Bolts Training Handouts

April 24 – 28, 2017
ROYCE HOTEL
Clark Freeport, Pampanga
MARY ANN P. BAUTISTA
City Treasurer
City of San Fernando, Pampanga
Constitutional Provision
A. Each Local Government Unit (LGU) shall have the power to
create its own sources of revenues and to levy taxes, fees
and charges subject to such guidelines and limitations as
the Congress may provide, consistent with the basic policy
of local autonomy.
Such taxes, fees, and charges shall accrue exclusively to

the local governments.
LGUs shall have a just share, as determined by law, in the

national taxes which shall be automatically released to
them. (Article X, Secs. 5-6, Phil. Constitution)
Constitutional Provision
The Constitution vests on local governments the power to

create their own sources of revenue and to levy taxes, fees,
and charges
Through the exercise of governmental powers LGUs can

levy taxes and regulatory fees
Through the exercise of corporate /proprietary powers

LGUs can impose charges for services rendered, establish
economic enterprises, and enter into contracts
Power of LGUs to Create Sources of Revenue
Each local government unit shall exercise its power

to create its own sources of revenues and to levy
taxes, fees and charges subject to the provisions
of the Local Government Code of 1991,
consistent with the basic policy of local
autonomy. Such taxes, fees and charges shall
accrue exclusively to the local government units.
(Sec. 129, LGC)
Power of LGUs to Create Sources of Revenue
The power to impose a tax, fee or charge or to

generate revenue under the Local Government
Code of 1991 shall be exercised by the
sanggunian of the local government unit
concerned through an appropriate ordinance.
(Sec. 132, LGC)
Legal Framework of LGU Taxing Powers
CONSTITUTION
LOCAL GOVERNMENT
CODE
LOCAL ORDINANCE
General Principle on Local Finance
The financial affairs, transactions, and
operations of LGUs shall be governed by the
following fundamental principles and policies, to
wit:
1. No money shall be paid out of the local

treasury except in pursuance of an
appropriations ordinance or law;(Sec. 305
(a), LGC);
General Principle on Local Finance
2. Provincial, city and municipal treasurers

shall open and maintain in the name of
their respective local government units
separate depository accounts for each
fund only with government financial
institutions (GFIs) that have universal
bank license and CAMELS rating of at least
“3”.(DOF Circular No. 001-2015, dated
June 1, 2015);
General Principles on Local Finance
3. Local government funds and monies shall

be spent solely for public purposes(Sec.
305 (b), LGC);
4. Local revenue is generated only from

sources expressly authorized by law or
ordinance, and collection thereof shall at
all times be acknowledged properly Sec.
305 (c), LGC);
5. For every payment received, the collecting officer

shall immediately issue an official receipt in
acknowledgment thereof. The receipt may be in the
form of cash tickets and the like, or officially numbered
receipts subject to proper custody, accountability and
audit (Sec. 4, COA Circular No. 92-382 dated. July 3,
1992);
6. All monies officially received by a local government

officer in any capacity or on any occasion shall be
accounted for as local funds, unless otherwise
provided by law(Sec. 305 (d), LGC);
7. Provinces, cities and municipalities shall maintain a

General Fund which shall be used to account for such
monies and resources as may be received by and
disbursed from the local treasury.
The General Fund shall consist of monies and

resources of the local government which are available
for the payment of expenditures, obligations or
purposes not specifically declared by law as accruing
and chargeable to, or payable from, any other fund
(Sec. 1, COA Circular No. 92-382 dated July 3, 1992;
Sec. 308, LGC);
8. There shall also be maintained in every

Provincial, City or Municipal Treasury the
following special funds:
• Special Education Fund(SEF)
• Trust Funds(TF)
• Special Accounts in the General Fund
9. Receipts, transfers, and expenditures involving

the foregoing special accounts shall be properly
taken up thereunder(Sec. 313, LGC);
10. Profits or income derived from the operation of

public utilities and other economic enterprises,
after deduction for the cost of improvement, repair
and other related expenses of the public utility or
economic enterprise concerned, shall first be
applied for the return of the advances or loans
made therefor. Any excess shall form part of the
general fund of the local government unit
concerned.(Sec. 313, LGC);
11. Every officer of the local government unit whose duties

permit or require the possession or custody of local
funds shall be properly bonded, and such officer shall
be accountable and responsible for said funds and for
the safekeeping thereof in conformity with the
provisions of law(Sec. 305 (f), LGC); and
12. Local governments shall formulate sound financial

plans, and local budgets shall be based on functions,
activities, and projects, in terms of expected results.
(Sec. 305 (g), LGC)
Fundamental Principles in Local Taxation
(Sec. 130, LGC)
1. Taxation shall be uniform in each local government unit

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

economic policy, or in restraint of trade
Fundamental Principles in Local Taxation
(Sec. 130, LGC)
3. The collection of local taxes, fees. Charges and other
impositions shall in no case be let to any private person.
4. The revenue collected pursuant to the provisions of this

Code shall inure solely to the benefit of, and be subject to
disposition by, the local government unit levying the tax,
fee, charge or other imposition unless otherwise
specifically provided herein;
5. Each local government unit, shall, as far as practicable,

evolve a progressive system of taxation.
Common Limitations on the Taxing Powers of
LGUs (Sec. 133, LGC)
Unless otherwise provided herein, the exercise of the taxing
powers of provinces, cities, municipalities and barangays
shall not extend to the levy of the following:
a. Income tax, except when levied on banks, and

other financial institutions;
b. Documentary stamp tax;
c. Taxes on estates, inheritance, gifts, legacies and
other acquisitions mortis causa, except as
otherwise provided herein;
d) 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;
e) Taxes, fees and charges and other impositions upon goods

carried into or out of, or passing through, the territorial
jurisdictions of local government units in the guise of charges
for wharfage, tolls for bridges or otherwise, or other taxes,
fees or charges in any form whatsoever upon such goods or
merchandise;
f) Taxes, fees or charges on agricultural and aquatic products

when sold by marginal farmers or fishermen;
g) Taxes on business enterprise certified to by the Board of

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

Internal Revenue Code, as amended, and taxes, fees or
charges on petroleum products;
i) Percentage or value-added tax (VAT) on sales, barters or

exchanges or similar transactions on goods or services
except as otherwise provided herein;
j) Taxes on the gross receipts of transportation contractors

and persons engaged in the transportation of passengers
or freight by hire and common carriers by air, land or
water, except as provided in this Code;
k) Taxes on premiums paid by way of reinsurance or

retrocession;
l) 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;
m) Taxes, fees, or other charges on Philippine products

actually exported, except as otherwise provided herein;
n) Taxes, fees, or charges, on Countryside and Barangay

Business Enterprises and cooperatives duly registered under
R.A. No. 6810 and Republic Act Numbered Sixty-nine
hundred thirty-eight (R.A. No. 6938) otherwise known as the
"Cooperatives Code of the Philippines" respectively; and
o) Taxes, fees or charges of any kind on the National

Government , its agencies and instrumentalities, and local
government units.
Withdrawal of Tax Exemption Privileges or
Incentives (Art. 283, IRR, LGC)
- Unless otherwise provided for in this Rule, beginning January 1,

1992, local tax exemption privileges or incentives granted to and
presently enjoyed by any person, whether natural or juridical,
including government-owned or controlled corporations, are
considered withdrawn, except the following:
a) Local Water Districts;

b) Cooperatives duly registered under R.A. No. 6938
(Cooperative Code of the Philippines);
c) Non-stock and non-profit hospitals and educational
institutions;
d) Business enterprises certified to by the Board of Investments (BOI)

as pioneer or non-pioneer for the period of six (6) or four (4) years
respectively, from the date of registration;
e) Business entity, association, or cooperatives registered under R.A.
6810, otherwise known as the Magna Carta for Countryside and
Barangay Business Enterprises or Kalakalan 20; and
f) Printer and/or publisher of books or other reading materials
prescribed by the Department of Education, Culture and Sports
(DECS) as School texts or reference, insofar as receipts from the
printing and/or publishing thereof are concerned.
- Unless otherwise repealed by law, business

and economic enterprises operating within
export processing zones administered by the
Export Processing Zone Authority shall continue
to enjoy the tax incentives and tax exemption
privileges enjoyed under the provisions of PD 66,
as amended.
The Revenue Sources of LGUs have different
purposes
• Taxes – enforced contributions made for purposes

of revenue generation and redistribution
• Fees – imposed collections as a system of recovery
for delivery of service by a public officer; purpose is
regulation and service delivery
• Charges – pecuniary liability as rents against
persons or property
Basic Formula for the Computation of Tax
Standard formula:
Tax Due = Tax base x Tax rate +
penalty/discounts
3 Basic Elements of a Tax
Tax subject - the object to be taxed

land? business? professional?
Tax base – characteristic of object where tax is indexed
(For land) zonal value? assessed value? market value?
(For business) gross receipts? capitalization?
 Tax rate – fixed? percentage of tax base? combination?
Increasing local income of LGUs depends on
the willingness and ability to use their taxing
powers
• Constitution grants the powers to LGUs

• Code sets the operating framework
• BUT, provisions not self-executory.
Decisions must be made by the Sanggunian, and
enacted through an ordinance, implemented by the
Local Chief Executive though the different
departments, with the local treasurer leading the
way in generating revenues for the LGU…
City Treasurer
Legal foundation of LGU’s power
to tax
• Section 5, Article X, 1987 Constitution
Each local government unit shall have the power to create its
own sources of revenues and to levy taxes, fees, and charges
subject to such guidelines and limitations as the Congress
may provide, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue
exclusively to the local governments.
• Section 129, Local Government Code (RA7160)
Each Local government unit shall exercise its power to create
its own sources of revenue and to levy taxes, fees, and
charges subject to the provisions herein, consistent with the
basic policy of local autonomy. Such taxes, fees and charges
shall accrue exclusively to the local government units.
Nature of the Taxing Power of LGU
• Not inherent, but a direct grant
– Though not inherent, it is not a mere delegation by the
legislative body but a direct grant from the constitution
• Limited
– Neither plenary nor absolute; subject to the guidelines
provided by Congress
• Legislative
– May be exercised only by the Sanggunian
• Territorial
– Can only be exercised within the territorial jurisdiction of
the LGU
Taxation powers of LGUs
Common Revenue –Raising Powers
• Reasonable fees and charges for services rendered (Sec. 153, LGC)
• Public Utility Charges (Sec. 154, LGC)
• Toll fees
• Exceptions: 1) Officers & enlisted men of the AFP; 2)PNP members on mission; 3) post
office personel delivering mail; 4) physically handicapped and disabled citizens who are 65
years old or older;
Specific Power of LGUs to impose taxes (Business-Related LGU Taxing Powers)
Power to Levy Community Tax
Powers under the miscellaneous provisions

BUSINESS-RELATED TAXING
POWERS OF PROVINCES
Tax on transfer of real property ownership (Sec. 135, LGC)
Tax on business of printing and publication (Sec. 136, LGC)
Franchise Tax (Sec. 137, LGC)
Tax on sand, gravel and other quarry resources (Sec. 138,
LGC)
Professional Tax (Sec. 139, LGC)
Amusement Tax (Sec. 140, LGC)
Annual fixed tax on delivery trucks and vans (Sec. 141, LGC)
Tax on Transfer of Real Property
Ownership (Sec. 135, LGC)
Transaction taxed Tax rate Tax base:
• Sale, donation, • Province: not more • The total consideration
barter, or any other than 50% of 1% involved or fair market
mode of • City: not more than value in case the
transferring 75% of 1% consideration is not
ownership or title substantial, whichever is
of real property higher.
Exception: Person liable to pay: Time of payment:

• Transfer or • Seller, donor, • Within 60days from
disposition transferor, the date of execution
pursuant to executor, or of the deed or from
RA6657 (CARP) administrator the date of the
decedent’s death
Tax on Business of Printing and
Publication
Transaction taxed Exception
• Business of printing and/or • Printing of DEPED/CHED/TESDA
publication of books, cards, prescribed texts or references
posters, leaflets, handbills,
certificates, receipts, pamphlets,
and others of similar nature
Tax rate Tax base

• Business Province City • OLD: gross annual receipt for
• OLD 50% of 1% 75% of 1% the preceding year
• NEWLY STARTED 1/20 of 1% 3/20 of 1% • NEWLY STARTED: capital
investment
Franchise Tax
Transaction taxed Franchise defined
• Enjoyment of a franchise • A right or privilege affected with public interest which
is conferred upon private persons or corporations,
under such terms and conditions as government and
its political subdivisions may impose in the interest of
public safety, security, and safety. (Sec. 131(m), LGC)
Tax rate Tax base

• Business Province City • OLD: gross annual receipt for
• OLD 50% of 1% 75% of 1% the preceding year
• NEWLY STARTED 1/20 of 1% 3/20 of 1% • NEWLY STARTED: capital
investment
Tax on Sand, Gravel, and Other
Quarry Resources
• Extraction of ordinary stones,
gravel, sand, earth, and other • Province: not more • Fair market value in
quarry resources from PUBLIC
LANDS or from the beds of seas,
than 10% the locality per cubic
lakes, rivers, streams, creeks, and • City: not more than meter of the subject
other PUBLIC WATERS within its
territorial jurisdiction. 15%
Who issues permit?: Distribution of Tax NOTE:

Proceeds:
• Exclusively by the • Extractions from
• PROV CITY
Provincial Governor PRIVATE LANDS are
• PROV 30%
pursuant to an • MUN 30%
within the taxing
ordinance of the • CITY - 60% authority of the Bureau
Sanggunian. • BRGY 40% 40% of Internal Revenue.
Professional Tax
• Exercise or practice • Not to exceed • Reasonable
of profession P300.00 classification by the
requiring Sanggunian
government
licensure
examination
Exception: Place of Payment Time of payment:
• Professionals • Province where • Annually, on or
exclusively employed profession is before January 31 or
by the government practiced or where before beginning the
principal office is practice of the
located profession
Amusement Tax
• Ownership, lease or operation of
theaters, cinemas, concert halls,
• Not more than 10% • Gross receipt from
circuses, boxing stadium, and • As amended by RA 9640 admission fees
other places of amusement
(An Act Amending Sec.
• Pop, rock, or similar concerts
• Exception to exception (CIR v. 140(A) of the LGC, May
SM Prime Holdings Inc., GR No. 21, 2009)
183505, February 26, 2010
Exception (not taxable): Under the NIRC: Distribution of Proceeds:

• Operas, concerts, dramas, • Cockpits
recitals, painting, and art
• Shared equally between
• Cabarets
exhibitions, flower shows, • Night or day clubs
the province and the
musical programs, literary and
• Boxing exhibitions municipality where
oratorical presentations such amusement places
• Professional basketball games
• PBA games (PBA v. CA, GR No.
119122, August 8, 2000) • Jai alai are located.
• Racetracks (Sec. 125, NIRC)
Annual Fixed Tax for Delivery
Trucks or Vans
Tax rate
Transaction taxed • Not exceeding P500.00
• Use by manufacturer, producers,
wholesaler, dealers, retailers of truck, van, Tax base
vehicle in the delivery or distribution of
distilled spirits, fermented liquors, • Every truck, van, or vehicle
softdrinks, cigar, and cigarettes, and other
products, determined by the Sangguniang
Panlalawigan, to sale outlets or Exemption
consumers, whether directly or indirectly
• Exempt from tax on peddlers
imposed by municipalities
Taxing Powers of Municipalities
Taxes, fees, and charges not otherwise

levied by the province. (Sec. 142, LGC)
Tax on Business (Sec. 143, LGC)

Municipality’s Tax on Business
Manufacturers, assemblers, 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. (g)
Wholesalers, distributers, or dealers in any article of commerce of whatever kind or nature. (g)
Exporters, and manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of

essential commodities
• Rice and corn
• Wheat or cassava flour, meat, dairy products, locally manufactured, processed or preserved food,
sugar, salt and other agricultural, marine, and fresh water products, whether in their original state
or not
• Cooking oil and cooking gas
• Laundry soaps, detergents, and medicine
• Agricultural implements, equipment, and post-harvest facilities, fertilizers, pesticides, herbicides
and other farm inputs
• Poultry feeds and other animal feeds
• School supplies and
• cement
Municipality’s Tax on Business
Retailers
• 400,000 or less Annual Gross Receipt – not exceeding 2% of the GR for the preceding
• More than 400,000 AGR – 1%
Contractors and other independent contractors (g)
Banks and other financial institutions

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

• Not exceeding P50.00 per peddler annually
Any business not otherwise specified in the above enumeration

• Provided, businesses subject to NIRC excise, vat, or percentage tax – not exceeding 2%gr
BUSINESS-RELATED TAXING
POWERS OF CITIES
The cities may levy the taxes, fees, and charges
which the province or municipality may impose and
may exceed the maximum rates allowed for the
province or municipality by not more than fifty
percent (50%) except the rates of professional and
amusement taxes.
BARANGAY IMPOSITIONS
Taxes – on stores or retailers with gross sales or receipts of the
preceding calendar year of ₱50,000 or less in the case of cities and
₱30,000 or less in the case of municipalities.
Service Fees and Charges – They may collect reasonable fees or

charges for services rendered
Barangay Clearance – no city or municipality may issue any license or

permit unless a clearance is first obtained from the barangay at
reasonable rate.
Other fess and Charges – reasonable fees and charges.

DIR. DIVINA M. CORPUZ
OIC Regional Director
Bureau of Local Government Finance R-III
Proposed 10 Point Socio Economic Agenda of President Duterte
Continue and maintain current

macroeconomic policies, including fiscal,
monetary, and trade policies.
Institute progressive tax reform and

more effective tax collection, indexing
taxes to inflation. A tax reform
package will be submitted to
Congress by September 2016.
3
Increase competitiveness and the
ease of doing business. This effort will
draw upon successful models used to
attract business to local cities (e.g.,
Davao) and pursue the relaxation of
the Constitutional restrictions on
foreign ownership, except as regards
land ownership, in order to attract
foreign direct investment;
Accelerate annual infrastructure

spending to account for 5% of GDP,
with Public-Private Partnerships
playing a key role.
Promote rural and value chain

development toward increasing
agricultural and rural enterprise
productivity and rural tourism.
Ensure security of land tenure to

encourage investments, and address
bottlenecks in land management and
titling agencies.
Invest in human capital development,

including health and education
systems, and match skills and training
to meet the demand of businesses
and the private sector.
Promote science, technology, and the

creative arts to enhance innovation
and creative capacity towards self-
sustaining, inclusive development.
Improve social protection programs,

including the government’s
Conditional Cash Transfer program, to
protect the poor against instability and
economic shocks.
10
Strengthen implementation of the

Responsible Parenthood and
Reproductive Health Law to enable
especially poor couples to make
informed choices on financial and
family planning.
BLGF’s ROLE
IN THE
ADMINISTRATIVE GOVERNANCE
OF LOCAL TREASURY
OPERATIONS
The Bureau of Local Government Finance is the
arm of the Department of Finance responsible
for the formulation and execution of policies to
uphold the financial viability of local
government units.
• It focuses on the function of assisting the local
government sector improve their fiscal status.
• Under a decentralized environment, BLGF
promotes fiscal autonomy and effective
financial management in the LGUs.
Legal Basis:
Executive Order No. 127 January 30, 1987
“REORGANIZING THE MINISTRY OF FINANCE”
Executive Order No. 292 July 25, 1987

"INSTITUTING THE ADMINISTRATIVE CODE OF 1987“
Vision /Mission
BLGF
of the Department of Finance
is the focal agency and an authority in
local finance that aims to be at the
forefront of local economic growth
leading the way
towards national development.
GOALS
• To support national development
programs and priorities.
• To provide administrative and

technical support to local treasury
and assessment offices.
GOALS
• To provide consultative/technical
assistance to local government units
for them to attain financial stability
and growth.
• To enable LGUs to deliver essential
services more efficiently and
effectively.
GOALS
• To continuously develop effective
and responsive organizational
internal processes.
• To sustainably empower BLGF

employees.
BLGF STRATEGY MAP VISION
BLGF of the Department of Finance
is the focal agency and an authority
in local finance that aims to be at the
forefront of local economic growth
leading the way towards national
development.
Outcome: LGU Fiscal Sustainability

MFO : Regulation of LGU Financial Management
KRAs : Policy Development Technical Assistance LGU Financial Performance M&E
S Treasury LGU Revenue Capacity
T Development
R and Generation Compliance Accountability
and and Reviews and
A Assessment Professionaliza-
T Resource Discipline
E Policy tion of the
Mobilization Treasury and
G Reforms
I Programs Assessment
E
and
Services
S Services
INSTITUTIONAL STRENGTHENING
Organizational Development, HR Systems, IT Systems, Knowledge Management,
Performance Management, Rewards and Recognition, Good Governance
E
N LGU Financial
V S
Performance Policy U
I
Monitoring Development P
R
O and P
N Evaluation O
M R
LGU Fiscal T
E
N Sustainability
T M
A E
L C
Regulation of LGU H
I Financial Management A
N N
F I
L S
U
Technical M
E Assistance S
N
C
E Attaining LGU Fiscal Sustainability
Organizational Structure
Office of the
Executive Director
Local Government
Administrative, Financial Local Fiscal Policy
Legal Service Units Operations
and Management Service Service
Service
Financial and Policy, Planning, Local Assessment

Management Division Legal Division
Programming and Operations Division
Standards Division
Administrative Division Internal Affairs Local Treasury

Division Local Financial Data Operations Division
Analysis Division
Information Systems
Management Division Project Execution and
LGU Debt Monitoring Management Division
& Evaluation Division
15 Regional Capacity Building

Offices Division
Plantilla of Personnel
No. of Filled Positions: 269

Based on the 2014 Approved RatPlan
No. of Unfilled Positions: 166
No. of Itemized Positions: 435
Professionalization
of Treasurers Level Muni City Prov
Level 3 1st Special 1st
Class Cities, Class
• Adoption of 3-level certification 1st Class,
system: SEAL Program HUCs
(Standardized Examination and Level 2 2nd - 3rd Class LGUs
Assessment for Local Treasury Level 1 Entry point for all LGUs
Operations) regardless of income
• Level 1 – Basic Competency classification; Must for
4th-6th Class LGUs; Basis
• Level 2 – Intermediate Competency for all designation and
• Level 3 – Advanced Competency appointment
• Aims to improve DOF/BLGF Results of the 2015 Level 1 Exams

selection and appointment No. of Examinees 2,994
process to ensure high level of Highest Score 141
competency/fitness of treasurers Lowest Score 17
• Minimize undue political pressure Cut-Off/Passing
95
to the Secretary of Finance as Score
appointing authority BCLTE Certified 494 or 16.5%

2,500 or
• Exam administration by CSC Needs Improvement
83.5%
Professionalization
of Treasurers
Weight Indicators
Local collection efficiency
• Performance Standards of
Stable and reliable local
Local Treasurers and Assistant revenue growth
Treasurers (DO No. 06-2015) Optimum fund management
• Sets the operational and Institution of administrative
and judicial remedies
competency benchmarks to 70%
Reportorial compliance with
institutionalize performance-based DOF requirements
culture in local treasury operations Compliance with COA rules and
• Performance appraisal system for regulations
local treasurers/assistants Cost effective local revenue

collection
• Basis for personnel action Code of conduct and ethical
standards
• Harmonization with the BLGF-
Capacity building and
SPMS professional development
• Provision of focused trainings 30%

Professional recognitions and
achievements
by BLGF; partnership with HEIs
Office management tools and
support system/s
Use of non-traditional
collection strategies
Continuing Professional
Development of Assessors
• BLGF is accredited by PRC as ‘Institutional
Continuing Professional Education
Provider’
• BLGF provides technical trainings that are
creditable as CPE units for renewal of Real
Estate Appraiser’s license, pursuant to RA No.
9646 (Real Estate Service Act)
• Trainings include:
• Philippine Valuation Standards
• Mass Appraisal
• Real Property Tax Administration
• General Revision of Property Assessments, etc.
Authority of the Secretary of Finance to Appoint
Local Treasurer and Assistant Treasurer
A. The appointment of a Treasurer shall be mandatory for

Provincial, City and Municipal Governments
(Sec. 470 (c), LGC)
while the appointment of an Assistant Treasurer shall be

optional for provincial, city and municipal governments
(Sec. 471(b), LGC)
B. The Treasurer shall be appointed by the Secretary of

Finance from a list of at least three (3) ranking, eligible
recommendees of the Governor or Mayor, as the case may
be, subject to civil service law, rules and regulations
(Sec. 470 (a)LGC)
Authority of the Secretary of Finance to Appoint Local
Treasurer and Assistant Treasurer.
x x x
C. No person shall be appointed in the career service of the

local government if he is related within the fourth civil degree
of consanguinity or affinity to the appointing or
recommending authority.
(Sec. 79, LGC)
D. The Secretary of Finance may delegate the appointing

authority over Provincial, City and Municipal Treasurers and
their Assistants, with the exception of Treasurers and
Assistant Treasurers in Metro Manila.
Authority of the Local Chief Executive (LCE) over the
Local Treasurer and Assistant Treasurer
The Treasurer shall be under the administrative supervision

of the Governor or Mayor, as the case may be, to whom he
shall report regularly on the tax collection efforts in the LGU.
(Sec. 470 (b)(c), LGC).
Qualifications of a Local Treasurer and Assistant
Treasurer
A. No person shall be appointed Treasurer unless, he/she

possess the following qualifications:
1. A citizen of the Philippines (dual citizenship not allowed,

CSC MC 23 s.2016);
2. A resident of the LGU concerned;
3. Of good moral character;
4. A holder of a college degree preferably in commerce,

public administration or law from a recognized college or
university;
Qualifications of a Local Treasurer and Assistant
Treasurer
5. A first grade civil service eligible or its equivalent; and
6. Must have acquired experience in treasury or accounting

service for at least five (5) years in the case of the City or
Provincial Treasurer, and three (3) years in the case of
Municipal Treasurer.
(Sec. 470 (c) and 471(b), LGC)
B. The Secretary of Finance, in the exercise of his/her

appointing power, may institute additional competency
standards as criteria in the selection process subject to civil
service rules and regulations.
Automatic Succession of the Assistant
Provincial/City/Municipal Treasurer as Acting/OIC/ICO
Provincial/City/Municipal Treasurer.
A. In case of the absence or disability of the head of a bureau

or office, his duties shall be performed by the assistant head.
When there are two or more assistant heads, the Secretary
shall make the designation. In the absence of an assistant
head, the Secretary may designate any officer or employee
of the bureau or office as acting head without additional
compensation.(Sec.32, Chapter 6, Book IV. E.O. 292)
Provincial/City/Municipal Treasurer as
Acting/OIC/ICOProvincial/City/Municipal Treasurer.
B. The regularly appointed Assistant Provincial/City/Municipal

Treasurer who automatically assumes as Acting or OIC-
Provincial/City/Municipal Treasurer shall within 24 hours
notify directly the BLGF Regional Director concerned of the
absence, sickness, death or any other reason of incapacity
of the regular incumbent to discharge his/her functions, and
of the date of his/her assumption.
Provincial/City/Municipal Treasurer as
Acting/OIC/ICOProvincial/City/Municipal Treasurer.
C. Within 48 hours after receipt of the notice, the BLGF

Regional Director shall issue the Order of Designation of
the Assistant Provincial/City/Municipal Treasurer, subject to
the confirmation of the Secretary of Finance.
D. It shall be the duty of the BLGF Regional Director

concerned to ensure that impending vacancies are properly
monitored and immediately acted upon.
Designation in the Absence of an Assistant Treasurer
In cases where there is no regularly appointed Assistant

Provincial/City/Municipal Treasurer, the next ranking and
qualified personnel of the Local Treasury Office, who is duly
bonded, may be designated as Acting or OIC
Provincial/City/Municipal Treasurer, as the case may be. If
other ranking and qualified personnel of other offices outside
of the Local Treasury Office of the local government unit
concerned, who is duly bonded, is considered due to dearth of
qualified and competent personnel within the local treasury
office, he/she may be designated as Acting or OIC
Provincial/City/Municipal Treasurer.
Detail or Temporary Assignment of Local Treasurers
and Assistant Local Treasurers
A. A detail is the movement of an employee from one

department or agency to another, which is temporary in
nature and does not involve a reduction in rank, status or
salary and does not require the issuance of another
appointment.
B. The employee detailed receives his/her salary only from

his/her mother unit/agency.
and Assistant Local Treasurers.
C. Guidelines to be observed regarding the detail or temporary

assignment of Local Treasurers and Assistant Local Treasurers:
1. The LCE requesting the detail or temporary assignment shall

submit a written request to the Secretary of Finance. The
request shall state the name of the employee to be detailed,
the period of detail and the reasons for the detail.
2. In case of detail or temporary assignment from one LGU to

another LGU, the request for such detail or temporary
assignment shall be approved only upon the concurrence in
writing by the LCE of the LGU where the Local Treasurer or
Assistant Local Treasurer sought to be detailed is
permanently appointed or stationed. (DOF Department
Personnel Order No. 335-03, October 1, 2003)
3. No detail or reassignment shall be made within three

(3) months before any election. (Sec. 5, Rule XVIII;
Omnibus Rules Implementing Book V of E. O. No. 292
and Other Pertinent Civil Service Laws)
Powers and Duties of Local Treasurer and Assistant
Treasurer
The Local Treasurer shall take charge of the Local Treasury Office
and perform the following duties and functions:
a) Collect all local taxes, fees and charges directly or through their
duly authorized deputies (Sec. 170, LGC);
b) Advise the Governor or Mayor, as the case may be, the
“sanggunian”, and other local government and national officials
concerned regarding disposition of local government funds, and
on such other matters relative to public finance;
c) Take custody of and exercise proper management of the funds of

the LGU concerned;
d) Take charge of the disbursement of all local government funds
and such other funds the custody of which may be entrusted to
him/her by law or other competent authority;
Treasurer
xxx
e) Inspect private commercial and industrial establishments
within the jurisdiction of the local government unit concerned
in relation to the implementation of tax ordinances, pursuant to
the provisions under Book II of the LGC;
f) Maintain and update the tax information system of the LGU;
g) In the case of the Provincial Treasurer, exercise technical

supervision over all treasury offices of component cities and
municipalities; and
h) Exercise such other powers and perform such other duties

and functions as may be prescribed by law or ordinance.
Treasurer
k) Specific Functions:
1. Certify as to the Availability of Funds
2. Implement Tax Collection and Enforcement Program
3. Prepare and Submit Reports
4. Certify RPT Delinquencies Remaining Uncollected
5. Examine the Books of Accounts and Pertinent Records
of Businessmen
6. Submit Certified Statement Covering Income and
Expenditures
7. Issue a Certified Statement Covering Actual Income
Treasurer
xxx
8. Keep full sets of secondary standards for use in the
Testing of Weights and Measures
9. Register in a Book All Branded and Counter Branded
Animals
10. See to it that Payment of Taxes of a Business is not

Avoided Through Simulation of the Retirement thereof
and Recommend to the Mayor for the Disapproval of
the Application for the Termination or Retirement of the
Business
Treasurer
xxx
11. Attend Sessions of the Sanggunian
12. Exercise Such Other Powers and Functions and

Perform Such Other Duties and Responsibilities
12.1 Remit of the Bureau of Internal Revenue (BIR);
the Government Service Insurance System (GSIS);
Pag-ibig; Philhealth obligations and share of Metro
Manila Development Authority (MMDA) for LGUs in
Metro Manila.
12.2 Deputies of the National Government Alien
Registration Fees.
Treasurer
xxx
12.3 Member of the following Local Committees and
Boards:
i. Local Finance Committee
ii. Local School Boards
iii. Appraisal Committee (for purposes of

expropriation and purchase of real property)
12.4 Duties and functions under the omnibus

Election Code
Administrative and Technical Supervision of BLGF
a) The Bureau of Local Government Finance (BLGF) shall

exercise administrative and technical supervision and
coordination over the treasury and assessment operations
of local governments (Sec. 43 (b), E.O. No. 127). It shall
provide consultative services and technical assistance to
local treasurers in the implementation of programs, policies
and regulations on local fiscal matters such as local
taxation, local revenue mobilization, and real property
assessment as well as administrative matters on the
recruitment, selection and appointment of Local Treasurers
b) Administrative Supervision-
1. Act on Personnel movement of the local treasurers and
assistant treasurer in terms of promotion, designation,
detail, secondment , transfer, retirement, extension of
service
2. Act on leave of absence filed
3. Issuance of Travel Authority (Official or Personal)
4. Disciplinary action –act on complaints, investigate, file a

formal charge
5. Conduct training programs, seminars, workshops and

other allied activities for the improvement of the
administrative skills in the local treasury offices
c) Technical Supervision
1. Supervise and coordinate the conduct of Local Treasury
and Assessment Operations of Provinces, Cities and
Municipalities within the region for the proper
implementation of laws, decrees, rules, regulations and
administrative issuances of the DOF;
2. Coordinate the plans, programs and activities of local

treasury and assessment offices in the conduct of tax
collection drives and tax information and education
campaigns;
3. Conduct regional training programs, seminars, workshops

and other allied activities for the improvement of the
technical skills in the local treasury offices;
4. Monitor and determine the efficiency and effectiveness of the

internal control system of the office of the Provincial/City/Municipal
Treasurer;
5. Monitor the performance of revenue generation in RPT, Business

Tax and non-tax revenues;
6. Conduct revenue and treasury operations evaluation to determine

the compliance by Local Treasurers with applicable laws, rules and
regulations;
7. Monitor the implementation by LGUs of national and local tax

ordinances and tax measures;
8. Review, evaluate, and monitor the timely and accurate submission

of LGU financial and fiscal reports for the purpose of target-setting
and policy formulation
Conduct of Local Treasury Operations Evaluation
The conduct of the local treasury operations evaluation is

governed by the enhanced Manual for the Evaluation of Local
Treasury Operations (MELTO) to provide a more systematic
and uniform set of evaluation procedures that are supported
and justified by existing laws, rules and regulations.
MELTO is a basic reference of the BLGF and its Regional

Offices and the Provinces in the conduct of the evaluation of
treasury operations of local governments within their
respective jurisdictions.
The BLGF Central Office shall conduct local treasury

operations evaluation within Metro Manila.
RESPONSIBILITIES
and
ACCOUNTABILITIES
of
LOCAL TREASURERS
and
OTHER ACCOUNTABLE OFFICERS
ARNOLD ESCUADRO
City Treasurer
San Jose City, N. E.
RESPONSIBILITY, ACCOUNTABILITY AND LIABILITY OF
LOCAL TREASURERS AND OTHER ACCOUNTABLE OFFICERS
INTRODUCTION
CONSTITUTIONAL PROVISIONS
ON ACCOUNTABILITY OF
PUBLIC OFFICERS
ART. II Sec. 1. Declaration of Principles and

State Policies
“The Philippines is a democratic and republican State.

Sovereignty resides in the people and all government
authority emanates from them.”
2
INTRODUCTION
PUBLIC OFFICERS
ART. XI, Sec. 1. Accountability of Public Officers
“Public office is a public trust. Public officers and

employees must at all times be accountable to the
people, serve them with utmost responsibility,
integrity, loyalty, and efficiency, act with patriotism and
justice, and lead modest lives.”
3
INTRODUCTION
PUBLIC OFFICERS
ART. XI, Sec. 15.
The right of the State to recover properties unlawfully

acquired by public officials or employees, from them or
from their nominees or transferees, shall not be barred
by prescription, laches, or estoppel.
4
INTRODUCTION
CONSTITUTIONAL PROVISIONS ON ACCOUNTABILITY OF
PUBLIC OFFICERS
ART. XI, Sec. 17.

“A public officer or employee shall, upon assumption of office and
as often thereafter as may be required by law, submit a declaration
under oath of his assets, liabilities, and net worth. In the case of
the President, the Vice-President, the members of the Cabinet, the
Congress, the Supreme Court, the Constitutional Commissions
and other constitutional offices, and officers of the armed forces
with general or flag rank, the declaration shall be disclosed to the
public in the manner provided by law.”
5
INTRODUCTION
ART. XI, Sec. 18.
“Public officers and employees owe the State and this

Constitution allegiance at all times, and any public
officer or employee who seeks to change his citizenship
or acquire the status of an immigrant of another country
during his tenure shall be dealt with by law.”
6
Responsibility, Accountability and Liability.
“Accountability breeds response-ability.”
– Stephen Covey
7
Responsibility - the obligation to prudently

exercise assigned or imputed authority attaching
to the assigned or imputed role of an individual or
group participating in organizational activities or
decision. (Section 108(l) LTOM)
8
 Responsibility of a Local Treasurer

Immediately and primarily responsible for all government
funds and properties under his/her custody
 Responsibility of Treasury Employees
Local treasury personnel directly entrusted with
custody/possession of funds or property shall be
immediately responsible to the Local Treasurer without
prejudice to the liability of either party to the LGU
9
Accountability - answerability of every public

officer whose duties permit or require the
possession or custody of government funds or
property and who shall be accountable therefor
and for the safekeeping thereof in conformity with
law, otherwise he shall be liable for the loss
thereof. (Section 108(a) LTOM)
10
 Accountability of Local Treasurer over

Government Funds and Properties.
• Take custody and exercise proper management of

funds of the city and take charge of the
disbursement of all local government funds and
such other funds the custody of which may be
entrusted to the office by law or other competent
authority (Section 470 of LGC)
11

Government Funds and Properties.
• Take custody of and be accountable for all

properties, real or personal, owned by the local
government unit and those granted to it in the form
of donation, reparation, assistance and
counterpart of joint projects (Section 490 of LGC)
• In case the LGU failed to create the position of a
General Services Officer (GSO)
12

Documents
• Custodianship of accountable forms. - The

treasurer shall be the custodian of all
accountable forms requisitioned by the local
government unit. He shall maintain a complete
record of the receipt, issue and transfer of
accountable forms (Sec. 24 of COA CIRCULAR
NO. 92-382, July 3, 1992 )
13
Primary and Secondary Responsibility (Sec. 102, P.D. 1445)

1. The head of any agency of the government is immediately and
primarily responsible for all government funds and property pertaining to
his agency;
2. Persons entrusted with the possession or custody of the funds or
property under the agency head shall be immediately responsible to him,
without prejudice to the liability of either party to the government.
14
ACCOUNTABLE OFFICERS
– the officer of any government agency whose duties permit or require the
possession or custody of government funds and property (such as the Local
Treasurer, Collecting Officer, Disbursing Officer, Cashier, Paymaster, and
Property Officer), who is required by law to render account to the Commission
on Audit. (LTOM)
– Every officer of any government agency whose duties permit or require the
possession or custody of government funds or property shall be accountable
therefor and for the safekeeping thereof in conformity with law. (P.D. 1445)
– Every accountable officer shall be properly bonded in accordance with law.
15
Liability of Accountable Officers.
Liability – a personal obligation arising from an

audit disallowance or charge in the course of
post audit of a transaction or examination of the
cash and accounts of an accountable officer,
which may be satisfied through payment or
restitution as determined by competent authority
and in accordance with law. (Sec. 105, PD 1445)
16
Liability of Accountable Officers
• Accountable officers for government property shall be

liable for its money value.
• Accountable officers for government funds shall be liable
for all losses attributed to negligence in the safekeeping
of funds.
• Local Treasurer shall exercise the “diligence of a good
father of a family” over accountable officers under his/her
supervision, otherwise, the treasurer shall be jointly liable
with them.
17
Liability for Acts Done Upon Direction of Superior
Officer, or Upon Participation of Other Department
Heads or Officers of Equivalent Rank
 The local treasurer or other accountable officer in the

Local Treasury Office shall not be relieved of liability for
illegal or improper use or application or deposit of
government funds or property by reason of his/her having
acted upon the direction of a superior officer, elective or
appointive, or upon participation of other department
heads or officers of equivalent rank, unless objection in
writing is registered. (Sec. 342, LGC)
18
Period of Accountability
 As a general rule, the accountability of a Provincial, City

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

accountabilities.
19
Prerequisite to accepting new accountabilities
• Turnover of accountabilities from the outgoing treasurer

to the incoming treasurer shall be done.
Advice of Retirement, Transfer and Settlement of

Accounts
• Treasurers shall advise in advance the Resident Auditor

concerned of the date of retirement, resignation, or other
modes of separation of service
20
Closing of Book Preparatory to Transfer of

Accountabilities
a. All the books and accounts shall be completely written
and up to date.
b. Cashbooks shall be totaled and closed as of the date of
transfer, certified by the outgoing treasurer showing the
balance per books. The successor shall certify
acknowledging the amount actually received.
c. All cash and cash items, checks, certificate of time
deposits shall be counted and inventoried showing the
amount, serial numbers and kind of investment.
21
Preparation of Invoice Receipts during Turnover of

Accountabilities
• Invoice-receipts of accountability shall be prepared in four

(4) copies
• Acknowledgement Receipt for Equipment (ARE)
• Consolidated Report of Accountability and Accountable
Forms (CRAAF) with RAAF of accountable officers.
22
Death or Incapacity of a Local Treasurer or

Accountable Officer
• The Secretary of Finance shall designate a custodian to

take charge of the funds and/or property until a qualified
successor shall have been appointed.
• The LCE may designate a committee to count the cash

and take an inventory of the properties for which the
officer was accountable and to determine the liability for
any shortage.
23
Liability of Accountable Officers
For Loss Of Government Funds/Property:
An officer who fails to notify and apply for relief from

cash accountability within the prescribed time, in time of
loss, shall not be relieved of liability or allowed credit for any
such loss in settlement of his accounts. (Sec. 73, P. D. No.
1445)
24
Basic Requirements for
Request for Relief from Accountability
 Notice of Loss
 Request for Relief from Accountability
 Written explanation or reason for delay in filing the notice
of Loss and Request for Relief.
 Progress or Final Investigation Report
 Affidavit or Sworn Statement of the Treasurer or
Accountable Officer
 Affidavit of two disinterested persons who have personal
knowledge of the fact of loss.
 Comment and/or recommendation of the LCE/Treasurer
 Memorandum Receipt of the property
25
Basic Requirements for
Request for Relief from Accountability
 When to File : Within 30 days from the date of occurrence
of loss
 Who shall File: The Accountable Officer
 Where to File : COA Auditor of the LGU
 What to File : Notice of Loss and Request for Relief from
Accountability (and other requirements)
 For other specific occurrences such as Fire, Theft,
Robbery/Hold-up, Force Majeure (Earthquake, Typhoons, etc.)
-- There are other requirements under COA MC 92-751
dated Feb. 24, 1992
26
27
ADMINISTRATIVE, CIVIL AND

CRIMINAL LIABILITIES OF
LOCAL TREASURERS AND OTHER
GOVERNMENT EMPLOYEES
ARNOLD ESCUADRO
City Treasurer
San Jose City, N. E.
ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES OF LOCAL
TREASURERS IN THE ADMINISTRATION OF LOCAL TAXES, FEES
AND CHARGES
Code of Conduct and Ethical Standards of Public

Officials and Employees (Republic Act No. 6713)
Standards of personal conduct –
•The Code of Conduct and Ethical Standards for Public Officials and
Employees, declares the policy of the State to promote a high standard
of ethics in the public service.
•Under the Code, every public official and employee shall observe the
declared norms as standards of personal conduct in the discharge and
execution of official duties.
28
AND CHARGES
Incentives and rewards shall be granted to officials and employees

who have demonstrated exemplary service and conduct on the basis of
their observance of the norms of conduct , namely:
a. Commitment to public interest
 Public officials and employees shall always uphold the public interest
over and above personal interest.
 All government resources and powers of their respective offices must
be employed and use efficiently, effectively, honestly and
economically, particularly to avoid wastage in public funds and
revenues.
29
AND CHARGES
b. Professionalism
 They shall perform and discharge their duties with the highest degree of
excellence, professionalism, intelligence and skill.
They shall enter public service with utmost devotion and dedication to
duty.
They shall endeavor to discourage wrong perceptions of their roles as

dispensers or peddlers of undue patronage.
30
AND CHARGES
c. Justness and sincerity

 They shall remain true to the people at all times.
 They must act with justness and sincerity and shall not discriminate
against anyone, especially the poor and the underprivileged.
 They shall at all times respect the rights of others, and shall refrain from
doing acts contrary to the law, good morals, good customs, public policy,
public order, public safety and public interest.
 They shall not dispense or extend undue favors on account of their
office to their relatives whether by consanguinity or affinity except
appointments of relatives to positions considered strictly confidential or
personal staff whose terms are coterminous
31
AND CHARGES
d. Political neutrality
 They shall provide service to everyone without unfair discrimination and
regardless of party affiliation or preference.
e. Responsiveness to the public

 They shall extend prompt, courteous, and adequate service to the public.
 Provide information on their policies and procedures in clear and understandable
language;
 Ensure openness of information, public consultations and hearings whenever
appropriate, encourage suggestions, simplify and systematize policy, rules and
procedures;
 Avoid red tape;
 Develop an understanding and appreciation of the socio-economic conditions
prevailing in the country, especially in the depressed rural and urban areas.
32
AND CHARGES
f. Nationalism and patriotism
 They shall at all times be loyal to the Republic and to the Filipino people, promote
the use of locally-produced goods, resources and technology and encourage
appreciation and pride of country and people.
 They shall endeavor to maintain and defend Philippines sovereignty against
foreign intrusion.
g. Commitment to democracy
 They shall commit themselves to the democratic way of life and values, maintain
the principle of public accountability, and manifest by deeds the supremacy of
civilian authority over the military.
 They shall at all times uphold the Constitution, and put loyalty to country above
loyalty to persons or party.
33
AND CHARGES
h. Simple living
They and their family shall lead modest lives appropriate to their positions and
income.
They shall not indulge in extravagant or ostentatious display of wealth in any form.
Basically, modest and simple living means maintaining standard of living within the
public official’s or employee’s visible means of income as correctly disclosed in his
income tax returns, annual statement of assets, liabilities and net worth and other
documents relating to financial and business interest and connections.
34
AND CHARGES
I. CIVIL LIABILITY
• GENERALLY
– A public officer is NOT LIABLE for damages which a

person may suffer from the just performance of his
OFFICIAL DUTIES and within the SCOPE of ASSIGNED
TASKS.
– Thus, MISTAKES concededly committed are not

actionable, ABSENT CLEAR SHOWING OF MALICE OR
NEGLIGENCE AMOUNTING TO BAD FAITH.
35
AND CHARGES
I. CIVIL LIABILITY
• WHAT IS “GOOD FAITH?”
– It consists of an honest intention to abstain from taking
unconscionable and unscrupulous advantage of another.
• THE DOCTRINE OF : “OMNIA PRAESUMUNTUR RITE ET

SOLEMNITER ESSE ACTA”
– Public officers are presumed to have regularly performed their
duties.
– All things are presumed to be correctly and solemnly done.
– It is upon him who alleges the contrary that the burden of proof
lies.
36
Article 27 and Article 32, Civil Code
• Article 27
– Persons suffering from material or moral loss because
a public servant or employee refuses or neglects,
without just cause, to perform official duty may file for
damages.
• Article 32
– Public officer or employee is liable if directly or
indirectly obstructs, defeats, violates or any manner
impedes the exercise of constitutional rights.
37
LIABILITY ARISING FROM BAD FAITH
• GENERAL RULE
– A public official is not immuned from damages in his
personal capacity for acts done in bad faith. A different
rule would sanction the use of public office as a “tool of
oppression”.
• BAD FAITH
– Not simply bad judgment or negligence;
– Imputes dishonest purpose or some moral obliquity and a
conscious doing of wrong, a breach of sworn duty through
some evil motive or intent or ill-will.
38
AND CHARGES
I. ADMINISTRATIVE LIABILITY
• CSC Rules;
• Ombudsman Cases;
• BLGF and other Quasi Judicial Cases
• Section 38 and 39, Book I of the
Administrative Code of 1987;
39
Section 38 and 39, Book I of the Administrative
Code of 1987
• LIABILITY OF SUPERIOR OFFICERS (SEC. 38)
– A public officer shall not be civilly liable in

performance of duty unless there’s a clear showing of
bad faith, malice, and gross negligence;
– Neglects to perform a duty within the period fixed;
– Superior not liable for acts of subordinates unless
actually authorized by written order.
40
Section 38 and 39, Book I of the Administrative
Code of 1987
• LIABILITY OF SUBORDINATE OFFICERS (SEC. 39)
– Not liable if done in good faith;

– Liable for willful, negligent acts which are contrary to
law, morals, public policy even if ordered or instructed
by superior.
41
LIABILITY ARISING FROM ULTRA VIRES ACTS AND
CRIMES
• GENERAL RULE
– Contracts executed within the scope of authority and
in compliance with the rules are valid and binding
upon the State.
• EXCEPTIONS:
-- Public officers are personally liable if:
 No authority on the part of the officer;
 Did not comply with the mandatory requirements.
42
LIABILITY ARISING FROM WRONGFUL
DISBURSEMENT OF FUNDS
NO MONEY SHALL BE DISBURSED UNLESS:
1. Local Budget Officer certifies to the existence of appropriation that has
been legally made for the purpose;
2. Local Accountant has obligated said appropriation;
3. Local Treasurer certifies to the availability of funds for the purpose;
4. Vouchers and payrolls shall be certified to and approved by the head of
the department or office who has administrative control of the fund
concerned, as to validity, propriety, and legality of the claim involved;
5. Approval by the Local Chief Executive
CONSEQUENCES OF BREACH
– Expenditures of government funds or uses of government property in
violation of law or regulation shall be a personal liability of the official or
employee found to be directly responsible therefor[Section 103, Government
Auditing Code]
43
LIABILITY FOR UNEXPLAINED WEALTH
• R.A. No. 3019

– Public official or employee acquired during incumbency an
amount of property which is manifestly out of proportion to
his salary and to his other lawful income;
– Property is deemed prima facie to have been unlawfully
acquired
– Coverage: including properties in the name of the spouse
and dependents, bank deposits, excessive expenditures,
ostentatious display of wealth, including frequent travels
abroad
– Properties will be forfeited in favor of the Government
44
Anti-Graft and Corrupt Practices Act
• Section 3(a)
– Persuading and inducing another public official to
violate rules and regulations or an offense in
connection with official duties; OR the public official
allowing himself to be persuaded.
• Section 3(b)
– Directly or indirectly requesting or receiving any gift,
benefit, percentage for himself or another person in
connection with a transaction upon which the official
has to intervene in official capacity
45
• Section 3(c)
– Directly or indirectly requesting or receiving any gift or
benefit for himself or another for whom the public
officer has secured or will secure any Government
permit or license in consideration of the gift given.
• Section 3(d)
– Acceptance or having a family member accept
employment in a private enterprise which has a
pending official business with him during the
pendency thereof or within one year after
46
• Section 3(e)
– Causing undue injury to any party, including the
Government, or giving any private party any
unwarranted benefit or preference in the discharge of
official functions through manifest partiality, evident
bad faith or gross inexcusable negligence.
47
• Section 3(f)
– Neglecting or refusing, after due demand or request,

without sufficient cause, to act within reasonable time,
on any matter pending before him or her for the
purpose of obtaining from any person interested in
the matter some pecuniary or material benefit, or to
favor his own interest or giving undue advantage to
another.
48
• Section 3(g)
– Entering, on behalf of Government, any contract or
transaction manifestly and grossly disadvantageous to the
same, whether or not the public officer profited or will profit
thereby.
• Section 3(h)
– Directly or indirectly having financial or pecuniary interest
in any business or transaction upon which he intervenes in
official capacity, or in which he is prohibited, by law or the
Constitution, from having any interest.
49
• Section 3(i)
– Becoming interested, for personal gain, or having material
interest in any transaction requiring the approval of a
board which he is a member and where exercise of
discretion in its approval is required, even if he votes
against the same or does not participate in the action of
the board.
• Section 3(j)
– Knowingly approving or granting any license, permit or
privilege in favor of a person not qualified for or not entitled
to said license or of a mere representative or dummy of
one not qualified.
50
• Section 3(k)
– Divulging valuable information of a confidential
character acquired by his office or by him on account
of his official position to unauthorized persons, or
releasing such information in advance of its
authorized release date.
51
• PENALTIES
– Violation of Section 3, 4, 5, and 6 of the Act shall be
punished with an imprisonment of not less than SIX
YEARS and ONE MONTH nor more than FIFTEEN
YEARS;
– Perpetual Disqualification from public office;
– Confiscation of forfeiture in favor of Government of
any prohibited interest and unexplained wealth
manifestly out of proportion to his salary and other
lawful income
52
CRIMINAL LIABILTY
CRIMINAL LIABILTY of ACCOUNTABLE OFFICERS in

GENERAL:
– There are a number of crimes peculiar only to public

officers and employees in the sense that one of the
indispensable elements should be that the offenders
is a public officer or employee;
– or the offense cannot exist without the public office;
– and perpetrated while the officer is in the performance
of his office.
53
CRIMINAL LIABILITY ARISING FROM STATUTES
• Revise Penal Code

• Republic Act No. 3019, as amended [“Anti-Graft and
Corrupt Practices Act”]
• Republic Act No. 7080, as amended by Republic Act No.
7659 [“Plunder”]
• Republic Act No. 6713 [Code of Conduct and Ethical
Standards for Public Officials]
• Presidential Decree No. 46
• Republic Act No. 1379
• Presidential Decree No. 1445
• Republic Act No. 7160 [“Local Government Code”]
54
Revised Penal Code
• Direct Bribery (Art. 210)

• Indirect Bribery (Art. 211)
• Corruption of Public Officials (Art. 212)
• Frauds against the Public Treasury and Similar
Offenses (Art. 213)
• Other Frauds (Art. 214)
• Possession of Prohibited Interest (Art. 216)
55
Revised Penal Code
• Malversation of Public Funds or Property (Art. 217)

• Failure of Accountable Officer to Render Account
(Art. 218)
• Failure to Render Account Before Leaving the
Country (Art. 219)
• Illegal Use of Public Funds or Property [Technical
Malversation] (Art. 220)
• Failure to Make Delivery of Public Funds or Property
(Art. 221)
56
Shortage, Overage and Malversation
 Any public officer who, by reason of the duties of

his/her office, is accountable for public funds or
property, shall appropriate the same, or shall take or
misappropriate or shall consent, or through
abandonment or negligence, shall permit any other
person to take such public funds or property, wholly or
partially, or shall otherwise be guilty of the
misappropriation or malversation of such funds or
property, shall suffer the corresponding penalties
prescribed by law.
57
Crime of Plunder
• Any public officer, by himself or in connivance with

members of his family, relatives by affinity and
consanguinity, business associate or other amasses,
accumulates, or acquires ill-gotten wealth through a
combination or series of criminal acts in the
aggregate amount of SEVENTY FIVE MILLION PESOS
(P75,000,000.00) shall be guilty of PLUNDER and
shall be punished by RECLUSION PERPETUA TO
DEATH.
58
Presidential Decree No. 46
• Punishes public officials who receives and also punishes

private persons who give or offer to give any gift or
present on any occasion, INCLUDING CHRISTMAS, when
such gift is given by reason of official position,
regardless of whether the gift is for past or future
favors.
• Throwing of parties and entertainment for the public
official or immediate relatives is also included.
• PENALTY: Imprisonment of NOT LESS THAN ONE YEAR or
more than FIVE YEARS and Perpetual Disqualification
from public office.
59
Presidential Decree No. 1445
• Violation of the provisions of Sec. 67, 68, 89,

106 and 108 P.D. No. 1445 or any regulation
issued by the Commission on Audit
implementing said sections, shall be punished
a FINE not exceeding ONE THOUSAND PESOS
or of imprisonment NOT EXCEEDING SIX (6)
MONTHS, or both.
60
AND CHARGES
Under R.A. No. 7160 or the Local Government Code of 1991
 Prohibited Acts Related to Award of Contracts (Sec. 520)

 Engaging in Prohibited Business Transactions or Possession
of Illegal Interest (Sec. 514)
 Failure to Post and Publish the Itemized Monthly Collections
and Disbursements (Sec. 153)
 Failure to Dispose of Delinquent Real Property at Public
Auction (Sec. 519)
61
AND CHARGES
Under R.A. No. 7160 or the Local Government Code of 1991
 Failure to Collect Tax Due on Real Property (Sec. 247 LGC)

 Omission to Make Property Assessments or Tax Rolls
(Sec. 517);
 Failure to Issue and Execute Warrant (Sec. 177);
 Attempt to Enforce Void or Suspended Tax Ordinances and
Revenue Measurers (Sec. 190);
62
Always Remember:
”Ignorance of the law excuses no one.”
63
AND CHARGES
References
 Local Treasury Operations Manual

 Local Government Code
 Republic Act No. 7160
 Revised Penal Code
 Anti-Graft and Corrupt Practices Act
 Excerpts from “The Law on Public Officers and Election
Law” by Dean De Leon, Jr. (1997)
64
REAL PROPERTY TAXATION
ARNOLD ESCUADRO
City Treasurer
San Jose City, N.E.
REAL PROPERTY TAXES
• Direct taxes imposed on the privilege to use real
property such as land, building, machinery and
other improvements, unless specifically
exempted.
• Province of Nueva Ecija v. Imperial Mining Co., Inc., GR No.
59463, November 19, 1982
– Actual use – refers to the purpose for which the

property is principally or predominantly utilized by the
person in possession thereof. (Sec. 199(b), LGC)
ILLUSTRATION 1
• Pedro owns a shop in the business district of
Laoag City. His family migrated to Hawaii in 2013.
When they left, he allowed his best friend Jose to
use the shop. In January 2014, Jose went to the
City Treasurer’s Office purposely to pay his local
taxes. The City Treasurer however, refused to
receive his payment for the Real Property Tax of
the shop for the reason that the property was
registered to Pedro and not to Jose. Is this right?
ANSWER TO ILLUSTRATION 1
• Section 217, Local Government Code
– Real property shall be classified, valued, and assessed
on the basis of its actual use regardless of where
located, whoever owns it and whoever uses it.
• Testate Estate of Lim v. City of Manila, GR No.
90639, February 21, 1990
– Unpaid realty taxes attach to the property and are
chargeable against the person who had actual or
beneficial use and possession of it regardless of
whether or not he is the owner.
ILLUSTRATION 2
• In January 2013, Jose bought a piece of land
from Pedro. Pedro did not pay his real
property taxes from 2010 to 2012. Jose went
to Pedro and asked the latter to pay his Real
Property Tax for 2010 to 2012. Pedro refused,
saying that it is now Jose’s responsibility as the
new owner. Is this right?
• Testate Estate of Lim v. City of Manila, GR No.
90639, February 21, 1990
– Unpaid realty taxes attach to the property and are
chargeable against the person who had actual or
beneficial use or possession of it regardless of
whether or not he is the owner. To impose the
real property tax on the subsequent owner which
was neither the owner nor the beneficial user of
the property during the designated periods would
not only be contrary to law but also unjust.
FUNDAMENTAL PRINCIPLES GOVERNING
REAL PROPERTY TAXATION (Sec. 198, LGC)
a) Real property taxes shall be appraised at its current and fair
market value;
– Fair market value – the price at which a property may be sold by a
seller who is not compelled to sell and bought by a buyer who is not
compelled to buy. (Sec. 199 (l), LGC)
b) Real property shall be classified for assessment purposes on the
basis of its actual use.
– For purposes of assessment, real property shall be classified as
residential, agricultural, commercial, industrial, mineral, timberland,
or special. (Sec. 215, LGC)
c) Real property shall be assessed o the basis of a uniform
classification within each local government unit;
d) The appraisal, assessment, levy, and collection of real property
tax shall not be left to any private persons; and
e) The appraisal and assessment of real property shall be equitable.
ILLUSTRATION 3
A city hired a private computer firm to take

charge of the collection of real property taxes
on the ground that the private computer firm
would be more capable of efficient and sound
collection. Is this proper?
• Section 198 (d), Local Government Code
– The appraisal, assessment, levy and collection of
real property tax shall not be let to any private
persons.
ILLUSTRATION 4
Anton has real properties in various locations in
the entire country. When he went to pay for
the real property tax of his property in Laoag
City, he questioned the treasurer, saying that he
will not pay the tax as it is way higher than the
tax he paid in Koronadal City for a property of
the same classification and measurements. Is
Anton’s contention valid?
• Sec. 198 (c), Local Government Code
– Real property shall be assessed on the basis of uniform
classification within each local government unit.
• Sec. 233, Local Government Code
– A province or city or municipality within the Metropolitan
Manila Area shall fix a uniform rate of basic real property tax
applicable to their respective localities.
• Sta. Lucia Realty & Dev’t., Inc. v. City of Pasig, GR No.
166838, June 15, 2011
– While a local government unit is authorized under several laws
to collect real estate tax on properties falling under its
jurisdiction, it is imperative to first show that these properties
are unquestionably within its geographical boundaries.
ADMINISTRATION OF REAL PROPERTY
TAXES (Sec. 200, LGC)
The provinces, cities, including the municipalities within
the Metropolitan Manila Area, shall be primarily
responsible for the proper, efficient, and effective
administration of the real property tax.
HOW?
• Sec. 232 and 233, LGC; and Sec 323, LGC IRR
(paraphrased)
– By way of an ordinance, the sanggunian of a province or a
city or a municipality in within the Metropolitan Manila
Area may levy and fix a uniform rate of an annual ad
valorem tax on real property within their locality.
TAXABLE PROPERTIES
REAL PROPERTY, such as:
• Land
• Building
• Machinery
• Other improvements not specifically exempted
NOTE: Basic Real Property Tax and the Special Levy for the Special Education
cover all of the above properties; while the Special Levy on Idle Lands and
Special Levy on Public Works cover only lands.
ILLUSTRATION 5
The Province of Masbate has a duly enacted
ordinance imposing a special levy on properties
benefited by the construction of a new paved
road. The assessor assessed the subject
properties, including the buildings and the
improvements on the lands subject of the new
ordinance. Is this proper?
– A province, city, or municipality may impose a
special levy on the lands comprised within its
territorial jurisdiction specially benefited by public
works projects or improvements funded by the
local government unit concerned…
REAL PROPERTY (IMMOVABLE PROPERTIES, SEC.
415, CIVIL CODE)
1. Land, buildings, roads and construction of all kinds adhered to the soil;
2. Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable;
3. Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object;
4. Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the
immovable in such a manner that it reveals the intention to attach them permanently to the tenements;
5. Machinery, receptacles, instruments, or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;
6. Animal houses, pigeon-houses, beehives, fishponds or breeding places of similar nature, in case their owner has placed
them or preserves them with the intention to have them permanently attached to the land, and forming a permanent
part of it; the animals in this places are included;
7. Fertilizer actually used on a piece of land;
8. Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant;
9. Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a
river, lake or coast;
10. Contracts for public works, and servitudes and other real rights over immovable property.
Exemptions from Real Property Tax (Sec.
234, LGC)
1. Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted for
consideration or otherwise, to a taxable person;
2. Charitable institutions, churches, parsonages, or convents appurtenant thereto,
mosques, non-profit or religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable
or educational purposes;
3. All machineries and equipment that are actually, directly, and exclusively used
by local water districts and government-owned or controlled corporations
engaged in the supply and distribution of water and/or generation and
transmission of electric power;
4. All real property owned by duly registered cooperatives as provided for under
RA6938;
5. Machinery and equipment used for pollution control and environment
protection.
CONDONATION OR REDUCTION OF
RPT AND INTEREST
By the Sanggunian upon recommendation of the Local
Disaster Risk Reduction and Management Council, in case
of
• A general failure of crops, or
• Substantial decrease in the price of agricultural or agri-based products,
or
• Calamity in the province, city, or municipality (Sec. 276, LGC)
By the president of the Philippines when public safety so

requires (Sec. 277, LGC)
TYPES OF REAL PROPERTY TAX
1. BASIC
2. SPECIAL LEVIES
1. Special Education Fund
2. Additional Ad Valorem on Idle Lands
3. For Public Works (Special Assessments)
BASIC REAL PROPERTY TAX
Sec. 233, Local Government Code
LGU RATE
PROVINCE Not exceeding 1% of assessed
value
CITY Not exceeding 2% of assessed
value
MUNICIPALITY WITHIN METRO Not exceeding 2% of assessed
MANILA value
Assessed Value – the fair market value of the property multiplied by the
assessment level (Sec. 199 (h), Local Government Code).
Assessment Level – the percentage applied to the fair market value to determine
the taxable value of the property (Sec. 199 (g), Local Government Code)
BASIC REAL PROPERTY TAX FORMULA
TAX DUE=(ASSESSED VALUE)x (TAX RATE)
Where,
ASSESSED VALUE = FMV x ASSESSMENT LEVEL
ILLUSTRATION 6
• Ana has a farm in Atok, Benguet. The farm
currently has an assessed value of P345,000.00.
The province of Benguet imposes a 1% basic real
property tax rate. How much is the real property
tax due?
• ANSWER:
TAX DUE=ASSESSED VALUE x TAX RATE
= p345,000.00 x 1%
=P3,450.00
SPECIAL EDUCATION TAX (Sec. 235, LGC)
A province or city or municipality within the Metropolitan Manila
Area, may levy and collect an annual tax of one percent (1%) on the
assessed value of real property which shall be in addition to the
basic real property tax. The proceeds thereof shall exclusively accrue
to the Special Education Fund.
RA 5447 created the Special Education Fund for specified activities with
its fund to be derived from additional tax on real property and a certain
portion of the taxes on Virginia-type cigarettes and duties on imported
leaf tobacco.
Sec. 272, Local Government Code
…the proceeds shall be allocated for the operation maintenance of public
schools, construction and repair of school buildings, facilities and
equipment, educational research, purchase of books and periodicals, and
sports development as determined by the Local School Board.
ILLUSTRATION 7
property tax and 1% SEF. How much is the real
property tax due?
• ANSWER:
– TOTAL TAX DUE = BASIC + SEF
= 1%(345,000) + 1%(345,0000
= 3,450 + 3,450
= 6,900.00
ADDITIONAL AD VALOREM ON IDLE
LANDS (Sec. 236, LGC)
A province or city or a municipality within the
Metropolitan Manila Area, may levy an annual
tax on idle lands at the rate not exceeding five
percent (5%)of the assessed value of the
property which shall be in addition to the basic
real property tax.
IDLE LANDS (Sec. 237, LGC)
INCLUDES
a) AGRICULTURAL LANDS
• More than one hectare in area
• Suitable for cultivation, dairying, inland fishery, and other agricultural uses
• One-half remain unutilized or unimproved
EXCLUDES
– Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a
hectare
– Lands actually used for grazing purposes
b) Lands, other than agricultural
• Located in a city or municipality
• More than one thousand square meters in area
• One-half of which remain unutilized or unimproved
INCLUDES
– Residential Lots in subdivisions duly approved by proper authorities
IDLE LANDS EXEMPT FROM TAX (Sec. 238,
LGC)
A province or city or a municipality within the

Metropolitan Manila Area may exempt idle
lands from the additional levy by reason of
force majeure, civil disturbance, natural
calamity, or any cause or circumstance which
physically or legally prevents the owner or the
property or person having legal interest
therein from improving, utilizing or cultivating
the same.
SPECIAL LEVY BY LOCAL GOVERNMENT
UNITS (Sec. 240)
A province or a city or a municipality may impose a
special levy on the lands comprised within its territorial
jurisdiction specially benefited by public works projects
or improvements funded by the local government units..
– Special levy shall not exceed 60% of the actual cost of
such project or infrastructure.
• Collected over a period of 5 to 10 years (Sec. 241, Local
Government Code)
– DOES NOT APPLY TO:
• Lands exempt from basic real property tax
• Remainder of the land portions of which have been donated to the
local government unit concerned for the construction or such
projects or improvements
SPECIAL LEVY IMPOSED BY OTHER
LAWS
• Socialized Housing Tax (RA 7279, Urban
Development and Housing Act of 1992)
– LGUs are authorized to impose an additional one-
half percent on the assessed value of all lands in
urban areas in excess of P50,000.00 except those
specifically exempted.
PAYMENT AND COLLECTION OF TAX
Accrual of tax January 1st of every year and such will constitute a lien superior to
any other lien/mortgage/encumbrance of any kind (Sec. 246, LGC)
Time and Manner of 1. Basic and SEF

Payment • One time payment on or before March 31
• 4 equal installments (on or before March 31/ June 30/
September 30/December 31
2. Other Special Levies – governed by the ordinance imposing them
Interest for late 2% of each month on unpaid amount until the delinquent amount is
Payment (Sec. paid provided in case shall the total interest exceed 36 months
255, LGC)
For Advance Discount not exceeding 20 % of the annual tax (Sec. 251, LGC)
Payment
For Prompt Discount not exceeding 10%of annual tax due (Art. 342, IRR of LGC)
Payment
ILLUSTRATION 8
currently has an assessed value of
P345,000.00. The province of Benguet
imposes a 1% basic real property tax rate. In
2013, she left the country without paying her
current Real Property Tax. She only paid all of
her Real Property tax obligations when she
came back on March 1, 2016. How much
should she pay?
2013 2014 2015 2016

RPT (basic) 3,450 3,450 3,450 3,450
Interest 2,484 1,863 1,035 0
discount 0 0 0 345
TOTAL 5,934 5,313 4,485 3,105
GRAND TOTAL = 18,837.00

ILLUSTRATION 9
property tax rate. In 2013, she left the country
without paying her current Real Property Tax.
She only paid all of her Real Property tax
obligations when she came back on March 5,
2016. Because she felt very ashamed because of
her delinquencies, she also paid her tax due for
the year 2017. How much did she pay?
2013 2014 2015 2016 2017

RPT (basic) 3,450 3,450 3,450 3,450 3,450
Interest 2,484 1,863 1035 0 0
Discount 0 0 0 345 690
TOTAL 5,934 5,313 4,485 3,105 2,760
GRAND TOTAL = 21,597.00

DISTRIBUTION OF PROCEEDS (Sec. 271 &
272, LGC)
• BASIC • SEF
DISTRIBUTION DISTRIBUTION
PROVINCE Province: 35% PROVINCE Province: 50%

Municipality: 40% Municipality: 50%
Barangay: 25% CITY City School Board
CITY City: 70%
Barangays: 30% MUNICPALITY Municipal School Board
• 50%- location WITHIN METRO
• 50%-shared by all MANILA
MUNICPALITY MMDA: 35%
WITHIN METRO Municipality:35%
MANILA Barangay: 30%
• 50%-location
• 50%-shared by all
TAX REMEDIES
LOCAL GOVERNMENT TAXPAYER
I. ADMINISTRATIVE I. ADMINISTRATIVE
1. Lien (Sec. 257, LGC) 1. Protest (Sec. 252, LGC)
The basic real property tax and any other 2. Claim for Refund or Credit (Sec.
tax levied under this title shall constitute a 253, LGC)
lien on the property subject to tax, superior
to all liens, charges or encumbrances in 3. Redemption of Real Property
favor of any person, irrespective of the (Sec. 261, LGC)
owner or possessor thereof, enforceable by
administrative or judicial action, and may II. JUDICIAL
only be extinguished upon payment of the 1. Question of Legality (Sec. 187,
tax and the related interests and expenses.
LGC)
2. Levy on Real Property (Sec. 258-
252, LGC) 2. Court Action
1. Appeal to CTA en banc within 15
II. JUDICIAL days from receipt of adverse CBAA
I. Civil action (Sec. 266, LGC) decision.
2. Appeal by certiorari with the
• Regular courts Supreme Court within 15 days from
notice of adverse CTA decision
3. Suit Assailing the validity of the
tax sale (Sec. 267, LGC)
ILLUSTRATION 10
• Imelda owns a piece of lot. She mortgage it to
the bank. Because of her failure to pay her
loan, the bank foreclosed the property. What
will happen with her delinquent taxes?
• Her delinquent taxes stays. It attached to the
property.
– The basic real property tax and any other tax levied
under this title shall constitute a lien on the property
subject to tax, superior to all liens, charges or
encumbrances in favor of any person, irrespective of
the owner or possessor thereof, enforceable by
administrative or judicial action, and may only be
extinguished upon payment of the tax and the
related interests and expenses.
LEVY (Sec. 258-262, LGC)
The LGU Treasurer will

issue the warrant on or
before or simultaneously
with the institution of the
civil action for collection Within 30 days
of delinquent tax. after the
Within 30
service of
days after
warrant by
posting and sale
publication.
Issuance of
Warrant and Preparation
Advertise Report Sale Issuance of
Written of
Delinquency sale or Sale to final deed of
Notice to Certificate
auction Sanggunian sale
the Assessor of Sale
&ROD
Upon failure of the

The Assessor and the delinquent taxpayer
ROD shall annottate to redeem the
the levy to the tax property within one
declaration and the year from date of
certificate of title sale
respectively
PROTEST
1. By any owner or person having legal interest on
the property or who is not satisfied with the
action of the assessor in the assessment of his
property; OR
2. By any owner of real property affected by a
special levy or any person having legal interest
by the filing of an appeal before the Local Board
of Assessment Appeals within 60 days from
receipt of notice of the assessment.
PROCEDURE FOR PROTEST
File written Treasurer If Denied,

protest with decides within appeal to the
Local treasurer 60 days from LBAA Appeal with the
within 30 days receipt of •Appeal to the LBAA CBAA within 30
Pay the tax under
from payment protest too, in case if days from
protest inaction of treasurer
of tax •If approved, refund receipt of
after the lapse of 60
•Within 30 days from or credit. days. adverse decision
payment of tax
ILLUSTRATION 11
• Enzo made a sworn declaration of his property
to have a value of P5,000 per square meter.
The City Assessor assessed the said property
at P2,000 per square meter. What is the
remedy of Enzo if he would like to maintain his
declared value. Explain briefly.
ANSWER: PROTEST
CLAIM FOR REFUND OR CREDIT
This is the remedy when an assessment

is found to be illegal or erroneous and
the tax is accordingly reduced or
adjusted. (Sec. 253, LGC)
When an Taxpayer files

assessment is written claim for
found to be illegal refund
or erroneous and •Within two years from Treasurer decides In case of denial,
the tax is the date the taxpayer within 60 days appeal to the LBAA
accordingly is entitles to such from receipt of the within 30 days as
reduction or
reduced or adjustment. claim in protest cases
adjusted. (Sec.
253, Local
Government Code)
ILLUSTRATION 12
For failure to pay delinquent real property
taxes, the local government resorted to the
administrative remedy of levy upon real
property. Whereupon, the real property was
sold at a public auction. The real owner
questioned the legality of the sale, contending
that he was not notified thereof. The reason for
this was that he failed to transfer the tax
declaration in his own name. Is the auction sale
valid?
• GR No. 120974 Estate of the late Mercedes, et. al.
vs. CA
– The notification thereof to the right person is an
indispensable requirement of the law, noncompliance
of which renders the auction sale void. Failure on the
part of the registered owner to transfer the tax
declaration in his name may not be used as a basis of
not informing the registered owner. The Local
Government Code directs the local assessor to declare
the property in the name of the defaulting owner, if
known, or against the unknown owner as the case
may be, and to assess the property to assess the
property for taxation.
PRINCIPLES and PROCEDURES
IN THE RECEIPT, REMITTANCE and
DEPOSIT OF COLLECTIONS
RICARDO L. BOBIS JR.

Municipal Treasurer
San Antonio, Zambales
ORGANIZATION CHART
General Control on Collection
a) Separation of Personal Money from

the Public Funds (Sec. 312, LGC)
b) Acknowledgement of Collections/Issuance
of Official Receipts
c) Acknowledgement of collections/issuance
of electronic Official Receipt
d) Prohibition Against the Use of
Temporary/Provisional Receipts
e) Collections Received Through Mail and
Procedures for Handling
General Control on Checks
Collection
f) Acceptance of Checks in Payment for
Taxes or Other Indebtedness to the
Government
g) Drawing of Check Payable to the Local
Government Unit
h) Issuance of Official Receipts for Payment
by Checks
i) Non-Acceptance of check with Erasure,
Alteration and/or Deficiency
General Control on Checks
Collection
j) Issuance of a Separate Official Receipt in
Case Amount Due is Less than the Face
Value of the Check
k) ) Payment by Private Check for Goods
Delivered and Services Rendered by
Government Agencies
l) Prohibition Against the Encashment of
Private Checks with Public Funds
m) Transfer of Government Funds from One Accountable

Officer to Another -
1. Transfer of government funds from one accountable officer to
another shall, except as allowed by law or regulation, be made only
upon prior direction or authorization of the Commission on Audit or
its representative. (Sec. 75, P.D. 1445)
2. When government funds are transferred from one accountable
officer to another, or from an outgoing officer to his successor, it shall
be done upon properly itemized invoice and receipt which shall
invariably support the clearance to be issued to the relieved or
outgoing officer subject to regulations of the Commission on Audit.
(Sec. 77, P.D. No. 1445)
n) Notification to the Auditor: Application for Relief from

Accountability for Government Funds – When loss of
government funds occur while they are in transit or the loss is
caused by fire, theft, or other casualty or force majeure, the officer
accountable therefor or having custody thereof shall immediately
notify the Commission on Audit or the auditor concerned, and
within thirty (30) days or such longer period as the Commission or
auditor may, in the particular case, allow, shall present his/her
application for relief, with the available supporting evidence.
Whenever warranted by the evidence, credit for the loss shall be
allowed. An officer who fails to comply with this requirement shall
not be relieved of liability or allowed credit for such loss in the
settlement of his accounts. (Sec. 73, P.D. No. 1445)
RECEIPT AND COLLECTION PROCESS
FLOW
Tax Payer hands over money
1. RCC accepts payment and issues corresponding Official
Receipt.
2. RCC consolidates daily collection and accomplishes RCD.
3. Turns over to Liquidating Officer for safekeeping.
4. LO prepares Summary of Collections and Remittances.
5. LO turns over intact all collections to the Treasurer
supported by the SCR and RCD.
6. MT/LO prepares deposit for the day. All collections must
be deposited intact daily.
7. MT/LO deposits collection and posts to corresponding
Cashbook.
FLOW
Revenue Collection Clerk Liquidating Officer
 RCD
 O.R.
 Duplicate Ors
 Cash/Checks  SCR & RCD
 Duplicate ORs
 Cash/Checks
 Deposit Slips
BANK
Cash/Checks
Deposit Slip
Municipal Treasurer
ORGANIZATION CHART
FLOW
Turnover and Verification of Collections
I. Turnover of Collections.
1. At the close of the business day at the Office –
 Collectors shall turn over all their collections intact to the Local
Treasurer or Liquidating Officer.
 Collectors accomplish the Report of Collections and Deposits
(RCD) in five (5) copies.
• Original - COA
• 2nd copy - Treasurer
• 3rd copy - Accountant
• 4th copy - Liquidating Officer
• 5th copy - retained by the collector concerned.
 Barangay Treasurers deputized to collect taxes imposed by prov/,
cities/mun. shall follow the same procedure in the remittance of
their collections to the Local Treasurer or Liquidating Officer
concerned
2. Collectors assigned to the field and travel time from

their places of assignment to the Local Treasury Office
is more than one (1) day –
 the turnover of collections shall be made at least once a

week or as soon as the collections reach Five Thousand
Pesos (₱5,000.00.)
 Field collectors shall remit their collections to the

Cashier or designated liquidating officer of the field office of
the LGU.
Treasury Field Office -
 When the distance of the field office to the local treasury

may expose government fund to the risk of loss while in
transit, the cashier or designated liquidating officer, upon
authorization by the Treasurer, may deposit the collections in
the authorized depository bank near the field office of the LGU.
 The procedures in reporting collections and deposits
prescribed in this Chapter shall be observed. (Sec. 33, NGAs)
3. The Accountable Officer shall provide denomination of

cash collections and list of checks received upon
remittance of daily collections.
4. Verification of Collections and Accountable Forms –
 The Local Treasurer or Liquidating Officer shall verify the RCD

as to initial balances on hand, receipts, sales and issues, and
the new balances on hand;
 make a physical count of the accountable forms remaining in
the custody of the Collectors; and check the same to the new
balances on hand column.
 The Local Treasurer or Liquidating Officer shall indicate his/her
verification by affixing his/her signature at the back of the
triplicate copy of the last official receipt issued.
 He/she shall count the money turned over to him/her and sign
the certification and receipt portion of all copies of the RCD.
Designation of Liquidating Officers
for Collections
a) The Local Treasurer may designate Liquidating Officers from
among the collectors whenever necessary. (Sec. 31,NGAS)
b) In LGUs with more than one liquidating officer, each Liquidating

Officer shall prepare consolidated RCD to be submitted to the
supervising Liquidating Officer, who shall prepare another
consolidated RCD.
c) Collectors shall turn over their collections to their designated

Liquidating Officer, in accordance with the procedures
prescribed for Daily Turnover and Verification of Collection.
The Report of Collections and Deposits shall be prepared in
five (5) copies, four (4) copies to be submitted to the Liquidating
Officer, the fifth copy to be retained by the Collector.
Daily Turnover and Verification of
Collections
d) The Liquidating Officer shall perform the procedures for the

receipt and verification of collections turned over to him/her.
e) He shall also accomplish the RCD in five (5) copies to

summarize the collections turned over to him/her by the
Collectors as well as his own collections
f) The Liquidating Officer shall turn over intact the cash

collections to the Local Treasurer together with the original and
two (2) copies of the RCD of Collectors and the duplicates of
the official receipts issued.
Collections
g) The Local Treasurer shall acknowledge receipt of the cash and

all accompanying documents by signing all copies of the RCD
of the Liquidating Officer on the certification and receipt portion
of the form.
The fourth copy of the RCD of the Liquidating Officer and the
RCD of Collectors shall be retained by the Liquidating Officer
for safekeeping.
Collections
h) For LGUs with designated Liquidating Officers by authority of

the Local Treasurer to deposit daily all collections to authorized
depository bank, the Liquidating Officer shall attach the
validated deposit slip for both checks and cash collections to
the Consolidated RCD submitted to the Local Treasurer.
i) The Local Treasurer or Liquidating Officer shall deposit all

collections and prepare the Consolidated RCD for recording in
the cashbook and submission to the Local Accountant,
accompanied by all supporting documents
Procedures and Controls on Deposit of
Collections with Authorized Depository Banks
a) Depository Accounts of Local Government Units. –

Local Treasurers shall maintain depository accounts in the
name of their respective local government units with banks,
preferably government owned, located in or nearest to their
respective areas of jurisdiction. Earnings of each depository
accounts shall accrue exclusively thereto. (Sec. 311, LGC)
b) Opening of Depository Accounts. –

1. Local Treasurers shall open and maintain, in the name of
their respective LGUs, separate depository accounts for
each fund in his custody. (Sec. 310, LGC)
2. In the opening of LGU depository accounts the following

guidelines shall be followed pursuant to Department of
Finance (DOF) Circular No. 001-2015, dated June 1,
2015
2.1. Local government units must have deposit

accounts only with Government Financial Institutions
(GFIs) that have a universal bank license and a
CAMELS (Capital Adequacy, Asset Quality,
Management, Earnings, Liquidity and Sensitivity to
Market Risks) rating of at least “3”.
2.2. Local government units may engage the payment and

collection services of a bank thru a transaction fee -
based arrangement, without the need for prior approval
from the BLGF, provided that all collections shall be
transferred to any of the GFIs referred hereof on the next
banking day counted from the collection date.
3. Bank accounts with banks other than GFIs referred

hereof, may be allowed for the LGU under the following
circumstances:
3.1 Where the GFIs cannot provide the necessary banking
products and services;
3.2 Where there are no accessible (within the twenty (20)
kilometer radius) GFIs, the LGU shall furnish the BLGF a
copy of the vicinity map showing the location and distance
between the LGU, the GFIs and the (proposed) bank; and,
3.3 Where security and safety are the reasons for opening and
maintaining an account in a (proposed) bank, the LGU
shall furnish the BLGF an Independent Report or
Certification from the Philippine National Police Provincial
Office confirming the existence of the security risks.
4. A maintaining balance may be allowed for operating

expenses of up to three (3) months, after having
performed a cost-benefit analysis, or up to the maximum
deposit insurance coverage of the Philippine Deposit
Insurance Corporation (PDIC) of ₱500,000.00,
whichever is lower.
All funds deposited shall be limited to operating funds

and no other deposits shall be maintained for special
projects or investment purposes. Any amount in excess
of the aforementioned authorized cash balance shall be
transferred to any of the GFIs referred hereof.
5. Where the LGU cannot meet all of the conditions set

under items (1) (2) and (3) hereof, it shall request for
prior approval from the BLGF to open and maintain an
account in the (proposed) upon compliance with the
following requirements:
5.1 Letter from the Local Chief Executive or his duly

designated officer requesting approval from the
BLGF citing the terms of the deposit, purpose for
opening and maintaining an account with the
(proposed) bank and specific reasons and
circumstances for not meeting the conditions;
5.2 Certification from the (proposed) bank that no elective or

appointive local government official of the LGU concerned
is a director, officer or stockholder of the bank, unless
certified that it is the only bank operating in the territorial
jurisdiction of the LGU;
5.3 Resolution of the local Sanggunian concerned authorizing

the LGU to deposit funds with the (proposed) bank with
the approval of the Local Chief Executive;
5.4 Certification from the Department of Interior and Local

Government (DILG) on the practice of accountability and
transparency (Good Financial Housekeeping);
5.5 Certification or Independent Report from the Philippine

National Police Provincial Office confirming the existence
of the security risk, in cases where security and safety are
the reasons for opening and maintaining an account in a
(proposed) bank;
5.6 The (proposed) bank’s latest CAMELS rating issued by

the BSP;
5.7 Vicinity map showing the location and distance between

the LGU, the GFIs referred hereof and the (proposed)
bank;
5.8 Other information that the BLGF may require in the course
of its evaluation.
6. In cases where the GFIs referred hereof establish or

operate a branch within the territorial jurisdiction of the
LGU or where the circumstances under item (3) hereof
no longer prevail, the LGU shall transfer all funds and
cash balances to the GFIs within three (3) banking days
from the time the exceptional circumstances no longer
prevail, whichever comes first.
c) Daily Deposit of Collections with the Banks. –
1. The Local Treasurer or Cashier shall deposit intact all

collections, as well as all collections turned over by the
Collectors with the authorized depository bank daily or
not later than the next banking day.
All deposits shall be recorded in the Cashbook – Cash

in Vault and Cashbook – Cash in Bank.
2. Collections of field collectors shall be remitted to the

Cashier/designated Liquidating Officer of the field office
of the local government unit.
When travel distance from the field office to the local

treasury may expose government funds to risk such as
loss in transit, the Cashier/designated Liquidating Officer,
upon authorization by the Local Treasurer, may deposit
the collections in the authorized depository bank near
the field office of the local government unit.
(Sec. 26, COA Circular No. 92-382)

Procedures and Controls on Deposit of Collections
with Authorized Depository Banks
d) Time Deposit Account –
1. Provinces, cities, municipalities and barangays may

deposit with duly authorized government depository
banks, idle funds in the General Fund under time
deposit accounts, upon prior authority of the sanggunian
and approval of the Local Chief Executive in accordance
with the aforecited procedures in the opening of
depository accounts with the bank under DOF 001-2015
dated June 1, 2015.
2. Idle Funds refer to cash which the local government unit can
freely invest in government securities and/or fixed term
deposits with authorized government depository banks, after
considering provisions for the coverage of regular and
recurring operating expenses like salaries, wages, repairs and
maintenance, inventories and supplies, debt servicing, etc., as
well as programmed disbursements for capital outlays and
other non recurring expenses, within the context of the cash
operating cycle of the local government unit.
Unremitted collections for, and funds set aside for the payment
of obligations to, other entities, government, and private, shall
not form part of the idle funds.(Sec. 22 of COA Circular No. 93-
382-A dated July 3, 1992)
e) Bank Statement or Snapshots –
1. Bank statements and/or snapshots of bank transactions

transmitted to the Local Treasurer by the depository
bank shall be forwarded to the Local Accountant who
shall be responsible for the preparation of the bank
reconciliation statement.
If the bank statements are sent by the bank directly to

the Local Accountant, a copy thereof should be furnished
to the Local Treasurer.
2. In case the bank statements are not readily available, a

snapshot of the LGU transactions may be obtained by
the Local Treasurer from the bank for updating and
reconciliation purposes.
Maintenance and Use of the Cashbook by Local
Treasurers, Cashiers, Liquidating Officers, Disbursing
Officers, Collectors and Other Accountable Officers
a) The treasurer/cashier shall record in his/her cashbook all

collections received by him/her. The treasurer shall maintain
cashbooks for Cash-in-Treasury and Cash in Bank.
The Cash-in-Treasury account shall be debited with the

collections received, and credited with the collections deposited
with the authorized depository bank. The Cash in Bank account
shall be debited with the deposits of collections with the bank, and
credited with the withdrawals from the depository account. (Sec.
29, COA Circular 92-382)
Maintenance and Use of the Cashbook by Local Treasurers,
Cashiers, Liquidating Officers, Disbursing Officers, Collectors
and Other Accountable Officers. –
b) The Treasurer’s Cashbooks. – The Local Treasurer shall

maintain the following cashbooks:
1. Cashbook-Cash in Treasury. – It shall be used by the Local

Treasurer to record the daily collections (Debit Column)
and deposits to the bank (Credit Column) based on the
Report of Collections and Deposits.
The cashbook shall be maintained by fund and shall be

updated and balanced daily.
CHAPTER 3
Sec 59. Maintenance and Use of the Cashbook by Local
Treasurers, Cashiers, Liquidating Officers, Disbursing Officers,
Collectors and Other Accountable Officers. –
2. Cashbook-Cash in Bank – The Cashbook for Cash in Bank

shall be used by the Local Treasurer to record all deposits of
collections (Debit Column) and withdrawals thru checks issued
from the banks (Credit Column) for the day. Separate
cashbook shall be maintained for each depository bank
account and by fund, and shall be updated and balanced daily.
3. Cashbook-Cash Advances. – The Cashbook for Cash

Advances shall be used by the Local Treasurer to record cash
advances received (Debit Column) and payments, refunds and
adjustments (Credit Column), and the balance (Balance
Column).
c) The Liquidating Officer’s Cashbook – The Liquidating Officer’s

Cashbook shall be used by the designated Liquidating Officer to
record all collections turned over to him/her by all designated
revenue collectors (Debit Column), and remittances to the Local
Treasurer or Liquidating Officer (Credit Column). Separate
cashbooks shall be maintained for each fund and shall be updated
and balanced daily.
d) The Collector’s Cashbook – The Collector’s Cashbook shall be

maintained by all designated collecting officers including field
collector’s receiving collections for the local government office.
Record all daily collections received at the Debit Column and all
daily remittances to the designated Liquidating Officer at the Credit
Column.
e) Daily Recording in the Cashbook – At the end of the day, all

transactions shall be entered in the appropriate cashbook. For
Cashbook-Cash in Treasury, Cashbook-Cash in Bank and
Cashbook-Cash Advances, the balances obtained at the end of
the day shall be reconciled with the cash on hand.
At the end of the month or when required to do so by competent

authority, the month’s account and transactions shall be closed,
ruled, and the accountable officers will accomplish the certificate of
transactions in the respective cashbooks.
CHAPTER 3
Maintenance and Use of the Cashbook by Local Treasurers,
Sec 59. Maintenance and Use of the Cashbook by Local
Cashiers, Liquidating
Treasurers, Cashiers,Officers, Disbursing
Liquidating Officers, Collectors
Officers, Disbursing Officers,
and Other
Collectors Accountable
and Other Officers
Accountable Officers. –
f) Accountable Officer’s Certificate of Transactions in the

Cashbook. Local Treasurers or Cashiers entrusted by reason of their
duties with collections, custody and/or disbursement of local funds
shall at the end of the month, or when required to do so by proper
competent authority, accomplish the following certificate:
“I HEREBY CERTIFY that the foregoing is a correct and complete record of all my cash
and depository transactions had by me in my capacity as (designation) of
(Name of the LGU) , during the period from ___________, 20__ to ______________,
20___, inclusive, as indicated in the corresponding columns.
________________________
(Signature Over Printed Name)
________________________
Title
__________________. 20___”
g) Reconciliation of Cashbook Balance. – All accountable officers

required to maintain a cashbook shall reconcile their cashbook
balances every end of the month or as the need arises with the
subsidiary accounting records. A certification of balances as
appearing in the subsidiary accounting records shall be obtained
from the Local Accountant at the end of the month or as required
by competent authority.
h) Safeguarding of Cashbook - At the close of office either for the

noon break or at the end of the day, all cashbooks shall be
locked up in fire-proof vaults or safes. This duty devolves upon
the officer entrusted by law to keep such cashbooks irrespective of
whether he is or not the one personally making the entries of the
cash transactions which are to be recorded therein.
Forms and Reports Used by Local Treasury Officials
a) Report of Collection and Deposits (RCDs). The RCD

shall be prepared daily by the following:
1. Collectors. –
1.1 RCDs of Collectors shall reflect collections,

remittances and duplicate copies of the Official
Receipt issued turned-over to their designated
Liquidating Officer/Local Treasurer.
1.2 It shall also contain report of accountability for

accountable forms used showing the name of the
forms and number, beginning balance, received,
issued and ending balance.
CHAPTER 3
Forms
Sec 60.and Reports
Forms Used
and Reports bybyLocal
Used Local Treasury Officials
Treasury Officials. –
3. Local Treasurer
3.1 The Local Treasurer shall verify and acknowledge

the submitted consolidated RCD and shall deposit
“intact” all collections turned-over by the Liquidating
Officer to the authorized depository banks.
3.2 For Real Property Tax payments, separate RCD shall

be prepared for the collections pertaining to the
Basic Tax and additional tax accruing to the Special
Education Fund (SEF).
CHAPTER 3
Forms
Sec 60.and Reports
Forms Used
and Reports bybyLocal
Used Local Treasury Officials
Treasury Officials. –
4. Submission of Collection Reports
Collecting Officers/Treasurers shall submit daily records

of receipts, together with the supporting documents, to
the Chief Accountant. The official assigned to the daily
recording of transaction in the books of accounts shall
turn-over the receipts and supporting documents to the
Auditor within ten (10) days after receipt of such records
and documents. The Auditor concerned shall conduct
the necessary examination and audit within thirty (30)
days from receipt thereof. (Sec. 68, GAAM Vol.1)
PROCESS OF
RECEIPT, REMITTANCE AND DEPOSIT OF COLLECTIONS
Receive payment from taxpayers/creditors and issue Collector/Teller
Official Receipt (OR). Prepare Report of
Collections and Deposits (RCD). Record in the
Collector’s cashbook. Remits to the Liquidating
Officer (if one is designated) or Treasurer.
Check remittances and verifies accountable forms of Liquidating Officer
collectors/tellers. Receive collections and signed in
the acknowledgement portion of the RCD of
collectors. Prepare consolidated RCD. Record
collection received in the cashbook and remits to
the Treasurer/Cashier.
Receive remitted collections and sign in the Treasurer
acknowledgment portion. Records in the Cashbook
– Cash in Treasury.
Deposit collections in the appropriate bank account Treasurer
per authorized depository bank. Records deposit in
the Cashbook – Cash in Bank.
Forward RCD to Accountant’ Office with copies of Treasurer

ORs and validated deposit slips.
PROPER HANDLING
OF
ACCOUNTABLE FORMS
RICARDO L. BOBIS JR.

Municipal Treasurer
WHAT IS ACCOUNTABLE FORM?
•It is a special kind of form utilized to

acknowledge receipt of collections or used
in disbursements, for proper accounting
and control of collections as well as
disbursements.
CUSTODIANSHIP OF ACCOUNTABLE FORMS
The local treasurer shall be the custodian of all accountable

forms requisitioned by the local government unit and
shall maintain a complete record of the receipt, issue
and transfer of accountable forms.
The local treasurer’s accountability for accountable forms

of all kinds is determined in connection with the audit
and examination of his accounts which show that each
receipt is properly accounted for.
Accountable Forms
1. A.F. 51 A. General Receipt
2. A.F. 52 B. Community Tax Certificate
3. A.F. 53 C. Cash Ticket
4. A.F. 54 D. Certificate of Ownership
5. A.F. 55 E. Certificate of Title
6. A.F. 56 F. Certificate of Marriage
7. A.F. 58 G. Certificate of Burial
8. BIR Form 16 H. Real Property Tax Receipt
Cash Tickets
Marriage License
Ownership of Cattle
CTC Corporation
CTC Individual
AF 51
AF 56
RCD
RCD
RAAF
Types of Accountable Forms
Types of Accountable forms (AF) for acknowledging

collections:
1. Accountable forms with money value, and

2. Accountable forms without money value
1. Accountable Forms with money value consist of

the following:
(1) Cash Tickets (AF No. 55A-F)
(2) Certificate of Transfer of Large Cattle(AF No. 52)
(3) Certificate of Ownership of Large Cattle ( AF No. 53)
(4) Marriage License Certificate (AF No. 54)
Types of Accountable Forms
2. The Accountable Forms without specific money

value :
(1) Official Receipt (AF No. 51)

(2) Real Property Tax Receipt (AF No. 56)
(3) Slaughter Permit Fee Receipt (AF No. 57
(4) City/Municipal Burial Permit Fee Receipt (AF
No. 58)
(5) Community Tax Certificate
(BIR Form Nos. 0016 - Individuals
(BIR Form Nos. 0017 - Corporations)
(6) Checks
1. ACCOUNTABLE FORMS WITH FACE VALUE
Cash Tickets (AF No. 55 )

• This is issued for collections from the temporary use of
market spaces, parking areas, and other income
generating activities where the issuance of a regular
receipt is not practicable.
Certificate of Transfer of Large Cattle (AF No. 52)
• This document evidences transfer of ownership of
large cattle. When issued, it superseded the original
certificate of ownership
Certificate of Ownership of Large Cattle (AF No. 53)
• This document is an evidence on original ownership
of large cattle.
Marriage License Certificate (AF No. 54)
• This is the license issued to contract marriage.
2. ACCOUNTABLE FORMS WITHOUT FACE VALUE
Official Receipt (AF No. 51)

• This is issued to acknowledge payment of taxes, licenses
and other dues or fees to the government for which no
special accountable forms have been authorized
Real Property Tax Receipt (AF No. 56)
• This is issued to acknowledge payment of basic real
property tax and additional tax accruing to the special
education fund
Slaughter Permit and Fee Receipt (AF No. 57)
• This form serves as permit, as well as an official receipt
acknowledging payment of fees for the slaughtering of large
cattle.
City/Municipal Burial Permit and Fee Receipt (AF No.58)
• This form serves a funeral or burial permit and official receipt
for fees collected.
2. ACCOUNTABLE FORMS WITHOUT FACE VALUE
Community Tax Certificate (BIR Forms. 0016 & 0017)

• This is issued to acknowledge payment for
community tax from:
- Individuals (BIR Form No. 0016)
- Corporate entities (BIR Form No. 0017)
Checks
• These are serially numbered forms purchased from
the servicing bank for use in the disbursement of
funds.
• They shall be kept in the custody of the local treasurer

who shall be accountable and responsible for the proper
care and use of the checks
PREPARATION OF OFFICIAL RECEIPTS
Pre-numbered official receipts shall be issued in strict numerical

sequence.
1. In preparing official receipts, all copies of each receipt shall

be exact copies or carbon reproductions in all respects of
the original.
2. If payment has been tendered in money order or check, the

official receipt shall be prepared with the date, number, and
the amount of such money order, or check together with
the purpose for which the payment has been received. The
address of the payor shall also be indicated on the official
receipt to facilitate communication with him/her, if
necessary. (Sec. 73, Book II, Vol. I, GAAM)
3. General Guidelines on the issuance of eOR: (COA

Circular No. 2013-007 dated September 18, 2013)
3.1. Receipt of collections through electronic means shall be

acknowledged by an eOR.
3.2. The eOR shall have the following minimum data content:
i. Name of the agency issuing the receipt
(Department/Agency/Regional Office/Operating or
Field Unit)
ii. Location and location code (place where the
collection is made and its assigned code)
iii. Name of Payor (person/entity making the payments)
iv. Date and time of receipt (date and time of the
collection and issuance of eOR)
v. Nature of collection (such as business tax, fees and

assessments, licenses etc.
vi. Amount received, detailed as to the nature of collection
coded as to their subsidiary ledger revenue classification
vii. eOR Number ( a unique and sequential number
generated by the system for every eOR issued)
viii. Transaction Number (number generated for every
transaction accepted by the system which does not
necessarily pertain to the generated eOR. It may include
cancellation of eOR, inquiry, etc.)
ix. Mode of payment (credit card/electronic fund
transfer/ATM/G-Cash, etc.)
x. Order of Payment Slip Number or Assessment Number
3.3. All collections shall be acknowledged by the local

government unit concerned through the issuance of official
receipts to establish that such collections have been
received.
3.4. Collections of national government agencies shall be
deposited to the account of the Treasurer of the Philippines.
Collections of local government units and of Government -
Owned and Controlled Corporations (GOCCs) shall be
deposited to their respective accounts in designated AGDBs.
3.5. Collections through electronic system shall be accounted for
in the books of the government agency concerned in
accordance with existing rules and regulation for receipts and
collections.
3.6. To ensure that transaction can be individually and safely

processed using online collection system, the government
agency concerned shall comply with the provisions of the
Joint Department Administrative Order No. 2s 2006 issued
by the Department of Finance and the Department of Trade
and Industry on the “Guidelines Implementing R.A. No.
8792 on EOCS in Government” or any subsequent
amendments thereto.
3.7. The government agency shall provide read/view and print

access rights to the COA Auditor in the computerized
system where online collections are being processed.
CONTROL OF ACCOUNTABLE FROMS
Name of Agency on the Face of Official Receipt –
For safety and control purposes, all official receipts

shall bear the name of the local government unit
printed or stamped on the face thereof. (Sec. 96, Book
II, Vol. I, GAAM)
ACCOUNTABILITY FOR ACCOUNTABLE FORMS
Accountability of Official Receipts – An official receipt is an

accountable form held in trust by the Local Treasurer or
other person duly authorized to possess or have custody
thereof.
The Accountable Officer shall be responsible for its

safekeeping, the proper and authorized use or application
thereof and the reporting of its use and condition, and shall
be liable for loss, damage or deterioration occasioned by
negligence in the keeping or use thereof. (Sec. 91, Book II,
Vol. I. GAAM)
Guidelines on the Procurement of Printing Service
1. Pursuant to Section 29 of Republic Act (RA) 9970,

procuring entities have the option to engage the services of
private printers for their printing and publication
expenditures, subject to public bidding in accordance with
RA 9184 and pertinent accounting and auditing rules and
regulations;
2. However, printing of accountable forms and sensitive high

quality/volume printing requirements shall only be
undertaken by recognized government printers, namely
Bangko Sentral ng Pilipinas, National Printing Office and
APO Production Unit. (Resolution No. 05-2010, GPPB)
Inspection of Accountable Forms Received from the

National Printing Office or Accredited Printers –
1. Upon receipt of the accountable forms from the National

Printing Office or accredited printers, the Local Treasurer
shall carefully examine each book or pad.
2. COA shall examine the book or pad of accountable forms

submitted. If found that the defects are due to error in
binding and printing, COA shall make proper notations on
the book or pad or on the defective sheet itself.
Use of Computer-Generated Official Receipts and Other

Accountable Forms –
The use by local government units of computer-generated

official receipts and other accountable forms in lieu of the
printed forms by the National Printing Office or accredited
printers shall require the prior approval of the Commission on
Audit (Sec. 68(2), P.D. No. 1445).This is to ensure that all the
pertinent information and control features are substantially
included on the face of the computer-generated forms.
Permanent Record book for Accountable Forms
The Local Treasurers are accountable for receipts, stamps and

other accountable forms in their possession or in the hands of
deputies and other employees entrusted therewith, shall keep
adequate permanent record books which should show, the
whereabouts of the accountable forms with which they are
charged, the name and title of the officer or the employee to
whom such forms have been given, and the evidence of the
receipt and subsequent sale and issuance of the same.
Upon receipt of accountable forms in the Treasury Office, the

Accountable Forms shall be verified and entered immediately
in the Permanent Record Book for Accountable Forms.
L) Content of the Permanent Record Book
1. The record book shall contain the following column headings:
1.1 Booklet Number/Quantity (in case of official receipt

without money value)
1.2 Serial Number/Total Value (in case of official receipt
with money value)
1.3 Name (in print) of Accountable Officer to whom issued
1.4 Signature of Accountable Officer
1.5 Date Received by Accountable Officer
1.6 Date reported totally used, sold, issued
• The columns shall be utilized for recording consecutively

all accountable forms in the order they are received in the
Office of the Treasurer concerned
• In the recording for each batch of accountable forms
purchased or received, the data shall be indicated as
heading;
 invoice number and date
 date the accountable forms were received,
 quantity,
 inclusive serial number
 total value of the accountable forms.
Requisition of Accountable Forms by
Collectors/Tellers.
• Collectors/Tellers shall file requisitions of accountable forms

for their use with the treasurer through a Requisition and
Issue Voucher.
• They shall be accountable for all accountable forms issued to

them
• There shall be no transfer of accountable forms between

collectors/tellers
• Accountable Forms shall be issued to bonded officers only in

sufficient quantities not to exceed three (3) month’s use.
SUBMISSION TO COA AUDITOR OF OBSOLETE, SPOILED
AND CANCELLED ACCOUNTABLE FORMS
• Accountable Officers shall submit to the COA Unit Auditor all

obsolete, spoiled, and cancelled official receipts and other
accountable forms for inspection and destruction.
• Under no circumstances shall accountable officers destroy

on their own accountable forms of any description, then be
relieved from responsibility.
• In case of obsolete accountable forms with or without fixed

money value, the accountable officer shall submit to the
COA Unit Auditor an inventory in four copies
The accountable officer shall submit an affidavit in 4 copies

stating:
• The denomination and total value of the forms
• The reason for the damage and the circumstance

surrounding the cause of such damage or the reason
for canceling the form, and the name of the officer or
employee responsible
• The COA Unit Auditor or his authorized representative shall

promptly inspect and destroy the accountable forms, and
make a certificate of such actions below the affidavit or
inventory.
• The auditor shall return the affidavit or inventory, with his
certificate of destruction, to the accountable officer who will
drop the accountable forms destroyed from his Monthly
Report of Accountability
• The accountable officer shall attach one copy of the
certified affidavit or inventory to the Monthly Report of
Accountability and retain the other copy for file. The COA
Unit Auditor shall keep the original copy
• In the case of spoiled or cancelled accountable forms which

do not bear fixed money value, such as printed official
receipts, etc. the accountable officer shall submit the
cancelled original and duplicate copies with the Report of
Collections and Deposit with such cancellation properly
noted on the record or abstract of collections concerned.
• Where the damage or cancellation of accountable forms is
due to negligence, or lack of proper care, appropriate
proceedings will be instituted against those responsible as
the facts in each case may warrant.
LOSS OF ACCOUNTABLE FORMS AND RELIEF FROM
ACCOUNTABILITY
• Any loss of accountable forms in the custody of

collecting and property officers shall immediately
be reported by the accountable officers
concerned to the Head of the agency.
• The Head of Agency shall at once issue a circular

or notice of such loss for the information and
guidance of all concerned to prevent the possible
fraudulent use of such accountable forms
ACCOUNTABILITY
• The notice to be issued shall specify the kind, quantity

and inclusive serial numbers of the lost accountable
forms and the place or placed where, and approximate
date or dates when the same were lost.
• The circular or notice of loss shall be issued only for

accountable forms generally used in all government
agencies.
• In case of accountable forms specially designed for the

exclusive use of an agency, the circularization shall be
confined within the agency.
ACCOUNTABILITY
• The head of an agency is not precluded from undertaking

other measures which may prevent the fraudulent use of
the lost accountable forms, like the publication of such
loss in newspapers of general circulation.
• Compliance with the foregoing provisions shall be one of

the requirements in the request for relief from
accountability for the loss of accountable forms
ACCOUNTABILITY
• When a loss of government funds occur while they are in

transit or the loss is caused by fire, theft, or other casualty
or force majeure, the officer accountable or having
custody thereof shall immediately notify the Commission
on Audit or the auditor concerned, and within thirty days
or such longer period as the Commission or auditor may
in the particular case allow, shall present his application
for relief, with the available supporting evidence.
RELIEF FROM ACCOUNTABILITY
• Whenever warranted by the evidence credit for

the loss shall be allowed
• An officer who fails to comply with this

requirement shall not be relieved of liability or
allowed credit for any such loss in the settlement
of accounts. (Sec. 73, PD1445)
INVENTORY AND REPORTING OF ACCOUNTABLE FORMS
• Accountable Officers shall render a report to the COA Unit

Auditor on their accountability for accountable forms at
least once a month in the prescribed form.
• Such report shall also be prepared in case of transfer of
office or accountability by the accountable officer.
• The report shall include, among others, the name/type,
quantity and serial number and/or value of the accountable
forms as of last month/period, the forms received and
issued during the month/period and the balances as of end
of month/period.
INVENTORY AND REPORTING OF ACCOUNTABLE FORMS
• Treasurers, collectors/tellers and other accountable

officers shall render their Report of Accountability for
Accountable Form (RAAF) monthly.
• The treasurer shall consolidate the RAAFs and submit a

Consolidated RAAF accompanied by the individual
RAAF to concerned COA Auditor not later than the fifth
day of the ensuing month. (COA Circular No. 2002-002
dated June 18, 2002)
OTHER REVENUE SOURCES AND
FUND TRANSFERS TO LGUs
Ms. JULIET G. QUINSAAT

City Treasurer
Angeles City
INCOME FROM OTHER REVENUES (EXTERNAL SOURCES)
Internal Revenue Allotment (IRA).
The Internal Revenue Allotment (IRA) refers to the shares of

LGUs from the national internal revenue taxes (NIRT)
equivalent to 40% of the total annual revenue collection of the
3rd year preceding the current fiscal year.
(Section 284, RA No. 7160, Article 378 [c], IRR of RA No. 7160)
National internal revenue taxes include the following:
• Income tax
• Estate tax and donor’s tax
• Value-added tax
• Other percentage taxes
• Taxes imposed by special laws, such as travel tax.
The allocation of the share of each LGU shall be released directly,

without need of any further action, to the provincial, city, municipal or
barangay treasurer, as the case may be. The IRA shall not be subject
to any lien or holdback that may be imposed by the national
government for whatever purpose. (Section 286, RA No. 7160; Article No.
383 [c], IRR of RA No. 7160)
Beginning FY 2007, the IRA is not only automatically released but

treated as an automatic appropriation (Section 4 RA No. 9358, FY 2006
Supplemental Appropriations). This means that the IRA need not pass
through congressional approval before it is released to LGUs. This
provision of the law makes the release of IRA shares more predictable
and allows LGUs to plan/program the use of their IRA fund more
effectively.

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

Code of 1991, Thirty Percent (30%)
2. On the second year, Thirty-Five Percent (35%) and
3. On the third year and thereafter, Forty Percent (40%)(Sec.

284, LGC)
In the event that an unmanageable public sector deficit is incurred

by the national government, the Secretary of Finance, the
Secretary of the Interior and Local Government and the Secretary
of Budget and Management shall submit to the President of the
Philippines, a joint recommendation that will institute necessary
adjustments in the IRA of LGUs.
xxx
- the President of the Philippines shall authorize the
necessary adjustments of the total IRA to be distributed
among the LGUs for the given year, provided that in no
case shall the adjusted amount be less than thirty
percent (30%) of the national internal revenue tax
collections of the third fiscal year preceding the current
fiscal year during which the reduction is to be made.
Allocation to Local Government Units. –The total annual IRA due

the LGUs shall be allocated among provinces, cities,
municipalities and barangays as follows:
1. General Allocation. – Distribution of Shares
1.1 Share of All Provinces -Twenty-Three Percent (23%)
1.2 Share of All Cities - Twenty-Three Percent (23%)
1.3 Share of All Municipalities - Thirty-Four Percent (34%)
1.4 Share of All Barangays - Twenty Percent (20%)

2. Share of Each Province, City and Municipality.– The share

of each province, city, and municipality shall be determined
on the basis of the following distribution formula:
2.1 Population - Fifty Percent (50%)
2.2 Land Area - Twenty-Five Percent (25%)
2.3 Equal Sharing -Twenty-Five Percent (25%)

3. Share of Each Barangay. –
3.1 Every barangay with a population of not less than one

hundred (100) inhabitants shall be entitled to an IRA of
not less than Eighty Thousand Pesos (₱80,000.00) per
annum chargeable against the twenty percent (20%)
share of the barangay from the total IRA.
Section 286 of R.A. 7160 provides that the share of each LGU
in the IRA shall be automatically released without need of
any further action and without lien or holdback
The IRA share based on population is computed using the population data
from a census of population conducted by the National Statistics Office (NSO)
every10 years as contained in a Presidential Proclamation Order.
(UBOM 2008 Edition)
The IRA share based on land area in computed using the consolidated
masterlist of land area prepared by the Land Management Bureau (LMB) of
the Department of Environment and Natural Resources (DENR) every three
(3) years.
The allocation of the individual share in the case of barangays, shall be

P80,000 for each barangay with a population of not less than 100 inhabitants.
The balance to be distributed shall be based on population (60%) and equal
sharing.
Internal Revenue Allotment (IRA)
Use of the Fund
• Pursuant to Section 17 of RA No. 7160, the fund shall be used

to provide for basic services and facilities, particularly those
which have been devolved by the National Government.
• Section 287, RA No. 7160, and Article 383 (b), IRR of RA No.
7160 direct LGUs to set aside no less than 20% of their IRA to
fund development projects as identified in the LGUs’
development plans.
• The DBM-DILG Joint Memorandum Circular No. 2011-1 dated

April 13, 2011, prescribes the specific use of the 20%
Development Fund for the following development projects:
Devolved Personal Services

In the first year of effectivity of the Code, LGU shall receive the
amount equivalent to the cost of the devolved personal services.
Such amount shall be in addition to the 30% IRA.
Basic Services and Facilities

Affected NGAs
• DA
• DPWH
• DECS
• DSWD
• DENR
• DOT
• DOH
• DOTC
Use of the Fund – (Social Development)
 Construction or rehabilitation of health centers, rural health units or hospitals, and

purchase of medical equipment;
 Construction or rehabilitation of local government-owned potable water supply
system;
 Establishment or rehabilitation of Manpower Development Centers;
 Construction or rehabilitation of evacuation centers;
 Purchase or repair of area-wide calamity related alarm or warning system;
 Rehabilitation of cultural/historical sites;
 Purchase or repair of appropriate calamity-related rescue operations equipment such
as inflatable boats, breathing apparatus, extraction tools, safe line rescue ropes, fire
extinguishers, chainsaws, two (2) way handheld radios and the like;
 Purchase and development of land for the relocation of informal settlers and
relocation of victims of calamities;
 Construction or rehabilitation of facilities such as multi-purpose hall intended to
cater out-of-school youths, women, senior citizens, minors, displaced families,
indigenous people and differently-abled persons; and
 Installation and maintenance of street lighting system except payment of electric
bills.
Use of the Fund – (Economic Development)
Construction or rehabilitation of communal irrigation or water impounding

system and purchase of post-harvest facilities such as farm or hand tractor
with trailer, thresher and mechanical driers;
Construction or rehabilitation of local roads or bridges and purchase of

appropriate engineering equipment such as dump trucks, graders and pay
loaders;
Capital expenditures related to the implementation of livelihood or

entrepreneurship/local economic development projects; and
Amortization of loans used to finance development projects cited in this

Joint Circular, subject to the 20% debt service cap.
Use of the Fund – (Environmental Management)
Reforestation and urban greening;
Construction or rehabilitation of sanitary landfills, material recovery

facilities and purchase of garbage trucks and related equipment;
Implementation of flood and erosion control projects such as

rehabilitation and construction of drainage systems, de-silting of rivers,
de-clogging of canals; and
Other environmental management projects that promote air and water

quality, as well as productivity of the coastal or freshwater habitat,
agricultural land and forest land.
Use of the Fund – (Expenditure Items Not Covered )
The following expense items that are not related to and/or not
connected with the implementation of development projects, programs
and activities shall not be paid out of the 20% development fund:
Administrative expenses such as cash gifts, bonuses, food allowance,

medical assistance, uniforms, supplies, meetings, communication, water
and light, petroleum products and the like;
Salaries, wages or overtime pay;
Traveling expenses, whether domestic or foreign;
Registration or participation fees in training, seminars, conferences or
conventions;
Construction, repair or refinishing of administrative offices;
Purchase of administrative office furniture, fixtures, equipment or
appliances; and
Purchase, maintenance or repair of motor vehicles or motor cycles.
Fund Release Procedures
The release of LGU share from the IRA follows these procedures:
For budget preparation purposes, the BIR submits to DBM a certification of the
LGU share from NIRT equivalent to 40% of the total annual revenue collection
of the 3rd year preceding the current fiscal year, as reconciled with the BTr.
The DBM programs the equivalent amount of IRA in the National Expenditure
Program. Based on the BIR certification and codal formula, the DBM computes
the individual share of each LGU, and informs the beneficiary LGUs of their
respective IRA shares through a Local Budget Memorandum issued not later
than June 15 of the preceding year for the purpose.
At the beginning of the year, the DBM prepares and releases comprehensively
the corresponding release documents to the Bureau of the Treasury (BTr).
The BTr, in turn, downloads the fund through the issuance of Authority to Debit
Account to the Authorized Government Servicing Banks (AGSBs), which credits
the shares of the beneficiary LGUs to their respective accounts.
Share in the Proceeds of the Tobacco Excise Tax
(R. A. No. 7171) .
a) The national government shall extend special support to the

farmers of the Virginia tobacco-producing provinces in terms of
financial assistance for developmental projects to be
implemented by the local governments of the provinces
concerned.
b) The special support to the Virginia tobacco-producing

provinces shall be utilized to advance the self-reliance of the
tobacco farmers through:
1. Cooperative projects that will enhance better quality of

products, increase productivity, guarantee the market and
as a whole increase farmers' income;
(R. A. No. 7171) .
2. Livelihood projects particularly the development of

alternative farming systems to enhance farmers' income;
3. Agro industrial projects that will enable tobacco farmers in

the Virginia tobacco-producing provinces to be involved in
the management and subsequent ownership of these
projects such as post-harvest and secondary processing
like cigarette manufacturing and by-product utilization; and
4. Infrastructure projects such as farm-to-market roads.
c) The financial support given by the national government for the

beneficiary provinces shall be constituted and collected from
the proceeds of fifteen percent (15%) of the excise taxes on
locally manufactured Virginia-type of cigarettes.
(R. A. No. 7171) .
d) The funds allotted shall be divided among the beneficiary

provinces pro rata according to the volume of Virginia tobacco
production.
e) Provinces producing Virginia tobacco shall be the beneficiary

provinces: Provided, however, That, to qualify as beneficiary, a
province must have an average annual production of Virginia
leaf tobacco in an amount not less than one million kilos:
Provided, further, That the Department of Budget and
Management shall each year determine the beneficiary
provinces and their computed share of the funds, referring to
the National Tobacco Administration (NTA) records of tobacco
acceptances, at the tobacco trading centers for the immediate
past year.
Share in the Proceeds from the Development and Utilization of the
National Wealth
a) Local government units shall have an equitable share in the

proceeds derived from the utilization and development of the
national wealth within their respective areas, including sharing
the same with the inhabitants by way of direct benefits. (Sec.
289, LGC)
b) The term national wealth shall mean all natural resources

situated within the Philippine territorial jurisdiction including
lands of public domain, waters, minerals, coal, petroleum,
mineral oils, potential energy forces, gas and oil deposits,
forest products, wildlife, flora and fauna, fishery and aquatic
resources and all quarry products. (Art. 386, IRR implementing
Sec. 289, LGC)
National Wealth
c) Amount of Share of Local Government Units. – LGUs shall, in

addition to the IRA, have a share of forty percent (40%) of the
gross collection derived by the national government from the
preceding fiscal year from the following:
1. Mining taxes, royalties, forestry and fishery charges, and

such other taxes, fees, or charges, including related
surcharges, interests, or fine, and from its share in any co-
production, joint venture or production sharing agreement
in the utilization and development of the national wealth
within their territorial jurisdiction.
National Wealth
2. Administrative charges enumerated herein accruing to the

National Government whether collected by the National
Government collecting agencies or, in certain cases, by LGUs.
3. Proceeds from the development and utilization of national

wealth where the local government actually collects and
automatically retains its share of at least forty percent (40%) of
such proceeds shall not form part of the revenue base in the
computation of the forty percent (40%) share.
(Art. 387, IRR implementing Sec. 290, LGC)
National Wealth
d) Share of Local Government Units from any Government Agency or

Government-Owned or Controlled Corporation. –Local government
units shall have a share based on the preceding fiscal year from the
proceeds derived by any government agency or government-owned
or controlled-corporation engaged in the utilization and development
of the national wealth based on the following formula whichever will
produce a higher share for the local government unit:
1. One percent (1%) of the gross sales or receipts of the preceding

calendar year; or
2. Forty percent (40%) of the mining taxes, royalties, forestry and

fishery charges and such other taxes, fees or charges, including
related surcharges, interests, or fines the government agency or
government-owned or controlled-corporation would have paid if it
were not otherwise exempt. (Sec. 291, LGC)
Shares from National Wealth
These following are the four (4) types of national wealth with the
corresponding collecting agency:
Particulars Collecting Agency
Department of Environment and

Forest Charges
Natural Resources (DENR) – OSEC
DENR – Mines and Geo-Sciences

Royalties and Mineral Reservation
Bureau
Energy Production Resources Department of Energy
Mining Taxes Bureau of Internal Revenue

Allocation of Shares. –The share in the resources of local government

units from any government agency or government-owned or controlled-
corporations shall be distributed in the following manner:
(Where the natural resources are located in the province)

Province – Twenty Percent (20%)
Component City/Municipality – Forty-Five Percent (45%)
Barangay – Thirty-Five Percent (35%)
(Where the natural resources are located in a highly urbanized or

independent component city)
City – Sixty-Five Percent (65%)
Barangay – Thirty-Five Percent (35%)
However, where natural resources are located in two(2) or more cities,

the allocation of shares shall be computed on the basis of population
(70%) and land area (30%)
National Wealth
f) Computation and Remittance of Shares of Local Government

Units in the Utilization and Development of National Wealth. –
The computation and remittance of the shares of LGUs from
the utilization and development of national wealth shall be in
accordance with the following procedures:
1. The computation of the forty percent (40%) share of each

LGU in the proceeds from the development and utilization
of national wealth from the preceding year, indicating the
corresponding share of each province, city, municipality and
barangay where the national wealth is being developed
and/or utilized, shall be submitted by the revenue collecting
agencies to the DBM not later than March 15 of each
ensuing year.
Share in the Proceeds from the Development and Utilization of
the National Wealth
2. The allotment representing the share of each LGU shall

be released without need of any further action, directly to
the provincial, city, municipal, or barangay treasurer, as
the case may be, on a quarterly basis within five (5) days
after the end of each quarter, and which shall not be
subject to any lien or holdback that may be imposed by
the national government. (Art. 390 (a) and (h), IRR
implementing Sec. 293, LGC)
National Wealth
g) Remittance of the Share of Local Government Units from Government

Agencies and Government-Owned or Controlled Corporations. –
Share of LGUs from the proceeds derived by any government agency
or GOCC engaged in the utilization and development of national
wealth shall be directly remitted by such corporations to the provincial,
city, municipal or barangay treasurer concerned within five (5) days
after the end of each quarter. Within three (3) days from the date of
remittance, the agency or GOCC concerned shall furnish the
Treasurer of the Philippines with a copy of the remittance advice. (Art.
390 (c), IRR implementing Sec. 293, LGC)
National Wealth
h) Mandatory Appropriation for Local Development and Livelihood

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

local development and livelihood projects of the recipient LGU.
In the case of proceeds derived from the development and utilization

of hydrothermal, geothermal and other sources of energy, 80% of the
proceeds shall be applied solely to lower the cost of electricity in the
LGU where such source of energy is located. (Section 294, RA No. 7160;
Article 391, IRR of RA No. 7160)
In the case of any government agency or government-owned or
controlled corporations engaged in the utilization and development of
the national wealth, such share shall be directly remitted by the
government agency/government-owned or controlled corporation
concerned to the provincial, city, municipal, or barangay treasurer
within five (5) days after the end of each quarter. (Section 293, RA No.
7160; Article 390 [b], IRR of RA No. 7160)

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

2006, DOF-DBM-DILG-DENR JC No. 2009-1 dated March 31, 2009,
DENR-DOF-DBM-DILG JC No. 2010-1 dated June 25, 2010, and
DOF-DBM JC 2016-1 dated January 4, 2016 prescribe the guidelines
and procedures for the release of LGU shares in the proceeds from
the utilization and development of national wealth, summarized
hereunder:
• Forest Charges
• Royalties from Mineral Reservation
• Mining Taxes, and
• Energy Source Production

Fund Release Procedures of LGU Shares in the proceeds from Forest Charges, Royalties from Mineral
Reservation, Mining Taxes, and Energy Source Production
The collecting agencies, i.e., Bureau of Internal Revenue (BIR), the Department
of Environment and Natural Resources (DENR), DENR-Mines and Geosciences
Bureau (MGB), and the Department of Energy submit to DBM a certification of
the projected total shares of LGUs based on the immediately preceding year’s
collections as basis for provision of appropriations cover.
During budget execution, the collecting agencies and the BTr submit to DBM a
reconciled certification on actual collections and actual remittances from the
immediately preceding year.
Based on the reconciled certification/s submitted the collecting agencies and

BTr, the DBM prepares and releases the corresponding release documents to
the BTr
Account to the AGSBs, which credits the shares of the beneficiary LGUs to their
respective accounts.
Other Special Shares of Local Government Units from National
Taxes
Share in Special Economic Zones
 Share in Special Economic Zones. – Businesses and

enterprises in Special Economic Zones shall pay gross income
tax of five percent (5%) in lieu of all national and local taxes.
The equivalent of three percent (3%) shall accrue to the
national government and one percent (1%) to the host local
government unit. The remaining equivalent of one percent (1%)
is to be distributed to the areas contiguous to the economic
zone. (R.A. No. 7227)
Taxes
 Local government units within the Cagayan Special Economic

Zone (CSEZ) are entitled to a share in the five percent (5%)
final tax on Gross Income Earned (GIE) paid by registered
enterprises within the CSEZ, as follows:
• One percent (1%) to the Province of Cagayan; and
• One-half percent (1/2%) to be shared by the municipalities

affected by the declaration of the Zone in proportion to their
income from business activities within the Zone
• The other shares of LGUs in ECOZONEs [such as those

under RA No. 7227] are already remitted to the benificiary
LGUs pursuant to RA No. 9400
Taxes
Use of the Fund
The shares of LGUs from the final tax on GIE paid by

registered enterprises within the CSEZ shall be used for
local development projects.
The following procedures are applied in releasing the shares of LGUs in the gross income taxes paid by all
businesses and enterprises within the ECOZONES:
For budget preparation purposes, the BIR submits to the DBM on or before
March 15 of every year a certification on the total computed LGU shares based
on the actual revenue collections corresponding to thirty percent (30%) of the
total final tax collected on GIE for the base year, which is two (2) years
immediately preceding the current year.
During budget execution, the BIR and BTr submit reconciled certification/s of
actual collections and remittances to the DBM.
Based on the reconciled certification/s submitted by the BIR and BTr, the DBM
prepares and releases the corresponding release documents to the BTr
Account to the AGSBs, which credits the shares of the beneficiary LGUs to their
respective accounts.
Taxes
 Share from Excess Collection in Value Added Tax (VAT).–(a) In
addition to the Internal Revenue Allotment, fifty percent (50%)
of the national taxes collected by the Bureau of Internal
Revenue (BIR) under Sections 106 and 108 of the National
Internal Revenue Code (NIRC) of 1997 (formerly Sections 100,
101 and 102 of the NIRC of 1977) in excess of the increase in
collection for the immediately preceding year shall be
distributed as follows:
a) Twenty percent (20%) shall accrue to the city or

municipality where such taxes are collected and shall be
allocated in accordance with Section 150 of R. A. No. 7160
or the Local Government Code of 1991; and
b) Eighty percent (80%) shall accrue to the national

government.
Taxes
c) Local Government Units' share in the Incremental Collection

from VAT pursuant to R. A. No. 7643, shall be allocated among
local government units entitled to such share in accordance
with Section 150 of the Local Government Code of 1991, to wit:
1. If VAT is paid by manufacturers, producers without branch

or sales outlets: One hundred percent (100%) to the city or
municipality where the business is located;
Taxes
2. If VAT is paid by manufacturers, producers, with factories,

project offices, plantations and plants:
2.1 Thirty percent (30%) to the city or municipality where

the principal office is located;
2.2 Seventy percent (70%) to the city or municipality where

the factory, project offices, plant or plantation is located.
Taxes
3. If VAT is paid by manufacturers, producers, exporters

where the plantation is located at a place other than the
place where the factory is located:

3.2 Forty two percent (42%) to the city or municipality

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

where the plantation is located.
.
Taxes
4. If VAT is paid by the manufacturers, producers, exporters

and has two (2) or more factories, plants, and plantations:

4.2 Seventy percent {70%) shall be prorated among the

localities where the factories, project offices, plants, and
plantations are located.
.
Taxes
d) The LGUs' share shall be released directly to the LGUs

concerned subject to the approval of special budget
pursuant to Section 35, Chapter 5, Book VI of E. O. No. 292
duly supported by the certification of actual VAT collections
and remittances under Sections 106 and 108 of the NIRC
of 1997 by the BIR. (Sec. 2, R. A. No. 7643, implemented
by DBM-DOF-DILG Joint Circular No. 1-02, February 6,
2002).
Extraordinary Receipts from External Sources
a) Collections derived from the repayment of loans and

advances made by the government as well as from other
non-recurring sources.
b) Income which does not regularly accrue to the government,

the collection for which is indefinite or does not depend
entirely on the authority of the government.
c) Foreign and domestic aid or grant provided for the LGU in

the form of money and/or materials
d) Extraordinary Receipts such as donations, grants, aids,

loans and borrowings.
FUND TRANSFERS
Transfer of Funds to Implementing Agencies
Fund transfers should be properly taken up in the books of

both agencies, used only for the purpose intended, and
properly accounted and reported (COA Circular No. 90-013
dated December 13, 1994)
FUND TRANSFERS
Documentary Requirements
Transfer
Source Agency:
• Copy of MOA/Trust Agreement

• Copy of Approved Program of Work (for infrastructure
project)
• Approved Project Expenditures or Estimated Expenses
indicating the project objective and expected output (for
other projects)
• For GOCCs, Board Resolution ratifying the MOA in case
of transfers not incorporated in the Corporate Operating
Budget and/or beyond the signing authority of the Agency
Head
FUND TRANSFERS
• For LGUs, asDocumentary

clarified under Requirements
COA Memorandum No. 2010-014
dated April 22, 2010, authorization by local sanggunian for the
Local Chief Executive to enter into contract in case of the
following:
o In the case of a reenacted budget:
- For new contracts entered into by the local chief executive for
contractual obligations included in the previous year’s annual and
supplemental budget
o In the case of the regularly enacted budget:

- For projects described in generic terms, such as infrastructure
projects, inter-municipal waterworks, drainage and sewerage, flood
control, irrigation system projects, reclamation projects or roads and
bridges
- For purchase of goods and services which are neither specified nor
encompassed within the regular personal services and maintenance
operating expenses
FUND TRANSFERS
Documentary Requirements
• Certification by the Accountant that funds previously

transferred to the Implementing Agency (IA) has been
liquidated, post audited and accounted for in the books
• Copy of the OR issued by the IA to the Source Agency

acknowledging receipt of funds transferred (for post-audit
activities)
FUND TRANSFERS
Implementation and Liquidation

Implementing Agency:
• Necessary supporting documents depending on the nature of

transactions
• Copy of MOA/Trust Agreement
• Copy of OR upon receipt of finds transferred
• Copy of OR issued by the Source Agency evidencing refund of

unexpended/unutilized balance of fund transfer
FUND TRANSFERS
Liquidation
Source Agency:
• Report of Checks Issued and Report of Disbursements

certified correct by the Accountant, approved by the Head of
the IA, and duly audited by the Auditor of the IA
• Copy of Credit Notice issued by the Auditor of the IA
• Copy of OR issued for the refund of unexpended/unutilized

balance of fund transferred
Local Fiscal Management
and
Fund Utilization
Concept of Funds
Introduction
 In line with the increased fiscal responsibility pursuant to

good governance of local funds, it is incumbent upon the
Local Treasurers and other fiscal officers to embrace and
apply effective fund management practices benchmarked
from the private sector in the daily operations of local
government units.
Concept of Funds
Introduction
 Governance in the local context is how decisions are made and

implemented at the local level and by whom.
 Good governance is viewed as the exercise of economic, political

and administrative authority to manage a country's/local
government's affairs at all levels.
It comprises mechanisms, processes, and institutions through which

citizens and groups articulate their interests, exercise their legal
rights, meet their obligations, and mediate their differences.
 Good governance is about efficiency in the management of public
funds, demanding high standards of integrity, transparency and
accountability. Thus, Local Treasurers need to continuously update
their knowledge and skills on their specific area of good governance,
which is fund or cash management.
Concept of Funds
Introduction
 Fund
A sum of money or other resources set aside for the purpose of
carrying out specific activities or attaining certain objectives in
accordance with special regulations, restrictions or limitations, and
constitutes an independent fiscal and accounting entity.
[Sec. 3(1), PD1445; Sec. 2(1), Title I(B), Bk V, 1987 Adm. Code; Sec. 306(h), RA 7160]
 Government Funds
Government funds include public moneys of every sort and other
resources pertaining to any agency of the government.
[Sec. 3(2), PD 1445; Sec. 2(2), Title I(B), Bk V, 1987 Adm. Code]
Concept of Funds
Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445)
SECTION 305. Fundamental Principles. - The financial affairs, transactions,

and operations of local government units shall be governed by the following
fundamental principles:
a) No money shall be paid out of the local treasury except in pursuance
of an appropriations ordinance or law;
b) Local government funds and monies shall be spent solely for public
purposes;
c) Local revenue is generated only from sources expressly authorized
by law or ordinance, and collection thereof shall at all times be
acknowledged properly;
d) All monies officially received by a local government officer in any
capacity or on any occasion shall be accounted for as local funds,
unless otherwise provided by law;
e) Trust funds in the local treasury shall not be paid out except in
fulfillment of the purpose for which the trust was created or the funds
received;
f) Every officer of the local government unit whose duties permit or
require the possession or custody of local funds shall be properly
Concept of Funds
Section 305 LGC (Sec. 138 GAAM vol. 1; Sec. 4 PD 1445)
g. Local governments shall formulate sound financial plans, and the

local budgets shall be based on functions, activities, and projects, in
terms of expected results;
h. Local budget plans and goals shall, as far as practicable, be
harmonized with national development plans, goals, and strategies in
order to optimize the utilization of resources and to avoid duplication
in the use of fiscal and physical resources;
i. Local budgets shall operationalize approved local development plans;
j. Local government units shall ensure that their respective budgets
incorporate the requirements of their component units and provide
for equitable allocation of resources among these component units;
k. National planning shall be based on local planning to ensure that the
needs and aspirations of the people as articulated by the local
government units in their respective local development plans are
considered in the formulation of budgets of national line agencies or
offices;
l. Fiscal responsibility shall be shared by all those exercising authority
over the financial affairs, transactions, and operations of the local
government units; and
Types of LGU Funds
Classification and Basic Maintenance of Funds
Government funds are generally classified into:
1. Local Funds (General Fund)
The General fund shall consist of monies and resources of the

local government which are available for the payment of
expenditures, obligations or purposes not specifically declared
by law as accruing and chargeable to, or payable from, any
other fund. (Sec. 308, RA 7160).
Types of LGU Funds
2. Special Funds
a. Special Education Funds (SEF)

SEF shall consist of the respective shares of provinces, cities,
municipalities and barangays in the proceeds of the additional
tax on real property to be appropriated for purposes prescribed
in Section 272 of the Local Government Code.
b. Trust Funds
Trust funds shall consist of private and public monies which
have officially come into the possession of the local
government or of a local government official trustee, agent or
administrator, or fulfillment of some obligation. A trust fund
shall only be used for the specific purpose for which it was
created or for which it came into the possession of the local
government unit (Sec. 309, RA 7160).
Types of LGU Funds
Special Accounts in the General Fund of the Local Government Units

caters to the following:
• Public utilities and other economic enterprises;

• Loans, interests, bond issues, and other contributions for specific
purposes; and
• Development projects funded from the share of the local government
unit concerned in the internal revenue allotment and such other special
accounts which may be created by law or ordinance
Profits or income derived from the operation of pubblic utilities and other
economic enterprises, after deductions for the cosdt of improvement, repair
and other related expenses of the public utility or economic enterprise
concerned, shall first be applied for the return of the advances or loans
made therefor. Any excess shall form part of the general fund of the local
government unit concerned (Sec. 313, RA 7160)
Fundamental Principles Governing Utilization of Local Funds
Basic Maintenance of Funds
• Separation of Books and Depository Accounts
Local accountants and treasurers shall maintain separate books

and depository accounts, respectively, for each fund in their
custody or under such rules and regulations as the Commission
on Audit may prescribe.
Legal Basis: (Sec. 310, LGC)

• Depository Accounts
Local treasurers shall maintain depository accounts in the of

their respective local government units with banks, preferably
government-owned, located in or nearest to their respective
areas of jurisdiction. Earnings of each depository account shall
accrue exclusively thereto.
Legal Basis:(Sec. 311, LGC)

• Separation of Personal Money from Public Funds.
Local treasurers and other accountable officers shall keep

personal monies separate and distinct from local public funds in
their custody and shall not make profit out of public money or
otherwise apply the same to any use not authorized by law or
ordinance.
Legal Basis:(Sec. 312, LGC)

DISBURSEMENT OF LOCAL FUNDS
General Principles Governing Fund Disbursements
 The Official Fiscal Year

The Official Fiscal Year of local government units shall be the period
beginning with the first (1st) day of January and ending with the thirty-first (31st) day of
December of the same year.
 Disbursements in Accordance with Annual or Supplemental

Appropriations
Disbursements shall be made in accordance with the ordinance authorizing the
annual or supplemental appropriations without prior approval of the sanggunian
concerned. Within 30 days after the close of each month, the local accountant
shall furnish the sanggunian with such financial, statements as prescribed by the
COA. In the case of the year-end statement of accounts, the period shall be 60
days after the thirty-first (31st) of December.
 Use of Appropriated Funds and Savings

Funds shall be available exclusively for the specific purpose for which they have
been appropriated. No ordinance shall be passed authorizing any transfer of
appropriations from one item to another. However, the local chief executive or
the presiding officer of the sanggunian concerned may, by ordinance be
authorized to augment any item in the approved annual budget for their
respective offices from savings in other items within the same expense class of
their respective appropriations.
 Restriction Upon Limit of Disbursements
Disbursements in accordance with appropriations in the approved annual budget
may be made from any local fund in the custody of the treasurer, but the total
disbursements from any local fund shall in no case exceed fifty percent (50%) of
the uncollected estimated revenue accruing to such local fund in addition to the
actual collections: Provided, however, That no cash overdraft in any local fund
shall be incurred at the end of the fiscal year.
 Prohibitions on Disbursements:
• Advance Payments - No money shall be paid on account of any
contract under which no services have been rendered or goods
delivered
• Expenditures for Religious or Private Purposes - No public
money or property shall be appropriated or applied for religious or
private purposes.
• Expenses for Reception and Entertainment - No money
shall be appropriated, used, or paid for entertainment or reception
except to the extent of the representation allowances authorized by law
or for the reception of visiting dignitaries of foreign governments or
foreign missions, or when expressly authorized by the President in
specific cases.
Basic Requirements for Disbursements from the General Fund and
Special Funds.
 Certification in the Disbursement Voucher by the Local Accountant
 Certification in the Disbursement Voucher by the Local Treasurer
 Approval by the Local Chief Executive, except for regularly recurring

administrative expenses
 The Disbursement Voucher for expenditures appropriated for the operation

of the sanggunian shall be approved by the Vice-Governor or the Vice-
Mayor of the province/city or municipality, as the case may be.
 The disbursements for Special Education Fund (SEF) shall be approved by

the Local Chief Executive as Chairperson of the Local School Board
 Trust Funds - should be utilized strictly in compliance with the provisions of

the Memorandum of Agreement (MOA), Funds Received from these sources
shall be maintained in separate bank accounts and shall never be
commingled with other funds of the LGU.
Modes of Disbursement
 Disbursements covered by Disbursement Vouchers and/or

Payrolls are usually paid either by check or in cash. Other
modes of disbursements include direct payments and/or bank
transfers. Ideally cash should be handled under the general
principles of the Imprest System where all payments must be
made by check and only payments in small amounts may be
made in cash through the petty cash fund.
(Sec. 172, Book III, Vol. I, GAAM)
Disbursement by Checks
 Upon receipt of the Disbursement Voucher for payment, the

Local Treasurer shall verify the propriety of the certifications
and approvals required therein. If complete, the Local Treasurer
shall then draw a check in payment therefor.
Preparation and Signing of Checks
 Checks shall be prepared and signed by the Local Treasurer and

countersigned by the Local Administrator (NGAs for LGUs, Sec 40)
 In case of temporary absence or incapacity of the aforesaid officials

these duties shall devolve upon their immediate assistants. (Sec. 345,
LGC; NGAs for LGUs, Sec. 40)
 In the case of municipalities where no Administrator has been

appointed, checks shall be countersigned by the Municipal Mayor. In
case, however, of expenditures for the operation of the sanggunian,
checks drawn thereon shall be countersigned by the provincial Vice
Governor, the city Vice Mayor, as the case may be. (Sec. 43, COA
Circular No. 92-382; NGAs for LGUs, Sec. 40)
Preparation and Signing of Checks
 Checks shall always be made payable to a specific person or entity

and never to “Cash” or “Bearer”. All checks shall be crossed for
deposit to the payee’s account, except checks which are payable to
government employees, financial assistance, Assistance for Individual
Crisis Situation (AICS), not exceeding P15,000.00. Unused checks shall
be kept in the vault, which shall be accessible only to the Local
Treasurer. The signing or countersigning of blank check shall not be
allowed.
Release of Checks
 The Local Treasurer shall release the check only to the payee or his
duly authorized representative. For purposes of releasing checks, the
Local Treasurer shall maintain a Check Register where all checks
issued shall be recorded chronologically and where the claimants shall
be required to acknowledge receipt hereof. (NGAs for LGUs, Sec. 41)
 It shall be released only when the Accountant’s Advice of Local Check

Disbursements’ has been prepared and submitted to the bank. All
checks issued shall be recorded chronologically in the Control Book of
Checks Issued/Check Register. Upon release of the check, the payee
shall be required to issue an Official receipt for the payment received
and/or affix his signature and the date of receipt of the check on the
Disbursement Voucher (Box “D”) and the Control Book of Checks
Issued. The Disbursement Voucher and the supporting documents
shall be stamped “PAID” by the Local Treasurer immediately after
claim is paid to prevent their possible re-use.
Reporting of Checks Issued
 Preparation of Report of Checks Issued

The checks issued including cancelled or voided checks shall be
recorded chronologically in the Report of Checks Issued which shall
be prepared daily for each fund in 3 copies by the Local Treasurer.
 Spoiled and Stale Checks

Checks may be cancelled when they become spoiled or stale. A
check is considered spoiled when it is torn, mutilated, defaced or
contains erasures/errors affecting the genuineness of material
information. On the other hand, a check is considered stale when it
is outstanding for over six months from date of issue, or as
prescribed by the government authorized depository bank.
 Lost Checks
A check is considered lost under the following circumstances:
 When it is misplaced, waylaid or left behind inadvertently or

negligently by the payee or holder in due course, or by the
custodian or carrier thereof, and after diligent search cannot be
found or located
 When it is lost due to fortuitous event such as fire, perils of tavel,

flood or typhoon or other causes due to force majeure and after
diligent search, cannot be found or recovered.
 When it is lost by theft or robbery. (Sec. 187 (a), Vol. I, GAAM)

 General Guidelines in the replacement of Lost, Destroyed and

Obsolete checks
If a check is lost, destroyed or become stale or obsolete the issuing
agency may issue a replacement check which shall be made under
such regulation in regard to issuance and payment and upon
compliance with requirements, to wit:
1. A sale and/or obsolete check shall be replaced with a new one

provided the original check is presented/surrendered for
cancellation.
2. MDS/other government check found to have been fraudulently

encashed shall be dishonored and charge back (photocopy
only to the GSB through the BTR.
(Section 190, GAAM, Vol. 1)
 Payment of lost or fraudulently encashed checks
When any check is lost, stolen or destroyed, the issuing officer may
issue a replacement check which shall be paid under the regulations of
the Commission on Audit in regard to issuance and payment and upon
execution of a bond to indemnify the issuing agency in such amount
and with such security as the Commission may require.
(Section 190, GAAM, Vol. 1)

Rules and Regulations on the Granting, Utilization and Liquidation
of Cash Advances
 General Principles
Ideally, cash should be handled under the general principles of the
imprest system, to wit:
1. Daily Receipts on collections must be deposited intact with the proper
bank.
2. All payments must be made by check
3. Only payments in small amounts may be made through the petty cash
fund. Replenishment of the petty cash fund shall be equal to the total
amount of expenditures mare therefrom.
In practice, however, there are certain instances when it may be very

difficult, impractical or impossible to make payments by check. In such a
case, payments may be made by the disbursing officer in the form of cash
through his cash advance.
COA Cir. No. 90-331 May 3, 1990

Disbursements Through Cash Advances
 Regular Cash Advances are those granted to Cashiers, Disbursing

Officers, Paymasters and/or Property/Supply Officers separately for
any of the following purposes:
• Salaries and Wages;
• Commutable Allowances
• Honoraria and other similar payments to officials and employees;
and
• Petty operating expenses (COA Circular 2012-001, 1.1.2)
 Special Cash Advances 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:
• Confidential expenses; and/or
• Expenditures for activities of the agency undertaken in the field
when it is impractical to pay by check.
(Sections 46 and 47, COA Circular No. 92-382)
GRANTING AND UTILIZATION OF CASH ADVANCES
• Only permanently appointed officials and employees shall be granted cash advances.
• Only duly appointed or designated disbursing officers may perform disbursing functions.
Officers and employees who are given cash advances for foreign travel need not be
designated as Disbursing Officers.
• Only one disbursing officer shall be assigned/designated for a specific legal purpose.
Additional disbursing officers may be assigned/designated for the same purpose only when
fully justified by the Agency Head.
• Transfer of cash advance from one AO to another shall not be allowed.
• The cash advance shall be used solely for the specific legal purpose for which it was granted.
Under no circumstance shall it be used for encashment of checks or for liquidation of a
previous cash advance.
• The Accountant shall obligate all cash advances granted. He shall see that cash advances for
a particular year are not used to pay expenses of other years.
Salaries, Wages, Allowances, Honoraria and Other Similar Payments
• The cash advance shall be equal to the net amount of the payroll for a pay
period.
• The cash advance shall be supported by the following documents:
o Copy of designation by the Agency Head in case the AO is not a

disbursing officer by appointment (Attachment to initial cash
advance)
o Copy of approved application for bond (attachment to initial cash

advance)
o Payroll or list of payees with their net payments

Petty Operating Expenses

• The cash advance shall be sufficient for the recurring expenses of the agency for one month.
The AO may request replenishment of the cash advance when the disbursements reach at least
75% or as the need requires, by submitting a replenishment voucher with all supporting
documents duly summarized in a report of disbursements.
• The cash advance shall not be used for payments of regular expenses, such as rentals,
subscriptions, light and water and the like. Payments out of the cash advance shall be allowed
only for amounts not exceeding P5,000.00 for each transaction, except when a higher amount
is allowed by law and/or specific authority by the Commission on Audit. Splitting the
transactions to avoid exceeding the ceiling shall not be allowed.
• The cash advance shall be supported by the following documents:
- Copy of authority by the Agency Head (attachment to initial cash advance)
- Copy of approved application for bond (attachment to initial cash advance)
- Estimate of expenses
Field/Activity Current Operating Expenses (COE)

• The special cash advance shall be used to pay the salaries and wages of the employees and the
miscellaneous operating expenses of the activity. Payment for each transaction shall not be
subject to amount limitation. However, all payments shall be approved by the Director/Head of
field Office.
• The amount of the cash advance shall be limited to the requirements for two months. Within 5
days after the end of each month, the AO shall submit a Report of Disbursements. Additional
cash advances shall be granted on the basis of the activity budget or the requirements for two
months, whichever is lower.
• The cash advance shall be supported by following documents:
o Copy of authority by the Agency Head (attachment to initial cash advance)
o Copy of approved application for bond (attachment to initial cash advance)
o Budget for COE of the Agency field office or agency activity in the field.
Foreign Travel
The cash advance shall be supported by the following

documents:
• Authority to travel
• Itinerary of travel
• Authority from the Office of the President for representation

allowance
RULES & REGULATIONS ON THE GRANTING, UTILIZATION & LIQUIDATION
OF CASH ADVANCES
Liquidation of Cash Advances
1. The AO shall liquidate his cash advance as follows:
• Salaries, Wages, etc. - within 5 days after each 15 day/ end of the month
pay period.
• Petty Operating Expenses and Field Operating Expenses - within 20 days

after the end of the year; subject to replenishment during the year.
• Foreign Travel - within 60 days after return to the Philippines.
Failure of the AO to liquidate his cash advance within the prescribed period
shall constitute a valid cause for the withholding of his salary.
OF CASH ADVANCES
2. The AO shall prepare the Report of Disbursements (using Gen. Form No.
______) in three (3) copies and submit the same with the
vouchers/payrolls and supporting documents to the Accountant. For
payments based on receipts and invoices only, he shall also prepare a
liquidation voucher which shall be submitted with the report and the
supporting documents to the Accountant. He shall ensure that receipt of
the report is properly acknowledged by the Accountant.
3. Within 10 days after receipt of the report and supporting documents for
the AO, the Accountant shall verify the report, record it in the books and
submit the same with all the vouchers/payrolls and supporting
documents to the Auditor.
OF CASH ADVANCES
4. Within 30 days from receipt of the report and supporting

documents from the Accountant, the Auditor shall complete
the audit. He shall issue the corresponding Credit Notice to
the AO to inform the latter of the amount allowed in audit
and any suspensions and/or disallowances made. In case of
disallowance, a copy of the Credit Notice shall be furnished
the Accountant who shall record the restoration of the cash
advance for the amount disallowed.
OF CASH ADVANCES
5. The AO shall submit to the Auditor the documents to settle

his suspensions/disallowances. When the documents are
found in order, the Auditor shall lift the suspension and/or
issue another Credit Notice for the settled disallowance,
copy furnished the Accountant who shall draw a Journal
Voucher to record the credit to the cash advance. In case of
cash settlement, the AO shall present the necessary Official
Receipt to the Auditor for notation.
OF CASH ADVANCES
6. The Credit Notice issued by the Auditor to the AO shall be

deemed sufficient compliance with the requirements of
COA Circular No. 81-156 dated January 19, 1981 (Restating
the Requirements for the Use of the Certificate of
Settlement and Balances and Providing Guidelines on its
Issuance, Including the Accounting Treatment Thereof).
7. When a cash advance is no longer needed or has not been

used for a period of two (2) months, it must be returned to
or deposited immediately with the collecting officer.
OF CASH ADVANCES
8. All cash advances shall be fully liquidated at the end of each

year. Except for petty cash fund, the AO shall refund any
unexpended balance to the Cashier/Collecting Officer who
will issue the necessary official receipt.
9. At the start of an ensuing year, a new cash advance may be

granted, provided that a list of expenses against the
previous cash advance is submitted. However, when no
liquidation of the previous cash advance is received on or
before January 20, the Accountant shall cause the
withholding of the AO's salary.
OF CASH ADVANCES
The following reports and documents are required to support the

liquidation:
• Salaries, Wages, etc. - Report of disbursements with all duly signed payrolls
and/or vouchers and all pertinent supporting documents, such as daily
time records, approved leaves of absence, etc.
• Petty Operating Expenses
 Report of Disbursements with supporting documents

 Approved Requisition and Issue Voucher with the Certificate of Emergency
Purchase, if necessary
 Receipts, sales invoices
 Certificate of Acceptance/Inspection
 Duly approved trip ticket, if for gasoline
 such other supporting documents as are required by the nature of the
expense
OF CASH ADVANCES
The following reports and documents are required to support the

liquidation:
• Current Operating Expenditures
 Same requirements as those for salaries, wages, etc. and petty operating
expenses, supra
 Canvass of at least three suppliers (Not required if purchase is made while on
official travel)
• Foreign Travel
 Itinerary of travel
 Certificate of travel completed
 Report on trip undertaken
 Plane, boat or bus ticket (if included in the cash advance)
 Receipts for hotel bills and incidental expenses
OF CASH ADVANCES
HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK
• A newly appointed or designated AO shall start with a new cashbook,

Before discharging his duties, the new AO shall be briefed by the
Accountant and the Auditor on the proper recording of the transactions
and other matters related to his work.
• The AO shall maintain separate cashbooks for salaries, wages,

allowances, etc. and for petty operating expenses. The AO shall record
the transactions in the prescribed cashbook daily. He may record each
invoice/receipt/voucher individually or the total disbursements for the
day depending on the volume of the transactions.
OF CASH ADVANCES
HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK
• The AO shall reconcile the book balance with the cash on hand daily. He
shall foot and close the books at the end of each month. The AO and the
Accountant shall reconcile their books of accounts at least quarterly.
• The cashbooks shall be kept at the Office of the AO and placed inside the
safe or cabinet when not in use. It may be taken from his custody only by
the Auditor or an official duly authorized by the Agency Head, who shall
issue the necessary receipt.
• When the AO ceases to be one, the cashbook shall submitted to the

Accountant or the Treasurer (for local government units) and shall form
part of the accounting records. No clearance shall be issued to an AO if
he fails to submit the cashbook as required.
OF CASH ADVANCES
BONDING OF ACCOUNTABLE OFFICERS
 Each accountable officer with a total cash accountability of more than

P2,000.00 shall be bonded. The amount of the bond shall depend on the
total accountability (cash and cash items) of the officer as fixed by the
Head of the Agency. In no case shall cash advances be granted in
amounts less than P2,000 each just to circumvent this requirement.
 The bonding requirements are as follows:

• Appointment and/or designation as accountable officer;
• Written character references by at least three officials of the Agency one of whom is
the Administrative and/or Legal Officer, other than the official who
appointed/designated him.
• Statement of assets and liabilities as of the end of the preceding year;
The foregoing documents shall be submitted, together with the application for bond,
to the auditor who shall fix and approve the amount of the bond and shall transmit the
same to the Fidelity Bond Division of the Bureau of the Treasury.
OF CASH ADVANCES
 When the accountability is increased, the Accountant shall

ensure that additional bond is applied for.
 When the AO ceases to be one, the Accountant shall

immediately inform the Fidelity Bond Division of such
cessation.
 The schedule of the bonds necessary for the cash

accountability of the AO is as follows:
OF CASH ADVANCES

OF CASH ADVANCES
RESPONSIBILITY OF THE AGENCY HEAD
It shall be the responsibility of the Head of the Agency

to ensure proper granting, utilization and liquidation
of all cash advances in accordance with these rules
and regulations.
Reporting of Cash Disbursements
 To account for cash disbursements, from regular and special cash

advances, the Accountable/Disbursing Officer shall prepare the
Report of Disbursements and submit the original and duplicate copy
with vouchers/payrolls/petty cash vouchers to the Accountant.
 He shall ensure that the receipt of the report and supporting

documents are properly acknowledged by the Accountant.
The Accountant shall verify the report including the completeness of

the supporting documents, prepare the Journal Entry Voucher (JEV)
and record the transaction in the Cash Disbursement Journal.
(NGAs for LGUs, Sec. 46)
Specific Guidelines on the Grant of Cash Advance for
Payroll, Field Operating Expenses and Travel
 Documentary Requirements common to all cash advances

except for travels
 Payroll Fund for Salaries, Wages, Allowances, Honoraria and Other
Similar Payments
 Petty Cash Fund
 Field/Activity Current Operating Expenses(COE)
 Travelling Allowances
• General Guidelines
Travels shall cover only those that are urgent and extremely
necessary, will involve the minimum expenditure and are
beneficial to the agency concerned and/or country.
(EO 298, dated March 23, 2004, as amended)
Specific Guidelines on the Grant of Cash Advance for
Payroll, Field Operating Expenses and Travel
 Documentary Requirements on Official Local and Foreign Travel of

Local Treasurers and their Assistants –
• Local Travel:
 Travel Authority issued by the LCE
 Duly approved Itinerary of Travel
 Certification from the Accountant that the previous cash
advance has been liquidated and accounted for in books
• Foreign Travel:
 2.2.1 Funded by LGU
 2.2.2 Funded by the National Government
 2.2.3 Funded by a Foreign Institution/Country
 2.2.4 Personal Foreign Travel
 General Guidelines. – The Accountable Officer shall liquidate each

cash advance within the following periods:
• Salaries, Wages, Allowances, Honoraria and other similar

payments – within 5 calendar days after the end of the pay
period.
• Field Operating Expenses – within 20 calendar days after the

end of the year subject to replenishment as frequently as
necessary during the year.
. Liquidation of Cash Advances
 General Guidelines. – The Accountable Officer shall liquidate each
cash advance within the following periods:
• Petty Cash Fund (PCF) – as soon as the disbursement reaches

75% or as needed, the PCF shall be replenished which shall be
equal to the total amount of expenditures made therefrom. In
case of termination, resignation, retirement or dismissal of the
PCF custodian, the remaining balance shall be liquidated
thereafter.
• Travelling Expenses – within 30 days after the return of the
official/employee concerned to his/her official station for local
travel and within 60 days after the return of the official/employee
concerned to the Philippines in the case of foreign travel.
• Special Purpose – as soon as the purpose of the cash advance
has been served.
Guidelines on Granting of Cash Advance for Intelligence and
Confidential Expenses
 Cash advances shall be used for specific legal purpose related to CF

and/or IF. Under no circumstance shall it be used for liquidation of
the previous cash advance or be transferred from one accountable
to another.
 Required documents to support DV for the grant of cash advance for
CF and IF for a specific sector;
• For NGAs
• For GOCCs
• For LGUs
(COA-DBM-DILG-GOCCs-DND Joint Circular No. 2015-01 dated

January 8, 2015)
Handling, Custody and Disposition of Cash Book
 A newly appointed or designated Accountable Officer shall start with

a new cash book.
 Before discharging his/her duties, the new Accountable Officer shall

be briefed by the Local Accountant and the Auditor on the proper
recording of the transactions and other matters related to his/her
work.
Sec. 181, Book III, Vol. I, GAAM)

Disbursements out of Petty Cash Fund
 Petty Cash Fund shall be maintained under the Imprest System.
 The fund should be sufficient for the non-recurring, emergency and

petty expenses of the Local Government Unit for one (1) month.
 Disbursements from the Petty Cash Fund shall be through the Petty
Cash Voucher which shall be signed by the payee to acknowledge
the amount received.
Government Expenditures
 Government expenditures are classified as follows:
• Current Operating Expenditures
 Personal Services
 Maintenance and Other Operating Expenses
 Financial Expenses
• Capital Outlays
IRREGULAR
LEGAL BASIS
UNNECESSARY UNCONSCIONABLE
COA CIRCULAR
NO. 2012-003
EXCESSIVE EXTRAVAGANT
COA CIRCULAR NO. 2012-003
October 29, 2012
Updated Guidelines for the Prevention and

Disallowance of Irregular, Unnecessary,
Excessive, Extravagant & Unconscionable
Expenditures
IRREGULAR EXPENDITURES
• Expenditure incurred w/o adhering to established

rules, regulations, procedural guidelines, policies,
principles or practices that have gained recognition
in laws
• Transaction conducted in a manner that deviates or
departs from, or w/c does not comply w/ standards
set
• Transaction which fails to follow or violates
appropriate rules of procedure
IRREGULAR EXPENDITURES
EXAMPLES
 Grant of Christmas bonus, cash gift & other fringe benefits to consultants
& members of the Board who are not salaried officials of the
government (BCDA vs COA, GR No. 178160, 2/26/09)
 Loyalty service award granted to employees that have not rendered the
minimum service of ten years in government
(BCDA vs COA, GR No. 142760), 8/6/02)
 Grant of food allowance, rice subsidy and health care allowance, there is
no law authorizing such allowance
(BFAR Employees Union, RO VII vs COA, GR No. 169815, 8/13/08;
Benguet State University vs. COA, GR No. 169637, 6/8/07)
ILLEGAL EXPENDITURES
• Transactions in violation of laws

EXAMPLES:
 For widening, repairing & improving sidewalks of a privately owned
subdivision where the land it is situated has not been transferred to
the government by way of donation or acquired by the government
through expropriation (Albon vs Bayani Fernando et al., GR No.
148357, 6/30/06)
 Entering into contracts w/o covering certificates of availability of

funds issued by the Chief Accountant even if the contract is signed
by the Accountant as witness (DOH vs CVCAA, et al., GR N0s
151373-74, 11/17/05)
UNNECESSARY EXPENDITURES
• Not supportive of the implementation of the
objectives & mission of the agency relative to the
nature of its operations
EXAMPLES
 Continuous repair of vehicles & equipment already considered beyond
economic repair as evidenced by frequent breakdown and non-use after
repair
 Hiring of consultants whose functions are redundant to the respective
functions of concerned officials – hiring of procurement consultant,
financial consultant, media consultant
EXCESSIVE EXPENDITURES
• Signifies unreasonable expense or expenses

incurred at an immoderate quantity or
exorbitant price
• Expenses w/c exceed what is usual or proper
or unreasonably high and beyond just
measure or amount
• Expenses in excess of reasonable limits
EXCESSIVE EXPENDITURES
EXAMPLES
 Payment of repair of government equipment at a
cost exceeding 30 percent of the current market
price of the same or similar equipment
 Procurement of materials/items in excess of the

requirements w/c eventually expired such as
vaccines, medicines, seeds, fertilizer, pesticides,
among others.
EXTRAVAGANT EXPENDITURES
• Expenses incurred w/o restraint, judiciousness and economy
• Expenses that exceed the bounds of propriety
• Those w/c are immoderate, prodigal, lavish, luxurious,
grossly excessive and injudicious
EXAMPLES
 Purchase of wines, liquors, cigars & cigarettes except when
served during state functions and government-sponsored
international conferences and conventions
 Procurement and use of luxury vehicles (Administrative Order
No. 3, 2/27/01)
UNCONSCIONABLE EXPENDITURES
• Unreasonable and immoderate, and which no man in

his/her right sense would make, nor a fair and honest man
would accept as reasonable, and those incurred in
violation of ethical and moral standards.
EXAMPLES
 Grant of exorbitant & unreasonable bonuses, allowances
& fringe benefits to public officials and employees
 Live-in seminars in five-star hotels within an
unreasonable period of time
LOCAL FUND MANAGEMENT AND UTILIZATION
Relevant Terms on Fund Management and Utilization:
• Accounts Payable – Obligations of government agencies,

whether current year or prior years, for which services had been
rendered, goods have been delivered or projects have been
completed and accepted.
(COA & DBM Joint Circular No. 2013-1 dated March 15, 2013)
• Accountable Officer – the officer of any government agency

whose duties permit or require the possession or custody of
government funds or property,
(Local Treasurer, Collecting Officer, Disbursing Officer, Cashier,
Paymaster, Property Officer and others
(COA Circular No. 2009-006 dated September 15, 2009)
• 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 obligations for specified amounts within the
appropriations ordinance (p. 87, UBOM for LGUs), (Sec. 8, COA
Cir. 2002-003 dated June 20, 2002). The authorization is called the
Allotment Release Order (ARO), which is a specific authority to
incur obligations not exceeding the amount for the specific purpose
indicated. (p. 88, UBOM for LGUs).
• Appropriation – refers to an authorization made by ordinance,

directing the payment of goods and services from local government
funds under specified conditions or for specific purposes. (Sec. 306
(b), LGC ) (Sec. 140, Book III, Vol. I, GAAM)
• Cash – Cash means money, which is the standard medium of

exchange in business transactions. Cash includes “money and
other negotiable instrument that is payable in money and
acceptable by the bank for deposit and immediate credit”. It
includes checks, bank drafts and money orders. (3.1, Annex A,
COA Resolution No. 2006-006 dated January 31, 2006, PGAS)
(Glossary of Terms of Budget of Expenditures and Sources of

Financing 2014, DBM, GAA 2014)
Relevant Terms on Fund Management and Utilization
• Cash Analysis – Cash analysis begins with a starting balance and

generates an ending balance after accounting for all cash receipts
and paid expenses during the period.
• Cashbook for Cash in Bank – shall be used to record deposits of

collections (Debit column) and withdrawals from the bank thru the
issuance of checks (Credit column). The cashbook shall be
maintained by bank account and by fund and shall be updated and
balanced daily. The accountable officer shall, at the end of the
month or when required to do so by proper competent authority,
rule and foot the cashbook (Section 27, MNGAS for LGUs, Vol. II).
• Cash Analysis – Cash analysis begins with a starting balance and

generates an ending balance after accounting for all cash receipts
and paid expenses during the period.
• Cashbook for Cash in Bank – shall be used to record deposits of

collections (Debit column) and withdrawals from the bank thru the
issuance of checks (Credit column). The cashbook shall be
maintained by bank account and by fund and shall be updated and
balanced daily. The accountable officer shall, at the end of the
month or when required to do so by proper competent authority,
rule and foot the cashbook (Section 27, MNGAS for LGUs, Vol. II).
• Cashbook for Cash in Treasury – shall be used to record

collections (Debit column) and deposits to the bank (Credit
column) based on the RCD. The cashbook shall be maintained by
the Treasurer by fund and shall be updated and balanced daily.
The accountable officer shall, at the end of the month or when
required to do so by proper competent authority, rule and foot the
cashbook. (Section 26, MNGAS for LGUs, Vol. II).
• Cash flow – Record of inflows and outflows of cash, representing

the operating activities during a given period.
• Cash Flow Forecasting – Estimate of the timing and amounts of

cash inflows and outflows over a specific period, usually one year.
• Certificate of Settlement and Balances – a written notification

by the Auditor to the agency head and the accountable officer
concerned of the total suspensions, disallowances and charges
found in audit, as well as the settlements thereof.
• Charge – refer to pecuniary liability, as rents or fees against

persons or property. (Sec. 131 (g), LGC)
• Check – is a negotiable instrument drawn against deposited

funds, to pay a specific entity a specific amount of funds on
demand.
• Credit Memo – A credit memo is a contraction of the term

"credit memorandum," which is a document issued by the seller
of goods or services to the buyer, reducing the amount that the
buyer owes to the seller under the terms of an earlier invoice.
The credit memo usually includes details of exactly why the
amount stated on the memo has been issued, which can be
used later to aggregate information about credit memos to
determine why the seller is issuing them.
• Current Assets – cash and other assets that are not earmarked
for specific purposes other than the payment of a current liability
or a readily marketable investment. (p. 391, Glossary of Terms
for State Auditors)
• Current Liability – A current liability is an obligation that is

payable within one year.
• Debit Memo – A bank creates a debit memo when it charges a
fee on its bank statement, thereby reducing the balance in the
checking of account.
• Disallowance – the disapproval in audit of a transaction, either
in whole or in part.
• Disbursement - Disbursements constitute all payments made
during a given period either in currency, by check, through bank
and electronic transfers, telegraphic transfers, letters of credit,
credit/debit cards and other non-conventional modes of
payment.

• Equity – residual interest of the government in an agency which is
the excess of the agency’s assets over its liabilities. (Sec. 3 (c), Vol
3, NGAS)
• Financial Expenses (FE) – These accounts include bank charges,
interest expense, commitment charges, documentary stamp
expense and other financial charges. It also includes losses incurred
relative to foreign exchange transactions and debt service subsidy
to GOCCs. (Sec. 7 (c), NGAS)
• Fixed Assets – fixed assets are items of property, plant and
equipment and are referred to as "fixed" because of their permanent
nature and because they are not subject to rapid turnover. They
include equipment, furniture and fixtures, land and buildings and any
other property considered tangible or long-lasting. (pp. 273-274,
Glossary of Terms for State Auditors)
Relevant Terms on Fund Management x x x and Utilization

• Fund – refers to a sum of money, or other assets convertible to
cash, set aside for the purpose of carrying out specific activities or
attaining certain objectives in accordance with special regulations,
restrictions, or limitations, and constitutes as independent fiscal and
accounting entity. (Sec. 306 (h), LGC)
• Fund Transfer – a transfer of money from one bank account to

another, either within a single financial institution or across multiple
institutions.
• Government Expenditures – include all charges against the fund
of the local government unit for current operating expenditures,
capital outlays and provisions for retirement of long term
obligations. The charges are both the amounts actually paid and
those incurred and recorded as liabilities to be paid in the future.
(Sec. 154, Book 111, Vol. I, GAAM)

• Government Funds – include public moneys of every sort and
other resources pertaining to any agency of the government.
(Sec. 3 (2), P.D. No. 1445)
• Head of Agency (HoA) – refers to the highest official of the NGA

and LGU. In the case of GOCCs, however, and solely for purposes
of this Circular, the HoA refers to the President and/or Chief
Executive Officer, who is in-charge of the day to day operations of
the corporation. (3.12, COA-DBM-DILG-GCG-DND Joint Circular
No. 2015-01 dated January 8, 2015)
• Intelligence and Confidential Fund Audit Unit (ICFAU) – refers

to the unit created under the Office of the Chairperson of the COA
in charge of the audit of CF and IF. (3.13, COA-DBM-DILG-GCG-
DND Joint Circular No. 2015-01 dated January 8, 2015)
• Long Term Liability – An obligation which will not become due

within a relatively short period, usually a year. (Sec. 28, Vol. III,
GAAM)
• Obligations – refers to an amount committed to be paid by the
local government unit for any lawful act made by an accountable
officer for and in behalf of the local unit concerned. (Sec. 306 (j),
LGC)
• Persons Liable – the persons determined by the auditor to be
answerable for an audit disallowance or charge arising from the
post-audit of transaction or examination of the cash and accounts
of an accountable officer.
• Persons Responsible – the persons determined by the auditor to
be answerable for compliance with the audit requirements as called
for in the notice of suspension.
• Quick Assets – a holding that can be converted into cash within

a short period of time. An example would be a marketable
security that is immediately saleable at a quoted price in the
open market. (p. 541, Glossary of Terms for State Auditors)
• Reconsideration – the process whereby an aggrieved party

requests the very officer or body who made the decision, order,
or ruling to review the same with the view of its modification or
reversal. This should be distinguished from "appeal" which is the
process of elevating to the next higher authority a decision, order,
or ruling.
• Responsibility – the obligation to prudently exercise assigned or

imputed authority attaching to the assigned or imputed role of an
individual or group participating in organizational activities or
decision.
• Real Property Tax Receivable – an annual ad valorem tax on

real property such as land, building, machinery, and other
improvement not hereinafter specifically exempted.

xxx
• Receivables – represents amounts collectible from customers
and other debtors arising from sale of merchandise or the
performance of services on account and claims for money lent,
including real property taxes due the Local Government Units
(LGUs). (4.1, PGAS 4, Annex A, Resolution No. 2006-006 dated
January 31, 2006)
• Settlement – the process of determining the status or balance of
the accountability of an accountable officer.
• Special Disbursing Officer (SDO) – refers to the HoA or a
regular employee designated by the HoA to be in charge of
making disbursements of CF and/or IF so received and
accountable therefor. (3.29, COA-DBM-DILG-GCG-DND Joint
Circular No. 2015-01 dated January 8, 2015)
• Special Education Tax Receivable – annual tax of one percent

(1%) on the assessed value of real property in addition to the
basic real property tax. (Sec. 235, LGC)
• Suspension – the deferment of action to allow or disallow in

audit a transaction pending compliance with certain
requirements.
• Trust Liability – An account used to record collections, income,

or receipts of agencies held in trust or guarantee for another
agency and for a specific purpose. (Glossary of Terms of Budget
of Expenditures and Sources of Financing 2014, DBM, GAA
2014)
CASH BOOK
Cash Book (Cash in Treasury)
LGU
Name of the province/city
municipality FUND
BALANCE Fund name/code
INSTRUCTIONS
CREDIT
DEBIT The difference between the Debit REFERENCE
The amount DATE
deposited
and Credit columns, with
PARTICULARS
which shall
The amount of collections The be
number of Report of
A. This form shall be
Date
the
based on RCD
of
banksthe source
based
attachedhands
on documents
the
Details
deposit
RCD’s
or
slips.
nature
of the Treasurer
of transactions
equal to the amount of cash collections
in the and deposits
accomplished as follows:
CASH BOOK
LGU
municipality FUND
Fund name/code
CASH BOOK
DATE
Date of the source documents
CASH BOOK
PARTICULARS
Details or nature of transactions
CASH BOOK
REFERENCE
The number of Report of
collections and deposits
CASH BOOK
DEBIT
The amount of collections
based on RCD
CASH BOOK
CREDIT
The amount deposited with
the banks based on the RCD’s
attached deposit slips.
CASH BOOK
BALANCE
The difference between the Debit
and Credit columns, which shall be
equal to the amount of cash in the
hands of the Treasurer
CASH BOOK
LGU
Name of the
B. The province/city
Treasurer shall maintain this record to monitor the cash in
municipality
treasury balance as of specific date. All transactions for theFUND day
BALANCE Fund name/code
shall be recorded INSTRUCTIONS
The amount
immediately.
CREDIT
DEBIT The difference between the Debit REFERENCE
and CreditDATE
deposited
columns,with
PARTICULARS
which shall
The amount of collections The be
number of Report of
based
C. At the A. This form shall be
Date
the of
banks the
equalday,
endonofRCD
each
attached
source
based on
to the documents
the
Details
amount
the
deposit
RCD’s
or nature
debitofand
slips.
of transactions
cashcredit
hands of the Treasurer
in theshalland
collections be deposits
ruled and
closed. All totals shall be written legibly in ink and the balances
accomplished
shall be carried forward as opening asbalances
follows:
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.
CASH BOOK
Cash Book (Cash in Bank)
LGU
municipality BANK ACCOUNT NO. FUND
DEBIT The bank name and account Fund name/code
INSTRUCTIONS
CREDIT
The amount deposited for the day
The amount
BALANCE number
based on the RCD’s depositchecks
slipsTheissued
and for thebetween
difference
DATE
day REFERENCE
the Debit
PARTICULARS
based
interest income A. This form shall be
andonother
the Checks/Bank
withholding
transactions based
and CreditAdvise
Daterelated
of the source
taxes/charges
on Journal Entry
Details
equal toand
andwhich
columns,
documents
The number
shall be of the source
or nature of transactions
the other
amount of Cashdocument
in
charges based on JEV Bank
Vouchers (JEV)
CASH BOOK
LGU
municipality
FUND
Fund name/code
CASH BOOK
BANK ACCOUNT NO.

The bank name and account
number
CASH BOOK
DATE
CASH BOOK
PARTICULARS
CASH BOOK
REFERENCE
The number of the source
document
CASH BOOK
DEBIT
based on the RCD’s deposit slips and
interest income and other related
transactions based on Journal Entry
Vouchers (JEV)
CASH BOOK
CREDIT
The amount checks issued for the day
based on the Checks/Bank Advise and
withholding taxes/charges and other
charges based on JEV
CASH BOOK
BALANCE
equal to the amount of Cash in
Bank
CASH BOOK
LGU
B. Themunicipality
Treasurer shall maintain this record to monitor the cash in
BANK ACCOUNT NO. FUND
bank balance as of specific date. The
All
bank
transactions
name and
for the
account
day
DEBIT Fund name/code
shall be recorded INSTRUCTIONS
immediately.
CREDIT
The amount
BALANCE number
based on the RCD’s depositchecks
slipsTheissued
and for thebetween
difference
DATE
day REFERENCE
the Debit
PARTICULARS
interest At based
C.income
transactions
theand
end A. This form shall be
onother
withholding
based on
the Checks/Bank
Date
Journal
and
related
of each
of the
Credit
day, the
source
taxes/charges
equal
Entry
Advise
Details
to
andwhich
columns,
debit andThe
documents
and
the
or nature
other
amount
of
of
number be ofbe
shallshall
credit
transactions
Cash document
in
the source
ruled and
closed. Allcharges
totals based
shall be written
on JEV legibly in ink and the balance
accomplished
Vouchers (JEV)
shall be asbalances
carried forward as opening follows:
Bank
of the Cash Book
for the next day.

CASH BOOK
Cash Book (Cash Advances)
LGU
municipality FUND
DISBURSING OFFICER The fund from
Name of Disbursing Officer which cash advance
DEBIT INSTRUCTIONS
CREDIT
BALANCE
DATE PARTICULARS
REFERENCE was made
The amountTheadvanced
amount by the and
disbursed out
Credit
of the
columns,
cash which
The number
shall beof the Voucher
Date of
Disbursing Officer based
Voucher Payroll
onthe
thesource
advances
Details
documents
or nature of transactions
equal to the amount of cash inPayroll
hand of Disbursing Officers
CASH BOOK
LGU
municipality FUND
The fund from
which cash advance
was made
CASH BOOK
DISBURSING OFFICER
Name of Disbursing Officer
CASH BOOK
DATE
CASH BOOK
PARTICULARS
CASH BOOK
REFERENCE
The number of the Voucher
Payroll
CASH BOOK
DEBIT
The amount advanced by the
Disbursing Officer based on the
Voucher Payroll
CASH BOOK
CREDIT
The amount disbursed out of the cash
advances
CASH BOOK
BALANCE
equal to the amount of cash in
CASH BOOK
LGU
B. Themunicipality
Treasurer shall maintain this record to monitor the cashFUND
advances balance as of specific DISBURSING
date. All OFFICER
transactions forThe thefund from
Name of Disbursing Officer which cash advance
dayDEBIT INSTRUCTIONS
shall be recorded immediately.
CREDIT
BALANCE
DATE PARTICULARS
REFERENCE was made
The amountTheadvanced
amount by the and
disbursed out
Credit
of the
columns,
cash which
The number
shall beof the Voucher
Disbursing Officer A. This form shall be
Date
based
Voucher Payroll
of
on
C. At the end of each the
thesource
day,
advances
Details
documents
the
equal
or nature
to debit
of transactions
and credit
the amount of cashshall be ruled and
inPayroll
closed. All totals shall be written legibly in ink and the balance
accomplished
shall be carried forward as opening asbalances
follows:of the Cash Book
for the next day.

CASH BOOK
Cash Book (Liquidating Officer)
LGU
municipality
LIQUIDATING OFFICER
Name of the designated
DEBIT INSTRUCTIONS
CREDIT
Liquidating Officer
BALANCE
Amounts remitted or turned-over to
Collections remitted by theand Credit columns, which shall REFERENCE
be
the treasurer/cashierDATE
supported PARTICULARS
by
tellers and market/field equal to the amount
RCDsDate
andofduplicate ORsdocuments
the source
The
of number
cash on of the source
ofor nature of transactions
Details
collectors and based on RCD hand not yet turned over todocument
the
tellers/collector
treasurer/cashier.
CASH BOOK
LGU
municipality FUND
Fund name/code
CASH BOOK
LIQUIDATING OFFICER
Liquidating Officer
CASH BOOK
DATE
CASH BOOK
PARTICULARS
CASH BOOK
REFERENCE
document
CASH BOOK
DEBIT
Collections remitted by the
tellers and market/field
collectors and based on RCD
CASH BOOK
CREDIT
Amounts remitted or turned-over to
the treasurer/cashier supported by
RCDs and duplicate ORs of
tellers/collector
CASH BOOK
BALANCE
equal to the amount of cash on
hand not yet turned over to the
treasurer/cashier.
CASH BOOK
Cash Book (Teller/Collector)
LGU
municipality TELLER/COLLECTOR
Teller/Collector
BALANCE
DEBIT
INSTRUCTIONS
individual tellers
CREDITThe difference between the Debit
Collections received by DATE
Collections remitted toand
and
theCredit PARTICULARS
columns, which
designated
REFERENCE
shall be of the source
The number
Date
liquidating of thesupported
officers source
equal documents
Details
to or amount
the
by nature ofoftransactions
cash on
market/field collectors and
hand
ORs/Cash tickets
based on individual RCDs
not yet remitted to
document
the
designated liquidating officer.
CASH BOOK
LGU
municipality FUND
Fund name/code
CASH BOOK
TELLER/COLLECTOR
Teller/Collector
CASH BOOK
DATE
CASH BOOK
PARTICULARS
CASH BOOK
REFERENCE
document
CASH BOOK
DEBIT
Collections received by
individual tellers and
market/field collectors and
based on individual RCDs
CASH BOOK
CREDIT
Collections remitted to the designated
liquidating officers supported by
ORs/Cash tickets
CASH BOOK
BALANCE
equal to the amount of cash on
hand not yet remitted to the
designated liquidating officer.
City Treasurer
Business taxes
• Those imposed by the local government unit
on the privilege of engaging in business,
occupation, and other activities within its
territorial jurisdiction.
• The proceeds of these taxes accrue exclusively
to local government unit that imposes them,
or may be shared with other local
government units when provided by law.
Gross Sales or Receipts
• Under Sec. 131(n) of the LGC :
“Gross Sales or Receipts” – the total amount of money or

its equivalent representing the contract price,
compensation or service fee, including the amount
charged or materials supplied with the services, and the
deposits or advance payments actually or constructively
received during the taxable quarter for the services
performed or to be performed for another person. “Gross
Sales or Receipts” exclude discounts that can be
determined at the time of sales, sales returns and the
excise taxes and value-added tax (VAT).
Gross Sales or Receipt
Contract price, compensation or service fee
INCLUDING
• Amount charged for materials supplied with the services
• Deposits or advance payments actually or constructively received during the
taxable quarter for the services performed or to performed for another
person
EXCLUDING
• Discounts, if determinable, at the time of sale
• Sales returns
• Excise tax
• Value added tax
BASIC STEPS IN
COMPUTING BUSINESS TAX
Step 1. Step 2. Step 3.
Classify the Determine Determine tax
business gross Receipts due
• Critical in • - locate tax due on

determining the tax schedule
business tax to be OR
imposed • - compute:
• Graduated • tax due = tax base x
• Fixed tax tax rate +
• Percentage tax surcharge/interest/
discount
Guidelines for business classification:
Avoid mis- • leads to lost revenues or excessive

exaction
classification • take extra care defining “essential
on 8 clusters commodities” in ordinance
Segregate • some businesses allowed to file

separate gross receipts
taxable • monitor properly or a source of tax
components avoidance
Apply Graduated Fixed Tax on
Manufacturers, assemblers, repackers, processors, brewers, distillers,
rectifiers and compounders of liquors, distilled spirits, wines and any
articles of commerce of whatever kind
Wholesalers, distributors, or dealers in any article of commerce of

whatever kind or nature
Exporters, manufacturers, millers, producers, wholesalers,

distributors, dealers or retailers of essential commodities
Contractors and other independent contractors

Apply Fixed Tax on:
Peddlers
engaged in •P50.00 per
sale of any
merchandise peddler
or article of
commerce
annually
Apply percentage tax on:
Retailers
Banks and other financial institutions, such as

• lending investors
• finance and investment companies
• Pawnshops
• money shops
• insurance companies
• stock markets
• stock brokers
• dealers in securities and foreign exchange
Any business not otherwise specified in the above enumerations

Apply graduated fixed tax or
percentage tax on
• Other businesses not in the Code
• At the rate or schedule that the Sanggunian may
prescribe
– But must not exceed the rates provided in Section 143
of the LGC
• For businesses subject to excise, value-added or
percentage tax under National Internal Revenue
Code, rate shall not exceed:
– for cities: 3%
– for municipalities: 2%
– of gross sales or receipts
Tax structure and rates for
business taxes
• Combination of fixed and percentage rates,
based on gross receipts & business
classification
• structured as a graduated fixed tax, with each
business classification falling under own tax
schedule
• becomes a percentage tax after highest level is
reached
• Cities may impose rates 50% higher than rates
allowed municipalities
Collection of Business Taxes
TAX PERIOD
• the calendar year
MANNER OF PAYMENT
• Annual or in equal quarterly installments
ACCRUAL
• On the 1st day of January
• On the first day of the quarter next following the effectivity of the ordinance
(new)
TIME OF PAYMENT
• Within the 1st 20 days of January
• 1st 20 days of the quarter following the effectivity of the ordinance (new)
• For justifiable reasons, the sanggunian may extend the time for payment
without surcharges or penalties for a period not exceeding 6 months
SITUS OF MUNICIPAL TAXATION
Definition of Terms
PRINCIPAL BRANCH WAREHOUSE
• The main or head office of the • A fixed place in a locality • a building used for storage of
business appearing in the which conducts the goods; if it accepts orders and
pertinent documents operations of the business as issue sales invoices, treated as
submitted to the SEC, DTI, or an extension of the principal sales office
other appropriate agencies as office
the case may be • Display offices even if allowed
• Official address in AI or to take orders are not
registration papers considered branches
considered as situs for tax
purposes
PLANTATION EXPERIMENTAL
• A tract of agricultural land FARMS
planted to trees or • Used for studies, tests,
seedlings… researches or experiments
• Includes inland fishing
Situs Illustration 1
MTREAS Company is a duly registered company
with an office in Baguio City. Its branch in
Bawang, La Union made a total sales of
P4Million in 2016. Where will MTREAS
Company pay the business tax of the P4million
sales?
Answer to Situs Illustration 1
Sec. 150(a), Local Government Code
For purposes of collection of taxes on business, assemblers,
repackers, brewers, distillers, rectifiers and compounders of liquor, distilled
spirits and wines, millers, producers, exporters, wholesalers, distributors,
dealers, contractors, banks and other financial institutions, and other
businesses, maintaining or operating a branch or sales outlet elsewhere
shall record the sale in the branch or sales outlet making the sale or
transaction, and the tax thereon shall accrue and shall be paid to the
municipality where such branch or sales outlet is located. In cases where
there is no such branch or sales outlet in the city or municipality where the
sale or transaction is made, the sale shall be duly recorded in the principal
office and the taxes due shall accrue and be paid in such city or
municipality.
To simplify:
• Where there is a branch or sales office or
warehouse
– sales recorded at branch and tax accrues to LGU
where branch is located
• No branch
• sales recorded at principal office for taxation
purposes and the tax shall accrue to the
municipality where that principal office is located
• MTREAS Company is a duly registered
company engaged in agricultural business with
principal office at Baguio City. The company
has a huge vegetable plantation in Atok,
Benguet. In the 2016, MTREAS Company
recorded a total sales of P10million. Where
will MTREAS pay the business tax of the
P10million sales?
Section 150 (b), Local Government Code (summarized)
Where there is a factory, project office, plant, or plantation in
pursuit of business:
– 30% of all sales recorded in the principal office - taxable
by the city or municipality where located
– 70% of all sales recorded in the sales office – taxable by
the city or municipality where the factory, project office,
plant or plantation is located.
• MTREAS Company is a duly registered
company engaged in agricultural business with
principal office at Baguio City. The company
has a huge vegetable plantation in Atok,
Benguet. In the 2016, MTREAS Company
recorded a total sales of P10million for its
canned vegetables processed in its factory in
Bawang, La Union. Where will MTREAS pay
the business tax of the P10million sales?
Section 150 (b), Local Government Code (summarized)
Where there is a factory, project office, plant, or plantation in pursuit
of business:
– 30% of all sales recorded in the principal office - taxable by the
city or municipality where located
– 70% of all sales recorded in the sales office – taxable by the city
or municipality where the factory, project office, plant or
plantation is located.
– The 70% will further be divided as follows:
• 60% to the city/municipality where the factory is located
• 40% to city or municipality where the plantation is located
• MTREAS Company is a duly registered company engaged
in agricultural business with principal office at Baguio
City. The company has a huge vegetable plantation in
Atok, Benguet. In the 2016, MTREAS Company recorded
a total sales of P10million for its canned vegetables,
P6million of which were canned cucumbers processed in
its factory in Bawang, La Union and the P4million from
broccoli preserves made by their plant in Tuba, Benguet.
Where will MTREAS pay the business tax of the
P10million sales?
Part of Section 150 (b), Local Government Code
(summarized)
Where there are 2 or more factories, project offices, plants or
plantations, located in different localities
the 70% will be pro-rated among the localities where
the factories, project offices, plants, and plantations are
located in proportion to their respective volumes of
production during the period for which the tax is due
Rules on Situs (summary)
• With branch, sales office or warehouse
– Where located
• No branch, sales office or warehouse
– Sales recorded in principal office and taxes accrue to such city or municipality
• With factory, project office, plant or plantation in pursuit of business
– 30% - principal office
– 70% - where factory, project office, plant or plantation is located
• The 70% will be divided as follows:
– 60% to where the factory is located
– 40% to where the plant is located
• With 2 or more factories, project offices, plants or plantation in different localities
– PRORATE in proportion to volume of production
CONDITIONS OF PAYMENT MUST BE CLEAR TO ALL
Tax is payable for every separate or distinct establishment or place where business is
conducted
One line of business does not become exempt because it is conducted together with some
other business for which tax has been paid
Tax on business must be paid by person conducting same
When person conducts two or more businesses subject to same rate of imposition, tax shall
be computed on combined total of gross sales or receipts
When person conducts two or more businesses subject to different rates of imposition,
taxable gross sales or receipts of each business are reported independently and tax is
computed on basis of pertinent schedule
Don’t allow business taxpayers to fall
through the cracks because of
administrative inefficiencies.
Requirements for new businesses
• Any person starting or establishing a business
covered by tax ordinance of LGU must first get
Mayor’s permit and pay the fee.
• No Business tax should be imposed on newly
started businesses. Provision on newly started
business applies to tax on printing &
publication and franchise as imposed only by
the provinces and cities. (Section 136 and 137,
LGC)
Issuance and posting of official
receipt
• Treasurer issues an official receipt for business tax.
Official receipt does not exempt taxpayer from any
other requirements imposed by other LGU
departments
• Official Receipt must be displayed conspicuously at

place of business. If person has no fixed place or
office, he must keep OR on his person.
• Official Receipt must be presented upon demand by

Mayor, Treasurer or their duly authorized reps.
Invoices or Receipts
• Person subject to business taxes shall issue a
commercial invoice or receipt for every sale,
transfer of merchandise, or for service rendered
• Receipts must be serially numbered in duplicate,

showing names or styles and business address.
• Original is given to customer. Duplicate kept in

place of business for 5 years.
• Receipts or invoices issued in compliance of BIR

requirements are OK.
Sworn statement of gross receipts
or sales
• For new business subject to tax, operator submits
sworn statement of capital investment before start
of business
• For existing business, operator submits sworn
statement of gross sales/receipts of the preceding
calendar year or quarter in manner or form
prescribed by Treasurer.
• Failure to submit sworn statement of gross sales
due to lack of books of accounts or records will
cause Treasurer or rep to assess gross sales on
basis of best available evidence on which tax will
be based.
Submission of Certified Income
Tax Return Copy
Annually, operators must submit a certified
photocopy of their ITR on or before April 30.
Deficiency in business tax arising from differences
in gross receipts between LGU documents and
ITR shall be payable on or before May 20 with
interest at rate of 10%.
Payments of deficiency tax made after May 20 will
be subject to 25% surcharge and 2% interest for
every month, counting from Jan up to month
payment is made.
ISSUANCE OF CERTIFICATION BY
TREASURER
• Treasurer may issue certification that business
tax has been paid, in case original Official
Receipt is lost/stolen/destroyed
• Certification must include Official Receipt

number and amount paid.
TRANSFER OF BUSINESS TO ANOTHER
LOCATION
• There is no payment of additional tax for
period for which payment of a tax has been
paid if:
-- business transfers to other site within

territorial limits of LGU, and
-- local business tax has been paid

RETIREMENT OF BUSINESS
• Upon termination of business, sworn
statement of gross sales for calendar year
must be submitted within 30 days from
closure.
• Tax due must be paid first before business is
fully terminated
• Termination is complete stop in operations.
• Termination is not change in ownership,
management, or name of business
RETIREMENT OF BUSINESS:
VERIFICATION
Treasurer ensures no tax avoidance occurs
through false claims of termination:
– Assigns inspector to verify stop in operations
– If findings show only a change in ownership,
management, or name, Treasurer recommends to
Mayor disapproval of application of termination
– Business continues to be liable for payment of
taxes, fees, charges
– In case business transferred to a new owner, new
owner is liable to pay tax on business and must
get new permit
OFFICIAL RETIREMENT OF BUSINESS
• If termination is legitimate, and tax due paid
for current year is less than tax due for current
year, tax difference must be paid before
business is officially retired.
• Business permit is surrendered to Treasurer
who cancels same and records cancellation in
books
OTHER LOCAL TAX – COMMUNITY TAX
Tax on Individual Basic P 5.00

Additional P 1.00 per P1,000.00
income
Not to Exceed P 5,000.00
Tax on Corporations Basic P 500.00
Additional P 2.00 per P5,000.00
income
Not to Exceed P 10,000.00
Date of accrual: accrues on Jan 1 every year;

payable w/o penalty until Feb 28
Individuals Liable to pay
Community Tax
• Every inhabitant of the Philippines 18 years of age or
over who has been regularly employed on a wage or
salary basis for at least 30 consecutive working days
during any calendar year
• An individual who is engaged in business or
occupation
• An individual who owns real property with an
aggregate assessed value of P1,000.00 or more
• An individual who is required by law to file an
income tax
OTHER LOCAL TAX – COMMUNITY TAX
• Exemptions:
-- Diplomatic and consular representatives
-- Transient visitors when their stay in the Philippines
does not exceed three (3) months.
• How collected and shared:

-- Collected by City or Municipal Treasurer;
-- Barangay Treasurer may be deputized if trained and
bonded
-- Proceeds collected by city/municipality not shared w/

barangay
-- Proceeds collected by barangay shared 50-50 with

city/municipality
Occasions when CTC is required to
be presented (Sec. 163, LGC)
• An individual subject to community tax acknowledges any
documents before a notary public
• Takes the oath of office upon appointment or election to any
position in the government service
• Receives any license, certificate, or permit from any public
authority
• Pays any tax or fees
• Receives any money from any public fund
• Transacts other official business
• Receives any salary or wage from any person or corporation
Other business-related
Impositions
Charges - pecuniary liabilities, as rents or fees against
persons or property. (Sec. 131 (g)
Fee - a charge fixed by law or ordinance for the regulation

or inspection of a business or activity (Sec. 131(l), LGC).
- It shall also include charges fixed by law or agency
for the services of a public officer in the discharge of
his official duties. (Art. 220(I), IRR).
Fees and charges are reflections of
your dual powers.
Fees and charges are reflections of the dual

powers of LGUs.
Corporate Police
power power
Distinctions of the 3 types of
non-tax revenues
TYPE PRIMARY PURPOSE BASE OF
IMPOSITION
REGULATORY OR PERMIT FEES regulation or inspection cost of regulation
of business or activities and surveillance
SERVICE FEES AND USER for services rendered or amount

CHARGES conveniences provided commensurate
by LGU to such services and
ensure continuing
delivery
RECEIPTS FROM ECONOMIC operation of public full cost recovery

ENTERPRISES enterprises
Here are some regulatory fees
imposed by LGUs.
IMPOSITION REGULATORY FUNCTION PERFORMED BASE
Business Ascertain whether business activities do Cost of issuing permit and

permit not violate ordinance regulating activity based on size
and type of business
Building Inspect whether building structure Cost of issuing permit and

permit conforms with plan, zoning, etc. surveillance based on Natl Bldg
Code
Demolition Inspect whether adequate safeguards Cost of issuing the permit and
permit are installed to ensure protection of inspection
people or other structures
Dog license Inspect whether dog has been Cost of impounding and feeding
fee vaccinated based on size of animal
Permit for Ascertain whether cockpit and Cost of issuing permit and
cockfighting personnel have necessary permits surveillance based on type of
cockfight held
Service fees cover services or
conveniences provided by the LGU
• Guiding principle to setting rates
Pass fees to beneficiaries:
-- at full cost
-- at amounts “commensurate” to services
• May use any or a combination of:
-- fixed rates
-- graduated fixed rates
• Use balanced judgment in setting rates
MANUAL ON THE SETTING UP
AND OPERATION OF LOCAL
ECONOMIC ENTERPRISES
RICARDO BOBIS
Municipal Treasurer
OUTLINE OF PRESENTATION
INTRODUCTION
01 o Current Situation
o Definition and Classification of LEEs
02 POLICY FRAMEWORK
PLANNING AND
03 IMPLEMENTING PROCEDURES
FOR PROPOSED / NEW LEEs
IMPLEMENTING PROCEDURES
04 FOR EXISTING LEEs
05 REVIEW AND ASSESSMENT OF

LEEs
INTRODUCTION
o Current Situation
o Definition and
Classification of LEEs
CURRENT SITUATION
IN TERMS OF POLICY:
o The local government code has provisions
relating to LEEs
o Inadequate guidelines on how to
implement the law
IN TERMS OF
IMPLEMENTATION:
o Dismal track record of most
LEEs per review by Castel
and Manasan
LOCAL GOVERNMENT UNITS
refers to a political subdivision of a nation or
state which is constituted by law and has
substantial control of local affairs (UP Law
Center)
DUAL 1. Public – carries out governmental

PERSONALITY OF powers as an agent (political
LGUs subdivision) of the state to promote
the public welfare.
2. Private – acts in a similar category

as a business (corporate entity)
performing functions not strictly
governmental.
LOCAL ECONOMIC ENTERPRISE
As a mode of delivering services – LEEs

are ventures wholly or partially owned by
LGUs that generate revenue/income
through sale of services and goods to
meet a perceived constituency demand.
TYPES OF
1. Public Utilities (PUs)
LEEs
2. Other Economic Enterprises
(OEEs)
PUBLIC UTILITY (PU)
PU is a type of LEE:
o created by the Local Sanggunian
through an ordinance;
o for the purpose of providing an
everyday basic necessity or
service to the public at large;
o which otherwise cannot be provided
adequately by the private sector; and
o Charges fees for the service (Section 17(j), RA
No. 7160)
LOCAL ECONOMIC ENTERPRISES
PUBLIC UTILITY (PU)
LGU PUs shall be limited to:

o Water supply;
o Power supply and distribution;
o Telecommunications;
o Sanitation; and
o Public transportation and transport
terminals.
OTHER ECONOMIC ENTERPRISES
(OEEs)
An OEE is:
o an LGU commercially operated
establishment
o created by the Local Sanggunian
through an ordinance
o for the purpose of improving
production and delivery of marketable
goods or services for specific market
groups.
LOCAL ECONOMIC ENTERPRISES
OTHER ECONOMIC ENTERPRISES
(OEEs)
OEEs may include but not limited to:

o Public markets and shopping centers;
o Slaughterhouses, livestock trading and animal
raising;
o Fish landing, ice plants and cold storage facilities;
o Post harvest facilities (grain storage, drying,
milling);
o Commercial retail and office spaces;
o Public parks, sports and recreational facilities;
and
o Public cemeteries.
POLICY FRAMEWORK
The parameters for the creation and
operation of LEEs are laid down in the
Local Government Code and related
circulars.
OPERATING PRINCIPLES
LOCAL GOVERNMENT CODE
SECTION 3(b) There shall be established in every LGU an accountable,

efficient, and dynamic organizational structure and
mechanisms that will meet the priority needs and service
requirements of its communities.
SECTION 3(f) Local government units may group themselves,

consolidate or coordinate their efforts, services, and
resources for purposes commonly beneficial to them.
The participation of the private sector in local

SECTION 3(l) governance, particularly in the delivery of basic services,
shall be encouraged to ensure the viability of local
autonomy as an alternative strategy for sustainability
development.
OPERATING PRINCIPLES
LOCAL GOVERNMENT CODE
SECTION LGUs shall enjoy full autonomy in the exercise of their

proprietary functions and in the management of their
22(d) economic enterprises, subject to the limitations provided in
this Code (LGC) and other applicable laws.
SECTION LGUs are enjoined to be self-reliant and shall continue

17(a) exercising the powers and discharging the duties and
functions currently vested upon them.
RELATED CIRCULARS
LOCAL BUDGET CIRCULAR NO. 100
ITEM 3.1 LGU transfer/advance to LEE/PU refers to any

amount transferred from the General Fund of the
LGU to subsidize the financial requirements for
operations of the LEE/PU.
ITEM 3.2 Transfer/advance to the LEE/PU shall be

subject to the rule under Section 313 of the
LGC.
ITEM 3.3 No amount of the LGU transfer/advance to the

LEE/PU shall be used to fund the PS
requirements of the said LEE/PU.
PROPOSED /NEW LEEs
Planning and Implementing
Procedures for Proposed / New
LEEs
PROCESS FLOW FOR PROPOSED/NEW LEEs
STEP 7
STEP 1 Present the Proposal for
Evaluate STEP 3 STEP 5 the Establishment of the
whether the LEE to the Sanggunian as
LGU should Assess Potential Present the FS Findings and
Basis for the Enactment
engage in LEE Financing Recommended Financing
of the Ordinance Creating
Sources Source to the LCE
the LEE
STEP 2 STEP 4 STEP 6 STEP 8

Conduct Feasibility Select Prepare a 5- Enact the
Study (FS) for Financing Year Business Ordinance
Proposed/New LEE Source for Plan for each Creating the
the LEE LEE LEE
STEP 1
Evaluate
whether the
LGU should
engage in LEE
STEP 1: EVALUATE WHETHER THE LGU
SHOULD ENGAGE IN LEE
RESPONSIBLE The LCE may assign or designate the relevant

PERSON / UNIT local officials who will be responsible for
planning and implementing the new LEEs.
1. Satisfy the LGU economic and social

4-HURDLE objectives as reflected in the PDPFP/CDP
CRITERIA and LDIP and AIP
2. Fill gaps and services not adequately
provided by private sectors. The following
points should be clearly established:
a. The LGU needs to play a primary role in
the provision of the proposed output to
be provided by the LEE
b. Output cannot be provided wholly or
partly by private sector.
4-HURDLE 3. Operate as a business enterprise with

CRITERIA its own business plan and budget.
4. Operate with appropriate staffing
4-HURDLE complement to satisfy its operating
CRITERIA objectives.
DECISIONS If:
objectives as reflected in the
PDPFP/CDP and LDIP and AIP

provided by private sectors.
Then:
1. Good/service should not be provided by the LGU;

and
2. Provision of the good/service should be left to the

private sector.
b
DECISIONS
If:
objectives as reflected in the PDPFP/CDP
and LDIP and AIP
provided by private sectors.
3. Operate as a business enterprise with its

own business plan and budget.
4. Operate with appropriate staffing

complement to satisfy its operating
objectives.
DECISIONS
Then:
The LGU should consider partnering with the private
sector or other LGUs:
1. Contracting out - service, management, lease

and concession contracts;
2. Build-operate-transfer (BOT) and its variants;
3. Joint ventures – with other LGUs, NGOs,
CSOs; and
4. Inter LGU partnerships.
STEP 1
Evaluate
whether the
LGU should
engage in LEE
STEP 2
Conduct Feasibility
Study (FS) for
Proposed/New LEE
STEP2: CONDUCT FEASIBILITY STUDY FOR
PROPOSED/NEW LEE
RESPONSIBLE An FS shall be conducted by the responsible

PERSON / UNIT officials to determine the viability of the
proposed LEE.
VALUE OF THE o The FS will help in determining whether the

FS proposed LEE is able to hurdle the 4 Hurdle
Criteria for the Appropriateness of the LEE
o Good reference in conducting project

feasibility study: NEDA’s Project Evaluation
and Development Manual.
STEP 2: CONDUCT FEASIBILITY STUDY FOR
PROPOSED/NEW LEE
5 MAJOR COMPONENTS OF A FEASIBILITY STUDY
01 02 03 04 05
MARKET TECHNICAL FINANCIAL ORGANIZATIONAL REGULATORY

SITUATION ANALYSIS (ECONOMIC) ANALYSIS AND OTHER PRE-
ANALYSIS SUSTAINABILITY OPERATIONAL
ANALYSIS REQUIREMENTS
o Establish the volume of demand o Based on the magnitude and o Establish financial viability o Identify the organizational o List down the necessary
and what the user-beneficiaries nature of the demand for the LEE in terms of adequate funds structure and manpower permits, leases, licenses,
“can” and are “willing” to pay in output, properly align the project flow for the project cost requirements needed to insurance, and other pre-
terms of a combination of “user scope, design, and specifications and the subsequent annual operate the LEE, including operating requirements
fees and charges” and “taxes” (the with the market situation; operating and maintenance positions, qualifications,
2 cost recovery mechanisms for (O&M) costs since there is and job descriptions.
o Ensure that the project scope,
LGU projects and LEEs); adequate cost recovery
design, and specifications have
and sufficient financial
o Identify competing products and no adverse environmental
(economic) incentives for
services as well as potential target impact; and
the LEE.
markets and customers; and
o In cases where there are
o Position the LEE products or potential negative environmental
services against its competitors (or effects, provide for mitigation (or
find a niche for the LEE products or compensation) in the project
services). design and costs.
STEP 1
Evaluate STEP 3
whether the
LGU should Assess Potential
engage in LEE Financing
Sources
STEP 2
Conduct Feasibility
Study (FS) for
Proposed/New LEE
STEP 3: ASSESS POTENTIAL FINANCING
SOURCES
SOURCES OF 1. Current Available LGU Revenues

FINANCING
• Taxes
• Fees and charges
• Revenues from existing LEE reserves
• Surpluses
• IRA.
Transfers to LEEs shall take the form of
advances or subsidy from the General Fund
pursuant to LGC Section 313, subject to existing
COA rules and regulations.
These advances or subsidy, however, cannot be
used to finance the personnel services of LEE
staff.
SOURCES
SOURCES OF 2. Borrowings
FINANCING o direct loans from lending institutions
o bond proceeds
3. Foreign and Local Grants
o for “hard” projects - whose results are
capital outlays and other infrastructure
projects whose results are tangible
assets)
o for “soft” projects – whose results are
not tangible, such as capacity building,
systems improvement and the like
4. Capital Income
o derived from sales or use of existing
LGU assets.
SOURCES
SOURCES OF 5. Cost Recovery

FINANCING o User fees and charges; and
o Revenue anticipating measures like special
levies, and earmarked taxation of future
benefits.
LGC Section 240 allows the LGUs to impose a
special levy on lands especially benefited by
public works projects or improvements funded by
the LGU provided that the special levy shall not
exceed 60% of the actual cost of such projects
and improvements.
The special levy takes the form of an additional
real property tax imposed on the benefited
properties. The imposition of a special levy
requires the enactment of an enabling ordinance.
SOURCES
SOURCES OF 6. Cost Sharing

FINANCING o Share the cost in operating LEEs mutually
beneficial to other parties, such as with
other LGUs, the national government, or
with the private sector.
7. Public Private Partnerships
o BOT and its variants;
o lease financing;
o contractor/supplier credit; and
o subject to the applicable rules and
regulations set by the PPP Center.
8. Donations from public and private entities
STEP 1
Evaluate STEP 3
whether the
LGU should Assess Potential
engage in LEE Financing
Sources
STEP 2 STEP 4
Conduct Feasibility Select
Study (FS) for Financing
Proposed/New LEE Source for
the LEE
STEP 4: SELECT SOURCE OF FINANCING
CONSIDERATIONS o Adequacy of Funds - Are funds

adequate with respect to the LEE
project’s capital and pre-operating and
initial operating maintenance and other
operating expenses (MOOE)
requirements?
o Impact - What is the impact of the

funding source or scheme on the
community, including economic impact
such as necessary “belt tightening”
measures and the deferment or even
cancellation of other projects?
STEP 1
Evaluate STEP 3 STEP 5
whether the
STEP 2 STEP 4
Conduct Feasibility Select
Study (FS) for Financing
Proposed/New LEE Source for
the LEE
STEP 5: PRESENT THE FS FINDINGS AND
RECOMMENDED FINANCING SOURCE TO THE LCE
CONSIDERATIONS o The responsible LGU czar should present to the

LCE the FS results as well as the suggested
funding source for the proposed LEE.
o Should the LCE decide to proceed with the

creation of the LEE, a Business Plan should be
prepared by the designated LGU personnel for the
LEE.
o In case of two or more proposed LEEs to be

created, each LEE should have its own BP. The
BP will spell out the implementing details of the
LEE within a 5-year period.
STEP 1
Evaluate STEP 3 STEP 5
whether the
STEP 2 STEP 4 STEP 6

Conduct Feasibility Select Prepare a 5-
Study (FS) for Financing Year Business
Proposed/New LEE Source for Plan for each
the LEE LEE
STEP 6: PREPARE A 5-YEAR BUSINESS
PLAN
CONSIDERATIONS o A 5-Year BP for each LEE to be created should be
prepared by the designated LGU personnel or
external consultant.
o For new LEEs, the BP shall serve as a blueprint

on how to make the operations of the LEE
financially self-sufficient and eventually profitable.
o The BP is the heart and soul of the operation of an

LEE and the most important document that will be
required by any lending institution or potential
investor.
o It is a powerful management tool that details how

the LEE is going to reach its objectives and where
it plans to go in relation to where it is.
STEP 6: PREPARE A 5-YEAR BUSINESS PLAN
3 MAJOR COMPONENTS OF A BUSINESS PLAN

01 02 03
LEE GOALS, MARKETING MANAGEMENT

POTENTIALS ANALYSIS AND AND
AND OUTLOOK PLAN PERSONNEL
PLAN
o 1st year of operations - detail some personnel holding

o Goals of the LEE o Includes: permanent positions to the LEE to supervise and
based on an analysis facilitate coordination and compliance to LGU regulatory
• profile of the target market; requirements.
of the industry to which
• assessment of competitors;
the LEE belongs; o The LEE personnel hired shall be on contractual status
consumption trends; • distinct advantages of the and/or on casual or job-order status. If their performance
falls below standards, these personnel can be replaced.
and LEE’s products or services;
and o The LEE may be exempted from paying local regulatory
o Economic forecasts or fees if so desired by the LGU. However, in the course
• marketing and sales of LEE operations, the LGU and its personnel (in their
outlook for the industry.
strategies. official and personal capacities) shall not be exempted
from paying user fees and charges in keeping with the
LEE’s economic nature.
STEP 7
the LEE
STEP 2 STEP 4 STEP 6

Conduct Feasibility Select Prepare a 5-
Study (FS) for Financing Year Business
Proposed/New LEE Source for Plan for each
the LEE LEE
STEP 7: PRESENT THE PROPOSAL TO THE
SANGGUNIAN
CONSIDERATIONS o The LCE shall propose to the

local Sanggunian the creation of
the LEE.
o All the necessary documents,
particularly the FS and BP, shall
support the proposal.
o The LCE may present a draft bill
for consideration of the local
Sanggunian.
STEP 7
the LEE
STEP 2 STEP 4 STEP 6 STEP 8

Conduct Feasibility Select Prepare a 5- Enact the
Study (FS) for Financing Year Business Ordinance
Proposed/New LEE Source for Plan for each Creating the
the LEE LEE LEE
STEP 8: ENACT THE ORDINANCE
CREATING THE LEE
CONTENTS The ordinance enacted by the Local
OF THE Sanggunian should contain, among
ORDINANCE others:
o purpose and justification for the
LEE;
o capitalization;
o sources of financing;
o organization and staffing;
o pricing policy; and
o Sunset provision.
Investment Opportunities for LGUs
• Business Operation
– Local College/Voctech Schools
– Local Water District
– Resort/Hotel Operation
– Hospital
– Gasoline Station
• Franchise
– Philippine Postal Corp. (Postal Station) – 25K
– Medline Dialysis Center – 1 M to 12M
– Jollibee Foods Corporation – 25M
EXISTING LEEs
Implementing Procedures for
Existing LEEs
PROCESS FLOW FOR EXISTING LEEs
STAFFING PLAN AND STAFFING TRANSITION
STRATEGY
STAFFING o Includes a transition strategy such

PLAN that LGU personnel detailed (either
full time or part time) to the LEE and
concurrently working in other LGU
units would gradually be weaned
out.
o The plan should include the hiring of
full time staff in the management and
operations of the LEE.
o At the end of 5 years, LEE should be
staffed with full time personnel.
FIVE-YEAR BUSINESS PLAN
BUSINESS o The assigned LGU staff or external

consultant shall develop a detailed 5-year
PLAN Business Plan (BP).
o For existing LEEs, a BP is mandatory to:

• implement the necessary changes to comply
with the legal requirements of LEEs; and
• make the operations of the LEE financially

self-sufficient and eventually profitable.
o The initial BP shall cover 5 years of

operation.
o The BP is a dynamic plan and should be

reviewed or revised whenever needed.
REVIEW AND ASSESSMENT OF LEEs
• a review and assessment of LEEs shall be

done every five years
• In case of existing LEEs, the review will start

five years after instituting changes to comply
with legal provisions governing LEEs
• In case of new LEEs, the review and

assessment will commence five years after
the start of its operations
• Review and assessment activities shall help

the LGUs determine whether to continue,
modify, expand, scale down or close LEE
operations
REVIEW AND ASSESSMENT OF LEEs
SEMI-ANNUAL FINACIAL SELF-SUFFICIENCY REVIEW
FINACIAL SELF-SUFFICIENCY EVALUATION
• Conducted every five years based on ten SASSFR Reports

EXIT STRATEGIES
• Service Shedding – LGU stops

production/provision of selected LEE
goods/services to concentrate on a few
goods/services
• Closure – LGU completely shuts down LEE

operations
• Divestment – the LGU relinquishes either

operational control or ownership to another
entity
• Privatization is a form of divestment

LOCAL BUDGET PROCESS

City Treasurer
PUBLIC FINANCIAL MANAGEMENT
ACCOUNTING
AUDITING
BUDGETING
REVENUE
GENERATION
PUBLIC REPORTING
ON PUBLIC SECTOR
FINANCIAL
OPERATIONS
DEBT CASH
MANAGEMENT MANAGEMENT
WHAT IS A BUDGET?
“A financial plan embodying the

estimates of income and
expenditures for a given period of
time (usually for one (1) fiscal
year).” (Section 306a, R.A. No. 7160)
BUDGET
Spending within our means
Investing in the right priorities
Delivering measurable results
Empowering citizens
through fiscal transparency,
accountability & participation
THE LOCAL BUDGET PROCESS
Budget Preparation is an executive function

pursuant to Section 318, RA 7160 which
mandates the LCE to prepare the executive
budget for the ensuing fiscal year.
The Sanggunian shall enact, through an

ordinance, the annual and supplemental
budgets of LGUs (Sec. 319, RA 7160).
The Sanggunian shall review the AOs of

component cities, municipalities and
barangays as the case maybe. While the
DBM Regional Offices shall review the AOs
of provinces (Sec. 326, 327, RA 7160)
The responsibility for the execution of the

annual and supplemental budgets and the
accountability therefor shall be vested
primarily in the LCE (Sec. 320, RA 7160).
The Vice-LCE shall sign all warrants drawn
on the treasury for all expenditures
appropriated for the operation of the
Sanggunian (Sec. 445(a)(1), 455(a)(1),
466(a)(1), RA 7160).
The responsibility for the execution of the

annual and supplemental budgets and the
accountability therefor shall be vested
primarily in the LCE (Sec. 320, RA 7160).
Fiscal responsibility shall be shared by all

those exercising authority over the financial
affairs, transactions, and operations of the
local government units (Sec. 305 (l), RA
7160).
pfm
LOCAL BUDGETING FRAMEWORK
within our means

PARTICIPATORY invests in the right priorities
delivers measurable results
POLICY-BASED
empowers citizens
PERFORMANCE-
INFORMED
BUDGET PREPARATION
o The first phase in the local budget
process
o Involves the cost estimation per PPA,

preparation of budget proposals,
executive review of budget proposals, and
the preparation of the LEP and the
Budget Message
o Starts with the issuance of the Budget

Call, and ends with the submission of the
Executive Budget to the Sanggunian on
or before October 16 of each year
BUDGET AUTHORIZATION
o The second phase in the local budget
process
o Starts from the time the Sanggunian

receives the Local Expenditure
Program, and ends with the enactment
of the Appropriation Ordinance and
approval thereof by the Local Chief
Executive
o Anchored on the fundamental principle

– “No money shall be paid out of the
local treasury except in pursuance of an
Appropriation Ordinance or law.”
(Section 305 (a), RA No. 7160)
BUDGET REVIEW
o The third phase of the local budget
process
o Primary purpose is to determine whether

the Appropriation Ordinance has complied
with the budgetary requirements and
general limitations set forth in the LGC, as
well as other laws
o Starts from the time the reviewing

authority receives the appropriation
ordinance and ends with the issuance of
the review action
BUDGET EXECUTION
o The fourth phase of the local budget

process
o Involves the release of allotments, the

certification of available
appropriations and cash, the
disbursement of funds and delivery of
goods in the most efficient, effective,
economical and ethical way
BUDGET ACCOUNTABILITY
o The last phase of the local budget

process - accounting for the budget
o Involves the use of management

control techniques to assist in
tracking receipts of income/revenue
and controlling expenditures
o Evaluation of financial and physical

performance
LOCAL GOVERNMENT UNIT
INTEGRATED FINANCIAL TOOLS
(LIFT) OVERVIEW
The LIFT is an IT-based solution that provides our LGUs with a
simple yet comprehensive tool to help local government plan,
budget, improve revenue collection and budget execution, as
well as audit.
LIFT shall serve as a tool to harmonize and complement the

various performance management systems currently being
implemented by the LGU oversight agencies (DBM, DILG and
DOF-BLGF).
• DBM and DOF – BLGF
eSRE system was enhanced to version 3 to incorporate new modules
(Expenditure Tagging, Expenditure Forecasting, SIPB, LGU FSS),
introduce data encoding improvements, modify selected existing
modules.
• DILG
Linked eSRE’s Local Government Financial Performance Monitoring
System (LGFPMS) indicators to DILG’s Local Government
Performance Management System (LGPMS)
Electronic Statement of Receipts and Expenditures (eSRE)System
The LGU System allows the Treasurers, Budget Officers and Assessors
to encode data needed in order to generate the SRE and QRRPA reports.
The Central System allows the Treasurers, Budget Officers and Assessors
to submit the encoded data to be reviewed and processed by regional and
central users.
It also runs various performance assessment

(Performance Standards, Fiscal Sustainability Scorecard, LGFPMS)
and forecasting procedures
(Annual Performance Targets and Medium-Term Forecasts).
Other additional modules are for Debt Management and Data Analytics.
Legal Basis:
a) DOF Department Order No. 08-2011: Adoption of Statement of Receipts and
Expenditures as the Official Reporting System on Local Government Fiscal and
Financial Operations and Providing the Rules and Financial Operations and
Providing the Rules and Regulations Threfor
b) DOF Department Order No. 34-2014: Amending Sections 3,8 and 9 of the
Department Order No. 8-2011 dated 11 February 2011
c) BLGF Memorandum Circular No. 8-2015: Guidelines in the submission and

reviewing of eSRE reports pursuant to the Department Order No. 034-2014 dated
26 May 2014, Amending Sections 3, 8, and 9 11 February 2012
Legal Basis:
d) DOF Department Order No. 59-2015: Electronic Submission of the Quarterly
Report on Real Property Assessments (QRRPA)
e) DILG-NEDA-DBM-DOF Joint Memorandum Circular No. 1-2016 : Updated

Guidelines on the Harmonization of Local Planning, Investment Programming,
Resource Mobilization, Budgeting, Expenditure Management , and Performance
Monitoring and Coordination on Fiscal Oversight
Conformity on the Freedom of Information Bill
Executive Order No. 02
Operationalizing in the Executive Branch the People’s

Constitutional Right to Information and the State of Policies
to Full Public Disclosure and Transparency in the Public
Service and Providing Guidelines Therefor
BLGF HAILED BY ABS-CBN
AS ONE OF THE TEN (10) GOVERNMENT AGENCIES
PROVIDING PROMPT DATA
ON DIGITAL FORMAT FOR FREE
But there have been patches of blue in an overcast sky.
In a span of almost a year, out of the approximately 40

national and local government agencies that the ABS-CBN
Investigative and Research Group dealt with, seven have
stood out in upholding the people’s right to know, the DPWH,
DOTC, Office of the Civil Defense-ARMM, PPPC, BSP, PSA
and DOF-BLGF.
These agencies did not only provide updated and detailed data
promptly, but these were also in digital format that could easily be
analyzed. Best of all, they did not impose any fees for providing
the service.
Unfortunately, these agencies remain the minority. In 8 out of

every 10 requests for government data and information, the
supposedly straight forward exercise has turned out to be a test
of patience and perseverance.
Now that we have an EO on FOI, will we see significant

improvement in government’s disclosure of information to
citizens?
CONCEPTS AND TERMINOLOGIES ON
REVENUE PROJECTIONS
Concepts and Terminologies on Revenue Projections
Income Target
Fiscal Performance / Cash Flow
Approved by
Capacity Annual Targets Forecasting
LFC and LCE
• 3 to 6 years • 1 year •Manually • Can be
projection encoded in the
projection used as
• Treasurers (as eSRE System
• LGU will use member of LFC) alternative
•1year
this for LDIP to agree projection forecasting
and CDP • Annual Target •Displayed in technique
(outside of Report SRE, SRS and • Seasonality
eSRE) • Use for BESF Reports index can
Treasurers’
• Every Performance •Approved by be
November Standards and the LFC and identified
LGU FSS LCE on a
• Every May quarterly
basis
• Every May
LOCAL GOVERNMENT
FINANCIAL PERFORMANCE
MONITORING SYSTEM
(LGFPMS)
LOCAL GOVERNMENT FINANCIAL PERFORMANCE
MONITORING SYSTEM (LGFPMS)
BASIS: BLGF Memorandum Circular No.

16-2015 dated 19 June 2015 (Local Public
Financial Management Tools for the Electronic
Statement of Receipts and Expenditures)
BLGF implementation of the Manual for the Local
Public Financial Management Tools for the
electronic Statement of Receipts and
Expenditure
Objective
To assess individual LGU performance
To provide active advisory to LGUs
To support LGU credit assessment
To support policy formulation

Category
Revenue Indicators (Revenue Generation
Capacity)
Expenditure Indicators (Expenditures Rigidity)
Debt Indicators (Debt Carrying Capacity of LGU)
Overall Financial Indicators (Financial

Management Capacity)
INDICATORS
EXAMPLE:
REVENUE LEVEL LGU NAME
INCOME
CLASS
REAL
PROPERTY TAX
TAX ON
BUSINESS
REGULATORY
OTHER TAXES FEES (PERMITS
SERVICE/USER
CHARGES
RECEIPTS
FROM
ECONOMIC
(BASIC + SEF) AND LICENSE)
ENTERPRISES
Total Revenues as compared to
the average value for the LGU ABRA 3 8,901,339.54 2,071,268.62
540,043.06 837,075.70 43,842,587.05 -
income class to which the LGU

APAYAO 3 6,178,719.11 7,543,263.76
belongs. 131,267.42 340,150.00 7,517,231.53 8,608,214.79
OTHER
FORMULA: TOTAL OTHER
RECEIPTS
RECEIPTS
(OTHER
INTERNAL TOTAL
REVENUE SHARES FROM INTER-LOCAL EXTRAORDINARY TOTAL
REVENUES Real Property Tax (General LGU NAME (OTHER
GENERAL
GENERAL
INCOME)
ALLOTMENT
(TOTAL)
NATIONAL TAX TRANSFER
COLELCTION
RECEIPTS REVENUE
Fund + SEF) + Tax on Business INCOME) INTEREST
+ Other Taxes + Regulatory Fees INCOME
+ Service/User Charges + ABRA 845,777.68 421,877.68 634,970,609.00 23,110.11 - 25,773,915.42 717,805,726.18
Receipts from Economic
Enterprises + Other Receipts + APAYAO 1,185,681.73 684,800.73 569,265,199.00 29,425.50 3,152,735.38 684,743.58 604,636,631.80
Internal Revenue Allotment +
Other Shares from National Tax
Collection + Inter-Local Transfer
+ Extraordinary Receipts
BENCHMARK: LGU revenue > LGU income class
average
INDICATORS
REVENUE EXAMPLE:
GROWTH
The trend in revenue across time
TOTAL TOTAL REVENUE REVENUE

LGU NAME
FORMULA: REVENUE (2013) (2014) GROWTH
Total RevenuesYr1 – Total RevenuesYr0 x

100 ABRA 869,388,298.48 717,805,726.18 -17%
Total RevenuesYr0
APAYAO 528,350,084.95 604,636,631.80 14%
BENCHMARK:
The average annual % increase in LGU
Annual Population Growth Annual Inflation Rate
revenues > Annual inflation rate + Rate (2014) = 1.82 (2014) = 3.1
Annual population growth rate
Philippine Statistics Authority
INDICATORS
PER CAPITA LOCALLY EXAMPLE:

2010 REAL SPECIAL
SOURCED REVENUE + LGU NAME

INCOME
CLASS
POPULATION PROPERTY TAX
(SOURCE: PSA) (BASIC)
EDUCATION
FUND (SEF)
TAX ON
BUSINESS
OTHER
TAXES
REGULATORY
FEES
Amount of revenues SEF under LGU control and

oversight on a per capita basis
ABRA
APAYAO
3
3
234,733.00 3,585,629.32 5,315,710.22 2,071,268.62 540,043.06 837,075.70
112,636.00 2,397,794.03 3,780,925.08 7,543,263.76 131,267.42 340,150.00
FORMULA: LGU NAME

INCOME SERVICE/USER
RECEIPTS FROM
ECONOMIC
INTERNAL
REVENUE
TOTAL SHARES
FROM NATIONAL
LOCALLY
SOURCED
CLASS CHARGES ALLOTMENT
Locally Sourced Revenue (LSR) + ENTERPRISES
(CURRENT YEAR)
TAX COLELCTION REVENUE
SEF ABRA 3
43,842,587.05 - 634,970,609.00 23,110.11 50,876,603.75
LSR = Real Property TaxPopulation
(General Fund) + Tax on Business + Other APAYAO 3
Taxes + Regulatory Fees + Service/User Charges + Receipts from 7,517,231.53 8,608,214.79 566,335,997.00 29,425.50 26,537,921.53
Economic Enterprises
PER CAPITA PER CAPITA

LOCALLY
BENCHMARK: LGU NAME
INCOME
CLASS
SOURCED
REVENUE + SEF
LOCALLY
SOURCED
LOCALLY
SOURCED
REVENUE REVENUE + SEF
Per capita locally sourced revenue + SEF
> average for the LGU income class to ABRA 3
56,192,313.97 216.74 239.39
which the LGU belongs APAYAO 3

30,318,846.61 235.61 269.18
INDICATORS
PER CAPITA GROWTH IN EXAMPLE:

LOCALLY SOURCED
PER CAPITA PER CAPITA
REVENUE LGU INCOME
LOCALLY
SOURCED
LOCALLY
SOURCED
PER CAPITA
GROWTH IN
NAME CLASS LOCALLY SOURCED
Growth in the amount of revenues under LGU REVENUE + SEF REVENUE + SEF
REVENUE (LSR)
(2014) (2013)
control on a per capita basis
ABRA 3 45%
239.39 149.74
FORMULA:
APAYAO 3 30%
LSR per CapitaYr1 – LSR per CapitaYr0 x 100 269.18 181.49
LSR per CapitaYr0
BENCHMARK:
Growth in Locally Sourced Revenue per
Capita > average for the LGU income
class to which the LGU belongs
INDICATORS
% LOCALLY SOURCED
REVENUES TO TOTAL EXAMPLE:
% LOCALLY
LGU REVENUE INCOME LOCALLY SOURCED
SOURCED
LGU NAME TOTAL REVENUE REVENUES TO
CLASS REVENUE
The share of revenues that are under LGU TOTAL LGU
control and results from local economic activity REVENUE
ABRA 3 7%
717,805,726.18 50,876,603.75
FORMULA: APAYAO 3
604,636,631.80 26,537,921.53
4%
Locally Sourced Revenues x 100

Total Revenues
BENCHMARK:
% Share of locally sourced revenue to
total LGU revenue > average share for
the LGU income class to which the LGU
belongs
INDICATORS
% ANNUAL EXAMPLE:
REGULAR INCOME LGU NAME
INCOME
CLASS
REAL PROPERTY
TAX (BASIC)
TAX ON
BUSINESS
REGULATORY
OTHER TAXES FEES (PERMITS
SERVICE/USER
CHARGES
RECEIPTS
FROM
ECONOMIC
AND LICENSE)
(ARI) TO TOTAL ABRA 3
ENTERPRISES
3,585,629.32 2,071,268.62 540,043.06 837,075.70 43,842,587.05 -

%REVENUE
Annual Regular Income to Total Revenue APAYAO 3
2,397,794.03 7,543,263.76 131,267.42 340,150.00 7,517,231.53 8,608,214.79
ARI = Real Property Tax (General Fund) + Tax on Business + OTHER

Other Taxes + Regulatory Fees + Service/User Charges + RECEIPTS INTERNAL
TOTAL SHARES % ANNUAL
(OTHER REVENUE ANNUAL
Receipts from Economic Enterprises + Internal Revenue LGU NAME
INCOME
GENERAL ALLOTMENT
FROM
REGULAR
TOTAL REGULAR
CLASS NATIONAL TAX REVENUE INCOME TO
Allotment (Current Year) + Other Shares from National Tax INCOME) (CURRENT
COLELCTION
INCOME
INTEREST YEAR) TOTAL REVENUE
Collection + Interest Income
INCOME
ABRA 3
FORMULA: APAYAO 3
421,877.68 634,970,609.00 23,110.11 686,292,200.54 717,805,726.18 96%
98%
593,588,144.76 604,636,631.80
Annual Regular Income x 100 684,800.73 566,335,997.00 29,425.50
Total Revenues
BENCHMARK:
% Share of recurring revenue to total LGU revenue > average share for the LGU income
class to which the LGU belongs
INDICATORS
REAL PROPERTY TAX BENCHMARK:

ACCOMPLISHMENT RATE 80% of Total Current Collectibles and
35% Cumulative Five-Year
(RPTAR) Delinquencies
% of current RPT collected within the year to EXAMPLE:
the total RPT due for the year as estimated
from the assessed value of taxable real REAL PROPERTY
REAL REAL PROPERTY TAX
properties LGU NAME PROPERTY TAX ACCOMPLISHMENT RATE
TAX TARGET
(BASIC + SEF) (RPTAR)
FORMULA: ABRA
39,878,087.21 8,901,339.54
22%
Actual RPT Collections (GF + SEF) x APAYAO

27,317,150.58 6,178,719.11
23%
100
Targeted RPT Collections (GF + SEF)
Actual Real Property Tax Collection = Real Property Tax Collection (GF + SEF)
Targeted Real Property Tax Collection = Real Property Tax Collectibles – Net of Restriction (GF + SEF)
INDICATORS
TOTAL EXPENDITURES EXAMPLE:

PER CAPITA
Average amount spent by LGU per INCOME
2010
TOTAL
TOTAL
constituent LGU NAME POPULATION EXPENDITURES
CLASS EXPENDITURES
(SOURCE: PSA) PER CAPITA
FORMULA: Total Expenditures = Total General Fund

(GF), Special Education Fund (SEF) and ABRA 3
234,733.00 619,885,598.75 2,640.81
Total Trust Fund (TF) Current Operating
Expenditures (PS + MOOE + FE) + Total
General Fund (GF), Special Education
Expenditures Fund (SEF) and Trust Fund (TF) Non-
Operating Expenditures (Capital Outlay)
APAYAO 3
112,636.00 480,557,892.74 4,266.47
Population
BENCHMARK:
Per capita total LGU expenditures >
average for the LGU income class to
which the LGU belongs
INDICATORS
PERSONAL SERVICES EXAMPLE:

EXPENDITURES RATIO PERSONAL SERVICES
CODAL LGU NAME
INCOME
CLASS
ANNUAL REGULAR
INCOME (2012)
ACTUAL PS
AMOUNT
EXPENDITURES
RATIO CODAL
(PSERC)
The ratio of LGU expenditures for personal
services in the General Fund to Annual
ABRA 3 31%
Regular Income of the LGU in the next 693,453,212.79 213,913,901.87
preceding year
APAYAO 3 42%
475,475,508.35 198,410,399.43
FORMULA:
PSE General Fundt x 100
ARIt+1
BENCHMARK:
PSER < 45% for 1st to 3rd income class LGUs and 55% for 4th
or lower income class LGUs and should exhibit a decreasing
trend
INDICATORS
TOTAL PERSONAL EXAMPLE:

SERVICES
TOTAL PERSONAL
EXPENDITURES LGU NAME
INCOME TOTAL ACTUAL PS SERVICES
CLASS EXPENDITURES AMOUNT EXPENDITURE
RATIO (TPSER) RATIO (PSERT)
The ratio of LGU expenditures for personal ABRA 3 35%

619,885,598.75 213,913,901.87
services to total LGU expenditures
APAYAO 3 41%
480,557,892.74 198,410,399.43
FORMULA:
Total Personal Services Expenditures x
100 Total Personal Services Expenditures =
Personal Services Expenditures General
Total Expenditures Fund + Trust Fund + Special Education

Fund (SEF)
BENCHMARK:
PSERT < average for the LGU income class
to which the LGU belongs and should be
decreasing
INDICATORS
TOTAL DEBT SERVICE EXAMPLE:

EXPENDITURE RATIO TOTAL DEBT
INCOME TOTAL SERVICE
(DSER) LGU NAME
CLASS EXPENDITURES
DEBT SERVICE
EXPENDITURE
RATION (DSER)
The ratio of LGU total debt service
expenditures to LGU total expenditures ABRA 3
619,885,598.75 61,589,483.30
10%
FORMULA: APAYAO 3
480,557,892.74 62,568,828.63
13%
Total Debt Service Expenditures x 100

Total Expenditures Total Debt Service Expenditures =
Debt Service (FE) (Interest Expense
& Other Charges) + Debt Service
(Principal Cost) (GF + TF + SEF)
BENCHMARK:
DSER < average for the LGU income class
decreasing
INDICATORS
EXAMPLE:
SOCIAL SERVICES
EXPENDITURE RATIO EDUCATION,
HEALTH, SOCIAL
CULTURE AND LABOR AND HOUSING AND
(SSER) LGU NAME
INCOME
CLASS
SPORTS/
MANPOWER
NUTRITION AND
POPULATION
CONTROL
EMPLOYMEN COMMUNITY
T DEVELOPMENT
SERVICES AND
SOCIAL
WELFARE
DEVELOPMENT
The ratio of LGU social expenditures to total
LGU expenditures
ABRA 3 - -
5,101,128.00 181,359,931.37 33,627,231.27
FORMULA: APAYAO 3 - -
2,611,796.09 72,794,327.83 27,501,985.64
Social Services Expenditures x 100
Total Expenditures Social Services Expenditures = Education,
Culture & Sports/Manpower Development + SOCIAL
Health, Nutrition & Population Control + Labor INCOME SOCIAL SERVICES TOTAL SERVICES
and Employment + Housing and Community
LGU NAME
CLASS EXPENDITURES EXPENDITURES EXPENDITURE
Development + Social Services and Social
RATIO
Welfare (GF + SEF + TF)
BENCHMARK:
SSER > average for the LGU income class ABRA 3 36%
220,088,290.64 619,885,598.75
APAYAO 3 21%
increasing 102,908,109.56 480,557,892.74
INDICATORS
ECONOMIC SERVICES EXAMPLE:

EXPENDITURE RATIO INCOME TOTAL ECONOMIC
ECONOMIC
SERVICES
LGU NAME
(ESER) CLASS EXPENDITURES SERVICES EXPENDITURE
RATIO
The ratio of LGU economic expenditures to
total LGU expenditures ABRA 3
619,885,598.75 179,589,375.41
29%
FORMULA: APAYAO 3
480,557,892.74 129,727,698.65
27%
Economic Services Expenditures x 100

Total Expenditures Economic Services Expenditures =
Economic Services (GF + SEF + TF)
BENCHMARK:
ESER > average for the LGU income class
increasing
INDICATORS
DEBT SERVICE RATIO

EXAMPLE:
(DSR)
The ratio of LGU expenditures for debt INCOME ANNUAL REGULAR DEBT SERVICE
service to total LGU annual regular income LGU NAME DEBT SERVICE
CLASS INCOME RATIO (DSR)
FORMULA: ABRA 3 9%
686,292,200.54 61,589,483.30
Debt Service Payment (GF) x 100
Annual Regular Income Debt Service (GF) = Debt Service (FE)
APAYAO 3
593,588,144.76 62,568,828.63
11%
(Interest Expense & Other Charges)
+ Debt Service (Principal Cost) (GF)
BENCHMARK:
DSR < 20% of annual regular income and
ratio should at least be stable if not
decreasing across time
INDICATORS
GROSS OPERATING EXAMPLE:

SURPLUS (GF) TO INCOME
DEBT SERVICE
(FE) (INTEREST
NET OPERATING
INCOME/ (LOSS)
GROSS OPRATING
LGU NAME EXPENSE & SURPLUS/
DEBT SERVICE RATIO CLASS
OTHER
CHARGES)
FROM CURRENT
OPERATIONS
DEFICIT
(GOSDSR) ABRA 3
17,474,886.86 238,653,995.60 256,128,882.46
The ratio of LGU operating surplus to debt service
APAYAO 3
Gross Operating Surplus/Deficit = Net Operating Surplus =- 12,516,724.26 222,962,920.53 235,479,644.79
Operating Income/ (Loss) From Current Operating Revenues –
Operations + Debt Service (FE) (GF) Operating Expenditures GROSS OPERATING
INCOME SURPLUS (GF) TO DEBT
LGU NAME DEBT SERVICE
CLASS SERVICE RATIO (GF)
FORMULA: (GOSDSR)
Gross Operating Surplus (Deficit) (GF) ABRA 3 416%
61,589,483.30
Debt Service Payment (GF)
APAYAO 3 376%
62,568,828.63
BENCHMARK:
GOSDSR > average for the LGU income class to
which the LGU belongs and should be increasing
INDICATORS
DEBT TO NET ASSET EXAMPLE:

RATIO (DNAR)
The ratio of an LGUs outstanding debt to its
depreciated asset base
FORMULA:
Total Outstanding Debt x
100
Total Net Assets = Total Assets (Net of
Total Net Assets
Depreciation
BENCHMARK:
DNAR should be < 1 indicating that an
LGU has a sufficient asset base to back
up its debt.
INDICATORS
CAPITAL EXAMPLE:
INVESTMENT
CAPITAL INVESTMENT
CAPITAL/
EXPENDITURES TO LGU NAME
INCOME
CLASS
INVESTMENT TOTAL REVENUE
EXPENDITURES TO
TOTAL REVENUES
EXPENDITURES
TOTAL REVENUES RATIO (CIETRR)
The % share of capital investment to total

RATIO (CIETRR)
LGU revenues
ABRA 3 96,619,271.73 717,805,726.18 13%
APAYAO 3 48,832,077.10 604,636,631.80 8%

FORMULA:
Capital Investment Expendituresx 100
Total Revenues
BENCHMARK:
CIETRR > average for the LGU income
class to which the LGU belongs and should
be stable if not increasing
INDICATORS
EXAMPLE:
NET OPERATING
NET OPERATING
SURPLUS TO TOTAL LGU NAME
INCOME
NET OPERATING
INCOME/ (LOSS)
TOTAL REVENUE
SURPLUS TO
TOTAL LGU
CLASS FROM CURRENT
LGU REVENUE RATIO OPERATIONS
REVENUE RATIO
(NOSTRR)
(NOSTRR) ABRA 3
238,653,995.60
717,805,726.18 33%
The ratio of LGU net operating surplus to
total LGU revenues APAYAO 3
222,962,920.53 604,636,631.80 37%
FORMULA:
Net Operating Surplus (Deficit) x 100
Total Revenues Net Operating Surplus/Deficit = Net
Operating Income/(Loss) from
Current Operations
BENCHMARK:
NOSTRR > average for the LGU income class to which
the LGU belongs and should be increasing in case of
operating surpluses and decreasing in case of
operating deficits
INDICATORS
UNCOMMITED CASH EXAMPLE:

BALANCE TO TOTAL INCOME FUND/CASH
FINANCIAL
COMMITMENT
UNCOMMITED
LGU NAME Amount Available for
LGU EXPENDITURE CLASS BALANCE, END
appropriations/operation
CASH BALANCE
s
RATIO (UCBTER) ABRA 3
The calculated figure reflects the 222,060,560.25 222,060,560.25 -
uncommitted cash portion of government
APAYAO 3
equity in the LGAS. This is roughly equivalent 259,336,512.16 201,252,572.47 58,083,939.69
to a sort of an annual financial reserve
FORMULA: INCOME TOTAL

UNCOMMITED CASH
BALANCE TO LOCAL
LGU NAME
Uncommited Cash Balance x 100 CLASS EXPENDITURES LGU EXPENDITURES
RATIO
Total Expenditures Uncommitted Cash Balance =
Amount Available for
Appropriations/Operations
BENCHMARK: ABRA 3 619,885,598.75 0%
UCBTER > average for the LGU income

APAYAO 3 480,557,892.74 12%
class to which the LGU belongs and should
be increasing
D E PA R T M E N T O F F I N A N C E
BUREAU OF LOCAL GOVERNMENT FINANCE
BASIC OPERATIONS ON LOCAL TREASURY

SERVICE TRAINING
Understanding LGU
Credit Financing and
Debt Management
Legal Framework of Credit Financing
• Sec. 296 (b): Credit lines from

government or private banks
and lending institutions for the
purpose of stabilizing local
finances
• Sec. 297 (a): Contract loans, credits, and

other forms of indebtedness with any
government or domestic private bank and
other lending institutions to finance the
construction, installation, improvement,
expansion, operation, or maintenance of
public facilities, infrastructure facilities,
housing projects, the acquisition of real
property, and the implementation of other
capital investment projects.
• Sec. 297 (b): Short, Medium and Long

term loans and advances from any
government bank and lending institution
against security of real estate or other
acceptable assets for the establishment,
development, or expansion of agricultural,
industrial, commercial house financing
and livelihood projects, and other
economic enterprises.
• Sec. 298: Deferred-payment and

other financial schemes- Acquire
property, plant, machinery,
equipment and such necessary
accessories under a supplier’s credit,
deferred payment plan, or other
financial scheme. (except for the
barangays)
• Sec. 299: Bonds and Other Long-

Term Securities- Authorized to issue
bonds, debentures, securities,
collaterals, notes and other
obligations to finance self-liquidating,
income production development or
livelihood projects. (except for the
barangays)
• Sec. 300: Inter-Local Government

Loans, grants and subsidies –
Extend loans, grants, or subsidies to
other LGUs; (except barangays)
• Sec 300: LGUs to jointly or severally
contract loans, credits, and other
forms of indebtedness
• Sec 301 (a): Loans from funds

secured by the national government
from foreign sources.
• Sec 302: Financing, construction,
maintenance, operation, and
management of infrastructure
projects by the private sector, subject
to provisions of R.A. No. 6957
Inventory of Alternative Financing Modalities
Table 1: Alternative Non-Traditional Financing Modalities for LGUs
Financing Alternatives Modalities

Borrowings i. Direct Loans
 Government Financial Institution
 Other Government Lending Windows
 Private and International Financial
Institutions
ii. Bond Issuance
Private Sector Tie-Ups i. BOT and its variants
ii. Supplier’s/Contractor’s Credit
iii. Leasing
Credit Financing – Government Banks
 BSP Circular Letter dated 14 March 2006.

 DOF Department Order No. 27-05 dated 9 December
2005.
 BSP Limitations specifies that:
 All Provincial, City, and Municipal Treasurer,
Commissioner of BIR and BOC, Heads of attached
agencies of the DOF and Heads of all GOCCs shall
deposit their funds and maintain depository accounts
with
A. LBP
B. DBP
Credit Financing – Municipal Development
Fund Office
The Municipal Development Fund, a revolving fund

created under PD 1914, and capitalized and funded
from proceeds of foreign loans, assistance or grants
made available to LGUs for specific purposes,
projects components and activities as stated in
international agreements from foreign governments
and/ or international organizations, was reorganised
under EO 41 as an Office under the DOF and
renamed the MDFO.
MUNICIPAL DEVELOPMENT FUND OFFICE
Financing windows Eligible Borrowers
Municipal Development Fund Project All LGUs nationwide
(MDFP)
Millennium Development Goals Fund All 4th-6th Income class Municipal LGUs
(MDGF)
Disaster Management Assistance Fund All LGUs nationwide except for cities
(DMAF) applying for disaster prevention and
mitigation
Mindanao Basic Urban Services Sector All LGUs in Region IX, X, XI, XII, CARAGA,
Project (MBUSSP) ARMM
Program Lending (PROLEND) All Provincial Government
Project Technical Assistance Contingency All LGUs except highly urbanized cities in
Fund (PTACF) NCR
Refinancing Facility All LGUs nationwide

Municipio Fund All 1st – 6th Income Class municipalities
Philippine Water Revolving Fund- Standby All LGUs nationwide
Credit
Credit Financing – Legal Limits
The BSP directive effectively limits the participation of

private commercial banks in the LGU deposit business
Consequently limiting the participation of private

commercial banks in the LGU lending business since the
IRA account maintained by the LGUs with the government
depository banks provide security to the credit
accommodation.
Nonetheless, the credit market is currently witnessing the

entry of private financing institutions in the LGU lending
business given the right credit mechanisms and revenue
benefits.
PUBLIC-PRIVATE PARTNERSHIP
DILG Guidelines for the Implementation of PPP for the People Initiative
for Local Governments (LGU P4)(DILG Memorandum Circular No. 2016-
120)
DILG MC 2016-120 provides for the different modalities under LGU P4

that LGUs may adopt in undertaking P4 projects:
• Build-and-Transfer (BT);
• Build-Lease-and-Transfer (BLT);
• Build-Operate-and-Transfer (BOT);
• Build-Own-and-Operate (BOO);
• Build-Transfer-and-Operate (BTO);
• Contract-Add-and-Operate (CAO);
• Develop-Operate-and-Transfer (DOT);
• Rehabilitate-Operate-and-Transfer (ROT);
• Rehabilitate-Own-and-Operate (ROO);
• Rehabilitate-Lease-and-Transfer (RLT);
• Rehabilitate-and-Transfer (RT);
PUBLIC-PRIVATE PARTNERSHIP
(cont’)
• Rehabilitate-Transfer-and-Operate (RTO);
• Concession;
• Joint Venture (JV);
• Lease or Affermage;
• Management Contract using LGU funds;
• Management Contract without using LGU funds;
• Service Contract using LGU funds;
• Service Contract without using LGU funds;
• Divestment or Disposition;
• Corporatizations;
• Incorporation of a Subsidiary with private sector equity;
• Onerous Donations;
• Gratuitous Donations; and
• Any other modality akin to any of the above, or features thereof, that
falls under the definition of a PPP.
DOF Policies on LGU Loan Certification
• Local Finance Circular (LFC) No. 1-2000, dated 19

January 2000: issued to enhance the access of all
LGUs to credits and other forms of indebtedness.
• LFC No. 01-2012: Amended the previous LFC, and
released on 16 April 2012, to ensure a more accurate
and appropriate evaluation of the maximum borrowing
and debt servicing capacities of all LGUs.
• LFC No. 01-2014: Issued on April 22, 2014 for 171
LGUs affected by Typhoon Yolanda, from 12 to 4
requirements, and extending the validity by 1 year
Streamlined Documentary
Requirements for Certification
1. Letter request from the Local Chief Executive indicating:
- The lending institution where to apply for a loan;
- Terms and condition of the proposed loan; and
- The purpose of the loan.
2. Certification of existing of loan/s duly certified by the Local

Treasurer with the following details:
• Types of loans & other obligations contracted;
• Purpose of the loans & other obligations contracted;
• Name of the lending institutions;
• Date of approval & maturity;
• Terms & conditions (interest rate & number of years to pay);
• Remaining balances of loans and other obligations; and
• Annual amortization schedules (segregating the principal from the
interest) issued by the lending institution.
Streamlined Documentary
Requirements for Certification
3. COA Annual Audit Certificate for the most recent year, which shall be
supported by the year-end financial reports for the past 3 years:
• Pre-closing trial balance (general fund);
• Detailed Statement of Financial Performance
An Agency Action Plan and Status of Implementation (AAPSI) report on
COA recommendations shall be required if the LGU has adverse findings;
and
4. Certification issued by the lending institution stating that it shall not

require LGU deposits as compensating balance for the loan if such lending
institution is not (1) not an authorized government depository bank or (2) an authorized
government bank required to obtain the prior approval of the Department of Finance as
provided under the DOF Department Order No. 27-05 (Banks other than LBP, DBP and
MDFO);
Streamlined Documentary Requirements for
Certification
- LGUs affected by Natural and/or Man Made Disaster
1. Letter request from the Local Chief Executive indicating:
- The lending institution where to apply for a loan;
- Terms and condition of the proposed loan; and
- The purpose of the loan.
2. Certification of existing of loan/s duly certified by the Local

Treasurer with the following details:
• Types of loans & other obligations contracted;
• Purpose of the loans & other obligations contracted;
• Name of the lending institutions;
• Date of approval & maturity;
• Terms & conditions (interest rate & number of years to pay);
• Remaining balances of loans and other obligations; and
• Annual amortization schedules (segregating the principal from the
interest) issued by the lending institution.
Certified true copy of declaration.
Features of the Certificate
• Certifies the amounts pertaining to:

– Net Debt Service Ceiling (NDSC)
– Borrowing Capacity (BC)
–Terms of the loan (period, interest, grace period, etc.)
–Name of lending institution
–Purpose of the loan
–Certificate number and date issued
–Notes on the certificate
Computing the NDSC and BC
• Debt Service Ceiling (DSC)

– 20% x Annual Regular Income (ARI)
• Where ARI is the average previous 3-year locally
sourced income + other shares from national taxes
based on COA data, + actual annual IRA based on
DBM data
• Net DSC (NDSC)
– DSC – All amortizations payable during the year
• Borrowing Capacity (BC)
– NDSC x Annuity Factor
LGU Loan Application Process
Local Government Unit (LGU) Lending Institution Bureau of Local Government Finance (BLGF) Bangko Sentral ng Pilipinas
Local Council, through a Pre-Evaluation/Setting of BLGF-RO BLGF-CO Evaluate LGU request

Resolution/Ordinance, Terms and Conditions and supporting
authorizes the Local Chief documentary
Executive to negotiate and Evaluate LGU request Final computation and requirements
contract loans and other and supporting issuance of certificate
forms of indebtedness documentary of NDSCBC
requirements
Submit Letter of Intent and negotiate Monetary Board renders
with the lending institution Opinion on the Monetary
Balance and Payments
Documents implications of the proposed
No LGU borrowing, per BSP
Complete/
Submit to BLGF a written request for Compliant? Circular No.926 s. 2016
certification of LGU Net Debt Service
Ceiling and Borrowing Capacity, with
complete supporting documents pursuant Yes
to DOF Department Order 054.2016
Evaluate financial reports
of the LGU
Submit the required
additional documents
Compute preliminarily
LGU Net Debt Service
Re-negotiate with the lending
Ceiling and Borrowing
institution for lower interest
Capacity (NDSCBC)
rate, longer tenor, or consider
other lending institutions, then
re-submit to BLGF
Submit to BLGF-CO all documentary
requirements and the preliminary
Yes computation for the issuance of
certificate of NDSCBC
Proposed Loan
Higher than BLGF
Certification?
No
Submit to BSP a written request for

Monetary Board Opinion
Submit to the Lending Institutions Approval and Signing of

the BLGF Certification, MB Opinion Loan Agreement with the
and Other Requirements LGU
Record receipt of Loan Proceeds Receive LGU Post Borrowing Receive LGU Post Borrowing
and prepare borrowing reports for Release of Loan Report Report
submission to BLGF-RO and BSP
Reporting Requirements of
Statement of Indebtedness,
Payments, and Balances
(SIPB)
BLGF POLICY ISSUANCE
• Local Finance Circular No. 1-2012 dated 16

April 2012 requires local treasurer to submit
the Statement of Indebtedness Payment
and Balances (SIPB) setting out the details
of the contracted loan;
• Objective: Access to readily and reliable

LGU debt data for the formulation of
economic and financial policies.
RESPONSIBILITIES for LOCAL TREASURERS
(PROVICIAL, CITY, MUNICIPAL)
1. Prepare and submit the annual SIPB on or before 28th of

February of the subsequent year. For newly contracted loans, the
SIPB report shall be submitted within ten (10) days after the
approval of the loan.
2. Coordination with the accountant in completing the annual SIPB

report by requesting data on the remaining loan balance
(principal and interest). In case of bond flotation, request data on
deposit to bond sinking fund and sinking fund balance to date.
3. TAKE NOTE: With or without loans, submit to the BLGF-RO the

annual SIPB report.

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April 24 – 28, 2017

Such taxes, fees, and charges shall accrue exclusively to

LGUs shall have a just share, as determined by law, in the

The Constitution vests on local governments the power to

Through the exercise of governmental powers LGUs can

Through the exercise of corporate /proprietary powers

Each local government unit shall exercise its power

The power to impose a tax, fee or charge or to

1. No money shall be paid out of the local

2. Provincial, city and municipal treasurers

3. Local government funds and monies shall

4. Local revenue is generated only from

5. For every payment received, the collecting officer

6. All monies officially received by a local government

7. Provinces, cities and municipalities shall maintain a

The General Fund shall consist of monies and

8. There shall also be maintained in every

9. Receipts, transfers, and expenditures involving

10. Profits or income derived from the operation of

11. Every officer of the local government unit whose duties

12. Local governments shall formulate sound financial

1. Taxation shall be uniform in each local government unit

d. Not be contrary to law, public policy, national

4. The revenue collected pursuant to the provisions of this

5. Each local government unit, shall, as far as practicable,

a. Income tax, except when levied on banks, and

e) Taxes, fees and charges and other impositions upon goods

f) Taxes, fees or charges on agricultural and aquatic products

g) Taxes on business enterprise certified to by the Board of

h) Excise tax on articles enumerated under the National

i) Percentage or value-added tax (VAT) on sales, barters or

j) Taxes on the gross receipts of transportation contractors

k) Taxes on premiums paid by way of reinsurance or

l) Taxes, fees or charges for the registration of motor vehicles

m) Taxes, fees, or other charges on Philippine products

n) Taxes, fees, or charges, on Countryside and Barangay

o) Taxes, fees or charges of any kind on the National

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

a) Local Water Districts;

d) Business enterprises certified to by the Board of Investments (BOI)

- Unless otherwise repealed by law, business

• Taxes – enforced contributions made for purposes

Tax subject - the object to be taxed

• Constitution grants the powers to LGUs

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

Power to Levy Community Tax

Powers under the miscellaneous provisions

Exception: Person liable to pay: Time of payment:

Tax rate Tax base

Tax rate Tax base

Who issues permit?: Distribution of Tax NOTE:

Exception (not taxable): Under the NIRC: Distribution of Proceeds:

Taxes, fees, and charges not otherwise

Tax on Business (Sec. 143, LGC)

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

Banks and other financial institutions

Peddlers engaged in any merchandize or article of commerce

Any business not otherwise specified in the above enumeration

Service Fees and Charges – They may collect reasonable fees or

Barangay Clearance – no city or municipality may issue any license or

Other fess and Charges – reasonable fees and charges.

Continue and maintain current

Institute progressive tax reform and

Accelerate annual infrastructure