SOURCE OF INCOME OF BARANGAY

1. Allotment of Internal Revenue Taxes. - Local government units shall have a share in
the national internal revenue taxes xxx (Sec. 284, LGC of 1991)

2. Share in the Proceeds from the Development and Utilization of the National
Wealth. - 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
of 1991)

Example: (a) R.A. No. 7942 or the Philippine Mining Act of 1995; (b) R.A. No. 8048 or
the Coconut Preservation Act of 1995 (PCA shares).

3. Tax on Sand, Gravel and Other Quarry Resources. The proceeds of the tax on sand,
gravel and other quarry resources shall be distributed as follows:

(1) Province - Thirty percent (30%);

(2) Component City or Municipality where the sand, gravel, and other quarry resources
are extracted - Thirty percent (30%); and

(3) Barangay where the sand, gravel, and other quarry resources are extracted - Forty
percent (40%). (Sec. 138, LGC of 1991)

4. Real Property Tax - Distribution of Proceeds. - The proceeds of the basic real property
tax, including interest thereon, xxx

(a) In the case of provinces:

(1) Province - Thirty-five percent (35%) shall accrue to the general fund;

(2) Municipality - Forty percent (40%) to the general fund of the

municipality where the property is located; and

(3) Barangay - Twenty-five percent (25%) shall accrue to the barangay

where the property is located xxx (Sec. 271, LGC of 1991)

5. Local Ordinances
 LOCAL GOVERNMENT TAXATION

General Principles in Local Taxation

Doctrine of Preemption - in the matter of taxation simply refers to an instance where the
national government elects to tax a particular area, impliedly withholding from the local
government the delegated power to tax the same field. This doctrine primarily rests upon the
intention of Congress.  Conversely, should Congress allow municipal corporations to cover
fields of taxation it already occupies, then the doctrine of preemption will not apply.

Local Government Units’ Power to Tax

a. Sec. 5 Art. X of the 1987 Constitution

Section 5. 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.

b. Sec. 129 of the Local Government Code (“LGC”)

Section 129. Power to Create Sources of Revenue. - Each local government unit shall
exercise its power to create its own sources of revenue and to levy taxes, fees, and charges
subject to the provisions herein, consistent with the basic policy of local autonomy. Such
taxes, fees, and charges shall accrue exclusively to the local government units.

BARANGAYS

SECTION 152 of the LGC. Scope of Taxing Powers. – The barangays may levy taxes,
fees, and charges, as provided in this Article, which shall exclusively accrue to them:

(a) Taxes – On stores or retailers with fixed business establishments with gross sales of
receipts of the preceding calendar xxx Thirty thousand pesos (P30,000.00) or less, in
the case of municipalities, at a rate not exceeding one percent (1%) on such gross
sales or receipts.

(b) Service Fees or Charges. – Barangays may collect reasonable fees or charges for
services rendered in connection with the regulations or the use of barangay-owned
properties or service facilities such as palay, copra, or tobacco dryers.

(c) Barangay Clearance.  – No city or municipality may issue any license or permit for
any business or activity unless a clearance is first obtained from the barangay where such
business or activity is located or conducted. For such clearance, the sangguniang
 barangay may impose a reasonable fee. The application for clearance shall be acted upon
within seven (7) working days from the filing thereof. In the event that the clearance is
not issued within the said period, the city or municipality may issue the said license or
permit.

(d) Other fees and Charges. – The barangay may levy reasonable fees and charges:

(1) On commercial breeding of fighting cocks, cockfights and cockpits;

(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor advertisements.

Procedure for approval and effectivity of tax ordinance

a. Secs. 132, 187 and 188 of the LGC

Section 132. Local Taxing Authority. - The power to impose a tax, fee, or charge or to
generate revenue under this Code shall be exercised by the sanggunian of the local
government unit concerned through an appropriate ordinance.

Section 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue
Measures; Mandatory Public Hearings. - The procedure for approval of local tax
ordinances and revenue measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose prior to the enactment
thereof: Provided, further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30) days from the
effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60)
days from the date of receipt of the appeal: Provided, however, That such appeal shall not
have the effect of suspending the effectivity of the ordinance and the accrual and payment
of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice
acting upon the appeal, the aggrieved party may file appropriate proceedings with a court
of competent jurisdiction.

Section 188. Publication of Tax Ordinances and Revenue Measures. - Within ten (10)
days after their approval, certified true copies of all provincial, city, and municipal tax
ordinances or revenue measures shall be published in full for three (3) consecutive days in
a newspaper of local circulation: Provided, however, That in provinces, cities and
municipalities where there are no newspapers of local circulation, the same may be posted
in at least two (2) conspicuous and publicly accessible places.

During the public hearing for the proposed Tax Ordinance, is the barangay required
to adopt the views or recommendations made by the constituents in the said hearing?
NO.
 In the case of Hagonoy Market Vendor Association v. Municipality of Hagonoy, Bulacan,
G.R. No. 137621, February 6, 2002, the Supreme Court said that “To be sure, public
hearings are conducted by legislative bodies to allow interested parties to ventilate their
views on a proposed law or ordinance. These views, however, are not binding on the
legislative body and it is not compelled by law to adopt the same. Sanggunian members
are elected by the people to make laws that will promote the general interest of their
constituents. They are mandated to use their discretion and best judgment in serving the
people. Parties who participate in public hearings to give their opinions on a proposed
ordinance should not expect that their views would be patronized by their lawmakers.”

Common Limitations on Local Government Units’ Power to Tax

Section 133. Common Limitations on the Taxing Powers of Local Government

Units. - Unless otherwise provided herein, ([Refers to Sec. 133 (o); See: 234(a)]
MIAA case.) 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; [the
exception is not actually IT but business tax computed based on income. Sec.
143(f) Income from Financial Leasing]
b. Documentary stamp tax;
c. Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa,
except as otherwise provided herein; [Transfer Tax Sec. 135]
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 enterprises 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 taxes 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;
[Amusement Tax under the case of Pelizluy Realty]
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; [Franchise Tax on common
carrier enjoying a franchise, First Phil. Industrial Corp. v. C.A.]
k. Taxes on premiums paid by way or 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;
[Franchise on tricycle only]
m. Taxes, fees, or other charges on Philippine products actually exported, except as
otherwise provided herein; [Business Tax Sec. 143(c)]
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
"Cooperative 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. [Sec. 234(a)]

Collection of Taxes

SECTION 165. Tax Period and Manner of Payment. – Unless otherwise provided in this
Code, the tax period of all local taxes, fees and charges shall be the calendar year. Such
taxes, fees and charges may be paid in quarterly installments.

SECTION 166. Accrual of Tax. – Unless otherwise provided in this Code, all local taxes,
fees, and charges shall accrue on the first (1st) day of January of each year. However,
new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st)
day of the quarter next following the effectivity of the ordinance imposing such new
levies or rates.

SECTION 167. Time of Payment. – Unless otherwise provided in this Code, all local
taxes, fees, and charges shall be paid within the first twenty (20) days of January or of
each subsequent quarter, as the case may be. The sanggunian concerned may, for a
justifiable reason or cause, extend the time for payment of such taxes, fees, or charges
without surcharges or penalties, but only for a period not exceeding six (6) months.

SECTION 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. – The
sanggunian may impose a surcharge not exceeding twenty-five (25%) of the amount of
taxes, fees or charges not paid on time and an interest at the rate not exceeding two
percent (2%) per month of the unpaid taxes, fees or charges including surcharges, until
such amount is fully paid but in no case shall the total interest on the unpaid amount or
portion thereof exceed thirty-six (36) months.

SECTION 170. Collection of Local Revenue by Treasurer. – All local taxes, fees, and
charges shall be collected by the provincial, city, municipal, or barangay treasurer, or
their duly authorized deputies.
 xxx

RELEASE OF THE SK FUND BY THE BARANGAY

 REPUBLIC ACT No. 10742; “Sangguniang Kabataan Reform Act of 2015”.

 DEPARTMENT OF BUDGET AND MANAGEMENT (DBM) DEPARTMENT OF

THE INTERIOR AND LOCAL GOVERNMENT (DILG) NATIONAL YOUTH
COMMISSION (NYC) Joint Memorandum Circular (JMC) No. 1 , s. 2019 Date:
January 23, 2019

SUBJECT: GUIDELINES ON THE APPROPRIATION, RELEASE, PLANNING AND

BUDGETING PROCESS FOR THE 5K FUNDS

3.0 GENERAL GUIDELINES

3.2.1 The SK funds shall be automatically released by the barangay to the SK, and
shall not be subject to any lien or holdback that may be imposed by the barangay for
whatever purpose.

3.2.2 Consistent with Section 20 (b) of RA No. 10742, the SK shall open a current
account in the name of the SK in a bank, preferably government-owned, situated in or
nearest to its area of jurisdiction, with the SK chairperson and the SK treasurer as the
official signatories. For efficiency and economy purposes, it is strongly encouraged
for the SK to open and maintain a depository account in the same bank and branch of
its barangay. In the opening of account, xxx

3.2.3 The SK funds shall be deposited by the barangay in the current account of the
SK not later than five (5) working days after the crediting of the monthly internal
revenue allotment (IRA) share of the barangay consistent with the rules and
regulations issued by the Commission on Audit (COA).

For all other income accruing to the general fund of the barangay, the corresponding
SK funds shall be deposited not later than five (5) working days after the end of the
month.
 The barangay may opt to transfer/release the SK funds earlier than herein prescribed
on an annual, semestral or quarterly basis, subject to the written agreement between
the barangay and the SK.

Failure by the barangay to release any amount of the SK fund shall subject the erring
officials to penalties under existing laws.

CRIMES COMMITTED BY PUBLIC OFFICERS

MALVERSATION

Malversation may be committed by appropriating public funds or property; by taking or

misappropriating the same; by consenting, or through abandonment or negligence, by
permitting any other person to take such public funds or property xxx.

For the prosecution of the crime to prosper, the concurrence of the following elements
must be satisfactorily proved:

(a) the offender is a public officer,

(b) he has custody or control of the funds or property by reason of the duties of his office,

(c) the funds or property are public funds or property for which he is accountable, and,

(d) he has appropriated, taken, misappropriated or consented, or, through abandonment or

negligence, permitted another person to take them.

Article 217 of the Revised Penal Code pertinently provides as follows:

ARTICLE 217. Malversation of public funds or property — Presumption of

malversation. — Any public officer who, by reason of the duties of his office, is
accountable for public funds or property, shall appropriate the same, or shall take or
misappropriate or shall consent, or through abandonment or negligence, shall permit any
other person to take such public funds or property, wholly or partially, or shall otherwise
be guilty of the misappropriation or malversation of such funds or property, shall suffer:
xxx
 In all cases, persons guilty of malversation shall also suffer the penalty of perpetual
special disqualification and a fine equal to the amount of the funds malversed or equal to
the total value of the property embezzled.

The failure of a public officer to have duly forthcoming any public funds or property with
which he is chargeable, upon demand by any duly authorized officer, shall be prima facie
evidence that he has put such missing funds or property to personal uses.

Who is an Accountable Officer

Under Section 101 of the Government Auditing Code of the Philippines (P.D. No. 1445),
an accountable officer is one who has custody or control of public property by reason of
the duties of his office.

Under Section 340 of the Local Government Code, a local accountable officer is one who
has possession or custody of local government funds because of the nature of their
functions or has participated in the use or application thereof.

Non-Accountable Officer – If the public officer is not an accountable officer, as a rule,

the crime committed is not malversation, but qualified theft. But, if the public officer
acquired the public funds or property through false pretense, the crime committed is
estafa. However, a non-accountable officer or private individual can be held liable for
malversation if he conspires with an accountable officer in committing the crime.

What if the Barangay Official made a cash advance for travel and the money is
misappropriated for his/her personal used. He can be made liable for Malversation?

In Panganiban v. People, G.R. No. 211543, December 9, 2015 the Supreme Court
answered that question in a negative. According to the Court, a cash advance for travel
expenses (travel allowance) is not public funds since the public officer received it in the
form of a loan. Hence, there is a transfer of ownership from the government to the public
officer making the cash advance as private property. The public officer can use it as his
own money in connection with his travel. Liquidation of cash advance for travel is
equivalent to payment of loan. Hence, failure to liquidate by presenting receipts of travel
expenses is not malversation. But, the public officer must return the unliquidated amount
to the government otherwise he may be liable for failure to render accounting under Art.
219 of the RPC.

Note however that cash advance for livelihood programs (People v. Icdang, G.R. No.
185960, January 25, 2012) or cash advance to buy working tools for a provincial project
(People v. Devalos, G.R. No. 145229, April 20, 2006) is public property. There is no
transfer of ownership since the public officer did not receive the cash advance in the form
of a loan. The public officer is required to use the money not for his personal benefit but
for a specific public purpose. Hence, failure to liquidate upon demand gives rise to the
presumption of malversation.
FAILURE TO RENDER ACCOUNTING

Is committed by (1) any public officer, whether in the service or separated therefrom by
resignation or any other cause, who fails to render account to the Commission on Audit
or provincial auditor as required by law or regulation after two months from the time
such accounts should be rendered (Art. 218, RPC); or (2) by a public officer who
unlawfully leaves or attempts to leave the Philippines without securing a certificate from
the Commission on Audit showing that his accounts have been finally settled. (Art. 219,
RPC)

TECHNICAL MALVERSATION

Illegal use of public funds or property is committed by a public officer who applies a
public fund or property under his administration to any public use other than that for
which such fund or property was appropriated by law or ordinance. (Art. 220, RPC)

Malum Prohibitum

In Ysidoro v. People, G.R. No. 192330, November 14, 2012, the mayor who applied 10
boxes of food appropriated for feeding program to the beneficiaries of shelter assistance
program is liable for technical malversation. Mayor’s act, no matter how noble or
miniscule (P3,396.00) the amount diverted, constitutes the crime of technical
malversation. Criminal intent is not an element of technical malversation.

The law punishes the act of diverting public property earmarked by law or ordinance for
a particular public purpose to another public purpose. The offense is malum prohibitum,
meaning that the prohibited act is not inherently immoral but becomes a criminal offense
because positive law forbids its commission based on considerations of public policy,
order, and convenience. It is the commission of an act as defined by the law and not the
character or effect thereof that determines whether or not the provision has been violated.
Hence, malice or criminal intent is completely irrelevant.

FALSIFICATION OF DOCUMENT

Falsification of document under Article 171 is committed by a public officer who taking
advantage of his official position, falsifies a document.

Document – is any written statement by which rights is established or an obligation

extinguished.
 Public Document – is one authorized by law or regulation or in which a public officer,
notary public or any person authorized to administer oaths intervenes for purpose of
authenticating the same, and not as a party thereto.

Official Document – is also a public document. It falls within a larger class called public
document. (Revised Penal Code, by Luis Reyes)

Official Documents include:

a. Documents issued by a public official in the exercise of functions of his office;

b. Documents in the execution of which a public officer takes part by virtue of his
office such as government payroll (Ilumin v. Sandiganbayan, G.R. No. 85667,
February 23, 1995); vouchers (People v. Sendaydiego, G.R. Nos. L-33252-54,
January 20, 1978); tax collection report (Zafra v. People, G.R. No. 176317, July
23, 2014); and

c. Documents that become part of the public records.

Falsification can be committed through the following:

1. Counterfeiting or imitating any handwriting, signature or rubric;

2. Causing it to appear that persons have participated in any act or proceeding

when they did not in fact so participate;

3. Attributing to persons who have participated in an act or proceeding statements

other than those in fact made by them;

xxx

5. Altering true dates;

xxx

Example:

Even though “intent to imitate” is not established because there is “no semblance
of similarity” between a false signature on the document and the genuine signature,
the person, who caused such false signature thereon may still be held liable for
falsification of the document by causing it to appear that the person whose
signature is forged had participated in the execution of the document when he did
not in fact do so. (U.S. v. Cinco, G.R. No. 12127, October 13, 1917)

Power of EMINENT DOMAIN of Barangay

In general, eminent domain is defined as "the power of the nation or a sovereign state to take, or
to authorize the taking of, private property for a public use without the owner’s consent,
conditioned upon payment of just compensation." It is acknowledged as "an inherent political
right, founded on a common necessity and interest of appropriating the property of individual
members of the community to the great necessities of the whole community."

The exercise of the power of eminent domain is constrained by two constitutional provisions:
(1) that private property shall not be taken for public use without just compensation under
Article III (Bill of Rights), Section 9 and (2) that no person shall be deprived of his/her life,
liberty, or property without due process of law under Art. III, Sec. 1.

Is the barangay has the power to expropriate private lands for public purpose? Yes.

Eminent Domain. – A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, or
purpose or welfare for the benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and pertinent laws:
Provided, however, That the power of eminent domain may not be exercised unless a
valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take
possession of the property upon the filing of the expropriation proceedings and upon
making a deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be
expropriated: Provided, finally, That, the amount to be paid for the expropriated property
shall be determined by the proper court, based on the fair market value at the time of the
taking of the property. (Section 19, LGC of 1991)

RULE VI of the LGC of 1991 IRR

Eminent Domain

ARTICLE 32. When Exercised. — (a) An LGU may, through its chief executive and
acting pursuant to an ordinance, exercise the power of eminent domain for public use,
purpose, or welfare of the poor and the landless, upon payment of just compensation,
pursuant to the provisions of the Constitution and pertinent laws.

(b) The power of eminent domain may not be exercised unless a valid and definite offer
has been previously made to the owner, and such offer was not accepted.

ARTICLE 33. Public Use, Purpose, or Welfare. — The following shall, among others, be
considered as public use, purpose, or welfare:

(a) Socialized housing;

(b) Construction or extension of roads, streets, sidewalks, viaducts, bridges, ferries,

levees, wharves, or piers;
 (c) Construction or improvement of public buildings;

(d) Establishment of parks, playgrounds, or plazas;

(e) Establishment of market places;

(f) Construction of artesian wells or water supply systems;

(g) Establishment of cemeteries or crematories;

(h) Establishment of drainage systems, cesspools, or sewerage systems;

(i) Construction of irrigation canals or dams;

(j) Establishment of nurseries, health centers, or hospitals;

(k) Establishment of abattoirs; and

(l) Building of research, breeding, or dispersal centers for animals.

Meaning of Public Use

There is no precise meaning of "public use" and the term is susceptible of myriad
meanings depending on diverse situations. xxx In this jurisdiction, "public use" is defined
as "whatever is beneficially employed for the community."

It is settled that the public nature of the prospective exercise of expropriation cannot
depend on the "numerical count of those to be served or the smallness or largeness of the
community to be benefited." The number of people is not determinative of whether or not
it constitutes public use, provided the use is exercisable in common and is not limited to
particular individuals. Thus, the first essential requirement for a valid exercise of eminent
domain is for the expropriator to prove that the expropriation is for a public use. xxx
(Barangay Sindalan, San Fernando Pampanga v. Court of Appeals, G.R. No. 150640,
March 22, 2007)