copies distributed as follows:
Original - Auditor thru the Chief Accountant together with the supporting documents
Duplicate - retained by the DO for his file
-l.'i7
LTO Form 54
PETTY CASH REPLENISHMENT REPORT
Name of Province/City/Municipality
Period Covered: - - - - -- -
Report No.: ______ _ _
Sheet No.: _______ _
Date Petty Cash
Particulars Amount Voucher
'
-
CERTIFICATION
I hereby certify to the correctness of the above information
Petty Cash Custodian Date
458
INSTRUCTIONS
PETTY CASH REPLENISHMENT REPORT
1. LGU - name of agency 2. Period covered - the period covering the duration of the replenishment
of the petty cash fund 3. Report No. - number of the PCRR 4. Sheet No. - page of the report 5. Date- date of the source document 6. Petty Cash Voucher No. - the number of the PCV 7. Pa1ticulars - purpose of the petty cash disbursement 8. Amount - amount appearing in the PCV 9. Certification - the signature of the petty cash custodian 10. Date - date when the PCRR was signed
459
LTO Annex 55
Process Flow on Petty Cash Fund Disbursements, Liquidation and Replenishment
Area of Responsibility/Pers Seq. Activity
on Responsible
I. Establishment/Replenishment of Petty Cash Fund
Petty Cash Custodian I Receive check from Cashier for the establishment/replenishment of petty cash fund. Record in the CDR the date, reference and the amount of check in the "Disbursements" column.
2 Encash check in GSB and keep the cash in a safety vault.
II. Utilization of Petty Cash Fund
Requesting Personnel 1 Accomplish Box A "Requested by" portion of the PCV
Immediate Supervisor 2 Sign Box A "Approved b" portion of the PCV and return to Requesting Personnel
Requesting Personnel 3 Submit to the Petty Cash Custodian for the release of fund
Petty Cash Custodian 4 Receive from the Requesting Personnel the PCV duly approved by concerned official
Petty Cash Custodian 5 Upon granting of the petty cash advance, sign in Box B "Paid by" potion of the PCV
Requesting Personnel 6 Receive petty cash and signs in Box B "Cash Received by" portion of the PCV
Petty Cash Custodian 7 Issue copy 2 of the PCV to requesting personnel
Petty Cash Custodian 8 Record paid PCV s in the CDR. Fill-up the following
columns: date, reference, name of payee, nature of payment, amount in the credit column and cash advance balance.
Petty Cash Custodian 9 File the original of the PCV awaiting liquidation
Ill. Liquidation of Petty Cash Advance
Petty Cash Custodian 1 Receive from Requesting Personnel copy 2 of the PCV together with supporting documents. Check and review completeness of documents such as the date, amount and nature of expenses paid as shown m the suppmting
documents
Petty Cash Custodian 2 If incomplete, return to Requesting Personnel for
460
completion of needed supporting documents
If complete, retrieve the original of PCV from file and fills up Box D "Liquidation Submitted" portion of the original and copy 2 of PCVs.
Petty Cash Custodian 3 Check the appropriate boxes for "Received Refund" of "Reimbursement Paid" portion and sign Box C of the PCV
Requesting Personnel 4 Check and fill up the appropriate boxes for "Liquidation Submitted" and "Reimbursement Paid" upon submission of necessary supporting documents and receipt or reimbursements of cash, if any, and sign the PCV
Petty Cash Custodian 5 Return copy 2 of the PCY to the Requesting Personnel
Petty Cash Custodian 6 If the amount granted is equal to the amount paid as shown in the liquidated PCY, proceeds t:> No. 7
If the amount is not equal to the amount paid, retrieve from file the CDR and record the necessary adjustments based on the liquidated PCY. Fill up the following columns: date, reference, name of payee, and nature of payment, amount in the appropriate debit, credit and balance column.
Petty Cash Custodian 7 File the original of the PDY together with the supporting documents awaiting replenishment.
IV. Replenishment of Petty Cash Fund
Petty Cash Fund 1 Retrieve from file the original of the PCV together with the Custodian supporting documents. Check the completeness of all PCVs
for replenishment.
Petty Cash Fund 2 Prepare the Petty Cash Replenishment Report (PCRR) in Custodian two copies based on PCVs in numerical sequence and fills
up the following columns: date, PCV No. particulars and amount.
Petty Cash Fund 3 Sign in the "Certified Correct by" portion of the PCRR Custodian
Petty Cash Fund 4 Based on the PCRR, prepare DY in three copies, and Custodian forward copies of the DY, original of the PCRR and PCV,
and supporting documents to Authorized Official for review and signature
Authorized Official 5 Sign in Box A portion of the DY
Petty Cash Fund 6 Forward Copies 1-3 of the DY, originals of PCRR and Custodian PCYs and supporting documents to Budget Division for
preparation of the Obligation Request (ObR)
461
LTO Form 56
DISBURSEMENT VOUCHER DVNo.:
Date:
Barangay City/Municipality:
Tel No. Province:
Payee: Employee No.: Fund:
Address: TIN No.:
Particulars Amount
A Certified B Certified: C Certified :
Existence of available appropriations for the Funds (Cash available) As to validity, propriety, and legality of claim
changes/expenses indicated above Approved:
For payment
Signature: Signature: Signature:
Printed Name: Printed Name: Printed Name:
Position: Position: Position:
Date: Date: Date:
D. Received Payment:
Check No.: Date:
Signature Over Printed Name/Date Bank Name:
Date OR Number: Date:
462
� ':J' ·�.,
Baran gay:
Te. No.
No: Name
A. Certified
Existence of available appropriations for the
changes/expenses indicated above
Signature:
Printed Name:
Position:
Date:
Payroll
Period Coverend
City/Municipality:
Province:
Compensation
Position Salaries & BIR
Wages Honoraria Total withholding Others Regular Tax
B. Certified C. Certified Funds (cash) available As to validity, propriety and
legality of claim
For payment Signature: Signature: Printed Name: Printed Name: Position: Position:
Date: Date:
LTO Form 57
Payroll No.
Deductions
Net Signature
Total Amount of
Due Recipient
D. Paid by:
Signature:
Printed Name:
Position:
Date:
PAYROLL
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. Period Covered period covered by payroll
2. Payroll Number - the payroll shall be numbered as.follows:
00 00 0000
u Serial nu1nber
(one series per year)
Month of Issue
Year of Issue
3. Barangay-Name of Barangay 4. Telephone Nurnber - tel. no of
barangay 5. City/Municipality
city/rnunicipality where the barangay is located
6. Province - Province where the barangay is located
7. No. entry nurnber in the payroll
8. 9. Narne - complete name of the
officers/ernployees covered by the payroll
10. Position posltlon of officer/employees
1 1 . Cornpensation: • Salaries and Wages -
amount of salaries and wages due the employees
• Honoraria amount corresponding to the honoraria for the period
• Blank Space - for other benefits and allowances due the employees
• Total - total amount of salaries/honoraria and other compensation due for the period.
12. Deductions amount of deductions from the employees such as BIR withholding tax, others
• Total - total amount of deductions
Note: Please sec Item No. (8J
464
13. Net Arnount Due gross incorne less total deductions
14. Signature of Recipient signature of officer/ernployee receiving the net arnount due
15. Box A - certification by the CCA on the existence of available appropriations for the expenses stated
16. Box B - certification by the BT on the availability of funds (cash)
1 7. Box C - certtfication by the PB on the validity, propriety and legality of the clairn and approval for payrnent
18. Bod D - to be signed by the BT/Disbursing Qfficer
B. This fonT1 shall be prepared in triplicate copies to be distributed as follows: Original - BRK to support
the SCP 211d copy-BT 3,·d copy - BRK
LTO Form 58
PURCHASE ORDER
Baran gay City/Municipality:
Tel No. Province:
Supplier: PO No.: Address: Date:
Mode of Procurement TIN: Bidding Negotiated Over the Counter Gentlemen:
Please deliver to this office the following articles subject to the terms and conditions contained herein Place of Delivery: Delivery Term: Date of Delivery: Payment Term:
Unit Particulars Quantity Unit Cost Amount
(Total Amount In Words)
Purpose:
In case of failure to make full delivery within the time specified above, a penalty on one-tenty (1/10)
of one percent for everyday of delay shall be imposed
Very truly yours
Sinature over Printed Name
Punong Barangay
Date Conforme: Existence of Available Appropriations of
(amount in workds/figures) I
Signature over Printed Name Signature over Printed Name Supplier Supplier
Date Date
465
_I
PURCHASE ORDER
INSTRUCTIONS
A. This form shall be accomplished as follows:
1.
2.
Supplier/ Address/TIN na,ne address and TIN of the supplier PO No. - the PO shall be nutnbered as.follows::
00 00 0000
u ...
Serial number (one series per year) Month oflssue Year of Issue
3. Barangay- Natne of Barangay 4. Telephone JVutnber - tel. no of
barangay 5. City/Municipality
city/,nunicipality where the barangay is located
6. Province - Province where the barangay is located
7. Date - date of PO preparation 8. Mode of Procure,nent - ,node of
procuretnent used such as public bidding, negotiated purchase, procuretnent service, etc. as provided under RA 9 I 84
9. Place/Date f Delivery - place and definite date/s of delivery. If not stated, it shall mean the office of the official making the order and the date shall be seven days after receipt of the PO by the supplier
IO. Delivery Term - delivery Term i.e. Free on Board (FOB) destination, FOB shipping point, etc. In the absence of such term it shall mean FO destination
I I. Payment Term specified period required when the delivered goods shall be paid and discounts al lowed, if any, such as 2/ I 0, n/30
12. Unit - unit of measure of the supplies (i.e. box, bottle etc.)
13. Particulars - brief description of the supplies/goods ordered
14. Quantity quantity of goods ordered
15.
16.
17.
18.
19.
20.
B.
Unit Cost - cost per unit of the supplies/goods ordered Atnount - total a,nount of the goods ordered (quantity ,nultiplied by unit cost) Penalty Clause penalty itnposed by the barangay in case of non-cotnpliance with the ter,ns of the PO Signed by - signature of the PB Coefor,ne signature over printed na,ne of supplier or his representative signifying his approval to the ter,ns set by the barangay and the date of signing Existence of Available Appropriation - the atnount of available appropriation cotntnitted for the purchase. This shall be signed by the CCA
This form shall be prepared in trip! icate copies to be distributed as follows: Original - Supplier for
confonne to the terms of the PO and attachment to the DV upon request for payment
2n" copy- BT 3'." copy - BRK
C. In case of negotiated purchase, the Barangay Secretary shal I indicate the Sangguniang Resolution No. under which the SB approved the contract.
LTO Form 59
PURCHASE REQUEST
Barangay PR No.: City/Municipality Date:
REQUISITION
Item Number Unit of Measurement Estimated Unti Cost
Qty. Item Desciption Estimated Amount
Total Estiimated Amount Purpose:
For use by the Barangay Treasurer Requested by: Approved by:
Signature over Printed Name Signature over Printed Name Requisitioner Requisitioner
Date Date
467
PURCHASE REQUEST
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. PR No. the PR shall be numbered as follows::
00 00 0000
L.. Serial number
. (one series per year) Month of Issue
... Year of Issue
2. Barangay - Name of Barangay 3. City/Municipality
city/municipality where the baran gay is 1 ocated
4. Date - date qf RO preparation 5. Item number- code of requested
goods 6. Quantity - quantity of goods
requested 7. Unit - unit of measure of the
goods requested (i.e. box, bottle, etc.)
8. Item Description brief description of the goods
9. Estimated Unit Cost the estimated cost per unit of the goods being requested
10. Estimated Amount - estimated total amount of the goods requested (est. quantity multiplied by est. unit cost)
I 1. Total Estimated Cost - total estimated amount of all the goods specified in the request
12. Purpose - a brief explanation on the purpose of the request
13. Requested by name and signature of the person requesting _the purchase of goods
14. Approved by - signature of the PB
468
B. This form shall be prepared in triplicate copies to be distributed as follows: Original - Supplier for
conforme to the terms of the PO and attachment to the DV upon request for payment
2nd copy-BT
3rd copy - BRK
.i,. °' 'Cl
LTOForm 60
Summary of Checks Issued
Barangay: City/Municipality: SCkl No.:
Barangay Treasurer: Province: Page:
Check Gross Deductions
Date No.
DVNo Fund Payee Particulars Amount Witholding Final VAT Net Amount
Tax EWT2% EWT1% EVAT1
5% Others
Certification: Acknowledgment:
I hereby certify that the foregoing is the complete and correct records I hereby acknowledge receipt of the SCkl complete with carbon of all checks issued from to . The carbon copies of the copies of all checks issued and originals of all paid DVs/payrolls
checks issued and originals of all paid DVs/payrolls are hereto attached. and supporting documents.
Barangay Treasurer Date Barangay Record Keeper Date
SUMMARY OF CHECKS ISSUED INSTRUCTIONS
A. This form shall be accomplished as follows:
1. Period the inclusive period covered by the report
2. SCkl No. - the SCkl shall be numbered as follows:
00 00 0000 Serial number
(one series per yea1·)
Month of Issue
Year of Issue
3. Barangay name of barangay
4. Barangay Treasurer - name of designated brgy treasurer
5. Date - date of the check 6. 7. Check No - serial number
of the check. The check issued including the cancelled ones shall be listed in correct nun1erical sequence
8. DY/Payroll - number of the DY/Payroll
9. Fund - name of the fun to which the payment was charged. Example - GF. CF. etc.
10. Payee - name of the payee 1 1 . particulars brief
description of the nature of disbursements
12. Gross Amount gross amount of the claim
13. Deductions - deductions on the total claim
14. Net Amount - amount of the check
15. Certification - to be signed by the BT
16. Acknowledgement - to be signed by the BRK
B. The SCkl shall be prepared in three copies to be distributed as follows:
470
Original - City/Municipal Accountant
2nd copy - BRK
3rd copy - DBC
.i,. -....)
Barangay: Barangay Treasurer: Date Particular 2007
CHECK DISBURSEMENTS REGISTER
City/Municipality: Province: BREAKDOWN OF EXPENDITURES Maintenance and Other Operatine Expenses FE Ref. Payroll Salaries& Honoraria Wages Gas,Oil& Telephone Office Supplies Lubricants Water Electricity Expenses Interest Expense
Certific,tion: I hereby cenify to the correctness of the above data. Records are based on the SCkl subrnined by the B and that !he carbon f the checks and all !he original of!he paid DVs/payroll supporting the entries are in my file - - -Barangay Record Keeper Date
CDRegNo. Page No. Capital Oullay Of!'1te Furniture & Equipment fatures
/
:rs (See L�t at the Back Ac'.oun'. I Amount Class,ficat'?n
LTO Form 61
Deductions Gross Due to BIR I Others Amount of Amount Checks Issued
CHECK DISBURSEMENT REGISTER
INSTRUCTIONS
A This shall! be accomplished as follows:
472
1. Month month covered by the Register
2. Page - number assigned to the sheet
3. CkDReg No - The Ck:DReg shal 1 be numbered as follows:
00 00 0000
lli Serial number
(one series per year) Month of Issue
Year of Issue
4. Date- date of DV
B.
preparation 5. Barangay - Name �f the C.
Brgy 6. Telephone Number - tel. no.
ofbarangay D. 7. City/Municipality
city/municipality where the baran gay is 1 ocated
8. Province - Province where E. the barangay is locatedDate - date of the transaction
9.
10. Particulars details or F · nature of payments
1 1. Reference the number assigned to the SCkl where the entry was taken
12. Breakdown of Expenditures - indicate amount under the applicable column provided for the following class
• Personal Services -payments for PS (i.e. payroll fund, salaries or honoraria
• Maintenance and Other Operating Expenses payments for MOOE
• Financial Expenses - payments for capital outlay
• Others - accounts which could not be accommodated in the specific columns shall be recorded in this column
13. Gross amount - gross amount of expenditures as indicated in the DV
14. Deductions - amount of deductions as indicated in the DV
1 5. Amount of checks - amount of disbursement per SCkl
A recapitulation of the "Others" columns shall be made at the bottom of the page At the end of the month, the amount columns in this Register shall be totaled, balanced and ruled. The register shall be certified and distributed as follows:
Original - City/Municipal Accountant 2
nd copy - BRK The certified register shall be submitted on or before the 5111 day of the following month supported with the certified SCkl to the City/Municipal Accountable. \All supporting documents to the SCkl shall remain with the BRK and shall be made available to COA representative anytime for examination/audit.
LTO Annex 62
Process Flow on Barangay Disbursement By Check
Area of Responsibility/Pers Seq.
on Responsible
Activity
Baran gay Keeper
Record
Barangay Treasurer
Punong Barangay
Prepares Disbursement Vouchers in three copies. Forwards the DY together with all supporting documents to the Barangay Treasurer.
2 Receives Disbursement Voucher 111 three copies duly certified in Box A by the Chainnan of Committee on Appropriation as to availability of appropriations together with all supporting documents.
3 Checks the availability of fund ( cash) to support the claim
4 Signs Box B of the Disbursement Voucher/Payroll certifying in the availability of fund ( cash)
5 Forwards the signed Disbursement Voucher/payroll to the Punong Barangay together with the supporting documents for certification and approval.
6 Certifies the Disbursement Voucher/Payroll as to validity, propriety and legality and approves it by signing in Box C.
7 Forwards the approved Disbursement Voucher/payroll to the Barangay Treasurer for the preparation of the check
8 Receives the approved Disbursement Voucher/Payroll
9 Verifies completeness of signatures on the Disbursement Vouchers/Payroll
10 Prepares the check in the name of the payee for the amount indicated in the Disbursement Voucher/Payroll Note 1. The check shall be prepared with a carbon copy, to be distributed as.follows:
Original - Payee Carbon copy- attached to Disbursement VouchedPayrol!
11 Signs the check
12 Forwards the check together with the Disbursement Voucher/Payroll and supporting documents to the Punong Barangay for countersignature on the check
13 Countersigns the check and returns it to the Barangay Treasurer together with the supporting documents for release.
473
Area of Responsibility/Pers
on Responsible Barangay Treasurer
Payee/Supplier
Barangay Treasurer
Barangay Keeper
474
Record
Seq. Activity
14 Receives and releases the check to the payee. Attaches the carbon copy of the check to the paid Disbursement Voucher/Payroll
15 Acknowledges the receipt of payment by signing in Box D of the Disbursement Voucher and retains 3rd copy for his file
16
17
18
19
20
21
22
23
24
25
Issues an Official Receipt, if applicable, to acknowledge the payment received.
Returns the signed Disbursement Voucher to the Barangay Treasurer with the Official Receipt to the Barangay Treasurer Note 2. The official receipt (if applicable) shall be made as an additional supporting document to the disbursements.
Attaches the official receipt issued by the payee/supplier to the original DV together with the carbon copy of the check. Retains the 2"d copy of the DV for file.
Records all the checks issued, including cancelled ones, in correct numerical sequence in the Summary of Checks Issued daily Note 1. The Summary of Check Issued shall be prepared in three copies to be distributed as follows: Original - City/Municipal Accountant 2"" copy - Barangay Record Keeper 3rd copy - Barangay Treasurer
Fills out the appropriate columns of the Summary of Check Issued based on the paid Disbursement Vouchers/Payrolls.
Sub totals the amount of the checks issued for the day
Records the disbursements of checks per Summary of Check Issued in the "Checks/Debit Memo/Bank Statements (Out)" column under the 'Cash in Bank" section of the Cash on Hand and in Bank Register
Totals and certifies the Summary of Check Issued weekly
Forwards three copies of the duly certified Summary of Check Issued supported by paid Disbursement Vouchers/Payrolls, carbon copies of the checks and supporting documents to the Barangay Record Keeper
Receives the certified Summa1y of Check Issued and checks completeness of supporting documents, accuracy of recording and correctness of totals
Area of Responsibility/Pers Seq.
on Responsible Baran gay Keeper
Record 26
27
28
29
30
31
32
33
Activity
Acknowledges receipt of the three copies of the Summary of Check Issued with supporting documents and returns the 3rd copy to the Barangay Treasurer for his file
Files the original (for City/Municipal Accountant) and 2nd
copy and the supporting documents for recording in the Check Disbursement Register
Retrieves the Summary of Check Issued. Records the total checks issued in the Check Disbursement Register, using the Summary of Check Issued as reference and distributes the payments made in the appropriate columns under the "Breakdown of Expenditures" section. Note 1. The Check Disbursement Register shall be prepared in two copies to be distributed as follows: Original - City/Municipal Accountant 2'"1 copy - Barangay Record Keeper
At month end, totals, rules and balances the Check Disbursement Register
Retrieves the Cash on Hand and in Bank Register previous submitted by the Barangay Treasurer
Reconciles the total checks issued in this register with the totals of checks issued under column "Out" per Cash on Hand and in Bank Register.
Certifies the Check Disbursement Register
Submits the certified Check Disbursement Register together with the Summary of Check Issued to the City/Municipal Accountant on or before the 5th day of the following month. Keeps 2nd copy for file
475
..
Baran gay:
Barangay Treasurer:
Date DV/ Payee
Payroll No.
.
Certification:
I hereby certify that the foregoing is the complete
and correct records of all cash payments for the
period to . The originals of all paid
DVs/payrolls are hereto attached.
..
. Barangay Treasurer
Summary of Cash Payment
City/Municipality: SCP No.:
Province:
Particulars Gross Amount Withholding
Tax
Acknowledgment:
I hereby acknowledge receipt of the certified SCP complete with
the originals of the paid DVs/Payrolls and supporting documents.
Barangay Record Keeper
LTO Form 63
I
Net Amount
'-0 t-"<:f"
\
SUMMARY OF CASH PAY1\1ENTS INSTRUCTIONS
A. This form shall be acco1npl ished as -follows:
1. SCP No. - the SCP shall be numbered as follows:
00 00 0000
u Serial number
(one series per year) Month of Issue
Year of Issue
2. Barangay - Name of the Brgy
3. Telephone Number - tel. no. o:f barangay
4. City/Municipality city/rnunicipality where the barangay is located
5. Province - Province where the barangay is located
6. Date - date payment was n1ade
7. DY/Payroll No. - number of the paid DY/payroll
8. Payee - nmne of the payee as indicated in the DY or the first na1ne appearing in the payroll followed by the word "et al"
9. Particulars brief description of the nature of pay1nents
10. Gross ainount gross ainount of DY /Payroll
1 1. Withholding Tax - amount of taxes withheld
12. Net A1nount a1nount actually paid
1 3. Certification - to be signed by the BT
14. Acknowledgement - to be signed by the BRK
B. This smn1nary shall be prepared every ti me a liquidation of the payroll fund is to be made in three copies to be distributed as follows:
Original - City/Municipal Accountant
2nd copy- BT/AO
3rd copy - BRK
477
_,,. -..) 00
Barangay:
Barangay Treasurer:
Date Particular
2007
CASH DISBURSEMENTS REGISTER
For the Month of Janua!:Y_, 2007
City/Municipality:
Province:
Payroll Fund
Reference Cash Advance Disbursements Balance
Certification :
I hereby certify to the correctness of the above data. Records are based
on the SCP submitted by the AO and that all the originals of the paid DVs/
payroll are all in my file.
Barangay Record Keeper Date
LTO Form 64
CDRegNo.
Page No.
Breakdown of Payments Deductions
Salaries and
Wages - Regular Honoraria Withholding Tax
CASH DISBURSEMENT REGISTER
INSTRUCTIONS
A This shall be accomplished as follows:
1 . Month month covered by
the Register 2. CDReg No - The CDReg
shall be numbered as follows:
00 00 0000
Lb; Serial nu1nber
(one series per year)
Month of Issue
Year of Issue
3. Barangay - Name of the Brgy
4. Telephone Number - tel. no. of barangay
5. City/Municipality city/municipality where the barangay is located
6. Province - Province where the barangay is located
7. Page - number assigned to the sheet
8. Date transaction
date of the
9. Particulars brief description/nature of the disbursement
10. Reference -numbers of DV, SCP as basis for the entry
11. Payroll fund • Cash Advances
amount received • Disbursements
amount disbursed out of the cash advance
• Balance the difference between the cash advance and disbursements rnade
12. Breakdown of Expenditures • Salaries and Wages
- Regular - amount paid to re6ular employees
• Honoraria - amount paid to barangay officials
• Blank Columns - for other expenditures where no special columns have been provided
13. Deductions - tax withheld from s�ary
B. In case where more than one sheet is utilized, each sheet shall be totaled and the totals shall be carried forward to the next sheet. The succeeding sheet shall start with the totals brought forward.
C. Entries in the Register shall be based on the SCP submitted by the BT/Disbursing Officer together with original paid DV /Payroll and the SC kl for cash advance received.
D. At the end of the month, the amount column in this Register shall be totaled, balanced and ruled.
E. The Register shall be certified and distributed as follows
Original - City/Municipal Accountant 2
11c1 copy - BRK F. The certified Register shall be submitted
on or before the 5111
of the following month supported with the certified SPPVC
479
LTO Form 65
LIQUIDATION REPORT
Barangay City/Municipality: LR No.:
Accountable Officer Province: Date:
Particulars Amount
Total amount spent
Amount of cash advance per DV No. dated
Amount refunded per OR No. dated
Amount to be reimbursed
A Certified B Certified: B Certified:
Correctness of the above data Purpose of travel/cash advance duly Supporting documents complete
accomplished
Signature: Signature: Signature:
Printed Name: Printed Name: Printed Name:
Position: Position: Position:
Date: Date: Date:
480
LIQUIDATION REPORT
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. IR No. the PR shall be numbered asfollows::
00 00 0000
u ...
Serial number
(one series per year)
Month of Issue
Year of Issue
2. Barangay - Name of the Brgy 3. Telephone Number - tel. no. of
barangay 4. City/Municipality
city/municipality wh�re the barangay is located
5. Province - Province where the barangay is located
6. Date - date of LR preparation 7. Particulars - brief description of
expenses incurred and detailed amount of expenses covered by the report, as recapitulated in the CD Reg
8. Amount detailed payments made out of the cash advance
9. Total Amount Spent total payments
I 0. Amount of Cash Advance -amount of cash received (the date and number of DV granting the cash advance shall be indicated)
1 1. Amount Refunded - amount due for refund (amount of cash advance less the total amount spent). An OR shall be issued for the refund and such shall be recorded in the CRDReg.
12. Amount to be reimbursed when total payment is more than the amount received, a new DV shall be prepared for the reimbursement
13. Box A certified - correctness of the data - name and signature of the BT-AO and the date it was signed
14. Box B Certified - purpose of travel/cash advance duly accomplished - name and signature of the PB and the date it was signed
15. Box C Certified - supporting documents complete - name and signature of the BRK and date it was signed.
A. This form shall be prepared in triplicate copies to be distributed as follows: Original - City/Municipal
Treasurer to support the liquidation of the cash advance
2nd
copy-BT 3rd
copy - BRK
A. Supporting Documents Invoices or OR
B. In Case of cash advance for travel, supporting documents shall include: Plane/bus/boat tickets or equivalent Boarding pass Certificate of Appearance
C. All advances received shall be fully liquidated before a new one shall be granted. Full accounting shall be made before a new/additional cash advance.
481
LTO Form 66
Process flow on Receipt of Barangay Cash Advance, Payment and Liquidation of Payroll/Travel
Area of Responsibility/Pers Seq.
on Responsible Activity
Barangay Record I Prepares Disbursement Vouchers in three copies. Fotwards the DV together with all supporting documents to the Barangay Treasurer.
Keeper
Barangay Treasurer
Punong Barangay
482
2 Receives Disbursement Voucher m three copies duly ce1tified in Box A by the Chairman of Committee on Appropriation as to availability of appropriations together with all supporting documents.
3 Checks the availability of fund (cash) to support the claim
4 Signs Box B of the Disbursement Youcher/Payroll certifying in the availability of fund ( cash)
5 Forwards the signed Disbursement Voucher/payroll to the Punong Barangay together with the supporting documents for certification and approval.
6 Certifies the Disbursement Voucher/Payroll as to validity, propriety and legality and approves it by signing in Box C.
7 Forwards the approved Disbursement Voucher/payroll to the Barangay Treasurer for the preparation of the check
8 Receives the approved Disbursement Voucher/Payroll
9 Verifies completeness of signatures on the Disbursement Vouchers/Payroll
10 Prepares the check in the name of the payee for the amount indicated in the Disbursement Voucher/Payroll Note 1. The check shall be prepared with a carbon copy, to be distributed as follows: Original - Payee Carbon copy - attached to Disbursement Voucher/Payroll
11 Signs the check
12 Forwards the check together with the Disbursement Voucher/Payroll and supporting documents to the Punong Barangay for countersignature on the check
13 Countersigns the check and returns it to the Barangay Treasurer together with the suppo1ting documents for release.
Area of Responsibility/Pers Seq.
on Responsible Activity
Baran gay Record 1 Prepares Disbursement Vouchers in three copies. Forwards the DV together with all supporting documents to the Barangay Treasurer.
Keeper
Barangay Treasurer
Punong Barangay
2 Receives Disbursement Voucher m three copies duly certified in Box- A by the Chairman of Committee on Appropriation as to availability of appropriations together with all supporting documents.
3 Checks the availability of fund (cash) to support the claim
4 Signs Box B of the Disbursement Voucher/Payroll certifying in the availability of fund ( cash)
5 Forwards the signed Disbursement Voucher/payroll to the Punong Barangay together with the supporting documents for certification and approval.
6 Certifies the Disbursement Voucher/Payroll as to validity, propriety and legality and approves it by signing in Box C.
7 Forwards the approved Disbursement Voucher/payroll to the Barangay Treasurer for the preparation of the check
8 Receives the approved Disbursement Voucher/Payroll
9 Verifies completeness of signatures on the Disbursement Vouchers/Payroll
10 Prepares the check in the name of the payee for the amount indicated in the Disbursement Voucher/Payroll Note 1. The check shall be prepared with a carbon copy, to be distributed as follows: Original - Payee Carbon copy- attached to Disbursement Voucher/Payroll
11 Signs the check
12 Forwards the check together with the Disbursement Voucher/Payroll and supporting documents to the Punong Barangay for countersignature on the check
13 Countersigns the check and returns it to the Barangay Treasurer together with the supporting documents for release.
483
Area of Responsibility/Pers Seq.
on Responsible Activity
Barangay Keeper
484
Record 25 Records all the payments made in the "Disbursement" column under the "Payroll Fund" section and show the "Breakdown of Expenditures". Note 1. The Cash Disbursement Register shall be prepared in two copies to be distributed as follows: Original - City/Municipal Accountant 2"d copy - Barangay Record keeper
27 Totals, balances and rules the Cash Disbursement Register at the end of the pay period
28 Submits the certified Cash Disbursement Register together with the Summary of Cash Pa�ments to the City/Municipal Accountant on or before the s t day of the following month. Keeps a 211d copy for file.
LTO Form 67
PETTY CASH VOUCHER No.:
LGU Date:
Baran gay City/Municipality:
Petty Cash Cust.: Province:
I. To be filled up upon request II. To be filled up upon liquidation
Particulars Amount
Total Amount Granted
Total Amount Paid per
OR No.
Amount Refunded/
(Reimbursed)
� Requested by:
� I I Received Refund
Name of Requestor I I Reimbursement Paid
Approved by:
Punong Barangay Petty Cash Custodian
B I Paid by: �
I I Liquidation Submitted:
Disbursing Officer I I Reimbursement Received by:
Cash Received by:
Signature over Printed Name of Payee Signature of Payee
Date: Date:
485
PETTY CASH VOUCHER
INSTRUCTIONS
A. This form shall be accomplished as follows:
1.
2.
3. 4. 5.
6.
7.
8.
9.
PCV No. the PR shall be numbered asfo"llo-ws::
00 00 0000
u Serial number
(one series per year) Month or Issue Year or Issue
Date - date of PCV preparation
I. To be filled out upon request
LGU - name of" LGU Barangay- Nan'le of Barangay Petty Cash Custodian - na1ne of designated petty cash custodian City/Municipality city!tnunicipality where the barangay is located Province - province where the barangay is located Particulars - brief description of the nature of disburse1nent/expense ·and a1nount of petty cash requested
10. Box A - Requested by - shall be signed by the requestor Approved by: - shall be signed by the PB
I 1. Box B Paid by - shall be signed by the PCFC Cash Received by - shall be signed by the recipient of cash
IL To be liquidation
filled out upon
12. Total Amount Granted the amount of cash received by the claimant
13. Total Amount Paid Per OR/Invoice NO. the total amount paid as shown in the invoice presented
1 4. Amount Refunded/Reitnbursed -the ditTerence between the total atnount granted less amount spent.
486
15. Box C - the PCFC shall check the appropriate box and affix his signature
16. Box D - the payee shall check the appropriate box and affix his signature.
B. Part I shall be filled out upon request of cash and Part II shall be filled out upon liquidation:
C. The PCV shall be prepared in two copies to be distributed as follows:
Original -BRK to support the SPPCV
2nd copy- Requesting Official
""" 00
LT0Form68
Summary of Paid Petty Cash Vouchers
Baran gay: City/Municipality: SPPCV No.: Barangay Treasurer: Province: Page:
Date PCV No. Payee Particulars Amounts
Certification: Acknowledgment : I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SPPCVs
and correct records of all payments from the Petty Cash complete with the originals of the paid PCVs and
Fund for period to . The originals of supporting documents.
the paid PCVs and supporting documents are hereto
attached.
Petty Cash Fund Custodian Barangay Record Keeper
SUMMARY OF PAID PETTY CASH VOUCHERS INSTRUCTIONS
A. This form shall be accomplished as follows:
1. SPPCV No. - the SPPCV shall be nu1nbered as follows:
00 00 0000
U Serial number
(one series per year) Month of Issue
Year of Issue
2. Page - page number 3. Barangay name of
barangay
4. Barangay treasurer - name
of designated barangay treasurer
5. City/Municipality city/municipality where the barangay is located
6. Province - province where the barangay is located
7. Date - date the PCV was paid
8. PCV No. - number of the paid PCV
9. Payee - name of the payee 10. Particulars brief
description of the nature of payments
11. Amount - amount paid 12. Certification - to be signed
by the PCFC 13. Certification - to be signed
by the PCFC 14. Acknowledgement - to be
signed by the BRK
B. It shall be prepared in three copies to be distributed as follows:
488
Original - City/Municipal Accountant
2nd copy - BRK
3rd copy - PCFC
� 00
\0
LTOForm 69
PETTY CASH FUND REGISTER
Period
Baran gay: City/Municipal: PCFReg No.
Tel. No.: Province: B Page
PETTY CASH FUND Breakdown of Disbursements
(104) MAINTENANCE AND OTHER OPERATING EXPENSES OTHERS (See List at the Back) Ref. Particulars
Traveling Office Gasoline, Telephone
Receipts Payments Balance Expenses· Supplies Oil& Expenses· ACCOUNT CLASSIFICATION Amount
Date Local Expenses Lubricants Mobile
I
Certification: Acknowledgement: I hereby certify to the correctness of the above data. Entries are
based on the certified SPPCVs. Original of the unreplenished PCVs are all in my file. I hereby acknowledge receipt of the PCFReg.
Petty Cash Fund Custodian Date Barangay Record Keeper
PETTY CASH FUND REGISTER
INSTRUCTIONS
A This shall be accomplished as follows:
• Travelling expenses local - amount paid for local travel
490
1. Month month covered by the Register
2. PCFRReg No The PCFRReg shall be numbered as follows:
00 00 0000
lli Serial number
(one series per year)
Month of Issue
Year of Issue
3. Page - number assigned to the sheet
4. Barangay name of barangay
5. Telephone number telephone number of barangay
6. City/Municipality city/municipality where the barangay is located
7. Province - province where the barangay is located
8. Date - date of the PCV and replenishment
9. Reference number of SPPCV/SCkl
10. Particulars details or nature of transactions
11. Petty Cash Fund • Receipts - amount
of PCF established/replenis hed
• Payments - amount of disbursed out of the PCF
• Balance the difference between the receipts and payments
12 Breakdown of Expenses • Maintenance and
Other Operating Expenses
• Office supplies expense -amount paid for office supplies purchased
• Fuel, oil and lubricants expenses - amount paid for fuel, oil & lubricants
• Telephone expense mobile - amount paid for mobile phone
13 Others - accounts classification -specific account title and amount -amount paid
B. A recapitulation of "others" column shall be made at the bottom of the page C. Enrtries in the PCFReg shall be based on the SPPCV together with the original paid PCVs and its supporting docl.,lments D. In cases where more than one sheet shall be utilized, each sheet shall be totaled and the totals shall be carried forward to the next sheet. The succeeding sheet shall start with the totals brought forward. E. At the end of the month, the amount columns in the Register shall be totaled, balanced and ruled F. The registers shall be certified and distributed as follows:
Original - City/Municipal Accountant 2
nd copy - PCFC 3rd copy- BRK
G. The certified Register shall be submitted to the City/Municipality Accountant on or before the 5
th of the following month supported with the certified SPPCV
LTO Annex 70
Process Flow on Establishment of Petty Cash Fund, Payment and Liquidation of PCF
Area of Responsibility/Pers Seq.
on Responsible Activity
Petty Cash Fund Custodian
Barangay Keeper
Record
Barangay Treasurer
Punong Barangay
Barangay T,easurer
A Receipt of the authority as Petty Cash Fund Custodian and Establishment of Petty Cash Fund
Receives the approved Sangguniang Bayan Resolution designating the Barangay Treasurer or an official as Petty Cash Fund Custodian
2 Forwards the documents to the Barangay Record Keeper for the preparation of the Disbursement Voucher for the establishment of Petty Cash Fund.
3
4
Prepares Disbursement Vouchers in three copies. Forwards the DY together with all supporting documents to the �arangay Treasurer.
Receives Disbursement Voucher in three copies duly certified in Box A by the Chairman of Committee on Appropriation as to availability of appropriations together with all supporting documents.
5 Checks the availability of fund ( cash) to support the claim
6 Signs Box B of the Disbursement Voucher/Payroll certifying in the availability of fund ( cash)
7 Forwards the signed Disbursement Voucher/payroll to the Punong Barangay together with the supporting documents for certification and approval.
8 Certifies the Disbursement Voucher/Payroll as to validity, propriety and legality and approves it by signing in Box C.
9 Forwards the approved Disbursement Voucher/payroll to the Barangay Treasurer for the preparation of the check
10 Receives the approved Disbursement Voucher/Payroll
11 Verifies completeness of signatures on the Disbursement Vouchers/Payroll
491
Area of Responsibility/Pers Seq. Activity
on Responsible Barangay Treasurer 12 Prepares the check in the name of the payee for the amount
indicated in the Disbursement Voucher/Payroll
Punong Barangay
Barangay Treasurer
Petty Cash Custodian
Requesting Official/Staff
Punong Barangay
Petty Cash Custodian
Requesting Official/Staff
492
Fund
Fund
Note I. The check shall be prepared with a carbon copy, . tq · be distributed as follows: Original - Payee Carbon copy - attached to Disbursement Voucher/Payroll
13 Signs the check
14 Forwards the check together with the Disbursement Voucher/Payroll and supporting documents to the Punong Barangay for countersignature on the check
15 Countersigns the check and returns it to the Barangay Treasurer together with the supporting documents for release
16 Receives and releases the check to the payee. Attaches the carbon copy of the check to the paid Disbursement Voucher/Payroll
17 Receives and encashes the check
B Request for cash from Petty Cash fund
18 Prepares the Petty Cash Voucher and signs the requested by portion of Box A Note 2. The Petty Cash Vouchers shall be prepared in two copies to be distributed as follows: Original - to support the Summary of Paid Petty Cash Vouchers 2"" copy - Requesting Official
Forwards the signed Petty Cash Voucher to the Punong 19 Barangay for approval.
20 Signs the approved by portion of Petty Cash Vouchers
21 Forwards the Petty Cash Vouchers to the Petty Cash Fund Custodian for payment
22 Pays the amount and signs the paid by portion of Box B
23 Receives the amount and signs the received by portion of Box B
24 Returns the signed Petty Cash Voucher to Petty Cash Fund Custodian and retains 211d copy for file
Area of Responsibility/Pers
on Responsible Requesting Official/Staff
Petty Cash Custodian
Fund
Seq. Activity
25 Submits to the Petty Cash Fund Custodian the Invoice/Official Receipt and other evidence supporting the disbursement
26 Retrieves documents and payments/disbursements
other evidence of
27 Retrieves the original petty cash vouchers and computes the amount due to/from the recipient of the fund
28 Reimburses the requesting official/staff for the advances made, if any and signs Box C Note 3. In case the PCF received exceeds the disbursements made, the requesting officials shall return the excess to the PCFC and signs Box C.
29 Signs Box D for the reimbursement received or liquidations made and returns the original of PCV to PCFC
Records all paid PCVs in the Summary of Paid Petty Cash Vouchers in chronological orders Note I. The Summary of Paid Petty Cash Vouchers in three copies to be distributed as follows:
Original - attached to D V for replenishment 2
nd copy - Barangay Record Keeper
3rd copy - Petty Cash Fund Custodian
30 Records Payments made in the amount column of the Summary of Paid Petty Cash Vouchers
31 Totals, rules and certifies the Summary of Paid Petty Cash Vouchers
32 Records the checks received for petty cash under the "Receipts" column in the "Petty Cash Fund" section of the Petty Cash Fund Register. Fills out the date and reference columns for the date and the Summary of Check Issued check numbers
33 Records the paid Petty Cash Vouchers as shown in the Summary of Paid Petty Cash Vouchers in the "Payment" column under the Petty Cash Fund section of the Petty Cash Fund Registers. Distributes the breakdown of expenses in the appropriate columns.
34 Totals, rules and balances the Petty Cash Fund Registers at month end
35 Recapitulates all entries in the "Others" column Note I. the Petty Cash fund Register shall be prepared in three covies to be distributed as follows:
493
LTO Form 71
INSPECTION AND ACCEPTANCE REPORT
Barangay City/Municipality:
Tel N,o.: Province:
Supplier: Invoice No.: IARNo.: RIS No.:
PONO.: Date: Date: Date: Date:
Unit Description Quantity
...
Inspection Acceptance
Date inspected: Date received:
__ Inspected, verified as lo quantity and specifications __ Complete __ Partial (Pis. specify quantity received)
-
Signature over Printed Name Signature over Printed Name
Authorized Inspector Authorized Inspector
494
INSPECTION AND ACCEPTANCE REPORT
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. Supplier - name of the supplier 2. PO No. - number of the PO 3. Date - date of the PO 4. Invoice No. - number of the
suppliers invoice 5. Date - date of the invoice 6. IAR No. - the IAR shall be
numbered as follows:
00 00 0000
u Serial number
(one series per year)
Month oflssue
Year of Issue
7. Date - date of IAR preparation 8. RIS No. - the number of the RIS 9. RIS Date - the date of the RIS 10. Unit - unit of measurement such
as ream, box roll, etc. for the items delivered
11. Description - brief description or details of the items delivered
12. Quantity number of units delivered
B. This form shall be prepared in triplicate copies to be distributed as follows: Original - BRK to support the
DV for payment 2
nd copy - City/Municipal Accountant
3rd copy- BRK 4th copy- BT
C. The .. Inspection" box shall be signed by the authorized Inspection Officer who conducted the inspection. The date of inspection shall also be indicated.
B. The receiving Bartingay Official shall ackhowledge receipt of the items by placing his name and signature on the
c.
.. Acceptance" box. He shall indicate whether the delivery is complete or partial by putting a check mark on the boxes provided. The date of receipt shall also be indicated
The JAR shall fotm p _art f the supporting documents to the claim of the supplier for payment
D. Disbursement Voucher shall be prepared only for the items delivered. Undelivered items, although covered by PO, shall not paid.
495
LTO Form 72
REQUISITION AND ISSUE SLIP
Barangay
Barangav: City/Municipality RIS No.: Date:
Tel No: Province SAi No.: Date:
Re·auisitio n lssuan ce
Stock.No. Unit Descriotion Ouantitv Quantity Remarks
Purpose:
Requested by: Approved for Issuance: Received Issued by:
by:
Signature Printed Name : Desiqnation Da t e
496
REQUISITION AND ISSUE SLIP
INSTRUCTIONS
A. This form shall be accomplished as follows:
1.
2.
3.
4.
5. 6.
7.
8.
9.
RIS No. - the RIS shall be numbered as follows:
00 00 0000 Serial nun:1ber
u (one series per year) Month oflssue Year of Issue
Date - date of the preparation of RIS SAI No. -control number of SAI Date - date of preparation of SAI Barangay - name of barangay Telephone Number - tel. no. Baran gay City/Municipality city/municipality baran gay is I ocated
where
Province - province where barangay is located Requisition
• Unit unit of
of
the
the
of the
•
measure1nent stock being requisitioned such as ream, box, etc. Particulars - description of the item being
•
requisitioned Quantity number/quantity stock requisitioned
of the being
• Stock No. - no of the item being requisitioned
• Description brief description of the ite1n requisitioned
10. Issuance • Quantity - actual
quantity issued/status of stock
• Re1narks - co1nments, if any
11. Purpose - brief explanation f the purpose of the requisition
12. Requested by- signature, name and designation of the person who requested the item and date of request
13. Approved for Issuance by - signature, name and designation of the person who approved the issuance and date of approval of PB
14. Received by- signature, name and designadon of the person who received the item and date of receipt
15. Issued by - signature, name and designation of the official who issued the item requisitioned and date of issue
B.
c.
This form shall be used to request for goods/supplies/property needed This form shall be prepared in three copies to be distribµted as follows:
Original - BRK to support the PO or the issuance
211d
copy-BT 3rd
copy - BRK
497
LTOForm 73
INVENTORY CUSTODIAN SLIP Baran gay City/Municipality: ICS No. Tel No.: Province:
Unit Descnption Quantity Estimated Useful life ..
-
R��by: Issued by: . .. ,
Signature over Printed Name Si9nature over Printed Name Barangay Tanod Barangay Tanod
I Date Date
498
LTOForm 74
PROPERTY ACKNOWLEDGEMENT RECEIPT
Baran gay: City/Municipality: PAR No:
Tel No.: Province:
Quantity Unit Description Property No. Date Acauired Cost
"
Received by:
Signature over Printed Name Signature over Printed Name
Recepient/User Barangay Treasurer
I Date Date
499
LTO Form 75
TRANSFER OF MONEY AND PROPERTY ACCOUNTABILITIES
Barangay: City/Municipality: Tel No.: Province: A. Money
Cash: No. of Pieces Denomination Amount
Checks Drawee Number Date Amount
B. Accountable Forms
Quantity Name of Forms Inclusive Serial Nos. From To
C. Proper!� Quantity Unit Description Property No.
D. Documents
Transferred by: Received by: I hereby CERTIFY that the I hereby ACKNOWLEDGE receipt from
above listed items/were acted the following upon as follows: (Name of Accountable Officer) a. Cash-refunded under OR No. dtd
- -
a. Property b. Accountabile Forms turned over to b. Accountable Forms and
(name of recipient) c. Financil documents c. Property-retuned/turned over to
(name of recipient) d. Documents - all documents turned over to
(see certified list)
Witnessed by: Approved by:
Barangay Official Punong Barangay
500
TRANSFER OF MONEY AND PROPERTY ACCOUNTABILITY INSTRUCTIONS
A. This form shall be accomplished as follows:
1. Money:
2.
3.
Cash • No. of pieces - quantity • Denomination
example: P 1,000, PSOO, etc.
• Amount - no o pieces multiplied by the denomination
• Total - total amount of cash
Checks • Drawee Bank - name
of the drawee bank • Number check
number • Date date of the
check • Amount - a1nount of
the check • Total - total amount of
the checks listed Accountable forms
• Quantity - quantity of for1ns
• N·ame of forms - name of accountable forms under his custody
• Inclusive Serial Nos. the beginning balance and ending serial numbers
Property: • Quantity - number of
pieces/units of PPE • Unit unit of
n1.easu re 1nen t
•
•
Description brief description of the PPE being transferred/received
Property No . assigned property number of the PPE
4. Documents lists of all docu1nents under the custody of AO
5. Transferred by - certification
6.
7.
8.
of the outgoing AO on the surrender of the money, property, accountable fonns and documents under his custodianship Received by acknowledgen1.ent of the Inco1ning barangay official on the receipt of the money, property, accountable forms and docun1ents surrendered by the outgoing AO Witnessed by - to be signed by the Barangay Official who witnessed the turnover Approved by - to be approved by the PB. In case the PB is the AO, the transfer shall be approved by the Ciy/Municipal Mayor
B. The TMP A shall be prepared in four copes every ti me an accountable officer ceases to be one to be distributed as
follows: Original - Incoming
Barangay Official 2nd copy-BT 3rd copy - Outgoing
Barangay Official 4'h copy - COA
501
LTO Form 76
WASTE MATERIAL REPORT
Baranoav Place of Storage Date:
ITEM FOR DISPOSAL
IT EM QTY. DESCRIPTION RECORDS OF SALES
ORNO. AMOUNT
Certified correct by: Approved by:
Signature Over Printer Name Signature Over Printer Name
Barangay Treasurer Barangay Treasurer
CERTIFICATE OF INSPECTION
I hereby certify that the property enumerated above were disposed of as follows:
Item Destroyed
Item Sold at private sale
Item Sold at public auction
Item Transferred without cost to
Property Inspector: Witness to Disposition:
Name and Sii:mature Name and Sia nature
502
WASTE MATERIAL REPORT INSTRUCTIONS
A. This form shall be accomplished as follovvs:
1. Barangay name of .the barangay
2. Place of Storage exact location of the items for disposal
3. Date - date of the preparation of the report
4. Item - entry number in the report
5. Quantity - number of items being reported as vvaste materials
6. Unit - unit of measurement 7. Description name and
description of item being reported
8. Record of Sales • OR No. official
receipt number covering the sale of vvaste materials
• Amount - amount of vvaste materials sold based on the OR
9. Total - total amount of sale 10. Certified Correct - name and
signature of the Property Officer
11 . Approved for Disposal name and signature of the Punong Barangay
B.CERTIFICATE OF INSPECTION 1. Indicate the corresponding item
number of the vvaste material in the line opposite the mode of disposition made
2. Property Inspector - name and signature of the concerned Property Inspector.
3. Witness to disposition - name and signature of tp.e person authorized to witness the disposition of the vvaste property ..
C. This report shall be prepared in three copies to be distributed as follovvs:
Original - Incoming Barangay Official
d .
2n copy-BT 3rd
copy - Outgoing Barangay Official
4th copy - COA
503
LTO Form 77
SUPPLIES LOGBOOK
Qty Issuance Balance Date Reference Description
Received Qty Received b·
,
,
'
504
A. This form shall be accomplished as follows:
SUPPLIES LOGBOOK INSTRUCTIONS
1. Date - date of entry 2. Reference - document used
as a basis in recording the receipt or issuance of supplies and materials
3. Description - description of the item being received (i.e. type, brand etc.)
4. Quantity Received � actual quantity received
5. Issuance
• Quantity - actual quantity received
• Received by signature, name and description of the person who received the item and date of receipt
6. Balance (Qty) - Running balance of the quantity of supplies on stock
B. A separate sheet/page shall be maintained for each item to monitor the stock balance.
505
LTO Annex 78
Reauisition, ssuanc� and Delivery of Materials and Supplies Area of
Responsibility/Pers Seq. Activity on Responsible
Requisitioner
Bids and Award Committee (BAC)
Chairman, Committee on Appropriation
Baran gay Keeper
Record
Chairman, Committee on Appropriation
Bids and Award Committee (BAC
506
Prepares the Requisition and Issue Slip (RIS) by filling out information in the Requisition portion Note 1. The RIS shall be prepared in three copies to be distributed as follows: Original - Barangay Treasurer 2
nd copy - Barangay Record Keeper 3rd copy - Requisitioner
2 Signs the Requested by portion
3 Forwards the signed RIS to the Barangay Treasurer
4 Receives the RIS
5 Checks the availability of stock. If not available, returns the RIS to the requisitioner for pr�paration of the purchase
6
7
request.
Based on the approved purchase request makes a reasonable estimate of the cost of the items to come up with the Approved Budget for the Contract (ABC).
8 Forwards the approved purchase request and the estimate or ABC to the Chairman, Committee on Appropriation (CCA) for earmarking of appropriations.
9 Receives the purchase request and ABC for earmarking
10 Forwards the purchase request and ABC to the Barangay Record Keeper for earmarking of the funds needed.
11
12
13
14
15
Checks the Registry of Appropriation and Commitments (RAC) and verifies the availability of funds Earmarks the needed amount Sends back the purchase request to the CCA for certification on the availability of appropriations
Receives the purchase request and certifies the availability of appropriations and returns the same to the BAC with the amount needed duly earmarked.
Conducts bidding or adopts alternative mode of procurement required under RA 9184.
16 Forwards the result of recommendation for award of Contract/PO to the Punong Barangay for approval
Area of Responsibility/Pers Seq. Activity
on Responsible Punong Barangay 17 Approves the result of the bidding
Barangay Keeper
Record
Chairman, Committee on Appropriations
Punong Barangay
Barangay Treasurer
Punong Barangay
Barangay Treasurer
Requisitioner
18 Sends the approved result of the bidding to Barangay Record Keeper for the preparation of Purchase Order
19 Receives and prepares contract/Purchase Order
20 Initials below the name of the CCa under the funds available portion of the contract/purchase order
21 Forwards the contract/purchase order together with the purchase request duly earmarked to the CCA for certification on the availability of appropriations
22 Signs the certification of funds available
23 Forwards the contract/purchase order to the Punong Barangay for approval.
24 Approves or signs the contract/purchase order
25 Forwards the contract/purchase order to the Barangay Treasurer for release
26 Receives the signed contract/purchase order and releases it to contractor/supplier. Retains a copy for file. (go to seq. 41)
27 Forwards the RIS to the Punong Barangay for approval if stock is available
28 Approves the RlS by signing the approved by portion
29 Returns the approved RIS to the Barangay Treasurer for the issuance of the supplies, materials and Property, Plant and Equipment.
A 30
Issuance of Supplies and Materials
Receives the approved RIS from the requisitioner
32 Fills up the issuance section of the RIS, on the quantity issued and the remarks, if needed
33 Issues the items requested and signs Box D
34 Receives the items requisitioned and signs Box C of the RIS
507
Area of Responsibility/Pers Seq.
on Responsible Activity
Barangay Treasurer
Requisitioner
Barangay Treasurer
Inspection Team
Baran gay Keeper
508
Record
B Issuance of small items with serviceable life of more
than one year 35 Prepares the Inventory Custodian Slip (JCS) for the
issuance of small items Note I. The JCS shall be prepared in three copies to be distributed as follows: Original - Barangay Treasurer 2nd copy - Barangay Record Keeper 3rd copy- recipient or user of the small item
36 Forwards the ICS to the requisitioner for signature
37 Issues the items requisitioned
38 Signs the received by po1iion of the ICS
39 Returns the signed !CS to the Barangay Treasurer
40 Signs the issued by po1iion of the ICS. Files the original and 211d copy and forwards the 3rd cop to the requisitioner.
41 Receives deliveries for inspection and signs the received by po11ion of the supplier's invoice/delivery receipt
42 Retrieves purchase order/contract
43 Prepares the Inspection and Acceptance Report (IAR) and forwards to Inspection Committee
44
45
46
47
Note I. The JAR shall be prepared in four copies to be distributed as follows: Original - to support the D V for payment 2nd copy - City/Municipal Accountant 3rd copy - Barangay Record Keeper 4th copy - Barangay Treasurer Note 2. In case of partial delivery, only the quantity actually delivered and accepted shall be indicated in the JAR.
Inspects deliveries and checks conformity with the specifications stated in the purchase order.
Forwards all copies of the duly accomplished IAR to Barangay Record Keeper.
Attaches the original to the disbursement voucher. Forwards the disbursement voucher together with the 4th
copy of the IAR for Barangay Treasurer file. Submits the 211d copy of IAR together with a copy of delivery receipts to the City/Municipal Accountant. Retains
the 3rct copy for file.
Area of Responsibility/Pers Seq. Activity
on Responsible Barangay Treasurer 48 Retrieves copy of Inspection and Acceptance Report (JAR)
and invoices from file
Baran gay Keeper
Record
50 Records supplies and materials received in the appropriate column of the supplies logbook
51 Forwards the copies of JAR and invoices to the barangay record keeper
52 Receives the copies of JAR and invoices
53 Records the cost of the delivered Supplies and Materials purchased on account in the charges column of the creditor's card based on the IAR supported with invoices. Note 1 Each supplier shall have an individual creditor's card
54
55
56
57
Retrieves the Summary of Check Issued
Records checks issued in the payment column of the creditor's card based on the paid disbursement voucher as reported in the Summary of Check Issued.
Extracts the balance due the suppliers as transactions are recorded in the creditor's card
Files the Summary of Check Issued Barangay Treasurer 58
59 Retrieves the original copy of the RIS from file
Records the issuance of supplies and materials in the
appropriate column in the supplies logbook based on the RIS.
509
LTO Annex 79 Requ1s1t1on, ssuance and Deliverv of Property and Equipment
Area of Responsibility/Person Seq. Activity
Responsible Requisitioner 1 Prepares the Requisition and Issue Slip (RIS) by filling out
information in the Requisition portion
Bids and A ward Committee (BAC)
Chairman, Committee on Appropriation
Baran gay Keeper
Record
Chairman, Committee on Appropriation
Bids and Award Committee (BAC
510
Note 1. The RIS shall be prepared in three copies to be distributed as follows: Original - Barangay Treasurer 2
nd copy - Barangay Record Keeper 3rd copy- Requisitioner
2 Signs the Requested by portion
3
4
5
6
7
Forwards the signed RIS to the Barangay Treasurer
Receives the RIS
Checks the availability of stock. If not available, returns the RIS to the requisitioner for preparation of the purchase request.
Based on the approved purchase request makes a reasonable estimate of the cost of the items to come up with the Approved Budget for the Contract (ABC).
Forwards the approved purchase request and the estimate or ABC to the Chairman , Committee on Appropriation (CCA) for earmarking of appropriations.
8 Receives the purchase request and ABC for earmarking
9 Forwards the purchase request and ABC to the Barangay Record Keeper for earmarking of the funds needed.
10 Checks the Registry of Appropriation and Commitments (RAC) and verifies the availability of funds
11 Earmarks the needed amount
12
13
Sends back the purchase request to the CCA for certification on the availability of appropriations
Receives the purchase request and certifies the availability of appropriations and returns the same to the BAC with the amount needed duly earmarked.
14 Conducts bidding or adopts alternative mode of procurement required under RA 9184.
Forwards the result of recommendation for award of 15 Contract/PO to the Punong Barangay for approval
Area of Responsibility/Pers Seq. Activity
on Responsible Punong Barangay 16 Approves the result of the bidding
Barangay Keeper
Record
Chairman, Committee on Appropriations
Punong Barangay
Barangay Treasurer
Punong Barangay
Barangay Treasurer
Requisitioner
17 Sends the approved result of the bidding to Barangay Record Keeper for the preparation of Purchase Order
18 Receives and prepares contract/Purchase Order
19 Initials below the name of the CCa under the funds available portion of the contract/purchase order
20 Forwards the contract/purchase order together with the purchase request duly earmarked to the CCA for certification on the availability of appropriations
21 Signs the certification of funds available
22 Forwards the contract/purchase order to the Punong Barangay for approval.
23 Approves or signs the contract/purchase order
24 Forwards the contract/purchase order to the Barangay Treasurer for release
25 Receives the signed contract/purchase order and releases it to contractor/supplier. Retains a copy for file. (refer to seq. 37)
26 Forwards the RIS to the Punong Barangay for approval if stock is available
27 Approves the RIS by signing the approved by portion
28 Returns the approved RIS to the Barangay Treasurer for the issuance of the supplies, materials and Property, Plant and Equipment.
29 Prepares the Property Acknowledgement Receipt (PAR) Note 1. The PAR shall be prepared in three copies to be distributed as follows: Original - Barangay Treasurer 211d copy -Barangay Record Keeper 3rd copy - recipient/user of the property
30 Issues the item to the requisitioner together with the PAR for signature
31 Signs the received by portion of the PAR and receives the items requisitioned. Returns the 2"d and 3rd copy of the signed PAR to the Barangay Treasurer.
511
Area of Responsibility/Pers Seq. Activity
on Responsible Barangay Treasurer · 32 Receives the Prope1ty Acknowledgement Receipt (PAR)
and signs the issued by p01tion
Baran gay Keeper
Record
Barangay Treasurer
Inspection Team
Baran gay Keeper
512
Record
33 Furnishes the requisitioner the 3rd
copy of the PAR for his file
34 Forwards the 2nd copy of the PAR to the Barangay Record Keeper and retains the original copy for his file
35
A
Receives and files the 211d copy of the PAR
Receipts of Property, Plant and Equipment and
recording the amount due the sur.pli,:,rs in the creditor's
card
36 Receives deliveries for inspection and signs the received by portion of the supplier's invoice/delivery receipt
37 Retrieves purchase order/contract
38
39
40
41
42
Prepares the Inspection and Acceptance Report (IAR) and forwards to Inspection Committee
Note I. The JAR shall be prepared in four copies to be distributed as follows: Original - to support the D V for payment 211d copy - City/Municipal Accountant 3rd copy - Barangay Record Keeper ih copy - Barangay Treasurer Note 2. In case of partial delivery, only the quantity actually delivered and accepted shall be indicated in the JAR.
Inspects deliveries and checks conformity with the specifications stated in the purchase order.
Forwards all copies of the duly accomplished IAR to Barangay Record Keeper.
Attaches the original to the disbursement voucher. Forwards the disbursement voucher together with the 4th
copy of the JAR for Barangay Treasurer file.
Submits the 2nd copy of JAR together with a copy of delivery receipts to the City/Municipal Accountant. Retains the 3rd copy for file.
Area of Responsibility/Pers Seq.
on Responsible Activity
Barangay Record 43 Retrieves copies of the Inspection and Acceptance Report Keeper
Barangay Treasurer
Requisitioner
Barangay Treasurer
Barangay Keeper
Record
(IAR) and invoices from file
44 Records the cost of the delivered PPE purchased on account in the Charges column of the creditor's card based on the IAR supported with invoices Note 1. Each supplier shall have an individual creditor's card
44 Records PPE received in the appropriate column of the Property, Plant and Equipment Register
45 Files the copies of JAR and invoices
46 Retrieves the Summary of Check Issued
4 7 · Records checks issued in the payment column of the creditor's card based on the paid disbursement voucher as reported in the Summary of Check Issued
48 Extracts the balance due the supplier as transactions are recorded in the creditor's card
49 Files the Summary of Check Issued.
B 50
Issuance of PPE
Prepares the Property Acknowledgement Receipt (PAR) Note 1. The PAR shall be prepared in three copies to be distributed as follows: Original - Barangay Treasurer 2
11d copy - Barangay Record Keeper
3rd copy- recipient/user of the property
51 Issues the item to the requisitioner together with the PAR for signature
52 Signs the received by portion of the PAR and receives the items requisitioned. Returns the 2nd and 3rd copy of the signed PAR to the Barangay Treasurer.
53 Receives the Property Acknowledgement Receipt (PAR) and signs the issued by portion
54 Furnishes the requisitioner the 3rd copy of the PAR for his file
55 Forwards the 2nd copy of the PAR to the Baran gay Record Keeper and retains the original copy for his file
513
56
Area of Responsibility/Pers Seq.
on Responsible Baran gay Record 57
Keeper
58
59
c
Barangay Record Keeper 60
61
62
Inspection Team 63
64
Baran gay Record Keeper 65
City/Municipal Accountant 66
Baran gay Record Keeper 67
Punong Barangay 68
Baran gay Record Keeper 69
Inspection Team 70
514
Receives and files the 2na copy of the PAR
Activity
Retrieves the Property Acknowledgement Receipt (PAR) submitted by the Barangay Treasurer
Records the issuance of PPE in the Property, Plant and Equipment Register to monitor its location based on the PAR
Files the PAR
Disposal of PPE Unserviceable Property Records all unserviceable property and returned small tangible items in the "inventory" section of the Inventory and Inspection Report of Unserviceable Property (IIRUP) Note 1. The IIRUP shall be prepared in three copies to be distributed as follows: Original City/Municipal Accountant 2nd copy- Inspection Team 3rd
copy - Barangay Record Keeper
Signs the prepared by portion
Forwards IIRUP to the inspection team for certification in the "Inspection" portion
Certifies the IIRUP
Returns the certified IIRUP to the Barangay Record Keeper
Forwards the IIRUP to the City/Municipal Accountant for the filling out of the columns on the cost, accumulated depreciation and net book value of PPE
Fills out the columns pertaining to the cost of the item for disposal and returns the IIRUP to Barangay Record Keeper
Receives the signed IIRUP and forwards it to the punong barangay for approval
Receives the IIRUP and signs the approved portion. Returns the IIRUP to the Barangay Record Keeper.
Disposal of Unserviceable Property Retrieves and forwards the IIRUP to Inspection Team to report disposal of unserviceable property.
Accomplishes the portion on disposal in the IIRUP to the Barangay Record Keeper
Area of Responsibility/Pers Seq. Activity
on Responsible Inspection Team 71 Returns the accomplished Inventory and Inspection Report
of Unserviceable Property (IIRUP) to the Barangay Record Keeper
Baran gay Keeper
Record
Accountable Officer
Punong Barangay
Barangay Keeper
Record
Punong Barangay
Barangay Keeper
Record
72 Acknowledges receipt of the original and 3rd copy of the IIRUP
73 Records the item disposed as deduction from the Property, Plant and Equipment Register
74 Submits the original of the IIRUP to the City/Municipal Accountant. Retains 3rd copy for file.
75 Retrieves the IIRUP previously submitted by the Barangay Treasurer
76 Records the disposal in the Property, Plant and Equipment Register as a reduction from the balance of PPE
77 Files the IIRUP
D
78
Loss of PPE
Submits a Notice of Loss and other supporting documents to the Punong Barangay tlu·ough the Barangay Treasurer, copy furnished the Auditor
79 Receives the notice and causes the conduct of an immediate investigation
80 Receives the result of investigation
81 Forwards the notice of loss and result of investigation to the Barangay Record Keeper
82 Prepares transmittal letter to GSIS and forwards to Punong Barangay for signature
83 Signs transmittal letter and returns to the Barangay Record Keeper
84 Submits the transmittal letter and the notice of loss together with the result of investigation to GSIS for indemnification of the lost property
85 Forwards copies of all the documents to City/Municipal Accountant and retains a copy for his file
86 Retrieves the notice of loss received from Punong Barangay thru the Barangay Treasurer
515
Area of Responsibility/Person Seq. Activity
Responsible Baran gay Record 87 Records the loss as a reduction from the balance of the Keeper Property, Plant and Equipment Register
88 Files the notice of loss
516
Area of Responsibility/Pers
on Responsible Barangay Treasurer/Inventory Team
Baran gay Keeper
Record
Barangay Treasurer/Inventory Team
Punong Barangay
LTO Annex 80
Reporting the Physical Count of PPE
Seq. Activity
1 Requests the Barangay Record Keeper for copies of the Property, Plant and Equipment Register and Report on the Physical Count of PPE (PRCPPE)
2 Conducts a physical inventory of all PPE Note 1. Any unserviceable equipment shall be duly noted in the report
3 Fills-up columns 7-9 of RPCPPE
4 Submits the RPCPPE to the Barangay Treasurer
5
Note 2. The RPCPPE shall be prepared in three copies to be distributed as follows: Original - City/Municipal Accountant 2
11d copy - Barangay Treasurer
� I 3 copy - Barangay Treasurer,1nventory Team
Receives the RPCPPE and reconciles details with the Property, Plant and Equipment Register
6 In case of discrepancies informs the Punong Barangay and requires explanation from the Barangay Treasurer of the discrepancies noted
7 Attaches to RPCPPE the explanation given by the Barangay Treasurer on the discrepancies and signs Box A
8 Forwards the RPCPPE to the Inventory Team for certification in Box B
9 Reviews the entries and certifies in Box B of the RPCPPE
10 Forwards the RPCPPE to the Punong Barangay for approval in Box C
11 Approves the RPCPPE signs in Box C and returns it back to the Inventory Team
517
Area of Responsibility/Pers
on Responsible Baran gay Treasurer/Inventory Team
Barangay Keeper
518
Record
Seq. Activity
12 Certifies the Report on the Physical Count of PPE (RPCPPE) and forwards the original and 2"d copy to the Barangay Record Keeper. Retains 3rd copy for file
13 Acknowledges receipt of the certified RPCPPE, submits the original to the City/Municipal Accountant and keeps 2m1
copy for file
v,
'°
L�U=- - - - - ----- -------------------- --Cash Flow Forecast
For FY- - - ---------------------- -- - --
Particulars Jan Feb Mar Apr Mav Jun
Cash Flows from Operating Activities
Cash Inflows
Collection from taxpayers
Share from Internal Revenue Collections
Receipts from sale of goods or services
Interest Income
Other Receipts
Cash Outflows
Payments for Personnel Services
Payment for Miscellaneous and Other Operating Expenses
Payment for Capital Outlays
Other Expenses
Total Cash Outflow
Net Cash From Investing Activities
Cash Flows From Financing Activities
Cash Inflows
From issuance of Debt Securities
Payment of Loan Amortization
Total Cash Flow
Net Cash From Financing Activities
Net Increase in Cash
Cash at the beginning of the period
Cash at the end of the period
Prepared by Approved by
Local Chief Executive
LTO Form 81
Jul Aug Sep Oct Nov Dec Total
CASH FLOW FORECAST
INSTRUCTIONS
l. The Cash Flow Forecast (CFF) shall be prepared for the whole year.
2. Cash Flow From Operating Activities - Pertains to the receipts (inflow) and disbursement (outflow) of cash out of the primary/regular operations of the Local Government Units, e.g. Collection of taxes, share from IRA, payments to creditors, employees, payment of interests.
3. Net Cash From Investing Activities - Pertains to the difference between receipts (inflows) and disbursement (outflows) from investing activities such as sale/purchase of PPE.
4. .Net Increase in Cash - Refers to the overall cash effect of the various activities of the LGU (Inflows-Outflows). If the cash inflow is greater than the cash outflow, there is an increase in cash, vice versa.
5. Cash at the Beginning of the Period - This pertains to the ending cash balance of the preceding year carried over to the current year.
6. Cash at the End of the Period - This is equal to the sum of the net increase in cash and the beginning cash. This becomes the beginning balance of the succeeding month.
7. Prepared by -Name of the person preparing the CFF
520
------�-
r
v,
N
CASH RECEIPTS FORECAST For FY--------------------- ------
Particulars .Jan Feb Mar Apr May .Jun Cash Flows from Operating Activities
Cash Inflows
Collection from taxpayers
Share from Internal Revenue Collections
Receipts from sale of goods or services
Interest Income
Other Receipts
Total Cash Inflow from Operating Activities
Cash Inflows from Investing Activities
From Sale of Property, Plant and Equipment
From sale of Debt Securities of other Entities
From Collection of Principal on Loans to Other Entities
Total Cash Inflow form Investing Activities
Cash Inflows from Financing Activities
From Issuance from Financing Activities
From Acquisition of Loans '
Total Cash Inflow from Financing Activities
Cash Receipts - This Month
Cash Receipts - Prior Month
Total Cash Receipts - As of this Month
Prepared by
Head of Collecting Department Local Chief Executive
.Jul Aua Sep
LTO Form 82
Oct Nov Dec Total
. ���������-
CASH RECEIPTS FORECAST
INSTRUCTIONS
522
1. The Cash Receipts Forecast (CRF) shall be prepared for the whole year.
2. Cash Inflow from Operating Activities -This pertains to the inflow of cash out of the primary/regular operations of the LGUs e.g. collection of taxes, share from the IRA< receipt from the sale of goods or services.
3. Cash Inflow from Investing Activities - Pertains to inflow of cash from the sale (issuance) or purchase oflong term investments. For example e.g. sale of real estate.
4. Cash Inflow from Financing Activities -This includes receipts or inflows of cash out of the borrowings/loans of the LGU e.g. issuance of debt securities, loan.
5. Cash Receipts This Month-This is the total of all cash inflows for the current mor.th.
6. Cash Receipts Previous Month -This is the total of all cash inflows for the previous month.
7. Total Cash Receipts as of this Month -Total of cash inflows beginning of the year to current month.
8. Prepared by-Name of persons preparing the CRF.
9. LCE Name of the Municipal/City Mayor or Provincial Governor
r
v,
N (.;.)
L<3U:- - ------------------- -- - ------� CASH DISBURSEMENT FORECAST
For FY- -- - ------------------ - -- --
Particulars .Jan Feb Mar Aor Mav .Jun Cash Outflows from Operating Activities
Payments for Personnel Servicies
Payments for Maintenance and Other Operating Expenses
Payments for Capital Outlay
Payment for Other Expenses
Total Cash Outflows from Operating Expenses
Cash Outflows from Investing Activities
To Purchase Property, Plant and Equipment
To Purchase Debt Securities of Other Entities
To Grant/Make Loans to Other Entities
Total Cash Outflow from Investing Activities
Cash Outflows from Financing Activities
Retirement/Redemption of Debt Securities
Payment of Loan Amortization
Total Cash Outflow from Financing Activities
Cash Disbursement - This Month
Cash Receipts - Prior Month
Total Cash Disbursements - As of this Month
Prepared by
Local Chief Executive
LTO Form 83
.Jul AUQ Seo Oct Nov Dec Total
CASH DISBURSEMENT FORECAST
INSTRUCTIONS
1. The Cash Disbursement Forecast (CDF) shall be prepared for the whole year.
2. Cash Outflow from Operating Activities - Pertains to the disbursement ( outflow) of cash out of the primary/regular operations of the Local Government Units e.g. payments to creditors, employees, interest payments.
524
3. Cash Outflow from Investing Activities - Pertains to disbursement ( outflow) of cash from the purchase (acquisition) of long term investments.
4. Cash Outflow from Financing Activities - Pertains to the disbursement ( outflow) of cash out of the LG Us borrowing.
5. Cash Disbursement This Month - total cash outflow for the current month.
6. Cash Disbursement Previous Month - total cash outflow for the previous month.
7. Total Cash Disbursement As of This Month- total cash outflow from beginning of the year up to current month.
8. Prepared by- Name of person preparing the CDF.
9. LCE- Name of Head of LGU.
-
r
t
Vl N Vl
LTO Form 84
LGU:����� � � ����=-:-�---,�---,-�,---��� � � � � ��� Cash Flow Analysis
Actual Forecast To Date Variance Adjusted Original Annual Particulars
Prior Month This Year to Year to (3- Estimated Forecast Over Balance Month Date Date 4l=Over<Underl Annual Annual
(1 l 12l 13\ (4) (5\ 16) (7) (8)
Cash Flows from Operating Activities Cash Inflows
Collections from taxpayers Share from Internal Revenue Collections Receipts from sale of goods or services Interest Income Other Receipts
Total Cash Inflow Cash Outflow
Payments for Personnel Services Payment for Maintenance and Other Operating Expenses Payments for Capital Outlays Payments for Other Expenses
Total Cash Outflow Net Cash from Operating Activities
Cash Flows from Investing Activities Cash Inflows
From sale of Property, Plant and Equipment From sale of Debt Securities of Other Entities From collection of Principal on Loans to Other Entities
Total Cash Inflows Cash Outflow
To Purchase Property, Plant and Equipment To Purchase Debt Securities of Other Entities
Total Cash Outflow Net Cash From Investing Activities
Cash Flows from Financing Activities Cash Inflows
From Issuance of Debt Securities From Acquisition of Loan
Total Cash Inflow Cash Outflows
Retirement/Redemption of Dept Securities Payment of Loan Amortization
Total Cash Outflow
Net Cash From Financing Activities Net Increase in Cash Cash at the Beginning of the Period Cash at the End of the Period
Prepared by
Treasurer Accountant Local Chief Executive
Instructions in Accomplishing LBE Form
Column 1 - Indicate actual cash flow of the previous month.
Column 2 - Indicate actual cash flow for the cmTent month.
Column 3 - Indicate the cumulative cash flow of the previous and current month cash Flow.
Column 4 - Indicate here the projected cash flow for the month.
Column 5 - Indicate in this column the difference between column 3 and column 4.
Column 6 - Indicate here the adjusted annual estimate by increasing on reducing the estimated annual amount with to-date variance. The estimated annual amount is 10 and the variance between the year to date and forecast to date is + 15 then the adjusted is 15, however, if the annual if the assigned is -5 the adjusted estimate annual is 5.
Column 7 - Indicate in this column the original forecast for the year.
Column 8 Determine the variance between the adjusted estimate annual and the original forecast by subtracting column 7 and column 6.
526
LTO Form 85
Present Value of an Annuity of 1 to be Received for n Year -----1)
r Years 1% 8% 10% 12% 14% 15% 16% 18% 20% 22% 24% 25%
1 .990 .926 .909 .893 .877 .870 .862 .847 .833 .820 .806 .800
2 1.970 1.783 1.736 1.690 1.6347 1.626 1.605 1.566 1.528 1.492 1.457 1.440
3 2.941 2.577 2.487 2.402 2.322 2.283 2.246 2.174 2.106 2.042 1.981 1.952
4 3.902 3.312 3.170 3.037 2.914 2.855 2.798 2.690 2.589 2.494 2.404 2.362
5 4.853 3.993 3.791 3.605 3.433 3.352 3.274 3.127 2.991 2.864 2.745 2.689
6 5.795 4.623 4.355 4.111 3.889 3.784 3.685 3.498 3.326 3.167 3.020 2.951
7 6.728 5,206 4.868 4.564 4.288 4.160 4.039 3.812 3.605 3.416 3.242 3.161
8 7.652 5.747 5.335 4.968 4.639 4.487 4.344 4.078 3.837 3.619 3.421 3.329
9 8.566 6.247 5.759 5.328 4.946 4.772 4.607 4.303 4.031 3.786 3.566 3.464
10 9.471 6.710 6.145 5.650 5.216 5.019 4.833 4.494 4.192 3.923 3.682 3.572
11 10.368 7.139 6.495 5.941 5.453 5.234 5.029 4.656 4.327 4.035 3.776 3.656
12 11.255 7.536 6.814 6.194 5.66 5.421 5.197 4.793 4.439 4.127 3.851 3.725
13 12.134 7.904 7.103 6.424 5.842 5.583 5.342 4.91 4.533 4.203 3.912 3.78
14 13.004 8.242 7.367 6.628 6.002 5.724 5.468 5.008 4.611 4.265 3.962 3.824
15 13.865 8.559 7.606 6.811 6.142 5.847 5.575 5.092 4.675 4.315 4.001 3.859
16 14.718 8.851 7.824 6.974 6.265 5.954 5.669 5.162 4.73 4.357 4.031 3.887
17 15.562 9.372 8.022 7.12 6.373 6.047 5.749 5.222 4.775 4.391 4.059 3.91
18 16.395 9.372 8.201 7.25 6.467 6.128 5.818 5.273 4.812 4.419 4.08 3.928
19 17.226 9.604 8.365 7.366 6.55 6.198 5.877 5.316 4.844 4.442 4.097 3.942
20 18.046 9.818 8.514 7.469 6.623 6.259 5.929 5.353 4.87 4.46 4.11 3.954
21 13.857 10.017 8.649 7.562 6.687 6.312 5.973 5.384 4.891 4.476 4.121 3.963
22 19.66 10.201 8.772 7.645 6.743 6.359 6.011 5.41 4.909 4.488 4.13 3.97
23 20.456 10.371 8.883 7.718 6.792 6.399 6.044 5.432 4.925 4.499 4.137 3.976
24 21.243 10.529 8.985 7.784 6.835 6.434 6.073 5.451 4.937 4.507 4.143 3.981
25 22.023 10.675 9.077 7.843 6.873 6.464 6.097 5.467 4.948 4.514 5.147 3.985
v.
LTO Form 86
INVOICE-RECEIPTS OF TRANSFER OF ACCOUNT ABILITIES
I. Depository Accounts
A. Cash in Treasury or Cash in Vault General Fund Trust Fund Special Fund
B. Cash in Banks: General Fund Acct. No. Trust Fund Acct. NO.
---
SEF Acct. NO. - -- - -
II. Investment Accounts
A. Certificate of Time Deposits Date of Placement Security
B. Treasury Bills. Date of Placement
C. Stocks Certificates Name of Stock
Ill. Accountable Forms
528
Accountable Form No. 51 Accountable Form No. 52 Accountable Form No. 53 Accountable Form No. 54 Accountable Form No. 55 Accountable Form No. 56 Accountable Form No. 57 Accountable Form No. 58 Community Tax Certificate (Ind.) Community Tax Certificate (Corp.) Cash tickets Parking tickets Others Afs (pis. specify)
Certificate No.
Amount Total
Term/Rate Maturity Date Principal
Term I Rate Maturity
No. of Shares Amount
Serials
Blank Unissued Checks
Acct. No. Gen. Fund-LBP
Acct. No. Gen. Fund-LBP
Serial Number
Acct. No. Gen. Fund-Other Banks
Acct. No. Trust Fund-LBP
Acct. No. Trust Fund-PNB
Acct. No. Trust Fund-Other Banks
Acct. No. SEF-LBP
Acct. No. SEF-PNB
Acct. No. SEF-Other Banks
IV. Others
1. Property (Refer to Acknowledgement Receipt for Equipment - (ARE)
2. Duplicate Combinations of Accountable Officer's Safe
3. Outstanding Checks
Check No./Date Payee Amount
I herebey certify that I have this day
of transferred to my successor Mr./Mrs. , the items
described above, as of _______ _
the date of the transfer of accountability.
Outgoing P/C/M Treasurer
Date
Verified Correct:
COA Representative
CERTIFICATION
I hereby certify that I have this day of
______ actually received from my predecessor, Mr./Mrs. ________ _ _ all the items described above, as of _ ____ _
the date of transfer of acountability, except ___ _
Incoming P/C/M Treasurer
Date
Witnessed by:
BLGF/RO/PTO Representative
529
LTO Annex 87
INTERNAL CONTROL CONCEPTS, POLICIES AND ELEMENTS
A. Basic Concepts
1. What are controls?
Control in general is the process of exercising or directing influence over the activities of an object, organism or a system. The goal of control is to prevent losses to the organization arising from the different hazards in government business operations.
4. Three (3) Basic Types of Control
There are three basic types of control:
• Preventive Controls - are designed to prevent the adverse actions or risk from occurring
• Detective Controls - are designed to detect an error or adverse event after it occurs but within a reasonable time to permit correction and through awareness of the problem, help prevents other errors from occurring.
• Corrective Controls - are designed to identify a problem and bring it to management's attention for resolution and correction.
The term internal controls, on the other hand, refer to "an organization's whole system or network of methods, procedures, and plans which govern its activities to accomplish its goals and objectives. "Such system is generally !mown as the Internal Control System or Structure (ICS).
3. Sub-sets of Internal Control System
The following sub-sets usually comprise the ICS:
• Financial controls or accounting controls
530
• Administrative controls • Program Controls • Budget Controls • Management Controls
Financial Controls or the accounting controls, relate to those methods and procedures used to produce accurate records and safeguard assets. They should be designed to ensure that:
• Specified individuals are held accountable for transactions under their control • Accounting records are accurately and reliably maintained • There is adequate segregation of record keeping duties from custodianship of the
agency's authorized • There is adequate segregation of incompatible duties and • There are adequate checking and reconciling procedures
The concept of accountability is an important element in financial controls. Without it, it would be difficult to implement financial controls. Accountability is the practice that holds each employee accountable for those areas for which he/she has been delegated responsibility.
It is this aspect of accountability that a public manager has a mechanism ensuring to discharge their responsibilities as required.
Administrative Controls - are primarily established to create a sound environment within which accounting controls may efficiently operate. They encompasses all those organizational plans, methods and procedures that help entities achieve operational efficiency and adherence to management policies. They are designed to ensure that:
• Assets are safeguarded and access to those assets is restricted • The agency operation is conducted in an orderly and efficient manner that includes a
detailed organizational structure that highlights lines of responsibility,, or centers of responsibi 1 ity
• Staff and team responsibilities match their ability • Management has the necessary information to exercise sound decisions, and • Transactions and other decisions are properly authorized.
Program Controls are put in place to ensure that the programs/projects of the government agency achieve their goals and objectives. The controls should be able to ensure the following:
• Responsiveness of the programs/projects to the needs of the client/beneficiaries and stakeholders
• Sustainability of the program/project, and • Those alternative courses of actions have been considered in the implementation of the
program/project
Budget Controls - are established to ensure that funds are properly allocated and utilized solely for the purpose for which they have been appropriated. Specifically, the system of budgetary controls shall:
• Establish and maintain the accountability of public officers • Ensure that funds are used only for the intended purpose, and • Ensure the disclosure of material errors in the accounts and unauthorized transactions
or loss of assets
Management Controls - have been broadly defined as "a process effected by management and other personnel designed to provide reasonable assurance regarding the achievement of objectives" with the following objectives:
• To keep the organization on course toward achievement of its mission, goals and objectives while minimizing surprises along the way
• To enable management to cope with rapidly changing economic and political environment, shifting service demands and priorities and the inevitable organizations restructuring that accompanies them, and
• To promote efficiency, reduce risk or resource loss, increase reliability of management data, and ensure compliance with laws, and regulations
8. Objectives of Internal Controls
1. To safeguard the reliability of data
---
531
JCS policies and procedures are designed to safeguard the accuracy and reliability of the
information by preventing and detecting e1rnrs on a timely basis. Management needs accurate information for catTying out the operation since reliable information is used in making critical management decisions.
2. To safeguard assets and records
ICS policies and procedures are designed to prevent and detect loss of assets and records on a timely basis. The physical assets of the agency can be stolen, misused or accidentally destroyed. The same is true with non-physical assets such as accounts receivable ledger, accountable forms and financial records.
3. To promote operational efficiency, and
TCS policies and procedures are meant to prevent unnecessary duplication of effort, protect against waste in all aspects of operation and discourage of inefficient use of resources.
4. To encourage adherence to prescribed policies
!CS policies and procedures are meant to provide reasonable assurance that those procedures and rules are adhered to by the agency personnel. The concept of reasonable assurance recognizes that the cost of agency's internal control structure should not exceed the benefits that are expected t be derived.
C. Importance of Internal Control
I. Errors in financial and other forms of information 2. Inaccurate financial information normally leads to poor decision-making 3. Irregularities waste, and fraudulent transactions cannot readily be detected 4. Programs/Project� do not address the needs, demands and priorities
D. General and Specific Standards of Internal Control
General Standards
I. Personnel Competence - Officers and employees should posses technical competence and professional integrity commensurate with their assigned responsibilities
2. Control Techniques - Internal control techniques are to be designed for and operated in all agency activities to accomplished the control objectives consistently, efficiently and effectively
3. Reasonable assurance and cost - Internal control systems are to provide reasonable assurance that the objectives of the systems will be accomplished at a reasonable cost.
Specific Standards
532
I. Documentation - the agency's ICS, policies, procedures, accountability for resources and all financial transactions shall be clearly documented and adequately suppo1ted.
2. Recording of transactions and events - financial transactions and events shall be promptly recorded in accordance with state accounting standards
3. Authorization and execution of transactions - all transactions shall be executed by persons acting within the scope of their authority
4. Segregation of duties and functions - Key duties and functions such as authorization, custody and accounting shall be assigned to separate offices and individuals to eliminate
opportunities to conceal errors and irregularities 5. Supervision Scheme - Qualified and continuous supervision of subordinates shall be
provided to assure adherence to approved policies and procedures 6. Physical control and access to agency resources - Tangible assets and records should be
physically safeguarded. Access to these records, both direct physical access through document processing, shall be in accordance with management's authorization.
7. Asset Accountability - Accountability for the custody and use of an asset is to be assigned and maintained and periodic comparison shall be made of the existing assets with the recorded accountability and appropriate action taken on any differences.
8. Built in checks - proofs of accuracy and documented trail of transactions are f eatures that should be built into the execution and recording of transactions to assure their correctness.
9. Presence of appraisal activity - Reviews of transactions and internal control shall be performed on an on-going basis for proper monitoring of adherence to prescribed policies and procedures
l 0. Prompt resolution of audit findings - Officers shall promptly evaluate findings and recommendations reported by auditors, determine proper actions in response to audit findings and recommendations, and complete within established time frames all actions that cotTect or otherwise resolve the matters to management's attention.
E. Limitations of Internal Control
l. Internal control must be attained at reasonable cost. Some necessary controls maybe sacrificed to avoid additional costs in terms of personnel, time and materials,
2. Good internal control methods and measures are not foolproof. They are vulnerable to collusion.
3. Strong internal controls are still subject to human fallibility such as negligence, erTOrs in judgment and lack of complete understanding;
4. Organizational changes may render internal control systems and manuals obsolete, and 5. The degree of compliance with internal control systems strongly influences their
effectiveness.
F. Some factors that may reduce the effectiveness of ICS
1. Misunderstanding of instructions 2. Mistakes in judgment 3. Personal carelessness 4. Distraction, personal problems or fatigue on the part of the person responsible for
performing a control procedure 5. Collusion among individuals, circumventing control procedures whose effectiveness
depends on segregation of duties, and 6. Management override of certain control policies and procedures
G. Control Environment
This sets the tone of the organization and is the foundation for all other components of controls. The control environment includes the following
• Integrity
• Ethical Values
533
---
• Competence of the entity's people • Management philosophy and operating cycle • The way management assigns authority and responsibility • The way management organizes and develop its people, and • Attention and direction provided by senior management.
Some criteria in assessing whether or not the agency has put in place the foregoing factors
• Shared ethical values, including integrity, should be established, communicated and practiced throughout the agency
• Human resource policies should be consistent with the agency's ethical values and with the achievement of its objectives
• Authority, responsibility and accountability should be clearly defined and consistent with the agency's objectives so that decisions and actions are undertaken by the appropriate people
• An atmosphere of mutual trust should be fostered to suppot1 the flow of information between people and their effective performance toward achieving the agency's objectives; and
• People should have the necessary knowledge, skills and tools to support the achievement of he agency's objective.
H. Risk Assessment
Risk is a probability of an event or action having an adverse effect on the organization. It is directly tied up to control objectives and those events or action that can. prevent the agency from achieving these objectives.
Probable Risks in an Agency
• Operations are not carried out effectively and efficiently • Assets (data financial resources, inventory, property, or personnel) are not adequately
safeguarded against loss • Financial and operating reports are unrealiable • Operation are not in compliance with laws and rules; and • Agency's mission or goals are not achieved
Factors that Affect Risk
534
• Ethical eliminate maintained by management Higher ethics - lower risk
• Competency, adequacy and integrity of personnel Overworked or under trained - more errors Unethical personnel - more irregularities
• Adequacy and effectiveness of the system of internal control More effective ICS -lower opportunity for errors and irregularities
• Degree of computerization Higher/reliable automation - lower risk of human error and hopefully the more corrective controls
• Size, complexity, volatility, geographical dispersion of operations Larger, more complex - more volatile
More dispersed - higher risk • Degree of regulation
• Impact customers have on the operations Greater the impact - higher the risk of negative publicity or financial loss
Effects of Uncontrolled Risks
• Resources are acquired or used inefficiently or ineffectively resulting in shortages of funds of failure of the agency to meet goals
• Loss of assets due to theft or unintentional errors • Unreliable financial and operational reports (incorrect, untimely, or incomplete) result 111
poor decision making by management • Non compliance with laws, rules or regulations result in financial penalties or damage to
the reputation or goodwill of the agency, and • Customer's dissatisfaction due to ineffective operations resulting in loss of customers or
negative publicity
Factors to Ensure that Risks are Addressed
• Risk assessment objectives • Risk identification and assessment, and • Mechanisms to respond to the changes in the agency
Some of the factors to ensure that risks are addressed
• There should be a clear set of operational objectives with appropriately linked subobjectives
• The significant internal and external risks faced by the agency in the achievement of its objectives should be identified and assessed
• Objectives and related plans should include measurable performance targets, and • External and internal environment should be monitored to obtain information that may
signal a need to re-evaluate the objectives and/or controls.
I. Control Activities
These are the policies and procedures that help ensure that management actions identified to assess risks are carried out. They help to ensure that necessary actions are taken to address risks. They include measures to motivate staff as well as traditional financial, administrative and procedural controls.
Are integral part of an entity's planning, implementing, reviewing and accountability for stewardship of government resources and achieving effective results.
They include approvals, authorizations, reconciliation and performance reviews, maintenance of security and the creation and maintenance of related records, which provide evidence of execution of these activities as well as appropriate documentation.
It is important to always remember VACA of controls:
V - Validity A - Authorization
535
C - Completeness A-Accuracy
List of Control Activities
536
• Top level reviews of actual perfonnance
Management should track major agency achievements and compare these to the plans, goals and objectives established by the agency
• Reviews by management at the functional or activity level.
Managers need to compare actual performance to planned or expected results throughout the organization and analyze significant differences.
• Management of human capital
Management should consider human capital as an asset rather than costs. Operational success is possible only when the right personnel for the job are on board and are provided with the right training, tools, structure, incentives, and responsibilities. Performance evaluation and feedback, supplemented by an effective reward system, should be designed to help employees understand the connection between their performance and the organization's success. Management should also consider how best to retain valuable employees, plan for their eventual succession, and ensure continuity of needed skills and abilities.
• Controls over information systems processing
In a computerized environment, these are two broad groups of information systems control:
1. General controls - include entity wide security program planning, management, control over data center operations, system software acquisition and maintenance, access security, and application system development and maintenance
2. Application controls - are controls designed to help ensure completeness, accuracy, authorization, and validity of all transactions during application processing. These include edit checks on data entered, accounting for transactions in numerical sequence, comparing the file totals with control accounts and controlling access to data, files and programs.
• Physical control over vulnerable assets
Management should establish physical control to secure and safeguard vulnerable assets. These include security for and limited access to assets such as cash securities, inventories, and equipment, which might be vulnerable to risk of loss or unauthorized use. It is also important that these assets should periodically be counted and compared to control records
• Establishment and review of performance measures and indicators
This control calls for comparisons and assessments relating difference sets of data to one another so that analyses of the relationships can be made and appropriate actions taken. It
also aims to validate the propriety and integrity of both organization and individual performance measures and indicators.
• Segregation of duties
Key duties and responsibilities need to be divided or segregated among different people to reduce the risk of error or fraud. This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets.
• Proper execution of transactions and events
Transactions and other significant events should be authorized and executed only by persons acting within the scope of their authority. This is the principal means of assuring that only valid transactions to exchange, transfer, use or commit resources and other events are initiated or entered into. Authorizations should be clearly communicated to managers and employees.
• Accurate and timely recording of transactions and events
Transactions should be promptly recorded to maintain their relevance and value to management in controlling operations and making decisions. This applies to the entire process or life cycle of a transactions or event from initiation and authorization through its final classification in summary records.
• Access restrictions to an accountability for resource and records
Access to resources and records should be limited to authorized individuals, and accountability for their custody and use should be assigned and maintained. Periodic comparison of resources with the recorded accountability should be made to help reduce the risk of errors, fraud, misuse or unauthorized alteration.
• Appropriate documentation of transactions and internal control
Internal control and all transactions and other significant events need to be clearly documented, and the documentation should be readily available for examination. The documentation should appear in management directives, administrative policies, or operating manuals and may be in paper or electronic form. All documentations and records should be properly managed and maintained.
Criteria in Assessing the Factors
• Policies designed to support the achievement of objectives and the management of its risks should be established communicated and practiced so that people understand what 1s expected of them and the scope of their freedom to act
• The decisions and actions of different units of the agency should be coordinated, and • Control activities should be designed as an integral part of the agency taking into
consideration its objectives; the risks of their achievements and inter-relatedness of control elements
537
J. Information and Communication
This component spans across all the other components of internal controls. These two elements are related where information must be communicated up and down through the agency m a manner and time frame that allow people to carry put their various responsibilities.
Information and communication processes consist of the methods and records established to record, process, summarize and report agency's data. They are used to identify the significant classes of transactions and how they are initiated, processes, controlled, and reported.
This component ensures that:
• Information resulting from agency's operations are provided to appropriate individuals on a timely basis
• Financial information regarding legislation, regulatory developments, economic changes, or similar external factors that may affect the depai1ment, and
• Emerging information needs are identified on a timely basis.
Elements of Information and Communication
• Strategic and integrated system - By strategic means that management should consider the planning, design and implementation of the information system as part of its overall agency strategy. On the other hand, it should ensure that the automated information systems is integrated with the other operations.
• Quality of information - this pertains to the appropriateness, timeliness and availability, correctness and accessibility of the information
• Existence of appropriate channels of communication including interested parties outside the agency
Criteria in assessing the component
• Communication process should support agency's values and the achievement of its objectives
• Sufficient and relevant information should be identified and communicated in a timely manner to enable people to perform their assigned responsibilities
• Plans to guide efforts in achieving objectives should be established and communicated, and
• Information needs and related information system should be reassessed as objectives change or as reporting deficiencies are identified.
K. Monitoring
This is the process put in place to assess the effectiveness of established internal control components and to make corrective action when appropriate. Although this is a function of the internal audit function of the agency, management has a responsibility to establish a variety of monitoring activities to measure the effectiveness of its internal controls.
Internal control should generally be designed to assure that ongoing monitoring occurs in the course of normal operations.
538
In includes regular management and supervisory activities, comparisons, reconciliation and other actions people take in performing their duties.
Monitoring of internal control should include policies and procedures for ensunng that the findings of audits and other reviews are promptly resolved.
Managers are to:
• Promptly evaluate findings from audits and other reviews including those showing deficiencies and recommendations reported by auditors and others who evaluate agency's operations
• Determine proper actions in response to findings and recommendations from audits and reviews
• Complete, within established timeframes, all actions that correct or otherwise resolve the matters brought to management's attention
Elements of Monitoring
• Operating management normal activities - normal management reviews of operation and financial reports
• Communication from external parties - this includes complaints from clients/customers • Agency structure and supervisory activities - these are the routine review of subordinates
work/reports by the supervisors. • Internal and external audit reports • Physical inventories and asset reconciliation
Criteria in assessing the monitoring component
• Performance should be monitored against the targets and indicators identified m the agency objectives and plans
• The assumptions behind the agency objectives should be periodically challenged • Follow-up procedures should be established and performed to ensure appropriate change
action occurs, and • Management should periodically assess the effectiveness of controls and communicate the
results to which it is accountable.
l. Evaluation of ICS
The management of any organizations, be it private or public, has the responsibility in installing the agency internal controls. Management must also evaluate internal controls to "provide a framework for reviewing operating procedures". In evaluating internal controls, management may be able to identify procedural problems that underlie perceived symptoms of inefficiencies/deficiencies and abuses.
The auditors, on the other hand, evaluate internal controls as a compliance with generally accepted auditing standards to enable him/her to focus the audit on risk areas.
Depending on the objectives, evaluation may be conducted on the following:
• Organizational unit(s) • Financial statement accounts, and • Cycle/Process/System.
539
QUESTION NAIR ES
CONTROL ENVIRONMENT
A. Integrity and Ethical Values
1. Does management set the "tone at the top" by demonstrating a commitment to integrity and ethics through both in words and in deeds?
2. Have appropriate agency policies regarding business practices, conflicts of interest, and code of conduct been established and communicated?
3. Have incentives and temptations that might lead to unethical behavior been reduced or eliminated?
4. Are all employees made aware that all forms of fraudul.ent acts against the agency will result m administrative and criminal and criminal investigations?
B. Management philosophy and operating
cycle
540
1. ls top management strongly committed to a system of internal control?
2. Are business risks carefully considered and adequately monitored?
3. Is management's selection of accounting principles and development of accounting estimates consistent with objective and fair reporting?
4. Has management demonstrated a willingness to adjust the financial statements for material misstatements?
5. Are important management and operating decisions dominated by one or two individuals?
6. Is the organizational structure clearly defined by use of a current organizational chart indicating lines of authority and responsibility?
7. Are manual of procedures in use? • If so, do you maintain copies on file? • Is somebody responsible for carrying out
the procedures provided? 8. Does the company have written policies:
• Delegation or assumption of duties
FC
REF.
NO
YES/NO
ORN/A
LTO Form 88
REMARKS
QUESTIONNAIRES
• Annual vacations for al I staff? • Obtaining background or reference for
new staff? • Training programs for employees? • Rotation of employees?
9. Does the agency maintain files of names and specimen signatures or initials of all persons authorized to approve transactions?
10. Does the agency have clearly defined requirements for the authorization and executing of significant contracts and other agreements not in the ordinary course of business?
11. Does the agency keep minutes of the meetings of the stockholders/board of directors/committees to record the decisions made in such meetings?
12. Does the agency require regular monitoring or review of compliance with the requirements of loan contracts, trust agreements, and similar contracts by designated officials?
13. Do related employees, if any, have job assignments that minimize the likelihood of collusion?
14. Does the agency employ security measures to check persons and vehicles coming in and out of its compound of premises?
15. Does the agency's system, physical layout and office routine provide for the proper safekeeping or safeguarding ( e.g. through the use of safes, vaults, locked cabinets, restricted areas, etc.) of the following: • Assets that are easy to pilfer (e.g. cash on
hand, inventories and certain property, plant and equipment)
• Documents of title or of ownership of investments ( e.g. Certificates of Land Titles, stock certificates, bonds, interest, coupon, notes receivables)
• Unused critical forms (e.g. purchase orders, receiving report, debit/credit memo, etc.)
• Company records when they are not in use ( e.g. general ledger, general and special journal/registers, subsidiary records for accounts receivable, account payables, inventories, property, plant and equipment, securities, etc.)
FC
REF.
NO
YES/NO
ORN/A
REMARKS
541
QUESTIONNAIRES
16. ln addition to the physical control in No. 12( c) does the agency account for the unused
forms ( e.g. recording them on up-to-date basis in a form register of similar control listing, periodically counting and reconciling the unused to such register)?
C. Manner of assigning authority and
delegating responsibility
1. Are levels of authority and responsibility documented by way of written policy and
more generally through the .entity's organizational chart?
2. Do employee job descriptions clearly document the authority level of each employee?
3. Where possible, have policies been put into place that: • Separate accounting and operating
functions?
• Separate accounting and custody functions?
• Separate authority and custody functions?
• Separate accounting functions? • Separate functions within the ECP
department?
4. Have employees been issued with guidelines
in relation to their authority levels?
• Do check payments need a second
signature? • Do check-signing limitations exist?
5. Does management monitor the activities of
those employees who have been assigned authority and delegated responsibility?
D. Competence of People
542
I. Do existing policies and procedures result in recruiting and developing competent and
trustworthy people necessary to support an effective internal control structure?
2. Do the personnel understand the duties and procedures applicable to their jobs?
3. Is the turnover of personnel in key positions
at an acceptable level?
4. Do they undergo relevant training?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
QUESTIONNAIRES
5. Is there proper supervision of less experienced staff?
6. Are the mission, goals, and objectives of the organization made clear to them?
7. Are manuals of operations made available to them?
E. MONITORING
I. Is there an internal audit unit? • Does it regularly assess the effectiveness
of internal controls? 2. If there 1s not internal audit unit, who
evaluates the effectiveness of the controls?
F. CONTROL ACTIVITIES
Specific policies
1. Do specific authorization procedures exist where transactions can only be examined on an individual basis? • Are bad debts written off only after
proper authorization?
G. Proper documentation and records
I. Do documents and records provide an adequate base for a transaction trail?
2. Where appropriate, are documents prenumbered?
3. Does adequate documentation exist for those goods that have been returned to suppliers?
4. Are non-current assets recorded in a noncurrent assets register and periodically reconciled with the control account?
H. Control over access
I. Is there restricted access to the premises? 2. Is access to sensitive areas protected by
security devices? 3. Is there restricted access to an organization's
documents and records? 4. Is access denied to suspended or sacked
employees? 5. Do all assets carry some fonn of individual
identification?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
543
QUESTIONNAIRES
I. Independent internal checks
l. Are independent checks carried out on the following account balances? • Bank • Account receivable • Inventory • Non-current assets, and • Account payable
J. Cash Receipts
544
1. Does the organization structure provide a clear-cut separation of cashiering function from accountir1g function?
2. Are the employees of the cashier's office denied access to, ls the collecting officer closely supervised by a responsible officer of the agency?
3. Are all accountable officers given instructions regarding their duties and responsibilities?
4. Do accountable officers keep a file of COA and other circulars pertaining to their work?
5. Are the collecting officer and other employees handling cash provided with safe?
6. If so, is the duplicate combination of the safe filed with an authorized official?
7. Is the combination of the safe changed whenever there is a change of custodian?
8. Is the cashier office amply protected against intrusion by unauthorized persons?
9. Are all employees handling cash adequately bonded?
10. If so, how much? 11. Are surprise cash counts frequently made by
department examiners? 12. Are official receipts booklets used? If so,
• Are these pre-numbered? • Are the booklets issued m numerical
sequence? • Is the form of payment indicated in the
receipts? • Is the numerical sequence of issued
officials r�ceipts and booklets checked by the accounting department?
• Is a register of forms maintained? If so, is it kept up-to-date?
• Are unused booklets physically safeguarded? State how?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
QUESTIONNAIRES
13. Are official receipts issued for every receipt of payment?
14. Is it the practice of collecting officer not to accept postdated checks payment of charges or fees?
15. Is the cashing of checks from collections prohibited? If not: • Is the prior approval or an authorized
person required before a check is cashed? • Are such checks deposited promptly?
16. Are collections deposited intact and as frequently as required by regulations?
17. ls the person making deposit escorted by armed guards and provided with transportation facilities?
18. Are all checks endorsed for deposit and deposited in appropriate banks?
19. Are items of deposits subsequently dishonored by the Bank/Treasury promptly adjusted in the collecting officer's records?
20. Are both the totals and details of bank authenticated duplicate deposit slip matched by the accounting department against the corresponding official receipts?
21. Are totals of bank-authenticated deposit slips compared with the debit to respective bank accounts in the book of original entry?
22. Are all cash funds and cash receipts in the debit to respective bank accounts in the book of original entry?
23. Are acknowledged deposits or deposits in transit invariably cleared the following month?
24. Are collection and deposits recorded daily in the cash book?
25. Is the cash book balance compared daily with the cash on hand?
26. Are collection reports submitted regularly to the accounting division?
27. ls reconciliation made monthly of the collecting officer's book balance and the accounting subsidiary ledger balance?
K. Mail Remittance
ls the mail opened by an employee who is independent of either cashier's office and the accounting office?
1. Are mail remittances recorded or listed by the person opening the mails?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
545
QUESTIONNAIRES
2. If so, is the record or list given to someone other than the collecting officer for followup to see that all remittances have been receipted for a deposited?
3. Is the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
List down a;1y additional controls and/or
weaknesses not covered by the foregoing and/or answers:
L. Disbursements
546
1. Are all payments except petty cash fund disbursements and payroll made by checks?
2. Are checks pre-numbered? 3. Are checks issued in numerical sequence? 4. ls the stock of unused checks accessible only
to the custodian and to those who prepare and sign checks?
5. Are all checks drawn countersigned by another responsible official/s?
6. ls the bank furnished of the name and specimen signatures of officials authorized to sign checks?
7. Is the signing of checks limited to officers or employees who have no access to accounting
records or to cash? 8. Are all checks for
countersigned always approved voucher
documents?
signature and accompanied by and supporting.
9. Are disbursements vouchers, supporting and account distribution reviewed by an authorized accounting staff? If so, is the covering voucher signed by the person who made the review?
10. Are DVs and other supporting documents reviewed by at least one signatory preparatory to the signing of the check?
FC
REF.
NO
YES/NO
OR NIA
REMARKS
QUESTIONNAIRES
11. Is the signing and countersigning of checks in advance or in blank prohibited?
12. Is the drawing of checks to cash or bearer (except for revolving funds replenishments and total payroll) prohibited?
13. Are voided or spoiled checks, all properly cancelled and held available for subsequent inspection?
14. Are the supporting documents all stamped "Paid" or marked with similar indications immediately after the check is signed to prevent their possible reuse?
15. Are checks drawn recorded promptly? 16. Is the payee's signature or receipt secured
before the check is delivered? 17. Are Bank accounts reconciled at least
once each month? 18. Are bank statements and paid checks all
sealed by the bank and delivered directly to the person preparing the reconciliation?
19. Is the reconciliation done by an employee whose duties do not involve: • Signing the checks? • Recording cash transactions? • Handling cash?
20. Does the person who reconciles bank accounts: account for all check numbers, examine signatures, endorsements payee's name and date and compare with the records?
21. Are checks bearing improper endorsements returned to the bank for corrections?
22. Are long outstanding checks properly followed and controlled?
23. Are "stop payments" on outstanding checks properly controlled?
24. Are reconciling items systematically followed up and promptly cleared?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
547
QUESTIONNAIRES
By currency:
548
25. Are those give cash advances duly designated as disbursing officers and adequately bonded?
26. Are all advances properly authorized and not excessive in amount?
27. Are all previous advances liquidated before a new cash advance is given?
28. Are advances liquidated by the officials within a reasonable time after the purpose of such advances has been accomplished?
29. Are cash payments always supported by approved vouchers and supporting documents?
30. Are expense vouchers and supporting documents stamped "Paid" to prevent their possible reuse?
31. Are entries in the cash up to date? 32. Are reports of disbursements regularly
submitted? 33. Are subsidiary records for cash advance
kept and reconciled with the control account periodically?
34, Is there conformation of outstanding balances at least once a year?
35. Is the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
List down any additional controls and/or weaknesses not covered by the foregoing and/or answers:
FC REF. NO
YES/NO ORN/A
REMARKS
QUESTIONNAIRES
M. Petty Cash Fund 1. Are there no cash on hand except for
Petty Cash Funds and remittances received after daily deposit is made?
2. Is the Imprest Fund system used? 3. Is access to and responsibility for the
fund vested in one person? 4. If custodian of other funds, are these
segregated and accounted for separately? 5. Does the custodian of the fund have no
access to: • Cash receipts? • General accounting records?
6. Are changes made in the stated amount of the fund authorized?
7. Are funds reimbursement checks made payable to the order of the custodian?
8. Does proper internal audit exist for petty cash vouchers and supporting documents at the time of reimbursing the fund?
9. Is the fund reasonable in amount? 10. Is there a "ceiling" for individual
payments from the fund/funds? If so, indicate the limits
11. Are all significant petty cash funds counted periodically on a surprise basis? Indicate who counts
12. Is the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
List down any additional controls and/or weaknesses not covered by the foregoing and/or answers:
N. Account receivables
1. Are credit extended only with the approval of responsible officials?
2. Are receivables supported with documents to justify claim against debtors?
FC
REF.
NO
YES/NO
ORN/A
'REMARKS
549
550
QUESTIONNAIRES
3. Are bills reviewed and checked by the accounting division?
4. Are billing documents properly approved?
5. Are forms used in billing pre-numbered? 6. Are bills numerically accounted for and
properly recorded? 7. Are voided bills cancelled and preserved
for reference? 8. Are bills properly filed and controlled to
prevent loss and tampering? 9. Are subsidiary ledgers maintained? 10. Are subsidiary ledgers regularly balanced
with the controlling accounts? 11. Are receivables aged periodically? 12. Are delinquent accounts periodically
reviewed by proper officials 13. Are statements of accounts regularly sent
to all debtors? 14. Are the statements prepared or checked
by someone no having access to the cash receipts journal or accounts receivable credits?
15. Are statements mailed by someone other than the account receivable bookkeepers?
16. Are statements controlled to prevent interception prior to mailing?
17. In case of differences reported, are the difference promptly acted upon and corrected?
18. Are uncollectible accounts write-offs approved by proper official?
19. Is a record maintained of accounts written off?
20. Are credit adjustment approved by a proper officials?
21. Are accounts with credit balances investigated, adjusted, or otherwise settled?
22. The approval of an unauthorized official a pre requisite to the payment of an account receivable credit balance?
23. Are duties of accounts receivable clerk divorced from any cash function?
24. Are account receivable bookkeepers rotated on their jobs?
25. Is there confirmation of accounts at least once a year?
FC REF.
NO
YES/NO
ORN/A
REMARKS
QUESTIONNAIRES
26. ls the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that 1mpa1r any control? List down any additional controls and/or weaknesses not covered by the foregoing and/or answers:
0. Prepayment and Deposits
I. Are schedules or details kept for prepayments and deposits?
2. Jf so, are they reconciled with the control account regularly?
3. Are monthly or periodic balances of prepayments analyzed to determine con-ect balances that will benefit future periods?
4. If possible, is the total amortization of prepayments made to reconcile with totals of charge to certain expense accounts?
5. Are receipts and other evidences of deposits well kept and placed under control?
6. Are deposits periodically reviewed to see if any are no longer required?
7. Are refunds of deposits always taken into account in the books?
8. Is the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
List down any additional controls and/or weaknesses not covered by the foregoing and/or answers:
FC
REF.
NO
YES/NO
ORN/A
REMARKS
551
QUESTIONNAIRES
P. Miscellaneous Liabilities and Deferred
Credits
1. Are there adequate subsidiary records for miscellaneous deposits, deferred
collections, trust liabilities and
miscellaneous liabilities and credits? 2. If so, are they periodically reconciled
with the control account? 3. Are miscellaneous liabilities and credits
occasionally confirmed? 4. Are there written instructions governing
miscellaneous deposits, if so, are they strictly followed?
5. Is there adequate review of the transfer of deferred credits to income, to income accounts?
6. ls it the tendency of the balances of undistributed collection to decrease m amount?
7. Is the foregoing information considered adequate as basis for our evaluation of internal control-in that there are no other additional auditing procedures, accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
Q. Payroll
552
1. Is a personnel division maintained? If so, • Do all hiring, changes m rates,
dismissals and resignations pass through this division?
• Does the division kept a complete
and up to date record of personnel and rates?
• Are resignations immediately reported to the Accounting Division?
2. Are time record books properly safeguarded or controlled to avoid alterations?
3. Is the total time worked by each employee approved by an authorized official?
4. Are payrolls prepared by persons independent of those who the paying?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
QUESTIONNAIRES
5. Is the time worked by each employee as stated m the payroll always checked against official time record book?
6. ls a permanent and up to date record kept of each employee showing all information needed in the verification· of payroll?
7. Are changes in rates and additions of persons to payrolls always verified against written authority or new appointments?
8. Are accumulation of payroll date, computation of individual pay and summarization of the total payroll rechecked by another employee before payment?
9. Are officers and employees required to acknowledge receipts of their salary pay?
10. Is it the practice of employees to sign the payroll only at the time payment?
11. Are the acknowledgement signatures compared with those in the personnel file by a person not connected with the preparation and disbursement of the payroll?
12. If certain officers and employees are paid by checks: • Are individual payroll check signed
by one who does not participate in • Preparation of the payroll? • Preparation of the payroll check? • Recording of payroll transactions m
the books of accounts? 13. If an employee cannot collect his pay
personally, 1s his written authority always required before allowing another person to collect it for him?
14. Are applicable legal requirements (withholding tax, GSIS, and Medicare premiums, etc.) complied with?
15. Are unclaimed wages deposited and liability set up within a reasonable time?
16. Is authority secured first before any overtime work is rendered?
17. Are salary index cards for all employees maintained?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
553
554
QUESTIONNAIRES
18. If so, are postings there up to date? 19. ls the foregoing information considered
adequate as basis for our evaluation of
internal control-in that there are no other additional auditing procedures,
accounting controls or other circumstances that mitigate weaknesses indicated above, or in that there are no other circumstances that impair any control?
FC
REF.
NO
YES/NO
ORN/A
REMARKS
Vl
Vl
Vl
LTO Form 89
BLGF Form No. _ _______ _ Republic of the Philippines
PROVINCE/CITY , Municipality of _ _____ _ Office of the Treasurer
REAL PROPERTY TAX BILL NO. _______ ___ _
M. _ ______ __ _
Sir/Madam: This is to inform you that per records of this Office the taxes due on the real property/ies described hereunder as of amount to
p
Name of Location Tax Dec. ASSESSED VALUE Annual Year Declared (Number No/ARP Land Imp. Mach Tax Tax Discount
Owner & Street No. of Brgy)
(1) (2) (3) (4) (5) (6) (7) (8) (9)
TOTAL NOTE:
1. Kindly inform this office of any error or omission that you may have discovered in this Bill. 2. Please present this Bill to this Office when payment is made
(10)
BASIC SEF Interest Sub-total Tax Discount Int. Sub-total
(9-10)C (9-10)C (9-11)P (9-11)P
(11) (12) (13) (14) (15) (16)
3. Payment of the said taxes/discounts/interest is up to _ ______ _ 4. Failure to pay the aforementioned real property taxes within twenty (20) days from receipts hereof of will force this office to apply the remedial measures
provided under Sec. 256 of RA 7160 to enforce collection of the same 5. Please disregard this Bill in case you have paid your taxes. Very truly yours,
Legend: C Current Year CITY/MUNICIPAL ACCOUNTANT P Previous Year
Grand Total
(12=16)
(17)
- -
FORM TITLE PREPARED BY FREQUENCY
REAL PROPERTY TAX BILL
Billing Clerk, Municipal/City Annually
• Current Year
• Previous Years
Before end of 1st Quarter
Before end of the 211d Quarter
NO OF COPIES PURPOSE OF FORM:
: Three (3)
1. To inform the taxpayer of his current tax (for up-to-date taxpayer) and of his delinquent taxes (for delinquent taxpayer) which he has to pay within a specified period of time.
2. To indicate breakdown of his � (a) Up-to-date (b) delinquent Current year tax - Delinquent tax -Tax Discounts - Interest
3. To record the owner of the possible consequences of failure to settle tax obligations
INSTRUCTIONS:
556
1. Look into the RPT AR of up-to-date/delinquent accounts filed alphabetically 2. Prepare the Real Property Tax Bill.
a. Assign RPTB Number. b. Enter the date when the bill is prepared c. Indicate the name of owner and mailing address d. Indicate date when the computation of tax, tax discounts and interest in unpaid tax
was made. e. Indicate the total amount of taxes billed on the line provided for the same
3. Make appropriate entries in the following Columns: 1. Indicate the name of the owner 2. Indicate Location 3. Enter the Tax Declaration No. (TD No.) 4. Enter the amount of the RPU as the Bill 5. Land, Improvement, Machinery 6. Enter the Annual Tax 7. Indicate the tax year
BASIC 8. Enter the tax (for up-to date) 9. Enter the tax (for up-to-date) l 0. Enter the tax discount (property owner) 11. Enter the interest(for delinquent taxpayers) 12. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the
tax and interests (Delinquent)
SEF
13. Enter the tax (for-up-to-date) 14. Enter the tax discount (prope1ty owner) 15. Enter the interest ( for delinquent taxpayer) 16. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the tax and interests ( delinquent) 17. Enter the sum of Columns 12 and 16
I
v.
v.
--.J
BARANGAY
Tax Name No. Dec. of
No./AR Owner
(I) (2) (3)
TOTAL
PREPARED BY
Mailing Address
(4)
LTO Form 90
Republic of the Philippines
City/Municipality of _ _ ________ _
Office of the Treasurer
CERTIFIED LIST OF ALL REAL PROPERTY TAX DELINQUENCIES As of December 31, ____ _ _ _ __ _ _
ASSESSED BASIC SEF Grand
VALUE Classification
Land Imp. Mach Annual
Year Tax Penalty Sub- Tax Penalty Sub-Total
Remarks of Property Tax
total total (13-
(I 1+ 12) (14+15) 16)
(5) (6) (7) (8) (9) (l 0) (11) (12) (13) (14) (15) (16) (17) ( 18)
CERTIFIED CORRECT
CITY/MUNICIPAL TREASURER
FORM TITLE PREPARED BY FREQUENCY NO. OF COPIES
Certified List of All Real Property Tax Delinquencies Records Clerk, Municipal/City Treasurer's Office Yearly, before the end of December four ( 4)
PURPOSE OF FORM
a. To record all pertinent information on individual real property unit (i.e., owners name, mailing address, location of property).
b. To reflect each real property unit's assessed value as well as the owner's taxes due for a particular year.
c. To reflect the total number of owners of delinquent real properties as well as the total tax collectibles in each barangay.
d. To provide data for the identification of real property units to be subject for remedial measures.
RECIPIENTS:
Office)
Original copy - Local Sanggunian Duplicate copy - Provincial Treasurer's Office (In case of _____ ? Mun. Treasurer's
Third copy - Barangay Captain Fourth copy- Office
INSTRUCTIONS: Column:
I. Enter the name of the Municipality/city/Barangay as well as the year on the lines provided in the upper p01tion of the list
2. Assign a number for each property owner irrespective of the number of real property units he/she has in the barangay;
3. Indicate the name of property owner 4. Indicate the mailing address of the property owner 5. Indicate the location of the real property unit 6. enter the assessed value of 7. the real property unit as to kind 8. land, improvement, machineries 9. Enter annual tax I 0. Enter the tax year
BASIC I I. Enter the basic tax 12. Enter penalty 13. Enter the sum of columns 11 and 12
SEF 14. Enter the SEF tax 15. Enter the penalty 16. Enter the sum of columns 14 and 15 17. Enter the sum columns 13 and 16
Whenever payment is made, the records clerk should draw a red line across the number assigned to the property owner (column 1 up to column 17). Under the column Remarks, the official receipt number and date of issue should be entered by the records clerk.
558
LTO Form 91
REPUBLIC OF THE PHILIPPINES
Prov/City/Mun. (MMA) of ________ _
NOTICE OF REALTY TAX DELINQUENCY
Date - -----
Mr./Ms. _____ �------Address
------------
Dear Sir/Madam:
In compliance to the requirement of Sec. 254 of R.A. 7160 (local Government Code of 1991) you are hereby informed of the tax delinquency on your property described as follows:
Lot No.: Block No. -------- ---- - - - ---�
TD No./ARPN - ----------- --- - -
Location --- ---�-- -- ----- -- --
Assessed Value ; Area sq. m./ha. --------- -- --� -------
Residential/Commercial/Industrial/Educational
Land ------�------
Improvement _________ _ Machinery Total
For the year(s) in the total amount of P _______ including penalties computed as follows:
19 __ & previous years taxes P _________ & ______ % penalty of P
20
20
tax ofP _______ & _______ %penaltyofP ____ _ _ _ _ tax of P & % penalty of P _______ _
Total Amount Due P --------------
In case any of the above stated taxes has already been paid, please furnish us with the number of the official receipt and the date of payment or Xerox copy of your receipt, otherwise we shall appreciate very much your early remittance of the aforestated total amount of P _____ . If after fifteen ( 15) days from your receipt hereof you failed to remit or pay the said amount, the remedies provided for under the law for the collection of delinquent taxes, shall be applied to enforce collection.
Very truly yours,
PROVINCIAL/CITY/MUN. TREASURER
559
Sir/Madam:
REPUBLIC OF THE PHILIPPINES Prov./City/Mun. of _________ _
WARRANT OF LEVY (Pursuant to Section 258 of LGC)
LTOForm 92
/
On the basis of the records of this Office, the undersigned hereby certifies that the following described real property/properties., is/are delinquent in the payment of real property taxes for the year/s and in the amount/s indicated, hereunder:
Declared Owner TD No./ARP No. Kind of Property
Classification
Total
Taxes due:
(Land, Building/Machinery/Improvement)
Area (sq.m./ha)
Add: Interest due:
Market Value
p - --
p - --
Totals
Assessment Level
Assessed Value
-----
-----
WHEREFORE, this Warrant of Levy is hereby issued on the property/properties described above pursuant to Section 258 of the Local Government code of 1991 (R.A. 716Q) for the total amount of the tax delinquency of P , covering the tax years period from _______ to , for all intents and purposes therein provided.
Issued this _ day of _______ 20 __ at the Province /City/Municipality of
(Provincial/City/Municipal Treasurer)
ACKNOWLEDGEMENT:
Date: Signature : Printed Name
-----------
Property Owner/ Administrator or Representative
Cc: Provincial/City/Municipal Assessor 560
------ --�-
Sir/Madam:
The Registrar of Deeds/Provincial/City Municipal Assessor
NOTICE OF LEVY
LTO Form 93
Please take notice that a Warrant of Levy, copy hereto attached has been issued pursuance to the provision s of Section 258 of the Local Government Code of ·1991 (R.A. 7160) and served upon Mr./Ms of , as owner/administrator/mortgagor/leases of the real property/ies described as follows:
TD.No. ARP PIN Kind of Property Location OCTffCTNo.
Very truly yours
(PROVINCIAL/CITY /MUN. TREASU RER)
561
LTO Form 94
REPUBLIC OF THE PHILIPPINES Prov./City/Mun. of ______ __ _
NOTICE OF PUBLICATION AND AUCTION SALE
Date _________ _
Mr./Ms ---------- - - -
Sir/Madam:
Records in this Office show that in spite of our letter to you dated _____ _ 19 , the delinquent realty taxes due on your property described hereunder have remained unpaid:
Lot No. ; Block No.---------� TD No./ARPN
- - - --- - -----------�
Location ___ _ _ _ ___ _ __________ _ Area ____ _ _ __ sq. m/ha. Assessed Value:
Land Improvement Machinery Total
COMPUTATION OF TAX DELINQUENCY: Total Taxes Penalties Total Amount Due
Because of said tax delinquency, your property is now included in the list of delinquent real property which will be published in the (name of newspaper) a newspaper of general circulation in the Prov/City/Municipality of pursuant to Sec. 260 of R.A. 7160 (Local Government Code of 1991 ), once a week for three (3) consecutive week on the dates of ______ , and , after which the property will be sold at public auction on
--- -----�
, 19 ; otherwise, we will proceed with the publication preparatory to auction sale. Thereafter, you will be required to pay the costs thereof in the amount of P in addition to the total amount due as taxes and penalties.
It is. therefore, urged that you pay the delinquent taxes and penalties as soon as pos�ible but not later than , 19 _ to avoid the inclusion of your name in the publication and the additional charged for the costs, the eventual sale of your property at public auction.
In case payment/s for any of the above stated taxes has/have been made already, please furnish us with the number of the official receipt and date of payment or Xerox copy thereof in order that the same could be reflected in your record, if omitted or neglected; otherwise we shall consider you to have confirmed our statement of your tax liability.
Very truly yours
(PROVINCIAL/CITY /MUN. TREASURER 562
LTO Form 95
REPUBLIC OF THE PHILIPPINES) Prov/City/Mun of S.S.
PROOF OF SERVICE
OF "NOTICE OF PUBLICATION AND AUCTION SALE" / I, _ _ _____ , of legal age, Filipino, single/married and resident of
_____ _ ____ _ _ _ __ , after being sworn in accordance with the law, depose and say:
1. That I am an employee of the Provincial/City/Mun. Treasurer's Office, assigned as
2. That on , 19 __ , at about ___ AM/PM, I served the attached "Notice of Publication and Auction Sale" dated to Mr./Ms
- - -- -
being the addressee thereof at his/her residence/office located at _ _ _ __ _ his/her address of record;
3. That as proof thereof, he/she has affixed his/her signature at the bottom of the attached notice as admission of such serve;
OR
4. That she/he was out then, I left a copy thereof to a certain Mr./Ms , a person of sufficient discretion found in his/her
------ -- �
residence/office who signed/refused to sign the acknowledgement of receipt.
SUBSCRIBED AND SWORN TO BEFORE ME this ___ day of _____ _ 20 __ , at the Provincial/City/Municipality of , Philippines, affiant exhibiting to me his, her Community Certificate No. , issued on ______ _ 20_ at the Provincial/City/Municipality of ________ _
(PROVINCIAL/CITY /MUN. TREASURER) (or Officer Authorized to Administer Oath)
563
LTO Form 96 REPUBLIC OF THE PHILIPPINES
Prov/City/Mun (MMA) of _______ _ _ Office of the Provincial/City/Mun. Treasurer
CERTIFICATE OF SALE OF DELINQUENT PROPERTY / I HEREBY CERTIFY THAT after having been advertised for sale in accordance with
Section 260 of R.A. 7160 (Local Government Code of 1991) and subject to the conditions set forth therein, the delinquent real property (land, machinery/improvement) described as follows:
Declared Owner Location TD No. ARPN Lot No Assessed Value: Land
_______ ;Area _ _____ sq.m./ha. _ ______ ; Block No. ____ _ _ _
Machinery _ _ _______ _ _
Improvement _ _ ________ _______ _______ �
has been sold at the public auction held today at the (place) to Mr./Ms _______ _ _ _ a citizen of the Philippines, of legal age, single/married to , and a resident of being the highest bidder thereof, for the total consideration of (P , payment of which is hereby acknowledge to have been received from him/her as for Official Receipt NO. ____ _ _ dated , 20 _, sufficient to satisfy the amount of taxes, penalties and costs due thereon itemized as follows:
Taxes Penalties Cost of Sale Total
BOUND ERIES: North
- -------- --�
East South
- ------ - --
West _ _______ _ _
NOTE: If covered by Torens Title indicate technical description therein
This certification is issued in pursuant to provisions of Section 260 of R.A. 7160, _ _______ , Philippines.
Copy furnished: Mr./Ms. __ __ ______ _ Owner/ Admin./Occupant
Attested:
Prov./City/Mun. Treasurer
(PROVINCIAL/CITY /MUN. TREASURER) (or Officer Authorized to Administer Oath)
564
LTO Form 97
REPUBLIC OF THE PHILIPPINES Prov./Mun./City of ____ __ ___ _
OFFICE OF THE PROV'L/MUN./CITY TREASURER
CERTIFICATE OF REDEMPTION
TO WHOM IT MAY CONCERN:
This is to certify that the real property (land, machinery, and/or improvement) described as follows:
Declared Owner ----- - ------
TD No./ARPN : Area sq.m./ha ------ -- ----- --
Location ------- - --------- - -----
Lot No. _________ __ : Block No. _______ _
Assessed Value: Land Machinery Improvement
which was sold to Mr./Ms. for the price of I! at the public auction conducted by this Office on , 20 was redeemed on _______ , 20 _ _ , by Mr./Ms. who was ascertained to be the ( ) delinquent taxpayer, ( ) representative of the delinquent taxpayer, ( ) person holding a lien or claim over the property by paying the total amount of I! as redemption cost and acknowledged under Official Receipt No. dated , 20_
At any time upon surrender to this Office of the Certificate of Sale dated
__ _____ and Official Receipt No. dated , 20 of the purchase price, including the 20% interest corresponding thereto which is from date of sale to the date of redemption shall be refunded to the purchaser.
This certificate is issued pursuant to Sec. 261 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991.
Very truly yours,
Prov'l/mun./City Treasurer
Copy furnished: Mr./Ms. (purchaser) Note: The municipal treasurer refers to the Municipal Treasurers in municipalities within Metro Manila Area which do not belong to any province.
565
LTO Form 98
REPUBLIC OF THE PHILIPPINES
Prov./Mun./City of _________ _
OFFICE OF THE PROV'L/MUN./CITY TREASURER
/
Date ___ _ _ _ ___ _
NOTICE OF REDEMPTION
Mr./Ms. _______ _ _ _ _ _ _
Sir/Madam:
I have the honor to inform you that the real property ( ) land, ( ) machinery and/or ( ) improvement described as follows:
Declared Owner: __ __ _ _ __ _ ____ _ TD No./ ARPN ____ _ _ _ :Area _____ sq.Im/ha. Location ______ __ _ _ ____ ______ _ Lot No. _______ __ _ ; Block No. ______ _ Assessed Value
Land Machinery Improvement
which you purchased for the price of P at the public auction conducted by this Office on , 20 __ upon payment of the total amount of P as redemption cost acknowledge under Official Receipt No. dated
___ _ _ _ _ , 20 __ , was redeemed on , 20 __ , pursuant to Sec. 261 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991. By virtue of the said redemption, the Certificate of Sale issued to you on , 20 __ , is hereby invalidated.
It is requested that the Official Receipt No. be returned to this Office at your earliest convenience, duly endorsed by signing your name at the backside thereof, together with the original of the Certificate of Sale if still in your possession or, if already registered, a certification by the Register of Deeds of the concerned locality that the same is now on file with said office, so that the amount of P covered thereby may be refunded to you with the corresponding accrued interest.
;- Very truly yours,
Prov./mun./city Treasurer
Enclosed : Copy of Certificate of Redemption Date _ _ __ __ _
566
LTO Form 99
REPUBLIC OF THE PHILIPPINES Prov./Mun./City of ________ _ _
Office of the Treasurer
FINAL DEED TO SALE
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, the real property declared in the name of _________ under ARP No. (OCT/TCT) OCT. No. has been delinquent in the payment of taxes for the year (or years) ; Ref. Number ____ _
WHEREAS, on account of said delinquency, the above-mentioned real property was advertised for sale at public auction to satisfy, all taxes and penalties due and the costs of sale in the total amount of , by posting on 20 , a NOTICE OF SALE for two (2) consecutive weeks at the main entrances of the City Hall, the provincial building and all municipal buildings in province, and in a public and conspicuous place in the barangay wherein the property is situated, in English and the local dialect commonly used, a copy of which was sent by registered mail messenger to the delinquent at his residence.
WHEREAS, at the public auction held on . 20 __ , pursuant to said NOTICE OF SALE the property as herein below described was sold to , and
citizenship, of legal age, man-ied to . Widow or widower, with residence and postal address at _______ _ _ _ _ _ _
Description of the Property Sold
ARP No. ____ _ ; Name of Owner _________ _ Area SW.M; Assessed Value P Location
----------- - ----------
(North __________ _ _ _ _ (East (South _ ____________ _ (West
(if covered by T01Tens Title, indicate technical description)
WHEREAS, the delinquent taxpayer or any other person in his behalf has not, within the period of one year from the date of sale, redeemed the property sold by paying to this Office the total amount of taxes and penalties due up to the date of redemption, the costs of sale and the interest at the rate of twenty four percent (24%) per annum on the purchase price;
NOW THEREFORE, pursuant to the provisions of R.A. 7160 (Local Government Code of 1991 ), the real property above described, free from any encumbrance _or third party claim -whatsoever, is hereby conveyed on , the holder of the CERTIFICATE OF SALE issued on , 20 ___ covering said property.
WITNESS:
Municipal/city Treasurer Provincial Treasurer
Municipal/city Assessor Provincial Assessor
567
Municipal/city Secretary S.B./SP
Municipal/city Mayor REPUBLIC OF THE PHILIPPINES)
------ - - - - - -�
) S.S.
Provincial Secretary, S.P.
Provincial Governor
In the municipality/province of this day of , 20 __ , personally appeared before me Mr./Ms. , Provincial/City/Municipal Treasurer of , who is known to me to be the same person who executed the foregoing document and acknowledged same as his free act and deed. Said Provincial Treasurer exhibited to me his Residence Certificate No. issued at on _ ____ ,20
This document consists of two (2) pages, including this one, each page having been signed by the Provincial/City/Municipal Treasurer and his witnesses and said document refers to the absolute sale of property therein described to , a citizen of _____ _
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal at the and on the date abovementioned.
Notary Public Commission expires on December 31, 20 __
Doc. No. --- -- -
Page No. _____ _ Book No. _____ _ Series of __ ___ _
568
LTO Form 100
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This COMPROMISE AGREEMENT is entered into by and between _ _ _ _ _ _ _ __ in his capacity as Prov/City/Mun. ( of MMA) of _ _ _ _ _ _ _
Philippines, hereinafter referred to as PARTY OF THE FIRST PART and resident of and with postal address at , hereinafter referred to as PARTY OF THE SECOND PART.
WITNESSETH:
That the PARTY OF THE FIRST PART is the Provincial/City/Municipal (MMA) Treasurer of whose office address is located at
That the PARTY OF THE SECOND PART is/are/owner(s) ofreal property, delinquent on realty tax located at barangay Municipal/City, Province of --------
which property of properties is/are described as follows:
C.T. No. TAX DEC. No. Lot No. Location Assessed Value
That the PARTY OF THE SECOND PART voluntarily agreed to pay of the total delinquent taxes due on the above-described property/properties upon the execution of this agreement and the remaining balance in installment of equal amount within a period of
months from the date of this agreement without necessity of demand, to the -------
PARTY OF THE FIRST PART, in the following manner:
Term 1 st installment 211d installment
Amount
That in case of default of the PARTY OF THE SECOND PART in settling in full the obligation within the stipulated period, the PARTY OF THE FIRST PART shall have the right over the above described property/properties, together with all the existing improvements thereon, to sell at public auction in accordance with the provisions of R.A. 7 J 60.
569
BLGF Form No.
Sir/Madam:
-------- - -
Republic of the Philippines
PROVINCE/CITY/MUNICIPALITY
Office of the Treasurer
CERTIFICATE OF TAX CREDIT
LTO Form 101
CTC No. ____ _
Date _ _ ____ _
Please be informed that this Certificate of Tax Credit No. in the - -- ----
amount of ___ _ _ _ _________ , is issued on even date in your favor, covering
It is further informed that this tax credit may be applied to future payments of the taxes due on the real property described hereunder:
Name of Declared Owner: - -- --------- - ------- - - - -
Kind: Classification ----------- ------- ---- - - --
Location ---------- ----------------- --- -
Baran gay Municipality/City Province
Tax Dec. No. - -----------------
Assessed Value: ---- ---------- ----
Very truly yours,
Provincial/City/Municipal Treasurer
570
L TO Annex 102
SAMPLE CASES OF THE ALLOCATION OF GROSS SALES FOR THE SITUS OF TAX
(Celestino et, p130-132, Handbook on Local Fiscal Administration in the Philippines)
Ml M2 M3
(Bl) (P)
M4 M5 M6 (B2)
Case 1: Given a business establishment selling commodities in 6 municipalities M 1 to M6. M3 is the allocation of the principal office (P) and branches (B 1 and B2) are located in Municipalities 1 and 6.
Allocation of Gross Sales
One hundred percent ( 100%) of gross sales in Municipality 1 where Branch 1 is located shall be allocated in that Municipality and the tax shall accrue to Municipality 1. The rule shall apply to B2 on sales in M6. All sales of the business establishment in M2, M3, M4 and M5 shall be allocated to the principal office in M3 and the business tax shall accrue to that municipality.
571
MI M2 M3
(B) (L) (P) (W)
M4 M5 M6
(F) (W) (B)
Case 2: A principal office (P) located in Municipality 3, with branches located in Municipalities 1 and 6, factory (F) and the warehouse (W) located in Municipality 4 and a plantation (L) and warehouse (W) in Municipality 2.
Allocation of Gross Sales
One hundred percent (100%) of gross sales in municipalities Ml and M6 where the branches are located shall Accrue to the municipalities where the branches are located, respectively. The gross receipts in municipalities M2, M3, M4 and M6 shall be taken up in Municipality 3 where the principal office is located. The said gross receipt shall be located as follows:
572
• 30& to Municipality 3 where the principal office is located • 60% of the remaining 70% to Municipality 4 or where the factory is located. Municipality
3 shall not be entitled to a share for the location of a warehouse. It can be entitled to a share if and only if the warehouse is also a branch or sales office, meaning the warehouse and conduct sales
• 40% of the remaining 70% to Municipality 2 where the plantation is located • Municipality 5 has no share.
M1 (B) M2 M3 (L) (L)
(L) (E) (P)
M7 M8 M9
(F)
M4 M5 M6 M10 M11 (F) (W) (B) (PL) (W) (PL) (D) (B)
Case 3: Consider the above diagram on two islands where a big business firm operates the following:
Principal Office (P) in M3 Branches/Sales Office (B) in M 1, MS and M 11 Factories (F) in M4 and M7 Plantations (L) in Ml, M2 and M3 Warehouse (W) in M4 and M 10 Display Center (D) in Ml 1 Port of Loading (PL) in M6 and MIO Experimental Farm (E) in M2
Sales Allocation
Sales in the Municipalities where the branches are located shall be 100% allocated to Ml, MS and Ml 1, respectively.
All sales outside the municipalities where the branches are located shall be recorded in the principal office and consequently allocated as follows:
• M3 which hosts the principal office gets 30% • Ml and M4 which host the factories will be allocated 60% of the remaining 70%.
Since there are two factories they shall share the 60% of 70% which will be apportioned on the basis of volume of production.
• Ml, M2 and M3 of the location of plantation shall get 40% of the 70%. The sales allocation shall be on the basis of volume of production in each municipality.
• The LGU where the warehouse is located will not be allocated any gross sales for hosting the warehouse unless the warehouse is simultaneously a branch. This will be the same predicament faced by LGUs hosting the display centers and port of loading. Experimental farms will be treated as factory if the production is already of economic quantity
573
574
REFERENCES
1. The Local Government Code of 1991, Annotated, Jose A. Nolledo, 1993 Reprint with August 1993 Addendum;
2. Local Government Taxation ( Philippine Laws on Local Government Finance), Vol. III, Annotated, Sofronio B. Ursal, 1992;
3. Philippine Law on Local Government Taxation, Annotated, Sofronio B. Ursal, 2000;
4. Real Property Taxation, Annotated, Atty. Florecita P. Flores and Antonio A. Avila, Jr., First Edition, 2002;
5. Local Taxation and Fiscal Matters, Book II, LGC of 1991, PACTAA, Inc., 1992;
6. Local Government Code of the Autonomous Region in Muslim Mindanao (Muslim Mindanao Autonomy Act No. 25);
7. Decentralization in the Philippines - Strengthening Local Government Financing and Resource Management in the Short-Term, Joint Document of the World Bank and Asian Development Bank, March 31, 2005;
8. Omnibus Election Code of the Philippines (BP 881), Commission on Elections (COMELEC), 1992;
9. Omnibus Rules Implementing Book V of EO 292, as Amended by MC No. 41, s. 1998, Civil Service Commission (CSC);
10. State Audit Code (Government Auditing Code of the Philippines or PD 1445), Reprinted 1999, Accounting and auditing Development Office, Commission on Audit (COA);
11. Government Accounting and Auditing Manual (GAAM), Vol. 1, Government Auditing Rules and Regulations, COA, 1992;
12. Government Accounting and Auditing Manual (GAAM), Vol. 2, Government Accounting, COA, 1992;
13. Government Accounting and Auditing Manual (GAAM), Vol. 3, Government Auditing Standards and Procedures, and Internal Control System, COA, 1992;
14. Manual on the New Government Accounting System (NGAS) for Local Government Units, Vol. I - III, Professional Development Center, COA, 2002;
15. Updated Description of Accounts under the NGAS (COA Circular No. 2004-008), Sept. 20, 2004;
16. 2005 IFAC Handbook of International Public Sector Accounting Standards (IPSAS);
17. Handbook on the Implementing Rules and Regulations (IRR) to the Government Procurement Reform Act (RA No. 9184);
18. Updated Budget Operations Manual (UBOM) for Local Government Units, Department of Budget and Management (DBM), June 2005;
19. Management Services, Part II, 2"d Ed., Nenita Angeles Deafio-Mejorada, 1993;
20. Manual on Certificate of Settlement and Balances, Revised 1993, COA, 1993;
21. Rules Implementing the Barangay Micro-Business Enterprises (BMBE Act of 2002 or RA 9178), Department of Finance (DOF) Order No. 17-04;
22. Local Administrative Regulation (LAR) No. 1-85, DOF, 1985;
23. Training Handbook on Cash Management and Control System, Professional Development Center, COA, May 2004;
24. Training Handbook on Internal Control Structure, Professional Development Center, COA, Nov. 2002;
25. Training Handbook on Risk Management, Professional Development Center, COA, Dec. 2004;
26. Revenue Audit Manual for Local Governments, Vol. I, COA, 1997;
27. DOF Circulars, Memoranda, Opinions, and Rulings, various years;
28. BLGF Circulars, Memoranda, Circular Letters, Opinions, and Rulings, various years;
29. COA Circulars and Memoranda, various years.
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