ULTOM All MPDC

LOCAL TREASURY
OPERATIONS MANUAL
2ND EDITION
DEPARTMENT OF FINANCE
BUREAU OF LOCAL GOVERNMENT FINANCE
Manila, Philippines
Local Treasury Operations Manual (LTOM), 2nd Edition
First Printing, 2019.
Printed in the Philippines
Published by the Bureau of Local Government Finance
ISBN: 978-971-94098-8-5
Copyright © Bureau of Local Government Finance, 2019

Telefax: +632 522-8771 / 527-2803
Web: www.blgf.gov.ph
E-mail: central@blgf.gov.ph
All rights reserved.
No part of this book may be reproduced in any form or by any means without the express
permission of the copyright owner and the publisher.
Cover design and layout by: Jane Dianne S. Gaylican

ACKNOWLEDGMENT
This Local Treasury Operations Manual (LTOM), 2nd Edition, is a product of collaboration
of key stakeholders whose common goal is to improve the quality of local public financial
management, particularly the treasury operations of local government units.
The Technical Working Group, composed of BLGF Central and Regional Office Directors,
technical staff, and selected provincial, city and municipal treasurers, in various
consultation workshops and fora, helped bring about this new LTOM edition.
The BLGF acknowledges the Department of Finance, through the Secretary of Finance
and the Undersecretary for Revenue Operations, for the guidance and support in the
updating and publication of this LTOM.
The BLGF is likewise grateful for the support extended by the European Union’s Public
Financial Management 2 (EU PFM 2) Project, entitled “Support to the LGUs for More
Effective and Accountable Public Finance Management”, during the development phase
of this LTOM, and to the Asian Development Bank (ADB), during the consultations and
exposure workshops with key stakeholders.
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Republic of the Philippines
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
MESSAGE
The Department of Finance (DOF) has made great strides in building revenues
and maintaining fiscal discipline in the Philippines. We paved the way toward increasing
national tax effort, foreign direct investments and, more importantly, maintaining high
growth over the past few years. These trends, in turn, ensured the roll out initiatives on
social services, as well as big- ticket infrastructure projects to address gaps in economic
development.
Our Bureau of Local Government Finance (BLGF) played and continues to play
a key and essential role to sustain all the gains we have achieved. Its strategies are
focused on implementing a three-pronged approach to modernize local finance: (i) policy
reforms and updating of regulations, (ii) improvements in systems and operations, and
(iii) high-impact capacity development.
This updated edition of the Local Treasury Operations Manual (LTOM) is indeed
one that will contribute to our goals of improving local finance as it incorporates updates
on relevant laws, policies, rules and regulations of the government. It seeks to address
competency gaps by providing local treasurers relevant information in key areas, such
as budgeting, accounting, auditing, supply management, real property assessment,
financing, custody and disbursement of funds, among others.
I believe this resource complements our strategy to professionalize the ranks of
local treasurers, which is key to a more transparent, independent and sustainable local
fiscal landscape. Equipping them with the right skills and ethical orientation to perform
their jobs well will likewise increase tax collection and revenue generation, and reduce
LGUs’ dependency on the internal revenue allotment.
I have high hopes that local treasurers will adopt the LTOM and take on a proactive
stance to further improve the efficiency of services provided by their respective LGUs.
Cutting red tape and ensuring a business-friendly environment will not only reduce the
stress and cost of tax-related processes, but also attract investments and ensure efficient
delivery of social services. I am confident that our cumulative and collaborative efforts will
enable us to achieve a long period of high and inclusive growth that leads to the economic
inclusion of all Filipinos.
Thank you.

CARLOS G. DOMINGUEZ
Secretary of Finance
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Manila 1004
MESSAGE
Congratulations to the Bureau of Local Government Finance (BLGF) for the

publication of this Local Treasury Operations Manual (LTOM), 2nd Edition.
We, at the Department of Finance (DOF), recognize the achievements and
accomplishments of your office to not only modernize local finance, but also to maintain
excellence and integrity in local fiscal administration. Despite the challenges, the BLGF
continues to put in place long-term policies and initiatives that seek to transform local
government units (LGUs) into becoming more innovative and independent, able to
respond to the growing demands to sustain our country’s thriving economy.
The LTOM, thus, places clearer focus on the vital role played by local treasurers,
and the contributions they make to build and drive LGUs’ capacities to allocate their own
funds to where they are needed most. It reaffirms DOF’s policies on good fiscal governance
and LGU fiscal autonomy, which are both critical and strategic in the achievement of our
development goals.
Through this Manual, local treasurers can now acquire the necessary knowledge,
resource materials and technical know-how to boost collections, increase the tax base,
and reinforce prudence in expenditure management. Over the long-term, this will redound
to the benefit of the government and the general public as it allows LGUs to effectively
meet local needs and priorities. However, much more work remains to be done.
In this context, we count on local treasurers to diligently use the LTOM and be
more efficient, progressive-minded, honest, transparent, accountable, and risk-averse,
but willing to take daring and bold decisions, to ensure good fiscal governance.
Local treasurers should build on and expand the progress the government has
already made and help address the remaining challenges to bring about real change.
After all, only against this backdrop can we effectively help the country leapfrog towards
a more sustainable and inclusive development path.
ANTONETTE C. TIONKO
Undersecretary
Revenue Operations Group
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8th Floor EDPC Building, BSP Complex, Roxas Boulevard, 1004 Manila
MESSAGE
Let me first congratulate the people behind the development and publication of
the Local Treasury Operations Manual (LTOM), 2nd Edition, for their tireless work and
invaluable dedication to update the basic reference for all local treasurers.
The Bureau of Local Government Finance (BLGF) remains committed to
undertake innovations and programs that continuously improve local finance to make it
viable and dynamic, and therefore help empower local governments as critical partners
in attaining our goal of sustainable and inclusive economic growth and development.
More than a decade since our first publication of the LTOM, much has changed
with the enactment of new laws, recent jurisprudence, and related rules and regulations
of oversight agencies that affect local treasury functions. As such, this LTOM, 2nd
Edition, provides a four-volume reference capturing the latest policy developments,
legal references, practical illustrations, organizational improvements, and standard
forms concerning local tax administration, revenue generation, tax information system
management, custody and disbursement of funds, expenditure management, election-
related responsibilities, internal controls and related fiduciary functions.
The issuance of this LTOM is very timely to support our vision to professionalize
the local treasury service under the Standardized Examination and Assessment for Local
Treasury Service Program of the Department of Finance and the BLGF, in partnership
with the Civil Service Commission. At the heart of this program lies the need to have a
reliable, updated, complete, and instructive resource to improve the knowledge, skills,
competencies and work-ethic in local treasury work and to be successful local fiscal
advisers and managers.
As local fiscal landscapes continuously evolve in pursuit of meaningful
decentralization, may this Manual be an effective instrument to help transform the quality
of local treasury work as an important dimension of a modern, responsive and inclusive
local public financial management system, on which the public can repose greater trust
and confidence.
NIÑO RAYMOND B. ALVINA

Executive Director
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Manila 1004
DEPARTMENT ORDER NO. _______________
1. LEGAL BASES. This Department Order is issued to promulgate the Local Treasury
Operations Manual (LTOM), 2nd Edition, pursuant to Article 456 of the Implementing Rules
and Regulations (IRR) of Republic Act (RA) No. 7160, otherwise known as the Local
Government Code (LGC) of 1991, and in line with the mandates of the Department of
Finance (DOF) to supervise the revenue operations of all local government units, under
Executive Order (EO) No. 292, s. 1987, and of the Bureau of local Government Finance
(BLGF) to exercise administrative and technical supervision, and coordination over treasury
and assessment operations of local governments, under EO No. 127, s. 1987.
2. COVERAGE. The LTOM, 2nd Edition, consists of four (4) books, which form integral parts
hereof, as follows:
Book I Fiscal Organization of Local Governments and the Local Treasury Office;
Book II Receipt and Collection of Income, Revenues and Other Fund Sources;
Book III Fund Management Practices, Expenditures and Disbursement; and
Book IV Detailed Procedures on the Administration and Collection of Real Property

Tax, Business Tax, Fees and Charges and Other Fund Sources.
3. LIMITATIONS. The provisions contained in the LTOM, 2nd Edition, are adoption of pertinent
provisions of relevant laws, jurisprudence, regulations, policies, issuances, opinions and
rulings affecting local finance and treasury operations. The applicable portions of related
provisions from various laws and issuances have been adopted into sections and/or
discussions of specific topics in the LTOM, and structured accordingly to cover the different
aspects of local treasury operations.
Users of the LTOM, 2nd Edition, are encouraged to further refer to the LGC and its IRR, the
Government Accounting and Auditing Manual, and the Manual on the New Government
Accounting System for LGUs, both of the Commission on Audit, the Budget Operations
Manual for LGUs of the Department of Budget and Management, cited jurisprudence, and
other pertinent issuances of DOF and BLGF on local finance and treasury operations.
4. SEPARABILITY CLAUSE. Any portion or provision of the LTOM, 2nd Edition, that may be
declared unconstitutional or invalid shall not have the effect of nullifying other portions and
provisions thereof as long, as such remaining portion or provision can still subsist and be
given effect in its entirety.
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5. REPEALING CLAUSE. This Order supersedes Department Order No. 10-08 dated 26
March 2008, and all Department issuances relative to the LTOM that are inconsistent
herewith. However, the LTOM, 2nd Edition, does not seek to supersede the issuances
and rulings of other oversight agencies, but only reiterates and amplifies their respective
applications in local treasury operations.
6. EFFECTIVITY. This Order shall take effect fifteen (15) days after its publication in the
Official Gazette and the University of the Philippines Office of the National Administrative
Register (ONAR) or in a newspaper of general circulation in the Philippines.
All BLGF Central and Regional Offices, and all local treasurers and assistant local treasurers
are hereby directed to properly, efficiently and strictly implement the LTOM, 2nd Edition.
CARLOS G. DOMINGUEZ
Secretary
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OVERVIEW
LOCAL TREASURY OPERATIONS MANUAL

A. INTRODUCTION
This LTOM, 2nd Edition, is a compendium of the latest laws, policies, rules and
regulations of the government that affect the local finance and treasury operations
of local government units (LGUs). It is a vital reference material for local treasurers,
which is designed to be dynamic and responsive to the changing policy landscape
and evolving local public financial management that affect local treasury operations.
This publication was developed in consultation with local treasurers and key
stakeholders, after various dialogues, meetings, exposure workshop, focus group
discussions and management review, together with selected provincial, city and
municipal treasurers forming the Technical Working Group.
1. Title. This Manual shall be known as the Local Treasury Operations Manual
(LTOM), 2nd Edition, also herein referred to as the LTOM, 2nd Edition.
2. Background. Prior to this publication, the first edition of the LTOM was issued
by the Secretary of Finance under Department Order No.10-08, dated 26 March
2008, pursuant to Article 456 of the Implementing Rules and Regulations (IRR) of
the Local Government Code (LGC) of 1991. The LTOM has since been designed
to serve as a handy reference material for all provincial, city and municipal
treasurers in discharging their mandated functions. Since then, the LTOM has
been a regular reference of local treasury offices in their day-to-day operations.
B. RATIONALE
In recent years, the DOF, through the BLGF, perceived the need to update, improve
and enhance the first edition of the LTOM to be continuously relevant and attuned to
recent laws, jurisprudence, and policies, rules and regulations issued by oversight
agencies, and to be published in a user-friendly and easy to carry form.
Developments over the past decade concerning local finance render some provisions
of the first LTOM obsolete and irrelevant to local treasury offices, and there were
cases or complaints wherein local treasurers and other officials unknowingly follow
superseded provisions. Thus, this LTOM, 2nd Edition, adopted measures to address
these issues and concerns, and strategically changed the content groupings and
packaging into a four-volume manual to make it more functional for local treasurers
and other stakeholders.
1. Major Changes in Fiscal Organization since the LTOM was Issued. The LTOM
is guided by the LGC, which consolidated and adopted the various provisions
of different laws expanding the fiscal decentralization and autonomy of local
governments. These include Presidential Decree (PD) No. 231, as amended by
PD No. 426, PD No. 464 and PD No. 477, which sought to improve the fiscal
operations and organization of LGUs.
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LTOM, 2ND EDITION
However, there are laws amending certain provisions of the LGC, as well as
other laws providing for changes in the fiscal operations of LGUs, that have been
issued after 2008. All these pertinent laws and policies are included in this LTOM
and summarized in Annex 1 hereof.
2. Relationship of the LTOM to Existing Laws, Issuances and Pronouncements

of Other Fiscal and Regulatory Agencies. The LTOM, 2nd Edition, is primarily
based on the provisions of the LGC and its IRR, and relevant jurisprudence,
particularly those that apply to LGU financial operations and fiscal management.
This Manual also draws heavily from the Government Accounting and Auditing
Manual (GAAM) and the New Government Accounting System for LGUs (NGAS-
LGU) of the Commission on Audit (COA); the Budget Operations Manual (BOM)
of the Department of Budget and Management (DBM); opinions/ rulings and
issuances of the DOF and the BLGF; policies, regulations and opinions/rulings/
decisions of various bodies or agencies and authorities concerned with local fiscal
management and operations, such as DOF, COA, DBM, National Economic and
Development Authority (NEDA), and other authoritative expert references.
Consequently, this Manual provides discussions, illustrations, forms and
prescribed courses of action to supplement existing guidelines and regulations
of the DOF and the BLGF. This Manual, however, does not seek to supersede
issuances and rulings of other competent authorities, but rather aim to reiterate
and amplify their respective implementation.
C. OBJECTIVES OF THIS MANUAL

The objectives of this Manual are as follows:
1. To provide Local Treasurers with an updated reference material that will
guide them in discharging their duties and functions under the decentralized
framework and environment of the LGC;
2. To equip Local Treasurers with necessary information to develop their own
capabilities to respond to the demands of their roles within the LGU and fiscal
management structures;
3. To enable Local Treasurers to fully appreciate their powers, functions, and
authorities, and to relate these constructively with those of other officers
concerned with fiscal functions;
4. To raise awareness of Local Treasurers on the basic concepts and tools of
the non-traditional functions of LGUs that they may be involved in, whether as
principals or as advisers; and
5. To serve as a guide to Local Treasurers and other fiscal officers in the
management of the LGU’s financial affairs conforming to prescribed
good governance practices and internal control measures for improved
accountability and transparency.
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OVERVIEW
D. BRIEF DESCRIPTION OF THIS MANUAL

This publication consists of four (4) books forming integral parts of the LTOM, 2nd
Edition, which are printed and packaged individually for easy reference. Each book
contains important information and annexes, and is intended to be used as a stand-
alone reference on local treasury operations.
Some provisions contained in the Manual are closely paraphrased, if not quoted
verbatim, from the relevant text of the laws, jurisprudence, regulations, policies,
issuances, opinions, rulings and decisions. Valid portions of various laws and
issuances were recast into a single provision, and parts of a single provision that
apply to the different aspects of treasury operations are reflected separately in the
appropriate topics.
The sources of particular sections or topics in this Manual are reflected in the text
itself, or set in parenthesis, to enable users to refer to the original provision if desired.
Likewise, the location of provisions alluded to in another chapter or section are
indicated in the respective portions.
For more detailed reading and information, users of this Manual are encouraged to
refer to the LGC and its IRR, the GAAM, the NGAS-LGU, the BOM and the myriad
of compilation of rulings, issuances and circulars of concerned oversight agencieis.
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LTOM, 2ND EDITION
BOOK I
Fiscal Organization of Local Governments
and the Local Treasury Office
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TABLE OF CONTENTS
TABLE OF CONTENTS
ACRONYMS xv
CHAPTER 1 1
FISCAL

ORGANIZATION OF LOCAL GOVERNMENTS
Section 1. Legal Framework 1
Section 2. Creation, Division, Merger, Abolition 3
and Conversion of LGUs
Section 3. The Provincial/City/Municipal Treasury Office 7
Section 4. Organizational Structures:
Models for the Local Treasury Office 8
CHAPTER 2 18
THE LOCAL TREASURER
AND THE ASSISTANT LOCAL TREASURER
Section 5. Authority of the Secretary of Finance to Appoint Local 18
Treasurer and Assistant Local Treasurer
Section 6. Authority of the LCE over the Local Treasurer 19
and Assistant Local Treasurer
Section 7. Qualifications of Local Treasurer 20
Section 8. Processing of the Appointments of Provincial, City, 20
and Municipal Treasurers and Assistant Provincial, City,
and Municipal Treasurers
Section 9. Designation of Acting/Officer-In-Charge (OIC)/In-Charge 26
of Office (ICO) Provincial/City/Municipal Treasurers
and Assistant Treasurers
Section 10. Automatic Succession of the Assistant Provincial/City/ 32
Municipal Treasurer
Section 11. Designation in the Absence of an Assistant Local Treasurer 32
Section 12. Relief or Detail of Local Treasurers 32
and Assistant Local Treasurers
Section 13. Other Personnel Actions for Local Treasurers 35
Section 14. Preventive Suspension of Local Treasurers 43
Section 15. Attendance to Administrative, Civil or Criminal Investigation 46
of Local Treasurers and Assistant Local Treasurers
Section 16. Approval and Grant of Application for Leave of Absence 47
Section 17. Authority to Travel Abroad and Participate 50
in Training Programs
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LTOM, 2ND EDITION
CHAPTER 3 52
ADMINISTRATIVE AND TECHNICAL SUPERVISION
Section 18. Scope and Nature 52
A. Administrative and Technical Supervision by the BLGF 52
B. Technical Supervision by Provincial Treasurer 53
Over Municipal and Component City Treasurers
Section 19. Fiscal Performance Evaluation of LGUs and Local Treasurers 54
A. Conduct of Local Treasury Operations Evaluation 54
B. LGU Financial Sustainability Score Cards (LGUFSS) 54
C. Performance Standards for Local Treasurers 55
Section 20. Turn-Over of Accountabilities to the Incoming 56
and Out-going Local Treasurers
CHAPTER 4 60
ROLES, DUTIES, AND RESPONSIBILITIES
OF THE LOCAL TREASURER
Section 21. Powers and Duties of Local Treasurer 60
Section 22. The Local Treasurer’s Role in Boards and Committees 67
Created Pursuant to the LGC and Other Laws
Section 23. Treasurer’s Role in National and Local Elections 70
Pursuant to the Omnibus Election Code
CHAPTER 5 71
BONDING OF LOCAL TREASURERS
AND OTHER LGU ACCOUNTABLE OFFICERS
Section 24. Legal Basis for the Bonding of Local Treasurers 71
and Other LGU Accountable Officers
Section 25. Guidelines on Bonding of Local Treasurers 71
and Accountable Officers
Section 26. Schedule of Cash Accountability 73
and the Corresponding Bonds
Section 27. Renewal 74
Section 28. Increase in the Amount of Accountability 75
Section 29. Accountable Officers Considered Unsafe Risks 75
Section 30. Cancellation of Bond 76
Section 31. Effect of Cancellation 76
Section 32. The Fidelity Fund 76
Section 33. Extent of Liability 76
Section 34. Validity of Fidelity Bonds. 77
Section 35. Adjudication and Payment of Claims against the Fidelity Fund 77
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TABLE OF CONTENTS
FORMS AND ANNEXES 80

Annex 1 List of Laws that Shaped Fiscal Decentralization 81
in the Philippines
Annex 2 DOF Department Order No. 031.2018 - Guidelines on the 119
Computation and Certification of Income for the Creation,
Conversion, Merger or Abolition of a Local Government Unit (LGU)
Annex 3 DOF Department Personnel Order No. 477-2019 124
- Guidelines on the Evaluation and Processing of Appointments
Annex 4 BLGF Memorandum Circular No. 025-2019 - Guidelines on the 131
Evaluation and Processing of Appointments of Local Treasurers
Annex 5 DOF Department Special Order No. 01-2018 - Updated Code 145
of Approving and Signing Authorities (CASA) of the Bureau
of Local Government Finance (BLGF)
Annex 6 BLGF Memorandum Circular No. 16-2015 - Local Public 149
Financial Management Tools for the Electronic Statement
of Receipts and Expenditures
Annex 7 DOF Department Order No. 075.2018 - Establishing the Local 151
Government Unit (LGU) Fiscal Sustainability Scorecard (FSS)
in the Bureau of Local Government Finance (BLGF)
Annex 8 DOF Department Order No. 006.2015 - Performance Standards 171
for Local Treasurers and Assistant Treasurers
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LTOM, 2ND EDITION
ACRONYMS
AGDB Authorized Government Depository Bank
AOM Audit Observation Memorandum
ASPP Annual Supplies Procurement Plan
ATAP Authority to Accept Payment
BARMM Bangsamoro Autonomous Region in Muslim Mindanao
BAC Bids and Awards Committee
BIR Bureau of Internal Revenue
BLGF Bureau of Local Government Finance
BMBE Barangay Micro Business Enterprises
BTr Bureau of the Treasury
CESB Career Executive Service Board
COA Commission on Audit
COMELEC Commission on Elections
CRAAF Consolidated Report of Accountability for
Accountable Forms
CSC Civil Service Commission
CTOO Chief Treasury Operations Officer
DILG Department of Interior and Local Government
DBM Department of Budget and Management
DepEd Department of Education
DOF Department of Finance
DO/PO District/Provincial Office
DOST Department of Science and Technology
EU PFM 2 European Union’s Public Financial Management 2
eSRE electronic Statement of Receipts and Expenditures
GAAM Government Accounting and Auditing Manual
GAD Gender and Development Fund
GF General Fund
GOCC Government Owned and Controlled Corporation
GSIS Government Service Insurance System
HUC Highly Urbanized City
HoA Head of the Agency
ICO In-Charge of Office
IPCR Individual Performance Commitment and Review
IRA Internal Revenue Allotment
IRR Implementing Rules and Regulations
JMC Joint Memorandum Circular
LCE Local Chief Executive
LDRRMF Local Disaster Risk Reduction and Management Fund
LFC Local Finance Committee
LGC Local Government Code
LGU Local Government Unit
LMB Land Management Bureau
LTO Local Treasury Operations
MC Memorandum Circular
MMA Metro Manila Area
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ACRONYMS
MMDA Metro Manila Development Authority

MOOE Maintenance and Other Operating Expenses
MTO Municipal Treasurer’s Office
NAPOLCOM National Police Commission
NCR National Capital Region
NEDA National Economic and Development Authority
NGAS New Government Accounting System
NSO National Statistics Office
OIC Officer-In-Charge
OPCR Office Performance Commitment and Review
PBL Public Bonding Law
PCW Philippine Commission on Women
PDS Personal Data Sheet
PNB Philippine National Bank
PPMP Project Procurement Management Plan
PRC Professional Regulation Commission
PS Personal Services
PSA Philippine Statistics Authority
PTO Provincial Treasurer’s Office
RAAF Report of Accountability for Accountable Forms
RATA Representation and Transportation Allowance
RCI Report of Checks Issued
RPT Real Property Tax
RRACCS Revised Rules on Administrative Cases in the Civil
Service
SALN Statement of Assets, Liabilities and Net Worth
SAM State Audit Manual
SC Supreme Court of the Philippines
SEAL Standardized Examination and Assessment for Local
Treasury Service Program
SEF Special Education Fund
SPL Special Privilege Leave
SPMS Strategic Performance Management System
SRE Statement of Receipts and Expenditures
SUC State Universities and Colleges
TCT Transfer Certificates of Title
TDS Tax Declarations
TOP Treasurer of the Philippines
UBOM Updated Budget Operations Manual
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LTOM, 2ND EDITION
INTRODUCTION
LTOM Book I describes the key features of the local government unit’s fiscal
organization and responsibilities, including the present requirements for the creation
of local governments, pursuant to existing laws.
Likewise, Book I discusses the policies and guidelines on the appointment and
designation of local treasurers and assistant local treasurers, their general and specific
roles, duties and responsibilities, as well as the scope and extent of administrative
and technical supervision over local treasury operations of LGUs.
LTOM Book I consists of five (5) Chapters, including Annexes, as follows:
Chapter 1 Fiscal Organization of Local Government Units (LGUs)
Chapter 2 The Local Treasurer and the Assistant Local Treasurer
Chapter 3 Administrative and Technical Supervision by the BLGF
Chapter 4 Roles, Duties and Responsibilities of the Local Treasurer
Chapter 5 Bonding of Local Treasurers and Other LGU Accountable Officers
xvii
CHAPTER FISCAL ORGANIZATION OF LOCAL GOVERNMENT
1 UNITS (LGUS)
SECTION 1. LEGAL FRAMEWORK

A. The State shall ensure the autonomy of local governments. (Article II, Sec. 4,
1987 Phil. Constitution)
B. The President of the Philippines shall exercise general supervision over local
governments. Provinces with respect to component cities and municipalities, and
cities and municipalities with respect to component barangays, shall ensure that
the acts of their component units are within the scope of their prescribed powers
and functions. (Article X, Sec. 4, 1987 Phil. Constitution)
Each 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. (Article
X, Sec. 5, 1987 Phil. Constitution)
LGUs shall have a just share, as determined by law, in the national taxes which
shall be automatically released to them. (Article X, Sec. 6, 1987 Phil. Constitution)
C. LGUs shall have the power and authority to establish an organization that shall
be responsible for the efficient and effective implementation of their development
plans, program objectives and priorities; to create their own sources of revenues
and to levy taxes, fees, and charges which shall accrue exclusively for their use
and disposition and which shall be retained by them; to have a just share in national
taxes which shall be automatically and directly released to them without need of any
further action; to have an equitable share in the proceeds from the utilization and
development of the national wealth and resources within their respective territorial
jurisdictions including sharing the same with the inhabitants by way of direct
benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of
real or personal property held by them in their proprietary capacity and to apply
their resources and assets for productive, developmental, or welfare purposes,
in the exercise or furtherance of their governmental or proprietary powers and
functions and thereby ensure their development into self-reliant communities and
active participants in the attainment of national goals. (Sec. 18, LGC)
D. Local governments shall be entitled to an equitable share in the proceeds of the
utilization and development of the national wealth within their respective areas,
in the manner provided by law, including sharing the same with the inhabitants by
way of direct benefits. (Art. X, Sec. 7,1987 Phil. Constitution) Every LGU created
or recognized under the LGC is a body politic and corporate endowed with powers
to be exercised by it in conformity with law. As such, it shall exercise powers
as a political subdivision of the National Government and as a corporate entity
representing the inhabitants of its territory. (Sec. 15, LGC)
E. When a new LGU is created, its corporate existence shall commence upon the
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LTOM, 2ND EDITION
election and qualification of its chief executive and a majority of the members of
its sanggunian, unless some other time is fixed therefor by the law or ordinance
creating it. (Sec.14, LGC)
F. Every LGU, as a corporation, shall have the following powers:
1. To have continuous succession in its corporate name;
2. To sue and be sued;
3. To have and use a corporate seal;
4. To acquire and convey real or personal property;
5. To enter into contracts; and
6. To exercise such other powers as are granted to corporations, subject to the
limitations provided in the LGC and other laws. [Sec. 22 (a), LGC]
G. LGUs shall enjoy full autonomy in the exercise of their proprietary functions and in
the management of their economic enterprises, subject to the limitations provided
in the LGC and other applicable laws. [Sec. 22 (d), LGC]
H. Every LGU shall exercise the powers expressly granted and those necessarily
implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion
of the general welfare. Within their respective territorial jurisdictions, LGUs shall
ensure and support, among other things, the preservation and enrichment of
culture, promote health and safety, enhance the right of the people to a balanced
ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic
prosperity and social justice, promote full employment among their residents,
maintain peace and order, and preserve the comfort and convenience of their
inhabitants. (Sec. 16, LGC)
I. 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];
2. Local government funds and monies shall be spent solely for public purposes
[Sec. 305 (b), LGC];
3. 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];
4. 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]; and
5. Provinces, cities and municipalities shall maintain a General Fund which
shall be used to account for such monies and resources as may be received
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FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS)
by and disbursed from the local treasury. The General Fund shall consist of
monies and resources of the local government which are available for the
payment of expenditures, obligations or purposes not specifically declared
by law as accruing and chargeable to, or payable from, any other fund. (Sec.
308, LGC)
SECTION 2. CREATION, DIVISION, MERGER, ABOLITION

AND CONVERSION OF LGUs
An LGU may be created, divided, merged, abolished, or its boundaries substantially
altered either by law enacted by Congress in the case of a province, city, municipality,
or any other political subdivision, or by ordinance passed by the sangguniang
panlalawigan or sangguniang panlungsod concerned in the case of a barangay
located within its territorial jurisdiction, subject to such limitations and requirements
prescribed in the LGC. (Sec. 6, LGC)
A. Common Requirements for Creation and Conversion of an LGU:
1. As a general rule, the creation of an LGU or its conversion from one level to
another level shall be based on three (3) verifiable indicators of viability and
projected capacity to provide services, to wit:
Indicators
It must be sufficient, based on acceptable standards, to provide for

all essential government facilities and services and special functions
Income
commensurate with the size of its population, as expected of the
LGU concerned.
It shall be determined on the total number of inhabitants within the
Population
territorial jurisdiction of the LGU concerned.
It must be contiguous, unless it comprises two or more islands
or is separated by a LGU independent of the others; properly
Land Area identified by metes and bounds with technical descriptions; and
sufficient to provide for such basic services and facilities to meet
the requirements of its populace.
2. Compliance with income, population and land area shall be attested to by

the DOF, the National Statistics Office (NSO), now known as the Philippine
Statistics Authority (PSA), and the Land Management Bureau (LMB),
respectively. (Sec. 7, LGC)
3. The creation of a province, city or municipality shall not reduce the land area,
population, and income of the original unit or units at the time of said creation
to less than the minimum requirements prescribed by law.
4. Also, no creation, division, merger, abolition, or substantial alteration of
boundaries of LGUs shall take effect unless approved by a majority of the
votes cast in a plebiscite called for the purpose in the political unit or units
directly affected. Said plebiscite shall be conducted by the Commission on
3
LTOM, 2ND EDITION
Elections (COMELEC) within one hundred twenty (120) days from the date
of effectivity of the law or ordinance effecting such action, unless said law or
ordinance fixes another date. (Sec. 10, LGC)
B. Requirements for the Creation of Local Governments - Local government
units may be created in accordance with the criteria provided for in the LGC,
summarized as follows:
Coverage/ Requisites for Creation Legal

LGU
Jurisdiction Income1 Population Land Area Basis
Province Cluster of Average annual A population A contiguous Sec.
municipalities, income, as certified of not less territory of at 461,
Constant prices adjust for the or by the DOF, of not 250,000 least 2,000 LGC
effects of inflation. Using municipalities less than inhabitants sq. km.2 as
constant prices enables us to and Php20,000,000.00 as certified certified by
component based on 1991 by the NSO, the LMB.
measure the actual change in
cities constant prices now known
output (and not just an increase (See Annex 2), as the PSA;
due to the effects of inflation. and either of the or
following requisites:
City3 Municipality Locally A population A contiguous RA
or a cluster of generated of not less territory of No.
barangays average 150,000 at least 100 9009
annual income, as inhabitants, sq. km. as
certified by the DOF, as certified certified by
of at least by the NSO, the 4
Php100,000,000.00 now known LMB.
for the last two as the PSA;
(2) consecutive or
years based on
2000 constant
prices (See
Annex 2), and if it
has either of the
following requisites:
1 The average annual income shall include the income accruing to the general fund, exclusive of special funds, trust funds, transfers
and non-recurring income.
2 The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do
not contribute to the income of the province.
3 A city may either be Component or Highly Urbanized. Provided, however, that the criteria established in the LGC shall not affect
the classification and corporate status of existing cities. Independent component cities are those component cities whose charters
prohibit their voters from voting for provincial elective officials. Independent component cities shall be independent of the province.
(Sec. 451, LGC)
4 The territorial jurisdiction of a newly-created city shall be properly identified by metes and bounds. The requirement on land area
shall not apply where the city proposed to be created is composed of one (1) or more islands. The territory need not be contiguous
if it comprises two (2) or more islands.
4

LGU
Jurisdiction Income Population Land Area Basis
Municipality5 A group of Average A population Contiguous Sec.
barangays annual income,as of not less territory of 442,
certified by 25,000 at least 50 LGC
the provincial inhabitants, sq. km. as
treasurer, as certified certified by the
of at least by the NSO, LMB.6
Php2,500,000.00 now known as
for the last two the PSA; and
(2) consecutive
years based on
1991 constant
prices (See
Annex 2);
Barangay7 Out of a N/A A population N/A Sec.
contiguous of at least 2,000 386,
territory inhabitants as LGC
certified by the
NSO, nown
known as
PSA, except
in cities and
municipalities
within Metro
Manila and other
metropolitan
political
subdivisions
or in HUCs
where such
territory shall
have a certified
population of
at least 5,000
inhabitants.
5 A municipality may be created, divided, merged, abolished, or its boundary substantially altered only by an Act
of Congress and subject to the approval by a majority of the votes cast in the plebiscite to be conducted by the
COMELEC in the LGU/s directly affected. Except as may otherwise be provided in the said Act, the plebiscite shall
be held within one hundred twenty (120) days from the date of its effectivity. (Sec. 441, LGC)
6 The territorial jurisdiction of a newly created municipality shall be properly identified by metes and bounds. The
requirement on land area shall not apply where the municipality proposed to be created is composed of one (1)
or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (Sec. 442, LGC)
7 Creation of a Barangay
i. To enhance the delivery of the basic services in the indigenous cultural communities, barangays may be
created in such communities by an Act of Congress, notwithstanding the aforementioned requirement.
ii. The territorial jurisdiction of the new barangay shall be properly identified by metes and bounds or by more
or less permanent natural boundaries. The territory need not be contiguous if it comprises two (2) or more
islands.
iii. The governor or city mayor may prepare a consolidation plan for barangay, based on the foregoing criteria,
within his territorial jurisdiction. The plan shall be submitted to the sangguniang panlalawigan or sangguniang
panlungsod concerned for appropriate action.
iv. In the case of municipalities within the Metropolitan Manila area and other metropolitan political subdivisions,
the barangay consolidation plan shall be prepared and approved by the Sangguniang Bayan concerned. (Sec.
386, LGC)
5
LTOM, 2ND EDITION

LGU
Jurisdiction Income Population Land Area Basis
Highly Cities Latest annual Minimum population N/A Sec.
Urbanized income of at least of 200,000 452,
Cities Php50,000,000.00, inhabitants, LGC
(HUC)8 based on 1991 as certified by the
constant prices,as NSO, now known as
certified by the City the PSA.
Treasurer (See
Annex 2); and
C. Requirements for the Merger/Consolidation or Abolition of LGUs

1. Division and merger of existing LGUs shall comply with the same
requirements herein prescribed for their creation: provided, however, that
such division shall not reduce the income, population, or land area of the
LGU/s concerned to less than the minimum requirements prescribed in the
LGC: provided, further, that the income classification of the original LGU/s
shall not fall below its current classification prior to such division. (Sec. 8,
LGC)
2. An LGU may be abolished when its income, population, or land area has
been irreversibly reduced to less than the minimum standards prescribed for
its creation under Book III of the LGC, as certified by the national agencies
mentioned in Sec. 7 of the same, to Congress or to the sanggunian concerned,
as the case may be. The law or ordinance abolishing an LGU shall specify
the province, city, municipality, or barangay with which the LGU sought to be
abolished will be incorporated or merged. (Sec. 9, LGC)
D. Creation, Division, Merger or Alteration of Boundaries of Municipalities
or Barangays in the Bangsamoro Autonomous Region pursuant to RA
No. 11504 or An Act Providing for the Organic Law for the Bangsamoro
Autonomous Region in Muslim Mindanao (BARMM)
1. The Bangsamoro Autonomous Region is an integral, indivisible, and
inseparable part of the territory of the Republic of the Philippines. The
Bangsamoro people shall uphold the Constitution as the fundamental law of
the land and unequivocally owe allegiance and fidelity to the Republic of the
Philippines. (Art. IV, Sec. 1, RA No. 11504)
8 Highly Urbanized Cities (HUC):
i. Cities which do not meet the above requirements shall be considered component cities of the province in
which they are geographically located. If a component city is located within the boundaries of two (2) or more
provinces, such city shall be considered a component of the province of which it used to be a municipality.
Qualified voters of highly urbanized cities shall remain excluded from voting for elective provincial officials.
[Sec. 452 (b)(c), LGC]
ii. Unless otherwise provided in the Constitution or the LGC, qualified voters of independent component cities
shall be governed by their respective charters, as amended, on the participation of voters in provincial
elections. Qualified voters of cities who acquired the right to vote for elective provincial officials prior to the
classification of said cities as highly urbanized after the ratification of the Constitution and before the effectivity
of the LGC, shall continue to exercise such right. (Sec. 452, LGC)
iii. It shall be the duty of the President to declare a city as highly urbanized after it shall have met the minimum
requirements prescribed, upon proper application therefor and ratification in a plebiscite by the qualified voters
therein. (Sec. 453, LGC)
6
2. In the exercise of its right to self-governance, the Bangsamoro Autonomous

Region is free to pursue its political, economic, social and cultural development
as provided for in the Organic Law. (Art. IV, Sec. 2, RA No. 11504)
3. The authority of the Bangsamoro Government to regulate the affairs of its
constituent local government units shall be guaranteed in accordance with
the Organic Law and a Bangsamoro local government code to be enacted
by the Parliament. The privileges already enjoyed by local government units
under Republic Act No. 7160, otherwise known as the “Local Government
Code of 1991,” as amended, and other existing laws shall not be diminished.
The Parliament may create, divide, merge, abolish, or substantially alter
boundaries of municipalities or barangays in accordance with a law enacted
by the Parliament. The municipalities or barangays created, divided,
merged, or whose boundaries are substantially altered, shall be entitled to
their appropriate share in the national taxes or Internal Revenue Allotment:
Provided, That the criteria laid down in Republic Act No. 7160, as amended,
and other national laws shall be satisfied: Provided, further, That it shall be
approved by a majority of the votes cast in a plebiscite in the political units
directly affected.
When such acts require the creation of a legislative district, the Bangsamoro
Government shall cooperate and coordinate with the National Government
through the Philippine Congress-Bangsamoro Parliament Forum to prioritize
the deliberations on the creation of a legislative district.
Nothing in the Organic Law shall be construed to allow the Bangsamoro
Government to create legislative districts.
(Art. Vl, Sec. 10, RA No. 11504)
4. The powers of government shall be vested in the Parliament which shall
exercise those powers and functions expressly granted to it by the Organic
Law, and those necessary for, or incidental to, the proper governance and
development of the Bangsamoro Autonomous Region. (Art. Vll, Sec. 2, RA
No. 11504)
SECTION 3. THE PROVINCIAL/CITY/MUNICIPAL TREASURY OFFICE

A. Pursuant to the provisions of the LGC, there shall be a municipal, city and
provincial treasurer, as among the officials mandated to respectively govern each
of the municipal, city and provincial governments. [Sec. 443(a), 454(a), 463(a),
LGC]
B. Pursuant to Sec. 470 (d) of the LGC, the treasurer shall take charge of the treasury
office, perform the duties provided for under Book II of the LGC, among other
powers and duties mentioned in Chapter 4 of this manual.
C. The provisions under Book II of the LGC shall govern the exercise by provinces,
cities, municipalities, and barangays of their taxing and other revenue-raising
powers. (Sec. 128 to 383, LGC)
7
LTOM, 2ND EDITION
SECTION 4. ORGANIZATIONAL STRUCTURES:

MODELS FOR THE LOCAL TREASURY OFFICE
A. The Local Treasury Office, as the core administrator of LGU funds and finances,
shall adopt appropriate and responsive organizational structure that takes into
consideration the major divisions or functional units of the office that respond to
the goals of the LGU and for the provision of efficient and quality services to its
constituency and key stakeholders.
Models of efficient and desirable organizational setup and structure of Provincial
Treasury Office (PTO), City Treasury Office (CTO) and Municipal Treasury Office
(MTO), according to specific considerations, are presented below.
B. The Local Treasury Office is also encouraged to create an Information Technology

(IT) Unit or IT plantilla positions to perform the following functions:
1. Handle the security and maintenance of digitized real property tax records
of the local treasury office and assist in the posting of related tax information
campaign materials;
2. Handle the maintenance and updating of systems applications and
information technology requirements of the local treasury office and provide
recommendations;
3. Prepare and submit reports as may be required by the BLGF;
4. Provide troubleshooting services in the local treasury office; and

5. Perform other related functions that may be assigned.
C. For the PTO, the following basic functional units/divisions are directly under the
Provincial Treasurer and may be assisted by an Assistant Provincial Treasurer,
or two Assistant Provincial Treasuers (one for Operations, and the other for
Administration). The Local Treasurers of component municipalities and cities are
under the technical supervision of the PTO. The functions of the divisions under
the PTO are provided below:
1. Administrative Division
a. Ensure that all national and local circulars, memoranda and guidelines
concerning local treasury operations are received, disseminated and
acted upon/complied with;
b. Maintain records of all communications and documents pertaining to
local treasury operations;
c. Prepare Office Performance Commitment and Review (OPCR) and
ensure submission of the Individual Performance Commitment and
Review (IPCR) of personnel, compliant to the approved Strategic
Performance Management System (SPMS) of the LGU;
8
d. Maintain records of all pertinent information of PTO personnel (i.e.,

PDS, SALN, Leave Credits);
e. Ensure the observance of R A No. 6713 or the “Code of Conduct and
Ethical Standards for Public Officials and Employees,” and recommend
disciplinary action when appropriate;
f. Ensure that all accountable officers are properly bonded pursuant to
the provisions of the Public Bonding Law (PBL);
g. Draft reply/memo circulars pertaining to treasury matters;
h. Conduct annual physical inventory of the following: unused accountable
forms; office supplies; property, plant and equipment; Transfer
Certificates of Title (TCTs)/Tax Declarations (TDs) of government-
owned properties and pertinent documents to support ownership; and
ensure that all buildings, property and equipment are insured annually;
i. Prepare monthly report of accountable forms;
j. Prepare and submit reports as may be required by the BLGF;
k. Perform other duties and functions that may be assigned.
2. Treasury Operations and Review Division

a. Assist in the conduct of public auction of delinquent real properties;
b. Recommend strategies and revenue measures to increase collection;
c. Assist the Provincial Treasurer in preparing proposed revenue
ordinances;
d. Prepare reports regarding collections on a regular basis;
e. Prepare the annual estimated revenue of the province before July 15th
of each year;
f. Prepare Budget Proposals of the PTO, including the Project
Procurement Management Plan (PPMP), Annual Supplies Procurement
Plan (ASPP), and other related reports;
g. Prepare and submit reports as may be required by the BLGF; and
h. Perform other duties and functions that may be assigned.
3. Cash Division
a. Disburse obligations, such as salaries and wages, allowances and
honorarium;
b. Prepare checks for disbursement of various obligations of the Province;
9
LTOM, 2ND EDITION
c. Receive daily collections including payments on real property tax paid

by property owners, to the provincial treasurer of the province to which
the municipality where the subject property is located;
d. Prepare daily consolidated report of collections and deposits and
attach the list of checks for deposit;
e. Deposit daily to authorized government depository banks (AGDBs) all
collections received from collectors or remitted by different collecting
offices;
f. Remit national and municipal shares;
g. Prepare daily report of checks issued (RCI);
h. Update cash books daily and prepare daily Cash Position Report;
i. Prepare daily, weekly or monthly report of collections;
j. Prepare and submit electronic Statement of Receipts and Expenditures

(eSRE) quarterly reports and other reports required by the BLGF;
k. Consolidate the eSRE quarterly reports of its component municipalities;

and
l. Perform other duties and functions that may be assigned.
4. Local Economic Enterprise Division. As may be necessary; refer to

functions of this division under the CTO.
Figure 1. Organizational Structure of the Provincial Treasury Office
PROVINCIAL TREASURER
Assistant Provincial Assistant Provincial

Treasurer Treasurer
(Operations) (Administration)
Local Economic
Administrative Treasury Operations Cash
Enterprise
Division and Review Division Division
Division
10
D. The City Treasury Office (CTO), on the other hand, is viewed to be more complex
in structure than that of the PTO. It has at least five major functional divisions,
each of which may be divided into sections; provided, that it is in accordance with
DBM and CSC rules and regulations.
All the functional divisions of the CTO are directly under the supervision of the
City Treasurer and may be assisted by one or two Assistant City Treasurers. The
functions of the divisions under the PTO are provided below:
1. Administrative Division
pertaining to treasury operations are received, disseminated and acted
upon/complied with;
b. Maintain records of all communications and documents pertaining to
treasury operations;
c. Prepare OPCR and ensure submission of the IPCR of personnel,
compliant to the approved SPMS of the LGU;
d. Maintain records of all pertinent information of CTO personnel (i.e.
e. Ensure the observance of RA No. 6713 or the “Code of Conduct and
disciplinary action, when appropriate;
the provisions of the PBL;
forms; office supplies; property, plant and equipment; TCTs/TDs of
government-owned properties and pertinent documents to support
ownership; and ensure that all buildings, property and equipment are
insured annually;
i. Prepare Budget Proposals of the CTO, including the PPMP, ASPP and
other related reports;
j. Prepare Estimated Revenue for submission before July 15th of each
year;
k. Issue accountable forms to accountable officers and prepare monthly
reports pertaining thereto;
l. Prepare and submit reports as may be required by the BLGF; and
m. Perform other duties and functions that may be assigned.
11
LTOM, 2ND EDITION
2. Cash Division. For clearer delineation of functions of personnel in the Cash

Division, it may be subdivided into two sections: (i) Cash Receipts Section,
and (ii) Cash Disbursement Section.
a. Receive daily collections from all collection officers of the LGU;
b. Prepare the daily consolidated report of collections and deposits and
c. Deposit daily cash and check collections to AGDBs;
d. Prepare daily, weekly and monthly report of collections;
e. Update cash books and prepare daily cash position report;
f. Prepare monthly report of used and unused accountable forms;
g. Disburse salaries and wages, allowances and honorarium of
employees;
h. Prepare checks in payment of various obligations of the city;
i. Remit national government and barangay shares;
j. Prepare daily RCI;
k. Prepare and submit quarterly eSRE reports, and other reports required
by the BLGF; and
3. Real Property Tax Division

a. Compute and collect payments on real property tax and issue
Certificate of payments/tax clearance upon request;
b. Update records of real property tax payments and prepare list of
delinquent properties for posting and publication;
c. Send notices of delinquency to delinquent real property owners;
d. Assist in the conduct of public auction of delinquent real properties;
e. Ensure that cash books of collectors are updated daily;
f. Prepare monthly report of barangay share;
g. Prepare monthly/quarterly report of real property tax collection;
h. Recommend strategies to increase real property tax collection;
i. Prepare and submit reports as may be required by the BLGF; and
j. Perform other duties and functions that may be assigned.
12
4. Business Tax and Miscellaneous Revenue Division

a. Evaluate gross receipts of business establishments and assess the
corresponding local business taxes, fees and charges, and other duly
authorized local impositions;
b. Collect and record payments on business taxes, fees and charges,
and other taxes;
c. Issue certificate of payment upon request;
d. Prepare notice of delinquency on local business tax;
e. Inspect business establishments within the jurisdiction of the city,
relative to the implementation of approved tax ordinances, pursuant to
the provisions of the LGC;
f. Calibrate and seal all weights and measures used within the LGU
jurisdiction;
g. Receive, inspect and assess applications of retirement of business;
h. Ensure that cash books of collectors are updated daily;
i. Recommend strategies to increase collection of local business tax;
j. Prepare and submit reports as may be required by the BLGF; and
k. Perform other duties and functions that may be assigned.
5. Treasury Operations and Review Division

a. Assist in the conduct of public auction of delinquent real properties;
b. Prepare reports regarding collections on a regular basis;
c. Recommend strategies and revenue measures to increase collection;
d. Prepare the annual estimated revenue of the city before July 15th of
each year;
e. Prepare Budget Proposals of the CTO, including the PPMP, ASPP and
other related reports;
f. Conduct Examination of Books of Accounts on Business
Establishments;
g. Evaluate request on re-assessment and tax credit;
h. Assist the City Treasurer in preparing proposed revenue ordinances;
i. Prepare and submit reports as may be required by the BLGF; and
j. Perform other duties and functions that may be assigned.
13
LTOM, 2ND EDITION
6. Local Economic Enterprise Division

a. Advise the LCE and the sanggunian, regarding the establishment
of local economic enterprises, if the same is warranted, marketable,
viable and self-liquidating;
b. Ensure that setting up and operation of the local economic enterprises
shall be included in the development planning and investment
programming;
c. Ensure that funding requirement for the creation of local economic
enterprise is included in the annual budget of the LGU;
d. Advise the LCE and sanggunian in the enactment of ordinances
on local economic enterprises, which should be aligned to the LGU
development goals and objectives and ensure that the same shall
operate under the basic principle of financial self-sufficiency via cost
recovery;
e. Advise the LCE and sanggunian regarding the efficiency and
effectiveness of its service delivery, that the same is respondent to the
needs of the constituency and does not compete with the goods and
services provided by the private sector; and
f. Advise the LCE of delinquencies incurred by the local economic
enterprise clients/lessees for the purpose of taking the necessary
remedial measures and enforcing sanctions, if applicable.
Figure 2. Organizational Structure of the City Treasury Office
CITY TREASURER
Assistant City Treasurer Assistant City Treasurer

(Operations) (Administration)
Real Business Treasury Local

Adminis-
Cash Property Tax and Operations Economic
trative
Division Tax Miscellaneous and Review Enterprise
Division
Division Revenue Division Division Division
14
E. For the Municipal Treasury Office (MTO), the organizational structure is simpler,
with only two (2) functional divisions, i.e., the Cash Division, and the Revenue
Division, whose functions are similar to that of the CTO’s, together with
Administrative Section to provide administrative support to the operations of the
office.
1. Administrative Section
regarding treasury operations are received, disseminated and acted
upon/complied with;
b. Maintain records of all communications and pertinent documents on
local treasury operations;
c. Prepare OPCR and ensure submission of the IPCR of personnel,
compliant with the approved SPMS of the LGU;
d. Maintain records of pertinent information of all MTO personnel (i.e.
e. Ensure the observance of RA No. 6713 or the “Code of Conduct and
disciplinary action when appropriate;
the provisions of the PBL;
forms; office supplies; property, plant and equipment; TCTs/TDs of
government-owned properties and pertinent documents to support
ownership; and ensure that all buildings, property and equipment are
insured annually;
i. Prepare Budget Proposals of the MTO, including the Procurement
Management Plan, Annual Supplies Procurement Plan and other
related reports;
j. Prepare the Estimated Revenue for submission before July 15th of
each year;
k. Issue accountable forms to accountable officers;
l. Prepare monthly report of accountable forms;
m. Prepare and submit reports as may be required by the BLGF; and
n. Perform other duties and functions that may be assigned.
15
LTOM, 2ND EDITION
2. Cash Division
a. Receive daily collections from all collection officers of the LGU;
b. Prepare the daily consolidated report of collections and deposits and
c. Deposit daily collections of the municipality to AGDBs;
d. Prepare daily, weekly and monthly report of collections;
e. Update Cash Books and prepare daily cash position report;
f. Assist the Municipal Treasurer in handling the disbursement of local
government funds and such other funds entrusted by law or other
competent authority;
g. Disburse salaries and wages, allowances and honorarium of
employees;
h. Prepare checks in payment of various obligations of the municipality;
i. Remit national and barangay shares;
j. Prepare daily RCI;
k. Prepare and submit quarterly eSRE reports required by the BLGF; and
3. Revenue Division
a. Compute and collect payments on Real Property Tax (RPT);
b. Prepare monthly/quarterly report of RPT collection;
c. Update records of RPT payment and prepare list of delinquent
properties;
d. Send notices of delinquency to delinquent real property owners;
e. Prepare notices of delinquency on RPT for posting and publication;
f. Prepare monthly report of barangay share;
g. Evaluate gross receipts of business establishments and assess local
business taxes, fees and charges, and and other duly authorized local
impositions;
h. Collect and record payments on business taxes, fees and charges, and
other taxes;
i. Prepare notice of delinquency on local business tax;
16
j. Inspect business establishments within the jurisdiction of the

municipality relative to the implementation of approved tax ordinances
pursuant to the provisions of the LGC;
k. Receive, inspect and assess applications for retirement of business;
l. Calibrate and seal all weights and measures within the jurisdiction of
the LGU;
m. Issue Certificate of payments/tax clearance, upon request;
n. Ensure that cash books of collectors are updated daily;
o. Recommend strategies to increase collection on RPT, business tax
and other revenues;
p. Prepare and submit reports as may be required by the BLGF; and
q. Perform other duties and functions that may be assigned.
Figure 3. Organizational Structure of the Municipal Treasury Office
MUNICIPAL TREASURER
Assistant Municipal Treasurer
Administrative Section
Cash Division Revenue Division
Note: Administrative functions may be more of records management, supply management,

bonding requirements, performance management and similar administrative support functions.
HR functions may be limited to attendance monitoring, travel order and training, monitoring
of personnel action, but maintenance of personnel records must still be lodged with the HR
office or department of the LGU.
17
CHAPTER THE LOCAL TREASURER
2 AND THE ASSISTANT LOCAL TREASURER
SECTION 5. AUTHORITY OF THE SECRETARY OF FINANCE

TO APPOINT LOCAL TREASURER AND ASSISTANT
LOCAL 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
Local Treasurer shall be optional [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]
C. Nepotic Appointment
1. No person shall be appointed in the career service of the local government
if he/she is related within the fourth civil degree of consanguinity or affinity to
the appointing or recommending authority. (Sec. 79, Title III, LGC)
2. All appointments in the national, provincial, city and municipal governments
or in any branch or instrumentality thereof, including government owned
or controlled corporations, made in favor of a relative of the appointing or
recommending authority or of the chief of the bureau or office or of persons
exercising immediate supervision over him, are hereby prohibited.
The word “relative” and members of the family referred to are those related
within the third degree either of consanguinity or of affinity.
(Sec. 59. Chapter VIII, Book V, Administrative Code of 1987)
3. The rule on Nepotic appointment under Sec. 79, Title III of the LGC applies to
local treasurers and assistant treasurers in LGUs and not that under Sec. 59,
Chapter VIII, Book V of the Administrative Code of 1987. (CSC Resolution
No. 1000170 dated 06 October 2010 as affirmed by CA Decision dated 07
November, 2013 in CA G. R. S. P. No. 121404)
18
THE LOCAL TREASURER AND THE ASSISTANT LOCAL TREASURER
SECTION 6. AUTHORITY OF THE LCE OVER THE LOCAL TREASURER

AND ASSISTANT LOCAL TREASURER
The Treasurer shall be under the administrative supervision of the Governor or Mayor,
as the case may be, to whom he/she shall report regularly on the tax collection efforts
in the LGUs. [Sec. 470 (b), LGC]
The administrative supervision by the Local Chief Executive (LCE) over local
treasurers shall be executed in close coordination with the Secretary of Finance being
the appointing authority of treasurers. For this purpose, the treasurer shall be guided
by the definition of administrative supervision as provided under Sec. 38(2), Chapter
7, Book IV of Executive Order 292 or the Administrative Code of 1987.
“Administrative Supervision. - (a) Administrative supervision which

shall govern the administrative relationship between a department or
its equivalent and regulatory agencies or other agencies as may be
provided by law, shall be limited to the authority of the department or its
equivalent to generally oversee the operations of such agencies and to
insure that they are managed effectively, efficiently and economically
but without interference with day-today activities; or require the
submission of reports and cause the conduct of management audit,
performance evaluation and inspection to determine compliance with
policies, standards and guidelines of the department; to take such
action as may be necessary for the proper performance of official
functions, including rectification of violations, abuses and other forms
of maladministration; and to review and pass upon budget proposals
of such agencies but may not increase or add to them;
(b) Such authority shall not, however, extend to: (1) appointments
and other personnel actions in accordance with the decentralization
of personnel functions under the Code, except when appeal is made
from an action of the appointing authority, in which case the appeal
shall be initially sent to the department or its equivalent, subject
to appeal in accordance with law; (2) contracts entered into by the
agency in the pursuit of its objectives, the review of which and other
procedures related thereto shall be governed by appropriate laws,
rules and regulations; and (3) the power to review, reverse, revise,
or modify the decisions of regulatory agencies in the exercise of their
regulatory or quasi-judicial functions; and
(c) Unless a different meaning is explicitly provided in the specific
law governing the relationship of particular agencies, the word
“supervision” shall encompass administrative supervision as defined
in this paragraph.”
The DOF shall maintain its focal role as the overseer of the operations of local treasury
offices, both in administrative and technical aspects.
19
LTOM, 2ND EDITION
SECTION 7. QUALIFICATIONS OF A LOCAL TREASURER

A. No person shall be appointed Treasurer unless, he/she possesses the following
qualifications:
1. A citizen of the Philippines;
A person with dual citizenship shall not be appointed in government unless
he/she renounces his/her foreign citizenship pursuant to the provision of RA
9225. (CSC Memorandum Circular No. 23, series of 2016)
2. A resident of the LGU concerned;
One is a resident of a place from which his departure is indefinite as to
time, definite as to purpose; and for this purpose he has made the place
his temporary home. (Uytengsu vs. Republic of the Philippines, GR No.
L-6379)
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;
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 indicators as criteria in the selection process, subject to
civil service rules and regulations.
SECTION 8. PROCESSING OF THE APPOINTMENTS OF PROVINCIAL,

CITY, AND MUNICIPAL TREASURERS AND ASSISTANT
PROVINCIAL, CITY, AND MUNICIPAL TREASURERS
Pursuant to Department Personnel Order (DPO) No. 477.2019 dated 04 June 2019,
and its implementing guidelines, the appointments of the Provincial, City, or Municipal
Treasurers or Assistant Treasurers shall be processed as follows:
A. CRITERIA FOR EVALUATION. ln evaluating all the recommendees of the LCE,
the following qualifications and attributes shall be weighted:
1. Education: College degree, preferably in commerce, public administration
or law, from a recognized college or university;
2. Experience in treasury or accounting service: Provincial and City Treasurers
and Assistant Provincial and City Treasurers: At least five (5) years; Municipal
Treasurers or Assistant Municipal Treasurers: At least three (3) years;
20
3. Performance: At least ‘Very Satisfactory’ rating in the last rating period prior
to the assessment or screening;
4. Relevant Training: Completion of trainings, scholarships, and other capacity
building interventions relevant to the duties and functions of the position
undertaken within the last five (5) years reckoned from the date of LCE
recommendation; and
5. Other Related Criteria and Attributes: To further establish competency and
fitness, additional criteria and attributes shall be evaluated and weighted,
namely: (i) Salary Grade/Rank; (ii) Previous Designation in the Local
Treasury Service; (iii) Post-graduate Degree/s; (iv) Bar and/or Professional
License; (v) SEAL certification; and (vi) Interview by the BLGF.
The weights for SEAL certification shall be as follows: 10% for BCLTE, 15%
for ICLTE, and 20% for ACLTE.
The table of criteria and the respective weight allocations is attached as
Annex 3 [Department Personnel Order (DPO) 477.2019].
All mandatory requirements required under the LGC and CSC rules that have no point
allocation or determined on a pass-fail basis, such as citizenship, residency, good
moral character, eligibility, and non-nepotic relationship, together with the applicable
clearances and certifications, shall be fully evaluated by the BLGF.
B. APPOINTMENT REQUIREMENTS AND PROCEDURES
1. Publication and Posting of Vacancy. Per ltem Nos. 3.2 and 3.3 of DPO
No. 477.2019, the publication and posting of the vacant position of Local
Treasurer (LT) or Assistant Local Treasurer (ALT), in accordance with RA
No. 7041, as amended, for at least fifteen (15) calendar days, shall first be
complied with. The filling up of the vacant position shall be made after fifteen
(15) calendar days from its publication, but shall not exceed nine (9) months
from the date of publication. Such notice of vacancy shall strictly contain the
qualification standards, as provided under Secs. 470 and 471 of Republic
Act (RA) No. 7160 or the Local Government Code (LGC) of 1991, and shall
be posted in at least three (3) conspicuous places within the concerned LGU,
and shall be reported to the Civil Service Commission (CSC).
2. Prescribed Documentary Requirements. The basic documentary
requirements for processing the appointments of LT and ALT are as follows:
First Level Basic Documentary Requirements

for Appointment of Local Treasurers and Assistant Local Treasurers
Document Remarks
A. Requirements from the Individual Recommendees
1. Personal Data Sheet (PDS) - CSC Form No. 212, with the
3 Originals*
following:
1.1 Service Record 3 Originals
1.2 Work Experience Sheet 3 Originals
21
LTOM, 2ND EDITION
Document Remarks
1.3 Previous Office Order of Designation as Treasurer/ 1 Certified Copy
Assistant Treasurer each
1.4 Sworn Certificate of Employment (for private work
1 Photocopy
experience)
1.4 Latest Approved Appointment (if applicable) 1 Certified Copy
1.5 Certificate of Residency9 1 Original
2. Certificate/s of Eligibility
2.1 Civil Service Commission for CSP and/or BCLTE 1 Authenticated
Copy for each
2.2 Professional Regulation Commission (PRC) applicable eligibility
2.3 Bar
1 Certified Copy
3. Relevant Training Certificates10
each
1 Certified Copy
4. Performance Evaluation for the last two (2) rating periods11
each
B. LGU Requirements
1. Recommendation Letter of Local Chief Executive, with the
1 Original*
following:
1.1 Sworn Statement of Non-Prohibited Relationship12 1 Original*
1.2 Certification of Availability of Funds 13
1 Original
1.3 Approved Plantilla Schedule for the current year 1 Certified Copy
1.4 Publication of Vacancy (not beyond 3 months old)
1 Original
and Posting, with Qualification Standards14
1.6 Certificate of SPMS Compliance 1 Certified Copy
1.7 If applicable, provide justification/certification for: 1 Original for each
a. Quantum Leap in Salary Grade applicable case
b. Dearth of Applicants/Inclusion of Applicants from Other or include in the
LGUs recommendation
c. Non-inclusion of Next-in-Rank Employees letter
1.8 Government Issued ID with Photo and Signature of LCE 1 Certified Copy
Additional Requirement for Assistant Local Treasurer:

Certificate of Compliance with Sec. 325 of Republic Act No. 716015
* Original document must be signed by hand.

9 Certificate issued by the concerned Barangay Chairman and stating the candidate’s good moral character
10 Maximum ot 120 hours for the last 5 years for PT/CT: and 40 hours for the last 5 years for MT
11 Reckoned from the date of recommendation of the LCE
12 Certificate must state that the nominee is not within the 4th degree of affinity or consanguinity of the LCE
13 Certificate issued by the concerned Local Accountant or Budget Officer stating the authorized salary rate, salary
grade and item number of the position
14 The Qualifications Standards to be published and posted must follow Sec. 470 and 471 of Republic Act No. 7160
15 Signed by hand by the LCE and Local Accountant stating that the filling up of the position complies with Sec.
325a of the LGC
22
Second Level Basic Documentary Requirements

Document Remarks
1. Transcript of Records (except for recommendees who are 1 Authenticated

already regularly appointed Local Treasurer/Assistant Local Copy for each
Treasurer) academic degree
2. Latest Sworn Statement of Assets, Liabilities, and Net Worth
1 Original
(SALN)
3. Medical Certificate - Latest CSC Form No. 211 1 Original
4. Valid Clearances and Certificate/s of No Pending Case (if with pending case/s,
provide Case Summary/ies):
4.1 National Bureau of Investigation (NBI) 1 Original
4.2 Civil Service Commission (CSC) 1 Original
4.3 Ombudsman 1 Original
4.4 BLGF (only for recommendees who are already appointed
1 Original
LT/ALT
4.5 LGU or NGA (only for recommendees who are appointed
1 Original
government personnel)
5. Marriage Certificate (for married female only) 1 Certified Copy
6. Acceptance of Lower Salary (if applicable) 1 Original
3. Submission of Documentary Requirements.

The LGU, through its Human Resource Management Officer, shall:
a. Require each recommendee to submit all documentary requirements
listed in item A under the First Level Basic Documentary Requirements
and ensure the completeness of information;
b. Prepare the documentary requirements in item B of the First Level
Basic Documentary Requirements;
c. Consolidate, label, tab and properly file in a docket or binder all
documents enumerated in Annex A, together with the letter of
recommendation of the LCE [See Annex 4 (MC 025-2019)] as cover;
and
d. Requisites in the Submission of Letter of Recommendation of the
LCE. The letter of recommendation with supporting documents shall
be submitted to the BLGF RO, through the Provincial Treasurer, in
the case of municipalities and component cities, and to the BLGF
CO Administrative Division, in the case of LGUs in the National
Capital Region (NCR), for pre-evaluation and initial screening. lf the
recommendation is made by the LCE in Acting Capacity, compliance
with Sec. 46 of RA No. 7160, or the LGC, shall be observed.
23
LTOM, 2ND EDITION
4. First Level (lnitial Screening) Process. The concerned BLGF Action Officer
shall pre-evaluate the LGU's compliance with the documentary requirements
and provide immediate feedback. ln case the documents submitted are
found incomplete or deficient, the LGU shall be properly notified using the
prescribed forms under the said guidelines. The evaluation of the documents
shall be certified as to completeness and orderliness, and submitted to
the BLGF Regional and Central Human Resource Merit Promotion and
Selection Boards (HRMPSBs) for deliberations. The BLGF HRMPSB shall
deliberate and rank the recommendees for LT and/or ALT position/s. lt shall
comparatively evaluate all recommendees using the prescribed evaluation
form. lnterview of recommendees by the BLGF Regional Director or
Executive Director, as the case may be, shall be required to further evaluate
the candidates' capacity for the position, and the corresponding points shall
be included in the evaluation sheet. The results of each deliberation shall
be formalized through a Board Resolution, and supported by duly signed
summary of ratings, including all the First Level documentary requirements
and the accomplished compliance certification, to be submitted to the BLGF
Central HRMPSB.
5. Second Level (Final Deliberation) Process. The BLGF Central HRMPSB
shall conduct the corresponding Second Level process for the final
deliberation of all recommendees. The BLGF CO Administrative Division
shall communicate the results to the BLGF RO to inform the concerned
recommendee of the submission of the documentary requirements specified
in the Second Level Basic Documentary Requirements. Upon completion of
all the required documents, the BLGF Central HRMPSB Chairperson shall
endorse the proposed appointment papers to the Secretary of Finance,
through the Undersecretary of Revenue Operations Group (ROG), for final
action, together with the certification as provided. As part of due diligence, the
BLGF Office of the Executive Director, the ROG Office of the Undersecretary,
and/or the DOF Office of the Secretary may require additional information or
clarification whenever warranted.
6. Return Without Action Policy. All recommendations or documents received
by the BLGF RO or CO that are not compliant with the requirements shall
be given up to thirty (30) days upon issuance of notification to complete
the same. If after the lapse of the said period the requirements remain
to be completed, the entire set of documents shall be immediately and
formally returned without action to the concerned LCE. ln cases of individual
applications received by the BLGF, the same shall be immediately referred
to the concerned LCE for appropriate action.
7. lssuance of Appointment Papers. All appointments signed and issued
by the Secretary of Finance shall be subject for attestation by the CSC.
The same are not covered by Section 18 Rule Vl of the ORAOHRA, which
requires the concurrence of the majority of all the members of the local
Sanggunian to approve such appointments, inasmuch as the appointing
authority is the Secretary of Finance.
24
As per ltem No. 3.11 of DPO No. 477.2019, a certified true copy of the
appointment shall be issued to the appointee, through the BLGF, copy
furnished the LCE, in order that said appointee can immediately take his/
her oath of office and assume the duties of the position. ln cases where
the nature of the appointment issued involves promotion or transfer from
another agency or LGU to another, the appointee shall seek an Authority
to Transfer from the head of the agency where he/she is employed prior to
assumption, which shall be submitted to the BLGF CO. Upon receipt of the
copy of appointment, the appointed LT or ALT shall submit to the CSC Field
Office, through the BLGF CO Admin Division, the following:
a. Duly acknowledged, signed and dated Appointment Paper;
b. Copy of the Oath of Office; and
c. Clearance Form (CSC Form No.7).
C. REAPPOINTMENT. In case of modifications in appointment due to conversion of

the local government (i.e., cityhood, division, merger, etc.), such shall be requested
by the LCE concerned and shall be screened and evaluated by the respective
BLGF Regional and Central HRMPSBs following the foregoing procedures and
requirements, to wit:
1. Recommendation Letter of Local Chief Executive, with the following:
a. Sworn Statement of Non-Prohibited Relationship;
b. Certification of Availability of Funds;
c. Approved Plantilla Schedule for the current year; and
d. Government Issued ID with Photo and Signature of LCE.
2. Personal Data Sheet (PDS) - CSC Form No. 212, with the following:
a. Service Record;
b. Work Experience Sheet;
c. Office Order of Designation as Treasurer/Assistant Treasurer;
d. Latest Approved Appointment; and
e. Certificate of Residency.
3. Certificate/s of Eligibility (CSC, PRC, BAR)
4. Relevant Training Certificates
5. Performance Evaluation for the last two (2) rating periods
6. Latest Sworn Statement of Assets, Liabilities, and Net Worth (SALN)
7. Valid Clearances and Certificate/s of No Pending Case (if with pending
case/s, provide Case Summary/ies): NBI, CSC, Ombudsman, BLGF
8. Marriage Certificate, if applicable.
25
LTOM, 2ND EDITION
Pending the issuance of an appointment, the incumbent treasurer/assistant

treasurer may be issued a Notice of Salary Adjustment to effect the commensurate
salary of the position upon the conversion of the LGU. For requests for change of
position title which corresponds to a reappointment, the publication of the position
is no longer necessary. Copies of the LGU’s Charter and plebiscite shall, however,
be likewise submitted to support the request.
D. ADMINISTRATIVE COSTS. All administrative costs related to the conduct of

screening and deliberations by the BLGF ROs and CO shall be chargeable to the
concerned BLGF office funds only. No fees, of whatever nature, shall be collected
for the processing of appointments from the LGU or individual recommendees.
(BLGF Memorandum Circular No. 025-2019, 30 October 2019)
SECTION 9. DESIGNATION OF ACTING/OFFICER-IN-CHARGE (OIC)/

IN-CHARGE OF OFFICE (ICO) - PROVINCIAL/CITY/
MUNICIPAL TREASURERS AND ASSISTANT TREASURERS
A. General Guidelines on Designation Pursuant to CSC Memorandum Circular
(MC) No. 24 s. 2017 - The designation of a treasurer shall be in accordance with
the following civil service rules:
1. Employees to be designated should hold permanent appointments in
career positions;
2. Designees can only be designated to positions within the level they
are currently occupying. Employees holding first level positions cannot
be designated to perform the duties of second level positions except
in meritorious cases as determined by the CSC Regional Office upon
request for exemption by the agency concerned, such as organizational
set-up, calamity and due to exigency of the service. The exception shall
not apply to positions involving supervisory and executive managerial
functions. Division Chiefs may be designated to perform the duties of
second level executive/ managerial or third level positions;
3. For position with incumbents who temporarily cannot perform the
duties of the position (vacation, or sick leave, study leave, scholarship,
maternity leave, special assignments), the designation should be
synchronized with the absence of the incumbent, unless earlier revoked
or recalled by the appointing officer/authority. However, the designation
of employees every year may be renewed in the exigency of the service
but not to exceed two (2) years;
4. For position without incumbents, a designation may be made only for
a maximum of one (1) year. However, the designation of employees
every year may be renewed in the exigency of the service but not to
exceed two (2) years;
26
5. Designations shall be made through an office order issued by the

appointing officer/authority concerned;
6. For designations to critical positions in the local government units
such as Provincial/City/Municipal Government Department Head, a
copy of the office order shall be furnished by the HRMOs of the LGUs
to the CSCFO concerned. Employees designated to positions with
duties involving practice of profession shall be required to possess the
necessary professional license;
7. Designees cannot be granted the salaries of the positions they are
being designated to. However, allowances that go with the performance
of the functions, such as RATA (Representation and Transportation
Allowances) or EME (Extraordinary and Miscellaneous Expenses) may
be granted as provided under the provisions of the General Appropriations
Act (GAA) or appropriation of the respective local sanggunian; provided
the grant of the same is specifically stated in the designation order; and
8. Only experience gained from designation compliant with the above
stated rules shall be credited as relevant experience for purposes of
appointment.
B. Designation of Local Treasurers and Assistant Local Treasurers - As a

general rule, the authority to designate an Acting/OIC/ICO Provincial, City or
Municipal Treasurer, or their respective Assistants, including the authority for
the payment of RATA and the extension of such designation, is delegated to
the concerned BLGF Regional Director, subject to the confirmation of the BLGF
Executive Director, in accordance with established rules and procedures for the
purpose. The designation of City and Municipal Treasurers and their Assistants
in the National Capital Region shall be made by the Secretary of Finance, upon
the indorsement of the BLGF Executive Director. (Department Special Order No.
01-2018 dated 09 November 2018)
C. Qualifications of the Acting/OIC/ICO - Provincial/City/Municipal Treasurer

and Acting/OIC/ICO-Assistant Treasurers - The proposed designee should
meet the following requirements:
1. Must have complied with the minimum qualification requirements of the
position pursuant to the provisions of Secs. 470 and 471 of the LGC;
2. Must belong to the local treasury service over which the Secretary of
Finance, through the Bureau of Local Government Finance, exercises
administrative and technical supervision;
In the absence of qualified and ranking personnel from the local treasury
office, ranking and qualified personnel from the local accounting or
budget offices, assessment office and other related LGU offices, or the
BLGF Central or Regional Offices, may be considered, subject to first
being detailed or reassigned by the appointing authority concerned to
27
LTOM, 2ND EDITION
the Local Treasury Office to which the recommendee will be assigned

before the designation as Acting/OIC/ICO can be effected; and
3. Must have completed or passed any additional competency standards
instituted by the Department of Finance (DOF), whether implemented
directly by the DOF or by an appropriate national government agency
in partnership with the DOF.
D. Recommendation of Local Chief Executive Required for Designations.

The designation of an Acting/OIC/ICO Provincial/City/ Municipal Treasurer and
Acting/OIC/ICO Assistant Provincial/City/Municipal Treasurer shall require written
request of the Local Chief Executive concerned.
E. Specific Guidelines in the Issuance of Designations of Provincial, City and

Municipal Treasurers and Assistant Treasurers.
1. The following designations shall be issued in case a vacancy occurs in the
Office of the Provincial, City or Municipal Treasurer or Assistant Treasurer:
a. Acting Treasurer/Assistant Treasurer
i. If the vacancy is permanent, occasioned by the retirement,
resignation, transfer, death, dismissal from the service,
which is final, and other modes of separation, which are
permanent in nature, of the regular incumbent and the
proposed designee meets the minimum qualifications
required for the position.
ii. The designee shall discharge fully the powers and
responsibilities of the Provincial, City, Municipal Treasurer
or Assistant Treasurer, as a result of permanent vacancy of
the position, with the same rights and prerogatives of the
position, except the right to receive the salary appurtenant
thereto.
b. Officer-in-Charge (OIC)
i. If the vacancy is temporary, occasioned by the suspension,
leave of absence or official travel exceeding five (5) working
days, dismissal from the service, which is not yet final,
detail to other station, and other forms of sudden incapacity
of the regular incumbent to perform official duties, and
the proposed designee meets the minimum qualifications
ii. The designee shall discharge fully the powers and
responsibilities as Provincial, City or Municipal Treasurer
or Assistant Treasurer, as a result of temporary vacancy of
the position, with the same rights and prerogatives of the
concerned position, except the right to receive the salary
appurtenant thereto.
28
c. In-Charge of Office (ICO)

i. If the vacancy in the position of Provincial, City or Municipal
Treasurer is not exceeding five (5) working days, and the
proposed designee meets the minimum qualifications
ii. As ICO Treasurer, the designee shall perform the duty in a
caretaker capacity, which shall be confined only to day-to-
day operations and functions of administration of the office,
such as signing authority over recurring transactions and
mandatory or statutory obligations of the local government
unit concerned.
2. Designations of Acting/OIC Treasurer and Assistant Treasurer shall be for
a period of one (1) year, unless sooner revoked. As may be applicable, the
period of designation shall be synchronized with the period of the absence
of the regular incumbent. As a matter of sound policy and when the exigency
of service so requires, designations may be extended but not to exceed one
(1) year, in accordance with Items 3 and 4, Sec. 13 of CSC MC No. 24, s.
2017, except when:
a. The designee for Provincial, City or Municipal Treasurer is the
regularly appointed Assistant Local Treasurer;
b. The filling up of the vacant position held by the designee is in
process and the designee is considered for the position;
c. The incumbent Treasurer or Assistant Local Treasurer is
suspended for a period exceeding one (1) year, wherein the
designation may be extended for the remaining period of
suspension;
d. The incumbent Treasurer or Assistant Local Treasurer is
dismissed from the service, but the decision is not yet final; and
e. There is established dearth of qualified employees within the
local government concerned. In the case of municipalities, the
concerned Provincial Treasurer shall certify such dearth in the
local treasury offices under his/her jurisdiction before designees
from non-treasury and other LGU treasury offices are considered.
3. All designations and extension thereof shall be upon the written request
of the local chief executive. In the case of designations of Treasurer and
Assistant Local Treasurer of component cities and of municipalities, the
indorsement of the concerned Provincial Treasurer is required. Extension
of designations shall only be conditioned on the satisfactory performance
of the designee during the period of designation pursuant to the approved
Strategic Performance Management System.
4. Designations of City and Municipal Treasurers and Assistant Local Treasurers
in the National Capital Region and extensions thereof shall be made by the
Secretary of Finance, except for ICO, which shall be acted upon by the BLGF
Executive Director. All other designations shall be made by the concerned
BLGF Regional Director, and such designations and extensions thereof shall
be confirmed by the BLGF Executive Director.
29
LTOM, 2ND EDITION
Designations of treasurers/assistant treasurers shall be processed by the

BLGF within fifteen (15) days before the expected temporary or permanent
vacancy. The designation Order issued by the Regional Office shall thereafter
be submitted to the BLGF Central Office within fifteen (15) days from its
issuance, for confirmation by the BLGF Executive Director. Non-submission
of the designation order for confirmation and/or non-compliance thereof will
render subject Order ineffective.
5. Designations shall comply with the requirements of DOF Department
Personnel Order No. 335-03, as amended, and Department Order No.
053.2016, as amended, establishing the Standardized Examination and
Assessment for Local Treasury Service (SEAL) Program. The requirement
of SEAL Level 1 in the designation of local treasurers and assistant local
treasurers shall take effect in June 2019 to provide for sufficient transition
period, address the dearth of qualified personnel in the local treasury offices
who may be designated for the purpose, and allow local treasury personnel
to acquire the certification through the Basic Competency on Local Treasury
Examination of the Civil Service Commission.
(DOF Personnel Order No. 469.2018, 24 May 2018 amending DPO No.
562.2016, 10 November 2016)
6. The rule on nepotism shall also apply in the designation of treasurers/
assistant treasurers.
7. Designations of employees holding first level positions to local treasurer or
assistant treasurer positions shall require prior approval from the concerned
CSC Regional Office, upon the request of the BLGF Regional Director
having jurisdiction thereof, in accordance with Sec. 13.c.2 of CSC MC No.
24, s.2017.
8. In case the designee is detailed from another LGU or office, the detail
should be covered by an agreement between the LCE of both LGUs or the
concerned agency head, particularly as regards the continued payment of
the salaries and other benefits of the designee by the LGU or office where
he/she is regularly appointed, and the subsequent return to his/her regular
station once deemed necessary and in the absence of any legal impediment,
and further, in accordance with the conditions set under Item 2(iii), Sec.
12(a) hereof, pursuant to Sec. 13 (b) of CSC MC No. 24, s. 2017.
9. The designation of a detailed employee as Acting/OIC/ICO Treasurer or
Assistant Treasurer shall require prior approval from the concerned CSC
Regional Office, upon the request of the BLGF Regional Director having
jurisdiction thereof, in view of the limitation specified under Item 2(ix), Sec.
13(a) hereof, pursuant to Item 7, Sec. 13.b of CSC MC No. 24, s. 2017.
10. The BLGF Executive Director shall confirm the designations of provincial,
city, and municipal treasurers issued by the BLGF Regional Offices.
(DPO No. 308. 2016 dated 29 July 2016 as amended by DPO No. 094.
2017, 17 February 2017)
30
F. Documentation – Designations submitted to the DOF, through the BLGF Central

Office, for confirmation, shall be supported by the following documents:
1. Regional Special Personnel Order (RSPO) issued by the BLGF Regional
Director;
2. Comments/Recommendations of the BLGF Regional Director contained in
an Indorsement;
3. Written endorsement of the Provincial Treasurer, in the case of the Acting/
OIC Municipal Treasurer and Acting/OIC Assistant Municipal Treasurer,
or Acting/OIC City Treasurer and Acting/OIC Assistant City Treasurer of
component cities;
4. Written request and recommendation of the Local Chief Executive(s)
concerned;
5. Updated Personal Data Sheet, as prescribed by the CSC;
6. Copy of the plantilla of the local treasury office of the LGU concerned;
[DOF Department Personnel Order (DPO) No. 335-03, 01 October 2003]
7. Justification in case the most ranking personnel in the treasury office was not
considered. In cases where there is no eligible personnel, a list of personnel
in the treasury office indicating their respective civil service eligibilities should
be attached;
8. Authenticated Civil Service Eligibility by the Civil Service Commission (CSC)
or its equivalent; (Art. V, Sec. 9, PD 807)
9. Sworn Statement of Assets and Liabilities of the immediate preceding year;
(Sec. 34, Chapter 9, Book 1, Administrative Code of 1987)
10. Performance Ratings using the CSC-approved Strategic Performance
Rating System of the LGU or results from any other performance evaluation
tool instituted by the DOF, applied during the period of designation, should at
least be Very Satisfactory or its equivalent thereof; (CSC MC No. 6, s. 2012)
11. Affidavit of Disclosure re: non-dual citizenships; (BLGF Memorandum
Circular No. 10-001-2016, 03 October 2016)
12. Notarized certification of non-relationship within the 4th degree of
consanguinity to the designee issued by the LCE;
13. Certification of the Provincial Treasurer that there is dearth of qualified
employees within the local government concerned, if applicable;
14. Written agreement between the LCEs or heads of agency concerned in case
the designee needs to be detailed to the local treasury office; and
15. Authority or approval of the CSC Regional Office concerned allowing the
designation of a first level employee and/or a detailed employee to be
designated Acting/OIC/ICO Treasurer or Assistant Treasurer.
31
LTOM, 2ND EDITION
SECTION 10. AUTOMATIC SUCCESSION OF THE ASSISTANT

PROVINCIAL/CITY/MUNICIPAL TREASURER
A. When the incumbent Local Treasurer dies, absconds or becomes incapacitated
and when the exigencies so require, the regularly appointed Assistant Local
Treasurer may automatically perform the functions as In-Charge of Office (ICO),
as defined in Sec. 9 hereof, without the need of order of designation from the
BLGF.
B. However, the regularly appointed Assistant Local Treasurer who automatically
assumes as ICO Local Treasurer shall within twenty-four (24) hours notify directly
the concerned BLGF Regional Director, the concerned banks and the COA 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.
C. Within forty-eight (48) hours after receipt of the notice, the BLGF Regional Director
shall, in the absence of the recommendation of the LCE concerned, issue the
Order of Designation of the Assistant Local Treasurer. The rules under Sec. 9
hereof shall suppletorily apply. In the case of the NCR, the BLGF Executive Director
shall immediately recommend to the Secretary of Finance for the issuance of the
designation order.
D. It shall be the duty of the BLGF to ensure that impending vacancies are properly
monitored and immediately acted upon, and that the concerned local chief
executive is properly informed.
SECTION 11. DESIGNATION IN THE ABSENCE

OF AN ASSISTANT LOCAL 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, OIC or ICO 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 LGU 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 or ICO Provincial/City/
Municipal Treasurer. The policies and procedures set under Sec. 9 of this Manual
shall be adopted for this purpose.
SECTION 12. RELIEF OR DETAIL OF TREASURERS

AND ASSISTANT LOCAL TREASURERS
A. Requests for relief of treasurers and assistant treasurers shall be acted upon only
for justifiable reasons and after compliance with the requisites of due process as
follows:
32
1. The treasurer consents thereto;

2. There exists an audit finding of actual shortage of cash which should be on
hand, pursuant to Sec. 348 of the LGC;
a. No order of relief shall be authorized unless the following are
established in coordination with the COA:
i. The actual date/s of auditorial visit by COA;
ii. Existence of actual cash shortage as appearing in the Cash
Examination Report; and
iii. There is a written recommendation from the COA for the relief of
the treasurer or assistant treasurer.
b. Upon confirmation with the COA, the Regional Director shall
immediately direct the relief from the office of the treasurer/ assistant
treasurer.
c. The concerned treasurer/assistant treasurer shall secure a clearance
from the COA relative to his/her restoration to Office.
3. The treasurer/assistant treasurer has been formally charged with grave
offense and the ninety (90)-day preventive suspension has expired, but
formal investigation has not yet been terminated.
(DOF Department Personnel Order 335-03, 01 October 2003)
B. The detail of Treasurers and Assistant Treasurers shall be in accordance with
Section 4 of Department Special Order No. 01.2018, dated 09 November 2018,
and shall be governed by the following guidelines, in accordance with Sec. 13 (b)
of CSC MC 24, s. 2017:
1. A detail is the temporary movement of an employee from one department
or agency to another which does not involve a reduction in rank, status or
salary.
2. An office order shall be issued by the appointing authority. Hence, in the
case of a local treasurer being detailed to another office or agency, the detail
order shall be issued by the Secretary of Finance or his/her duly authorized
representative upon the recommendation/consent/approval of the local
chief executive concerned. The local treasurer/assistant treasurer detailed
receives his/her salary only from his/her parent unit/agency.
3. A detail without the consent of the treasurer shall be allowed only for a
maximum period of one (1) year. Detail with consent shall be allowed for a
maximum of three (3) years provided that the extension or renewal thereof
shall be discretionary on the part of the parent agency.
4. The detail of a treasurer/assistant treasurer from one department or agency
to another shall be covered by an agreement manifesting the arrangement
between the agency heads that it shall not result in reduction in rank, status
33
LTOM, 2ND EDITION
or salary of the employee, the duration of the detail, duties to be assigned to

the employee and responsibilities of the parent agency and the receiving
agency.
5. No detail shall be made within three (3) months before any election unless
authorized by the COMELEC. (Sec. 5, Rule XVIII; Omnibus Rules
Implementing Book V of E. O. No. 292 and Other Pertinent Civil Service
Law)
6. If the treasurer/assistant treasurer believes that there is no justification for
the detail, he/she may appeal the detail order within fifteen (15) days from
receipt to the CSC (Commission) or CSC Regional Office (CSCRO) with
jurisdiction. Pending appeal, the detail order shall be executory unless
otherwise ordered by the CSC. Decision of said CSCRO may be further
appealed to the Commission within fifteen (15) days from receipt.
7. During the period of the detail, the parent LGU relinquishes administrative
supervision over the detailed treasurer/ assistant treasurer to the receiving
agency. Administrative supervision refers to the authority to direct the
performance of duties; restrain the commission of acts; and review, approve,
reverse or modify acts or decisions of the detailed treasurer/assistant
treasurer. In this regard, the receiving agency has the responsibility to
monitor the punctuality and attendance of the employee, approve requests
for leave, evaluate his/her performance, grant the authority to travel and
exercise other acts necessary to effectively supervise the treasurer/assistant
treasurer; provided a report on said matters is submitted to the parent agency
for record purposes.
8. Prior to the effectivity of the detail, the parent LGU shall furnish a certification
of the available sick and vacation leave credits of the detailed treasurer/
assistant treasurer to the receiving agency. In the event the receiving agency
approves requests for leave by the detailed treasurer/ assistant treasurer, a
copy of the same shall be submitted to the parent LGU.
9. The detailed treasurer or assistant treasurer shall be designated to a position
whose duties are comparable to his/her position in the parent agency.
However, he/she shall not be designated to a position exercising control
or supervision over regular and career employees of the receiving agency.
In the exigency of service, however, prior approval from the CSC Regional
Office concerned shall be sought to effect a designation to a position with
supervisory function over regular and career employees.
10. The authority to discipline the detailed treasurer/assistant treasurer is still
vested in the appointing officer/authority of the parent agency where he/she
belongs. As used herein, the authority to discipline includes the determination
of the existence of a prima facie case against the detailed treasurer/assistant
treasurer, issuance of a formal charge, issuance of the order of preventive
suspension if the case so warrants, conduct of formal investigation, and
rendering of the decision on the administrative case.
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11. With respect to personnel actions such as promotion, transfer, renewal,

change of status, demotion, upgrading and reclassification of positions and
the like, which require the issuance of an appointment, and other personnel
movements such as reassignment, detail, secondment, job rotation and
designation which do not necessarily require the issuance of an appointment,
including salary adjustment, step-increment and monetization of leave
credits concerning the detailed treasurer/ assistant treasurer, the same shall
still be under the jurisdiction of the mother agency notwithstanding that the
local treasurer/assistant treasurer is detailed in another agency.
12. All human resource actions and movements, including monetization of leave
credits, concerning the detailed treasurer/assistant treasurer, shall still be
under the jurisdiction of the parent agency, notwithstanding his/her detail in
another agency.
SECTION 13. OTHER PERSONNEL ACTIONS FOR LOCAL TREASURERS

The following human resource actions shall be approved by the Secretary of Finance,
or his/her duly authorized representative, subject to the recommendation/indorsement
of the concerned local chief executive:
A. Secondment
1. Secondment is the movement of an employee from one department or
agency to another which is temporary in nature and which may or may not
require the issuance of an appointment which may either involve increase in
compensation and benefits. Acceptance thereof is voluntary on the part of
the employee.
2. An office order shall be issued by the appointing authority or his/her duly
authorized representative in favour of the seconded Treasurer/Assistant
Treasurer, considering that secondment is a personnel action. (CSC letter
dated 7 November 2016)
3. Secondment shall be governed by the following general guidelines:
a. Secondment shall be limited to employees occupying managerial,
professional, technical and scientific positions;
b. Secondment to international bodies/organizations recognized by the
Philippine government may be allowed;
c. Secondment for a period of one year or more shall be subject to
approval by the CSC. In case the secondment of less than one year is
extended and such extension shall cover a total period of one year or
more, the extension shall be subject to CSC approval;
d. Approval of the secondment shall be subject to the following conditions:
35
LTOM, 2ND EDITION
i. A Memorandum of Agreement or contract for secondment

between the parent and receiving agency, concurred in by the
treasurer/assistant treasurer and approved by the Secretary
of Finance, shall be submitted to the CSC within 30 days from
signing of the contract;
ii. A seconded treasurer/assistant treasurer shall not be allowed to
report to the receiving agency earlier than the date of signing of
the Memorandum of Agreement; and
iii. The period of secondment shall be for a maximum of three (3)
years except otherwise provided by law or as required under
bilateral/ multilateral agreements.
e. Any violation of the provisions of the Memorandum of Agreement shall
be ground for discontinuance thereof without prejudice to the filing of
disciplinary action against the person/s responsible for the violation;
f. Acceptance of scholarship by a seconded treasurer/assistant treasurer
shall terminate the secondment;
g. Payment of salaries of a seconded treasurer/assistant treasurer shall
be borne by the receiving agency. In case of a higher compensation
covered by a duly issued appointment within the Philippine government,
the same may be used for the purpose of computing his retirement
benefits but not for the purpose of commutation of leave credits earned
in the mother agency. In case of a lower compensation, the parent
agency (LGU) shall pay the difference. This rule does not apply in
cases of secondment to international agencies; and
h. The seconded treasurer/assistant treasurer shall be on leave without
pay in his/her parent agency (LGU) for the duration of his secondment,
and during such period, he or she may earn leave credits which are
commutable immediately thereafter and payable by the receiving
agency.
[Sec. 6 (c), CSC MC No. 15, s. 1999]
B. Transfer (Sec. 11 of CSC MC No. 24, s. 2017)

Transfer is the movement of an employee from one position to another which is of
equivalent rank, level or salary without gap in the service involving the issuance
of an appointment.
The transfer may be from one organizational unit to another in the same department
or agency or from one department or agency to another.
A treasurer/assistant treasurer who seeks to transfer to another office shall notify
the LCE concerned in writing within 30 days prior to the effective date of his/her
transfer. The LCE shall endorse the said request to the Secretary of Finance, or
his/her duly authorized representative, who shall notify the treasurer/assistant
treasurer in writing of the approval of the request within 30 days from date of notice.
36
If said request is not granted by the LCE or the Secretary of Finance, or his/her duly
authorized representative, it shall be deemed approved after the lapse of 30 days
from the date of notice without the need to notify the employee concerned. It is
understood that the treasurer/assistant treasurer who seeks to transfer is cleared
from money, property and work-related accountabilities.
If, for whatever reason, the treasurer/assistant treasurer fails to transfer on the
specified date, he/she shall be deemed resigned. However, should he/she opt to
remain in the same LGU before the specified date of transfer, he/she may be
reappointed if there is no gap in the service or reemployed if there is gap in
service. In both cases, the treasurer/assistant treasurer shall undergo the usual
hiring process.
Transfer during election period shall be governed by COMELEC rules and
regulations.
C. Reassignment [Sec. 13(a) CSC MC No. 24, s. 2017]

Reassignment is the movement of an employee across the organizational structure
within the same department or agency, which does not involve reduction in rank.
The reassignment of local treasurers and assistant local treasurers shall be made
in accordance with Section 4 of Department Special Order No. 01.2018, dated 09
November 2018, and shall be governed by following civil service rules:
1. Reassignment of employees with station-specific place of work indicated in
their respective appointments within the geographical location of the agency
shall be allowed only for a maximum period of one (1) year. The restoration
or return to original post/assignment shall be automatic without the need of
any order of restoration/revocation of the order of reassignment.
An appointment is considered station-specific when: (a) the particular office
or station where the position is located is specifically indicated on the face of
the appointment paper; or (b) the position title already specifies the station,
such as Human Resource Management Officer, Accountant, Budget Officer,
Assessor, Social Welfare and Development Officer, and such other positions
with organizational unit/station-specific function. Such position titles are
considered station-specific even if the place of assignment is not indicated
on the face of the appointment.
It is noted that the appointment of a treasurer/assistant treasurer is station
specific.
2. Reassignment is presumed to be regular and made in the interest or exigency
of public service unless proven otherwise or if it constitutes constructive
dismissal. Constructive dismissal exists when an official or employee quits
his/her work because of the agency head’s unreasonable, humiliating, or
demeaning actuations, which render continued work impossible because of
geographic location, financial dislocation and performance of other duties
and responsibilities inconsistent with those attached to the position. Hence,
37
LTOM, 2ND EDITION
the employee is deemed illegally dismissed. This may occur although there
is no diminution or reduction in rank, status or salary of the employee.
Reassignment that constitutes constructive dismissal may be any of the
following:
a. Reassignment of an employee to perform duties and responsibilities
inconsistent with the duties and responsibilities of his/her positions
such as from a position of dignity to a more servile or menial job;
b. Reassignment to an office not in the existing organizational structure;
c. Reassignment to an existing office but the employee is not given any
definite set of duties and responsibilities;
d. Reassignment that will cause significant financial dislocation or will
cause difficulty or hardship on the part of the employee because of
geographic location;
e. Reassignment that is done indiscriminately or whimsically because
the law is not intended as a convenient shield for the appointing/
disciplining officer to harass or oppress a subordinate on the pretext
of advancing and promoting public interest, such as reassignment
of employees twice within a year, or reassignment of career service
officials and employees with valid appointments during change of
administration of elective and appointive officials; or
f. Reassignment that results in constructive dismissal must be sufficiently
established.
3. The employee may appeal the reassignment order within 15 days upon receipt
thereof to the Commission or CSCRO with jurisdiction, as provided under
specific law, if he/she believes there is no justification for the reassignment.
Pending appeal, the reassignment shall not be executory. The decision of
the CSCRO may be further appealed to the Commission within 15 days from
receipt thereof.
Reassignment during election period shall be governed by COMELEC rules
and regulations.
D. Reinstatement [Sec. 11(f) CSC MC No. 24, s. 2017]

The reinstatement of a treasurer/assistant treasurer shall be guided by the
following:
Reinstatement to a comparable position- is the restoration of a person, as a result
of a decision, to a career position from which he/she, through no delinquency or
misconduct, been separated but subject position is already abolished, requiring the
issuance of an appointment to a comparable position to the separated employee.
Reinstatement to the position – involves the restoration of a person, as a result of
a decision, to a career position from which he/she, through no delinquency or
38
misconduct, been separated from the service but subject position is still available,
does not need the issuance of an appointment.
The reinstatement of treasurers/assistant treasurers shall be effected upon the
issuance of an appropriate order of the Secretary of Finance or the Executive
Director of BLGF, as may be applicable.
E. Extension of Service [Sec. 129, CSC MC No. 24, s. 2017]

The extension of service of a treasurer/assistant treasurer who will reach the
compulsory retirement age of 65 years may be allowed for a period of six (6)
months and in meritorious circumstances may be extended for another six (6)
months. The request for extension shall be filed with the CSC not later than three
(3) months prior to the date of his/her compulsory retirement. Services rendered
during the period of extension shall no longer be credited as government service.
However, for one who will complete the fifteen (15) years of service required under
the GSIS Law, a maximum period of two (2) years may be allowed. Services
rendered during the period of extension shall be credited as part of government
service for purposes of retirement.
The request shall be submitted to the BLGF with the following documents:
1. Recommendation for the extension of service signed by the Local
Chief Executive concerned, or the treasurer in case of extension
to complete the 15-year service required under the GSIS Law,
containing the justifications for the request;
2. Certification by a licensed government physician that the treasurer/
assistant treasurer subject to the request is still mentally and
physically fit to perform the duties and functions of his/her position;
3. Certified true copy of the employee’s Certificate of Live Birth;
4. Clearance of no pending administrative case issued by the CSC,
Office of the Ombudsman, the LGU concerned and the BLGF;
5. Service record of the treasurer/assistant treasurer, if the purpose of
the extension is to complete the 15-year service requirement under
the GSIS Law;
6. Certification from the GSIS on the Total Length of Service (TLS) of
the treasurer or assistant treasurer for those who are completing the
15-year service requirement;
7. Certified true copy of the updated Plantilla of Personnel issued by the
LGU HRM Officer; and
8. Proof of payment of the filing fee.
The request shall be forwarded to the BLGF Executive Director, thru the concerned
BLGF Regional Director and Provincial Treasurer, as may be applicable, for initial
evaluation, not later than six (6) months prior to retirement.
39
LTOM, 2ND EDITION
The BLGF Executive Director shall evaluate the recommendation and subsequently
endorse the same to the CSC for approval.
The only basis for the Secretary of Finance, BLGF Executive Director or the LCE
to allow treasurers/ assistant treasurers to continue rendering service after his/
her 65th birthday is a CSC Resolution granting the request for extension. In the
absence of such resolution, the said treasurer/assistant treasurer shall not be
authorized to perform the duties of his/her position and his/her salaries shall be
the liability of the official responsible for the continued service of the treasurer/
assistant treasurer.
During the period of extension, the employee on service extension shall be
entitled to salaries and salary increases, allowances, and other remunerations that
are normally considered part and parcel of an employee’s compensation package
subject to the existing regulations on the grant thereof, except step increments.
The treasurer/assistant treasurer shall likewise be entitled to 15 days’ vacation
and 15 days sick leave annually, provided that the same are not commutative and
cumulative.
F. Other Modes of Separation from the Service

1. Resignation
The resignation of a local treasurer/assistant local treasurer shall be guided
by the provisions of Sec. 104 of CSC MC No. 24, s. 2017:
a. Resignation is an act of an official or employee by which he/she
voluntarily relinquishes in writing his/her position effective on a specific
date which shall not be less than thirty (30) days from the date of such
notice or earlier as mutually agreed upon by the employee and the
appointing officer/authority. To constitute a complete and operative
resignation of an official or employee, there must be a written intention
to relinquish the office, the acceptance by the appointing officer/
authority and a written notice of such acceptance duly served to the
official or employee concerned (It is now clear that there is a 30-day
notice rule in the government sector. Also note that in the case of
Reyes v. Atienza, 470 SCRA 670, the Supreme Court said that without
acceptance by competent authority, resignation is nothing and the
officer remains in office.)
b. An official or employee is deemed to have tendered his/her resignation
upon receipt by the appointing officer/authority of the former’s written
resignation.
c. Pending receipt by the official or employee of the action taken
by the appointing officer/authority on the resignation, the official or
employee shall remain in office and retain all the powers, duties and
responsibilities appurtenant thereto.
d. The appointing officer/authority shall act on the notice of resignation
within 30 days from receipt thereof. In case the resignation of the
40
official/employee remains unacted upon for 30 days from receipt of the

formal letter of resignation by the appointing officer/authority, it shall be
deemed complete and operative on the specified date of effectivity or
30 days from submission thereof, in cases where the effectivity date
is not specified. It must be understood, however, that the required
clearance from money, property and work-related accountabilities shall
be secured by the official or employee before or immediately after the
date of effectivity of resignation.
e. In the interest of service, however, the appointing officer/authority may
set a date of effectivity of the resignation, but in no case shall be earlier
than the date specified in the letter of resignation or 30 days from
submission thereof.
f. The acceptance of resignation is mandatory. The appointing officer/
authority may suspend the effectivity date of resignation despite its
initial written notice of acceptance due to any of the following reasons:
i. When the country is at war or when any other national or local
emergency has been declared by the appropriate authority; and
ii. When it is necessary to prevent loss of life or property or in case
of imminent danger to public safety due to an actual or impending
emergency caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity.
A resignation previously suspended due to any of the above-mentioned
reasons shall nonetheless be effective 30 days after the circumstances
causing the previous suspension has ceased as certified by the
appropriate authority or the appointing officer/authority.
g. If the last day of the period given to the appointing officer/authority to
act and furnish copy of the written action on the tendered resignation
falls on a holiday or non-working day, copy of the written action shall be
furnished the official or employee concerned on the next working day
immediately following a holiday or non-working day.
h. The treasurer/assistant treasurer concerned may withdraw the tender
of resignation any time prior to the receipt of notice of acceptance of
the resignation from the Secretary of Finance or the BLGF Executive
Director, as may be applicable, or before the lapse of the 30-day
period given for the latter to act on the resignation, whichever comes
first. Such acceptance is mandatory because the resignation is not yet
considered complete.
i. Until the resignation is accepted, the tender of resignation is revocable.
Once the resignation is deemed complete and operative, the withdrawal
thereof shall not automatically restore the treasurer/assistant treasurer
to his/her former position.
41
LTOM, 2ND EDITION
In such case, once the Secretary of Finance as the appointing authority,

or the BLGF Executive Director, as may be applicable, accepts the
resignation and the treasurer/assistant treasurer is notified of such
acceptance, the resignation is complete and cannot be withdrawn
unless the appointing authority allows such withdrawal.
j. The following documents shall be submitted to the CSC Field Office
concerned within thirty (30) calendar days from the date of the
effectivity of the resignation, for record purposes:
i. the voluntary written notice of the treasurer/assistant treasurer
informing the Secretary of Finance as the appointing authority, or
the BLGF Executive Director, as may be applicable that he/she
is relinquishing his/her position and the effectivity date of said
resignation;
ii. the acceptance of resignation in writing by the Secretary of
Finance, or the BLGF Executive Director, as may be applicable
which shall indicate the date of effectivity of the resignation; and
iii. proof of notice of the acceptance of resignation to the treasurer/
assistant treasurer.
k. A treasurer/assistant treasurer under investigation, except those
prohibited by law (under Sec. 12 RA 3019 of the Anti-Graft and
Corrupt Practices Act), may be allowed to resign pending decision of
his/her case without prejudice to the continuation of the proceedings
until finally terminated.
Under RA 3019, public officers charged of bribery and any crimes are
not allowed to retire or resign pending investigation.
2. Dismissal
Dismissal is the termination or the act of being discharged from employment
or service for cause. It is the definite severance of an officer or employee
from government service on the initiative of the agency or office, CSC,
Ombudsman, or regular courts.
(Sec. 105, CSC MC No. 24, s. 2017)
The implementation of a dismissal order for a treasurer or assistant treasurer
shall be the responsibility of the Secretary of Finance or the BLGF Executive
Director, as may be applicable.
3. Dropping from the Rolls and Retirement pursuant to Sec. 106, CSC MC
No. 24, s. 2017
For other modes of separation of a treasurer/assistant treasurer, such as
dropping from the rolls, retirement, or death, a copy of the order of dropping
from the rolls or notice of separation signed by the Secretary of Finance or
the BLGF Executive Director, as may be applicable, stating the date of such
42
separation or death, shall be submitted by the BLGF to the CSC Field Office
concerned within thirty (30) calendar days from the date of the effectivity of
the dropping from the rolls, date of separation, or death for record purposes.
SECTION 14. PREVENTIVE SUSPENSION OF LOCAL TREASURERS

A. Preventive Suspension Issued by the Office of the Ombudsman
1. Grounds. The Ombudsman may direct the preventive suspension of a
treasurer/assistant treasurer pending an investigation on the following
grounds:
a. the charge against such treasurer/assistant treasurer involves
dishonesty, oppression or grave misconduct or neglect in the
performance of duty;
b. the charges would warrant removal from the service; or
c. the respondent’s continued stay in office may prejudice the case
filed against him.
2. Duration. The preventive suspension shall continue until the case is

terminated by the Office of the Ombudsman but not more than six (6)
months, without pay, except when the delay in the disposition of the case by
the Office of the Ombudsman is due to the fault, negligence or petition of the
respondent, in which case the period of such delay shall not be counted in
computing the period of suspension herein provided.
(Sec. 24, R. A. 6770)
3. Entitlement to salaries and back wages. If exonerated, back salaries and
other benefits due the treasurer/assistant treasurer at the rate prescribed for
the position he/she held from the time of his/her preventive suspension until
his/her actual reinstatement shall be paid without deduction. (Edgar R. Del
Castillo vs. CSC, et al., GR No. 112513, 21 August 1997)
B. Preventive Suspension Issued by the DOF or CSC

1. Grounds. Upon petition of the complainant or motu propio, the DOF or
CSC who have concurrent administrative disciplinary authorities may issue
an order of preventive suspension upon service of the formal charge or notice
of charge/s, or immediately thereafter to any treasurer/ assistant treasurer
pending an investigation, if:
The charge involves dishonesty; oppression; grave misconduct; neglect
in the performance of duty; administrative offenses which are punishable
by dismissal from the service on its second or third offense; or if there are
reasons to believe that the local treasurer/assistant treasurer is guilty of
charges which would warrant his/her removal from the service.
43
LTOM, 2ND EDITION
An order of preventive suspension may be issued to temporarily remove

the treasurer/assistant treasurer from the scene of his/her misfeasance,
malfeasance or nonfeasance to preclude the possibility of:
a. exerting undue influence or pressure on the witnesses against
him/her; or
b. tampering with evidence that may be used against him/her.
In lieu of preventive suspension, for the same purpose, the proper disciplining
authority or head of office, may reassign respondent to other unit of the
agency during the formal hearings.
2. Duration. Unless otherwise provided for by law, the disciplining authority may
place the respondent under preventive suspension for a maximum period of
ninety (90) days in the case of national agencies or sixty (60) days in the case
of LGUs. When the administrative case against an officer or employee under
preventive suspension is not finally decided by the disciplining authority
within the period of preventive suspension, he/she shall be automatically
reinstated in the service unless the delay in the disposition of the case is
due to the fault, negligence or petition of the respondent, in which case,
the period of delay shall not be included in the counting of the period of
preventive suspension. Any period of delay caused by motions filed by the
respondent shall be added to the period of preventive suspension. Provided,
that where the order of preventive suspension is for a period less than the
maximum period, the disciplining authority undertakes to finish the formal
investigation within the said period and is precluded from imposing another
preventive suspension. Provided, further, that should the respondent be on
authorized leave, said preventive suspension shall be deferred or interrupted
until such time that said leave has been fully exhausted.
3. Entitlement to Salaries and Back Wages. The payment of back salaries
during the period of suspension shall be governed by the following:
a. A declaration by the CSC that an order of preventive suspension is
null and void on its face entitles the treasurer/assistant treasurer to
immediate reinstatement and payment of back salaries corresponding
to the period of the unlawful preventive suspension without awaiting
the outcome of the main case.
b. The phrase “null and void on its face” in relation to a preventive
suspension order, imports any of the following circumstances:
i. The order was issued by one who is not authorized by law.
ii. The order was not premised on any of the conditions
under Sec. 26 (A and B) Rule 7, of the Revised Rules on
Administrative Cases in the Civil Service (RRACCs).
iii. The order of preventive suspension was issued without a
formal charge or notice of charges.
iv. While lawful in the sense that it is based on the enumerated
grounds, the duration of the imposed preventive suspension
44
has exceeded the prescribed periods, in which case the

payment of back salaries shall correspond to the excess
period only.
4. Reinstatement. A declaration of invalidity of a preventive suspension order
not based on any of the reasons enumerated shall result in the reinstatement
of the treasurer/assistant treasurer. The payment of back salaries shall,
however, await the final outcome of the principal case. If the treasurer/
assistant treasurer is fully exonerated of the charge/s or when penalty imposed
in the principal case is reprimand, he or she shall be paid such back salaries.
Otherwise, no back salaries shall be awarded.
The phrase “full exoneration” contemplates a finding of not guilty for the
offense/s charged. Downgrading of the charge to a lesser offense shall not be
construed as “full exoneration” within the contemplation of these guidelines.
Even if the respondent treasurer/assistant treasurer be eventually found
innocent of the charge/s proffered against him/her, the same shall not give
rise to payment of back salaries corresponding to the period of preventive
suspension in the absence of any finding of its illegality.
(Rule 7, RRACCS)
5. Claims for salaries during preventive suspension, if exonerated, shall be

supported by the following documents:
a. A certified true copy of the order of exoneration or of the court’s
order dismissing the criminal case against the treasurer/assistant
treasurer absolving him/her;
b. A certified true copy of the authority granted by the department
head for the payment of salary during suspension; or
c. A certified true copy of the President’s order of exoneration
providing for payment of salary during suspension.16
6. Other provisions on Suspension of Local Treasurers and Assistant Local

Treasurers:
a. Any public officer against whom any criminal prosecution under
a valid information pursuant to RA 3019 otherwise known as
the Anti-Graft and Corrupt Practices Act or under the provisions
of the Revised Penal Code on bribery is pending in court, shall
be suspended from office. Should he/she be convicted by final
judgment, he/she shall lose all retirement gratuity benefits under
any law, but if he/she is acquitted, he/she shall be entitled to
reinstatement and to the salaries and benefits which he/she failed
to receive during suspension, unless in the meantime administrative
proceedings have been filed against him/her.17
16 Sec 220, Volume I, Government Accounting and Auditing Manual (GAAM)

17 Sec. 13, RA 3019 otherwise known as the Anti-Graft and Corrupt Practices Act
45
LTOM, 2ND EDITION
b. The respondent treasurer/assistant treasurer is entitled to back

salaries from the time he/she was dismissed until his/her
reinstatement - i.e. for the period of his/her preventive suspension
pending appeal. For the period of his/her preventive suspension
pending investigation, the respondent is not entitled to any back
salaries.18
SECTION 15. ATTENDANCE TO ADMINISTRATIVE, CIVIL

OR CRIMINAL INVESTIGATION OF LOCAL TREASURERS
Absence of a Treasurer or Assistant Treasurer is considered service in regular course
under the following circumstances:
A. Witness in a criminal case. When a Treasurer or Assistant Treasurer is
summoned by the court or is required by lawful authority to render service as a
witness in a criminal case, such service shall be deemed to be of service in the
regular course of employment and the Treasurer or Assistant Treasurer shall be
entitled to his/her salary during the period of such service payable by the office
to which he/she pertains, regardless of whether he/she has served for or against
the prosecution in such criminal case [Sec. 226 (a), Vol. I, GAAM]. In case the
hearing or trial is conducted outside the LGU where the Treasurer or Assistant
Treasurer is stationed, he/she shall automatically be on official travel and
shall be entitled to per diem and transportation expenses, subject to the usual
accounting and auditing rules and regulations. The summons of the Court shall
be considered sufficient supporting documentation in lieu of a Travel Order.
B. Witness in his/her own behalf in a criminal or administrative proceeding.
The attendance of a Treasurer or Assistant Treasurer in his/her own behalf, to
secure his/her exoneration from charges or matter alleged against him/her is
attendance to his/her own benefit. If he/she is not under suspension, the time
consumed in such attendance shall be charged to his/her leave, if he/she has
any. Upon exoneration, however, when the case in which he/she is the accused
or the respondent is the direct result of an act performed by him/her in connection
with his/her official duties, his/her absence charged to his/her leave may be
readjusted and his/her attendance in court considered as service in due course.
But when the criminal charges filed are not the direct acts performed by him/her
in connection with his/her official duties, forced absences from duty resulting from
his/her arrest and required attendance in court may not be considered official.
He/she shall not in such case be entitled to salary. [Sec. 226 (b), Vol. 1, GAAM]
C. Witness in a civil case between two private parties, and in which the
Government has no interest. A witness is not obliged to attend as such in a civil
action before any court, judge, justice, or other officer out of the province in which
he/she resides, unless the distance be less than fifty (50) kilometers from his/her
18 CSC vs Bersamin, et al. GR No. 187858
46
place of residence to the place of trial by the usual course of travel. Therefore,
a Treasurer or Assistant Treasurer cited to appear in a civil case between two
private parties wherein the Government has no interest, in order to testify as to
knowledge of fact obtained by him/ her in his/her official capacity, shall not be
entitled to salary for absence on account of such appearance if the distance from
his/her place of residence to the place of trial by the usual course of travel be more
than fifty (50) kilometers. If the distance involved is less than fifty (50) kilometers,
and the Local Treasurer or Assistant Local Treasurer is cited as a witness in a civil
case involving private persons as litigants for knowledge or fact acquired by him/
her in his/her private capacity, his/her absence will be chargeable against him/her
without prejudice to his/her right to seek reimbursement from the party at whose
instance he/she testified. If such witness testifies on a case from knowledge or
fact acquired by him/her in his/her official capacity, or to produce official papers
or documents, and the distance between his/her place of residence and the place
of trial is less than fifty (50) kilometers, his/her appearance will be considered
service in due course, but in such a case the province, city or municipality to
which he/she pertains shall collect witness’ fees for his/her appearance under the
conditions prescribed by the Rules of Court. [Sec. 226, (c) Vol. I, GAAM]
SECTION 16. APPROVAL AND GRANT OF APPLICATION

FOR LEAVE OF ABSENCE OF LOCAL TREASURERS
A. The approval of application for leave of Provincial, City and Municipal Treasurers
and Assistant Provincial, City and Municipal Treasurers shall be as follows:
1. All applications for leave of absence, i.e. vacation, sick, maternity/paternity,
and special privilege leave (SPL) and terminal leave of Provincial/City/
Municipal Treasurer, regardless of duration or period of absence, and
Assistant Provincial/City/Municipal Treasurer, exceeding seven (7) days,
shall be approved by the concerned BLGF Regional Director. In the
case of NCR Treasurers, all applications for leave of absence shall be
approved by the BLGF Executive Director.
2. Where the applicant intends to leave the country, the application for leave
and the issuance of travel authority shall be approved by the BLGF
Executive Director, regardless of the duration, subject to the guidelines
set by the DOF and other existing policies, rules and regulations on
foreign travel.
3. Application for leave of Provincial/City/Municipal Treasurer exceeding
seven (7) days, shall be supported by a request from the LCE concerned
for the designation of an Acting or OIC Treasurer. Likewise, the LCE
concerned shall recommend the approval of said application for leave.
4. Application for leave of absence of Assistant Provincial/City/Municipal
Treasurer for a period of seven (7) days, and below shall be approved by
47
LTOM, 2ND EDITION
the Provincial/City/Municipal Treasurer, a copy of which shall be furnished

the BLGF Regional Director for proper information.
B. Provincial/City/Municipal Treasurer and Assistant Treasurer shall be entitled to
special privilege leave (SPL) as mandated under existing laws (Sec. 21, Rule XVI,
Omnibus Rules Implementing Book V of EO No. 292). Likewise, Provincial/City/
Municipal Treasurer and Assistant Treasurer may avail of paternity leave of not
more than seven (7) days which shall be non-cumulative and non-commutative,
immediately before, during or after the childbirth or miscarriage of their legitimate
spouse. (Sec. 20, Omnibus Rules Implementing Book V of EO No. 292, as
amended by CSC Memorandum Circular No. 41, s. 1998)
1. The SPL to which the Provincial/City/Municipal Treasurer and Assistant
Provincial/City/Municipal Treasurer shall be entitled to are the following:
a. Funeral/Mourning Leave
b. Graduation Leave
c. Enrollment Leave
d. Wedding/Anniversary Leave
e. Birthday Leave
f. Hospitalization Leave
g. Accident Leave
h. Relocation Leave
i. Government Transaction Leave
j. Calamity Leave
A maximum of three (3) days within a calendar year or a combination of the
special leave privileges of their choice may be availed of by the Provincial/
City/ Municipal Treasurer and the Assistant Provincial/ City/ Municipal
Treasurer. The SPL may be availed of by the Provincial/City/ Municipal
Treasurer and the Assistant Treasurer when the occasion is personal to
them or that of their immediate family members.
In addition to the above special privileges, a Provincial/City/Municipal
Treasurer or an Assistant Treasurer may also avail of the Parental Leave to
Solo Parents in accordance with CSC Memorandum Circular No. 08, s.2004.
Such leave refers to leave benefits granted to a solo parent to enable said
parent to perform parental duties and responsibilities, with respect to minor
children, where physical presence is required. The parental leave of seven
(7) days can be availed of every year on a staggered or continuous basis,
and is not convertible to cash unless specifically agreed upon previously,
provided the solo parent has rendered at least one (1) year government
service, whether continuous or broken, reckoned from the effectivity of
Republic Act 8972. (“An Act Providing for Benefits and Privileges to Solo
Parents and their Children”, 22 September 2002)
Maternity Leave. Under CSC Memorandum Circular No. 25, s.2010,
qualified female treasurers, regardless of age and civil status, may also
avail of the special leave benefits provided for women who have undergone
surgery caused by gynecological disorders, pursuant to the provisions
and implementing rules and regulations of Republic Act No. 9710 (An Act
48
Providing for the Magna Carta of Women). This special leave may be availed
for every instance of gynecological disorder requiring surgery for a maximum
period of two (2) months per year, with full pay based on her gross monthly
compensation, provided that such treasurer has rendered at least six (6)
months aggregate service in any or various government agencies for the last
twelve (12) months prior to undergoing surgery for gynecological disorder.
2. Whenever a Provincial/City/Municipal Treasurer or an Assistant Treasurer
retires, voluntarily resigns, or is allowed to resign, or is separated from
the service through no fault of his/her own, he/she shall be entitled to the
commutation of all accumulated vacation leave and/or sick leave to his/her
credit, exclusive of Saturdays, Sundays and holidays, without limitation as
to the number of days of vacation leave and sick leave that he/she may
accumulate provided his/her leave benefits are not covered by special law.
(Sec. 26, Rule XVI, Omnibus Rules Implementing Book V of EO No. 292,
as amended by CSC Memorandum Circular No. 41, s. 1998)
3. When a Provincial/City/Municipal Treasurer or an Assistant Provincial/ City/
Municipal Treasurer whose leave credits have been commuted following his/
her separation from the service is re-employed in the Government before
the expiration of the leave commuted, he/she shall no longer refund the
money value of the unexpired portion of his/her leave. Insofar as his/her
leave credit is concerned, he/she shall start from a zero balance in his/her
new government office. (Sec. 26, Rule XVI of Omnibus Rules Implementing
Book V, E. O. No. 292, as amended by CSC Memorandum Circular No. 41,
s. 1998)
4. A Provincial/City/Municipal Treasurer or an Assistant Provincial/ City/
Municipal Treasurer who has accumulated at least fifteen (15) days’
vacation leave credits shall be allowed to monetize a minimum of ten (10)
days; provided, that at least five (5) days are retained after monetization
and, provided further, that a maximum of thirty (30) days may be monetized in
a given year. (Sec. 22, Rule XVI of Omnibus Rules Implementing Book V,
EO No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
Municipal Treasurer may be allowed to monetize fifty percent (50%) or more
of his/her accumulated vacation or sick leave credits for valid and justifiable
reasons such as the following:
a. Health, medical and hospital needs of the Provincial/City/ Municipal
Treasurer or the Assistant Provincial/City/Municipal Treasurer or
the immediate members of his/her family;
b. Financial aid or assistance brought about by force majeure events
such as calamities, typhoons, fire, earthquakes and accidents;
c. Educational needs of the Provincial/City/Municipal Treasurer or
the Assistant Provincial/City/Municipal Treasurer or the immediate
members of his/her family;
49
LTOM, 2ND EDITION
d. Payment for mortgages and loans entered into for the benefit
of the Provincial/City/Municipal Treasurer or Assistant Provincial/
City/Municipal Treasurer or the immediate members of his/her
family; and
e. Extreme financial needs of the Provincial/City/Municipal Treasurer
or Assistant Provincial/City/Municipal Treasurer or the immediate
members of his/her family to fulfil basic needs for food, shelter and
clothing.
6. The monetization of fifty percent (50%) or more of the accumulated leave
credits shall be upon the favorable recommendation of the LCE and subject
to availability of funds. (Sec. 23, Omnibus Rules Implementing Book V,
E. O. No. 292, as amended by CSC Memorandum Circular No. 41, s. 1998)
Municipal Treasurer with ten (10) days or more vacation leave credits shall
be required to go on vacation leave whether continuous or intermittent for
a minimum of five (5) working days annually. (Sec. 25, Omnibus Rules
Implementing Book V, E. O. No. 292, as amended by CSC Memorandum
Circular No. 41, s. 1998)
SECTION 17. AUTHORITY TO TRAVEL ABROAD

AND PARTICIPATE IN TRAINING PROGRAMS
A. The conduct of capacity development programs for local treasurers and their
participation thereof, shall be subject to an authority issued by the BLGF/DOF
upon review and evaluation of the training design submitted by the concerned
organizer. The concerned treasurer, however, should seek permission from the
LCE for his/her attendance. The local treasurer may designate a caretaker of the
treasury office, only with the function of overseeing the day to day operations of
the office during his/her absence.
B. A local treasurer who intends to travel abroad, or leave the country, either
on a personal or official business, shall be required to secure an authority to
travel abroad from the BLGF Central Office, subject to an indorsement by the
concerned Regional Office. (Department Special Personnel Order No. 001.2018,
9 November 2018)
The following documents shall be submitted at least thirty (30) days prior to the
intended schedule of travel:
1. Letter request stating the destination and purpose of travel;
2. Certification that applicant has no pending administrative/criminal
complaint/ case (Issued by the BLGF Central and Regional Office);
3. For personal travel abroad, approved leave of absence (CSC Form
No. 6) for the duration of said travel, recommended by the Local Chief
50
Executive and approved by the BLGF Regional Director/Executive

Director;
4. For official travel abroad:
a. Invitation from the concerned event sponsor; or
b. Authority from the LCE for the local treasurer’s participation to the
event;
5. Sworn statement duly notarized indicating the estimated expenses of the
travel and how it will be financed;
6. Sworn statement of sponsoring party in case expenses are not to the

account of the local treasurer.
7. Clearance from money, property and work-related accountabilities (CSC
Form No. 7, s. 2017);
8. Certified true copy of applicant’s latest statement of assets, liabilities and
net worth; and
9. Recommendation of the Municipal Mayor as to who will be designated
as OIC/ICO of the Municipal Treasury Office.
51
CHAPTER
3
SECTION 18. SCOPE AND NATURE
A. Administrative and Technical Supervision by the BLGF.
1. The BLGF shall exercise administrative and technical supervision and
coordination over the treasury and assessment operations of local
governments [Sec. 43 (b), EO No. 127]. It shall provide consultative
services and technical assistance to local treasurers in the implementation
of programs, policies and regulations on local fiscal matters such as local
taxation, local revenue mobilization, and real property assessment as well
as administrative matters on the recruitment, selection and appointment of
Local Treasurers and Assistant Local Treasurers.
2. The functions and authorities of the Secretary of Finance over local treasurers
and assistant treasurers delegated upon the BLGF under Department
Special Order No. 01.2018 as provided under Annex 5.
3. Administrative Supervision
a. Process appointments of Local Treasurers and Assistant Treasurers
and other personnel actions such as promotion, designation, detail,
secondment, transfer, retirement, and extension of service, subject to
existing CSC rules and regulations.
b. Act on leave of absence filed.
c. Issuance of Authority for foreign Travel of Local Treasurers and
Assistant Local Treasurers either on Official or Personal purpose.
d. Act on complaints and enforce administrative disciplinary action
against Local Treasurers and Assistant Local Treasurers:
i. Initiate and act on complaints;
ii. Conduct fact-finding and preliminary investigation;
iii. File formal charges, if warranted and authorized by the
Secretary of Finance;
iv. Recommend the imposition of administrative disciplinary
sanctions upon erring treasurers; and
v. Implement decisions/resolutions/orders of judicial and quasi-
judicial bodies against local treasurers.
e. Conduct training programs, seminars, workshops and other allied
activities for the improvement of the administrative skills in the local
treasury offices.
52
4. Technical Supervision
a. Supervise and coordinate the conduct of Local Treasury and
Assessment Operations of Provinces, Cities and Municipalities within
the region for the proper implementation of laws, decrees, rules,
regulations and administrative issuances of the DOF;
b. Coordinate the plans, programs and activities of local treasury and
assessment offices in the conduct of tax collection drives and tax
information and education campaigns;
c. Conduct regional training programs, seminars, workshops and other
allied activities for the improvement of the technical skills in the local
treasury offices;
d. Monitor and determine the efficiency and effectiveness of the internal
control system of the office of the Provincial/City/Municipal Treasurer;
e. Monitor the performance of revenue generation in RPT, Business Tax
and non-tax revenues;
f. Conduct revenue and treasury operations evaluation to determine
the compliance by Local Treasurers with applicable laws, rules and
regulations;
g. Monitor the implementation by LGUs of national and local tax
ordinances and tax measures; and
h. Review, evaluate, and monitor the timely and accurate submission of
LGU financial and fiscal reports for the purpose of target-setting and
policy formulation.
B. Technical Supervision by Provincial Treasurer Over Municipal and
Component City Treasurers.
1. Municipal Treasury Offices. The Provincial Treasurer shall:
a. Conduct treasury operations evaluation over treasury offices;
b. Monitor all eSRE reports uploaded by municipal treasurers to the eSRE
Web Information System, and shall review, analyze and approve/reject
the reports within fifteen (15) days from the prescribed periods set for
the local treasurers;
c. Exercise the authority to review and examine on a continuing basis
real property tax record to ensure the proper implementation hereof
and determine compliance with existing laws and regulations; (Art.
291, IRR, Implementing Sec. 200, LGC)
d. Provide technical consultative services such as mentoring, coaching,
trainings, among others; and
e. Perform such other functions as may be provided by law and regulations
of DOF and BLGF.
53
LTOM, 2ND EDITION
2. Component City Treasury Offices. The Provincial Treasurer shall:

a. Provide technical consultative services such as mentoring, coaching,
trainings, among others;
b. Conduct treasury operations evaluation with respect to the imposition,
collection and sharing on tax, sand, gravel and other quarry resources,
as maybe applicable; and
c. Perform such other functions as may be provided by law, and rules
and regulations of DOF and BLGF.
SECTION 19. FISCAL PERFORMANCE MONITORING OF LGUS

AND LOCAL TREASURERS
A. Conduct of Local Treasury Operations Evaluation
1. The BLGF shall regularly conduct efficient and effective evaluations of local
treasury operations of all provinces, cities and municipalities to ensure
compliance with applicable laws, rules and regulations, and to provide the
necessary technical assistance for the purpose.
2. The BLGF Central Office shall conduct local treasury operations evaluation
within Metro Manila and other LGUs outside Metro Manila, when necessary.
3. In the case of the Regional Offices, evaluation shall be conducted within
the provinces and cities, including municipalities in coordination with the
Province.
B. Local Government Unit (LGU) Fiscal Sustainability Scorecard (FSS)
1. In order to improve the revenue collection efficiency of all LGUs, optimize their
income generation mandates under the LGC, enjoin good fiscal governance
at all levels, and promote openness and transparency in local fiscal and
financial management, the LGU FSS is established as per Department
Order No. 075.2018 dated 20 December 2018 to be the regular evaluation
and assessment tool of the Bureau for the LGUs. The LGU FSS is issued in
order to: (1) regularly assess individual LGU fiscal and financial performance;
(2) provide comprehensive metrics and data analytics on local finance; (3)
support credit financing assessment; (4) assist in local and national policy
formulation; and (5) encourage the development of appropriate rewards
system.
2. The LGU FSS shall cover all provinces, cities and municipalities, and shall
be regularly developed and updated by the BLGF as part of its regular
programs to build and sustain good fiscal governance by LGUs.
3. The primary data sources shall be the SRE and QRRPA reports submitted
by the Local Treasurers and Assessors, respectively. Additional official
references shall be considered in regard to benchmarks and reporting
54
compliance requirements, such as population data and growth rate , SMV

ordinance, among others.
4. The Local Government Financial Performance Management System
(LGFPMS) prescribed by the BLGF under Memorandum Circular (MC) No.
16-2015, dated 19 June 2015, shall serve as a guide in establishing a fiscal
and financial performance framework in processing the LGU FSS. (Annex
5)
5. The parameters for evaluation for the Financial or Quantitative Indicators
and for Non-Financial or Qualitative Indicators are discussed in details in
Annex 6.
C. Performance Standards for Local Treasurers and Assistant Local Treasurers
1. The Performance Standards and Evaluation System for Local Treasurers
referred to as “Performance Standards” is established to set the criteria
and system on the regular performance appraisal of Local Treasurers and
Assistant Local Treasurers with the end goal of evaluating the level of
competency, professionalism and productivity of all Local Treasurers. This
is to ensure that their knowledge, skill sets, and strategies are attuned to the
strategic directions and priorities, particularly on local government fiscal and
financial management, of the Department of Finance.
2. The Performance Standards shall be an integral part of the human resource
management and development strategy of the Department to build and
sustain a results-oriented performance and professional culture among
Local Treasurers and Assistant Local Treasurers. As such, it shall be used
as basis for purposes of appointment and other personnel action, such as
promotion, renewal of designation, and extension of service, accountability
assessment, awards and recognitions, capacity building interventions,
among others, pursuant to existing rules and regulations.
3. There shall be a regular monitoring and performance evaluation of all Local
Treasurers and Assistant Local Treasurers, to be based on objectively
verifiable indicators and established guidelines, supported by appropriate
management and information systems, and to be undertaken by the BLGF in
a transparent, impartial, open, and synchronized process. Local Treasurers
and Assistant Local Treasurers who fail to meet the minimum standards
shall be given assistance to improve. If the performance of a Local Treasurer
or Assistant Local Treasurer remains unacceptable, despite the opportunity
given, the BLGF shall institute the appropriate administrative action. In no
case shall these performance standards and guidelines engender solicitation
of favors or impose undue patronage on Local Treasurers, Assistant
Treasurers or any officials and employees of the Department.
4. The policy to undertake a regular performance evaluation through
Performance Standards shall apply to all provincial, city, and municipal
treasurers and assistant treasurers, whether permanent or designate.
55
LTOM, 2ND EDITION
5. The parameters for evaluation for the Performance Standards are discussed
in details under Department Order No. 006.2015 dated 20 January 2015
(Annex 8).
SECTION 20. TURN-OVER OF ACCOUNTABILITIES TO THE

INCOMING AND OUT-GOING LOCAL TREASURERS
The following steps and procedures shall be undertaken in the turn-over of
accountabilities between the incoming and outgoing local treasurer due to retirement,
resignation, leave of absence, relief, transfer or detail to other offices:
A. Closing of Books Preparatory to Transfer of Accountabilities
1. Before the transfer of accountabilities is effected, all the books and accounts
shall be completely written up to date, including supplies adjustment, as well
as reports on accountable forms and cashbooks.
2. The cashbooks shall then be totaled and closed as of the date of transfer
and ruled off and certified by the outgoing treasurer, showing the balance as
per book and the amount transferred to his/her successor. The successor
shall also certify therein acknowledging the amount actually received by him/
her from his/her predecessor.
3. All cash and cash items, checks, certificate of time deposit, stock certificates
shall be counted and listed in an inventory showing the denomination of
each kind of money.
4. The inventory of checks shall also show their respective serial numbers,
date, amount and name of the payee and of the bank on which they are
drawn.
5. Investment certificates like time deposits, treasury bills and stock certificates
shall be inventoried showing their serial numbers and amounts and kind of
investment. This inventory of cash and other cash items shall be compared
with the cashbook balances.
B. Preparation of Invoice-Receipts
1. The outgoing officer shall prepare the invoice-receipts (please see
Attachment “A”) in quadruplicate covering his/her entire accountability for
money, property, unused accountable forms and unissued blank checks.
The accomplished invoice-receipts shall then be submitted, viz:
a. Provincial/City/Municipal Auditor
b. Incoming Provincial/City/Municipal Treasurer
c. Out-going Provincial/City/Municipal Treasurer
d. Provincial/City/Municipal Treasury Office
Each invoice receipt shall bear the following certificate at the bottom of
each sheet:
56
I hereby certify that I have this day of ,

transferred to my successor, Mr./Ms. the items
described above, as of , the date of transfer of accountabilities.
___________________________
Outgoing P/C/M Treasurer
_____________
Date
I hereby certify that I have this day of , actually

received from my predecessor, Mr./Ms.
all the items described above, as of , the date of
transfer of accountability, except
.
________________________
Incoming P/C/M Treasurer
______________
Date
2. In the case of property, complete detailed inventories shall be made on

the regular form prescribed therefor in the Acknowledgment Receipt for
Equipment (ARE). The inventories, appropriately worded and receipted
for, shall serve as the invoice-receipts. The invoice-receipts covering
accountable forms shall be made on the regular form of CRAAF. The various
accountable forms in the hands of other accountable officers, which cannot
actually be counted by the incoming Treasurer shall also be transferred to
him/her, supported by the corresponding RAAF held by accountable officer
which were last submitted, duly signed by them.
3. All other important documents such as stock certificates, certificates of time
deposits, treasury bills, duplicate combination of accountable officers’ safes,
etc., pertaining to the Office which are not included in the inventory above
mentioned must also be listed and invoiced by the outgoing officer and
receipted for by the incoming officer.
C. Advice of Transfer and Settlement of Account:

Provincial, City and Municipal Treasurers shall advise their corresponding
Provincial, City and Municipal Auditors in advance of the actual date of their
relinquishment of Office due to retirement, resignation, leave of absence, relief,
transfer or detail to other Offices, so as to enable their resident Auditors to give
preference to the audit of the Treasurer’s accounts over other work/ activities
and to give such officers an opportunity to adjust the differences found in the
settlement of accounts before actually effecting the transfer of accountability.
57
LTOM, 2ND EDITION
ATTACHMENT A
INVOICE RECEIPT OF TRANSFER OF ACCOUNTABILITIES

Province/City/Municipality of _____________________________
I. DEPOSITORY OF ACCOUNTS Amount Total

A. CASH IN TREASURY/CASH IN VAULT
GENERAL FUND Php
TRUST FUND Php
SPECIAL EDUCATION FUND Php
SPECIAL ACCOUNTS (use separate sheet if necessary) Php
Php
B. CASH IN BANK
GENERAL FUND Php
TRUST FUND Php
SPECIAL EDUCATION FUND Php
SPECIAL ACCOUNTS (use separate sheet if necessary) Php
Php
II. INVESTMENT ACCOUNTS
A. CERTIFICATE OF TIME DEPOSITS
Date of Maturity
Security Term/Rate Principal
Placement Date
Php
-use separate sheet if necessary-

B. TREASURY BILLS
Date of Placement Term/Rate Maturity

C. STOCK CERTIFICATES
Name of Stock Certificate No. No. of Shares Amount
Php

III. ACCOUNTABLE FORMS
A. ACCOUNTABLE FORMS (WITH AND WITHOUT MONEY VALUE)
Serial Numbers
To From
Accountable Form No. 51
Community Tax Certificate (Individual)
Community Tax Certificate (Corporation)
Cash Tickets
Parking Tickets
Other Accountable Forms: (please specify)
58
B. BLANK UNISSUED CHECKS
Servicing Bank Account Number Serial Numbers

GENERAL FUND
TRUST FUND
SPECIAL EDUCATION FUND
SPECIAL ACCOUNTS
IV. OTHERS
A. OUTSTANDING CHECKS
Check Number Payee Amount

GENERAL FUND
TRUST FUND
SPECIAL EDUCATION FUND
SPECIAL ACCOUNTS
CERTIFICATION
I hereby certify that I have this day of I hereby certify that I have this day of
______________ transferred to my successor, ______________ actually received from my
Mr./Ms._____________________________ predecessor,
__________, all the items described above Mr./Ms.____________________________
as ____________, the date of the transfer of _______, all the items described above as
accountability. of____________, the date of the transfer of
accountability.
Outgoing Provincial/City/Municipal Incoming Provincial/City/Municipal Treasurer

Treasurer
SIGNED IN THE PRESENCE OF:
COA REPRESENTATIVE BLGF REPRESENTATIVE
(BLGF Memorandum Circular No. 03-2007, 05 March 2007)
59
CHAPTER ROLES, DUTIES, AND RESPONSIBILITIES
4 OF THE LOCAL TREASURER
SECTION 21. POWERS AND DUTIES OF LOCAL 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 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;
E. Inspect private commercial and industrial establishments within the jurisdiction of
the LGU 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.
(Sec. 470, LGC)
I. Specific Functions
1. Certify as to the Availability of Funds. No money shall be disbursed
unless the local budget officer certifies to the existence of the appropriation
that has been legally made for the purpose, the local accountant has
obligated said appropriation, and the local treasurer certifies the availability
of funds for the purpose.19 It is the primary duty of the local treasurer to
certify to the availability of funds prior to all disbursements from the local
treasury, in conjunction with the certification of the local budget officer on the
existence of an appropriation for the purpose and the certification of the local
accountant on the obligation for the appropriation.
19 Sec. 344, LGC
60
ROLES, DUTIES, AND RESPONSIBILITIES OF THE LOCAL TREASURER
2. Implement Tax Collection and Enforcement Program. The Local

Treasurer is vested by law to collect and receive all monies accruing to
their respective jurisdictions whether in the form of collectible taxes and other
revenues or trust funds pertaining to other branches or units of government.
3. Prepare and Submit Reports. The Local Treasurer shall prepare and submit
daily report of collections, with the supporting document. Likewise, the Local
Treasurer shall accomplish and submit quarterly reports of Statement of
Receipts and Expenditures (SRE) prescribed under DOF DO No. 034.2014,
dated 26 May 2014, and other reports in forms prescribed by the BLGF/DOF.
4. Certify RPT Delinquencies Remaining Uncollected. The provincial, city
or municipal treasurers or his/her deputy shall prepare a certified list of all
real property tax delinquencies which remained uncollected or unpaid for
at least one (1) year in his/her jurisdiction, and a statement of the reason
for such non-collection or non-payment and shall submit the same to the
sanggunian concerned on or before the thirty-first (31st) of December of
the year immediately succeeding the year in which the delinquencies were
incurred, with a request for assistance in the enforcement of the remedies for
collection provided in the LGC. (Sec. 269, LGC)
5. Examine the Books of Accounts and Pertinent Records of Businessmen.
The provincial, city, municipal or barangay treasurer may by himself/herself
or through any of his/her deputies duly authorized in writing, examine the
books, accounts, and other pertinent records of any person, partnership,
corporation, or association subject to local taxes, fees and charges in order
to ascertain, asses, and collect the correct amount of the tax, fee, or charge.
Such examination shall be made during regular business hours, only once
for every tax period, and shall be certified to by the examining official. Such
certificate shall be made of record in the books of accounts of the taxpayer
examined.
In case the examination herein authorized is made by a duly authorized
deputy of the local treasurer, the written authority of the deputy concerned
shall specifically state the name, address, and business of the taxpayer
whose books, accounts, and pertinent records are to be examined, the
date and place of such examination, and the procedure to be followed in
conducting the same.
For this purpose, the records of the revenue district office of the Bureau of
Internal Revenue (BIR) shall be made available to the local treasurer, his
deputy or duly authorized representative. (Sec. 171, LGC)
6. Designate the Barangay Treasurer as his/her Deputy to Collect Local
Taxes, Fee and Charges. The provincial, city and municipal treasurer may
designate the barangay treasurer as his deputy to collect local taxes, fees
or charges. In case a bond is required for the purpose, the provincial, city
or municipal government shall pay the premiums of the bond that may be
required under the LGC. (Sec. 170, LGC)
61
LTOM, 2ND EDITION
7. Submit Certified Statement Covering Income and Expenditures.

The Local Treasurer shall submit, on or before the fifteenth (15th) day of
July each year, to the LCE a certified statement covering the income and
expenditures of the preceding fiscal year, the actual income and expenditures
of the first two (2) quarters of the current year and the estimated income and
expenditures for the last two (2) quarters of the current year. All statements
of income and expenditure shall be jointly certified by the Local Treasurer
and the Local Accountant.
8. Issue a Certified Statement Covering Actual Income. On or before the fifth
(5th) day of September each year, the City or Municipal Treasurer, jointly with
the City or Municipal Accountant, shall issue a certified statement covering
the actual income of the past year, estimates of income of the current and
ensuing fiscal years from local sources, for the barangay concerned. Based
on such certified statement, the barangay treasurer shall submit, on or before
the fifteenth (15th) day of September each year, to the punong barangay a
statement covering the estimates of income and expenditures for the past,
current and ensuring fiscal years. [Art. 423 (b), IRR, LGC]
Upon receipt of the statement of income and expenditures from the barangay
treasurer, the punong barangay shall prepare the barangay budget for the
ensuing fiscal year in the manner and within the period prescribed in the
implementing barangay budget to the sangguniang barangay for enactment.
[Art. 423 (c), IRR, LGC]
9. Keep Full Sets of Secondary Standards for Use in the Testing of
Weights and Measures. On the sealing of weights and measures, Municipal
Treasurers shall keep full sets of secondary standards in their offices for use
in the testing of weights and measures. These secondary standards shall
be compared with the fundamental standards of the Department of Science
and Technology (DOST) at least once a year. The sealing and licensing of
weights and measures shall be the duty of the Municipal Treasurer and their
deputies. In case of violation, fraudulent practices and unlawful possession
or use of instruments of weights and measures, shall settle an offense
involving the commission of fraud before a case therefore is filed in court,
upon payment of a compromise penalty of not less than Two Hundred Pesos
(Php200.00). [Sec. 148 (b), LGC]
10. Register in a Book All Branded and Counter Branded Animals. On
cattle registration, the Municipal Treasurer shall register in a book properly
prepared and kept for the purpose, all branded and counter branded animals
presented for registry, and shall enter the name and residence of the owner,
and the class, color, sex, age, brand, knots of radiated hair and other marks
of identification of the cattle registered. The original registry entry and the
copy thereof issued as a certificate of ownership shall be signed by the
owner and the Municipal Secretary.20
20 Sec. 517, Revised Administrative Code of the Philippines
62
Upon every transfer of large cattle, the Municipal Treasurer shall issue to
the purchaser of the animal a certificate of transfer showing the name and
residence of the owner/vendor, name and residence of the buyer, purchase
price, identification marks of the animal and the reference to the original
certificate of ownership by number and the name of municipality which
issued the certificate.
11. Ensure that Payment of Taxes of a Business is not avoided through
Simulation of the Retirement thereof and Recommend to the Mayor for
the Disapproval of the Application for the Termination or Retirement
of the Business. The Local Treasurer shall ensure that the payment of
taxes of a business is not avoided through simulation of the termination or
retirement thereof. For this purpose, the Local Treasurer shall observe as
follows:
a. Assign every application for the termination or retirement of a business
to an inspector from the Local Treasury Office who shall proceed to the
address on record of the business to verify if it is no longer operating.
If the inspector finds that the business is simply placed under a new
name, manager and/or a new owner, the Local Treasurer concerned
shall recommend to the LCE for the disapproval of the application for
termination or retirement of the business. Accordingly, the business
shall continue to be liable for the payment of all taxes, fees and charges
imposed thereon under existing local tax ordinances; and
b. In the case of a new owner to whom the business was transferred
by sale or other form of conveyance, said new owner shall be liable to
pay the tax or fee for the transfer to him/her of the business if there
is an existing ordinance prescribing such transfer tax.21
12. Attend Sessions of the Sanggunian. The Local Treasurer, when required
and upon prior approval of the LCE, shall attend the sessions of the
sanggunian. [Sec. 470(e), LGC]
13. Exercise Such Other Powers and Functions and Perform Such Other
Duties and Responsibilities. The Local Treasurer shall exercise such other
powers and functions and perform such other duties and responsibilities as
may be prescribed by law or ordinance, as follows:
a. Remittance of statutory obligations to the BIR; the Government
Service Insurance System (GSIS); Pag-ibig; PhilHealth obligations
and share of Metro Manila Development Authority (MMDA) for LGUs in
Metro Manila.
b. Deputies of the National Government Alien Registration Fees.
c. Members of the following Local Committees and Boards:
i. Local Finance Committee
21 Art 241, IRR, LGC
63
LTOM, 2ND EDITION
ii. Local School Boards22

iii. Appraisal Committee (for purposes of expropriation and purchase
of real property)
d. In accordance with DBM guidelines, certify, along with the local Budget
Officer, Planning Development Officer and the Accountant, the Budget
of Expenditures and Sources of Financing to support the preparation
of the LGU’s annual budget which should include, among others, the
Programs/Projects/Activities (PPAs) on Gender and Development
(GAD) pursuant to RA No. 7192,23 RA No. 971024 and Philippine
Commission on Women (PCW)-Department of Interior and Local
Government (DILG)-DBM-NEDA JMC No. 2016-01 dated 12 January
2016.25
e. The local treasurer must ensure that the requirements of Sec. 13 of RA
10173 (Data Privacy Act of 2012) and Sec. 5 of its Implementing Rules
and Regulations are observed. Specifically, if needed, the processing
of personal information will only be done to carry out the functions of
public authority as provided for by the LGC.
The principles of transparency, legitimate purpose and proportionality
must be observed in undertaking the publication of List of Delinquency
in the payment of the Real Property Tax and in Advertisement and
Sale under Secs. 254 and 260, respectively, of the LGC.
In order to protect the rights of the taxpayers, the local treasurer must
see to it that no personal data are included in all publications of notices.
J. Role of the Local Treasurer in Local Government Enterprise Operations.
The local treasurer of the LGU operating a public enterprise shall have the
following functions in its establishment and operations:
1. Advise the LCE, the sanggunian, in the management of the public enterprise
on its financing aspects;
2. Advise the sanggunian in the enactment of ordinances on public enterprises,
especially in relation to their financial management;
3. Take charge of the collections and take custody of funds of all government
enterprises;
NOTE
The foregoing provisions of RA No. 7160 or the LGC state clearly that the
collection of local taxes, fees and charges is the duty and function of the local
treasurer, thus, primarily accountable therefor. However, considering the
multifarious duties and functions of the local treasurer and the impossibility
22 Sec. 98 (a), LGC

23 Women in Development and Nation Building Act
24 The Magna Carta of Women
25 Amendments to Philippine Commission on Women-DILG-DBM-NEDA JMC No. 2013-01:Guidelines on the Localization of the
Magna Carta of Women
64
NOTE
of being able to attend to all taxpayers coming to the treasury office, the
aforecited provisions of the same Code likewise allow the local treasurer to
authorize deputies to perform such collection function. This goes without
saying that the deputies to be authorized must be permanent appointees
in the Local Treasury Office and properly bonded. It is very important that
anyone deputized by the local treasurer to collect must be under the direct
supervision of said local official being the ultimate accountable officer for
local funds. (BLGF 2nd Indorsement, 19 December 2010)
Accepted definition of a duly authorized deputy is that “a person who is

given the authority to stand in the place of another”. Such authorization shall
be expressly detailed in writing in order to establish properly the duties/
responsibilities of the person acting as deputy. xxx.
xxx... the primary mandate of the City Treasurer is the custody of and
exercise of proper management of the funds of the local government unit
concerned. This includes collections received from its economic enterprises’
operations. Therefore, he should have supervision and monitoring of treasury
operations since he is the primary accountable officer for all funds received
as well as the usage of all accountable forms issued by the City. (COA RO
No. XI, AOM No. 2017-024, 15 December 2017)
4. Ensure that payments are made on duly certified and approved disbursement
vouchers;
5. Advise the LCE of delinquencies of government enterprise clientele
for purposes of enforcing sanctions and taking the necessary remedial
measures;
6. Recommend qualified persons for designation as collectors;
7. Maintain records of payments of market stall holders and of other government
enterprise’s lessors;
8. Prepare periodic financial reports for each government enterprise as required
by BLGF rules and regulations;
9. Ensure that payments are made on duly certified and approved disbursement
vouchers;
10. Advise the LCE of delinquencies of government enterprise clientele
for purposes of enforcing sanctions and taking the necessary remedial
measures;
11. Recommend qualified persons for designation as collectors;
12. Maintain records of payments of market stall holders and of other government
enterprise’s lessors; and
13. Prepare periodic financial reports for each government enterprise as required
by BLGF rules and regulations.
65
LTOM, 2ND EDITION
K. Duties and Responsibilities of Local Treasurers Relative to Credit Financing.

Local Treasurers have the following duties and responsibilities that relate to the
powers of LGUs to use credit financing, indebtedness and alternative sources of
funds:
1. Act as the custodian of all funds directly released to the LGU from the
proceeds of grants and from loans, credits and other forms of indebtedness,
as well as income and express profits derived from the operations of the
projects financed from them. He/she shall deposit these funds in a separate
depository account in the name of the LGU with banks, preferably government
owned, located in or nearest to the area of jurisdiction of the LGU;
2. Prepare the required reports of checks issued, disbursements and other
accountabilities;
3. In coordination with other LGU official concerned, ensure that the debt
servicing for the LGU credit does not exceed twenty percent (20%) of its
annual regular income for each year until the loan is fully paid [Sec. 324 (b),
LGC];
4. Pay or amortize loans, including all interests incurred, as appropriate from
the income of the projects or services and/or from the regular income of the
LGUs until fully paid; and
5. Upon authorization of the sanggunian concerned, Local Treasurers shall:
a. Establish a Sinking Fund for the re-payment of bond issues or maintain
Trust Funds for the purpose;
b. Maintain special accounts in the General Fund for loans, interest,
bond issues, and receipts arising from BOT transactions, such as toll
fees, charges, and other mandatory contributions for specific purposes
(Sec. 313, LGC);
c. Maintain separate records of funds received for projects financed by
proceeds of loans, credits, grants, and other forms of financing to keep
track of the cash flow of the project fund; and
d. If required, provide financial data about the LGU that may be needed
in relation to its availment of the funding sources and mechanisms.
The Assistant Local Treasurer shall have the following functions and responsibilities:
A. The assistant local treasurer shall assist the treasurer and perform such duties
as the latter may assign to him/her. He/she shall have authority to administer
oaths concerning notices and notifications to those delinquent in the payment of
real property tax and concerning official matters relating to the accounts of the
treasurer or otherwise arising in the offices of the treasurer and the assessor.
[Sec. 471(c), LGC]
B. In case of the absence of the Local Treasurer, the Assistant Local Treasurer may
automatically perform the functions of the former, as provided under Sec. 10.a
hereof.
66
SECTION 22. THE LOCAL TREASURER’S ROLE IN BOARDS

AND COMMITTEES CREATED PURSUANT
TO THE LGC AND OTHER LAWS
A. Local Finance Committee (LFC)
1. It is mandatory for every province, city, or municipality to create an LFC
which shall be composed of the following:
a. Local Treasurer
b. Local Planning and Development Officer
c. Local Budget Officer
2. The LFC shall exercise the following functions:
a. Determine the income reasonably projected as collectible for the
ensuing fiscal year;
b. Recommend the appropriate tax and other revenue measures or
borrowings which may be appropriate to support the budget;
c. Recommend to the LCE concerned the level of the annual expenditures
and the ceilings of spending for economic, social and general services
based on the approved local development plans;
d. Recommend to the LCE concerned the proper allocation of expenditures
for each development activity between current operating expenditures
and capital outlays;
e. Recommend to the LCE concerned the amount to be allocated for
capital outlay under each development activity or infrastructure project;
f. Assist the sangguniang panlalawigan in the review and evaluation of
budget of component cities and municipalities in the case of provincial
finance committee, the barangay budgets in the case of city or
municipal finance committee, and recommend the appropriate action
thereon;
g. Assist the sanggunian concerned in the analysis and review of annual
regular and supplemental budgets of the respective LGU to determine
compliance with statutory and administrative requirements; and
h. Conduct semi-annual review and general examination of cost and
accomplishments against the performance standards applied in
undertaking development projects. A copy of this report shall be
furnished the LCE and the sanggunian concerned, and shall be posted
in conspicuous and publicly accessible places in the Provinces, Cities,
Municipalities and barangays.
(Sec. 316, LGC)
67
LTOM, 2ND EDITION
B. Local School Boards (LSB). There shall be established in every province, city, or
municipality a provincial, city, or municipal school board. The composition of the
LSB shall be as follows:
1. The Provincial School Board shall be composed of the governor and the
division superintendent of schools as Co-Chairpersons; the chairman of
the education committee of the sangguniang panlalawigan, the Provincial
Treasurer, the representative of the pederasyon ng mga sangguniang
kabataan in the sangguniang panlalawigan, the duly elected president of
the provincial federation of parents-teachers associations, the duly elected
representative of the teachers’ organizations in the province, and the duly
elected representative of the non-academic personnel of public schools in
the province, as members;
2. The City School Board shall be composed of the city mayor and the city
superintendent of schools as Co-Chairpersons; the chairperson of the
education committee of the sangguniang panlungsod, the City Treasurer,
the representative of the pederasyon ng mga sangguniang kabataan in the
sangguniang panlungsod, the duly elected president of the city federation
of parents-teachers associations, the duly elected representative of the
teachers’ organizations in the city, and the duly elected representative of the
non-academic personnel of public schools in the city, as members; and
3. The Municipal School Board shall be composed of the municipal mayor and
the district supervisor of schools as Co-Chairpersons; the chairman of the
education committee of the sangguniang bayan, the Municipal Treasurer,
the representative of the pederasyon ng mga sangguniang kabataan in the
sangguniang bayan, the duly elected president of the municipal federation of
parent-teacher associations, the duly elected representative of the teachers’
organizations in the municipality, and the duly elected representative of the
non-academic personnel of public schools in the municipality, as members.
[Sec. 98 (a) and (b), LGC]
The performance of the duties and responsibilities of the abovementioned
officials in their respective LSBs shall not be delegated. [Sec. 98 (d), LGC]
4. The Provincial, City and Municipal School Boards shall have the following
functions:
a. Determine, in accordance with the criteria set by the Department of
Education (DepEd), the annual supplementary budgetary needs for
the operation and maintenance of public schools within the province,
city, or municipality, as the case may be, and the supplementary local
cost of meeting such needs, which shall be reflected in the form of an
annual school board budget corresponding to its share of the proceeds
of the special levy on real property constituting the Special Education
Fund (SEF) and such other sources of revenue as the LGC and other
laws and ordinances may provide;
68
b. Authorize the Provincial, City or Municipal Treasurer, as the case may

be, to disburse funds from the SEF pursuant to the budget prepared
and in accordance with existing rules and regulations;
c. Serve as an advisory committee to the sanggunian concerned on
educational matters such as, but not limited to, the necessity and uses
of local appropriations for educational purposes;
d. Recommend changes in the names of public schools within the
territorial jurisdiction of the LGU for enactment by the sanggunian
concerned (Sec. 99, LGC); and
e. The Co-Chairpersons and Members of the Provincial, City or Municipal
School Board shall perform their duties as such without compensation
or remuneration. Members thereof who are not government officials
or employees shall be entitled to necessary travelling expenses and
allowances chargeable against the funds of the LSB concerned,
subject to existing accounting and auditing rules and regulations.
(Sec. 101, LGC)
C. Bids and Awards Committee (BAC).

In order that local treasurers and assistant local treasurers give utmost priority to
their primary duties in revenue generation, resource mobilization, disbursement,
and fund management, as provided under the LGC, and inasmuch as RA
9184 (Government Procurement Reform Act) do not require their mandatory
membership in the BAC and the Technical Working Group (TWG), relative to
the procurement of goods, consulting services and infrastructure projects, it is
directed that all local treasurers and assistant local treasurers, whether appointed
or designated, shall be prohibited from becoming regular members of the BAC
and TWG of LGUs. However, they may serve as provisional members when the
local treasury office is the end-user of the goods, services and projects that may
be subject of procurement.
To ensure that accountabilities in procurement and disbursement functions are
properly defined, all local treasurers and assistant local treasurers shall ensure
appropriate internal control therefor, particularly in certifying the availability of
funds before money shall be disbursed, including those for payment of procured
goods, service and projects.
(DOF Department Order No. 042.2019 dated June 12, 2019)
D. Committee on Appraisal
The City or Municipal Treasurer shall act as Chairman relative to distraint of
personal property, with a representative of the Commission on Audit and the city
or municipal assessor as member. (Sec. 175 (e), LGC)
69
LTOM, 2ND EDITION
SECTION 23. TREASURER’S ROLE IN NATIONAL AND LOCAL

ELECTIONS PURSUANT TO THE OMNIBUS
ELECTION CODE
A. Local Treasurers shall comply with applicable Resolutions issued by the
COMELEC every election period on election duties and functions, personnel
action, leave of absence, travel, among others, and shall be guided by the
applicable rules and regulations of the DOF and the BLGF.
B. The Municipal Treasurer shall be a member of the Municipal Board of
Canvassers. OIC Municipal Treasurer may not be appointed thereto. In the
case of Provincial/City Board of Canvassers, the Provincial or City Treasurer
may be appointed thereto as substitute members in case of non-availability,
absence, disqualification due to relationships or incapacity for any cause of
the regular member thereof.
70
CHAPTER BONDING OF LOCAL TREASURERS
5 AND OTHER LGU ACCOUNTABLE OFFICERS
SECTION 24. LEGAL BASIS FOR THE BONDING OF LOCAL TREASURERS

AND OTHER LGU ACCOUNTABLE OFFICERS
Treasury Circular No. 02-2009 dated 06 August 2009, and revised Treasury Order
Nos. 01-95 and 01-99 issued by the Bureau of the Treasury (BTr), pertaining to
regulations promulgated for the effective bonding of accountable officers pursuant to
the provisions of the Public Bonding Law (PBL).
SECTION 25. GUIDELINES ON BONDING OF LOCAL TREASURERS

AND ACCOUNTABLE OFFICERS
A. Bonding of Local Treasurers and Accountable Officers.
1. Every officer of the LGU 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] Each accountable
officer whose total cash accountability is not less than Php5,000 shall
be bonded. The amount of bond shall depend on the total accountability
of the officer as fixed by the HoA. An official or employee who has both
money and property accountability shall be bonded only once to cover both
accountabilities, but the amount of bond shall be in accordance with the
Schedule issued by the BTr. (COA Circular No. 2006-005, dated 13 July
2006)
2. Every officer, agent and employees of the Government of the Philippines or
of the companies or corporations of which the majority of the stock is held
by the National Government, regardless of the status of their appointment
shall, whenever the nature of the duties performed by such officer, agent or
employee permits or requires the possession, custody or control of funds or
properties for which he/she is accountable, be deemed a bondable officer
and shall be bonded or bondable and his/her fidelity insured.
A Barangay Treasurer shall be bonded in an amount of accountability to
be determined by the Sangguniang Barangay but the amount of maximum
bond shall not exceed Php10,000.00 as authorized by the LGC or at an
amount which may or hereinafter be prescribed by any other law, premium
for which shall be paid by the Barangay. (Sec. 4, Treasury Circular No. 02-
2009, 06 August 2009)
3. All Heads of Agencies shall upon appointment or lawful accession by any
accountable public officer to a bondable position or office pertaining to their
respective jurisdiction or separation therefrom of any such public officer,
notify in writing the Treasurer of the Philippines (TOP) through the Bureau
of the Treasury (BTr) District/Provincial Office (DO/PO) having jurisdiction
71
LTOM, 2ND EDITION
over the agency/office/Government Owned and Controlled Corporation

(GOCC)/LGU/State University and College (SUC) within 5 days from
such appointment, lawful accession or separation and submit the required
application for bond or cancellation thereof, as applicable. (Local Treasury
Circular No. 02-2009, Sec. 6.2)
4. The duty to notify the TOP shall be given preferential attention of such heads
of departments, bureaus and offices of the National Government including
GOCCs, SUCs, heads of LGUs, Provincial and Local Treasurers and other
officials concerned. (Local Treasury Circular No. 02-2009, Sec. 6.3)
B. Procedure for Bonding Application.
1. The applicant shall accomplish in duplicate General Form (GF) Nos. 57A
(Request Form) and 58A (Application Form), copies of which can be
secured from BTr DOs/POs GF No. 58A and shall be subscribed and sworn
to before any officer authorized to administer oath, attaching therewith two
(2) passport size identification pictures taken within the last three (3) months
prior to the date of application. The Request and Application Forms shall be
accompanied by the following:
a. Latest SALN
b. List of bondable public officers certified by the agency officer in charge
of Administrative and/or Finance Department, Service, Division or unit
(Form Annex D of TC No. 02-2009)
2. The Request and Application Forms, together with required supporting
documents, shall be filed at the BTr DOs/POs having jurisdiction over the
agency for verification of the following:
a. If GF Nos. 57A and 58A have been properly accomplished and in
order;
b. If the required supporting documents are complete and in order;
c. If the name of the applicant appears on the list of bondable public
officers submitted by the agency; and
d. If the applicant is a safe and conservative risk in accordance with Sec.
320 of the PBL.
3. In case of non-compliance with the aforementioned documents, the request
and application form shall be returned to the applicant for necessary
correction and/or compliance.
4. If documents are found to be complete and in order, the applicable bond
premium shall be assessed and corresponding authority to accept payment
(ATAP) shall be issued to the applicant for the payment of bond to the
Authorized Government Depository Bank (AGDB) where the TOP has a
deposit account.
(Treasury Circular No. 02-2009, 06 August 2009)
72
BONDING OF LOCAL TREASURERS AND OTHER LGU ACCOUNTABLE OFFICERS
SECTION 26. SCHEDULE OF CASH ACCOUNTABILITY

AND THE CORRESPONDING BONDS
A. Amount of Bond.
The amount of bond shall be based on the total accountability (cash, property
and accountable forms) of the accountable public officer as determined by the
Head of Agency (HoA). Provided, the individual maximum accountability of each
accountable public officer shall not exceed One Hundred Million Pesos(Php100M).
However, the HoA may assign to other public officers the excess accountability
for which separate Fidelity Bond shall be secured. (Sec. 5.1, Treasury Circular
No. 02-2009)
B. Authority to Fix Schedule of Premium.
The TOP with the approval of the Secretary of Finance shall fix and, from time to
time, review the uniform rate of the bond premium chargeable for insurance under
the PBL. (Sec. 5.2, Treasury Circular No. 02-2009)
C. Rate of Premium.
The rate of premium of the Fidelity Bond is equal to 1.5% of the amount of bond
but shall not be less that Php150.00. The Revised Schedule of Premium Rates
(please refer to the table below) shall form an integral part of Treasury Circular
02-2009 until amended or revised. (Sec. 5.3, Treasury Circular No. 02-2009)
1. CASH ACCOUNTABILITY
Minimum Cash Maximum Cash

Amount of Bond Bond Premium
Accountability Accountability
Bond Premium shall

75% of their Total
not be less than
5,000.00 9,000.00 Cash Availability
Php 150.00
9,001.00 12,000.00 9,000.00 150.00

12,001.00 15,000.00 11,250.00 168.75
15,001.00 18,000.00 13,500.00 202.50
18,001.00 21,000.00 16,750.00 251.25
21,001.00 25,000.00 18,900.00 283.50
25,001.00 30,000.00 22,500.00 337.50
30,001.00 35,000.00 26,250.00 393.75
35,001.00 40,000.00 30,000.00 450.00
40,001.00 50,000.00 37,500.00 562.50
50,001.00 60,000.00 45,000.00 675.00
60,001.00 80,000.00 60,000.00 900.00
80,001.00 100,000.00 75,000.00 1,125.00
100,001.00 250,000.00 100,000.00 1,500.00
250,001.00 500,000.00 225,000.00 3,375.00
500,001.00 750,000.00 350,250.00 5,253.75
750,001.00 1,000,000.00 500,000.00 7,500.00
73
LTOM, 2ND EDITION
Minimum Cash Maximum Cash

Amount of Bond Bond Premium
Accountability Accountability
1,000,001.00 2,500,000.00 750,000.00 11,250.00
2,500,001.00 5,000,000.00 1,500,000.00 22,500.00
5,000,001.00 25,000,000.00 3,500,000.00 52,500.00
25,000,001.00 75,000,000.00 4,000,000.00 60,000.00
75,000,001.00 100,000,000.00 5,000,000.00 75,000.00
2. PROPERTY ACCOUNTABILITY

a. Government Securities 30% of their total value x 1.5% = Premium
b. Equipment 30% of their total value x 1.5% = Premium
c. Supplies and Materials 30% of their total value x 1.5% = Premium
3. FOR ACCOUNTABLE FORMS
a. Internal Revenue Stamp
b. Documentary Stamp
c. Customs Documentary Stamp
d. Cash Tickets 10% of their total
value rounded
e. Postage and other Stamp Stocks off to the nearest
X 1.5% = Premium
f. Cattle Registration Certificates hundred
g. Marriage Certificates
h. Auto Driver Certificates
i. Motor Vehicle License
j. Other Accountable Forms
having face value
SECTION 27. RENEWAL

The Fidelity Bond of an accountable officer shall be renewed before the expiration
of the bond. The application for renewal of bond shall be accomplished by using
General Form 57A and accompanied by the following:
A. List of bonded public officers subject for renewal certified by the agency official
in charge of Administrative and/or Finance Department, Service, Division or
Unit;
B. Agency certification that the bond applicant has no pending administrative and/
or criminal case (Annex E). For a bond applicant with pending administrative
and/or criminal case, copies or pertinent pleadings, orders and resolutions
filed or issued by the disputing parties, prosecutory or investigatory
offices and judicial bodies shall be attached to the bond application;
C. Copy of the latest BTr approved bond or copy of the Confirmation Letter; and
D. Latest Sworn SALN (7.2 - 7.2.3, Treasury Circular No. 02-2009, 06 August
2009)
74
SECTION 28. INCREASE IN THE AMOUNT OF ACCOUNTABILITY

A. Any increase in the amount of accountability will have a corresponding increase
in the premium of the bond.
B. The applicant shall accomplish and submit GF 57A to the concerned DO/PO
together with the following:
C. Special Order increasing the amount of accountability; and
1. List of bonded public officers certified by the agency official in charge of:
Administrative and/or Finance Department, Service, Division or Unit.
2. The amount of bond premium shall be computed based on the increased
amount of bond. The bond shall take effect upon the time of payment of
premium on the new bond application.
D. The Chief Treasury Operations Officer (CTOO) II of the BTr concerned shall cancel
the previously assigned risk number to the applicant and issue a new risk number
to the new bond application. (7.3 Treasury Circular No. 02-2009, 06 August 2009)
SECTION 29. ACCOUNTABLE OFFICERS CONSIDERED

UNSAFE RISKS
The bond application shall be evaluated to determine if the applicant is a safe and
conservative risk in accordance with Sec. 320 of the PBL. When there is basis to
prove that the applicant public officer is an unsafe risk owing to character, association
or habits, the following procedures shall be followed:
A. The bond application shall be transmitted to the RD with the recommendation for
disapproval stating the basis therefor. When the recommendation is affirmed by the
RD, the disapproval shall be communicated in writing to the HoA of the applicant
public officer stating therein the factual and legal basis for such disapproval.
B. The disapproval/decision of the RD maybe appealed by the concerned HoA by
filing a letter of appeal with the TOP within fifteen (15) days from the receipt of
such disapproval/decision. The letter of appeal shall state clearly and distinctively
the grounds and arguments of the appeal. A copy of the assailed written action/
decision and disapproved bond application and its supporting documents shall be
attached to the letter of appeal. The letter of appeal shall likewise be accompanied
by a postal money order or MDS check in the amount of Php500.00 as appeal fee
payable to the TOP.
C. Within 5 days from receipt of the letter of appeal and the appeal fee, the TOP
shall require the RD to elevate the entire records relating the disapproved bond
application. The TOP shall have fifteen (15) days from receipt of the records from
the RD to resolve the appeal.
D. The decision of the TOP shall be final, executory and not appealable. (7.1.8,
Treasury Circular No. 02-2009, 06 August 2009)
75
LTOM, 2ND EDITION
SECTION 30. CANCELLATION OF BOND

The HoA or authorized representative shall immediately submit a written request
for bond cancellation to the concerned BTr DO/PO CTOO II involving accountable
public officers who are no longer accountable by reason of retirement, separation
from the service, promotion, transfer, suspension from office or for any other cause
rendering them not bondable to their present position. They shall likewise request for
the cancellation of the bond and shall accomplish GF Nos. 57A, items 10-16. (7.4
Treasury Circular no. 02-2009, 06 August 2009)
SECTION 31. EFFECT OF CANCELLATION

The cancellation of the bond for any cause allowed under Treasury Circular No. 02-
2009 before expiration date, has the effect of limiting the liability of the Fidelity Fund
to the transactions within the period covered up to the time of its cancellation. The
bond premium paid for the accountable public officer whose bond is canceled shall
not be transferrable and not refundable. (4.12, Treasury Circular No. 02-2009)
SECTION 32. THE FIDELITY FUND

A. All bond premium collected by the BTr shall constitute the Fidelity Fund. The
Fund shall answer for defalcations, shortages and unrelieved accountability after
all possible means of recovery of the amount from the accountable official or
employee have been exhausted or his/her insolvency is declared by a competent
court. It shall be available for the payment of court fees incident to civil proceedings
to recover the sum lost.
B. The Fidelity Fund shall not be used for the following:
1. To replace fines imposed on bonded officials/employees as a result of
criminal conviction for violation of the Revised Penal Code or any penal law;
2. To answer the liability of a bonded official/employee convicted of estafa
through falsification of public documents in his/her capacity as private
individual; and
3. To refund the accountability of a bonded official/employee found short in
accountability but not removed or relieved of the duties. (Sec. 8.0, Bureau of
the Treasury Order No. 01-95)
SECTION 33. EXTENT OF LIABILITY

A. Primary Liability. The head of any Government agency at all levels, whether
national, corporate or local is primarily responsible and accountable for all
government funds and property pertaining to his agency. (Sec. 6.1, Treasury
Circular No. 02-2009)
76
B. Effect of Failure to Notify. Failure on the part of the HoA to make the required
notification to the TOP through the concerned DO/PO shall render them primarily
liable to any such loss or damage to public funds or properties their respective
agency, province, city or municipality, barangay as the case maybe, may incur on
account of such failure. (Sec. 6.4, Treasury Circular No. 02-2009)
SECTION 34. VALIDITY OF FIDELITY BONDS

A. An accountable public officer shall be considered bonded/insured with the Fidelity
Fund upon payment of the bond premium. The Fidelity Bond shall be valid and
effective at the time of payment and receipt of bond premium by the AGDB. The
accountable public officer shall submit to the BTr DO/PO a copy of the AGDB
validated deposit slip and ATAP as proof of payment of bond premium, after which
the confirmation letter shall be issued. (4.9, Treasury Circular No. 02-2009, 06
August 2009)
B. An approved Fidelity Bond shall be non-transferable and personal to the
accountable public officer and shall remain valid and effective for one (1) year from
the time of payment and receipt of bond premium. The Fidelity Bond shall be
subject to renewal yearly before the expiration of the present bond coverage while
the accountable public officer is holding such position for which he was bonded.
Failure to renew shall consider such bond as automatically cancelled and shall
have no legal effect. (Treasury Circular No. 02-2009, Sec. 4.10)
SECTION 35. ADJUDICATION AND PAYMENT OF CLAIMS

AGAINST THE FIDELITY FUND
A. Application for Relief from Accountability - When loss of public funds or
property occurs while they are in transit or the loss is caused by fire, theft, or
other casualty or force majeure, the public officer accountable therefore or having
possession, custody or control thereof shall immediately notify the COA or the
agency auditor concerned, and within thirty (30) days or such longer period as
the Commission or auditor may in the particular case allow, shall present his
application for relief with the available supporting evidence.
B. Effect of Relief from Accountability by COA - The relief from accountability of
the accountable public officer granted by the COA shall relieve the agency from
responsibility for the loss or damage to public funds or property.
C. Fidelity Fund; When Liable - When no relief of accountability is granted by COA,

the agency concerned may file claim for reimbursement from the Fidelity Fund to
the extent of the approved bond covered or amount of loss whichever is lower.
D. Claims - Any and all claims against the Fidelity Fund shall be filed as a money claim
with COA, with copy to BTr together with the evidence relating thereto. Claims
approved by the COA shall constitute a legal claim against the Fidelity Fund.
77
LTOM, 2ND EDITION
E. Requirements for Payment of Adjudicated Claim - The agency shall file a claim
for payment from the Fidelity Fund with the BTr, attaching the favorable findings
of COA. The BTr shall process the claim in accordance with existing budgeting,
accounting and auditing rules and regulations.
1. In case of defalcation, shortages and unrelieved losses in the account
of bonded public officer, the claim shall be supported by the following
documents:
a. Agency and COA findings and recommendation on the defalcation,
shortages and unrelieved accountability;
b. Latest SALN of the bonded official/employee;
c. Proof of current and subsisting bond and payment of bond premium;
and
d. Other document/s which may be required by the BTr.
2. In case of proven shortages and defalcation, the public officer responsible
thereto should be removed or relieved of his duties without prejudice to civil,
criminal or administrative cases to be instilled.
3. Only approved claims shall be paid from the Fidelity Fund. (8 - 8.5.3, Treasury
Circular No. 02-2009, 06 August 2009)
F. Penal Clause
Unjustified failure of an accountable public officer to comply with the requirements
to apply the Fidelity Bond pursuant to Treasury Circular No. 02- 2009 and the
PBL shall subject the responsible official/employee to applicable criminal, and/
or administrative liability under the Revised Penal Code and PD 1445. (9.0
Treasury Circular No. 02-2009, 06 August 2009)
78
FORMS AND ANNEXES
79
LTOM, 2ND EDITION
FORMS AND ANNEXES
80
CHAPTER CHAPTER TITLE
1
FORMS AND ANNEXES
ANNEX 1- LIST OF LAWS THAT SHAPED FISCAL DECENTRALIZATION
IN THE PHILIPPINES
Laws Provisions
19 June 1959 If the provincial board, municipal board or city council of
the city, or municipal council of the municipality or regularly
Republic Act No. 2264 organized municipal district shall fail to enact a budget
before the beginning of the ensuing fiscal year, the budget
An Act Amending the for the preceding fiscal year shall be deemed re-enacted.
Laws Governing Local (Section 1)
Governments by Increasing
their Autonomy and Copies of the provincial and city budgets shall be furnished
Reorganizing Provincial the Secretary of Finance within ten days from their approval,
Governments who shall have the power to review such budgets in order
to see to it that the above provisions and conditions are
complied with. If within ninety days after submission to the
Secretary of Finance, the secretary takes no action, the said
budget shall be deemed to have complied with the above
provisions. (Section 1)
All chartered cities, municipalities and municipal district

shall have authority to impose municipal license taxes or
fees upon persons engaged in any occupation or business,
or exercising privileges in chartered cities, municipalities or
municipal districts by requiring them to secure licenses at
rates fixed by the council of the LGU (Section 2)
All chartered cities, municipalities and municipal district

shall have authority to regulate and impose reasonable
fees for services rendered in connection with any business,
profession or occupation being conducted within the city,
municipality or municipal district and otherwise to levy for
public purposes, just and uniform taxes, licenses or fees
(Section 2)
Provincial Boards of provinces shall have the authority

to appropriate money for purposes not specified by law,
having in view the general welfare of the province and the
inhabitants and to appropriate money for loans or aids to
municipalities or municipal districts of the province under
such terms and conditions as the provincial boards may fix.
(Section 3)
Appointments by provincial governors, city mayors and

municipal mayors shall become effective upon the issuance
of such appointments and upon attestation by the provincial
treasurer of provinces, in case of appointments made by
81
LTOM, 2ND EDITION
Laws Provisions
provincial governors and municipal mayors, and by the city
treasurer, in case of appointments made by city mayors. All
appointments made by provincial governors, city mayors
and municipal mayors shall, after being attested to by the
respective provincial or city treasurers, be forwarded within
ten days to the commissioner of civil service for review
pursuant to civil service law and rules. (Section 8)
1 January 1960 The barrio council with the approval of a two-thirds vote
of the barrio assembly as provided in section four hereof,
Republic Act No. 2370 may raise, levy, collect and/or accept monies and other
contributions from the following sources (Section 14):
An Act Granting
Autonomy to Barrios of • Voluntary contributions annually from each male or
the Philippines, otherwise female resident twenty-one years of age or over;
known as “Barrio Charter • License on stores, signs, signboards, and billboards
Act” displayed or maintained in any place exposed to public
view except those displayed at the place or places
where profession or business advertised thereby is in
whole or in part conducted;
• A tax on gamecocks owned by residents of the barrio

and on the cockfights conducted therein: Provided,
that nothing herein shall authorize the barrio council to
permit cockfights.
• Monies, materials and voluntary labor for specific public

works and cooperative enterprises of the barrio raised
from resident, landholders, producers and merchants of
the barrio;
• Monies from grants-in-aid, subsidies, contributions and

revenues made available to barrios from municipal,
provincial or national funds;
• Monies from private agencies and individuals;
• An additional percentage, not exceeding one-fourth of

one percent of the assessed valuation of the property
within the barrio, collected by the municipal treasurer
along with the tax on real property levied for municipal
purposes by the municipality and deposited in the name
of the barrio with the municipal treasurer: Provided, that
no tax or license fee imposed by a barrio council shall
exceed fifty per centum of a similar tax or fee levied,
assessed or imposed by the municipal council.
82
FORMS AND ANNEXES
Laws Provisions
Ten per cent of all real estate taxes collected within the
barrio shall accrue to the barrio general fund, which sum
shall be deducted in equal amounts from the respective
shares of the province and municipality: Provided, That the
municipal treasurer may designate the barrio lieutenant and/
or the barrio treasurer as his deputy to collect the said taxes.
(Section 15)
All ordinances for raising barrio funds through taxes and

voluntary contributions may be initiated in the barrio council,
and submitted to the barrio assembly. Such ordinances may
also originate in the barrio assembly which may approve
the same finally without further action by the barrio council.
(Section 16)
The barrio treasurer shall collect all taxes existing (except

real property), fees and contributions due the barrio treasury
for which he shall issue official receipts. The treasurer, who
shall be bonded in any amount to be fixed by the barrio
council not exceeding ten thousand pesos, shall be the
custodian of the barrio funds and property and shall deposit
all collections with the municipal treasurer within a period
of one week after receipt of such fees and contributions.
(Section 16)
12 September 1967 The purpose of this Act to grant to local governments greater
freedom and ampler means to respond to the needs of their
An Act Granting Further people and promote their prosperity and happiness and
Autonomous Powers to effect a more equitable and systematic distribution of
to Local Governments, governmental powers and resources. (Section 2)
otherwise known as
“Decentralization Act of The allotment share of provinces and cities as provided for in
1967” the penultimate paragraph of Section eight, Commonwealth
Act Numbered Five hundred eighty-six, as amended by
Republic Act Numbered Seven hundred eighty-one, is
hereby increased from ten to thirteen per centum and the
allotment share of municipalities exclusive of cities as
provided for in the same Code is hereby increased from
two to four per centum, provisions of existing laws to the
contrary notwithstanding. (Section 13)
Within five days after the end of each month, the treasury
field cashiers to whom all collection agents shall remit all
their collections in each province shall retain from the internal
revenue collections accruing to the General Fund and remit
to the Provincial Treasurer an amount equivalent to one-
twelfth of the predetermined annual internal revenue regular
allotment of the province and municipalities under it, and to
the city treasurer an amount equivalent to one-twelfth of the
pre-determined annual internal revenue regular allotment
of the city: Provided, That in provinces where there are no
treasury field cashiers, such personnel shall be appointed.
(Section 14)
83
LTOM, 2ND EDITION
Laws Provisions
26 August 1972 Regulations on building permit, inspection and other fees,
and for compliance with the same shall be covered by
Republic Act No. 6541 city and municipal ordinances: Provided, That Traditional
indigenous family dwellings under Section 1.01.04 (d) shall
An Act to Ordain and be exempt from payment of building permit fees. (Section
Institute a National Building 1.02.04)
Code of the Philippines,
otherwise known as
“National Building Code
of the Philippines”
1 July 1973 Section 2. Fundamental Principles
Section 4. Local Authority.
Section 5. Common Limitations on the Taxing Powers of
Presidential Decree No. Local Governments.
231 Section 7. Tax on Transfer of Real Property Ownership.
Section 8. Tax on Business of Printing and Publication
Section 9. Franchise Tax.
Enacting a Local Tax Section 10. Sand and Gravel Fee
Code for Provinces, Cities, Section 11. Taxes Transferred
Municipalities and Barrios, Section 12. Occupation Tax
otherwise known as “Local Section 13. Amusement Tax on Admission.
Tax Code” Section 14. Fees for Sealing and Licensing of Weights and
Measures.
Section 15. Tax on Peddlers.
Section 16. Rental Fee for Use of Municipal Waters, Rivers
etc. as Log Pond
Section 17. Specific Limitations on Power
Section 18. Scope of Powers of Municipalities
Section 19. Tax on Business of Municipalities
Section 20. Fees and Charges of Municipalities
Section 21. Fishery Rentals or Fees of Municipalities
Section 22. Specific Limitations on Power of
Municipalities
Section 23. Scope of Power of Cities
Section 24. Additional Taxing Powers of Cities
Section 25. Specific Limitation on Power of Cities
Section 26. Scope of Power of Barrios
Section 27. License Taxes and Fees of Barrios
Section 28. Service Charges of Barrios
Section 29. Contributions of Barrios
Section 30. Market Fees
Section 31. Slaughterhouse Fees3
Section 32. Public Utility Charges.
Section 33. Tuition Fees.
Section 34. Tolls for Roads, Bridges, Canals and Ferries.
Section 35. Charges for Holding Benefits
Section 36. Permit Fee
Section 37. Service Charge
84
FORMS AND ANNEXES
Laws Provisions
Section 53. Fixing of the Tax and Manner of Payment.
Section 54. Accrual of the Tax.
Section 55. Time for the Payment.
Section 58. Collection of Local Revenue by Treasurer.
Section 59. Examination of Books of Accounts
and Pertinent Records of Businessmen by
Provincial or City Treasurer.
Section 60. Application of Article.
Section 61. Local Government’s Lien.
20 May 1974 This Code shall govern the appraisal and assessment of
real property for purposes of taxation by provinces, cities
Presidential Decree 464 and municipalities, as well as the levy, collection and
administration of real property tax. (Section 1)
Enacting A Real Property
Tax Code, otherwise known Chapter II of this Code provides the provisions on the
as “Real Property Tax appraisal and assessment of real property.
Code” Section 4. Administration of the Real Property Tax.
Section 15. Preparation of Schedule of Values.
Section 17. Amendment of Schedules of Market Values.
Section 23. Certification of Revised Values to the Secretary
of Finance.
Chapter V of this Code provides the provisions on Special

Levies on Real Property.
Section 41. An additional one per cent tax on real property

for the Special Education Fund.
Section 42. Additional ad valorem tax on idle lands.
Section 47. Special levy by local governments.
Section 55. Special levy by the National Government.
Chapter VI of this Code provides the provisions on Collection

of Real Property Tax.
Section 57. Collection of tax to be the responsibility of

treasurers.
Section 58. Assessor to furnish treasurer with assessment
roll.
Section 59. Notice of time for collection of tax.
Section 60. Payment of real property taxes in installments.
Chapter VIII of this Code provides the provisions on

Organizations, Functions and Supervisions.
Section 88. Provincial or city assessor, his assistant and

deputies and their appointments.
Section 91. Supervision over local assessment offices.
Section 96. Remission of tax by provincial or city board or
council.
85
LTOM, 2ND EDITION
Laws Provisions
3 June 1974 This Decree shall govern the conduct and management
of the financial affairs, transactions, and operations of
Presidential Decree No. provinces, cities, municipalities and barrios, and shall
477 provide the organization for local administration in the local
governments. (Section 1)
“Decree on Local Fiscal
Administration” Section 3. Supervisory authority of the Department of
Finance.
Section 7. The Local Funds.
Section 12. Separation of Personal Money from Public
Funds.
Chapter II of this Decree provides the provisions on Special

Accounts.
Section 15. Form and Content.

Section 24. The role of the treasurer in the budget process.
Section 29. Review of Provincial and City Budgets.
Section 30. Review of Municipal Budgets.
Chapter IV of this Decree provides the provisions

on Expenditures, Disbursements, Accounting and
Accountability.
Section 41. Disbursement of Local Government Funds in

General.
Section 51. Certification, on and approval of, vouchers.
Section 52. Officials authorized to draw checks in
settlement of obligations.
Chapter V of this Decree provides the provisions

on Organization for Local Fiscal Administration
Section 60. Provincial or City Treasurers.

Section 61. Qualifications.
Section 63. Sub provincial treasurers.
Section 64. Assistant Provincial or City Treasurer.
Section 65. Qualifications and Functions.
Section 70. Municipal or Municipal District Treasurer.
Section 71. Qualifications.
Section 73. Treasury and auditorial visitations.
Section 74. Assistant Municipal or Municipal or Municipal
District Treasury.
Section 75. Qualifications and Functions.
Section 78. Appointment of treasury personnel in provinces,
cities, municipalities and municipal districts.
Section 79. Local treasury career service.
86
FORMS AND ANNEXES
Laws Provisions
2 August 1974 Every requisitions must be accompanied by a certificate,
signed by the local treasurer showing that an appropriation
therefore exists and that the estimated amount of such
Presidential Decree No. expenditure has been set aside for its liquidation. (Section
526 6)
When procurement is to be done at the local government

Providing for an Improved level and save in exempt cases, the local treasurer shall call
System of Acquisition, bids for open public competition. The call for bids shall show
Utilization, Care, Custody the complete specifications and technical descriptions of the
and Disposal of Supplies supplies desired and shall embody all terms and conditions
in the Local Governments, of participations and award, terms of delivery and payment
Amending for the Purpose and of all other covenants affecting the transaction.
Section of RA No. 246,
In all calls for bids, the right to waive any defect in the tender
otherwise known as
as well as the right to accept the bid most advantageous to
“The Local Autonomy
the government shall be reserved. In no case, however, shall
Act of 1959”, and Other
failure to meet the specifications or technical requirements
Related Laws (Supply
of the supplies desired be waived. (Section 8)
Management)
In cases of emergency where the need for the supplies is
exceptionally urgent or absolutely indispensable to prevent
immediate danger to, or loss of, life, local government units
may make emergency purchases or place repair orders
without public bidding regardless of amount. Delivery and
utilization of purchase and/or repair orders under this section
shall be made within fifteen (15) days after the placing of the
same. Immediately after the emergency purchase or repair
order is made, the chief of office or department making the
emergency purchase or repair order shall draw a regular
requisition to cover the same showing thereon (Section 14)
On or before the fifteenth day of April each year, the local

treasurer shall prepare, for the approval of the local chief
executive, an annual procurement program for the ensuing
fiscal year which shall contain and show an itemized list
of the estimated quantity of supplies needed for the entire
ensuing fiscal year, a complete description thereof as
to kind, quantity and quality, the estimated cost, and the
balance on hand. However, the total estimated cost of the
approved annual procurement program shall not exceed
the total appropriations authorized for the acquisition of
supplies. (Section 19)
87
LTOM, 2ND EDITION
Laws Provisions
19 May 1975 Tax Declaration on Real Property. – Imprisonment for a
period of not less than two (2) nor more than four (4) years
Presidential Decree No. and perpetual disqualification from holding an elective
705 or appointive office, shall be imposed upon any public
officer or employee who shall issue a tax declaration on
Revising Presidential real property without a certification from the Director of
Decree No. 389, otherwise Forest Development and the Director of Lands or their
known as the Forestry duly designated representatives that the area declared
Reform Code of the for taxation is alienable and disposable lands, unless the
Philippines property is titled or has been occupied and possessed by
members of the national cultural minorities prior to July 4,
1955. (Section 84)
25 June 1975 This Decree shall be known as the decree on Credit
Financing for Local Governments, which shall govern the
Presidential Decree No. conduct and management of the credit transactions and
752 borrowings of provinces, cities, and municipalities. (Section
1)
‘Credit Financing for
Local Governments” It shall be the basic policy that any local government may
avail of credit facilities and resort to borrowings only if the
local funds are not sufficient to finance the prosecution,
completion, expansion, operation, and maintenance of local
infrastructures and other socio-economic developmental
projects. (Section 2)
Provincial, city and municipal governments may upon

recommendation of the Secretary of Finance contract loans,
credits, and other forms of indebtedness with the Philippine
National Bank, the Development Bank of the Philippines,
the Government Service Insurance System, and/or any
other national lending institution to finance the construction,
installation, improvement, expansion, operation, or
maintenance of electric light and power plants, public
markets and slaughter-houses, waterworks and irrigation
systems, telephone and radio communications systems,
government housing projects, the purchase of rural and
urban estates and other capital investment projects, subject
to such terms and conditions as may be prescribed by law
and the provisions of the respective charters of the aforesaid
banks and lending institutions. [Section 4 (a)]
Provincial, city and municipal governments may likewise

secure from the Land Bank of the Philippines short, medium
and long-term loans and advances against security of real
estate and/or other acceptable assets for the establishment,
development or expansion of agricultural, industrial, home
building or home financing projects and other productive
enterprises. [Section 4 (b)]
88
FORMS AND ANNEXES
Laws Provisions
The Secretary of Finance shall promulgate, from time to
time, such rules and regulations, as he may deem necessary
for the proper and effective implementation of this Decree.
(Section 11)
19 December 1975 Declaration and listing in the assessment rolls. All timber
and forest lands owned by the Republic of the Philippines
Presidential Decree No. or any of its political subdivision, the beneficial use of which
853 has been granted to a taxable person, shall be declared for
taxation purposes and listed in the assessment rolls in the
Providing for the name of the concessionaire or licensee.
Classification and Valuation
of Timber and Forest All timber and forest lands that are privately owned shall
Lands for Purposes of Real be declared and listed in the name of the private owner.
Property Tax (Section 2)
Assessment Level. The assessment level for all timber and

forest lands shall be 40% of their market value as determined
by the Provincial/City Assessor in accordance with such
methods, procedures or regulations that the Secretary of
Finance may prescribe for the purpose. (Section 3)
Appraisal and Assessment of Timber and Forest Lands.
1. In cases where timber or forest land is located in one

municipality or in one city, it shall be the responsibility of
the Provincial/City Assessor, by himself or thru his Municipal
Deputy Assessor, to appraise and assess the same in
accordance with the methods, procedures, or regulations
that the Secretary of Finance may prescribe therefor.
2. In cases, however, where the timber and forest lands

are found in two or more municipalities, the Provincial
Assessor likewise shall appraise and assess the same and
he shall issue separate tax declarations covering the areas
corresponding to each municipality.
3. In cases where timber and forest lands cover two or

more provinces and/or cities, the Provincial/City Assessors
concerned shall jointly appraise and assess the property in
accordance with regulations to be issued by the Secretary
of Finance. (Section 5)
Officer responsible for the collection of the real property

tax. The basic and additional real property tax on timber
and forest lands shall be collected by the Provincial/City
Treasurers where the timber and forest lands are located.
(Section 7)
Tax Discount. If the basic real property tax and the additional
one (1%) per cent tax accruing to Special Educational Fund
are paid in full within the prescribed period of payment as
provided for under Section 60 of Presidential Decree No.
464, the taxpayer shall be granted a discount as follows:
89
LTOM, 2ND EDITION
Laws Provisions
60% on the tax due and payable during the year
1975,
1976, and
1977. (Section 9)
Remedies and Sanctions. Collection of the real property tax

shall may be enforced through any or all of the remedies
provided under Presidential Decree No. 464, and the use
or nonuse of one remedy shall not be a bar against the
institution of the others. (Section 11)
There shall be created in every municipality where there

are timber and forest lands, regardless of class of such
municipality, the position of Municipal Deputy Assessor,
whose appointment shall be governed by Section 90 of
Presidential Decree No. 464. (Section 12)
12 April 1976 For purposes of effective fiscal management, Metropolitan
Manila is hereby divided into the four (4) Local Treasury and
Presidential Decree No. Assessment Districts. (Section 1)
921
Under the general direction of the Commissioner for Finance
“Providing for the of the Metropolitan Manila Commission, the City Treasurers
Administration of Local and the City Assessors of the treasury and assessment
Financial Services in districts created under Section one hereof shall, henceforth,
Metropolitan Manila, exercise general supervision over the local treasury and
creating Local Treasury assessment offices of the municipalities belonging to
and Assessment Districts their respective districts. Accordingly, said City Treasurers
therein” and City Assessors, in addition to the powers, duties, and
functions exercised by them under existing laws, decrees,
and rules and regulations, shall also discharge the duties
and functions heretofore exercised and performed under
existing laws by the Provincial Treasurers and Provincial
Assessors of the provinces of Rizal and Bulacan insofar
as the aforesaid offices of the municipalities within the
Metropolitan Manila Area are concerned. (Section 2)
The power to appoint the Municipal Treasurers, Assistant

Municipal Treasurers and Municipal Deputy Assessors
of the municipalities within the Metropolitan Manila Area
theretofore exercised by the Provincial Treasurers and
Provincial Assessors of the provinces concerned shall
be vested upon the Commissioner for Finance of the
Metropolitan Manila Commission subject to the provisions
of Sections 70 and 74 of Presidential Decree No. 477 and
Section 90 of Presidential Decree No. 464, as the case may
be, upon recommendation of the City Treasurer or the City
Assessor of the District concerned. (Section 3)
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FORMS AND ANNEXES
Laws Provisions
As provided for under existing laws, the City Treasurers and
City Assessors of cities integrated in the Metropolitan Manila
Area shall be appointed by the President of the Philippines
upon recommendation of the Secretary of Finance. Assistant
City Treasurers, Assistant City Assessors and other city
treasury and assessment personnel shall be appointed in
accordance with the provisions of existing laws. (Section 5)
The City and Municipal Treasurers of the cities and

municipalities in the Metropolitan Manila Area shall continue
to perform their duties and functions as such treasurers
conformably with existing laws, decrees, and rules and
regulations, and as herein provided for. (Section 6)
The City Assessors and Municipal Deputy Assessors in the

Metropolitan Manila Area shall continue to perform their
duties and functions as such assessors conformably with
existing laws, decrees, and rules and regulations. (Section
8)
16 May 1978 The Budget Commission shall be responsible for the
review and evaluation and for taking appropriate action on
Presidential Decree No. the annual principal and supplemental budgets and other
1375 financial statements covering all funds of local governments;
and the review and formulation of recommendations on
“Transferring to the Budget resolutions of local legislative bodies involving appropriation
Commission the functions of local funds. (Section 1)
of Local Government
Budget Administration” Revenue funds shall not be paid out of any local treasury
except in pursuance of specific statutory authority or of
appropriations duly approved pursuant to PD No. 477 and
this Decree. (Section 5)
10 February 1983 Each local government unit shall have the power to create
its own sources of revenue and to levy taxes, subject to
Batas Pambansa 337 such limitations as may be provided by law. [Section 8(1)]
For purposes of taxation by local government units, the

“The Local Government appraisal and assessment of real property, as well as the
Code” levy, collection and administration of real property taxes,
shall be governed by the provisions of existing laws insofar
as they are not inconsistent with this Code. [Section 8(2)]
The barangay treasurer shall collect all taxes due or unpaid

including real property taxes, fees and other charges and
contributions accruing to the barangay treasury for which he
shall issue official receipts and shall deposit all collections
with the city or municipal treasury within a period of one
week after receipt thereof: Provided, That he collects the real
property tax due in his own barangay after being deputized
by the treasurer concerned for the purpose. [Section 107(1)]
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LTOM, 2ND EDITION
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The financial records of the barangay shall be kept in the
office of the city or municipal treasurer in simplified manner
as prescribed by the Commission on Audit Representatives
of the Commission on Audit shall annually audit such
accounts or as often as may be necessary and make a
report of the audit to the sangguniang barangay and to the
sangguniang bayan or sangguniang panlungsod, as the
case may be. [Section 107(2)]
The municipal treasurer shall be appointed by the Minister

of Finance upon recommendation of the municipal mayor,
subject to civil service law, rules and regulations. He shall
take charge of the municipal treasury office and acts as the
chief financial officer of the municipality. [Section 155(1)]
The provincial treasurer shall take charge of the provincial

treasury office and act as the chief financial officer of the
province. [Section 212(1)]
There shall be an assistant provincial treasurer who shall be

appointed by the Minister of Finance upon recommendation
of the provincial governor, subject to civil service laws,
rules and regulations. When the exigency of the service
so requires, additional positions for assistant provincial
treasurers may be created. [Section 213(1)]
16 July 1987 Incentives to Registered Enterprises. (Article 39)
Regional or area headquarters established in the Philippines

by multinational corporations and which headquarters do
Executive Order No. 226 not earn income from the Philippines and which act as
supervisory, communications and coordinating center for
their affiliates, subsidiaries, or branches in the Asia-Pacific
The Omnibus Regional are exempted from the payment from income tax.
Investments Code of 1987 (Article 63)
Regional or area headquarters in the Philippines by

multinational corporations are exempt from contractor’s tax.
(Article 64)
The regional or area headquarters of multinational companies

shall be exempt from all kinds of local licenses, fees, dues,
impost or any other local taxes or burdens.(Article 65)
Regional or area headquarters shall enjoy tax and duly

free importation of equipment and materials for training,
conferences which are needed for the functions of the
regional or area headquarters and which are not locally
available subject prior approval of the Board of Investments
(BOI). (Article 66)
92
FORMS AND ANNEXES
Laws Provisions
9 January 1990 Until otherwise provided by the Congress, there is hereby
constituted the Metropolitan Manila Authority, hereinafter
Executive Order No. 392 referred to as the Authority, to be composed of the heads of
the four (4) cities and thirteen (13) municipalities comprising
“Constituting the the Metropolitan Manila area. (Section 1)
Metropolitan Manila
Authority” The Authority shall have jurisdiction over the delivery of basic
urban services requiring coordination in the Metropolitan
Manila. These basic urban services shall include among
others: land use, planning and zoning; traffic management;
public safety; urban development and renewal; management
and control of operations during calamities and emergencies
affecting public welfare and safety; and sanitation and waste
management. Any change in the classification of zoning
shall however be subject to the approval of the Housing and
Land Use Regulatory Board (HLURB). (Section 1)
• The Authority shall be governed by the Metropolitan

Manila Council, hereinafter referred to as the Council,
composed of the Mayors of the four (4) cities and thirteen
(13) municipalities of Metropolitan Manila. (Section 2)
• City and municipal treasurers of the local government

units comprising Metropolitan Manila shall continue
to collect all revenues and receipts accruing to the
Metropolitan Manila Commission and remit the same to
the Authority; Provided, that such income collections as
well as the share of the Authority from the regular sources
of revenue in the General Fund of the city or municipality
as local counterpart for the integrated basic services and
developmental projects shall treated as a trust fund in their
books of account. (Section 7)
• All city and municipal treasurers, municipal assessors,

and their assistants as well as all other officials whose
appointment is currently vested upon the Metropolitan
Manila Commission shall be appointed by the President
of the Philippines, upon recommendation of the Council,
subject to the Civil Service law, rules and regulations.
(Section 8)
• Other treasury and assessment personnel shall be

appointed by the local chief executive in the city or
municipality in accordance with existing laws. (Section 8)
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LTOM, 2ND EDITION
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1 January 1992 Section 6. Authority to Create Local Government Units.
Section 7. Creation and Conversion.
Republic Act No. 7160 Section 8. Division and Merger.
An Act Providing for a Local Section 9. Abolition of Local Government Units.
Government Code of 1991, Section 10. Plebiscite Requirement.
otherwise known as "Local Section 11. Selection and Transfer of Local Government
Government Code of 1991 Site, Offices and Facilities.
LGC Book 1” Section 18. Power to Generate and Apply Resources
Section 115. Budget Information.
1 January 1992 Section 385. Manner of Creation of Barangays.
Section 386. Requisites for Creation of Barangays.
Section 387. Chief Officials and Offices.
Section 393. Benefits of Barangay Officials.
Republic Act No. 7160 Section 395. Barangay Treasurer: Appointment,
Qualification, Powers and Duties.
Section 441. Manner of Creation of Municipalities.
Section 442. Requisites for Creation of Municipalities.
An Act Providing for a Local Section 443. Officials of the Municipal Government.
Government Code of 1991, Section 449. Manner of Creation of Cities.
otherwise known as "Local Section 450. Requisites for Creation of Cities.
Government Code of 1991 Section 454. Officials of the City Government.
LGC Book 3" (Local Section 460. Manner of Creation of Provinces.
Government Units) Section 461. Requisites for Creation of Provinces.
Section 470. Appointment, Qualifications, Powers, and
Duties of Treasurer.
Section 471. Assistant Treasurer.
Section 472. Qualifications, Powers and Duties of
Assessor.
Section 473. Assistant Assessor.
1 January 1992 Section 513. Failure to Post and Publish the Itemized
Monthly Collections and Disbursements.
Republic Act No. 7160 Section 516. Penalties for Violation of Tax Ordinances.
Section 517. Omission of Property from Assessment or
Tax Rolls by Officers and Other Acts.
An Act Providing for a Local
Section 522. Insurance Coverage.
Government Code of 1991,
Section 523. Personnel Retirement and/or Benefits.
otherwise known as "Local
Section 526. Application of this Code to Local Government
Government Code of 1991
Units in the Autonomous Regions.
LGC Book 4"
Section 529. Tax Ordinances or Revenue Measures.
(Miscellaneous and Final
Provisions)
94
FORMS AND ANNEXES
Laws Provisions
13 March 1992 The provisions of existing laws, rules and regulations to the
contrary notwithstanding, no taxes, local and national, shall
Republic Act No. 7227 be imposed within the Subic Special Economic Zone. In lieu
of paying taxes, three percent (3%) of the gross income
An Act Accelerating the earned by all businesses and enterprises within the Subic
Conversion of Military Special Economic Zone shall be remitted to the National
Reservations into other Government, one percent (1%) each to the local government
Productive Uses, Creating units affected by the declaration of the zone in proportion to
the Bases Conversion their population area, and other factors. In addition, there
and Development is hereby established a development fund of one percent
Authority for the Purpose, (1%) of the gross income earned by all businesses and
Providing Funds Therefor enterprises within the Subic Special Economic Zone to be
and for other purposes, utilized for the development of municipalities outside the
otherwise known as City of Olongapo and the Municipality of Subic, and other
"Bases Conversion and municipalities contiguous to be base areas. [Section 12(c)].
Development Act of
1992". Except as herein provided, the local government units
comprising the Subic Special Economic Zone shall retain
their basic autonomy and identity. The cities shall be
governed by their respective charters and the municipalities
shall operate and function in accordance with Republic
Act No. 7160, otherwise known as the Local Government
Code of 1991. [Section 12(i)].
28 April 1992 Investors, as certified by the Filipino Investors Society and
duly confirmed by the Screening Committee, shall be exempt
Republic Act No. 7459 from payment of license fees, permit feed and other business
taxes in the development of their particular inventions. This
An Act Providing Incentives is an exception to the taxing power of the local government
to Filipino Investors and units. The certification shall state that the manufacture of the
Expanding the Functions of invention is made on a commercial scale.
the Technology Application
and Promotion Institute, Investors shall be exempt from paying any fees involved in
Appropriating Funds their application for registration of their inventions. (Section
Therefor, and for other 5)
Purposes, otherwise known To promote, encourage, develop and accelerate
as “Philippine Investors commercialization of technologies developed by local
and Invention Incentives researchers or adapted locally from foreign sources including
Act” inventions, any income derived from these technologies
shall be exempted from all kinds of taxes during the first ten
(10) years from the date of the first sale, subject to the rules
and regulations of the Department of Finance; Provided,
that this tax exemption privilege pertaining to invention shall
be extended to the legal heir or assignee upon the death of
the inventor.
The technologies, their manufacture or sale, shall also

be exempt from payment of license, permit fees, customs
duties and charges on imports. (Section 6)
95
LTOM, 2ND EDITION
Laws Provisions
24 February 1995 Business establishments operating within the Zone shall be
entitled to the existing fiscal incentives as provided for under
Republic Act No. 7922 Presidential Decree No. 66, the law creating the Export
Processing Zone Authority (EPZA), or those provided under
An Act Establishing a Book VI of Executive Order No. 226, otherwise known as the
Special Economic Zone Omnibus Investments Code of 1987 [Section 4(b)].
and Free Port in the
Any provision of existing law, rules or regulations to the
Municipality of Santa
contrary notwithstanding, no taxes, local and national, shall
Ana and the Neighboring
be imposed on business establishments operating within the
Islands in the Municipality
Zone. In lieu of paying taxes, said business establishments
of Aparri, Province of
shall pay and remit to the national government five per
Cagayan, Providing Funds
centum (5%) of their gross income, to be divided as follows:
Therefor, and For Other
Purposes, otherwise known 1. Two per centum (2%) shall accrue to the general fund
as "Cagayan Special of the national government;
Economic Zone Act of
2. One per centum (1%) to the Province of Cagayan;
1995"
3. One-half per centum (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; and
4. One and one-half per centum (1 1/2%) to the Cagayan
Economic Zone Authority which shall be created under
this Act [Section 4(c)].
24 February 1995 • Business establishments operating within the
ECOZONES shall be entitled to the fiscal incentives as
Republic Act No. 7916 provided for under Presidential Decree No. 66, the law
creating the Export Processing Zone Authority, or those
provided under Book VI of Executive Order No. 226,
(as amended by RA 8748) otherwise known as the Omnibus Investment Code of
1987. (Section 23)
• Tax credits for exporters using local materials as Inputs
An Act Providing for the shall enjoy the same benefits provided for in the Export
Legal Framework and Development Act of 1994. (Section 23)
Mechanisms For the • Except for real property taxes on land owned
Creation, Operations, by developers, no taxes, local and national,
Administration, and shall be imposed on business establishments
Coordination of Special operating within the ECOZONE. (Section 24)
Economic Zones in the
Philippines, Creating • All persons and services establishments in the
For This Purpose, The ECOZONE shall be subject to national and local taxes
Philippine Economic Zone under the National Internal Revenue Code and the Local
Authority (PEZA), And For Government Code. (Section 25)
Other Purposes, otherwise • Goods manufactured by an ECOZONE enterprise shall
known as “The Special be made available for immediate retail sales in the
Economic Zone Act of domestic market, subject to payment of corresponding
1995” taxes on the raw materials and other regulations that
may be adopted by the Board of the PEZA. (Section 26)
96
FORMS AND ANNEXES
Laws Provisions
• Without prior Bangko Sentral approval, after tax
profits and other earnings of foreign investments in
enterprises in the ECOZONE may be remitted outward
in the equivalent foreign exchange through any of the
banks licensed by the Bangko Sentral ng Pilipinas in
the ECOZONE: Provided, however, That such foreign
investments in said enterprises have been previously
registered with the Bangko Sentral. (Section 28)
• An additional deduction equivalent to one- half (1/2) of

the value of training expenses incurred In developing
skilled or unskilled labor or for managerial or other
management development programs incurred by
enterprises In the ECOZONE can be deducted from the
national government's share of three percent (3%) as
provided In Section 24. (Section 42)
• An additional deduction equivalent to one- half (1/2) of

the value of training expenses incurred In developing
skilled or unskilled labor or for managerial or other
management development programs incurred by
enterprises In the ECOZONE can be deducted from the
national government’s share of three percent (3%) as
provided In Section 24. (Section 42)
• The PEZA, the Department of Labor and Employment,

and the Department of Finance shall jointly make a
review of the incentive scheme provided In this section
every two (2) years or when circumstances so warrant.
(Section 42)
1 March 1995 The affairs of Metropolitan Manila shall be administered by
the Metropolitan Manila Authority, hereinafter referred to
Republic Act No. 7924 as the MMDA, to replace the Metro Manila Authority (MMA)
“Creating the Metropolitan organized under Executive Order No. 392, series of 1990.
Manila Development (Section 2)
Authority or MMDA”
Sources of Funds and the Operating Budget of MMDA
(Section 10):
a. To carry out the purposes of this Act , the amount of One

billion pesos (P1,000,000,000) is hereby authorized to
be appropriated for the initial operation of the MMDA.
Thereafter, the annual expenditures including capital
outlays of the MMDA shall be provided in the General
Appropriations Act.
b. The MMDA shall continue to receive the Internal

Revenue Allotment (IRA) currently allocated to the
present MMA.
97
LTOM, 2ND EDITION
Laws Provisions
c. The MMDA is likewise empowered by levy fines, and
impose fees and charges for various services rendered.
d. Five percent (5%) of the total annual gross revenue of

the preceding year, net of the internal revenue allotment,
of each local government unit mentioned in Section 2
hereof, shall accrue and become payable monthly to the
MMDA by each city or municipality. In case of failure to
remit the said fixed contribution, the DBM shall cause the
disbursement of the same to MMDA chargeable against
the IRA allotment of the city or municipality concerned,
the provisions of Section 286 of RA 7160 to the contrary
notwithstanding (Section 10) of the barangay from the
real property and other local taxes. (Section 27)
For purposes of DBM computation of agency income, the

LGUs shall submit on February 28 of each year a statement
of the certified LGU Gross Revenue of the immediately
preceding year as well as a statement of Certified LGU
Gross Revenue estimate of the current year.
In case of failure to remit said fixed contributions, the DBM,

upon request of the Chairman, shall cause its disbursement
to the Authority, chargeable against the IRA share of the City
or Municipality concerned, the provisions of Section 286 of
RA 7160 to the contrary notwithstanding. (Section 28)
1 June 1999 Business establishments operating within the ECOZONE
shall be exempt from national and local taxes, with exemption
Republic Act No. 8748 from real property taxes. In lieu thereof, fiver percent (5%) of
the gross income earned by business enterprises within the
ECOZONE shall be paid and remitted as follows:
1. Three percent (3%) to the National Government; and
2. Two percent (2%) which shall be directly remitted to the

An Act Amending RA No. of the municipality or city where the business enterprise
7916, Otherwise Known is located. (Section 4)
as the “Special Economic All persons and service establishments in the ECOZONE
Zone Act of 1995” shall be subject to national and local taxes under the NIRC
and the LGC. (Section 5)
Except for real property taxes on land owned by developers,

no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. (Section 24)
All persons and service establishments in the ECOZONE

shall be subject to national and local taxes under the
National Internal Revenue Code and the Local Government
Code.” (Section 25)
98
FORMS AND ANNEXES
Laws Provisions
23 June 1999 The Department shall within six (6) months after the
effectivity of this Act, establish, with the participation of
LGUs, NGOs, POs, the academe and other concerned
Republic Act No. 8749 entities from the private sector, formulate and implement
the Integrated Air Quality Improvement Framework for
a comprehensive air pollution management and control
program. The framework shall, among others, prescribe
An Act Providing for the emission reduction goals using permissible standards,
a Comprehensive Air control strategies and control measures to undertaken
Pollution Control Policy and within a specified time period, including cost-effective use
for Other Purposes. of economic incentives, management strategies, collective
actions, and environmental education and information.
The Integrated Air Quality Improvement Framework shall be

adopted as the official blueprint with which all government
agencies must comply with to attain and maintain ambient
air quality standards. (Section 7)
In coordination with other appropriate government agencies,

the LGUs shall prepare and implement a program and other
measures including relocation, whenever necessary, to
protect the health and welfare of residents in the area.
For those designated as nonattainment areas, the

Department, after consultation with local government
authorities, nongovernment organizations (NGOs), people’s
organizations (POs) and concerned sectors may revise
the designation of such areas and expand its coverage to
cover larger areas depending on the condition of the areas.
(Section 10)
Simultaneous with the issuance of the guideline values

and standards, the Department, through the research
and development program contained in this Act and
upon consultation with appropriate advisory committees,
government agencies and LGUs, shall issue, and from time
to time, revise information on air pollution control techniques.
(Section 11)
Consistent with the provisions of this Act, the Department

shall have the authority to issue permits as it may determine
necessary for the prevention and abatement of air pollution.
Said permits shall cover emission limitations for the

regulated air pollutants to help attain and maintain the
ambient air quality standards. These permits shall serve as
management tools for the LGUs in the development of their
action plan. (Section 16)
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LTOM, 2ND EDITION
Laws Provisions
The Department, in collaboration with the DOTC, DTI and
LGUs, shall develop an action plan for the control and
management of air pollution from motor vehicles consistent
with the Integrated Air Quality Framework. The DOTC shall
enforce compliance with the emission standards for motor
vehicles set by the Department. The DOTC may deputize
other law enforcement agencies and LGUs for this purpose.
[Section 22 (b)]
Local Government Units (LGUs) shall share the responsibility

in the management and maintenance of air quality within
their territorial jurisdiction. Consistent with Sections 7, 8 and
9 of this Act, LGUs shall implement air quality standards
set by the Board in areas within their jurisdiction; Provided,
however, That in case where the board has not been duly
constituted and has not promulgated its standards, the
standards set forth in this Act shall apply.
The Department shall provide the LGUs with technical

assistance, trainings and a continuing capability-building
program to prepare them to undertake full administration
of the air quality management and regulation within their
territorial jurisdiction. (Section 36)
23 November 1999 The regional or area headquarters and regional operating
headquarters of multinational companies shall be exempt
Republic Act No. 8756 from all kinds of local taxes, fees, or charges imposed by
a local government unit except real property tax on land
An Act Providing for the improvements and equipment. (Article 66 Section 6)
Terms, Conditions and
Licensing Requirements
of Regional or Area
Headquarters, Regional
Operating Headquarters,
and Regional Warehouses
of Multinational Companies,
Amending for the Purpose
Certain Provisions of
Executive Order No. 226,
Otherwise Known as the
Omnibus Investments
Code of 1987. This law
is otherwise known as
“Regional Headquarters
Law”.
100
FORMS AND ANNEXES
Laws Provisions
June 14, 2000 Notwithstanding any law to the contrary, within two (2) years
from the date of the effectivity of this Act, all departments,
Republic Act No. 8792 bureaus, offices and agencies of the government, as well
as all government-owned and -controlled corporations, that
An Act Providing for the pursuant to law require or accept the filling of documents,
Recognition and Use of require that documents be created, or retained and/
Electronic Commercial or submitted, issue permits, licenses or certificates of
and Non-Commercial registration or approval, or provide for the method and
Transactions and manner of payment or settlement of fees and other
Documents, Penalties for obligations to the government, shall –
Unlawful Use Thereof,
and for other purposes, 1. accept the creation, filing or retention of such documents
otherwise known as in the form of electronic data messages or electronic
"Electronic Commerce documents;
Act of 2000." 2. issue permits, licenses, or approval in the form of
electronic data messages or electronic documents;
3. require and/or accept payments, and issue receipts

acknowledging such payments, through systems using
electronic data messages or electronic documents; or
4. transact the government business and/or perform

governmental functions using electronic data messages
or electronic documents, and for the purpose, are
authorized to adopt and promulgate, after appropriate
public hearing and with due publication in newspapers
of general circulation, the appropriate rules, regulations,
or guidelines, to, among others, xxx (Section 27)
24 February 2001 A municipality or a cluster of barangays may be converted
into a component city if it has a locally generated average
annual income, as certified by the Department of Finance,
Republic Act No. 9009 of at least One hundred million pesos (P100,000,000.00) for
the last two (2) consecutive years based on 2000 constant
“An Act Amending Section prices, and if it has either of the following requisites:
450 of RA No. 7160,
Otherwise Known as The • a contiguous territory of at least one hundred (100)
Local Government Code square kilometers, as certified by the Land Management
of 1991, By Increasing Bureau; or
The Average Annual • a population of not less than one hundred fifty thousand
Income Requirement for a (150,000) inhabitants, as certified by the National
Municipality or Cluster of Statistics Office.
Barangays to be Converted
into a Component City” The territorial jurisdiction of a newly created city shall be
properly identified by metes and bounds. The requirement
on land area shall not apply where the city proposed to
be created is composed of one (1) or more islands. The
territory need not be contiguous if it comprises two (2) or
more islands.
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LTOM, 2ND EDITION
Laws Provisions
The average annual income shall include the income
accruing to the general fund, exclusive of special funds,
transfers, and non-recurring income.
8 June 2001 The obligations of generating companies and energy

resource developers to communities hosting energy
generating facilities and/or energy resource developers as
defined under Chapter II, Sections 289 to 294 of the Local
Republic Act No. 9136 Government Code and Section 5(i) of Republic Act No. 7638
and their implementing rules and regulations and applicable
orders and circulars consistent with this Act shall continue:
Provided, further, That the obligations mandated under
Chapter II, Section 291 of Republic Act No. 7160, shall
An Act Ordaining Reforms apply to privately-owned corporations or entities utilizing the
in the Electric Power national wealth of the locality.
Industry, Amending for the
Purpose Certain Laws and To ensure the effective implementation of the reduction in cost
For Other Purposes, of electricity in the communities where the source of energy
otherwise known as is located, the mechanics and procedures prescribed in the
“Electric Power Industry Department of the Interior and Local Government (DILG)-
Reform Act of 2001” or DOE Circulars No. 95-01 and 98-01 dated 31 October 1995
“EPIRA Law” and 30 September 1998, respectively and other issuances
related thereto shall be pursued.
Towards this end, the fund generated from the eighty percent
(80%) of the national wealth tax shall, in no case, be used by
any local government unit for any purpose other than those
for which it was intended. (Section 66.)
13 November 2002 The Office of the Treasurer of each city or municipality shall
register the BMBE’s and issue a Certificate of Authority to
Republic Act No. 9178 enable the BMBE to avail of the benefits under this Act.
Any such applications shall be processed within fifteen (15)
An Act to Promote the working days upon submission of complete documents.
Establishment of Barangay Otherwise, the BMBEs shall be deemed registered. The
Micro Business Enterprises Municipal or City Mayor may appoint a BMBE Registration
(BMBEs), Providing Officer who shall be under the Office of the Treasurer. Local
Incentives and Benefits government units (LGU’s) are encouraged to establish
Therefor, and for other a One-Stop-business Registration Center to handle the
Purposes. efficient registration and processing of permits/licenses of
BMBEs. Likewise, LGUs shall make a periodic evaluation
of the BMBE’s financial status for monitoring and reporting
purposes.
The LGUs shall issue the Certificate of Authority promptly

and free of charge. However, to defray the administrative
costs of registering and monitoring the BMBEs, the LGUs
may charge a fee renewal.
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The Certificate of Authority shall be effective for a period of
two (2) years, renewable for a period of two (2) years for
every renewal.
As much as possible, BMBEs shall be subject to minimal

bureaucratic requirements and reasonable fees and
charges. (Section 4)
The BMBE shall report to the city or municipality of any

changer in the status of its ownership structure, and shall
surrender the original copy of the BMBE Certificate of
Authority for notation of the transfer. (Section 6)
All BMBEs shall be exempt from tax for income arising from
the operations of the enterprise.
The LGUs are encouraged either to reduce the amount of

local taxes, fees and charges imposed or to exempt BMBEs
from local taxes, fees and charges. (Section 7)
10 January 2003 All procurement of the national government, its departments,
bureaus, offices and agencies, including state universities
Republic Act No. 9184 and colleges, government-owned and/or -controlled
corporations, government financial institutions and local
“An Act Providing for government units, shall, in all cases, be governed by these
the Modernization, principles (Section 3):
Standardization and
Regulation of the • Transparency in the procurement process and in the
Procurement Activities of implementation of procurement contracts.
the Government and for • Competitiveness by extending equal opportunity to
Other Purposes”, otherwise enable private contracting parties who are eligible and
known as “Procurement qualified to participate in public bidding
Law”
• Streamlined procurement process that will uniformly
apply to all government procurement. The procurement
process shall be simple and made adaptable to
advances in modern technology in order to ensure an
effective and efficient method.
• System of accountability where both the public officials

directly or indirectly involved in the procurement process
as well as in the implementation of procurement contracts
and the private parties that deal with government are,
when warranted by circumstances, investigated and
held liable for their actions relative thereto.
• Public monitoring of the procurement process and the

implementation of awarded contracts with the end in
view of guaranteeing that these contracts are awarded
pursuant to the provisions of this Act and its implementing
rules and regulations, and that all these contracts are
performed strictly according to specifications.
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This Act shall apply to the Procurement of Infrastructure
Projects, Goods, and Consulting Services, regardless of
source of funds, whether local or foreign, by all branches
and instrumentalities of government, its departments,
offices and agencies, including government-owned and/or
-controlled corporations and local government units, subject
to the provisions of Commonwealth Act No. 138. Any treaty
or international or executive agreement affecting the subject
matter of this Act to which the Philippine government is a
signatory shall be observed. (Section 4)
The GPPB shall be composed of the Secretary of the

Department of Budget and Management, as Chairman,
the Director-General of the National Economic and
Development Authority, as Alternate Chairman, with the
following as Members; the Secretaries of the Departments
of Public Works and Highways, Finance, Trade and Industry,
Health, National Defense, Education, Interior and Local
Government, Science and Technology, Transportation and
Communications, and Energy, or their duly authorized
representatives and a representative from the private sector
to be appointed by the President upon the recommendation
of the GPPB. The GPPB may invite a representative from
the Commission on Audit to serve as a resource person.
(Section 64)
22 March 2004 Each LGU may raise funds to subsidize the necessary
expenses for the operation and maintenance of sewerage
Republic Act No. 9275 treatment or septage facility servicing their area of jurisdiction
through local real property taxes and enforcement of a
An Act Providing for a service fee system.
Comprehensive Water
Quality Management and The DENR shall implement a wastewater charge system in
for Other Purposes all management areas through the collection of wastewater
charges/fees. (Section 7)
A water quality management fund, to be administered by the

Department, in coordination with other concerned agencies,
as a special account in the National Treasury is hereby
established.
The fines imposed and damages awarded to the government

by the Pollution Adjudication Board (PAB), proceeds of
permits issued by the Department under this Act, donations,
endowments and grants in the form of contributions to the
national government under this Act shall form part of the
fund. Such donations, endowments and grants shall be
exempt from donor’s taxes and all other taxes, charges or
fees imposed by the government and shall be deductible
from the gross income of the donor for income tax purposes.
(Section 9)
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Rewards, monetary or otherwise, shall be provided to
individuals, private organization and entities, including civil
society, that have undertaken outstanding and innovative
projects, technologies, processes and techniques or
activities in water quality management. Said rewards shall
be sourced from the Water Quality Management Fund
herein created. (Section 25)
An incentive scheme is hereby provided for the purpose of

encouraging LGUs, water districts (WDs), enterprises, or
private entities, and individuals, to develop or undertake an
effective water quality management, or actively participate
in any program geared towards the promotion thereof as
provided in this Act. (Section 26)
20 March 2007 Business enterprises presently registered and granted
with tax and duty incentives by the Clark Development
Corporation (CDC), Poro Point Management Corporation
Republic Act No. 9400 (PPMC), JHMC, and Bataan Technological Park Incorporated
(BTPI), including such governing bodies, shall be entitled
to the same incentives until the expiration of their contracts
entered into prior to the effectivity of this Act. (Section 7)
An Act Amending Republic
Act No. 7227, as amended, These provisions express that the following Special
otherwise known as the Economic Zones will be exempted in paying all national and
‘Bases Conversion local taxes. In lieu of said taxes, a five percent (5%) tax on
and Development Act gross income earned shall be paid by all registered business
of 1992”, and For Other enterprises within the EZs and shall be directly remitted as
Purposes follows: three percent (3%) to the National Government, and
two percent (2%) to the treasurer’s office of the municipality
or city where they are located.
Section 12. Subic Special Economic Zone

Section 15. Clark Special Economic Zone (CSEZ)
and Clark Freeport Zone (CFZ).
Section 15-A. Poro Point Freeport Zone (PPFZ)
Section 15-B. Morong Special Economic Zone (MSEZ)
Section 15-C. John Hay Special Economic Zone (JHSEZ)
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29 June 2007 The Aurora Special Economic Zone Authority (ASEZA)
may administer the following incentives to the registered
enterprises located therein to the extent of the activity/
Republic Act No. 9490 project:
A. Income Tax Holiday (ITH) (Section 5)
An Act Establishing the Imposition of a tax rate of five percent (5%) on Gross Income
Aurora Special Economic Earned (GIE) - Except for real property tax on land, no local
Zone in the Province and national taxes as prescribed under Republic Act No.
of Aurora, Creating for 8424, also known as - The National Internal Revenue Code
the Purpose the Aurora of 1997, as Amended - such as income tax, excise tax and
Special Economic Zone franchise taxes, shall be imposed on registered enterprises
Authority, Appropriating operating within the Aurora Ecozone. In lieu thereof, five
Funds Therefor and for percent (5%) of the gross income earned shall be paid as
Other Purposes, otherwise follows:
known as “Aurora Special 1. Three percent (3%) to the national government; and
Economic Zone Act of
2007” 2. Two percent (2%) shall be remitted by the business
establishments to the treasurer’s office of the municipality
or city where the enterprise is located.
All persons and service establishments in the Aurora

Ecozone shall be subject to national and local taxes under
the National Internal Revenue Code of 1997, as amended,
and the Local Government Code. [Section 5(c)].
3 August 2007 In order to ascertain, assess, and collect the correct amount
of local taxes, fees or charges, the BIR records pertaining
to any person, partnership, corporation or association
Executive Order No. 646 subject to local taxes, fees, and charges shall be made
available to the local treasurer, his deputy or duly authorized
representative. (Section 1)
Accessibility of Information For the purpose of ascertaining the correctness of any

on Taxpayers between the return, or in making a return when none has been made,
Bureau of Internal Revenue or in determining the liability of any person for any internal
and the Local Government revenue tax, or in collecting any such liability, or in evaluating
Units for Tax Collection tax compliance, the LGUs, upon proper request of the
Commissioner of Internal Revenue or his duly authorized
representative, shall provide the BIR with any information
such as, but not limited to, costs and volume of production,
receipts or sales, and gross incomes of taxpayers. (Section 2)
The LGUs’ access to records of, or information provided for

by, BIR and vice versa shall be utilized for the aforementioned
purposes only, and shall not be used for any other purpose,
or disclosed to unauthorized persons. (Section 3)
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FORMS AND ANNEXES
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The Department of Finance shall prepare and issue the

necessary guidelines for the effective implementation of this
Executive Order, with due regard to the security of taxpayers’
information. (Section 4)
16 December 2008 RE developers of renewable energy facilities, including
hybrid systems, in proportion to and to the extent of the RE
Republic Act No. 9513 component, for both power and non-power applications,
as duly certified by the DOE, in consultation with the BOI,
Renewable Energy Act of shall be entitled to the following incentives:
2008 - An Act Promoting
the Development, Utilization xxx
and Commercialization c. Special Realty Tax Rates on Equipment and Machinery.
of Renewable Energy - Any law to the contrary notwithstanding, realty and
Resources and for Other other taxes on civil works, equipment, machinery, and
Purposes to be known as other improvements of a Registered RE Developer
"Renewable Energy Act actually and exclusively used for RE facilities shall not
of 2008". exceed one and a half percent (1.5%) of their original
cost less accumulated normal depreciation or net book
value: Provided, That in case of an integrated resource
development and generation facility as provided under
Republic Act No. 9136, the real property tax shall only
be imposed on the power plant. (Section 15)
19 December 2008 Appropriation and Sources of Income. xxx
b. To partially provide for the funding of the fire service

the following taxes and fees which shall accrue to the
Republic Act No. 9514 General Fund of the National Government, are hereby
imposed:
An Act Establishing 1. Fees to be charged for the issuance of certificates,

A Comprehensive Fire permits and licenses as provided for in Section 7 (a)
Code of the Philippines, hereof;
Repealing Presidential 2. One-tenth of one per centum (0.1%) of the verified
Decree No. 1185 and For estimated value of buildings or structures to be
Other Purposes otherwise erected, from the owner thereof, but not to exceed
known as the “Revised Fire fifty thousand (P50,000.00) pesos, one half to be
Code of the Philippines of paid prior to the issuance of the building permit, and
2008”. the balance, after final inspection and prior to the
issuance of the use and occupancy permit;
3. One-hundredth of one per centum (0.10%) of the

assessed value of buildings or structures annually
payable upon payment of the real estate tax, except
on structures used as single family dwellings;
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4. Two per centum (2%) of all premiums, excluding re-
insurance premiums for the sale of fire, earthquake
and explosion hazard insurance collected by
companies, persons or agents licensed to sell such
insurances in the Philippines;
5. Two per centum (2%) of gross sales of companies,

persons or agents selling fire fighting equipment,
appliances or devices, including hazard detection
and warning systems; and
6. Two per centum (2%) of the service fees received

from fire, earthquake, and explosion hazard
reinsurance surveys and post loss service of
insurance adjustment companies doing business in
the Philippines directly through agents. (Section 12)
The collection and assessment of taxes, fees and fines as

prescribed in the Local Government Code, except those
contained in this Code, shall be the function of the concerned
local government units. [(Section 13(b)]
17 February 2009 Chapter V of this Act provides the provisions on
Responsibilities, Rights and Privileges of Cooperatives such
as:
Tax Treatment of Cooperative - Duly registered cooperatives

Republic Act No. 9520 under this Code which do not transact any business with
non-members or the general public shall not be subject to
any taxes and fees imposed under the internal revenue laws
and other tax laws. Cooperatives not falling under this article
An Act Amending the shall be governed by the succeeding section. (Article 60)
Cooperative Code of the
Philippines to be known Tax and Other Exemptions - Cooperatives transacting
as the “The Philippine business with both members and non-members shall not
Cooperative Code of be subjected to tax on their transactions with members.
2008”. In relation to this, the transactions of members with the
cooperative shall not be subject to any taxes and fees,
including not limited to final taxes on members’ deposits
and documentary tax. Notwithstanding the provisions of any
law or regulation to the contrary, such cooperatives dealing
with nonmembers shall enjoy the following tax exemptions:
“(1) Cooperatives with accumulated reserves and

undivided net savings of not more than Ten million pesos
(P10,000,000.00) shall be exempt from all national, city,
provincial, municipal or barangay taxes of whatever
name and nature. Such cooperatives shall be exempt
from customs duties, advance sales or compensating
taxes on their importation of machineries, equipment and
spare parts used by them and which are not available
locally a certified by the Department of Trade and Industry
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FORMS AND ANNEXES
Laws Provisions
(DTI). All tax free importations shall not be sold nor the
beneficial ownership thereof be transferred to any person
until after five (5) years, otherwise, the cooperative and
the transferee or assignee shall be solidarily liable to
pay twice the amount of the imposed tax and / or duties.
"(2) Cooperatives with accumulated reserves and divided

net savings of more than Ten million pesos (P10,000,000.00)
shall fee the following taxes at the full rate:
“(a) Income Tax
“(b) Value-Added Tax
“(c) All other taxes unless otherwise provided herein; and
“(d) Donations to charitable, research and educational

institutions and reinvestment to socioeconomic projects
within the area of operation of the cooperative
“(3) All cooperatives, regardless of the amount of accumulated

reserves and undivided net savings shall be exempt from
payment of local taxes and taxes on transactions with
banks and insurance companies: Provided, That all sales
or services rendered for non-members shall be subject to
the applicable percentage taxes sales made by producers,
marketing or service cooperatives: Provided further, That
nothing in this article shall preclude the examination of
the books of accounts or other accounting records of the
cooperative by duly authorized internal revenue officers
for internal revenue tax purposes only, after previous
authorization by the Authority. (Article 61)
21 May 2009 Section 140 of Republic Act No. 7160, otherwise known as
“The Local Government Code of 1991”, is hereby amended
Republic Act No. 9640 to read as follows:
An Act Amending Section • SEC. 140. Amusement Tax. - (a) The province may levy
140 (A) of RA No. 7160, an amusement tax to be collected from the proprietors,
Otherwise Known as “The lessees, or operators of theaters, cinemas, concert halls,
Local Government Code of circuses, boxing stadia, and other places of amusement
1991”, otherwise known as at a rate of not more than ten percent (10%) of the gross
“Amusement Tax” receipts from the admissions fees.
• In the case of theaters or cinemas, the tax shall first be

deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before
the gross receipts are divided between said proprietors,
lessees, or operators and the distributors of the
cinematographic films.
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• The holding of operas, concerts, dramas, recitals,
paintings, and art exhibitions, flower shows, musical
programs, literary and oratorical presentations, except
pop, rock, or similar concerts shall be exempt from the
payment of the tax herein imposed.
• The sangguniang panlalawigan may prescribe the time,

manner, terms and conditions for the payment of tax. In
case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interest
and penalties, as it may deem appropriate.
• The proceeds from the amusement tax shall be shared

equally by the province and the municipality where such
amusement places are located.
27 July 2009 This Act provides for the development of policies and plans
and the implementation of actions and measures pertaining
Republic Act No. 10121 to all aspects of disaster risk reduction and management,
including good governance, risk assessment and early
“An Act Strengthening warning, knowledge building and awareness raising,
The Philippines Disaster reducing underlying risk factors, and preparedness for
Risk Reduction and effective response and early recovery. (Section 4)
Management System,
Providing for the The present Local Calamity Fund shall henceforth be known
National Disaster as the Local Disaster Risk Reduction and Management Fund
Risk Reduction and (LDRRMF). Not less than five percent (5%) of the estimated
Management Framework revenue from regular sources shall be set aside as the
and Institutionalizing LDRRMF to support disaster risk management activities
the National Disaster such as, but not limited to, pre-disaster preparedness
Risk Reduction and programs including training, purchasing life-saving rescue
Management Plant, equipment, supplies and medicines, for post-disaster
Appropriating Funds activities, and for the payment of premiums on calamity
Therefor And For Other insurance. The LDRRMC shall monitor and evaluate the use
Purposes”, otherwise and disbursement of the LDRRMF based on the. LDRRMP
known as “NDRRMC Law” as incorporated in the local development plans and annual
work and financial plan. Upon the recommendation of the
LDRRMO and approval of the sanggunian concerned, the
LDRRMC may transfer the said fund to support disaster
risk reduction work of other LDRRMCs which are declared
under state of calamity. (Section 21)
Of the amount appropriated for LDRRMF, thirty percent

(30%) shall be allocated as Quick Response Fund (QRF)
or stand-by fund for relief and recovery programs in order
that situation and living conditions of people In communities
or areas stricken by disasters, calamities, epidemics, or
complex emergencies, may be normalized as quickly as
possible. (Section 21)
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FORMS AND ANNEXES
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Unexpended LDRRMF shall accrue to a special trust fund
solely for the purpose of supporting disaster risk reduction
and management activities of the LDRRMCs within the next
five (5) years. Any such amount still not fully utilized after
five (5) years shall revert back to the general fund and will
be available for other social services to be identified by the
local sanggunian. (Section 21)
The present Calamity Fund appropriated under the annual

General Appropriations Act shall henceforth be known as
the National Disaster Risk Reduction and Management
Fund (NDRRM Fund) and it shall be used for disaster
risk reduction or mitigation, prevention and preparedness
activities such as but not limited to training of personnel,
procurement of equipment, and capital expenditures. It
can also be utilized for relief, recovery, reconstruction and
other work or services in connection with natural or human
induced calamities which may occur during the budget year
or those that occurred in the past two (2) years from the
budget year. [Section22(a)]
23 October 2009 The registered enterprises operating within the FAB may
be entitled to the existing pertinent fiscal incentives as
Republic Act No. 9728 provided for under Republic Act No. 7916, as amended
by Republic Act No. 8748, also known as the Special
An Act Converting the Economic Zone Act of 1995, or those provided under
Bataan Economic Zone Executive Order No. 226, as amended, otherwise known
Located in the Municipality as the Omnibus Investment Code of 1987. (Section 5)
of Mariveles, Province of
Bataan, into the Freeport No taxes, local and national, shall be imposed on business
Area of Bataan (FAB), establishments operating within the FAB. In lieu thereof,
Creating for this purpose said business establishments shall pay a five percent (5%)
the Authority of the final tax on their gross income earned in the following
Freeport Area of Bataan percentages:
(AFAB), Appropriating 1. One per centum (1%) to the National Government;
Funds Therefor and for
other purposes, otherwise 2. One per centum (1%) to the Province of Bataan;
known as "Freeport Area
of Bataan (FAB) Act of 3. One per centum (1%) to the treasurer's office of the
2009”. Municipality of Mariveles; and
4. Two per centum (2%) to the Authority of the Freeport

of Area of Bataan. (Section 6)
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22 April 2010 The Aurora Ecozone may provide incentives such as
tax and duty-free importations of raw materials, capital
Republic Act No. 10083 and equipment to registered enterprises located therein.
However, exportation or removal of goods from the territory
An Act Amending Republic of the Aurora Ecozone to the other parts of the Philippine
Act No. 9490, otherwise territory shall be subject to customs duties and taxes under
known as “Aurora Special the Tariff and Customs Code of the Philippines, as amended,
Economic Zone Act of and the National Internal Revenue Code (NIRC) of 1997, as
2007” amended. [Section 3(f)]
Imposition of a tax rate of five percent (5%) on Gross Income
Earned (GIE). - Except for real property tax on land, no local
and national taxes as prescribed under Republic Act No.
8424, also known as "The National Internal Revenue Code
of 1997, as Amended" such as income tax, excise tax and
franchise taxes, shall be imposed on registered enterprises
operating within the Aurora Ecozone. In lieu thereof, five
percent (5%) of the gross income earned shall be paid as
follows:
“(a) Three percent (3%) to the national government;
“(b) One percent (1%) shall be remitted by the business
establishments in equal shares to the respective treasurer’s
office of the province and the municipality where the
enterprise is located; and
“(c) One percent (1%) shall be remitted by the registered

enterprises to the APECO.
“All persons and service establishments in the Aurora

Ecozone shall be subject to national and local taxes under
the National Internal Revenue Code of 1997, as amended,
and the Local Government Code. [Section 4(c)].
13 November 2002 This Act does not apply to the following:
xxx
Republic Act No. 10173 Information relating to any discretionary benefit of a financial
nature such as the granting of a license or permit given by
the government to an individual, including the name of the
An Act Protecting Individual individual and the exact nature of the benefit
Personal Information and Information necessary in order to carry out the functions of
Communications Systems public authority which includes the processing of personal
in the Government and the data for the performance by the independent, central
Private Sector, Creating monetary authority and law enforcement and regulatory
for this Purpose a National agencies of their constitutionally and statutorily mandated
Privacy Commission, functions. Nothing in this Act shall be construed as to have
and for other Purpose, amended or repealed Republic Act No. 1405, otherwise
otherwise known as “Data known as the Secrecy of Bank Deposits Act; Republic Act
Privacy Act of 2012” No. 6426, otherwise known as the Foreign Currency Deposit
Act; and Republic Act No. 9510, otherwise known as the
Credit Information System Act (CISA);
112
FORMS AND ANNEXES
Laws Provisions
Information necessary for banks and other financial
institutions under the jurisdiction of the independent, central
monetary authority or Bangko Sentral ng Pilipinas to comply
with Republic Act No. 9510, and Republic Act No. 9160, as
amended, otherwise known as the Anti-Money Laundering
Act and other applicable law [(Section 4 ( c ) ( e ) ( f )]
11 October 2016 Ambisyon Natin 2040 is a national long-term vision that will
serve as a guide for development planning. To ensure sound
Executive Order. No. 5, macroeconomic policy, local government units (LGUs) shall
Series of 2016 remain dependent on the Internal Revenue Allotment (IRA).
Responsible, strategic and supportive fiscal sector can be
achieved by:
Approving and Adopting
the Twenty-Five-Year 1. Increasing local sources of LGU revenue, institute
Long Term Vision Entitled legislated and non-legislated measures – LGUs need to
maximize the revenue-raising powers granted to them
Ambisyon Natin 2040 as
by the Local Government Code. Among the potential
Guide for Development measures are a) professionalization of local treasurers
Planning, otherwise known through the Standardized Examination and Assessment
as “Ambisyon Natin for Local Treasury Service Program; b) updating key
local finance manuals to take into account developments
2040”
in local finance; c) intensifying LGU fiscal monitoring and
performance evaluation through standardized reporting
tools and metrics; d) establishing the idle land tax in
all LGUs; and e) enjoining LGUs to comply with LGC
requirements concerning local revenue base; and
2. Formulating and implementing expenditure

management reforms – Several measures will be put in
place to improve agency budget utilization and address
underspending. These include: a) strengthening the
linkage between planning and budgeting; b) capacity
building for line agencies and other stakeholders; c)
streamlining the release of funds and development of
integrated and user-friendly financial management
system; d) strengthening project monitoring through
modern technology such as integrated systems,
geotagging and mapping; and e) developing a codex for
consistent and efficient application of the Commission
on Audit Rules.
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19 December 2017 Authority of the Commissioner to Prescribe Real Property
Values.— The Commissioner is hereby -authorized to divide
Republic Act No. 10963 the Philippines into different zones or areas and shall, upon
An Act Amending Sections mandatory consultation with competent appraisers both
5, 6, 24, 25, 27, 31, 32, 33, from the private and public sectors, and with prior notice to
34, 51, 52, 56, 57, 58, 74, affected taxpayers, determine the fair market value af real
79, 84, 86, 90, 91, 97, 99, properties located in each zone or area, subject to automatic
100, 101, 106, 107, 108, adjustment once every three (3) years through rules and
109, 110, 112, 114, 116, regulations issued by the Secretary of Finance based on the
127, 128, 129, 145, 148, current Philippine valuation standards: Provided, That no
149, 151, 155, 171, 174, adjustment in zonal valuation shall be valid unless published
175, 177, 178, 179, 180, in a newspaper of general circulation in the province, city or
181, 182, 183, 186, 188, municipality concerned, or in the absence thereof, shall be
189, 190, 191, 192, 193,
current Philippine valuation standards: Provided, That no
194, 195, 196, 197, 232,
adjustment in zonal valuation shall be valid unless published
236, 237, 249, 254, 264,
in a newspaper of general circulation in the province, city or
269, and 288; Creating
municipality concerned, or in the absence thereof, shall be
New Sections 51-A, 148-A,
posted in the provincial capitol, city or municipal hall and in
150-A, 150-B, 237-A, 264-
two (2) other conspicuous public places therein: Provided,
A, 264-B, and 265-A; and
further, That the basis of any valuation, including the records
Repealing Sections 35, 62,
of consultations done, shall be public records open to the
And 89; All Under Republic
inquiry of any taxpayer. For purposes of computing any
Act No. 8424, Otherwise
internal revenue tax, the value of the property shall be,
Known as the National
whichever is the higher of:
Internal Revenue Code of
1997, as Amended, and for “(1) the fair market value as determined by the
Other Purposes. This law Commissioner; or
is better known as “Tax
“(2) the fair market value as shown in the schedule of
Reform for Acceleration
values of the Provincial and City Assessors. [Section
and Inclusion (TRAIN)
4 (e)]
Law”
3 November 2015 A duly registered and accredited Microfinance NGO shall
pay a two percent (2%) tax based on its gross receipts from
Republic Act No. 10693 microfinance operations in lieu of all national taxes: Provided,
That preferential tax treatment shall be accorded only to
An Act Strengthening NGOs whose primary purpose is microfinance and only on
Nongovernment their microfinance operations catering to the poor and low-
Organizations (NGOs) income individuals in alignment with the main goal of this
Engaged in Microfinance Act to alleviate poverty. The non-microfinance activities of
Operations for the Poor, Microfinance NGOs shall be subject to all applicable regular
otherwise known as taxes.
“Microfinance NGOs Act”
Duly registered and accredited Microfinance NGOs, as
well as their clients, shall be required to have a Taxpayer
Identification Number (TIN): Provided, That this shall be
accomplished within a reasonable time as prescribed, by
the Council: Provided, further, That the relevant government
agencies, in coordination with the Council, shall provide
simplified forms and procedures for securing the TIN.
(Section 20)
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FORMS AND ANNEXES
Laws Provisions
28 May 2018 All government agencies shall set up a Citizen’s Charter
indicating the most current and updated service standards.
Republic Act No. 11032 (Section 6)
An Act Promoting the No government officer or employee shall have any contact,
Ease of Doing Business in any manner, except during the preliminary assessment
and Efficient Delivery of and evaluation of submitted documents, unless strictly
Government Services, necessary with any application or requesting party
Amending for the Purpose concerning an application or request. (Section 7)
Republic Act No. 9485,
Otherwise Known as the All applications or requests submitted shall be acted upon
“Red Tape Act of 2007, by the assigned officer or employee within the prescribed
and for Other Purposes”. working period which shall not be longer than three (3)
working days in the case of simple transactions and seven
(7) working days in the case of complex transactions from
the date of request and/or complete application or request
was received.
Accessing Government Services; Acceptance of

Applications or Requests; Action of Offices. (Section 9)
Automatic Approval or Automatic Extension of License,
Clearance, Certification or Authorization (Section 10)
A single or unified business application form shall be
used in processing new applications for business permits
and business renewals which consolidates all the
information of the applicant or requesting party by various
local governmentdepartments, such as, but not limited
to, the local taxes and clearances, building clearance,
sanitary permit, zoning clearance, and other specific LGU
requirements, including the fire clearance from the Bureau
of Fire Protection (BFP).
The unified forms shall be made available either online using

technology-neutral platforms and thru hard copies which
shall likewise be made available at all times in designated
areas of the concerned office and/or agency. [Section 11(a)]
A Business One Stop Shop (BOSS) for the city/municipality’s

business permitting and licensing system to receive and
process manual and/or electronic submission of application
for license, clearance, permit, certification, or authorization
shall be established within the cities/municipalities’ Negosyo
and other relevant city/municipality offices/departments,
among others, engaged in starting a business, dealing with
construction permits. [Section 11(b)]
Cities/Municipalities are mandated to automate their

business permitting and licensing system or set up an
electronic BOSS for a more efficient business registration
processes. [Section 11(c)]
115
LTOM, 2ND EDITION
Laws Provisions
Other local clearances such as, but not limited to, sanitary
permits, environmental and agricultural clearances shall be
issued together with the business permit. [Section 11(d)]
Business permits shall be valid for one (1) year. The city/
municipality may have the option to renew business permits
within the first month of the year or on the anniversary date
of the issuance of the business permit. [Section 11(e)]
27 July 2018 There is hereby created a Bangsamoro Regional Office
of the Bureau of Local Government Finance under the
Republic Act No. 11054 Department of Finance which shall have the authority
to coordinate, assist, and monitor the treasury and
An Act Providing for assessments operations of constituent local government
the Organic Law for the units within the Bangsamoro Autonomous Region in
Bangsamoro Automous pursuance of good governance and local autonomy. The
Region in Muslim regional office shall be guided by the standards set by
Mindanao, Repealing for the Department of Finance-Bureau of Local Government
the Purpose Republic Finance including the requirements set for the appointment
Act No. 6734, Entitled of local treasurers. (Section 3)
"An Act Providing for
An Organic Act for the The Bangsamoro Government may create its own sources
Autonomous Region in of revenues, and may levy taxes, fees and charges, subject
Muslim Mindanao," As to the provisions of the Organic Law which shall accrue
Amended by Republic exclusively to the Bangsamoro Government.
Act No. 9054, Entitled Article XII of this Law provides the provisions on Fiscal
"An Act to Strengthen Autonomy.
and Expand the Organic The constituent local government units in the Bangsamoro
Act for the Autonomous Autonomous Region shall continue to exercise the taxing
Region in Muslim powers granted under Republic Act No. 7160, otherwise
Mindanao", otherwise known as the Local Government Code, as amended.
known as the “Organic (Article XII Section 6)
Law for the Bangsamoro
Autonomous Region in The Parliament may grant tax exemptions and incentives
Muslim Mindanao." or which shall not diminish national revenues provided that the
“BBL” grant of tax exemption and incentives as provided for under
Executive Order No. 458, series of 1991, otherwise known
as the “Omnibus Investments Code” shall continue to apply.
(Article XII Section 8)
Limitations on the Taxing Powers; Exceptions (Article XII

Section 8)
National Government taxes, fees, and charges collected,

other than tariff and customs duties, shall be shared as
follows:
(a) Twenty-five percent (25%) to the National Government

provided that for the first ten (10) years upon the effectivity of
the Organic Law, the share shall accrue to the Bangsamoro
Government, provided, further, that after the first ten (10)-
year period, the National Government may extend the period
116
FORMS AND ANNEXES
Laws Provisions
upon petition of the Bangsamoro Government. (Article XII
Section 10)
The Bangsamoro Revenue Office shall be established for

the assessment and collection of taxes in the Bangsamoro
Autonomous Region. (Article XII Section 11) Payment of
Taxes by Corporations, Partnerships or Firms. (Article XII
Section 12)
The Parliament shall enact a law detailing the shares of

constituent LGUs in the seventy-five (75%) share of the
Bangsamoro Government in the national taxes, fees, and
charges collected in the Bangsamoro territorial jurisdiction.
(Article XII Section 13)
Related Laws - LTOM:
1. RA No. 2264 – An Act Amending the Laws Governing Local Governments by

Increasing their Autonomy and Reorganizing Provincial Governments
(19 June 1959)
2. RA No. 2370 – Barrio Charter (1 January 1960)
3. RA No. 5185 – Decentralization Act of 1967 (12 September 1967)
4. RA No. 6541 – National Building Code of the Philippines (26 August 1972)
5. PD No. 231 – Local Tax Code (1 July 1973)
6. PD No. 464 – Real Property Tax Code (20 May 1974)
7. PD No. 477 – Decree on Local Fiscal Administration (3 June 1974)
8. PD No. 526 – Supply Management (2 August 1974)
9. PD No. 705 – Revising Presidential Decree No. 389, otherwise known as the Forestry
Reform Code of the Philippines (19 May 1975)
10. PD No. 752 – Credit Financing for Local Governments (25 June 1975)
11. PD No. 853 – Providing for the Classification and Valuation of Timber and Forest Lands
for Purposes of Real Property Tax (19 December 1975)
12. PD No. 921 – Providing for the Administration of Local Financial Services in
Metropolitan Manila, creating Local Treasury and Assessment Districts
therein (12 April 1976)
13. PD No. 1375 – Transferring to the Budget Commission the functions of the
Local Government Budget Administration (16 May 1978)
14. Batas Pambansa No. 337 – The Local Government Code (10 February 1983)
15. EO No. 226 – The Omnibus Investments Code of 1987 (16 July 1987)
16. EO No. 392 – Constituting the Metropolitan Manila Authority (9 January 1990)
17. RA No. 7160 – Local Government Code of 1991 (LGC Books 1 to 4) (1 January 1992)
18. RA No. 7227 – Bases Conversion and Development Act of 1992 (13 March 1992)
19. RA No. 7459 – Philippine Investors and Invention Incentives Act – (28 April 1992)
20. RA No. 7922 – Cagayan Special Economic Zone Act of 1995 (24 February 1995)
21. RA No. 7916 (as amended by RA 8748) – The Special Economic Zone Act of 1995
(24 February 1995)
22. RA No. 7924 – Creating the Metropolitan Manila Development Authority or MMDA (1
March 1995)
23. RA No. 8748 – An Act Amending RA No. 7916, Otherwise Known as the “Special
Economic Zone Act of 1995” (1 June 1999)
117
LTOM, 2ND EDITION
24. RA No. 8749 – An Act Providing for a Comprehensive Air Pollution Control Policy and
for Other Purposes. (23 June 1999)
25. RA No. 8756 – Regional Headquarters Law (23 November 1999)
26. RA No. 8792 – Electronic Commerce Act of 2000 (June 14, 2000)
27. RA No. 9009 – An Act Amending Section 450 of Republic Act No. 7160, otherwise
known as the Local Government Code of 1991, by Increasing the
Average Annual Income Requirement for a Municipality or Cluster of
Barangays to be Converted into a Component City. (24 February 2001)
28. RA No. 9136 – Electric Power Industry Reform Act of 2001 or “EPIRA Law” (8 June
2001)
29. RA No. 9178 – Barangay Micro Business Enterprises Act of 2002 (13 November 2002)
30. RA No. 9184 – Procurement Law (10 January 2003)
31. RA No. 9275 – An Act Providing for a Comprehensive Water Quality Management and
for Other Purposes (22 March 2004)
32. RA No. 9400 – An Act Amending Republic Act No. 7227, as amended, otherwise
known as the ‘Bases Conversion and Development Act of 1992”, and
for Other Purposes (20 March 2007)
33. RA No. 9490 – Aurora Special Economic Zone Act of 2007” (29 June 2007)
34. EO 646 – Accessibility of Information on Taxpayers between the Bureau of Internal
Revenue and the Local Government Units for Tax Collection (3 August 2007)
35. RA No. 9513 – Renewable Energy Act of 2008. (16 December 2008)
36. RA No. 9514 – Revised Fire Code of the Philippines of 2008 (19 December 2008)
37. RA No. 9520 - An Act Amending the Cooperative Code of the Philippines to be known
as the “The Philippine Cooperative Code of 2008”. (17 February 2009)
38. RA No. 9640 – Amusement Tax (21 May 2009)
39. RA No. 10121 – An Act Strengthening the Philippine Disaster Risk Reduction and
Management System, Providing for the National Disaster Risk and
Management Framework and Institutionalizing the National Disaster
Risk and Reduction and Management Plan, Appropriating Funds
Therefor and for other purposes (27 July 2009)
40. RA No. 9728 – Freeport Area of Bataan (FAB) Act of 2009 (23 October 2009)
41. RA No. 10083 – Aurora Special Economic Zone Act of 2007 (22 April 2010)
42. RA No. 10173 – Data Privacy Act of 2012 (15 August 2012)
43. RA No. 10693 – Microfinance NGOs Act (3 November 2015)
44. EO No. 5, Series of 2016 – Ambisyon Natin 2040 (11 October 2016)
45. RA No. 10963 – TRAIN Law (19 December 2017)
46. RA No. 11032 – Red Tape Act of 2007 (28 May 2018)
47. RA No. 11054 – Organic Law for the Bangsamoro Autonomous Region in Muslim
Mindanao.” or “BBL” (27 July 2018)
118
FORMS AND ANNEXES
ANNEX 2
Manila 1004
DEPARTMENT ORDER NO. 031-2018

04 May 2018
SUBJECT: GUIDELINES ON THE COMPUTATION AND CERTIFICATION OF

INCOME FOR THE CREATION, CONVERSION, MERGER OR
ABOLITION OF A LOCAL GOVERNMENT UNIT (LGU)
1.0 RATIONALE
This Department Order establishes the rules and guidelines in the attestation or
certification of income relative to the requirement of law in the creat ion, conversion,
merger, or abolition of local government units (LGUs). Pursuant to Sections 7, 8 and 9
of Republic Act (RA) No. 7160, otherwise known as the Local Government Code (LGC)
of 1991 , and RA No. 90091, the Department of Finance (DOF) is mandated to attest the
income indicator in the creation, conversion, merger or abolition of LGUs. Likewise, the
provincial treasurer and the city treasurer are mandated by the LGC to certify the income
requirement for the creation of municipalities and for the classification of a city into a
highly urbanized city, respectively.
2.0 LEGAL BASES

2.1 Section 7 of thve LGC requires that the creation of an LGU or its conversion from
one level to another level shall be based on verifiable indicators of viability and
projected capacity to provide services, to wit: (i) income; (ii) population; and (iii)
land area. The income of such LGU must be sufficient, based on acceptable
standards, to provide for all essential government facilities and services and
special functions commensurate with the size of its population, as expected of
the local government unit concerned;
2.2 Section 8 of the LGC prescribes that the division and merger of existing LGUs
shall comply with the same requirements of Section 7 of the LGC. However,
such division shall not reduce the income, population, or land area of the local
government unit or units concerned to less than the minimum requirements
prescribed in this Code: Provided, further, That the income classification of the
original local government unit or units shall not fall below its current income
classification prior to such division.
2.3 Section 9 of the LGC further mandates that an LGU may be abolished when
its income, population, or land area has been irreversibly reduced to less than
the minimum standards prescribed for its creation under Book Iii of the LGC, as
certified by the national agencies mentioned in Section 17 of the LGC to Congress
or to the sanggunian concerned, as the case may be.
1
An Act Amending Section 450 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991,
by Increasing the Average Annual Income Requirement for a Municipality or Cluster of Barangays to be Converted
into a Component City
119
LTOM, 2ND EDITION
2.4 The income requirement for the conversion of municipality or a cluster of barangays
into a component city and for the creation of a province shall be certified by the
DOF, pursuant to Section 45O(a), as amended by RA No. 9009, and Section
461(a) of the LGC, respectively.
For the conversion into a component city, the required locally generated average
annual income for the last two {2) consecutive years shall be at least One Hundred
Million Pesos (Php100,000,000.00) based on 2000 constant prices. While the
required average annual income for the creation of a province shall be not less
than Twenty Million Pesos (Php20,000,000.00) based on 1991constant prices.
Provided, That the creation thereof shall not reduce the income of the original
unit or units at the time of said creation to less than the minimum prescribed
requirements.
2.5 The income requirement for the creation or conversion to a municipality and
classification into highly urbanized city shall be respectively certified by the
provincial and city treasurer, pursuant to Section 442(a) and Section 452(a) of
the LGC.
For the creation of a municipality or conversion of a barangay int o a municipality,
the required average annual income for the last two (2) consecutive years shall
be at least Two Million Five Hundred Thousand Pesos (Php2,S00,000.00), based
on 1991constant prices. Provided, That the creation thereof shall not reduce the
income of the original municipality or municipalities at the time of said creation to
less than the minimum requirements prescribed herein. While the required latest
annual income for the classification into a highly urbanized city shall be at least
Fifty Million Pesos (PhpS0,000,000 .00) based on 1991constant prices.
2.6 Sections 442{c), 4S0(c), as amended, and Sectio n 461( c) of the LGC, defines
the composition of the average annual income as t he income accruing to the
general fund, exclusive of special funds, trust funds, transfers and non-recurring
income.
2.7 Under Department Special Order No. 6-92 dated 21 August 1992, or the Code
of Approving and Signing Authorities, the Bureau of Local Government Finance
(BLGF) of the DOF is mandated to certify the income of LGUs.
2.8 Under Department Order 08-2011 dated 11 February 2011, the electronic
Statement of Receipts and Expenditures (eSRE) is the official report ing system
of the DOF on local fiscal and financial matters, to be maintained by the DOF-
BLGF to fully establish a reliable, accurate and timely reporting and monitoring
system in the country.
2.9 Resolution No. 2, series of 2009, entitled “Approving the Synchronized Rebasing
of Price Indices to Base Year 2006” of the National Statistical Coor dina t ion
Board (NSCB), now known as the Philippine Statistics Authority (PSA), has
approved the rebasing of the price indicesto base year 2,006. The PSA has
declared through its letters dated 04 November 2014 and 10 M a.y 2016 that the
old Consumer Price Index {CPI) series will no longer be generated once the new
or rebased series becomes available.
3.0 PURPOSE
This Department Order shall be used by the BLGF and the provincial and city treasurers
in attesting and certifying the income requirement for purposes required by the LGC to
ensure uniformity in the computation thereof.
120
FORMS AND ANNEXES
4.0 BASIC DATA
The BLGF and the concerned provincial and city treasurer s shall use the approved
Statement of Receipts and Expenditures (SRE) submitted by the LGUs through eSRE
system for the last two (2) consecutive years, and four (4) years prior to the issuance
of the latest income reclassification, as the basic data for computing and attest in g the
income requirement.
5.0 FEATURES OF THE CERTIFICATION
The certification of the average annual income shall be comprised of the following
income requirements:
5.1 Average Annual Income of Proposed LGU;
5.2 Resulting Average Annual Income of the Original LGU or LGU s (in determining
whether the income of the original unit or units at the time of the creation or
conversion will be reduced to less than the minimum requirements prescribed in
th e LGC); and
5.3 Resulting Average Annual Regular Income of the Original LGU or LGUs (as basis
of the income classification of the original LGU or LGUs at the time of said creation
or conversion).
6.0 DETERMINATION OF ANNUAL INCOME
Based on the definition of annual income cited in the LGC and RA No. 9009, it shall be
composed of income accruing to the general fund, exclusive of special funds, trust funds,
transfers and non-recurring income, and computed as follows:
6.1 Creation of Province, Creation of Municipality or Conversion of Barangay into

Municipality, and Classification of Component Cit y int o Highly Urbanized City:
Annual
= Real Property Tax (General Fund) + Tax on Business + Other
Income
Taxes+ Regulatory Fees (Permits and Licenses) + Service/
User Charges (Service Income) + Receipts from Economic
Enterprises (Business Income)+ Interest Income+ Shares
from Philippine Economic Zone Authority (PEZA) + Internal
Revenue Allotment (IRA)
6.2 Conversion of Municipality/ies or Cluster of Barangays into Component City:

Locally Real Property Tax (General Fund) + Tax on Business + Other
Generated = Taxes+ Regulatory Fees (Permits and Licenses) + Service/
Annual User Charges {Service Income) + Receipts from Economic
Income Enterprises (Business Income) + Interest Income + Shares
from PEZA
7.0 COMPUTATION OF THE AVERAGE ANNUAL INCOME BY INDEXING
7.1 In the absence of the PSA-issued CPI based on the required base year, the BLGF
shall compute the CPI factor and apply to the average annual income at current
prices using the following steps of indexing approach:
7.1.1. Compute the growth rate of CPI based on available constant price
released by PSA for fiscal year (t) by dividing the difference of current
year and prior year CPI based on available constant prices to prior year
121
LTOM, 2ND EDITION
CPI based on available constant price.

Growth Rate of CPI based on available constant pricet -CPI
CPI based on = based on available constant pricet-1
available constant
pricest CPI based on available constant pricet-1
7.1.2. Estimate the CPI based on required constant price of fiscal year (t) for
the creation of province/municipality and conversion into component city
using the computed growth rate of CPI based on available constant price.
Required (1 + Growth Rate of CPI based on available

= constant pricet) x
CPlt
Required CPlt-1
The CPI based on required constant prices is 100. Hence, computation

of the required CPI factor shall be as follows:
Required CPI based on Required Constant Pricet
=
CPlt
100
7.1.3. Divide annual income at current prices by the CPI factor based on required
constant prices, depending on the LGU type to get the annual income at
constant price.
Annual income at con- = Annual income at current pricest
stant prices (AICP)t
Required CPI factort
7.1.3.1 Creation of Province: compute the annual income at constant

prices received by the province from all the subject municipalities.
7.1.3.2 Conversion into Component City: compute the locally generated

annual income at constant prices of component municipality or
cluster of barangays.
7.1.3.3 Creation of Municipality: compute the annual income at constant
prices received by all the subject barangays.
7.1.3.4 Classification of Component City as Highly Urbanized City:
compute the latest annual income at constant prices of the
subject component city.
7.1.4. Add each annual income at constant price for a given year to get the total
annual income and divide the total annual income by the number of fiscal
years to get the average annual income based on constant prices.
Average Annual income at constant prices A/CPt1 + AICPt1

=
(AICP)t1, t2 2
7.2 To determine if the creation or conversion of an LGU will not reduce the income
of the original unit or units at the time of said creation or conversion to less than
the minimum requirements prescribed in the LGC, compute the reduced average
annual income of the original unit or units by deducting the shares of income of
the proposed LGU to the annual income of the original unit or units.
122
FORMS AND ANNEXES
8.0 RESULTING INCOME CLASSIFICATION OF THE ORIGINAL LGU/LGUs
The average Annual Regular Income of the original LGU/LGUs less than it s shares from
the proposed LGU at current prices, shall be the basis in determining the resulting income
classification of the original LGU/LGUs, based on existing policy of the DOF on income
classification.
9.0 RESPONSIBILITIES OF THE BLGF
The BLGF, being the policy and technical arm of DOF in supervising the revenue
operations of all local governments, shall implement this Order and shall be responsible
for the following:
9.1 Update annually the CPI Factor based on the available CPI data released by the
PSA;
9.2 Provide annually the matrix of CPI t able to be used by the provincial and city
treasurers in computing and certifying the lat est annual income;
9.3 Issue the Certificate of Average Annual Income to requesting LGU s and legislators,
as prescribed in the LGC, indicating the result s of the above mentioned income
requirements;
9.4 Capacitate provincial and city treasurers on the process and methodology of
computing and certifying the latest annual income;
9.5 Issue appropriate clarificatory guidelines/updates/ advisories relative to the

implementation of this Depart ment Order subject to the direct supervision and
approval of the Undersecretary of Revenue Operations Group; and
9.6 Provide an annual report to the DOF on the certifications issued.
10.0 REPEALING CLAUSE
All department orders, circulars and issuances inconsistent with this Department Order
are hereby repealed or modified accordingly.
11.0 EFFECTIVITY
This Department Order shall be effective fifteen (15) days after completion of its publication
in a newspaper of general circulation.
CARLOS G. DOMINGUEZ
Secretary
123
LTOM, 2ND EDITION
ANNEX 3
Manila 1004
DEPARTMENT PERSONNEL ORDER NO. 477-2019
GUIDELINES ON THE EVALUATION AND PROCESSING OF APPOINTMENTS

OF LOCAL TREASURERS AND ASSISTANT LOCAL TREASURERS
1. LEGAL BASES. This Department Order is issued under the following legal bases:
1.1. Section 470 (a) and 471 (a) of Republic Act (RA) No. 7160, or the Local
Government Code (LGC) of 1991 mandate that the local treasurer and
assistant local treasurer shall be appointed by the Secretary of Finance from
a list of at least three (3) ranking, eligible recommendees of the governor or
mayor, as the case may be, subject to civil service law, rules and regulations;
1.2. Section 470 (c) of the LGC of 1991 provides that no person shall be appointed
local treasurer unless one is a citizen of the Philippines , a resident of the
local government unit (LGU) concerned, of good moral character, a holder
of a college degree preferably in commerce, public administration or law
from a recognized college or university, a first-grade civil service eligible
or its equivalent, and has at least five (S) years experience in treasury or
accounting service in the case of the city or provincial treasurer, and three
(3) years in the case of municipal treasurer;
1.3. Section 471 (b) of the LGC of 1991 provides that no person shall be
appointed assistant treasurer unless one is a citizen of the Philippines,
a resident of the LGU concerned, of good moral character, a holder of a
college degree preferably in commerce, public administration, or law from
a recognized college or university, a first-grade civil service eligible or
its equivalent, and has at least five (5) years experience in the treasury
or accounting service in the case of the assistant city or provincial treasurer,
and three (3) years in the case of assistant municipal treasurer;
1.4. Section 2 of Executive Order (ED) No. 292, s. 1987 and Section 65 of EO
No. 127, s. 1987 mandate the DOF to be responsible for the supervision
of the revenue operations of all LGUs, and the Secretary of Finance shall
issue such rules, regulations and other issuances to ensure the effective
implementation of the EO;
1.5. Section 43 (b) of Executive Order (EO) No. 127, s. 1987, and Section 33 (2)
of EO No. 291, s. 1987 mandate the Bureau of Local Government Finance
(BLGF) to exercise administrative and technical supervision and coordination
over the treasury and assessment operations of local governments;
124
FORMS AND ANNEXES
1.6. Civil Service Commission (CSC) Memorandum Circular (MC) No. 6, series
2012 requires the establishment and implementation of the Strategic
Performance Management System in the performance-based evaluation for
personnel action;
1.7. Department Order (DO) No. 053.2016 dated 20 Oct 2016 institutionalizes the
Standardized Examination and Assessment for local Treasury Service (SEAL)
Program, and set the Basic Competency on Local Treasury Examination
(BCLTE), the Intermediate Competency on Local Treasury Examination
(ICLTE) and the Advance Competency on Local Treasury Examination
(ACLTE) as integral criteria in selecting and evaluating recommendees for
local treasury appointments;
1.8. CSC MC No. 24, s. 2017I Resolution No. 1701009 dated 16 June 2017
(Omnibus Rules on Appointments and Other Human Resource Actions), as
amended by CSC Resolution No. 1800692 doted 03 July 2018 , provide
the rules on the preparation, submission o, f and actions to be taken on
appointments and other human resource movements of employees
appointed to first and second level positions;
1.9. CSC Resolution Nos. 1701330 and 1701331, both dated 20 September
2017 authorizes the regular offering of BCLTE as a civil service eligibility
exam, leading to Local Treasurer Eligibility, and the ICLTE as a promotional
exam, respectively; and
1.10. CSC MC No. 23, s. 2016, doted15 September 2016, and CSC MC No. 08, s.
2017, doted 21 March 2017 set the Policy on Employment in the Government
Service of Filipino Citizens with Dual Citizenships.
2. SCOPE AND RATIONALE. To ensure the delivery of quality service standards,
the herein procedural guidelines shall govern the evaluation and processing
of appointments of Provincial, City and Municipal Treasurers, and Assist ant
Provincial, City and Municipal Treasurers by the BLGF Central and Regional
Offices.
The BLGF, through its duly constituted Human Resource Merit Promotion and
Selection Boards (HRMPSBs) in the Central Office (CO) and In each Regional
Office (RO), shall adopt the herein criteria and guidelines in determining the best
candidate for local treasury positions to be appointed by the Secretary of Finance,
consistent with existing law, and civil service rules and regulations.
3. GENERAL POLICES. The follow ing general policies shall be ob served:
3.1. All CSC rules and regulations on appointment, promotion, transfer, and other
human resource actions, and internal policies of the DOF to determine the
competence and fitness of recommendees for local treasury appointments
shall be complied with;
3.2. The vacant posit ion of Local Treasurer and Assistant Local Treasurer, as
the case may be, shall be published and posted in accordance with RA No.
7041(Publication Law), as amended, for at least fifteen (15) calendar days.
125
LTOM, 2ND EDITION
The filling up of vacant position shall be made after fifteen (15) calendar
days from its publication, which, however, shall not exceed nine (9) months
from its publication.
3.3. Said notice of vacancy shall contain the qualification standards for the
position as provided under RA No . 7160 and shall be posted in at least three
(3) conspicuous places within the LGU and shall be reported to the CSC;
3.4. The recommendation of the local chief executive (LCE) for appointment
of Provincial, City and Municipal Treasurer, and Assistant Provincial, City
and Municipal Treasurer positions shall be in writing and signed by hand,
and in accordance with Sections 470(c) and 471(b) of the LGC. The
recommendation of an Acting LCE shall be in accordance with Sec. 46 of
the LGC;
3.5. The recommendation of the LCE for the appointment of the Municipal
Treasurer and the Assistant Municipal Treasurer, as well as the City Treasurer
and the Assistant City Treasurer of component cities, shall be endorsed by
the concerned Provincial Treasurer to the BLGF within five (5) working days
from receipt thereof;
3.6. No fees, of whatever nature, shall be collected for the processing of
appointment by the BLGF and the DOF. Moreover, it shall be the sole
responsibility of the concerned recommendees to secure and renew the
required clearances, certifications and other relevant documents, and shall
not in any manner be undertaken by the BLGF;
3.7. There shall be constituted and established the BLGF Central HRMPSB
for local Treasurers, which shall be chaired by the BLGF Executive Director,
and the BLGF Regional HRMP58 for Local Treasurers in every BLGF RO,
which shall be chaired by the concerned BLGF Regional Director, to evaluate
the qualifications and competence of all recommendees of the concerned
LCE. In the case of LGUs in the National Capital Region (NCR), the BLGF
Central HRMPSB shall perform the functions for the purpose;
3.8. Such HRMPSBs shall convene at least once every quarter and shall be
supported by appropriate members and staff to perform secretariat and
technical support functions, to be constituted by the respective chairs.
The concerned Provincial Treasurer or his/her duly authorized alternate
shall be designated as ex officio member of the BLGF Regional HRMPSB
for deliberations of local treasury appointments in component cities and
municipalities.
3.9. The BLGF Regional 1-tRMPSB for Local Treasurers shall evaluate and rank
the recommendees, formalized through a Regional HRMPSB Resolution,
with a duly signed summary of ratings and the required documents to be
submitted to the BLGF Central HRMPSB for Local Treasurers, which in
turn shall evaluate the same and formalize the final deliberations through a
Central HRMPSB Resolution;
126
FORMS AND ANNEXES
3.10. To further assess the candidates’ capacity for the position, interview of the
recommendees of the LCE by the BLGF Executive Director, in the case of
LGUs in the NCR, or by the BLGF Regional Director, in the case of LGUs
within the regional jurisdiction, shall be conducted before submitting the
same to the BLGF Central HRMPSB; and
3.11. All appointments signed by the Secretary of Finance and officially released
to the BLGF shall be immediately transmitted to the appointed local treasurer
or assistant local treasurer, copy furnished the concerned regional office, in
order that said local treasurer or assistant local treasurer can immediately
take his/her oath of office and assume the duties of the position.
4. CRITERIA FOR EVALUATION. In evaluating all the recommendees of the LCE,
the following qualifications and attributes shall be weighted:
4.1. Education: College degree, preferably in commerce, public administration
or law, from a recognized college or university;
4.2. Experience in treasury or accounting servlce1: Provincial and City
Treasurers or Assistant Provincial and City Treasurers: At least five (5)
years; Municipal Treasurers or Assistant Municipal Treasurers: At least three
(3) years;
4.3. Performance: At least ‘Very Satisfactory’ rating in the last rating period2
prior to the assessment or screening;
4.4. Relevant Training3: Completion of trainings, scholarships, and other
capacity building interventions relevant to the duties and functions of the
position undertaken within the last five (5) years reckoned from the date of
LCE recommendation;and
4.5. Other Related Criteria and Attributes: To further establish competency and
fitness, additional criteria and attributes shall be evaluated and weighted,
namely: (i) Salary Grade/Rank; (ii) Previous Designation in the Local
Treasury Service; (iii) Post-graduate Degree/s; (iv) Bar and/or Professional
license; (v) SEAL certification; and (vi) Interview by the BLGF.
Further, in evaluating previous designations of recommendees, only
the designations as assistant local treasurer shall be given weight for
appointments to assistant local treasurer position, while designations as
local treasurer shall be given weight for appointment to both local treasurer
and assistant local treasurer positions. The weights for SEAL certification,per
1 Experience refers to the previous jobs in either the government or private sector whether full-time or part-
time, which, as certified by the Human Resources Management Officer or authorized officials of the previous
employer, are functionally related to the duties In the PDF of the position to be filled. (Sec. S6 Part Ill of CSC MC
No. 24, s. 2017). Relevant experience acquired through a designation covered by an Office or Memorandum
Order may be considered for meeting the experience requirement (Sec. 60 Part Ill of CSC MC No. 24, s. 2017)
2 CSC Resolution 1800692, promulgated on 02 July 2018
3 Trainings/learning and development Interventions intended to enable the candidate to successfully perform the
duties and responsibilities as Indicated In the PDF or ID of the position to be filled. Sec 61 Part IV of CSC MC
No. 24, s. 2017
127
LTOM, 2ND EDITION
DO No. 053.2016, are hereby amended, as follows: 10% for BCLTE, 15%
for ICLTE, and 20% for ACLTE.
The table of criteria and the respective weight allocations is hereto attached as
Annex All mandatory requirements required under the LGC and CSC rules that
have no point allocation or determined on a pass-fail basis, such as citizenship4,
residency5, good moral character6, eligibility7 and non-nepotic relationship8,
together with the applicable clearances and certifications, shall be fully evaluated
by the BLGF.
5. EVALUATION PROCESS
5.1. Notwithstanding any prior processing by the concerned local government
to ensure completeness of documents and evaluation of candidates, which
is hereby encouraged, there shall be established a two -level evaluation
process for all recommendees of the LCEs for appointment to local treasurer
and assistant local treasurer positions, which shall at all times require due
diligence and shall be promptly acted upon by the BLGF, as follows:
5.1.1. The First Level Process (Initial Screening) shall be done by the BLGF
Regional HRMPSB for Local Treasurers to rank all recommendees
according to Item 4 hereof and determine the completeness/
sufficiency and authenticity of documentary requirements. This shall
commence upon full compliance with the documentary requirements
of all recommendees. The result of the Regional Screening, together
with all the supporting documents, shall be indorsed to the BLGF CO.
The same process shall apply in the case of LGUs in the NCR, to be
acted upon by the Administrative Division of the BLGF CO; and
5.1.2. The Second Level Process (Final Deliberation) shall be undertaken by
the BLGF Central HRMPSB for the final screening and deliberations
of the best qualified and the most competent candidate to the position.
5.2 Any application or recommendation submitted to the DOF or the BLGF
Central and Regional Offices that are not compliant with the required
documents has thirty (30) days to complete the same, after which the
entire set of documents shall be immediately returned without action to the
concerned LGU, with appropriate notification. The same process shall apply
to LGUs within the NCR to be acted upon by the Administrative Division of
the BLGF Central Office.
5.3 All proposed candidates for appointment to Provincial, City and Municipal
Treasurer and Assistant Provincial, City and Municipal Treasurer positions
that have been evaluated and deliberated upon by the BLGF Central
HRMPSB for Local Treasurers shall be submitted to the Undersecretary for
4 Filipino citizenship per CSC Memorandum Circular No. 23, s. 2016
5 A resident of the loc.11 government unit concerned per Sec. 470 (c) and Sec. 471 (b) of the LGC
6 Of good moral character per Sec. 470 (c) and Sec. 471 (b) of the LGC
7 First-grade civil service eligibility per Sec. 470 (c) and Sec. 471 (b) of the LGC, or its equivalent per CSC Resolution
No. 1701330
8 Sec. 79 of the LGC: 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.
128
FORMS AND ANNEXES
Revenue Operations Group, who shall review and indorse the same to the
Secretary of Finance for final action.
6. RESPONSIBILITY OF THE BLGF. The BLGF Executive Director shall be
authorized to issue guidelines or circulars relative to and consistent with this Order
to ensure streamlined implementation, due diligence, and continual improvement
of service delivery standards, such as the prescribed documentary requirements
for each level of HRMPSB evaluations, checklists and templates, step-by-step
procedures, certification of completeness and orderliness of required documents,
and comparative evaluation matrices, among others. Any adjustments on
weights and allocations of Annex “’A”’ hereof shall be upon the approval of the
Undersecretary of Revenue Operations Group.
7. REPEALING CLAUSE. This Order effectively repeals Local Administrative
Regulations No. 1-85, dated February 7, 1985. All other DOF orders and issuances
or parts thereof that are inconsistent herewith are hereby repealed or modified
and amended accordingly.
8. EFFECTIVITY. This Department Order shall take effect immediately.
All BLGF officials and employees are hereby enjoined to properly, efficiently and
strictly implement the provisions of th is Order within their respective jurisdictions.
CARLOS G. DOMINGUEZ
Secretary
129
LTOM, 2ND EDITION
Annex A
DETAILED CRITERIA FOR EVALUATION

The following qualifications and attributes shall be evaluated and rated numerically
by the concerned BLGF HRMPSBs for Local Treasurers:
CRITERIA POINT SCORE

1. Education from a recognized college or university
a. Commerce, Public Administration or Law Degree 15 15
b. Other College Degrees 10
2. Experience in treasury or accounting service
Provinces and Cities Municipalities
a.15 years or more a. 10 years or more 20
b. 5 years to < 10years
20
b. 10 years to < 15years 18
c. over 5 years to < 10years c. over 3 years to < 5 years 16
d. at least 5 years d. at least 3 years 14
3. Applicable DOF Examination/Certification
a. SEAL 3 Certification (ACLTE) 20
b. SEAL 2 Certification (ICLTE) 15
20
c. SEAL 1 Certification (BCLTE) 10
4. Performance Rating in the last 2 rating periods
a. Outstanding 10 10
b. Very Satisfactory 8
5. Relevant Training
Provinces and Cities Municipalities 10
a. Above 120 hours a. Above 40 hours 10
b. 120 hours minimum b. 40 hours minimum 8
6. Rank/Salary Grade (SG)
a. SG 24 and above 5
b. SG 18 to SG 23 4 5
c. SG 11 to SG 17 3
d. SG 10 and below 2
7. Previous Designation as Acting/OIC/ICO Local
Treasurer or Acting/OIC/ICO
Non-LT/Non-ALT Regular LT/Regular ALT
a. 3 years or more a. 2 years or more 9 9
b. 2 years to < 3 years b. 1 year to < 2 years 7
c. 1 year to < 2 years c. 6 months to < 1 year 5
d. At least 6 months to <1 year d. At least 3 months to <6 months 3
8. Other Additional Points
8.1 Bar/RA 1080 Passer/Professional License Holder* 3
8.2 Post Graduate Degree 3 8
8.3 Post Graduate Diploma and Certificate 1
8.4 Collegiate/Post Graduate Honors Awards 1
10. Interview by the BLGF Executive Director or
3 3
Regional Director
Total 100
130
FORMS AND ANNEXES
ANNEX 4
REPUBLIC OF THE PHILIPPINES
8th Floor EDPC Building, Bangko Sentralng Pilipinas Complex
Roxas Boulevard, Manila 1004• Telefax Nos. 527-2780 / 527-2790
E-mail: blgf@blgf.gov.ph
BLGF MEMORANDUM CIRCULAR NO. 025- 2019

OCT 03 2019
: All BLGF Central and Regional Officials and Employees;

TO
All Provincial, City and Municipal Treasury Offices;
and Others Concerned
SUBJECT : Guidelines on the Evaluation and Processing
of Appointments of Local Treasurers and Assistant
Local Treasurers
This Memorandum Circular is issued to inform all concerned of the herein
attached Department Personnel Order (DPO) No. 477.2019, dated 04 Jun
2019, issued by the Secretary of Finance, on the Guidelines on the Evaluation
and Processing of Appointments of Local Treasurers and Assistant Local
Treasurers, thereby prescribing the streamlined documentary requirements and
evaluation criteria, integrating the Standardized Examination and Assessment for
Local Treasury Service (SEAL) Program, under Department Order No. 053.2016,
dated 20 Oct 2016, and setting the two-level screening process for evaluation by
BLGF Regional Offices (ROs) and Central Office (CO).
In line with Section 71 of the said DPO and pursuant to the BLGF Quality
Policy, the following supplementary guidelines are hereby issued for compliance by
all concerned, consistent with all applicable civil service rules and regulations:
1. Publication and Posting of Vacancy. Per Item Nos. 3.2 and 3.3 of DPO
No. 477.2019, the publication and posting of the vacant position of Local
Treasurer (LT) or Assistant Local Treasurer (ALT), in accordance with RA
No. 7041, as amended, for at least fifteen (15) calendar days, shall first be
complied with. The filling up of the vacant position shall be made after fifteen
(15) calendar days from its publication, but shall not exceed nine (9) months
from the date of publication. Such notice of vacancy shall strictly contain the
qualification standards, as provided under Sections 470 and 471 of Republic
Act (RA) No. 7160 or the Local Government Code (LGC) of 1991, and shall
be posted in at least three (3) conspicuous places within the concerned LGU,
and shall be reported to the Civil Service Commission (CSC).
2. Prescribed Documentary Requirements. The basic documentary
requirements for processing the appointments of LT and ALT are provided in
Annex A, for First Level Process (Initial Screening), and Annex B, for Second
Level Process (Final Deliberation). The sample letter of recommendation of
131
LTOM, 2ND EDITION
the local chief executive (LCE) is provided under Annex C hereof. The LGU,
through its Human Resource Management Officer, shall:
a. Require each recommendee to submit all documentary requirements
listed in Item A of Annex A and ensure the completeness of information;
b. Prepare the documentary requirements in Item B of Annex A; and
c. Consolidate, label, tab and properly file in a docket or binder all
documents enumerated in Annex A, together with the letter of
recommendation of the LCE (Annex C) as cover.
3. Requisites in the Submission of Letter of Recommendation of the
LCE. The letter of recommendation with supporting documents shall be
submitted to the BLGF RO, through the Provincial Treasurer, in the case
of municipalities and component cities, and to the BLGF CO Administrative
Division, in the case of LGUs in the National Capital Region (NCR), for pre-
evaluation and initial screening. If the recommendation is made by the LCE
in Acting Capacity, compliance with Sec. 46 of RA No. 7160, or the LGC,
shall be observed.
4. Constitution of the BLGF HRMPSB. The BLGF Regional HRMPSB of
each BLGF RO shall be chaired by the concerned BLGF Regional Director,
and composed of ranking Bureau personnel. The concerned Provincial
Treasurer or his/her duly authorized ranking alternate shall serve as ex officio
member thereof in screening local treasury appointments in component
cities and municipalities, per Item Nos. 3.7 and 3.8 of DPO 477.2019. The
BLGF Central HRMPSB shall be chaired by the BLGF Executive Director,
and composed of ranking Bureau personnel, per Item Nos. 3.7 and 3.8 of
DPO 477.2019.
5. First Level (Initial Screening) Process. The concerned BLGF Action Officer
shall pre-evaluate the LGU’s compliance with the documentary requirements
and provide immediate feedback. In case the documents submitted are
found incomplete or deficient, the LGU shall be properly notified using the
form prescribed in Annex D hereof. The evaluation of the documents shall
be certified as to completeness and orderliness, per Annex E hereof, and
submitted to the BLGF Regional and Central HRMPSBs for deliberations.
The BLGF HRMPSB shall deliberate and rank the recommendees for LT and/
or ALT position/s. It shall comparatively evaluate all recommendees using
Annex F hereof. Interview of recommendees by the BLGF Regional Director
or Executive Director, as the case may be, shall be required to further evaluate
the candidates’ capacity for the position, and the corresponding points shall
be included in the evaluation sheet. The results of each deliberation shall
be formalized through a Board Resolution, and supported by duly signed
summary of ratings, including all the First Level documentary requirements
and the accomplished compliance certification, to be submitted to the BLGF
Central HRMPSB.
132
FORMS AND ANNEXES
6. Second Level (Final Deliberation) Process. The BLGF Central HRMPSB

shall conduct the corresponding Second Level process for the final
deliberation of all recommendees. The BLGF CO Administrative Division
shall communicate the results to the BLGF RO to inform the concerned
recommendee of the submission of the documentary requirements specified
in Annex B hereof. Upon completion of all the required documents, the BLGF
Central HRMPSB Chairperson shall endorse the proposed appointment
papers to the Secretary of Finance, through the Undersecretary of Revenue
Operations Group (ROG), for final action, together with the certification as
provided in Annex F hereof. As part of due diligence, the BLGF Office of the
Executive Director, the ROG Office of the Undersecretary, and/or the DOF
Office of the Secretary may require additional information or clarification
whenever warranted.
7. Return Without Action Policy. All recommendations or documents received
by the BLGF RO or CO that are not compliant with the requirements shall
be given up to thirty (30) days upon issuance of notification to complete
the same. If after the lapse of the said period the requirements remain
to be completed, the entire set of documents shall be immediately and
formally returned without actio!l to the concerned LCE. In cases of individual
applications received by the BLGF, the same shall be immediately referred
to the concerned LCE for appropriate action.
8. Issuance of Appointment Papers. All appointments signed and issued
by the Secretary of Finance shall be subject for attestation by the CSC.
The same are not covered by Section 18 Rule VI of the ORAOHRA, which
requires the concurrence of the majority of all the members of the local
Sanggunian to approve such appointments, inasmuch as the appointing
authority is the Secretary of Finance.
As per Item No. 3.11 of DPO No. 477.2019, a certified true copy of the
appointment shall be issued to the appointee, through the BLGF, copy
furnished the LCE, in order that said appointee can immediately take his/
her oath of office and assume the duties of the position. In cases where
the nature of the appointment issued involves promotion or transfer from
another agency or LGU to another, the appointee shall seek an Authority
to Transfer from the head of the agency where he/she is employed prior to
assumption, which shall be submitted to the BLGF CO. Upon receipt of the
copy of appointment, the appointed LT or ALT shall submit to the CSC Field
Office, through the BLGF CO Admin Division, the following:
a. Duly acknowledged, signed and dated Appointment Paper;
b. Copy of the Oath of Office; and
c. Clearance Form (CSC Form No. 7).
9. Administrative Costs. All administrative costs related to the conduct of
screening and deliberations by the BLGF ROs and CO shall be chargeable
to the concerned BLGF office funds only. No fees, of whatever nature, shall
133
LTOM, 2ND EDITION
be collected for the processing of appointments from the LGU or individual

recommendees.
10. Effectivity. This Memorandum Circular shall take effect immediately and all
proposed appointments pending at the BLGF RO level shall be evaluated
in accordance with the herein guidelines. All BLGF Regional Directors
are enjoined to strictly comply with the herein rules, and to immediately
and widely disseminate the same to all concerned under their respective
jurisdictions.
All concerned shall be guided accordingly.
NIÑO RAYMOND B. ALVINA

Executive Director
Attachments
Annex A First Level Basic Documentary Requirements for Appointment of L Ts and ALTs
Annex B Second Level Documentary Requirements for Appointment of LTs and ALTs
Annex C Sample Letter of Recommendation of Local Chief Executive
Annex D Notification of Deficiency in Documentary Requirements
Annex E First Level Compliance Evaluation of Requirements for Appointment
Annex F Second Level Compliance Evaluation of Requirements for Appointment
Annex G Comparative Evaluation Sheet
134
FORMS AND ANNEXES
ANNEX A
First Level Basic Documentary Requirements
Document Remarks
1. Personal Data Sheet (PDS) - CSC Form No. 212, with the
3 Originals*
following:
1.3 Office Order for Designation as Treasurer/Assistant 1 Certified Copy
Treasurer each
1.4 Sworn Certificate of Employment (for private work
1 Photocopy
experience)
1.4 Latest Approved Appointment (if applicable) 1 Certified Copy
1.5 Certificate of Residency1 1 Original
2. Certificate/s of Eligibility
2.1 Civil Service Commission for CSP and/or BCLTE 1 Authenticated
Copy for each
2.2 Professional Regulation Commission (PRC) applicable eligibility
2.3 Bar
1 Certified Copy
3. Relevant Training Certificates2
each
1 Certified Copy
4. Performance Evaluation for the last two (2) rating periods3
each
B. LGU Requirements
1. Recommendation Letter of Local Chief Executive, with the
1 Original*
following:
1.1 Sworn Statement of Non-Prohibited Relationship4 1 Original*
1.2 Certification of Availability of Funds5 1 Original
1.3 Approved Plantilla Schedule for the current year 1 Certified Copy
1.4 Publication of Vacancy (not beyond 3 months old)
1 Original
and Posting, with Qualification Standards6
1.7 If applicable, provide justification/certification for: 1 Original for each
a. Quantum Leap in Salary Grade applicable case
b. Dearth of Applicants/Inclusion of Applicants from Other or include in the
LGUs recommendation
c. Non-inclusion of Next-in-Rank Employees letter
1.8 Government Issued ID with Photo and Signature of LCE 1 Certified Copy
Additional Requirement for Assistant Local Treasurer:
Certificate of Compliance with Sec. 325 of Republic Act No. 71607
* Original document must be signed by hand.

1 Certificate issued by the concerned Barangay Chairman and stating the candidate’s good moral character
2 Maximum ot 120 hours for the last 5 years for PT/CT: and 40 hours for the last 5 years for MT
3 Reckoned from the date of recommendation of the LCE
4 Certificate must state that the nominee is not within the 4th degree of affinity or consanguinity of the LCE
5 Certificate issued by the concerned Local Accountant or Budget Officer stating the authorized salary rate, salary
grade and item number of the position
6 The Qualifications Standards to be published and posted must follow Section 470 and 471 of Republic Act No.
7160
7 Signed by hand by the LCE and Local Accountant stating that the filling up of the position complies with Section
325a of the LGC
135
LTOM, 2ND EDITION
ANNEX B
Second Level Basic Documentary Requirements
Document Remarks
1. Transcript of Records (except for recommendees who are 1 Authenticated

already regularly appointed Local Treasurer/Assistant Local Copy for each
Treasurer) academic degree
2. Latest Sworn Statement of Assets, Liabilities, and Net Worth
1 Original
(SALN)
3. Medical Certificate - Latest CSC Form No. 211 1 Original
4. Valid Clearances and Certificate/s of No Pending Case (if with pending case/s,
provide Case Summary/ies):
4.4 BLGF (only for recommendees who are already appointed
1 Original
LT/ALT
4.5 LGU or NGA (only for recommendees who are appointed
1 Original
government personnel)
5. Marriage Certificate (for married female only) 1 Certified Copy
6. Acceptance of Lower Salary (if applicable) 1 Original
136
FORMS AND ANNEXES
ANNEX C
Sample Letter of Recommendation of Local Chief Executive
Date
NINO RAYMOND B. ALVINA
Executive Director
Bureau of Local Government Finance Manila
Thru: [NAME OF REGIONAL DIRECTOR]
Regional Director, BLGF Regional Office No. __
Dear Executive Director ALVINA:
In the exigencies of the service and in view of the vacancy of the [Provincial/City/
Municipal Treasurer/Assistant Treasurer] of this [Province/City/Municipality], I am
recommending the following personnel for the Bureau’s evaluation from which the
Secretary of Finance shall appoint, in accordance with Republic Act No. 7160 and
DOF Department Personnel Order No. 477.2019, to wit:
Remarks/Brief Summary
Name Position, Official Station
of Qualifications
1.
2.
3.
add rows if there are additional recommendees
Please find enclosed herein the following supporting documents for your perusal:
1. Personal Data Sheet and other supporting documents of the above
recommendees;
2. Sworn Statement of Non-Prohibited Relationship with the above
recommendees;
3. LGU Certification of Availability of Funds;
4. Approved Plantilla Schedule of the LGU for the current year;
4. Publication of Vacancy and Posting;
5. Certificate of SPMS Compliance from CSC;
6. Other justifications (if applicable); and
7. Government-issued ID with Photo and Signature of the undersigned.
Thank you.
Sincerely yours,
[Signature]
[NAME OF GOVERNOR/MAYOR]
[Position]
137
LTOM, 2ND EDITION
ANNEX D
NOTIFICATION OF DEFICIENCY IN DOCUMENTARY REQUIREMENTS
MAYOR/GOVERNOR _______
Province/City/Municipality of ______
Subject : Notice of Deficiency of Requirements for Local Treasury
Appointment
Dear Mayor/Governor _______
This has reference to the proposed appointment of Provincial/City/Municipal
Treasurer/Assistant Treasurer of the Province/City/Municipality of _______ , per your
letter of recommendation dated _____ , received by this Office on _______.
Please be informed that upon perusal of the documents submitted, the following
deficiencies and observations have been found:
Name of Recommendee:
Documentary Requirement from Individual Remarks/Instruction
1.
2.
3.
Documentary Requirement from LGU Remarks/Instruction
1.
2.
3.
In accordance with the policy of this Bureau, it is respectfully requested that the
above-listed documents be fully accomplished and completely submitted within thirty
(30) days from receipt of this notification. Otherwise, we will be constrained to return
the entire set of documents for appointment without action.
Thank you.
Very truly yours,
Name and Signature of Regional Director
138
FORMS AND ANNEXES
ANNEX E
COMPLIANCE EVALUATION OF REQUIREMENTS FOR APPOINTMENT
First Level Process: BLGF Regional Office No.
Name of LGU Name of LCE

Position Salary Grade I PhP
Instructions: Please mark “C” if the requirement Is fully complied, and “NA” if not applicable. This Certification
must be submitted to the BLGF Central Office only when the 1• Level Requirements have been fully complied,
and collated.
Document Remarks Evaluation

1. PDS - CSC Form No. 212, with the following: 3 Originals
1.3 Previous Office Order of 1 Certified Copy
Designation as LT/ALT, if any each
1.4 Sworn Certificate of Employment
1 Photocopy
(for private work experience)
1 .4 Latest Appointment (if applicable) 1 Certified Copy

1.5 Certificate of Residency 1 Original
2. Certificate/s of Eligibility 1 Authenticated
2.1 CSC for CSP and/or BCLTE Copy for each
applicable
2.2 PRC/Bar eligibility
1 Certified Copy
3. Relevant Training Certificates
each
4. Performance Evaluation (last two(2) rating 1 Certified Copy
periods) each

1. Letter Recommendation of Local Chief Executive,
1 Original
w/ the following:
1.1 Sworn Statement of Non-Prohibited
1 Original
Relationship
1.2 Certification of Availability of Funds 1 Original
1.3 Approved Plantilla Schedule (current year) 1 Certified Copy
1.4 Publication of Vacancy (not > 3 months old)
1 Original
and Posting, w/ QS
1.7 Justification/certification (if applicable):
1 Original for
a. Quantum Leap in Salary Grade each case or
b. Dearth of Applicants/Inclusion of Applicants include in the
from Other LGUs letter
c. Non-inclusion of Next-in-Rank Employees
139
LTOM, 2ND EDITION
1.8 Government-Issued ID with Photo

1 Certified Copy
and Signature of LCE
2. Certificate of Compliance with Section 325 of LGC
1 Original
(in the case of ALT)
This is to CERTIFY that the BLGF Regional HRMPSB has received and
evaluated the documents for the appointment of ______________________
in the Province/City/Municipality of _________________________, finding
said documents complete, in order, and in accordance with existing rules and
regulations.
Issued by: Noted by:
Name and Signature Name and Signature

of BLGF Action Officer/Secretary of BLGF Regional Director
Date: ______________ Date: ______________
140
FORMS AND ANNEXES
141
LTOM, 2ND EDITION
ANNEX F
COMPLIANCE EVALUATION OF REQUIREMENTS FOR APPOINTMENT
Second Level Process: BLGF Central Office
Name of LGU Name of LCE

Position Salary Grade I PhP
Instructions: Please mark ·c· if the requirement is fully complied, and” NA” if not applicable. This certification, together
with the subject documents, shall be submitted to the BLGF Central HRMPSB.

1 Authenticated
1.Transcript of Records (except for recommendees who are already regularly Copy for each
appointed Local Treasurer/Assistant Local Treasurer) academic
degree
2. Latest SALN 1 Original
3. Medical Certificate (CSC Form No. 211) 1 Original
4. Valid Clearances and Certificate/s of No Pending Case (if with pending easels, provide Case
Summary/ies):

4.4 BLGF (only for recommendees who are already appointed LT/ALT) 1 Original
4.5 LGU or NGA (only for recommendees who are appointed govemment
1 Original
personnel)
1 Certified
5.Marriage Certificate (for married female only)
Copy
6.Acceptance of a Lower Salary (if applicable) 1 Original
This is to CERTIFY that the BLGF Central HRMPSB has received and evaluated the
documents for the appointment of ___________________________________ in the
Province/City/Municipality of ___________________________________, found said
documents complete, in order, and in accordance with existing rule s and regulations.
Issued by: Noted by:
Name and Signature Name and Signature

of BLGF Action Officer of BLGF Central HRMPSB Secretary
Date: ______________ Date: ______________
142
FORMS AND ANNEXES
BLGF Human Resource Merit Promotion and S

ANNEX G • BLGF COMPARATIVE MATRIX OF EV
NAME OF LGU IC POSITION TO BE
Name of Regular Incumbent Status of Regular Incumbent

NAME OF RECOMMEN
Current Position &
CRITERIA POINT SCORE
Particulars
1. Education from a recognized college or university

a. Commerce, Public Administration or Law Degree 15 15
b. Other College Degrees 10
2. Experience in treasury or accounting service

Provinces and Cities Municipalities
a.15 years or more a. 10 years or more 20
18
20
b. 10 years to < 15years b. 5 years to < 10years
c. over 5 years to < 10years c. over 3 years to < 5 years 16
d. at least 5 years d. at least 3 years 14
3. Applicable DOF Examination/Certification

a. SEAL 3 Certification (ACLTE) 20
b. SEAL 2 Certification (ICLTE) 15
20
c. SEAL 1 Certification (BCLTE) 10
4. Performance Rating in the last 2 rating periods

a. Outstanding 10 10
b. Very Satisfactory 8
5. Relevant Training
Provinces and Cities Municipalities 10
a. Above 120 hours a. Above 40 hours 10
b. 120 hours minimum b. 40 hours minimum 8
6. Rank/Salary Grade (SG)
a. SG 24 and above 5
b. SG 18 to SG 23 4 5
c. SG 11 to SG 17 3
d. SG 10 and below 2
7. Previous Designation as Acting/OIC/ICO Local Treasurer or

Acting/OIC/ICO
Non-LT/Non-ALT Regular LT/Regular ALT
a. 3 years or more a. 2 years or more 9
9
b. 2 years to < 3 years b. 1 year to < 2 years 7
c. 1 year to < 2 years c. 6 months to < 1 year 5
d. At least 6 months to <1 year d. At least 3 months to <6 months 3
8. Other Additional Points
8.1 Bar/RA 1080 Passer/Professional License Holder* 3
8.2 Post Graduate Degree 3 8
8.3 Post Graduate Diploma and Certificate 1
8.4 Collegiate/Post Graduate Honors Awards 1
10. Interview by the BLGF Executive Director or Regional

3 3
Director
Total 100 -
Publication Prepared by: Recommending

Date Issued
Expiration Date
Regional HRMPSB Secretary Regional HRMP
Date Signed: ___________ Date Signed: _
143
LTOM, 2ND EDITION
Selection Board (HRMPSB) for Local Treasury

VALUATION· LOCAL TREASURY APPOINTMENT
FILLED RECOMMENDING LCE SALARY GRADE ITEM NO.:
t/Reason of Vacancy
NDEE NO. 1 NAME OF RECOMMENDEE NO. 2 NAME OF RECOMMENDEE NO. 3
& Office Current Position & Office Current Position & Office
RO CO RO CO RO CO
Particulars Particulars
Score Score Score Score Score Score
- - - - - - - -
g Approval: CO Final Evaluation: Confirmed per CO Deliberations
PSB Chair Central HRMPSB Secretary Central HRPMSB Chair

_________ Date Signed: ______ Date Signed: _________
144
FORMS AND ANNEXES
ANNEX 5: UPDATED CODE OF APPROVING AND SIGNING

AUTHORITIES (CASA) OF THE BUREAU OF LOCAL
GOVERNMENT FINANCE (BLGF)
Under Department Special Order No. 01-2018 dated 09 November 2018, the
following approving and signing authorities have been delegated to the Bureau of
Local Government Finance and certain functions have been clarified as follows:
Initial Action / Final
Function and Responsibility Recommendation- Action /
Indorsement Approval*
1. Department Orders, Circulars,
ED - USec SOF
and Regulations
2. Travel Authority for Foreign Travel (Official and Personal)
2.1. NCR: LT / ALT LCE - AFMSD - DED ED
2.2. Regions: LT / ALT LCE - RD - DED ED
3. Appointment and Other Personnel actions
3.1. Appointment
LCE - AFMS - DED -
3.1.1 NCR: LT/ALT SOF
ED
3.1.2 Regions: LT/ALT LCE - RD - DED - ED SOF
3.2. Oath and Assumption of Office LCE / RD / ED / SOF
3.3. Cancellation of Appointment
LCE - AFMSD - DED
3.3.1. NCR: LT/ALT SOF
- ED
LCE - RD - DED -
3.3.2 Regions: LT/ALT SOF
ED
3.4. Recommendation for Extension of Service
3.4.1. NCR: LT /ALT LCE - AFMSD - DED ED
3.4.2. Regions: LT / ALT LCE - PT - RD - DED ED
3.5. Secondment
3.5.1. NCR: LT/ALT LCE - AFMSD - DED ED
3.5.2. Regions: LT/ALT LCE - PT - RD - DED ED
3.6. Original Designation (including Authority for the Payment of RATA)
and Extension Thereof
LCE - AFMSD - DED
3.6.1. NCR: LT/ALT SOF
- ED
3.6.2. Regions: LT/ALT LCE - PT RD
3.7. Confirmation of RSPOs on Designations AFMSD - DED ED
4. Actions on Reassignment and Detail
LCE - AFMSD - DED
4.1. NCR: LT/ALT SOF
- ED
4.2. Regions: LT/ALT LCE - PT - RD - DED ED
5. Action on Letter of Resignation; and Indorsement of Optional/Compulsory Retirement
5.1. NCR: LT/ALT LCE - AFMSD - DED ED
145
LTOM, 2ND EDITION

5.2. Regions: LT/ALT LCE - PT - RD - DED ED
6. Applications for Leave
6.2. Regions: LT/ALT LCE RD
7. Setting of Performance Targets for LT
LFPSD - DED ED
and ALT
8. Approval of Performance Assessment/Evaluation
8.2. Regions: LT/ALT LCE - PT RD
9. Approval of Loan Applications and Agreements
under the Assessment Loan Revolving Fund (PD LGUOSD - DED ED
No. 1002)
10. Administrative Discipline
10.1. NCR: LT / ALT
10.1.1. Order to Comment/Issue
LSD - DED ED
Show-cause Order
10.1.2. Preliminary Investigation Report - PI Team
10.1.3. Resolution of Complaint LSD - DED ED
10.1.4. Attestation on Compromise
LSD - DED ED
Agreement
BOPIR /
10.1.5. Notice of Charge/Formal Charge LSD - DED - ED
SOF
BOPIR /
10.1.6. Order of Preventive Suspension LSD - DED - ED
SOF
10.1.7. Designation of Hearing Officer
LSD - DED ED
and Prosecutor
10.1.8. Decisions on Administrative BOPIR /
LSD - DED - ED
Cases SOF
10.1.9. Resolution on Motion for BOPIR /
LSD - DED - ED
Reconsideration SOF
10.1.10. Recommend the Granting
of Removal/Commutation LCE - AFMSD - DED
SOF
of Administrative Penalties - ED
and Disabilities
10.2. Regions: LT/ALT
10.2.1. Order to Comment/Issue Show-
SI RD
cause Order
10.2.2. Preliminary Investigation Report - SI
10.2.3. Attestation in Compromise
RD - LSD - DED ED
Agreement
10.2.4. Resolution of Complaint SI RD
10.2.5. Confirmation of Resolution - ED
146
FORMS AND ANNEXES

BOPIR /
10.2.6. Notice of Charge/Formal Charge LSD - DED - ED
SOF
BOPIR /
10.2.7. Order of Preventive Suspension LSD - DED - ED
SOF
10.2.8. Designation of Hearing Officer
LSD - DED ED
and Prosecutor
10.2.9. Decisions on Administrative BOPIR /
LSD - DED - ED
Cases SOF
10.2.10. Resolution on Motion BOPIR /
LSD - DED - ED
for Reconsideration SOF
10.2.11. Recommend the Granting
of Removal/Commutation
LCE - RD - DED - ED SOF
of Administrative Penalties
and Disabilities
10.3. Implement Decision, Order and Resolution
LSD - DED ED
(DOR)
11. Non-Disciplinary Cases
11.1. Appeal on Invalidated/ Disapproved
AFMSD - LSD - DED ED
Appointment
11.2. Resolution/Comment on Protest
AFMSD - LSD - DED ED
on Appointment
11.3. Petition for Recall of Appointment AFMSD - LSD - DED ED
11.4. Dropping from the Rolls
11.4.1. Return to Work Order
11.4.1.a. NCR: LT /ALT HRMO - LCE - DED ED
11.4.1.b. Regions: LT / ALT HRMO - LCE RD
11.4.2. Written Notice for Unsatisfactory or Poor Performance, Physically
Unfit and Mental Disorder
11.4.2.a. NCR: LT / ALT HRMO - LCE DED
11.4.2.b. Regions: LT / ALT HRMO - LCE RD
11.4.3. Notice/Order of Separation thru Dropping from the Rolls
LCE - AFMSD - LSD -
11.4.3.a. NCR: LT / ALT ED
DED
11.4.3.b. Regions: LT / ALT LCE - RD - LSD - DED ED
The initial action or recommendation of the Provincial Treasurers under Items 3.4.2,
3.5.2, 3.6.2, 4.2, 5.2, and 8.2 shall be with respect only to their authority over LTs
and ALTs of component cities and municipalities within their respective jurisdictions.
The final action to be signed by the BLGF Executive Director or the concerned BLGF
Regional Director, as the case may be, shall bear the notation “By Authority of the
Secretary of Finance:”.
147
LTOM, 2ND EDITION
DSO No. 01-2018 amended the applicable provisions in the Local Treasury Operations
Manual (LTOM) issued under Department Orders (DOs) No. 013.2018 and 10-08
dated 19 December 2017 and 26 March 2008, respectively, Department Personnel
Order (DPO) No. 515.2017 dated 27 July 2017, and repeals DPO No. 335-03 dated
1 October 2003, DPO No. 321-00 dated 17 November 2000, DPO No. 305-00 dated
27 October 2000, and Department Special Order No. 6-92 dated August 21, 1992.
Legend: ‘ – ’ denotes sequential action / indorsement; and ‘ / ’ denotes alternative action / indorsement;
Authorized AFMSD Administrative, Financial and Management Service Director of BLGF;

Signatory/ BOPIR Board of Personnel Inquiry and Review of DOF;
Office DED Deputy Executive Director (Administration or Operations) of BLGF;
ED Executive Director of BLGF;
HRMO Human Resource Management Officer of LGU;
HRMPSB Human Resource Merit Promotion and Selection Board of BLGF;
LCE Local Chief Executive;
LFPSD Local Fiscal Policy Service Director
LGUOSD LGU Operations Service Director
LSD Legal Service Director of BLGF;
PI Preliminary Investigation Team of BLGF;
PT Provincial Treasurer;
SI Special Investigator of BLGF;
SOF Secretary of Finance; and
USec Undersecretary of Revenue Operations Group of DOF.
148
FORMS AND ANNEXES
ANNEX 6
8th Floor EDPC Building, Bangko Sentralng Pilipinas Complex
Roxas Boulevard, Manila 1004• Telefax Nos. 527-2780 / 527-2790
E-mail: blgf@blgf.gov.ph
BLGF MEMORANDUM CIRCULAR NO. 16- 2015
TO : All Bureau Officials and Personnel; Regional Directors for the

Bureau of Local Government Finance; Provincial, City
and Municipal Treasurers and Others Concerned
SUBJECT : LOCAL PUBLIC FINANCIAL MANAGEMENT TOOLS FOR

THE ELECTRONIC STATEMENT OF RECEIPTS AND
EXPENDITURES
DATE : 19 June 2015
Pursuant to DBM-DILG-DOF.:.NEDA Joint Memorandum Circular No. 2015-1 dated

February 24, 2015, providing for the adoption of the local government units Public Financial
Management Reform Roadmap and Implementation Strategy in pursuit of attaining the
Philippine Development Plan’s goal of inclusive growth and poverty reduction and promoting
good governance and strong public financial management (PFM) at the local levels, the
Department of Finance particularly the Bureau of Local Government Finance (BLGF) shall
lead in capacitating LGUs in resource mobilization, revenue generation and related treasury
and assessment enhancement tools which include, among others, revenue and cash flow
forecasting tools.
The BLGF developed the Manual for the Local Public Financial Management Tools for the
electronic Statement of Receipts and Expenditures (eSRE). This Manual is the result of
the comprehensive studies under the auspices of the Asian Development Bank Technical
Assistance projects since 2007 (ADB TA 4556, ADB TA 4778, ADB TA 7451) and the European
Union project “Support for Local Government Units for More Effective and Accountable Public
Financial Management” (LGU PFM 2) for the BLGF and the local treasury offices.
The Manual consists of two books, as follows:
1. A Manual on Determining Local Government Fiscal Capacity and Reconciling Local

Revenue Forecasts
The Manual describes the BLGF Revenue Forecasting Model which utilizes the eSRE
data and is incorporated in the eSRE system. The forecasting model generates annual
revenue forecasts for key LGU own-source revenue items per LGU, which serves as
the basis for the annual regular revenue targeting exercise. These targets are then
subjected to a revenue target reconciliation process, also prescribed in this Manual,
which involves the BLGF Regional Office and the LGU’s treasury office. The agreed
revenue targets will be used for the annual budgeting exercise. The Manual guides
the BLGF Central Office and LGUs on the meaning and use of the revenue forecasts
and the target reconciliation process.
149
LTOM, 2ND EDITION
In addition, the Local Treasurers are provided an objective process by which to

gauge their own forecasts and if necessary, rationally justify or defend it vis-a-vis the
forecasts generated by the model by citing qualitative factors specific to the LGU not
captured by the model. Through this process of statistical estimation and rationalized
and objective review by both the BLGF and Local Treasurers, income forecasting
and targeting is now more firmly grounded in the principles of good public financial
management.
2. Guidebook for the New Local Government recommends Activities leading to the
adoption of the LGU revenue and cash flow forecasting Tool shall be included in the
regular functions of the BLGF particularly of its Regional Offices.
The New LGFPMS, which improved on the original LGFPMS, a set of twenty
(20) indicators - levels, ratios and percentages - clustered into four main areas:
revenue indicators, expenditure indicators, debt and investment capacity indicators,
and financial management capacity indicators. The Guidebook for the New Local
Government Financial Performance Monitoring System describes in detail the
composition of each of these indicators, how they are computed using the eSRE
database, what they mean in terms of measuring performance in public financial
management, how they are currently being utilized, in part or in whole, and how they
can be prospectively utilized.
Activities leading to the adoption of the Manual for the Local Public Financial Management
Tools for the electronic Statement of Receipts and Expenditures (eSRE) shall be included in
the regular functions of the BLGF.
All concerned are hereby enjoined to support the implementation of the above mentioned
Local Public Financial Management Tools.
ATTY. SALVADOR M. DEL CASTILLO

OIC-Executive Director
150
FORMS AND ANNEXES
ANNEX 7
Manila 1004
ESTABLISHING THE LOCAL GOVERNMENT UNIT (LGU) FISCAL SUSTAINABILITY

SCORECARD (FSS) IN THE BUREAU OF LOCAL GOVERNMENT FINANCE (BLGF)
1.0 LEGAL BASES. This Department Order (DO} is issued to establish the LGU Fiscal
Sustainability Scorecard as the official LGU fiscal and financial performance evaluation
system of the DOF, through the BLGF, under the following legal bases:
1.1 Executive Order (EO) Nos. 127, 127-A and 292 mandate the Department of Finance
(DOF} to be responsible for the formulation, institutionalization and administration
of fiscal policies, in coordination with other concerned subdivisions, agencies and
instrumentalities of the government, and to supervise the revenue operations of all
LGUs;
1.2 EO No. 127 mandates the BLGF to assist in the formulation and implementation
of policies on local revenue administration and fund management, and to exercise
administrative, technical supervision and coordination over the treasury and
assessment operation of local governments;
1.3 Department of Budget and Management - Department of the Interior and Local
Government - DOF - National Economic Development Authority (DBM-DILG-DOF
NEDA) Joint Memorandum Circular (JMC) No. 2015-1, dated 24 February 2015, sets
the LGl,J Public Financial Management (PFM) Reform Roadmap and Implementation
Strategy to attain the Philippine Development Plan’s goal of inclusive growth and
poverty reduction, to promote good governance and strong PFM at the local levels,
and to enjoin the DOF, particularly the BLGF, to lead in capacitating LGUs in resource
mobilization, revenue generation and related treasury and assessment enhancement
tools;
1.4 Sec. 12.3 and Sec. 12.4 of DILG-NEDA-DBM-DOF JMC No. 1 Series of 2016, dated
18 November 2016, requires the DOF, through the BLGF, to provide the following
performance measurements systems: (i) Local Government Financial Performance
Management System; (ii) Local Government Fiscal Sustainability .Scorecard; (iii)
Local Treasurers Performance Standards; and (iv) Creditworthiness Rating Index;
and to mainstream them ihto local PFM, and harmonize and complement them
through the LGU Integrated Financial Tool (LIFT);
1.5 DBM-DOF-DILG-JMC No. 2018-1, dated 12 July 2018, enjoins the adoption of the
modified format for the Statement of Receipts and Expenditures (SRE) of LGUs and
the updated guidelines in the preparation and submission thereof;
1.6 DOF DO No. 23-08, dated 29 July 2008, prescribes the New Income Brackets for
the Re-Classification of Provinces, Cities and Municipalities and amending for the
purpose DOF DO No. 20-05, dated 29 July 2005;
151
LTOM, 2ND EDITION
1.7 DOF DO No. 08-2011, dated 11 February 2011, specifies the adoption of the
Statement of Receipts and Expenditures (SRE) as the official reporting system on local
government fiscal and financial operations and providing the rules and regulations
therefor;
1.8 DOF DO No. 034-2014, dated 26 May 2014, provides for the amendment of Sections
3, 8 and 9 of the DO No. 08-2011 dated 11 February 2011 by stipulating the submission
of timely and/or accurate SRE reports;
1.9 Sec. 219 of the LGC which states that the provincial, city or municipal assessor shall
undertake a general revision of real property assessment within two (2) years after
the effectivity of the Code and every three (3) years thereafter; and
1.10 Sections 1 and 2 of the DOF DO No. 059.2015, dated 28 May 2015, requires the
electronic submission of the Quarterly Reports on Real Property Assessments
(QRRPA) module in the electronic SRE system.
2.0 RATIONALE AND OBJECTIVES. In order to improve the revenue collection efficiency of
all LGUs, optimize their income generation mandates under the LGC, enjoin good fiscal
.governance at all levels, and promote openness and transparency in local fiscal and
financial management, the LGU Fiscal Sustainability Scorecard (FSS), hereinafter referred
to as “LGU FSS”, is hereby established to be the regular evaluation and assessment tool
for LGUs in order to: (1) regularly assess individual LGU fiscal and financial performance;
(2) provide comprehensive metrics and data analytics on local finance; ·{3) support
credit financing assessment; (4) Assist in local and national policy formulation; and (5)
encourage the development of appropriate rewards system.
3.0 SCOPE AND DATA SOURCE OF THE LGU FSS. The LGU FSS shall cover all provinces,
cities and municipalities, and shall be regularly developed and updated by the BLGF as
part of its regular programs to build and sustain good fiscal governance by LGUs. The
primary data source shall be the eSRE and QRRPA modules under the LGU Integrated
Financial Tools (LIFT) System being maintained by the BLGF for all LGUs. Additional
official references shall be considered in regard to benchmarks and reporting compliance
requirements, such as population data and growth rate, SMV ordinance, among others.
4.0 POLICY GUIDELINES. The following policy guidelines shall be observed:
4.1 The SRE, as the official financial management reporting prescribed by the DOF
to monitor LGUs’ financial performance, shall be used as the key data source in
computing and analyzing the LGU FSS.
4.2 The local Goyernment Financial Performance Management System (LGFPMS)

prescribed by the BLGF under Memorandum Circular (MC) No. No. 16-2015, dated
19 June 2015, shall serve as a guide in establishing a fiscal and financial performance
framework in processing the LGU FSS (See Annex A).
4.3 Quantitative parameters shall be designed to gauge the fiscal and financial
performance assessment of lGUs which shall include indicators assessing the
revenue, expenditures, debt and investment, and financial management capacity.
Qualitative parameters, on the other hand, shall be used to measure the behavioral
and other non-financial indicators, which shall include compliance with reportorial
duties and responsibilities as required by the DOF and BLGF; and
4.4 In setting the baselines and benchmarks, the LGU level, i.e. province, city and
municipality, income classification or income bracketing, and similar other clustering
mechanisms shall be considered in the performance evaluation.
152
FORMS AND ANNEXES
5.0 PARAMETERS FOR EVALUATION
5.1 The LGU FSS shall consist of two (2) indicators: (1) the Financial (Quantitative)
Indicators, which shall constitute 90 percent of the total score, and (2) the Non
Financial (Qualitative) Indicators, which shall constitute the remaining 10 percent.
5.2 There shall be three (3) key result areas (KRAs) for the Financial (Quantitative)
Indicators, namely: {i) Revenue Generation Capacity, (ii) Local Collection Growth and
(iii) Expenditure Management. For Non-Financial (Qualitative) Indicators, the focus
shall be on reportorial compliance on the (i) eSRE, (ii) SMV and (iii) QRRPA.
5.3 To measure the outputs and outcomes of local treasurers under Financial (Quantitative)
Indicators, the following sub-KRAs on local revenue generation and fund manage_
ment shall be measured:
5.3.1 Revenue Generation Capacity. The total weight of this indicator shall be
distributed to the six (6) sub-KRAs following the formula below:
a. Regular Income Level is the sum of locally sourced income (excluding

the Special Education Fund [SEF]), current year’s IRA, other shares from
national tax collections, and interest income;
b. Local Revenue Level refers to locally generated revenues, which shall

include real property tax (basic), business tax, other taxes, regulatory fees,
service/user charges, and receipts from economic enterprises;
c. Local Revenue Growth is the actual growth of locally generated revenues.

It shall be the main driver of revenue performance to ensure stable or
progressive collection growth and to be used as evidence of sustainability
for each local revenue source;
d. Dependence on Locally Sourced Income is the percent share of local

revenues (excluding Other Receipts) to the total regular income;
e. Dependence on Internal Revenue Allotment (IRA) is the percent share of

IRA to the total regular income; and
f. Dependence on Other Shares from National Tax Collection is the percent

share of receipts from other shares from national taxes to the total regular
income.
5.3.2 Local Collection Growth. The total weight of this indicator shall be distributed
to the two (2) sub-KRAs, which shall be the main drivers of ownsource revenue
performance, following the formula below:
a. Tax Revenues is the sum of collections from real property tax (excluding
SEF), other tax and tax on business; and
b. Non-Tax Revenue is the sum of collections from regulatory fees, user/

service charges and income from economic enterprise.
5.3.3 Expenditure Management. This Indicator focuses on the expenditure profile
and utilization of funds, including those covered by mandatory obligations and
governed by statutory limitations under the LGC. The total weight of this Indicator
shall be distributed to four (4) sub-KRAs following the below parameters:
a. Expenditure per Capita is the amount spent by the LGU per constituent for
153
LTOM, 2ND EDITION
various expenditure classes;
b. Use of IRA for Local Development Projects. Sec. 287 of the LGC: each
LGU shalf appropriate in its annual budget no less than twenty percent
(20%) of the annual IRA for development projects;
c. Limitation on Expenditure on Personal Services. Sec. 325a of the LGC: the

total appropriations, whether annual or supplemental, for personal services
of the LGU for one (1) fiscal year shall not exceed forty-five percent (45%)
in the case of first to third class provinces, cities, and municipalities, and
fifty-five percent (55%) in the case of fourth class or lower, of the total
annual income from regular sources realized in the next preceding fiscal
year; and
d. Limitation on Debt Service. Sec. 3248 of the LGC: the amount of

appropriations for debt servicing shall not exceed twenty percent (20%) of
the regular income of the LGU concerned.
5.4 For Non-financial (Qualitative) Indicators, the following sub-KRAs shall be measured
with regard to reportorial duties and responsibilities of local treasurers and assessors,
as required by the DOF and the BLGF, and the statutory requirement of the LGC in
regard to updating local revenue bases, as follows:
5.4.1 Submission of Timely and Accurate eSRE Reports in relation to DOF DO No.
8-2011, as amended;
5.4.2 Regular Updating of SMV and Conduct of General Revision of Property

Assessments, as required by DOF-DILG JMC Nos. 2010-01 and 2010-02; and
5.4.3 Submission of Timely and Accurate QRRPA, as prescribed under DO No.

059.2015 dated 28 May 2015.
5.5 In the case of municipalities, the Non-Financial (Qualitative) Indicator shall only
pertain to Submission of Timely and Accurate eSRE Reports in relation to DOF DO
No. 8-2011, as amended;
5.6 The rating scheme for the above mentioned KRAs shall be based on statistical baselines
and standards according to LGU level and income bracketing or classifications;
5.7 The detailed sub-KRAs for both financial and non-financial indicators, including the
prescribed parameters, benchmarks and rating system, are provided in Annex B
hereof; and
5.8 The prescribed templates for the LGU FSS are provided in Annex C (Provinces and
Cities) and Annex D (Municipalities) hereof.
6.0 RATING. There shall be six (6) rating levels based on the consolidated weighted scores
from all performance indicators using the below point rank and final rating scheme:
154
FORMS AND ANNEXES
Score Final Rating Remarks

>= 80 but <= A: Excellent All revenue and expenditure Indicators are very strong;
100 very I high compliance to reportorial requirements and
directives of the DOF and the BLGF.
>= 70 but B: Very Good Most of the revenue and expenditure indicators are met
< 80 very satisfactorily; compliance to reportorial requirements
are high
>= 60 but C:Good Most of the revenue and expenditure indicators are above
<70 average performance, minimum level of compliance to
reportorial requirements are mostly met.
>= 50 but D: Average Revenue and expenditure indicators have not significantly
<60 changed and are generally on the average; compliance to
reportorial requirements are mostly met.
>= 40 but E: Needs Almost all of the key revenue and expenditure indicators
< 50 Improvement need to be improved and validated; minimum reportorial
requirements are not generally complied with.
< 40 F: Poor All revenue and expenditure indicators are way below
the benchmarks; key reportorial requirements, mainly the
SRE, are not submitted and complied with.
7.0 COVERAGE OF RATING PERIOD. The fiscal performance evaluation for LGUs shall be
undertaken by the BLGF annually for every full fiscal year or from January 1 to December
31 of the immediately preceding year.
8.0 RESPONSIBILITIES OF THE BLGF. The BLGF, as the policy and technical arm of the
DOF in supervising the revenue operations of LGUs, shall implement this Order and be
responsible for the following:
8.1 Undertake the LGU FSS and complete the evaluation no later than every September
30 of the current year;
8.2 Issue the necessary implementing guidelines and procedures through appropriate
office orders or circulars;
8.3 Conduct periodic review of the parameters used in the LGU FSS and make the
necessary adjustments on the sub-KRAs, maximum score, weights, and corresponding
rating to ensure statistical robustness of the models, subject to the approval of the
Undersecretary for Revenue Operations Group;
8.4 Analyze the results of the LGU FSS and publish an annual report therefor;
8.5 Sign, approve, and disseminate the official LGU FSS results;
8.6 Post and publish electronically the individual LGU FSS results;
8.7 Use the individual LGU FSS as basis in evaluating further the treasury and assessment
operations of the LGUs; and
8.8 Use and recommend individual LGU FSS as component of performance-based grant
system and awards of other government agencies.
9.0 REPEALING CLAUSE. All Department orders, memoranda, circulars or other issuances
or parts thereof that are inconsistent herewith are hereby deemed repealed and/or
modified accordingly.
155
LTOM, 2ND EDITION
10.0 EFFECTIVITY. This Department Order shall take effect fifteen (15) days after its
publication in the Official Gazette and the UP Office of the National Administrative
Register or in a newspaper of general circulation in the Philippines.
CARLOS G. DOMINGUEZ
Secretary
156
FORMS AND ANNEXES
Annex A
LOCAL GOVERNMENT FINANCIAL PERFORMANCE MONITORING SYSTEM (LGFPMS

INDICATORS)
The LGFPMS of the BLGF serves provides the LGU fiscal and financial performance evaluation
framework, covering twenty (20) financial and service delivery indicators, grouped as follows:
1. Revenue Indicators (8): These are indicators that reflect revenue generation
capacity, and measure revenue stability, predictability of local revenues, and degree
of local government control over local revenues;
2. Expenditure Indicators (6): These are indicators that reflect expenditure rigidity and
define the degree of flexibility in allocating resources for different purposes;
3. Debt and Investment Capacity Indicators (5): These are indicators that define the
extent to which the LGU service debt obligations and consider the importance of
capital expenditures and capacity to attract long-term financing for investments; and
4. Financial Management Capacity Indicator (1): This indicator compares revenues

with expenditures, and describes the LGU efficiency in financial resources
management.
The specific indicators and ratios under the LGFPMS are listed as follows:
Group No. Specific Indicator

1 Revenue Level
2 Revenue Growth
3 Per Capita Locally Sourced Income (LSI) and Special Education
Fund (SEF)
Revenue 4 Per Capita Growth in LSI
Indicators 5 % LSI to Total Revenue
6 % Annual Regular Income (ARI) to Total Revenue
7 Ratio of Total Revenue Office Operations Cost to Total Revenues
Collected (TROOC)
8 Real Property Tax Accomplishment Rate (RPTAR}
9 Per Capita Total Expenditures
10 Personal Services Expenditure Ratio Coda I (PSERC)
Expenditure 11 Total Personal Services Expenditure Ratio (TPSER)
Indicators 12 Total Debt Service Expenditure Ratio (DSER}
13 Social Services Expenditure Ratio (SSER}
14 Economic Services Expenditure Ratio (ESER)
15 Debt Service Ratio (DSR)
Debt and 16 Gross Operating Surplus to Debt Service Ratio (GOSDSR)
Investment 17 Debt to Net Asset Ratio (DNAR)
Capacity 18 Capital Investment Expenditures to Total LGU Revenue Ratio
Indicators (CIETRR)
19 Net Operating Surplus to Total LGU Revenue Ratio (NOSTRR)
157
LTOM, 2ND EDITION
Group No. Specific Indicator

Financial 20 Uncommitted Cash Balance to Total Expenditure Ratio (UCBTER}
Management
Capacity
Indicator
The LGU FSS also looks into the overall fiscal performance of LGUs according to four (4) basic
typologies using the combined financial performance indicators and service delivery indicators
to describe the profile of LGU revenue and expenditure patterns, and to measure improved
constituency welfare via improved service delivery using local finance data, as follows:
Type 1: Good Revenue; Good Expenditure; Type 3: Poor Revenue; Good Expenditure; and
Type 2: Good Revenue; Poor Expenditure; Type 4: Poor Revenue; Poor Expenditure.
158
FORMS AND ANNEXES
Annex B
Detailed Financial and Non-Financial Indicators, Key Result Areas (KRAs),

Parameters, Benchmark and Scoring System for the LGU FSS
A. Financial (Quantitative) Indicators- 90%. The following KRAs and scores shall be
used:
No. KRA Score
1 Revenue Generation Capacity 60
2 Local Collection Growth 10
3 Expenditure Management 20
Total 90
1. Revenue Generation Capacity (60 points). The total weight of this KRA shall be
distributed to six (6) sub-KRAS, namely: (i) Regular Income Level, (ii) Local Revenue
Level, (iii) Local Revenue Growth, (iv} Dependence on Locally Sourced Income, (v)
Dependence on IRA, and (vi) Dependence on Other Shares from National Tax Collection.
1.1. Regular Income Level (5 points) 1.2. Local Revenue Level (10 points)
Parameter Rating Weight Parameter Rating Weight
Mean+50% Very Good 5 Mean+50% Very Good 5
Mean+25% Good 4 Mean+25% Good 4
Mean Fair 3 Mean Fair 3
Needs Needs
Mean-25% 2 Mean-25% 2
Improvement Improvement
Mean-50% Poor 1 Mean-50% Poor 1
Maximum Score 5 Maximum Score 5
1.3. Local Revenue Growth (20 points)

Parameter Rating Weight
>20% 20
>10% 15
Actual Growth >5% 10
>0% 5
<0% 0
Maximum Score 20
1.4. Dependence on Locally Sourced Income (10 points)

P >=20%; C >=50% Very Good 10
P >=15% but <20%; C >=40% but <50% Good 8
P>=10% but <15%; C >=30% but <40% Fair 6
Needs
P >=5% but <10%; C >=20% but 30% 4
Improvement
P >=0% but <5%; C >=0% but <20% Poor 2
Maximum Score 10
159
LTOM, 2ND EDITION
1.5. Dependence on IRA (10 points)

P <75%; C <50% Very Low 10
P >=75% but <80%; C >=50% but <60% Low 8
P >=80% but <85%; C >=60% but <70% Fair 6
P >=85% but <90%; C >=70% but 80% HIgh 4
P >90%; C >80% Very High 2

Maximum Score 10
1.6. Dependence on Other Shares from National Tax Collection (5 points)

<10% Very Low 5
>=10% but <15% Low 4
>=15% but <30% Fair 3
30% High 2
Maximum Score 10
2. Local Collection Growth (10 points). The total weight of this KRA shall be distributed to
the two (2) KRAs, namely: (i) Tax Revenues, and (ii) Non-Tax Revenues.
2.1. Tax Revenues (5 points) 2.2. Non-Tax Revenues (5 points)

>20% 5 >20% 5
>10% 4 >10% 4
Actual Growth >5% 3 Actual Growth >5% 3
>0% 2 >0% 2
<0% 1 <0% 1
Maximum Score 5 Maximum Score 5
3. Expenditure Management (20 points). This KRA focuses on the expenditure profile of
LGUs and measures utilization of funds according to statutory limitations. The total weight
of this indicator shall be distributed to the four (4) sub-KRAs, namely: (i) Expenditure per
Capita, (ii) Use of IRA for Local Development Projects, (iii) Limitation on Expenditure for
Personal Services and (iv) Limitation on Debt Service.
3.1. Expenditure Per Capita (5 points) 3.2. Use of IRA for Local Development
Mean+50% Very High 5 >20% Passed 5
Mean+25% High 4 <20% Failed 0
Mean Fair 3 Maximum Score 5
Mean-25% Low 2
Mean-50% Very Low 1
Maximum Score 5
160
FORMS AND ANNEXES
Annex B
3.3. Limitation on Expenditure on 3.4. Limitation on Debt Service (5 points)

Personal Services (5 points)

<= 45% (H); >20% Passed 5
Passed 5
<=55% (L) <20% Failed 0
>= 45% (H); Maximum Score 5
Failed 0
>=55% (L)
Maximum Score 5
B. Non-Financial (Qualitative) Indicators -100/4. The following KRAs and scores shall
be used:
No. KRA Score

4 Submission of Timely and Accurate eSRE 4
Regular Updating of SMV and Conduct
5 3
of General Revision of Property Assessments
6 Submission ofTimely QRRPA 3
Total 10
1. Submission of Timely and Accurate eSRE (4 points)

Timely and No Rejection Compliant 4
Timely with Rejection; or No Rejection but not Timely Non-Compliant 2
No Report Submitted No Report 0
Maximum Score 4
2. Regular Updating of SMV and Conduct of General Revision of Property

Assessments (3 points)

SMV is Current and Effective Compliant 3
SMV is Outdated by at Least 3 Years Non-Compliant 0
Maximum Score 3
3. Submission of Timely QRRPA (3 points)

Complete according to form Compliant 3
Incomplete according to form Non-Compliant 1.5
No Report Submitted No Report 0
Maximum Score 3
C. Adjustments for Municipal FSS. In the case of municipalities, the Non-Financial (Qualitative)
Indicator shall only pertain to Submission ofTimely and Accurate eSRE Reports, in relation to
DOF DO No. 8-2011, as amended, which shall have a weight of 10 points.
161
LTOM, 2ND EDITION
Annex B
D. Summary of Indicators. Below is the summary of the two (2) indicators and six (6) KRAs:
For Provinces and Cities

Maximum
Maximum
KRAs Weight Weighted
Score
Score
A. Financial 1. Revenue Generation Capacity 60
(Quantitative) 2. Local Collection Growth 10 90% 90 points
Indicators
3. Expenditure Management 20
B. Non- 4. SRE Compliance 40
Financial 5. SMV Updating 30 10% 10 points
(Qualitative)
6. QRRPA Compliance 30
Indicators
Total 100% 100 points
For Municipalities
Maximum
Maximum
KRAs Weight Weighted
Score
Score
A. Financial 1. Revenue Generation Capacity 60
(Quantitative) 2. Local Collection Growth 10 90% 90 points
Indicators
3. Expenditure Management 20
B. Non-
Financial
4. SRE Compliance 10 10% 10 points
(Qualitative)
Indicators
Total 100% 100 points
162
FORMS AND ANNEXES
Annex C
DEPARTMENT OF FINANCE I BUREAU OF LOCAL GOVERNMENT FINANCE
LGU Fiscal Sustainability Scorecard for Provinces and Cities1

NAME OF -PROVINCE/CITY/MUNICIPALITY INCOME CLASSIFICATION
Key Result Max Year 1 Year 2 Year 3

Indicator
Area Score Rating Score Rating Score Rating Score
1.1 Regular income level 2
5
1.2 Local revenue level 3
10
1. Revenue 1.3 Local revenue growth 20
Generation 1.4 Dependence on locally
10
Capacity sourced income4
1.5 Dependence on IRA 10
(60 points)
1.6 Dependence on Other
Shares from National Tax 5
Collection
2.1 Tax Revenues
2.1.1 Real property tax
(Basic) 5
2. Local 2.1.2 Tax on Business
Collection 2.1.3 Other Taxes
Growth
2.2 Non-Tax Revenues
(10 points) 2.2.1 Regulatory Fees
2.2.2 User/Service 5
Charges
2.2.3 Econ. Enterprise
3.1 Total Expenditure Per
5
Capita5
3.2 Use of IRA for Local
3. Expenditure 5
Development Projects6
Management
3.3 Limitation on
(20 points) Expenditure 5
for Personal Services7
3.4 Limitation on Debt
5
Service8
SUB-TOTAL: QUANTITATIVE INDICATORS
90
(90%)
4. Submission of Timely and Accurate
Statement of Receipts and Expenditures, 4
per DO 8-2011, as amended
5. Regular Updating of Schedule of Market
Values and Conduct of General Revision of
Property Assessment per Sec. 219 of the 3
Local Government Code and DOF- DILG
Joint Memorandum Circular No. 2010-01
163
LTOM, 2ND EDITION

Indicator
Quarterly Report on Real Property 3
Assessment (QRRPA)
SUB-TOTAL: QUALITATIVE INDICATORS
10
(90%)
OVERALL SCORE9 100
OVERALL RATING
DATA SOURCES: LGU Treasurer’s Electronic Statement of Receipts and Expenditures (BLGF
run date of ________ _, LGU Assessor’s Quarterly Reports on Real Property Assessment for the
applicable years, and approved LGU Schedule of Market Values
• Rating scheme for KRAs 1.1, 1.2, 1.4, 1.5 and 1.6 was based on performance according to income classification
"in relation to average performance of LG Us within the same income
classification. NI= Needs Improvement
'Total regular Income is the sum of locally sourced income (excluding SEF), current year's IRA+ other shares from
national tax collection. Other Income/receipts were not considered
due to reporting errors.
• Total revenues collected from real property tax (basic), business tax, other taxes, regulatory fees, user charges,
and income from economic enterprise.
•%share of local revenues (excluding Other Receipts) to total regular income
• Based on __ Census, with __ % projected annual growth for FY __ .
• At least 20% of IRA should be utilized for local development projects (LGC Sec. 287)
, Not to exceed 45% of the annual regular income realized in the next preceding fiscal year for 1st - 3rd Income
class LGUs or 55% for 4th or lower Income dass LGUs (LGC Sec. 325a)
• Expenditures for debt servicing not to exceed 20% of the regular Income for the fiscal year (LGC Sec. 324a)
• Based on the weighted score for all quantitative (KRAs 1, 2 & 3) and qualitative (KRAs 4, 5 & 6) Indicators: 100%
= 90% Quantitative KRAs + 10% Qualitative KRAs
• Re-computed based on the latest FY __ report per BLGF run date of _____ .
164
FORMS AND ANNEXES
Annex C
Annex A· Detailed Report

LGU Name:
Income Class: 2010 Population
FY Covered: 2015 Population
Indicator/Item Year 1 +/-YoY Year 2 +/- YoY Year 3 +/-YoY

1. Regular Income
Locally Sourced Income
% Share to Regular Income
Internal Revenue Allotment (Current)
Other Shares from Nat’I Tax Collection
2. Local Revenue
Tax Revenues
Real property tax (Basic)
Tax on Business
Other Taxes
Non-tax Revenues
Regulatory Fees
User/Service Charges
Income from Econ. Enterprise
3. Internal Revenue Allotment Current
4. Other Shares from Nat’I Tax Collection

Share from Economic Zone
Share from EVAT
Share from National Wealth
Share from PAGCOR/PCSO/Lotto
Share from Tobacco Excise Tax
5. Total Expenditures (with SEF)

General Public Services
per Capita
Economic Services
per Capita
Social Services
per Capita
Education
per Capita
165
LTOM, 2ND EDITION

Health
per Capita
Labor
per Capita
Housing
per Capita
Debt Service
6. Total Expenditures per Capita

Population/Projected Population
7. Utilization of IRA for Local Development

Projects
20% Expenditure
8. Personal Services (PS)

PS-to-Total Expenditures Ratio
9. Total Debt Service

Debt-to-Regular Income Ratio
Notes on Rating System Used in the Preliminary Scorecard:

Regular Income and Locally Sourced Income were assessed
according to Income Class, with the following scale:
Very Good= 50% higher than the average value (Dependence on locally sourced income was assessed
Good = 25% higher thin the average value
using the same scale but on per LGU type basis)
Fair= Average
Needs Improvement= 25% lower than the average value
Total Expenditure per Capita was assessed according
Poor= 50% lower than the average value
to LGU Type
IRA Dependence was assessed according to LGU Type
Very High= 50% higher than average value
Very Low= Less than 50%
High= 25% higher than average value
Low= Greater than 50% but less then 60%
Fair= Average dependence for municipalities: 60%-70% Fair= Average
High= Greater than 70% but less than 80% Low= 25% lower than average value
Very High= Greater than 80% Very Low= 50% lower than average value
Use of IRA for Local Dev’t Projects: PASSED = Ratio is greater than or equal to 20% else, FAILED
Limitation on PS Expenditure : PASSED: <=45% for 1st - 3rd Class LGUs, <=55% for 4th to lower income class LGUs;
else FAILED
Debt Service Ratio: PASSED: Expenditures for debt servicing is less than or equal to 20% of regular Income; else, FAILED
166
FORMS AND ANNEXES
Annex C
DEPARTMENT OF FINANCE I BUREAU OF LOCAL GOVERNMENT FINANCE
LGU Fiscal Sustainability Scorecard for Provinces and Cities1

NAME OF -PROVINCE/CITY/MUNICIPALITY INCOME CLASSIFICATION

Indicator
1.1 Regular income level2 5
1.2 Local revenue level3 10
1. Revenue 1.3 Local revenue growth 20
Generation 1.4 Dependence on locally
10
Capacity sourced income4
1.5 Dependence on IRA 10
(60 points)
1.6 Dependence on Other
Shares from National Tax 5
Collection
2.1 Tax Revenues
2.1.1 Real property tax
(Basic) 5
2. Local 2.1.2 Tax on Business
Collection 2.1.3 Other Taxes
Growth
2.2 Non-Tax Revenues
(10 points) 2.2.1 Regulatory Fees
2.2.2 User/Service 5
Charges
2.2.3 Econ. Enterprise
3.1 Total Expenditure Per
5
Capita5
3. Expenditure 3.2 Use of IRA for Local 5
Management Development Projects6
3.3 Limitation on Expenditure
(20 points) 5
for Personal Services7
3.4 Limitation on Debt
5
Service8
SUB-TOTAL: QUANTITATIVE INDICATORS
90
(90%)
167
LTOM, 2ND EDITION

Indicator
Statement of Receipts and Expenditures, 10
per DO 8-2011, as amended
SUB-TOTAL: QUALITATIVE INDICATORS
10
(90%)
OVERALL SCORE9 100
OVERALL RATING
DATA SOURCE: LGU Treasurer’s Electronic Statement of Receipts and Expenditures (BLGF run
date of _______)
• Rating scheme for KRAs 1.1, 1.2, 1.4, 1.5 and 1.6 was based on performance according to income classification
"in relation to average performance of LG Us within the same income
classification. NI= Needs Improvement
'Total regular Income is the sum of locally sourced income (excluding SEF), current year's IRA+ other shares from
national tax collection. Other Income/receipts were not considered
due to reporting errors.
• Total revenues collected from real property tax (basic), business tax, other taxes, regulatory fees, user charges,
and income from economic enterprise.
•%share of local revenues (excluding Other Receipts) to total regular income
• Based on __ Census, with __ % projected annual growth for FY __ .
• At least 20% of IRA should be utilized for local development projects (LGC Sec. 287)
, Not to exceed 45% of the annual regular income realized in the next preceding fiscal year for 1st - 3rd Income
class LGUs or 55% for 4th or lower Income dass LGUs (LGC Sec. 325a)
• Expenditures for debt servicing not to exceed 20% of the regular Income for the fiscal year (LGC Sec. 324a)
• Based on the weighted score for all quantitative (KRAs 1, 2 & 3) and qualitative (KRAs 4, 5 & 6) Indicators: 100%
= 90% Quantitative KRAs + 10% Qualitative KRAs
• Re-computed based on the latest FY __ report per BLGF run date of _____ .
168
FORMS AND ANNEXES
Annex D
Annex A· Detailed Report

LGU Name:
Income Class: 2010 Population
FY Covered: 2015 Population

1. Regular Income
Locally Sourced Income
Internal Revenue Allotment (Current)
Other Shares from Nat’I Tax Collection
2. Local Revenue
Tax Revenues
Real property tax (Basic)
Tax on Business
Other Taxes
Non-tax Revenues
Regulatory Fees
User/Service Charges
Income from Econ. Enterprise
3. Internal Revenue Allotment Current
4. Other Shares from Nat’I Tax Collection

Share from Economic Zone
Share from EVAT
Share from National Wealth
Share from PAGCOR/PCSO/Lotto
Share from Tobacco Excise Tax
5. Total Expenditures (with SEF)

General Public Services
per Capita
Economic Services
per Capita
Social Services
per Capita
Education
per Capita
169
LTOM, 2ND EDITION

Health
per Capita
Labor
per Capita
Housing
per Capita
Debt Service
1. Total Expenditures per Capita

Population/Projected Population
2. Utilization of IRA for Local Development

Projects
20% Expenditure
3. Personal Services (PS)

PS-to-Total Expenditures Ratio
4. Total Debt Service

Debt-to-Regular Income Ratio
Notes on Rating System Used in the Preliminary Scorecard:

Regular Income and Locally Sourced Income were assessed
according to Income Class, with the following scale:
Very Good= 50% higher than the average value (Dependence on locally sourced income was assessed
Good = 25% higher thin the average value
using the same scale but on per LGU type basis)
Fair= Average
Needs Improvement= 25% lower than the average value
Total Expenditure per Capita was assessed according
Poor= 50% lower than the average value
to LGU Type
IRA Dependence was assessed according to LGU Type
Very High= 50% higher than average value
Very Low= Less than 50%
High= 25% higher than average value
Low= Greater than 50% but less then 60%
Fair= Average dependence for municipalities: 60%-70% Fair= Average
High= Greater than 70% but less than 80% Low= 25% lower than average value
Very High= Greater than 80% Very Low= 50% lower than average value
Use of IRA for Local Dev’t Projects: PASSED = Ratio is greater than or equal to 20% else, FAILED
Limitation on PS Expenditure : PASSED: <=45% for 1st - 3rd Class LGUs, <=55% for 4th to lower income class LGUs;
else FAILED
Debt Service Ratio: PASSED: Expenditures for debt servicing is less than or equal to 20% of regular Income; else, FAILED
170
FORMS AND ANNEXES
ANNEX 8
Manila 1004
SUBJECT: PERFORMANCE STANDARDS FOR LOCAL TREASURERS

AND ASSISTANT TREASURERS
WHEREAS, the Department aims to instill a results-oriented performance culture

with a high level of professionalism and excellence among local treasurers and assistant
treasurers so that they discharge their duties and responsibilities competently and efficiently,
and the performance of their shared mandate and responsibility contribute at all times to good
local fiscal governance;
WHEREAS, consistent with the policies and guidelines of the Civil Service Commission,
a regular, output-oriented, and performance-based appraisal system for local treasurers and
assistant treasurers is necessary towards effective supervision of local treasury operations in
the local governments by the Department;
WHEREAS, the Secretary of Finance has appointing and disciplining authority over
all provincial, city and municipal treasurers and assistant treasurers, pursuant to Sec. 470 and
Sec. 471 of Republic Act No. 7160 (Local Government Code):
NOW, THEREFORE, in consideration of the foregoing premises, the Performance

Standards and Evaluation System for Local Treasurers, hereinafter referred to as
“Performance Standards”, and other relevant guidelines are hereby established for adoption
and implementation by the Bureau of Local Government Finance (BLGF):
Section 1. Purpose. The Performance Standards shall set the criteria and system
on the regular performance appraisal of local treasurers and assistant treasurers. It is the
goal of the Department to evaluate the level of competency, proficiency, professionalism and
productivity of all local treasurers so that their knowledge, skill sets, and strategies are attuned
to the strategic directions and priorities, particularly on local government fiscal and financial
management, of the Department.
Section 2. Policy Guidelines. The Performance Standards shall be an integral part

of the human resource management and development strategy of the Department to build
and sustain a results-oriented performance and professional culture among local treasurers
and assistant treasurers. As such, it shall be used as basis for purposes of appointment and
other personnel action, such as promotion, renewal of designation, and extension of service,
accountability assessment, awards and recognitions, capacity building interventions, among
others, pursuant to existing rules and regulations. Toward this end, there shall be a regular
monitoring and performance evaluation of all local treasurers and assistant treasurers, to be
based on objectively verifiable indicators and established guidelines, supported by appropriate
management and information systems, and to be undertaken by the BLGF in a transparent,
impartial, open, and synchronized process. Local treasurers and assistant treasurers who fail
to meet the minimum standards shall be given assistance to improve. If the performance of a
local treasurer or assistant treasurer remains unacceptable, despite the opportunity given, the
171
LTOM, 2ND EDITION
BLGF shall institute the appropriate administrative action. In no case shall these performance
standards and guidelines engender solicitation of favors or impose undue patronage on local
treasurers, assistant treasurers or any officials and employees of the Department.
Section 3. Scope. The policy to undertake a regular performance evaluation through

Performance Standards shall apply to all provincial, city, and municipal treasurers and
assistant treasurers, whether permanent or designate.
Section 4. Parameters for Evaluation. The Performance Standards shall consist

of two (2) key results areas, namely, the Operational Performance Goals (OPGs), which
constitute 70 percent of the total score, and the Competency Performance Goals (CPGs),
which constitute the remaining 30 percent.
4.1. Operational Performance Goals (OPGs) - 70%. The following OPG indicators
shall measure the outputs and outcomes of local treasurers in local revenue generation and
fund management:
No. Indicator Points Weighted Score

1 Local Collection Efficiency 35 24.5
2 Stable and reliable local revenue orowth 20 14.0
3 Optimum fund manaqement 15 10.5
4 Institution of administrative and judicial
10 7.0
remedies
5 Reportorial compliance with DOF
10 7.0
requirements
6 Compliance with COA rules and requlations 5 3.5
7 Cost effective local revenue collection 5 3.5
Total 100 70.0
4.2. Competency Performance Goals (CPGs) - 30%. The following CPG indicators
shall measure the behavioral and other non-technical dimensions in the work of local
treasurers:
No. Indicator Points Weighted Score

1 Code of conduct and ethical standards 40 12.0
2 Capacity buildinq and professional
30 9.0
development
3 Professional recoqnitlons and achievements 15 4.5
4 Office management tools and support
10 3.0
system/s
5 Use of non-traditional collection strateqies 5 1.5
Total 100 30.0
Section 5. Indicators for OPGs. To operationalize the OPG indicators, the following
specific benchmarks, formula and other parameters shall be adopted:
5.1. Local Collection Efficiency (35 points). This indicator measures the collection
of current and delinquent local revenues based on actual collections vis-a-vis the respective
targets in all local revenue areas. The total weight of this indicator shall be distributed to the
four major local revenue sources, namely: real property tax, business tax, regulatory fees and
service/user charges (hereinafter referred to as “fees and charges”), and business income
172
FORMS AND ANNEXES
from economic enterprises (hereinafter referred to as “economic enterprise”).
The weight assignment is further distributed according to the revenue taxing powers of LGUs,
and the historical performance of the four revenue sources for each level of LGU:
5.1.1. If the LGU is operating a local economic enterprise, the standard and weight
distribution to be adopted shall be:
Benchmark: 85% Collection of target in each local revenue source

Benchmark scoring by revenue source: >100% = 1; >95% but <100% = 0.75; >90% but
<95% = 0.50; >85% but <90% = 0.25; <85% = 0
Formula: Collection Efficiency = (Collection/Tarqet) x 100%
Computation: Formula to be applied per local revenue source; benchmark score to be
summed up to qet total score
Data Source: Statement of Receipts and Expenditures; Quarterly Report on Real Property
Assessments (for real property tax only)
Weight Distribution (Points)
Revenue Source Province City Municipality
Real Property Tax 14 12 11
Business and Other Taxes 6 17 10
Fees and Charges 10 3 7
Economic Enterprise 5 3 7
Total 35 35 35
5.1.2. If the LGU is not operating a local economic enterprise, the standard and weight
Benchmark: 85% Collection of target in each local revenue source

<95% = 0.50; >85% but <90% = 0.25; <85% = 0
Formula: Collection Efficiency = (Collection/Tarqet) x 100%
Computation: Formula to be applied per local revenue source and summed up to get total
score
Data Source: Statement of Receipts and Expenditures; Quarterly Report on Real Property
Assessments (for real property tax only)
Total 35 35 35
5.1.3. Target and Collection Efficiency Parameters. In determining the targets and in
computing the collection efficiency of local revenue sources, the following guidelines shall be
adopted:
5.1.3.1. Real Property Tax (RPT). For purposes of OPG 1, real property tax collection
173
LTOM, 2ND EDITION
shall pertain to receipts from basic real property tax, and Special Education Fund,
including collections from current and prior year penalties and properties acquired by
the local government for want of bidder. In determining the RPT target, the current
year collectibles and the cumulative collectible delinquencies for the last five (5) years
only, based on the Quarterly Report on Real Property Assessments, as reported by
the local assessors shall be computed. The parameters to be adopted in determining
the target, collections, and collection efficiency shall be:
Real Property Tax
Item Formula
Collection RPT Current Year Collection+ Prior Year (Basic)+ Prior Year
Penalty (Basic)+ Prior Year (SEF) + Prior Year Penalty (SEF)
Target (Total Current Collectibles x 80%) +
(Cumulative Five-Year Delinquencies x 35%)
Efficiency Collection/ Target
5.1.3.2. Business and Other Taxes, Fees and Charges, and Income from Economic
Enterprise. The targets/collectibles for business and other taxes, regulatory fees, and
service/user charges, and income from economic enterprise shall be determined by
the BLGF using an annual regional Incremental Factor, to be based on the prior year’s
gross regional domestic product (GROP), as determined by the National Economic
and Development Authority, and prior year’s inflation rate as may be applicable to
Metro Manila or other areas outside Metro Manila. The parameters to be adopted in
determining the target, collections, and collection efficiency shall be:
Business and Other Taxes
Item Formula
Collection Tax on Business (Current Year) + Other Taxes (Current Year)
Target (Tax on Business [Current Year] +
Other taxes (Current Year) x Incremental Factor
Regulatory Fees and and Service/User Charges
Item Formula
Collection Regulatory Fees (Current Year)+ Service/User Charges (Current
Year)
Target (Regulatory Fees [Prior Year] + Service/User Charges [Prior
Yearn x Incremental Factor
Economic Enterprise
Item Formula
Collection Income from Economic Enterprise (Current Year)
Target Income from Economic Enterprise (Prior Year) x Incremental
Factor
174
FORMS AND ANNEXES
5.1.3.3. Issuance of Targets. The BLGF shall issue local revenue targets to all local
treasurers not later than May 31 every year.
5.1.3.4. Concurrence of Local Treasurers with the BLGF Targets. Upon issuance of
the local revenue targets, local treasurers may request for adjustment by reason of
force majeure, civil disturbance, natural calamity or any cause or circumstance, which
legally prevents the treasurer from enforcing collection. If no adjustment is requested
and approved by the BLGF within thirty (30) days upon issuance of the targets. the
original targets, as issued, shall be adopted as basis for computing OPG 1.
5.2. Stable and reliable level of revenue growth (20 points). This indicator measures
the efforts of local treasurers in ensuring stable and progressive growth in local revenue
collections. Growth is measured based on the nominal increase in the immediately preceding
fiscal year’s collections in all local revenue areas. Similar to OPG 1, the total weight of this
indicator shall be distributed to the four major local revenue sources, namely: real property tax,
business tax, fees and charges, and economic enterprise. The weight assignment is further
distributed according to the revenue taxing powers of LGUs, and the historical performance of
the four revenue sources for each level of LGU.
5.2.1. If the LGU is operating a local economic enterprise, the standard and weight
Benchmark: > 0% growth in each local revenue source

<10% = 0.50; >0% but <5% = 0.25; SO%= 0
Formula: Revenue Growth = [(Current Local Revenues/ Previous Year’s Local Revenues)
- 11 x 100%
Computation: Formula to be applied per local revenue source and to be multiplied with
the corresponding weight; benchmark score to be summed up to get total score
Data Source: Statement of Receipts and Expenditures
Total 20 20 20
5.2.2. If the LGU is not operating a local economic enterprise, the standard to be
adopted shall be:

<10% = 0.50; >0% but <5% = 0.25; 50%= 0
Formula: Revenue Growth = [(Current Local Revenues/ Previous Year’s Local Revenues)
- 11 x 100%
Computation: Formula to be applied per local revenue source and to be multiplied with
the corresponding weight; benchmark score to be summed up to get total score
175
LTOM, 2ND EDITION

Total 20 20 20
5.3. Optimum Fund Management - General Fund and Special Education Fund (15
points). This indicator measures the management of the cash flow for payment of obligations
and in optimizing fund utilization and managing expenditures to ensure that released allotments
are adequately covered by available cash and/or future collections. This indicator, accounts
for the net ending cash balance, together with the total receipts from all fund sources, less the
total expenditures for the current fiscal year. The standard to be adopted shall be:
Benchmark: > Current Year Expenditures (Net Surplus)

Benchmark scoring: Net Surplus= 1; Net Deficit= 0
Formula: Net Surplus/Net Deficit= (Cash Balance Beginning +[Total Receipts Excluding
Loans, Grants & Aids) - (Total Expenditures Excluding Debt Service & Disbursement from
Grants & Aids)
Computation: Multiply weight with the benchmark score
Indicator Score Total
Surplus 15 X 1 15
Deficit 15 X 0 0
5.4. Institution of Administrative and Judicial Remedies (10 points). This indicator
measures the treasurer’s practical use of the available civil remedies for the collection of any
delinquent local tax, fee, charge, or other revenues within the LGU jurisdiction. Under the
Local Government Code, local treasurers are mandated to institute administrative (distraint or
levy) and/or judicial actions in aid of tax collection enforcement. Five (5) points shall be given
each for the institution of remedies for the collection of delinquent real property tax and for
other local taxes.
5.4.1. For the collection of delinquencies in real property tax, the standard to be
adopted shall be:
Benchmark: Issuance of warrant of levy OR Endorsement to the LGU legal officer of the
institution of civil action
Benchmark scoring:
Warrant/s of levy issued = 1 Endorsement to legal officer = 1
No warrant of levy issued = 0 OR
No endorsement to leqal officer = 0
Formula: Score= Benchmark score x 5 points
Computation: Rating is not dependent on volume of warrants issued or endorsement/s
made to the LGU leqal officer.
Data Source: Certified copy of warrant/s of levy sent to taxpayer; OR Certified copy of
endorsement of treasurer to the LGU legal officer
176
FORMS AND ANNEXES
5.4.2. In case the local treasurer has collected already at least 90% of the total current
year collectibles, the full 5 points shall be credited with or without availing of administrative or
judicial remedies for RPT collection.
5.4.3. For the collection of delinquencies in other local taxes, the standard to be
adopted shall be:
Benchmark: Issuance of warrant of distraint AND Endorsement to the LGU legal officer
of the institution of civil action
Benchmark scoring: A
Warrant/s of distraint issued = 0.5 N Endorsement to legal officer = 0.5
No warrant of distraint issued = 0 D No endorsement to legal officer= 0
Formula: Score = Benchmark score x 5 points

Computation: Sum up rating per action; Rating is not dependent on volume of warrants
issued or endorsement/s made to the LGU legal officer.
Data Source: Certified copy of warrant/s of distraint sent to taxpayer AND Certified copy
of endorsement of treasurer to the LGU legal officer
5.5. Reportorial compliance with DOF requirements (10 points). This indicator
measures compliance with reportorial duties and responsibilities, as required by the
Department, namely, the SRE (DOF DOs 08-2011 and 034- 2014), the Certified List of Real
Property Tax (RPT) Delinquencies (DOF DO 10-08), the Statement of Indebtedness (DOF
LFC 1-2012), and the LGU-BIR Information Sharing (EO 646 and DOF DO 9-08). It shall be
the shared duty of the local treasurer and assistant treasurer to ensure compliance with such
reportorial accountabilities. The standard to be adopted shall be:

Benchmark scoring:
Report Weight (Points) Benchmark
1. SRE 5
2. Certified List of RPT Delinquencies 3 Complete= 1
3. Statement of Indebtedness 1 Incomplete = 0
4. LGU-BIR Information Sharinq 1
Formula: Score = Benchmark score x Weight per Report
Remarks: Correspondents weighted scores to be summed up.
Data Source/s: BLGF Central and/or Regional Offices
5.6. Compliance with COA Rules and Regulations (5 points). This indicator
accounts for the involvement in any irregular or illegal activities of the local treasurer or
assistant treasurer that could adversely affect the financial operations of LGUs and that may
lead to the filing of administrative and criminal complaint/s. This shall be based on any adverse
findings of the Commission on Audit (COA) for which the local treasurer or assistant treasurer
is primarily responsible. The standard to be adopted shall be:
177
LTOM, 2ND EDITION
Benchmark: No adverse findinq/s from COA

Benchmark scoring: No adverse findings = 1; With adverse findings = 0
Formula: Score = Benchmark score x Weight
Computation: To be based on the Annual Audit Report (AAR) of COA. Such basis shall
be the AAR immediately preceding the rating period/year or the latest available AAR of the
LGU.
Data Source: BLGF copy of the COA AAR
5.7. Cost Effective Local Revenue Collection (5 points). This indicator measures
the ratio of total cost of collection and the actual local revenues collected to determine the
cost effectiveness of the local treasurer and assistant treasurer in local revenue collection.
The ratio determines whether the LGU is subsidizing the cost of collecting the tax, or the tax
is contributing to the revenue coffers of the LGU. The standard to be adopted shall be:

Benchmark scoring:
Ratio Score Weight Total Score
<10% 1 5
10% but < 15% 0.75 3.75
5
15% but < 20% 0.5 2.5
>20 0 0
Formula: Cost to Collect Ratio = (Total Expenditures of Treasurer’s Office/Total Local
Revenues) x 100
Totai Actual Expenditures = Personal Services (PS) of the Treasurer’s Office+ Maintenance
and Other Operating Expenses (MOOE) of the Treasurer’s Office
Total Local Revenues = Tax Revenues+ (Non-Tax Revenues - Other Receipts)

Computation: Multiply weight with the benchmark score according to the corresponding
cost to collect ratio.
5.7.1. Adjustment in Expenditures Data. The local treasurer or assistant treasurer

concerned may request for adjustment in the expenditures data used in the evaluation.
Subject to validation and approval by the BLGF, MOOE expenditures may be adjusted to
exclude any or all of (i) Interest Expenses; (ii) Subsidies to NGAs, LGUs, or GOCCs; (iii)
Insurance Expenses; (iv) Fidelity Bond Premiums; (v) Election-related expenditures; and (vi)
Other expenditures appropriated in the Treasurer’s Office, but were actually used for other
LGU office/s.
Section 6. Indicators for CPGs. To operationalize the indicators for CPGs,

the following specific benchmarks, formula and other parameters shall be adopted:
6.1. Code of conduct and ethical standards (40 points). This indicator determines
the compliance of local treasurers and assistant treasurers with the code of conduct and
ethical standards of public officials and employees pursuant to Republic Act No. 6713. Full
points shall be given if no disciplinary actions/penalties, namely, (i) reprimand, (ii) fine, or (iii)
suspension (final and executory), have been meted by judicial and quasi-judicial bodies for
offenses or violations of existing laws, rules and regulations. The standard to be used shall be:
178
FORMS AND ANNEXES
Benchmark: No adverse findinq/s from COA

Benchmark scoring:
10 points 10 points 20 points
No Reprimand = 1 No Fine = 1 No Suspension = 1
Reprimanded = 0 Fined = 0 Suspended = 0
Remarks: Data to be based on the immediately preceding year’s records.
Computation: Multiply weight (by sanction) with the benchmark score.
Data Source: BLGF Central/Regional Offices
6.2. Capacity building and professional development (30 points). This indicator
measures the capacity building and development activities availed of or engaged in by local
treasurers and assistant treasurers to improve their technical proficiency, competence, and
skills from duly recognized and bona fide organizations. Such trainings shall be categorized into
(i) Core Trainings, or those trainings, seminars, and workshops that are directly related to fiscal
and financial management, and (ii) Non-Core Trainings or those conferences, conventions,
workshops, and similar activities that enhance leadership, personality, management, and
other skills required to improve competency. The standard to be used shall be:
Benchmark: Core Trainings > 32 hours; Non- Core Trainings > 16 hours
Benchmark scoring:
Core Trainings - 20 points Non-Core Trainings - 10 Points
No. of Hours Weiqht Score No. of Hours Weiqht Score
>80 1 20 > 40 1 10
> 64 but< 80 0.8 16 > 32 but< 40 0.8 8
> 48 but< 64 0.6 12 > 24 but< 32 0.6 6
> 32 but< 48 0.5 10 > 16 but< 24 0.5 5
< 32 0 0 <16 0 0
Remarks: Data to be based on the immediately preceding year’s certified copy of training
certificates to be presented by local treasurers/assistant treasurers.
Computation: Multiply weight (according to the number total training hours by area) with
the benchmark score.
Data Source: BLGF Central/Regional Offices
6.3. Professional recognitions and achievements (15 points). This indicator

accounts for the annual recognitions, citations and other similar awards conferred to local
treasurers and assistant treasurers in at least two (2) areas, namely, (i) LGU awards/
recognitions with direct contribution of the treasurer/assistant treasurers, (ii) those conferred
by government and legitimate private organizations relating to local treasury performance, (iii)
resource speakership or expert engagement outside the local treasury department; (iv) civic
commendations, achievements and other honorific conferment; or (v) individual contribution
to research, published works, engagement in special project of high significance or similar
endeavors involving expertise in local treasury operations. The standard to be used shall be:
179
LTOM, 2ND EDITION
Benchmark: Award/recognition in at least one (1) area

Benchmark scoring:
Indicator Weight Score
Awards in two (2) award areas 1 15
Award in one (1) award area 0.5 7.5
No award in any area 0 0
Remarks: Evaluation to be based on the immediately preceding year’s certified copy of
awards/recognitions/citations submitted to BLGF; Number of awards per area not a factor
to get higher score.
Remarks: Multiply applicable weight (bv indicator) with the benchmark score.
6.4. Office management tools and support system/s (10 points). This indicator
mea sures the adoption of quality management tools and other innovative support system/s
that improve workplace organization, foster efficient records management, improve service
delivery to clientele, enable better customer service experience to taxpayers, maintain
orderliness in office affairs and transactions, among others. Such tools and support systems
may include the (i) 5S office organization method, (ii) manual or computerized records
management system, (iii) integrated information systems, (iv) quality management certification
systems, etc. The standard to be used shall be:
Benchmark: One (1) working management tool or support system, such as, but not limit-
ed to, those enumerated above.
Benchmark scoring:
Two (2) or more workinq systems 1 10
One ( 1 ) workinq system 0.75 7.5
No working support system 0 0
Remarks: Evaluation to be based on actual supervisory/ocular visit by the BLGF, in the case
of city and provincial treasurers’ offices (including the lone municipality in Metro Manila),
and by certification of the Provincial Treasurer, in the case of municipal treasurers’ offices.
Remarks: Multiply applicable weight (bv indicator) with the benchmark score.
6.5. Use of non-traditional collection strategies (5 points). This indicator gives

credit to innovative and non-traditional collection enforcement strategies of local treasurers
and assistant treasurers. Such strategies may include, but not limited to, (i) tax clearance
as requirement for renewal of business permits, (ii) one-stop-shop systems, (iii) local tax
caravans, (iv) use of social and tri-media for tax information campaign, (v) use of electronic
banking to facilitate payment, (vi) awards/tokens for top and prompt taxpayers, (vii) integration
of local tax concepts in the education curriculum, (viii) linkage with other local projects, etc.
These strategies must be legal and included in the plans and programs of the local treasurer.
180
FORMS AND ANNEXES
Benchmark: One (1) non-traditional collection enforcement strategy, such as, but not
limited to those enumerated above.
Benchmark scoring:
Three (3) or more workinq strateqies 1 5
Two (2) more working strategies 0.75 3.75
One (1) more workinq strategy 0.5 2.5
No innovative collection strateqie? 0 0
Remarks: Evaluation to be based on (i) submitted proof/documentation or any evidence
of implementation of such strategies by the local treasurer/assistant treasurer, (ii) through
actual supervisory/ocular visit by the BLGF, in the case of city and provincial treasurers’
offices (including the municipality in Metro Manila), and (iii) by certification of the Provincial
Treasurer, in the case of municipal treasurers’ offices.
Remarks: Multiply applicable weight (per indicator) with the benchmark score.
Section 7. Rating Scheme and Form. There shall be five rating levels based on the
consolidated scores from all performance indicators using the below point rank and adjectival
rating scheme. The results of the Performance Standards shall be issued in the form as
prescribed in Annex A.
Score Adjectival Rating Summary of Performance

> 95 to 100 Level 5 - Outstanding Demonstrates exceptional
performance in all
operational and competency
standards.
> 85 but < 95 Level 4 - Very Satisfactory Exceeds the minimum
standards.
> 75 but < 85 Level 3 - Satisfactory Complies with the minimum
standards.
> 65 but < 75 Level 2 - Unsatisfactory Fails to meet the minimum
operational or competency
standards
< 65 Level 1 - Poor Fails to deliver most or
all of the operational or
competency standards.
Section 8. Coverage of Rating Period. Performance evaluation for local treasurers

and assistant treasurers shall be undertaken annually, and the performance period shall cover
one full fiscal year or from January 1 to December 31. In the event that a local treasurer or
assistant treasurer has not completed one full fiscal year of service, the rating shall be based
on at least six (6) months of service and the parameters for evaluation shall be adjusted
accordingly by the BLGF. No evaluation shall be made for services rendered for less than six
(6) months.
Section 9. Performance Evaluation Cycle. The following stages shall be observed

in the course of the performance evaluation by the BLGF and all other concerned parties:
181
LTOM, 2ND EDITION
Stage 1: Local Revenue Target Setting. With reference to Section 5, Item 1.3, this
stage shall be undertaken from April to May of the fiscal year prior to the start of
the performance period where targets for all local revenues are determined, issued
and validated with the local treasurers. Upon concurrence and acceptance by the
concerned local treasurer and assistant treasurer, such targets shall be deemed final.
Stage 2: Collection Enforcement and Compliance Monitoring. In this stage, the

BLGF shall regularly monitor the plans and programs of local treasurers and assistant
treasurers and provide the necessary technical assistance in support of local treasury
administration and other LGU-set performance goals, as well as the treasurer’s
compliance concerning reportorial obligations, primarily the SRE, actions on the COA
adverse findings (if any}, progress on the institution of collection remedies, continuing
capacity building programs, among others.
Stage 3: Data Validation and Rating. The actual performance evaluation shall begin
in June of the subsequent fiscal year that is subject of the performance evaluation
and shall conclude in October of the same year. As such, the BLGF Central Office
shall first release the preliminary data/results of applicable OPG indicators to all
BLGF Regional Offices no later than the end of June every year. Subsequently, the
BLGF shall notify all local treasurers and assistant treasurers to submit the pertinent
documents required in the OPG and CPG indicators that cannot be generated by the
eSRE system. Within two (2) months after the release of SRE data, the validation
and confirmation of the results of the evaluation shall be completed for approval by
the BLGF. The BLGF may delegate only to the Provincial Treasurers the gathering
and consolidation of documents required from municipal treasurers, but it shall be the
sole duty of the BLGF to rate, determine, and discuss the results of the performance
of all treasurers and assistant treasurers. The Checklist of requirements is attached
as Annex B.
Stage 4: Performance Results Awarding and Intervention Planning. The final

results of the annual performance evaluation shall be released and issued to all
local treasurers and assistant treasurers, as well as to their respective local chief
executives and other concerned parties, every October. The BLGF may award local
treasurers and assistant treasurers in recognition of exceptional performance in their
work. No other performance awards shall be given instituted unless they are linked
with the Performance Standards. In addition, the BLGF shall ensure that appropriate
measures and actions are enforced based on the results of the performance
evaluation, including but not limited to personnel action and intervention development
and planning to address weaknesses and gaps of local treasurers and assistant
treasurers.
Section 10. Performance Evaluation Group. The BLGF shall constitute the
Personnel Evaluation Group (PEG) for Local Treasurers and Assistant Treasurers, under the
Administrative, Financial and Management Service, with counterpart structure in all BLGF
Regional Offices. The PEG shall take charge of all performance planning, programming, and
implementation activities, and action on appeals, to ensure a synchronized and objective
evaluation of all local treasurers and assistant treasurers. Further, the PEG, which shall
be headed by the Executive Director, shall review and recommend for the approval of the
Secretary of Finance all performance evaluation results of local treasurers and assistant
treasurers.
Section 11. Accuracy and Integrity of Evaluation Tools and Data Sources. The
BLGF shall ensure that the data sources, systems and tools, as identified in all the OPG and
CPG indicators, to be used in the performance evaluation of local treasurers and assistant
182
FORMS AND ANNEXES
treasurers are verified, true and accurate. The necessary management information systems,
tools and procedures shall be adopted to ensure timely, accurate and reliable monitoring and
reporting to support the efficient conduct of performance evaluation. The use of falsified data
and evidence of performance shall be subject to the appropriate administrative sanctions.
Section 12. Appeals. Considering that the outcome of the annual performance
evaluation may affect tenure, and other personnel actions, such as promotion and performance
recognition, local treasurers and assistant treasurers have the right to appeal within ten (10)
days upon receipt of the evaluation by the BLGF.
Section 13. Personnel Action and Capacity Building Interventions. The BLGF
shall introduce appropriate capacity building programs and other remedial interventions
based on the results of the performance evaluation, especially for treasurers and assistant
treasurers who receive “Unsatisfactory” and “Poor” performance ratings. In the event that
a local treasurer or assistant treasurer receives “Poor” rating in two consecutive evaluation
periods, the BLGF shall institute the appropriate administrative sanction pursuant to the
Revised Rules on Administrative Cases in the Civil Service.
Section 14. Penalty Clause. Failure to comply with the provisions of this Order
shall be a ground for an administrative sanction for violation of reasonable office rules and
regulations, and neglect of duty for non-compliance with this Order.
Section 15. Repealing Clause. All orders, memoranda, circulars or other issuances
or parts thereof that are inconsistent with this Department Order are hereby deemed repealed
and/or modified accordingly.
Section 16. Separability Clause. If any part of this Department Order is declared by
the courts as unconstitutional or contrary to existing laws, the other parts shall remain in full
force and effect.
Section 17. Effectivity. This Department Order shall take effect immediately upon its
publication in a newspaper of nationwide circulation.
CESAR V. PURISIMA
183
LTOM, 2ND EDITION
-ANNEX A-
Bureau of Local Government Finance
PERFORMANCE STANDARDS EVALUATION

OF LOCAL TREASURERS AND ASSISTANT TREASURERS
For the Fiscal Year ____
Name: ___________________________________ Station: _________________________

Position: _________________________________
Part I: Operational Performance Goals (OPGs)

Indicator Max Score Score Earned
1. Local Collection Efficiency 24.5
2. Stable and reliable local revenue growth 14.0
3. Optimum cash management 10.5
4. Institution of administrative and judicial remedies 7.0
5. Reportorial compliance with DOF requirements 7.0
6. Compliance with COA rules and regulations 3.5
7. Cost effective local revenue collection 3.5
OPG Total Score 70
Part II: Competency Performance Goals (CPGs)

Indicator Max Score Score Earned
1. Code of conduct and ethical standards 12.0
2. Capacity building and professional development 9.0
3. Professional recognition and achievements 4.5
4. Office management tools and support system/s 3.0
5. Use of non-traditional collection strategies 1.5
CPG Total Score 30
Legend
Score Adjectival Rating Total Score
> 95 to 100 Level 5 - Outstanding (I + II)
> 85 to < 95 Level 4 - Very Satisfactory
> 75 to < 85 Level 3 - Satisfactory
Adjectival
> 65 to < 75 Level 2 - Unsatisfactory
Rating
< 65 Level 1 - Poor
Recommending Approval: Conforme:
__________________________________ __________________________________
Name of Signature of RD/ED Name of Signature of Ratee
Approved by:
__________________________________
Issued this __ day of 20___
184
LOCAL TREASURY
OPERATIONS MANUAL
2ND EDITION
Manila, Philippines
ISBN: 978-971-94098-8-5

Telefax: +632 522-8771 / 527-2803

BOOK II
Receipt and Collection of Income, Revenues
and Other Fund Sources
i
TABLE OF CONTENTS
TABLE OF CONTENTS
Section 36. Definition of Terms vi
CHAPTER 1 1
TAXING POWERS OF LOCAL GOVERNMENT UNITS (LGUs)
Section 37. Power of LGUs to Create Sources of Revenue 1
Section 38. Fundamental Principles of Taxing and Other Revenue 1
Raising Powers of LGUs
Section 39. Power of LGUs to Levy Taxes, Fees or Charges 4
Section 40. Authority to Adjust Tax Rates 4
Section 41. Valid Tax Ordinances and Revenue Measures 5
Section 42. Taxing Powers of Provinces 10
Section 43. Taxing Powers of Cities 11
Section 44. Taxing Powers of Municipalities 12
Section 45. Taxing Powers of Municipality within the 12
Metropolitan Manila Area (MMA)
Section 46. Common Limitations on the Taxing Powers of LGUs 13
Section 47. Collection of Taxes 14
CHAPTER 2 16
SOURCES OF INCOME
Section 48. Professional Tax 16
Section 49. Community Tax 18
Section 50. Real Property Tax 21
Section 51. Special Provisions 31
Section 52. Special Education Fund (SEF) 33
Section 53. Special Levy on Idle Lands 34
Section 54. Special Levy on Lands Benefited by Public Work Projects 35
Section 55. Disposition of Proceeds 36
Section 56. Tax on Transfer of Real Property Ownership 38
Section 57. Local Business Tax 39
Section 58. Tax on Sand, Gravel, and Other Quarry Resources 46
Section 59. Tax on Delivery Trucks or Vans 47
Section 60. Amusement Tax 47
Section 61. Franchise Tax 49
Section 62. Tax on Printing and Publication 51
Section 63. Tax Revenues – Fines and Penalties 51
Section 64. Share from Internal Revenue Allotment (IRA) 51
Section 65. Share from Expanded Value Added Tax (VAT) 56
Section 66. Share from National Wealth 60
Section 67. Share in the Proceeds of the Tobacco Excise Tax 66
Section 68. Share from Economic Zones 69
Service 69. Service Income 69
Section 70. Business Income 79
ii
LTOM, 2ND EDITION
Section 71. Share from Philippine Amusement and Gaming 82

Corporations (PAGCOR)
Section 72. Share from Philippine Charity Sweepstakes Office (PCSO) 82
Section 73. Other Source of Income of LGUs 84
Section 74. Local Economic Enterprises (LEEs) 89
Section 75. Establishing and Governing the LEE 89
Section 76. Basic Services and Facilities 90
Section 77. Examples of Government Enterprises 93
Section 78. Private Sector Participation in the Operation 94
and Management of LGU Enterprises
CHAPTER 3 95
COLLECTION PROCEDURES
Section 79. Designation of Collecting Officers 95
Section 80. Prohibition from Holding Other Positions as Cashier 95
or Treasurer
Section 81. Acknowledgment of Collections 95
Section 82. Use of Electronic Official Receipts (eORs) to Acknowledge 96
Collection of Income and Other Receipts of Government
Section 83. Procedures for Handling Collections Received 98
through the Mail
Section 84. Checks Received in Payment for Taxes 98
or Other Indebtedness to the LGU
Section 85. Handling of Dishonored Checks Received in Payment 101
of Taxes and Other Indebtedness to the Government
Section 86. Control of Official Receipts and other Accountable Forms 105
Section 87. Control of Collections 111
Section 88. Deposit of Collections 111
Section 89. Designation of Liquidating Officers 114
Section 90. Reporting for Collections and Deposits 114
Section 91. Receipt and Collection Process 116

Annex 9 JMC No. 2019-01: Guidelines for the Review, Adjustment, 118
Setting and/or Adoption of Reasonable Regulatory Fees
and Charges of Local Government Units
Annex 10 Requirements of a Valid Ordinance 129
Annex 11 Local Revenue Toolkit for Philippine Local Government 131
Units (Annex G of A Local Revenue Toolkit for Philippine
LGUs, Guidelines on Provincial/Local Planning
and Expenditure Management, NEDA/ADB, 2007)
Annex 12 Cashbook (Cash in Treasury) (Annex 19 of MNGAS for LGUs, 137
Volume II)
Annex 13 Cashbook (Cash in Bank) (Annex 20 of MNGAS for LGUs, 138
Volume II)
Annex 14 Cashbook (Cash Advance) (Annex 21 of MNGAS for LGUs, 139
Volume II)
iii
TABLE OF CONTENTS
LTOM Form No. 1 Cashbook (Collector) 140

LTOM Form No. 2 Cashbook [Liquidating Officer (LO)] 141
Annex 15 Notice of Dishonor (COA Revised Cash Examination 142
Manual, 2013)
Annex 16 Report of Accountability for Accountable Forms (RAAF) 143
(Annex 42 of MNGAS for LGUs, Volume II)
Annex 17 Consolidated Report of Accountability for Accountable 145
Forms (CRAAF) (Annex 43 of MNGAS for LGUs, Volume II)
Annex 18 Report of Collections and Deposits (RCD) (Annex 41 of 149
MNGAS for LGUs, Volume II)
Annex 19 DOF Department Circular No. 01-2017 - Amended 151
Guidelines on Authorized Government Depository Banks
Annex 20 BLGF Memorandum Circular No. 07-01-2017 - DOF 157
Department Circular No. 01-2017 (Amended Guidelines on
Authorized Government Depository Banks)
iv
LTOM, 2ND EDITION
INTRODUCTION
LTOM Book II describes and enumerates the taxing powers of provinces, cities, and
municipalities, as well as the sources of revenues to support their operations. This
Book provides relevant provisions and procedures in the collection of revenues and
receipts, as well as illustrations and samples. It also provides illustrations and samples
for better understanding of the flow of processes.
This Book consists of three (3) Chapters including Forms and Annexes, viz:
Chapter 1 Taxing Powers of LGUs
Chapter 2 Sources of Income
Chapter 3 Collection Procedures
v
DEFINITION OF TERMS
SECTION 36. DEFINITION OF TERMS

A. Actual Use refers to the principal purpose for which the property is principally or
predominantly utilized by the person in possession thereof. [Sec. 199 (b), LGC]
B. Agricultural Land refers to land devoted principally to the planting of trees, raising
of crops, livestock and poultry, dairying, salt making, inland fishing and similar
aquacultural activities, and other agricultural activities, commercial or industrial
land. [Sec. 199 (d), LGC]
C. Agricultural Product – includes the yield of the soil, such as corn, rice, wheat, rye,
hay, coconuts, sugarcane, tobacco, root crops, vegetables, fruits, flowers and
their by-products; ordinary salt; all kinds of fish; poultry; and livestock and animal
products, whether in their original form or not.
1. The phrase "whether in their original form or not" refers to the transformation
of said products by the farmer, fisherman, producer or owner through the
application of processes to preserve or otherwise to prepare the said products
for the market such as freezing, drying, salting, smoking, or stripping for
purposes of preserving or otherwise preparing said products for the market.
[Sec. 31 (a), LGC]
2. To be considered an agricultural product whether in its original form or not,
its transformation must have been undertaken by the farmer, fisherman,
producer or owner.
3. Agricultural products, as defined, include those that have undergone not only
simple but even sophisticated processes employing advanced technological
means in packaging like dressed chicken or ground coffee in plastic bags or
styropor or other packaging materials intended to process and prepare the
products for the market.
4. The term "by-products" shall mean those materials which in the cultivation
or processing of an article remain over, and which are still of value and
marketable, like copra cake from copra or molasses from sugar cane.
[Art. 220 (a), IRR, implementing Sec. 131 (a), LGC]
D. Branch or Sales Office refers to a fixed place in a locality which conducts the
operations of the business as an extension of the principal office. However, offices
used only as display areas of the products where no stocks or items are stored
for sale, although orders for the products may be received thereat, are not branch
or sales offices as herein contemplated. A warehouse which accepts orders
and/or issues sales invoices independent of a branch with sales office shall be
considered as a sales office. [Art. 243 (a) (2), IRR implementing Sec. 150, LGC]
E. Charges refer to pecuniary liability, as rents or fees against persons or property.
(Sec. 131 (g), LGC)
F. Experimental Farms refer to agricultural lands utilized by a business or corporation
to conduct studies, test, researches or experiments involving agricultural, agri-
vi
LTOM, 2ND EDITION
business, marine or aquatic, livestock, poultry, dairy and other similar products for
the purpose of improving the quality and quantity of goods or products.
G. Exporter means any person, natural or juridical, licensed to do business in the
Philippines, engaged directly or indirectly in the production, manufacture or trade
of products or services which earns at least fifty percent (50%) of its normal
operating revenues from the sale of its products or services abroad for foreign
currency: Provided, That in the case of services, the same shall be limited to
information technology services, construction services and other services as
defined jointly by the DOF and the DTI. Services rendered by overseas contract
workers are not covered by the definition. (Sec. 4(a), RA 7844 or the Export
Development Act of 1994)
H. Fee means a charge fixed by law or ordinance for the regulation or inspection of
a business or activity. [Sec. 131 (l), LGC]
I. Franchise is a right or privilege, affected with public interest which is conferred
upon private persons or corporations, under such terms and conditions as the
government and its political subdivisions may impose in the interest of public
welfare, security, and safety. [Sec. 131 (m), LGC]
J. Gross Sales or Receipts include the total amount of money or its equivalent
representing the contract price, compensation or service fee, including the
amount charged or materials supplied with the services and deposits or advance
payments actually or contructively received during the taxable quarter for the
services performed or to be performed for another person excluding discounts
if determinable at the time of sales, sales return, excise tax and value-added tax
(VAT). [Sec. 131 (h), LGC]
K. Income refers to all revenues and receipts collected or received forming the gross
accretions of funds of the local government units (LGUs).
L. Principal Office refers to the head or main office of the business appearing in the
pertinent documents submitted to the Securities and Exchange Commission, or
the Department of Trade and Industry (DTI), or other appropriate agencies as the
case may be. [Art. 243 (a) (1), IRR implementing Sec. 150, LGC]
M. Plantation refers to a tract of agricultural land planted to trees or seedlings
whether fruit bearing or not, uniformly spaced or seeded by broadcast methods
or normally arranged to allow highest production. For purposes of this Article,
inland fishing ground shall be considered as plantation. [Art. 243 (a) (4), IRR
implementing Sec. 150, LGC]
N. Receipts refer to income realized from operations and activities of the local
government or are received by it in the exercise of its corporate functions
consisting of charges for services rendered, conveniences furnished, or the price
of a commodity sold, as well as loans, contributions or aids from other entities,
except provisional advances for budgetary purposes. (Sec. 36, Chapter 1, Volume
1, GAAM)
vii
DEFINITION OF TERMS
O. Revenue refers to income derived from the regular system of taxation enforced
under authority of law or ordinance, and, as such, accrues more or less regularly
every year. (Sec. 36, Chapter 1, Volume 1, GAAM)
P. Warehouse refers to a building utilized for the storage of products for sale and
from which goods or merchandise are withdrawn for delivery to customers or
dealers, or by persons acting in behalf of the business. A warehouse that does
not accept orders and/or issue sales invoices as aforementioned shall not be
considered a branch or sales office. [Art. 243 (a) (3), IRR implementing Sec. 150,
LGC]
viii
CHAPTER TAXING POWERS OF THE LOCAL GOVERNMENT
1 UNITS (LGUs)
SECTION 37. POWER OF LGUs TO CREATE SOURCES OF REVENUE

A. Each LGU shall have the power to create its own sources of revenues and to levy
taxes, fees and charges subject to the provisions of the Code, consistent with
the basic policy of local autonomy. Such taxes, fees and charges shall accrue
exclusively to the local governments. (Sec. 129, LGC)
B. The revenue collected pursuant to the provisions of the LGC shall inure solely
to the benefit of, and be subject to disposition by the LGU levying the tax, fee,
charge or other impositions unless otherwise specifically provided in the LGC.
[Sec. 130(d), LGC]
C. 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)
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. (Sec. 305 (d), LGC)
SECTION 38. FUNDAMENTAL PRINCIPLES OF TAXING

AND OTHER REVENUE RAISING POWERS OF LGUs
The following fundamental principles shall govern the exercise of the taxing and other
revenue-raising powers of the LGUs.
A. Taxation shall be uniform in each LGU. [Sec. 130(a), LGC]
1. Equality and uniformity in local taxation means that all taxable articles or
kinds of property of the same class shall be taxed at the same rate within
the territorial jurisdiction of the taxing authority of LGU and not necessarily
in comparison with other units although belonging to the same political
subdivision. In fine, uniformity is required only within the geographical
limitation of the taxing authority (p. 416, Tax Law and Jurisprudence,
Second Edition, Vitug and Acosta). Thus, if the tax is a municipal tax, it
must be uniform throughout the municipality (Notes on Sec. 130, LGC;
p. 20, Philippine Law on Local Government Taxation, Volume 1, Third
Edition, Ursal, 2010). The uniformity required is only within the territorial
jurisdiction of a province, a city, a municipality or a barangay [Art. 219(a),
IRR, implementing Sec. 130(a), LGC].
2. A tax is considered uniform when it operates with the same force and
effect in every place where the subject may be found. Where the statute or
ordinance applies equally to all persons, firms and corporations placed in
similar situations, there is no infringement of the rule on equality. Inequalities
1
TAXING POWERS OF THE LOCAL GOVERNMENT UNITS (LGUs)
which result from the singling out of one particular class, in respect to other
classes, for taxation and exemption infringe no constitutional limitation. (p.
416, Tax Law and Jurisprudence, Second Edition, Vitug and Acosta)
3. Uniformity is not equivalent to equality in taxation (p. 23, Phil. Law on Local
Government Taxation, Volume One, Third Edition, Ursal, 2010). The
Supreme Court ruled, “It is true that the uniformity essential to the valid
exercise of the power of taxation does not require identity or equality under
all circumstances, or negate the authority to classify the object of taxation.
The classification made in the exercise of this authority, to be valid, must,
however, be reasonable and this requirement is not deemed satisfied unless:
a. It is based upon substantial distinctions which make the real differences;
b. These are germane to the purpose of the legislation or ordinance;
c. The classification applies, not only to present conditions, but, also, to
future conditions substantially identical to those of the present; and
d. The classification applies equally to all those who belong to the same
class.”
B. Taxes, fees, charges and other impositions shall:
1. Be equitable and based as far as practicable on the taxpayer’s ability to pay.
[Sec. 130 (b) (1), LGC]
NOTE
Equitability is characterized by equity. It means being fair to all concerned
and that is without prejudice, favor or vigor entailing undue hardship. It is the
word fairness that best describes equitable. If the tax is excessive, it is not
fair. When the tax discriminates, aside from violating the rule of uniformity, it
is not fair. If the tax is in restraint of trade (that is, discourages investors), it
is not fair.
The taxpayer’s ability to pay must be considered. It cannot be absolute or it

cannot be based on a hard and fast rule. Ability to pay is more equated with
the progressive system of taxation, that is, the more you earn, the more tax
you pay. Taxation must be based, as far as practicable, on ability to pay.
(p. 209, Local Government Code, Annotated, Nolledo)
The question as to when a tax is said to be “equitable,” is related to the

distribution of the tax burden itself. Thus, the most equitable tax system
is that which is most closely in conformity with the standards of equity in
the distribution of real income. (p. 24, Philippine Law on Local Government
Taxation, Volume One, Third Edition, Ursal, 2010)
2. Be levied and collected only for public purposes. [Sec.130 (b)(2), LGC]
2
LTOM, 2ND EDITION
NOTE
Public purpose requires that the proceeds of taxation are used to support
the existence of the local government or the pursuit of its governmental
objectives. (Local Government Code, Annotated, Nolledo)
The tax should be designed to support the services of the government and
the recognized public needs. The tax must affect the area as a community
rather than as individual. (Local Government Code, Annotated, Nolledo)
3. Not be unjust, excessive, oppressive, or confiscatory. [Sec. 130, (b) (3), LGC]
NOTE
The tax must be reasonable in order not to be unjust or oppressive. (Local
Government Code, Annotated, Nolledo)
4. Not be contrary to law, public policy, national economic policy, or in restraint

of trade. [Sec. 130(b) (4), LGC]
NOTE
A tax is contrary to law if it is a tax beyond the authority of an LGU to impose.
(Nolledo, Local Government Code, Annotated)
Thus, a local ordinance, to be valid, must not contravene the Constitution or

any statute; not to be unfair or oppressive; not be partial or discriminatory; not
prohibit but may regulate trade; be general and consistent with public policy;
and not unreasonable. (US vs. Abendan, 24 Phil. 165)
A tax must not be in restraint of trade in that it must not deter the free flow
of commerce in the country, and cause considerable increase in the price of
commodities, to the prejudice of the consuming public. [Sec. 130 (e), Local
Government Taxation, Annotated, Ursal]
5. The collection of local taxes, fees, charges and other impositions shall in no
case be let to any private person. [Sec. 130(c), LGC]
6. In no case can the National Government share in local taxes even if
provided by law. The Constitution provides that local taxes, fees and charges
shall accrue exclusively to the local governments. (Sec. 5, Art. X, 1987
Constitution)
7. Each LGU shall, as far as practicable, evolve a progressive system of
taxation [Sec. 130 (e), LGC]. A progressive tax is one where the tax rate
increases as the tax base increases. In the case of tax on business,
manufacturers pay more taxes per annum as their gross sales or receipts for
the preceding year increases. (Local Government Taxation, Volume One,
Third Edition, Ursal, 2010)
3
SECTION 39. POWER OF LGUs TO LEVY TAXES, FEES OR CHARGES

A. LGUs may exercise the power to levy taxes, fees, or charges on any base or
subject not otherwise specifically enumerated in the LGC or taxed under the
provisions of the National Internal Revenue Code (NIRC), as amended, or other
applicable laws, provided that the taxes, fees or charges shall not be unjust,
excessive, oppressive, confiscatory or contrary to declared national policy;
provided further, that the ordinance levying such taxes, fees, or charges shall not
be enacted without any prior public hearing conducted for the purpose. (Sec. 186,
LGC)
B. The city and municipality may impose and collect such reasonable fees and
charges on business and occupation, and except as reserved to the province in
Sec. 139 of the LGC, on the practice of any profession or calling, commensurate
with the cost of regulation, inspection and licensing before any person may
engage in such business or occupation, or practice such profession or calling.
(Sec. 147, LGC)
To ensure uniform procedure in setting reasonable fees and charges as provided
for by the provisions of RA No. 7160, and in order to set a balance between
recovering the cost of service and the ease of doing business in compliance with
RA No. 11032, DOF-DILG JMC No. 2019.01 dated 14 May 2019, issued by the
Secretary of Finance and the Secretary of Interior and Local Government, provides
the guidelines for the review, adjustment, setting and/or adoption of reasonable
regulatory fees and changes of local government units. (Annex 9)
NOTE
For details on the implementation of DOF-DILG JMC No. 2019.01, refer
to BLGF Memorandum Circular No. 020.2019, dated 02 September 2019,
providing for the Local Fees and Charges (LFC) Toolkit on the Review,
Setting, and/or Adoption of Reasonable Local Fees and Charges.
SECTION 40. AUTHORITY TO ADJUST TAX RATES

LGUs shall have the authority to adjust the tax rates not oftener that once every five
(5) years but in no case shall such adjustment exceed ten percent (10%) of the rates
fixed under the LGC (Sec. 191, LGC)
NOTE
However, while xxx City may rectify and amend their old tax ordinance in
order to give full implementation of the LGC, it, however, cannot impose a
straight 1.25% at its initial implementation of the LGC in so far as retailers
are concerned. xxx City should, at the very least, start with 1% (the minimum
tax rate) as provided under Sec. 143(d) of the LGC. xxx.
Considering that 11 years had already elapsed from its implementing in

2006, xxx City could adjust its tax rate twice now which will make its adjusted
4
LTOM, 2ND EDITION
NOTE
tax rate for retailers pegged at 1.2%, in accordance with Sec. 191 of the
LGC. To clarify, from 2006- 2011 (first 5 years), the initial tax rate should start
with 1%; from 2011-2016 (next five years) – 1.1%, thus, for the years 2017-
2021, the adjustment is 1.21%.
Clearly, the aforementioned jurisprudence is illustrative that the upward

adjustment of tax rates in accordance with Sec. 191 of the LGC shall
be reckoned with the existing tax rate imposed by the LGU under a duly
enacted ordinance.
However, for this purpose, xxx City should pass an ordinance to give effect
to the above discussed tax adjustments. xxx.
(GR No. 211093, 06 June 2017)
SECTION 41. VALID TAX ORDINANCES AND REVENUE MEASURES

A. The power to impose a tax, fee or charge or to generate revenue under the
LGC shall be exercised by the sanggunian of the LGU concerned through an
appropriate ordinance. (Sec. 132, LGC)
B. For any revenue ordinance to be valid, it must conform to the provisions of Chapter
5, Title I, Book II of the LGC, which define both substantive and procedural
requirements therefor.
C. As in all revenue measures, it is up to the particular local government to enact the
necessary revenue ordinance that would enable it to avail of its power to impose
a given tax, fees, charges and other impositions.
D. Procedures and the Role of the Local Treasurer in the Adoption/Approval of Local
Revenue Measures/Code
Stages Activities Role of Treasurer
Draft Local Revenue Measures/Code
- Provide historical data on collection and estimated

increase.
- Collate data on existing revenue ordinance from
neighboring LGUs with similar income class/ Assist in the
geographical location.
- Require revenue generating offices to provide preparation
rates of taxes, fees and charges. of the
Drafting Stage - Discuss/deliberate proposed revenue ordinance draft local
with revenue generation offices to come up with
the final draft of the revenue ordinance. revenue
- Present to the Local Chief Executive, the final draft measures/
of the proposed revenue ordinance code
Local Chief Executive approves the proposed revenue

ordinance and endorses the same to the Sanggunian
5
Sanggunian refers the proposed revenue

ordinance to the Committee on Ways and
Means
Attend committee/
Deliberation Sanggunian conducts public hearing public hearing to
and Refinement - Discussion/Deliberation/Modification justify the proposed
Stage - Documentation rates on taxes, fees
and charges
Sanggunian enacts revenue ordinance and
submits to the LCE for approval
- Amendments
- Approval
Publication of approved revenue

ordinance
- Three (3) consecutive days in newspaper of
local circulation
- Posting in at least two (2) conspicuous and
publicly accessible places if there are no Secure copies of
newspapers of local circulation enacted/approved
Publication revenue ordinances
Stage For revenue ordinance with penal for public
provisions dissemination and
- Three (3) consecutive days in a newspaper implementation
of general circulation within the territorial
jurisdiction of the LGU
- Posting in at least two (2) accessible and
conspicuous places in the absence of any
newspaper of general circulation
Collection of taxes,
fees and charges
Implementation Implementation of the approved revenue based on the new
Stage ordinance rates as provided
in the approved
revenue ordinance
E. Procedural Requirements for a Tax Ordinance and Revenue Measures

1. Written Notices to Interested or Affected Parties – In addition to the
foregoing requirement on publication or posting, the sanggunian concerned
shall cause the sending of written notices of the proposed ordinance,
enclosing a copy thereof, to the interested or affected parties operating or
doing business within the territorial jurisdiction of the LGU concerned. [Art.
276 (b) (2), IRR, implementing Sec. 188, LGC]
6
LTOM, 2ND EDITION
Information must reach those that shall be directly affected by the imposition.
For example, when the measure is on business tax, the LGU may invite the
business community in the public hearing. To ensure compliance with the
requirement, sending of written notices is necessary.
The notice/s shall specify the date or dates and venue of the public hearing
or hearings. [Art. 276 (b) (3), IRR, implementing Sec. 188, LGC]
2. Public Hearing
a. The initial public hearing shall be held not earlier than ten (10) days
from the sending out of notice/s, or the last day of publication, or
date of posting thereof, whichever is later. [Art. 276 (b) (3), IRR,
b. Public hearings shall be conducted for the purpose prior to the
enactment of the tax ordinance or revenue measure. (Sec. 187, LGC)
c. At the public hearing/s, all affected or interested parties shall be
accorded an opportunity to appear and present or express their views,
comments and recommendations, and such public hearings shall
continue until all issues have been presented and fully deliberated
upon and/or a consensus is obtained, whether for or against the
enactment of the proposed tax ordinance or revenue measure. [Art.
276 (b) (4), IRR, implementing Sec. 188, LGC]
d. The secretary of the sanggunian concerned shall prepare the minutes
of such public hearing and shall attach to the minutes the position
papers, memoranda and other documents submitted by those who
participated. [Art. 276(b) (5), IRR, implementing Sec. 188, LGC]
e. No tax ordinance or revenue measure shall be enacted or approved in
the absence of a public hearing duly conducted in the manner herein
prescribed. [Art. 276 (c), IRR, implementing Sec. 188, LGC]
3. Approval of Ordinances
a. If the Local Chief Executive (LCE) concerned approves the same, he/
she shall affix his/her signature on each and every page thereof. [Sec.
54 (a), LGC]
b. The LCE may veto any ordinance of the sangguniang panlalawigan,
sangguniang panlungsod, or sangguniang bayan on the ground that it is
ultra vires or prejudicial to the public welfare, stating his/her reasons therefor
in writing [Sec. 55 (a), LGC], and return the same to the sanggunian, which
may proceed to reconsider the same [Sec. 54 (a), LGC].
c. The veto shall be communicated by the LCE concerned to the
sanggunian within fifteen (15) days in the case of a province, and
ten (10) days in the case of a city or a municipality; otherwise, the
ordinance shall be deemed approved as if he/she had signed it. [Sec.
54 (b), LGC]
7
d. The LCE may veto an ordinance or resolution only once. [Sec. 55 (c),
LGC]
e. The sanggunian concerned may override the veto of the LCE by two-
thirds (2/3) vote of all its members, thereby making the ordinance or
resolution effective for all legal intents and purposes. [Sec. 54 (a),
LGC]
4. Publication of Tax Ordinances and Revenue Measures – (a) Within ten
(10) days after their approval, certified true copies of all provincial, city, and
municipal tax ordinances or revenue measures shall be published in full
for three (3) consecutive days in a newspaper of local circulation: Provided,
however, that in provinces, cities and municipalities where there are no
newspapers of local circulation, the same may be posted in at least two (2)
conspicuous and publicly accessible places. (Sec. 188, LGC) (b) If the tax
ordinance or revenue measure contains penal provisions, the gist of such
ordinance or revenue measure shall be published in a newspaper of general
circulation within the province where the local sanggunian concerned
belongs. In the absence of any newspaper of general circulation within the
province, posting of such ordinance or measure shall be made in accessible
and conspicuous public places in all municipalities and cities of the province
to which the sanggunian enacting the ordinance or revenue measure
belongs. (Art. 276, IRR, implementing Sec. 188, LGC)
5. Effectivity of Tax Ordinances or Revenue Measures – The tax ordinances or
revenue measures take effect upon compliance with the above procedural
and substantive requirements.
In case the effectivity of any tax ordinance or revenue measure falls on any
date other than the beginning of the quarter, the same shall be considered
as falling at the beginning of the next ensuing quarter and the taxes, fees, or
charges due shall begin to accrue therefrom. [Art. 276 (a), IRR, LGC]
6. Furnishing of Copies of Tax Ordinances and Revenue Measures – Copies of
all provincial, city and municipal tax ordinances and revenue measures shall
be furnished the respective local treasurers for public dissemination. (Sec.
189, LGC)
7. Review of Tax Ordinances or Revenue Measures –The LGC provides the
following cautionary steps wherein tax ordinances or revenue measures
of component cities and municipalities are reviewed by the sangguniang
panlalawigan, and ordinances of barangays by the sangguniang panlungsod
or sangguniang bayan:
a. Review of Component City and Municipal Ordinances or Resolutions
by the Sangguniang Panlalawigan
i. Within three (3) days after approval, the secretary to the
sangguniang panlungsod or sangguniang bayan shall forward
to the sangguniang panlalawigan for review, copies of approved
revenue ordinances and resolutions. [Sec. 56 (a), LGC]
8
LTOM, 2ND EDITION
ii. Within thirty (30) days after receipt of copies of such revenue
ordinances and resolutions, the sangguniang panlalawigan
shall examine the documents or transmit them to the provincial
attorney, or if there be none, to the provincial prosecutor for
prompt examination. The provincial attorney or provincial
prosecutor shall, within a period of ten (10) days from receipt
of the documents, inform the sangguniang panlalawigan in
writing of his/her comments or recommendations, which may
be considered by the sangguniang panlalawigan in making its
decision. [Sec. 56 (b), LGC]
iii. If the sangguniang panlalawigan finds that such an ordinance or
resolution is beyond the power conferred upon the sangguniang
panlungsod or sangguniang bayan concerned, it shall declare
such ordinance or resolution invalid in whole or in part. The
sangguniang panlalawigan shall enter its action in the minutes
and shall advise the corresponding city or municipal authorities
of the action it has taken. [Sec. 56 (c), LGC]
iv. The review by the sangguniang panlalawigan of the component
city and municipal revenue ordinances is limited to determining
the legality thereof or if the same exceed the powers conferred
upon by law to the sangguniang panlungsod or sangguniang
bayan. Exceeding such powers is ultra vires and amounts to
usurpation of the legislative functions of the city or municipal
councils.
v. The review by the sangguniang panlalawigan is in the nature
of legislative check and it is a measure by which the provincial
government exercises its power of general supervision over
component units.
vi. If no action has been taken by the sangguniang panlalawigan
within thirty (30) days after submission of such an ordinance or
resolution, the same shall be presumed consistent with law and
therefore valid. [Sec. 56 (d), LGC]
vii. Pending review by the higher council, a revenue ordinance
continues to be in force and effect.
viii. Declaration of invalidity of the revenue ordinance is equivalent to
disapproval thereof.
ix. The signature of the governor is required in relation to the
resolution adopted by the sangguniang panlalawigan, approving
or disapproving the revenue ordinance or resolution enacted by
the sangguniang bayan or sangguniang panlungsod.
b. Review of Barangay Ordinances by the Sangguniang Panlungsod
or Sangguniang Bayan
9
i. Within ten (10) days after its enactment, the sangguniang

barangay shall furnish copies of all barangay ordinances
to the sangguniang panlungsod or sangguniang bayan
concerned for review as to whether the ordinance is consistent
with law and city or municipal ordinances.
ii. If the sangguniang panlungsod or sangguniang bayan, as the
case may be, fails to take action on barangay ordinances
within thirty (30) days from receipt thereof, the same
shall be deemed approved.
iii. If the sangguniang panlungsod or sangguniang bayan, as the
case may be, finds the barangay ordinances inconsistent with
law or city or municipal ordinances, the sanggunian concerned
shall, within thirty (30) days from receipt thereof, return
the same with its comments and recommendations to the
sangguniang barangay concerned for adjustment, amendment,
or modification; in which case, the effectivity of the barangay
ordinance is suspended until such time as the revision called
for is effected.
[Sec. 57, LGC]
SECTION 42. TAXING POWERS OF PROVINCES

Except as otherwise provided in the LGC, the province may levy only the taxes, fees,
and charges specifically reserved to provinces, as follows: (Sec. 134, LGC)
A. Tax on Transfer of Real Property Ownership (Sec. 135, LGC);
B. Tax on Business of Printing and Publication (Sec. 136, LGC);
C. Franchise Tax (Sec. 137, LGC);
D. Tax on Sand, Gravel and Other Quarry Resources (Sec. 138, LGC);
E. Professional Tax (with required government examination) (Sec. 139, LGC);
F. Amusement Tax (Sec. 140, LGC, as amended by Republic Act (RA) No. 9640,
21 May 2009);
G. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in, Certain Products (Sec. 141, LGC);
H. Real Property Tax (Sec. 232, LGC);
I. Additional Levy on Real Property for the Special Education Fund (SEF) (Sec. 235,
LGC);
J. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC);
10
LTOM, 2ND EDITION
K. Special Levy on Lands Benefited by Public Works, Projects or Improvements

Funded by LGU concerned (Sec. 240, LGC);
L. Service Fees and Charges (Sec. 153, LGC);
M. Public Utility Charges (Sec. 154, LGC); and
N. Toll Fees or Charges (Sec. 155, LGC)
SECTION 43. TAXING POWERS OF CITIES

A. Except as otherwise provided in the LGC, the city may levy the taxes, fees, and
charges which the province or municipality may impose: provided, however
that the taxes, fees, and charges levied and collected by highly urbanized and
independent component cities shall accrue to them and distributed in accordance
with the provisions of the LGC.
B. The rates of taxes that the city may levy may exceed the maximum rates allowed
for the province or municipality by not more than fifty percent (50%) except the
rates of professional and amusement taxes.
(Sec. 151, LGC)
C. The city may levy and collect a percentage tax on any business not otherwise
specified under paragraphs (a) to (g), Article 232, IRR of the LGC, at rates not
exceeding three percent (3%) of the gross sales or receipts of the preceding
calendar year. (Art. 237, IRR implementing Sec. 151, LGC)
D. A city may levy local business tax in addition to local franchise tax at the same
time. (GR No. 213136, 5 September 2018)
E. Cities may levy the following taxes, fees and charges:
1. Tax on Transfer of Real Property Ownership (Sec. 135, LGC);
2. Tax on Business of Printing and Publication (Sec. 136, LGC);
3. Franchise Tax (Sec. 137, LGC);
4. Tax on Sand, Gravel and Other Quarry Resources (excluding component
cities) (Sec. 138, LGC);
5. Professional Tax (Sec. 139, LGC);
6. Amusement Tax (Sec. 140, LGC, as amended by RA 9640, 21 May 2009);
7. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or
Producers; Wholesalers of, Dealers, or Retailers in, Certain Products (Sec.
141, LGC);
8. Tax on Business (Sec. 143, LGC);
9. Community Tax (Sec. 156, LGC);
11
10. Real Property Tax (Sec. 232, LGC);

11. Additional Levy on Real Property for the Special Education Fund (Sec. 235,
LGC);
12. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC);
13. Special Levy on Lands Specially Benefited by Public Works, Projects or
Improvements (Sec. 240, LGC);
14. Socialized Housing Tax (RA 7279 & LFC 1-97);
15. Fees and Charges on Business and Occupation (Sec. 147, LGC);
16. Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC);
17. Fishery Rentals, Fees and Charges (Sec. 149, LGC);
18. Service Fees and Charges (Sec. 153, LGC);
19. Public Utility Charges (Sec. 154, LGC); and
20. Toll Fees or Charges (Sec. 155, LGC).
SECTION 44. TAXING POWERS OF MUNICIPALITIES

Except as otherwise provided in the LGC, municipalities may levy taxes, fees and
charges not otherwise levied by provinces (Sec. 142, LGC), as follows:
A. Tax on Business (Sec. 143, LGC);
B. Community Tax (Sec. 156, LGC);
C. Special Levy on Lands Specially Benefited by Public Works, Projects or
Improvements (Sec. 240, LGC);
D. Fees and Charges on Business and Occupation (Sec. 147, LGC);
E. Fees for Sealing and Licensing of Weights and Measures (Sec. 148, LGC);
F. Fishery Rentals, Fees and Charges (Sec. 149, LGC);
G. Service Fees and Charges (Sec. 153, LGC);
H. Public Utility Charges (Sec. 154, LGC); and
I. Toll Fees or Charges (Sec. 155, LGC).
SECTION 45. TAXING POWERS OF THE MUNICIPALITY WITHIN

THE METROPOLITAN MANILA AREA (MMA)
A. The municipality within MMA may levy taxes on businesses enumerated under
Article 232, IRR implementing Sec. 143 of the LGC, at rates not exceeding fifty
12
LTOM, 2ND EDITION
percent (50%) of the maximum rates prescribed for said businesses. [Art. 236
(a), IRR implementing Sec. 144, LGC]
B. The municipality may levy and collect taxes which may be imposed by the
province at the rates not exceeding those prescribed therein. [Art. 236 (b), IRR
C. Real Property Tax (Sec. 232, LGC);
D. Additional Levy on Real Property for the Special Education Fund (SEF) (Sec.
235, LGC);
E. Additional Ad Valorem Tax on Idle Lands (Sec. 236, LGC);
F. In the case of the basic real property tax, the municipality within MMA may fix
a uniform rate not exceeding two percent (2%) of the assessed value of real
property. [Sec. 233 (b), LGC]
SECTION 46. COMMON LIMITATIONS ON THE TAXING POWERS

OF LGUs
Unless otherwise provided in the LGC, 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 otherwise provided in the LGC;
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 LGU concerned;
E. Taxes, fees and charges and other impositions upon goods carried into or out of,
passing through, the territorial jurisdictions of LGUs 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 (BOI) 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
(NIRC), 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 in the LGC;
13
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 the LGC1;
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 charges on Philippine products actually exported, except as
otherwise provided in the LGC;
N. Taxes, fees, or charges on Countryside and Barangay Business Enterprises and
Cooperatives duly registered under RA No. 68102 and RA No. 69383, as amended
by RA 9520; and
O. Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and local government units.
(Sec. 133, LGC)
SECTION 47. COLLECTION OF TAXES

A. Tax Period and Manner of Payment – Unless otherwise provided in the LGC, 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. (Sec. 165, LGC)
B. Accrual of Tax – Unless otherwise provided in the LGC, 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. (Sec. 166, LGC)
C. Time of Payment – Unless otherwise provided in the LGC, 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. (Sec. 167, LGC)
D. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges – The Sanggunian
may impose a surcharge not exceeding twenty-five percent (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. (Sec. 168,
LGC)
1 City of Manila et al vs. Hon. Angel Valera Colet, et al ,GR No. 120051, 10 December 2014
2 KALAKALAN Bilang 20
3 Cooperative Code of the Philippines
14
LTOM, 2ND EDITION
E. Interest on other Unpaid Revenues – Where the amount of any revenue due an
LGU, except voluntary contributions or donations, is not paid on the date fixed in
the ordinance, or in the contract, expressed or implied, or upon the occurrence of
the event which has given rise to its collection, there shall be collected as part of
that amount an interest thereon at the rate not exceeding two percent (2%) per
month from the date it is due until it is paid, but in no case shall the total interest
on the unpaid amount or a portion thereof exceed thirty-six (36) months. (Sec.
169, LGC)
F. 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. (Sec. 170, LGC)
15
CHAPTER SOURCES OF INCOME
2
TAX REVENUES
SECTION 48. PROFESSIONAL TAX
An annual tax on each person engaged in the exercise or practice of profession
or calling, such as but not limited to: lawyers; certified public accountants; doctors
of medicine; architects; civil, electrical, chemical, mechanical, structural, industrial,
mining, sanitary, metallurgical and geodetic engineers; marine surveyors; doctors
of veterinary science; dentist; professional appraisers; connoisseurs of tobacco;
actuaries; interior decorators, designers, real estate service practitioners (RESP),
(i.e. real estate consultants, real estate appraisers and real estate brokers) requiring
government licensure examination given by the Real Estate Service pursuant to
Republic Act No. 9646 insurance agents and actuaries, and all professions requiring
government licensure examination regulated by the Professional Regulations
Commission, Supreme Court, etc. (Sec. 139, LGC, Revenue Regulations 11-2018)
The collection and administration of the professional tax shall be guided by the
following:
A. The amount of professional tax shall not exceed Php300.00, or the rate provided
under a duly enacted local ordinance, subject to adjustment not exceeding ten
percent (10%) every five (5) years. [Local Finance Circular (LFC) No. 001.2019,
12 June 2019]
B. Every person legally authorized to practice his/her profession shall pay the
professional tax to the province, city or the lone municipality within MMA where
he/she practices his/her profession or where he/ she maintains his/her principal
office in case he/she practices his/her profession in several places: Provided,
however, that such person who has paid the corresponding professional tax shall
be entitled to practice his/her profession in any part of the Philippines without
being subjected to any other national or local tax, license, or fee for the practice
of such profession. [Sec. 139 (b), LGC]
C. The professional tax shall be payable annually, on or before the thirty-first (31st)
day of January. Any person first beginning to practice a profession after the month
of January must, however, pay the full tax before engaging therein. [Sec. 139
(d), LGC] The Sanggunian concerned may, for a justifiable reason or cause,
extend the time of payment of such taxes, fees, or charges without surcharges
or penalties, but only for a period not exceeding six (6) months. (Sec. 167, LGC,
LFC No. 001.2019)
D. Any individual or corporation employing a person subject to professional tax
shall require payment by that person of the tax on his/her profession before
employment and annually thereafter, as may be provided under a duly enacted
local ordinance. [Sec 139 (c), LGC]
16
LTOM, 2ND EDITION
E. A line of profession does not become exempt even if conducted with some other
profession for which the tax has been paid. [Sec. 139 (d), LGC] For example, a
lawyer who is also a Certified Public Accountant (CPA) must pay the professional
tax imposed on lawyers and that fixed for CPAs, if he/she is to practice both
professions. [Art. 228 (f), IRR implementing Sec. 139, LGC]
F. Professionals exclusively employed in the government shall be exempt from the
payment of this tax [Sec. 139 (d), LGC], unless he/she has been duly authorized
to practice the profession outside of his/her official business. (LFC No. 001.2019)
G. Exemption from Payment of Business Permit. A business permit is issued
primarily to regulate the conduct of business or trade. However, an LGU cannot,
through the issuance of such permit regulate the practice of a profession, which
is within the exclusive domain of the agency or office specifically empowered by
law to supervise and regulate the profession. Unless covered under Section 7
of LFC No. 001.2019, a professional who has paid his/her professional tax shall
be exempt from the payment of business permit fee in the operation of his/her
clinic or office. However, a professional shall still be required to secure a business
permit, at no cost, from the concerned LGU during the registration of office/clinic
and renewal thereof, subject to a duly enacted local ordinance.
H. Applicability of Local Business Tax on Professionals. If, upon verification, a
professional is actually engaged in selling, trading or distributing of any articles of
commerce of whatever kind, or involved in the function of trade, or undertake any
business activity that does not constitute the practice of profession, pursuant to
applicable law/s governing the practice of such profession, he/she shall be liable
to pay the annual local business tax (LBT) to the city or municipality concerned,
pursuant to the applicable rates provided under Secs. 143 and 146 of the LGC,
and as may be provided under a duly enacted local ordinance.
The professional concerned shall likewise be subject to the payment of business
permit fee during the registration of the office/clinic and the renewal thereof. A
separate recording of the transactions shall be maintained by said professional.
I. Payment of Service Fees and Charges. LGUs may impose and collect other
applicable fees and charges (i.e. garbage fee, sanitary inspection fee, occupancy
permit fee, etc.), the amount of which shall be reasonable commensurate to the
cost of regulation or provision of service, as may be provided under a duly enacted
local ordinance; provided, however, that no service charge shall be based on
capital investments or gross sales or receipts of the persons or business liable
therefor.
(LFC No. 001.2019 dated 12 June 2019)
J. Documentation Requirements:
1. Upon Payment of Tax – For purposes of collecting the tax, the Provincial/City
Treasurer or his/her duly authorized representative shall require from such
professionals their current annual registration cards issued by competent
authority before accepting payment of their professional tax for the current
year. The Professional Regulation Commission (PRC) shall likewise require
17
SOURCES OF INCOME
the professionals’ presentation of proof of payment before registration of

professionals or renewal of their licenses. [Art. 228 (f), IRR implementing
Sec. 139, LGC]
2. On Transaction Documents of Practicing Professionals – Any person subject
to the professional tax shall write in deeds, receipts, prescriptions, reports,
books of account, plans and designs, surveys and maps, as the case may
be, the number of the official receipt issued to him/her. [Sec 139 (e), LGC]
SECTION 49. COMMUNITY TAX

Cities or municipalities may levy a community tax in lieu of the former residence tax
levied and collected under Sec. 38 of P. D. No. 231, as amended. Accordingly, all
cities and municipalities shall enact, for the purpose, a local tax ordinance to take
effect 1 January 1992. For purposes of enacting a local tax ordinance levying the
community tax, the conduct of a public hearing provided for under Sec. 186 of the
LGC, shall be dispensed with. (Art. 245, IRR implementing Sec. 156, LGC)
A. Imposition of Community Tax – The levy or imposition of community tax by
a city or municipality shall be governed by the following rules and procedural
guidelines:
1. Individuals liable for the payment of the Community Tax:
a. Every inhabitant of the Philippines eighteen (18) years of age or over
who has been regularly employed on a wage or salary basis for at
least thirty (30) consecutive working days during any calendar year;
b. An individual who is engaged in business or occupation;
c. An individual who owns real property with an aggregate assessed
value of One Thousand Pesos (₱1,000.00) or more; and
d. An individual who is required by law to file an income tax return.
[Art. 246 (a), IRR, implementing Sec. 157, LGC]
2. Rate of Community Tax Payable by Individuals:
a. The rate of the annual community tax that may be levied and collected
from said individuals shall be Five Pesos (₱5.00) plus an additional tax
of One Peso (₱1.00) for every One Thousand Pesos (₱1,000.00) of
income4 regardless of whether from business, exercise of profession,
or from property but which in no case shall exceed Five Thousand
Pesos (₱5,000.00).
4 Sec. 1A, 2b, Administrative Order No. 260, 16 January 1992
The sanggunians of all cities and municipalities including those comprising the Metropolitan Manila Area, shall
enact, effective as of 1 January 1992, their respective tax ordinances levying the community tax at the following
schedules:
A. For individual taxpayers-
1. Basic Tax-Php5.00
2. Additional tax not exceeding Php5,000.00 for the following:
a. xxx
b. Salaries or gross receipts or earnings derived from the exercise of profession or the pursuit of
any occupation during the preceding year-Php1.00 for every Php1,000.00
18
LTOM, 2ND EDITION
b. In case of husband and wife, each of them shall be liable to pay the
basic tax of Five Pesos (₱5.00), but the additional tax imposable on the
husband and wife shall be One Peso (₱1.00) for every One Thousand
Pesos (₱1,000.00) of income from the total property owned by them
and/or the total gross receipts or earnings derived by them.
[Art. 246 (b), IRR implementing Sec. 157, LGC]
3. Juridical Persons Liable for the Payment of the Community Tax - Every
corporation, no matter how created or organized, whether domestic or
resident foreign, engaged in or doing business in the Philippines shall
pay community tax of Five Hundred Pesos (₱500.00) and an additional
tax, which, in no case, shall exceed Ten Thousand Pesos (₱10,000.00) in
accordance with the following schedule:
a. For every Five Thousand Pesos (₱5,000.00) worth of real property in
the Philippines, owned by the juridical entity during the preceding year,
based on the assessed value used for the payment of the real property
tax under existing laws - Two Pesos (₱2.00); and
b. For every Five Thousand Pesos (₱5,000.00) of gross receipts or
earnings derived from the business in the Philippines during the
preceding year - Two Pesos (₱2.00).
c. The dividends received by a corporation from another corporation
shall, for the purpose of the additional tax, be considered as part of
the gross receipts or earnings of said corporation.
[Art. 246 (c), IRR implementing Sec. 158, LGC]
B. Exemptions – The following are exempt from the community tax:
1. Diplomatic and consular representatives; and
2. Transient visitors when their stay in the Philippines does not exceed three
(3) months. (Sec. 159, LGC)
C. Place of Payment – The community tax shall be paid in the place of residence
of the individual, or in the place where the principal office of the juridical entity is
located (Sec. 160, LGC). The following are the guidelines for the place of payment
of the community tax:
1. The community tax shall be paid in the city or municipality where the
residence of the individual is located, or in the city or municipality where
the principal office of the juridical entity is located [Art. 246 (e) (1), IRR
implementing Sec. 160, LGC]. Thus, a sales office or branch office is not
liable to pay community tax in the city or municipality where it is located.
(Sec. 2, Office of the President MC No. 153 s. 1992, 04 June 1992)
2. It shall be unlawful for any City or Municipal Treasurer to collect the community
tax outside the territorial jurisdiction of the city or the municipality. [Art. 246
(e) (2), IRR implementing Sec. 160, LGC]
19
SOURCES OF INCOME
3. Any person, natural or juridical, who pays the annual community tax to a city
or municipality other than the city or municipality where his/her residence, or
principal office in the case of juridical persons, is located shall not anymore
pay the community tax. (Sec. 2, Office of the President MC No. 153, 04
June 1992; BLGF 1st Indorsement, 26 July 1993)
D. Time for Payment – Guidelines as to when the community tax shall be paid:
1. The community tax shall accrue on the first (1st) day of January of each
year and shall be paid not later than the last day of February of each year.
2. If a person reaches the age of eighteen (18) years or otherwise loses the
benefit of exemption on or before the last day of June, he/she shall be liable
for the community tax on the day he/she reaches such age or upon the
day the exemption ends. However, if a person reaches the age of eighteen
(18) years or loses the benefit of exemption on or before the last day of
March, he/she shall have twenty (20) days to pay the community tax without
becoming delinquent.
3. Persons who come to reside in the Philippines or reach the age of eighteen
(18) years on or after the first (1st) day of July of any year, or who cease to
belong to an exempt class on or after the same date, shall not be subject to
the community tax for that year.
4. Corporations established and organized on or before the last day of
June shall be liable for the community tax for that year. But corporations
established and organized on or before the last day of March shall have
twenty (20) days within which to pay the community tax without becoming
delinquent. Corporations established and organized on or after the first day
of July shall not be subject to the community tax for that year.
(Sec. 161, LGC)
E. Penalties for Late Payment – If the tax is not paid within the time prescribed
above, there shall be added to the unpaid amount an interest of twenty-four
percent (24%) per annum from the due date until it is paid. (Sec. 161, LGC)
It is clarified, however, that the phrase “until it is paid” must be interpreted in
accordance with the limitations of the LGC on other unpaid revenues imposed
by the local government, which in no case shall the total interest on the unpaid
amount or portion thereof exceed thirty-six (36) months. Thus, for community tax,
the penalty shall not go beyond 36 months or seventy-two percent (72%) of the
unpaid amount. (BLGF MC No. 01-001-2017, 05 January 2017)
F. Issuance of Community Tax Certificate (CTC) – A CTC shall be issued to every
person or corporation upon payment of the community tax. It may also be issued
to any person or corporation not subject to the community tax upon payment of
One Peso (₱1.00) (Sec. 162, LGC)
G. Printing of Community Tax Certificate – The Bureau of Internal Revenue
(BIR) shall cause the printing of CTCs and distribute the same to the cities and
municipalities through the City and Municipal Treasurers in accordance with
prescribed regulations. [Art. 249, IRR implementing Sec. 164 (a), LGC]
20
LTOM, 2ND EDITION
H. Collection of the Community Tax by Barangay Treasurers – The tax ordinance

levying the community tax shall authorize the City or Municipal Treasurer to
deputize the Barangay Treasurers to collect the community tax in their respective
jurisdictions. Said deputation, however, shall be limited to the community
tax payable by individual taxpayers and shall be extended only to Barangay
Treasurers who are properly bonded in accordance with existing laws. [Art. 250,
IRR implementing Sec. 164 (b), LGC]
I. Allocation of Proceeds of the Community Tax – The proceeds of the community
tax actually and directly collected by the City or Municipal Treasurer shall accrue
entirely to the General Fund of the city or municipality concerned. However,
proceeds of the community tax collected through the Barangay Treasurers shall
be apportioned as follows:
1. Fifty percent (50%) shall accrue to the General Fund of the city or municipality
concerned; and
2. Fifty percent (50%) shall accrue to the barangay where the tax is collected.
[Art. 251, IRR implementing Sec. 164 (c), LGC]
SECTION 50. REAL PROPERTY TAX (RPT)

The ad valorem tax is a levy on real property determined on the basis of a fixed
proportion of the value of the property. [Sec. 199 (c), LGC] A province or city or
a municipality within the Metropolitan Manila Area may levy an annual ad valorem
tax on real property such as land, building, machinery, and other improvement not
specifically exempted under the LGC.
A. FUNDAMENTAL PRINCIPLES
The appraisal, assessment, levy and collection of RPT shall be guided by the
following fundamental principles:
1. Real property shall be appraised at its current and fair market value.
[Sec. 198 (a), LGC] All real property, whether taxable or exempt, shall be
appraised at the current and fair market value prevailing in the locality where
the property is situated. The Department of Finance (DOF) shall promulgate
the necessary rules and regulations for the classification, appraisal, and
assessment of real property pursuant to the provisions of the LGC. (Sec.
201, LGC)
2. Real property shall be classified for assessment purposes on the basis of its
actual use. [Sec. 198 (b), LGC]
3. Real property shall be assessed on the basis of a uniform classification within
each LGU [Sec. 198 (c), LGC]. To this end, Provincial, City, and the Municipal
Assessors of the municipality within the MMA shall prepare a schedule of fair
market values for the different classes of real property situated within their
respective LGUs for enactment by ordinance of the sanggunian concerned.
(Sec. 212, LGC)
21
SOURCES OF INCOME
4. The appraisal, assessment, levy and collection of RPT shall not be let to any
private person. [Sec. 198 (d), LGC]
5. The appraisal and assessment of real property shall be equitable. [Sec. 198
(e), LGC]
B. ADMINISTRATION OF THE REAL PROPERTY TAX
1. The provinces and cities, including the municipality within MMA, shall be
primarily responsible for the proper, efficient and effective administration of
the RPT, subject to the rules and regulations governing the classification,
appraisal and assessment of real property issued by the DOF.
2. Accordingly, the DOF and the provincial governments shall exercise the
authority to review and examine on a continuing basis, property assessment
and real property tax records to ensure the proper implementation hereof
and determine compliance with existing laws and regulations.
(Art. 291, IRR, implementing Sec. 200, LGC)
ILLUSTRATION
Administration of real property tax, as contemplated under Sec. 200 of the

LGC, refers to the sequential process in the administration of real property
tax which starts from the tax mapping phase, through property valuation and
tax determination phases, to a final tax collection phase. The distribution and
disbursement of the tax proceeds collected is not part of the real property
tax administration cycle. (BLGF Letter to the Provincial Governor of Nueva
Vizcaya, 07 January 2013)
C. RATES OF LEVY
1. A province or city or municipality within MMA shall fix a uniform rate of basic
RPT applicable to their respective jurisdiction as follows:
a. For provinces - not exceeding one percent (1%) of the assessed value;
and
b. For cities, or municipality of MMA - not exceeding two percent (2%) of
the assessed value.
No public hearing shall be required before the enactment of a local tax

ordinance levying the basic RPT.
(Art. 324, IRR, Implementing Sec. 233, LGC)
2. For Renewable Energy (RE) developers - Special Realty Tax Rates on
Equipment and Machinery of a Registered RE Developer actually and
exclusively used for RE facilities not exceeding one and a half percent (1.5%)
of their original cost less accumulated normal depreciation or net book value.
[Sec. 15(c), RA 9513 or an Act Promoting the Development, Utilization
and Commercialization of Renewable Energy Resources and For Other
Purposes]
22
LTOM, 2ND EDITION
NOTE
Municipalities outside Metro Manila Area have no power to enact an ordinance

levying real property tax, as such power and authority is vested only upon
their respective provinces. (BGLF 1st Indorsement, 05 May 1994)
D. EXEMPTIONS FROM PAYMENT OF REAL PROPERTY TAX

The following are exempted from payment of the RPT:
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. [Sec. 234 (a), LGC] Political
subdivisions of the Republic of the Philippines are the autonomous regions,
provinces, sub-provinces, cities, municipalities and barangays. (Sec. 4, Book
I, EO No. 292) Government Owned and Controlled Corporations (GOCCs)
are not considered political subdivisions.
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. [Sec. 234 (b), LGC] Charitable institutions
are those whose principal aim is to give of its material substance or time to
benefit those who are in need of such assistance, or will be benefited by
such gift or expenditure in some other way than simply by an improvement
of morals. Generally, the exemption of charitable institutions is expressly
or impliedly limited to property devoted to charitable purposes and does
not include property belonging to such institutions not used for secular or
non-charitable purposes, such as property used to create revenue. (DOF
Assessment Regulations No. 3-75, 10 February 1975)
NOTE
On NGCP’s Franchise. The Central Board of Assessment Appeals

(CBAA) should determine whether the subject properties of the National
Grid Corporation of the Philippines (NGCP) are used in connection with
its franchise. If the subject properties are used in connection with NGCP’s
franchise, then NGCP is exempt from paying real properties on the subject
properties. If the subject properties are not used in connection with NGCP’s
franchise, then the assessment level should be based on actual use, in
accordance with Sec. 218 (a-c) of the LGC. (GR No. 213157, 10 August
2016)
On GSIS. The appraisal and assessment of the real properties of the

Government Service Insurance System (GSIS) shall be guided by the
following: That all real properties of the GSIS are exempt from the payment
of real property tax.
23
SOURCES OF INCOME
NOTE
1. That if the beneficial use thereof has been granted or enjoyed by a

taxable person/entity, the liability for the payment of the real property
tax shall be shouldered by the beneficial user; and
2. That in case the beneficial user fails to pay the real property tax,
the property cannot in any event, be subject of a public auction sale
notwithstanding its realty tax delinquency.
[BLGF Memorandum Circular (MC) No. 19-2014, 25 April 2014]
On PPA. The Decision of the Supreme Court in the case of ‘MIAA vs. City
of Paranaque’ categorically specified that Philippine Ports Authority (PPA) is
not a government-owned or controlled corporation but an instrumentality of
the National Government thus, the real properties thereof are exempt from
the payment of the real property tax. However, it is emphasized that when
the beneficial use of these properties has been granted, for consideration or
otherwise, to taxable entities, such property becomes taxable. (BLGF MC
No. 101-2013 dated 13 November 2013)
On SSS. The appraisal and assessment of the real properties of the Social
Security System (SSS) shall be guided by the following:
1. That all real properties of the SSS are exempt from RPT;
2. That if the beneficial user thereof has been granted to or is allowed to be
enjoyed by a taxable person or entity other than the SSS, the payment
of RPT shall be borne by the beneficial user; and
3. That in case the beneficial user thereof fails to pay the RPT due thereon,
the property in issue cannot in any manner be the subject of a sale
through public auction.
(BLGF MC No. 023.22018, 13 November 2018)
3. All machineries and equipment that are actually, directly and exclusively used
by local water districts and GOCCs engaged in the supply and distribution
of water and/or generation and transmission of electric power. [Sec. 234 (c),
LGC]
4. All real properties owned by duly registered cooperatives as provided under
RA No. 69385 as amended by RA No. 9520. [Sec. 234 (d), LGC]
5. Machinery and equipment used for pollution control and environmental
protection. [Sec. 234 (e), LGC]
6. Except as provided herein, any exemption from payment of RPT previously
granted to, or presently enjoyed by, all persons, whether natural or juridical,
including all GOCCs are hereby withdrawn upon the effectivity of the LGC.
[Sec. 234, LGC]
5 Cooperative Code of the Philippines
24
LTOM, 2ND EDITION
E. COLLECTION OF REAL PROPERTY TAX (RPT)

1. Date of accrual of RPT. The RPT for any year shall accrue on the first (1st)
day of January and from that date, it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or encumbrance of any
kind whatsoever, and shall be extinguished only upon the payment of the
delinquent tax. (Sec. 246, LGC)
2. Responsibility of Local Treasurers to Collect – The collection of RPT
with interest thereon and related expenses, and the enforcement of the
remedies provided for in Title 2, Book II of the LGC, or any applicable rules
and regulations shall be the responsibility of the City or Municipal Treasurer
concerned. (Sec. 247, LGC)
3. Where RPT may be paid – RPT shall be paid to the Office of the City or
Municipal Treasurer of the city or municipality where the real property is
located. Property owners, however, at their option or convenience, may pay
their RPT at the Office of the Provincial Treasurer of the province to which
the municipality where the property is located, belongs. (Art. 338, IRR,
implementing Sec. 247, LGC) Real property taxes for properties located in
a city or a municipality within MMA, shall be paid with the Office of the City
or Municipal Treasurer concerned.
4. Deputation of Barangay Treasurers – The City or Municipal Treasurer may
deputize the Barangay Treasurer to collect all taxes on real property located
in the barangay: provided, that the Barangay Treasurer is properly bonded
for the purpose. Provided, further, that the premium on the bond shall be
paid by the city or municipal government concerned. [Sec. 247, LGC]
5. Assessor to Furnish Local Treasurer with Assessment Roll – The
provincial, city or municipal assessor shall prepare and submit to the treasurer
of the LGU, on or before the thirty-first (31st) day of December each year,
an assessment roll containing a list of all persons whose real properties
have been newly assessed or reassessed and the values of such properties
(Sec. 248, LGC), notwithstanding cases where the Assessor’s records are
computerized and the same are directly and operationally connected to the
Office of the Provincial, City or Municipal Treasurer in the form of Local Area
Networking (LAN).
6. Notice of Time for Collection of Tax – The city or municipal treasurer shall,
on or before the thirty-first (31st) day of January each year, in the case of the
basic real property tax and the additional tax for the Special Education Fund
(SEF) or on any other tax levied under Title Two-Real Property Taxation,
post the notice of dates when the tax may be paid without interest at a
conspicuous and publicly accessible place at the city or municipal hall. Said
notice shall likewise be published in a newspaper of general circulation in
the locality once a week for two (2) consecutive weeks. (Sec. 249, LGC)
25
SOURCES OF INCOME
7. Payment of Real Property Taxes in Installments

a. The owner of the real property or the person having legal interest
therein may pay the basic RPT and the additional tax for SEF due
thereon, without interest, in four (4) equal installments, to be due and
payable as follows:
1st Installment - on or before the thirty-first (31st) day of March
2nd Installment - on or before the thirtieth (30th) day of June
3rd Installment - on or before the thirtieth (30th) day of September
4th Installment - on or before the thirty-first (31st) day of December
(Sec. 250, LGC)
b. In the implementation of the installment scheme in the collection of
RPT, the following shall be observed:
i. Payment of RPT shall first be applied to prior years' delinquencies,
interests and penalties, if any and only after said delinquencies
are settled may tax payments be credited for the current period.
ii. The date for the payment without interest of any other tax
imposed under Title 2, Book II of the LGC shall be prescribed by
the sanggunian concerned.
iii. Excluded from the above schedule of installment payments is
the special levy on properties benefited by development, the
payments of which shall be governed by the schedule specified
in the enabling ordinance enacted by the sanggunian concerned.
(Sec. 250, LGC)
NOTE
The payment of quarterly installments, having been fixed by law, cannot

be extended by way of a local ordinance. (BLGF 2nd Indorsement to the
Treasurer of Iloilo City, 14 June 1994)
F. Tax Discount for Advanced and Prompt Payment

1. Prompt payments may be given a discount of ten percent (10%), while
advanced payments may be entitled to the maximum discount of 20%. (Art.
342, IRR, implementing Sec. 251, LGC)
2. The tax discount rates shall be specified in an appropriate and duly enacted
ordinance enacted by the sanggunian of the LGU concerned. In the absence
of an ordinance, the discounts shall not be granted.
26
LTOM, 2ND EDITION
NOTE
Anent the proper accounting treatment of advance payments of real property
taxes consisting of the basic tax (RPT) and the additional Special Education
Fund (SEF), xxx they shall be recognized as Deferred RPT and Deferred
SEF, respectively. These advance collections are not yet income of the
Local Government Unit (LGU); rather, they are still considered liabilities until
such time that the taxes for which they are paid become due. (COA letter
dated 21 January 2019 to BLGF Executive Director)
G. Assessment of Property Subject to Back Taxes

1. Real property declared for the first time shall be assessed for the period
during which it would have been liable but in no case for more than ten (10)
years prior to the date of initial assessment.
2. Provided, however, that such taxes shall be computed on the basis of the
applicable schedule of values in force during the corresponding period.
3. Provided further that the total tax liability shall include the current year in
addition to the ten (10) years back taxes.
4. If such taxes are paid on or before the end of the quarter following the date
the notice of assessment was received by the owner or his representative,
no interest for delinquency shall be imposed thereon; otherwise, such taxes
shall be subject to an interest at the rate of two percent (2%) per month or a
fraction thereof until such taxes are fully paid.
(Sec. 222, LGC)
H. Repayment of Excessive Collections
1. When an assessment of the basic RPT, or any other tax levied under Title
2, Book II of the LGC, is found to be illegal or erroneous and the tax is
accordingly reduced or adjusted, the taxpayer may file a written claim for
refund or credit for taxes and interests with the provincial or city treasurer
within two (2) years from the date the taxpayer is entitled to such reduction
or adjustment.
2. The provincial or city treasurer shall decide the claim for tax refund or credit
within sixty (60) days from receipt thereof. In case the claim for tax refund
or credit is denied, the taxpayer may avail of the remedies as provided in
Chapter 3, Title 2, Book II of the LGC.
(Sec. 253, LGC)
3. In case of tax credit, a Certificate of Tax Credit shall be issued to the property
owner or to the person having legal interest therein.
27
SOURCES OF INCOME
NOTE
Tax refund may be applicable under the following circumstances:

- No existing property in which to apply the tax credit.
- When the property that was taxed has been declared exempt.
- If the amount of tax paid is more than the annual tax due.
Tax credit may be applicable under the following circumstances:

- There is an existing property in which to apply the tax credit.
- When the property is not exempt.
Tax credit certificate is not transferable. In case of tax refund for prior years,
the Local Treasurer shall ensure budget appropriation and authority for
payment of prior year obligation.
I. Interest on Delinquent RPT

In case of failure to pay the basic RPT or any other tax levied under Title 2, Book II
of the LGC, upon the expiration of the periods as provided in Sec. 250 of the same
Code, or when due, as the case may be, shall subject the taxpayer to the payment
of interest at the rate of two percent (2%) per month on the unpaid amount or
a fraction thereof, until the delinquent tax shall have been fully paid: Provided,
however, that in no case shall the total interest on the unpaid tax or portion
thereof exceed thirty six (36) months. (Sec. 255, LGC)
NOTE
Unpaid real property tax that accrued prior to 1 January 1992 are imposed
an interest of 2% per month, with a maximum of 24% per year, in accordance
with the law then in force which was PD No. 464. While unpaid real property
tax that accrued on 1 January 1992 onwards are imposed an interest of
2% per month, but not exceeding 36 months or a maximum rate of 72%, in
accordance with the governing law which is RA No. 7160, which repealed
PD No. 464. (2nd Indorsement to the ICO-Regional Director, Region XII,
Cotabato City, 20 December 2010)
Note: Refer to Book IV for sample computation
J. Remedies for the Collection of RPT

1. Administrative and Judicial Remedies – When the RPT and any other tax
levied such as: Annual Ad Valorem Tax, Additional Levy on Real Property for
the Special Education Fund (SEF), Additional Ad Valorem Tax on Idle Lands,
and Special Levy by Local Government Units, under Title 2, Book II of the
LGC, becomes delinquent, the LGU concerned, through the Office of the
Provincial or City Treasurer, or the Municipal Treasurer of the municipality
within MMA, may avail of remedies by administrative or judicial action.
28
LTOM, 2ND EDITION
a. The Administrative Remedies which are summary in nature are:

i. Levy on Real Property; and
ii. Sale of Real Property at Public Auction.
b. The judicial remedy is availed of in the court of appropriate jurisdiction.
2. The foregoing remedies are cumulative, simultaneous and unconditional,
that is, any or all of them or a combination thereof may be resorted to and
the use of one remedy shall not be a bar against the institution of the others.
Formal demand for the payment of the delinquent taxes and penalties due
is not a prerequisite to such remedies. The Notice of Delinquency required
under Sec. 254 of the LGC shall be sufficient for the purpose.
(Art. 347, IRR, implementing Sec. 256, LGC)
K. Local Government’s Lien – The basic RPT and any other tax levied under Title
Two, Book II of the LGC, constitute a lien on the real property subject to tax. Such
lien is superior to all liens, charges or encumbrances in favor of any person,
irrespective of the owner or possessor thereof, enforceable by administrative or
judicial action, and may only be extinguished upon payment of the tax and the
related interests and expenses. (Sec. 257, LGC)
L. Treasurer to Certify Delinquencies Remaining Uncollected - The provincial,
city or municipal treasurer or his/her deputy shall prepare a certified list of all
RPT delinquencies which remained uncollected or unpaid for at least one (1)
year in his/her jurisdiction, and a statement of the reason or reasons for such
non-collection or non-payment, and shall submit the same to the sanggunian
concerned on or before the thirty-first (31st ) of December of the year immediately
succeeding the year in which the delinquencies were incurred, with a request for
assistance in the enforcement of the remedies for collection provided in the LGC.
(Sec. 269, LGC)
ILLUSTRATION
The Certified list of RPT delinquencies as of 31 December 2018 shall be

submitted to the sanggunian on or before the 31st of December 2019.
M. Guidelines in Determining Delinquency

1. Taxpayers are delinquent if they fail to pay their taxes within the period fixed
by statute or executive order. (GR No. 6133 U.S. v. Estavillo, 19 Phil. 478)
2. Tax delinquencies shall be governed by the provisions of applicable laws then
in force and effect.
29
SOURCES OF INCOME
NOTE
Years delinquent Applicable Law Penalty
1992-present RA 7160 2% per month, not to exceed 72%
Sec. 66, PD No. 2% per month, not to exceed 24%
1986-1991
464 per annum
2% per month, not to exceed 24%
1979-1985 PD No. 1621
per annum
NOTE
For purposes of computation of the real property taxes due for the years
1986 to 1991, the penalty or interest imposed is two percent on the amount
of the delinquent tax for each month of delinquency or fraction thereof but in
no case shall the total penalty exceed twenty-four percent per annum of the
delinquent tax, pursuant to Sec. 66 of the Real Property Tax Code of 1974 or
PD No. 464.
However, from 01 January 1992 onwards, the proper basis for the computation
of the real property tax payable, including penalties or interests, if applicable,
must be the LGC, which took effect on the 1st of January 1992 inasmuch as
Sec. 534 thereof had expressly repealed PD No. 464 or the Real Property
Tax Code. Sec. 5(d) of the LGC provides that rights and obligations existing
on the date of effectivity of the new Code and arising out of contracts or any
source of presentation involving an LGU shall be governed by the original
terms and conditions of the said contracts or the law in force at the time
such contracts were vested. (The Honorable Secretary of Finance vs. The
Honorable Ricardo M. Ilarde, et al, GR No. 121782, 09 May 2005)
Note: Refer to Book IV for sample computation
N. Periods Within Which to Collect RPT

The basic RPT and any other tax levied under Title 2, Book II of the LGC, shall
be collected within five (5) years from the date they become due. No action for
the collection of the tax, whether administrative or judicial shall be instituted after
the expiration of such period. In case of fraud or intent to evade payment of the
tax, such action may be instituted for the collection of the same within ten (10)
years from the discovery of such fraud or intent to evade payment. The period of
prescription within which to collect shall be suspended for the time during which:
1. The local treasurer is legally prevented from collecting the tax;
2. The owner of the property or the person having legal interest therein requests
for re-investigation and executes a waiver in writing before the expiration of
the period within which to collect; and
3. The owner of the property or the person having legal interest therein is out
of the country or otherwise cannot be located.
(Sec. 270, LGC)
30
LTOM, 2ND EDITION
O. Penalty for Failure to Issue and Execute Warrant – Without prejudice to

criminal prosecution under the Revised Penal Code and other applicable laws,
any local treasurer or his/her deputy who fails to issue or execute warrant of levy
within one (1) year from the date of the issuance thereof, or who is found guilty of
abusing the exercise thereof in an administrative or judicial proceeding shall be
dismissed from the service. (Sec. 259, LGC)
P. Further Distraint or Levy – Levy may be repeated if necessary until the full
amount due, including all expenses, is collected. (Sec. 265, LGC)
Q. Action Assailing Validity of Tax Sale

1. No court shall entertain any action assailing the validity of any sale at public
auction of real property or rights therein under Title 2, Book II of the LGC,
until the taxpayer shall have deposited with the court the amount for which
the real property was sold, together with interest of two percent (2%) per
month from the date of sale to the time of the institution of the action. The
amount so deposited shall be paid to the purchaser at the auction sale if the
deed is declared invalid but it shall be returned to the depositor if the action
fails.
2. Neither shall any court declare a sale at public auction invalid by reason
of irregularities or informalities in the proceedings unless the substantive
rights of the delinquent owner of the real property or the person having legal
interest therein have been impaired.
(Sec. 267, LGC)
R. Payment of Delinquent Taxes on Property Subject of Controversy

In any action involving the ownership or possession of, or succession to, real
property, the court may, “motu propio” or upon representation of the provincial, city
or municipal treasurer or his/her deputy, award such ownership, possession, or
succession to any party to the action upon payment to the court of the taxes with
interest due on the property and all other costs that may have accrued, subject to
the final outcome of the action. (Sec. 268, LGC)
SECTION 51. SPECIAL PROVISIONS

A. Condonation or Reduction of RPT and Interest
In case of a general failure of crops or substantial decrease in the price of
agricultural or agri-based products, or calamity in any province, city, or municipality,
the sanggunian concerned, by ordinance passed prior to the first day of January of
any year and upon recommendation of the Local Disaster Coordinating Council,
may condone or reduce, wholly or partially, the taxes and interest thereon for the
succeeding year or years in the city or municipality affected by the calamity. (Sec.
276, LGC)
31
SOURCES OF INCOME
NOTE
The condonation or reduction contemplated under Sec. 276 is prospective in

application, meaning, only real property taxes or interests due the succeeding
year or years, after any of the abovementioned incidents happened which
adversely affected the taxpayer’s ability to pay, may be condoned or reduced
and not unpaid real property taxes or interests of the past year or years.
(BLGF Letter to the City Treasurer of Isabela City, Basilan, 01 June 2011)
B. Condonation or Reduction of Tax by the President of the Philippines

The President of the Philippines may, when public interest so requires, condone
or reduce the RPT and interest for any year in any province or city, or municipality
within the Metropolitan Manila Area. (Sec. 277, LGC)
ILLUSTRATION
The President of the Philippines promulgates Executive Orders (EOs) to

effect the policy under Sec. 277 of the LGC.
Since 2014, the following EOs were issued by the President pursuant to Sec.
277 of the LGC: (i) EO No. 173, s. 2014, (ii) EO No. 19, s. 2017, (iii) EO No.
60, s. 2018, and (iv) EO No. 88, s. 2019. These EOs reduced all liabilities
for real property tax, including any special levies accruing to the Special
Education Fund (SEF), on property, machinery and equipment actually and
directly used by Independent Power Producers (IPPs) for the production
of electricity under Build-Operate-Transfer scheme and similar contracts,
whether denominated power purchase agreements, energy conversion
agreements or other contractual agreements, with GOCCs, assessed by
LGUs and other entities authorized to impose RPT for all years up to the
issuance of the EOs, to an amount equivalent to the tax due if computed
based on the following:
1. The assessment level to be applied on the fair market value (FMV)

of machinery and equipment of the IPP is fifteen percent (15%);
2. The annual depreciation rate of such machinery and equipment
shall be at rate of two percent (2%) per annum; and
3. The resulting tax due shall be less any amounts already paid by the
IPPs.
All interests on RPT delinquencies on such machinery and equipment were

ordered condoned and the concerned IPPs were relieved from payment
thereof.
32
LTOM, 2ND EDITION
C. Fees in Court Actions – All court actions, criminal or civil, instituted at the instance
of the provincial, city or municipal treasurer under the provisions of the LGC, shall
be exempt from the payment of court and sheriff’s fees. (Sec. 280, LGC)
D. Fees in Registration of Papers of Documents on Sale of Delinquent Real
Property to Province, City or Municipality – All certificates, documents and
papers covering the sale of delinquent property to the province, city or municipality,
if registered in the Registry of Property, shall be exempt from the documentary
stamp and registration fees. (Sec. 281, LGC)
E. Penalties for Omission of Property from Assessment or Tax Rolls by Officers
and Other Acts
1. Any officer charged with the duty of assessing a real property who willfully
fails to assess, or who intentionally omits from the assessment or tax roll
any real property which he/she knows to be taxable, or who willfully or
negligently underassesses any real property, or who intentionally violates
or fails to perform any duty imposed upon him/her by law relating to the
assessment of taxable real property shall, upon conviction, be punished by
imprisonment of not less than one (1) month nor more than six (6) months,
or by a fine of not less than One Thousand Pesos (Php1,000.00) nor more
than Five Thousand Pesos (Php5,000.00) or both such imprisonment and
fine, at the discretion of the court.
2. The same penalty shall be imposed upon any officer in charged with the duty
of collecting the tax due on real property who willfully or negligently fails to
collect the tax and institute the necessary proceedings for the collection of
the same.
3. Any other officer required to perform acts relating to the administration of
the RPT or to assist the assessor or treasurer in such administration, who
willfully fails to discharge such duties shall, upon conviction, be punished by
imprisonment of not less than one (1) month nor more than six (6) months,
or by a fine of not less than Five Hundred Pesos (Php500.00) nor more than
Php 5,000.00 or both such imprisonment and fine, at the discretion of the
court. (Art. 375, IRR of the LGC)
F. Penalties for Failure to Dispose of Delinquent Real Property at Public
Auction – The local treasurer concerned who fails to dispose of delinquent real
property at public auction and any other LGU official whose acts hinder prompt
disposition of delinquent real property at public auction shall, upon conviction,
be subject to imprisonment of not less than 1 month nor more than 6 months,
or a fine of not less than Php1,000.00 nor more than Php5,000.00 or both such
imprisonment and fine, at the discretion of the court. (Art. 377, IRR of the LGC)
SECTION 52. SPECIAL EDUCATION FUND (SEF)

A province or city, or municipality within MMA, may levy and collect an annual tax of
one percent (1%) on the assessed value of real property which shall be in addition
33
SOURCES OF INCOME
to the basic RPT. The proceeds thereof shall exclusively accrue to the SEF. (Sec.
235, LGC) No public hearing shall be required before the enactment of a local tax
ordinance levying the additional one percent (1%) SEF tax.
(Art. 326, IRR, LGC)
The annual tax of one percent (1%) that accrues to the SEF is the maximum rate.
LGUs may impose a lower rate.
NOTE
Having established the propriety of imposing an additional levy for the

special education fund at the rate of 0.5%, it follows that there was nothing
erroneous in the Municipality of Narra having acted pursuant to Sec. 48 of
the Ordinance. Thus, it could not be faulted for collecting from owners of
real properties located within its territory an annual tax as special education
fund at the rate of 0.5% of the assessed value subject to tax of the property.
Likewise, it follows that it was an error for respondent to hold petitioner
personally liable for the supposed deficiency in collections. (Lucena D.
Demaala vs. COA, GR No. 199752, 17 February 2015)
SECTION 53. SPECIAL LEVY ON IDLE LANDS

A province or city, or municipality within MMA, 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 RPT. (Sec. 236, LGC)
A. Coverage of Idle Lands
For purposes of real property taxation, idle lands shall include the following:
1. Agricultural lands, more than one (1) hectare in area, suitable for
cultivation, dairying, inland fishery, and other agricultural uses, one-
half (1/2) of which remain uncultivated or unimproved by the owner of
the property or person having legal interest therein. Agricultural lands
planted to permanent or perennial crops with at least fifty (50) trees to
a hectare shall not be considered idle lands.
2. Lands, other than agricultural, located in a city or municipality, more
than one thousand (1,000) square meters in area, one-half (1/2) of
which remain unutilized or unimproved by the owner of the property or
person having legal interest therein.
3. Regardless of land area, it shall likewise apply to residential lots in
subdivisions duly approved by proper authorities, the ownership of
which has transferred to individual owners, who shall be liable for the
additional tax provided that individual owners who shall be liable for
the additional tax provided that individual lots of such subdivisions,
the ownership of which has not been transferred to the buyer shall
be considered as part of the subdivision, and shall be subject to the
additional tax payable by the subdivision owner or operator.
34
LTOM, 2ND EDITION
(Art. 328, IRR of the LGC)

B. For this additional tax on idle lands, the following should be observed:
1. Exemption from Tax on Idle Lands – A province or city or municipality within
the MMA 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 of the property or person
having legal interest therein from improving, utilizing or cultivating the same.
(Sec. 238, LGC)
2. Listing of Idle Lands by the Assessor – The Provincial, City or Municipal
Assessor shall make and keep an updated record of all idle lands located
within his/her area of jurisdiction. For purposes of collection, the Provincial,
City or Municipal Assessor shall furnish a copy thereof to the Provincial or
City Treasurer who shall notify, on the basis of such record, the owner of
the property or person having legal interest therein of the imposition of the
additional tax. (Sec. 239, LGC)
SECTION 54. SPECIAL LEVY ON LANDS BENEFITED

BY PUBLIC WORK PROJECTS
A. It is a special levy on the lands comprised within its territorial jurisdiction specially
benefited by public works projects or improvements funded by the LGU concerned.
B. The special levy shall not exceed sixty percent (60%) of the actual cost of such
projects and improvements, including the costs of acquiring land and such other
property in connection therewith.
C. The special levy shall not apply to lands exempt from basic RPT and the
remainder of land portions of which have been donated to the LGU concerned for
the construction of such projects and improvements.
(Sec. 240, LGC)
D. The tax ordinance imposing the special levy shall:
1. Describe with reasonable accuracy the nature, extent, and location of the
public works projects or improvements to be undertaken;
2. State the estimated cost of the public works projects or improvements;
3. Specify the metes and bounds by monuments and lines; and
4. Specify the number of annual installments for the payment of the special
levy which in no case shall be less than five (5) years nor more than ten (10)
years.
5. The sanggunian concerned shall not be obliged, in the apportionment and
computation of the special levy, to establish a uniform percentage of all lands
subject to the payment of the tax for the entire district, but it may fix different
35
SOURCES OF INCOME
rates for different parts or sections thereof, depending on whether such land
is more or less benefited by the proposed work.
(Sec. 241, LGC)
6. Prior to the enactment of an ordinance imposing a special levy, the
sanggunian concerned shall:
a. Conduct a public hearing thereon; and
b. Notify in writing the owners of the real property to be affected or the
persons having legal interest therein as to the date and place thereof
and afford the latter the opportunity to express their positions or
objections relative to the proposed ordinance.
(Sec 242, LGC)
E. The special levy shall be apportioned, computed, and assessed according to the
assessed valuation of the lands affected as shown by the books of the assessor
concerned or its current assessed value as fixed by said assessor if the property
does not appear of record in his/her books. (Sec. 243, LGC)
F. The special levy shall accrue on the first (1st) day of the quarter next following the
effectivity of the ordinance imposing such levy. (Sec. 245, LGC)
SECTION 55. DISPOSITION OF PROCEEDS

A. Distribution of Proceeds
The proceeds of the basic real property tax, including interest thereon, and
proceeds from the use, lease or disposition, sale or redemption of property
acquired at a public auction, in accordance with the provisions of Title 2, Book II of
the LGC, by the province or city or municipality within the MMA shall be distributed
as follows:
1. In the case of Provinces
a. Province - Thirty-five percent (35%) shall accrue to the General
Fund of the province;
b. Municipality - Forty percent (40%) shall accrue to the General
Fund of the municipality where the property is located; and
c. Barangay - Twenty-five percent (25%) shall accrue to the
barangay where the property is located.
2. In the case of Cities
a. City - Seventy percent (70%) shall accrue to the General Fund
of the city; and
b. Barangay - Thirty percent (30%) shall be distributed among the
component barangays of the cities where the property is located
36
LTOM, 2ND EDITION
in the following manner:

i. Fifty percent (50%) shall accrue to the barangay where
the property is located;
ii. Fifty percent (50%) shall accrue equally to all component
barangays of the city.
3. In the case of Municipality within the Metropolitan Manila Area
a. Metropolitan Manila Authority - Thirty-five percent (35%) shall
accrue to the General Fund of the Authority;
b. Municipality - Thirty-five percent (35%) shall accrue to the
General Fund of the municipality where the property is located;
c. Barangays - Thirty percent (30%) shall be distributed among the
component barangays of the municipality where the property is
located in the following manner:
i. Fifty percent (50%) shall accrue to the barangay where
the property is located; and
ii. Fifty percent (50%) shall accrue equally to all component
barangays of the municipality. (Sec. 271, LGC)
D. Release of Barangay Share. The share of each barangay shall be released,

without need of any further action, directly to the Barangay Treasurer on a
quarterly basis within five (5) days after the end of each quarter and shall not be
subject to any lien or holdback for whatever purpose (Sec. 271 (d), LGC) and to
such rules as may be prescribed by the Commission on Audit for this purpose.
(Art. 362, IRR implementing Sec. 271 (d), LGC)
E. Application of Proceeds of the Additional One Percent SEF Tax. The proceeds
from the additional one percent (1%) tax on real property accruing to the SEF
shall be automatically released to the local school boards; Provided, That in case
of provinces, the proceeds shall be divided equally between the provincial and
municipal school boards, Provided, however, That the proceeds shall be allocated
for the operation and 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 and approved by
the local school board. (Sec. 272, LGC)
NOTE
Refer to Book III on the Use of the SEF, under DBM/DepEd/DILG Joint
Circular No. 1, 26 May 2017.
37
SOURCES OF INCOME
F. Proceeds of the Tax on Idle Lands. The proceeds of the additional real property
tax on idle lands shall accrue to the respective General Fund of the province
or city where the land is located. In the case of municipality within the MMA,
the proceeds shall accrue equally to the Metropolitan Manila Authority and the
municipality where the land is located. (Sec. 273, LGC)
Accordingly, the proceeds of this tax shall be treated in the income account as
revenue from taxation. (Art. 364, IRR implementing Sec. 273, LGC)
G. Proceeds of the Special Levy. The proceeds of the special levy on lands
benefited by public works, projects and other improvements shall accrue to the
General Fund of the local government unit which financed such public works,
projects or other improvements. (Sec. 274, LGC)
Accordingly, all income derived from this special levy shall be treated in the income
account as revenue from taxation. (Art. 365, IRR implementing Sec. 274, LGC)
SECTION 56. TAX ON TRANSFER OF REAL PROPERTY OWNERSHIP

A. The province may impose a tax on the sale, donation, barter, or on any other
mode of transferring ownership or title of real property at the rate of not more than
fifty percent (50%) of one percent (1%) of the total consideration involved in the
acquisition of the property, or of the fair market value (FMV) in case the monetary
consideration involved in the transfer is not substantial, whichever is higher. [Sec.
135 (a), LGC]
B. The FMV as used herein shall be that reflected in the prevailing schedule of
fair market values enacted by the sanggunian concerned. [Art. 224 (a), IRR,
implementing Sec. 135 (a), LGC]
C. The prevailing schedule of fair market value, tax rate, surcharges and interests
prescribed in the tax ordinance at the time of death of decedent shall be the basis
in computing the subject transfer tax.
D. For this purpose, the Register of Deeds of the province concerned shall, before
registering any deed, require the presentation of the evidence of payment of the
tax. The Provincial Assessor shall likewise make the same requirement before
cancelling an old tax declaration and issuing a new one in place thereof. Notaries
Public shall furnish the Provincial Treasurer with a copy of any deed transferring
ownership or title to any real property within thirty (30) days from the date of
notarization.
E. It shall be the duty of the seller, donor, transferor, executor or administrator to pay
the tax herein imposed within sixty (60) days from the date of the execution of the
deed or from the date of the decedent's death. [Sec. 135 (b), LGC]
F. The sale, transfer or other disposition of real property pursuant to RA No. 6657
shall be exempt from this tax [Sec. 135 (a), LGC]. However, transfer of ownership
over a land pending issuance of a free patent under Commonwealth Act No. 141,
as amended by the Bureau of Lands is subject to this tax.
38
LTOM, 2ND EDITION
G. Private sector entities and individuals engaged in developing socialized housing

projects under RA No. 7279, for the benefit of the underprivileged and homeless
are exempted from payment of transfer tax for both raw and completed projects.
(Sec. 20, RA 7279)
H. Guidelines on the Grant of Relief on Surcharges and Interests on Tax and Transfer
of Real Property Ownership in Support of the Estate Tax Amnesty Program (RA
No. 11213):
1. The grant of relief shall be imposed only on all surcharges and interests
on local transfer tax on estates of decedent/s who died on or before 31
December 2017 and shall be availed by the legal heirs, administrator
or executor until 14 June 2021.
2. The grant of relief shall be authorized under a duly enacted local
ordinance upon the effectivity of Department of Finance (DOF)
Department Circular No. 001-2019.
3. The grant of relief shall be applied to transfer on real property ownership
by succession only, and in no case shall apply to other kinds of transfer.
4. Local treasurers shall collect the tax on transfer of real property
ownership which shall only be based on the prevailing schedule of
fair market value of the subject property at the time of the death of the
decedent, and in accordance with the grant of relief that the LGU may
authorize pursuant to the circular.
(DOF Department Circular No. 001-2019, 5 September 2019)
SECTION 57. LOCAL BUSINESS TAX

A. The tax on persons or entities in the course of trade or business, such as:
1. On manufacturers, assemblers, repackers, processors, brewers, distillers,
rectifiers, and compounders of liquors, distilled spirits, and wines or
manufacturers of any article of commerce of whatever kind or nature. [Sec.
143 (a), LGC]
a. Manufacturer includes every person who, by physical or chemical
process alters the exterior texture or form or inner substance of any
raw material or manufactured or partially manufactured product in
such manner as to prepare it for special use or uses to which it could
not have been put in its original condition; or
b. Who by any such process, alters the quality of any such raw material
or manufactured or partially manufactured products so as to reduce it
to marketable shape or prepare it for any use of industry; or
c. Who by any such process, combines any such raw material or
manufactured or partially manufactured products with other materials
or products of the same or of different kinds and in such manner that
the finished products of such process or manufacture can be put to
a special use or uses to which such raw materials or manufactured
39
SOURCES OF INCOME
or partially manufactured products in their original condition could not

have been put; and
d. Who in addition, alters such raw material or manufactured or partially
manufactured products, or combines the same to produce such
finished products for the purpose of their sale or distribution to others
and not for his/her own use or consumption.
[Sec. 131 (o), LGC]
2. On wholesalers, distributors, or dealers [Sec. 143 (b), LGC]
Wholesale means a sale where the purchaser buys or imports the
commodities for resale to persons other than the end user regardless of the
quantity of the transaction. [Sec. 131(z), LGC]
3. On exporters, and on manufacturers, millers, producers, wholesalers,
distributors, dealers or retailers of essential commodities
The following are essential commodities:
a. Rice and corn
b. Wheat or cassava flour, meat, dairy products, locally manufactures,
processed or preserved food, sugar, salt and other agricultural, marine,
and fresh water products, whether in their original state or not
c. Cooking oil and cooking gas
d. Laundry soap, detergents and medicine
e. Agricultural implements, equipment and post-harvest facilities,
fertilizers, pesticides, insecticides, herbicides and other farm inputs
f. Poultry feeds and other animal feeds
g. School supplies
h. Cement
4. On retailers [Sec. 143 (d), LGC]
Retail means a sale where the purchaser buys the commodity for his own
consumption, irrespective of the quantity of the commodity sold. [Sec. 131
(w), LGC]
5. On contractors and independent contractors [Sec.143(e), LGC]
a. Contractor includes persons, natural or juridical, not subject to
professional tax under Sec. 139 of the LGC, whose activity consists
essentially of the sale of all kinds of services for a fee, regardless of
whether or not the performance of the service calls for the exercise
or use of the physical or mental faculties of such contractor or his
employees.
40
LTOM, 2ND EDITION
b. The term “contractor” shall include the following:

i. General engineering, general building and specialty contractors;
ii. Filling, demolitions and salvage works contractors, proprietors or
operators of mine drilling apparatus, proprietors or operators of
dockyards;
iii. Persons engaged in the installation of water system, and gas or
electric light, heat, or power;
iv. Proprietors or operators of smelting plants, engraving, plating
and plastic lamination establishments;
v. Proprietors or operators of establishments for repairing,
repainting, upholstering, washing or greasing of vehicles, heavy
equipment, vulcanizing, recapping and battery charging;
vi. Proprietors or operators of furniture shops and establishments
for planning or surfacing and recutting of lumber, and sawmills
under contract to saw or cut logs belonging to others;
vii. Proprietors or operators of dry-cleaning or dyeing establishments,
steam laundries, and laundries using washing machines;
viii. Proprietors or owners of shops for the repair of any kind of
mechanical and electrical devices, instruments, apparatus or
furniture and shoe repairing by machine or any mechanical
contrivance;
ix. Proprietors or operators of establishments or lots for parking
purposes;
x. Proprietors or operators of tailor shops, dress shops, milliners and
hatters, beauty parlors, barbershops, massage clinics, sauna,
Turkish and Swedish baths, slenderizing and building saloons
and similar establishments, photographic studios, funeral parlors;
xi. Proprietors and operators of hotels, motels and lodging houses;
xii. Proprietors or operators of arrastre and stevedoring, warehousing
or forwarding establishments;
xiii. Master plumbers, smiths, and house or sign painters;
xiv. Printers, bookbinders, lithographers;
xv. Publishers except those engaged in the publication or printing
of any newspaper, magazine, review or bulletin which appears
at regular intervals with fixed prices for subscription and
sale and which is not devoted principally to the publication of
advertisements; and
41
SOURCES OF INCOME
xvi. Business agents, private detective or watchman agencies,

commercial and immigration brokers and cinematographic film
owners, lessors and distributors.
[Sec. 131 (h), LGC]
6. On Banks and Other Financial Institutions [Sec. 143 (f), LGC]
Banks and other financial institutions include the following:
a. Non-bank financial intermediaries
b. Lending investors
c. Finance and investment companies
d. Pawnshop
e. Money shops
f. Insurance companies
g. Stock markets
h. Stock brokers and dealers in securities
i. Foreign exchange
[Sec. 130 (e), LGC]
NOTE
Refer to Local Finance Circular (LFC) No. 1-93 dated 16 June 1993, LFC No.
2-07 dated 26 February 2007, as reiterated under BSP Circular Letter No.
CL-2017-079 dated 27 December 2017, and BLGF Memorandum Circular
No. 016.2018 dated 10 August 2018.
7. On peddlers
a. Peddler means any person who, either for himself or on commission,
travels from place to place and sells his goods or offers to sell and
deliver the same.
b. Whether a peddler is a wholesale peddler or a retail peddler of
a particular commodity shall be determined from the definition of
wholesale dealer or retail dealer.
[Sec.131 (t), LGC]
c. The LGU may impose tax on peddlers engaged in the sale of any
merchandise or article of commerce at a rate not exceeding fifty pesos
(Php50.00) per peddler annually. [Sec. 143(g), LGC]
42
LTOM, 2ND EDITION
8. Other Businesses
On any business not otherwise previously classified which the sanggunian
concerned may deem proper to tax, provided, that on any business subject
to the excise, value added or percentage tax under the National Internal
Revenue Code (NIRC) as amended, the rate of tax shall not exceed two
percent (2%) of gross sales or receipts of the preceding calendar year,
[Sec. 143 (h), LGC] and provided further, that in line with existing national
policy, any business engaged in the production, manufacture, refining,
distribution or sale of oil, gasoline, and other petroleum products shall not
be subject to any local tax imposed in this Article. (Art. 232 (h), IRR of the
LGC)
B. Rates of Tax
1. The municipality within MMA may levy the taxes on businesses enumerated
in Article 233 of this Rule at rates which shall not exceed by fifty percent
(50%) the maximum rates prescribed for said businesses.
2. The said municipality within MMA, pursuant to Article 275 of this Rule, may
levy and collect the taxes which may be imposed by the province under
Articles 2246, 2257, 2268, 2279, 22810, 22911 and 23012 of this Rule at rates not
exceeding those prescribed therein.
[Art. 236 (b) IRR of the LGC]
C. PAYMENT OF LOCAL BUSINESS TAXES

1. The taxes imposed under Sec. 143 of the LGC shall be payable for every
separate or distinct establishment or place where business subject to the tax
is conducted and one line of business does not become exempt by being
conducted with some other business for which such tax has been paid. The
tax on a business must be paid by the person conducting the same. [Sec.
146 (a) LGC]
The conduct or operation of two (2) or more related businesses provided
under Article 232, IRR of the LGC by any one person, natural or juridical
shall require the issuance of a separate permit or license to each business.
[Art. 242 (a), IRR of the LGC]
2. In cases where a person conducts or operates two (2) or more of the
businesses mentioned in Sec. 143 of the LGC which are subject to the same
rate of tax, the tax shall be computed on the combined total gross sales or
receipts of the said two (2) or more related businesses. [Sec. 146 (b) LGC]
6 Tax on Transfer of Real Property Ownership

7 Tax on Business of Printing and Publication
8 Franchise Tax
9 Tax on Sand, Gravel, and Other Quarry Resources
10 Professional Tax
11 Amusement Tax
12 Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers or
Retailers in Certain Products
43
SOURCES OF INCOME
3. In cases where a person conducts or operates two (2) or more businesses

mentioned in Sec. 143 of the LGC which are subject to different rates of tax,
the gross sales or receipts of each business shall be separately reported
for the purpose of computing the tax due from each business. [Sec. 146 (c)
LGC]
NOTE
Refer to Book IV for sample computation
D. SITUS OF TAX
For purposes of collection of taxes, manufacturers, assemblers, repackers,
brewers, distillers, rectifiers and compounders of liquor, distilled spirits and wines,
millers, producers, exporters, wholesalers, distributors, dealers, contractors,
banks and other financial institutions, and other businesses, maintaining or
operating branch or sales outlet elsewhere shall record the sale in the branch
or sales outlet making the sale or transaction, and the tax thereon shall accrue
and shall be paid to the city or municipality where such branch or sales outlet is
located.
In cases where there is no such branch or sales outlet in the city or municipality
where the sale or transaction is made, the sale shall be duly recorded in the
principal office and the taxes due shall accrue and shall be paid to such city or
municipality. (Sec. 150, LGC)
The following sales allocation shall apply to manufacturers, assemblers,
contractors, producers, and exporters with factories, project offices, plants, and
plantations in the pursuit of their business:
1. All sales made in a locality where there is a branch or sales office or
warehouse shall be recorded in said branch or sales office or warehouse
and the tax shall be payable to the city or municipality where it is located.
2. In cases where there is no such branch, sales office or warehouse in the
locality where the sale is made, the sale shall be recorded in the principal
office along with the sales made by said principal office and the tax shall
accrue to the city or municipality where said principal office is located.
3. In cases where there is a factory, project office, plant or plantation in pursuit
of business:
a. Thirty percent (30%) of all sales recorded in the principal office shall be
taxable by the city or municipality where the principal office is located,
and
b. Seventy percent (70%) of all sales recorded in the principal office shall
be taxable by the city or municipality where the factory, project office,
plant or plantation is located.
44
LTOM, 2ND EDITION
c. LGUs where only experimental farms are located shall not be entitled
to the sales allocation herein provided.
d. However, on-site sales of commercial quantity made in experimental
farms shall be similarly imposed the corresponding tax under Sec. 143
of the LGC, and allocated as herein provided.
e. The foregoing sales allocation shall be applied irrespective of whether
or not sales are made in the locality where the factory, project office,
plant or plantation is located.
4. In the case of a plantation located in a locality other than that where the
factory is located, said seventy percent (70%) sales allocation mentioned in
item (2) under subparagraph (c) above shall be divided as follows:
a. Sixty percent (60%) to the city or municipality where the factory is
located; and
b. Forty percent (40%) to the city or municipality where the plantation is
located.
5. In cases where a manufacturer, assembler, producer, exporter or contractor
has two (2) or more factories, project offices, plant, or plantations located
in different localities, the seventy percent (70%) sales allocation mentioned
in item (2) under sub-paragraph (c) above shall be pro-rated among the
localities where the factories, project offices, plants, and plantations are
located in proportion to their respective volumes of production during the
period for which the tax is due. In the case of project offices of service and
other independent contractors, the term "production" shall refer to the cost
of projects actually undertaken during the tax period.
6. The sales allocation herein provided shall be applied irrespective of whether
or not sales are made in the locality where the factory, project office, plant
or plantation is located. In case of sales made by the factory, project office,
plant or plantation, the sale shall be covered by items (1) and (2) above.
7. In the case of manufacturers sales made by the factory, project office, plant
or plantation, the sale shall be covered by paragraphs (a) and (b) above.
8. The city or municipality where the port of loading is located shall not levy
and collect tax imposable under Sec.143 of the LGC, unless the exporter
maintains in said city or municipality its principal office, a branch, sales office
or warehouse, factory, plant, or plantation in which case the foregoing rules
on the matter shall apply accordingly.
9. The following guidelines shall apply to sales made by route trucks, vans or
vehicles:
a. For route sales made in the locality where a manufacturer, producer,
wholesaler, retailer or dealer has a branch or sales office or warehouse,
the sales shall be recorded in that branch, sales office or warehouse
45
SOURCES OF INCOME
and the tax due thereon is paid to the LGU where such branch, sales
office or warehouse is located.
b. For route sales made in a locality where a manufacturer, producer,
wholesaler, retailer or dealer has no branch, sales office or warehouse,
the sales shall be recorded in the branch, sales office or warehouse
from where the route trucks withdraw their products for sale, and the
tax due on such sales is paid to the LGU where such branch, sales
office or warehouse is located.
c. Based on the foregoing, LGUs where route trucks deliver merchandise
cannot impose any tax on said trucks except the annual fixed tax
authorized to be imposed by the province under Sec. 141 of the
LGC, which cities may likewise impose under Sec. 151 of the same
Code, on every delivery truck or van or any motor vehicles used by
manufacturers, producers, wholesalers, dealers or retailers in the
delivery or distribution of distilled spirits, fermented liquors, softdrinks,
cigars and cigarettes, and other products as may be determined by the
sanggunian concerned.
[Art. 243, IRR implementing Sec. 150 (b), LGC]
NOTE
SECTION 58. TAX ON SAND, GRAVEL AND OTHER QUARRY

RESOURCES
A. The province may levy and collect not more than ten percent (10%) of fair market
value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and
other quarry resources, such as but not limited to marl, marble, granite, volcanic
cinders, basalt, tuff and rock phosphate, extracted from public lands or from the
beds of seas, lakes, rivers, streams, creeks, and other public waters within its
territorial jurisdiction. [Art. 227 (a), IRR, implementing Sec. 138, LGC]
B. The following shall govern the administration and collection of this tax:
1. The permit to extract sand, gravel and other quarry resources shall be
issued exclusively by the Provincial Governor, pursuant to the ordinance of
the sangguniang panlalawigan. [Art. 227 (b), IRR, implementing Sec. 138,
LGC]
2. The proceeds of the tax on sand, gravel and other quarry resources shall be
distributed as follows:
a. Province - Thirty percent (30%);
b. Component city or municipality where the sand, gravel and other
quarry resources are extracted - Thirty percent (30%); and
46
LTOM, 2ND EDITION
c. Barangay where the sand, gravel and other quarry resources are
extracted - Forty percent (40%).
[Art. 227 (c), IRR, implementing Sec. 138, LGC]
C. Only quarry resources extracted from public lands are subject to local taxes.
Quarry resources extracted from private lands are not within the taxing power of
the local government.
NOTE
The LGU may not invoke the Regalian doctrine to extend the coverage of
their ordinance to quarry resources extracted from private lands, for taxes,
being burdens, are not to be presumed beyond what the applicable statute
expressly and clearly declares, tax statutes being construed strictissimi juris
against the government. (GR No. 126232 November 27, 1998)
SECTION 59. TAX ON DELIVERY TRUCKS OR VANS

A. It is an annual fixed tax for every truck, van or any vehicle used by manufacturers,
producers, wholesalers, dealers or retailers in the delivery or distribution of
distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other
products as may be determined by the sangguniang panlalawigan, to sales
outlets, or consumers, whether directly or indirectly, within the LGU in an amount
not exceeding Five Hundred Pesos (₱500.00).
B. The manufacturers, producers, wholesalers, dealers, and retailers referred to
in the immediately foregoing paragraph shall be exempt from tax on peddlers
referred to in Sec. 143 (g) of the LGC.
(Sec. 141, LGC)
SECTION 60. AMUSEMENT TAX

A. It is a tax collected from the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia, and other places of amusement. [Sec. 140
(a), LGC]
B. The collection and administration of the amusement tax shall be guided by the
following:
1. The rate of amusement tax shall not be more than ten percent (10%) of the
gross receipts from admission fees. (RA 9640)
2. In the case of theaters or cinemas, the tax shall first be deducted and withheld
by their proprietors, lessees, or operators and paid to the local treasurer
before the gross receipts are divided between said proprietors, lessees, or
operators and the distributors of the cinematographic films. [Sec. 140 (b),
LGC]
47
SOURCES OF INCOME
3. The holding of operas, concerts, dramas, recitals, paintings, and art

exhibitions, flowers shows, musical programs, literary and oratorical
presentations, except pop, rock or similar concerts shall be exempt from
the payment of the amusement tax, subject to guidelines issued by the
Department of Finance (DOF) [Art. 229 (c), IRR implementing Sec. 140
(c), LGC]. The admission fees on resort, swimming pools, bath houses, hot
springs and tourist spots are not subject to amusement tax but subject to
business tax imposed under Sec. 143 of the LGC, pursuant to the Supreme
Court Decision in the case of Pelizloy Corp. vs. Province of Benguet, GR No.
183137,10 April 2013.
4. The sanggunian concerned may prescribe the time, manner, terms and
conditions for the payment of tax including the issuance by the proprietor,
lessee, or operator of the theater or amusement place of admission tickets. In
case of fraud or failure to pay the tax, the sanggunian concerned may impose
such surcharges, interests, and penalties as it may deem appropriate. [Art.
229 (d), IRR implementing Sec. 140 (d), LGC]
5. The proceeds of the amusement tax shall be shared equally by the province
and the municipality where such amusement places are located. [Sec. 140
(e), LGC]
6. Not only theaters and cinema houses, but all "places of amusement" such
as night clubs, cockpits, and the like, are subject to the amusement tax on
admission if any amount is charged as entrance fee to the patrons. (p. 77,
Philippine Law on Local Government Taxation, Annotated, 2000 edition,
Ursal) A golf course cannot be considered a place of amusement. (Alta
Vista and Country Club v. City of Cebu, GR No.180235, 10 January 2016)
7. For the effective administration of the amusement tax, an administrative
provision may be provided in the tax ordinance, requiring proprietors, lessees
or operators liable to the amusement tax on admission to:
a. Number the admission tickets consecutively and serially;
b. Reflect in the admission tickets the name of the amusement place and
the fee charged for admission;
c. Register ticket rolls or booklets with the Provincial/City Treasurer of
the locality where the amusement place is located before issuing the
tickets;
d. Tear admission tickets into halves, once issued, the first half to be
given by the gatekeepers to the customer or patron and the other half
to be deposited in a ticket box to be made available for inspection by
the Local Treasurer or his/her deputy; and
e. Provide a strong and safe ticket box to contain the admission ticket
halves, which boxes will be secured with a separate padlock, the only
key to which shall be deposited with the Local Treasurer concerned.
48
LTOM, 2ND EDITION
(p.110, Phil. Law on Local Government Taxation, Third Edition,

Volume One, 2010, Ursal)
SECTION 61. FRANCHISE TAX

A. Notwithstanding any exemption granted by any law or other special law, the
province may impose a tax on businesses enjoying a franchise. (Sec. 137, LGC)
B. Business franchise tax is imposed on franchise conferred upon by government
and its political subdivisions, such as telecommunications and electric power,
among others. Business Franchise issued by private persons or juridical entity
are not subject to franchise tax.
NOTE
There is no double taxation when local business tax is imposed in addition

to the local franchise tax, as ruled by the Supreme Court, viz:
Petitioner claims that the assessment of business tax in addition to local

franchise tax is a case of double taxation.
We do not agree. As aptly ruled by the Court of Appeals (CA), the two taxes
are not of the same kind and character and can be imposed by the same
taxing authority at the same time.
First, “business taxes imposed in the exercise of police power for regulatory
purposes are paid for the privilege of carrying on a business in the year the
tax was paid. It is paid at the beginning of the year as a fee to allow the
business to operate for the rest of the year. it is deemed a prerequisite to
the conduct of business.”
A franchise tax, on the other hand is a tax on the privilege of transacting

business in the state and exercising corporate franchises granted by the
state. it is not levied on the corporation simply for existing as a corporation,
upon its property or its income, but on its exercise of the rights or privileges
granted to it by the government. it is within this context that the tax enjoying
a franchise in Sec. 137 of the LGC should be interpreted and understood.
This Court went on further that to be liable for local franchise tax, the
following requisites should concur: (1) that one has a “franchise” in the
sense of a secondary or special franchise; and (2) that it is exercising its
rights or privileges under this franchise within the territory of the pertinent
local government unit.
Clearly, there can be no double taxation as the two taxes are different nature
and imposed for different purposes. Undeniably, both requisites for local
franchise tax are also present in this case.
(Resolution dated 5 September 2018 on GR No. 213136, Supreme Court,

Manila, Third Division)
C. The administration and collection of franchise tax shall be governed by the

following:
49
SOURCES OF INCOME
1. Tax Rate and Base of Franchise Tax - The LGU may impose a tax on
businesses enjoying a franchise, at a rate not exceeding fifty percent (50%)
of one percent (1%) of the gross annual receipts which shall include both
cash sales and sales on account realized during the preceding calendar
year within its territorial jurisdiction, excluding the territorial limits of any city
located within the province. [Art. 226 (a), IRR, implementing Sec. 137, LGC]
2. Limitation of the Province to Impose Franchise Tax - The province,
however, shall not impose the tax on businesses enjoying franchise operating
within the territorial jurisdiction of any highly-urbanized or component city
located within the province. [Art. 226 (b), IRR, implementing Sec. 137, LGC]
3. Exemption of Public Utility Vehicle Operators with Certification of
Public Convenience - The term "businesses enjoying franchise" shall not
include holders of certificates of public convenience for the operation of
public utility vehicles for reason that such certificates are not considered as
franchise. [Art. 226 (c), IRR, implementing Sec. 137, LGC]
4. Tax Rate and Base of Franchise Tax for Newly Started Business - In
the case of a newly started business, the tax shall not exceed one-twentieth
(1/20) of one percent (1%) of the capital investment. In the succeeding
calendar year, regardless of when the business started to operate, the tax
shall be based on the gross receipts for the preceding calendar year, or any
fraction thereof. [Art. 226 (d), IRR, implementing Sec. 137, LGC]
5. Capital Investment as Basis of the Franchise Tax of a Newly Started
Business – The capital investment to be used as basis of the tax of a newly
started business as herein provided shall be determined in the following
manner:
a. In the locality where the principal office of the business is located,
the paid-up capital stated in the Articles of Incorporation, in case of
corporations, or in any similar document in case of other types of
business organizations or enterprises, shall be considered as the
capital investment.
b. Where there is a branch or sales office which commences business
operations during the same year as the principal office but which is
located in another province or in a city outside the province, the paid-
up capital referred to above shall be reduced by the amount of the
capital investment made for the said branch or sales office which shall
be taxable instead by the province or city where it is located.
c. Where the newly-started business is a branch or sales office
commencing business operations at a year later than that of the
principal office, the capital investment shall mean the total funds
invested in the branch or sales office.
[Art. 226 (d), IRR, implementing Sec. 137, LGC]
50
LTOM, 2ND EDITION
NOTE
SECTION 62. TAX ON PRINTING AND PUBLICATION

The LGU may impose a tax on the business of persons engaged in the printing
and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature13, at a rate not exceeding fifty percent (50%)
of one percent (1%) of the gross annual receipts for the preceding calendar year.
A. In the case of a newly started business, the tax shall not exceed one-twentieth
(1/20) of one percent (1%) of the capital investment. In the succeeding calendar
year, regardless of when the business started to operate, the tax shall be based
on the gross receipts for the preceding calendar year, or any fraction thereof, as
provided herein.
B. The receipts from the printing and/or publishing of books or other reading materials
prescribed by the Department of Education, Culture and Sports (now DepEd) as
school texts or references shall be exempt from the tax herein imposed.
(Sec. 136, LGC)
SECTION 63. TAX REVENUES - FINES AND PENALTIES

Fines and penalties imposed in relation to:
A. Collection of taxes on individual and corporation;
B. Collection of real property taxes; and
C. Collection of taxes on goods and services.
SECTION 64. SHARE FROM INTERNAL REVENUE ALLOTMENT (IRA)

A. Allotment of Internal Revenue Taxes – (a) LGUs 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:
13 Printing of newspapers, magazines and other periodicals, books and brochures, music and music manuscripts,
maps, atlases, posters, advertising catalogues, prospectuses and other printed advertising, postage stamps,
taxation stamps, documents of title, cheques and other security papers, registers, albums, diaries, calendars,
business forms and other commercial printed matter, personal stationery and other printed matter by letterpress,
offset, photogravure, flexographic and other printing presses, duplication machines, computer printers, embossers,
etc., including quick printing. Printing directly into textiles, plastic, glass, metal, wood and ceramics (except silk-
screen printing on textiles and wearing apparel). The material printed is typically copyrighted. Printing on labels or
tags (lithographic, gravure printing, flexographic printing, others).
This class excludes: Silk screen-printing on textiles and wearing apparel; Manufacture of paper articles, such as
binders; Publishing of printed matter; Photocopying of documents. (Philippine Standard Industrial Classification
(PSIC), 2009, Class Code 1811)
51
SOURCES OF INCOME
1. On the first year of the effectivity of the LGC, 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)
NOTE
On July 3, 2018, the Supreme Cour, in GR No. 199802 and GR No. 208488,
modified Sections 284, 285, 286 and 290 of the LGC, including the pertinent
provisions of the IRR of the LGC, by deleting the phrase “internal revenue”
in said sections.
B. In the event that an unmanageable public sector deficit is incurred by the national
government, the Secretary of Finance, the Secretary of the Interior and Local
Government and the Secretary of Budget and Management shall submit to the
President of the Philippines a joint recommendation that will institute necessary
adjustments in the IRA of LGUs.
C. Upon receipt of the joint recommendation of the Secretary of Finance, the
Secretary of the Interior and Local Government and the Secretary of Budget
and Management and subject to consultation with the presiding officers of both
Houses of Congress and the presidents of the leagues of LGUs, the President of
the Philippines shall authorize the necessary adjustments of the total IRA to be
distributed among the LGUs for the given year, provided that in no case shall the
adjusted amount be less than thirty percent (30%) of the national internal revenue
tax collections of the third fiscal year preceding the current fiscal year during
which the reduction is to be made.
D. Adjustments to the IRA share of LGUs shall be made only after effecting a
corresponding reduction of the national government expenditures including cash
and non-cash budgetary aids to GOCCs, government financial institutions (GFIs),
the Oil Price Stabilization Fund (OPSF) and the Bangko Sentral ng Pilipinas
(BSP).
(Art. 379, IRR implementing the 2nd and 3rd paragraphs of Sec. 284, LGC)
E. The term "budget deficit" means a shortfall of revenues against disbursements
while "public sector" refers to the national government itself, plus the fourteen
(14) major government corporations, the government financial institutions, all
the LGUs, the BSP, the social security institutions and the Oil Price Stabilization
Fund. Hence, the sum of the deficits of all these different units within the public
sector is what is referred to as the "public sector deficit." (p. 373, Philippine Law
on Local Government Taxation, Third Edition, Volume One, Ursal, 2010)
F. Public sector deficit means the shortfall of revenues against disbursements of the
national government, the fourteen (14) major government corporations, the GFIs,
all the LGUs, the BSP, and the social security institutions.
52
LTOM, 2ND EDITION
G. Allocation to LGUs – The total annual IRA due the LGUs shall be allocated
among provinces, cities, municipalities and barangays as follows:
1. General Allocation
a. Share of all provinces – Twenty-Three Percent (23%)
b. Share of all cities – Twenty -Three Percent (23%)
c. Share of all municipalities – Thirty-Four Percent (34%)
d. Share of all barangays – Twenty Percent (20%)
2. Share of Each Province, City and Municipality – The share of each province,
city, and municipality shall be determined on the basis of the following
distribution formula:
a. Population – Fifty Percent (50%)
b. Land Area – Twenty-Five Percent (25%)
c. Equal Sharing – Twenty-Five Percent (25%)
3. Share of Each Barangay
a. Every barangay with a population of not less than one hundred (100)
inhabitants shall be entitled to an IRA share of not less than Eighty
Thousand Pesos (₱80,000.00) per annum chargeable against the
twenty percent (20%) share of the barangays from the total IRA.
b. After deducting the aggregate sum of the individual barangay share
of ₱80,000.00 each from the total twenty percent (20%) allocation for
all barangays, the remaining balance of said twenty percent (20%)
allocation shall be further distributed to the barangays based on the
following formula:
i. On the first year of the effectivity of LGC (CY 1992):
1. Population – Forty Percent (40%) and
2. Equal Sharing – Sixty Percent (60%)
ii. On the second year:
1. Population – Fifty Percent (50%)
2. Equal Sharing – Fifty Percent (50%)
iii. On the third year and thereafter:
1. Population – Sixty Percent (60%)
2. Equal Sharing – Forty Percent (40%)
4. Financial requirements for the initial year of existence of provinces, cities,
and municipalities to be created after the effectivity of the LGC shall be
specified in the law creating said LGUs.
53
SOURCES OF INCOME
5. Newly created barangays – Financial requirements of barangays created by

LGUs after the effectivity of the LGC shall be the responsibility of the LGU
concerned. (Art. 382, IRR implementing Sec.285, LGC)
6. Automatic release of IRA shares – The IRA shall be released directly by
the Bureau of the Treasury (BTr) to the LGU beneficiaries only through
authorized government servicing banks (AGSBs). [General Appropriations
Act (GAA)]
a. The individual shares in IRA of each LGU shall be automatically
released, without the need of any further action, direct to the provincial,
city, municipal, or barangay treasurer, as the case may be, on a monthly
basis but not beyond five (5) days after the end of each month.
i. Compute the specific shares of the LGUs based on the Joint
Certifications issued by the collecting agencies and the BTr.
ii. Issue to the BTr the pertinent budget release documents,
including the list of the specific shares of LGUs, as bases for the
transfer of funds to the LGUs through the AGSBs.
b. The BTr shall be the recipient of the Special Allotment Release Order
(SARO) and Advice of Notice of Cash Allocation Issued (ANCAI) while
the corresponding Notice of Cash Allocation (NCA) shall be issued
to the AGSBs. The BTr shall issue the disbursement document, i.e.
Authority to Debit Account (ADA), so as to effect the transfer of IRA
and other funds to the LGUs from BTr’s MDS sub-account to the
depository account of the LGUs, and issue the corresponding Notice
of ADA Issued to advise the LGUs accordingly. (DOF-DBM Joint
Circular No. 2016-1, 04 January 2016)
7. Exemption to the Lien or Holdback of the IRA Shares – The IRA share of
LGUs shall not be subject to any lien or holdback that may be imposed by the
national government for whatever purpose unless otherwise provided in the
LGC or other existing laws and loan contracts or project agreements arising
from foreign loans and international commitments, such as the premium
contributions of LGUs to the GSIS and loans contracted by LGUs under
foreign-assisted projects. [Art. 383 (c), IRR implementing Sec. 286, LGC]
8. Mandatory Appropriation for Local Development Projects – It shall
be mandatory for each LGU to set aside in its annual budgets amounts
no less than twenty percent (20%) of its IRA for the year as appropriation
for local development projects that are embodied or contained in the local
development plans. Copies of the development plans of LGUs shall be
furnished the Department of Interior and Local Government (DILG). (Art.
384, IRR implementing Sec. 287, LGC)
9. Guidelines on Change or Transfer of Depository Bank/Bank Branch/
Current Account for IRA
a. Request of LGUs for change or transfer of depository bank/bank
branch/current account for IRA purposes shall be directly submitted to
54
LTOM, 2ND EDITION
the BTr-Province/District Office (BTr-PO/DO) concerned for processing

and submission to the Regional Director for final action.
Request for such change/transfer made by a bank branch or any other
party in lieu of the LGU concerned shall not be considered/entertained.
b. LGUs shall only be allowed such change/transfer under the following
conditions:
i. The change/transfer is duly authorized by the local sanggunian
ii. LGUs which have outstanding contractual obligations with their
present depository banks, shall not request for transfer of their
account to another bank unless the LGU concerned has secured
prior clearance from its present depository bank.
iii. The transfer of depository bank shall be limited to authorized
government servicing banks (GSBs) under the Modified
Disbursement Scheme (MDS) such as, the Land Bank of the
Philippines (LBP), Development Bank of the Philippines (DBP)
and Philippine Veterans Bank (PVB).
c. Requests for transfer of IRA depository accounts to the PNB shall no
longer be considered. However, LGUs shall be allowed to transfer,
on their own, local funds from LBP, DBP and PVB as the case may
be to PNB to comply with the loan arrangements with the said bank,
provided that the same is supported by a duly approved Sanggunian
resolution. As such, transfer of depository accounts to the Philippine
National Bank (PNB) should have prior approval from the Department
of Finance pursuant to Department Order No. 27-05, 9 December
2005.
d. Requests of LGUs for change or transfer of depository bank/
bank branch/current account shall be supported with the following
documents:
i. Certified true copy of the Sanggunian resolution authorizing the
LGU to change or transfer its IRA depository bank/bank branch/
current account;
ii. Name of new servicing banks, location and bank account number;
and
iii. Clearance from present depository bank branch allowing the
transfer, in case the LGU has an outstanding loan/contractual
obligation with the said bank.
e. Change of depository bank shall be approved and implemented only
at the beginning of each calendar year.
f. Transfer of IRA depository account from one bank branch to another
branch of a particular GSB and change current account within the
same depository bank shall be approved on a quarterly basis.
55
SOURCES OF INCOME
g. To give BTr-PO/DO sufficient time for evaluation/processing and for

effecting changes in their respective IRA database, the LGUs should
observe the following deadlines in the submission of their requests to
BTr ROs concerned:
i. For change or transfer of depository bank/bank branch in the
ensuing calendar year:
Deadline for submission by LGUs – On or before December 7 of
the calendar year.
Effectivity of approval – Beginning of following year
ii. For transfer to another bank branch of the same GSB/change
of account within the same bank branch for the ensuing quarter:
Deadline for submission by LGUs – On or before the 7th day of
the last month of the current quarter.
h. LGUs are advised not to close their existing current account until such
time that the LGU concerned has received the approval of the BTr RO
on the proposed transfer/change.
(BTr Circular No. 01-2017, 28 December 2016)
SECTION 65. SHARE FROM EXPANDED VALUE ADDED TAX (VAT)

Value added tax is a tax on consumption levied on the sale, barter, exchange or lease
of goods or properties and services in the Philippines and on importation of goods into
the Philippines. The seller is the one statutorily liable for the payment of the tax but
the amount of the tax may be shifted or passed on to the buyer, transferee or lessee
of the goods, properties, and services at the time of the effectivity of RA No. 9337.
A. Share from Excess Collection in Value Added Tax (VAT) – In addition to the IRA,
fifty percent (50%) of the national taxes collected by the BIR under Secs. 106
and 108 of the NIRC (formerly Secs. 100, 101 and 102 of the NIRC of 1977) in
excess of the increase in collection for the immediately preceding year shall be
1. Twenty percent (20%) shall accrue to the city or municipality where such
taxes are collected and shall be allocated in accordance with Sec.150 of the
LGC;
2. Eighty percent (80%) shall accrue to the national government; and
3. LGUs' share in the incremental collection from VAT pursuant to R. A. 7643,
shall be allocated among LGUs entitled to such share in accordance with
Sec. 150 of the LGC, to wit:
a. 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;
56
LTOM, 2ND EDITION
b. If VAT is paid by manufacturers, producers, with factories, project

offices, plantations and plants:
i. Thirty percent (30%) to the city or municipality where the principal
office is located; and
ii. Seventy percent (70%) to the city or municipality where the
factory, project offices, plant or plantation is located.
c. 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:
office is located;
ii. Forty-two percent (42%) to the city or municipality where the
factory is located; and
iii. Twenty-eight percent (28%) to the city or municipality where the
plantation is located.
d. If VAT is paid by the manufacturers, producers, exporters and has two
(2) or more factories, plants, and plantations:
office is located;
ii. Seventy percent (70%) shall be prorated among the localities
where the factories, project offices, plants, and plantations are
located; and
iii. The LGUs share shall be released directly to the LGUs
concerned, subject to the approval of special budget pursuant
to Sec. 35, Chapter 5, Book VI of EO No. 292 duly supported by
the certification of actual VAT collections and remittances under
Secs. 106 and 108 of the NIRC of 1997 by the BIR. (Sec. 2, RA
No. 7643, implemented by DBM-DOF-DILG Joint Circular No.
1-02, 06 February 2002)
B. The share from expanded value added tax also includes share from VAT in lieu
of franchise tax collected from racetrack operations of the Manila Jockey Club
(MJCI), Inc. and the Philippine Racing Club, Inc. (PRCI). (COA Circular No. 2015-
009, 1 December 2015)
Guidelines and Procedure for the Release of the LGU shares from the VAT from
MJCI and PRCI.
Republic Act Nos. 8407 and 7953 granted to the MJCI and PRCI, respectively,
the franchise to operate racetracks where:
MJCI and PRCI shall remit to the National Treasury a franchise tax equal
to twenty five percent (25%) of their gross earnings from the horse races
57
SOURCES OF INCOME
authorized to be held under their respective franchise which is equivalent to

8 1/2% of the total wager fund or gross receipts on the sale of betting tickets
during the racing day allotted as follows:
% shares
National Government 5/25
Province or city/municipality where racetrack is located 5/25
Philippine Charity Sweepstakes Office (PCSO) for PRCI/
Municipal hospital where the racetrack is located for MJCI/ 7/25
Philippine
Anti-Tuberculosis Society 6/25
White Cross (WC) 2/25
D. Procedural Guidelines
1. LGU’s Share Computation
Gross receipts (8.5% Club’s commission) Php xxxxx

VAT Rate (10% or 12% whichever is
10% or 12%
applicable)
VAT Output Php xxxxx
Less: Input tax Php xxxxx
VAT Due and Payable Php xxxxx
LGU’s Percentage Share (5/25) 20%
LGU’s share Php xxxxx
Note : LGU’s share is computed from the 8.5% of Club’s commission only
10% VAT rate up to 31 January 2006
12% VAT rate effective 1 February 2006
2. Input Tax is the value added tax (VAT) due from or paid by a VAT-registered
person in the course of his trade or business on importation of goods or local
purchase of goods or services, including lease or use of property, from a
VAT-registered person.
Output Tax means the VAT due on the sale or lease of taxable goods or
properties or services by any person liable to pay the tax under Sec. 105 of
the NIRC.
3. Responsibilities
a. Department of Finance (DOF) - Bureau of Internal Revenue (BIR)
For the release of LGU shares for remittances in CY 2008 chargeable
against the 2009 General Appropriations Act (GAA) and thereafter:
i. For CY 2008 and every year thereafter, prepares the monthly
summary of VAT payments of MJCI and PRCI paid/filed with the
BIR and forwards copy of the summary to the BTr within 10 days
after the end of the month of filing of returns
58
LTOM, 2ND EDITION
ii. Submits to Department of Budget and Management (DBM), the

duly signed BTr-BIR Joint Certification of VAT payments received
by BIR from the MJCI and PRCI and deposited to BTr, together
with the computation of the shares of LGUs thereon on or before
30 April 2009 and ensuing year thereafter.
For the annual budget preparation (BP) for CY 2009 and for every BP
year thereafter:
Prepares and submits to Department of Budget and Management
(DBM) not later than 15 March 2008 and of each ensuing year, the
projected amount representing the VAT payments for the current year
for inclusion in the National Expenditure Program (NEP) starting in CY
2009 and for every BP Year thereafter.
b. DOF-Bureau of the Treasury (BTr)
i. Receives from the BIR the summary of VAT payments of MJCI
and PRCI, validates the same from the credit advices received
from Authorized Government Depository Banks (AGDBs) and
prepares the summary of deposits with the corresponding Journal
Entry Voucher (JEV) issued.
ii. Consolidates the monthly summary of VAT payments, validates
the same from the BTr recorded VAT deposits, prepares the
whole year summary with the corresponding JEV issued, and
attach the same to the BTr-BIR joint certification.
iii. Prepares and signs yearly BTr-BIR Joint Certification showing
the reconciled VAT payments received by the BIR from the MJCI
and PRCI and deposited to the BTr.
iv. Submits to BIR the duly signed BTr-BIR Joint Certification of VAT
payments together with the summary of recorded VAT deposits
of MJCI and PRCI with the corresponding JEV issued within 15
days from receipt of the summary of VAT payments from the BIR
c. Department of Budget and Management
i. Includes in the NEP the projections/estimates of VAT payments
for income derived by MJCI and PRCI for the current year
submitted by the BIR
ii. Releases the shares directly to the LGUs, based on the BIR
computation of LGU shares supported by the BIR-BTr Joint
Certification on the actual collections made by the BIR and
actually deposited to the BTr, as submitted to DBM not later than
April 30 of each year, subject to cash programming, budgeting,
accounting and auditing rules and regulations.
(DOF-DBM Joint Circular No. 2008-1, 16 June 2008)
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SOURCES OF INCOME
SECTION 66. SHARE FROM NATIONAL WEALTH

A. LGUs shall have an equitable share in the proceeds derived from the utilization and
development of the national wealth within their respective areas, including sharing
the same with the inhabitants by way of direct benefits. (Sec. 289, LGC)
B. The term national wealth shall mean all natural resources situated within the
Philippine territorial jurisdiction including lands of public domain, waters, minerals,
coal, petroleum, mineral oils, potential energy forces, gas and oil deposits, forest
products, wildlife, flora and fauna, fishery and aquatic resources and all quarry
products. (Art. 386, IRR implementing Sec. 289, LGC)
C. 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.
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)
D. Share from Mining Taxes
Updated Guidelines and Procedures on the Release of the share of LGUs from
the Collections Derived by the National Government
1. Roles and Responsibilities
The following national government agencies shall endeavor to establish
and share among themselves on a timely basis, information and an updated
database to facilitate the exchange of information needed for the smooth and
reliable processing and release of the shares of LGUs from mining taxes.
a. The DOF- BIR, shall:
i. Submit to the DBM, in coordination with DOF, for budget
preparation purposes, the estimated or projected mining tax to be
collected for the current year and the corresponding forty percent
(40%) share of the LGUs on or before March 15 of every year.
The said estimated or projected mining tax collection shall be
60
LTOM, 2ND EDITION
equivalent to the amount of excise tax from the mining industry

allocated from the total revenue target of the BIR.
ii. Prepare and approve a Joint Certification with the BTr, for
budget execution purposes, the actual collections from mining
taxes during each calendar quarter and the schedule of the
corresponding shares of the beneficiary LGUs. The said
certification shall be transmitted to the BTr, for validation and
approval purposes within seventy five (75) days and immediately
after the end of the calendar quarter.
In the preparation of the said schedule of shares of certain LGUs
where the mining sites/operations are located in two (2) or more
provinces, or in two (2) or more component cities, or in 2 or more
barangays, the updated master list of land area officially issued
by the Land Management Bureau (LMB) and the updated census
of population issued by the National Statistics Office (NSO) shall
be adopted as basis in computing the allocable share of the
affected LGUs.
iii. Determine the correct mining taxes paid and collected during the
immediately preceding year based on the estimated and actual
volumes and values of the mineral products submitted by the
Mines and Geosciences Bureau (MGB).
b. The DOF- BTr, shall:
i. Validate and approve the Joint Certification transmitted by the
BIR within thirty (30) days immediately after receipt hereof. The
said certification shall be validated from the reports transmitted
by the BTr Regional Offices and Authorized Agent/Government
Depository Banks.
ii. Transmit to the DBM the duly validated and approved Joint
Certification within forty five (45) days immediately after the
actual receipt of said certification and schedule of LGU shares
from the BIR.
iii. Furnish the BIR a copy of the validated and approved joint
certification accompanied by the summary of recorded mining
tax deposits and/or collections and the Journal Entry Voucher
issued representing total BIR collections, within fifteen (15) days
from transmittal thereof to the DBM.
c. The Department of Environment and Natural Resources (DENR):
i. The MGB, shall furnish the BIR not later than the end of February,
the estimated annual volumes and values of metallic mineral
production of mining companies for the current year.
ii. In order to assist in the enhancement of the mining tax collections,
furnish the BIR not later than the end of March, the actual volumes
61
SOURCES OF INCOME
and values, on a per project basis, of metallic minerals produced

during the immediately preceding year.
For non-metallic minerals, the actual volumes and values of
production, on a per remittance/project during the immediately
preceding year, shall be furnished to the BIR not later than the
end of October of the ensuing year.
iii. Provide the BIR, within sixty (60) days after the end of each
quarter, the list of new metallic permittees, actual volumes and
values of their respective production and extraction sites.
d. Land Management Bureau (LMB), shall furnish the BIR an updated
copy of the consolidated master list of land area not later than
December 15 of every third year after CY 2001, after coordination with
the DBM.
e. Department of the Interior and Local Government (DILG)-Bureau of
Local Government Supervision (BLGS), shall:
i. Prepare and submit to the BIR not later than the 15th day of May,
the validated list of actual extraction sites of all non-metallic
mineral products with a summary of LGUs where such production/
extraction originated.
ii. Enjoin the Local Chief Executives (LCEs) to ensure submission
by mining permittees of the quarterly production and sales report
form to the MGB Regional Offices.
iii. Furnish the DBM, BIR and BTr with the updated master list of
LGUs during the 1st quarter of each year.
f. DBM-Regional Operations and Coordination Service (ROCS) and
Regional Offices (ROs) shall:
i. Program, for budget preparation purposes, the amount
representing the LGUs shares of mining taxes in the budget of
the following year, based on the estimated or projected mining
taxes to be collected for the current year and the corresponding
40% share of the LGUs submitted by the BIR.
ii. Release the shares of the LGUs in the mining taxes by issuing
the allotment and the corresponding cash allocation based on
the Joint Certification issued by the BIR and BTr of mining tax
collections and the schedule of the corresponding shares of
the beneficiary LGUs. The funding check shall be deposited to
the Government Servicing Banks (GSBs) for direct credit to the
account of the beneficiary LGUs.
iii. Release the LGU’s share based on the Joint Certification issued
by the BIR and BTr of mining tax collections during the first three
(3) quarters of the calendar year in February of the ensuing year.
62
LTOM, 2ND EDITION
Releases based on mining taxes collected during the fourth

quarter shall be released in May of the ensuing year.
2. Distribution of Shares of LGUs
Pursuant to Sec. 292 of the LGC, the 40% share of the LGUs from the
preceding year’s collections of mining taxes shall be distributed as follows:
% of Distribution
Highly
Particulars Component Urbanized/
Province City/ Independent Barangay Total
Municipality Component
City
Where the natural
resources are
located in the 20 45 35 100
Province and in one
City/Municipality/
Barangay
Where the natural
resources are
located in a
highly urbanized 65 35 100
or independent
component city and
in one barangay
Provided, however, that where the natural resources are located in two (2) or more
provinces, or in two (2) or more component cities or municipalities, or in two (2)
or more highly urbanized or independent component cities or in two (2) or more
barangays, their respective shares shall be computed on the basis of:
Population: 70
Land Area: 30
3. Funding Source
The 40% share of LGUs from the gross mining tax collections derived by
the national government from the preceding fiscal year shall be released
chargeable against the current year’s General Appropriations Act.
(DOF-DBM-DILG-DENR JMC No. 2009-1, 31 March 2009)
E. Share from Proceeds derived from Hydro-Power Plants, Geothermal and
Other Sources of Energy
Benefits to Communities Hosting the Generation Facility and Energy Resource
Development Projects pursuant to Chapter II, Secs. 289 to 294 of the LGC:
1. Scope of Application
The LGU hosting the national wealth shall have an equitable share in the
proceeds derived from the utilization and development of national wealth,
including sharing the same with the inhabitants by way of direct benefits.
63
SOURCES OF INCOME
2. Amount of Share of LGUs

Any government agency or government-owned or controlled corporation and
private corporation or entities engaged in the utilization and development of
the national wealth are required to provide share to the host LGUs, based
on the preceding fiscal year of the proceeds, based on the following formula,
whichever will produce a share higher for the LGU:
a. One percent (1%) of the gross sales or receipts of the preceding
calendar year; or
b. Forty percent (40%) of the national wealth taxes, royalties, fees or
charges derived by the government agency or government owned and
controlled corporation and privately owned corporation or entities.
c. Nature of Benefits
i. Eighty percent (80%) of the proceeds shall be applied solely to
lower the cost of electricity either through subsidy or non-subsidy
scheme or combination of both.
1. Non-subsidy scheme may take the form but not limited
to electrification, technical upgrading and rehabilitation of
distribution lines to reduce electricity losses, use of energy
saving devices, and support of the infrastructure facilities
servicing the needs of the public which can all redound to
the reduction of the electricity rate of the area.
2. Subsidy scheme will be directly utilized to subsidize the cost
of power used by the consumers. This may be applied with
or without ceiling or at graduated rates (per KWH per level
of consumption) in the following form which the host LGU
may choose from:
a. Subsidy per customer, an equal or predetermined
level or rate of subsidy per qualified customer:
i. All consumer types
ii. Residential consumer only
iii. Other preferred types of consumer combinations
such as: commercial, industrial, public,
buildings, irrigation/communal water system,
street lights, etc.
b. Subsidy of power consumption, which amount
of subsidy depends on the magnitude of power
consumption of qualified consumers:
i. All consumer types
ii. Residential consumer only
64
LTOM, 2ND EDITION
iii. Other preferred types of consumer combinations,

such as commercial, industrial, public buildings,
irrigation/communal water system, streetlights,
etc.
ii. Twenty Percent (20%) of the proceeds shall be utilized for the
development and livelihood projects which shall be appropriated
by their respective sanggunian.
d. Allocation of Shares
The amount of share of the LGUs shall be distributed in the following
manner:
i. For energy resource located in the province, share shall be
appropriated as follows:
1. Host Barangay - 35%
2. Host Component City/Municipality - 45%
3. Host province - 20%
ii. For energy resource located in a highly urbanized or independent
component city, share shall be appropriated as follows:
1. Host Barangay - 35%
2. Host City - 65%
iii. For energy resource located in two (2) or more provinces, or in
two (2) or more municipalities/cities or two (2) or more barangays,
their respective shares shall be appropriated on the basis of the
following:
1. Population - 70%
2. Land Area - 30%
Where the land area is the area of the host barangays found
within the technically delineated energy resource area and
where the population refers to the population of host barangays
found wholly or partially within the technically delineated energy
resource.
e. Monitoring
i. The DILG shall monitor the compliance of host LGUs. To assist
in the monitoring of compliance, all host LGUs of energy projects
are required to submit the following:
1. The scheme of electricity rate reduction adopted by the
host LGU (with proper documentation) based on the
prescription in the DILG-DOE Joint Circular 95-01 dated
65
SOURCES OF INCOME
31 October 1995 at the start of the use of fund or upon the

amendment of scheme by the respective LGU councils.
2. Summary of transactions thirty (30) days after the end of
each quarter.
The DILG shall furnish the DOE the above information
within fifteen (15) days from the date of the reporting period.
ii. The COA shall conduct yearly audit of the national wealth
proceeds consistent with its responsibility to examine all accounts
pertaining to uses of funds and property owned or held in trust by
the government or any of its agencies as mandated under Sec. 2
of Presidential Decree No. 1445 of 1976.
iii. In the event of violation or non-compliance with the provisions of
the DILG-DOE Joint Circular 95-01 and 98-01, and other relevant
issuances, the DILG may, upon prior notice and hearing, order the
project proponent the non-remittance of the royalty payment to
the host LGU concerned pending completion of the investigation
of the concerned LGU if the project proponent is a government-
owned or controlled corporation; or notify the DBM regarding
such violation and order the non-release of the LGU shares if the
project proponent is a private company. The unremitted funds
shall be deposited in the government bank under escrow.
(Rules and Regulations to Implement RA No. 9136, Entitled
“Electric Power Industry Reform Act of 2001”)
SECTION 67. SHARE IN THE PROCEEDS

OF THE TOBACCO EXCISE TAX
The share from excise tax on tobacco products is 15% of the incremental revenue
collected from the excise tax on tobacco products under RA No. 8240. It shall be
allocated and divided among the provinces producing burley and native tobacco in
accordance with the volume of tobacco leaf production.
Guidelines on the release and utilization of the shares of LGUs from the collection
of excise tax on locally manufactured Virginia-type cigarettes under RA No 7171 and
Burley and Native tobacco excise tax pursuant to RA No. 8240, as amended by RA
No. 10351.
A. Uses of the Fund
1. Shares of LGUs from the Collection of Excise Tax on Locally Manufactured
Virginia-Type Cigarettes under RA No. 717114.
The fund shall be utilized to advance the self-reliance of the tobacco farmers
through:
14 RA No. 7171 “An Act To Promote The Development Of The Farmer In The Virginia Tobacco Producing Provinces”
66
LTOM, 2ND EDITION
a. Cooperative projects that will enhance better quality of products,

increase productivity, guarantee the market and as a whole increase
farmers' income;
b. Livelihood projects particularly the development of alternative farming
systems to enhance farmers' income;
c. 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
d. Infrastructure projects such as farm-to-market roads.
2. Shares of LGUs from the Collection of Burley and Native Tobacco Excise Tax
Pursuant to RA No. 8240, as Amended by RA No. 10351.
a. The fund shall be exclusively utilized for programs in pursuit of the
following objectives:
i. Programs that will provide inputs, training and other support for
tobacco farmers who shift to production of agricultural products
other than tobacco including, but not limited to, high value crops,
spices, rice, corn, sugarcane, coconut, livestock and fisheries;
ii. Programs that will provide financial support for tobacco farmers
who are displaced or who cease to produce tobacco;
iii. Livelihood programs and projects that will promote, enhance,
and develop the tourism potential of tobacco-growing provinces;
iv. Infrastructure projects such as farm to market roads, schools,
hospitals and rural health facilities; and
v. Agro-industrial projects that will enable tobacco farmers to be
involved in the management and subsequent ownership of
projects, such as post-harvest and secondary processing like
cigarette manufacturing and by-product utilization.
b. The beneficiary LGUs shall submit to the DBM- Regional Office
(RO) concerned a list of programs and projects to be implemented,
supported by the following:
i. Approved sanggunian ordinance or resolution;
ii. Mechanism and period of implementation; and
iii. Projected or estimated number of beneficiaries.
c. In the identification and submission of the list of programs and projects
to be implemented, the beneficiary LGUs shall ensure the following:
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SOURCES OF INCOME
i. The programs and projects to be implemented are included in

the Annual Investment Program duly prepared/formulated and
endorsed by the local development council and duly approved by
the local sanggunian concerned; and
ii. In case a program/project is to be undertaken by a cooperative,
an authenticated or a certified true copy of the Certificate of
Registration from the Cooperative Development Authority is
submitted by the cooperative to the LGU prior to the implementation
of the program/project.
d. Upon receipt of the beneficiary LGU’s list of programs and projects to
be implemented, together with the necessary supporting documents,
the DBM-RO concerned shall endorse the said list to the DBM Central
Office (CO).
e. The endorsement by the DBM-RO concerned of the LGU’s submission
of the list of programs and projects together with the necessary
supporting documents, shall serve as the basis of the DBM-CO for
releasing the corresponding Notices of Cash Allocation (NCA) to the
Authorized Government Servicing Banks (AGSBs) and the Advice of
NCA Issued (ANCAI) to the BTr.
f. Upon receipt of the ANCAI, the BTr shall release the corresponding
Authorities to Debit Account (ADA) to the AGSBs. In parallel, the
BTr shall inform the beneficiary LGUs of their released shares and
the corresponding list of programs and projects to be implemented
through the issuance of Notices of Authority to Debit Account issued.
g. The release and utilization of the shares of the beneficiary LGU shall
be in accordance with the existing cash programming, budgeting,
accounting and auditing rules and regulations and other applicable
laws, rules and regulations.
h. Posting/Reporting Requirements
i. The recipient LGU shall prepare quarterly reports on fund
utilization and status of program/project implementation, and
said reports shall be posted within twenty (20) days from the end
of each quarter on the LGU’s website, the website established by
the DBM for the purpose, and in at least three (3) conspicuous
public places in the locality for transparency and accountability,
consistent with the Full Disclosure Policy of the DILG.
ii. The beneficiary LGUs shall also submit the quarterly reports on
funds utilization and status of program/project implementation to
the DBM and Bureau of Local Government Finance (BLGF) ROs
concerned within thirty (30) days from the end of each quarter.
iii. The recipient LGU shall comply with the posting requirements
prescribed under RA No. 9184.
(DBM Local Budget Memorandum No. 76, 06 October 2017)
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LTOM, 2ND EDITION
SECTION 68. SHARE FROM ECONOMIC ZONES

A. PEZA – except for real property taxes on land owned by developers, no taxes,
local and national, shall be imposed on business establishments operating within
the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all
business enterprises within the ECOZONE shall be paid and remitted as follows:
1. three percent (3%) to the National Government
2. two percent (2%) to be directly remitted to the treasurer’s office of the
municipality or city where the enterprise is located
(Sec. 4, RA No. 8748, amending Sec. 24 of RA No. 7916)
B. Special Economic Zone – Businesses and enterprises in Special Economic Zones
shall pay gross income tax (GIT) as may be provided for by the specific charters.
C. The specific provisions of local tax ordinances/revenue codes levying such
surcharges and penalties on the late remittance/payment of the 2% LGU share in
the 5% GIT of ecozone locators should be in harmony with the provisions of RA
7916, as amended, and RR1-2000, which are the governing laws on the matter.
(BLGF MC No. 13-2011, 04 July 2011)
SECTION 69. SERVICE INCOME

Fees and charges collected in the exercise of regulatory powers such as:
A. Business Permit Fees
All businesses shall obtain a Mayor's Permit before they can engage in any
business within a city or municipality. This permit allows them the privilege of
conducting their business within the jurisdiction of the city or municipality.
NOTE
By way of an ordinance, the LGU may impose a Mayor’s Permit Fee on electric
and/or telecommunication poles/posts owned by public utility companies which
are erected on government and/or private lots along government streets, roads,
highways and/or alleys. Such fee shall be commensurate with the cost of
regulation, inspection and licensing. (GR No. 224825, 17 October 2018)
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SOURCES OF INCOME
B. Building Permit Fees

No person, firm or corporation, including any agency or instrumentality of the
government, shall erect, construct, alter, repair, move, convert, or demolish any
building or structure or cause the same to be done without first obtaining a building
permit from the Building Official assigned in the place where the subject building
is located or the building work is to be done. (Sec. 301, P. D. 1096)
1. Permits supplementary to a Building Permit shall be applied for and issued
by the Building Official. These include Ancillary and the Accessory Permits.
a. Ancillary Permits include the following: Architectural Permit; Civil/
Structural Permit; Electrical Permit; Mechanical Permit; Sanitary
Permit; Plumbing Permit; and Electronics Permit.
b. Accessory Permits are issued by the Building Official for accessory
parts of the project with very special functions or use which are
indicated in the plans and specifications that accompany the building
permit application. These may include, among others: bank and
records vaults; swimming pools; firewalls separate from the building/
structure; towers; silos; smokestacks; chimneys; commercial/industrial
fixed ovens; industrial kilns/furnaces; water/waste treatment tanks,
septic vaults; concrete and steel tanks; booths, kiosks and stages;
and tombs, mausoleums and niches.
Accessory Permits are issued by the Building Official for activities being
undertaken prior to or during the processing of the building permit.
The coverage is spelled out in the accessory permit form including
the expiry period. These shall be signed by the concerned owner/
applicant and by the concerned professionals. These permits include,
among others, ground preparation and excavation, encroachment
of foundation to public area, fencing, for fence not exceeding 1.80
meters high, sidewalk construction, temporary sidewalk enclosure and
occupancy, erection of scaffolding, erecting, repair, removal of sign;
and demolition.
(IRR of PD No. 1096 or the National Building Code of the
Philippines, 2005 Revised Edition)
2. Except as otherwise provided herein, the Building Official shall be
responsible for carrying out the provisions of the National Building Code in
the field as well as the enforcement of orders and decisions made pursuant
thereto. Due to the exigencies of the service, the Secretary of the Department
of Public Works and Highways (DPWH) may designate incumbent Public Works
District Engineers, City Engineers and Municipal Engineers to act as Building
Officials in their respective areas of jurisdiction. The designation made by
the Secretary shall continue until regular positions of Building Official are
provided or unless sooner terminated for causes provided by law or decree.
(Sec. 205, PD No. 1096)
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LTOM, 2ND EDITION
3. Payment of Related Fees and Charges – The corresponding fees and charges
shall be collected for services rendered in connection with the processing and
issuance of building permit fees, signboard permit fee, plumbing inspection
permit fee, sanitary inspection fees, mechanical installation and inspection
fees and such other impositions as may be prescribed by the Department of
Public Works and Highways from persons, firms and corporations before they
are allowed to erect, construct, alter, move, convert or demolish any public
or private building or structure within the city/municipality in the exercise of
regulatory powers over public buildings and structures.
4. Every Building Official shall keep a permanent record and accurate account of
all fees and other charges fixed and authorized by the Secretary to be collected
and received under this Code. Subject to existing budgetary, accounting and
auditing rules and regulations, the Building Official is hereby authorized to
retain not more than twenty (20%) percent of his collection for the operating
expenses of his office. The remaining eighty (80%) percent shall be deposited
with the provincial, city or municipal treasurer and shall accrue to the General
Fund of the province, city or municipality concerned.
(Sec. 208, PD No. 1096)
5. Disposition and use of the 20% generated from building permit fees and
other charges under the national building code, viz:
a. The collection shall be made by the Local Treasurer, and the Official
Receipt shall show the breakdown of the total collections indicating
the share of the local government concerned - 80% and the share of
the national government - 20%. (RA 6541-2004, Revised IRR of PD
No. 1096)
b. The Local Treasurer shall remit and credit five percent (5%) of income
to the account of the DPWH Secretary under Special Account No. 154
thru the Bureau of the Treasury (BTr).
c. The remittances made by the Local Treasurer to the BTr shall be
validated in accordance with Item 2 (g) Sec. 210 of the Revised
Implementing Rules and Regulations of PD 1096.
d. If there is no discrepancy in the course of validation, the remittance
shall be credited to the concerned accounts. Otherwise, the same
shall be verified and adjusted immediately by the local treasurer.
e. The 15% Office of the Building Official (OBO) fund shall cover all the
necessary operating expenses of the OBO, including the purchase
of equipment, supplies and materials, traveling expenses, obligation
expenses and sheriff’s fees and payment of other prior years obligations
not adequately funded, subject to existing budgetary auditing rules
and regulations.
[DPWH-DILG JMC No. 001 dated 04 July 2013]
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SOURCES OF INCOME
C. Zonal/Location Permit Fees.

The Local Treasurer shall collect a Zoning Fee for Locational Clearance for all
structures to be constructed in the city/municipality in accordance with existing local
ordinances in compliance with Housing and Land Use Regulatory Board (HLURB)
guidelines (PD No. 957).
D. Tricycle Operators Permit Fees
The sangguniang bayan or panlungsod shall, subject to the guidelines prescribed
by the Department of Transportation and Communications (now DOTr), enact
an ordinance to regulate the operation of tricycles and grant franchises for the
operation thereof within the territorial jurisdiction of the municipality or city. [Sec.
447 (a) (3) (vi), LGC]
However, the issuance of licenses to tricycle drivers and charging of fees for the
registrations of motorcycles are under the jurisdiction of the Land Transportation
Office (LTO).
E. Fishery Rentals, Fees and Charges
Cities and municipalities shall have the exclusive authority to grant fishery
privileges in the city/municipal waters and impose rentals, fees or charges therefor
in accordance with the provisions of this Section.
The sanggunian may:
1. Grant fishery privileges to erect fish corrals, oysters, mussels or other aquatic
beds or bangus fry areas, within a definite zone of the city/municipal waters,
as determined by it: provided, however, that duly registered organizations
and cooperatives of marginal fishermen shall have the preferential right to
such fishery privileges: provided, further, that the sanggunian may require a
public bidding in conformity with and pursuant to an ordinance for the grant
of such privileges: provided, finally, that in the absence of such organizations
and cooperatives or their failure to exercise their preferential right, other
parties may participate in the public bidding in conformity with the above
cited procedure.
2. Grant the privilege to gather, take or catch bangus fry, prawn fry or kawag-
kawag or fry of other species and fish from the city/municipal waters by nets,
traps or other fishing gears to marginal fishermen free of any rental, fee,
charge or any other imposition whatsoever.
3. Issue licenses for the operation of fishing vessels of three (3) tons or less
for which purpose the sangguniang bayan shall promulgate rules and
regulations regarding the issuances of such licenses to qualified applicants
under existing laws.
4. Provided, however, that the sanggunian concerned shall, by appropriate
ordinance, penalize the use of explosives, noxious or poisonous substances,
electricity, muro-ami, and other deleterious methods of fishing and prescribe
a criminal penalty therefor in accordance with the provisions of this Code:
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LTOM, 2ND EDITION
provided, finally, that the sanggunian concerned shall have the authority to
prosecute any violation of the provisions of applicable fishery laws.
(Sec. 149, LGC)
F. Fees on Weights and Measures
1. General Provision – Every person before using instruments of weights and
measures for business, service, commercial, or other transactions with the
public within the city/municipality, shall first have them sealed and pay the
corresponding fee, fixed under an ordinance, to the City/Municipal Treasurer.
2. Instruments Usually Covered – Sealing shall include the following
instruments:
a. Linear metric measures
b. Metric measures of capacity
c. Metric instruments of weights
d. Apothecary balances of precision
e. Scales or balances with complete set of weights
3. For each and every re-testing and re-sealing of weights and measuring
instruments including gasoline pumps outside the office upon request of the
owner or operator, an additional service charge to be fixed by ordinance for
each instrument shall be collected.
4. Exemptions
a. All instruments for weights and measures used in government work
or maintained for public use by any instrumentality of the government
shall be tested and sealed free.
b. Dealers of weights and measuring instruments intended for sale.
5. Administrative Provisions
a. Unless otherwise provided by ordinance, law or other valid order,
the official receipt for the fee issued for the sealing of weights and
measures shall serve as a license to use such instrument for one (1)
year from the date of sealing, unless deterioration or damage renders
the weights and measures inaccurate within the period.
b. Unless otherwise provided, the license shall be preserved by the
month of the year following its original issuance. Such license shall be
preserved by the owner and together with the weights and measures
covered by the license shall be presented (exhibited) on demand by
the City/Municipal Treasurer or his/her deputies.
c. The City/Municipal Treasurer is hereby required to keep full sets of
secondary standards which shall be compared with the fundamental
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SOURCES OF INCOME
standards in the Department of Science and Technology (DOST)

annually. When found to be within accepted tolerances, the secondary
standards shall be distinguished by label, tag or seal and shall be
accompanied by a certificate showing the degree of their variation from
the fundamental standards. If the variation is of sufficient magnitude to
impair the utility of instrument, it shall be destroyed at the DOST.
d. The City/Municipal Treasurer or his/her deputies shall conduct periodic
physical inspection and test of weight and measure instruments within
the locality.
e. Instruments of weight and measure found to be defective beyond
repair shall be confiscated in favor of the government and shall be
destroyed by the City/Municipal Treasurer in the presence of the City/
Provincial Auditor or his/her representative.
6. The municipality may levy fees for the sealing and licensing of weights and
measures at such reasonable rates as shall be prescribed by the sangguniang
bayan [Sec. 148 (a), LGC]. Cities are similarly empowered to levy such fees
(Sec. 151, LGC).
7. The sanggunian concerned shall prescribe the necessary regulations for
the use of such weights and measures, subject to the guidelines prescribed
by the DOST. The sanggunian concerned shall, by appropriate ordinance,
penalize fraudulent practices and unlawful possession or use of instruments
of weights and measures and prescribe the criminal penalty in accordance
with the provisions of the LGC. However, the sanggunian may authorize the
Local Treasurer to settle an offense not involving the commission of fraud
before a case is filed in court, upon payment of a compromise penalty of not
less than Two Hundred Pesos (₱ 200.00). [Sec. 148 (b), LGC]
8. The ordinance of the sanggunian concerned may also embody such
sanctions as may deem appropriate as regards the use of any weight or
measure not properly sealed or licensed in accordance with the foregoing
provisions, such as the confiscation of said illegal weight and measure, or
the revocation of the permit or license of the business, and/or the filing of
appropriate charges against the owner or operator of the business. [Art. 234
(c), IRR implementing Sec. 148, LGC]
9. Fraudulent Practices Relative to Weights and Measures – The following acts
relating to weights and measures are prohibited:
a. for any person other than the official sealer or his/her duly authorized
representative to place or attach an official tag, seal, sticker, mark,
stamp, brand or other characteristic sign used to indicate that such
instrument of weight and measure has officially been tested, calibrated,
sealed or inspected;
b. for any person to imitate any seal, sticker, mark, stamp, brand, tag or
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LTOM, 2ND EDITION
other characteristic sign used to indicate that such instrument of weight

or measures has been officially tested, calibrated, sealed or inspected;
c. for any person other than the official sealer or his/her duly authorized
representative to alter in any way the certificate or receipt given by
the official sealer or his/her duly authorized representative as an
acknowledgment that the instrument for determining weight or
measure has been fully tested, calibrated, sealed or inspected;
d. for any person to make or knowingly sell or use any false or counterfeit
seal, sticker, brand, stamp, tag, certificate or license or any dye for
printing or making the same or any characteristic sign used to indicate
that such instrument of weight or measure has been officially tested,
calibrated, sealed or inspected;
e. for any person other than the official sealer or his/her duly authorized
representative to alter the written or printed figures, letters or symbols
on any official seal, sticker, receipt, stamp, tag, certificate or license
used or issued;
f. for any person to use or reuse any restored, altered, expired, damaged
stamp, tag certificate or license for the purpose of making it appear
that the instrument of weight of measure has been tested, calibrated,
sealed or inspected;
g. for any person engaged in the buying and selling of consumer products
or of furnishing services the value of which is estimated by weight or
measure to possess, use or maintain with intention to use any scale,
balance, weight or measure that has not been sealed or if previously
sealed, the license therefor has expired and has not been renewed in
due time;
h. for any person to fraudulently alter any scale, balance, weight, or
measure after it is officially sealed;
i. for any person to knowingly use any false scale, balance, weight or
measure, whether sealed or not;
j. for any person to fraudulently give short weight or measure in the
making of a scale;
k. for any person, assuming to determine truly the weight or measure
of any article bought or sold by weight or measure, to fraudulently
misrepresent the weight or measure thereof; or
l. for any person to procure the commission of any such offense
above-mentioned by another.
10. Instruments officially sealed at some previous time which have remained
unaltered and accurate and the seal or tag officially affixed thereto remains
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SOURCES OF INCOME
intact and in the same position and condition in which it was placed by the
official sealer or his/her duly authorized representative shall, if presented
for sealing, be sealed promptly on demand by the official sealer or his/her
authorized representative without penalty except a surcharge fixed by law
or regulation.
(Art. 64, RA 7394, Consumer Act)
11. Penalties
a. Any person who shall violate the provisions of paragraphs (a) to (f) and
paragraph (l) of Article 64 or its implementing rules and regulations
shall, upon conviction, be subject to a fine of not less than Two hundred
pesos (₱200.00) but not more than One thousand pesos (₱1,000.00)
or by imprisonment of not more than one (1) year or both upon the
discretion of the court.
b. Any person who shall violate the provisions of paragraph (g) of Article
64 for the first time shall be subject to a fine of not less than Five
hundred pesos (₱500.00) or by imprisonment of not less than one (1)
month but not more than five (5) years or both, upon the discretion of
the court.
c. The owner-possessor or user of instrument of weights and measure
enumerated in paragraphs (h) to (k) of Article 64 shall, upon conviction,
be subject to a fine of not less than Three hundred pesos (₱300.00) or
imprisonment not exceeding one (1) year, or both, upon the discretion
of the court.
(Art. 65, RA 7394, Consumer Act)
12. Unlawful possession or use of instrument not sealed before using and not
sealed within the period prescribed
a. Any person with the practice of buying or selling goods by weights and/
or measures, or of furnishing services the value of which is estimated
by weight or measure who has in his/her possession, without permit,
any unsealed scale, balance, weight or measure, and any person
who uses in any purchase or sale or in estimating the value of any
service furnished, any instrument of weight or measure that has not
been officially sealed, or if previously sealed, the license therefor has
expired and has not been renewed in due time shall be punished by a
fine of an amount imposed in the ordinance or by imprisonment for a
period prescribed therein, or both at the discretion of the court.
b. If, however, such scale, balance, weight or measure, has been officially
sealed at some previous time and the seal and tag officially affixed
thereto remain intact and in the same position and condition in which
they were placed by the official sealer, and the instrument is found not
to have been altered or rendered inaccurate but still to be sufficiently
accurate to warrant its being sealed without repairs or alterations, such
instruments shall, if presented for sealing promptly on demand of an
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LTOM, 2ND EDITION
authorized sealer or inspector of weights and measures, be sealed,

and the owner, possessor, or user of the same shall be subject to no
penalty except a surcharge to be fixed by ordinance plus the regular fee
fixed by law for the sealing of an instrument of its class, this surcharge
to be collected and accounted for by the City/Municipal Treasurer in the
same manner as the regular fees for sealing such instruments.
(Commonwealth Act No. 466)
13. Administrative Penalties
a. Any person with the practice of buying or selling by weight and measure
using unsealed and/or unregistered instrument shall be penalized an
amount fixed in an ordinance:
i. When correct; and
ii. When incorrect, but within tolerable allowance of defect or short
measure.
b. Failure to produce weight and measure tag or license or certificate
upon demand, but the instrument is duly registered:
i. When correct; and
ii. When incorrect, but within tolerable allowance of defect or short
measure.
c. Any person found violating any of the above two (2) provisions for
the second time shall be fined twice the above penalty.
d. Recommendation shall be made to the Mayor for the closure of
business establishments using fraudulent weights and measures.
G. Registration Fees
1. Civil Registration Fees
There shall be collected fees, fixed under an ordinance, for services rendered
by the Local Civil Registrar of the city/municipality, pursuant to the prescribed
fees of the Philippine Statistics Authority (PSA).
2. Cattle/Animal Registration Fees
Cattle Registration Requirements:
a. Certificate of Ownership – The owner of large cattle is hereby
required to register ownership of said cattle with the City/Municipal
Treasurer for which a Certificate of Ownership shall be issued to the
owner upon payment of a registration fee fixed by an ordinance.
b. Certificate of Transfer – When large cattle are sold or the ownership
is transferred to another person, the sale or transfer shall be registered
with the City/Municipal Treasurer. A Certificate of Transfer shall be
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SOURCES OF INCOME
issued to the purchaser or new owner upon payment of a transfer

certificate fee in an amount fixed by ordinance.
c. Registration of Owner's Brand – The owner of large cattle shall
register his/her owner's brand with the City/Municipal Treasurer and
pay the brand registration fee provided by ordinance.
d. Branding Fee – The owner of large cattle is required to pay service
fee rendered by the LGU for marking said cattle.
H. Registration Plates, Tags and Sticker Fees
These are the fees collected from registration plates, tags; and stickers issued by
LGUs.
I. Clearance and Certification Fees
1. Police Clearance
Fees fixed by an ordinance and collected by the City/Municipal Treasurer for
each Police Clearance Certificate obtained from the Station Commander of
the Philippine National Police (PNP) of the city/municipality.
2. Secretary’s Fees
Fees fixed in an Ordinance from every person requesting for copies of official
records and documents from the offices of the city/municipality.
3. Health Certificate
Fee from any person who is given a physical examination by the City/
Municipal Health Officer or his/her duly authorized representative, as
required by existing ordinances.
4. Real Property Tax Clearance
Fees collected for the issuance of certification that the real property tax for a
specific period has been paid.
5. Other Clearances and Certifications
Fees collected not falling under any of the specific Clearance and Certification
Fees.
J. Supervision and Regulation Enforcement Fees
Fees and charges collected in the supervision and enforcement of laws and
regulations, such as traffic enforcement and other LGU regulations and the like.
K. Inspection Fees
Fees for the conduct of inspections by authorized government officials. This
includes health inspection fees, sanitary inspection fees, mechanical inspection
fees, etc.
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LTOM, 2ND EDITION
L. Verification and Authentication Fees

Fees collected for verification of official documents on record. These also include
fees collected for issuance of authenticated copies of legal documents such as
birth/death/marriage certificates.
M. Processing Fees
Fees collected for the processing of documents for securing permits/applications.
These also include fees for processing birth certificate and other civil registry
certificates, permit application and the like.
N. Occupation Fee
Fees imposed on all individuals employed or practicing their calling which do not
require board examinations.
O. Fines and Penalties- Service Income
These are the fees on fines and penalties imposed for delayed or non-payment
of service fees.
SECTION 70. BUSINESS INCOME

A. School Fees
Fees imposed to students of local universities/colleges and public schools. It
includes tuition, registration, affiliation, athletic, cultural, diploma and graduation,
transcript of records, library, training, entrance examination fee, comprehensive
examination and the like.
B. Affiliation Fees
Fees collected by local institutions from students undertaking practice of their
professions or internships.
C. Seminar/Training Fees
Fees collected or billed for attendance in short course trainings and seminars.
D. Rent Income
Income derived from use of government properties/facilities, such as rent/lease of
function rooms/buildings, fees on storage, warehousing, use of heavy equipment
of other government agencies and receipt of contingent rent. Contingent rent
are additional rent income on top of the agreed rate as provided in the lease
agreement.
E. Communication Network Fees
Fees collected from domestic money transfer, social telegram service, two way
radio service, public calling service, fixed line telephone service, telegraphic
transfer, electronic messaging service and other related services. It includes fees
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SOURCES OF INCOME
collected for the connection of telephone services and the monthly fees for use
of the facility.
F. Transportation System Fees
Income from the operation of transportation system like trains, buses, watercrafts,
aircrafts and the use of land transport system terminals.
G. Road Network Fees
Fees charged for use of road networks and bridges.
H. Waterworks System Fees
Income derived from the operation of waterworks system, such as water connection
fees, water utilization fees, irrigation fees and the like.
I. Power Supply System Fees
Income earned from power generation, transmission and distribution.
J. Seaport System Fees
Fees imposed on vessels for use of port facilities, such as:
1. Loading/discharging of cargoes
2. Embarking/disembarking passengers
3. Bunkering and anchoring at the port
4. Fees charged for cargoes whether for domestic shipment or transshipment
5. Security fee for the transport of containers
K. Parking Fees
These are fees/charges imposed (fixed and ambulant) on use of public areas as
parking fees and the like.
L. Receipts from Operation of Hostels/Dormitories and Other Like Facilities
These are fees/charges imposed on the use of hostels and dormitories, cottages,
guest houses and the like.
M. Receipts from Market Operation
These are collections from the operation of markets, including rentals of market
spaces (fixed and ambulant) and other income-earning facilities of the market.
N. Receipts from Slaughterhouse Operation
These are collections from the operation of slaughterhouse which includes rentals
of spaces for warehousing, livestock, slaughter fees and share from ante/post
mortem fees.
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LTOM, 2ND EDITION
O. Receipts from Cemetery Operations

These are collections from the operations of cemetery which includes rentals of
spaces for interment and operation of crematorium and columbary.
P. Receipts from Printing and Publication
These are the receipts from sale of printed forms, materials or other publications.
Q. Sales Revenue
It is the income from the sale of merchandise and other inventory items and
services in the regular course of business.
R. Garbage Fees
These are the fees from garbage collection and other environmental and sanitation
fees.
S. Hospital Fees
These are fees/charges for hospital services including medical, dental and
laboratory fees.
T. Dividend Income
It is the Income from dividends earned from equity investment.
U. Interest Income
It is the interest earned on loans receivable, investments and bank deposits.
V. Service Concession Revenue
This is the revenue recognized for the allocation of the cost of the asset put up by
the operator for use in the service concession agreement.
W. Other Service Concession Revenue
This is the revenue received from operators of service concession asset in excess
of any threshold set for the operator’s collections.
X. Gains
1. Gain on Foreign Exchange (FOREX)
It is the gain in the revaluation of accounts in foreign currency denomination
to local currency at balance sheet date. It also includes actual gain realized
in the conversion of foreign currency to local currency.
2. Gain on Sale of Investments
It is the gain on sale of government investments such as bonds or securities,
etc.
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SOURCES OF INCOME
Y. Share in the Profit from Joint Venture

This is the share of government agencies from profit on joint venture operations.
Z. Fines and Penalties – Business Income
These are charges for delayed or non-compliance with business regulatory
requirements.
(COA Circular No. 2015-009, 1 December 2015)
SECTION 71. SHARE FROM PHILIPPINE AMUSEMENT

AND GAMING CORPORATIONS (PAGCOR)
PAGCOR has the rights, privileges and authority to operate and license gambling
casinos, gaming clubs and other similar recreation or amusement places, gaming
pools, i.e. basketball, football, bingo, etc., except jai-alai, whether on land and sea
within the territorial jurisdiction of the Republic of the Philippines; provided that the
corporation shall obtain the consent of the LGU that has territorial jurisdiction over the
area chosen as the site for any of its operations.
The operation of slot machines and other gambling paraphernalia and equipment
shall not be allowed in establishments open or accessible to the general public
unless the site of these operations are three-star hotels and resorts accredited by
the Department of Tourism authorized by the corporation and by the LGU concerned.
The LGU has a share in the earnings of PAGCOR.
(RA No. 9487, 20 June 2007)
SECTION 72. SHARE FROM PHILIPPINE CHARITY

SWEEPSTAKES OFFICE (PCSO)
A. PCSO is the principal government agency for raising and providing funds for health
programs, medical assistance and services, and charities of national character. It
is responsible for operating and supervising the charity sweepstakes races, the
lottery and other similar activities as a source of funds consistent with its charter.
[Executive Order (EO) No. 357, 05 August 1996]
B. General Guidelines
1. Approval of Grant to LGUs
A proportionate grant from the thirty percent (30%) Lotto Charity Fund
in favor of LGUs where lotto tickets are sold, subject to the applicable
provisions on the use thereof under RA No. 1169.
2. Sharing of Funds by LGUs
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LTOM, 2ND EDITION
The LGUs concerned shall receive their share of the Lotto Charity Fund as
follows:
a. Municipalities – seven percent (7%) to be shared on a 5:2 ratio
between the municipality concerned and its province
b. Cities – five percent (5%)
3. Draw-down Periods
For purposes of administrative facility, draw-downs by the LGUs concerned
shall be made on a semestral basis, i.e., every six (6) months
4. Availment of the Five Percent (5%) Fund
Local non-government organizations (NGOs), institutions and agencies
performing charity work shall, at the level of the proper LGU, have access to
and may avail of the fund allocated to such LGU subject to limitations as to
use as laid down in RA No. 1169.
(Executive Order No. 357, 07 October 1996)
C. Small Town Lottery (STL)
1. The STL was declared as one of the regular product of the PCSO. It is
implemented locally all over the country through Authorized Agent
Corporations (AAC). It is a regular game of the PCSO authorized by the
national government thru Sec. 1 of RA 1169, as amended.
a. The STL refers to the PCSO lottery conducted at the local level, i.e.,
cities, provinces, etc., involving the collection of bets, issuance of
tickets, conduct of draws, payments to winners and remittances.
b. Revenue Allocation
The gross receipts shall be allocated as follows:
I. Gross Sales/Retail Receipts 100.00%

Printing Cost 2.00%
II. Net Sales 98.00%
III. Prize fund (55% of Net Sales) 53.90%
Agency Commission (10% of gross sales) 10.00%
10% Withholding Tax from Agency Commission 1.00%
Net of Agency Commission 9.00%
BIR Taxes (5% of Prize Fund) 2.695%
Net of Prize Fund 41.205%
IV. Charity Fund (30% of Net Sales) 29.40%
City/Municipality 3.00%
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SOURCES OF INCOME
Congressional District 0.25%

Provincial Government 0.75%
Philippine National Police 2.50%
National Headquarters 0.40%
Police Regional Office 0.40%
Police Provincial Office 0.60%
Operating Fund/Expenses (PCSO) 4.70%
Total 98.00%
i. 0.50% of the printing cost shall be retained by
the AACs, in case printing of the STL tickets
shall be undertaken by the AACs.
ii. The remaining 1.50% of the printing cost shall

be remitted by the AAC to PCSO.
c. The PCSO shall enter into an agreement with the LGU, indicating the
category of programs for which their allocation may be utilized and the
reportorial requirements pertaining to their utilization.
d. STL shares allocated for the Provincial Government shall be added to
the PCSO Charity Fund in case of STL AACs operating in chartered
cities.
(PCSO 2016 Revised IRR for the STL Operations of the PCSO)
SECTION 73. OTHER SOURCES OF LGU INCOME

Benefits to Communities Hosting the Generation Facility and Energy Resource
Development Projects Pursuant to Sec. 5(i) of RA No. 7638 (Department of Energy
Act of 1992)
A. Scope of Application
This rule shall apply to generation facilities and/or energy resource development
projects located in all barangays, municipalities, cities, provinces and regions.
B. Obligation to Provide Financial Benefits
The generation facilities and/or energy resource development facilities, such as,
but not limited to the following, are required to provide the financial benefits under
Energy Regulations (ER) No. 1-94 of the Department of Energy (DOE):
1. Spin-off facilities of the National Power Corporation (NPC) or their
transferees, including generation facilities owned by NPC transferred to the
Power Sector Assets and Liabilities Management Corporation (PSALM) and
subsequently privatized pursuant to the Act
2. Agus and Pulangui Complexes
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LTOM, 2ND EDITION
3. Facilities owned and operated by NPC-Small Power Utilities Group (SPUG)

4. Facilities under Build-Operate-Transfer (BOT) arrangements and other
variants with NPC (NPC Independent Power Producers (IPPs), NPC-SPUG,
National Irrigation Administration (NIA), Philippine National Oil company-
Energy Development Corporation (PNOC-EDC) and other government
agencies
5. Facilities under BOT arrangement and other variant with Distribution Utilities
(IPPs of Distribution Utilities)
6. Self-Generation Facilities
7. Facilities operating in economic zones
8. Integrated energy resource development and generation facilities such as
hydro, geothermal and coal
C. Beneficiaries
Direct benefits shall be provided to the host LGU, especially the community and
people affected while equitable preferential benefits shall be provided to host
region. Host LGU or host region shall be understood as follows:
1. With respect to generation facilities, in the case of power barges, the host
LGU or region is that where the power barge is moored; in all other cases, the
host LGU or region is that where the generation facility is physically located.
Generation facilities shall not include transmission lines and substations.
2. With respect to energy resource:
a. Coal
The host LGU or region is that where the producing positive coal
reserve is located, as delineated by detailed geophysical, geological
and exploration surveys.
b. Geothermal
The host LGU or region is that where the producing geothermal
reservoir is located as delineated by geochemical, geophysical,
and exploration surveys. “Producing geothermal reservoir” refers to
the subsurface geological environment where the geothermal fluids
accumulate and circulate, inclusive of the production and re-injection/
recharge zone.
c. Hydro
The host LGU or region is that where the hydro reservoir is located
as delineated by detailed topographic, geological and geo-technical
investigations, reservoir and dam height optimization studies, and
as delineated by detailed ground surveys. “Hydro reservoir” refers to
either a natural lake or an artificial lake created by the impounding
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SOURCES OF INCOME
of stream flow, runoff and subsurface water including but not limited
to intakes, diversion weirs and transbasin underground tunnel to
generate power.
d. Petroleum/Natural Gas
The host LGU or region is that where the producing petroleum/natural
gas reservoir is located, as delineated by detailed geochemical,
geophysical exploration surveys.
D. Nature of Benefits Provided Under ER 1-94
1. The generation company and/or energy resource developer shall set aside
one centavo per kilowatt-hour (Php0.01/KWh) of the total electricity sales as
financial benefit of the host communities of such generation facility, where
applicable.
a. For a generation facility and/or energy resource located in a non-highly
urbanized city, the Php0.01/KWh financial benefit shall be allocated as
follows:
i. Fifty percent of one centavo per kilowatt hour (Php0.005/KWh)
of the total electricity sales shall be set aside as an electrification
fund (EF) to be applied in the following radiating order:
1. Designated resettlement area/s
2. Host barangay(s)
3. Host municipality/ies or city/ies
4. Host province/s
5. Host region/s
6. Other areas as may be prioritized/determined by the DOE
ii. Twenty five percent of one centavo per kilowatt hour (Php0.0025/
KWh) of the total electricity sales as a development and livelihood
fund (DLF) to be applied in the following manner:
1. Designated resettlement area/s - 5%
2. Host barangay/s - 20%
3. Host municipality/ies or city/ies - 35%
4. Host province/s - 30%
5. Host region/s - 10%
In the absence of a designated resettlement area/s, funds
allocated for the resettlement shall form part of the host
barangay/s.
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LTOM, 2ND EDITION
iii. Twenty five percent of one centavo per kilowatt hour (Php0.0025/
KWh) of the total electricity sales as a reforestation, watershed
management, health and/or environment enhancement fund
(RWMHEEF) to be allocated in the following manner:
1. Designated resettlement area/s - 5%
2. Host barangay/s - 20%
3. Host municipality/ies or city/ies - 35%
4. Host province/s - 30%
5. Host region/s - 10%
In the absence of a designated resettlement area/s, funds
barangay/s.
b. For a generation facility and/or energy resource located within a highly
urbanized city, the Php0.01/KWh financial benefit shall be allocated as
follows:
i. Seventy five percent of one centavo per kilowatt-hour (Php0.0075/
KWh) of the total electricity sales of all generation facilities located
in highly urbanized city shall be set aside into one account as a
electrification fund (EF) to be applied in the following priority:
1. Designated resettlement area/s
2. Host barangay/s

3. Host city/ies
4. Province/s nearest to the host city/ies

5. Region/s of the host city/ies
6. Host communities of other facilities with insufficient
electrification fund
7. Areas traversed by transmission lines and sub-stations of
similar facilities
ii. Twelve and one-half percent of one centavo per kilowatt-hour
(Php0.00125) as a DLF to be allocated in the following manner:
1. Designated resettlement area/s – 10%
2. Host barangay/s – 30%
3. Host city/ies – 60%
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SOURCES OF INCOME
iii. Twelve and one-half percent of one centavo per kilowatt-hour

(Php0.00125) as a RWMHEEF to be allocated in the following
manner:
1. Designated resettlement area/s – 10%
2. Host barangay/s – 30%
3. Host city/ies – 60%
In the absence of designated resettlement area/s, funds
barangay/s.
c. In case of integrated hydro-electric generation projects with cascading
generation facilities, where the generation facilities and energy
resources are located in different municipalities/cities or provinces,
irrespective of its location, whether located in a highly urbanized city
or non-highly urbanized city, allocation of financial benefits shall follow
number 4(a)i, hereof. The host communities of the generation facilities
and energy resource development projects shall equally divide said
financial benefits. The host municipality/city of the generation facility
adjacent to the energy source shall in no case be a host to both said
generation facility and energy resource.
i. All interest earnings from EF, DLF, RWMHEEF shall be set aside
into one trust account to be utilized for the electrification projects
of the communities in the following order of priority:
1. Direct host barangay/s, and host municipality/ies or city/ies
with insufficient accrued EF
2. Areas traversed by transmission lines, and sub-stations or
similar facilities
3. Areas not directly connected to the Grid or national
transmission system which include isolated or remote
communities
ii. The financial assistance advanced by the generation company
and energy resource developer during its pre-operation stage
or before the start of the commercial operations for the purpose
of securing favorable endorsement from the community and the
people affected, after RA 7638 (DOE Law) has become effective
shall be credited by the generation company, energy resource
developer or their successors-in-interest against the accrued
financial benefits based on the following criteria:
1. The projects to be funded under the advance financial
assistance should be approved by the DOE consistent with
E.R. 1-94
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LTOM, 2ND EDITION
2. The total financial assistance to be amortized as a rate of

twenty percent (20%) from the accrued financial benefits
shall be based on the actual amount spent for the project/s
validated by the DOE.
3. Amortization of financial assistance shall commence from
the next quarter billing, after the DOE has issued a validated
report on the actual amount spent for the projects.
(Rules and Regulations to Implement RA No. 9136, Entitled
“Electric Power Industry Reform Act of 2001”)
SECTION 74. LOCAL ECONOMIC ENTERPRISES (LEEs)

LEEs are ventures wholly or partially owned by LGUs that generate revenue/income
through the sale of services and goods to meet a perceived constituency demand.
An effective LEE is one that contributes to the quality service delivery goals of the
LGU. As such, an effective LEE must be designed, set up, operated, and managed
in accordance with a well-prepared feasibility study and a detailed business plan that
ensures the proposed LEE:
A. has clear vision, mission, goals, and objectives that fully respond to a particular
constituency need;
B. supports the LGU development goals and objectives embodied in its Provincial
Development and Physical Framework Plan (PDPFP) if it is a province or
Comprehensive Development Plan (CDP) if it is a city/municipality, and its
corresponding Local Development Investment Program (LDIP) and Annual
Investment Program (AIP);
C. augments and does not compete with goods and services provided by the private
sector;
D. operates under the basic principle of financial self-sufficiency via cost recovery;
E. uses a performance-based approach with efficiency and effectiveness in
service delivery as requisites; and
F. publishes annual performance reports that will provide accountability and
transparency.
(DBM Manual on the Setting up and Operation of LEE, 2016)
SECTION 75. ESTABLISHING AND GOVERNING THE LEE

An enterprise may only be established and operated by virtue of an ordinance duly
enacted by the sanggunian. In relation to the imposition and collection of fees and
charges, the ordinance shall include provisions on the following:
A. Public utility charges/rates for the operation of public utilities owned, operated
and maintained by the LGUs within their jurisdiction. (Sec. 154, LGC);
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SOURCES OF INCOME
B. Toll fees or charges for the use of any public road, pier or wharf, waterway, bridge,
ferry or telecommunications systems funded and constructed by the LGU
concerned. (Sec. 155, LGC; Sec. 47, Volume I, GAAM); and
C. When public safety and welfare so requires, the sanggunian concerned may
discontinue the collection of the tolls, and thereafter the said facility shall be free
and open for public use. (Sec. 155, LGC)
SECTION 76. BASIC SERVICES AND FACILITIES

A. LGUs shall endeavor to be self-reliant and shall continue exercising the powers
and discharging the duties and functions currently vested upon them. They shall
also discharge the functions and responsibilities of national agencies and offices
devolved to them pursuant to the LGC. LGUs shall likewise exercise such other
powers and discharge such other functions and responsibilities as are necessary,
appropriate, or incidental to efficient and effective provision of the basic services
and facilities enumerated herein. [Sec. 17 (a), LGC]
B. Such basic services and facilities include, but are not limited to the following:
1. For a Barangay
a. Agricultural support services which include planting materials,
distribution system and operation of farm produce collection and
buying stations;
b. Health and social welfare services which include maintenance of
barangay health center and day-care center;
c. Services and facilities related to general hygiene and sanitation,
beautification, and solid waste collection;
d. Maintenance of katarungang pambarangay;
e. Maintenance of barangay roads and bridges and water supply systems;
f. Infrastructure facilities such as multi-purpose hall, multi-purpose
pavement, plaza, sports center, and other similar facilities;
g. Information and reading center; and
h. Satellite or public market, where viable.
2. For a Municipality
a. Extension and on-site research services and facilities related to
agriculture; and fishery activities which include dispersal livestock and
poultry, fingerlings, and other seeding materials for aquaculture; palay,
corn, and vegetable seed farms, medicinal plant gardens, fruit trees,
coconut, and other kinds of seedling nurseries, demonstration farms;
quality control of copra and improvement and development of local
distribution channels preferably through cooperatives; inter-barangay
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LTOM, 2ND EDITION
irrigation systems; water and soil resources utilization and conservation

projects; and enforcement of fishery laws in municipal waters including
the conservation of mangroves;
b. Pursuant to national policies and subject to supervision, control and
review of the Department of Environment and Natural Resources
(DENR), implementation of community-based forestry projects which
include integrated social forestry programs and similar projects;
management and control of communal forests with an area not
exceeding fifty (50) square kilometers; establishment of tree parks,
greenbelts, and similar forest development projects;
c. Subject to the relevant provisions of Title 5, Book I of the LGC, health
services which include the implementation of programs and projects
on primary health care, maternal and child care, and communicable
and non-communicable disease control services; access to secondary
and tertiary health services; purchase of medicines, medical supplies,
and equipment needed to carry out the services herein enumerated;
d. Social welfare services which include programs and projects on
child and youth welfare, family and community welfare, women's
welfare, welfare of the elderly and disabled persons; community-
based rehabilitation programs for vagrants, beggars, street children,
scavengers, juvenile delinquents, and victims of drug abuse; livelihood
and other pro-poor projects; nutrition services; and family planning
services;
e. Information services which include investments and job placement
information systems, tax and marketing information systems, and
maintenance of a public library;
f. Solid waste disposal system or environmental management system
and services or facilities related to general hygiene and sanitation;
g. Municipal buildings, cultural centers, public parks including freedom
parks, playgrounds, and sports facilities and equipment, and other
similar facilities;
h. Infrastructure facilities intended primarily to service the needs of the
residents of the municipality and which are funded out of municipal
funds including, but not limited to municipal roads and bridges, school
buildings and other facilities for public elementary and secondary
schools; clinics, health centers and other health facilities necessary to
carry out health services; communal irrigation, small water impounding
projects and other similar projects; fish ports; artesian wells, spring
development, rain water collectors and water supply systems; seawalls,
dikes, drainage and sewerage, and flood control; traffic signals and
road signs; and similar facilities;
i. Public markets, slaughterhouses and other municipal enterprises;
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SOURCES OF INCOME
j. Public cemetery;
k. Tourism facilities and other tourist attractions, including the acquisition
of equipment, regulation and supervision of business concessions and
security services for such facilities; and
l. Sites for police and fire stations and sub-stations and the municipal
jail.
3. For a Province
a. Agricultural extension and on-site research services and facilities
which include the prevention and control of plant and animal pests and
diseases; dairy farms, livestock markets, animal breeding stations,
and artificial insemination centers; and assistance in the organization
of farmers' and fishermen's cooperatives and other collective
organizations, as well as the transfer of appropriate technology;
b. Industrial research and development services, as well as the transfer
of appropriate technology;
c. Pursuant to national policies and subject to supervision, control and
review of the DENR, enforcement of forestry laws limited to community-
based forestry projects, pollution control law, small-scale mining law,
and other laws on the protection of the environment, and mini hydro
electric projects for local purposes;
d. Subject to the provisions of Title 5, Book 1 of the LGC, health services
which include hospitals and other tertiary health services;
e. Social welfare services which include programs and projects on rebel
returnees and evacuees; relief operations; and, population development
services;
f. Provincial buildings, provincial jails, freedom parks and other public
assembly areas, and other similar facilities;
g. Infrastructure facilities intended to service the needs of the residents
of the province and which are funded out of provincial funds including,
but not limited to, provincial roads and bridges; inter-municipal water-
works, drainage and sewerage, flood control, and irrigation systems;
reclamation projects; and similar facilities;
h. Programs and projects for low-cost housing and other mass dwellings,
except those funded by the Social Security System (SSS), Government
Service Insurance System (GSIS), and the Home Development Mutual
Fund (HDMF): provided, that national funds for these programs and
projects shall be equitably allocated among the regions in proportion
to the ratio of the homeless to the population;
i. Investment support services, including access to credit financing;
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LTOM, 2ND EDITION
j. Upgrading and modernization of tax information and collection services

through the use of computer hardware and software and other means;
k. Inter-municipal telecommunications services, subject to national policy
guidelines; and
l. Tourism development and promotion programs.
4. For a City
All the services and facilities of the municipality and province, and in addition
thereto are the following:
a. Adequate communication and transportation facilities; and
b. Support for education, police and fire services and facilities; [Sec. 17
(b), LGC]
c. Notwithstanding the provisions of sub-section Sec. 17 (b) of the LGC,
public works and infrastructure projects and other facilities, programs
and services funded by the National Government under the annual
General Appropriations Act (GAA), other special laws, pertinent
executive orders, and those wholly or partially funded from foreign
sources, are not covered under this Section, except in those cases
where the LGU concerned is duly designated as the implementing
agency for such projects, facilities, programs and services. [Sec. 17
(c), LGC]
d. The designs, plans, specifications, testing of materials, and the
procurement of equipment and materials from both foreign and local
sources necessary for the provision of the foregoing services and
facilities shall be undertaken by the LGU concerned, based on national
policies, standards and guidelines. (Sec. 17, LGC)
SECTION 77. EXAMPLES OF GOVERNMENT ENTERPRISES

Among the government enterprises known to have been established and operated by
LGUs are the following:
A. Beach Houses
B. Coliseums
C. Cold Storage Plants
D. Communication and Transportation Facilities
E. Cultural Centers
F. Electric Power Plants
G. Ferries
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SOURCES OF INCOME
H. Food Terminal Markets

I. Health Resorts
J. Hospitals
K. Irrigation Systems
L. Lease of Equipment and Machinery
M. Low-Cost Housing and Other Dwelling Projects
N. Markets
O. Multi-Purpose Hall, Multi-Purpose Pavements and Plazas
P. Public Cemeteries
Q. Radio Stations
R. Sports Complexes and Sports Facilities
S. Telephone Systems
T. Toll Roads & Bridges
U. Tourism Facilities and Other Tourist Attractions
V. Waterworks Systems
W. Wharves
X. Water Supply Systems
SECTION 78. PRIVATE SECTOR PARTICIPATION IN THE OPERATION

AND MANAGEMENT OF LGU ENTERPRISES
A. The participation of the private sector in local governance, particularly in the
delivery of basic services, shall be encouraged to ensure the viability of local
autonomy as an alternative strategy for sustainable development. [Sec. 3 (l), LGC]
B. To ensure the active participation of the private sector in local governance, LGUs
may, by ordinance, sell, lease, encumber, or otherwise dispose of public economic
enterprises owned by them in their proprietary capacity. [Sec. 17 (j), LGC]
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CHAPTER COLLECTION PROCEDURES
3
SECTION 79. DESIGNATION OF COLLECTING OFFICERS
The head of an agency may designate such number of collecting officers or agents
as may be deemed necessary.
As a general rule, the collection of revenues and receipts shall be done by the regularly
appointed collecting officer/treasurer.
In local government units, local treasurers are vested by law to collect and receive
all monies accruing to their respective jurisdictions whether in the form of collective
taxes and other revenues or receipts or trust funds pertaining to other branches or
units of the government. (Secs. 170 and 247, LGC)
Collectors/tellers may also be designated to assist collecting officers/treasurers and
they shall turn over their collections daily to the collecting officer/treasurer concerned.
(Sec. 65, Chapter 3, Volume I, GAAM)
SECTION 80. PROHIBITION FROM HOLDING OTHER POSITIONS

AS CASHIER OR TREASURER
Government cashiers are prohibited from holding positions as cashiers or treasurers
of savings and loan associations or any other association or organization. (Sec. 67,
Chapter 3, Volume I, GAAM)
SECTION 81. ACKNOWLEDGMENT OF COLLECTIONS

General Guidelines:
A. No payment of any nature shall be received by a collecting officer without
immediately issuing an official receipt in acknowledgment thereof. [Sec. 69,
Chapter 3, Volume I, Government Accounting and Auditing Manual (GAAM)]
B. Where mechanical devices are used to acknowledge cash receipts, the
Commission on Audit (COA) may approve, upon request, exemption from the use
of Accountable Forms. (Sec. 70, Chapter 3, Volume I, GAAM)
C. Official receipts are designed to cover a particular kind of collection only. Unless
otherwise specifically authorized, an official receipt shall be issued only for the
purpose for which it is intended. General forms shall be used only for collections
for which no specific form has been authorized. (Sec. 71, Chapter 3, Volume I,
GAAM)
D. At no instance shall temporary receipts be issued to acknowledge the receipt of
public funds. (Sec. 72, Chapter 3, Volume I, GAAM)
95
E. Pre-numbered official receipts shall be issued in strict numerical sequence. In

preparing official receipts, all copies of each receipt shall be exact copies of
carbon reproductions in all respects of the original.
If payment has been tendered in money order or check, the official receipt shall
be prepared with the date, number and the amount of such money order, or
check together with the purpose for which the payment has been received. The
address of the payor shall also be indicated on the official receipt to facilitate
communication with him if necessary. (Sec. 73, Chapter 3, Volume I, GAAM)
F. Cash tickets issued to transient vendors in the public market to acknowledge
market fees shall pertain only to the vendor buying the same and shall be good
only for the space or spaces of the market premises to which he is assigned. If
a vendor disposes of his merchandise by wholesale to another vendor, the latter
shall purchase new tickets if he desires to sell the same merchandise, even if
done in the same place occupied by the previous vendor. The name of the vendor,
the place and date of issue shall be indicated at the back of the cash tickets
issued to a vendor. (Sec. 74, Chapter 3, Volume I, GAAM)
SECTION 82. USE OF ELECTRONIC OFFICIAL RECEIPTS (eORs)

TO ACKNOWLEDGE COLLECTION OF INCOME
AND OTHER RECEIPTS OF GOVERNMENT
Electronic Collection System is an online facility provided by government agencies
that enables debtors, creditors and other clients to pay government dues and
charges through a computer or telephone. It is a system for receiving, sending,
storing, generating or otherwise processing electronic data messages or electronic
documents pertaining to receipt and deposit of government collections.
General Guidelines:
A. All collections shall be acknowledged by the government agency concerned
through the issuance of official receipts to establish that these have been received.
B. Receipt of collections/revenue through electronic means shall be acknowledged
by an electronic official receipt (eOR). eOR refers to a proof of payment generated/
issued through Electronic Payment and Collection System (EPCS) with unique or
sequential reference numbers that can be validated using the same system. More
specifically, the eOR refers to an evidence of payment for collection received
by the agency from clients, generated through the agency’s electronic collection
system.
EPCS is a system that accepts and processes electronic payments, authenticates
the payor and payee, validates availability of funds and executes the appropriate
debit and credit instructions for the fund source and destination accounts,
generates and forwards electronic proof of payment or eOR to the payor, or allows
secure access thereto and creates, retains and safeguards the resulting detailed
electronic transaction records which are accessible by authorized personnel.
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LTOM, 2ND EDITION
C. The eORs shall have the following minimum data content:

1. Name of the agency issuing the receipt
2. Location and location code (place where the collection is made and its
assigned code)
3. Name of payor (person/entity making the payments)
4. Date and time of receipt (date and time of the collection and issuance of
eOR)
5. Nature of collection (such as business tax, fees, charges, assessments,
licenses etc.)
6. Amount received, detailed as to the nature of collection coded as to their
subsidiary ledger revenue classification
7. eOR number (a unique and sequential number generated by the system for
every eOR issued)
8. 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.)
9. Mode of payment (credit card/ electronic fund transfer/ ATM/G- Cash, etc.)
10. Order of Payment Slip Number or Assessment Number
D. Collections of local government units shall be deposited to the accounts in
designated authorized government depository bank.
E. Collections though electronic system shall be accounted for in the books of the
government agency concerned in accordance with existing rules and regulations
for receipts and collections.
F. To ensure that transactions 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. 02. S. 2006
issued by the Department of Finance and the Department of Trade and Industry
on the “Guidelines Implementing RA No. 8792 on EPCS in Government” or any
subsequent amendments thereto.
G. The government agency shall provide read/view and print access rights to the
Commission on Audit Auditor in the computerized system where online collections
are being processed.
(COA Circular No. 2013-007, 18 September 2013)
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SECTION 83. PROCEDURES FOR HANDLING COLLECTIONS RECEIVED

THROUGH THE MAIL
Collections received through the mail shall be acknowledged, and remitted or
deposited, and recorded just like other collections. Basic controls shall, however, be
maintained:
A. Incoming mail shall be opened by or under the supervision of a responsible officer
of the Records Section of the LGU.
B. In addition to the usual records maintained for incoming mail, a list shall be
prepared by the Records Section of all checks, money orders, warrants, or
currency received, listed individually and totaled. The list shall contain spaces
for information on the acknowledgment of receipt of the collection as well as its
subsequent remittance or deposit with authorized depositories. The list shall be
certified correctly by the Chief of the Records Section.
C. After accomplishing the list, the Records Section shall immediately deliver the
duplicate copy direct to the COA Auditor. The three (3) other copies and the
collections and cover letters shall be delivered direct to the Collecting Officer who
shall verify the correctness of the list, sign the acknowledgement portion on all 3
copies, and return the last copy to the Records Section.
D. The Collecting Officer shall immediately issue an official receipt (OR) for each
and every collection on the list. The OR number and the date of issue shall be
recorded on the appropriate spaces of the original and triplicate copies of the list.
E. Collections arising therefrom shall also be included in the Report of Collection
and Deposits together with the other collections for the day. The prescribed
procedures in the turn-over of collections and accomplishments of the forms shall
likewise be observed.
F. The Treasurer shall insure that the OR is correctly and properly recorded in the
list. The payor’s copy of the OR shall be forwarded to the Records Section which
shall mail it back to the payor with a cover letter. The Treasurer, shall, however,
forward to the Records Section for mailing, only the OR of cleared checks. In case
of dishonored checks, the procedures on dishonored checks in this Manual shall
be followed.
SECTION 84. CHECKS RECEIVED IN PAYMENT FOR TAXES

OR OTHER INDEBTEDNESS TO THE LGU
General Guidelines:
A. Acceptance of Checks in Payment for Indebtedness
An officer charged with the collection of revenue or the receiving of monies payable
to the government shall accept payment, for taxes dues or other indebtedness to
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LTOM, 2ND EDITION
the government, in the form of checks issued in payment government obligations,

upon proper indorsement and identification of the payee or indorsee. Checks
drawn in favor of the government in payment of any such indebtedness shall
likewise be accepted by the officer concerned (Sec. 76, Chapter 3, Volume 1,
GAAM).
B. Drawing of Checks
1. Checks in payment for indebtedness to the government must be drawn by
the payor himself/herself and made payable to the treasurer of the LGU.
Only the official title or designation of the official concerned shall be stated as
the payee. Under no circumstance shall the following checks be accepted:

a. Checks drawn payable to the name of agency head or any of its
officers;
b. Checks drawn payable to “Cash”;
c. Indorsed checks;
d. Post-dated checks; and
e. Stale checks. (Sec. 77, Chapter 3, Volume I, GAAM)
2. Standard sequence for dates written in numerical format when the date on a
check is written in purely numeric form, like in the formats as follows:
11032018
110318
11/03/2018
11-03-2018
11-03-18
11.03.2018
11.03.18
3. Clearing participants shall read the date as 3 November 2018 or as the
case maybe, regardless of the form or shape of the partition symbol (like an
asterisk or double partition line/back slash, small circle or square, etc.)
4. Clearing participants should advise their clients to write the date on their
checks in the standard format for which is as follows:
“MM-DD-YYYY” or “MM-DD-YY”, that is Month-Day-Year sequence.
5. A check with issue date written entirely in numerals (without clear indication
which numerals refer to the month of issue) is deemed to warrant to the
drawee bank that the check is neither “stale” nor “post-dated”. (Philippine
Clearing House Corporation Memo Circular No. 3436, 24 April 2018)
C. Issuance of Official Receipt for Payment by Checks
Before issuing an Official Receipt, the Collecting Officer shall carefully scrutinize
the check presented to him/her and make sure that it is complete and correct
particularly as to date, signature or countersignature, and amount in words and
99
figures appearing on the face of the check. The number and the date of the official
receipt issued shall be indicated at the back of the check. (Sec. 78, Chapter 3,
Volume I, GAAM)
D. Non-Acceptance of Checks
When a check drawn in favor of the government is not accepted by the drawee
bank for any reason, the drawer shall continue to be liable for the sum due and all
penalties resulting from delayed payment. (Sec. 79, Chapter 3, Volume I, GAAM)
Non-Acceptance of Checks with Erasure, Alteration and/or Deficiency
1. Effective January 4, 2016, any check that shows or indicates on its face any
erasure or alteration of the following:
a. date;
b. name of the payee (whether indicated as “Cash” or “Bearer” or “Holder”
or a specific name or any other word or phrase of identification;
c. amount in figure/s;
d. amount in words;
e. signature/s of the drawer/s or the drawer’s signatory/ies;
f. account name;
g. account number;
h. check number; or
i. Magnetic Ink Character Recognition (MICR) characters
regardless of any signature or initials that appear to indicate
authorization of the alteration or erasure
OR
2. Any check that does not indicate the following shall no longer be eligible or
acceptable for clearing:
a. date;
b. payee;
c. amount payable in figures;
d. amount payable in words, except for checks issued by banks (Manager’s
or Cashier’s Checks, Demand Drafts) using a check writer; or
e. signature of the Drawer/s
(Philippine Clearing House CHOM No. 15-460.A, 02 September
2015)
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LTOM, 2ND EDITION
E. Payors With Previously Dishonored Checks

Whenever a payor has a record of a previously dishonored private check drawn
by him/her in payment of taxes and dues, even if such check has already been
settled, any private check presented by him/her shall no longer be accepted. In
such case the payor shall be required to pay only in cash or by certified check.
The treasurer shall make a list of payors whose checks have been dishonored
and shall circularize the list to all collecting officers under his jurisdiction. (Sec. 80,
Chapter 3, Vo. 1, GAAM)
F. Issuance of a Separate Official Receipt in Case the Amount Due is Less
Than the Face Value of Check
No change shall be given to the payor in the event that the amount of the taxes or
dues is less than the face value of the check in payment thereof. The difference
shall be receipted for by the issuance of a separate general receipt and shall be
accounted for simultaneously with the collection as miscellaneous trust liabilities
(deferred income). (Sec. 81, Chapter 3, Volume 1, GAAM)
G. Payment by Private Check for Goods Delivered and Services Rendered by
Government Agencies.
When payment for goods or services is made by private check, no such service
shall be rendered or goods delivered by the LGU unless the check in payment
thereof has been honored by the drawee bank. (Sec. 82, Chapter 3, Volume I,
GAAM)
SECTION 85. HANDLING OF DISHONORED CHECKS RECEIVED

IN PAYMENT OF TAXES AND OTHER INDEBTEDNESS
TO THE GOVERNMENT
A. A check is dishonored either by non-payment or non-acceptance. Dishonor by
non-payment occurs when:
1. The check is duly presented for payment and payment is refused or cannot
be obtained;
2. Presentment is excused and the check is overdue and unpaid.
B. Dishonor by non-acceptance happens when:
1. The check is duly presented for acceptance and such an acceptance as is
prescribed by law is refused or cannot be obtained;
2. Presentment for acceptance is excused and the check is not accepted.
(COA Revised Cash Examination Manual, 2013)
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C. General Guidelines
1. Cancellation of Official Receipt

a. Upon receipt of the debit memo and the dishonored check(s) from
the bank, constructive cancellation of the official receipt covering the
dishonored check shall be immediately effected by the Treasurer on
the copy in his/her possession.
b. The Treasurer shall immediately photocopy the dishonored checks and
record as credit in the Cashbook-Cash in Bank and cancel payment
in the taxpayer’s index card. He/She shall also notify the collector/
teller of the dishonor and the cancellation of the official receipt. The
collector/ teller shall note the cancellation in the triplicate copies of the
receipt. The Treasurer shall then inform the Auditor who shall effect
the cancellation in the duplicate copy of official receipt, in case the
same has already been submitted for audit.
c. The Treasurer shall forward the debit memo and the photocopy of the
dishonored checks to the Accountant. The Accountant shall cancel
the official receipt if still in his/her possession. He/She shall prepare
the Journal of Entry Voucher (JEV) taking up the dishonored check
by crediting the Cash in Bank account and debiting the appropriate
income account. In case of dishonor of check payments for Real
Property Tax (RPT) or Special Education Tax (SET), the RPT/SET
Receivables and corresponding Deferred RPT/SET Income shall be
restored. The accounts Due to LGUs, RPT Income, Cash in Bank and
RPT Discount shall be adjusted accordingly. He/She shall furnish the
Treasurer with a copy of the duly approved JEV. The Treasurer shall
record the JEV number in the Cashbook-Cash in Bank as reference in
the entry effecting the cancellation of the dishonored check.
[Sec. 57, Chapter 3, Volume 1, Manual on the New Government
Accounting System (MNGAS) for LGUs]
2. Notice of Dishonor
Sec. 89 of the Negotiable Instruments Law provides that when a negotiable
instrument has been dishonored by non-acceptance or non-payment,
notice of dishonor must be given to the drawer and to each indorser, and
any drawer or indorser to whom such notice is not given is discharged.
Notice of dishonor should be given to the drawer (or to the indorser-payor
of the government check) to protect the interest of the government. The
collecting officer neglecting or failing to give the required notice of dishonor
to the drawer, who, as a result thereof is discharged from liability, shall be
personally answerable for the resulting loss suffered by the government.
(Sec. 85, Chapter 3, Volume 1, GAAM)
The Notice of Dishonor shall be prepared in five (5) copies to be distributed
as follows:
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LTOM, 2ND EDITION
Original – Drawer, delivered either personally or by

registered mail with return card on the same
day of issuance of the Notice of Dishonor.
Duplicate – Treasurer
Triplicate – Local Accountant for the preparation of the
required Adjustment Journal Entry (AJE)
Quadruplicate – COA Auditor having audit jurisdiction
Quintuplicate – Collecting Officer
(Sec. 86, Book II, Volume I, GAAM)
3. Action on Dishonored Checks
Should the drawer of a dishonored check fails to settle his/her account or
deposit the amount sufficient to cover the same within five (5) days from
receipt of the notice of dishonor, the head of local treasury shall immediately
transmit the papers to the city or provincial prosecutor for the institution of
the necessary criminal action under Article 315 of the Revised Penal Code,
as amended by Republic Act No. 4885, and/or BP Blg. 22.
The aforementioned provision applies only to cases where the check has
been dishonored for lack or insufficiency of funds. Where the check has been
dishonored by reason of formal defects, such as lack of countersignature, the
treasurer shall take immediate steps to collect the taxes or dues previously
paid under the dishonored checks, for which the official receipt covering
the checks has been subsequently cancelled and, if necessary, initiate the
prompt institution of the corresponding civil action for the collection of the
amount involved (Sec. 87, Chapter 3, Volume I, GAAM).
4. Recording and Reporting of Dishonored Checks by the Local Treasurer
Upon receipt of the debit memo and the dishonored check/s from the bank,
the Local Treasurer shall photocopy the dishonored checks and immediately
record it in the appropriate cashbook with the following explanation:
“To take up the Journal Entry Voucher No. _____, dated ________, covering
dishonored Check(s) No. ______ for ₱__________, acknowledged by O.R.
No. _______ dated ________.”
a. The dishonored check and corresponding cancelled official receipt
shall also be recorded in the Report of Collections for the current
month regardless of whether or not the dishonored check pertains to
the previous month. A negative debit entry on the cash column and
a negative entry on the distribution column shall be made on the last
sheet immediately below the totals with the following explanations:
“Cancellation of O.R. No. ______ dated _______ for Php_______
on account of dishonor of Check No. _______, per Debit Memo No.
_______ dated ________.”
b. The local treasurer shall forward the debit memo and the photocopy of
the dishonored check/s to the local accountant for the preparation of the
103
Journal Entry Voucher (JEV) in three (3) copies. The local accountant
shall furnish the local treasurer with a copy of the duly approved JEV
for the latter’s recording of the JEV No. in the entries previously made
in the appropriate Cash in Bank cashbook. The original copy of the
JEV taking up the dishonored check/s and the supporting documents
shall be submitted to the Auditor concerned and the duplicate copy
shall be retained by the local accountant.
c. The dishonored check/s and the corresponding cancelled OR shall
also be reflected in the individual taxpayer’s records/ index cards
and other records of collections maintained by the Office of the Local
Treasurer. At the end of each month the local treasurer shall prepare
a report of dishonored check/s in four (4) copies to be distributed as
follows:
Original – Local Chief Executive
Duplicate – COA Auditor
Triplicate – Local Accountant
Quadruplicate – Local Treasurer’s file
5. Redemption of Dishonored Checks
The following rules shall be observed when a dishonored check is redeemed:
a. A dishonored check shall be redeemed by tendering payment by way
of cash or manager’s/cashier’s check to the local treasurer or collecting
officer concerned. No other mode of payment shall be accepted;
b. Upon receipt of the cash or manager’s/cashier’s check, the collecting
officer or local treasurer shall issue an OR for the amount received.
The nature of the payment to be indicated shall be the same as that in
the previous OR cancelled, with the following notation on the receipt:
“Previous payment acknowledged by O.R. No. _____, dated ____,
cancelled on (date of notice of dishonor).” Accordingly, the redemption
of the dishonored check shall be recorded in the cashbook together
with other collections.
c. If the payor is liable for the payment of fine or penalty arising from
delayed payment, the amount corresponding to the fine or penalty shall
also be imposed and collected in addition to the principal tax or dues
paid by him/her. (Sec. 89 (c), Volume I, GAAM). The fine or penalty to
be imposed shall be pursuant to the duly approved ordinance of the
LGU concerned.
d. Upon redemption of the dishonored check in the manner herein
prescribed, the collecting officer or local treasurer shall not return
the check to the payor concerned unless the latter first surrenders
the previous OR issued therefor. If the previous receipt is no longer
available, a sworn statement to the effect that it has been lost or
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LTOM, 2ND EDITION
misplaced should be submitted by the payor to the collecting officer

or local treasurer who shall forthwith cancel the surrendered OR
and forward it (or the affidavit) to the accounting office for file with
the corresponding report of collections where the cancellation was
recorded.
e. In the Report of Collections, an asterisk shall be placed opposite the
line on which the OR is indicated and a corresponding footnote shall
be placed on the last page of the report just below the totals as follows:
“Redemption of dishonored check previously acknowledged by O.R.
No. ____ dated _____, which was cancelled on (date of notice of
dishonor). This footnote, together with copy of the new OR and the
cancelled original copy of the previous OR (or affidavit) shall be the
bases of the accounting unit for making the reversing entry in the
proper journal.
6. Custody of Dishonored Checks. Pending their redemption, dishonored
checks shall remain in the custody of the local treasurer, unless the court
shall direct otherwise, in which case appropriate receipts should be secured
from the officer authorized to take custody of the checks. The local treasurer
shall immediately advise transfer of custody of the checks. (Sec. 90, Chapter
3, Volume I, GAAM)
SECTION 86. CONTROL OF OFFICIAL RECEIPTS

AND OTHER ACCOUNTABLE FORMS
The local treasurer shall be the custodian of all accountable forms requisitioned by
the LGU. He/she shall maintain a complete record of the receipt, issue and transfer
of accountable forms. (Sec. 24, COA Cir. 92-382, 3 July 1992).
An official receipt is an accountable form held in trust by the collecting officer/
treasurer or other person duly authorized to possess or have custody thereof. He/she
shall be responsible for its safekeeping, the proper and authorized use or application
thereof and 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,
Chapter 3, Volume I, GAAM).
A. Guidelines in the Procurement of Printing Services
1. All agencies of the government shall engage the services of the National
Printing Office (NPO), Bangko Sentral ng Pilipinas (BSP) and Apo
Production Unit as recognized government printers (RGPs) for the printing of
accountable forms and sensitive, high quality or high volume requirements,
subject to the following:
a. The recognized government printers shall undertake the printing
requirements themselves and shall not sub-contract any portion
thereof to other printers; and
105
b. An agency may be allowed to engage private printers for the printing

of accountable forms and sensitive, high quality or high volume
requirements upon certification by the RGPs that they are unable to
service the said requirements. Said engagement of private printers
shall be in accordance with Republic Act No. 9184, its Implementing
Rules and Regulations, and Government Procurement Policy Board
(GPPB) guidelines.
(Sec. 23, General Appropriations Act, FY 2019)
2. Procedure on the Procurement of Printing Services
a. The procuring entity shall prepare the technical specifications for the
accountable forms which shall include, among others, the prescribed
security features, output quantity, and target completion time.
b. It shall then conduct a market analysis to determine the Approved
Budget for the Contract (ABC) taking into consideration the prevailing
standard cost for its printing requirements.
The procuring entity may seek the assistance of the Presidential
Communications Operations Office (PCOO) in determining whether
no RGP is capable of undertaking the printing service.
Upon determination by the PCOO that no RGP can undertake the
printing service due to time constraints and equipment limitations, the
procuring entity may engage the services of private printers.
c. Thereafter, the procuring entity shall send a Request for Quotation
(RFQ) to the RGPs. The quotations received will be evaluated by the
procuring entity to determine which among the RGPs is most capable
in performing the printing service in the most advantageous terms for
the procuring entity.
In case the offer submitted by an RGP exceeds the ABC set by the
procuring entity, it may request the PCOO to determine whether the
offer of the RGP is excessive and set the appropriate rate for such
transaction.
d. The procuring entity shall then engage the services of the appropriate
RGP through an Agency-to-Agency Agreement pursuant to Section
53.5 of the Implementing Rules and Regulations of RA 9184.
e. The appropriate RGP engaged by the procuring entity shall directly

undertake the printing services for the contracts entered into, and
cannot engage, subcontract, or assign any private printer to undertake
the performance of the printing service.
(GPPB Resolution No. 05-2010)
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LTOM, 2ND EDITION
B. Types of Accountable Forms

Accountable forms for acknowledging collections are of two classes:
1. The Accountable Forms with Face value consist of the following:
Type of Form Utilization

a. Accountable Forms No. 55 (55A-F) - For the temporary use of market
Cash Tickets spaces, parking areas and other income
generating activities where the issuance
of a regular receipt is not practicable
b. Accountable Form No. 52 - Certificate Evidence of transfer of large cattle,
of Transfer of Large Cattle when issued, it supersedes the original
certificate of ownership
c. Accountable Form No. 53 - Certificate Evidence of original ownership of large
of Ownership of Large Cattle cattle
d. Accountable Form No. 54 - Marriage Issued for marriage contract
License Certificate
2. The Accountable Forms without Face Value – Accountable forms without

specific money value printed on the face of each form consist of the
following:
Type of Form Utilization

a. Accountable Form No. 51 - Official To acknowledge payment of taxes,
Receipt licenses and other dues or fees to
the government for which no special
accountable forms have been authorized
b. Accountable Form No. 56 - Real To acknowledge payment of real property
Property Tax Receipt taxes
c. Accountable Form No. 57 - Slaughter Serves as permit as well as an Official
Permit and Fee Receipt Receipt (OR), acknowledging payment for
the slaughtering of large cattle
d. Accountable Form No. 58 - City/ This form is prescribed for use of burial
Municipal Burial Permit and Fee permit. When a city/municipal ordinance
Receipt prescribes a fee therefor, this form shall
serve as receipt for the fee collected.
e. BIR Form Nos. 0016 and 0017 - For the use of individual taxpayers and
Community Tax Certificate, corporate entities, respectively
f. Checks Serially pre-numbered forms purchased
from the servicing bank for disbursements
charged against the account
(Sec. 493, Volume II, GAAM)
C. Inspection of Accountable Forms

1. Upon receipt of accountable forms from the recognized government
printers,the Treasurer shall examine carefully each book or pad. He/She
shall segregate any book or pad found to contain defects such as incorrect
107
series of numbers, or missing leaves or sheets, etc. and submit it to the

Commission on Audit (COA) Auditor together with a statement of the defects
or deficiencies noted.
2. The COA Auditor shall examine the book or pad. If he/she finds the defects
are due to error in binding or printing, he/she shall make proper notations
on the book or on the defective sheet itself. He/She shall also immediately
furnish the Treasurer concerned with two copies of the certificate covering
his action. The Treasurer shall use this certificate in support of a credit to his
account for the missing or defective forms noted by the Auditor. The Auditor
shall send two (2) copies of the certificate to the head of the recgnized
government printer (RGP). These copies shall contain the initials or numbers
that are written on the respective card covers of the defective books or pads,
or on a slip covering such information for the guidance of the RGP in locating
employees responsible for the error or deficiency.
D. Permanent record book for accountable forms

1. Treasurers/collecting officers accountable for receipts/stamps and other
accountable form in their possession or in the hands of deputies and other
employees entrusted therewith, shall keep adequate permanent record
books which should show, among other things, the whereabouts of the
accountable forms with which they are charged, the name and title of the
officer or employee to whom such forms have been given, and the evidence
of the receipt and subsequent sale and issuance of the same. The record
books shall contain the following column headings:
a. Booklet Number/Quantity (in case of official receipt without money
value)
b. Serial Number/Total value (in case of official receipt with money value)
c. Name (in print) of accountable officer to whom issued
d. Signature of accountable officer
e. Date received by accountable officer
f. Date reported totally used, sold, issued
2. These columns shall be utilized for recording consecutively all accountable
forms in the order they are received in the office of the Treasurer.
3. The recording of each batch of accountable forms received shall be headed
by data on the invoice number and date, the date the accountable forms
were received, the quantity, and the inclusive serial numbers and/or total
value of the accountable forms.
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LTOM, 2ND EDITION
E. Name of the agency on the face of the official receipt

For purposes of control, all official receipts being used by an agency shall bear
the name of the LGU printed or stamped on the face therof.
F. Issuance of accountable forms to accountable officers
Accountable forms shall be issued to bonded officers only in sufficient quantities
not to exceed three months use.
G. Report of the Accountable Officer
1. The Report of Accountability for Accountable Forms (RAAF), shall be used
to report the quantity of accountable forms received, issued or cancelled by
the accountable officer at the end of the month.
Treasures/collectors/tellers and other accountable officers shall render this
report of accountability for accountable forms at the end of the month for
consolidation by the local treasurer. Such report shall also be prepared in
case of transfer of office or accountability by the accountable officer.
(Sec. 50, Chapter 2, Volume II, MNGAS for LGUs)
2. The Consolidated Report of Accountability for Accountable Forms (CRAAF)
shall be prepared by the Treasurer to consolidate the RAAF of accountable
officers. The consolidated report accompanied by the individual reports
shall be submitted to the COA auditor concerned for verification not later
than the fifth day of the ensuing month.
(Sec. 51, Chapter 2, Volume II, MNGAS for LGUs)
H. Submission to COA Auditor of obsolete, spoiled and cancelled accountable forms

1. Accountable officers shall submit to the COA 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.
2. In case of obsolete accountable forms with or without fixed money value,
the accountable officer shall submit to the COA Auditor an inventory in four
copies.
3. In case of spoiled or damaged accountable forms which have fixed value,
the accountable officer shall submit an affidavit in four (4) copies stating:
a. The denomination and total value of the forms
b. The reason for the damage and the circumstance surrounding the
cause of such damage or the reason for cancelling the form, and the
name of the officer or employee responsible.
109
4. The COA Auditor or his/her authorized representative shall promptly inspect

and destroy the accountable forms, and make a certificate of such actions
below the affidavit or inventory. The destruction shall be witnessed and
certified to by the accountable officer and a responsible LGU official. 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 (1) copy of the certified affidavit or
inventory to the Monthly Report of Accountability and retain the other copy
for file. The COA Auditor shall keep the original copy.
5. In case of spoiled or cancelled accountable forms which do notbear fixed
money values such as printed official receipts, Accountable Form Nos. 51,
56, etc., the accountable officer shall submit the cancelled original and
duplicate copies with the Report of Collections and Deposits (RCD) with
such cancellation properly noted on the record.
6. 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.
I. Immediate issuance of notice of loss of accountable forms
1. Any loss of accountable forms in the custody of collecting officers shall
immediately be reported by the accountable officers concerned to the
treasurer. The treasurer 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. The notice to be issued shall
specify the kind, quantity and inclusive serial numbers of the lost accountable
forms and the place or places where, and approximate date or dates when
the same were lost.
2. 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.
3. The treasurer is not precluded from undertaking other measures which may
prevent the fraudulent use of the lost accountable forms, like the publication
of such loss in newspapers of general circulation.
4. Compliance with the foregoing provisions shall be one of the requirements
in the request for relief of accountability for the loss of accountable forms.
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LTOM, 2ND EDITION
SECTION 87. CONTROL OF COLLECTIONS

A. Liability for Loss of Government Funds
Every officer accountable for government funds shall be liable for all losses
resulting from the unlawful deposits, use or application thereof and for all losses
attributable to negligence in the keeping of the same. (Sec. 101, Chapter 3,
Volume I, GAAM)
B. Prohibition against the Encashment of Private Checks with Public Funds.
At no instance should money in the hands of the Collecting Officer be utilized for
the purpose of encashing private checks. A private check is a check drawn by a
natural or juridical person other than a government agency. (Sec. 105, Chapter 3,
Volume I, GAAM)
C. Separation of Personal Money from the 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. (Sec. 106, Chapter 3, Volume I, GAAM)
SECTION 88. DEPOSIT OF COLLECTIONS

A. The local treasurer shall deposit intact all his/her collections as well as all
collections turned over to him/her by the collectors/tellers with the authorized
depository bank daily or not later than the next banking day. He/She shall record
all deposits made in the cashbook and prepare the Report of Collections and
Deposits (RCD). (Sec. 32, Chapter 3, Volume I, MNGAS for LGUs)
B. Collection by field collectors shall be verified by the cashier or designated
liquidating officer of the field office of the LGU. When travel distance of the field
office to the local treasury may expose government funds to the risk of loss while
in transit, the cashier or designated liquidating officer, upon authorization by the
local treasurer, may deposit the collections in the authorized depository bank near
the field office of the LGU (Sec. 33, Chapter 3, Volume I, MNGAS for LGUs).
C. Local treasurers shall maintain depository accounts in the name of their respective
LGUs with banks preferably government owned located in or nearest to their
respective areas of jurisdiction. Earnings of each depository account shall accrue
exclusively thereto. (Sec. 129, Chapter 3, Volume I, GAAM).
D. Local treasurers shall maintain depository accounts for each fund in their custody
or administration under such rules and regulations as the Commission on Audit
may prescribe (Sec. 130, Chapter 3, Volume I, GAAM).
E. Provinces, cities, municipalities and barangays may deposit with AGDBs, idle
funds in the General Fund under time deposit accounts, upon prior authority of
the sanggunian and approval of the LCE. (Sec. 21, COA Circular No. 92-382, 03
July 1992)
111
Idle Funds refer to cash which the LGU can freely invest in government securities
and/or fixed term deposits with AGDBs, 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 LGU. 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, COA
Circular No. 93-382-A, 17 March 1993)
F. Opening of Depository Account
1. Provinces, cities and municipalities shall deposit and maintain government
funds with any of the following AGDBs:
a. Land Bank of the Philippines (LBP)
b. Development Bank of the Philippines (DBP)
c. Philippine Postal Savings Bank (PPSB)
d. Al Amanah Islamic Investment Bank of the Philippines
e. United Coconut Planters Bank (UCPB) – authorized to accept funds
from LGUs until further notice from the BSP, and subject to limitations
that may be prescribed by the Monetary Board
f. Philippine Veterans Bank (PVB) – authorized to accept funds from
LGUs, and subject to limitations prescribed by the Monetary Board
2. Deposits with banks other than those mentioned AGDBs may be allowed
without need of BLGF’s prior approval if any of the following circumstances
exists:
a. The aforementioned banks cannot provide the required banking
products and services;
b. The aforementioned banks or their collection facilities, are not
accessible within a twenty (20) kilometer radius; or
c. There are security and safety risks.
Provided that the following documentary requirements shall be
maintained by the LGU concerned: (a) Specific banking products or
services required, and Certifications from the AGDBs that the banking
products or services cannot be provided; (b) Vicinity map showing
the locations and the distance between the LGU and the AGDBs,
and the distance between the LGU and the proposed bank; and (c)
Report or Certification from the Philippine National Police Provincial
Office confirming the existence of the security risk. Provided, further,
that depository accounts shall not exceed the following prescribed
maximum balances:
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LTOM, 2ND EDITION
Maximum Maintaining
LGU Income Classification
Balance (PhP)
Municipality - 1st Class 15,000,000.00
Municipality - 2nd Class 10,000,000.00
Municipality - 3rd Class 7,500,000.00
Municipality - 4th Class 5,500,000.00
Barangay 500,000.00
C. When the depository account exceeds the maximum maintaining balance, the
LGU shall request for prior approval from the BLGF to open and maintain an
account with non-AGDBs upon submission of the following:
1. Letter from the Head of the LGU or its duly designated officer stating: (1) the
terms of the deposit, purpose for opening and maintaining an account with
the proposed bank, and the specific circumstance; and (2) shall comply with
fiscal and financial reporting requirements of the BLGF.
2. Certification from the proposed bank that no elective or appointive 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; Copy of the Resolution of the local Sanggunian authorizing the
LGU to deposit funds with the proposed bank with the approval of the LCE;
and directing the LCE and all concerned with fiscal and financial reporting
requirements of the DOF and the BLGF.
D. The LGUs shall require the proposed bank to: (i) within one (1) banking day, notify
the LGU, if the bank’s authority to accept government deposits has been revoked
pursuant to relevant laws, issuances, or regulations of the BSP; and (ii) within five
(5) banking days, submit to the BSP proof of receipt of such notice.
On the last business day of March of every year, the heads of LGUs shall submit
the following to the BLGF: (i) a report on its receipt of a notice of revocation of
authority from any bank where it maintains an account, if any; and, (ii) a list of its
accounts in all banks.
E. Where any of the AGDBs establishes or operates a branch or extension office
within the territorial jurisdiction or in the locality where the LGU or any of its branches,
field offices, departments, divisions or operating units holds or conducts its office
or business, or (ii) the exceptional circumstances no longer prevail, whichever
comes first, the LGU shall transfer all funds and cash balances to the AGDBs
within three (3) banking days.
(DOF Department Circular No. 01.2017 dated 11 May 2017, as circularized
under BLGF Memorandum Circular No. 07-01-2017, dated 03 July 2017)
113
SECTION 89. DESIGNATION OF LIQUIDATING OFFICERS

The Local Treasurer may designate Liquidating Officers from among the collectors
whenever necessary.
A. Collectors/tellers shall turn over their collections to their designated liquidating
officers. The Report of Collections and Deposits (RCD) shall however be prepared
in five copies, four copies to be submitted to the liquidating officer, the fifth copy to
be retained by the Collector/Teller.
B. The Liquidating Officer shall perform the procedures for the receipt and verification
of collections turned over to him/her. He/She shall also accomplish the RCD in
four copies to summarize the collections turned over to him/her by Collectors/
Tellers as well as his/her own collections.
C. The Liquidating Officer shall turn over intact the cash collections to the Local
Treasurer/Cashier together with the originals and two copies of the RCDs of
collectors/tellers and duplicates of the official receipts issued. The Local Treasurers/
Cashiers 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 RCDs of collectors/tellers shall be retained by the Liquidating Officer.
(Sec. 31, Chapter 3, Volume I, MNGAS for LGUs)
SECTION 90. REPORTING FOR COLLECTIONS AND DEPOSITS

A. Collectors/tellers shall issue a receipt to acknowledge collections made. The
receipt maybe in the form of pre-numbered official receipts or cash tickets and the
like. At the close of each business day, these collectors/tellers shall accomplish
the Report of Collections and Deposits (RCDs) in four copies. The original and
two copies, together with the duplicates of the Official Receipts issued, shall
be submitted to the Local Treasurer/Cashier to whom the cash collected shall
be turned over. The fourth copy of the RCD shall be retained by the collector/
teller concerned. Barangay Treasurers deputized to collect taxes imposed by
Provinces/Cities and Municipalities shall follow the same procedures in turning
over their collections to the Local Treasurer/Cashier concerned.
B. In case of collectors assigned to the field, where travel time from their places of
assignment to the Local Treasurer’s Office is more than one day, turn-over of
collection shall be made at least once a week or as soon as the collections reach
Php5,000.00 (Sec. 29, Chapter 3, Volume I, MNGAS for LGUs).
C. Recording of Collections in the Cashbook.
1. The Local Treasurer/Cashier shall record in his/her cashbook all collections
received by him/her. He/She shall provide in his/her cashbook columns for
the accounts Cash-In-Treasury and Cash-In-Bank. The Cash-In-Treasury
account shall be debited with collections received and credited with the
collections deposited with the authorized depository bank. The Cash-In-
114
LTOM, 2ND EDITION
Bank account shall be debited with the deposits of collections with the bank
and credited with withdrawals from the depository account (COA Circular
No. 92-382, 03 July 1992).
2. The Treasurer/Cashier shall maintain the following cashbooks:
a. Cashbook - 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. He/She shall likewise
accomplish the following certification in the cashbook:
I HEREBY CERTIFY that the foregoing is a correct and complete
record of the cash transactions had by me in my capacity as Treasurer/
Cashier of __________________________ during the period from
____________, 20___ to _______________, 20___, inclusive, as
indicated in the corresponding columns.
Signature over Printed Name

_________________, 20___
Deposits shall also be recorded in the debit column of the Cashbook

- Cash in Bank.
(Sec. 26, Volume II, MNGAS for LGUs)
b. Cashbook - Cash in Bank shall be used to record deposits of collections
(Debit 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. He/She shall
likewise accomplish the following certification in the cashbook:
record of the cash transactions had by me in my capacity as Treasurer/
Cashier of __________________________ during the period from
____________, 20___ to _______________, 20___, inclusive, as

_________________, 20___
c. Cashbook - Cash Advances
The accountable officer shall maintain a cashbook for cash advances
to record the cash advances received (Debit Column) and payments,
115
refunds and adjustments (Credit Column) and the balance (Balance

Column). 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. He/She shall likewise accomplish the following certification
in the cashbook:
record of the cash transactions had by me in my capacity as Disbursing
Officer of __________________________ during the period from
____________, 20___ to _______________, 20___, inclusive, as

_________________, 20___
SECTION 91. RECEIPT AND COLLECTION PROCESS

The following is the summary of receipt and collection process in the LGU:
PERSON/UNIT
PROCESS
RESPONSIBLE
1. Receive payment from taxpayers/creditors and
issue Official Receipts (OR). Prepare Report of
Collections and Deposits (RCDs). Remit to the Collector/Teller
Liquidating Officer or LO (if one is designated)
or Local Treasurer
2. Check remittances and verify Accountable
Forms (AF) of Collectors/Tellers. Consolidate
Liquidating Officer
collections and remit to the Local Treasurer/
Cashier. Prepare RCD.
3. Receive remitted collections, consolidate
the same and prepare RCD. Record in the Local Treasurer
cashbook Cash-In-Treasury.
4. Deposit collections in the appropriate bank

account per authorized depository bank. Local Treasurer
Record deposit in the cashbook Cash-In-Bank.
5. Forward RCD to the Accounting Unit with

Local Treasurer
copies of ORs and validated deposit slips.
6. Prepare Journal Entry Voucher (JEV) and

Accountant
record in the Cash Receipt Journal
116
LTOM, 2ND EDITION
FORMS AND ANNEXES
117
1
FORMS AND ANNEXES
ANNEX 9

DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT (DILG)
DEPARTMENT OF FINANCE (DOF)
Joint Memorandum Circular (JMC) No.: 2019-01

Date: May 17, 2019
SUBJECT GUIDELINES FOR THE REVIEW, ADJUSTMENT, SETTING

AND/OR ADOPTION OF REASONABLE REGULATORY FEES
AND CHARGES OF LOCAL GOVERNMENT UNITS
___________________________________________________________________
1.0 Background
1.1 The regulation of business and activities as well as the delivery of services
to the people, through local government entail costs to the government,
and equity requires that person/s benefitting from the services to share the
cost of providing such services.
1.2 If the primary purpose of the imposition is generation of revenue and that
regulation is merely incidental, the imposition is a "tax", but if regulation
is the primary purpose and the fact that revenue is incidentally obtained
does not make the imposition a tax, but merely a "fee"1 .
1.3 However, the determination of the amount of the fees and charges shall
be finding the balance between recovering the cost of services rendered
and ease of doing business. But any revision of fees and charges need
to be coordinated with stakeholders to ensure that the rates are just
and reasonable and to minimize, if not avoid, unintended impacts on
established priorities and the general public.
1.4 In order to help local government units (LGUs) build strong enabling
environment for good local governance and serve our constituents fairly,
particularly the business sector, we enjoin all LGUs to review, adjust, and/
1 GR No. 173863, dated 15 September 2010
118
LTOM, 2ND EDITION
or revise their local revenue ordinances in accordance with the rationalized

procedure for setting fees and charges.
2.0 Purpose
2.1 This Joint Memorandum Circular (JMC) is being issued for the guidance of
LGUs to ensure uniform procedure in setting reasonable fees and charges
as provided for by the provisions of Republic Act (RA) No. 7160, otherwise
known as the Local Government Code (LGC) of 1991 and in order to set
a balance between recovering the cost of services and the ease of doing
business in compliance with RA No. 11032, otherwise known as the Ease
of Doing Business and Efficient Government Service Delivery (EODB
EGSD) Act of 2018.
3.0 Legal Compliance
3.1 RA No. 7160: Local Government Code of 1991
3.1.1 Secs. 134, 142, 151 and 152 allow provinces, cities, municipalities and
barangays to impose and collect taxes, fees and charges on business
and occupation and on the practice of any profession and calling.
3.1.2 Sec. 147 provides that fees and charges imposed by municipalities
should be reasonable and commensurate with the cost of regulation,
inspection and licensing before any person may engage in such
business or occupation, or practice of such profession or calling.
Furthermore, Article 233 of the Implementing Rules and Regulations
(IRR) of the LGC provides that no such fee or charge shall be based on
capital investment or gross sales or receipts of the person or business
liable therefore.
3.1.3 Sec. 153 stipulates that LGUs may collect reasonable fees and
charges for services rendered.
3.1.4 Sec. 130 requires that the exercise of the taxing and other revenue
raising powers of LGUs shall be governed by the following principles:
a) uniform in each local government unit; b) equitable and based as
far as practicable on the taxpayer’s ability to pay, levied and collected
only for public purposes, not be unjust, excessive, oppressive,
or confiscatory, and not be contrary to law, public policy, national
economic policy, or in the restraint of trade; c) collections shall in no
case be let to any private person; d) collections shall inure solely to the
benefit of, and be subject to the disposition by the local government
unit levying the tax, fee, charge or other imposition; and e) evolve a
progressive system of taxation.
3.1.5 Sec. 132 stipulates that the power to impose a tax, fee or charge
to generate revenue under the LGC shall be exercised by the LGU
concerned through an appropriate ordinance.
3.1.6 Secs. 444(3)(iv), 455(3)(iv) and 465(3)(iv) provide that the licenses
and permits are to be issued by the local chief executives.
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FORMS AND ANNEXES
3.1.7 Secs. 55 (c) provides that the local chief executive may veto an
ordinance or resolution only once. The sanggunian may override
the veto of the local chief executive by two-thirds (2/3) vote of all its
members, thereby making the ordinance effective even without the
approval of the local chief executive concerned.
3.1.8 Secs. 187 stipulates that public hearing is mandatory prior to the
enactment of the LGC.
3.1.9 Secs. 56 and 57 provide that sangguniang panglungsod or sangguniang
bayan and sangguniang barangay shall forward to the sangguniang
panlalawigan and sangguniang panglungsod or sangguniang bayan
respectively the approved ordinances. Within the time prescribed
therein, the appropriate sanggunian shall review the forwarded
approved ordinance to determine whether such is beyond the power
of the sangguniang panglungsod or bayan concerned or whether
the barangay ordinance is consistent with law and city or municipal
ordinances.
3.1.10 Secs. 56 (d) provides that if no action has been taken by the
sangguniang panlalawigan within thirty (30) days after submission of
such ordinance or resolution, the same shall be presumed consistent
with law and therefore valid.
3.1.11 Secs. 188 requires that within ten (10) days after their approval,
certified true copies of all provincial, city, and municipal tax ordinances
or revenue shall be published in full for three (3) consecutive days in a
newspaper of local circulation; the same shall be posted in at least two
(2) conspicuous and publicly accessible places.
3.2 RA No. 11032: Ease of Doing Business and Efficient Government Service
Delivery (EODB EGSD) Act of 2018
3.2.1 Sec. 5 provides that all proposed regulations of government agencies
under Sec. 3 of the same Act shall undergo regulatory impact
assessment to establish if the proposed regulation does not add undue
regulatory burden and cost to these agencies and the applicants or
requesting parties.
3.2.2 Sec. 6 provides that all government agencies including departments,
bureaus, offices, instrumentalities, or government-owned and/or
-controlled corporations, or LGUs shall set up their respective most
current and updated service standards to be known as the Citizen’s
Charter in the form of information billboards which shall be posted
at the main entrance of offices or at the most conspicuous place, in
their respective websites and in the form of published materials written
either in English, Filipino, or in the local dialect, that detail:
“(a) A comprehensive and uniform checklist of requirements for each
type of application or request;
“(b) The procedure to obtain a particular service; “(c) The person/s
120
LTOM, 2ND EDITION
responsible for each step;

“(d) The maximum time to conclude the process;
“(e) The document/s to be presented by the applicant or requesting
party, if necessary;
“(f) The amount of fees, if necessary; and “(g) The procedure for filing
complaints.”
3.2.3 Sec. 21 provides that imposition of additional cost not reflected in the
Citizen’s Charter constitutes a violation and holds persons responsible
liable under the same Act.
4.0 Scope/Coverage
4.1 This Joint Memorandum Circular (JMC) covers all Local Chief Executives (LCEs),
Vice-Governors, Vice-Mayors, Sanggunian Members, Punong Barangays,
Regional Directors of the Department of the Interior and Local Government (DILG)
and the Department of Finance - Bureau of Local Government Finance (DOF
BLGF), Provincial/City/Municipal/Barangay Treasurers and Heads of Department
or Offices in the LGU and others concerned.
5.0 Definitions
5.1 Cost of Service - refers to the sum of (a) direct costs such as supplies,
materials, salaries/wages of personnel directly involved and proportionate
share in the overhead expenses incurred by the LGU in rendering service,
and (b) such expenses incurred by the LGU in rendering the service, and
(c) such other readily identifiable incidental expenses incurred in rendering
the service. The cost of service shall be considered in the regular budget
of the operating department/division/unit rendering the pertinent service as
authorized in the appropriation ordinance2.
5.2 Cost recovery - refers to the process of compensating the cost associated
with the provision of services (including regulation), which involves the
collection of user or regulatory fees to ensure long-term sustainability3.
5.3 Charges - refers to the pecuniary liability, as a rent or fees against a persons
or property in exchange for the use or utility of a facility or service of the
government4.
5.4 Fee - refers to a charge fixed by law or ordinance for the regulation or
inspection of a business or activity5.
5.5 Imposition - pertains to the act of levying a tax, fee or charge on a particular
subject, which is done by way of an ordinance.
5.6 Taxes - A monetary charge imposed by the government on persons, entities,
transactions, or property to yield public revenue6.
2 As defined in DOF-DBM-NEDA Joint Circular No. 1-2013, dated 30 January 2013

3 Ibid
4 Sec. 131(9) of the LGC
5 Sec. 131(1) of the LGC
6 Black’s Law Dictionary
121
FORMS AND ANNEXES
6.0 Policy Content and Guidelines

6.1 This Joint Memorandum Circular (JMC) shall apply to all fees and charges
being imposed by LGUs rendering services to the public, whether regulatory
or service fees, the purpose of which is to recover the cost of service rendered,
except when the rate or the method for determining the rate has already been
prescribed under the LGC and/or other special laws.
6.2 Enumeration of Common and Allowable Fees and Charges, among others
Fees and Charges Province Cities Municipalities Brgy.

1. Business permit/Mayor's Permit
No Yes Yes No
fee7
2. Barangay Clearance8 No No No Yes
3. Permit to extract sand, gravel and
Yes No No No
other quarry resources9
4. Fees for Sealing and Licensing of
No Yes Yes No
Weights and Measures10
5. Fishery Rentals, Fees and
No Yes Yes No
Charges11
6. Fees on commercial breeding of
fighting cocks, cockfighting an No No No Yes
cockpit12
7. Fees on places of recreation
No No No Yes
which charge admission fees13
7 Sec. 147. Fees and Charges. - The municipality may impose and collect such reasonable fees and charges on
business and occupation and. except as reserved to the province in Sec. 139 of this Code, on the practice of
any profession or calling, commensurate with the cost of regulation, inspection and licensing before any person
may engage in such business or occupation, or practice such profession or calling.
8 Sec. 152. xxx...
(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, cockfighting an cockpits;
(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor advertisements.
9 Sec. 138. Tax on Sand, Gravel and Other Quarry Resources - The province may levy and collect not more than
ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and
other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from
public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial
jurisdiction.
The permit to extract sand, gravel and other quarry resources shall be issuedexclusively by the provincial
governo,r pursuant to the ordinance of the Sangguniang Panlalawigan.
10 Sec. 148. Fees for Sealing and Licensing of Weights and Measures. - (a) The municipality may levy fees for
the sealing and licensing of weights and measures at such reasonable rates as shall be prescribedby the
Sangguniang Bayan.
11 Sec. 149. Fishery Rentals, Fees and Charges. - (a) Municipalities shall have the exclusive authority to grant
fishery privileges in the municipal waters and impose rentals, fees or charges therefore in accordance with the
provisions of this Section. xxx...
12 Supra Note 2
13 Ibid
122
LTOM, 2ND EDITION
Fees and Charges Province Cities Municipalities Brgy.

8. Fees on billboards, signboards,
neon signs, and outdoor No No No Yes
advertisements.14
9. Service fees15 Yes Yes Yes Yes
10. Public utility charges16 Yes Yes Yes Yes
11. Toll fees and charges17 Yes Yes Yes Yes
12. Other fees and charges strictly in

accordance with Sec. 18618 of the Yes Yes Yes Yes
Local Government Code (LGC)
6.3 Determination of Reasonable Rates of Fees and Charges

6.3.1 The rates of fees and charges shall be revised at just and reasonable
rates sufficient to recover the cost of services rendered taking into
consideration the Local Fees and Charges (LFC) Toolkit to be issued
by the Department of Finance which comprises the direct fixed cost
and variable costs of rendering services:
6.3.1.1 Variable costs shall include the following:
6.3.1.1.1 salaries and wages of personnel directly involved in
delivering the service;
6.3.1.1.2 costs of supplies and materials;
6.3.1.1.3 transportation and travel expenses; and
6.3.1.1.4 supplies, materials, and other resources.
6.3.1.2 Fixed costs consist of proportionate share in the overhead
expenses comprising depreciation rates of equipment and
utilities used, which includes:
6.3.1.2.1 cost of water;
6.3.1.2.2 electricity; and
14 Ibid
15 Sec. 154. Service Fees and Charges. - Local government units may impose and collect such reasonable fees
and charges for services rendered.
16 Sec. 154. Public Utility Charges. - The Sanggunian concerned may prescribe the terms and conditions and
fix the rates for the imposition of toll fees or charges for the use of any public road, pier or wharf, waterway,
bridge, ferry or telecommunication system funded and constructed by the local government unit concerned:
Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed
Forces of the Philippines and members of the Philippine National Police on mission, post office personnel
delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.
17 Ibid
18 Sec. 186. Power To Levy Other Taxes, Fees or Charges. - Local government units may exercise the power to
levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under
the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the
taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national
policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without
any prior public hearing
123
FORMS AND ANNEXES
6.3.1.2.1 other regular services rendered to the applicants.

6.3.1.3 The DOF, through the BLGF, shall issue within thirty (30)
days the LFC Toolkit and issue the necessary amendments
thereto.
6.3.2 Other Considerations:
6.3.2.1 In the succeeding revision of the rates, LGUs may have an
option to adjust the rate of imposition or last revision of the
subject rates of fees and charges by indexing approach:
Provided, that there are no changes in the variables used in
the computation and subject to the guidelines to be issued by
the DOF, through the BLGF.
6.3.2.2 Subsequent to the adjustment of the rate of imposition, such
revision shall be as much as possible, be uniform for similar
or comparable services and functions offered by LGUs.
6.3.2.3 The revised rates shall be imposed through the issuance
of an appropriate ordinance and compliance to all legal
requirements including the conduct of a public hearing and
publications.
6.4 Creation of an Oversight Committee on the Revision of Fees and Charges
6.4.1 Within three (3) months after the effectivity of this Joint Memorandum
Circular (JMC), LCEs are advised to issue an Executive Order creating
an oversight committee on the revision of fees and charges composed
of the following:
6.4.1.1 Composition
6.4.1.1.1 For Provinces:
Chairperson: Local Chief Executive

Co-Chairperson Provincial Treasurer
Members: Provincial Budget Officer
Provincial Planning and Development
Coordinator Provincial Accountant
Sanggunian Secretary
Additional members may be identified depending on the type

of fees and charges being reviewed and the department/
office in-charge of the service e.g., Assessor, Environment
Officer, Health Officer, etc.
124
LTOM, 2ND EDITION
6.4.1.1.2 For Cities and Municipalities:
Chairperson: Local Chief Executive

Co-Chairperson City/Municipal Treasurer
Members: City/Municipal Budget Officer
City/Municipal Planning and
Development Coordinator City/Municipal
Accounting
Sanggunian Secretary
Liga ng mga Barangay Representative
Additional Members may be identified depending on the type

of fees and charges being reviewed and the department/office
in-charge of the service e.g., Assessor, Business Permits
and Licensing Officer (BPLO), Building Official, Environment
Officer, Sanitary Officer, Zoning Officer, etc.
6.4.2 Functions and Responsibilities
6.4.2.1 The Committee on Revision of Fees and Charges shall have
the following functions and responsibilities:
6.4.2.1.1 Ensure that the guiding principles as prescribed
under the LGC and this JMC are observed;
6.4.2.1.2 Review the rationale for fees and user charges
imposed by the LGU and methodology for
determination of the fee schedule or rates;
6.4.2.1.3 Gather data on the cost of delivering regulatory,
service fees and charges, in order to compute the
appropriate rates that will recover the cost, using
the LFC Toolkit;
6.4.2.1.4 Submit to the LCE and the sanggunian the
recommended proposed local revenue ordinance
including a program of action to institute reforms.
6.5 Roles and Responsibilities of Oversight Agencies and Local Government
Units Local Government Units (LGUs)
6.5.1 The LCE shall call for the immediate review and appropriate updating
of their respective Local Revenue Code (LRC). Furthermore, LCE
shall ensure that their LRCs, schedule of fees and charges and result
of the review of such via the LFC Toolkit are published online in their
website and/or in three (3) conspicuous places in their localities.
6.5.1.2 In the case of municipalities and cities, once approved by
the sangguniang bayan or panlungsod, the recommended
proposed local revenue ordinance shall be submitted to the
sangguniang panlalawigan concerned. If the sangguniang
125
FORMS AND ANNEXES
panlalawigan finds that such an ordinance or resolution

is beyond the power conferred upon the sangguniang
panlungsod or sangguniang bayan concerned, it shall declare
such ordinance or resolution invalid in whole or in part.
6.5.1.3 The sanggunian panlalawigan shall review the revenue
codes/ordinances passed in their jurisdiction in connection
with the imposition of fees and charges of their component
cities and municipalities.
6.5.1.4 In the case of barangays, once approved by the sanggunian
members, the recommended proposed local revenue
ordinance shall be submitted to the sangguniang bayan or
sanggunian panlungsod concerned.
6.5.1.1 The sangguniang panlungsod and sangguniang bayan,
shall review the revenue codes/ordinances passed in their
jurisdiction in connection with the imposition of fees and
charges of their component barangays. If the sangguniang
panlungsod or sangguniang bayan, as the case may be,
finds the barangay ordinances inconsistent with law or city
or municipal ordinances, the sanggunian concerned shall,
within thirty (30) days from receipt thereof, return the same
with its comments and recommendations to the sangguniang
barangay concerned for adjustment, amendment, or
modification; in which case, the effectivity of the barangay
ordinance is suspended until such time as the revision called
for is effected.
6.5.1.2 The concerned city and municipal treasurers shall guide
and assist the component barangays in determining and
setting of the rates of fees and charges within their respective
jurisdictions to ensure uniformity and compliance with the law
and this Joint Memorandum Circular (JMC).
6.5.2 Department of the Interior and Local Government (DILG)
6.5.2.1 The DILG shall advocate with the LGUs, through the leagues,
the importance of the utilization of the LFC Toolkit in updating
their revenue ordinances and/or codes.
6.5.2.2 The DILG shall take the necessary measures and
institutionalize a monitoring system to ensure compliance of
LGUs.
6.5.2.3 Through their Regional Offices, disseminate this Joint
Memorandum Circular (JMC) to all LGUs and others
concerned.
6.5.3 Department of Finance (DOF)
6.5.3.1 The DOF, through the BLGF, shall prepare, update and
126
LTOM, 2ND EDITION
issue the necessary guidelines and/or advisories on the LFC

Toolkit for LGUs containing the cost accounting framework in
the determination of the reasonable rate of fees and charges
and for the primary purpose of analyzing the efficient cost
recovery of the LGUs. The LFC Toolkit shall be available in
two modes: 1) Excel-based template; and 2) Local Fees and
Charges Estimation System (LFCES) incorporated in the
LGU Integrated Financial Tools (LIFT) System.
6.5.3.2 The DOF, through the BLGF and the Philippine Tax Academy
(PTA), in coordination with the DILG, shall conduct capacity
building, training, and technical assistance programs for
concerned personnel relative to the review, setting, and/or
adoption of reasonable regulatory fees and charges by using
the LFC Toolkit in revising their fees and charges..
6.5.3.3 The DOF, through the BLGF, shall regularly monitor the
fees and charges imposed by LGUs through the DOF-BLGF
online portal, and shall ensure that the schedule of rates and
analysis of such are regularly published online and readily
available to the different stakeholders and the general public.
6.5.3.4 The DOF, through the BLGF, shall coordinate with the DILG in
monitoring the compliance of the LGUs in the implementation
of this Joint Memorandum Circular (JMC).
6.5.3.5 The DOF, through the BLGF Regional Offices, hereby
instructs to disseminate this Joint Memorandum Circular
(JMC) to all local treasurers and others concerned for their
information and guidance.
7.0 Repealing Clause
7.1 All rules, regulations, orders, and/or Circulars previously issued by the DILG
and DOF that are contrary to, or inconsistent with the provisions of this Joint
Memorandum Circular (JMC) are hereby repealed or modified accordingly.
8.0 References
8.1 RA No. 7160: Local Government Code of 1991
8.2 RA No. 11032: Ease of Doing Business and Efficient Government Service
Delivery (EODB EGSD) Act of 2018
9.0 Effectivity
9.1 This Joint Memorandum Circular (JMC) shall take effect immediately.
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FORMS AND ANNEXES
10. Approving Authority
EDUARDO M. AÑO CARLOS G. DOMINGUEZ

Secretary, DILG Secretary, DOF
11. Feedback
11.1 For related queries, kindly contact the Office of the Bureau of Local Government
Development (BLGD) through telephone nos. (02) 927-7852 or (02) 925-0356
or at email address: localfiscal.blgd@gmail.com or visit www.dilg.gov.ph and/
or the BLGF through Tel. No. (02) 527-2790 or visit www.blgf.gov.ph.
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LTOM, 2ND EDITION
ANNEX 10 - REQUIREMENTS OF A VALID ORDINANCE

In the case of Magtajas Cagayan De Oro vs. Pryce Properties Corp. & PAGCOR 234
SCRA 255, the Supreme Court ruled that an ordinance must conform to the following
substantive requirements to be valid:
A. It must not contravene the Constitution or any statute.
LGUs do not have the inherent power to tax. The inherent power belongs to the
State and is merely a legislative. As such, tax ordinances must always yield to a
legislative act which is superior, having been enacted by the State. (p. 445b, The
Revised Philippine Constitution, Volume 1, 1983 edition, Bernas)
The sanggunian exercises only delegated legislative powers conferred on them
by Congress as the national law-making body. As mere agents, LGUs are vested
with the power of subordinate legislation. The delegate cannot be superior to
not exercise powers higher than those of the principal. Local government cannot
undo acts of Congress from which they derived their powers and negate by
mere ordinance the mandate of the statute. (Pablo P. Magtajas, et al. vs. Pryce
Properties Corp. Inc., et al., GR No. 111097, 20 July 1994)
The constitution is a written instrument agreed upon by the people, as the absolute
rule of action and decision for all departments and officers of the government
and in the opposition, to which any act or rule of any department or officer of the
government, or even of the people themselves, will altogether be void. (Cooley,
Constitutional Limitation 3) Underscoring supplied, “It is, in other words, the
supreme written law of the land.” (The 1987 Constitution of the Republic of the
Philippines: A Commentary, 1996, Bernas)
B. It must not be unfair or oppressive.
A tax ordinance is fair when it is equitable. It is equitable when it is just, reasonable,
and proportionate to one’s ability to pay. The progressive system of taxation is one
good example of equitable taxation since it increases as the tax base increases.
It is oppressive when it is unreasonably burdensome, unjustly severe, or harsh.
C. It must not be partial or discriminatory.
What is being espoused is uniformity of tax application. A tax is uniform when it
operates with the same force and effect in every place where the subject of it
is sound. The uniformity rule requires merely a geographical and not intrinsic
uniformity. A tax is not unconstitutional simply because it is not intrinsically equal
and uniform in its operation upon individuals. In other words, the uniformity rule
does not prohibit classification for purposes of taxation (The Constitution of
the Republic of the Philippines: A Commentary, 1988, Bernas). However, the
classification must be based upon real and substantial differences between the
persons, property or privileges and those not taxed must bear some reasonable
relation to the object or purpose of legislation or to some governmental policy of
legitimate end of governmental action (See pp. 79-80, Taxation in the Philippines,
Volume 1, Matic)
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FORMS AND ANNEXES
In Pepsi Cola vs. Butuan, the Supreme Court ruled that classification is permitted
if (1) the standards used are not arbitrary but reasonable and substantial;
(2) the classification is germane to achieve the purpose of the legislation; (3) the
classification present and future conditions, other circumstances being equal; and
(4) the classification applies equally to all those belonging to one class.
D. It must not prohibit but only regulate trade.
A provision under Sec. 133 (e) of the LGC prohibits LGUs from imposing taxes on
goods carried in or out of the municipalities. The rationale is to allow the free flow
of commerce in the country and thus, avoid causing an increase in the prices of
commodities to the consuming public. (DOF Provincial Circular, Unnumbered, 17
April 1947, cited in Philippine Law on Taxation, 2000 Ed., Ursal)
1. In the case of Wise & Co. vs. City of Manila, GR No. L9957, 25 April 1958,
the Court declared as invalid a tax ordinance requiring the inspection of, and
charging of a fee therefore, meat coming from outside city limits.
2. In Saldana vs. City of Iloilo, GR No. L-10470, 27 September 1957, the Court
declared as a forbidden export tax an inspection fee on every hog, cattle and
carabao transported to other places.
3. The DOF likewise had directed municipal treasurers of Palawan to desist from
charging outgoing fee in the transport of rice and corn from one municipality
to another. (DOF 3rd Endorsement to the Provincial Treasurer of Palawan,
07 July 1987)
E. It must be generally consistent with public policy.
Public policy is defined in Black’s Law Dictionary as “that principle of the law which
holds that no subject can lawfully do that which has a tendency to be injurious
or against the public good.” The term “policy,” in turn, is defined as “the general
principles by which government is guided in the management of public affairs, or
the legislature, in its measures.”
Thus, since the local councils exercise only delegated legislative powers conferred
on them by Congress as the national law-making body, the ordinances they enact
must be consistent with the policies declared by Congress through the measures
it enacted, as well as be harmonized with the national government’s policies
enshrined in executive orders and other administrative issuances.
F. It must not be unreasonable.
A tax is said to be unreasonable when it is unjust, excessive, oppressive or
confiscatory. It is:
1. Unjust when it is deficient in justice and fairness;
2. Excessive when it is characterized by whatever is notably higher than what is,
reasonable, proper, usual, necessary and equitable;
3. Oppressive when it is unreasonably burdensome, unjustly severe, or harsh;
and
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LTOM, 2ND EDITION
4. Confiscatory when it amounts to undue seizure or forfeiture of private property

in favor of the public treasury. (Sec. 3, PD 231)
The question of reasonableness of tax rates is open to judicial inquiry, but,
much is left to the discretion of the municipal authorities in setting the tax
rates. Courts in fact go slow in writing off an ordinance as unreasonable
unless the amount is so excessive as to be prohibitive. As a rule, Courts
consider the municipal conditions as a whole and the nature of business
made subject to the imposition as factors in determining the reasonableness
of tax rates (Victorias Milling Co. Inc. vs. Municipality of Victorias, GR No.
L-21183, 27 September 1968).
A tax ordinance, however, does not become oppressive simply because it
carries a penal clause imposing a fine or imprisonment, neither does it become
unconstitutional because it subjects the taxpayers to criminal prosecution for
non-payment. (Villanueva vs. City of Iloilo, GR No. L-262521, 28 December
1968)
131
FORMS AND ANNEXES
ANNEX 11 - LOCAL REVENUE TOOL KIT FOR PHILIPPINE LGUS

(ANNEX G OF A LOCAL REVENUE TOOLKIT
FOR PHILIPPINE LGUS, GUIDELINES ON PROVINCIAL/
LOCAL PLANNING AND EXPENDITURE MANAGEMENT,
NEDA/ADB, 2007)
The LGC provides LGUs with powerful resource mobilization tools that can be grouped
into five distinct classes of potential revenue sources. These are:
I. Land - based Tools
II. Community Activity - based Tools
III. Infrastructure - based Tools
IV. Debt-based Tools
V. Revenue sharing Tools
Most of these tools are being effectively used by rapidly growing LGUs in the
Philippines, Thailand and Indonesia.
Under the LGC, the province, as a political and corporate unit of government serves
as a dynamic mechanism for the “effective governance” and development of
component cities and municipalities within its territorial jurisdiction.
I. Land-Based Tools
These are potential revenue sources that rely on the real property (land and
improvements) resources of LGUs.
A. Basic Real Property Tax (Sec. 232, LGC). This is a yearly ad valorem tax
on real property such as land, building, plant, machinery and equipment, and
other improvements. The maximum tax is 2% of the assessed value of real
properties which is a percentage of the fair market value of real property.
The LGC prescribes the graduated schedule of assessment for agricultural,
residential, and other real property classification. LGUs are required to
prepare and update every three years a schedule of fair market values for all
classes of real property.
B. SEF (Sec. 235, LGC). This is an additional yearly ad valorem tax on real
property. The amount of tax is 1% of the assessed value of real property and
is collected together with the basic real property tax.
C. Tax on Transfer of Real Property (Sec. 135, LGC). This tax is imposed
on any mode of transferring title of ownership of real property from one
person to another, such as through sale, barter or donation. The amount of
tax is 75% of 1% of the total consideration or fair market value, whichever is
higher, and is payable within 60 days from the execution of the deed. Sale or
transfer under the Comprehensive Agrarian Reform Program is exempt from
this tax. (Applicable only to cities and provinces)
D. Idle Land Tax (Sec. 236, LGC). This is a yearly ad valorem tax on idle land
and is in addition to the basic real property tax and SEF. The maximum
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LTOM, 2ND EDITION
amount of tax is 5% of the assessed value of property. Idle lands include

agricultural lands more than one hectare in area, one half of which remains
uncultivated or unimproved; non-agricultural lands more than 1,000 square
meters in area, one-half of which remain unutilized or unimproved; and
residential lots in subdivision, regardless of area. (Applicable only to cities,
provinces, and Metro Manila municipality)
E. Public Land Use Tax (Sec. 234a, LGC). An LGU may collect real property
tax on government lands which are used for the private benefit of individuals
or corporations. For example, concessionaires or business establishments
within government properties such as the lands of the Air Transportation
Office may be levied real property taxes on government lands they occupy.
F. Land Sale of Foreclosed Real Properties (Sec. 257, 258 and 260, LGC).
Local taxes, fees and charges constitute a lien on real properties owned by
a taxpayer. An LGU may foreclose on the properties of delinquent taxpayers
and sell these properties through public auction. In the absence of bidders,
or if the bids are not enough to pay the tax obligation, including interests and
penalties, the LGU treasurer will purchase the property for the LGU.
G. Land Investment. An LGU may acquire and develop land using its ordinary
corporate powers (Sec. 18, LGC), though purchase of foreclosed real
properties (Sec. 263, LGC) or through joint ventures (Sec. 302, LGC) with
the private sector, or through build-operate and transfer (BOT) scheme.
Such investment in land development provides direct revenues to the LGU
in terms of profits upon disposition and in terms of enhanced property value
and higher property tax base.
H. Land Reclassification (Sec. 20, LGC). An LGU may reclassify 15% for
highly urbanized and independent component cities, 10% for component
cities and first- to third- class municipalities, 5% for fourth- to sixth- class
municipalities of existing agricultural lands for other uses which are deemed
to have greater economic value.
I. Land Development Permit Fee. The regulation of land development and
subdivisions is one of the devolved functions to LGUs. In the exercise of the
functions, LGUs may impose development permit fees, to cover the cost
service in the process of issuance of a permit. Alternatively, LGUs may base
the development permit fee on the financial impact or economic benefits to
be derived from such a permit.
J. Tax on Sand, Gravel and other Quarry Resources (Sec. 138, LGC).
This is an ad valorem tax on ordinary stones, sand, gravel, earth and other
quarry resources extracted from public lands or from beds of seas, lakes,
rivers, streams, creeks, and other public waters within an LGU’s territorial
jurisdiction. The tax should be no more than 10% of the fair market value in
the locality per cubic meter. (Applicable only to cities and provinces)
In addition to the land-based tools provided by the 1991 LGC, Sec. 43 of
RA 7279, also known as the Urban Development and Housing Act (UDHA),
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FORMS AND ANNEXES
allows all LGUs to levy a 0.5% socialized housing tax on the assessed value
of all lands in urban areas in excess of ₱50,000. The funds can be used to
finance social housing projects of the LGU.
II. Community Activity-Based Tools
These are potential revenue sources that rely on the flow of economic activity
within the territorial jurisdiction of an LGU.
A. Business Tax (Sec. 143, LGC). This is a tax imposed on various categories
of business operations (manufacturer, retailer, exporter, service, etc.). The
tax follows a graduated schedule based on sales or receipts of the preceding
year. The LGC prescribes the graduated schedule of tax rates for the
categories of business. (Applicable only to cities and municipalities)
B. Community Tax (Sec. 156, LGC). This is a yearly tax on individuals and
juridical persons. An individual who is at least 18 years old and is gainfully
employed or is engaged in business or occupation or owns real property
with assessed value of at least ₱1,000, pays the community tax to the LGU
where he/she resides. The amount of tax is ₱ 5 plus ₱ 1 for every ₱ 1,000 of
income from all sources, but not exceeding ₱ 5,000. In the case of husband
and wife, the additional tax is based on their total combined properties and
gross income. (Applicable only to cities and municipalities)
C. Franchise Tax (Sec. 137, LGC). This is a yearly tax imposed on a business
enjoying a franchise within the territorial jurisdiction of the LGU. The amount
of tax is 75% of 1% of gross receipts realized within the territorial jurisdiction
of the LGU during the preceding calendar year, payable within the first 20
days of January and quarterly thereafter. For a newly started business, the
amount of tax is 1/20 of 1% of capital investment. (Applicable only to cities
and provinces)
D. Tax on Business of Printing and Publication (Sec. 136, LGC). This
is a yearly tax on the business of persons engaged in the printing and/or
publication of books, cards, posters, leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature. The amount of tax is 50% of 1% of
the gross annual receipts of the preceding calendar year. For a newly started
business, the amount of tax is 1/20 of 1% of capital investment. (Applicable
only to cities and provinces)
E. Professional Tax (Sec. 139, LGC). This tax is imposed on the practice of a
profession requiring government examination. The tax is for every profession
practiced, i.e., a CPA-lawyer who practices both professions must pay for
two professions. Professionals working exclusively for the government are
exempt. The amount of tax is ₱300.00 per year and be paid to the LGU
where the professional resides. (Applicable only to cities and provinces)
F. Amusement Tax (Sec. 140, LGC). This is a percentage tax on gross receipts
from admissions of amusement places such as movie houses, clubs and
other places of entertainment. The amount of tax should not exceed 10% of
gross receipts (RA No. 9640). The time, manner, terms and conditions for
134
LTOM, 2ND EDITION
payment are to be prescribed by ordinance. (Applicable only to cities and

provinces)
G. Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141, LGC). This is an
annual fixed tax for every truck, van or any vehicle used by manufacturers,
producers, wholesalers, dealers or retailers in the delivery or distribution of
products, as may be determined by the local legislative council to sales outlets
or consumers whether directly or indirectly within the LGU’s jurisdiction in an
amount not exceeding ₱500. (Applicable only to cities and provinces)
H. Fees and Charges (Sec. 147, LGC). Municipalities and cities may impose
such reasonable fees and charges on business and occupation except
those reserved to the province under Sec. 139 commensurate with the cost
of regulation, inspection and licensing.
I. Fees for Sealing and Licensing of Weights and Measures (Sec. 148,
LGC). The local legislative council may levy reasonable fees for the sealing
and licensing of weights and measures. (Applicable only to cities and
municipalities)
J. Fishery Rentals, Fees and Charges (Sec. 149, LGC). The local legislative
council may grant fishery privileges within its territorial waters and impose
rentals, fees or charges. (Applicable only to cities and municipalities)
K. Service Fees and Charges (Sec. 153, LGC). LGUs may impose and collect
such reasonable fees and charges for services rendered.
III. Infrastructure-Based Tools
These are potential revenue sources that are based on the “user” or
“beneficiary”- pay principle, i.e. that people or entities like corporations
should pay for the use of or benefits derivable from public infrastructure.
These tools are primarily cost recovery mechanisms for infrastructure
projects. However, they can be converted to loan equivalents for purposes
of raising credit finance for infrastructure projects.
A. Special Levy by LGUs (Sec 240, LGC). This is a tax imposed on lands
specially benefited by public works projects which are funded by the local
government. Public works projects which provide benefits to adjacent lands
are roads, drainage, power transmission lines, water distribution lines and
telecommunication lines. Benefits include appreciation in value, increased
economic/commercial activities, reduced maintenance costs of property
improvements, etc. The maximum amount of tax to be generated from a
special levy is 60% of the actual project costs, which include cost of land and
other real properties acquired in connection with the project. The tax liability
is allocated among the real properties affected by the project in proportion to
the benefits to be derived. The tax may be paid in yearly installment over at
least 5 years but not more than 10 years.
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FORMS AND ANNEXES
B. Toll Fees or Charges (Sec. 155, LGC). The local legislative body may
prescribe the terms and conditions and fix the rate of toll fees or charges
for the use of any public road, pier, waterway, bridge and ferry, including
telecommunication systems funded and constructed by the LGU. Toll fees
should be commensurate with the economic benefits derived by users of the
facilities.
C. Public Utility Charges (Sec. 154, LGC). LGUs may fix the rates for the
operation of public utilities owned, operated and maintained by them within
their jurisdiction.
IV. Debt-Based Tools
These are tools that allow LGUs to secure debt finance for so-called “income-
generating projects” and to make investments in financial debt instruments like
securities -Treasury bills, commercial papers, and shares of stocks.
A. Debt Financing (Sec. 297-302, LGC). LGUs may borrow money directly
from the financial/banking system — commercial or government — or other
sources or through the flotation of bonds in the financial markets to fund
development projects. An LGU may use its real property as collateral for
such loans. In addition to loans, credits, deferred payment schemes, bond
and security issues, and other forms of indebtedness, cities are allowed to
enter into Build-Operate-Transfer (BOT) agreements with the private sector.
B. Financial Investment (Sec 18, LGC). LGUs may invest in public or private
financial instruments. Excess or idle funds may generate additional revenues
through bank time deposits.
V. Revenue Sharing-Based Tools
These are tools based on national government revenues shared with LGUs as
provided for in the LGC.
A. Share in Mining, Fishery, and Forestry Taxes (Sec. 290, LGC). In addition
to its IRA, LGUs shall have a 40% share in the gross collection derived
by the national government from the preceding fiscal year from mining
taxes, royalties, forestry and fishery charges, and such other taxes, fees,
or charges plus any share that may accrue to it in any co-production, joint
venture or production sharing agreement in the utilization and development
of the national wealth within their territorial jurisdiction.
B. Share in the Gross Sales or Taxes of GOCCs (Sec. 291, LGC). LGUs
may share in the gross sales or taxes of a government-owned or controlled
corporation (GOCC), if it is engaged in the development and utililization of
natural resources located in a LGU.
1. Eighty percent, however, of the proceeds derived from the development
and utilization of hydropower, geothermal, and other sources of energy
shall be applied solely to lower the cost of electricity in the LGU where
such energy sources are located. (Sec. 294, LGC)
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LTOM, 2ND EDITION
2. The share of the LGU is 1% of the gross sales of the preceding year
or 50% of the mining taxes, royalties, forestry and fishery charges,
and such other taxes, fees and charges, including related surcharges,
interests, or fines the government agency or GOCC would have paid
if it were not exempt.
Table G.1. Probable Infrastructure Financing Options for Philippine LGUs
Over the Next 3 Years Next 6 Years Over 6 Years

Regular Tax Sources Concessions Additional National Revenue
(Property and Business Sharing
Taxes)
Conveyance of Special Assessments Other Special Taxes and
Development Rights Charges like congestion
charges, higher vehicle
ownership fees
Debt Instruments Development Impact Fees
including Bonds
Tax Incentives and Land Readjustment
Government Guarantees
User Fees and Charges
Source: Annex G. A LOCAL REVENUE TOOL KIT FOR PHILIPPINE LGUS,

Guidelines on Provincial/Local Planning and Expenditure Management, NEDA/
ADB, 2007
137
FORMS AND ANNEXES
Annex 12: Cash Book, Cash-In-Treasury (Annex 19 of MNGAS for LGUs, Volume II)
ANNEX 12 - CASHBOOK (CASH IN TREASURY)

This 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. He shall likewise accomplish the following certification in the
cashbook: (Sec. 26, Volume II MNGAS for LGUs)
CASHBOOK
___________________________
LGU
Fund: ______________________
CASH IN TREASURY
Date Particulars Reference
Debit Credit Balance
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. LGU - name of the province/city/municipality
2. Fund - fund name/code
3. Date - date of the source documents
4. Particulars - details or nature of transactions
5. Reference - the number of Report of Collections and Deposits
6. Debit- the amount of collections based on RCD
7. Credit - the amount deposited with the banks based on the RCD's
attached deposit slips
8. Balance - the difference between the Debit and Credit columns, which shall
be equal to the amount of cash in the hands of the Treasurer.
B. The Treasurer shall maintain this record to monitor the cash in treasury balance
as of specific date. All transactions for the day shall be recorded immediately.
C. At the end of each day, the debit and credit shall be ruled and closed. All totals
shall be written legibly in ink and the balances shall be carried forward as opening
balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with the
running balance column.
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LTOM, 2ND EDITION
Annex 13: Cash Book, Cash-In-Bank (Annex 20 of MNGAS for LGUs, Volume II)
ANNEX 13 - CASHBOOK (CASH IN BANK)

CASHBOOK
___________________________
LGU
Bank Account No.: _________________ Fund: ______________________
CASH IN BANK
INSTRUCTIONS
2. Fund - the Fund name/code
3. Bank Account No. - the bank name and account number
6. Reference - the number of the source document
7. Debit - the amount deposited for the day based on the RCD's deposit slips
and interest income and other related transactions based on Journal Entry
Vouchers (JEV)
8. Credit - the amount of checks issued for the day based on the Checks/
Bank Advise and withholding taxes/charges and other charges based on
JEV
9. Balance - the difference between the Debit and Credit columns which
shall be equal to the amount of Cash in Bank.
B. The Treasurer shall maintain this record to monitor the cash in bank balance
shall be written legibly in ink and the balances shall be carried forward as
opening balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with
the running balance column.
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FORMS AND ANNEXES
Annex 14: Cash Book, Cash Advance (Annex 21 of MNGAS for LGUs, Volume II)
ANNEX 14 - CASH BOOK (CASH ADVANCE)
CASHBOOK
___________________________
LGU
Disbursing Officer: _________________ Fund: ______________________
CASH ADVANCES
INSTRUCTIONS
2. Disbursing Officer - name of Disbursing Officer
3. Fund - the fund from which cash advance was made
6. Reference - the number of the Voucher Payroll
7. Debit - the amount advanced by the Disbursing Officer based on the
Voucher Payroll
8. Credit - the amount disbursed out of the cash advances
9. Balance - the difference between the Debit and Credit columns which
shall be equal to the amount of cash in hand of Disbursing Officers
B. The Treasurer shall maintain this record to monitor the cash advances balance
shall be written legibly in ink and the balances shall be carried forward as
opening balances of the Cash Book for the next day.
D. The difference of the totals of Debit and Credit columns should tie-up with the
running balance column.
140
LTOM, 2ND EDITION
LTOM Form No. 1: Cash Book, Teller/Collector
LTOM FORM NO. 1 - CASHBOOK (COLLECTOR)
CASHBOOK
___________________________
LGU
Collector: ___________________
Remitted to
Collections Balance on
Date Report No. Particulars LO
Debit Hand
Credit
INSTRUCTIONS
2. Collector - name of collector
3. Date - date of the Report of Collections and Deposits (RCD)
4. Report No. - shall be numbered one series per year
5. Particulars - nature of collection
6. Debit - total collections per RCD
7. Credit - amount of collections remitted to the Liquidating Officer (LO)
8. Balance - the difference between the Debit and Credit columns or the
unremitted collections to the LO
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FORMS AND ANNEXES
LTOM Form No. 2: Cash Book, Liquidating Officer
LTOM FORM NO. 2 - CASHBOOK [LIQUIDATING OFFICER (LO)]
CASHBOOK
___________________________
LGU
Fund: ______________________
Balance on
Date Report No. Debit Credit
Hand
INSTRUCTIONS
2. Liquidating Officer - name of liquidating officer
3. Date - date of the Report of Collections and Deposits (RCD)
5. Debit - summary of collections turned over by the collectors as well as the
LO’s own collections
6. Credit - collections turned over by the LO to the Treasurer/Cashier
7. Balance - the difference between the Debit and Credit columns or collections
not yet turned over to the Treasurer/Cashier
142
LTOM, 2ND EDITION
COA Revised Cash Examination Manual, 2013
ANNEX 15 - NOTICE OF DISHONOR

NOTICE OF DISHONOR
________________________
________________________
________________________
Sir/Madam:
You are hereby notified that your check issued by _____________________,

Name of Servicing Bank
with Check No.:___________, dated ____________, in the amount of

Php ___________________________, paid to us and acknowledged by our Official
Receipt No.:___________________, dated _________________ has been deposited
but was dishonored and returned to us due to ______________________________
________________________________.
In view thereof, we have today, reversed the payment recorded and reinstated your
liability in the same manner as if you had never tendered any payment.
Please settle your account in cash or by certified check to the undersigned within
five (5) days from receipt of this notice. Otherwise, we will be constrained to institute
criminal action against you as may be warranted under Article 315 of the Revised
Penal Code and Batas Pambansa Blg. 22.
Very truly yours,

_______________________________
Local Treasurer
Note: The last paragraph applies only to cases where the cause of dishonor of the check is lack or insufficiency of
funds. Where the check is dishonored by reason of defect inform, such as incomplete signature or the like.
143
144
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS (RAAF)
FORMS AND ANNEXES

REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS
______________________________________________________
LGU
Month of _________________________ 20 _____________
Accountable Officer: _____________________________ Designation: _____________________________ Report No. __________________
Beginning Balance Receipt Issued Ending Balance

Name of Inclusive Serial Nos. Inclusive Serial Nos. Inclusive Serial Nos. Inclusive Serial Nos.
Qty. Qty. Qty.
Form & No.: Qty. From To From To From To From To
CERTIFICATION:
I hereby certify that the foregoing is a true statement of all accountable forms received, issued and transferred by me during the period above-stated and the
correctness of the beginning balances.
______________________________________________ ________________________________
Name and Signature of the Accountable Officer Date
LTOM, 2ND EDITION
Annex 15: Report of Accountability for Accountable Forms (RAAF)

ANNEX 16 - REPORT OF ACCOUNTABILITY

FOR ACCOUNTABLE FORMS (RAAF)
INSTRUCTIONS
A. The report shall be accomplished as follows:

2. Month - month on which the report is made
3. Accountable Officer - name of accountable officer
4. Designation - position/designation
5. Report No. - number assigned by the Treasurer/Collectors/Accountable
Officers
6. Name of Forms & No. - Name of accountable forms under the custody of
the accountable officers. Indicate the corresponding code number of each
form.
7. Beginning Balance - balance of the accountable forms available at the
beginning of the month. Indicate inclusive serial numbers.
8. Receipt - number of units received by the accountable officers during the
month. Indicate inclusive serial numbers.
9. Issued - number of units issued by the accountable officers during the
10. Ending Balance - remaining units of the accountable forms still in the
custody of the accountable officers at the end of the month. Indicate
inclusive serial numbers.
B. The report shall be prepared in two copies and to be distributed as follows:
Original – Treasurer
2nd copy – Accountable Officer's File
C. Treasurers, collectors/tellers and other accountable officers shall render this
report of accountability for accountable forms at the end of each month for
consolidation by the local treasurer.
D. The report shall be certified by the Treasurer/Accountable Officer.
145
146
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS (CRAAF)
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS

FORMS AND ANNEXES
______________________________________________________
LGU
Month of _________________________ 20 _____________
Treasurer: _____________________________ Report No. __________________
Name of Beginning Balance Receipt Issued Ending Balance

Form & AF No.: Inclusive Serial Nos. Inclusive Serial Nos. Inclusive Serial Nos. Inclusive Serial Nos.
No.: Qty. Qty. Qty. Qty.
From To From To From To From To
Certified Correct:
________________________________ ____________________________
Treasurer Date
LTOM, 2ND EDITION
Annex 16: Consolidated Report of Accountability for Accountable Forms (CRAAF)

ANNEX 17 - CONSOLIDATED REPORT OF ACCOUNTABILITY

FOR ACCOUNTABLE FORMS (CRAAF)
INSTRUCTIONS
2. Month - month on which the report is made
3. Treasurer - name of the Treasurer
4. Report No. - number assigned by the Treasurer's Office on the report
5. Name of Forms - name of accountable forms under the custody of the
accountable officers.
6. Code no. - corresponding code number of the accountable forms
7. Beginning Balance - balance of the accountable forms available at the
beginning of the month. Indicate inclusive serial numbers.
8. Receipt - number of units received by the accountable officers during the
9. Issued - number of units issued by the accountable officers during the
10. Ending Balance - remaining units of the accountable forms still in the
custody of the accountable officers at the end of the month. Indicate
inclusive serial numbers.
B. The report shall be prepared in two copies and to be distributed as follows:
Original - COA through the Accounting Office
2nd copy - Treasurer's File
C. The Treasurer shall render this report to consolidate the Report of Accountability
for Accountable Forms.
D. This consolidated report shall be accompanied by the RAAF of all accountable
officers which shall be submitted to the auditor not later than the fifth day of
the ensuing month
147
FORMS AND ANNEXES
Page 1 of 2
REPORT OF COLLECTIONS AND DEPOSITS (RCD)
______________________________
Name of LGU
Fund: _______________________ Date: __________

Name of Accountable Officer: ____________________________ Report No: ______
A. COLLECTIONS
1. For Collectors
Official Receipt/Serial No.
Type (Form No.) Amount
From To
2. For Liquidating Officers/Treasurers
Name of Accountable Officer Report No. Amount
B. REMITTANCES/DEPOSITS
Accountable Officer/Bank Reference Amount
148
LTOM, 2ND EDITION
Page 2 of 2
C. ACCOUNTABILITY FOR ACCOUNTABLE FORMS
Beginning Balance Receipt Issued Ending Balance
Name of Form Inclusive Inclusive Inclusive Inclusive
& No. Qty.
Serial Nos.
Qty.
Serial Nos.
Qty.
Serial Nos.
Qty.
Serial Nos.
From To From To From To From To
D. SUMMARY OF COLLECTIONS AND REMITTANCES/DEPOSITS

Beginning
Balance: List of Checks:
Add: Collections
Cash: Check No. Payee Amount
Checks:
TOTAL:
Less:
Remittance/
Deposit to
Cashier/Treasurer/
Depository Bank:
Balance: -Use additional sheets if necessary-
CERTIFICATION VERIFICATION AND ACKNOWLEDGMENT

I hereby certify that the foregoing report of collections I hereby certify that the foregoing
and deposits and accountability of accountable forms report of collection has been
is true and correct. verified and acknowledge receipt of
_____________________________,
Amount in Words
Php __________________.
Amount in Figures
_________________________ ___________ ____________________ ___________

Name and Signature Date Name and Signature Date
Accountable Officer Cashier/Treasurer
149
FORMS AND ANNEXES
Annex 17: Report of Collection and Deposits (Annex 41 of MNGAS for LGUs, Volume II)
ANNEX 18 - REPORT OF COLLECTION AND DEPOSITS (RCD)

INSTRUCTIONS
2. Fund - Fund name/code
3. Name of Accountable Officer - the name of the accountable officer
4. Date - date of the report
6. Collections
For Collectors
a. Type (Form No.) - type of official receipts used
b. Official Receipt No. (From _____ To_____) - serial number of the
Official Receipts issued by the Treasurer/Accountable Officer including
the cancelled ones in chronological and numerical sequence
c. Amount - amount of collections received
For Liquidating Officers/Treasurers
a. Name of Accountable Officer - the name of collector/accountable
officer remitting the collections
b. Report No. - the reference number of the Report of Collections and
Deposits of the Collector, bearing the collector no. and the series
c. Amount - amount of collections received from collectors/liquidating
officers, taxpayers and other sources
7. Remittances and Deposits
a. Accountable Officers/Bank - the name of the liquidating officer to whom
the collections were remitted or the name of the depository bank
b. Reference - reference documents used as basis in the remittance/deposit
of the collections like the RCD number/deposit slip.
c. Amount - amount of remittances/deposits
8. Accountability for Accountable Forms
a. Name of Forms & No. - the name(s) of the form(s) (checks/official
receipts/etc.) for which this report is being made shall be written in the
boxes provided
b. Qty. and Serial No. - the quantity and the corresponding serial numbers
of the forms on hand at the start of the period; those received, and those
issued or transferred during the period covered; and the balance at the
end of the period shall be entered in these columns.
9. Summary of Collections and Remittances/Deposit - A summary shall be
prepared as shown in the report.
150
LTOM, 2ND EDITION
10. Certification - shall be signed by the Accountable Officer preparing the report.
11. Verification and Acknowledgement - shall be signed by the Treasurer/
Liquidating Officer receiving the RCD and corresponding remittances. In
case of RCD of the Local Treasurer, this portion shall no longer be filled up.
However, the validated deposit slip/remittance advice from the bank shall be
attached to the report.
B. This report shall be prepared in four (4) copies and to be distributed as follows:
Original - COA thru the Accounting Division together with the duplicate copy
of the OR
2nd Copy - Treasurer's File
3rd Copy - Liquidating Officer's File
4th Copy - Collector's File
C. Collections for the day should be deposited intact daily. The balance of collections
not deposited during the day due to cut-off should be deposited in the next working
day.
151
FORMS AND ANNEXES
ANNEX 19
Manila 1004
DEPARTMENT CIRCULAR NO. 01-2017

11 May 2017
TO : HEADS OF ALL NATIONAL GOVERNMENT AGENCIES,
GOVERNMENT - OWNED OR -CONTROLLED CORPORATIONS/
GOVERNMENT FINANCIAL INSTITUTIONS AND PROVINCIAL,
CITY, MUNICIPAL AND BARANGAY TREASURERS (LOCAL
TREASURERS)
SUBJECT : AMENDED GUIDELINES ON AUTHORIZED GOVERNMENT
DEPOSITORY BANKS
Section 1. Section 3 of Department Circular No. 01-2015 dated June 1, 2015, as
amended, is hereby amended to read as follows:
"3.1 “Authorized Government Depository Banks” (“AGDBs”)” refer to banks
where NGAs/ GOCCs/ GFls/ GICPs/ GCEs and LGUs are allowed by law to
deposit Government Funds and maintain depository accounts, or by way of
exception, a bank allowed by the Department of Finance and the Monetary
Board to hold government deposits subject to prescribed rules and regulations.”
3.2 “Government Financial Institutions (“GF/s”)” refer to financial institutions
or corporations in which the government directly or indirectly owns majority of
the capital stock and which are either: (1) registered with or directly supervised
by the Bangko Sentral ng Pilipinas (“BSP”); or are (2) collecting or transacting
funds or contributions from the public and thereafter, placing them in financial
instruments or assets such as deposits, loans, bonds and equity including,
but not limited to, the Government Service Insurance System and the Social
Security System.
3.3 “Government Funds” include public moneys of every sort and other
resources pertaining to any agency of the government, including LGUs and
GOCCs.
3.4 “Government Instrumentalities with Corporate Powers (“GICPs”) /

Government Corporate Entities (“GCEs”)” refer to instrumentalities or
agencies of the government which are neither corporations nor agencies
integrated within the departmental framework, but vested by law with special
functions or jurisdiction, endowed with some if not all corporate powers,
administering special funds, and enjoying operational autonomy usually
through a charter including, but not limited to, the following: The Manila
International Airport Authority, the Philippine Ports Authority , the Philippine
Deposit Insurance Corporation, the Metropolitan Waterworks and Sewerage
System, the Laguna lake Development Authority, the Philippine Fisheries
Development Authority, the Bases Conversion and Development Authority, the
152
LTOM, 2ND EDITION
Cebu Port Authority, the Cagayan de Oro Port Authority, the San Fernando Port
Authority, the Local Water Utilities Administration and the Asian Productivity
Organization.
3.5 “Government-Owned or -Controlled Corporations (iGOCCs)” refer
to any agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or proprietary in
nature, and owned by the Government of the Philippines directly or through
its instrumentalities either wholly or, where applicable as in the case of stock
corporations, to the extent of at least a majority of its outstanding capital stock.
Provided, however, That for purposes of this Circular, the term “GOCC” shall
include GICP/GCE and GFI as defined herein.”
Section 2. Section 5.2 of Department Circular No. 01-2015 dated June 1, 2015, as
"5.2 NGAs, GOCCs and LGUs, specifically allowed by law, rules and regulations
to retain income and/or for operations and/or working balances, shall deposit
and maintain Government Funds with any of the following banks:
a. Land Bank of the Philippines;
b. Development Bank of the Philippines;
c. Philippine Postal Savings Bank;
d. Al Amanah Islamic Investment Bank of the Philippines;
e. United Coconut Planters Bank - authorized to accept funds from NGAs/
GOCCs/ LGUs until further notice from the BSP, and subject to limitations
that may be prescribed by the Monetary Board; and
f. Philippine Veterans Bank - authorized to accept funds from NGAs/ GOCCs/

LGUs, and subject to \imitations prescribed by the Monetary Board.
5.2.1 NGAs and GOCCs shall secure written authority to open deposit
accounts and/or deposit Government Funds from the duly authorized
official of the BTr/ DOF in all banks, including those listed in Section
5.2, in accordance with relevant laws, issuances, and regulations
of the BSP. NGAs and GOCCs shall submit a notarized waiver: (i)
allowing the BTr/ DOF to examine, inquire, or look into all its deposits
or accounts in all banks, including those listed in Section 5.2, and (ii)
allowing the BTr/ DOF to require the banks, including those listed in
Section 5.2, to submit reports/statements with respect to its accounts.
Subject to the existence of any of the circumstances under Section
5.4 and prior approval under Section 5.5, a GOCC may be allowed to
deposit Government Funds and maintain accounts with banks other
than those listed in Section 5.2, provided that the account balance
shall be either: (i) equivalent to its operating expenses of up to three
(3) months based on its latest audited financial statement; or (ii) up
to the maximum deposit insurance coverage of the Philippine Deposit
Insurance Corporation (PDIC) of P500,000.00 , whichever is lower .
153
FORMS AND ANNEXES
All Government Funds deposited in banks other than those listed in

Section 5.2 shall be used solely for operations, and no other deposits
shall be maintained for special projects or investment purposes. Any
amount in excess of the authorized cash balance in Section 5.4 shall
be transferred to the TSA or to any of those listed in Section 5.2.
5.2.2 Subject to the existence of any of the circumstances under Section
5.4 and prior approval under Section 5.5, provinces, cities, and
municipalities may be allowed to deposit Government Funds and
maintain accounts with banks other than those listed in Section 5.2,
provided that municipalities are allowed to deposit Government Funds,
without need of the BLGF’s prior approval, for the maintenance of
an account that shall have a balance up to its maximum maintaining
balance provided in Schedule A of this Circular. All LGUs shall comply
with the requirements of Section 5.5.2, and other relevant laws,
issuances, and regulations of the BSP.”
"5.3 To remove revenue and expenditure floats:
5.3.1 The NGA/ GOCC/ LGU, may engage the payment and collection
services of banks other than those listed in Section 5.2, thru a transaction
fee-based arrangement, without the need for prior approval from the
DOF, in the case of GOCCs, or from the BLGF, in the case of LGUs:
provided, that in the case of NGAs the implementation of any payment
and collection system should require approval of BTr for consistency
with the TSA framework; provided, further, that the proposed bank will
only serve as a collection bank for the account of the NGA/ GOCC/
LGU: provided, finally that, all collections of collection banks shall be
transferred to any of those listed in Section 5.2, or in the case of NGAs/
GOCCs, to the TSA or to any of those listed in Section 5.2, on the next
banking day counted from the collection date.
5.3.2 All interest income earned by deposits of NGAs/ GOCCs shall be
remitted quarterly to the National Treasury, unless expressly provided
by law that interest earnings of the account shall accrue to the fund
for which the account was opened or maintained. The NGA/ GOCC
shall furnish the bank a copy of the certification of the exemption from
automatic remittance of interest income, which may be granted by the
BTr/ DOF upon confirmation of the legal basis submitted by the NGA/
GOCC.”
"5.4 Deposits with banks other than those listed in Section 5.2 may be allowed,
only if any of the following circumstances exists:
5.4.1 The banks listed in Section 5.2 cannot provide the required banking
5.4.2 The banks listed in Section 5.2, or their collection facilities, are not
154
LTOM, 2ND EDITION
5.4.3 There are security and safety risks.”

amended , is hereby amended to read as follows:
"5.5 Where any of the circumstances under Section 5.4 exists:
5.5.1 The NGA/ GOCC/ LGUs shall request prior approval from the BTr for
NGAs/ DOF for GOCCs/ BLGF for LGUs, to open and maintain an
account in a bank other than those listed in Section 5.2. It shall submit
the following to the BTr/ DOF/ BLGF, as applicable:
a. Letter from the Head of the NGA/ GOCC/ LGU or its duly designated
officer stating: (i) the terms of the deposit, purpose for opening and
maintaining an account with the proposed bank, and the specific
circumstance under Section 5.4; and, (ii) that the NGA/ GOCC/
LGU shall comply with fiscal and financial reporting requirements
of the BTr/ DOF/ BLGF;
b. In the case of a GOCC, it shall submit: (i) a copy of the board
resolution authorizing the GOCC to deposit funds with the
proposed bank, (ii) its latest audited financial statements issued
not more than eighteen (18) months at the time of the submission
of the request, and (iii) a Summary of its Daily Collection Report for
the last three (3) months;
c. In the case of an LGU, it shall submit: (i) a certification from the
proposed bank that no elective or appointive 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; and, (ii) a copy of the Resolution of the
local Sanggunian authorizing the LGU to deposit funds with the
proposed bank with the approval of the Local Chief Executive,
and directing the Local Chief Executive and all concerned officers
to perform all such acts to ensure full compliance with fiscal and
financial reporting requirements of the DOF and the BLGF;
d. In cases where the circumstance in Section 5.4.1 is prevailing, the
letter from the Head of NGA/ GOCC/ LGU shall identify the specific
banking products or services required, and, if so required by the
BTr/ DOF/ BLGF, provide certifications from those listed in Section
5.2 that the banking products or services cannot be provided;
e. In cases where the circumstance in Section 5.4.2 is prevailing,
the NGA/ GOCC/ LGU shall submit a vicinity map showing (i) the
locations, and (ii) the distance between the NGA/ GOCC/ LGU,
and those listed in Section 5.2, and (iii) the distance between the
NGA/ GOCC/ LGU and the proposed bank;
f. In cases where the circumstance in Section 5.4.3 is prevailing,
the NGA/ GOCC/ LGU shall submit a report or certification from
the Philippine National Police Provincial Office confirming the
existence of the security risk; and
155
FORMS AND ANNEXES
g. Other information that the BTr/ DOF/ BLGF may require in the
course of its evaluation.
5.5.2 The NGAs/ GOCCs/ LGUs shall require the proposed bank to: (i)
within one (1) banking day, notify the NGA/ GOCC/ LGU, if the bank’s
authority to accept government deposits has been revoked pursuant
to relevant laws, issuances, or regulations of the BSP; and, (ii) within
five (5) banking days, submit to the BSP proof of receipt of such notice.
On the last business day of March of every year, the heads of NGAs/
GOCCs/ LGUs shall submit the following to the BTr/ DOF/ BLGF: (i) a
report on its receipt of a notice of revocation of authority from any bank
where it maintains an account, if any; and, (ii) a list of its accounts in
all banks.”
Section 5. Section 5.5.2 of Department Circular No. 01-2015 dated June 1, 2015,
as amended, is hereby renumbered as Section 5.6, and amended to read as follows:
"5.6 Where (i) any of those listed in Section 5.2 establishes or operates a branch
or extension office within the territorial jurisdiction or in the locality where the
NGA/ GOCC/ LGU or any of its branches, field offices, departments, divisions
or operating units holds or conducts its office or business, or (ii} the exceptional
circumstance under Section 5.4 is no longer prevailing, whichever comes first:
the NGA/ GOCC/ LGU shall transfer all funds and cash balances to banks
listed in Section 5.2 within three (3) banking days; provided, that in the case
of an NGA, proper reporting of cash balances on the bank accounts should be
made to the BTr or its field offices before and after the closure of the account
with the proposed bank.”
Section 6. Section 3 of Department Circular No. 03-2016 (Requests for Extension
of Deadline) is hereby deleted. The provision on “Sanctions” of Department Circular
No. 01- 2015 is hereby reinstated and renumbered as Section 6-A, and shall be
implemented starting July 1, 2017 .
Section 7. NGAs and GOCCs shall submit notarized waivers required under Sect
ion 5.2.1 for all existing accounts within ninety (90) days from the effectivity of this
Department Circular.
Section 8. All other orders, circulars, memoranda, issuances contrary or inconsistent
herewith, including Department Circular No. 03-2015 dated August 24, 2015, and
Department Circular No. 02-2016 dated July 8, 2016, except Sections 1 and 3, are
hereby revoked and/or modified.
Section 9. This Circular shall take effect immediately, upon publication in the Official
Gazette or in a newspaper of general circulation in the Philippines.

CARLOS G. DOMINGUEZ
156
LTOM, 2ND EDITION
SCHEDULE A
Prescribed Maximum Maintaining Balance of LGUs
with banks that are not listed in Section 5.2
LGU - Income Maximum Maintaining

Classification Balance (Php)
Municipality - 2nd Class 10,000,000.00
Municipality - 3rd Class 7,500,000.00
Barangay 500,000.00
157
FORMS AND ANNEXES
ANNEX 20
8th Floor EDPC Building, BSP Complex, Roxas Boulevard, 1004 Manila
BLGF MEMORANDUM CIRCULAR NO. 07-01-2017

3 July 2017
TO : All Central and Regional Directors of this Bureau; All Provincial,

City and Municipal Treasurers; and All Others Concerned
SUBJECT : DOF Department Circular No. 01.2017 (Amended Guidelines on

Authorized Government Depository Banks)
__________________________________________________________________
This Memorandum Circular is issued to inform and enjoin the compliance by
all concerned of the herein attached Department Circular (DC) No. 01.2017, dated 11
May 2017, issued by the Secretary of Finance, and published in the Manila Standard
on 18 May 2017, prescribing the amended guidelines on authorized government
depository banks for all local government units (LGUs).
The amendments under DC No. 001.2017, in regard to LGU concerns, read
as follows:
Section 1. Section 3 of Department Circular No. 01.2015 dated June 1, 2015,
as amended, is hereby amended to read as follows:
“3.1 “Authorized Government Depository Banks (AGDBs)” refer to
banks where LGUs are allowed by law to deposit Government Funds and
maintain depository accounts, or by way of exception, a bank allowed by
the Department of Finance and the Monetary Board to hold government
deposits subject to prescribed rules and regulations.”
3.2 “Government Financial Institutions (GF/s)” refer to financial
institutions or corporations in which the government directly or indirectly
owns majority of the capital stock and which are either: (1) registered with
or directly supervised by the Bangko Sentral ng Pilipinas (“BSP”); or are (2)
collecting or transacting funds or contributions from the public and thereafter,
placing them in financial instruments or assets such as deposits, loans, bonds
and equity including, but not limited to, the Government Service Insurance
System and the Social Security System.
3.3 “Government Funds” include public moneys of every sort and other
resources pertaining to any agency of the government, including LGUs and
GOCCs.”
XXX XXX XXX
158
LTOM, 2ND EDITION
Section 2. Section 5.2 of Department Circular No. 01-2015 dated June 1,

2015, as amended, is hereby amended to read as follows:
“5.2 LGUs, specifically allowed by law, rules and regulations to retain income
and/or for operations and/or working balances, shall deposit and maintain
Government Funds with any of the following banks:
a. Land Bank of the Philippines;
b. Development Bank of the Philippines;
c. Philippine Postal Savings Bank;
d. Al Amanah Islamic Investment Bank of the Philippines;
e. United Coconut Planters Bank- authorized to accept funds from LGUs
until further notice from the BSP, and subject to limitations that may be
prescribed by the Monetary Board; and
f. Philippine Veterans Bank - authorized to accept funds from LGUs, and
subject to limitations prescribed by the Monetary Board.
5.2.1 XXX.
5.2.2 Subject to the existence of any of the circumstances under Section
5.4 and prior approval under Section 5.5, provinces, cities and municipalities
may be allowed to deposit Government Funds and maintain accounts with
banks other than those listed in Section 5.2, provided that municipalities are
allowed to deposit Government Funds, without need of the BLGF’s prior
approval, for the maintenance of an account that shall have a balance up
to its maximum maintaining balance provided in Schedule A of this Circular.
All LGUs shall comply with the requirements of Section 5.5.2, and other
relevant laws, issuances and regulations of the BSP.”
Section 3. Section 5.3 of Department Circular No. 01.2015 dated June 1,

“5.3 To remove revenue and expenditure floats:
5.3.1 The LGU may engage the payment and collection services of
banks other than those listed in Section 5.2, thru a transaction fee-based
arrangement, without the need for prior approval from the BLGF: provided,
that the proposed bank will only serve as a collection bank for the account
of the LGU: provided, further, that all collection banks shall be transferred to
any of those listed in Section 5.2 on the next banking day counted from the
collection date.”
XXX XXX XXX

“5.4 Deposits with banks other that those listed in Section 5.2 may be allowed,
only if any of the following circumstances exists:
5.4.1 The banks listed in Section 5.2 cannot provide the required banking
159
FORMS AND ANNEXES
5.4.2 The banks listed in Section 5.2 or their collection facilities, are not
5.4.3 There are security and safety risks.”

“5.5 Where any of the circumstances under Section 5.4 exists:

5.5.1 The LGU shall request prior approval from the BLGF to open and
maintain an account in a bank other than those listed in Section 5.2. It shall
submit the following to the BLGF, as applicable:
a. Letter from the Head of the LGU or its duly designated officer stating:
(i) the terms of the deposit, purpose for opening and maintaining an
account with the proposed bank, and the specific circumstance under
Section 5.4; and, (ii) that the LGU shall comply with fiscal and financial
reporting requirements of the BLGF;
b. X X X.
c. In the case of an LGU, it shall submit (i) a certification from the proposed
bank that no elective or appointive 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;
and, (ii) a copy of the Resolution of the local Sanggunian authorizing the
LGU to deposit funds with the proposed bank with the approval of the
Local Chief Executive, and directing the Local Chief Executive and all
concerned with fiscal and financial reporting requirements of the DOF
and the BLGF;
d. In cases where the circumstances in Section 5.4.1 is prevailing, the letter
from the Head of LGU shall identify the specific banking products or
services required, and, if so required by the BLGF, provide certifications
from those listed in Section 5.2 that the banking products or services
cannot be provided;
e. In cases where the circumstance in Section 5.4.2 is prevailing, the LGU
shall submit a vicinity map showing (i) the locations, and (ii) the distance
between the LGU, and those listed in Section 5.2 and (iii) the distance
between the LGU and the proposed bank;
f. In cases where the circumstance in Section 5.4.3 is prevailing, the
LGU shall submit a report or certification from the Philippine National
Provincial Office confirming the existence of the security risk; and
g. Other information that the BLGF may require in the course of its
evaluation.
5.5.2. The LGUs shall require the proposed bank to: (i) within one (1) banking
day, notify the LGU, if the bank’s authority to accept government deposits
160
LTOM, 2ND EDITION
has been revoked pursuant to relevant laws, issuances, or regulations of the

BSP; and (ii) within five (5) banking days, submit to the BSP proof of receipt
of such notice.
On the last business day of March of every year, the heads of LGUs shall
submit the following to the BLGF: (i) a report on its receipt of a notice of
revocation of authority from any bank where it maintains an account, if any;
and, (ii) a list of its accounts in all banks.”
Section 6. Section 5.5.2 of Department Circular No. 01.2015 dated June 1,

2015, as amended, is hereby renumbered as Section 5.6, and amended to
read as follows:
“5.6 Where (i) any of those listed in Section 5.2 establishes or operates a
branch or extension office within the territorial jurisdiction or in the locality
where the LGU or any of its branches, field offices, departments, divisions or
operating units holds or conducts its office or business, or (ii) the exceptional
circumstance under Section 5.4 is no longer prevailing, whichever comes first:
the LGU shall transfer all funds and cash balances to banks listed in Section
5.2 within three (3) banking days.”
Section 7. Section 3 of Department Circular No. 03.2016 (Requests for
Extension of Deadline) is hereby deleted. The provision on “Sanctions” of
Department Circular No. 01.2015 is hereby reinstated and renumbered as
Section 6-A, and shall be implemented starting July 1, 2017.
Section 8. xx x.
Section 9. All other orders, circulars, memoranda, issuances, contrary or
inconsistent herewith, including Department Circular No. 03.2015 dated
August 24, 2015 and Department Circular No. 02.2016 dated July 8, 2016,
except Sections 1 and 3, are hereby revoked and or modified.
Section 10. This Circular shall take effect immediately, upon publication in
the Official Gazette or in a newspaper of general circulation in the Philippines.
Schedule A of DC No. 01-2017 provides the following prescribed maximum
maintaining balance of LGUs with non-AGDBs:
LGU - Income Maximum Maintaining

Classification Balance (Php)
Municipality - 2 Class
nd
10,000,000.00
rd
7,500,000.00
th
5,500,000.00
th
3,500,000.00
th
1,500,000.00
Barangay 500,000.00
161
FORMS AND ANNEXES
Furthermore, for the effective monitoring thereof and for the purpose of
updating the database of this Bureau in line with Sec. 5.5.2 of said DC, all local
treasurers are instructed to submit to the concerned BLGF Regional Office, not
later than 29 September 2017, an updated report on LGU depository banks as of
30 June 2017, using the previously issued standard reporting format by this Bureau.
The Regional Directors of this Bureau are hereby instructed to immediately
and widely disseminate this issuance to all Provincial, City and Municipal Treasurers
within their respective regional jurisdictions, who in turn are likewise hereby directed
to provide a copy for their respective Provincial Governors, City and Municipal Mayors
and others concerned.
For strict compliance.
NINO RAYMOND B. ALVINA

OIC Executive Director
162
LOCAL TREASURY
OPERATIONS MANUAL
2ND EDITION
Manila, Philippines
ISBN: 978-971-94098-8-5

Telefax: +632 522-8771 / 527-2803

LTOM, 2ND EDITION
BOOK III
Fund Management Practices,
Expenditures and Disbursements
i
TABLE OF CONTENTS
TABLE OF CONTENTS
CHAPTER 1 1
LOCAL AND OTHER SPECIAL FUNDS
Section 93. Concept of Funds 1
Section 94. Fundamental Principles Governing the Financial 1
Affairs, Transactions, and Operations of LGUs
Section 95. Classification of Funds in the Local Government 2
CHAPTER 2 4
LOCAL BUDGETING
Section 96. The Local Budget Process 4
Section 97. Use of Appropriated Funds and Savings 13
CHAPTER 3 14
EXPENDITURES AND DISBURSEMENTS
Section 98. Expenditures 14
Section 99. Prohibition against Expenditures 14
Section 100. Types of Unlawful Expenditures 15
Section 101. Disbursements 30
Section 102. Policies Related to the Budget, Accounting, and 30
Disbursement Functions in LGUs
Section 103. Disbursements by Check 31
Section 104. Cancellation of Lost Checks Issued 35
Section 105. Cancellation of Spoiled and Stale Checks 36
Section 106. Cash Disbursement 36
Section 107. Cash Advances 38
Section 108. Granting and Utilization of Cash Advances 39
Section 109. Liquidation of Cash Advances 43
Section 110. Guidelines and Procedures in the Write-off of 49
Unliquidated Cash Advances
Section 111. Special Education Fund (SEF) Disbursements 53
Section 112. Trust Fund Disbursements 55
Section 113. Utilization of Confidential Funds 56
Section 114. Guidelines on the Grant and Liquidation of Cash 61
Advance for Confidential Funds
CHAPTER 4 65
FUND MANAGEMENT PRACTICES
Section 115. Cash Programming Tools 65
Section 116. Medium Term Forecast 65
Section 117. Cash Flow Analysis (CFA) 66
ii
LTOM, 2ND EDITION
Section 118. Information Provided by the Cash Flow Forecast 67

and Cash Flow Analysis
Section 119. Daily Cash Flow 68
Section 120. Number of Days’ Usage in Cash 68
Section 121. The Administrative Process for Capital Expenditures 69
Section 122. Payback Period 69
CHAPTER 5 70
EXAMINATION, AUDIT, AND SETTLEMENT OF ACCOUNTS
Section 123. General Principles, Rules, and Regulations 71
Section 124. Guidelines in the Issuance of Audit Observation 75
Memorandum(AOM)/Notice of Suspension (NS)/Notice
of Disallowance (ND)/Notice of Charge (NC)/Notice
of Settlement of Suspension/ Disallowance/Charge (NSSDC)
and Statement of Audit Suspensions, Disallowances
and Charges (SASDC)
Section 125. Service of Copies of ND/NS/NC 77
Section 126. Notice of Settlement of Suspension/ Disallowance/ 78
Charge (NSSDC)
Section 127. Statement of Audit Suspensions, Disallowances, and 78
Charges (SASDC)
Section 128. Issuance of Notices by Special Audit Team 79
Section 129. Decisions and Appeals 79
Section 130. Appeal to the Supreme Court 82
Section 131. Finality and Enforcement of Decisions 82
Section 132. Unsettled ND/NC/NS 84
Section 133. Determination of Balance of Accountability 84
Section 134. Cash Examination 84
Section 135. Objectives of Cash Examination 85
Section 136. Common Procedures and Techniques 85
Section 137. Specific Procedures and Techniques 87
Section 138. Accountable Officer’s Presence During the Count 89
Section 139. Sealing of the Vault, Safe, and Other Cash Receptacles 90
Section 140. Cash Shortage or Overage 90
CHAPTER 6 95
ACCOUNTABILITY, RESPONSIBILITY, AND LIABILITY
OF LOCAL TREASURERS AND OTHER ACCOUNTABLE
OFFICERS
Section 141. Determination of Persons Responsible/Liable 95
Section 142. Other Liabilities of Local Treasurer Under the Local 96
Government Code (LGC)
Section 143. Policies on Cash Examination 97
Section 144. Indemnity from Fidelity Fund 99
iii
TABLE OF CONTENTS
Section 145. Filing of Request for Relief from Accountability Due to 100
Fortuitous Events or Natural Calamities, or Due to Acts
of Man; Theft, Robbery, Arson, etc.

Annex 21 Disbursement Voucher (DV) 112
Annex 22 Check Register 115
Annex 23 Report of Checks Issued 117
Annex 24 Report of Disbursements 119
Annex 25 Liquidation Report 121
Annex 26 Petty Cash Voucher (PCV) 123
Annex 27 Daily Cash Position Report 125
Annex 28 Confidential Fund-Physical and Financial Plan 126
Annex 29 Certification of the Accountable Officer 127
of the Confidential Fund
Annex 30 Accomplishment Report on the Use of CF 128
Annex 31 Transmittal Letter for the Audit Team Leader Enumerating 129
the Supporting Documents for the Liquidation
of the Cash Advance
Annex 32 Confidential Fund-Liquidation Report 131
Annex 33 Transmittal Letter for the COA Chairperson Enumerating 132
the Supporting Documents for the Liquidation
of the Cash Advance
iv
LTOM, 2ND EDITION
INTRODUCTION
LTOM Book III discusses the fundamentals of fund management practices,
expenditures and disbursement process as components of good local fiscal
management. It also features the procedures and remedies on cash shortages
and the COA guidelines on the examination of books of accounts of the LGUs.
It likewise highlights the role and responsibilities of local treasurers, as well as their
administrative, civil and criminal liabilities, in the administration and custody of local
government funds.
Book III consists of eight (8) Chapters, including Forms and Annexes, viz:
Chapter 1 Local and Other Special Funds
Chapter 2 Local Budgeting
Chapter 3 Expenditures and Disbursements
Chapter 4 Fund Management Practices
Chapter 5 Examination, Audit and Settlement of Accounts
Chapter 6 Accountability, Responsibility and Liability of Local Treasurers
and Other Accountable Officers
v
DEFINITION OF TERMS

The following terms shall be understood in the sense as hereunder defined, unless
the context otherwise indicates:
A. Accountable Officer – officer of any government agency whose duties permit or
require the possession or custody of government funds or property (e.g. the Local
Treasurer, Collecting Officer, Disbursing Officer, Cashier, Paymaster, Property
Officer and the like) is mandated by law to render account to the COA.1
B. 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, Commission
on Audit (COA) Resolution No. 2006-006, Philippine Government Accounting
Standards (PGAS), 31 January 2006]
C. Check – is a negotiable instrument drawn against deposited funds, to pay a
specific entity a specific amount of funds on demand.
D. 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)
1 Governance for Sustainable Human Development, United Nations Development Programme (UNDP), 1997.
vi
CHAPTER LOCAL AND OTHER SPECIAL FUNDS
1
SECTION 93. CONCEPT OF FUNDS
A. 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 an
independent fiscal and accounting entity. (Sec. 306 h, LGC)
B. Government Funds include public moneys of every sort and other resources
pertaining to any agency of the government. [Sec. 135, Volume I, Government
Accounting and Auditing Manual (GAAM)]
C. Local treasurers and other treasury personnel play an increasing role in
safeguarding local finance and improving financial performance of LGUs. In
particular, it is incumbent upon them to continuously embrace and apply effective
fund management practices in the daily operations of LGUs to ensure good
governance.
SECTION 94. FUNDAMENTAL PRINCIPLES GOVERNING

THE FINANCIAL AFFAIRS, TRANSACTIONS,
AND OPERATIONS OF LGUS
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 LGU 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.
G. Local governments shall formulate sound financial plans, and local budgets shall
be based on functions, activities, and projects, in terms of expected results.
1
LOCAL AND OTHER SPECIAL FUNDS
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. LGUs 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 LGUs 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 LGUs.
M. The LGU shall endeavor to have a balanced budget in each fiscal year of operation.
[Sec. 305 (a to m), LGC]
N. No contract involving the expenditure of public funds shall be entered into unless
there is an appropriation therefor, the unexpended balance of which, free of
other obligations, is sufficient to cover the proposed expenditure. [Sec. 85 (1),
Presidential Decree (PD) No. 1445]
SECTION 95. CLASSIFICATION OF FUNDS

IN THE LOCAL GOVERNMENT
A. Local Funds
Every LGU 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. 308, LGC)
Special Accounts shall be maintained in the General Fund for the following:
1. Public utilities and other economic enterprises;
2. Loans, interests, bond issues, and other contributions for specific purposes;
and
3. Development projects funded from the share of the LGU concerned in the
internal revenue allotment and such other special accounts which may be
created by law or ordinance. (Sec. 313, LGC)
2
LTOM, 2ND EDITION
B. Special Funds
There shall be maintained in every provincial, city or municipal treasury the
following special funds:
1. Special Education Fund (SEF) – 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
Sec. 272 of the LGC.
2. Trust Funds - consist of private and public monies which have officially
come into the possession of the local government or of a local government
official as trustee, agent or administrator, or which have been received as
guaranty for the fulfillment of some obligation. A Trust Fund shall only be
used for the specific purpose for which it was created or for which it came
into the possession of the LGU. [Sec. 309 (b), LGC]
C. 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 administration under such
rules and regulations as the COA may prescribe. (Sec. 310, LGC)
3
CHAPTER LOCAL BUDGETING
2
SECTION 96. THE LOCAL BUDGET PROCESS
The budget process in LGUs is divided into five (5) phases:
Preparation
Accountability Authorization
Execution Review
A. Budget Preparation Phase. It is the first phase of the local budget process. It
involves cost estimation per programs, projects and activities (PPAs), preparation
of budget proposals, executive review of budget proposals, and preparation of
Local Expenditure Program and the Budget Message. This phase starts with the
issuance of the Budget Call and ends with the submission of the Executive Budget
to the Sanggunian.
The Local Chief Executive (LCE) shall prepare the executive budget for the
ensuing fiscal year upon receipt of the statements of income and expenditures
from the treasurer, the budget proposals from the heads of various departments
and offices and the estimates of revenue and budgetary ceilings from the Local
Finance Committee (LFC).
The LFC composed of the Local Planning and Development Coordinator, Local
Budget Officer and the Local Treasurer shall have among others the following
functions as defined in Sec. 316 of the LGC:
1. Determine the income reasonably projected as collectible for the ensuing
fiscal year;
2. Recommend the appropriate tax and other revenue measures or borrowings
considered realistic and feasible to support the budget;
3. Recommend to the LCE the level of annual expenditures and ceilings of
4
LTOM, 2ND EDITION
spending for economic, social and general public services based on the
approved local development plan;
4. Recommend to the LCE the proper allocation of expenditures for each
development project/activity and between current operating expenditures
and capital outlays; and
5. Recommend to the LCE the amount to be allocated for capital outlay.
a. Role of the Local Treasurer in Budget Preparation
i. Certify jointly with the Local Accountant all statement of income
and expenditures of the preceding fiscal year, the actual income
and expenditures of the first two (2) quarters of the current year
and the estimated income and expenditures for the last two (2)
quarters of the current year.
ii. Prepare budget proposal of the Local Treasurer’s Office and
submit this to the Local Budget Officer for review and consolidation.
iii. Budget proposals of department or offices shall be divided
into two (2) primary categories, namely: the current operating
expenditures and the capital outlays. Such budget proposals
shall contain the following information:
1. Objectives, functions, and projects showing the general
character and relative importance of the work to be
accomplished or the services to be rendered, and the cost
thereof;
2. Organizational charts and staffing patterns indicating the list
of plantilla positions with their corresponding salaries, and
proposals for reclassification of positions and salary changes
as well as the creation of new positions with their proposed
salary grade, duly supported by proper justification;
3. Brief description of the functions, projects and activities for
the ensuing fiscal year, expected results for each function,
project and activity, and the nature of work to be performed,
including the objects of expenditures for each function,
project and activity;
4. Relation of the work and financial proposals to approved
local development plans;
5. Estimated current operating expenditures and capital
outlays with comparative data for the last two (2) preceding,
current, and ensuing fiscal years; and
6. Accomplishment reports for the last two (2) preceding and
current fiscal years.
5
LOCAL BUDGETING
b. The LFC of which the Local Treasurer is a member shall:

i. Conduct technical budget hearings to validate the revenue
sources, PPAs, cost estimates and expected outputs for the
budget year.
ii. Evaluate all budget proposals using the output and cost criteria.
The Budget Preparation Flow Chart
INDICATIVE RESPONSIBLE
ACTIVITY OFFICIAL
SCHEDULE
ISSUE THE BUDGET JUNE 16 LCE

CALL
CONDUCT BUDGET LCE/LFC/

JUNE 16
FORUM DEPARTMENT HEADS
PREPARE AND
SUBMIT BUDGET JULY 15 DEPARTMENT HEADS
PROPOSALS
CONDUCT BUDGET
AUGUST 15 LCE/LFC
HEARING
PREPARE THE
OCTOBER 10 LCE/LFC
EXECUTIVE BUDGET
PREPARE THE
OCTOBER 10 LCE/LFC
BUDGET MESSAGE
SUBMIT EXECUTIVE
BUDGET TO THE OCTOBER 10 LCE/LFC
SANGGUNIAN
B. Budget Authorization Phase. It is the second phase in the local budget process.
This phase starts from the time the Sanggunian receives the Local Expenditure
Program (LEP) submitted by the LCE. The Sanggunian shall deliberate on the
6
LTOM, 2ND EDITION
budget, and authorize the annual budget through an Appropriation Ordinance

(AO) in accordance with the fundamental principle that no money shall be paid
out of the Local Treasury except in pursuance of an AO or law. The AO enacted
by the Sanggunian shall be presented to the LCE for approval.
1. Role of the Local Treasurer in Budget Authorization
Upon request of the Sanggunian through the LCE, the local treasurer as
head of the Local Treasurer’s Office may appear before the body or the
Committee on Appropriations/Finance to explain or justify his/her proposal.
2. The LFC of which the local treasurer is a member, shall assist the Sanggunian
in the analysis and review of the annual and supplemental budgets to
determine compliance with statutory and administrative requirements.
C. Budget Review Phase. It is the third phase in the local budget process. Its
primary purpose is to determine whether the AO has complied with the budgetary
requirements and general limitations set forth in the LGC and provisions of other
applicable laws. It starts from the time the reviewing authority receives the AO for
review and ends with the issuance of the review action.
(Budget Operations Manual for LGUs 2016 Edition)
The Department of Budget and Management (DBM) shall review ordinances
authorizing the annual or supplemental appropriations of provinces, highly
urbanized cities, independent component cities, and municipalities within the
Metropolitan Manila Area in accordance with Sec. 327 of the LGC. (Sec. 326,
LGC)
The Sangguniang Panlalawigan shall review the ordinance authorizing annual or
supplemental appropriations of component cities and municipalities in the same
manner and within the same period prescribed for the review of other ordinances.
(Sec. 327, LGC)
D. Budget Execution Phase. The execution of the budget in accordance with
existing rules and regulations is the fourth phase of the budget process in local
governments. After the usual recording of appropriations in the proper registries,
the execution of the budget involves the release of allotments, the certification
of available appropriations and cash, the recording of actual obligations and
disbursements of funds for approved PPAs and the delivery of goods and services
to target clients.
1. Role of the Local Treasurer in Budget Execution
a. The local treasurer takes charge of collection of revenues and
disbursement of local government funds and such other funds of the
LGU. He ensures that cash is available for payment of obligations and
disbursements do not exceed appropriations.
b. He/She shall prepare the Detailed Financial and Physical Performance
Targets by Programs/Projects/Activities and Performance Indicator of
the Treasurer’s Office. This document presents the quarterly breakdown
7
LOCAL BUDGETING
of the financial allocation that is needed to accomplish a specific level

of targets. It enables the office to match available resources with the
level of effort to deliver their goods/services or outputs, and determine
the magnitude and timing of additional releases.
c. The LFC of which the Treasurer is a member shall prepare the
Summary of Financial and Physical Performance Targets of the
different departments/offices for the entire calendar year to serve as
basis in comparing actual level of accomplishment for the preceding
year and knowing the available resources for the budget year.
d. The local treasurer shall prepare the cash program to determine a
realistic cash inflow on a monthly basis; Use as basis the actual inflow
of revenues for the past three (3) years, and; Consider the months
where revenue is high, like when payments of taxes become due, or
months where revenue collection is low.
The Cash Flow Model of the BLGF may be used as reference.
Identify amounts considered as under-collection of taxes and revenues.
This is a signal that the original cash receipts forecast is overstated. It
becomes necessary to decrease the cash disbursements program for
the remaining months to prevent the incurrence of a cash overdraft.
e. The LFC shall implement corrective measures by comparing the actual
performance in both the financial and physical accomplishments vis-à-
vis the targets for the quarter.
f. Proposed corrective action shall be submitted by department heads to
the Local Planning Development Coordinator for review and evaluation
after which it shall be discussed with the LFC members for final
deliberation. The proposed corrective action is then recommended by
the LFC to the Local Chief Executive for approval. Upon approval,
the department head shall implement corrective action to get back on
track with planned targets for the fiscal year.
g. The LFC through the local treasurer, shall use the results of the cash
flow analysis as basis for adjusting the cash program and the financial
and physical targets.
h. The LFC shall compare the actual performance in both the financial
and physical accomplishments vis-à-vis the targets for the quarter.
i. As department head, he/she shall adjust/revise their Project
Procurement Management Plan (PPMP) and the Annual Procurement
Plan (APP).
j. The local treasurer adjusts the cash program for shortages and
overages and on the basis of the adjusted cash program, the LFC
adjusts the financial and physical targets.
8
LTOM, 2ND EDITION
k. The LFC shall determine amounts considered as over-collection of

taxes and effect upward adjustments in the cash program to match the
increase in the cash receipts forecast. If this is not done, a significant
amount of cash will be idle at the end of the year.
2. The LFC of which the Local Treasurer is a member shall:
a. Prepare Summary of Financial/Physical Performance Targets.
b. Adjust Financial/Physical Performance Targets and determine
amounts considered as over-collection of taxes, and effect upward
adjustments in the cash program, to match the increase in the cash
receipts forecast.
3. Budgetary Accounts in Budget Execution
The budgetary accounts to be maintained in the budget execution process
include the following:
a. Appropriation – an authorization made by ordinance directing payment
of goods and services from local government funds under specified
conditions or purposes. (Sec. 306 (b), LGC) Generally, there are
appropriations for a general purpose requiring expenditures to be
made for a number of incidental purposes without specifying an exact
amount for any one of the incidental purposes. There are those which
go into considerable detail and limit the expenditure to certain amounts
for certain specific purposes. (Sec. 140, Book III, Volume 1, GAAM)
i. Annual Appropriation - an appropriation consisting of specified
amounts for salaries, wages, and sundry expenses, etc.,
authorized by the sanggunian as necessary for the regular
operations of the LGU during any given year. (Sec. 141, Book
III, Volume 1, GAAM) This is also the "Annual Budget" of an
LGU which refers to a financial plan embodying the estimates of
income and expenditures for one (1) fiscal year. [Sec. 306 (a),
LGC]
Failure to Enact the Annual Appropriations:
1. In case the sanggunian concerned fails to pass the
ordinance authorizing the annual appropriations at the
beginning of the ensuing fiscal year, it shall continue to hold
sessions, without additional remuneration for its members,
until such ordinance is approved, and no other business
may be taken up during such sessions. If the sanggunian
still fails to enact such ordinance after ninety (90) days
from the beginning of the fiscal year, the ordinance
authorizing the appropriations of the preceding year shall
be deemed re-enacted and remain in force and effect until
the ordinance authorizing the proposed appropriations is
passed by the sanggunian concerned. However, only the
9
LOCAL BUDGETING
annual appropriations for salaries and wages of existing

positions, statutory and contractual obligations, and
essential operating expenses authorized in the annual
and supplemental budgets for the preceding year shall be
deemed re-enacted, and disbursement of funds shall be in
accordance therewith.
2. In the implementation of such re-enacted ordinance, the
local treasurer concerned shall exclude from the estimates
of income for the preceding fiscal year those realized from
nonrecurring sources, like national aids, proceeds from
loans, sale of assets, prior year adjustments and other
analogous sources of income. No ordinance authorizing
supplemental appropriations shall be passed in place of
annual appropriations.
3. In case the revised income estimate be less than the
aggregate re-enacted appropriations, the local treasurer
concerned shall accordingly advise the sanggunian
concerned which shall, within ten (10) days from the
receipt of such advise, make the necessary adjustments
or reductions. The revised appropriations authorized by
the sanggunian concerned shall then be the basis for
disbursements.
(Sec. 323, LGC)
ii. Continuing Appropriation – an appropriation available to support
obligations for a specified purpose or project, such as those
for the construction of physical structures or for the acquisition
of real property or equipment, even when these obligations
are incurred beyond the budget year. [Sec. 306 (e), LGC] The
Continuing Appropriation includes the unexpended balance of
20% development fund; unexpended balance of capital outlay
from the Local Disaster Risk Reduction Management Fund
(LDRRMF); and unexpended balance of capital outlay of the
different departments of the local government, duly supported by
available cash.
Reversion of Unexpended Balances of Appropriations,
Continuing Appropriations:
1. Unexpended balances of appropriations authorized in
the annual appropriations ordinance shall revert to the
unappropriated surplus of the general fund at the end of
the fiscal year and shall not thereafter be available for the
expenditure except by subsequent enactment.
2. However, appropriations for capital outlays shall continue
and remain valid until fully spent, reverted or the project is
completed.
10
LTOM, 2ND EDITION
3. Reversions of continuing appropriations shall not be

allowed unless obligations thereof have been fully paid or
otherwise settled.
4. The balances of continuing appropriations shall be reviewed
as part of the annual budget preparation and the sanggunian
concerned may approve, upon recommendation of the
LCE, the reversion of funds no longer needed in connection
with the activities funded by said continuing appropriations
subject to the foregoing provisions.
(Sec. 322, LGC)
iii. Supplemental Appropriation – prepared to adjust the equilibrium
of the first approved budget which has been disturbed by
current economic, political or social conditions, or to provide an
additional amount to the original appropriation which proved to
be inadequate or insufficient for the particular purpose intended.
(Sec. 144, Book III, Volume I, GAAM) The local treasurer and
the local accountant shall submit a statement of funding sources.
No ordinance providing for a supplemental budget shall be
enacted except for the following:
1. When supported by funds actually available as certified by
the local treasurer:
Funds actually available refer to the amount of money
collected, as certified by the local treasurer at any given
point, during the fiscal year which is over and above the
estimated income collection for that point in the year. Thus,
funds are actually available when realized income exceeds
estimated income as of the said fiscal year. Funds are
likewise deemed actually available when there are savings.
For this purpose, savings refer to portions or balances as
of any given point in the fiscal year of any programmed or
allotted appropriation which remain free of any obligation
or encumbrance and which are still available after the
satisfactory completion or the unavoidable discontinuance
or abandonment of the work, activity or purpose for which
the appropriation was originally authorized, or which result
from unobligated compensation and related costs pertaining
to vacant positions and leaves of absence without pay.
2. If covered by new revenue source(s):
New revenue source refers to money measures not
otherwise considered during the preparation and enactment
of the annual budget. Such new revenue measures include
ordinance passed by the Sanggunian during the fiscal year
but after the annual budget had already been enacted into
11
LOCAL BUDGETING
law which imposes new local taxes, charges, fees, fines

or penalties, or which raises existing local taxes, charges,
fees, fines or penalties. Such revenue sources also
include new or higher remittances, contributions, subsidies
or grants in aid from the National Government or from
government corporations and private entities which have
not been included in the estimate of income which served
as basis for the annual budget.
An ordinance providing for a supplemental budget may also
be enacted in times of public calamity by way of budgetary
realignment to set aside appropriations for the purchase of
supplies and materials or the payment of services, which
are exceptionally urgent or absolutely indispensable to
prevent imminent danger to, or loss of, life and property,
in the jurisdiction of the LGU or in other areas declared
in a state of calamity by the President. Such ordinance
shall clearly indicate the sources of funds available for
appropriations, as certified under oath jointly by the local
treasurer and local accountant and attested to by the LCE,
and the various items of appropriations affected and the
reasons for the changes.
(Administrative Order No. 47, s. 1993 amending Art. 417 of the
IRR of the LGC)
NOTE
xxx. Regarding the propriety of using these advance payments as source of

fund for supplemental budget, Sec. 321, Art. 1, Chapter III, Title V, Book III,
of the Local Government Code of 1991 (LGC) sternly states; “[N]o ordinance
providing for a supplemental budget shall be enacted, except when supported
by funds actually available, as certified by the local treasurer, or by new
revenue sources.” Expounding on this point, Art. 417 (a) of the Implementing
rules and regulations of the LGC states: “Funds actually available refers to
the amount of money actually collected as certified by the local treasurer
during a given fiscal year, which is over and above the realized income of
that year.” In other words, funds are actually available when realized income
exceeds estimated income of that fiscal year. Thus, the advance payments
may not qualify as source of fund for a supplemental budget.
To be clear, advance collections remain a liability of the LGU. Being an

unrealized income, they may not be a source of fund for a supplemental
budget. (COA letter, 21 January 2019 to BLGF Executive Director)
b. Allotment – an authorization issued by the LCE to a department/office

of the LGU which authorizes it to incur obligations for a specific amount
within its appropriation.
12
LTOM, 2ND EDITION
c. Obligation - the specific amount within the allotment which is committed

to be paid by the LGU for any lawful expenditure made by an accountable
officer for and in behalf of the LGU concerned.
E. Budget Accountability Phase
Budget accountability is the last and final phase of the budget process. It is the
accounting for the budget. It involves the use of management control techniques to
assist in tracking receipts of income/revenues and controlling expenditures. This
mechanism provides a venue for the LCE, local Sanggunian and stakeholders to
be continuously informed of the states of implementation of PPAs being funded
by public funds. It covers the monitoring and analysis of all financial transactions,
the recording of budgetary accounts in the registries, recording in the books of
accounts of all receipts and expenditures and financial reporting of their current
status. An integral part of accountability is the evaluation of the financial and
physical performance of the LGU.
(Budget Operations Manual for Local Government Units 2016 Edition)
SECTION 97. USE OF APPROPRIATED FUNDS AND SAVINGS

Funds shall be available exclusively for the specific purposes for which they have been
appropriated. No ordinance shall be passed authorizing any transfer of appropriations
from one item to another. However, the LCE 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. (Sec. 336, LGC)
13
CHAPTER EXPENDITURES AND DISBURSEMENTS
3
SECTION 98. EXPENDITURES
Government expenditures include all charges against the fund of the agency 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, Volume I, Government
Accounting and Auditing Manual (GAAM)]
Classification of Expenditures
A. Current Operating Expenditures refer to appropriations for the purchase of goods
and services for current consumption or for benefits expected to terminate within
the fiscal year. [Sec. 306 (f), LGC]
Current Operating Expenditures are classified into:
1. Personal Services
2. Maintenance and Other Operating Expenses
B. Capital Outlays refer to appropriations for the purchase of goods and services,
the benefits of which extend beyond the fiscal year and which add to the assets
of government including investments in the capital of government-owned or
controlled corporations and their subsidiaries as well as investments in public
markets and slaughter houses. [Sec.306 (d), LGC] (Sec. 155, Volume I, GAAM)
SECTION 99. PROHIBITIONS AGAINST EXPENDITURES

A. No public money or property shall be appropriated or applied for religious or
private purposes. (Sec. 335, LGC)
B. No money shall be paid on account of any contract under which no services have
been rendered or goods delivered. (Sec. 338, LGC)
C. No money shall be appropriated, used or paid for entertainment or reception
except to the extent of the representation allowances authorized by law or for
the reception of visiting dignitaries of foreign governments or foreign missions, or
when expressly authorized by the President in specific cases. (Sec. 343, LGC)
D. Disbursements in accordance with appropriations in the approved annual budget
may be made from any Local Fund in the custody of the local treasurer, but the
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.
In case of emergency arising from a typhoon, earthquake, or any other calamity,
the Sanggunian concerned may authorize the local treasurer to continue making
14
LTOM, 2ND EDITION
disbursements from any local fund in his/her possession in excess of the

limitations herein provided, but only for such purposes and amounts included in
the approved annual budgets.
Any overdraft which may be incurred at the end of year in any local fund by
virtue of the provisions hereof shall be covered with the first collections of the
immediately succeeding fiscal year accruing to such local fund. (Sec. 337, LGC)
SECTION 100. TYPES OF UNLAWFUL EXPENDITURES

A. Irregular Expenditure – signifies an expenditure incurred without adhering
to established rules, regulations, procedural guidelines, policies, principles
or practices that have gained recognition in laws. Irregular expenditures are
incurred if funds are disbursed without conforming to prescribed usages and rules
of discipline. There is no observance of an established pattern, course, mode
of action, behavior, or conduct in the incurrence of an irregular expenditure. A
transaction conducted in a manner that deviates or departs from, or which does
not comply with standards set is deemed irregular. A transaction which fails to
follow or violates appropriate rules of procedure is likewise irregular. (3.1, COA
Circular No. 2012-003, 29 October 2012)
1. Cases that are considered “Irregular” Expenditures or Uses of Government
Funds and Property are:
a. Payments of salaries, allowances and other forms of additional
compensation under the following cases:
i. Payment of salaries and wages wherein the signatures in the
logbook vary with the signatures of the workers in the payroll
(COA Decision No. 2008-083, 11 September 2008);
Similar case that may also fall under this category follows:
Payment of salaries or wages of laborers under a labor payroll to
persons other than the payee unless properly authorized by the
latter.
ii. Honoraria granted to members of special committees such as
an Executive Committee, Program on Awards and Incentives
for Service Excellence and Regional Selection and Promotions
Board, Regional Therapeutic, Regional Pre-qualification and
Public Bids and Awards and Inspection Committee, which are
performing functions inherent in the regular functions of the
agency (COA Decision No. 2008-126, 24 December 2008);
Similar cases that may also fall under this category follow:
1. Honoraria to private individuals sitting as members
of special committees (e.g., Ethics Committee) of a
government agency, without authority of approval from the
DBM; and
15
2. Honoraria or Representation and Transportation Allowance

(RATA) granted to members of different committees on
various Regional and District Offices (ex. Regional Acting
Vice President and District Supervisors) in violation of Sec.
4 of DBM Budget Circular No. 2003-5, 23 September 2003,
as amended.
iii. Honoraria paid to members of the Bids and Awards Committee
(BAC) and Technical Working Group (TWG) in excess of the rates
provided for under Sec. 5 (5.3), DBM Budget Circular No. 2004-
5A, 07 October 2005 and for procurement activities pertaining to
contracts not yet awarded to the winning bidder (Joseph Peter
Sison, et. al vs. Rogelio Tablang, et. al. GR No. 1777011, 05
June 2009);
iv. Grant of Christmas bonuses, cash gift and other fringe benefits
to consultants and to members of the Board who are not salaried
officials of the government as they are not considered employees
of the hiring agency (COA Decision No. 2006-030, 11 April 2006,
BCDA vs. COA, GR No. 178160, 26 February 2009);
v. Grant of amelioration allowance or any similar benefits to private
employees of service contractors contrary to Administrative
Order (A.O.) No. 365, 10 October 1997 (HDMF vs. COA, GR No.
157001, 19 October 2004);
vi. Loyalty service award granted to employees that have not yet
rendered the minimum service of ten (10) years in the government
required under Civil Service Commission (CSC) Memorandum
Circular No. 42, s. 1992 (BCDA vs. COA, GR No. 142760, 06
August 2002);
1. Annual payment of Anniversary Bonus to government
employees which is not consistent with A.O. No. 263, 28
March 1996, authorizing the grant thereof of their agencies’
milestone years-that is, on the 15th anniversary and 5th year
thereafter.
vii. Payment of COLA and other allowances deemed integrated in
the salary per DBM-NCC No. 59 and DBM-CCC No. 10 (Victoria
C. Gutierrez, et. al. vs. DBM, GR No. 153266, 18 March 2010);
viii. Grant of food allowance, rice subsidy and health care allowance
as there is no law authorizing the grant of such allowances (BFAR
Employees Union, R.O. VII vs. COA, GR No. 169815, 13 August
2008 and Benguet State University vs. COA, GR No. 169637, 8
June 2007);
16
LTOM, 2ND EDITION
1. Payment of health care insurance, except for LGUs (The

Province of Negros Occidental vs. The Commissioners,
COA, et. al., GR No. 182574, 28 September 2010)
ix. RATA and cash gift to the Office of the Government Corporate
Counsel (OGCC) Lawyers rendering legal assistance to GOCCs
without the presence of the three concurring conditions required
under Sec. 6 of Executive Order (EO) No. 878, 4 March 1983
(COA Decision No. 2006-030, 11 April 2006);
1. Attorney’s fees paid to regular employees.
x. Payment of Collective Negotiation Agreement (CNA) signing
bonus to members of governing board (non-organic employees)
and those occupying managerial positions higher than division
chief (COA Decision 2008-029, 29 February 2008)
xi. Payment of CNA cash incentive/benefit to rank-and-file employees
where the conditions required in determining “savings” under
Public Sector Labor-Management Council (PSLMC) Resolution
No. 02, s. 2003, 19 May 2003 and DBM Budget Circular No.
2006-1, 01 February 2006 are not met; and
xii. Premiums paid for the Personnel Accident Insurance of officers
and employees of GOCCs without prior authority from the DBM
and/or the Office of the President (COA Decision No. 2006-030,
11 April 2006)
1. Procurement and payment of corresponding premiums for
Directors and Officers Liability Insurance (DOLI).
b. Hiring of private lawyers by the GOCCs to handle their cases and
legal matters without prior written conformity and acquiescence of the
Solicitor General or the Government Corporate Counsel, as the case
may be, and the written concurrence of the COA; (Phividec Industrial
Authority, et al. vs. Capitol Steel Corp., et al., GR No. 155692, 23
October 2003)
c. Hiring of casual and probationary employees under job order with
entitlement and benefits enjoyed by regular government employees,
in violation of CSC Resolution No. 020790, 5 June 2002 and CSC
Memorandum Circular No. 15, s. 1999;
d. Hiring of consultants/retired employees such as:
i. Hiring of consultants and contractuals to perform functions that
will exercise control and supervision over regular employees
(CSC Memorandum Circular No. 26, s. 1997);
17
ii. Continuous extension of the services of a foreign consultant to

undertake relatively simple supervisory work required for the
final stages of the project that can be done by the implementing
agency itself or a local consultant (NHA vs. COA, GR No. 101370,
02 September 1993); and
iii. Hiring of employees who had previously opted to retire/be
separated from the service as a result of rationalization efforts
of their agency within five (5) years after retirement/separation
(Civil Service regulations; DBM Circular Letter No. 2011-14, 22
December 2011).
e. Payment for damages, litigation costs and attorney’s fees awarded by
the court to a contractor caused by serious lapses and omissions of a
public officer such as the issuance of change orders without authority
from the Sangguniang Panlungsod and his/her failure to protect public
funds from being garnished (COA Decision No. 2008-043, 06 May
2008);
f. Reimbursement and/or payments of expenses such as:
i. Reimbursement of expenses incurred by persons who are not
authorized to attend conferences, meetings and other official
functions;
ii. Unless there is a law which provides otherwise, reimbursement
of legal expenses incurred by public officials and employees
against whom criminal/civil/administrative suits have been filed,
in relation to the performance of their public functions.
g. Payment of rental contracts for service vehicles covering a continuous
period of more than 15 days without the authority or approval of the
Secretary of the DBM, appropriation and certification of availability of
funds (COA Decision No. 2009-007, 09 February 2009);
h. Release of funds to non-government organization/people’s
organizations (NGOs/POs) for money market placement, time deposit
or other forms of investments (COA Circular No. 2007-001, 25 October
2007);
i. Release of assistance such as fertilizers, seeds and other farm inputs
and equipment other than to the intended farmer beneficiaries;
j. Advertisements;
i. Media advertisements, except those required in the issuance
of agency guidelines, rules and regulations, the conduct of
public biddings, and the dissemination of important public
announcements (A.O. No. 103, 31 August 2004)
ii. Expenses for advertisements of anniversaries, etc. in newspapers,
TV or radio merely for publicity or propaganda purposes except
18
LTOM, 2ND EDITION
when the nature of the agency’s mission would require such

expenses as in the case of promotion of trade and business
k. Donations, contributions, grants and gifts, except if said activities are
undertaken pursuant to the mandate of the donor-agency (A.O. No.
103, 31 August 2004);
i. Release of funds as financial assistance to civic organizations
such as Rotary, Jaycees and Lions, non-stock non-profit
corporations/ foundations and private corporations.
l. Payment of foreign travel expenses to private individuals purportedly
as representatives of an international organization for the purpose of
attending a convention, using the travel rates prescribed under F.O.
298, 23 March 2004 which governs government personnel only;
m. Including names or initials and/or images or pictures of government
officials in billboards and signages of government programs, projects
and properties banned under Department of the Interior and Local
Government (DILG) Memorandum Circular No. 2010-101, 23
September 2010;
n. Acceptance of a project as 100 percent complete pursuant to Certificate
of Inspection Report when the project was not yet completed (Manuel
Leycano, Jr. vs. COA, GR No. 154665, 10 February 2006); and
i. Acceptance of a project constructed not in accordance with plans
and specifications and with noted deficiencies; and
ii. Acceptance of seeds and other articles/goods without passing
the required quality test by the responsible government entity
such as by the Bureau of Plant Industry, in case of seeds.
o. Use of government motor vehicles for private social functions such
as receptions, balls, theaters and for other personal purposes; use by
spouse, children, friends and the like, of the official entitled thereto,
even if they are in the company of said officials; or on Sundays, legal
holidays or out of their regular office hours or outside the route of
the official or employee, unless properly authorized (A.O. No. 239, 15
September 2008)
(Annex A, COA Circular No. 2012-003, 29 October 2012)
2. Illegal expenditures are expenditures which are contrary to law. (The 2009
Rules and Regulations on Settlement of Accounts, COA Circular No.
2009-006, 15 September 2009)
19
Cases that are considered “Illegal” Expenditures or Uses of Government

Funds and Property:
a. Payment of claims under a contract awarded not strictly in accordance
with the procedures prescribed under Republic Act (RA) No. 9184 and
its Revised Implementing Rules and Regulations (IRR):
i. For contracts entered into containing provisions that substantially
depart from the draft Agreement included in the Bid Documents
(Demosthenes P. Agan, Jr., et al. vs. PIATCO, et al., GR No.
155001, 05 May 2003);
ii. For contracts awarded under an alternative mode of procurement
for items that should have undergone complete public bidding
process and eventually resulted in overpricing (Director Fredric
Villanueva, et al. vs. COA, GR No. 151987, 18 March 2005;
Nava vs. Palattao, et al., GR 160211, 28 August 2006);
iii. For contracts awarded to a bidder who failed to meet the minimum
amounts required to be put up at the time the bids were submitted
(Demosthenes P. Agan, Jr., et al. vs. PIATCO, et al., GR No.
155001, 05 May 2003);
iv. For delivery of equipment that is not brand new and does not
conform to the specifications called for in the Invitation to Bid
(Ramon T. Lim vs. COA, GR No. 130325, 12 March 2003);
Similar case that may fall under the category follows:
1. For deliveries of imported rice and other similar goods not
conforming to the required specifications.
v. For base and portable radio communications equipment
without purchasers’ and dealers’ permits from the National
Telecommunications Commission (NTC) in violation of Act No.
3846, otherwise known as the “Radio Control Law” (Fe D. Laysa
vs. COA, GR No. 128134, 18 October 2000).
b. Payment for contracts under the following conditions without the prior
approval or authorization of the local Sanggunian which is required
under Sec. 22 (c) of RA No. 7160 [Hon. Gabriel Luis Quisumbing,
et al. vs. Hon. Gwendolyn F. Garcia, et al., GR No. 175527, 08
December 2008] as clarified under COA Memorandum No. 2010-014,
22 April 2010;
i. In case of regularly enacted budget
1. For projects described in appropriation ordinances in
generic terms such as infrastructure projects, inter-
municipal waterworks, drainage and sewerage, flood
control, irrigation systems projects, reclamation projects,
roads and bridges
20
LTOM, 2ND EDITION
2. For purchase of goods and services which are neither

specified in the appropriation ordinance nor encompassed
within the regular personal services and maintenance
operating expenses
ii. In case of a reenacted budget
a. For new contracts entered into by the LCE covering
contractual obligations included in the previous year’s
annual and supplemental budgets
c. Payment of compensation or benefits to government personnel under
the following circumstances:
i. Exemplary public service award incentive paid to three term
local officials as this is not among the compensation and benefits
enumerated under Art. 77 of the IRR of the LGC as due the elective
local officials, and that such payment contravenes Art. 170 (c) of
the said IRR which provides that no elective or appointive official
shall receive additional, double or indirect compensation unless
specifically authorized by law (COA Decision No. 2008- 088, 26
September 2008);
ii. Separation/disability/death plan benefits to retiring employees
which constitute supplementary retirement plan prohibited under
Sec. 28 (b) of Commonwealth Act No. 186, as amended by RA
No 4968 (COA Decision No. 2008-078, 20 August 2008);
iii. Financial assistance granted to retiring employees which
constitutes supplementary pension/retirement benefit plan
proscribed by law (Avelina B. Conte, et al. vs. COA, GR No.
116422, 04 November 1996);
iv. Partial release/payment or enjoyment of retirement benefits
in whatever guise, such as in the form of loan before actual
retirement (DBP vs. COA, GR No. 144516, 11 February 2004);
v. Additional retirement benefits which are beyond that allowed
under existing retirement laws (COA Decision No. 2006-030, 11
April 2006);
vi. Additional benefits paid to officials and employees of GOCCs
based on Governing Board resolutions whose power to fix
compensation and benefits were revoked under RA No. 6758
effective 1 July 1989 unless subsequently restored (SSS vs.
COA, GR No. 149240, 11 July 2002);
vii. Fringe benefits paid to Board of Directors, officers and employees
exceeding the limitations prescribed under RA No. 6758 such as
Social Amelioration Benefits, two-month Christmas bonus and
Mid-year Financial Assistance (COA Decision No. 2006-030, 11
April 2006);
21
viii. Hazard pay paid to health workers/employees not assigned in

establishments specifically mentioned in Sec. 21 of RA No. 7305
and without proof of exposure to specific health hazards for at
least 50 percent, of his/her working hours (COA Decision No.
2010- 092, 21 October 2010);
ix. Hazard allowance paid to employees who are not principally
engaged in the delivery of health or health-related services such
as Social Insurance Group of Government Service Insurance
System (KMG vs. COA, GR No. 150769, 31 August 2004);
x. Hazard pay of public health workers at a predetermined or fixed
amount (i.e., ₱4,988.75/month for Health workers, receiving
salary grade 20 and above) which contravenes Sec. 21 of RA No.
7305 (Magna Carta for Public Health Workers) and Rule XV,
Sec. 7.1.5 of its IRR (A.M. No. 03-9-02-SC, 27 November 2008);
xi. Payment of honoraria without covering appropriation (Fe D.
Laysa vs. COA, GR No. 128134, 18 October 2000);
xii. Grant of allowances and bonuses to Board Members of water
districts other than per diems allowed pursuant to Sec. 13 of PD
No. 198 (Rodolfo S. De Jesus, et al. vs. COA, GR No. 156641,
05 February 2004);
xiii. Payment of transportation allowance paid to officials who are
assigned or presently use government motor vehicles [Sec. 45,
RA No. 10155 (GAA 2012)]. Similarly, grant of gasoline allowance
or reimbursement of gasoline expenses to officials who are
receiving transportation allowance is also considered illegal;
xiv. Extraordinary and Miscellaneous Expenses (EME) of LGUs in
excess of the limitations provided for discretionary expenses
under Sec. 325(h) of the LGC;
xv. Payment of personal services expenditures such as salaries,
honoraria, allowances, bonuses, and other similar forms of
compensation out of financial subsidy to LGUs [DBM Local
Budget Circular (LBC) No. 89, 23 June 2008];
Payment of personal services expenditures in excess of the
limitation prescribed under Sec. 325(a) of the LGC.
xvi. Honoraria and other forms of allowances such as per diems,
representation allowance, Christmas gift checks paid to
Department Secretaries/Undersecretaries/Assistant Secretaries
or their alternates as members of’ governing boards of collegial
bodies as these partake of the nature of additional compensation
or remuneration proscribed under Sec. 13, Art. VII of the 1987
Philippine Constitution (Bitonio, Jr. vs. COA, GR No. 147392, 12
22
LTOM, 2ND EDITION
March 2004; NAC vs. COA, GR No. 156982, 08 September 2004;

and Dela Cruz, et al. vs. COA, GR No. 138489, 29 November
2001);
1. Payment of per diems and allowances to Board of Directors
Secretariat and other officers in subsidiaries of GOCCs
acquired by the government through Proclamation No. 50,
s. 1986, 15 December 1986;
2. Payment of EME to an ex-officio member of the Board
(COA Decision No. 2010-048, 23 March 2010); and
3. Additional benefits paid to officials, employees and the
members of the Board of GOCCs based on issuances
of the Department Secretary to which the GOCCs are
attached.
xvii. Payment of COLA and other allowances deemed integrated in
the salary per DBM NCC No. 59 and DBM-CCC No. 10 (Victoria
C. Gutierrez, et al. vs. DBM, GR No. 153266, 18 March 2010);
d. Payments thru checks that are countersigned by the Secretary
to the LCE contrary to Sec. 345 of the LGC which requires that
the countersigning be made by the local administrator or in his/her
temporary absence or incapacity by his/her immediate assistant (COA
Decision No. 2008-061, 03 July 2008);
e. Use of public funds for private purposes [Sec. 4(2) of PD No. 1445]
such as:
i. For repair/rehabilitation or construction of multi-purpose building
or a specific cooperative composed of private individuals where
the lot and building subject of improvement are privately owned
(COA Decision No. 2008-127, 24 December 2008);
ii. For widening, repairing and improving sidewalks of a privately-
owned subdivision where the land on which it is situated had
not been transferred to the government by way of donation or
acquired by the government through expropriation (Aniano A.
Albon vs. Bayani Fernando, et al., GR No. 148357, 30 June
2006); and
iii. Use of government property such as office supplies and office
equipment, and government facilities and buildings for personal
purposes.
f. Entering into contract in an amount way beyond the appropriated
amount in violation of Sec. 85 of PD No. 1445 (Hon. Tomas R. Osmena
vs. COA, GR No. 98355, 02 March 1994);
23
g. Entering into contracts without 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 Nos. 151373-
74, 17 November 2005);
h. Purchase of science education facilities by the Schools Division
Superintendent using funds intended for the improvement of facilities
of nationalized High Schools (Venancio R. Nava vs. Rodolfo G.
Palattao, et al., GR No. 160211, 28 August 2006);
i. Expenses for foreign travel of officials or employees, including
uniformed personnel of the DILG and Department of National Defense
(DND) who are due to retire within one year after the said foreign travel
[Sec. 16(c), General Provisions, 2012 GAA or pertinent provisions
of the GAA for the year];
j. Charges to accounts payable not founded on valid claims in violation
of Sec. 46 of P. D. No. 1177 (Fe D. Laysa vs. COA, GR No. 128134,
18 October 2000);
k. Hiring of private lawyers by LGUs except in cases where a component
city or municipality is a party adverse to the provincial government or
to another component city or municipality (COA Circular No. 98-002,
09 June 1998);
l. Use of funds intended for a specific purpose/project, for other
purposes such as administrative and miscellaneous expenses of the
implementing agency, and for projects not intended to be implemented
under the program; and
m. Grant of cash advance for no specific stated public purpose (Sec. 89,
PD No. 1445).
(Annex B, COA Circular No. 2012-003, 29 October 2012)
B. Unnecessary Expenditures – pertains to expenditures which could not pass the

test of prudence or the diligence of a good father of a family, thereby denoting
non-responsiveness to the exigencies of the service. Unnecessary expenditures
are those not supportive of the implementation of the objectives and mission of the
agency relative to the nature of its operation. This would also include incurrence
of expenditure not dictated by the demands of good government, and those the
utility of which cannot be ascertained at a specific time. An expenditure that is not
essential or that which can be dispensed with without loss or damage to property
is considered unnecessary. The mission and thrusts of the agency incurring the
expenditures must be considered in determining whether or not an expenditure is
necessary. (4.1, COA Circular No. 2012-003, 29 October 2012)
Cases that are considered “Unnecessary” Expenditures or Uses of Government
Funds and Property are:
24
LTOM, 2ND EDITION
1. Creation or continued operation of subsidiaries, the function of which

duplicates that of the parent corporation;
2. Hiring of public relations (PR) companies;
3. PR expenses by government insurance corporations whose members and
where government properties are compulsorily insured;
4. Hiring of consultants whose functions are redundant to the respective
functions of concerned officials, for example hiring of procurement consultant,
financial consultant or media consultant;
5. Hiring of consultants rendering services not aligned/related to the mandate/
thrusts of the hiring Agency and/or exceeding the agreed consultancy period
including renewals;
6. Professional service contract for the design of a building with already
existing design/plan, and subject services of the Architect was superfluous
and unnecessary (COA Decision 94-117, 10 March 1994);
7. Purchase of high-end or expensive models/brands of electronic gadgets such
as mobile phones, desktops, laptops, etc. unless justified by circumstances;
8. Construction of buildings and/or procurement of equipment not actually
needed or without any intended purpose, not put to use or use for purposes
other than the intended purpose, not completed and could not be properly
maintained or operations sustained;
9. Construction of housing units which were not distributed/awarded or disposed
of within considerable period of time, as evidenced by the deterioration of
the units;
10. Replacement of serviceable structure/equipment;
11. Continuous repair of vehicles and equipment already considered beyond
economic repair as evidenced by frequent breakdown and non-use after
repair; and
12. Grant of overtime pay for work that is not of urgent nature as to require
completion within a specified time or that can be undertaken during regular
office hours.
(Annex C, COA Circular No. 2012-003, 29 October 2012)
C. Excessive Expenditures – signifies unreasonable expense or expenses incurred

at an immoderate quantity and exorbitant price. It also includes expenses which
exceed what is usual or proper as well as expenses which are unreasonably high
and beyond just measure or amount. They also include expenses in excess of
reasonable limits. (5.1, COA Circular No. 2012-003, 29 October 2012)
25
Cases that are considered “Excessive” Expenditures of Government Funds are:

1. Overpricing of purchases, characterized by grossly exaggerated or inflated
quotations, in excess of the current and prevailing market price by a 10
percent variance from the purchased item;
2. Payment for repair of government equipment at a cost exceeding 30 percent
of the current market price of the same or similar equipment;
3. Expenditures for supplies and materials including fuel inventory in quantities
exceeding the normal three-month requirements, except under the
circumstances enumerated under the pertinent provision of the GAA;
4. Granting of cash advance in excess of estimated budget;
5. Provision of mobile phone, whether postpaid line subscription or prepaid, in
excess of one unit for each entitled official which should not be lower than
Division Chief rank;
6. Grant of cash advance for intelligence funds in excess of one-month
requirement. In emergency cases, cash advance in excess of one- month
requirement may be granted but not to exceed the three-month requirements;
7. Release of funds to NGOs/POs in excess of the project requirements;
8. Using expensive thermoplastic materials with longer life span on an asphalt
overlay with shorter life span;
9. Installation of materials/items in excess of the requirements prescribed
under existing regulations and/or in places without the need for the same or
with already existing installations, such as:
a. Installation of another camera in places with existing functional
camera; and
b. Installation of raised pavement studs with spacing shorter than the
9-meter requirement.
10. Procurement of materials/items in excess of the requirements which
eventually expires such as vaccines, medicines, seeds, fertilizer, pesticides,
among others;
11. Inclusion in the contract of a specific infrastructure project, special items
such as motor vehicles and computers which unnecessarily increased
project costs due to the provision of indirect costs;
12. Procurement and distribution of seeds to farmers in excess of the required
number of bags of seeds per hectare;
13. Purchase of expensive specialized folders and other easily accessible and
readily available items which have limited useful life;
14. Payment of cost of imported equipment in excess of the cost of importation
indicated in pro-forma Consular Invoice of the foreign supplier, Bureau of
26
LTOM, 2ND EDITION
Internal Revenue (BIR) and Bureau of Customs (BOC) tax receipts, and
other cost of importation and reasonable mark-up;
15. Excessive expenditures in the celebration of Christmas, anniversary and
other special occasions;
16. Excessive allowances to participants and expenses in relation to lakbay-
aral, seminars or trainings; and
17. Claims for EMEs and other similar expenses of GOCCs in excess of the
amounts authorized in their corporate charters and in the absence thereof,
the amounts fixed under the GAA. The amount provided to in the charter
shall be included in the Corporate Operating Budget (COB), subject to the
approval of the DBM.
(Annex D, COA Circular No. 2012-003, 29 October 2012)
D. Extravagant Expenditures – signifies those incurred without restraint,

judiciousness and economy. Extravagant expenditures exceed the bounds of
propriety. These expenditures are immoderate, prodigal, lavish, luxurious, grossly
excessive, and injudicious. (6.1, COA Circular No. 2012-003, 29 October 2012)
Cases that are considered “Extravagant” Expenditures of Government Funds
are:
1. Purchase of wines, liquors, cigars and cigarettes, except when served
during state functions and government-sponsored international conferences
and conventions;
2. Payment for rent of expensive halls or rooms in luxury hotels or restaurants
used for meetings/seminars and other official functions, except when such
hotels or restaurants are used for government-sponsored international
conventions, meetings and the like;
3. Conduct of out-of-town meeting which can be made within the office
premises;
4. Hiring of expensive vans, cars, aircraft when there is available ordinary
public conveyance, except in meritorious cases and justified by prevailing
circumstances;
5. Use of expensive decorative lamp posts and other similar items/fixture;
6. Procurement and use of luxury vehicles by government officials, except
those allowed under Sec. 6 of Administrative Order No. 3 issued on 27
February 2001;
7. Luxurious furnishings for government buildings, except those intended for
showcase, trade and commerce, promotion of arts and culture and use of
dignitaries; and
8. Installation of highly sophisticated outdoor signs, billboards and neon signs
27
advertising the office, except for banks, trading corporations, hotels, or

buildings used for culture and arts.
(Annex E, COA Circular No. 2012-003, 29 October 2012)
E. Unconscionable Expenditures – pertains to expenditures which are

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. (7.1, COA Circular No. 2012-003, 29
October 2012)
Cases that are considered “Unconscionable” Expenditures of Government
Funds are the following:
1. Grant of exorbitant and unreasonable bonuses, allowances and fringe
benefits to public officials and employees and members of governing boards;
2. Live-in seminars in five-star hotels with significant numbers of participants
and unreasonable period of time;
3. Payment of excessive and unreasonable retirement benefits;
4. Purchase of supplies and materials including agricultural equipment/
machineries and other farm inputs in significant quantities far exceeding the
requirements and were not actually needed, thus, left idle and unused;
5. Extension of loans in significant and unreasonable amount to unqualified
borrowers whereby recovery of the loans granted is remote;
6. Overpricing in significant amounts exceeding 100 percent of the current and
prevailing market value;
7. Payment for repairs of government equipment involving significant amount
exceeding 100 percent of the current market value price of the same or
similar equipment; and
8. Release of significant amounts to NGOs/POs without evaluating the necessity
of the project, the needs of the intended recipients and the reasonableness
of the project requirements.
(Annex F, COA Circular No. 2012-003, 29 October 2012)
F. Inclusion of Situations Deemed IUEEU Expenditures in the Updated List

1. Need/Justification
As the lists of Irregular, Unnecessary, Excessive, Extravagant or
Unconscionable (IUEEU) expenditures cannot exhaust the situations
which are deemed such, there is a need to set up a system whereby a list
of disallowed expenditures peculiar to an agency or a class/category shall
be made using a self-propelling or time-adjusting mechanism such that a
case declared IUEEU expenditure in a particular situation/sector is, likewise,
28
LTOM, 2ND EDITION
deemed IUEEU expenditure in other cases/sectors similarly situated.

2. Criteria for Inclusion of an IUEEU situation in the Updated Lists – A situation
may be included in the updated list if it corresponds positively to at least one
of the following criteria:
a. There are no established judicial precedents relative to the case/issue;
b. There is a substantial/notable recurrence of a particular problem within
a very limited time;
c. It results in losses or non-operation of the agency; and
d. The case is an accurate illustration of the substantive area of the
IUEEU expenditure definition.
3. Procedure for Inclusion – In case an IUEEU situation corresponds to any,
several or all of the criteria set above, the following steps should be observed
in including the IUEEU situation into the Updated List:
i. The Supervising Auditor/Audit Team Leader, through the Cluster
Director/Assistant Commissioner recommends to the Commission
Proper, IUEEU situations deemed ripe for inclusion in the Updated
List;
ii. The IUEEU situation will be taken up in a Commission Proper meeting
where the proposed inclusion will be deliberated, upon resolving
among other things, whether or not the situation will apply only to the
agency classification involved or to the three sectors (national, local
and corporate) of government;
iii. Thereafter, the Commission Proper shall issue a Resolution effecting
the inclusion of the IUEEU situation in the Updated List; and
iv. Finally, the Resolution shall be published and circularized for the
information of all sectors concerned.
(8.0, COA Circular No. 2012-003, 29 October 2012)
G. Liability for Unlawful Expenditures

1. Expenditures of funds or use of property in violation of Title V (Local Fiscal
Administration) of the LGC and other laws shall be a personal liability of the
official or employee responsible therefor. (Sec. 351, LGC)
Any official or employee of the LGU knowingly incurring any obligation, or
authorizing any expenditure in violation of the provisions of the Administrative
Code of 1987 (FNG No. 292) or taking part therein, shall be dismissed from
the service, after due notice and hearing by the duly authorized appointing
official. If the appointing official is other than the President and should he/
she fail to remove such official or employee, the President may exercise the
power of removal. (Sec. 43, Book VI, E. O. No. 292)
29
SECTION 101. DISBURSEMENTS

Disbursements refer to the settlement of government payables/obligations by check
or by cash. Another mode of disbursement is payment by Authority to Debit Account
(ADA).
Typical transactions for which disbursements are made are as follows:
A. Personal Services
B. Maintenance and Other Operating Expenses
C. Capital Outlay
D. Financial Expenses
[Sec.37, Chapter 3, Volume I, Manual on the New Government Accounting
System (MNGAS) for LGUs]
The official fiscal year of LGUs 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. (Sec.
353, LGC)
SECTION 102. POLICIES RELATED TO THE BUDGET, ACCOUNTING,

AND DISBURSEMENT FUNCTIONS IN LGUs
The responsibilities of the heads of the Requesting Unit, the Budget Unit, the
Accounting and the Treasurer are set forth as follows:
A. The Head of the Requesting Unit shall prepare the Obligation Request (ObR)
and the Disbursement Voucher (DV) and certify on the necessity and legality of
charges to appropriation and allotment under his/her direct supervision. He/she
shall also certify to the validity, propriety and legality of supporting documents.
B. The Head of the Budget Unit shall certify the existence of available appropriation,
take charge of budgetary activities as provided under Secs. 344 and 475 of
the LGC, and shall maintain the Registries of Appropriations, Allotments and
Obligations as prescribed under the MNGAS for LGUs.
C. The Head of the Accounting Unit shall certify the obligation of allotment and
completeness of supporting documents in the DV.
D. The Treasurer shall certify the availability of funds in the DV as provided in the
LGC and prepare the Daily Cash Position Report to be submitted to the LCE.
(COA Circular No. 2006-002, 31 January 2006)
E. The approval of disbursements by the LCE himself/herself shall be required
whenever local funds are disbursed except for regularly recurring administrative
expenses such as; payrolls for regular or permanent employees, expenses for
light, water, telephone, remittances to government creditor agencies such as
GSIS, LBP, DBP, NPO, Procurement Service of the DBM and others where the
30
LTOM, 2ND EDITION
authority to approve may be delegated. DV for expenditures appropriated for the

operation of the Sanggunian shall be approved by the Provincial Vice Governor,
the City Vice Mayor or the Municipal Vice Mayor, as the case may be. (Sec.39,
Chapter 3, Volume I, MNGAS for LGUs)
SECTION 103. DISBURSEMENTS BY CHECK

A. Checks shall be drawn only on duly approved disbursement vouchers. It shall be
drawn by the Local Treasurer and countersigned by the Local Administrator. In
case of temporary absence or incapacity of the aforesaid officials, these duties
shall devolve upon their immediate assistants. In the case of municipalities where
no Administrator has been appointed, checks shall be countersigned by the
Municipal Mayor. In case, however, of expenditures appropriated for the operation
of the Sanggunian, checks drawn shall be countersigned by the Provincial Vice
Governor, the City Vice Mayor, or the Municipal Vice Mayor, as the case may be.
(Sec. 340, Chapter 3, Volume I, MNGAS for LGUS)
B. All checks issued including cancelled checks shall be recorded chronologically in
the Cashbook – Cash in Bank. (Sec.41, Chapter 3, Volume I, MNGAS for LGUs)
C. The Treasurer shall release the check only to the payee or his/her duly authorized
representative. For purposes of releasing checks, the 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. (Sec.42,
D. The checks released to claimants shall be reported in the Report of Checks
Issued (RCI) which shall be prepared daily by the Treasurer for each fund. It
shall be submitted to the Accountant, for preparation of Journal Entry Voucher
(JEV) and recording in the Checks Disbursements Journal. (Sec.43, Chapter 3,
Volume I, MNGAs for LGUs)
E. Paid vouchers, including its supporting documents, shall be perforated and
conspicuously stamped PAID by the cashier. (COA Circular No. 92-389, 3
November 1992)
F. To ensure that checks encashed by government depository banks are for legitimate
local government expenditures, the use of the Accountant’s Advice of Local
Check Disbursements is prescribed. Government depository banks are enjoined
to pay checks issued by LGUs only if covered by the Accountant’s Advice. The
Accountant’s duly designated and authorized representative shall deliver to the
agency concerned their copies which shall be duly acknowledged by the Bank’s
Cashier or Bank’s Representative. A separate notice shall be prepared for each
financial institution where the LGU maintains its depository account. In order to
identify the check issued for a particular voucher, the provincial/city/municipal
treasurer shall indicate on the face of the check the number assigned to the
disbursement voucher by the province/city/municipal accountant. (COA Circular
No. 96-007, 15 May 1996)
31
Guidelines and Principles on the Acceptability of the Evidence of Receipt of

Payment for Disbursements:
1. Generally, the objective of examining the evidence of receipt of payment is to
establish that the funds disbursed have actually been received by the payee
so that any liability arising from the claim has indeed been extinguished or
reduced in the amount received by the payee.
2. Such evidence of receipt of payment may take several forms but whatever
form is taken, the minimum data content are as follows:
a. Name of Disbursing Officer making the payment
b. Date of Payment
c. Name of Recipient
d. Address of the Recipient
e. Purpose of the Payment
f. Amount of Payment Received
3. The evidence of receipt of payment may be a paper-based document or an
electronic document.
A paper-based evidence of receipt of payment may take any of the following
forms:
a. Official Receipt (OR) - The OR shall be required for disbursements
where the payee/recipient is a business establishment required by
the Bureau of Internal Revenue (BIR) to issue official receipts for
its collections. The OR may also be in the form of cash receipt tape
generated by cash register with BIR seal.
b. Reimbursement Expense Receipt (RER) - The RER shall be acceptable
for disbursement where the payee is not a business entity required
by the BIR to issue ORs and the money is advanced by the official
concerned and the expense is authorized to be reimbursed by the
government agency concerned.
c. Acknowledgment Receipt (AR) - The AR shall be acceptable for
disbursements made from the cash advance of the disbursing official
where the payee is not a business entity required by the BIR to issue
ORs. It may be printed, typewritten or handwritten and must bear the
signature of the payee.
d. Voucher Receipt (VR) - The VR shall be acceptable for disbursements
made to individual persons. The VR is that portion of the Disbursement
Voucher/Payroll that is signed by the payee to manifest his/her receipt
of the indicated amount.
e. Credit Card Payment Slip (CCPS) - The CCPS shall be acceptable
as support for claims of reimbursement of expenses where the official
32
LTOM, 2ND EDITION
concerned used his/her personal credit card to defray the expenses

and the expenses are authorized to be reimbursed by the government
agency concerned.
An electronic document refers to information or the representation
of information, data, figures, symbols or other modes of written
expression, described or however represented, by which a right is
established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically.
It includes digitally-signed documents and any print-out or output,
readable by sight, or other means, which accurately reflects the
electronic data message or electronic document.
It is equivalent to electronic data message which refers to information
generated, sent, received or stored by electronic optical and similar
means, but not limited to the following:
i. Electronic Data Interchange (EDI)
ii. Electronic mail
iii. Telegram
iv. Telex
v. Telecopy
4. The electronic document form of an evidence of receipt of payment is
acceptable on the basis of the following provisions of RA 8792 otherwise
known as the E-Commerce Act:
“Sec. 7. Legal Recognition of Electronic Documents- Electronic documents
shall have the legal effect, validity or enforceability as any other document
or legal writing and-
a. Where the law requires that a document to be in writing, that requirement
is met by an electronic document if the said electronic document
maintains its integrity and reliability and can be authenticated so as to
be usable for subsequent reference, in that-
i. The electronic document has remained complete and unaltered,
a part from the addition of any endorsement and any authorized
change, or any change which arises in the normal course of
communication, storage and display.
ii. The electronic document is reliable in the light of the purpose
for which it was generated and in the light of all relevant
circumstances.
b. Paragraph (a) applies whether the requirement therein is in the form
of an obligation whether the law simply provides consequences for the
document not being presented or retained in its original form.
33
c. Where the law requires that a document be presented or retained in

its original form, that requirement is met by an electronic document if-
i. There exists a reliable assurance as to the integrity of the
document from the time when it was first generated in its final
form.
ii. That document is capable of being displayed to the person to
whom it is to be presented: Provided that no provision of this
Act shall apply to vary any and all requirements of existing laws
on formalities required in the execution of documents for their
validity.
For evidentiary purposes, an electronic document shall be functional
equivalent of a written document under existing laws.
This Act does not modify any statutory rule relating to the admissibility
of electronic data messages or electronic documents, except the rules
relating to authentication and best evidence.”
5. Since an evidence of receipt of payment is traditionally required to be in
writing and capable of being presented in its original form, then the electronic
record of such receipt may be acceptable as evidence of receipt of payment
for audit purposes only if the following conditions are met:
a. The electronic document or record has remained complete and
unaltered.
b. The electronic document is reliable.
c. There is reliable assurance as to the integrity of the document from the
time when it was first generated in its final form.
d. The document is capable of being displayed to the person to whom it
is to be presented.
The steps in disbursements for General Fund through issuance of
check are as follows:
PROCESS PERSON/UNIT RESPONSIBLE

a. Gather supporting documents, and Concerned offices
approved Obligation Request (ObR), (COA Circular No. 2006-002, 31
prepare Disbursement Voucher (DV) and January 2006)
forward to the Accounting Unit.
b. Certify as to obligation of allotment for the Accounting Unit
purpose as indicated and completeness
of supporting documents, assign
number to DV, sign Box A and forward
to Treasurer.
34
LTOM, 2ND EDITION

c. Certify on the availability of fund (Box B) Treasurer (COA Circular No. 2006-
and forward to approving officer. 002, 31 January 2006)
d. Approve on the payment covered by Local Chief Executive or authorized
the DV (Box C) and forward DV to the approving officer
Cashier
e. Prepare, sign check and forward check Treasurer
with DV to countersigning officer.
f. Countersign check and forward to Administrator/Vice-Mayor for the Local
Accountant for preparation of the Sanggunian disbursements
Accountant’s Advice of Local Check
Disbursements.
g. Prepare Accountant’s Advice of Local Accountant
Check Disbursements and submit to
bank. Return DV, check and supporting
documents to Cashier/ Treasurer.
h. Record check in the Check Register and Treasurer
release check to claimant. Record
disbursement in Cashbook – Cash
in Bank. Prepare Report of Checks
Issued (RCI). Forward RCI with DV and
supporting documents to Accounting
Unit.
i. Prepare the Journal Entry Voucher (JEV) Accounting Unit
based on individual checks/voucher;
sign “Prepared by” portion (Approved
by Chief Accountant), and record JEV
in the Check Disbursements Journal.
Post monthly to the General Ledger/
Subsidiary Ledgers.
j. Forward RCI, DV, supporting documents Accountant
and JEV to the Office of the Auditor.
[Sec.44, Chapter 3, Volume I, (MNGAS for LGUs)]
SECTION 104. CANCELLATION OF LOST CHECKS ISSUED

A check is considered lost when it is misplaced, waylaid or left behind inadvertently/
negligently by the payee or holder in due course or by the custodian/carrier thereof
and after diligent search cannot be found or located; or when it is lost due to fortuitous
event, theft or robbery.
Upon submission of sworn statement from the payee that a check issued by the LGU
is lost, the treasurer shall immediately notify the bank concerned for the stoppage
of payment. He/She shall forward the sworn statement to the accountant who shall
prepare the JEV to cancel the payment made. Copy of the JEV shall be furnished
the treasurer as basis for him/her to debit the amount in the Cashbook-Cash in Bank.
(Sec.58, Chapter 3, Volume I, MNGAS for LGUs)
35
SECTION 105. CANCELLATION OF 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 with erasures/errors affecting the
genuineness of any material information contained therein. On the other hand, a
check is considered stale when it is outstanding for over six months from date of issue,
or as prescribed by the government authorized depository bank.
A spoiled or stale check shall be marked cancelled on its face and reported, as follows:
A. For spoiled checks, which are immediately cancelled and for which the RCI has
not yet been prepared, the cancelled check shall be attached to the RCI and
reported chronologically with the other checks issued and the word "Cancelled"
shall be indicated on the report.
B. For stale checks, which have been unclaimed and thus, the original DV and
supporting documents are still with the Local Treasurer, the cancelled check
shall be presented in the RCI after the last check issued for the period indicated
in the report. The original DV and supporting documents shall be returned to
the Accountant who shall prepare a JEV to record the transaction as Accounts
Payable.
C. For checks which became spoiled or stale in the hands of the payee and require
replacement, a new check may be issued upon submission of the spoiled or stale
check to the Local Treasurer. A certified copy of the DV shall be requested from
the Auditor for presentation to the Administrator/ LCE who shall countersign the
check. The cancelled check shall be reported and attached to the RCI prepared at
the period of cancellation. The replacement check shall be reported chronologically
in the RCI.
SECTION 106. CASH DISBURSEMENT

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/her cash advance. (COA Circular No. 97-002,
10 February 1997)
The cash disbursement process in the payment of salaries and wages out of cash
advance from General Fund is as follows:

A. Processing of payrolls to be paid by cash is Concerned offices
the same as that of steps (a) to (d) for check
disbursements.
36
LTOM, 2ND EDITION

B. Gather duly certified and approved payrolls Office of the Treasurer
to be paid out of cash advance. Prepare
DV for cash advance corresponding to the
net amount of payrolls and submit to the
Accounting Unit.
C. Certify on the availability of fund and forward Treasurer (COA Circular No. 2006-
to the Approving Officer 002, 31 January 2006)
D. Approve on the payment and forward payroll Local Chief Executive or Authorized
to the Cashier. Approving Officer
E. Gather duly certified and approved payroll Office of the Treasurer
to be paid out of cash advance. Prepare
DV for cash advance corresponding to the
net amount of payroll/s and submit to the
Accounting Unit.
F. Check completeness of document/ previous Accounting Unit
cash advance/s liquidated, sign Box A of DV
and forward to Treasurer
G. Certify on the availability of fund (Box B) and Treasurer
forward to the Approving Officer.
H. Approve on the payment covered by DV (Box Local Chief Executive
C) and forward to Treasurer for preparation
of checks.
I. Prepare and sign checks, and forward check Treasurer

with DV to countersigning officer
J. Countersign check and forward to Administrator

Accountant for preparation of Advice.
K. Prepare Accountant’s Advice of Local Check Accountant

Disbursements and return DV, check and
supporting documents to Cashier/Treasurer.
L. Encash check and pay claimants. Record Treasurer/Disbursing Officer
disbursement in Cashbook-Cash Advances.
M. Return unused cash to the Treasurer/ Cashier. Disbursing Officer
An official receipt (OR) shall be issued by the
Treasurer/Cashier to acknowledge the return
of unused cash and indicate check number
of cash advance granted on the face of the
OR. Record the refund as credit to cash
advance and attach OR to the Cashbook-
Cash Advances.
N. Prepare Report of Disbursement, attach paid Disbursing Officer
payrolls/supporting documents and copy of
Official Receipt (OR) for unused cash advance
returned to Treasurer/Cashier. Sign “Certified
Correct” portion of Report of Disbursement
and submit to Accounting Unit.
37

O. Prepare JEV to record the liquidation of Accountant
cash advance. Record JEV in the Cash
Disbursement Journal (CDJ). Post monthly to
the General Ledger/Subsidiary Ledger.
P. Forward Report of Disbursement and Accountant

supporting documents including JEV to the
Office of the Auditor.
SECTION 107. CASH ADVANCES

Cash payments shall be made only on duly approved payrolls/disbursement vouchers
out of regular cash advances or special cash advances. (Sec. 45, Chapter 3, Volume
1, MNGAS for LGUs)
A. Regular cash advances are those granted to cashiers, disbursing officers,
paymasters and/or property/supply officers separately for any of the following
purposes:
1. Salaries and Wages;
2. Commutable Allowances;
3. Honoraria and other similar payments to officials and employees; and
4. Petty operating expenses consisting of small payments for maintenance
and operating expenses which cannot be paid conveniently by check or are
required to be paid immediately.
B. Special Cash Advances are those granted on the explicit authority of the Head
of the Agency only to duly designated disbursing officers or employees for other
legally authorized purposes as follows:
1. Current operating expenditures of the agency field office or of the activity of
the agency undertaken in the field when it is impractical to pay the same by
check, such as:
a. Salaries, Wages and Allowances
b. Maintenance and other operating services
2. Travel expenditures including transportation fare, travel allowance, hotel
room/lodging expenses and other expenses incurred by officials and
employees in connection with official travel.
(COA Circular No. 97-002, 10 February 1997)
38
LTOM, 2ND EDITION
SECTION 108. GRANTING AND UTILIZATION OF CASH ADVANCES

A. GUIDELINES:
1. No cash advance shall be given unless for a legally specific purpose.
2. No additional cash advance shall be allowed to any official or employee
unless the previous cash advance given to him/her is first settled or a proper
accounting thereof is made.
3. A cash advance shall be reported as soon as the purpose for which it was
given has been served.
4. Only permanently appointed officials shall be designated as disbursing
officers. Elected officials may be granted a cash advance only for their
official traveling expenses.
5. Only duly appointed or designated disbursing officers may perform disbursing
functions. Officers and employees who are given cash advances for official
travel need not be designated as Disbursing Officers.
6. 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 local chief executive. (COA
Circular No. 92-382, 3 July 1992)
7. Transfer of cash advance from one Accountable Officer to another shall not
be allowed.
8. 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.
9. The Accountant shall obligate all cash advances granted. He/She shall see
that cash advances for a particular year are not used to pay expenses of
other years.
B. DOCUMENTARY REQUIREMENTS COMMON TO ALL CASH ADVANCES

EXCEPT FOR TRAVELS
1. Authority of the accountable officer issued by the Head of Agency or his/her
duly authorized representative indicating the maximum accountability and
purpose of cash advance (for initial cash advance)
2. Certification from the Accountant that previous cash advances have been
liquidated and accounted for in the books
3. Approved application for bond and/or fidelity bond for the year will be required
for cash accountability of ₱5001 or more. (COA Circular No. 2013-001, 10
January 2013 – Amendment to COA Circular No. 2012-001, 14 June 2012)
39
C. ADDITIONAL DOCUMENTARY REQUIREMENTS FOR SALARIES, WAGES,

ALLOWANCES, HONORARIA AND OTHER SIMILAR EXPENSES
The cash advance for payroll fund shall be equal to the net amount of the payroll
for the pay period.
1. Approved contracts (for initial payment)
2. Approved payroll or list of payees indicating their net payments
3. Approval/authority (presidential directive or legislative enactment) or legal
basis to pay any allowance/salaries/wages/fringe benefits
4. Daily time record (DTR) approved by the supervisor
(COA Circular No. 2012-001, 14 June 2012)
D. PETTY CASH FUND FOR OPERATING EXPENSES:

1. The Petty Cash Fund (PCF) to be set up shall be sufficient for the recurring
petty operating expenses of the agency for one month. The cash advance
shall not be used for payment of regular expenses, such as rentals,
subscriptions, light and water bills and the like. Payments out of PCF, which
shall be through a Petty Cash Voucher, shall be allowed only for amounts
not exceeding ₱15,000 for each transaction, except when a higher amount
is allowed by law and/or specific authority by the Commission on Audit.
Splitting of transactions to avoid exceeding the Ceiling shall not be allowed.
2. The Accountable officer 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. (COA Circular No. 97-002, 10
February 1997)
3. PCF shall be maintained under the imprest system. Disbursements from the
fund shall be through the Petty Cash Voucher (PCV) which shall be signed
by the payee to acknowledge the amount received. The Official Receipt shall
be attached to the PCV.
4. PCF shall be set up at the beginning of the year. An Obligation Request (ObR)
shall be prepared for the fund and recorded in the registers. A disbursement
voucher shall be prepared for replenishments of the PCF during the year
duly supported by a list/summary of the PCVs, the PCVs and its supporting
documents.
5. At the end of the year, PCF shall be fully liquidated by preparing a Report of
Disbursement supported by the list/summary of the PCVs and its supporting
documents. The ObR setting up the fund at the beginning of the year shall
be cancelled. Another ObR shall be prepared taking up the liquidation and
recorded in the registers based on the actual expenses incurred. Unused
cash shall be returned to the Treasurer who shall issue an official Receipt to
40
LTOM, 2ND EDITION
acknowledge the amount returned. A new cash advance for PCF shall be set
up in the ensuing year.
6. Additional Documentary Requirements for Initial Cash Advances:
a. Approved estimates of petty expenses for one month
E. FIELD/ACTIVITY CURRENT OPERATING EXPENSES (COE):

1. 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.
2. 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 Accountable
Officer 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.
3. Additional Documentary Requirement:
i. Approved Budget for COE of the agency field office or agency activity
in the field. (COA Circular No. 2012-001, 14 June 2012)
F. TRAVELLING ALLOWANCES:
1. Official local or foreign travels and assignments under this Order shall cover
only those which meet the following criteria: (i) it is essential to the effective
performance of an official or employee’s mandates or functions; (ii) it is
required to meet the needs of the department, agency, bureau or office, or
there is substantial benefit to be derived by the State; (iii) the presence of
the official or employee is critical to the outcome of the meeting, conference,
seminar, consultation or any official activity to be attended; and (iv) the
projected expenses are not excessive or involve minimum expenditure.
2. All officials authorized to approve local or overseas travels are required, as far
as practicable, to minimize travel cost. Hence, all forms of communications,
such as, but not limited to teleconferencing and videoconferencing or
submission of briefs and position papers, as alternatives to travel, must
be explored, provided, these do not compromise national security and
confidentiality of official communications.
(EO No. 77, 15 March 2019)
41
3. General Guidelines:
a. Both official local and foreign travels shall be treated and accounted
for as cash advances. Official local travel shall no longer be treated as
direct charges to appropriations of allotments. The Accountant shall
obligate all cash advances granted.
b. No cash advance shall be granted to any official or employee unless
a proper accounting of the previous cash advance for travel given to
him/her is first made or the same is first liquidated and/or settled:
c. Proper accounting shall mean the receipt by the Accountant of the
prescribed liquidation documents although not yet recorded in the
books of accounts nor audited by the auditor.
d. Liquidation shall mean the recording of the liquidation documents
in the books of accounts by the accountant as a credit to the cash
advance account after verifying the same, although not yet audited by
the Auditor.
e. Settlement shall mean the issuance of the Credit Notice by the Auditor
after the audit of the liquidation documents.
f. Cash advances granted for purposes of official travel, both local and
foreign, shall not require bonding of the traveling official or employee.
(COA Circular No. 96-004, 19 April 1996)
4. Documentary Requirements:
a. Local Travel
i. Office Order/Travel Order approved in accordance with Sec. 3 of
Executive Order (EO) No. 298
ii. Duly approved itinerary of travel
iii. Certification from the accountant that the previous cash advance
has been liquidated and accounted for in the books
b. Foreign Travel
1. Office Order/Travel Order approved in accordance with the
provisions of Secs. 1 and 2 of EO No. 459, 01 September 2005
i. Provincial Governors and Mayors of highly urbanized
cities or independent component cities - as approved
by the Secretary of the Department of Interior and Local
Government
ii. Other government officials and employees - as approved
by the head of agency
2. Duly approved itinerary of travel
42
LTOM, 2ND EDITION
3. Letter of invitation of host/sponsoring country agency/organization

4. For plane fare, quotations of three travel agencies or its equivalent
5. Flight itinerary issued by the airline/ticketing office/travel agency

6. Copy of the United Nations Development Programme (UNDP)
rate for the daily subsistence allowance (DSA) for the country of
destination for the computation of DSA to be claimed
7. Document to show the dollar to peso exchange rate at the date
of grant of cash advance
8. Where applicable, authority from the Office of the President to
claim representation expenses
9. In case of seminars/trainings
a. Invitation addressed to the agency inviting participants
(issued by the foreign country)
b. Acceptance of the nominees as participants (issued by the
foreign country)
c. Programme Agenda and Logistics Information
10. Certification from the accountant that the previous cash advance
has been liquidated and accounted for in the books
SECTION 109. LIQUIDATION OF CASH ADVANCES

A. GENERAL GUIDELINES
1. The accountable officer shall liquidate cash advances within the following
period:
a. Salaries, Wages, Allowances, Honoraria and other Similar Payments
– within five (5) calendar days after the end of the pay period.
b. Field Operating Expenses – within 20 calendar days after the end of
the year subject to replenishment as frequently as necessary during
the year.
c. 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, immediately
thereafter.
d. Travelling Expenses – within 30 days after the return of the official/
employee concerned to his/her official station for local travel and
43
within 60 days after the return of the official/employee concerned to

the Philippines in the case of foreign travel.
e. Special Purpose – as soon as the purpose of the cash advance has
been served.
2. The Accountable Officer (AO) shall prepare the Report of Disbursements
in three copies and submit the original and duplicate of the same with
duly accomplished vouchers/payrolls and supporting documents to the
accountant. For payments based on receipts and invoices only, he/she shall
also prepare a liquidation voucher which shall be submitted with the report
and the supporting documents to the accountant. The AO shall be deemed
to have complied with the requirement of proper accounting for the cash
advance upon receipt by the Accountant of the liquidation documents.
3. Within ten (10) days after receipt of the report and supporting documents
form 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. The cash advance shall be considered liquidated in the books of
accounts although not yet audited by the COA auditor.
4. Within thirty (30) days from receipt of the report and supporting documents
from the accountant, the auditor shall complete the audit. He/she shall
issue the corresponding Credit Notice to the AO to inform the latter of
the amount allowed 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. The amount allowed in audit by the Auditor as contained
in the Credit Notice shall be deemed to have been settled.
5. The AO shall submit to the Auditor the documents to settle his/her suspension/
disallowance. 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.
6. The Credit Notice issued by the Auditor to the AO shall be deemed sufficient
compliance with the requirements of COA Circular No. 94-001, 20 January
1994. (Prescribing the Manual on Certificate of Settlement and Balance,
Revised 1993)
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 refunded immediately to
the collecting officer.
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.
44
LTOM, 2ND EDITION
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.
B. DOCUMENTARY REQUIREMENTS
1. Payroll Fund for Salaries, Wages, Allowances, Honoraria and other Similar
Expenses
a. Report of Disbursements certified correct by the Accountable Officer
b. Approved payrolls/vouchers duly acknowledged/signed by the payee/s
c. Approved Daily Time Records (DTRs) or Certificate of Service
d. Approved application for leave
e. In case of payment of personnel under the “job order” status, duly
verified/accepted accomplishment report
f. OR in case of refund for unclaimed salaries
g. Authority from the claimant and identification of documents, if claimed
by person other than the payee
h. Such other pertinent supporting documents as are required by the
nature of expense
2. Petty Cash Fund
a. Summary of Petty Cash Vouchers
b. Report of Disbursements
c. Petty Cash Replenishment Report
d. Approved purchase request with Certificate of Emergency Purchase,
if necessary
e. Bills, receipts, sales invoices
f. Certificate of inspection and acceptance
g. Report of Waste Materials in case of replacement/repair
h. Approved trip ticket for gasoline expenses
i. Canvass from at least three suppliers for purchases involving ₱1,000
and above, except for purchases made while on official travel
j. Summary/Abstract of Canvass
k. Petty Cash Vouchers duly accomplished and signed
l. OR, in case of refund
45
m. For reimbursement of toll receipts: toll receipts and trip tickets

n. Such other supporting documents that may be required and/or required
under the company policy depending on the nature of the expenses
3. Field/Activity Current Operating Expenses
Same requirements as those for salaries, petty operating expenses,
other personal services, and maintenance and other operating expenses
depending on the nature of expenses incurred.
4. Traveling Expenses
a. Local Travel
i. Paper/electronic plane, boat or bus tickets, boarding pass,
terminal fee
ii. Certificate of appearance/attendance
iii. Copy of previously approved itinerary of travel
iv. Revised or supplemental Office Order or any proof supporting
the change of schedule
v. Revised Itinerary of Travel, if the previous approved itinerary was
not followed
vi. Certification by the head of agency (HoA) as to the absolute
necessity of the expenses together with the corresponding bill or
receipts, if the expenses incurred for official travel exceeded the
prescribed rate per day (certification or affidavit of loss shall not
be considered as an appropriate replacement for the required
hotel/lodging bills and receipts)
vii. Liquidation report
viii. Reimbursement Expense Receipt (RER)
ix. Official Receipt (OR) in case of refund of excess cash advance
x. Certificate of travel completed
xi. Hotel room/lodging bills with official receipts in the case of official
travel to places within 50-kilometer radius from the last city or
municipality covered by the Metro Manila Area, or the city or
municipality where their permanent official station is located if
outside the Metro Manila Area, if the travel allowances being
claimed include the hotel room/lodging rate.
b. Foreign Travel
i. Paper/electronic plane tickets, boat or bus tickets, boarding pass
ii. Certificate of appearance/attendance for training/ seminar
participation
46
LTOM, 2ND EDITION
iii. Bills/receipts for non-commutable representation expenses

approved by the President under Sec. 13 of EO No. 248
iv. For reimbursement of actual travel expenses in excess of the
prescribed rate (EO No. 298)
1. Approval by the President
2. Certification from the HoA that it is absolutely necessary
3. Hotel room bills with official receipts (certification or
affidavit of loss shall not be considered as an appropriate
replacement for the required hotel/lodging bills and
receipts)
v. Revised Itinerary of Travel, if applicable
vi. Narrative report on trip undertaken/Report on Participation
vii. OR in case of refund of excess cash advance
viii. Certificate of Travel Completed
ix. Liquidation Report
(COA Circular 2012-001, 14 June 2012)
6. HANDLING, CUSTODY AND DISPOSITION OF THE CASHBOOK
a. A newly- appointed or designated AO shall start with a new cashbook.
Before discharging his/her 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/her work.
b. 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/She may record
each invoice/receipt/voucher individually or the total disbursements
for the day depending on the volume of the transactions.
c. The AO shall reconcile the book balance with the cash on hand daily.
He/she 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.
d. The cashbooks shall be kept at the Office of the AO and then placed
inside the safe or cabinet when not in use. It may be taken from his/her
custody only by the Auditor or an official duly authorized by the Agency
Head, who shall issue the necessary receipt.
e. When the AO ceases to be one, the cashbook shall be submitted to the
Treasurer and shall form part of the accounting records. No clearance
shall be issued to an AO if he/she fails to submit the cashbook as
required.
47

7. DUTIES AND RESPONSIBILITIES OF THE COA AUDITOR ON THE
GRANTING, UTILIZATION AND LIQUIDATION OF CASH ADVANCES
The resort to the cash advance system despite certain problems has been
recognized as a facilitative tool in the financial operations of the government.
The Auditor shall periodically evaluate the accountability of the Accountable
Officer (AO) and recommend reduction of the cash advance if found
excessive.
a. Cash Examination
i. The Auditor shall conduct an examination of the accountability of
each AO at least once every semester or as existing regulations
of the COA require.
ii. The Auditor shall demand the presentation by the AO of his/her
cashbook, cash and cash items for examination. Failure by the
AO to have duly forthcoming any public funds with which he/she
is chargeable, upon payment by the Auditor shall be prima facie
evidence of misappropriation.
iii. The Auditor shall exclude from among the cash items presented
any accommodation checks, “vales”, IOUs, chits or other forms
of promissory notes and should not accept them as credit to the
account.
iv. The Auditor shall at once demand in writing the production of the
missing funds at the moment the shortage or loss is discovered
and established. The granting of a grace period for the restitution
is not allowed by law.
v. The Auditor shall submit the cash examination report, together
with all the working papers/evidences disclosing the shortage,
to the Provincial/City Auditor (if the offense is committed in an
LGU) or to the COA Director concerned for the filing of criminal
proceedings in accordance with COA Memorandum No. 83-81B,
COA Memorandum No. 90-660 and paragraphs 3.1 and 3.2 of
COA Memorandum No. 95-112, 26 December 1995.
b. During Periods Where No Cash Examination is Conducted
i. Upon failure of the AO to liquidate his/her cash advance within
two (2) months for AOs holding office within the station and
three (3) months for AOs outside the station from date of grant
of the cash advance, the Auditor shall issue a letter demanding
liquidation or explanation for non-liquidation.
ii. If thirty (30) days have elapsed after the demand letter is served
and no liquidation or explanation is received, or the explanation
48
LTOM, 2ND EDITION
received is not satisfactory, the Auditor shall advise the head of

the agency to cause or order the withholding of the payment of
any money due the AO.
c. The AO shall likewise be held criminally liable for failure to settle his/
her accounts. For this purpose the Auditor shall:
i. Execute an affidavit stating the nature/purpose of the cash
advance; the amount not liquidated/accounted for; the fact that no
liquidation or explanation has been submitted despite demand or
if explanation has been submitted, the same is not satisfactory;
the date the letter of demand was served on or received by the
AO; and other information which may be pertinent to the case.
ii. State in the affidavit the violation of the provisions of Sec. 89 of
PD 1445 and the penal provisions under Sec. 128 of the same
law, both of which are herein quoted in full to wit:
“Sec. 89. Limitations on Cash Advance – No cash advance shall
be given unless for a legally authorized specific purpose. A cash
advance shall be reported on and liquidated as soon as the
purpose for which it was given has been served. No additional
cash advance shall be allowed to any official or employee unless
the previous cash advance given to him/her is first settled or a
proper accounting thereof is made.”
“Sec. 128. Penal Provision – Any violation of the provisions of
Secs. xx 89, xx of this Code or any regulation issued by the
Commission implementing these Sections shall be punished
by a fine not exceeding one thousand pesos (₱1,000) or by
imprisonment in the discretion of the court.”
iii. The affidavit shall be submitted to the COA Director concerned
who shall refer the case to the appropriate Office of the Deputy
Ombudsman, if the offense is committed within the Metropolitan
Manila Area, in accordance with paragraphs 3.1.1 and 3.2,
respectively, of COA Memorandum No. 95-112, 26 Dec 1995.
SECTION 110. GUIDELINES AND PROCEDURES IN THE WRITE-OFF

OF UNLIQUIDATED CASH ADVANCES
As a rule, cash advances must be liquidated within the prescribed periods depending
upon the nature of the particular cash advance.
Dormant unliquidated cash advances are advances granted to disbursing officers,
agency officers and employees which remained non-moving for ten (10) years or
more and when settlement/collectability could no longer be ascertained.
49
Write-off of dormant accounts is the process of derecognizing the asset account

and the corresponding allowance for impairment from the books of accounts and
transferring the same to the Registry of Accounts Written Off (RAWO). This does not
mean condoning/extinguishing the obligation of the accountable officer/debtor.
A. SPECIFIC GUIDELINES:
The Accountant shall:
1. Conduct regular and periodic verification, analysis, and validation of the
existence of the receivables, unliquidated cash advance, and fund transfers,
and determine the concerned debtors, accountable officers (Regular and
Special Disbursing Officers, Collecting Officers, Cashiers) and the source and
implementing government entities concerned;
2. Reconcile the unliquidated fund transfers between the source and
implementing government entities, prepare the adjusting entries for the
reconciling items noted, and require liquidation of the balances;
3. Prepare the necessary adjusting entry/ies for the following:
a. Recognition of the computed/determined impairment in accordance
with the Philippine Public Sector Accounting Standards or Philippine
Financial Reporting Standards
b. Correction of inadvertent errors, or inaccurate calculation or
computation
c. Reclassification of accounts
d. Recovery/settlement of previously written off accounts
Adjustments made pursuant to items (2) and (3) need not be submitted
to the COA for approval but are subject to the usual audit. However, the
accountant or the auditor may seek assistance from the Government
Accountancy Sector; and;
e. Prepare aging of dormant receivables, unliquidated cash advances, and
fund transfers on a quarterly basis to support the request for write-off,
and indicate in the remarks column the existence of the applicable
conditions, as follows:
i. Absence of records or documents to validate/support the claim
and/or unreconciled reciprocal accounts
ii. Death of the accountable officer/employee/debtor
iii. Unknown whereabouts of the accountable officer/ employee/
debtor, and that he/she could not be located despite diligent
efforts to find him/her
iv. Incapacity to pay or insolvency
50
LTOM, 2ND EDITION
v. Exhaustion of all possible remedies by the Management to collect

the receivables and to demand liquidation of cash advances and
fund transfers
vi. No pending case in court involving the subject dormant accounts.
B. PROCEDURES IN THE WRITE-OFF
1. The Head of the government entity shall file the request for authority to
write-off dormant receivable accounts, unliquidated cash advances, and fund
transfers to the COA Audit Team Leader (ATL) and/or Supervising Auditor
(SA). No filing fee is required;
2. The request shall be supported by the following documents:
a. Schedule of dormant accounts by accountable officer/debtor/
government entity and by account, certified by the accountant and
approved by the Head of the government entity;
b. Certified relevant documents validating the existence of the conditions,
as applicable, such as:
i. Death Certificate issued by Philippine Statistics Authority
(formerly National Statistics Office)
ii. Proof of Insolvency
iii. Certification from the Department of Trade and Industry that
the debtor has no registered business
iv. Certification from the Securities and Exchange Commission that
the Corporation is no longer active
v. Certificate of no residency in the barangay of the municipality/
city of last known address
vi. Proof of exhaustion of all remedies to collect the receivables and
demand to liquidate the cash advances and fund transfers, such
as but not limited to copies of served or returned demand letters
vii. Certification by Legal Officer of the entity of no pending case
relative to the account
viii. Certification by the responsible officials of the entity to the effect
that there are no records/documents available to validate claim
ix. Other justifications, like in the case of request for write-off due
to loss of documents, the circumstances of the loss should be
stated in the letter-request
x. In case of fund transfer, the unliquidated amount after reconciliation
shall be supported by certification by the Chief Accountants and
approved by the Heads of the source and implementing entities
that the fund was utilized for the purpose, and certification from
51
the recipient that the project was partially or fully implemented,

supported by pictures of the implemented projects.
3. The COA Regional Directors (RD) shall have jurisdiction over decisions of
SAs/ATLs of LGUs within their respective regions. All appeals shall be filed
with the RD having jurisdiction over the place where the auditee is situated.
Appeals shall be by Appeal Memorandum, with proof of service of copy
thereof to the Auditor concerned, as well as proof of payment of the filing fee.
4. Within five (5) calendar days from receipt of the Appeal Memorandum, the
RD shall issue an Order to Answer to the SA/Regional Supervising Auditor
(RSA)/ATL concerned. The SA/RSA/ATL shall have fifteen (15) calendar
days within which to file the Answer, together with the entire records of the
case.
5. Within five (5) calendar days from receipt of the Answer and the entire
records of the case, the RD shall transmit the same to the concerned
Cluster Director (CD) of the National Government Sector (NGS)/ Corporate
Government Sector, for adjudication. The RD shall ensure that the
documentary requirements in Rule V of the Revised Rules of Procedure of
the COA (RRPC) or COA Circular No. 2016-005, as the case may be, are
complete and that every page thereof is numbered in continuous sequence,
prior to transmittal to the CD. The transmittal communication shall indicate
the number of pages consisting the records of the case.
6. Should additional documentary requirements be needed by the CD, the
same shall be addressed to the SA/RSA/ATL concerned, through the RD.
The SA/RSA/ATL shall have five (5) calendar days within which to comply.
The transmittal of these additional documents back to the CD, shall likewise
be coursed through the RD, who shall act on them in the same manner and
within the same period prescribed.
7. The RD shall monitor the status of cases within his/her regional jurisdiction
and shall include the same in the required regional reports.
8. The RD shall be furnished a copy of final decisions at the level of the CD, for
information and monitoring.
(COA Circular No. 2019-002, 20 March 2019)
9. The Accountant shall:
a. Prepare the Journal Entry Voucher (JEV) within 15 working days upon
receipt of the decision granting the authority to write-off, for approval
of the Head of the government entity, effect the adjusting entries in the
books, and enter the gross amount of the receivables in the Registry of
Accounts Written-Off (RAWO).
b. Submit the JEV to the COA ATL.
52
LTOM, 2ND EDITION
c. Maintain a RAWO to record the accounts written-off and keep a

copy of the approved request for write-off including the records and
documents pertaining thereto.
d. At the end of the year, foot entries in the RAWO and make the
appropriate disclosures in the Notes to Financial Statement (FS).
SECTION 111. SPECIAL EDUCATION FUND (SEF) DISBURSEMENTS

A. The Treasurer and/or the concerned accountable officers shall maintain separate
cashbooks for the SEF which shall be in accordance with the prescribed format.
B. Disbursement procedures including the reports to be submitted by the accountable
officer concerned are the same as those for the General Fund. However,
disbursements shall be approved by the Local Chief Executive concerned as co-
chairman of the local school board. The division/city superintendent of schools
or the district supervisor concerned, as the cash maybe, shall certify vouchers
or payrolls as to validity, propriety, and legality of the claim involved. (Sec. 91,
Chapter 5, Volume I, MNGAS for LGUs).
C. Allowable Expenses Chargeable Against the Special Education Fund (SEF)
1. Operation and Maintenance of Public Schools
a. Payment of compensation/allowances of teachers locally hired in
elementary and secondary schools identified to have shortages per
the teacher deployment analysis of Department of Education (DepEd);
the rates of compensation/allowances shall be determined by the Local
School Board (LSB) based on funds available, but not to exceed the
salary schedule being implemented by the LGU concerned; Provided,
that for the purpose of hiring teachers chargeable against the SEF, the
LSB in each province, city or municipality shall utilize the list found in
the Registry of Qualified Applicants
b. Payment of salaries/wages of utility workers and security guards hired
in public elementary and secondary schools which have not been
provided such position in the DepEd budget
c. Payment of expenses pertaining to the operation of schools, which
may include utilities and communication expenses
2. Construction and Repair of School Buildings
a. Construction, repair and maintenance of school buildings and other
facilities for public elementary and secondary schools which are
deemed to have shortage of classrooms or of other facilities, as the
case maybe per DepEd classroom deployment analysis, subject to
existing standards/specifications set by DepEd and/or Department of
Public Works and Highways (DPWH); furthermore, this item shall be
given priority in the SEF budget
53
b. Acquisition and titling of school sites

3. Facilities and Equipment
a. Acquisition of laboratory, technical and similar apparatus and
information technology equipment and corollary supporting services
(e.g. internet connection maintenance), subject to the prevailing
requirements and specifications set by the DepEd
4. Educational Research
a. Educational research other than the research subject areas funded in
the DepEd budget, subject to the prevailing policies and guidelines of
the DepEd.
5. Purchase of Books and Periodicals
a. Purchase of library books and periodicals for the libraries of the
different elementary and secondary schools in the province, city
and municipality and purchase of instructional materials, workbooks
and textbooks needed by public elementary and secondary schools,
subject to the prevailing policies and guidelines of the DepEd.
6. Sports Development
a. Expenses for school sports activities at the national, regional,
division, district, municipal and barangay levels, as well as for other
DepEd related activities subject to the prevailing requirements and
specifications set by the DepEd.
7. Funding for the Early Childhood Care and Development Council (ECCD)
Program under Republic Act No. 8980, 5 December 2000, particularly for
the following purposes:
a. Direct services related to the implementation of the ECCD program,
such as salaries/allowances of locally hired child development teachers
and/or day care workers, etc.
b. Organization and support of parent cooperatives to establish
community based ECCD programs.
c. Provision of counterpart funds for the continuing professional
development of ECCD public service providers.
d. Provision of facilities for the conduct of the ECCD Program.
e. Payment of expenses pertaining to the operations of the National Child
Development Centers, including but not limited to, utilities (electricity
and water expenses) and communication (telephone expenses).
(DepEd/DBM/DILG Joint Circular No. 1, 26 May 2017, Revised
Guidelines on the Use of the SEF)
54
LTOM, 2ND EDITION
SECTION 112. TRUST FUND DISBURSEMENTS

A. The Treasurer and/or the concerned accountable officers shall maintain separate
cashbooks for the Trust Fund which shall be in accordance with the prescribed
format. (Sec.98, Chapter 5, Volume I, MNGAS for LGUs)
B. Disbursements from trust funds shall be in accordance with the specific purpose
stated in the trust agreement/approved budget between the trustor and trustee
(LGU) as certified by the Chief Accountant. The certification on the disbursement
voucher as to existence of funds held in trust shall serve this purpose. (Sec. 100,
C. Disbursements from the Trust Fund shall require:
1. Certification and approval of vouchers and payrolls as to validity, propriety
and legality of the claim involved by the department/office head concerned
2. Certification as to existence of funds held in trust and completeness and
propriety of supporting documents by the Accountant
3. Certification as to cash availability by the Treasurer (COA Circular No. 2006-
002, 31 January 2006)
4. Approval by the Administrator of the fund
D. Disbursement from the trust fund shall be as follows:
1. DISBURSEMENT BY CHECK

a. Gather supporting documents, Concerned offices
prepare DV/payroll and forward to the
Accounting Unit.
b. Check completeness of documents and Accounting Unit
verify existence of funds held in trust,
assign number to DV/payroll, sign box A
and forward to the Treasurer.
c. Verify claim, certify on the availability Treasurer (COA Circular No.
of fund (Box B) and forward to the 2006-002, 31 January 2006)
approving officer.
d. Approve transaction (Box C) and Local Chief Executive or
forward DV to Cashier. authorized approving officer
e. Prepare and sign check and forward Treasurer
check with DV to countersigning officer.
f. Countersign check and forward to Administrator
Accountant for preparation of the
Accountant’s Advice.
55

g. Prepare Accountant’s Advice of Local Accountant
Check Disbursements and return DV,
check and supporting documents to
Cashier/Treasurer.
h. Issue check to claimant. Record Treasurer
disbursement in Cashbook - Cash
in Bank. Prepare Report of Checks
Issued (RCI), forward RCI with DV and
supporting documents to Accounting
Unit.
i. Prepare the JEV based on individual Accounting Unit
checks/voucher; sign “Prepared By”
portion )approved by Chief Accountant)
and record JEV in the Check
Disbursement Journal. Post monthly to
the General Ledger/Subsidiary Ledgers.
j. Forward RCI, DV, supporting documents Accountant
and JEV to the Office of the Auditor for
final custody and post audit.
2. PAYMENTS THROUGH CASH ADVANCES

For payments through cash advances, procedures “a” to “d” for check
disbursement shall be followed. The rest of the procedures shall be the
same as that of the General Fund.
(Sec.102, Chapter 5, Volume I, MNGAS for LGUs)
SECTION 113. UTILIZATION OF CONFIDENTIAL FUNDS

Confidential Fund (CF) refers to the lump-sum amount provided as such in the General
Appropriations Act for National Government Agencies, in appropriation ordinances
for Local Government Units (LGUs) and in the Corporate Operating Budgets for
Government Owned and Controlled Corporations, for their Confidential Expenses.
Confidential expenses refer to those expenses pertaining/related to surveillance
activities in civilian government agencies that are intended to support the mandate or
operations of the agency.
The utilization of this fund is generally confidential and classified by nature which
requires not only strong internal controls in the release and utilization thereof, but also
strict auditing rules to prevent mishandling or improper application of funds.
A. GENERAL GUIDELINES
1. LGUs are entitled to Confidential Funds if the peace and order is a priority
concern and which have duly allocated CF, but not Intelligence Fund in their
56
LTOM, 2ND EDITION
annual appropriations ordinances, provided that, specific amount for Peace

and Order Program (POP) is included in their Peace and Order and Public
Safety Plan and provided further, that there is a specific appropriation for
POP in their annual budget. The computation of allowable CF of an LGU
shall be based on the budget of the LGU’s POP only.
POP refers to any or a combination of the following programs, activities and
projects which may be included as part of the Peace and Order and Public
Safety Plan of an LGU so that these shall be eligible for funding the CF:
a. Crime prevention and law enforcement activities (e.g. conduct of
coordination meetings with partner agencies/stakeholders, increase
in police visibility, provision of equipage and/or logistical support for
law enforcement agencies and conduct of awareness raising activities
for the community
b. Aid and/or capability development for personnel of law enforcement
agencies, and volunteers/partners
c. Programs for anti-illegal drug, illegal gambling, counter insurgency
and/or counter-terrorism, illegal logging, illegal mining, illegal fishing,
smuggling and human trafficking
2. All allocations of CF shall be supported with a Physical and Financial Plan
indicating the proposed amount allocated for each program, activity, and
project, where disbursements pertaining to confidential expenses shall be
based.
3. Release and utilization of the total CF shall be covered by a resolution duly
approved by two-thirds (2/3) of the total membership of the Local Peace and
Order Council.
4. In the event that additional CF in excess of the limitation is extremely
necessary, additional appropriation supported with duly authorized
supplemental budget shall be approved by the Secretary of the Department
of Interior and Local Government (DILG).
5. CF shall be used only for the following Confidential Expenses:
a. Purchase of Information necessary for the formulation and
implementation of program, activities and projects relevant to the
national security and peace and order
b. Rental of transport vehicle related to confidential activities
c. Rentals and the incidental expenses related to the maintenance of
safe houses
d. Purchase or rental of supplies, materials and equipment for confidential
operations that cannot be done through regular procedures without
compromising the information gathering activity concerned
e. Payment of rewards to informers (non-employee of concerned
government agency) subject to the following conditions:
57
i. Approval by the Head of Agency (the highest official of the LGU)

ii. Supported with documents evidencing the success of the
information gathering and/or surveillance activities on account of
the information given by the informer
iii. Directly related to the conduct of the specific confidential activities
of authorized agencies
f. Uncover/Prevent illegal activities that pose a clear and present danger
to agency personnel/property, or other facilities and resources under
the agency protection, done in coordination with the appropriate law
enforcement agencies
g. Others that may be authorized by the General Appropriations Act or
other special law/s
6. Conduct of confidential activities shall, as far as practicable, be done with
proper collaboration with any of the following enforcement agencies:
a. The Philippine National Police (PNP)
b. The Armed Forces of the Philippines (AFP)
c. The Philippine Drug Enforcement Agency (PDEA)
d. Other agencies with law enforcement functions
Such collaboration, if undertaken, must be specified in the
accomplishment report of the concerned agency.
7. In no case shall CF be used for:
a. Salaries, wages, overtime, additional compensation, allowance or
other fringe benefits of officials and employees who are employed by
the government in whatever capacity or elected officials, except when
authorized by law
b. Representation, consultancy fees or entertainment expenses
c. Construction or acquisition of buildings or housing structures
8. Disbursements from CF shall be supported with documentary evidence of
payment among others, which shall be submitted to the Intelligence and
Confidential Fund Audit Unit (ICFAU) in a sealed envelope and signed by the
Special Disbursing Officer (SDO).
ICFAU refers to the unit created under the Office of the Chairperson of the
Commission on Audit in charge of the CF and Intelligence Fund (IF).
SDO refers to the head of the agency (HOA) or a regular employee designated
by the HOA to be in charge of making disbursements of CF so received and
accountable therefor.
9. Disbursements form CF shall be supported by Certification of the Accountable
Officer of the CF signed under oath, containing the following:
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LTOM, 2ND EDITION
a. That the certifying officer or employee is accountable for the

disbursements from the cash advance of CF
b. That the expenses were incurred in connection with the agency’s
confidential operations and activities, with supporting documents
attached to the liquidation for CF, documentary evidence of payment
kept in a sealed envelope in the vault in the Office of SDO
c. That the details and supporting documents of transactions that are
classified are in the custody of the agency and kept in its vault which
may be inspected by ICFAU if the circumstances so demand
d. That the funds are not used for payment of salaries and wages,
overtime, additional compensation, allowance or other fringe benefits
of officials and employees, representation/entertainment expenses,
consultancy fees and construction or acquisition of buildings or
housing structures
e. That the purchase of equipment (if there is any) is relevant to the
confidential activities
f. That the expenditures are necessary and utilized for legal purposes
10. In case of misuse of CF, and depending on the participation in the transaction,
the Budget Officer, Chief Accountant, the Treasurer and Project Officer may
likewise be held accountable with the SDO.
B. PROCEDURAL GUIDELINES
1. LGUs with peace and order concerns shall allocate in their respective Annual
Appropriations Ordinance funds for POP, as part of its Peace and Order and
Public Safety Plan.
The total amount for CF shall not exceed thirty percent (30%) of the total
amount allocated for the LGU’s POP.
2. The release and use of CF shall be covered by a resolution duly approved
by two-thirds (2/3) of the total membership of the Local Peace and Order
Council.
3. LGUs shall secure certification from the concerned PNP chief in their locality
relative to the peace and order situation highlighting in concrete details the
circumstances which require the urgency in allocating CF.
4. Additional CF shall be covered with a supplemental budget authorized by
the Sanggunian concerned and/or reviewed by the DBM Secretary or his/
her authorized representative as the case may be, the source of which shall
not come from 20% Development Fund of the LGU.
5. Request for additional CF in excess of the ceiling provided shall be filed with
the concerned DILG Field Officer justifying the need thereof supported with
the following documentary requirements:
59
a. Duly approved Three-Year Peace and Order and Public Safety Plan;
b. Annual and Supplemental Appropriations Ordinance indicating the
appropriations for CF;
c. Certification from the Budget Officer as to the availability of
appropriations;
d. Certifications from the concerned PNP Chief in their locality relative
to the peace and order situation highlighting in concrete details the
circumstances which require the urgency in allocating funds for
confidential activities;
e. Physical and Financial Plans for both the original allocation for CF and
the subject request; and
f. Certification of Full Disclosure Policy (FDP) compliance.
6. Upon review of the documents and the field-verification of the circumstances
as to the need to allocate additional CF, the DILG Regional Office shall
forward the request within five (5) days to the Director of the Bureau of Local
Government Supervision (BLGS) for further evaluation. The Director of the
BLGS shall submit his/her recommendation to the Secretary of the DILG,
who shall approve or disapprove the request.
C. REPORTING REQUIREMENTS
To strengthen accountability, all HoAs of LGUs which released CF shall submit
Quarterly Accomplishment Report on the use of CF, which must be duly certified
by the HoA, not later than the 15th day of the first month of the succeeding quarter
to the Secretary of the DILG.
D. PROTECTION OF SECURITY INFORMATION

With due regard for the protection from unauthorized disclosure of classified
information relating to sensitive, confidential and intelligence matters, the following
procedures shall be observed:
1. The HoA shall classify the information reflected on the required status reports
on CF as “confidential”, using as reference the provisions of OP Memorandum
Circular Nos. 78, S. 1964 and 196, S. 1968; Letter of Instruction 1420 s.
1984; EO 608 s. 2007, and its implementing rules and regulations ,14 April
2009.
2. The Security Officer duly designated by the HoA to handle the intelligence
report, and was issued security clearance to have access to such classified
information, shall submit accomplishment report.
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LTOM, 2ND EDITION
SECTION 114. GUIDELINES ON THE GRANT AND LIQUIDATION

OF CASH ADVANCE FOR CONFIDENTIAL FUNDS
A. GRANT OF CASH ADVANCE
1. Cash advances shall be used for specific legal purpose related to CF. Under
no circumstance shall it be used for liquidation of the previous cash advance
or be transferred from one accountable officer to another.
2. Cash advances for CF shall be drawn by duly designated and bonded SDOs
or HoA for the implementation of a program, activity, and project chargeable
to the corresponding CF of the agency, upon approval of the HoA. In no case
shall cash advance for CF be utilized as reimbursement of the expenses
prior to the granting of cash advance.
3. The cash advance shall not exceed the maximum cash accountability of
the SDO/HoA as indicated in his/her designation Order and approved bond
application.
4. Cash advances chargeable against the CF of agencies shall not exceed the
appropriation therefor and the ceilings as specified herein.
5. Cash advances shall be limited to the requirements for three (3) months. The
disbursement voucher (DV) shall clearly state the duration of implementation
of the projects. If the implementation of the project will extend to more than
3 months, additional amount may be granted only after liquidation of the
previous cash advance. If on the other hand, cash advances are drawn
monthly, liquidation shall also be done monthly. Cash advances shall be
granted only upon the certification of the Agency Accountant stamped or
printed on the DV that previous cash advance for the same purpose, project
or activity given to the SDO requesting cash advance has been liquidated
and proper accounting was made.
6. No transfer of funds/appropriation through cash advances or any form of
payment from one agency to another for purposes of confidential activities
shall be allowed.
7. The following are the required documents to support the DV for the grant of
cash advance for CF:
a. Certified copy of the designation of the SDO. If the HoA is the SDO, a
certification by the HoA to that effect shall be signed by him/her;
b. Certified copy of the approved application for fidelity bond together
with a copy of the official receipt evidencing payment of premium
of List of Accountable Officers with Approved Bond issued and duly
certified by the Bureau of the Treasury;
c. Certified copy of the transmittal letter of the Liquidation Report (LR)
of the previous cash advances duly stamped, “received” by the
ICFAU, COA and certification of the accountant that the SDO has no
unliquidated CF advances;
61
d. Original specimen signatures of signatories to DV and Obligation

Request (ObR);
e. Certified copy of the Physical and Financial Plan where disbursements
of the cash advance of the CF shall be based;
f. Certified copy of the annual budget bearing approval of proper
authorities concerned;
g. Certified copy of the Annual/Supplemental Budget supported with the
Annual Invest Program (AIP) showing the allocation/budget for POP of
the LGU, and the corresponding Appropriation Ordinance approving
the budget;
h. Statement of Itemized POP of the LGU where the allowable CF was
computed duly certified by the Budget Officer;
i. Certified copy of the minutes of the meeting evidencing the 2/3 votes
of the Local Peace and Order Council approving the POP and the
release of the CF;
j. Certification from the concerned PNP Chief in the locality highlighting
the peace and order situation in the locality and supporting the need
to release and use the CF;
k. Approval by the DILG Secretary in case of additional appropriation for
CF; and
l. Certified copy of the ObR.
8. Within seven (7) days after release of check, the cash advance voucher
with covering transmittal letter enumerating the supporting documents shall
be submitted by the Agency Accountant or authorized representative in a
sealed envelope to the concerned COA Audit Team Leader (COA ATL) for
post audit.
B. LIQUIDATION OF CASH ADVANCE

1. Liquidation of cash advance for CF shall be audited by the ICFAU.
2. All cash advances for CF shall be liquidated within 30 days after every
quarter, or from the approved target date of completion of the project/activity,
or after the cash advance had been fully utilized whichever comes first in
accordance with the following procedures:
a. Submission of the Liquidation Report (LR) duly signed by the HoA or
SDO approved by the HoA, together with the supporting documents
and listed in the covering transmittal letter of the LR. These shall be
submitted directly to the ICFAU in a sealed envelope with a visible
label “CONFIDENTIAL - For ICFAU Only” through any of the following:
i. Registered mail
62
LTOM, 2ND EDITION
ii. Courier
iii. Authorized liaison officer
b. The agency liaison officer’s authorization by the HoA must be presented
to the receiving staff designated by the ICFAU.
c. The ICFAU authorized receiving staff shall open the sealed envelope in
front of the liaison officer to verify the completeness of the documents
stated in the covering transmittal letter. If incomplete, the ICFAU
authorized receiving staff shall not stamp “received” and shall return
the documents in a sealed envelope signed by the ICFAU staff.
d. A copy of the transmittal letter, duly received by the ICFAU authorized
staff, shall be forwarded by the liaison officer to the Agency Accountant
and the COA ATL concerned. Upon receipt of said transmittal letter,
the Agency Accountant shall record the liquidation of the cash advance
in the books of accounts.
e. In case of LR received by ICFAU thru mail, the “Received” copy shall
immediately be sent to the concerned agency within five (5) days upon
its receipt.
f. In case Notice of Disallowance is issued by ICFAU after post audit
of the liquidation of the cash advance, the Agency Accountant shall
restore in the books of accounts the cash advance corresponding to
the amount of disallowance and shall form part of the unliquidated
cash advance of the SDO/HoA.
g. All cash advances for CF shall be liquidated at year-end.
3. The liquidation of cash advances for CF shall be supported by the following
documentary requirements:
a. Liquidation report;
b. Certified copy of the check and paid DV of the cash advance being
liquidated, signed and/or approved by the HoA with certification by the
Agency Accountant stamped or printed on the DV;
c. Documentary evidence of payments and Certification by the HoA,
required under General Guidelines 8 and 9 of Sec. 113 of this Manual;
d. Copy of the Physical and Financial Plan;
e. Copy of the Accomplishment Report and its proof of submission to the
concerned agencies;
f. Copy of the transmittal letter of the DV and supporting documents
pertaining to the cash advance being liquidated duly stamped
“Received” by the office of the COA ATL; and
g. Other supporting documents the ICFAU deems necessary for the
proper evaluation of liquidation documents submitted.
63
C. RESPONSIBILITIES OF THE SPECIAL DISBURSING OFFICER

1. Disburse the CF in accordance with the provisions of Joint Circular No.
2015-01, 08 January 2015.
2. Maintain separate records of all transactions in Cash Disbursement Record
for CF and retain a certified photocopy/duplicate copy of required supporting
documents and reports on the Utilization of CF.
3. Prepare and submit to the HoA, for approval, the LR and progress reports
of the cash advances and the quarterly accomplishment report on the use
of CF.
4. Prepare and submit to ICFAU the LR of cash advances supported with
documentary requirements.
D. HANDLING, CUSTODY AND DISPOSITION OF THE CASH DISBURSEMENT

RECORD (CDR)
Cash Disbursement Record (CDR) refers to a record maintained by the Special
Disbursing Officer (SDO) showing the receipt, disbursement and balance of the
Confidential Fund (CF).
1. The appointed or designated SDO shall maintain a CDR as required in the
New Government Accounting System (NGAS) Manual. Before discharging
his/her duties, the new SDO shall be briefed by the Accountant on the proper
recording of the CF transactions and other matters related to his/her work.
2. The SDO shall record each invoice/receipt/voucher individually, or the total
disbursements for the day depending on the volume of the transactions.
3. The SDO shall reconcile the balance of the CDR with cash on hand daily.
He/she shall foot and close the CDR and reconcile with the cash on hand
balance at the end of each month.
4. The CDR shall be kept in the safe and steel cabinet with lock in the office of
the SDO when not in use. It may be taken out from his/her custody only by
the ICFAU or a duly authorized representative or an official duly authorized
by the HoA, who shall issue necessary receipt thereof.
5. When the SDO ceases to be one, he/she shall submit the CDR together with
files of the proof of payments in a sealed envelope with his/her signature on
the sealing tape to the treasurer who shall place the same in the vault. Such
turn-over shall be evidenced by a receipt. No clearance shall be issued to an
SDO if he/she fails to submit the CDR, or if the requirements for handling,
custody, recording and reconciliation have not been faithfully complied with.
6. The CDR shall be available to the ICFAU or a duly authorized representative
of the COA Chairperson at any time for examination.
(COA/ DBM/ DILG, Governance Commission for GOCCs, Department of
National Defense Joint Circular No. 2015-001, 8 January 2015)
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CHAPTER FUND MANAGEMENT SERVICES
4
SECTION 115. CASH PROGRAMMING TOOLS
Cash Programming Tools that may aid the Local Treasurer in cash management and
programming are the Cash Flow Forecast (CFF) and the Cash Flow Analysis (CFA).
SECTION 116. MEDIUM TERM FORECAST

A. Medium-Term Revenue Forecasting Model.
1. The BLGF medium-term revenue forecasting model arrives at LGU-level
projections via a three-step forecasting process.
a. Step 1: The annual growth rates (AGRs) for each revenue category in
the Statement of Receipts and Expenditures (SRE), i.e. Real Property
Tax, Business Tax, Fees and Charges and Receipts from Economic
Enterprises, and for each LGU type — province, city, and municipality,
are forecasted. The calculation is based on estimated elasticities
econometrically estimated from available Budget Operation Statement
(BOS), Statement of Income and Expenditures (SIE) and SRE data
from 1991 up to the most recent data.
b. Step 2: The AGRs for each revenue category by individual LGU are
forecasted. The calculation utilizes individual LGU revenue elasticities,
by revenue category, with respect to the LGU type to which they belong
and calculated using 5-year most recent SRE data.
c. Step 3: The AGRs for each revenue category, by individual LGU, are
applied on the actual base year (time = t) LGU revenue estimates as
stored in the SRE to come up with the forecast revenue in year t+1.
The forecast in year t+1 becomes the base year for forecasting t+2,
and so on, for multi-year forecasts.
2. For IRA, the forecasting process is as follows:
a. Step 1: Forecast the AGRs of the IRA using the elasticities
econometrically estimated from available data from the year the IRA
was implemented to the most recent data.
b. Step 2: Calculate the IRA distribution for each LGU type of the
forecasted IRA.
c. Step 3: Get the percentage distribution of particular LGU over the
total IRA for each LGU type using the most recent IRA data. The
application of the percentage distribution of particular LGU to the total
IRA forecasted for each LGU type is the forecast IRA for year t+1, year
t+1 becomes the base year for forecasting t+2, and so on.
65
FUND MANAGEMENT SERVICES
3. The forecasting process for the transfers from Special Shares is as follows:
a. Step 1: Forecast AGRs for Special Shares, which are Shares from
Economic Zone, Expanded Value Added Tax (EVAT), National Wealth,
Philippine Amusement Gaming Corporation (PAGCOR) /Philippine
Charity Sweepstakes Office (PCSO)/ Lotto and Tobacco Excise Tax,
based on the total Special Shares for each LGU type receiving Special
Shares using elasticities econometrically estimated. The annual
growth rates for each LGU type are applied on total Special Shares of
the actual base year (t) to come up with the forecast value of Special
Shares in year t+1, and so on.
b. Step 2: Determine the probability of a particular LGU to receive its
Special Shares using the joint probability, i.e. the product of frequency
distribution across years and frequency distribution across LGUs per
LGU Type.
c. Step 3: Compute the forecasted value of Special Shares by applying
the probability of a particular LGU to receive its Special Shares to the
forecast value for Special Shares for particular LGU Type to determine
the Special Shares of a particular LGU for year t+1, and so on.
NOTE
The revenue forecasting model and templates are provided under BLGF
Memorandum Circular No. 16-2015, 19 June 2015, entitled “Local Public
Financial Management Tools for the Electronic Statement of Receipts and
Expenditures (eSRE).”
B. Medium Term Forecast for Current Operating Expenditures (COE).

Refer to Budget Operations Manual (BOM) 2016 for LGUs of the Department of
Budget and Management (DBM) for the forecasting model of the medium-term
forecasts for COE.
SECTION 117. CASH FLOW ANALYSIS (CFA)

A. The CFA is a cash flow monitoring tool use to guide the LCE, the Local Treasurer,
and the Local Budget Officer to control the releases of allotment depending on the
collection/expenditure performance during the period. It provides information on
the cash overage/surplus or cash shortage/deficit on a monthly or periodic basis,
so that, timely decisions can be made for wise and prudent cash utilization.
B. The preparation of the CFA requires the following information:
1. Actual cash receipts and disbursements of the month or period;
2. Actual cash receipts and disbursements from the beginning of the year to
the end of the reporting month (Year-to-Date Actual). This will become next
month’s beginning balance;
66
LTOM, 2ND EDITION
3. Year to date forecast or estimates which is the cumulative total of the

projected cash flow from the beginning of the year to the month under
analysis, as indicated in the CFF;
4. Adjusted Estimated Annual Amount which is computed as follows:
AEAA = Aytd + P + Anc/d - Aac/d

Where:
AEAA is the adjusted estimated annual amount;
Aytd is the actual year to date;
P is the projected cash flow for remaining months;
Anc/d is the amount not yet collected/disbursed but projected for previous/
this month and deemed to be still collectible or payable; and
Aac/d is the amount already collected/disbursed but projected for next
months.
5. Annual Original Forecast which is the annual total amount in the CFF; and
6. Variance between the Adjusted Estimated Annual Amount and the Annual
Original Forecast. The actual and adjusted figures are subtracted from the
Annual Original Forecast figure. (pp. 92-93, Updated Budget Operations
Manual (UBOM) for LGUs)
SECTION 118. INFORMATION PROVIDED BY THE CASH FLOW

FORECAST AND CASH FLOW ANALYSIS
The analysis of the Cash Flow provides the following information to the LCE, the
Sanggunian, the LFC and other fiscal officers of the LGU, so that, important fiscal
decisions and policies could be promptly introduced and implemented:
A. Excess in the Collection of Taxes and Other Revenues – This is generally
good, but a regular and very substantial excess in the collection may mean an
underestimated original cash collection forecast. This is particularly applicable if
the to-date variance is also reflected in the annual variance. In this case, a re-
evaluation of the annual forecast may be required. If there is substantial net annual
excess in the receipts for whatever reason, the LCE may decide to increase the
annual budget for the succeeding year.
B. Under-Collection of Taxes and Other Revenues – This may require increased
efforts in the collection of such taxes or generation of such revenues. A consistently
big shortfall in collection should cause alarm to the LCE and other local officials
on possible problems in collection efforts or in resource mobilization operations.
In this instance, estimates should be adjusted to a more realistic level. The
shortfall in collection should be considered in deciding any subsequent release
of allotment.
67
CHAPTER
C. Excess in the Disbursement – This means unplanned expenditures are being

paid. Consistent material on disbursement excess should warn the LCE on the
possibility of imposing additional reserve, and suspension or postponement of
planned activities.
D. Under-Disbursement – This may mean savings if the annual variance resulted
from the non-incurrence of certain regular expenses or project expenses costing
less than the estimated amounts. Under-disbursement may also result from
postponement of payments to contractors or for obligations that are not yet legally
due. Long-outstanding obligations should be investigated and proper action
should be undertaken to settle them if there are valid claimants, or to revert them
to surplus if there are no more valid claimants after the lapse of two (2) years.
Long-outstanding obligations should also warn local officials of indiscriminate
commitment or obligation of funds even without valid claimants or contracts.
Sources of savings should be evaluated and determined as early as possible, so
that funds can be used or appropriated for some other purpose.
SECTION 119. DAILY CASH FLOW

The Local Treasurer may also prepare a Daily Cash Flow Statement to show the highs
and lows in cash inflows and cash outflows on a daily basis. The daily cash flows are
managed to avoid embarrassment arising from the inability to meet immediate cash
requirements of the LGU, to pay suppliers on due dates, and to profitably make use
of temporary idle cash balance. The Daily Cash Flow Statement may be prepared in
addition to the monthly CFF and the CFA.
SECTION 120. NUMBER OF DAYS’ USAGE IN CASH

A. An LGU may adopt a policy of maintaining its cash at a level equal to a certain
number of days’ requirement. This may be done by computing the average
cash requirement per day and the number of days’ usage in cash. The following
formulas are used in the computation:
Operating Expenses (net of depreciation and other non-cash charges)
1. Average Cash Requirement = Number of working Days in One Year Cash
Balance
2. Number of Days’ Usage in Cash = Average Cash Requirement Per Day
B. The resulting Number of Days’ Usage in Cash will show how many days the current
cash balance of the LGU will be able to cover current operational requirements.
C. Capital Investment and Expenditure Assessment – With the expanded role
of the Local Treasurer as the financial adviser to the LCE in the sourcing and
management of LGU funds and the increasing opportunity for LGUs to embark
on long-term income-generating capital projects, it is becoming more imperative
that the Local Treasurer should have basic working knowledge of the different
tools used in the evaluation and assessment of capital investment activities.
68
LTOM, 2ND EDITION
This is because capital projects involve the commitment of a large amount of

LGU resources and funds and increase the financial risk in their operation, so
much so that whatever decisions made in the present would have future material
repercussions to the LGU.
SECTION 121. THE ADMINISTRATIVE PROCESS

FOR CAPITAL EXPENDITURES
This involves searching for capital investment opportunities, submission of project
proposals to prospective funders/underwriters, evaluation of various proposals,
control of capital expenditures and follow-up of results. To be assured that capital
investment proposal would be consistent with the LGU long-term plans and programs
and to avoid waste of time, effort and resources, criteria for the project proposal
must be established. The criteria may include the objective, relevance, suitability
to the LGU, and most importantly profitability or income-generation potential of the
proposed project. To guide the Local Treasurer in the evaluation and analysis of the
different project proposals, the methods discussed in the succeeding sections may
be employed.
SECTION 122. PAYBACK PERIOD

A. The payback period refers to the length of time or number of years it will take to
recover the initial outlay for a project. The formula for this is as follows:
Investment Payback Period = Annual Cash Inflow from Operations
B. The Annual Cash Inflow from Operations is the amount of cash a project is
expected to generate annually. It is equal to the cash inflows from projected sales
and or service fees minus the estimated cash outflows for operational expenses.
The payback period will determine the number of years of recovering the cost of
the project within the economic life of the asset. The economic life of an asset is
its estimated useful life or that length of period during which economic benefits
can be derived therefrom. It is usually shorter than the physical life of the asset.
C. Payback Period is Shorter than the Economic Life of the Asset – If the payback
period is shorter than the economic life of the asset, the LGU is expected to
realize profit or investment return between the payback period and the economic
life.
D. Payback Period is Equal to the Economic Life of the Asset – If the economic life
is just equal to the payback period, the investment would not be bringing in any
income and may even be considered a losing proposition since the time value of
money is disregarded.
E. Annual Cash Inflows is Uneven – If the annual cash inflows are uneven, the
payback period is computed by adding the annual cash inflows from year to
year until the accumulated amount becomes equal to the investment cost. If the
asset has a scrap value, the payback period may be computed by dividing the
investment (less scrap value) by the annual cash inflow from operation.
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CHAPTER EXAMINATION, AUDIT, AND SETTLEMENT
5 OF ACCOUNTS
The Commission on Audit (COA) is vested by the Constitution with the power, authority
and duty to examine, audit and settle all accounts pertaining to the revenues and
receipts of and expenditures or uses of funds, owned or held in trust by, or pertaining
to, the Government, or any of its subdivisions, agencies, or instrumentalities, including
government-owned or controlled corporations.
COA has the exclusive authority to define the scope of its audit and examination,
establish the techniques and methods required therefor, and promulgate accounting
and auditing rules and regulations, including those for the prevention and disallowance
of irregular, unnecessary, excessive, extravagant, or unconscionable (IUEEU)
expenditures or uses of government funds and property.
Specifically, such jurisdiction shall extend over but not limited to the following cases
and matter:
A. Disallowance of expenditures or uses of government funds, and properties found
to be illegal, irregular, unnecessary, excessive, extravagant or unconscionable;
B. Money claims due from or owing to any government agency;
C. Determination of policies, promulgation of rules and regulations, and prescription
of standards governing the performance by the Commission of its powers and
functions;
D. Resolution of novel, controversial, complicated or difficult questions of law relating
to government accounting and auditing;
E. Charges made in the audit of revenues and receipts resulting from under-appraisal,
under-assessment or under collection;
F. Audit of the books, records and accounts of public utilities as provided by law;
G. Visitorial power over non-governmental organizations:
1. Subsidized by the government.
2. Those required to pay levies or government share.
3. Those funded by donations through the government.
4. Those for which government has put up a counterpart fund.
5. Those entrusted with government funds or properties.
H. Authorization and enforcement of the Settlement of Accounts subsisting between
agencies of the government;
I. Compromise or release in whole or in part, of any settled claim or liability to any
government agency;
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LTOM, 2ND EDITION
J. Power to require the submissions of papers relative to government obligations;

K. Opening and revision of settled accounts;
L. Retention of money due to a person for satisfaction of his/her indebtedness to the
government;
M. Seizure by the Auditor of the office of the local treasurer found to have a shortage
in cash;
N. Checking and audit of all property or supplies of the government agency;
O. Constructive distraint of property of any accountable officer with shortage in his/
her accounts upon a finding of a prima facie case of malversation of public funds
or property against him/her; and
P. In coordination with appropriate legal bodies, collection of indebtedness found to
be due a government agency in the settlement and adjustment of its accounts by
the Commission.
(The 2009 Revised Rules of Procedure of the COA)
SECTION 123. GENERAL PRINCIPLES, RULES, AND REGULATIONS

A. Settlement of Accounts
1. Settlement of Accounts is the process of determining the balance of the
account of an accountable officer, through an audit and examination thereof,
to verify the total debits and total credits that may be allowed. Such balance
represents the disallowance or charge which shall be his/her accountability.
A suspension may likewise result from such audit as provided in these rules.
2. The settlement of accounts shall be evidenced by an appropriate marking in
the documents audited as prescribed by the Commission. If no balance in the
account is found or the transaction is allowed in audit, the audited documents
shall indicate “Allowed in Audit”. Otherwise a Notice of Suspension (NS),
Notice of Disallowance (ND) or Notice of Charge (NC) shall be issued, and
the documents marked accordingly, with amount suspended/disallowed/
charged indicated therein.
3. The audit and examination of transactions pertaining to an account shall be
done in accordance with laws, rules, regulations and standards to determine
whether these transactions may be allowed, suspended, disallowed or
charged in audit. In case an audit decision cannot as yet be reached due to
incomplete documentation/information, or if the deficiencies noted refer to
financial or operational matters which do not involve pecuniary loss, an Audit
Observation Memorandum (AOM) shall be issued.
a. A transaction is suspended in audit when it is temporarily disallowed/
disapproved until the requirements on matters raised in the course of
audit are to be complied with. This shall cover only transactions which
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EXAMINATION, AUDIT AND SETTLEMENT OF ACCOUNTS
may result in pecuniary loss to the government. An NS shall be issued

indicating the requirements to be complied by the officers concerned.
b. A transaction is disallowed in audit when it is disapproved either in
whole or in part of being an illegal, irregular, unnecessary, excessive,
extravagant or unconscionable expenditure. An ND is issued for the
disallowed amount.
c. A transaction is charged in audit when the correct amount of revenue/
receipt due the government is not received by the agency as a result
of under-appraisal/assessment/collection. An NC is issued for the
uncollected amount.
4. An Audit suspension or disallowance/charge shall be settled by the persons
responsible or liable therefor through compliance with the requirements, or
payment/restitution or by any of the modes of extinguishment of obligation
by law, respectively. A Notice of Settlement of Suspension/Disallowance/
Charge (NSSDC) shall be issued for such settlement.
5. The Auditor shall, within fifteen (15) calendar days after the end of each
quarter, prepare and issue a Statement of Audit Suspensions, Disallowances
and Charges (SASDC) to inform of the total suspensions, disallowances
and charges for the agency as of the end of the quarter audited. In case
of a retiring/transferring officer, the Auditor shall issue the updated list of
outstanding suspensions, disallowances and charges for said officer, within
five (5) days from receipt of request for such list.
6. The COA is authorized to withhold salary and other emoluments of a Local
Treasurer or Assistant Treasurer up to the amount of his/her alleged shortage,
but not to apply the withheld amount to the alleged shortage for which his/
her liability is still under litigation. (Encarnacion E. Santiago vs. COA, et al.,
GR No. 146824, 21 November 2017)
B. Linkage to the Annual Audit Report (AAR)

1. The total unsettled suspensions, disallowances and charges at the end of
the calendar year as reflected in the SASDC for the last quarter, shall be
reported in the AAR of the same year.
2. The AAR shall also include in its comments and observations other
deficiencies noted in the audit of accounts as indicated in the AOM.
C. Responsibilities for Audit and Settlement of Accounts

1. Responsibilities of the Head of the Agency (HoA)
a. The HoA who is primarily responsible for all government funds
and property pertaining to his/her agency, shall ensure that: (i) the
required financial and other reports and statements are submitted
by the concerned agency officials in such form and within the period
prescribed by the Commission; (ii) the settlement of disallowances and
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LTOM, 2ND EDITION
charges is made within the prescribed period; (iii) the requirements of

transactions suspended in audit are complied with; and (iv) appropriate
actions are taken on the deficiencies noted as contained in the AOM.
b. He/She shall initiate the necessary administrative and/or criminal
action in case of unjustified failure/refusal to effect compliance with
the foregoing requirements by subordinate officials. Gross negligence
in disciplining subordinates who are the subject of repeated adverse
audit findings shall subject the officials concerned to disciplinary action
by the proper authorities as the evidence may warrant.
c. He/She shall enforce the COA Order of Execution (COE) by requiring
the withholding of salaries or other compensation due the person
liable in satisfaction of the disallowance or charge.
d. He/She shall ensure that all employees who are retiring or transferring
to other agencies shall first settle the disallowances and charges for
which they are liable.
2. Responsibility of the Agency Accountant
a. The Chief Accountant, Bookkeeper or other authorized official
performing accounting and/or bookkeeping functions of the audited
agency shall ensure that:
i. The reports and supporting documents submitted by the
accountable officers are immediately recorded in the books of
accounts and submitted to the Auditor within the first ten (10)
days of the ensuing month;
ii. The financial records are made accessible at reasonable hours to
the Auditor or his/her authorized representatives when needed;
iii. The audit suspensions, disallowances and charges including
their settlements, are properly monitored and reconciled with the
SASDC issued by the Auditor in accordance with these rules;
iv. The disallowances and charges that have become final and
executory as contained in the Notice of Finality of Decision (NFD)
are recorded in the books of accounts, and settlements thereof
under the NSSDC are dropped therefrom; and
v. The subsidiary ledgers/records are maintained and properly
updated for each official/employee determined to be liable/
responsible for the amount disallowed/ charged/ suspended.
3. Responsibility of the Auditor
The Auditor shall:
a. Enforce submission of the receipt and disbursement records with all
paid vouchers, official receipts, reports and supporting documents
as prescribed by the Commission and the related laws, rules and
73
regulations, and as necessary in the course of audit;

b. Conduct the examination and audit of the records, reports and
documents submitted covering transactions under the identified audit
areas;
c. Prepare, as a result of his/her examination and audit, the pertinent NS/
ND/NC and AOM;
d. Serve the AOM, NS, ND, NC, NFD or COE to persons concerned/
responsible/liable;
e. Sign NFD for disallowances/charges made by him/her;
f. Prepare the COE for disallowances/charges made by him/her, for
signature of his/her Director;
g. Monitor the enforcement of the COE issued by the authorized officers
and report to his/her Director the action taken by the agency;
h. Issue the NSSDC when an audit suspension/disallowance/charge has
been settled; and
i. Prepare and transmit a quarterly SASDC to the agency head and the
accountant.
4. Responsibility of the COA Director
The COA Director shall:
a. Exercise general supervision and review in the audit and settlement
of accounts;
b. Act on appeals;
c. Sign the NFD for decisions rendered by him/her;
d. Sign the COE for decisions rendered by him/her and by the Auditor;
and
e. Consolidate the SASDCS, for all auditees under his/her jurisdiction. In
the regions, consolidation shall be by cluster and sector for quarterly
submission to the cluster/sector concerned for purposes of national
consolidation.
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LTOM, 2ND EDITION
SECTION 124. GUIDELINES IN THE ISSUANCE OF AUDIT

OBSERVATION MEMORANDUM (AOM)/NOTICE
OF SUSPENSION (NS)/NOTICE OF DISALLOWANCE
(ND)/NOTICE OF CHARGE (NC)/NOTICE OF SETTLEMENT
OF SUSPENSION/ DISALLOWANCE/ CHARGE (NSSDC)
AND STATEMENT OF AUDIT SUSPENSIONS,
DISALLOWANCES AND CHARGES (SASDC)
A. AOM and Management Reply
1. The Auditor shall issue an AOM for observations relating to financial/
operational deficiencies such as accounting, internal control or property
management which do not involve pecuniary loss. An AOM may also be
issued for documentary or other information requirements to enable the
auditor to make a decision in audit.
2. The AOM is addressed to the HoA and the officer/s concerned stating the
deficiencies noted and/or the requirements to be complied with and requiring
a response thereto. It shall be signed by both the Audit Team Leader and the
Supervising Auditor.
3. The AOM shall be replied to by the agency officials concerned within fifteen
(15) calendar days from receipt thereof.
4. If the agency officials fail to reply within the period specified above, the audit
observation on financial/operational deficiencies shall be deemed accepted
and shall be included in the Management Letter and/or Audit Report. In case
of failure to submit the required documents or information needed to reach
an audit decision, an NS/ND/NC may be issued by the Auditor, as warranted,
after a re-evaluation of available documents/information.
5. The agency reply/comments shall be evaluated by the Auditor vis-a-vis the
audit observations and he/she shall inform the HoA and officers concerned
in writing, of the results of the evaluation.
6. The documents/information submitted in response to the requirements of the
AOM may, after audit and examination, provide the basis for the allowance
in audit of the transactions, or the subsequent suspension, disallowance or
charge thereof, as warranted.
B. Notice of Suspension (NS)
1. The Auditor shall issue an NS for transactions of doubtful legality/ propriety/
regularity which may result in pecuniary loss of the government, and which
will be disallowed in audit if not satisfactorily explained or validly justified by
the parties concerned.
2. The NS shall be addressed to the HoA and the accountant and served on
the persons responsible, stating the amount suspended, the reasons for
75
the suspension, the justification/explanation/legal basis or documentation

required in order to lift the suspension, and the persons responsible for
compliance with the requirements. It shall be signed by both the Audit Team
Leader and Supervising Auditor.
3. The NS shall be issued as often as suspensions are made by the Auditor
for the purpose of notifying the agency head and the accountable officer
concerned of the amount suspended in audit.
4. A suspension should be settled within ninety (90) calendar days from receipt
of the NS; otherwise the transaction covered by it shall be disallowed/
charged after the Auditor shall have satisfied himself/herself that such action
is appropriate. Consequently, the Auditor shall issue the corresponding ND/
NC.
5. The date of receipt of the NS by the responsible officers or their authorized
representatives as provided in Sec. 12 of The 2009 Rules and Regulations
on the Settlement of Accounts, COA Circular No. 2009-006, 15 September
2009, shall be the reckoning date for purposes of counting the 90-day period.
C. Notice of Disallowance (ND)
1. The Auditor shall issue an ND for transactions which are irregular/
unnecessary/excessive and extravagant, and those which are illegal and
unconscionable.
2. The ND shall be addressed to the agency head and the accountant;
served on the persons liable; and shall indicate the transaction and amount
disallowed, reasons for the disallowance, the laws/rules/regulations violated,
and persons liable. It shall be signed by both the Audit Team Leader and the
Supervising Auditor.
3. The ND shall be issued as often as disallowances are made by the Auditor
in order to notify the agency head, the accountant, and the persons liable for
the amount disallowed in audit.
4. The disallowance shall be settled within six (6) months from receipt of the
ND by the persons liable.
5. The date of receipt of the ND by the persons liable therefor or by their
authorized representatives as provided under Sec. 12 of The 2009 Rules
and Regulations on the Settlement of Accounts, COA Circular No. 2009-006,
15 September 2009, shall be the reckoning date for purposes of counting the
6-month period for appeal.
D. Notice of Charge (NC)
1. The Auditor shall issue the NC as follows:
a. If the amount assessed/appraised is less than what is due the
government, the difference shall be a proper audit charge.
b. If the amount billed is less than the amount due the government, the
difference shall also be a proper audit charge.
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LTOM, 2ND EDITION
c. If the amount collected is less than what is due the government, the
difference shall likewise constitute a proper audit charge.
2. The NC shall be addressed to the agency head and the accountant; served
on the persons liable; and shall indicate the transaction and amount charged,
reasons for the charge, laws/rules/regulations violated; and persons liable. It
shall be signed by both the Audit Team Leader and the Supervising Auditor.
3. The NC shall be used and issued as often as charges are made by the
Auditor to notify the agency head, the accountant and the persons liable for
the charges noted in the audit of revenues/receipts/assessments.
4. The audit charge shall be settled within six (6) months from the date of
receipt of the NC.
5. The date of receipt of the NC by the persons liable therefor or by their
authorized representatives, as provided in Sec. 12 of The 2009 Rules and
Regulations on the Settlement of Accounts, COA Circular No. 2009-006,
shall be the reckoning date for purposes of counting the 6-month period for
appeal.
SECTION 125. SERVICE OF COPIES OF ND/NS/NC

A. A copy of the NS/ND/NC shall be served to each of the persons liable/ responsible,
by the Auditor, through personal service. If personal service is not practicable, it
shall be served by registered mail. In case there are several payees, as in the
case of a disallowed payroll, service to the accountant who shall be responsible
for informing all payees concerned, shall constitute constructive service to all
payees listed in the payroll.
B. Personal service is done by delivering personally a copy to the party or by leaving
it in his/her office with his/her clerk or with a person having charge thereof. If no
person is found in his/her office, or his/her office is not known, or he/she has no
office, then by leaving the copy between the hours of eight in the morning and six
in the evening at the party’s residence, if known, with a person of sufficient age
and discretion then residing therein.
C. Service by registered mail is done by sending a copy by registered mail to the office
address of the party, if known; otherwise at his/her residence with instruction to the
Postmaster to return the mail to the sender after ten (10) days, if undelivered. If no
registry service is available in the locality of either the sender or the addressee,
service may be done by ordinary mail.
D. The Auditor shall maintain a record of the date of actual or constructive service of
notices for purposes of determining the running of the ninety (90) days maturity
period of the suspension and the six (6) months period to appeal the disallowances
and charges. This information shall be included in the Record of COA Decisions
(ROCD).
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SECTION 126. NOTICE OF SETTLEMENT OF SUSPENSION/

DISALLOWANCE/CHARGE (NSSDC)
The Auditor shall issue the NSSDC whenever a suspension/disallowance or charge
is settled.
A. A suspension shall be settled by the submission of the justification/ explanation
and/or documentation required under an NS and after the Auditor becomes
satisfied that the transaction is regular/legal/proper and that no loss was suffered
by the government. If the Auditor is not satisfied with the justification/ explanation
and/or documentation submitted, he/she shall issue the corresponding ND/NC.
B. A disallowance or charge shall be settled by payment of the amount disallowed
or by such other applicable modes of extinguishment of obligation as provided by
law. In the case of the latter modes, the Auditor may refer to the General Counsel,
for evaluation and advice, the propriety of the settlement.
C. Settlement of disallowance or charge may also result from a decision of the
Director, Adjudication and Settlement Board (ASB) or the Commission Proper,
lifting the disallowance or charge.
D. The NSSDC shall be addressed to the agency head and the accountant, copy
furnished the persons responsible/liable and shall indicate the NS/ND/NC settled,
amount, nature of transaction and the mode of settlement. It shall be signed by
the Audit Team Leader and the Supervising Auditor.
SECTION 127. STATEMENT OF AUDIT SUSPENSIONS, DISALLOWANCES

AND CHARGES (SASDC)
A. The Auditor shall prepare the SASDC summarizing the total suspensions,
disallowances and charges of the audited transactions of an agency at the end
of each quarter. The SASDC shall indicate the balance at the beginning of each
quarter of the suspension/ disallowances/ charges, as well as the suspension/
disallowances/ charges, and settlements during the quarter. It shall be signed by
the Audit Team Leader and the Supervising Auditor.
B. The SASDC shall be issued to the agency head and the Chief Accountant within
fifteen (15) calendar days from the end of each quarter, copy furnished the COA
Director concerned.
C. The quarterly SASDC issued by the Auditor shall be the basis for the preparation
by the COA Director of a consolidated quarterly SASDC for his/her region/cluster
showing the total unsettled suspensions/ disallowances/ charges per auditee
department/agency.
D. The Assistant Commissioner for the Sector shall be furnished with a copy of the
consolidated quarterly SASDC of each cluster/region for purposes of national
consolidation into a Sector SASDC as input into a database to be maintained
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LTOM, 2ND EDITION
by the Information Technology Office showing the total unsettled disallowances,

charges and suspensions per sector.
SECTION 128. ISSUANCE OF NOTICES BY SPECIAL AUDIT TEAM

A. The following procedures shall be observed in the issuance of the notices for
transactions disallowed and charged in special audits and settlements thereof:
1. The Special Audit Team Leader and Supervisor shall sign the ND/NC for
transactions audited.
2. The ND and NC issued shall be marked as “Special Audit ND/NC No. ,
Office Order No. .”
3. The ND/NC/ issued shall be transmitted by the Cluster Director of the Office
that conducted the special audit, to the agency head and the accountant
through the Auditor of the agency audited and the concerned Cluster/
Regional Director, together with the special audit report. The Audit Team
Leader shall serve the copies of the ND/NC on the persons liable and such
ND/NC shall be included in the SASDC for the current quarter.
4. In case of settlement of the ND/NC by the persons liable, evaluation thereof
shall be made by the Director of the Office which conducted the special
audit, who shall then advise the auditor of the agency concerned to issue
the NSSDC.
B. The Special Audit Team shall be authorized to reopen accounts already post-
audited and/or settled pursuant to Sec. 52 of PD 1445. The Office Order directing
the special audit is deemed sufficient authority to reopen the accounts.
C. In case the transaction subject of the special audit has been earlier allowed in
audit, the special audit team shall preliminarily discuss the disallowance or charge
with the Auditor concerned. If the latter disagrees with the findings of the audit
team, the written comment shall be requested from the Auditor for evaluation of
the special audit team.
D. The Auditor shall consider the significance or impact of the disallowances and
charges issued by the special audit team on the fairness of presentation of the
balance of the accounts of the agency, and consequently on the audit opinion.
SECTION 129. DECISIONS AND APPEALS

A. Period to Appeal
1. Any person aggrieved by a disallowance or charge may within six (6) months
from receipt of the notice, appeal in writing as prescribed in these Rules.
A disallowance or charge not appealed within the period prescribed shall
become final and executory.
2. The filing by the aggrieved party of an appeal will suspend the running of the
prescribed period.
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3. The running of the 6-month period shall resume upon receipt of a decision
from the Director.
(The 2009 Rules and Regulations on the Settlement of Account, COA
Circular 2009-006, 15 September 2009)
B. Proceedings Before the Director
1. For purposes of the Unified Audit Approach, jurisdiction over appeals from
NDs/NCs and from denials of request for relief from accountability, pursuant
to Rule V of the 2009 Revised Rules of Procedure of the COA (RRPC), the
COA Regional Directors shall have jurisdiction over the following:
a. Appeals from NDs/NCs issued by the SAs/ATLs of local government
units (LGUs)
b. Appeals from decisions of the SAs/ATLs of LGUs within their respective
regions, denying requests from relief from accountability.
A person aggrieved by a disallowance/charge may file an Appeal
Memorandum to the Director within six (6) months from receipt of the
ND/NC.
(COA Resolution No. 2009-006, 15 September 2009)
2. Within five (5) calendar days from receipt of the Appeal Memorandum, the
Director shall order the Auditor to file his/her Answer, copy furnished the
Appellant, and to submit the entire records of the case including the Excerpt
of Documents and Summary of Events (EDSE), duly numbered at the bottom
of each page.
3. The Auditor shall comply with the order of the Director within fifteen (15)
calendar days from receipt thereof. The appellant may file a reply within the
same period from receipt of the Answer.
4. The Director shall decide the appeal within fifteen (15) calendar days from
receipt of the complete documents necessary for evaluation and decision.
5. If the Director reverses, modifies or alters the decision of the Auditor, the
case shall be elevated to the Commission Proper for automatic review of the
Director’s decision.
6. The Director shall not entertain a motion for reconsideration of his/her decision.
(The 2009 Rules and Regulations on the Settlement of Accounts, COA
Circular No. 2009-006, 15 September 2009)
C. Abolition of the COA Adjudication and Settlement Board (ASB)
The CP resolves to abolish the ASB without prejudice to its restoration should it
become necessary in the future. All appeals from the decisions of the Directors
and all cases presently under the jurisdiction of the ASB shall be filed with the CP,
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LTOM, 2ND EDITION
and Rule VI (Proceedings before the ASB) of the RRPC is repealed. All cases
pending with the ASB shall be forwarded to the CP for decision.
(COA Resolution No. 2012-001, 22 March 2012)
D. Proceedings Before the Commission Proper (CP)
1. Appeal from the Decision of the Director
a. A party aggrieved by the decision of the Director involving
disallowances/charges exceeding one million (₱1,000,000.00) pesos
may file an appeal to the CP within the time remaining of the six (6)
months period to appeal;
b. The CP shall decide any case or matter brought before it within sixty
(60) calendar days from the date of its submission for decision or
resolution.
c. A case or matter is deemed submitted for decision or resolution upon
the filing of the last pleading, brief, or memorandum required by the
rules of the Commission. If the account or claim involved in the case
needs reference to other person or office, or to a party interested, the
period shall be counted from the time the last comment necessary to
a proper decision is received by it.
2. Automatic Review of the Decision of the Director.
a. A decision of the Director which reverses, modifies or alters a decision
of the Auditor shall be automatically reviewed by the CP.
b. The CP shall within 60 calendar days from receipt of the Auditor’s
decision and the entire records of the case, review the same and
renders its own decision.
(The 2009 Rules and Regulations on the Settlement of Account,
COA Circular No. 2009-006, 15 September 2009)
3. Motion for reconsideration of CP Decision
a. A decision or resolution of the Commission upon any matter within its
jurisdiction shall become final and executory after the lapse of thirty
(30) days from notice of the decision or resolution.
The filing of a petition for certiorari shall not only stay the execution of
the judgment or final order sought to be reviewed, unless the Supreme
Court shall direct otherwise upon such terms as it may deem just.
b. A Motion for Reconsideration (MR) may be filed within 30 days from
notice of the decision or resolution, on the grounds that the evidence
is insufficient to justify the decision; or that the said decision of the
Commission is contrary to law. Only one (1) motion for reconsideration
of a decision of the Commission shall be entertained.
(COA Resolution No. 2011-006, 12 August 2011)
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c. A motion to reconsider a decision, suspends the running of the

period to elevate the matter to the Supreme Court. Within two (2)
days from its filing, the Commission Secretary shall refer the motion
to the concerned office of the Legal Services Sector for study and
recommendation. The latter, shall, within 15 days from receipt thereof,
submit for consideration of the CP either a draft decision or resolution
upon meritorious grounds, or a recommendation to deny the Motion for
Reconsideration (MR) for having been filed out of time, or for failure to
raise a new matter or show sufficient ground to justify a reconsideration
of the assailed decision or resolution.
In case the CP denies a motion for reconsideration for having filed out
of time or for failure to raise any new matter or other sufficient ground
to justify a reconsideration thereof, the Secretary of the Commission
shall issue a notice to the parties, within five (5) days from the relevant
Minutes of Meeting of the CP are signed, informing them of the
Resolution of the CP.
(COA Resolution No. 2013-018, 30 September 2013)
SECTION 130. APPEAL TO THE SUPREME COURT

A. The party aggrieved by any decision, order, or ruling of the CP may within thirty (30)
days from his/her receipt of a copy thereof, appeal on certiorari to the Supreme
Court in the manner provided by law and Rules of Court.
B. When the decision, order, or ruling of the CP adversely affects the interest of any
government agency, the appeal may be taken by the head of the agency.
SECTION 131. FINALITY AND ENFORCEMENT OF DECISIONS

A. Notice of Finality of Decision (NFD)
1. A decision of the CP, Director or Auditor upon any matter within their
respective jurisdiction; if not appealed, shall become final and executory.
2. The NFD shall be issued by the authorized COA official to the agency head
to notify that a decision of the Auditor, Director, or CP has become final and
executory, there being no appeal or motion for reconsideration filed within
the reglementary period.
3. The NFD shall be addressed to the Agency Head, Attention: The Chief
Accountant and shall indicate the particulars of the COA decision that has
become final and executory and the persons liable.
4. A copy of the NFD shall be served by the Auditor of the agency concerned
on the persons liable or their authorized representatives who shall indicate
their printed name and signature and the date of receipt thereof.
5. The Chief Accountant shall, on the basis of the NFD, record in the books of
accounts, the disallowance and/or charge as a receivable.
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LTOM, 2ND EDITION
6. COA Order of Execution (COE)

a. The COE shall be issued to enforce the settlement of an audit
disallowance/ charge, whenever the persons liable therefor refuse or
fail to settle them after the decision has become final and executory.
b. The COE shall be approved by the following officers, not earlier than
five 5 days from receipt of the NFD by the agency head:
i. Director, for NFD issued by him/her or by the Auditor
ii. General Counsel for NFD issued by him/her or by the Commission
Secretary, or for judgment rendered by the Supreme Court
c. The COE shall be addressed to the Agency Head, Attention: The
Treasurer/ Cashier, and shall indicate the NFD, the particulars of the
decision being enforced and the persons liable.
d. The Auditor shall monitor the implementation of the COE and report to
the Director the action taken by the agency thereon. Unsettled COEs
shall be referred to the General Counsel for appropriate action including
referral to the Office of the Solicitor General and the Ombudsman.
B. Dropping from the Books of Accounts of Settled ND or NC
Recorded final disallowances and charges which are settled shall be dropped
from the books of accounts upon receipt by the Accountant of the NSSDC.
C. Opening and Revision of Settled Accounts
1. At any time before the expiration of three (3) years after the settlement of
any account by an auditor, the Commission may motu proprio review and
revise the account or settlement and certify a new balance. For the purpose,
it may require any account, voucher, or other papers connected with the
matter to be forwarded to it.
2. When any settled account appears to be tainted with fraud, collusion, or
error of calculation, or when new and material evidence is discovered,
the commission may, within 3 years after the original settlement, open the
account, and after a reasonable time for reply or appearance of the party
concerned, may certify thereon a new balance. An Auditor may exercise the
same power with respect to settled accounts upon prior authorization of the
COA Chairman pertaining to the agency under his/her jurisdiction.
3. Accounts once finally settled shall in no case be opened or reviewed except
as herein above provided.
4. If a settled account is re-opened or reviewed, and a new balance is certified
in accordance with Sec. 52 of PD No. 1445, the aggrieved party may appeal
therefrom.
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SECTION 132. UNSETTLED ND/NC/NS

A. ND/NC/NS which have not been settled as of effectivity of these rules shall
be covered by a special report (Report on ND/NC/NS Issued prior to the 2009
Rules and Regulation on Settlement of Accounts) to be prepared by the Auditor
and submitted to his/her Director, together with the copies of the ND/NC/NS.
Disposition thereof shall be as follows:
1. NDs and NCs for which an Auditor’s Order (AO) or Final Order of Adjudication
(FOA) had been issued but which have not been settled shall be verified and
monitored as to their settlement. Information shall be given to the General
Counsel through the Director as to the reason/s for non- enforcement of the
AO or FOA.
2. NDs and NCs which have become final and executory but are not covered by
an AO or FOA shall be forwarded to the officer concerned for the issuance of
the COE.
3. NDs and NCs issued which have not become final and executory shall be
governed by these Rules.
4. NSs shall be evaluated by the Auditor and the corresponding ND/NC or
NSSDC shall be issued.
SECTION 133. DETERMINATION OF BALANCE OF ACCOUNTABILITY

A. The SASDC shall be issued covering transactions commencing from the effectivity
of the Rules on Settlement of Accounts.
B. The first SASDC issued shall reflect a zero balance for uniformity and simplicity in
the application of the rules and for facility in the monitoring of agency suspensions/
disallowances/charges. This is not in any way intended to mean that there are no
existing suspensions, disallowances or charges.
C. The suspensions, disallowances, and charges existing at the effectivity of these
Rules shall continue to be monitored and enforced by the Commission.
(The 2009 Rules and Regulations on the Settlement of Accounts, COA
Circular No. 2009-006, 15 September 2009)
SECTION 134. CASH EXAMINATION

Cash is the most liquid asset of an agency. Because of its liquidity, it is attractive, that
it is most susceptible to theft and misappropriation. To guard against the loss of cash
through theft or fraud, adequate cash management mechanisms and controls must
be in place.
The COA is constitutionally mandated with the power, authority and duty to examine,
audit, and settle all accounts pertaining to the revenues and receipts of, and
expenditures or uses of funds and property, owned or held in trust by, or pertaining
to, the government.
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LTOM, 2ND EDITION
Cash examination is an audit technique whereby an authorized examiner of cash and

accounts inquires into the correctness and physical existence of the balance of cash
in the custody of an Accountable Officer (AO), the validity of his/her cash transactions,
the reliability of the cash records and his/her conformance with prescribed procedures.
SECTION 135. OBJECTIVES OF CASH EXAMINATION

The entire cash examination process involves a comprehensive review that aims to
provide an overall determination of whether:
A. all government funds in the hands of an AO are actually existing and properly
accounted for.
B. the agency and its AOs are adhering strictly to prescribed rules and regulations
on cash transactions.
C. the agency’s practices and provide adequate safeguards against fraud and losses
of government funds.
Cash examination seeks to establish what the AO has and what he/she should
have at the time of the examination. It specifically aims to-
1. establish the actual existence of cash in the custody of the AO as well as the
validity of the cash items presented;
2. determine whether all monies received had been correctly recorded and
fully accounted for in accordance with laws, rules and regulations;
3. ascertain whether disbursements are valid, duly authorized, actually paid
and properly recorded;
4. prove the accuracy of the cash balance reflected in the cashbook; and
5. verify if accountable forms are duly accounted for.
SECTION 136. COMMON PROCEDURES AND TECHNIQUES

A. The Auditor will:
1. Require the AO to temporarily suspend all transactions. If the cash count
cannot be finished at the close of office hours, seal or double lock their safe,
vault or other cash receptacles at the end of the day and continue the count
on the succeeding business day/s until completed.
2. Cause the production of all cash, cash items, etc., by signing and serving
the cash production notice in General Form No. 74(A). Require the AO to
acknowledge the notice by signing the “Noted and Complied With” box.
3. Require the AO to post all transactions (such as collections, remittances,
deposits, cash advances and disbursements) in his/her cashbook up to the
time of examination, foot balance, rule in ink and write the certification as
follows:
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I here certify on my official oath that all cash and depository transactions
had by me in my capacity as ___________
(Designation)
of __________
(Name of Agency)
at the time of
examination, showing the balance of __________ (₱____________) have
been correctly and completely recorded in the Cashbook.
___________ ______________________
Date Signature over Printed Name
If the unrecorded transactions are voluminous, consider them as cash items

during the count.
4. Establish proper cut-off by taking note of the last number of Official Receipt/
check issued, control paid voucher/payroll. Affix full signature and indicate
cut-off date at the back of the second copy of the official receipt.
5. See to it that all cash, checks, money orders, paid vouchers, other cash
items, and unused accountable forms are presented. Inspect the safe, vault
or other cash receptacles where the cash and cash items are usually kept.
6. Require the AO to segregate private and/or personal funds, if any, count
them and have them placed in an envelope properly labeled as private/
personal funds.
7. Require the AO to segregate by currency and denomination, the notes and
coins presented. Have the notes arranged in bundles and the loose coins in
groups.
8. Segregate the cash items by group, such as: cash in pay envelopes, checks,
money orders, paid vouchers, partially paid payrolls, etc. Proceed with the
listing of the cash items. In the case of checks, and money orders, indicate
the serial number, date, drawer, drawee and amount. In the case of paid
vouchers/partially paid payroll, indicate voucher number, date, payee/
payrolls head and amount.
9. Proceed with the piece-by-piece count in the presence of the AO, starting
from the highest to the lowest denomination, listing them in space in General
Form 74 (A).
10. See to it that no note or coin presented has been demonetized. Mutilated
notes must be examined for acceptability. It is the common practice of banks
not to accept mutilated notes unless the serial numbers at both ends are
intact.
11. After the count of cash, cash items and accountable forms, require the AO
to accomplish and sign the certification in General Form No. 74(A) in the
presence of two responsible persons whose signatures shall likewise be
affixed on the appropriate spaces.
12. Check the footings of the cashbook to ascertain the correctness of its total
and balances. Take note of errors and require the AO to adjust/correct the
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LTOM, 2ND EDITION
cashbook. Disclose in the cashbook that the adjustment, if any, was made
at the instance of the examining auditor with the AO and the former affixing
their initials and indicating the date of adjustment.
13. Accomplish the Statement of Accountability in General Form 74 (A) starting
from the date of last examination to current on the basis of verified amounts
of debits and credits to accountability of the AO. Ensure that the beginning
balance of the statement shall reflect the amount of accountability determined
during the last examination.
14. Prepare the Reconciliation Statement of Accountability to reconcile the
established accountability with the accounting records.
15. Prepare the Statement of Accountability for Accountable Forms.
16. Compare the balance of accountability arrived at with the inventory of unused
accountable forms. Require the AO to explain discrepancies in writing, if any.
Shortages of accountable forms with money value shall, like a shortage, be
covered by a letter of demand.
17. Require the AO to accomplish and sign the certificate of accountability
provided in General Form No. 74 (A).
18. Accomplish the required auditor’s certification provided in General Form No.
74 (A).
19. Determine the adequacy of the bond using the Bureau of the Treasury (BTr)
guidelines on bonds.
20. Determine the adequacy of the precautionary measures adopted by the
agency to safeguard cash and whether the existing measures adopted by
the agency to safeguard cash and the existing facilities of the AO provide
adequate protection against loss.
21. Review all necessary work papers and supporting documents. Prepare the
narrative report.
SECTION 137. SPECIFIC PROCEDURES AND TECHNIQUES

In addition to the common procedures and techniques, the auditor shall perform the
following:
A. Collecting Officer
1. Check all entries in the cashbook from the date of last examination up to the
date of current examination.
2. Examine all checks and money orders for regularity. Verify if private checks
were received in payment of taxes, dues, fees, and other government
obligations by tracing them to the corresponding official receipts.
3. Ascertain that private checks are made payable to the agency or the official
title or designation of the agency head. Disallow accommodated private
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checks, including post-dated checks, stale checks/money orders, chits and

promissory notes.
4. Require the AO to explain the existence of obsolete checks and other
accountable forms, if any.
5. Count and list all unused accountable forms on hand. Inspect unused
booklets to make sure that each set of serial number is complete. In case
of missing copies, require the AO to explain the loss in writing. See to it that
the notice of loss is immediately disseminated. Recommend the immediate
destruction of obsolete checks and other accountable forms.
6. Prepare the Statement of Accountability starting from the balance of the
last examination to the date of current examination, on the basis of verified
amounts of collections and remittances/deposits.
7. Analyze collections and remittances/deposits to determine if amounts
collected are remitted/deposited.
8. Inquire into major steps, obtain flow chart, if any or narrative procedures
on the receiving, keeping, disposing and accounting for collections. Identify
deviations from prescribed regulations and sound internal control structures
on the basis of the duties of the collecting Officer (CO) and his/her staff,
ascertain whether the daily collections of the staff are turned over to the CO
at the end of the day.
B. Disbursing Officer (DO)
1. Examine all cash items for regularity. Ascertain that they are all current and
duly approved.
a. Unposted paid vouchers/payrolls
Determine why the paid vouchers/payrolls are not posted in the
Cashbook. If they are duly approved and acknowledged in all respects,
consider them as valid cash items.
b. Partially paid payrolls
Verify contents of pay envelopes, if any. Treat cash in pay envelopes
as cash items. Add payments already made in the payroll. Consider
the total of cash found inside the pay envelopes and total payments
already made as cash items. Disallow chits and promissory notes
inside the pay envelopes.
c. Checks and money orders
Disallow checks and money orders paid by the DO out of his/her cash
advance. Allow checks drawn as cash advances in favor of the DO as
cash items.
d. Paid invoices, reimbursement expense receipt (RER), promissory
notes, etc.
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LTOM, 2ND EDITION
If the fund being examined is a cash advance for petty expenses,

consider paid invoices/receipts covering authorized petty expenses
for goods and services, as valid cash items. Allow sales invoices and/
or charge invoices as cash items only when supported with ORs.
Disallow chits and promissory notes under circumstances.
2. Count and list all unused checks on hand. Inspect unused booklets for
missing checks. In case of missing checks require the DO to explain the
loss in writing. See to it that the DO immediately disseminated the notice of
loss and notified the bank for stoppage of payment.
3. Check all entries in the cashbook from the date of last examination to the
date of current examination.
a. Based on accounting records, determine whether all cash advances/
withdrawals have been entered in the cashbook on the dates they
were received.
b. Check all disbursements against the corresponding vouchers.
Determine whether the vouchers were duly approved and payments
acknowledged. Pay particular attention to erasures/alterations on the
voucher and the cashbook. Make sure that the amount entered in
the cashbook was the approved amount to the voucher. Where the
vouchers could no longer be made available to the auditor, such as
in the case of agencies with centralized accounting systems, secure
confirmation of the aforesaid disbursements from the auditor of the
agency where the books are kept.
c. Trace refunds of cash advances to the original receipts issued.
d. Determine propriety and correctness of adjusting entries.
e. Consider all discrepancies affecting the DO’s accountability in the
preparation of the Statement of Accountability.
4. Prepare the Statement of Accountability starting from the last date of
examination to the date of current examination, on the basis of verified cash
advances, disbursements and refunds. Require the DO to accomplish and
sign the certificate of accountability.
SECTION 138. ACCOUNTABLE OFFICER’S PRESENCE

DURING THE COUNT
The auditor will ensure the presence of the AO at all times during the cash count. If,
at any time during the cash count, the AO has to leave the premises, stop the count
immediately, segregate the cash counted and cause the return of all cash to the safe,
have it properly secured and resume the count only upon his/her return.
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SECTION 139. SEALING OF THE VAULT, SAFE, AND OTHER CASH

RECEPTACLES
A. The auditor will:
1. Seal the vault, safe or other cash receptacles only in exceptional cases,
such as:
a. Absence or non-appearance of the AO on the date of the count
specially when the intention of the auditor to examine the former has
become obvious or made known to other employees.
b. Refusal of the AO to submit himself/herself to cash examination.
c. Interruption or non-completion of the count during the day or the
necessity of controlling cash, cash items and records.
d. Death, incapacity, or absconding of the AO.
2. Require at least two agency personnel to witness the sealing and sign the
sealing paper.
3. Seal by pasting a sheet/s of paper on the appropriate place/s of the vault,
safe or receptacle. Make sure that the vault, safe or receptacle could not be
opened without breaking the seal.
4. Retain a duplicate copy of each properly accomplished sealing paper.
5. The public officer charged with the custody of the vault, safe or receptacle,
who, shall break the seal placed by the auditor or permit them to be broken,
shall be liable for the penalties prescribed under Art. 227 of the Revised
Penal Code.
SECTION 140. CASH SHORTAGE OR OVERAGE

A. Cash Shortage
The Auditor will:
1. Recheck all figures and computations if the examination discloses a cash
shortage, before declaring the AO short of his/her funds.
2. Demand at once from the AO the immediate production of the missing
fund(s) the moment the amount of shortage is definitely established. Execute
the demand in writing and have the AO acknowledge receipt thereof on the
duplicate copy. Obtain from the AO a written explanation of how the shortage
occurred within seventy-two (72) hours from his/her receipt of the letter of
demand.
3. Recommend to the agency head the immediate relief of the defaulting officer
from his/her duties as AO. The recommendation shall be in writing duly
acknowledged by the agency head or his/her duly authorized representative
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LTOM, 2ND EDITION
on the duplicate copy which is to form part of the auditor’s work papers.
Institute such measures necessary to safeguard adequately the cash and
records.
4. If a shortage is discovered on the accounts of a local treasurer, seize the
office and its contents and notify the COA Director concerned, the local chief
executive and the local accountant.
5. Turnover immediately to the AO next-in-rank in the local treasury service the
Office of the Treasurer and its contents, close, and render his/her account
on the date of the turnover.
6. In case the AO next-in-rank is likewise under investigation, take full possession
of the office and its contents, close and render his/her accounts on the date
of taking possession, and temporarily continue the public business of such
office until such time that the local treasurer is restored or a successor has
been duly designated.
7. Direct the proper officer to withhold the payment of salary and other
emoluments except retirement pay, terminal leave benefits or gratuities,
due the defaulting AO once his/her cash shortage is ascertained. Sign
the withholding order. Report such withholding order promptly to the COA
Chairperson.
The salaries and emoluments to be withheld shall correspond to the amount
of the alleged shortage. Said amount shall be considered merely withheld
and shall not be applied to the shortage until final resolution by a competent
court of the AO’s indebtedness, if such is initiated. In the event that the
AO is found liable for the cash shortage, the withheld salary and other
emoluments shall be applied in payment of the indebtedness otherwise, it
shall be released to the AO.
8. The constructive distraint contemplated under Sec. 47 of Presidential Decree
No. 1445 may be effected under the following circumstances:
a. A shortage in the accounts of an AO is discovered in audit;
b. The amount of the shortage has not been restituted;
c. A prima facie case of malversation of public funds or property is found
against him/her;
d. There is reasonable ground to believe that he/she is retiring from the
government service; or intends to leave the Philippines; or intends to
remove his/her personal property from the Philippines; or intends to
hide or conceal such property;
e. The interest of the government has to be safeguarded.
9. The following are the procedures in effecting constructive distraint:
a. The auditor who discovered the shortage shall immediately submit a
report to the Chairperson, thru the supervising Auditor and Cluster/
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Regional Director concerned, embodying his/her findings and

recommendation to place the personal property of the defalcating AO
under constructive distraint.
b. Upon evaluation of such report and finding a need for the constructive
distraint as recommended therein, the Commission shall forthwith
prepare a warrant directing the auditor to place under constructive
distraint, the goods, chattels or effects and other personal property
of whatever character of the AO. The warrant shall be signed by the
Chairperson and shall show clearly the name and address of the
defalcating AO, the amount of shortage incurred, and the fact of prior
demand made for the restitution thereof.
c. The auditor directed to serve the warrant of constructive distraint shall
serve the same personally on the defalcating AO himself/herself. In
case, however, where the said AO refuses to receive the warrant or is
absent from his/her given address, the warrant shall be served upon
someone of suitable age and discretion in the premises or upon the
person in possession or occupancy of the personal property of the AO,
who shall acknowledge all the copies of warrant. In case actual service
of the warrant upon the AO or upon either of the two other persons just
mentioned cannot be made, a copy thereof shall be left in the premises
or in the office of the AO or in the place of the person in possession or
occupancy of the said property of the AO which fact shall be attested to
in said copy and in all the other copies of the warrant by the distraining
officer in the presence of at least two credible witnesses, whereupon
the warrant is deemed properly served. A copy of the warrant thus
served shall be furnished to the AO with a notation that a copy of the
same was left with the person who is in possession or occupancy of
his/her personal property.
d. Upon service of the warrant, the distraining officer shall require the
defalcating AO or any other person having possession or control of
the personal property in question to accomplish a receipt covering the
property distrained and to obligate himself/herself to preserve the same
intact and unaltered and to dispose of it in any manner whatsoever
without the express authority of the COA.
e. In case the said AO or other person having the possession and/or
control of the property sought to be placed under constructive distraint
refuses or fails to accomplish the receipt herein referred to or lists only
a number of such personal property not sufficient to cover the amount
of the shortage, the distraining officer shall proceed to prepare a list
of the property choosing such quantity as is sufficient to satisfy the
shortage, and in the presence of two witnesses leave a copy thereof in
the premises where the property distrained is located, after which the
said property shall be deemed to have been placed under constructive
distraint.
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LTOM, 2ND EDITION
f. Where some of the property distrained consists of stocks and other

securities, a copy each of the warrant of constructive distraint and the
receipt or list shall be served upon the president, manager, treasurer
or other responsible officer of the corporation, company, or association
which issued the said stocks or securities. In case of debts and credits,
copies of such documents shall be left with the person owing the debts
or having in his/her possession or under his/her control such credits,
or with his/her agent. The warrant of constructive distraint and the
receipt or list shall be sufficient authority to the person owing the debts,
or having in his/her possession or under his/her control any credits
belonging to the AO, to desist from the settlement thereof without the
written authority of the COA. In case of bank accounts, the copies
of the warrant and receipt or list shall be served upon the president,
manager, treasurer, or other responsible officer of the bank concerned,
whereupon the bank shall desist from allowing withdrawals therefrom
or so much thereof, as may be sufficient to satisfy the shortage of the
AO without written authority of the COA.
g. If the property distrained are registered with any government office,
the distraining officer shall notify in writing the government official
concerned of the fact of the constructive distraint, furnishing him/her
with a copy each of the warrant and the receipt or list. The notification
shall contain the following:
i. Nature and description of the property distrained.
ii. Date of distraint.
iii. Name of the owner and/or actual possessor thereof.
iv. Nature and amount of shortage for which the distraint was effected.
h. A copy of such notice shall be sent to the last known address of the AO
through registered mail with return card or served upon the AO or his/
her agent or to the occupant or possessor of the property in question.
Receiving copies of the return card or the notice shall be kept secured
together with the audit work papers of the examining auditor.
10. The summary remedy by constructive distraint of personal property may be
repeated until the full amount of the shortage of the defaulting AO, including
the expenses of the distraint, is satisfied.
11. A report on any constructive distraint effected pursuant to Sec. 47 of PD No.
1445 shall be submitted by the distraining officer to the COA Chairperson,
thru the Supervising Auditor and the Cluster/Regional Director concerned,
furnishing a copy to the Legal Services Sector of the Commission. Such
report shall form part of the supporting documents of the complaint for
malversation to be initiated against the defalcating AO. It shall provide the
Ombudsman or other government prosecutors with basis to apply with the
proper court for the attachment of the property distrained with the rules of
court.
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12. If at any time after the constructive distraint has been effected, the AO
restitutes the full amount of the shortage, his/her personal property placed
under such distraint, shall be released therefrom.
Prosecution of the AO
13. Where a cash shortage is firmed up, submit the final narrative report together
with the affidavits, sworn statements and other supporting documents to
the Cluster/Region Director thru the Supervising Auditor for review and
evaluation.
14. If the facts and circumstances of the case warrant the filing of a criminal
action, the Cluster/Regional Director shall initiate such action by forwarding
the report accompanied by a letter-complaint to the Deputy Ombudsman
(for Luzon, Visayas or Mindanao) concerned, recommending the initiation
of criminal proceedings against the defaulting AO. Where the shortage is
discovered by special audit teams of other offices of the Commission, the
responsibility to initiate the criminal action shall fall upon the director or the
head of such office.
15. For the purpose of prosecuting the defaulting AO, make the following
documents available to the prosecuting officials:
a. Certified true copies of AO’s appointment, oath of office, official
designation and approved application for bond.
b. A copy of the Report of Cash Examination, narrative report and its
supporting exhibits and schedules, letter of demand, and the written
explanation of the AO on how the shortage occurred if any.
c. Affidavit or sworn statements of the auditors and other witnesses.
16. If the shortage is material and a case has already been filed, request thru the
COA Chairperson, the Department of Foreign Affairs the National Bureau of
Investigation and the Bureau of Immigrations and Deportation to deny the
AO any clearance for purposes of travel abroad unless cleared by the COA.
B. Cash Overage
1. In case a cash overage is determined, extend the examination as may be
necessary to establish the cause of the overage and uncover any irregularity
if any.
2. Obtain explanation from the AO. If the overage cannot be satisfactorily
explained by the AO, forfeit the amount in favor of the government and
request the Collecting Officer to issue an official receipt therefor.
(COA Memorandum No. 2013-004, 09 July 2013, Prescribing the Use of
the Revised Cash Examination Manual)
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CHAPTER ACCOUNTABILITY, RESPONSIBILITY AND LIABILITY
6 OF LOCAL TREASURERS AND OTHER ACCOUNTABLE
OFFICERS
Accountability refers to the answerability for government funds of every public officer
whose duties permit or require the possession or custody of such government
funds in conformity with laws and regulations. Other public officers, although not
accountable for government funds by the nature of their duties, may likewise be
similarly held accountable and responsible therefor through their participation in the
use or applications of such government funds.
Liability is a personal obligation arising from an audit disallowance or charge which
may be satisfied through payment or restitution as determined by competent authority
or by other modes of extinguishment of obligation as provided by law.
Accountable Officer is the officer of any government agency who by the nature of his/
her duties and responsibilities or participation in the collection/receipt and expenditure/
use of government funds, is required by law or regulation to render account to the
Commission on Audit (COA).
SECTION 141. DETERMINATION OF PERSONS RESPONSIBLE/LIABLE

Persons liable are the persons determined to be answerable for an audit disallowance,
charge or decision.
Persons responsible are the persons determined to be answerable for compliance
with the audit requirements as called for in the Notice of Suspension.
The liability of public officers and other persons for audit disallowances/charges
shall be determined on the basis of (a) the nature of the disallowances/charge; (b)
the duties and responsibilities or obligations of officers/employees concerned; (c)
the extent of their participation in the disallowed/charged transactions; and (d) the
amount of damage or loss to the government, thus:
A. Public officers who are custodians of government funds shall be liable for their
failure to ensure that such funds are safely guarded against loss or damage; that
they are expended, utilized, disposed of or transferred in accordance with law and
regulations, and on the basis of prescribed documents and necessary records.
B. Public officers who certify as to the necessity, legality and availability of funds or
adequacy of documents shall be liable according to their respective certifications.
C. Public officers who approve or authorize expenditures shall be liable for losses
arising out of their negligence or failure to exercise the diligence of a good father
of a family.
D. Public officers and other persons who confederated or conspired in a transaction
which is disadvantageous or prejudicial to the government shall be held liable
jointly and severally with those who benefited therefrom.
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ACCOUNTABILITY, RESONSIBILITY AND LIABILITY OF LOCAL TREASURERS AND OTHER ACCOUNTABLE OFFICERS
E. The payee of an expenditure shall be personally liable for a disallowance where

the ground thereof is his/her failure to submit the required documents, and the
Auditor is convinced that the disallowed transaction did not occur or has no basis
in fact.
The liability for audit charges shall be measured by the individual participation
and involvement of public officers whose duties require appraisal/assessment/
collection of government revenues and receipts in the charged transaction.
The liability of persons determined to be liable under a Notice of Disallowance/
Notice of Charge shall be solidary and the COA may go against any person liable
without prejudice to the latter’s claim against the rest of the persons liable.
SECTION 142. OTHER LIABILITIES OF LOCAL TREASURER

UNDER THE LOCAL GOVERNMENT CODE (LGC)
A. Prohibitions Against Pecuniary Interest
Without prejudice to criminal prosecution under applicable laws, any local
treasurer, accountant, budget officer, or other accountable local officer having
any pecuniary interest, direct or indirect, in any contract, work or other business
of the local government unit of which he/she is an accountable officer shall be
administratively liable therefor. (Sec. 341, LGC)
B. Failure To Issue And Execute Warrant
Without prejudice to criminal prosecution under the Revised Penal Code and
other applicable laws, any local treasurer or his/her deputy who fails to issue or
execute the warrant of levy within one (1) year from the time the tax becomes
delinquent or within thirty (30) days from the date of the issuance thereof, or who
is found guilty of the abusing the exercise thereof in an administrative or judicial
proceeding shall be dismissed from the service. (Secs. 177 and 259, LGC)
C. Failure To Collect Tax Due On Real Property
Any officer charged with the duty of collecting the tax due on real property who
willfully or negligently fails to collect the tax and institute the necessary proceedings
for the collection of the same shall be punished by a fine of not less than One
Thousand Pesos (₱1,000.00) nor more than Five Thousand Pesos (₱5,000.00) or
by imprisonment of not less than one (1) month nor more than six (6) months or
both such fine and imprisonment, at the discretion of the Court. (Sec. 517, LGC)
D. Failure To Dispose Of Delinquent Real Property At Public Auction
The local treasurer concerned who fails to dispose of delinquent real property at
public auction, in compliance with the pertinent provisions of LGC and any other
local government official whose acts hinder the prompt disposition of delinquent
real property at public auction, shall upon conviction, be subject to a fine of not
less than One Thousand Pesos (₱1,000.00) nor more than Five Thousand Pesos
96
LTOM, 2ND EDITION
(₱5,000.00) or imprisonment of not less than one (1) month nor more than six (6)
months, or both such fine and imprisonment at the discretion of the court. (Sec.
519, LGC)
SECTION 143. POLICIES ON CASH EXAMINATION

A. Responsibility
1. It is the declared policy of the State that all resources of the government shall
be managed, expended or utilized in accordance with laws and regulations,
and safeguarded against loss or wastage through illegal or improper
disposition, with a view to ensuring efficiency, economy and effectiveness in
the operations of government. The responsibility to take care that such policy
is faithfully adhered to rests directly with the chief or head of the government
agency concerned.
2. Fiscal responsibility shall, to the greatest extent be shared by all those
exercising authority over the financial affairs, transactions, and operations of
the government agency.
3. The head of any agency of the government is immediately and primarily
responsible for all government funds and property pertaining to his/her
agency. Persons entrusted with the possession or custody of the funds or
property under the agency head shall be immediately responsible to him/her,
without prejudice to the liability of either party to the government.
4. The head of an agency may designate such number of collecting Officers
(COs) or agents as may be deemed necessary. They shall render reports
of their collections, under the regulations of COA, to be submitted promptly
to the auditor concerned who shall conduct the necessary examination and
audit within thirty (30) days from receipt thereof.
5. When an officer accountable for government funds or property absconds with
them, dies or becomes incapacitated in the performance of his/her duties, the
proper agency head shall designate a custodian to take charge of the funds
or property until a successor shall have been appointed and qualified. The
agency head may appoint committee to count cash and take an inventory
of the property for which the Officer was accountable and to determine the
responsibility for any shortage therein. One copy of the inventory and of the
report of the committee duly certified shall be filed with the Commission but
the findings of the committee shall not be conclusive until approved by the
Commission or its duly authorized representative.
When a local treasurer or officer accountable for government funds or property
absconds with them, dies or becomes incapacitated in the performances of
his/her duties, the Secretary of Finance, in the case of funds and property of
the province, city and municipality shall designate a custodian to take charge
of the funds or property until a successor shall have been appointed and
qualified.
97
If the absconding, deceased, incapacitated or superseded officer is responsible

to another who is accountable, the latter may himself designate the committee
or take other lawful measures for the protection of his/her interest.
6. At the close of each month, depositories shall report to the agency head, in
such form as he/she may direct, the condition of the agency account standing
on their books. The head of the agency shall see to it that reconciliation is
made between the balance shown in the reports and the balance found in the
books of the agency.
7. An AO shall maintain his/her cashbook and such other records or their
equivalents as may be prescribed by the agency’s operating procedures and
reconcile with the accounting records at least quarterly, unless the agency
requires a more frequent reconciliation.
8. An AO, upon ceasing to act in his/her official capacity as such, shall submit
to the auditor of the agency concerned a report of his/her accountability. Any
remaining balance of such accountability shall be deposited in the proper
treasury without unnecessary delay.
9. Government cashiers are prohibited from holding positions as cashiers
or treasurer of savings and loan associations or any other association or
organization.
B. Accountability
1. Every Officer of any government agency whose duties permit or require
possession or custody of government funds or property shall be accountable
therefor and for the safekeeping thereof in conformity with law. Every AO shall
be properly bonded in accordance with law.
The fidelity bonds covering government accountability and responsibility of
AOs shall be in accordance with the regulations issued by the Bureau of
Treasury (BTr). Copies of the approved fidelity bonds as well as documents
subsequently issued for their cancellation shall be furnished to the Auditor.
2. Transfer of government funds from one officer to another shall, except as
allowed by law or regulation be made only upon prior direction or authorization
of Commission or its representative.
3. When government funds or property are transferred from one AO to another,
or from an outgoing officer to his/her successor, it shall be done upon properly
itemized invoice and receipt which shall invariably support the clearance to
be issued to the relieved or out-going officer, subject to the regulations of the
Commission.
C. Liability
1. Expenditures of government funds or uses of government property in violation
of law or regulations shall be a personal liability of the official or employee
found to be directly responsible therefor.
98
LTOM, 2ND EDITION
2. Every officer accountable for government funds shall be liable for all loses
resulting from the unlawful deposit, use or application thereof and for all loses
attributable to negligence in the keeping of the funds.
3. No AO shall be relieved from liability by reason of his/her having acted under
the direction of a superior officer in paying out, applying, or disposing of the
funds or property with which he/she is chargeable; unless prior to the act, he
notified the superior officer in writing of the illegality of the payment, application
or disposition. The officer directing any illegal payment or disposition of the
funds or property shall be primarily liable for the loss, while the AO who fails
to serve the required notice shall be secondarily liable.
4. Unless he/she registers his/her objection in writing, the local treasurer,
accountant, budget officer, or other AO 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. The superior officer directing, or the department
head participating in such illegal or improper use or application or deposit of
government funds or property, shall be jointly and severally liable with the
local treasurer, accountant, budget officer, or other AO for the sum or property
so illegally or improperly used, applied or deposited.
5. Any public officer who commits any of the acts defined and penalized under
Arts. 213, 217, 218, 219 and 220 of the Revised Penal Code shall suffer the
penalty provided therefor.
6. In any criminal or civil proceedings against an officer for the embezzlement
or misappropriation of government funds or property, or to recover an amount
due the government from an AO, it shall be sufficient, for the purpose of
showing a balance against him/her, to produce the working papers of the
auditor concerned. A showing in this manner of any balance against the
officer shall be prima facie evidence of the misappropriation of the funds or
property unaccounted for or of civil liability of the officer as the case may
be. The existence or contents of bonds, contracts, or other papers relating
to or connected with the settlement of any account may be proved by the
production of certified copies thereof but the court may require the production
of the original when this appears to be necessary for the attainment of justice.
SECTION 144. INDEMNITY FROM FIDELITY FUND

A. The Fidelity Fund shall be available for the purpose of replacing defalcations,
shortages, unrelieved losses in the accounts of bonded public officers, for the
payment of fees and costs incident to civil proceedings brought against them to
recover sums paid on their account.
B. The relief from accountability of the accountable public officer granted by the COA
shall relieve the agency from responsibility for the loss or damage to public funds
or properly.
99
C. When no relief of accountability is granted by the COA, the agency concerned may
file claim for reimbursement from the Fidelity Fund to the extent of the approved
bond covered or amount of loss whichever is lower.
D. Any and all claims against the Fidelity Fund shall be filed as a money claim with
the COA, with a copy to the Bureau of Treasury (BTr) together with the evidence.
Claims approved by the COA shall constitute a legal claim against the Fidelity
Fund.
E. The agency shall file claim for payment from the Fidelity Fund with the BTr, attaching
the favorable findings of the COA. The BTr shall process the claim in accordance
with existing budgeting, accounting and auditing rules and regulations.
F. In case of defalcation, shortages and unrelieved losses in the account of bonded
public officer, the claim shall be supported by the following documents:
1. Agency and COA findings and recommendations on the defalcations,
shortages and unrelieved accountability;
2. Latest Statement of Assets and Liabilities of the bonded official/employee;
3. Proof of current and subsisting bond and payment of bond premium;
4. Other document/s which may be required by the BTr.
G. Receipt of refund from Fidelity Fund shall be accounted for in the same manner
as cash settlement or restitution.
SECTION 145. FILING OF REQUEST FOR RELIEF FROM

ACCOUNTABILITY DUE TO FORTUITOUS EVENTS
OR NATURAL CALAMITIES, OR DUE TO ACTS
OF MAN; THEFT, ROBBERY, ARSON, ETC.
When a loss of government funds or property occurs while they are in transit or the
loss is covered by fire, theft, or other casualty or force majeure, the Officer accountable
therefor or having custody thereof shall immediately notify the Commission or the
Auditor concerned and, within 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.
(COA Memorandum No. 2013-004, 09 July 2013, Prescribing the Use of the
Revised Cash Examination Manual)
100
LTOM, 2ND EDITION
PROCEDURE ON THE REQUEST FOR RELIEF OF ACCOUNTABILITY:
A. Who may file
1. Persons who are accountable for government funds and property which were
lost and/or damaged without negligence on their part in the custody thereof.
2. Representative of the Accountable Officer
B. Where to file
1. Audit Team assigned at the government agency where the accountable officer
filing the request is assigned
C. What are the requirements
1. Notice of loss of government supplies and property to the head of the agency
and the auditor assigned thereat;
2. Request for relief from accountability of the person accountable for government
funds and property filed within thirty (30) days or of such longer period as may
be allowed by the Commission accompanied by the following documents:
a. The basic notice of loss showing the exact date of filing and receipt in
the Office of the Auditor concerned;
b. Affidavit of the accountable officer containing a statement of facts and

circumstances of the loss, i.e. property lost and its valuation, actual date
in which the absence was first noted, manner of disappearance, efforts
exerted to recover the same, provisions made to safeguard the property,
date when the loss was reported to the auditor and police authorities,
etc.,
c. Affidavits of two (2) disinterested persons cognizant of the facts and

circumstances of the loss;
d. Final investigation report of the office or department head, proper

government investigating agency such as Philippine National Police
(PNP), Bureau of Fire Protection (BFP), National Bureau of Investigation
(NBI), etc.);
e. Comment/s and/or recommendation of the agency head;
f. List and description including book value, date of acquisition, property

number, account classification, condition of the property, and other
additional relevant information of the properties lost as attested by the
concerned officials, as the case may be;
g. Latest inventory and inspection report preceding the loss and inspection
report on the extent of damage/loss;
h. Exact or accurate amount of government cash or book value of the

property, subject of the request for relief;
i. Memorandum Receipt, if any, covering the properties subject of the

request;
101
j. Certification from Police/Fire Chief/Provincial Governor/Mayor or other

competent authority as to the destruction brought by natural calamity
and/or insurgency;
k. Report on Cash Examination conducted immediately after the loss (for

cash losses);
l. Certificate by the veterinarian as to the cause of death with a description

of the animal, if the property is a government animal under the care of a
veterinarian, and autopsy report;
m. Authenticated pictures of the site (loss through fire and theft or robbery/
hold-up;
n. Fire insurance policy;
o. Certification of the proper official on the actual occurrence of calamity

specifying therein the approximate or exact time of occurrence and the
affected areas;
p. Insurance policy, if any, and the fact of receipt of the insurance proceeds;
q. Affidavits of security guards pertaining to the incident, if manned by

them, and the contract of security services;
r. Information on whether or not the accountable officer was accompanied

by police/security escorts during theft or robbery/hold-up of cash (going
to and fro the bank, office break-in, etc.) and the appropriate explanation
if none; and
s. Comments and/or recommendation of the auditor.
D. Who will decide on the request
1. Audit Team Leader if the amount does not exceed P100,000
2. Cluster/Regional Director if the amount if more than P100,000 but not more
than P500,000
3. Commission Proper if the amount exceeds P500,000.
102
LTOM, 2ND EDITION
A. File the request with the Auditor - For Amount not exceeding Php100,000.00
Accountable COA
Officer
or Persons
Procedures Specific Office
Representative Responsible
1 File request for Ask for sufficient Audit Group/Team Receiving Clerk
relief with identification Concerned
sufficient and inquire about:
identification or
authorization. • Properties lost or
damaged and their
corresponding value:
• Name of accountable
officer and the agency
from which he/she
belongs
2 Examine request for relief Audit Group/Team Action Officer

from accountability to Concerned
determine if the documents
in support of the relief
are complete (Secs. 498 and
499 of the Government
Accounting and Auditing
Manual Volume I and Secs.
151 and 152 of COA Circular
No. 92-386, 20 October
1992, for
LGUs)
3.a If the documents are Audit Group/Team Action Officer

incomplete, inform the Concerned
accountable officer / counsel
/ representative to comply
with the formalities and
procedural requirements.
3.b If the documents are Audit Group/Team Receiving Clerk

complete, stamp “received” Concerned
on at least one request for
relief and the requesting
party’s receiving copy, write
down the date, time of
receipt, affix the initial of the
receiving clerk then
give a copy to the said
/ representative.
103
4 Inform the accountable Audit Group/Team Action Officer

officer / counsel / Concerned
representative of the
proceedings before the
Auditor
(Secs. 5 to 9 of Rule IV
of the Revised Rules of
Procedures (RRPC) of the
Commission on Audit)
Inform also the period during

which an inquiry on the
status of the request can be
made.
5 Issue Decision pursuant to Audit Group/Team Audit Team Leader

Sec. 5, Rule IV of RRPC. concerned (ATL)
Supervising
Auditor (SA)
6 Distribute the decision to the Audit Group/Team Releasing Clerk

head of agency, auditor and Concerned
agency officials affected
by the decision through
personal service, or if
not practicable through
registered mail pursuant
to Secs. 6 and 7, Rule IV of
RRPC.
B. File the request with the Cluster/Regional Director through the Audit Team
assigned at government agencies - For amounts exceeding P100,000.00 but not
more than Php500,000
Accountable COA
Officer
or Persons
Procedures Specific Office
Representative Responsible
1 File the request Ask for sufficient Audit Group/Team Receiving Clerk
with identification Concerned
sufficient and inquire about:
identification or
damaged and their
corresponding value
from which he/she
belongs
104
LTOM, 2ND EDITION

determine if the
documents in support of
the relief are complete
(Secs. 498 and 499 of the
Government Accounting and
Auditing Manual Volume I
and Secs. 151 and
152 of COA Circular No. 92-
386, 20 October 1992, for
LGUs)

accountable officer /
counsel / representative to
comply with the formalities
and procedural requirements

party’s receiving copy, write
down the date, time of
requesting party or his/ her
representative.

Director
(Secs. 8 to 10 of Rule V of
the RRPC).

made.
5 Elevate the case, together Audit Group/Team Audit Team

with the comments and Concerned Leader/
recommendations Supervising
to the Cluster/Regional Auditor
Director concerned.
105
6 Upon receipt of the request Cluster/COA Action Officer

from the ATL/SA, inform the Regional Office
accountable officer/counsel/ Concerned
representative in writing of
the receipt of the request.

which an inquiry on the status
of the request can be made.
7 Issue decision pursuant to Cluster/COA Cluster/Regional

Secs. 8 and 9, Rule V of Regional Office Director
RRPC Concerned
8 Distribute the decision to the Cluster/COA Releasing Clerk

head of agency, auditor Regional Office
concerned and agency Concerned
officials affected by the
decision through personal
service, or if not practicable
through registered mail
C. File the request with the Commission Proper through the Audit Team and Cluster/
Regional Director - For Amount in Excess of P500,000.00
Accountable COA
Officer
or Persons
Representative Procedures Specific Office
Responsible
1 File the request Ask for sufficient Audit Group/Team Receiving Clerk
with identification and inquire Concerned
sufficient about:
identification or
damaged and their
corresponding value
from which he/she
belongs
106
LTOM, 2ND EDITION

determine if the documents
in support of the relief are
complete (Secs. 498 and
499 of the Government
Accounting and Auditing
Manual Volume I and Secs.
151 and
152 of COA Circular No. 92-
386, 20 October 1992, for
LGUs)

/ representative to comply
with the formalities and
procedural requirements.

party’s receiving copy,
write down the date, time of
accountable officer/counsel/
representative.

Commission Proper
(Secs. 1 and 4 of Rule VIII of
the RRPC).

made.
107
5 Elevate the request, Audit Group/Team Audit Team

together with the comments Concerned Leader/
and recommendations to the Supervising
Cluster/Regional Director Auditor
concerned.
6 Upon receipt of the request Cluster/COA Action Officer

from the ATL/SA, inform the Regional Office
accountable officer/counsel/ Concerned
representative in writing of
the receipt of the request.

made.
7 Elevate the case, together Cluster/COA Cluster/Regional

with the comments and Regional Office Director
recommendations to the Concerned
Assistant Commissioner,
Legal Services Sector.
8 Upon receipt of the request Legal Services Director

from the Cluster/Regional Sector concerned
Director, inform the
/ representative in writing
of the receipt of the request.

made.
9 Refer the case to the Commission Commission

Cluster/COA Regional Office Secretariat Secretary
concerned for comment and
recommendation pursuant to
Sec. 4, Rule VIII of RRPC.
10 Submit comment to the Cluster//COA Cluster/Regional

Commission Secretary Regional Office Director
concerned
108
LTOM, 2ND EDITION
11 Upon submission of the Commission Commission

comment, refer the case with Secretariat Secretary
the complete records of the
case to the Legal Services
Sector (LSS) for review,
evaluation, preparation of
draft decision
12 Submit draft decision to the Legal Services Assistant

Commission Proper (CP) Sector Commissioner
13 Conduct formal deliberation, Commission

submission of concurring or Proper
dissenting opinion and
finalization of decision,
pursuant to Secs. 4 and 5,
Rule X of RRPC.
14 Distribute the decision or Commission Commission

Resolution to the Central Secretariat Secretary
Office Records Division,
Rollo or folder of the
Commission
Secretary, LSS, Cluster/
Regional Director
concerned, Auditor
concerned and the parties or
their counsels, pursuant to
Sec. 8, Rule X of RRPC.
(COA Key Services Procedural Flow)

The COA Regional Directors shall have jurisdiction over the appeals from decisions
of the Supervising Auditors/Audit Team leaders of local government units within their
respective regions, denying requests for relief from accountability.
109
FORMS AND ANNEXES
110
LTOM, 2ND EDITION
FORMS AND ANNEXES
111
1
FORMS AND ANNEXES
Annex B - COA Circular No. 2006-000, 31 January 2006
ANNEX 21 - DISBURSEMENT VOUCHER (DV)

Name of Province/City/Municipality
Address
DISBURSEMENT VOUCHER DV No.
MODE OF PAYMENT
MDS Check Commercial Check ADA Others
TIN/Employee ObR No.

Payee
No.
Responsibility Center
Office/Unit/ Code
Address Project
EXPLANATION AMOUNT
A. Certified: B. Certified:
Obligation of Allotment for the purpose as Availability of Funds
indicated and completeness of supporting
documents
___________________________ ______ ___________________________ ______

Signature over Printed Name/ Date Signature over Printed Name/ Date
Position Position
C. Approved for Payment: D. Received Payment:
___________________________ ______ ___________________________ ______

Signature over Printed Name/ Date Signature over Printed Name/ Date
Position Position
Check Number Date of Bank
Check Name
OR No./Date
JEV No. Date
112
LTOM, 2ND EDITION
INSTRUCTIONS
A. The DV shall be printed in one whole sheet of 81/2 x 11 size bond paper. This
shall be prepared in three copies to be distributed as follows:
Original - Accounting Unit
Duplicate - Cash Unit
Triplicate - Payee
B. The Accounting Unit shall stamp the date of receipt on the face of this form.
C. This form shall be accomplished in the following manner:
1. DV No. - Number assigned to the DV by the Accounting Unit. It shall be
numbered as follows:
0000 00 0000
Serial number
(One series
for each year)
Month
Year
2. Mode of Payment - put a check mark () in the appropriate box opposite
the mode of payment.
3. Payee - name of the payee or creditor
4. TIN/Employee No. - Tax Identification Number (TIN) of the claimant/
Identification Number assigned by the agency to the officer/employee
5. Obligation Request No. - Number of the obligation request supporting the
DV
6. Address - address of the claimant
7. Responsibility Center (Office/Unit/Project and Code) - the office/unit/
project and code assigned to the cost center where the disbursement shall
be charged
8. Explanation - brief description of the disbursement
9. Amount - amount of claim
10. Certified (Box A) - certification of the Head of Accounting Unit or his/her
authorized representative as to obligation of allotment for the purpose as
indicated and completeness of supporting documents
The certifying officer shall affix his/her signature, print his/her name, indicate
his/her position, and the date of his/her signing on the spaces provided
11. Certified (Box B) - certification by the Treasurer or his/her Authorized
Representative on the availability of fund
The certifying officer shall affix his/her signature, print his/her name, indicate
his/her position, and the date of his/her signing on the spaces provided.
113
FORMS AND ANNEXES
12. Approved for Payment (Box C) - approval by the Agency Head or his/her
Authorized Representative on the payment covered by the DV
The approving officer shall affix his/her signature, print his/her name, indicate
his/her position, and the date of his/her signing on the spaces provided.
13. Received Payment (Box D) - acknowledgment by the claimant or his/
her duly authorized representative for the receipt of the check/cash and
the date of receipt. The claimant/payee shall affix his/her signature on the
spaces provided and shall indicate the number and the date of the check,
bank name and number and date of OR/other relevant documents issued to
acknowledge the receipt of payment.
14. JEV No. and Date - Number and date of the Journal Entry Voucher
114
LTOM, 2ND EDITION
Annex 39, Volume II, MNGAS for LGUs
ANNEX 22 - CHECK REGISTER

CHECK REGISTER
_____________________________________________
LGU
Fund ____________________________ Bank Account No. __________
___________________________ ___________________ ____________________

Accountable Officer Official Designation Station
CHECK Received by:
Date Name of
Date Amount Name/
Issued Number Payee Date
Released Signature
For Accountable Officer’s Use
115
FORMS AND ANNEXES
INSTRUCTIONS
A. The Check Register shall be accomplished as follows:
1. LGU - name of the municipality/province/city
2. Fund - fund name/code
3. Bank Account No. - name of Bank
4. Date - date of check issued
5. Check Number - serial number of the MDS checks drawn shall be entered
in numerical sequence, including cancelled ones
6. Check – Date Released - date when the check is released to the payee.
7. Name of Payee - name of the payee/claimant
8. Amount - amount of check issued by the Accountable Officer
9. Received by - name and signature of the payee/claimant and the date
received
B. Each Disbursing Officer/Accountable Officer shall maintain this record. All
transactions for the day shall be recorded immediately.
116
LTOM, 2ND EDITION
ANNEX 23 - REPORT OF CHECKS ISSUED

REPORT OF CHECKS ISSUED
_____________________________________________
LGU
Bank Name/Acct. Name: ______________ Report No.: ________________

Sheet No.: ________________
Checks Responsibility Nature of

DV No. Payee Amount
Date No. Center Payment
117
FORMS AND ANNEXES
INSTRUCTIONS
The RCI shall be accomplished as follows:
2. Period Covered - period covered by the report
3. Sheet No. - sheet number of the report
4. Report No. - number assigned by the Treasury Office on the report. The report
shall be numbered as follows:
00-00-00-0000
Series(One series per year)
Month
Year
Fund
5. Bank Name/Account No. - name of the bank and the account number where
the check is drawn
6. Check No. - number of the check issued covered by the report including the
cancelled ones.
7. Check Date - date of the check issued covered by the report
8. DV Number - number of the reference DV
9. Responsibility Center - code assigned to each cost center
10. Payee - name of the payee
11. Nature of Payment - nature of claim paid
12. Amount - amount of the check issued
13. Certification - the report shall be certified by the Disbursing Officer on last
sheet of the report.
14. Date - date report was submitted to the Accounting Unit
15. Received by: - name and signature of the designated personnel receiving
the report
16. Date - date of receipt of the report by the Accounting Unit
Additional instructions:
a. The RCI shall be prepared in three copies by the Treasurer’s Office daily to be
Original – COA Auditor thru the Accounting Unit together with the original
copy of the paid petty cash vouchers/payroll/replenishment of Petty Cash
Fund (PCF) and supporting documents
2nd copy – Accounting Unit
3rdcopy – Treasurer’s file
b. One (1) RCI shall be prepared for each bank account and it shall be the basis
for the preparation of Journal Entry Voucher (JEV).
c. This report shall be prepared chronologically including cancelled/voided checks.
118
LTOM, 2ND EDITION
ANNEX 24 - REPORT OF DISBURSEMENTS

REPORT OF DISBURSEMENTS
_____________________________________________
LGU
Accountable Officer: ______________ Report No.: ________________

Designation: ____________________ Sheet No.: ________________
Date Payee Reference Amount
TOTAL
Certified Correct: Received by:
__________________________________ __________________________________
Disbursing Officer Accounting Clerk
__________________________________ __________________________________
Date Date
119
FORMS AND ANNEXES
INSTRUCTIONS
A. This report shall be accomplished as follows:
2. Accountable Officer - name of the Accountable Officer
3. Designation - position or designation
4. Report No. - assigned RD number which shall be as follows:
00-00-00-00-0000
Serial number(one series per year)
Month
Year
Disbursing Officers & Paymasters' Code
Fund
5. Sheet No. - page number of the report
6. Date - date of the DV/source of documents
7. DV No. - assigned DV number
8. Payee - name of the person/office to whom payment is made
9. Nature of Payment - nature of claims paid
11. Amount - amount of disbursement covered in the DV or supporting
documents
12. Certified by - name and signature of Disbursing Officer/Paymaster
13. Received by - name and signature of the designated Accounting
personnel who will acknowledge the report
B. The Disbursing Officer/Paymaster shall prepare this report to liquidate his/
her cash advance for each nature of cash advance such as cash advance for
salaries and field operating expenses and petty cash fund (at end of the year).
C. This report shall be prepared in three (3) copies and to be distributed as
follows:
Original - COA thru the Accounting Unit together with the original copy of
the paid vouchers/payroll and supporting documents
2 copy - Accounting Unit
nd
3rd copy - Disbursing Officer's File
120
LTOM, 2ND EDITION
ANNEX 25 - LIQUIDATION REPORT

No.:
LIQUIDATION REPORT Date:
__________________________________________ Responsibility Center
LGU
PA R T I C U L A R S AMOUNT
Itinerary of Travel:
TOTAL AMOUNT SPENT

AMOUNT OF CASH ADVANCE PER DV NO. ___ DTD. ____
AMOUNT REFUNDED PER O.R. NO. ___ DTD. ____
AMOUNT TO BE REIMBURSED
Submitted by: Received by:
_______________________________________________ ______________________________
Accounting Unit
______________________________
Date
121
FORMS AND ANNEXES
INSTRUCTIONS
A. This report shall be accomplished as follows:
2. No. - number assigned by the Accounting Office which shall be as follows:
00-00-00-0000
Series(One series per year)
Month
Year
Fund
3. Date - date of the preparation of the report
5. Particulars and Amount - brief description of what has transpired of the
travel and corresponding costs
6. Total Amount Spent - actual amount spent
7. Amount of Cash Advance - amount of cash advanced for the travel
8. Amount Refunded - excess amount on the cash advanced less expenses
incurred
9. Amount to be Reimbursed - amount of cash advanced less expenses
incurred in the travel
10. Certified by: - signature of the employees/officer who made the cash
advance
11. Received by: - name and signature of the designated personnel in the
Accounting Office receiving the report
12. Date - date of receipt of the report by the Accounting Unit
B. This report shall be prepared by the employees/officers who made the cash
advance. It shall be prepared in three (3) copies:
Original - COA thru the Accounting Officer
Duplicate - Accounting Officer
Triplicate - employees/officer concerned
122
LTOM, 2ND EDITION
ANNEX 26 - PETTY CASH VOUCHER (PCV)

PETTY CASH VOUCHER No.:
__________________________________ Date:
LGU
Payee/Office: _______________________ Responsibility Center
Address : _______________________
I. To be filled up upon request II. To be filled up upon liquidation
Particulars Amount Total Amount Granted ________________
Total Amount Paid per

OR No. ___________ ________________
Amount Refunded/
(Reimbursed) _______________
A. Requested by: C.
_______________________________
Name of Requestor Received Refund
Approved by: Reimbursement Paid
_______________________________ __________________________________
Immediate Supervisor Disbursing Officer
B. Paid by: D.
_______________________________
Disbursing Officer Liquidation Submitted
Cash Received by: Reimbursement Received by:
_______________________________ __________________________________
Signature over Printed Name of Payee Signature of Payee
Date: __________________________ Date: _____________________________
123
FORMS AND ANNEXES
INSTRUCTIONS
A. The form shall be accomplished as follows:
1. LGU - name of the agency
2. No. - number and date assigned to the PCV by the date the Accounting
Section/Unit, it shall be numbered in the following manner:
00-00-00-0000
Serial number (One series per year)
Month
Year
Fund
3. Date - date of the preparation of PCV
4. Payee/Office & Address - name/office/address of payee requesting for
petty cash advance.
5. Responsibility Center - code of the requesting office as assigned by the
COA
I. To be filled up upon request
6. Particulars - purpose of the petty cash advance request
7. Amount - amount of the petty cash requested
8. Box A - Requested by - shall be signed by the requestor
9. Box A - Approved by - shall be signed by the Immediate Supervisor of
the Requestor
10. Box B - Paid by - shall be signed by the Disbursing Officer (DO)
11. Box B - Cash Received by - shall be signed by the recipient of cash
II. To be filled upon liquidation
12. Total Amount Granted - the amount of cash received by the claimant
13. Total Amount Paid Per OR No._____ - the total amount paid as shown
in the invoice presented
14. Amount Refunded/Reimbursed - the difference between the total
amount granted less amount spent
15. Box C - the DO shall check the appropriate box and affix his/her signature
16. Box D - the payee shall check the appropriate box and affix his/her
signature
B. Part I shall be filled up upon request of the petty cash advance and Part II shall
be filled up upon liquidation.
C. The PVC shall be prepared in two (2) copies distributed as follows:
Original - Auditor thru the Chief Accountant together with the supporting
documents
Duplicate - retained by the DO for his/her file
124
LTOM, 2ND EDITION
ANNEX 27 - DAILY CASH POSITION REPORT
LGU
DAILY CASH POSITION REPORT
General Fund
As of __________________
Collections:
Local Taxes ₱ xxx
Internal Revenue Allotment xxx
Permits and Licenses xxx
Service Income xxx
Business Income xxx
Other Income xxx
Total Collections ₱ xxx
Less: Disbursements
Personal Services xxx
Maintenance and Other Operating Expenses xxx
Capital Outlays xxx
Financial Expenses xxx
Total Disbursements ₱ xxx
Net Cash Available for the day xxx
Add: Cash, Beginning Balance xxx
Total Cash Available to date ₱ xxx
Certified Correct:
____________________________
Treasurer/Authorized Representative
____________________________
Date
125
126
Annex A of COA/DBM/DILG/ Governance Commission for GOCCs/DND Joint Circular No. 2015-01, 8 January 2015
ANNEX 28 - CONFIDENTIAL FUND-PHYSICAL AND FINANCIAL PLAN

FORMS AND ANNEXES
Physical and Financial Plan

Confidential Fund
CY 20___
LGU: ____________________________________ Appropriation No.: _______________________ Yearly CF Approved and Budget Appropriation: ₱
Programs, QUARTERLY/MONTHLY PHYSICAL TARGETS

Activities and Expected 1st Quarter/Months of 2nd Quarter/Months of 3rd Quarter/Months of 4th Quarter/Months of
Projects (PAPs) Outcome __________ __________ __________ __________
Fund Source Physical Target Budget (₱) Physical Target Budget (₱) Physical Target Budget (₱) Physical Target Budget (₱)
Total
Prepared by: Noted by: Approved by:
_____________________________ ________ _____________________________ ________ ________________________________________ _________

Project Accountable Officer Date Budget Officer Date Local Chief Executive Date
LTOM, 2ND EDITION
Annex B of COA/DBM/DILG/ Governance Commission for GOCCs/DND

Joint Circular No. 2015-01, 8 January 2015
ANNEX 29 - CERTIFICATION OF THE ACCOUNTABLE OFFICER

OF THE CONFIDENTIAL FUND
CERTIFICATION
________________________
Date
We hereby certify that the amount of _____________________________
(₱___________) was incurred by the undersigned in connection with PROJECT
______________________ (File Code No.) from the cash advance drawn on
____________ in the amount of ____________________.
We further certify that:

a. The certifying officer or employee is accountable for the disbursement
from the cash advance of CF;
b. The expenses were incurred in connection with the agency's
confidential operations and activities, with supporting documents
attached to the liquidation for CF, documentary evidence of payment
kept in sealed envelope in the vault in the office of the SDO;
c. The details and supporting documents of transactions that are
classified are in custody of the agency and kept in its vault which may
be inspected by Intelligence and Confidential Fund Audit Unit if the
circumstances so demand;
d. The funds are not used for payment of salaries and wages, overtime,
additional compensation, allowance or other fringe benefits of officials
and employees, representation/entertainment expenses, consultancy
fees and construction or acquisition of buildings or housing structures;
e. The purchase of equipment is relevant to the confidential activities;
and,
f. This expenditures are necessary and utilized for legal purposes.
_________________________________________
PROJECT ACCOUNTABLE OFFICER/SDO
Attested:
____________________________
HEAD OF THE AGENCY/
GOVERNOR/MAYOR
Subscribed and sworn to me this _____of _____, 20___.
_______________________
Name and Signature
127
128
Annex C of COA/DBM/DILG/ Governance Commission for GOCCs/DND Joint Circular No. 2015-01, 8 January 2015
ANNEX 30 - ACCOMPLISHMENT REPORT ON THE USE OF CF

ACCOMPLISHMENT REPORT
UTILIZATION OF CONFIDENTIAL FUNDS
(Please check one)
FORMS AND ANNEXES
Agency: AR No.:
Period Covered
AR Date:
Total Amount of CF Per Budget CY 20__ ₱____________ Total Amount of Cash Advance for the Period: ₱_________________
Program/Project/Ac-
tivities Per Physical &
Actual Outcome/Accomplishment Amount Utilized Limiting Factor Facilitating Factor Reference*
Financial Plan (Form in
Annex C)
Summary:
Amount this Quarter: ₱
Cumulative 1st Quarter to End of this Quarter ₱

Prepared by Approved by
___________________________________________ ___________________ ______________________________________ ______________

Special Disbursing Officer Date Local Chief Executive Date
*state available document attached as evidence of payment
LTOM, 2ND EDITION
Annex D of COA/DBM/DILG/ Governance Commission for GOCCs/DND

ANNEX 31 - TRANSMITTAL LETTER FOR THE AUDIT TEAM LEADER

ENUMERATING THE SUPPORTING DOCUMENTS FOR
THE LIQUIDATION OF THE CASH ADVANCE
Name of Agency
Date ________________
The Audit Team Leader

(Agency)
Dear Sir/ Madam;
We are submitting the herein documents relative to the cash advance drawn
for Confidential Fund of this agency in the amount of ₱______________ for the
period _________ by (name of SDO) ________ as follows:
_________a. Certified Copy of the Physical and Financial Plan

_________b. Certified copy of the designation of the Special Disbursing
Officer (SDO). If the Head of Agency (HoA) is the SDO, a
Certification by the HoA to that effect shall be signed by
him/her
_________c. Certified copy of the approved application for fidelity bond
together with a copy of the Official Receipt (OR) evidencing
payment of premium or List of Accountable Officers with
Approved Bond issued and duly certified by the Bureau of
Treasury
_________d. Certified copy of the transmittal letter of the Liquidation
Report (LR) of the previous cash advances duly stamped
"received" by the Intelligence and Confidential Fund
Audit Unit, COA and certification of the Accountant that the
SDO has no unliquidated CF cash advances;
_________e. Original specimen signatures of signatories to Disbursement
Voucher (DV) and Obligation Requests (ObR) in case of
NGAs and LGUs;
Additional requirements for specific Sector
_________f. Certified copy of Annual/Supplemental Budget supported
with the Annual Investment Plan (AIP) showing the
allocation/budget for Peace and Order Programs (POP) of
the LGU, and the corresponding Appropriation Ordinance
approving the budget
Page 1 of 2
129
FORMS AND ANNEXES
_________g. Statement of Itemized POP of the LGU where the allowable

CF was computed duly certified by the Budget Officer
_________h. Certified copy of the minutes of the meeting evidencing the
2/3 votes of the Local Peace and Order Council approving
the POP and the release of the CF
_________i. Certification from the concerned Philippine National
Police (PNP) Chief in the locality highlighting the peace
and order situation in the locality and supporting the need
to release and use of the CF
_________j. Approval by the Department of Interior and Local
Government (DILG) Secretary in case of additional
appropriation for the CF
_________k. Certified copy of the Obligation Request (ObR)
_________l. Others:
_________ l.1 _________________________________
_________ l.2 _________________________________
_________ l.3 _________________________________
Please acknowledge receipt hereof.

Very truly yours,
(Local Chief Executive)
Page 2 of 2
130
LTOM, 2ND EDITION
Annex E of COA/DBM/DILG/ Governance Commission for GOCCs/DND

ANNEX 32 - CONFIDENTIAL FUND-LIQUIDATION REPORT
LIQUIDATION REPORT No.: _________________
Date: ________________
_______________________________________
Agency Resp. Center Code: _____
Particulars Amount
Total Amount Spent ____________

Amount of Cash Advance Per DV No. ___ Dtd ___ ____________
Amount Refunded Per OR No. ___ Dtd ___ ____________
Amount to be Reimbursed ____________
Certified: Correctness of the Certified: Purpose of cash Certified: Supporting

above data advance duly accomplished documents complete and
proper
____________________ ____________________ ____________________

Claimant Immediate Supervisor Head, Acctg. Unit or SDO
131
FORMS AND ANNEXES
Annex F of COA/DBM/DILG/ Governance Commission for GOCCs/DND

ANNEX 33 - TRANSMITTAL LETTER FOR THE COA CHAIRPERSON

ENUMERATING THE SUPPORTING DOCUMENTS
FOR THE LIQUIDATION OF THE CASH ADVANCE
Name of Agency
Date ________________
The Honorable Chairperson

Commission on Audit
Quezon City
Attention: The Head

Intelligence and Confidential Funds Audit Unit
Dear Chairperson:
We are submitting the herein documents relative to the liquidation of the
cash advance drawn for Confidential Fund (CF) of this agency in the amount of
₱______________ for the period _________ by (name of SDO) ________ as follows:
_____ 1. Liquidation Report

_____ 2. Certified photocopies of the check and paid DV of the cash
advance being liquidated signed and/or approved by the HoA
_____ 3. Documentary evidence of payments and Certification by the HoA
_____ 4. Copy of the supporting documents attached to the cash advance
for the CF as submitted to the Audit Team Leader as follows
_____ a. Certified copy of the designation of the SDO. If the HoA

is the SDO, a certification by the HoA to that effect
shall be signed by him/her;
_____ b. Certified copy of the approved application for fidelity
bond together with a copy of the Official Receipt (OR)
evidencing payment of premium or List of Accountable
Officers with approved Bond issued and duly certified
by the Bureau of Treasury;
_____ c. Certified copy of the transmittal letter of the Liquidation
Report of the previous cash advances duly stamped
"received" by the ICFAU, COA and certification of the
Accountant that the SDO has no unliquidated CF cash
advances;
_____ d. Original specimen signatures of signatories to DV and
Obligation Requests (ObR);
132
LTOM, 2ND EDITION
_____ e. Others:
_____ e.1 _____________________________________
_____ e.2 _____________________________________
_____ e.3 _____________________________________
Additional requirements
_____ f. Certified copy of Annual/Supplemental Budget
supported with the Annual Investement Program
showing the allocation/budget for Peace and Order
Program (POP) of the LGU, and the corresponding
Appropriation Ordinance approving the budget
_____ g. Statement of Itemized POP of the LGU where the
allowable CF was computed duly certified by the
Budget Officer
_____ h. Certified copy of the minutes of the meeting
evidencing the 2/3 votes of the Local Peace
and Order Council approving the POP and the
release of the CF
_____ i. Certification from the concerned PNP Chief in the
locality highlighting the peace and order situation
in the locality and supporting the need to release
and use of the CF
_____ j. Approval by the DILG Secretary in case of
additional appropriation for the CF
_____ k. Certified copy of the ObR
_____ 5. Certified Copy of the Physical and Financial Plan
_____ 6. Certified copy of the Accomplishment Report and its proof of
submission to the Secretary of the DILG
_____ a.Others
Please acknowledge receipt hereof.
Very truly yours,
(Local Chief Executive)
133
LOCAL TREASURY
OPERATIONS MANUAL
2ND EDITION
Manila, Philippines
ISBN: 978-971-94098-8-5

Telefax: +632 522-8771 / 527-2803

LTOM, 2ND EDITION
BOOK IV
Detailed Procedures on the Administration
and Collection of Real Property Tax, Business Tax,
Fees and Charges, and Other Fund Sources
i
TABLE OF CONTENTS
TABLE OF CONTENTS
CHAPTER 1 1
REAL PROPERTY TAX
Section 147. Procedures in Computing Real Property Taxes (RPT), 1
Interests and Discounts
Section 148. Treatment of Real Property Tax Payment under Protest 5
Section 149. Periods of Assessment and Collection 5
Section 150. Procedures in the Conduct of Administrative Action through 6
Levy on Real Property and Judicial Action
Section 151. Compromise Agreement in the Payment of Real Property Tax 15
CHAPTER 2 17
BUSINESS AND OTHER LOCAL TAXES
Section 152. Schedule on Business Tax 17
Section 153. Sample Illustrations of Other Local Taxes Imposed by 29
Provinces, Cities and Municipality within Metro Manila
Section 154. Sample Illustrations of Situs of Tax on Businesses 33
Section 155. Mayor’s Permit to Operate Business 41
Section 156. Examination of Books of Accounts 43
and Pertinent Records of Businessmen
Section 157. Guidelines in the Conduct of Examination of Book 44
of Accounts
Section 158. Retirement of Business 48
CHAPTER 3 50
CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Section 159. General Policy 50
Section 160. Credits and Other Sources of Funds Available to LGUs 50
Section 161. Other Build-Operate-Transfer Arrangements 50
Section 162. Duties and Responsibilities of Treasurers Relative 52
to Credit Financing
Section 163. Provisions for the Servicing of Contractual Obligations 53
of LGUs
Section 164. Enforceability of Loan Obligations Notwithstanding 53
the Expiration of the Terms of the Elective Contracting
Officials
Section 165. Guidelines on the Use of Funds Raised by Indebtedness 54
Section 166. Tax Exemption Privileges of LGUs 54
Section 167. Limitations on the Use of Credit Lines to Stabilize Local 55
Finance
Section 168. Common Requirements for Credit Financing of Local 55
Development Projects
ii
LTOM, 2ND EDITION
Section 169. Acceptable Collateral 56

Section 170. Special Account for Loans, Interest, Bonds, and Contributions 57
for Specific Purposes
Section 171. Other Requirements for Loans, Deferred Payments, 57
and other Financial Loans, Schemes
Section 172. Inter – LGUs Loans, Grants, and Subsidies 57
Section 173. Joint and Several LGU Loan Arrangements 58
Section 174. Loans from Funds Secured by the National Government 58
from Foreign Sources
Section 175. Deferred Payments and Other Financial Schemes 59
Section 176. Bonds and Other Long Term Securities 59
Section 177. Private Sector Financing under the Build-Operate-Transfer 60
(BOT) Arrangement
Section 178. Authority to Negotiate and Secure Grants 63
Section 179. Prohibited Acts Related to the Awards of Contracts under 64
the Provisions on Credit Financing
Section 180. Debt Management 65
CHAPTER 4 71
THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND
ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES
(eSRE) FINANCIAL MANAGEMENT REPORTING SYSTEM
Section 181. Statement of Receipts Expenditures (SRE) Financial Report 71
System: Definition, Composition, and Legal Basis
Section 182. Statement of Receipts Expenditures (SRE): Purpose and Use 72
Section 183. Electronic Statement of Receipts and Expenditures (eSRE) 73
Section 184. Guidelines and Manuals for the Preparation and Submission 75
of the eSRE Reports
Section 185. Submission of SRE Report 75
Section 186. Responsibilities and Sanctions 76
Section 187. Environment and Natural Resources Data Management Tool 77
(ENRDMT) Reports
Section 188. Submission of ENRDMT Reports 77
Section 189. Responsibilities and Sanctions 77

LTOM Form No. 3 Letter of Authority 80
LTOM Form No. 4 List of Documents to be Examined 81
LTOM Form No. 5 Tax Data Sheet 82
LTOM Form No. 6 Tax Data Sheet and Assessment Form 83
LTOM Form No. 7 Letter of Assessment (First Notice) 84
LTOM Form No. 8 Letter of Assessment (Second Notice) 85
LTOM Form No. 9 Letter of Assessment (Final Notice) 86
LTOM Form No. 10 Final Notice Before Issuance of Warrant 87
of Distraint and Levy
iii
TABLE OF CONTENTS
LTOM Form No. 11 Non-presentation of Documents 88

LTOM Form No. 12 Final Notice of Non-presentation of Documents 89
LTOM Form No. 13 Letter of Confirmation 90
LTOM Form No. 14 Certificate of Confirmation 91
LTOM Form No. 15 Certificate of Examination 92
LTOM Form No. 16 Notice of Delinquency in the Payment 93
of Real Property Tax
LTOM Form No. 17 Notice of Real Property Tax Delinquency 94
(First Notice)
(Second Notice)
(Final Notice)
LTOM Form No. 20 Warrant of Levy 97
LTOM Form No. 21 Notice of Levy (Local Assessor 98
and Registrar of Deeds)
LTOM Form No. 22 Report of Levy (Sanggunian) 100
LTOM Form No. 23 Notice of Auction Sale 102
of Delinquent Real Properties
LTOM Form No. 24 Notice of Sale 103
LTOM Form No. 25 Public Auction Registration Form 104
LTOM Form No. 26 List of Registered Bidders 105
LTOM Form No. 27 Undertaking and Waiver of Bidders 106
LTOM Form No. 28 Rules and Regulations of Public Auction 107
LTOM Form No. 29 Certificate of Sale 111
LTOM Form No. 30 Declaration of Forfeiture of Delinquent Property 112
LTOM Form No. 31 Report of Sale 113
LTOM Form No. 32 Certificate of Redemption 114
LTOM Form No. 33 Cancellation of Warrant of Levy 115
(Local Assessor and Registrar of Deeds)
LTOM Form No. 34 Final Deed of Sale 116
LTOM Form No. 35 Statement of Receipts and Expenditures 118
(Exhibits1 and 1-a of BLGF SRE Form No. 1)
iv
LTOM, 2ND EDITION
INTRODUCTION
LTOM Book IV contains procedures, remedies and forms in the collection of real
property-related taxes, business and other local taxes, fees and charges. It also features
the policies, rules and procedures on credit financing and other resource mobilization
mechanisms, as well as the DOF-BLGF financial reporting requirements for LGUs.
This Book consists of four (4) chapters, including Forms and Annexes, viz:
Chapter 1 Real Property Taxation
Chapter 2 Business and Other Local Taxes
Chapter 3 Credit Financing and Alternative Sources of Funds
Chapter 4 The Statement of Receipts and Expenditures (SRE)
and the Electronic Statement of Receipts and Expenditures
(eSRE) Financial Management Reporting System
v
DEFINITION OF TERMS

A. Amusement is a pleasurable diversion and entertainment. It is synonymous to
relaxation, avocation, pastime, or fun. [Sec. 131 (b), Local Government Code
(LGC)]
B. Amusement places include theaters, cinemas, concert halls, circuses and other
places of amusement where one seeks admission to entertain oneself by seeing
or viewing the show or performances. [Sec. 131 (c), LGC]
C. Capital Investment is the capital which a person employs in any undertaking, or
which he/she contributes to the capital of a partnership, corporation, or any other
juridical entity or association in a particular taxing jurisdiction. [Sec. 131 ( f ) , LGC]
D. Corporation includes partnerships, no matter how created or organized, joint-
stock companies, joint accounts (cuentas en participacion), associations or
insurance companies, but does not include eneral professional partnerships and
joint venture or consortium formed for the purpose of undertaking construction
projects or engaging in petroleum, coal, geothermal, and other energy operations
or consortium agreement under a service contract with the government.
General partnerships are partnerships formed by persons for the sole purpose
of exercising their common profession, no part of the income of which is derived
from engaging in any trade or business;
The term “resident foreign” when applied to a corporation means a foreign
corporation not otherwise organized under the laws of the Philippines but engaged
in trade or business within the Philippines.
[Sec. 131 (i), LGC]
E. Dealer means one whose business is to buy and sell merchandise, goods and
chattels as a merchant. He/she stands immediately between the producer or
manufacturer and the consumer and depends for his/her profit not upon the labor
he bestows upon his commodities but upon the skill and foresight with which he/
she watches the market [Sec. 131 (k), LGC].
F. Investment is the placing of capital or laying out of money in a way intended
to secure income or profit from its employment. (Philippine Law Dictionary, 3rd
edition, Moreno)
G. Loan – in reference to money, it is a contract under which one of the parties
delivers to another a sum of money on the condition that the same amount shall be
paid (Art. 1933, Civil Code of the Philippines). It involves the delivery by one party
and the receipt by the other party of a given sum of money, upon an agreement,
express or implied, that the recipient will repay the same sum, with or without
interest. [People v. Concepcion, 44 Phil 129]
vi
CHAPTER REAL PROPERTY TAX
1
SECTION 147. PROCEDURES IN COMPUTING REAL PROPERTY
TAXES (RPT), INTEREST AND DISCOUNTS
A. Computation of the Basic Tax and Special Education Fund (SEF) Tax – In
computing the basic RPT and the tax accruing to the SEF, the following basic
components should be noted:
1. The assessed value of the real property shall be taken from the Assessment
Roll submitted by the Local Assessor concerned.
2. The applicable tax rate shall be the rate fixed for the subject property by the
approved tax ordinance of the LGU concerned.
3. Formula for the computation of RPT
i. Basic Tax:
Tax Due = (Assessed Value) (Basic Tax Rate) - Discount + Interest
ii. SEF Tax:
Tax Due = (Assessed Value) (SEF Tax Rate) - Discount + Interest
iii. Total Tax Due
Tax Due = Basic Tax Due + SEF Tax Due
B. Formula for the Computation of the Tax Discount for Advanced and Prompt
Payment
Discount = [ (Assessed Value) (Tax Rate) (Tax Discount Rate) ]
C. Formula for the Computation of the Interest Due on Unpaid Taxes
Interest = [ (Assessed Value) (Tax Rate) (Number of Months Delinquent1) ]
Sample Computations
Sample A. A property with an Assessed Value (AV) of ₱1,000,000.00. Basic and SEF
Tax rates is at 1%.
Case 1: Establish the Basic Tax, SEF Tax and the Total Tax Due of the property.
Illustration:
a. Basic Tax Due = [ (Assessed Value) (Basic Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (0) + (0) ]
Basic Tax Due = ₱ 10,000.00
1 Maximum of 36 months.
1
REAL PROPERTY TAX
b. SEF Tax Due = [ (Assessed Value) (SEF Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (0) + (0) ]
SEF Tax Due = ₱ 10,000.00
c. Total Tax Due = [ (Basic Tax Rate) + (SEF Tax Rate) ]

= [ (₱ 10,000.00) + (₱ 10,000.00) ]
Total Tax Due = ₱ 20,000.00
Case 2: Assuming the Total Tax Due established in Case 1 is for Calendar Year (CY)
2019 and the local ordinance provides for 20% Discount for Advance Payments, what
is the new Total Tax Due in case the owner would want to pay in full before 2019?

= [ (₱ 1,000,000.00) (1.0%) (20%) ]
Discount = ₱ 2,000.00
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
SEF Tax Due = ₱ 80,000.00
a. Total Tax Due = [ (Basic Tax Rate) + (SEF Tax Rate) ]

= [ (₱ 8,000.00) + (₱ 8,000.00) ]
Case 3: Supposing the owner failed to pay in 2018 but will be paying during the 1st
quarter of 2019. What is the new Total Tax Due if the local tax ordinance provides for
a 10% discount on full payment made during the 1st quarter?
First, determine the discount as follows:
= [ (₱ 1,000,000.00) (1.0%) (20%) ]
Discount = ₱ 2,000.00
Then compute the taxes due.
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
SEF Tax Due = ₱ 80,000.00
a. Total Tax Due = [ (Basic Tax Rate) + (SEF Tax Rate) ]

= [ (₱ 8,000.00) + (₱ 8,000.00) ]
2
LTOM, 2ND EDITION
Case 4: Assume that the same property has been delinquent since CY 1988 and its
owner asked for a computation if he /she is to pay in January 2018, to include taxes
due for 2019 and 2020. Assume further that no general revision was ever conducted
since 1988. Rates of Discount for Advance and Prompt payment are 20% and 10%,
respectively.
a. For 1988 to 1991, in determining the maximum allowable interest for late payment,
the provisions of PD 464 shall apply.
Interest (Annual)
= [ (Assessed Value) (Tax Rate) (Interest Rate) (Number of Months Delinquent) ]
= [ (₱ 1,000,000.00) (1.0%) (2%) (12) ]
= ₱ 2,400.00
Applicable Basic Interest/ Interest/ Total Tax

Year SEF Tax
Penalty Tax (discount) (discount) Due
1988 24% 10,000 2,400 10,000 2,400 24,800
1989 24% 10,000 2,400 10,000 2,400 24,800
1990 24% 10,000 2,400 10,000 2,400 24,800
1991 24% 10,000 2,400 10,000 2,400 24,800
SUBTOTAL (1988-1991) 99,200
For delinquency from 1992 onward, the impositions under the LGC shall apply at
2% per month, with a maximum of 36 months that is equivalent to 72% of interest
annually.
Interest (2016)
= [ (₱ 1,000,000.00) (1.0%) (2%) (36) ]
= ₱ 7,200.00
Applicable Basic Interest/ SEF Interest/ Total Tax

Year
Penalty Tax (discount) Tax (discount) Due
1992 72% 10,000 7,200 10,000 7,200 34,400
1993 72% 10,000 7,200 10,000 7,200 34,400
1994 72% 10,000 7,200 10,000 7,200 34,400
1995 72% 10,000 7,200 10,000 7,200 34,400
1996 72% 10,000 7,200 10,000 7,200 34,400
1997 72% 10,000 7,200 10,000 7,200 34,400
1998 72% 10,000 7,200 10,000 7,200 34,400
1999 72% 10,000 7,200 10,000 7,200 34,400
2000 72% 10,000 7,200 10,000 7,200 34,400
2001 72% 10,000 7,200 10,000 7,200 34,400
2002 72% 10,000 7,200 10,000 7,200 34,400
2003 72% 10,000 7,200 10,000 7,200 34,400
3
REAL PROPERTY TAX
Applicable Basic Interest/ SEF Interest/ Total Tax

Year
Penalty Tax (discount) Tax (discount) Due
2004 72% 10,000 7,200 10,000 7,200 34,400
2005 72% 10,000 7,200 10,000 7,200 34,400
2006 72% 10,000 7,200 10,000 7,200 34,400
2007 72% 10,000 7,200 10,000 7,200 34,400
2008 72% 10,000 7,200 10,000 7,200 34,400
2009 72% 10,000 7,200 10,000 7,200 34,400
2010 72% 10,000 7,200 10,000 7,200 34,400
2011 72% 10,000 7,200 10,000 7,200 34,400
2012 72% 10,000 7,200 10,000 7,200 34,400
2013 72% 10,000 7,200 10,000 7,200 34,400
2014 72% 10,000 7,200 10,000 7,200 34,400
2015 72% 10,000 7,200 10,000 7,200 34,400
2016 72% 10,000 7,200 10,000 7,200 34,400
SUBTOTAL (1992-2016) 516,000
For delinquencies less than 36 months:

Interest (2017)
= [ (₱ 1,000,000.00) (1.0%) (2%) (25) ]
= ₱ 5,000.00
Interest (2018)
= [ (₱ 1,000,000.00) (1.0%) (2%) (13) ]
= ₱ 2,600.00
To compute for advance payment Discount, which is applicable for the 2020 tax
dues:
= [ (₱ 1,000,000.00) (1.0%) (10%) ]
Discount = ₱ 2,000.00
Rate of Tax Due

Basic Penalties/ SEF Penalties/
Year Interest/ Basic &
(discount) Tax (discount) Tax (discount)
SEF
2017 50% 10,000 5,000 10,000 5,000 30,000
2018 26% 10,000 2,600 10,000 2,600 25,200
2019 (10%) 10,000 (1,000) 10,000 (1,000) 18,000
2020 (20%) 10,000 (2,000) 10,000 (2,000) 16,000
SUBTOTAL (2017-2019) 89,200
TOTAL TAX DUE (1988-2020) 704,400
4
LTOM, 2ND EDITION
SECTION 148. TREATMENT OF REAL PROPERTY TAX PAYMENT

UNDER PROTEST
A. No protest shall be entertained unless the taxpayer first pays the tax. There shall
be annotated on the tax receipt the words "paid under protest".
The protest in writing must be filed within thirty (30) days from payment of the tax
to the provincial, city treasurer or municipal treasurer, in the case of a municipality
within Metropolitan Manila Area, who shall decide the protest within sixty (60)
days from receipt. [Sec. 252 (a), LGC]
B. The tax or a portion thereof paid under protest shall be held in trust by the Local
Treasurer concerned. However, fifty percent (50%) of the tax paid under protest
shall be distributed in accordance with Sec. 271 of the LGC, on the distribution of
proceeds. [Art. 343 (b), IRR, implementing Sec. 252 (b), LGC]
C. In the event that the protest is finally decided in favor of the taxpayer, the amount
or portion of the tax protested shall be refunded to the protestant, or applied as
tax credit against his/her existing or future tax liability. [Sec. 252 (c), LGC]
D. In the event that the protest is denied or upon the lapse of the sixty (60)-day
period prescribed in sub-paragraph (a) of Sec. 252 of the LGC, the taxpayer may
avail of the remedies as provided for in Chapter 3, Title Two, Book II of the same
Code. [Sec. 252 (d), LGC]
E. Should the taxpayer find the action on the protest unsatisfactory, the taxpayer
may appeal with the Local Board of Assessment Appeal (LBAA) within sixty (60)
days from receipt of the decision on the protest. (Sec. 226, LGC)
F. If the taxpayer is still unsatisfied with the decision of the LBAA, the taxpayer may
NOTE
Payments under protest and appeal to the LBAA are “successive

administrative remedies to a taxpayer who questions the correctness of an
assessment.” The LBAA shall not entertain any appeal “without the action of
the local assessor” on the protest. (GR No. 184203, 26 Nov. 2014)
appeal with the Central Board of Assessment Appeals (CBAA) within thirty (30)
days from receipt of the LBAA’s decision. (Sec. 229, LGC)
SECTION 149. PERIODS OF ASSESSMENT AND COLLECTION

A. Local taxes, fees or charges shall be assessed within five (5) years from the date
they become due. No action for the collection of such taxes, fees and charges
whether administrative or judicial, shall be instituted after the expiration of such
period: Provided, that taxes, fess or charges which have accrued before the
effectivity of the LGC may be assessed within a period of three (3) years form the
date they become due.
5
REAL PROPERTY TAX
B. In case of fraud or intent to evade payment of taxes, fees or charges, the same
may be assessed within ten (10) years from discovery of the fraud or intent to
evade payment.
C. Local taxes, fees or charges may be collected within five (5) years from the date of
assessment by administrative or judicial action. No such action shall be instituted
after the expiration of said period: Provided, however, that taxes, fees or charges
assessed before the effectivity of the LGC may be collected within a period of
three (3) years from the date of assessment.
D. The running of the periods of prescription provided in the preceding paragraphs
shall be suspended for the time during which:
1. The treasurer is legally prevented from making the assessment of collection;
2. The taxpayer requests for a reinvestigation and execute a waiver in writing
before the expiration of the period within which to assess or collect: and
3. The taxpayer is out of the country or otherwise cannot be located.
(Sec. 194, LGC)
SECTION 150. PROCEDURE IN THE CONDUCT OF ADMINISTRATIVE

ACTION THROUGH LEVY ON REAL PROPERTY
AND JUDICIAL ACTION
A. Administrative Action as Remedy for the Collection of Real Property Tax
1. Pre-Auction Sale Activities
a. Notice of the Delinquency in the Payment of Real Property Tax2
i. When the real property tax or any other tax imposed becomes
delinquent, the provincial, city or municipal treasurer shall issue
the Notice of Delinquency with the following specifications:
1. Description, location, and owner of the real property subject
to delinquent tax;
2. Date upon which the tax became delinquent;
3. That personal property may be distrained to effect payment
of the delinquent tax;
4. That at any time before the distraint of personal property,
payment of the tax with surcharges, interests and penalties
may be made; and
5. Unless the tax, surcharges and penalties are paid before
the expiration of the year for which the tax is due, the
2 LTOM Form No. 16 - Notice of Deliquency in the Payment of Real Property Tax
6
LTOM, 2ND EDITION
delinquent real property will be sold at public auction, and

the title to the property will be vested in the purchaser,
subject however to the right of the delinquent owner of
the property or any person having legal interest therein to
redeem the property within one (1) year from the date of
sale.
ii. Post the notice of delinquency at the main entrance of the
provincial capitol, city or municipal hall and in a publicly accessible
and conspicuous place in each barangay of the LGU concerned.
iii. The notice of delinquency shall also be published once a week for
two (2) consecutive weeks, in a newspaper of general circulation
in the province, city or municipality.
(Sec. 254, LGC)
iv. Serve a copy of the Notice of Real Property Tax Delinquency3
either by registered mail with return card or by personal service
to the delinquent real property owner or any person having legal
interest therein at the address appearing in the records of the
local treasury office or known personally by the Local Treasurer
concerned.
NOTE
xxx, we note that unlike land registration proceedings which are in rem, cases
involving an auction sale of land for the collection of delinquent taxes are in
personam. Thus, notice by publication, though sufficient in proceedings in
rem, does not as a rule satisfy the requirements of proceedings in personam.
As such, mere publication of the notice of delinquency would not suffice,
considering that the procedure in tax sales is in personam. It was, therefore,
still incumbent upon the city treasurer to send the notice of tax delinquency
directly to the taxpayer in order to protect the interests of the latter. (GR No.
133698, 4 April 2001)
b. Levy on Real Property

i. After the expiration of the time required to pay the basic real
property tax or any other tax, issue a warrant of levy on or before,
or simultaneously with the institution of the civil action for the
collection of delinquent tax.
ii. Warrant of Levy4 – When issuing a warrant of levy, the local
treasurer shall prepare a duly authenticated certificate showing
the following:
3 LTOM Form No. 17 - Notice of Real Property Tax Delinquency (First Notice); LTOM Form No. 18 - Notice of
Real Property Tax Delinquency (Second Notice); LTOM Form No. 19 - Notice of Real Property Tax Delinquency
(Final Notice)
4 LTOM Form No. 20 - Warrant of Levy
7
REAL PROPERTY TAX
1. Name of the delinquent owner of the property or person

having legal interest therein;
2. Description of the property; and
3. Amount of the tax due and the interest thereon.
iii. The warrant shall operate with the force of a legal execution
throughout the province, city or municipality within the Metropolitan
Manila Area (MMA). The warrant shall be mailed or served upon
the delinquent owner of the real property or person having legal
interest therein, or in case he/she is out of the country or cannot
be located, to the administrator or occupant of the property.
iv. Notice of Levy5 – At the same time, written notice of levy with
the attached warrant shall be mailed to or served upon the
assessor and the Registrar of Deeds (RoD) of the province, city
or a municipality within the MMA where the property is located,
annotated the levy on the tax declaration (TD) and the certificate
of title to the property, respectively.
v. The levying officer shall submit a report on the levy to the
sanggunian concerned within ten (10) days after the receipt of
the warrant by the owner of the property or person having legal
interest therein6.
(Sec. 258, LGC)
c. Advertisement of Sale
i. Within thirty (30) days after the service of the warrant of levy,
a local treasurer shall proceed to publicly advertise for sale
or auction the property or a usable portion therof as may be
necessary to satisfy the tax delinquency and expenses of sale.
ii. The advertisement shall be effected by posting a notice at the
main entrance of the provincial, city or municipal building, and
in publicly accessible and conspicuous place in the barangay
where the real property is located.
iii. The Notice of Sale shall be published once a week for two (2)
weeks in a newspaper of general circulation in province, city or
municipality where the property is located.7
iv. The advertisement shall specify the following:
1. Amount of the delinquent tax, interest due thereon and
expenses of sale;
2. Date and place of sale;
5 LTOM Form No. 21 - Notice of Levy
6 LTOM Form No. 22 - Report of Levy (Sanggunian)
7 LTOM Form No. 23 - Notice of Auction Sale of Delinquent Real Properties
8
LTOM, 2ND EDITION
3. Name of the owner of the real property or person having

legal interest therein; and
4. Description of the property to be sold.
v. At any time before the date fixed for the sale, the owner of the
real property or person having legal interest therein may stay
the proceedings by paying the delinquent tax, the interest due
thereon and the expenses of sale.
(Sec. 260, LGC)
vi. Service of Notice of Sale (NS)8 – In addition to the publication,
the local treasurer may serve the NS through registered mail with
return card or personally upon the owner of the delinquent real
property or person having legal interest therein, at the address
appearing in the records of the local treasury office or known
personally by the Local Treasurer. In the event that the real
property owner is out of the country or cannot be located, the
warrant shall be served upon the duly appointed administrator of
the delinquent real property or the occupant thereof who must be
of sufficient age and discretion.
vii. The local treasurer may, by ordinance duly approved advance
an amount sufficient to defray the costs of collection through
administrative and judicial remedies, including the expenses of
advertisement and sale. (Sec. 260, LGC)
viii. In the conduct of auction sale, the local treasurer may recommend
to the local chief executive (LCE) the creation of an auction
committee. The committee may be created for the purpose of
formulating the rules and regulations of the auction and may be
composed of the Local Treasurer, Legal Officer, Local Assessor,
and a representative of the Office of the LCE, of the LGU
undertaking the public sale or auction.
ix. The rules and regulations in the conduct of public auction on
delinquent real properties may include the qualifications of those
who are allowed to participate in the auction. The rules and
regulations set shall be disseminated before the conduct of sale.
Based on Article 1491 of the Civil Code of the Philippines (RA
No. 386) as amended, the following persons are disqualified to
purchase a property at public auction9.
1. The guardian, the property of the person or persons who
may be under his/her guardianship;
8 LTOM Form No. 24 - Notice of Sale

9 LTOM Form No. 28 - Rules and Regulations of Public Auction
9
REAL PROPERTY TAX
2. Agents, the property whose administration or sale may

have been entrusted to them, unless the consent of the
principal has been given;
3. Executors and administrators, the property of the estate
under administration;
4. Public officers and employees, the property of the State
or any of the subdivision thereof, or of any government
owned or controlled corporation (GOCC), or institution, the
administration of which has been entrusted to them; this
provision shall apply to judges and government experts
who, in any manner whatsoever, take part in the sale;
5. Justices, judges, prosecuting attorneys, clerks of superior
and inferior courts, and other officers and employees
connected with the administration of justice, the property
and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise
their respective functions; this prohibition includes the act
of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object
of any litigation in which they may take part by virtue of
their profession; and
6. Any others specially disqualified by law.
2. Auction Proper Activities

a. The sale shall be held either at the main entrance of the provincial,
city or municipal building, or on the property to be sold, or at any other
place as specified in the notice of sale. (Sec. 260, LGC)
NOTE
The public auction of land to satisfy delinquency in the payment of real

estate tax derogates or impinges on property rights and due process. Thus,
the steps prescribed by law are mandatory and must be strictly followed; If
not, the sale of the real property is invalid and does not make its purchaser
the new owner. Strict adherence to the statutes governing tax sales is
imperative not only for the protection of the taxpayers, but also to allay any
possible suspicion of collusion between the buyer and the public officials
called upon to enforce the laws. (GR No. 220440, 8 November 2017)
b. Registration of Bidders10 – Any qualified person interested to

participate in the public auction shall register with the local treasurer.
Bidders shall be assigned a number which shall be called or referred
to during the entire proceedings.
10 LTOM Form No. 25 - Public Auction Registration Form; LTOM Form No. 26 - List of Registered Bidders; LTOM
Form No. 27 - Undertaking and Waiver of Bidder
10
LTOM, 2ND EDITION
c. The property shall be sold to the highest bidder. No bid lower than the
floor price shall be admitted. The floor price shall be equivalent to the
sum of delinquent tax, the interest due thereon and expenses of sale.
The highest bidder, within two (2) hours after award shall pay the bid
price in cash or in manager’s check.
d. Certificate of Sale (CS)11 – The local treasurer shall prepare and
deliver to the purchaser of the delinquent real property a CS containing
the name of the purchaser, a description of the property sold, the
amount of the delinquent tax, the interest due thereon, the expenses
of sale and a brief description of the auction proceedings. (Sec. 260,
LGC)
e. Declaration of Forfeiture12 – In case there is no bidder for the real
property advertised for sale, or if the highest bid is for an amount
insufficient to pay the real property tax and the related interest and
costs of sale, the local treasurer conducting the sale shall purchase
the property in behalf of the local government unit concerned to satisfy
the claim.
Within two (2) days thereafter, the local treasurer shall make a report
of his proceedings which shall be reflected upon the records of his/her
office.
It shall be duty of the Registrar of Deeds concerned, upon registration
with his/her office of any such declaration of forfeiture to transfer the
title of the forfeited property to the local government unit concerned.
Within one (1) year from the date of such forfeiture, the taxpayer or
any of his/her representative, may redeem the property by paying to
the local treasurer the full amount of the real property tax and the
related interest and the cost of sale.
(Sec. 263, LGC)
3. Post-Auction Sale Activities
a. Report of Sale13 – Within thirty (30) days after the sale, the local
treasurer or his/her deputy, make a report of the sale to the sanggunian
concerned, and which shall form part of the records of his/her records.
b. The local treasurer shall remit to the owner of the real property or
person having legal interest therein the proceeds of the sale in excess
of the delinquent tax, the interest due thereon, and the expenses of
the sale.
c. Certificate of Redemption14 – Within one (1) year from the date of
sale, the owner of the delinquent real property or person having legal
11 LTOM Form No. 29 - Certificate of Sale

12 LTOM Form No. 30 - Declaration of Forfeiture of Delinquent Property
13 LTOM Form No. 31 - Report of Sale
11
REAL PROPERTY TAX
interest therein or his representative, shall have the right to redeem

the property upon payment to the local treasurer of the amount of
delinquent tax, including the interest thereon, and the expenses of
sale from the date of delinquency to the date of sale, plus interest of
not more than two percent (2%) per month on the purchase price from
the date of sale to the date of redemption.
ILLUSTRATION
It must be noted that within the 1-year redemption period, possession of the
property auctioned is retained by the owner or person having legal interest
therein and will continue to enjoy the income or fruits thereof. The reason is that,
redemption period affords the owner an extended chance to pay the delinquent
tax. Hence, ownership of the property is not vested upon the purchaser
immediately after the public auction. In the event the owner exercises such
right of redemption by paying the redemption price, that is, the amount of the
delinquent tax, the interest due thereon, and the expenses of sale, plus interest
of not more than 2% per month on the purchase or bid price, the amount of the
purchase or bid price should be readily available to be returned to the purchaser
upon surrender of the Certificate of Sale.
Therefore, in the meantime, the local treasurer should hold in trust the excess
amount until the expiration of the 1-year redemption period. If the owner or
person having legal interest fails to redeem the property, the excess amount may
then be remitted. Henceforth, ownership shall be vested upon the purchaser in
auction through the execution of the Final Deed of Sale.
(BLGF Letter to the ICO-City Treasurer of Pasig, 05 January 2013)
NOTE
The counting of one (1) year redemption period of property sold at public auction
for its tax delinquency should be counted from the date of annotation of the
Certificate of Sale in the proper Register of Deeds if such is provided in the local
government unit’s ordinance.
(GR No. 171033, 03 August 2010 - City Mayor, City Treasurer,
City Assessor All of Quezon City, and Alvin Emerson S. Yu, vs. Rizal
Commercial Banking Corporation)
Such payment shall invalidate the Certificate of Sale issued to the

purchaser and the owner of the delinquent real property or person
having legal interest therein shall be entitled to a Certificate of
Redemption which shall be issued by the local treasurer or his/her
deputy.
The local treasurer or his/her deputy, upon receipt from the purchaser
of the Certificate of Sale, shall forthwith return to the latter the entire
amount paid by him/her plus interest of not more than two percent
(2%) per month. Thereafter, the property shall be free from the lien of
such delinquent tax, interest due thereon and expenses of sale.
(Sec. 261, LGC)
14 LTOM Form No. 32 - Certificate of Redemption
12
LTOM, 2ND EDITION
d. The local treasurer shall inform the assessor and the registrar of
deeds of the cancellation of the warrant of levy due to the exercise of
redemption by the property owner15.
e. Final Deed of Sale16 – In case the owner or person having legal interest
therein fails to redeem the delinquent property as provided herein, the
local treasurer shall execute a deed conveying to the purchaser said
property, free from lien of the delinquent tax, interest due thereon and
expenses of sale. The deed shall briefly state the proceeding upon
which the validity of the sale rests.
(Sec. 262, LGC)
f. Upon execution of the Final Deed of Sale (FDS) of the auctioned real
property in favor of the purchaser, the local treasurer shall require the
owner of the auctioned property to surrender possession of deliquent
real property and the corresponding owner’s duplicate copy of the
Transfer Certificate of Title (TCT) and the Tax Declaration (TD). These
will be attached to the FDS which shall be submitted to the Register
of Deeds (RoD).
g. The RoD having jurisdiction over the place where the property is
located shall consolidate the title in the name of the purchaser who
shall be entitled to a copy of a new TCT.
h. The purchaser as the new owner, shall be issued the corresponding
TD. It shall be the duty of the local assessor to issue a new TD in the
name of the purchaser as the new owner of the auctioned property.
The new owner shall be liable to pay the annual ad valorem tax and
other taxes that will thereafter become due thereon.
i. If the property is not redeemed, the ownership thereof shall be fully
vested on the local government unit concerned. (Sec. 263, LGC)
j. Resale of Real Estate Taken for Taxes, Fees, or Charges – The
sanggunian concerned may, by ordinance duly approved and upon
notice of not less than twenty (20) days, sell and dispose of the real
property acquired through purchase/forfeiture at public auction. The
proceeds of the sale shall accrue to the general fund of the local
government unit concerned. (Sec. 264, LGC)
15 LTOM Form No. 33 - Cancellation of Warrant of Levy (Assessor and Registrar of Deeds)
16 LTOM Form No. 34 - Final Deed of Sale
13
REAL PROPERTY TAX
NOTE
By virtue of the foregoing provisions of Secs. 263 and 264 of the LGC, the
City exercised its right of forfeiture over the delinquent property for want of
bidder. The owner of the delinquent property had one year from the date of
forfeiture to redeem the property by paying the full amount of the delinquent
tax, interest and expenses incurred related to the auction sale. However,
the delinquent owner failed to exercise his statutory right to redeem the
property. Thereafter, following the procedures, a Transfer Certificate of Title
was issued to the City as the new absolute owner in fee simple.
Therefore, this Bureau sees no injustice against the former if the forfeited
property is subsequently sold at the prevailing market price which appears
to be the most advantageous to the interest of Caloocan City as the owner.
Suffice it to say that, as owner of the property, the city has both the right and
duty to sell the same at a price or consideration most advantageous and
beneficial to its interest which is in line with the opinion of COA to base the
selling price of the property from the prevailing market value. (BLGF Letter
to the OIC City Assessor of Caloocan, 28 January 2013)
B. Collection of Real Property Tax Through the Courts

1. The delinquent RPT or any deficiency thereof after public sale or auction
may be collected by civil action in a court of competent jurisdiction which
shall be filed by the local treasurer within the period prescribed under Sec.
270 (Periods Within Which to Collect Real Property Taxes), Chapter 6, Title
Two, Book II of the LGC. The institution of the civil action may be done
simultaneously with the administrative remedy of collection. (Sec. 266, LGC)
2. The delinquent basic RPT or any other tax levied under Title 2, Book II of
the LGC, shall constitute indebtedness of the taxpayer to the LGU, hence,
collection of such indebtedness can be enforced through civil action in any
court of competent jurisdiction, observing the following:
a. The local treasurer shall furnish the provincial attorney or city or
municipal legal officer a certified statement of delinquency who,
within fifteen (15) days after receipt, shall file the civil action
in the name of the province, city or municipality in the proper
court of competent jurisdiction. The jurisdiction of the court is
determined by the amount sought to be recovered exclusive of
interests and costs. Thus, where the delinquent tax due does not
exceed Ten Thousand Pesos (Php10,000.00), the competent
court is the municipal or city trial court, and where the amount
due is in excess of Ten Thousand Pesos (Php10,000.00), the
proper court is the regional trial court;
b. Where cognizable in an inferior court, the action must be filed in
the municipality or city where the delinquent property is located.
Where the regional trial court has jurisdiction, the plaintiff LGU
14
LTOM, 2ND EDITION
shall file the complaint in the city or province where the property
is situated; and
c. In both cases, that is, where the claim is either cognizable by
an inferior court or by the regional trial court, the local treasurer
shall furnish the provincial attorney or the city or municipal legal
officer concerned the exact address of the defendant where he/
she may be served with summons.
(Art. 357, IRR implementing Sec. 266, LGC)
SECTION 151. COMPROMISE AGREEMENT IN THE PAYMENT

OF REAL PROPERTY TAX
The compromise agreement does not operate to defeat effective tax administration of
the LGU or serve to discourage diligent taxpayers but rather a mechanism by which
the property owners may avail of, in case the delinquent tax is beyond the capacity of
the taxpayer to pay the whole amount within the required payment period.
A. Compromise agreement in the payment of real property tax (RPT) may be allowed
at any time prior to the issuance of the warrant of levy. Payment of RPT thru
compromise agreement shall be in accordance with Sec. 255 of the LGC.
Real properties covered by a compromise agreement shall not be included in the
administration of judicial and administrative remedies.
B. Authority to Enter into a Compromise Agreement - The Local Chief Executive

(LCE), thru a sanggunian resolution of the Provincial/City or Municipality within
MMA, shall have the authority to enter into a compromise agreement.
The concerned sanggunian, upon evaluation of the recommendation of the Local
Treasurer, shall determine the terms and conditions of the compromise agreement
such as:
1. amount and period of payment
2. number of installments; and
3. penalty in case of non-compliance with the terms and conditions of the said
agreement.
C. Guide to Compromise Agreement – A compromise agreement may be resorted

to by the delinquent taxpayer in the settlement of delinquent RPT obligations, as
may be justified as follows:
1. The delinquent RPT has accumulated and is beyond the capacity of the
taxpayer to pay the whole amount in one payment within the required
payment period.
15
REAL PROPERTY TAX
2. The accumulated delinquent RPT shall be paid within the terms and
conditions of the compromise agreement and no penalties or interest shall
be waived.
3. The amount to be paid in the compromise agreement shall cover current
year taxes and prior year/s delinquencies.
D. The Local Treasurer concerned shall maintain a copy of all compromise
agreements entered into by the LGU.
16
CHAPTER BUSINESS AND OTHER LOCAL TAXES
2
SECTION 152. SCHEDULE ON BUSINESS TAX
A. Business Taxes on manufacturers, assemblers, repackers, processors, brewers,
distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or
manufacturers of any article of commerce of whatever kind or nature shall be
imposed in accordance with the following schedule:
With gross sales or receipts for the preceding calendar Amount of Tax
year in the amount of Per Annum
Less than ₱ 10,000.00 ₱ 165.00
₱ 10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 302.00
50,000.00 or more but less than 75,000.00 1,320.00
750,000.00 or more but less than 1,000,000.00 10,000.00
1,000,000.00 or more but less than 2,000,000.00 13,750.00
2,000,000.00 or more but less than 3,000,000.00 16, 500.00
4,000.000.00 or more but less than 5,000,000.00 23,100.00
at a rate not
exceeding thirty
seven and a half
6,500,000.00 or more
percent (37-1/2%)
of one percent
(1%)
Illustrative Case 1a. Compute the tax on business of a repacker if the total annual
gross sales for the preceding year 2018 amounted to ₱3,500,000.00 and to be
paid on the first working day of January 2019.
Referring to the schedule, the gross sales of ₱3,500,000.00 falls under the
bracket “3,000,000.00 or more but less than 4,000,000.00”, therefore, the
business tax for CY 2019 is ₱19,800.00.
17
Illustrative Case 1b. Compute the tax on business of a repacker if the total annual
gross sales for the preceding years 2017 and 2018 amounted to ₱3,500,000.00
and ₱7,000,000.00, respectively, and paid on 31 July 2019.
bracket “3,000,000.00 or more but less than 4,000,000.00”, therefore, the
business tax due, including surcharge and interests is computed as follows:
Tax Due for 2018:
Gross Sales for 2017 = ₱3,500,000.00

Tax based on the schedule ₱19,800.00
Surcharge ₱19,800.00 x 25% 4,950.00
₱24,750.00
Interest
January to December 2018 12 mos. x 2%=24%
January to July 2019 7 mos. x 2%=14%
38%
₱24,750.00 x 38% ₱ 9,405.00
Total Tax Due for 2018 ₱34,150.00

bracket “6,500,000.00 or more,” therefore, the business tax due including
surcharge and interests, is computed as follows:
Tax Due for 2019:
Gross Sales for 2018 ₱7,000,000.00

Tax Rate (37.5% of 1%) 0.00375 ₱26,250.00

Surcharge ₱26,250.00 x 25% 6,562.50
Tax for 2019 ₱32,812.50
Plus Interest (Jan-Jul 2019) ₱32,812.50 x 14% 4,593.75
Total Tax Due for 2019 ₱37,406.25*
Illustrative Case 2. If the total annual gross sales of an assembler for the
preceding year is ₱7,000,000 and payment is made in January 2019, compute
for the total tax due.
Gross Sales for 2018 ₱7,000,000.00
Tax Rate (37.5% of 1%) 0.00375
Tax Due ₱ 26,250.00
B. Business tax on wholesalers, distributors, or dealers in any article of commerce

of whatever kind or nature shall be imposed in accordance with the following
schedule:
18
LTOM, 2ND EDITION
Less than ₱ 1,000.00 ₱ 18.00
₱ 1,000.00 or more but less than 2,000.00 33.00
at a rate not
exceeding fifty
2,000,000.00 or more
percent (50%) of one
percent (1%)
Illustrative case: Compute the tax on business of a wholesaler if the annual

gross sales for the preceding year amounted to ₱5,000,000.00.
Gross Sales ₱5,000,000.00
Tax Rate (50% of 1%) 0.005
Tax Due ₱ 25,000.00
The city may exceed the maximum rates allowed for the province or
municipality by not more than 50%.
The business enumerated in paragraph (a) of Sec. 143 of the LGC shall no longer
be subject to the tax on wholesalers, distributors, or dealers herein provided for.
[Art. 232 (b), IRR implementing Sec. 143 (b), LGC]
19
C. Business tax on exporters, and on manufacturers, millers, producers, wholesalers,

distributors, dealers, or retailers of essential commodities at a rate not exceeding
one-half (1/2) of the rates prescribed under subsections (a), (b) and (d) of Sec.
143 of the LGC.
The term "exporters" shall refer to those who are principally engaged in the
business of exporting goods and merchandise, as well as manufacturers and
producers whose goods or products are both sold domestically and abroad. The
amount of export sales shall be excluded from the total sales and shall be subject
to the rates not exceeding one half (1/2) of the rates prescribed (a), (b) and (d) of
Art. 232 (c), LGC.
NOTE
A “dealer” in any article of commerce (except essential commodities), like

a wholesaler, is subject to the business tax under Sec. 143 (b) of the LGC;
however, if the same dealer is also engaged in the business of retail, he
shall be subject to the tax under Sec. 143 (d) of the LGC.
A wholesaler who is at the same time a retailer and who deals both in
“essential commodities” as listed in paragraph (c) of Sec. 143 of the LGC
and in “non-essential commodities”, shall be entitled to the concession
or reduced tax afforded by the same paragraph insofar as his business
transactions in such essential commodities are concerned. Necessarily, he
shall keep a separate account for this class of sales or receipts to be entitled
to the reduced tax rates. Otherwise he shall be liable as wholesaler at the
rates prescribed under Sec. 143 (d), both of the LGC.
(Philippine Law on Local Government Taxation Volume 1,

Business Taxes, Licenses, Fees and Charges, 2010 edition, Ursal)
Illustrative case: Compute the tax on business of a cement manufacturer

with total annual gross sales amounting to ₱5,000,000.00 for the preceding
year 2017, and payment is made in January 2018.
Gross Sales ₱5,000,000.00
Tax based on schedule A17 ₱ 24,375.00

Cement being an essential commodity, the tax rate shall not
exceed ½ of the rates prescribed under schedule A
(₱24,375.00/2) ₱ 12,187.50
The city may exceed the maximum rates allowed for the province or
municipality by not more than 50%.
17 Sec. 143 (a), LGC
20
LTOM, 2ND EDITION
D. On retailers – The guidelines on the administration and collection of the

business tax on retailers are as follows:
With gross sales or receipts for the

Amount of Tax Per Annum
preceding calendar year in the amount of
₱400,000.00 or less 2%
more than ₱400,000.00 1%
1. The rate of two percent (2%) per annum shall be imposed on sales not
exceeding Four Hundred Thousand Pesos (₱400,000.00), while the rate of
one percent (1%) per annum shall be imposed on sales in excess of the first
Four Hundred Thousand Pesos (₱400,000.00).
2. Barangays, however, shall have the exclusive power to levy taxes, as
provided under Art. 240 (a) of the IRR of the LGC, on gross sales or receipts
of the preceding calendar year of Fifty Thousand Pesos (₱50,000.00) or
less, in the case of cities, and Thirty Thousand Pesos (₱30,000.00) or less,
in the case of municipalities.
(Art. 232 (d), IRR implementing Sec. 143, LGC)
Illustrative case: Compute the tax on business of a retailer with total annual
gross sales of ₱450,000.00 for the preceding year 2018, and payment is
made in January 2019.
Gross Sales = ₱450,000

Less: ₱400,000 x 2% ₱8,000.00
₱ 50,000 x 1% ₱ 500.00
Business tax due ₱8,500.00
E. On contractors and other independent contractors in accordance with the

following schedule:
Less than ₱ 5,000.00 ₱ 27.50
5,000.00 or more but less than ₱ 10,000.00 61.60
21
2,000,000.00 or more at a rate not
exceeding fifty
percent (50%) of
one percent (1%)
Illustrative Case: Compute the total tax due of a contractor with total
receipts of ₱6,000,000 from the preceding year and payment is made in the
current year.
Total receipts = ₱6,000,000.00

Less: 2,000,000.00 ₱ 11,500.00
₱4,000,000.00
Tax Rate (50% of 1%) 0.005 20,000.00
Total tax due ₱ 31,500.00
a. Determination of taxable gross receipts of construction

contractors
i. The taxable gross receipts shall be the amounts received by the
principal contractor as the total contract price less the amount
paid to sub-contractors under sub-contract arrangements, if there
is any. The gross receipts of sub-contractors are in turn subject to
the same business tax as construction contractors.
ii. The taxable gross sales or receipts include the total amount of
money or its equivalent actually or constructively received during
the taxable quarter for the services performed or to be performed,
consisting of the following:
1. The contract price;
2. The compensation or service fee, including the amount
charged for materials installed or used in conjunction with
the services; and
3. Deposits or advance payments.
Taxable gross receipts exclude discounts that can be determined
at the time of sales, sales returns, and the excise taxes and VAT
paid by the contractor.
22
LTOM, 2ND EDITION
b. Situs or Place of Payment of Business Tax on Construction

Contractors – For the purpose of collection of the business tax on
construction contractors, the following rules shall apply:
i. On Domestic Construction Projects – For projects bidded and
implemented within the territorial jurisdiction of the Philippines:
1. All gross receipts realized from domestic projects or
contracts undertaken by the branch office shall be
recorded in the said branch office and the tax thereon
shall be payable to the city or municipality where the said
branch is located; and
2. In cases where there is no branch office, the gross receipts
from domestic projects or contracts shall be recorded in
the Head/Principal Office and the same shall be allocated
as follows:
a. Thirty percent (30%) of the gross receipts shall be
taxable by the city or municipality where the principal
office is located; and
b. Seventy percent (70%) of the gross receipts shall be
taxable by the city or municipality where the project
office is located.
ii. On Overseas Construction Projects – For construction projects

undertaken by a Philippine-based construction contractor
outside the territorial boundaries of the Philippines, as well as
construction contracts involving fabrication works with attendant
installation works outside the Philippines, which are paid for in
accepted freely convertible foreign currency:
1. In the case of overseas construction projects, the

construction contractors shall declare separately the gross
receipts realized therefrom, which shall not be subject to
the business tax;
2. In the case of pre-fabricated works which are paid for
in accepted freely convertible foreign currency with
attendant installation works outside the Philippines, the
gross receipts realized therefrom shall be subject to not
more than one half (1/2) of the rate under paragraph (e)
(1) of this Section; and
3. In case there is transfer or relocation of the Head/Principal
Office or of any branch to another city or municipality,
the construction contractor shall give due notice of
such transfer or relocation to the cities or municipalities
concerned at least fifteen (15) days before such transfer
or relocation is effected.
(DOF LFC No. 3-95, 22 May 1995)
23
F. On Banks and Other Financial Institutions

a. Banks and other financial institutions are subject to a business tax at a rate
not exceeding fifty percent (50%) of one percent (1%) on the gross receipts
of the preceding calendar year derived from:
i. interests, commissions and discounts from lending activities;

ii. income from financial leasing;
iii. dividends, rentals on property and profit from exchange or sale of
property; and
iv. insurance premium.
[Sec. 143 (f), LGC]
b. Guidelines Applicable to Banks
i. For the purpose of imposing the tax on gross receipts of banks, the
term "gross receipts" shall include only the following:
1. Interest from loans and discounts representing interest earned
and actually collected on loans and discounts such as:
a. Discounts earned and actually collected in advance on
bills discounted;
b. Interest earned and actually collected on demand loans;
c. Interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance; and
d. Interest earned and actually collected on mortgage
contracts receivables.
2. Interest earned and actually collected on inter-bank loans;
3. Income from rental of property shall include the following:
a. Earned portion of rental collected in advance from
lessees of safe deposit boxes; and
b. Rental earned and actually collected from lessees of
bank premises and equipment.
4. Income earned and actually collected from acquired assets;
5. Income from sale or exchange of assets and property;
6. Cash dividends earned and received on equity investments;
7. Commissions from lending activities; and
8. Income component of rentals from financial leasing.
24
LTOM, 2ND EDITION
ii. The following income and receipts of banks shall be excluded from the
taxing authority of the LGUs:
1. Interest earned under the expanded foreign currency deposit
system;
2. Interest accumulated by lending institutions on mortgages
insured under RA No. 580, as amended, otherwise known as the
Home Financing Act; and
3. Receipts from filing fees, service and other administrative
charges.
iii. Situs or Place of Payment of Tax on Banks
1. All transactions filed with or negotiated in the branch shall be
recorded in said branch and the gross receipts derived from said
transaction shall be taxable by the city or municipality where
such branch is located. This rule shall be applied to:
a. Transactions negotiated with and approved by the branch
manager under his own authority;
b. Transactions filed and negotiated in the Branch but being
beyond the approving authority of the branch manager, are
forwarded to the Head Office for final approval; and
c. Transactions where the stated address in the loan
application of the borrower is the city or municipality where
the Bank has a branch, in which case the Head Office upon
approval of the loan shall credit the transaction to the Bank
Branch.
2. The gross receipts derived from transactions made by the Head
Office, except gross receipts recorded in the branches, shall
be taxable by the city or municipality where said Head Office is
located.
3. In case there is a transfer or relocation of the Head Office or of
any branch to another city or municipality, the bank shall give due
notice of such transfer or relocation to the chief executives of the
cities or municipalities concerned within fifteen (15) days after
such transfer or relocation is effected.
(DOF LFC No. 2-07, 26 February 2007 as reiterated
under Bangko Sentral ng Pilipinas (BSP) Circular Letter
No. CL - 2017 - 079, 27 December 2017)
(BLGF Memorandum Circular No. 016-2018, 10 August 2018)
25
c. Guidelines Applicable to Insurance Companies

i. Gross Receipts of Insurance Companies Subject to Tax – Gross
receipts of insurance companies shall include only the following:
1. Insurance premiums actually collected, except the following
tax exempt premiums which must be recorded and declared
separately:
a. Premiums collected on insurance policies issued before
the effectivity of the ordinance imposing the tax;
b. Two percent (2%) of all premiums for the sale of fire,
earthquake, and explosion hazard insurance pursuant
to the Fire Code of the Philippines (PD No. 1185, as
amended by RA 9514);
c. Premiums refunded within six (6) months after payment of
the account;
d. Reinsurance premiums by a company that has already
paid the tax;
e. Premiums collected or received by any branch of a
domestic corporation, firm, or association doing business
outside the Philippines on account of a life insurance of
the insured who is a non-resident;
f. Premiums collected or received on account of any
reinsurance, if the risk insured covers property located
outside the Philippines, or the insured, in case of personal
insurance, resides outside the foreign country where the
original insurance has been issued or perfected;
g. Portions of the premiums collected or received by
insurance companies pertaining to variable contracts; and
h. The excess of the amount necessary to insure the lives of
variable contracts.
However, the aforementioned tax-exempt premiums shall
be recorded and declared separately.
2. Interest earnings on loans and discounts actually collected;
3. Rentals actually collected from property owned by insurance
companies;
4. Income actually collected from acquired assets; and
5. Cash dividends received on equity investments.
(DOF LFC No. 2-93, 16 June 1993)
26
LTOM, 2ND EDITION
ii. Income and Receipts of Insurance Companies Not Subject to Tax –

All other incomes and receipts of insurance companies not enumerated
in the preceding paragraph shall be excluded from the taxing authority
of the city or municipality concerned; Service fees received from fire,
earthquake, and explosion pre-insurance adjustment business directly
to agents, pursuant to the Fire Code of the Philippines. (PD No. 1185)
iii. Situs or Place of Payment of Tax on Insurance Companies – The
situs of tax on insurance companies shall be in accordance with the
following rules:
1. Insurance contracts/policies issued by the Head Office or
branch shall be recorded in the said office or branch as the case
may be and the premiums and/or gross receipts due on such
contracts/ policies shall be taxable by the city or municipality
where such Head Office or branch to which such premiums or
gross receipts were actually paid is located. This rule shall be
applied irrespective of whether the insurance contracts/policies
were solicited or negotiated by insurance agents, or brokers who
are not residents of the city or municipality where the branch is
located, or who are not affiliated with or assigned to such branch.
2. The offices of an insurance agent, or broker, shall not be
considered a branch and shall not be subject to the situs of
taxation rule.
3. All insurance premiums and/or gross receipts from transactions
not recorded in the branches or the insurance companies shall be
recorded in the Head Office and taxable by the city or municipality
where the said Head Office is located.
4. In case there is transfer or relocation of the Head Office or of any
branch to another city or municipality, the insurance company
shall give due notice to the LCEs of the cities or municipalities
concerned within fifteen (15) days after such transfer or relocation
is effected.
(DOF LFC No. 2-93, 16 June 1993)
d. Guidelines Applicable to Financing Companies
i. Financing companies shall refer to corporations or partnerships,
except those regulated by the BSP, the Insurance Commission, and
the Cooperative Development Authority (CDA), which are primarily
organized for the purpose of extending credit facilities to consumers
and to industrial, commercial or agricultural enterprises, either by
discounting or factoring commercial papers or accounts receivable,
or by buying and selling contracts, leases, chattel mortgages, or other
evidences of indebtedness, or by leasing of motor vehicles, heavy
equipment and industrial machinery, business and office machines
and equipment, appliances and other movable property.
27
ii. For the purpose of imposing business tax on financing companies,

gross receipts shall include only the following:
1. Interest earned and actually collected on loans and discounts,
viz:
a. Discounts earned and actually collected in advance on
bills discounted;
b. Interest earned and actually collected on demand loans;
c. Interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance; and
d. Interest earned and actually collected on mortgage
contract receivables.
2. Interest earned and actually collected on inter-bank loans
3. Rental of property – this represents the following rental income:
a. Earned portion of rental collected in advance from
lessees of safe deposit boxes; and
b. Rental earned and actually collected from lessees on
bank premises and equipment.
4. Income earned and actually collected from acquired assets
5. Income from sale or exchange of assets or property
6. Cash dividends earned and received on equity investments
7. Income component of rentals from financial leasing
iii. All other incomes and receipts of financing companies not enumerated
in the preceding paragraph shall be excluded from the taxing authority
of LGUs.
iv. Situs or Place of Payment of Tax on Financing Companies – The
situs of tax on financing companies shall be in accordance with the
following:
1. All transactions made by the branch shall be recorded in said
branch and the gross receipts derived from said transactions
shall be taxable by the city or municipality where such branch is
located.
2. The gross receipts derived from transactions made by the Head
Office, except gross receipts recorded in the branches, shall
be taxable by the city or municipality where said Head Office is
located.
28
LTOM, 2ND EDITION
3. In case there is a transfer or relocation of the head office or any

branch to another city or municipality, the bank shall give due
notice of such transfer of relocation to the Chief Executives of
the cities or municipalities concerned within fifteen (15) days
after such transfer or relocation is effected.
(DOF LFC No. 3-93, 16 June 1993)
e. Guidelines Applicable to Credit Card Companies
NOTE
Credit card companies fall within the purview of banks and other financial
institutions contemplated under Sec. 143 (f) of the LGC, and therefore may
be subject to business taxes at the rate of 50% of 1% on the gross receipts
upon enactment of the appropriate ordinance by the LGU concerned. (BLGF
Letter to Picazo Buyco Tan Fider & Santos Law Offices, 15 March 1999)
SECTION 153. SAMPLE ILLUSTRATIONS OF OTHER LOCAL TAXES

IMPOSED BY PROVINCES, CITIES
AND MUNICIPALITY WITHIN METRO MANILA
A. Tax on Transfer of Real Property Ownership
Illustrative Case a.1 Compute the tax on transfer of real property ownership of a
property with a fair market value (FMV) of ₱1,000,000.00 and the total consideration
involved in the acquisition is ₱2,000,000.00:
If the property is located in the

If the property is located in the City:
Province:
2,000,000 x (50% of 1%) 2,000,000 x (75% of 1%)
2,000,000 x 0.005 = ₱10,000.00 2,000,000 x 0.0075 = ₱15,000.00
transfer tax payable to province transfer tax payable to the city
Note: The basis for computing the tax is the total consideration involved in the
acquisition since it is higher than the FMV of the property.
Illustrative Case a.2 Compute the tax on transfer of real property ownership of
a property with a fair market value (FMV) of ₱1,000,000.00 and with the following
specifications:
29
Location: City
Type of Property: Land
Classification: Residential
Mode of Transfer: Inheritance
Decedent’s death: 2 December 2015
Payment of Transfer Tax: 31 March 2019
General Revision: every three years
FMV ₱1,000,000.00
Multiplied by (75 % x 1%) 0.0075 ₱ 7,500.00

Interest ₱7,500.00 x 72% 5,400.00
Tax for 2019 ₱ 12,900.00
Illustrative Case a.3 Compute the tax on transfer of real property ownership of a
property with a fair market value (FMV) of ₱1,000,000.00 and the total consideration
involved in the acquisition is ₱2,000,000.00, with the following specifications:
Location: Province
Date of Notarized Deed of Sale: 1 January 2016
Payment of Transfer Tax: 31 March 2019
The basis for computing the tax is the total consideration involved in the acquisition since
it is higher than the FMV.
Acquisition Cost ₱2,000,000.00

Multiplied by (50% x 1%) 0.005 ₱ 10,000.00

Interest ₱10,000.00 x 72% 7,200.00
Tax for 2019 ₱ 17,200.00
Illustrative Case a.3 Computation in Consideration of the 60 Day Period from

the Time of Death of the Decedent:
Compute the tax on transfer of real property ownership of a property with a fair
market value (FMV) of ₱1,000,000.00 and the total consideration involved in the
acquisition is ₱ 500,000.00, with the following specifications:
Location: City
Mode of Transfer: Inheritance
Decedent’s death: 31 March 2019
Payment of Transfer Tax: 15 June 2019
FMV ₱1,000,000.00
Multiplied by (75 % x 1%) 0.0075 ₱ 7,500.00

Interest* ₱7,500.00 x 2% 150.00
Tax for 2019 ₱ 7,650.00
30
LTOM, 2ND EDITION
Computation of Interest*:
In consideration of the 60 day period from the date of the decedent’s death**:
Decedent’s death: 31 March 2019

Thus:
April 1-30, 2019 = 30 days

May 1-30, 2019 = 30 days
TOTAL 60 days
Therefore:
Since the 60 day period covers the months of April to May, and the tax was
paid on 15 June 2019, there shall be imposed a 2% interest for delinquency in
the month of June,.
NOTE:-**
“Sec. 135. Tax on Transfer of Real Property Ownership.
a. xxx
b. xxx
It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein
imposed within sixty (60) days from the date of the execution of the deed or from the date of the
decedent’s death.”
B. Tax on Business of Printing and Publication

Compute the tax if the gross annual receipts for the preceding calendar year
amounts to ₱500,000.00:
₱500,000 x (50% of 1%)

₱500,000 x .005 = ₱2,500 tax on business of printing and publication
In case of a newly started business, the tax shall not exceed 1/20of1% of the capital
investment. In the succeeding calendar year, regardless of when the business
started to operate, the tax shall be based on the gross receipts for the preceding
calendar year, or any fraction thereof, as provided herein. (Sec. 136, LGC)
However, the city may exceed the maximum rate allowed for the province
or municipality by not more than 50% except the rates of professional and
amusement taxes. (Sec. 151, LGC)
C. Franchise Tax
Compute the tax of a business with gross annual receipts for the preceding
calendar year amounting to 1,000,000.00:
31
Gross receipts - ₱1,000,000 x (50% of 1%)

₱1,000,000.00 x 0.005 = ₱5,000.00
In case of a newly started business, the tax shall not exceed 1/20of1% of the capital
investment. In the succeeding calendar year, regardless of when the business
started to operate, the tax shall be based on the gross receipts for the preceding
calendar year, or any fraction thereof, as provided herein. (Sec. 137, LGC)
However, the city may exceed the maximum rate allowed for the province
or municipality by not more than 50% except the rates of professional and
amusement taxes. (Sec. 151, LGC)
D. Tax on Sand, Gravel and other Quarry Resources

Compute the tax of 200 cubic meters of sand extracted from the province and the
fair market value per cubic meter of sand is ₱500/cubic meter. Assume that the
ordinance imposes a tax rate of 10% on the FMV.
Fair market value per cubic meter of sand = ₱500/cubic meter x 10%=50/cubic
meter
200 cubic meters x ₱50/cubic meter= ₱10,000 total tax due on sand and
gravel.
E. Amusement Tax
Compute the tax assuming gross receipts from admission amounted to
₱100,000.00.
Gross receipts - ₱100,000.00 x 10% = ₱10,000 amusement tax due the province
or city
Note: the rate of amusement tax imposed by the province or city was decreased
from 30% to 10% per RA No. 9640.
F. Professional Tax
The tax shall be uniform for provinces and cities at an amount not exceeding
₱300.00.
However, LGUs shall have the authority to adjust the tax rates not oftener that
once every five (5) years but in no case shall such adjustment exceed ten percent
(10%) of the rates fixed under the LGC (Sec. 191, LGC)
G. Annual Fixed Tax Imposed for Every Delivery Truck or Van
The tax shall not exceed ₱500.00 for the province or municipality. The city may levy
the tax exceeding the maximum amount imposed by the province or municipality
by not more than 50%.
32
LTOM, 2ND EDITION
H. Community Tax
Illustrative Case 1:
For Individual:
An employee receiving a monthly salary of ₱52,000 shall be computed a
community tax as follows:
Annual Tax ₱ 5.00

Additional tax:
₱1.00 for every ₱1,000
₱52,000 x 12 = 624,000/annum
624,000/1,000
₱624.00
₱624.00 x ₱1.00
Community tax due ₱629.00
Illustrative Case 2:
On Corporation:
Compute the community tax due on XYZ Corporation owning a real property with
a total assessed value of ₱5,000,000. The business registered a gross sales of
₱2,000,000 during the preceding year. The community tax is paid in February of
the current year.
Annual Tax ₱ 500.00

Additional tax:
From business operation:
₱2.00 for every ₱5,000
₱2,000,000/₱5,000
₱400 x ₱2.00 ₱ 800.00
Community tax due ₱ 1,300.00
SECTION 154. SAMPLE ILLUSTRATIONS OF SITUS OF TAX

ON BUSINESSES
A. MANUFACTURER
Manufacturer 1
Offices/Facilities Location
Principal/Head Office LGU1
Factory 1 LGU1
Factory 2 LGU2
Sales/Branch Office LGU2
33
Facts:
a. Company A operates two (2) bakeries producing and selling baked products
b. Factory 1 caters to Luzon clienteles
c. Factory 2 caters to Visayas clienteles
d. Said factories have separate invoicing, purchase and official receipting
systems
e. Sales of goods sourced from Factory 1 are recorded in the Principal/Head
Office
f. Sales of goods sourced from Factory 2 are recorded in the Branch/Sales
Office
g. All sales are consolidated in the Principal/Head Office
Situs of Tax
a. All sales made in the locality where there is no sales office shall be recorded
in the Principal/Head Office along with the sales made by the principal/head
office, and shall be 100% taxable by LGU1 since the Principal/Head Office
and Factory 1, wherein it caters Luzon-Based customers are both located
in LGU1.
b. All sales made and recorded in the sales/branch office shall be 100% taxable
in LGU2 where the said sales office/branch office is located.
c. LGU1 and LGU2 may collect Mayor’s Permit fee and other regulatory fees
and charges as may be imposed under their respective duly enacted tax
ordinances.
NOTE: The consolidation of all sales of the Company are only for purposes of
income tax and VAT, as required by the Bureau of Internal Revenue (BIR)
Manufacturer 2
Factory LGU3
Plantation LGU4
Facts:
a. Company A is a manufacturer with principal office located in LGU1 where
all sales are effected and recorded.
b. Sales are also made in locality where there is no branch/sales office
c. Sales are made in a locality where there is a sales/branch office
d. Plantation is located in a locality other than that where the factory is located
34
LTOM, 2ND EDITION
Situs of Tax
a. 30% of all sales made in the locality where there is no sales office shall
be recorded in the principal/head office along with the sales made by the
principal/head office, shall be taxable by LGU1 where the principal/head
office is located.
b. 70% of sales allocation shall be divided as follows:
i. 60% to LGU3 where the factory is located
ii. 40% to LGU4 where the plantation is located
iii. All sales made in the sales/branch office shall be recorded thereat and
100% taxable by LGU2 where the sales/branch office is located
iv. LGU1, LGU2, LGU3 and LGU4 may collect Mayor’s Permit fee and
other regulatory fees and charges as may be imposed under their
respective duly enacted tax ordinances
Manufacturer 3
Factory 1 LGU3
Factory 2 LGU4
Fact:
a. In cases where there are two or more factories
Situs of Tax
a. 30% of all sales made in the locality where there is no sales office shall
be recorded in the principal/head office along with the sales made by the
principal/head office, shall be taxable by LGU1 where the principal/head
office is located.
b. 70% of sales allocation shall be prorated among the localities where such
factories are located in proportion to their respective volumes of production
during the period for which the tax is due.
NOTE: This shall likewise apply to plants, plantations or project offices. In
the case of project offices of service and other independent contractors,
the term production shall refer to the cost of projects actually undertaken
during the tax period.
35
B. ROUTE TRUCKS
Office/Facilities Location
Warehouse 1 LGU1
Warehouse 2 LGU2
Factory 1 LGU3
Factory 2 LGU4
Facts:
a. Company A is engaged in the business of manufacturing and marketing
personal and household care products.
b. Has a central warehouse in LGU1 where finished product are stored and
transferred to another warehouse in LGU2
c. Sales orders are booked by salesmen with various customers within and out
of LGU2
d. Sales orders are submitted to warehouse 2 for processing and prepares the
sales invoices on the basis of which goods are withdrawn from warehouse 2
Situs of Tax
a. Products taken from warehouse 2 delivered to customers outside LGU2
shall be recorded in warehouse 2 and the tax thereon paid in LGU2 where
warehouse 2 is located.
b. Deliveries or sales made of products taken from warehouse 1 to places
where it does not have any branch/sales office, or another warehouse, shall
be recorded in the principal/head office and the taxes due thereon shall be
paid to LGU 1.
C. PROCESSOR
Project Office/Mining Area LGU2
Facts:
a. Mining company whose operations include the processing of extracted
minerals to finished products.
b. Sales/transactions are recorded in the principal/head office located in LGU1.
c. Project office/mining area is located in LGU2
36
LTOM, 2ND EDITION
Situs of Tax
a. Thirty percent (30%) of all sales/transactions recorded in the principal office
shall be taxable by LGU1 where the principal office is located; and
b. Seventy percent (70%) of all sales/transactions recorded in the principal
office shall be taxable by LGU2 where the project office/mining area is
located.
NOTE: In the case of project offices/mining areas that are geographically located in two
(2) or more localities, the allocation of the business tax imposed by LGUs concerned shall
be decided by the “Committee” which will be composed of affected LGUs where there are
mining operations subject to the allocation provided above when there are two or more
project offices located in different localities.
D. DISTRIBUTOR
Sales Service Centers Nationwide
Warehouse LGU1
Facts:
a. Company A is engaged in the distribution of pharmaceutical and consumer
products
b. Opened sales service centers where delivery of stocks takes place
c. Sales service centers are mere liaison offices where orders for goods are
submitted
d. Sales service centers receives an order and relays information to the
principal/head office
e. Principal/head office checks the availability of the items subject of the order.
If stocks are available, the sales invoice is generated by the principal/head
office, and the sales invoice together with the goods are dispatched directly
from the central warehouse to the customers
Situs of Tax
a. All sales made and recorded in principal/head office shall be 100% taxable
by LGU1 where the principal/head office is located
b. Sales service centers which are mere liaison offices shall not share in the
business tax
c. Warehouse as a mere storage area may only be subject to Mayor’s Permit
fee and other regulatory fees and charges
d. LGU1 and LGUs where sales service centers are located may collect Mayor’s
Permit fee and other regulatory fees and charges, as may be imposed under
their respective duly enacted tax ordinances
37
E. POWER PRODUCER
LGU1
Plant
LGU2
Administrative Office LGU3
Facts:
a. Company A is engaged in power generation
b. Sales of electricity generated from the power plant and billing are recorded
and invoiced in the principal office
c. Unified plant physically located in LGU 1 and LGU2
d. Leases office space in LGU3 which serves as an administrative office
Situs of Tax
a. 30% of all sales recorded in the principal/head office shall be taxable by
LGU1 where the principal/head office is located.
b. 70% of all sales recorded in the principal/head office shall be taxed equally
between LGU1 and LGU4.
c. LGU3 shall not share in the local business tax paid to LGU1 LGU2
d. LGU1, LGU2, and LGU3 may collect Mayor’s Permit fee and other regulatory
fees and charges as may be imposed under their respective duly enacted
tax ordinances.
F. SERVICE CONTRACTOR
Fabrication/Manufacturing Site LGU2
Facts:
a. Company A is engaged in the business of supply and installation of power
and distribution of industrial machineries
b. Upon purchase order of client, company orders imported and local parts
c. There are parts of products that would entail an assembly/fabrication/
modification process
d. The whole assembly is then installed on-site
38
LTOM, 2ND EDITION
Situs of Tax
a. Company A shall pay its local business tax in full as a service contractor to
LGU1.
b. LGU2 shall not share in the local business tax paid to LGU1. Maintaining
a fabrication/manufacturing site in LGU2 does not make the company a
manufacturer. It is merely a part of, or incidental to, and is necessary to its
main business of supply and installation of industrial machinery. It must be
considered a single transaction, which cannot be divided into its components
or integral parts and treated separately for purposes of taxation, thus, it may
not be further taxed.
c. Both LGUs may impose Mayor’s permit and other regulatory fees and
charges, as may be provided under their duly enacted local ordinances.
G. REAL ESTATE LESSOR
Properties for lease Various LGUs
Facts:
a. Company A is a lessor of real properties located in various places within the
jurisdiction of different LGUs
b. Lease agreements between the lessor and lessee are administered in the
principal/head office
c. Principal/head office issues corresponding invoices
d. Rentals collected from lessors are recorded in the principal/head office
Situs of Tax
a. Taxes dues shall accrue and shall be paid 100% to LGU1 where the principal/
head office is located
b. LGUs where real properties are subject of lease agreements shall not share
in the local business tax
c.
d. LGU1 and various LGUs may collect Mayor’s Permit fee and other regulatory
fees and charges as may be imposed under their respective duly enacted
tax ordinances.
39
H. TOLLWAYS OPERATORS AND CONCESSIONAIRES (TOCs)
LGU1
LGU2
Toll Barrier/Plaza
LGU3
LGU4
Facts:

a. Company A was granted the concession to finance, design, rehabilitate,
expand, operate and maintain the Manila North Expressway and charge
fees for the users for a concession.
b. Toll Barriers and/or Toll Plazas are strategically situated along the Tollways
System and housing the Toll Booths manned by collecting personnel
Situs of Tax
a. All receipts collected by the Tollbooths in a Toll Barrier/Plaza shall be recorded
in said Toll Barrier/Plaza and the tax due thereon shall be payable to LGU 1,
LGU2, LGU 3 and LGU4 where the said Tollbooths or Toll Barriers/Plazas
are located.
b. LGU1 where the principal/head office is located shall not share in the LBT
due to LGU 2, LGU3 and LGU4, except on the LBT due attributed to the
collections made by the Toll Barrier situated within the territorial jurisdiction
of LGU 1.
c. LGUs traversed by the tollways system where the TOC does not maintain
any Tollbooth or Toll Barrier/Plaza shall not be entitled to the collection of
the LBT.
d. All receipts from Electronic Toll Collection System (ETC) such as “EC
Tag”, “Easy Trip Tag”, and “Badge/Magnetic Card”, or any other modes of
electronic collection, shall be recorded in the Toll Barrier/Plaza where the
e-Card or e-Pass is used and the charges therefrom shall be recorded in
said Toll Barrier/Plaza and the tax due thereon shall be payable to the LGU
where the said Toll Barrier/Plaza is located.
LGU1, LGU2, LGU3 and LGU4 may impose Mayor’s permit and other
regulatory fees and charges, as may be provided under their duly enacted
local ordinances.
40
LTOM, 2ND EDITION
SECTION 155. MAYOR’S PERMIT TO OPERATE BUSINESS

The following procedures shall be observed in securing Mayor’s Permit for business:
A. Application for Mayor’s Permit – An application to operate business shall be
filed with the Office of the City/Municipal Mayor.
B. Documentation Requirements – The following documents may be required, if
applicable:
1. For a newly started business
a. Proof of business registration, incorporation, or legal personality (i.e.
Department of Trade and Industry (DTI) /Securities and Exchange
Commission (SEC) / Cooperative Development Authority (CDA)
Registration);
b. Basis for computing taxes, fees and charges (e.g. business
capitalization in the case of franchise/printing and publication as basis
for the computation of local business tax);
c. Occupancy Permit, if required by national laws (e.g. Building Code)
and local laws;
d. Contract of Lease (if lessee);
e. Barangay clearance (for businesses which are not required occupancy
permits); and
f. Locational clearance.
2. For renewal of existing business permit
a. Basis for computing taxes, fees, and charges (e.g. Income Tax
Returns); and
b. Barangay Clearance (original copy)
(JMC Memorandum Circular No. 01, s. 2016, 30 August 2016)
3. Streamlined Procedures for the Issuance of Local Business Licenses-
Clearances, Permits, Certifications or Authorizations
The LGUs are mandated to implement the following revised guidelines in
the issuance of business licenses, clearances, permits, certifications or
authorizations:
a. A single or unified business application form shall be used in processing
new applications for business permits and business renewals which
consolidates all the information of the applicant or requesting party by
various local government departments, such as, but not limited to, the
local taxes and clearances, building clearance, sanitary permit, zoning
clearance, and other specific LGU requirements, as the case may be
including the fire clearance from the Bureau of Fire Protection (BFP).
41
The unified form shall be made available online using technology-

neutral platforms such as, but not limited to the central business
portal or the city/municipality’s website and various channels for
dissemination. Hard copies of the unified forms shall likewise be made
available at all times in designated areas of the concerned office and/
or agency.
b. A one-stop business facilitation service hereinafter referred to as the
Business One Stop Shop (BOSS) for the city/municipality’s business
permitting and licensing system to receive and process manual and/
or electronic submission of application for license-clearance, permit,
certification or authorization shall be established within the cities/
municipalities’ Negosyo Center as provided for under Republic Act
No. 10644, otherwise known as the “’Go Negosyo Act”. There shall
be a queuing mechanism in the BOSS to better manage the flow of
applications among the LGU departments receiving and processing
applications. LGUs shall implement co-location of the offices of the
treasury, business permits and licensing office, zoning office, including
the Bureau of Fire Protection (BFP), and other relevant city/municipality
offices/ departments, among others, engaged in starting a business,
dealing with construction permits.
c. Cities/Municipalities are mandated to automate their business
permitting an electronic BOSS within a period of three (3) years upon
the effectivity of this Act for a more efficient business registration
processes. Cities/Municipalities with electronic BOSS shall develop
electronic versions of licenses, clearances, permits, certifications or
authorizations with the same level of authority, which may be printed
by businesses in the convenience of their offices. The Department
of Information and Communication Technology (DICT) shall make
available to LGUs the software for the computerization of the
business permit and licensing system. The DICT, Department of
Trade and Industry (DTI), and Department of the Interior and Local
Government (DILG), shall provide technical assistance in the planning
and implementation of a computerized or software-enabled business
permitting and licensing system.
d. To lessen the transaction requirements, other local clearances such
as, but not limited to, sanitary permits, environmental and agricultural
clearances shall be issued together with the business permit.
e. Business permits shall be valid for a period of one (1) year. The city/
municipality may have the option to renew business permits within the
first month of the year or on the anniversary date of the issuance of
the business permit.
f. Barangay clearances and permits related to doing business shall be

applied, issued, and collected at the city/municipality in accordance
42
LTOM, 2ND EDITION
with the prescribed processing time of this Act: Provided, that the
share in the collections shall he remitted to the respective barangays.
(Sec. 11, RA No. 11302 or An Act Promoting Ease Of Doing Business
and Efficient Delivery of Government Services, Amending for the
Purpose Republic Act No. 9485, Otherwise Known as the Anti-Red Tape
Act of 2007, and for Other Purposes, approved 28 May 2018)
SECTION 156. EXAMINATION OF BOOKS OF ACCOUNTS

AND PERTINENT RECORDS OF BUSINESSMEN
A. The following shall govern the examination of books of accounts and pertinent
records of businessmen by the Local Treasurer:
1. Only the Local Treasurer, or his/her duly authorized representative, of the
LGU imposing the tax, fee or charge, may examine the books of accounts
and pertinent records of business in order to ascertain, assess and collect
the correct amount of tax, fee or charge. [Art. 259(a), IRR, Implementing
Sec. 171, LGC]. Consequently, no personnel from the Office of the LCE and
other departments within the LGU may inspect records of businessmen;
2. The examination of the books of accounts and pertinent records of business
is an inherent function of the Local Treasurers and may be performed or
enforced without need of an executive order from the LCE or an implementing
ordinance of the sanggunian. (BLGF 1st Indorsement to the City Treasurer
of Santiago City, 13 May 1996)
B. Authority to Conduct Examination
1. The provincial, city and municipal, or barangay treasurer may, by himself/
herself or through any of his/her deputies duly authorized in writing, conduct
the examination of the books, accounts, and other pertinent records of any
person, partnership, corporation, or association subject to local taxes, fees
and charges [Art. 256(b), IRR, Implementing Sec. 171, LGC] in order to
ascertain, assess, and collect the correct amount of the tax, fee, or charge.
2. The LGC has not specified the rank of the officials who may be deputized
to examine books of accounts of business establishments. It is, however,
proposed that only personnel occupying plantilla of permanent positions
in the Local Treasury Office shall be deputized in writing by the treasurer
concerned to examine the books of accounts of business establishments in
their respective jurisdiction.
C. Written Authority to Conduct Examination – In case the examination is made
by a duly authorized deputy of the Local Treasurer, the written authority of the
deputy concerned shall specifically state the name, address, and business of
the taxpayer whose books, accounts and pertinent records are to be examined,
the date and place of such examination, and the procedure to be followed in
conducting the same. [Art. 259(d), IRR Implementing Sec. 171, LGC]
43
D. Time, Frequency and Certification – The examination shall be made during

regular business hours not oftener than once a year for every tax period, which
shall be the year immediately preceding the examination, and shall be certified to
by the examining official. Such certification shall be made of record in the books
of accounts of the taxpayer examined. [Art. 259 (C), IRR Implementing Sec. 171,
LGC]
E. Access to the Bureau of Internal Revenue (BIR) Records – The records

of the Revenue District Office of the BIR shall be made available to the Local
Treasurer, his/her deputy or duly authorized representative. [Art. 259(e), IRR
Implementing Sec. 171, LGC; EO 646 as implemented under DOF DO No. 9-08,
26 March 2008; and MOU between DILG, DOF, BIR and different leagues of
LGUs including “Liga ng mga Barangay sa Pilipinas”]
SECTION 157. GUIDELINES IN THE CONDUCT OF EXAMINATION

OF BOOK OF ACCOUNTS
A. Administrative Preparation by the Local Treasurer/Head of the Local Treasury
Office – Prior to the conduct of any examination of the books of accounts of a
business establishment, the Local Treasurer or Head of the Local Treasury Office
concerned shall undertake the following steps:
1. From the list of business taxpayers, the Local Treasurer shall select/ identify
the business entities that shall be verified and examined based on, but not
limited to the following:
a. Complexity of the business;
b. Materiality and volume of prior years’ gross sales;
c. Number of sales/distribution outlets;
d. Delinquency in payment of business taxes; and
e. Other relevant factors.
2. The Local Treasurer shall create the examination team to be composed of
staff from the Local Treasury Office. The team shall be headed preferably
by a Certified Public Accountant (CPA) or a degree holder of Bachelor of
Science in Accountancy.
a. Ideally, a pair of deputized examiners shall conduct the examination of
the accounts of business establishments. However, in order to cover
more establishments, the examination may be done by a lone deputy.
b. No deputized examiner shall be assigned to the same business
establishment he/she had examined the previous year.
3. The local treasurer shall prepare and sign the Letter of Authority (LOA) and
shall serve as the authority of the examiner/deputies to conduct examination
44
LTOM, 2ND EDITION
of the taxpayer’s books of accounts and other pertinent records. The taxpayer
or his/her authorized representative shall acknowledge immediately upon
receipt hereof the LOA served by the deputies18.
B. Responsibilities of the Examination Team
1. The examination team shall prepare the schedule of activity to be performed
during the conduct of the examination of books of accounts, detailing the
objectives and procedures, based on the Guidelines issued by the local
treasurer concerned.
2. The designated team leader shall exercise close supervision over the
members of the team in the conduct of the examination and shall ensure
that they conduct themselves at all times with proper decorum.
3. Deputized examiners shall wear their office uniform/appropriate attire in
the conduct of examination. They shall properly identify themselves to the
owner/manager of the business establishment by presenting their office
identification card.
4. In case the books of accounts and other records are not available on the first
visit, another appointment with the business owner/ representative should
be made not later than three (3) days after serving the LOA.
5. Deputized examiners shall avoid making any tick marks or writings on the
same, except for the certification that said books of accounts have been
examined, date examined, and the signature of the Deputized Examiner
after the last entry.
6. Where the examination of the books of accounts and other records could not
be accomplished in one (1) day, the deputized examiner shall indicate on the
Tax Data and Assessment Form, the date and time when the examination
started and when terminated.
7. If at the time of the examination of a business entity, the owner or
representative cannot be contacted or could not produce the pertinent
records and books of accounts needed for the examination, this fact must
be noted by the examination team in the Tax Data and Assessment Form.
In case similar circumstances occur during the second and third visits,
the same facts should be noted in the Tax Data and Assessment Form,
indicating the time and date of each visit. The notation shall also be made in
the original copy of the LOA19.
8. The deputized examiners shall perform the following activities:
a. Review pertinent records of the business establishment to be examined
such as Articles of Incorporation and By-Laws, SEC/DTI Registration,
minutes of board meetings, etc.;
18 LTOM Form No. 3 - Letter of Authority, LTOM Form No. 4 - List of Documents to be Examined
19 LTOM Form No. 11 - Non-Presentation off Documents; LTOM Form No. 12 - Final Notice of Non-Presentation
of Documents
45
b. Review of the working papers, if any, of the business establishment if

previously examined;
c. Submission of the LOA to the owner/president of the business
establishment; and
d. Acceptance of the following books of accounts and documents for
verification/examination:
i. Mayor’s Permit for current year;
ii. Business License Official Receipts for current year;
iii. Books of Accounts such as Sales Journals/Registers, Purchase
Journals/ Registers, Cash Receipts/Disbursement Journals/
Registers, General Ledgers, Subsidiary Ledgers;
iv. Audited Financial Statements (Income Statement, Balance Sheet
and Cash Flow Statement);
v. Community Tax Certificate;
vi. Official Receipts, Cash/Charge/Collection; Receipts/Invoices,
Order Slips, Delivery Receipts, Debit/Credit Memos, Sales
Returns;
vii. Purchase Receipts/Invoices;
viii. Articles of Incorporation and/or amendments, if any;
ix. Monthly non-Value Added Tax (VAT) returns;
x. Report on quarterly VAT relief (submitted to BIR);
xi. Monthly VAT returns; and
xii. Others, such as beginning and ending merchandise inventory
reports, stock cards, and such other reports relevant to the
business taxpayer’s operations.
C. Detailed Examination Activities

1. For Validation of Sales Accounts
a. Compare/Validate the amount of gross sales/receipts account on the
Income Statement with the sales account in the General Ledger;
b. Check posting to the General Ledger from Sales Journals/Cash
Receipts Journals and other books where sales or service income are
reflected;
c. Confirm the income/revenue from the customer’s Records of Sales/
Receipts (at random); and
d. Compute the correct gross receipts/sales based on the sales records
examined.
46
LTOM, 2ND EDITION
2. For Validation of Purchase Accounts

a. Verify the amount of purchases reflected in the Income Statement
from the General Ledger;
b. Check posting to the General Ledger from Purchases/Cash Payments
Journals; and
c. Verify entries in Purchases/Cash Receipts Journals with purchase
documents (at random).
3. For Validation of Inventory
a. Check beginning and ending inventory on Financial Statement with
General Ledger balance;
b. Verify computation of the ending balance of the Inventory Account by
comparing it with the last physical inventory count conducted;
c. If warranted, inspect at random material items in the inventory and
check against the physical inventory count; and
d. Observe the volume of customers, sales activities and deliveries of the
business entity to have a sense of daily sales volume.
4. Other Examination Activities
a. Maintain files of the necessary examination working papers;
b. Secure a copy of the Schedule of Account Receivables/Payables for
succeeding examination of the books of accounts of the business
entity; and
c. Verify the amount shown on the Schedule of Account Receivables/
Payables from the individual Subsidiary Ledgers.
D. Preparation of Working Papers and Tax Data and Assessment Form

1. Tax Data Working Papers or Tax Data Sheet20 – This working paper shows
the comparison between the gross receipts/sales declared per business
permit application and the gross receipts/sales as appearing in the sales
documents examined. The amount of the understatement or overstatement
in gross receipts/sales is likewise presented in the working papers.
2. Tax Data and Assessment Form21 – This shall be accomplished in
triplicate and submitted by the deputies to their immediate supervisor for
every examination and inspection conducted. It contains all the pertinent
information on the business concerned and the detailed findings of the
deputies. This form shows the detailed computation of the additional
assessment for business tax based on the computed understatement of
20 LTOM Form No. 5 - Tax Data Sheet

21 LTOM Form No. 6 Tax Data Sheet and Assessment Form
47
sales/receipts declared in the business permit application, the amount of

surcharges and penalties, the interest on the deficiency tax assessed, as
well as the signatures of the examination team and the local treasurer. The
Tax Data and Assessment Form shall be attached to the LOA and shall
be submitted to their immediate supervisor for review before submission
to the local treasurer for approval. The original copy of the Tax Data and
Assessment Form shall be given to the business taxpayer concerned.
3. A letter of assessment/assessment notice (1st Notice) shall be issued to
the taxpayer showing the amount of tax deficiency inclusive of penalties,
surcharges and interest resulting from the conduct of examination. A second
assessment notice (2nd Notice) may be sent to the taxpayer in case he/she
fails to respond to the first notice. A third assessment notice [a maximum of
three (3) notices] may be sent before a final demand for payment and possible
foreclosure proceedings may be issued to the taxpayer. In accordance with
Sec. 195 of the LGC, the taxpayer, within sixty (60) days from receipt of
the Letter of Assessment, may file a written protest with the local treasurer
contesting the assessment; otherwise the assessment shall become final
and executory 22.
4. A letter of confirmation/certificate of confirmation/certificate of examination
shall be issued to signify the completion of the examination conducted. The
original copy of the Letter of Confirmation/Certification of Examination shall
be issued to the taxpayer concerned and the duplicate copy shall be attached
to the Tax Data and Assessment Form for file at the Local Treasury Office23.
5. Submission to the LCE by the local treasurer of the list of final demand
letters sent to business taxpayers for possible foreclosure proceedings24
SECTION 158. RETIREMENT OF BUSINESS

A. A business subject to tax shall, upon termination thereof, submit a sworn statement
of its gross sales or receipts for the current year. If the tax paid during the year
be less than the tax due on said gross sales or receipts of the current year, the
difference shall be paid before the business is considered officially retired. (Sec.
145, LGC)
B. Termination of Business Construed – For purposes hereof, termination shall
mean that business operations are stopped completely. Any change in ownership,
management and/or name of the business shall not constitute termination as
herein contemplated. Unless stated otherwise, the assumption of the business by
any new owner or manager or re-registration of the same business under a new
name will be considered by the LGU concerned only for record purposes in the
course of the renewal of the permit or license to operate the business.
22 LTOM Form No. 7 - Letter of Assessment (First Notice); LTOM Form No. 8 - Letter of Assessment (Second
Notice); LTOM Form No. 9 - Letter of Assessment (Final Notice)
23 LTOM Form No. 14 - Certificate of Confirmation; LTOM Form No. 15 - Certificate of Examination
24 LTOM Form No. 10 - Final Notice Before Issuance of Warrant of Distraint and Levy
48
LTOM, 2ND EDITION
C. Confirmation of Retirement of Business and Taxation – The local treasurer

concerned shall see to it that the payment of taxes of a business is not avoided
by simulating the termination or retirement thereof. For this purpose, the following
procedural guidelines shall be strictly followed:
1. The local treasurer shall assign every application for the termination or
retirement of business to an inspector in his/her office who shall go to the
address of the business on record to verify if it is really no longer operating.
If the inspector finds that the business is simply placed under a new name,
manager and/or new owner, the local treasurer shall recommend to the
Mayor the disapproval of the application for the termination or retirement of
said business.
2. Accordingly, the business shall continue to be liable for the payment of all the
taxes, fees and charges imposed on it under existing local tax ordinances.
3. In addition, in the case of a new owner to whom the business was transferred
by sale or other form of conveyance, said new owner shall be liable to pay
the tax or fee for the transfer of the business to him/her if there is an existing
ordinance prescribing such transfer tax.
D. In case it is found that the retirement or termination of the business is found to be
legitimate, and the tax due from therefrom be less than the tax due for the current
year based on the gross sales or receipts, the difference in the amount of the tax
shall be paid before the business is considered officially retired or terminated.
E. The permit issued to a business retiring or terminating its operations shall be
surrendered to the local treasurer who shall forthwith cancel the same and record
the cancellation in his/her books.
(Art. 241, IRR implementing Sec. 145, LGC)
NOTE
On the year an establishment retires or terminates its business within the

municipality, it would be required to pay the difference in the amount if the
tax collected, based on the previous year’s gross sales or receipts, is less
than the actual tax due based on the current year’s gross sales or receipts.
(GR No. 154092 14 July 2005)
F. If the business changes ownership or relocates from one city/municipality to

another, it shall be the duty of the new owner, agent or manager of such business
to secure a new permit as required and pay the corresponding permit fee as
though it were a new business.
49
CHAPTER CREDIT FINANCING AND ALTERNATIVE SOURCES
3 OF FUNDS
SECTION 159. GENERAL POLICY

A. It shall be the basic policy that any LGU may create indebtedness, and avail
of credit facilities to finance local infrastructure and other socio-economic
development projects in accordance with the approved local development plan
and public investment program.
B. An LGU may also avail of credit lines from government or private banks and
lending institutions for the purpose of stabilizing local finances. (Sec. 296, LGC)
SECTION 160. CREDITS AND OTHER SOURCES OF FUNDS AVAILABLE

TO LGUs
LGUs may avail of the following credit financing, indebtedness and other financing
mechanisms for the purposes under, and in accordance with the provisions of the
LGC, as well as other relevant laws:
A. Loans, credit, and other forms of indebtedness (Sec. 297, LGC);
B. Deferred payment and other financial schemes (Sec. 298, LGC);
C. Loans, grants and subsidies to other LGUs (Sec. 300, LGC);
D. Joint and several loans with other LGUs (Sec. 300, LGC);
E. Loans from funds secured by the National Government from foreign sources
(Sec. 301, LGC);
F. Bonds and other long-term securities (Sec. 299, LGC);
G. Private sector financing, construction, maintenance operations, and management
of infrastructure projects under Build-Operate-Transfer (BOT) arrangement; and
H. Grants
SECTION 161. OTHER BUILD-OPERATE-TRANSFER ARRANGEMENTS

BOT arrangements entail various degrees of involvement of the private sector in the
financing, construction and management of public infrastructure and facilities. Among
the arrangements referred to as BOT, are the following:
A. Build-Transfer
1. A contractual arrangement under which the project proponent finances and
constructs an infrastructure or facility and after its completion turns it over to
the government agency or LGU concerned.
50
LTOM, 2ND EDITION
2. The LGU shall pay the proponent on an agreed schedule its total investment
plus a reasonable rate of return.
3. This arrangement is most suitable for the construction of any infrastructure
or development project, including sensitive facilities with security or strategic
implications that the Government opts to operate directly.
B. Build-Lease-Transfer
1. A contractual arrangement under which project proponent finances and
constructs an infrastructure or facility and upon its completion turns it over to
the sponsor agency or LGU on a lease arrangement.
2. The terms and fixed period of the lease enable the proponent to recover its
investments and make a reasonable profit.
3. The title of the facility is transferred to the sponsor agency or LGU at the end
of the contracted lease period.
C. Build-Own-and-Operate
1. A contractual arrangement under which a project proponent is authorized
to finance, construct, own, operate and maintain an infrastructure or
development facility.
2. The proponent, which in this case owns the assets, is allowed to recover
its total investment, the costs of maintaining and operating the facility and
a reasonable return, by collecting tolls, fees, rentals or other charges from
facility users.
3. Under this scheme, the proponent, as project owner, may assign its operation
and maintenance to a facility operator.
D. Build-Transfer-and-Operate
1. A contractual arrangement under which the sponsor government agency or
LGU contracts a private entity to build an infrastructure facility on a turn- key
basis.
2. The contractor assumes cost over-runs, delays, and specified performance
risks.
3. The title is transferred to the project sponsor as soon as the facility is
commissioned satisfactorily, but the private entity operates the facility on its
behalf under an agreement.
E. Contract-Add-and-Operate (CAO)
1. A contractual arrangement under which the project proponent is authorized
to add to any existing infrastructure facility which it is renting from the
government and to operate the expanded project over an agreed franchise
period.
51
2. Any transfer arrangement as regards the added facility depends on the

specific agreements and approved contractual arrangements.
F. Rehabilitate-Operate-and-Transfer (ROT) – A contractual arrangement under
which an existing facility is turned over to the private sector to refurbish, operate
and maintain for a franchise period, at the expiry of which it is turned to the
Government.
G. Rehabilitate-Own-and-Operate (ROO) – A contractual arrangement under which
an existing facility is turned over to the private sector to refurbish and operate with
no time limitation imposed on ownership. As long as the operator is not in violation
of its franchise, it can continue to operate the facility in perpetuity.
SECTION 162. DUTIES AND RESPONSIBILITIES OF TREASURERS

RELATIVE TO CREDIT FINANCING
Local treasurers have the following duties and responsibilities that relate to the powers
of LGUs to use credit financing, indebtedness and alternative sources of funds:
A. Act as the custodian of all funds directly released to the LGU from the proceeds of
grants and from loans, credits and other forms of indebtedness, as well as income
and express profits derived from the operations of the projects financed from
them. He/she shall deposit these funds in a separate depository account in the
name of the LGU with banks, preferably government owned, located in or nearest
to the area of jurisdiction of the LGU;
B. Prepare the required reports of checks issued, disbursements and other
accountabilities;
C. In coordination with other LGU official concerned, ensure that the debt servicing
for the LGU credit does not exceed twenty percent (20%) of its annual regular
income for each year until the loan is fully paid [Sec. 324 (b), LGC];
D. Pay or amortize loans, including all interests incurred, as appropriate from the
income of the projects or services and/or from the regular income of the LGUs
until fully paid;
E. Coordinate with the local accountant in completing the annual Statement of
Indebtedness, Payments and Balances (SIPB) report [BLGF MC No. 005.2018];
and
F. Upon authorization of the sanggunian concerned, Local Treasurers shall:
1. Establish a sinking fund for the re-payment of bond issues or maintain trust
funds for the purpose;
2. Maintain special accounts in the General Fund for loans, interest, bond
issues, and receipts arising from BOT transactions, such as toll fees,
charges, and other mandatory contributions for specific purposes (Sec. 313,
LGC);
52
LTOM, 2ND EDITION
3. Maintain separate records of funds received for projects financed by

proceeds of loans, credits, grants, and other forms of financing to keep track
of the cash flow of the project fund; and
4. If required, provide financial data about the LGU that may be needed in
relation to its availment of the funding sources and mechanisms.
SECTION 163. PROVISIONS FOR THE SERVICING OF CONTRACTUAL

OBLIGATIONS OF LGUs
A. Using Portion of IRA Shares as Payment to Contractual Obligations - Any LGU,
through its local chief executive (LCE) and upon authorization by the sanggunian
concerned, may authorize the National Government to deduct or withhold a
portion of its IRA share for the payment of its contractual obligation, subject to
the limitations defined in the succeeding paragraph (c) hereof. For this purpose,
the resolution of the local sanggunian shall clearly state the name of the creditor,
the nature of the indebtedness, the amount to be withheld and the period of time
that such withholding of IRA shares shall be made. (Art. 401, IRR implementing
Sec. 303, LGC)
B. Mandatory Appropriations for Re-payment of Loans - LGUs shall appropriate
in their respective annual budgets such amounts as are sufficient to pay the
loans and other indebtedness incurred or redeem or retire bonds, debentures,
securities, notes and other obligations issued under this Chapter as they become
payable until the total obligations shall have been paid in full. Provided, that failure
to provide the appropriations herein shall render their annual budgets inoperative.
(Sec. 303, LGC)
C. Mandatory Requirements and Limitations on Debt Service - LGUs shall make full
provision for all statutory and contractual obligations: provided, however, that the
amount of appropriations for debt servicing shall not exceed twenty percent (20%)
of the regular income of the LGU concerned. [Sec. 324 (b), LGC]
D. Regular income shall refer to revenues and receipts realized by provinces, cities
and municipalities from regular sources of the local General Fund including the
IRA and other shares provided for under the LGC, but exclusive of non-recurring
receipts such as other national aids, grants, financial assistance, loan proceeds,
sale of fixed assets and other similar receipts.
SECTION 164. ENFORCEABILITY OF LOAN OBLIGATIONS

NOTWITHSTANDING THE EXPIRATION OF THE TERMS
OF THE ELECTIVE CONTRACTING OFFICIALS
Loan obligations contracted by LGUs will subsist and remain binding and enforceable
notwithstanding the expiration of the terms of the elective local officials who contracted
the same. The corporate existence of the LGU is not co-terminus with the term of its
officials who merely are its agents. The sanggunian which authorized the contracting
53
of loan obligations binds the succeeding sanggunian of the LGU which is separate
and distinct from the personality of its officials. (DOJ Opinion No. 160, s. 1994)
SECTION 165. GUIDELINES ON THE USE OF FUNDS RAISED

BY INDEBTEDNESS
A. An LGU may contract loans, credits, and other forms of indebtedness with any
government or domestic private bank and other lending institutions to finance the
following:
1. Construction, installation, improvement, expansion, operation, or
maintenance of public facilities, infrastructure facilities, housing projects;
2. Acquisition of real property; and
3. Implementation of other capital investment projects, subject to such terms
and conditions as may be agreed upon by the LGU and the lender. [Sec.
297 (a), LGC]
B. An LGU may likewise secure from any government bank and lending institution
short, medium, and long term loans and advances against security of real estate
or other acceptable assets for the establishment, development, or expansion of
agricultural, industrial, commercial house financing and livelihood projects, and
other economic enterprises. [Sec. 297 (b), LGC]
C. Government financial and other lending institutions are authorized to grant loans,
credits, and other forms of indebtedness out of their loanable funds to LGUs for
purposes specified above. [Sec. 297 (c), LGC]
SECTION 166. TAX EXEMPTION PRIVILEGES OF LGUs

LGUs shall be exempt from payment of duties and taxes for the importation of heavy
equipment or machinery which shall be used for the construction, improvement,
repair and maintenance of roads, bridges, and other infrastructure projects, as
well as garbage trucks, fire trucks, and other similar equipment: provided, that
such equipment or machinery shall not be disposed of, either by public auction or
negotiated sale, within five (5) years from their importation. To avail of the incentives
and for expeditious processing of request for duty and tax exemption, the following
specific requirements are prescribed:
A. A letter application signed by the LCE (Governor, City Mayor or Municipal Mayor)
or his/her duly authorized representative, attaching therewith the pertinent Board
Resolution, authorizing the LCE to import/accept donation;
B. The usual import-documents such as:
1. Bill of lading, airway bill, parcel post notice or other shipping documents;
2. Commercial invoice and packing list; and
54
LTOM, 2ND EDITION
3. Other relevant documents covering the shipment.

C. Sworn statement that the imported articles are not for sale, hire or barter; and
D. An undertaking from the LGU that, upon release and physical possession of the
machinery and equipment, the notice, "ENTERED DUTY/TAX-FREE UNDER
THE NEW LOCAL GOVERNMENT CODE" shall be printed in a conspicuous
space on the machinery and equipment which was accorded duty-and-tax-free
release. (Sec. 5, DOF DO No. 21.92)
SECTION 167. LIMITATIONS ON THE USE OF CREDIT LINES

TO STABILIZE LOCAL FINANCE
In the use of credit lines for the purpose of stabilizing local finances, as provided in
Sec. 296 of the LGC, LGUs shall observe the following guidelines:
A. Availment must be approved by the concerned sanggunian; and
B. Funds availed through credit for this purpose shall be spent and disbursed solely
to finance expenditures covered by appropriations authorized in the duly approved
local government budget for the current year.
SECTION 168. COMMON REQUIREMENTS FOR CREDIT FINANCING

OF LOCAL DEVELOPMENT PROJECTS
LGUs shall observe the following common requirements in the use of credit financing
for their development projects:
A. Inclusion of the proposed project in the approved local development plan and
public investment program. [Sec. 296 (a), LGC]
B. Sanggunian resolution authorizing the LCE to secure/negotiate and/or enter into
an agreement, which may include the following:
1. Endorsing the proposed project
2. Identifying the forms/types of financing the projects
3. Authorizing the mode/form of financing the projects
C. Certificate of Net Debt Service Ceiling and Borrowing Capacity [Appendix 57,
BSP Cir. 926, s. 2016]
D. Favorable Monetary Board Opinion on the probable effects of the proposed credit
operation on monetary aggregates, the price level and the balance of payments
(BoP) [Sec. 43, RA 11211]
55
The list of data on the financial and other operations of the LGU, as well as the socio-
economic climate within its territory, are shown as follows:
LGU FINANCIAL DATA COMMONLY REQUIRED WHEN AVAILING OF
INDEBTEDNESS AND OTHER FINANCING MECHANISMS
A. LGU INCOME
Local Sources Tax Revenue
Real Property Taxes Business Taxes and Licenses Other Taxes
Non Tax Revenue
Operations of Economic Enterprises Regulatory Fees
Service/Users Charges Other Receipts
Shares from National Tax Collections/ Grants/Aids
Internal Revenue Allotment (IRA) Share in National Wealth
Share in tobacco Excise Tax Grants
Domestic Foreign National Aid
Loans, Borrowing, and Transfers Loans
Transfers
Inter-Local Transfers
B. LGU EXPENDITURES
1. By Function
a. General public services
b. Education, culture and sports
c. Labor and employment
d. Housing and Community Development
Other credit worthiness documentary requirements and further credit analysis to

be done by the Bureau of Local Government Finance are discussed in a separate
manual entitled "Creditworthiness Rating Manual."
SECTION 169. ACCEPTABLE COLLATERAL

The most common securities or collaterals which LGUs may offer for loans to satisfy
the requirements of lending institutions are any one or a combination of the following:
A. Assignment of a portion of the share from the IRA of the LGU concerned;
Any LGU through its LCE and upon authorization by way of a resolution of the
sanggunian concerned, may authorize the National Government to deduct or
withhold a portion of its IRA share for the payment of its contractual obligations,
subject to the limitations under Sec. 324 (b) of the LGC. The resolution of the
sanggunian shall clearly state the name of the creditor, the nature of indebtedness,
the amount to be withheld, and the period and term that such withholding of the
IRA shares shall be made;
B. Chattel mortgage of equipment financed by the loan;
C. Real estate mortgage of the patrimonial property of the LGU; and
D. Net profit from the project financed by the credit.
56
LTOM, 2ND EDITION
SECTION 170. SPECIAL ACCOUNT FOR LOANS, INTERESTS, BONDS,

AND CONTRIBUTIONS FOR SPECIFIC PURPOSES
LGUs shall maintain special accounts in their general fund for the following:
A. Public utilities and other economic enterprises;
B. Loans, interests, bond issues, and other contributions for specific purposes;
C. Development projects funded from the IRA; and
D. Such other special accounts which may be created by law or ordinance
SECTION 171. OTHER REQUIREMENT FOR LOANS, DEFFERED

PAYMENTS, AND OTHER FINANCIAL LOANS, SCHEMES
The officials of LGUs contracting loans and other forms of indebtedness under the
provisions of this Chapter shall also comply with the following:
A. Any other provisions of the LGC, or other laws that may be relevant to a particular
project or the transactions necessary to realize it;
B. The rules and regulations on property and supply management, which shall be
applied in the acquisition of equipment or machinery under the loans, deferred
payment and other financial schemes; and
C. All applicable accounting and auditing policies and regulations.
SECTION 172. INTER-LGU LOANS, GRANTS, AND SUBSIDIES

Provinces, cities and municipalities may, upon approval of the majority of all members
of the sanggunian concerned and in amounts not exceeding their surplus funds,
extend loans, grants, or subsidies to other LGUs under such terms and conditions as
may be agreed upon by the contracting parties. (Sec. 300 1st par., LGC) There are
no standard terms and conditions for loans under this scheme. However, the creditor
LGU and the borrower LGU have to negotiate, come to an agreement, and observe
the following processes:
A. Enactment by the lending and the borrowing LGUs of the required resolutions
and/or ordinances duly signed/approved by the majority of all the members of
their respective sanggunian, stipulating the terms and conditions that shall include
the following:
1. Repayment scheme and grace period;
2. Interest lending/borrowing rate;
3. Security/collateral;
4. Benefits to both the lending and the borrowing LGUs; and
5. Automatic budget allocation of the necessary amount for repayment
57
B. Ratification of the loan contract by the sanggunian of both contracting LGUs/

parties, which is needed for the loan agreement to become valid and enforceable.
C. Certification by the Local Treasurer of the lending LGU, attested to by its Auditor,
of the accumulated surpluses eligible for lending, grants or subsidies.
SECTION 173. JOINT AND SEVERAL LGU LOAN ARRANGEMENTS

LGUs may, upon approval of their respective sanggunian, jointly and severally contract
loans, credits, and other forms of indebtedness for purposes mutually beneficial to
them. (Sec. 300, LGC)
SECTION 174. LOANS FROM FUNDS SECURED BY THE NATIONAL

GOVERNMENT FROM FOREIGN SOURCES
The President or his/her duly authorized representative may, through any government
financial or other lending institution, relend to any province, city, municipality, or
barangay, the proceeds of loans contracted with foreign financial institutions or other
international funding agencies.
A. Guidelines:
1. The loans shall be used for the purpose of:
a. Financing the construction, installation, improvement, expansion,
operation or maintenance of public facilities, infrastructure facilities, or
housing projects;
b. Acquiring real property; and
c. Implementing other capital investment projects.
2. Such loans shall be subject to the terms and conditions agreed upon by the
President and the LGU. The proceeds from such loans shall accrue directly
to the LGU. [Sec. 301 (a), LGC]
3. The President may likewise authorize the relending to LGUs the proceeds
of grants secured from foreign sources, subject to the provisions of existing
laws and the applicable grant agreements. [Sec. 301 (b), LGC]
4. Repayment or amortization of loans, including their accrued interest thereon,
may be financed partly from the income of the projects or services and from
the regular income of the LGU, which must be provided for and appropriated
regularly in its annual budget until the loan and interest thereon shall have
been fully paid. [Sec. 301 (c), LGC]
5. First tier LGUs may directly contract loans with multilateral financial
institutions created by multilateral treaties to which Philippines is a signatory.
[Sec. 1, EO No. 809, s. 2009]
58
LTOM, 2ND EDITION
B. The Municipal Development Fund as Conduit - The Municipal Development

Fund, created under PD No. No. 1914, operates for the above purposes with the
DOF as administrator. Provinces, cities and municipalities may tap the Municipal
Development Fund for loans through agreements with the DOF, setting the terms
and conditions of the loan. (Sec. 1, P. D. 1914)
SECTION 175. DEFERRED PAYMENTS AND OTHER FINANCIAL

SCHEMES
Provincial, city and municipal governments may acquire property, plant, machinery,
equipment, and such necessary accessories under a supplier's credit, deferred
payments plan, or other financial schemes (Sec. 298, LGC) under the following
conditions:
A. That the acquisition of such equipment, machinery, and their accessories shall be
governed by the pertinent provisions of the Implementing Rules and Regulations
of the LGC, on "Local Government Supply and Property Management", whether
such items are to be supplied or purchased from a local or foreign supplier; and
B. That the LCE, through a sanggunian resolution, is authorized to negotiate
the contract executed under the deferred payment scheme. (Art. 396, IRR
implementing Sec. 298, LGC)
SECTION 176. BONDS AND OTHER LONG TERM SECURITIES

Subject to the rules and regulations of the Bangko Sentral of the Pilipinas (BSP) and
the Securities and Exchange Commission (SEC), provinces, cities and municipalities
are authorized to issue bonds, debentures, securities, collaterals, notes and other
obligations to finance self-liquidating, income-producing development or livelihood
projects pursuant to the priorities established in the approved local development plan
or the public investment program. (Sec. 299, LGC)
A. Debt Service Requirement and Limitations - As debt instruments, bonds are
subject to the mandatory appropriations in the respective annual budgets of
LGUs, as provided under Sec. 303 of the LGC. Likewise, bonds are subject to the
debt service limitations provided for under Sec. 324 (b) of the LGC. The Bureau
of Local Government Finance (BLGF) certification on the maximum borrowing
or debt service capacity of an LGU is part of the documentation required for the
issuance of local government bonds.
B. Sanggunian Approval - The sanggunian concerned shall, by way of an ordinance
approved by a majority of all its members, declare and state the terms and
conditions of the bonds and the purpose for which the proposed indebtedness is
to be incurred. (Sec. 299, LGC)
C. National Government Guarantee - In cases where the bond issue shall bear the
guarantee of the National Government, the approval of the Secretary of Finance
shall be required. [Art. 397 (b), IRR implementing Sec. 299, LGC]
59
D. Local Government Bond Issuances are Subject to Rules and Regulations

of the BSP - Whenever LGUs contemplate to borrow within the Philippines,
the prior opinion of the Monetary Board shall be requested in order that it may
render an opinion on the probable effects of the proposed operation on monetary
aggregates, the price level and the balance of payments. (Sec. 123, Art 111, R.
A. No. 7653 or the BSP Charter)
E. Local Government Bonds are Exempt from Registration Requirements of
the SEC - Local government bonds are exempt from the registration requirements
of the SEC. However, in order to maintain standards in the securities market,
the SEC maintains authority and control over the underwriters and brokers of all
types of securities including local government bonds.
F. Special Documentation Requirements for Local Government Bonds. - In
addition to the common requirements, the following documentary requirements
shall be complied with in the issuance of local government bonds:
1. BLGF certification as to the debt service capacity of the LGU concerned
(BSP Circular No. 926 s. 2016, 13 September 2016);
2. DOF certification as to the national government guarantee in case the
flotation requires National Government guarantee (BSP Circular No. 44);
3. Monetary Board opinion on the probable effects of the proposed issuance
of the LGU Bonds on the monetary aggregates, price levels and balance of
payments (BSP Circular No. 41);
4. Sanggunian resolution for the following:
a. Establishment of sinking fund for the payment of retiring or maturing
bonds;
b. Authorizing the LCE to enter into an agreement with the financial
advisor/trustee; and
c. Certifying that the LGU will or will not seek any National Government
guarantee for the bond.
5. Annual Audit Report for the immediately preceding year; and
6. Budget Operation Statement/Statement of Actual Income and Expenditure
for the past five (5) years duly signed by the Local Treasurer and/or Local
Accountant indicating the IRA actually received for the same period.
SECTION 177. PRIVATE SECTOR FINANCING UNDER THE BUILD-

OPERATE-TRANSFER (BOT) ARRANGEMENT
LGUs may avail of the several variations of BOT arrangement to finance, construct,
maintain, operate and manage infrastructure projects. The general provisions are as
follows:
60
LTOM, 2ND EDITION
A. Authorization
LGUs may enter into contracts with duly pre-qualified individual contractor,
for the financing, construction, operation, and maintenance of any financially
viable infrastructure facilities, under the build-operate-and-transfer agreement,
subject to the applicable provisions of R. A. No. 6957, authorizing the financing,
construction, operation and maintenance of infrastructure projects by the private
sector and the rules and regulations issued thereunder and as such terms and
conditions provided for in this Section. [Sec. 302 (a), LGC]
B. Inclusion in Local Development Plans and Public Investment Programs
LGUs shall include in their respective local development plans and public
investment programs priority projects that may be financed, constructed, operated
and maintained by the private sector under this Section. [Sec. 302 (b), LGC]
C. Disclosure and Public Endorsement
It shall be the duty of the LGU concerned to disclose to the public all projects
eligible for financing under this Section, including official notification of duly
registered contractors and publication in newspaper of general or local circulation
and in conspicuous and accessible public places. Local projects under the BOT
agreement shall be confirmed by the Local Development Councils (LDCs). [Sec.
302 (b), LGC]
D. Terms and Conditions
Projects implemented under the provisions of this Section shall be subject to the
following terms and conditions:
1. The provincial, city or municipal engineer, as the case may be, upon formal
request in writing by the LCE, shall prepare the plans and specifications
for the proposed project, which shall be submitted to the sanggunian for
approval. [Sec. 302 (c) (1), LGC]
2. Upon approval by the sanggunian of the project plans and specifications,
the provincial, city or municipal engineer shall, as the case may be, cause
to be published once every week for two (2) consecutive weeks in at least
one (1) local newspaper which is circulated in the region, province, city or
municipality in which the project is to be implemented, a notice inviting all
duly qualified contractors to participate in a public bidding for the projects
so approved. The conduct of public bidding and award of contracts for local
government projects under this Section shall be in accordance with the LGC,
and other applicable laws, rules and regulations. [Sec. 302 (c) (2) 1st par.,
LGC]
3. In the case of a BOT agreement, the contract shall be awarded to the lowest
complying bidder whose offer is deemed most advantageous to the local
government and based on the present value of its proposed tolls, fees,
rentals, and charges over a fixed term for the facility to be constructed,
operated, and maintained according to the prescribed minimum design
and performance standards, plans and specifications. For this purpose, the
61
winning contractor shall be automatically granted by the LGU concerned the

franchise to operate and maintain the facility, including the collection of tolls,
fees, rentals, and charges, in accordance with sub-Section (c) (4) hereof.
[Sec. 302 (c) (2) 2nd par., LGC]
4. In the case of a BOT agreement, the contract shall be awarded to the lowest
complying bidder based on the present value of its proposed schedule
of amortization payments for the facility to be constructed according to
the prescribed minimum designs and performance standards, plans and
specifications. [Sec. 302 (c) (2) 3rd par., LGC]
5. Any contractor who shall undertake the prosecution of any project under this
Section shall post the required bonds to protect the interest of the province,
city, or municipality, in such amounts, as may fixed by the sanggunian
concerned. [Sec. 302 (c) (3), LGC]
6. The provincial, city or municipal engineer shall, as the case may be, not
allow any contractor to initiate the prosecution of projects under this Section
unless such contractor presents proof or evidence that he/she has posted
the required bond. [Sec. 302 (c) (3), LGC]
7. The contractor shall be entitled to a reasonable return of its investment in
accordance with its bid proposal, as accepted by the LGU concerned.
8. In the case of a BOT agreement, the repayment shall be made by authorizing
the contractor to charge and collect reasonable tolls, fees, rentals, and
charges for the use of the project facility not exceeding those proposed in
the bid and incorporated in the contract:
a. Provided, that the LGU concerned shall, based on reasonableness
and equity, approve the tolls, fees, rentals and charges;
b. Provided, further, that the imposition and collection of tolls, fees,
rentals and charges shall be for a fixed period, as proposed in the bid
and incorporated in the contract, which shall in no case exceed fifty
(50) years;
c. Provided, finally, that during the lifetime of the contract, the contractor
shall undertake the necessary maintenance and repair of the facility in
accordance with standards prescribed in the bidding documents and
in the contract. [Sec. 302 (c) (4) 1st and 2nd pars., LGC]
9. In the case of BOT agreement, the repayment shall be made through
amortization payments in accordance with the schedule proposed in the bid
and incorporated in the contract.
10. In case of land reclamation or construction of industrial estates, the
repayment plan may consist of the grant of a portion or percentage of the
reclaimed land or the industrial estate constructed. [Sec. 302 (c) (4) 3rd and
4th pars., LGC]
62
LTOM, 2ND EDITION
11. Every infrastructure project undertaken under this Section shall be

constructed, operated, and maintained by the contractor under the technical
supervision of the LGU and in accordance with the plans, specifications,
standards, and costs approved by it. [Sec. 302 (c) (5), LGC]
E. Review of Contracts - The provincial, city or municipal legal officer shall, as the
case may be, review the contracts executed pursuant to this Section to determine
their legality, validity, enforceability and correctness of form. [Sec. 302 (d), LGC]
F. BOT Project Formulation and Proponent Selection - The existing BOT legal
framework based on R. A. No. 7718 recognizes two (2) modes for identifying
projects and selecting proponents, which affect the processes involved in the
early phases of the BOT project. These modes are as follows:
1. Solicited Proposals - These are the priority projects identified by the sponsor
agency or LGU. The sponsor formulates the project based on its objectives
and studies, and then invites ("solicits") the private sector to participate in its
realization.
2. Unsolicited Proposals - These are BOT project proposals of private
proponent to prospective sponsor agencies/LGUs. An unsolicited project
may be accepted if it addresses existing priorities or needs that may or may
not have been previously realized by the prospective sponsor. The agency/
LGU may accept an unsolicited proposal on a negotiated basis if the project
meets certain conditions.
SECTION 178. AUTHORITY TO NEGOTIATE AND SECURE GRANTS

LCEs may, upon authority of the sanggunian, negotiate and secure financial grants
or donations in kind, in support of the basic services or facilities enumerated under
Sec. 17 of the LGC, from local and foreign assistance agencies, without necessity of
securing clearance or approval therefore from any department, agency, or office of
the National Government or from any higher LGU.
A. Projects with National Security Implications – Provided, that projects financed
by such grants or assistance with national security implications shall be approved
by the national agency concerned: provided, further, that when such national
agency fails to act on the request for approval within thirty (30) days from receipt
thereof, the request shall be deemed approved. (Sec. 23 1st par., LGC)
B. Required Report to Congress and the President – The LCE shall, within thirty
(30) days upon signing of such grant agreement or deed of donation, report the
nature, amount, and terms of such assistance to both Houses of Congress and
the President. (Sec. 23, 2nd par., LGC)
C. Formal Procedural Requirements – In availing of the Official Development
Assistance (ODA) facilities, the LGU needs to consider that ODA donors as a matter
of procedure coordinate regularly with the National Economic and Development
Authority (NEDA) which in turn coordinates local government matters with the
DILG. For this reason, the following formal procedures shall be observed:
63
1. The LGU prepares the project proposal using the required NEDA forms in
consultation with the DILG and NEDA and with other National Government
Agencies (NGAs), as appropriate;
2. The LDC evaluates the project proposal for consistency with its Local
Development Plan and the Annual Investment Program (AIP);
3. Upon satisfactory evaluation of the proposal, the sanggunian authorizes the
LCE to negotiate the grant;
4. NEDA checks the proposal for possible duplication with other proposed/
on-going projects, and upon clearance endorses it to the ODA institution. If
duplications or conflicts are found, the proposal is referred back to the LGU
for review and revision;
5. The LCE endorses the project, through NEDA, to the identified ODA-
granting institution;
6. The LGU submits the project proposals to the DILG which refers it to the
concerned NGAs for possible security implications;
7. The concerned NGAs review the project proposal and within thirty (30)
days, inform the DILG and the LGU concerned of the result of the review.
As appropriate, the proposal may be approved or objected due to security
implications, or referred back for revisions;
8. LGU coordinates directly with the ODA grant funding institutions in monitoring
the latter's processing of the proposal and regularly informs the DILG and
the NEDA of the status of the proposal;
9. NEDA coordinates regularly with the ODA grant funding institution in
facilitating the evaluation and approval of the local project proposal; and
10. An NGA or higher local or regional governmental body (i.e. PDC and RDC)
evaluates the project proposals only upon express request of the ODA grant
donor and the consent of the LGU(s) concerned.
SECTION 179. PROHIBITED ACTS RELATED TO THE AWARDS

OF CONTRACTS UNDER THE PROVISIONS ON
CREDIT FINANCING
A. It shall be unlawful for any public official or employee in the provincial, city,
or municipal government, or their relatives within the fourth civil degree of
consanguinity or affinity, to enter into or have any pecuniary interest in any
contract for the construction, acquisition, operation, or maintenance of any
project awarded pursuant to the provisions of Title 4, Book II of the LGC, or for
the procurement of any supplies, materials, or equipment of any kind to be used
in the said project.
64
LTOM, 2ND EDITION
B. Any person convicted for violation of the provisions of said Title shall be removed
from office and shall be punished by imprisonment of not less than one (1) month,
nor more than two (2) years, at the discretion of the court, without prejudice to
prosecution under other laws.
(Sec. 520, LGC)
SECTION 180. DEBT MANAGEMENT

A. Purpose and Need for Debt
LGUs are empowered under Sec. 296 of the LGC to create indebtedness, and
avail of credit facilities to finance local infrastructure and other socio-economic
projects in accordance with the approved local development plan and public
investment program.
To ensure the efficient implementation of the debt service limit on the LGU loans
and borrowings as provided in Sec. 324(b) of the LGC, BSP required all banks
and non-bank quasi-banks (NBQB), under its Circular Letter, series of 2002, 28
May 2002, to present a certificate of LGUs debt service and borrowing capacities,
duly certified by the BLGF.
Aimed to guarantee an accurate and proper evaluation of the request for Certificate
of Net Debt Service and Borrowing Capacities (NDSC), BLGF issued on 16 April
2012, Local Finance Circular (LFC) No. 1-2012, requiring LGUs to submit lists of
supporting documents to be submitted by the LGUs requesting said certificate.
On the other hand, BSP in its Circular No. 769, s. of 2012, issued guidelines on
request for Monetary Board Opinion on the monetary and balance of payments
implications of proposed domestic borrowings by LGUs, pursuant to Sec. 123 of
RA No. 7653.
Moreover, to facilitate, expedite and render efficient service standards to all LGUs
requesting for certification on NDSC and Borrowing Capacity (BC), across all
levels and in any of its geographical jurisdiction. BLGF issued Memorandum
Circular No. 05-2016, 26 February 2016, requiring its Regional Offices to evaluate
and validate the documentary requirements submitted by LGUs and determine
the preliminary computation of NDSC and Net Borrowing Capacity (NBC) before
BLGF Central Office makes final computation and issue certificate.
Under DOF Department Order No. 054.2016, 25 October 2016, irrelevant
requirements were removed to improve BLGF efficiency and service delivery
without prejudice to the accuracy of the certificate. The BLGF deemed it prudent
to cut the existing twelve (12) documentary requirements down to four (4), and
improve the review and computation of NDSC and Borrowing Capacity (BC) of
the concerned LGUs.
1. Documentary Requirements for the Certification of Debt Service and
Borrowing Capacity
65
a. Letter request from the LCE indicating:

i. The selected lending institution;
ii. Terms and conditions of the proposed loan (repayment period
and interest rate); and
iii. The specific purpose of the loan.
b. Certificate by the local treasurer of presence or absence of loan/s,
duly certified with the following details:
i. Types of loan/s and other obligations contracted;
ii. Purpose of the loan/s and other obligations contracted;
iii. Name of the lending institution/s;
iv. Date of approval and maturity of loan/s;
v. Terms and conditions (interest rate and number of years to pay);
vi. Remaining balances of loan/s and other obligations; and
vii. Annual amortization schedules (segregating the principal from
the interest) issued by the lending institution.
c. COA Annual Audit Certificate for the most recent year, which shall be
supported by the year-end financial report for the past three (3) years:
i. Pre-closing Trial Balance (General Fund);
ii. Detailed Statement of Financial Performance;
iii. An Agency Action Plan and Status of Implementation (AAPSI)
report on COA recommendations shall be required if there
are findings of COA, while they may only be ‘qualified and not
‘adverse’, pertaining to local financial management and treasury
matters or specifically concern the local treasurer, such as, but
not limited to: (a) Unremitted and undeposited collections;
(b) Unliquidated cash advances; (c) Unremitted mandatory
contributions and GSIS, PAGIBIG, Philhealth, withholding tax to
BIR; and (d) Unreconciled cash book with the Bank Reconciliation
Statement and Subsidiary Ledger.
d. Certification issued by the lending institution stating that it shall not
require LGU deposits as compensating balance for loan, if such
lending institution is (1) not an authorized depository bank or (2) an
authorized government depository bank required to obtain the prior
approval of the DOF as provided under the DOF Department Circular
No. 001.2017, 1 May 2017.
2. Documentary Requirements for LGUs Affected by Natural and/or Man-
Made Disasters. Local governments that cannot in any way provide the full
documentary requirements aforestated, due to natural and/or man-made
calamities, and have been declared under state of calamity either by national
or local authorities shall, for a period of one (1) year from the declaration of
state of calamity, be required only to submit the documents required in Sec.
3.1 and 3.2 hereof, together with certified copy of such declaration.
66
Process Flow Request for Certificate of Net Debt Service Ceiling (NDSC) and Borrowing Capacity (BC)
Local Government Unit (LGU) L e nding Institution Bureau of Local Government Finance (BLGF)
Pt9...£V81'... tion/Setting of TerTnS BLGF-RO BLGF..CO Evtill,,.te LGU ,.qu•a.t •nd

Local Coun~ through •
•nd Conditions suppottng documentary
ResolubonlOrdlJ'lanoe. authon::•• the
LOC81 Chief E.x.cuW. to ne-votiete ~uitenwnts
•M contract loans •nd other foma Evaluate L.GU rwquest and F.-.•I oorrputation and
of .,debtedness iSSUanoe of oerulicate of
supporting documentary
requinunents NOS CBC
Submit Letter of lnt•nt and negobete Mon•l•ry So•td ,.nde,.

Op9iion on th• t.ionetary
with the lending in sUubon
B•lanoe and Paynwnts
irrlpieations of th• propoMd
No LGU botTOWing . p•r BSP
C.C..,lar No .70Q s.. 2012
Submit 10 SLGF • v.Tltten request for
oertific9tion of LGU Ne:t O.bt Serva
C.. ,g and Bom>'WW'lg C.p•city. wCh
oompiete supportsig documents
pursuant to OOF Loc.91 F"inenoe Circular
No01 ·-2'012
Evaluate fine ncial ~ports of the
LGU
Subtrit th• Nquftd

edditional doou,,,.nts
Co""'ute prelirninHi>/ LGU Net

Re~.-goii.te v."lth the O.bt S•t'WIOe C.. ,g and
•nding institution for BOtrO"-YIQ C.pacity (NOSCSC)
lower ri te~st n1te. longer
tenor. or consider other
lend.rig instil.ution1. then
submC letter cont•ining
•djus,t.ments to BLGF
Subl'nll to SLGF<::O e l
documentary- ,.quW.ments. •nd
th• prein'WI• ry CO"l)utation for
the &suanoe of certificate of
Nt>scac
Submd: to BSP a wntten re.quest fo r

"-ionetary Soard Opinion
LTOM, 2ND EDITION

Submit 10 the Lending ln.stltubOns tt'I• BLGF
Approval and Signing of Loan
C.rtif'~tion . MB Qs>9iion and 01h•t
Agreemen t wet\ the LGU
RequAments
Reootef receipt of Loan Prooe~s and

Reoaive LGU Post BorroWW'lg Report Reoe:Ne LGU Post Borro~g Report
prepare borro\Wi-g reporta for subtnc»ion ~
BLGF-RO and BSP
67
B. Funding Competing Capital Projects

It is equally important for the Local Treasurers to know which capital project to
choose from several alternative projects in order to maximize the utilization of loan
proceeds. In the selection of projects to be funded, a balance will be established
between the projects' abilities to meet the priorities of the LGU and the financial
requirements of the projects. For each project, the viability and approvability of
the project and its funding from long-term debt should be assessed based on the
following factors:
1. Nature of the Project and Uses of Funds – For each project for which the loan
is proposed, the nature of the project as well as the intended use of the loan
proceeds should be fully described.
2. Cost-Benefit Analysis of the Project – The benefits of the proposed project
should be defined and, when appropriate, quantified in monetary terms.
The sources and uses of funds should be identified and estimated. Where
revenues are part of the benefits, all assumptions made in deriving the
revenues should be documented. The validity of the assumptions and the
risk associated with the revenue flows will be assessed. The costs of the
project will be estimated, with the basis of estimates documented and the risk
associated with the estimates assessed. If regular funds are proposed to be
utilized, the impact upon the LGU budgets will be assessed.
3. Expenditure Plan and Sources of Debt Servicing – A detailed plan for the
funds expenditure and debt repayment should be developed for each project.
The plan should demonstrate the timely matching of funds availability with
project expenditures and that debt service should commence with the flow of
revenues needed to pay the interest and principal on the debt. The basis of
the estimates for the project cost expenditure plan and the basis of revenue
cash flow estimates should be documented and the risk associated with those
revenue flows should be analyzed.
C. Debt Management Policy
Since the Local Treasurer is the custodian of all funds of the LGU including funds
sourced from loans and other types of indebtedness, it is equally important that
he/she should be involved in the overall debt management strategy of the LGU.
1. The LGU should adopt and maintain effective debt management policies
that recognize the capital improvement needs of the LGU as well as the
taxpayers' ability to pay while taking into account existing legal, economic,
financial and debt market considerations. The following factors relevant to
the issuance of debt should be considered:
a. Legal constraints on debt capacity and various financing alternatives;
b. The urgency of the capital requirements to be met and the economic
costs of delay;
c. Willingness and financial ability of the taxpayers to pay for the capital
improvements;
68
LTOM, 2ND EDITION
d. Proper balance between internal and external financing;

e. Current interest rates and other market considerations;
f. The financial condition of the LGU;
g. The types, availability and stability of the revenues to be pledged for
the repayment of the debt; and
h. Type of debt to be incurred/issued.
2. The LGU may adopt a combination of the following debt management
policies depending upon its needs and situation:
a. Capital projects related to economic enterprise operations should
be financed solely by debt to be repaid from user fees and revenues
generated from the respective economic enterprise operations.
b. Capital projects not related to economic enterprise operations shall
be financed by debt to be repaid from available revenue sources
earmarked for said projects.
c. Cash surpluses, to the extent available and not restricted, should be
used to finance scheduled capital projects.
d. The LGU shall resort to long-term debt only for purposes of constructing
or acquiring capital assets such as market, Plant, Property and
Equipment, and for making major renovations to existing capital
projects.
e. All capital projects financed through loans and debt instruments should
be financed for a period not to exceed the useful or economic life of
the project.
f. The LGU shall not construct or acquire a public facility if it is unable
to adequately provide for the subsequent annual operation and
maintenance costs of the facility.
i. The LGU shall, at all times, manage its debt and sustain its
financial position in order to maximize its debt capacity, and seek
and maintain a high credit rating.
ii. The LGU should consider coordinating with other local government
entities to the fullest extent possible, so as to minimize the
overlapping debt burden to citizens.
iii. The LGU shall ensure that an adequate system of internal control
exists so as to provide reasonable assurance as to compliance
with appropriate laws, rules, regulations and covenants
associated with its outstanding debts.
iv. The LGU shall link planning and budgeting.
v. Revenue sources will only be earmarked for debt service when
69
legally available and when there are sufficient revenue sources

to fund the LGU's regular operational needs.
vi. The LGU shall avail of soft loans with concessional rates of
interest and long repayment terms. In case the LGU issues bonds
and other debt instrumentalities, it shall market its debt through
the use of competitive bidding whenever deemed feasible, cost
effective and advantageous to do so.
vii. The LGU shall continually monitor its outstanding debt in
relation to existing conditions in the debt market, and shall
refinance/restructure its debt when it is more cost effective and
advantageous to do so. The LGU may also consider the pre-
termination or early repayment of its debt when sufficient cost
savings can be realized.
viii. In case the LGU issues bonds to finance its capital projects, it
should stabilize its debt service payments through the use of
appropriate stabilization arrangements such as the maintenance
of a Sinking Fund or the establishment of Fund Reserves.
70
CHAPTER THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND
4 ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES
(eSRE) FINANCIAL MANAGEMENT REPORTING SYSTEM
SECTION 181. STATEMENT OF RECEIPTS AND EXPENDITURES (SRE)

FINANCIAL REPORT SYSTEM: DEFINITION,
COMPOSITION, AND LEGAL BASIS
A. The SRE is the official reporting system of the DOF for monitoring LGU financial
performance. This report is generated through the Electronic Statement of Receipts
and Expenditures (eSRE) system of the BLGF. It captures data that generates
information on the fiscal capacity, level of borrowings, and creditworthiness of
LGUs. The SRE report also provides financial information to the LCE for the
purpose of policy formulation and fiscal management.
B. The SRE was formerly known as the Statement of Income and Expenditures
(SIE). The word “Income” was replaced with “Receipts” so as to include loan
proceeds and other receipts not classified as income (i.e., proceeds from loan,
sale of assets, etc.). Likewise, expenditures are classified into operating and non-
operating to distinguish outright expense (operating) from capital and investment
outlays and loan payments (non-operating).
C. The SRE presents receipts and expenditures of the General Fund, SEF, and the
Trust Fund and Trust Liabilities. The Trust Liabilities in the SRE report is added to
separate collection of advance payment of Real Property Tax. The data presented
in the SRE are totals of major captions comprising various account classifications
from its main source documents, namely: (a) Statement of Receipt Sources
(SRS); and (b) Statement of Expenditures (SOE).
D. The SRE is divided into three major segments:
1. The first is the current operating segment which is identical to the COA’s
Statement of Financial Performance. It shows the operating income from
local and external sources and current operating expenses (COE) which
includes Personal Services (PS), Maintenance and Other Operating
Expenses (MOOE), and Financial Expenses (FE);
2. The second segment is the non-operating receipts and expenditures which
is equivalent to the investing and financing activities in the COA’s Cash
Flow Statement which includes receipts from sale of assets, investment,
loan proceeds and expenditure such as purchase of assets, investment and
payment of loans; and
3. The third segment is the fund balance which shows the details of cash
balances.
E. Legal Basis
The eSRE was instituted by the DOF as the official reporting system on local
government fiscal and financial matters pursuant to DO 8-2011, which provides that:
71
THE SRE AND eSRE FINANCIAL MANAGEMENT REPORTING SYSTEM
“The DOF shall be responsible for supervision of the revenue operations of all
LGUs, with the objective of making these entities less dependent on funding from
the national government.”
“The BLGF issued Memorandum Circular Nos. 14-2008, 18-2008 and 19- 2008
prescribing the Statement of Receipts and Expenditures for collecting and
monitoring financial information and performance of all LGUs, thereby upgrading
the SIE system for the purpose of harmonizing the data with other government
fiscal reports, such as the New Government Accounting System of the COA, and
to synchronize the preparation of the SRE by concerned LGU officials.”
“The eSRE is hereby instituted as the official Reporting system of the DOF on
Local Government Fiscal and Financial Matters, to be maintained by the BLGF
to fully establish a reliable, accurate and timely reporting and monitoring system
in the country.”
SECTION 182. STATEMENT OF RECEIPTS AND EXPENDITURES (SRE):

PURPOSE AND USE
A. Purpose
1. LGU Monitoring System – LGU financial performance can be evaluated
through the data inputted to the system based from reports submitted by the
LGUs.
2. Policy Development – SRE offers sound financial information to assist
policymakers and legislators in drafting local and national legislations,
policies, rules and regulations.
3. Forecasting and Planning – consolidated data are useful in planning,
forecasting, debt certification, creditworthiness rating system, LGU income
classification system, among others.
4. Statistics – the SRE provides key granular data in local finance such as
locally sourced income, external sources of revenues and expenditures and
such other financial or fiscal statistics on LGU finance that can be used to
design economic and fiscal capacity models.
B. Users and Uses:
User/s Use/s
Bureau of Local As a tool in monitoring the LGUs’ financial
Government Finance performance, data source in setting LGUs’
(BLGF) annual income targets, data source and tool
in medium- term revenue and expenditure
forecasting, and tool for creditworthiness
rating and debt capacity monitoring.
72
LTOM, 2ND EDITION
User/s Use/s
Department of Finance (DOF) As data source for revenue collections,
borrowings, LGU’s surplus and deficit as input
to consolidated public sector financial position
(CPSFP) and drafting of national policies.
Department of the Interior and As data source for revenue collections,
Local Government (DILG) borrowings, LGU’s surplus and deficit as input
to consolidated public sector financial position
(CPSFP) and drafting of national policies.
Municipal Development Fund As data source for processing of LGU’s
Office (MDFO) application for loans/grants.
National Economic As data source for local finance statistics,
Development Authority forecasting and planning.
(NEDA)
Department of Budget As data source for the preparation of Budget
and Management of Expenditures and Sources of Financing
(DBM) (BESF) and in cash flow forecasting.
National Tax Research Center As data source for local finance statistics for
(NTRC) research and publication purposes.
Bangko Sentral ng Pilipinas
(BSP)
Senate of the Philippines As source of local financial data and analysis
House of Representatives in aid of legislation.
Financial Institutions As data source for evaluation of LGU’s credit
application.
Potential Donors As data source and basis for extending grants/
donations/aids/loans to LGUs.
Other Stakeholders/ Researchers As data source for economic forecasts and to
evaluate the LGUs’ operating performance.
Public Serve as source of information in the
assessment of local governments’
performance in public financial management
and other local finance statistics and reports.
SECTION 183. ELECTRONIC STATEMENT OF RECEIPTS

AND EXPENDITURES (eSRE)
A. The eSRE System was primarily established to provide the BLGF with detailed
and timely financial information for the purpose of monitoring LGUs’ financial
performance and to address the financial monitoring and management needs of
LGUs’ users.
B. The eSRE System is composed of the eSRE LGU Report System and the eSRE
Central System. The eSRE LGU Report System is a system installed in all LGUs
for the purpose of entering LGU-specific SRE data and generating reports which
will be submitted to the BLGF for review and approval. The eSRE Central System
serves as a web-based engine to view financial data and report records which are
73
submitted by all LGUs Once the data of the LGUs are uploaded from the eSRE
LGU Report System to the eSRE Web System, the BLGF can generate, review,
approve analyze reports.
C. The current release version of the eSRE includes the following modules:
1. Debt Management Module – This module is used to generate LGUs’ debt
capacity certificate and to monitor LGUs’ borrowing activities. It captures the
aggregate debt of the LGUs and provides early warning if LGUs are nearing
the statutory 20% debt ceiling.
2. Creditworthiness and Financial Indicator Module – Creditworthiness
shows the capacity of an LGU to incur and repay debt responsibly while the
financial indicators measure LGU’s performance in terms of public financial
management and determine its overall financial health.
3. Fiscal Capacity Model – This module is used to generate forecasts key
own-source revenue levels of all provinces, cities and municipalities which
can be used for planning purposes.
D. The e-SRE database also provides information for the following LGU performance
systems:
1. LGU Fiscal Sustainability Scorecard (LGU FSS) – the SRE provides
the main backend database in computing the benchmarks for all financial
indicators of the Scorecard and in rating the reporting compliance of
treasurers.
2. Performance Standards for Local Treasurers and Assistant Treasurers
– the SRE is used for computing financial indicators measuring performance
in achieving various operational goals of treasurers and assistant treasurers.
3. Seal of Good Local Governance (SGLG) – the SRE provides financial
indicators for the Department of the Interior and Local Government
performance management indicator system.
4. Cities and Municipal Competitiveness Index (CMCI) – the National
Competitiveness Council (NCC) uses the SRE for the computation of the
Ratio of LGU collected tax to total LGU revenues. This is one of the indicators
in the CMCI which measures economic development and competitiveness
at the local government level.
5. Philippine Poverty- Environment Initiative (PPEI) and Extractive
Industries Transparency Initiative (EITI) – The SRE serves as data source
on the detailed account of shares from national wealth received by LGUs
such as local taxes, fees and user charges paid from extractive industries as
well as the tagging of the expenditures items from such proceeds.
6. Most Business Friendly LGU Award – The Philippine Chamber of
Commerce and Industry (PCCI) used the SRE as part of the Qualifying
Indicator to commend LGUs that have become successful in creating an
environment that is conducive to business.
74
LTOM, 2ND EDITION
SECTION 184. GUIDELINES AND MANUALS FOR THE PREPARATION

AND SUBMISSION OF THE ESRE REPORTS
A. Manual for the Preparation of the SRE for LGUs (Concepts, Input Preparation
and Reporting) - The Manual contains the guidelines, procedures and instructions
in the preparation of SRE which shall be the used by all local treasurers and SRE
focal persons. The objectives of this manual are the following:
1. Uniformity in the preparation of the SRE report by applying common
classification of accounts, use of terminologies and timing of recording
financial transactions in harmony with the New Government Accounting
System (NGAS) reports and in conformity with the Philippine Financial
Reporting System (PFRS) and International Financial Reporting Standards
(IFRS);
2. Identification of various source documents to be used in the preparation of
SRE report and guidelines for the completion of the various report forms;
and
3. Illustration on the utilization of the financial information for monitoring the
financial performance of the LGUs.
The electronic copy of these manuals are downloadable online at http://blgf.
gov. ph/manuals
B. Electronic Statement of Receipts and Expenditures v2.1 User Manuals (LGU
System & Central System)
1. The eSRE User’s Manual provides the necessary information for encoders
to provide information for the eSRE reporting system and reviewers and
approvers to evaluate the submissions. Each type of user is provided with
screen shots and procedure steps to be able to use the system efficiently.
2. The eSRE System Central System User’s Manual provides technical
guidance to users assigned for the maintenance of the eSRE Central system.
Each type of user is provided with screen shots and procedures steps to be
able to use the system efficiently.
SECTION 185. SUBMISSION OF SRE REPORT

A. Pursuant to Sec. 3 of Department Order No. 034-201424, 26 May 2014, BLGF
adopts the following guidelines on the submission of eSRE reports:
1. The eSRE cash basis reports shall be uploaded to the eSRE Web Information
System by all local treasurers on or before the following dates:
a. For the first three quarterly reports: on or before the 20th of the month
following the end of the quarter.
24 Amending Secs. 3,8 and 9 of the Department Order No. 8-2011, 11 February 2011
75
b. For the year-end report: on or before March 31 of the subsequent

calendar year.
2. When the deadline falls on a Saturday, Sunday or legal holiday, eSRE
reports shall be submitted on the next working day.
B. Grace Period - Upon written request prescribed by the BLGF, the local treasurers
who failed to submit eSRE report on time may be given a grace period of fifteen
(15) days from the prescribed period. The BLGF Regional Director upon the
recommendation of the BLGF Regional Reviewer shall approve the request
provided that, such delay was due to fortuitous events, force majeure or other
analogous causes.
SECTION 186. RESPONSIBILITIES AND SANCTIONS

A. Sec. 8 of Department Order No. 8-2011, 11 February 2011, amending the penalties
for failure to submit timely and/or accurate eSRE reports is hereby adopted, to wit:
“Failure of the concerned local treasurer to submit timely and/or accurate eSRE
reports shall constitute sufficient grounds for filing a complaint in accordance with
the Revised Rules on Administrative Cases in the Civil Service (RRACCS) of the
Civil Service promulgated on 8 November 2011, specifically:
1. The failure to submit the reports within the prescribed period is considered
a light offense, hence, Sec. 46 (F.3) of Rule 10 of the RRACCS shall apply:
Violation of reasonable office rules and regulations:
1st Offense – Reprimand
2nd Offense – Suspension of one (1) day to thirty (30) days
3rd Offense – Dismissal from the service
2. The submission of inaccurate reports is considered a less grave offense.
Inaccurate report shall mean a report containing data that materially affects
the integrity of the report which may consequently mislead end-users. For
this purpose, Sec. 46 (D.2) of Rule 10 of the RRACCS shall apply:
Simple Misconduct:
1st Offense – Suspension of one (1) month and one (1) day to six (6) months
2nd Offense – Dismissal from the service
The complaint shall be initiated by the proper disciplining authority or his
authorized representative and a show-cause memorandum shall be issued
accordingly to the concerned treasurer.
76
LTOM, 2ND EDITION
SECTION 187. ENVIRONMENT AND NATURAL RESOURCES DATA

MANAGEMENT TOOL (ENRDMT) REPORTS
A. The ENRDMT was instituted to serve as the data capturing tool for the environment
and natural resources revenues and expenditures of LGUs hosting extractive
operations, to ensure that the payments made by extractive companies are
reported accurately and in a timely manner.
B. Sec. 1 of DOF Department Order No. 049-201625 provides that the data
requirements for the PH-EITI and the PPEI annual reports shall form part of the
quarterly SRE reports submitted by local treasurers to report payments made by
extractive industries and detailed account of the shares from national wealth.
C. The eSRE System shall include the ENRDMT to provide a facility for the LGUs to
report the following direct and non-direct payments:
1. Local taxes, fees and other charges;
2. Receipts of shares from national wealth within the LGU’s jurisdiction;
3. Expenditures of LGUs coming from receipts/collections from the extractive
industries and shares from national wealth; and
4. Such other monetary and non-monetary benefits received by LGUs from
extractive industries and shares from national wealth.
SECTION 188. SUBMISSION OF ENRDMT REPORTS

Pursuant to Sec. 3.A of Department Order No. 078-201726, 15 December 2017, the
ENRD reports shall be uploaded to the ENRDMT web system by all concerned local
treasurers on or before the following dates:
A. For the first three quarterly reports: on or before the 30th of the month following
the end of the quarter.
B. For the year-end report: on or before April 30 of the subsequent fiscal year.
SECTION 189. REPONSIBILITIES AND SANCTIONS

Failure of the concerned local treasurer to submit timely and/or accurate eSRE
reports shall constitute sufficient grounds for filing a complaint in accordance with the
Revised Rules on Administrative Cases in the Civil Service (RRACCS) of the Civil
Service promulgated on 8 November 2011, specifically:
A. The failure to submit the reports within the prescribed period is considered a light
offense, hence, Sec. 46 (F.3) of Rule 10 of the RRACCS shall apply:
25 Inclusion of Environment and Natural Resources Data in the Electronic Statement of Receipts and Expenditures
System for Local Treasurers
26 Amending Secs. 1,2 and 4 of Department Order No. 049.2016 (Inclusion of Environment and Natural Resources
Data in the Electronic Statement of Receipts and Expenditures System for Local Treasurers)
77
Violation of reasonable office rules and regulations:

1st Offense – Reprimand
2nd Offense – Suspension of one (1) day to thirty (30) days
3rd Offense – Dismissal from the service
B. The submission of inaccurate reports is considered a less grave offense; hence,

Sec. 46 (D.2) of Rule 10 of the RRACCS shall apply:
Simple Misconduct:
1st Offense – Suspension of one (1) month and one (1) day to six (6) months
2nd Offense – Dismissal from the service
78
LTOM, 2ND EDITION
FORMS AND ANNEXES
79
CHAPTER
1
FORMS AND ANNEXES
LTOM FORM NO. 3 - LETTER OF AUTHORITY
City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER
Letter of Authority No.:
Date : ___________
NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS
Dear Sir/Madam:
Pursuant to Section 17127 of RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991, please
be advised that the bearers hereof, from this Office and deputized as Examining Official/s, are hereby authorized to
examine your books of accounts and other pertinent business records thereof, to ascertain, assess and collect the
true and correct amount of the tax, fee or charge due, for the period _____________to____________, __________.
The Examining Officials, are under the instruction to properly identify themselves and present/display their
Identification Cards (ID) at all times.
The examination hereof shall be made during regular business hours, once every tax period, and shall be certified
by the abovementioned examining officials. Such certification shall be made of record in your books of accounts.
Your cooperation in this regard will be highly appreciated.
Very truly yours,

____________________________
Local Treasurer
Deputies:
Acknowledgement:
__________________________________
Date Received: _______________ Name and Signature of Examining Official/s
__________________________________
Position/Designation of Examining Official/s
___________________________________________
Signature over Printed Name of Declared Business Date: ______________________
Owner or his/her Authorized Representative
27 Section 171. Examination of Books of Accounts and Pertinent Records of Businessmen by Local Treasurer. - The
provincial, city, municipal or barangay treasurer may, by himself or through any of his deputies duly authorized
in writing, examine the books, accounts, and other pertinent records of any person, partnership, corporation, or
association subject to local taxes, fees and charges in order to ascertain, assess, and collect the correct amount
of the tax, fee, or charge. Such examination shall be made during regular business hours, only once for every
tax period, and shall be certified to by the examining official. Such certificate shall be made of record in the books
of accounts of the taxpayer examined.
In case the examination herein authorized is made by a duly authorized deputy of the local treasurer, the written
authority of the deputy concerned shall specifically state the name, address, and business of the taxpayer
whose books, accounts, and pertinent records are to be examined, the date and place of such examination and
the procedure to be followed in conducting the same.
For this purpose, the records of the revenue district office of the Bureau of Internal Revenue shall be made
available to the local treasurer, his deputy or duly authorized representative.
80
LTOM, 2ND EDITION
LTOM FORM NO. 4 - LIST OF DOCUMENTS TO BE EXAMINED

Date: ___________________

Dear Sir/Madam:
Pursuant to Letter of Authority attached hereto, please prepare the following pertinent
business records of your business establishment/company, viz:
1. Business Permit, for the period __________ to __________, _________.

2. Business License Receipts, for the period __________ to __________, _________.
3. Latest Letter of Authority and Letter of Confirmation (proof of examination) issued.
4. Audited Financial Statement, for the period __________ to __________,
_________.
5. Books of Accounts, for the period __________ to __________, _________.
6. Purchases, Sales and Delivery Invoices, for the period __________ to __________,
_________.
7. Value-Added Tax (VAT), Percentage, Excise or Quarterly payments to Bureau of
internal Revenue (BIR).
8. Business Permit and Taxes paid in other Cities or Municipalities if the business has
branches outside the LGU.
9. Schedule of Gross Sales/Receipts for every branch duly certified by an authorized
official or representative of the establishment/company
10. Articles of Incorporation/Partnership
11. Contract of Lease (if place of business is rented)
12. List of employees submitted to Social Security System (SSS)
13. Letter of Credit/Bill of Lading (for Importers & Exporters)
14. POEA license, deployment reports (for ManpowerAgencies)
15. DOT Accreditation (for Tourist oriented and related business)
16. Contract of Agreement on Projects (for General Building and Engineering
Contractors)
17. Community Tax Certificate
Your cooperation in this regard will be highly appreciated.
Very truly yours,

___________________________
Local Treasurer
81
FORMS AND ANNEXES
LTOM FORM NO. 5 - TAX DATA SHEET

Date: ____________________
TAX DATA SHEET
Letter of Authority No. :
Date of Examination :
Time when the Examination Started :
Time when the Examination Ended :
Period/Year Covered :
Name of Business :
Nature of Business :
Name of Business Owner :
Complete Business Address :
License No. :
Citizenship :
Amount of Capital Investment (PhP) :
Mayor's Gross Sales/ Gross Sales/

Date of Type of Understatement of Overstatement of
Permit Receipts per Receipts per
Issue Business Sales Sales
No. Permit Examination
PAYMENTS
Taxes/Fees/Charges Amount Paid Date of Payment

REMARKS:
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
Examined by:
_____________________________________
Name and Signature of Examining Official/s
_____________________________________
Date: ________________
82
LTOM, 2ND EDITION
LTOM FORM NO. 6 - TAX DATA SHEET AND ASSESSMENT FORM

Date: ____________________
TAX DATA AND ASSESSMENT FORM
Name of Business : Nature of Business :

Name of Business Owner : Mayors’ Permit No. :
Complete Business Address :
Letter of Authority/Appointment No. : Date Issued :

Community Tax Certificate No. : Date Issued :
Particulars Declared Actual Year Tax Tax Difference Surcharge Interest Total
Sales Sales Due Paid
Findings and Recommendations

_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
Examined by:
_____________________________________
Name and Signature of Examining Official/s
_____________________________________
Date: ________________
83
FORMS AND ANNEXES
LTOM FORM NO. 7 - LETTER OF ASSESSMENT (FIRST NOTICE)

Date: ___________________

Dear Sir/Madam:
Please be informed that based on the conduct of examination of books of accounts and other
pertinent business records thereat on _________________ you are hereby requested to pay
the amount of ₱ _______________________ representing additional business tax including
surcharges and penalties covering the period, from _____________ to ______________,
_________.
To avoid the inconveniences of a legal action to enforce payment of your deficiency, it is hereby
required that you settle the aforesaid amount within fifteen (15) days from your receipt hereof.
Very truly yours,

____________________________
Local Treasurer
Letter of Authority No.: ________________

Date of Examination: _________________
Acknowledgment:
Date Received: _______________
____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative
84
LTOM, 2ND EDITION
LTOM FORM NO. 8 - LETTER OF ASSESSMENT (SECOND NOTICE)

Date: ___________________

Dear Sir/Madam:
Records of this Office show that you failed to settle your remaining deficiencies discovered
during the conduct of examination of books of accounts and other pertinent business records
thereat on _________________ by examining official/s of this Office.
As provided under our letter dated ___________ and received by your company on
____________, you are hereby requested to pay the amount of ₱ __________________
representing additional business tax including surcharges and penalties covering the period,
from _____________ to ______________, __________.
In this regard, please settle the aforesaid amount within ten (10) days from receipt hereof.
Failure to do so shall constrain us to cancel your Mayor’s Permit or effect the civil remedies
provided for under Section 174 of RA No. 7160 otherwise known as the Local Government
Code (LGC) of 1991, by enforcing the collection thru distraint and levy or by judicial action.
Very truly yours,

____________________________
Local Treasurer

Acknowledgment:
____________________________________
Representative
85
FORMS AND ANNEXES
LTOM FORM NO. 9 - LETTER OF ASSESSMENT (FINAL NOTICE)

Date: ___________________

Dear Sir/Madam:
Records of this Office show that you failed to settle your remaining deficiencies discovered
during the conduct of examination of books of accounts and other pertinent business records
thereat on _________________ by examining official/s of this Office.
As provided under our Letter of Assessments dated __________ and __________, respectively,
which was received by your company on __________ and ____________, respectively, you
are requested to settle the amount of ₱__________________ representing additional
business tax including surcharges and penalties covering the period, from _____________ to
______________. However, in spite of these notices, no reply or attempt to settle this
obligation on your part was made.
Please be informed that pursuant to Section 195 of RA No. 7160 otherwise known as the
Local Government Code (LGC) of 1991, the subject assessment becomes final and executory
and therefore, thus, the immediate settlement of the aforesaid tax obligation is exigently
requested, otherwise, this Office will be constrained to cancel your Mayor’s Permit or effect
the civil remedies provided for under Section 174 of the LGC by enforcing the collection thru
distraint and levy or by judicial action.
Very truly yours,

____________________________
Local Treasurer

Acknowledgment:
____________________________________
Representative
86
LTOM, 2ND EDITION
LTOM FORM NO. 10 - FINAL NOTICE BEFORE ISSUANCE

OF WARRANT OF DISTRAINT AND LEVY
Date: ___________________

Subject: Tax Deficiency Discovered During Examination of your Books Pursuant to:
Letter of Authority No. :

Amount (PhP) :
Year :
Dear Sir/Madam:
Records of this office show that despite several notices served and duly receipted on your
business establishment/company and in consideration of the length of time that has elapsed,
this Office has not yet received a reply from your part.
In view hereof, we would like to inform you that we are giving you a LAST
OPPORTUNITY to make the necessary settlement of your additional business tax including
surcharges and penalties amounting to PhP __________________, covering the period, from
_____________ to ______________, _________, within five (5) days from receipt of this
NOTICE.
Please be informed that pursuant to Section 195 of RA No. 7160 otherwise known as the
Local Government Code (LGC) of 1991, the subject assessment becomes final and executory
and thus, the immediate settlement of the aforesaid tax obligation is exigently requested,
otherwise, this Office will be constrained to cancel your Mayor's Permit or effect the civil
remedies provided for under Section 174 of the Local Government Code by enforcing the
collection thru distraint and levy or by judicial action.
Very truly yours,

____________________________
Local Treasurer
Acknowledgment:
____________________________________
Representative
87
FORMS AND ANNEXES
LTOM FORM NO. 11 - NON-PRESENTATION OF DOCUMENTS

Date: ___________________

Dear Sir/Madam:
Records of this office show that you failed to present for examination, your books of accounts
and other pertinent business records thereat, notwithstanding the service of Letter of Authority
No. ___________, dated _____________, on ____________, in violation of Section 170 of
RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991.
In this regard, you are hereby given three (3) days from receipt hereof to present your book of
accounts and other pertinent business documents for examination to this Office during regular
office hours. Failure to do so will constrain this Office to recommend for the cancellation of
your Mayor’s Permit or effect the civil remedies provided for under Section 174 of the Local
Government Code of 1991.
Very truly yours,

____________________________
Local Treasurer
Acknowledgment:
____________________________________
Representative
88
LTOM, 2ND EDITION
LTOM FORM NO. 12 - FINAL NOTICE OF NON-PRESENTATION

OF DOCUMENTS
Date: ___________________

Dear Sir/Madam:
Records of this office show that you failed to present for examination, your books of accounts
and other pertinent business records thereat notwithstanding the service of Letter of Authority
No. ___________, dated _________________, on _______________, in violation of Section
LOA No. Date of LOA No. Date Served/Issued
170 of RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991.
Unless the books of accounts and other pertinent records relative thereof are presented to
this office within three (3) days from the receipt hereof, the following actions shall be taken to
effect the desired examination of book of accounts, to wit:
1. Cancellation of Mayor’s Permit

2. Effect the civil remedies provided for under Section 174 of the LGC.
Very truly yours,

____________________________
Local Treasurer
Acknowledgment:
____________________________________
Representative
89
FORMS AND ANNEXES
LTOM FORM NO. 13 - LETTER OF CONFIRMATION

Date: ___________________

Dear Sir/Madam:
This refers to the examination of books of accounts and other pertinent business records
thereat pursuant to our Letter of Authority No. ______________ dated _____________,
LOA No. Date of LOA No.
serve/issued to your business establishment on __________________ .

Date Served/Issued
Please be informed that the said examination thereat has concluded and the corresponding
reports of the examining official/s has been submitted and made record in this Office.
Very truly yours,

____________________________
Local Treasurer
90
LTOM, 2ND EDITION
LTOM FORM NO. 14 - CERTIFICATE OF CONFIRMATION

Province/City/Municipality of ____________________________
CERTIFICATE OF CONFIRMATION
This is to certify that on _______________, the books of accounts

and other pertinent business records thereat for the year _______ of
Mr./Ms.____________________________of_____________________________________,
Name of Business Owner Name of Business
with complete business address at ____________________________________________

has been examined by the Complete Business Address
Examining Official/s of this Office pursuant to the Letter of Authority No. ________,
LOA No.
dated ____________, whose findings and recommendations are stated

Date of LOA No.
herein.
A certificate of examination has been made of record in the book of accounts thereat on even
date.
This certification is issued for whatever legal purpose it may serve.
Issued this _______ day of ___________________, __________.

Day Month Year
Certified by:

____________________________
Local Treasurer
Verified and Concurred by:
Name of Examining Official/s:
______________________________
Name and Signature of Examining
Official/s
______________________________
Position/Designation of Examining
Official/s
91
FORMS AND ANNEXES
LTOM FORM NO. 15 - CERTIFICATE OF EXAMINATION

CERTIFICATE OF EXAMINATION
This is to certify that on _______________, the books of accounts and other
pertinent records thereat for the year ______ of Mr./Ms. __________________________ of

Name of Business Owner
____________________________________________________, with business address at

Name of Business
____________________________________________________has been examined by the

Complete Business Address
Examining Official/s of this Office pursuant to the Letter of Authority No. ________,
LOA No.
dated _____________.
Date of LOA No.
It is further certified that the gross sales/receipts amounting

to _______________________________________________________________________
(PhP ______________________) of the aforesaid business establishment has been
Total Gross Sales/Receipts Examined
determined by virtue of the said examination of books of accounts, which shall be the basis
in the computation of business taxes, fees and charges due thereof for the period, from
_____________ to ______________ of the current year.
This certification is issued for whatever legal purpose it may serve.
Issued on this _______ day of ___________________, __________.

Day Month Year
Certified by:

____________________________
Local Treasurer
Verified and Concurred by:
Name of Examining Official/s:
______________________________
Name and Signature of Examining
Official/s
______________________________
Position/Designation of Examining
Official/s
92
LTOM, 2ND EDITION
LTOM FORM NO. 16 - NOTICE OF DELINQUENCY IN THE PAYMENT

OF REAL PROPERTY TAX
NOTICE OF DELINQUENCY IN THE PAYMENT OF REAL PROPERTY TAX
Based on the records of this office, the real property tax of the following properties
have not been paid:
Tax Total
Declared Location of Kind of Year/s of Tax Due
Declaration Assessed
Owners Property Property Delinquency as of ____
Number Value
1.
2.
3.
4.
5.
6.
7.
8.

Personal property may be distrained to effect payment. At any time before the distraint
of personal property, payment of the tax with surcharges, interests and penalties may be
made, and unless that tax, surcharges and penalties are paid before the expiration of the year
for which the tax is due, the delinquent real property will be sold at public auction, and the title
to the property will be vested in the purchaser, subject however, to the right of the delinquent
owner of the property or any person having legal interest therein to redeem the property within
one (1) year from the date of sale.
____________________________
Date: _______________ Local Treasurer
93
FORMS AND ANNEXES
LTOM FORM NO. 17 - NOTICE OF REAL PROPERTY TAX

DELINQUENCY (FIRST NOTICE)

Date: _________________
NAME OF DECLARED OWNER
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that you have real property tax delinquency on your property
computed as follows:
Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Penalty Tax Penalty Total Amount
Total Tax Due ----Php
Please settle the delinquency within ten (10) days from receipt of this notice.
Very truly yours,

____________________________
Local Treasurer
94
LTOM, 2ND EDITION

DELINQUENCY (SECOND NOTICE)

Date: _________________
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that you failed to settle your real property tax delinquency as
provided in our letter dated __________________and computed as follows:
Date of First Notice
Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :

BASIC SEF
Please settle the delinquency within seven (7) days from receipt of this letter.
Very truly yours,

____________________________
Local Treasurer
95
FORMS AND ANNEXES

DELINQUENCY (FINAL NOTICE)

Date:
____________________
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that despite two (2) notices, you still have not settled your real
property tax delinquency computed as follows:
Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :

BASIC SEF
-continued on separate sheet if necessary-
We are giving you five (5) days as a final chance to settle the said obligation
otherwise, we will initiate legal proceedings against the property.
Very truly yours,

____________________________
Local Treasurer
96
LTOM, 2ND EDITION
LTOM FORM NO. 20 - WARRANT OF LEVY

WARRANT OF LEVY

COMPLETE ADDRESS
Records show that you still have not paid your real property tax delinquency
computed as follows:
Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :

BASIC SEF
Please settle the delinquency within ten (10) days from receipt of this notice.
WHEREFORE, this Warrant of Levy is hereby issued on the property described
above pursuant to Section 258 of RA 7160
Day Month Year
____________________________
Local Treasurer
97
FORMS AND ANNEXES
LTOM FORM NO. 21 - NOTICE OF LEVY (LOCAL ASSESSOR

AND REGISTRAR OF DEEDS)

Date:
___________________
NAME OF ASSESSOR
COMPLETE OFFICE ADDRESS
Dear Sir/Madam:
Please be informed that a Warrant of Levy, copy hereto attached has been
issued to the real property described hereunder:

Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :

Kindly annotate the said levy on the tax declaration of the said property.
Thank you.
Very truly yours,

____________________________
Local Treasurer
98
LTOM, 2ND EDITION


Date:
___________________
NAME OF REGISTRAR OF DEEDS
Dear Sir/Madam:
Please be informed that a Warrant of Levy, copy hereto attached has been
issued to the real property described hereunder:

Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :

Kindly annotate the said levy on the certificate of title of the said property.
Thank you.
Very truly yours,

____________________________
Local Treasurer
99
FORMS AND ANNEXES
LTOM FORM NO. 22 - REPORT OF LEVY (SANGGUNIAN)


Date:
___________________
THE HONORABLE MEMBERS
LOCAL SANGGUNIAN
Gentlemen and Ladies:
Respectfully submitting to your office the list of real properties with Warrant of
Levy, pursuant to Sec. 258 of RA 7160, otherwise known as the Local Government
Code (LGC) of 1991.
Very truly yours,

____________________________
Local Treasurer
100
LIST OF REAL PROPERTY TAX DELINQUENCIES ISSUED WITH WARRANT OF LEVY
Declared Owner/s Tax Declaration No. Location of Property Kind of Property Assessed Value
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
CERTIFIED CORRECT:

____________________________
Local Treasurer
LTOM, 2ND EDITION
101
102
LTOM FORM NO. 23 - NOTICE OF AUCTION SALE OF DELINQUENT REAL PROPERTIES
____________________________
Province/City/Municipality
FORMS AND ANNEXES
NOTICE OF AUCTION OF SALE OF DELINQUENT REAL PROPERTIES
ursuant to Section 260 of Republic Act No. 7160 (Local Government Code of 1991), the undersigned hereby gives notice to the public that we will conduct an
P
auction sale of delinquent real properties on ________________ at _____________________. The auction will be held at ____________________.
Date of Auction Time of Auction Place of Auction
Total
Declared Tax Declaration Location of Kind of Assessed Year/s of
TCT Number Delinquencies as Cost of Sale
Owner/s Number Property Property Value Delinquency
of _____
1.
2.
3.
4.
5.
6.
At any time before _____________________, the owner of the real property or person having legal interest therein may stay the
Date of Auction
proceedings by paying the delinquent tax, the interest due thereon and the expenses of sale.
____________________________
Local Treasurer
LTOM, 2ND EDITION
LTOM FORM NO. 24 - NOTICE OF SALE


Date:
___________________
COMPLETE ADDRESS
Dear Sir/Madam:
Pursuant to Section 260 of Republic Act No. 7160 (Local Government Code
of 1991), the undersigned will conduct and auction sale of delinquent real properties
on __________________________ at ____________________. The auction will
Time of Auction Place of Auction
be held at the ___________________.

Date of Auction
In this regard, your property/ies described hereunder will be included in the

list of delinquent real properties that will be auctioned on that date:
Declared Owner/s :
TCT No. :
Kind of Property :
Assessed Value :
BASIC SEF
Tax Year Tax Interest Tax Interest Total Amount
-continued on separate sheet if necessary-
At any time before _______________, you may stay the proceedings by

Date of Auction
paying the delinquent tax, the interest due thereon and expenses of sale.
Very truly yours,

____________________________
Local Treasurer
103
FORMS AND ANNEXES
LTOM FORM NO. 25 - PUBLIC AUCTION REGISTRATION FORM

PUBLIC AUCTION REGISTRATION FORM
Date: ____________________
Please tick the appropriate box to determine your bidder number
Individual Bidder
Corporate Bidder
Official Receipt No. : Assigned Bidder No. :

For Individual Bidder:
Name :
Complete Address :
Telephone No. :
Mobile No. :
Email Address (if any) :
Citizenship :
Sex :
For Corporate Bidder:
Name of Representative :
Complete Address :
Telephone No. :
Mobile No. :
Email Address (if any) :
Citizenship :
Sex :
Business/Employer’s Complete Address :
Business/Employer’s Contact No. :

Business/Employer’s Email Address/Website :
DECLARATION
In pursuance to Art. 1491 of RA 386 otherwise known as the Civil Code of the Philippines and
Sec. 89 of RA 7160, otherwise known as the Local Government Code (LGC) of 1991, I understand that it
is unlawful to engage in any business transaction with the LGU in which he/she is an official or employee
or over which he/she has the power of supervision, or with any of its authorized boards, officials, agents,
or attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred,
directly or indirectly, out of the resources of the LGU to such person or firm or purchase any real estate
or other property forfeited in favor of such local government unit for unpaid taxes or assessment, or by
virtue of a legal process at the instance of the said LGU.
______________________________________
Signature over printed name
Name of Registered Bidder/ Representative
Based on the foregoing declaration, I hereby certify that the above bidder is ______________
to participate. Specify if Qualified or Not Qualified
_____________________________________
Signature over printed name
Local Auction Committee
104
LTOM FORM NO. 26 - LIST OF REGISTERED BIDDERS

Date: ____________________
LIST OF REGISTERED BIDDERS

Assigned Bidder
Name of Bidder/Representative Complete Address/Business Address Contact No. Official Receipt No.
No.
CERTIFIED CORRECT:

____________________________
Local Treasurer
LTOM, 2ND EDITION
105
FORMS AND ANNEXES
LTOM FORM NO. 27 - UNDERTAKING AND WAIVER OF BIDDERS


UNDERTAKING AND WAIVER

I, _____________________________________, of legal age, Filipino, Single/Married, and a resident of
Name of Registered Bidder/Representative
__________________________________________, after being sworn in accordance with law, depose

Complete Address
and say:
1. That I am a registered bidder during the public auction of delinquent real properties on
________________, at __________________________________;
Actual Date of Public Auction Place where the Public Auction was conducted
2. That I am informed of the status, condition and ownership of the real property/ies sold during the
above Public Auction, and I am aware of, acknowledge and accept the terms and conditions of the
said Public Auction as provided for under the Rules and Regulation of Public Auction as promulgated
by the Local Auction Committee;
3. That I acknowledge the I understand the provisions provided under the Rules and Regulation of
Public Auction provided;
4. That I hereby undertake to pay the bid price that I will successfully bid for, otherwise, the property/ies
sold to me shall be awarded to the LGU concerned;
5. Further, I am aware and understand that the registration fee of the said public auction is non-
deductible from the bid price; and
6. That I executed this document to attest to the truth of the foregoing and for whatever legal purpose
this may serve.
IN WITNESS WHEREOF, I have hereunto set my hand this _______ day of ___________________,
Day Month
__________.
Year
____________________________________
__Name of Registered Bidder/Representative
REPUBLIC OF THE PHILIPPINES)

___________________________ ) SS.
BEFORE ME, a Notary Public for and in the Province/City/Municipality of _______________________ ,

personally appeared: Name of LGU
NAME CTC Number Date and Place Issued
Known to me and me known to be the same person who executed the foregoing instrument and acknowledged
to me that the same is/are his/her/their free act and voluntary deed.
WITNESS MY HAND AND SEAL on this _______ day of ___________________, __________.

Day Month Year
Doc No. :
Page No. : ____________________________
Book No. :
Notary Public
Series of :
The information provided is not covered by the data privacy act and is only meant to carry out the provisions of public auction pursuant to Sec. 258 (Levy
on Real Property) and Sec. 260 (Advertisement and Sale) of the LGC.
106
LTOM, 2ND EDITION
LTOM FORM NO. 28 - RULES AND REGULATIONS OF PUBLIC AUCTION


RULES AND REGULATION OF PUBLIC AUCTION
(SHALL BE READ BEFORE THE CONDUCT OF PUBLIC AUCTION)
Date: _________________
I. WHO MAY PARTICIPATE:
Person/s or Corporation/s that paid the required registration fee and accomplished
the registration form issued, such as but not limited to:
1. All Filipino citizens who are not otherwise disqualified by law to acquire real
property in the Philippines and in pursuant to the limitations provided under
Art. 149128 of RA 386 otherwise known as the Civil Code of the Philippines
and Sec. 8929 of RA 7160 otherwise known as the Local Government Code
(LGC) of 1991 and other applicable laws rules and regulations.
2. Partnership, corporations and other legal entities duly registered with the
Securities and Exchange Commission (SEC) , 60% of the capital of which is
owned by Filipino citizens and not disqualified by law to acquire real property
in the Philippines;
28 Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:
a. The guardian, the property of the person or persons who may be under his guardianship;
b. Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the
principal has been given;
c. Executors and administrators, the property of the estate under administration;
d. Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned
or controlled corporation, or institution, the administration of which has been entrusted to them; this provision shall
apply to judges and government experts who, in any manner whatsoever, take part in the sale;
e. Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the
act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be
the object of any litigation in which they may take part by virtue of their profession.
f. Any others specially disqualified by law.
29 SECTION 89. Prohibited Business and Pecuniary Interest.
a. It shall be unlawful for any local government official or employee, directly or indirectly, to:
1. Engage in any business transaction with the local government unit in which he is an official or employee
or over which he has the power of supervision, or with any of its authorized boards, officials, agents, or
attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred, directly
or indirectly, out of the resources of the local government unit to such person or firm;
2. Hold such interests in any cockpit or other games licensed by a local government unit.
3. Purchase any real estate or other property forfeited in favor of such local government unit for unpaid taxes or
assessment, or by virtue of a legal process at the instance of the said local government unit.
4. Be a surety for any person contracting or doing business with the local government unit for which a surety
is required; and
5. Possess or use any public property of the local government unit for private purposes.
b. All other prohibitions governing the conduct of national public officers relating to prohibited business and pecuniary
interest so provided for under Republic Act Numbered 6713 (RA 6713) otherwise known as the "Code of Conduct
and Ethical Standards for Public Officials and Employees" and other laws shall also be applicable to local
government officials and employees.
107
FORMS AND ANNEXES
3. Duly authorized representative or person/s having legal interest to the

property of the declared owner;
II. CONDUCT OF PUBLIC AUCTION:
1. PublicAuction shall be conducted using the ____________________________
method. Specify if Open or Closed Bidding
2. All correspondence and documents relating to public auction, shall be

written in English. Supporting documents and printed literature may be in
another language provided they are accompanied by an accurate translation
in English.
3. Participating bidders shall be required to pay a non-refundable registration
fee and a refundable cash bond and shall accomplish the “registration form”.
4. Registered bidders shall be read and issued a copy of Rules and Regulations
in Public Auction and shall sign the “undertaking and waver”.
5. Registered bidders who accede to the rules and regulation of public auction
shall be entered into a list, and shall be assigned with a bidder number, upon
which such bidder shall be called or referred to during the entire proceedings
of the public auction. Only those with assigned bidder number may participate
in the public auction.
6. All bid price shall be quoted in Philippine Peso (₱).
7. The local treasurer and his/her duly authorized representative shall facilitate
the proceedings and shall read/tally the list of delinquent properties subject
for public auction. The delinquent real property shall be sold to the highest
cash bidder.
8. All bids shall be reviewed and validated by the local treasurer and/or his/her
duly authorized representative/s.
9. Bids shall be ranked, the ranking shall be calculated from highest to lowest
bid, the highest bid shall be declared as the winner.
III. CONDITIONS:
1. All participating bidders are required to pay a non-refundable amount of

_________________________________________, Php_______________
Registration Fee in Words Registration Fee in Figures
that shall cover the registration fee for the Public Auction and post a
refundable cash bond in the amount of ____________________________,
Cash Bond Amount in Words
Php_____________________, as provided under Real Property Tax (RPT)

Cash Bond Amount in Figures
Ordinance No. _________, dated _______________.

2. The local treasurer does not warrant the authenticity or validity of the
Certificate of Title (Title) of the registered or declared owner nor does
guarantee the correctness or accuracy of the description of the property.
108
LTOM, 2ND EDITION
Successful bidders acquire no better Title than that of the registered or

declared owner appearing on the Title and they will acquire the property
together with all its encumbrances like mortgage, lease and the like, existing
at the time of the purchase in the public auction. In the observance of
due diligence, participating bidders may first ascertain the existence and
authenticity of the Title of the property they wish to bid.
3. If land and improvement is covered by two (2) separate tax declarations and
both are delinquent but declared under one (1) person or declared as joint
ownership, the same shall be auctioned off together, to avoid the sale to a
different bidder.
4. The delinquent real property shall be sold to the highest bidder whose bid
is sufficient to pay the delinquent RPT, the interest due or penalties, and the
expenses of sale, the sum of which shall be the floor price for accepting any
bid.
5. The highest bidder shall, upon award, immediately pay the bid price which
shall be made in cash or manager’s check for the exact amount of the
bid payable in the name of the local treasurer or in the name of the LGU
concerned, as the case may be.
6. A Certificate of Sale shall be issued by the local treasurer to the highest
bidder, which contains the name of the latter, a sufficient description of the
property sold, the amount of the delinquent tax, the interest due or penalties,
the expenses of sale and a brief description of the public auction.
7. At any time before the date of the public auction, the declared owner/person
having legal interest therein or authorized representative may stop the
proceedings by paying in full, the following:
a. The amount of delinquent tax
b. The interest due or penalties, and
c. The expenses of sale.
8. Within one (1) year from the date of public auction, or as the case maybe,
the declared owner/person having legal interest therein or authorized
representative of the delinquent real property, shall have the right to redeem
the same by paying in full, the following:
a. The redemption price, which consists of the amount of delinquent tax
b. The interests due or penalties
c. The expenses of sale, computed from the date of delinquency to the
date of sale
d. Interest of not more than two percent (2%) per month on the purchase
price from the date of Public Auction to the date of payment of the
redemption price.
Full payment of the redemption price shall invalidate the Certificate of
Sale issued.
109
FORMS AND ANNEXES
9. Upon full payment of the redemption price, the declared owner/person

having legal interest therein or authorized representative of the delinquent
real property shall be entitled to a Certificate of Redemption which shall be
issued by the local treasurer. The local treasurer shall be responsible for
the request for cancellation of annotation of the Certificate of Title and Tax
Declaration with the RoD and local assessor, respectively.
10. The highest bidder shall return the Certificate of Sale to the local treasurer,
who shall forthwith return to the former the entire amount paid in the Public
Auction, including interest of not more than two percent (2%) per month from
the date of sale to the date of payment of the redemption price.
11. From the date of sale until the expiration of the period of redemption, the
delinquent real property shall remain in the possession of the declared
owner/person having legal interest therein or authorized representative, who
shall be entitled to all the income and fruits thereof.
The proceeds of the sale in excess of the delinquent tax, the interest due or
penalties and the expenses of sale shall be remitted to the declared owner/
person having legal interest therein or authorized representative.
12. In case the declared owner/person having legal interest therein or authorized
representative of the delinquent real property fails to redeem the delinquent
property, the local treasurer shall execute a Final Deed of Sale in favor of
the highest bidder, conveying subject real property, free from all liens of
delinquent tax, the interests due or penalties and expenses of sale. However,
the highest bidder shall be responsible to pay the corresponding taxes and
fees and charges relative to the transfer thereof.
13. In case there is no bidder for the real property advertised for public auction,
or if the highest bid is for an amount insufficient to pay the taxes, fees,
or charges, related surcharges, interests, penalties and costs, the local
treasurer conducting the sale shall purchase the property in behalf of the
LGU to satisfy the claim.
The information provided is not covered by the data privacy act and is only meant to carry out the provisions of public auction pursuant to Sec. 258 (Levy
on Real Property) and Sec. 260 (Advertisement and Sale) of the LGC.
110
LTOM, 2ND EDITION
LTOM FORM NO. 29 - CERTIFICATE OF SALE

CERTIFICATE OF SALE

I hereby certify that after having been advertised for sale pursuant to Sec. 260 of
RA 7160 otherwise known as the Local Government Code (LGC) of 1991, and subject to
the conditions set forth therein, the delinquent real property (land/building/machinery/
improvement) described hereunder was sold at the public auction:
Name of Declared Owner :
Tax Dec. No. : Kind of Property :

ARP : Location :
PIN : TCT No. :
The public auction was held on __________________ at

Date of the Public Auction
_______________________, and the subject delinquent real property was sold

Place where the Public Auction was Conducted
to Mr./Ms. _________________________, a citizen of the Philippines, of legal
age and a resident of ____________________________, being the highest
bidder thereof, for total consideration of _____________________________,

Total Purchase/Bid Price in Words
(Php________________), payment is hereby acknowledge received per Official

Total Purchase/Bid Price in Figures
Receipt No. ___________________, dated ___________, sufficient to satisfy the amount
of taxes, interest due or penalties and expenses of sale thereon, itemized as follows:
For the year/s _____________________, the real property tax (RPT) delinquency,
including penalty/ies and expenses of sale is computed as follows:
BASIC SEF
Assessed Expenses of
Value Sale

Day Month Year

____________________________
Local Treasurer
111
FORMS AND ANNEXES
LTOM FORM NO. 30 - DECLARATION OF FORFEITURE

OF DELINQUENT PROPERTY
____________________________

I HEREBY DECLARE that the delinquent real property described as follows:
Declared Owner/s :
TCT Number :
Kind of Property :
Assessed Value :
has been forfeited in favor of the __________ at the public auction held on
LGU
________ at the __________________, for the amount of taxes and penalties due
on the property and cost of sale, there being no interested bidder at the public auction
of the delinquent property or the highest bid offered having been for an amount not
sufficient to pay the taxes, penalties and costs due thereon, computed as follows:
Basic and SEF Taxes ₱

Penalties
Costs of Sale
Excess of Bid Price
Total ₱
This Declaration is issued pursuant to the provisions of Section 263 of Republic

Act 7160.
Province/City : Date :
Attested:

____________________________
Local Treasurer
112
LTOM, 2ND EDITION
LTOM FORM NO. 31 - REPORT OF SALE

____________________________

Date: _________________
THE HONORABLE MEMBERS
LOCAL SANGGUNIAN
COMPLETE LGU ADDRESS
Gentlemen/Ladies:
Respectfully submitting to your office the list of real properties sold at auction
on __________________.
Date of Public Auction
Attached to this letter is the Minutes of the Public Auction.
Very truly yours,

____________________________
Local Treasurer
113
FORMS AND ANNEXES
LTOM FORM NO. 32 - CERTIFICATE OF REDEMPTION

____________________________

Date: _________________
This is to certify that the real property described hereunder and purchased by
_____________________________ on _________________ was redeemed upon
Name of Highest Bidder Date of Auction
payment of the total amount of ₱___________________ by _________________.

Declared Owner
Declared Owner/s :
TCT Number :
Kind of Property :
Assessed Value :
At any time upon surrender to this office of the Certificate of Sale, dated
___________ and Official Receipt Number/s ______________ dated __________
Date of Auction Official Receipt of Bid Price Date of Auction
the entire amount paid plus interest of
not more than two percent (2%) per month of the purchase price from the date of
redemption shall be refunded to the purchaser.

____________________________
Local Treasurer
114
LTOM, 2ND EDITION
LTOM FORM NO. 33 - CANCELLATION OF WARRANT OF LEVY

(LOCAL ASSESSOR AND REGISTRAR
OF DEEDS)
____________________________

Date: _________________
ASSESSOR
REGISTRAR OF DEEDS
Dear Sir/Madam:
This is to inform that the Warrant of Levy dated _________________ issued
on the property covered by Tax Declaration Number _______ and Transfer Certificate
of Title (TCT) No. ________ was cancelled due to the exercise of redemption by the
declared owner/s.
Very truly yours,

____________________________
Local Treasurer
115
FORMS AND ANNEXES
LTOM FORM NO. 34 - FINAL DEED OF SALE


FINAL DEED OF SALE

KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, the real property declared in the name of Mr./Ms. ______________________

Name of Declared Owner/Person having Legal Interest
Therein or Authorized Representative
under Tax Declaration No.: ________________, ARP: ________________, PIN: __________,
has been delinquent in the payment of Real Property Tax (RPT) for the year/s: _____________.
Period of years delinquent
WHEREAS, a Notice of Sale, dated _________________ was advertised pursuant

Date of Notice of Sale
to the provision of Section 260 of RA 7160 otherwise known as the Local Government Code
(LGC) of 1991, and was served personally and thru registered mail to the declared owner/
person having legal interest therein or authorized representative at his/her registered.
WHEREAS, on account of said delinquency, the abovementioned real property was

advertised for sale at a public auction to satisfy the amount of delinquent tax, including interest
due thereon and the expenses of sale in the total amount of __________________________,
Total Amount Due provided in the Certificate of Sale in Figures
Php ___________________________.
Total Amount Due provided in the Certificate of Sale in Words
WHEREAS, at the public auction held on _____________________ at

Date where the Public Auction was Conducted
___________________, the subject property was sold to Mr./Ms. ________________________,
Place where the Public Auction was Conducted Name of the Highest Bidder
a citizen of the Philippines, of legal age and a resident of ________________________,

Complete Address of the Highest Bidder
being the highest bidder thereof, for total consideration of __________________________,
Total Purchase/Bid Price in Words
(Php____________________), payment is hereby acknowledge received per Official Receipt

Total Purchase/Bid Price in Figures
No. ____________, dated ___________, sufficient to satisfy the amount of taxes, interest due
or penalties and expenses of sale thereon.
WHEREAS, the declared owner/person having legal interest therein or authorized

representative, within the period of one (1) year pursuant to Section 261 of the LGC, failed to
redeem the subject property by paying the amount of delinquent tax, including interest due
thereon and the expenses of sale from the date of delinquency to the date of sale, plus interest
of not more than two percent (2%) per month on the purchase price from the date of sale to
the date of redemption.
NOW THEREFORE, the real property under Tax Declaration No.: ________________,
ARP: ________________, PIN: ________________, free from any encumbrance or third
party claim whatsoever, is hereby conveyed to Mr./Ms. ______________________________,
Name of the Highest Bidder
the holder of the Certificate of Sale dated ___________________, issued by

Date of the Certificate of Sale
116
LTOM, 2ND EDITION
_____________________________, covering the subject property.

Name of the Local Treasurer
IN WITNESS WHEREOF, the parties hereto have signed this deed this _______ day
Day
of ________________, ____________in ________________________, Philippines.

Month Year Name of LGU
____________________________ ____________________________
Vendor Vendee
Name of the Local Treasurer Name of Highest Bidder
Signed in the presence of:
____________________________ ____________________________
Name of Witness 1 Name of Witness 2

REPUBLIC OF THE PHILIPPINES)

___________________________ ) SS.
BEFORE ME, a Notary Public for and in the Province/City/Municipality of _____________________

_____________ , personally appeared:
Name of LGU
NAME CTC Number Date and Place Issued
Known to me and me known to be the same person who executed the foregoing instrument and
acknowledged to me that the same is/are his/her/their free act and voluntary deed. WITNESS
MY HAND AND SEAL on this _______ day of ___________________, __________.
Day Month Year
____________________________
Notary Public
Doc No. :
Page No. :
Book No. :
Series of :
117
FORMS AND ANNEXES
LTOM FORM NO. 35 - STATEMENT OF RECEIPTS AND EXPENDITURES

(EXHIBITS1 AND 1-A OF BLGF SRE FORM NO. 1)
ITEM
STATEMENT OF RECEIPTS AND EXPENDITURES
NO.
1 LGU: __________
2 Period __________
% of
Income
General General
3 Particulars / Target SEF Total
Fund + SEF to
Budget
Total
4 A B C D E F
5 LOCAL SOURCES
6 TAX REVENUE
7 Real Property Tax
8 Tax on Business
9 Other Taxes
10 NON-TAX REVENUE
Regulatory Fees (Permits and
11
Licenses)
Service/User Charges (Service
12
Income)
Receipts from Economic Enterprises
13
(Business
Other Receipts (Other General
14
Income)
15 EXTERNAL SOURCES
16 Internal Revenue Allotment
Other Shares from National Tax
17
Collections
18 Inter-Local Transfers
Extraordinary Receipts/Grants/
19
Donations/Aids
TOTAL CURRENT OPERATING
20
INCOME
ADD: SUPPLEMENTAL BUDGET
21
(UNAPPROPRIATED)
TOTAL AVAILABLE FOR CURRENT
22
OPERATING
LESS: CURRENT OPERATING
23
EXPENDITURES (PS+MOOE+CO)
24 General Public Services
Education, Culture & Sports/
25
Manpower Development
Health, Nutrition & Population
26
Control
27 Labor and Employment
118
LTOM, 2ND EDITION
ITEM
NO.
Housing and Community
28
Development
29 Social Services and Social Welfare
30 Economic Services
Debt Service (FE) (Interest Expense
31
& Other Charges)
TOTAL CURRENT OPERATING
32
EXPENDITURES
NET OPERATING INCOME/(LOSS)
33
FROM CURRENT
34 ADD: NON-INCOME RECEIPTS
35 CAPITAL/INVESTMENT RECEIPTS
36 Proceeds from Sale of Assets
Proceeds from Sale of Debt
37
Securities of Other
38 Collection of Loans Receivables
RECEIPTS FROM LOANS AND
39
BORROWINGS
40 Acquisition of Loans
41 Issuance of Bonds
42 OTHER NON-INCOME RECEIPTS
43 TOTAL NON-INCOME RECEIPTS
ADD: SUPPLEMENTAL BUDGET FOR
44
CAPITAL OUTLAY
TOTAL AMOUNT AVAILABLE FOR
45
CAPITAL
LESS: NON-OPERATING
46
EXPENDITURES
CAPITAL/INVESTMENT
47
EXPENDITURES
Purchase/Construct of Property
48
Plant and Equipment
Purchase of Debt Securities of Other
49
Entities
Grant/Make Loan to Other Entities
50
(Investment Outlay)
51 DEBT SERVICE (Principal Cost)
52 Payment of Loan Amortization
Retirement/Redemption of Bonds/
53
Debt Securities
OTHER NON-OPERATING
54
EXPENDITURES
TOTAL NON-OPERATING
55
EXPENDITURES
NET INCREASE/(DECREASE) IN
56
FUNDS
57 ADD: CASH BALANCE, BEGINNING
119
FORMS AND ANNEXES
ITEM
NO.
58 FUND/CASH AVAILABLE
Less: Payment of Prior Year/s Accounts
59
Payable
60 CONTINUING APPROPRIATION
61 ADD: ADVANCE PAYMENT FOR RPT
62 FUND/CASH BALANCE, END

FUND/CASH BALANCE, END
Amount set aside to finance projects with
appropriations
provided in the previous years (Continuing

appropriations)
Amount set aside for payment of Accounts

Payable
Amount set aside for Obligation not yet Due and

Demandable
Amount Available for appropriations/operations

Total Assets (net of accumulated

depreciation)
Certified Correct:
Provincial / Municipal Treasurer

120
LTOM, 2ND EDITION
Guidelines on the Preparation of the Statement of Receipts and Expenditures
ITEM
FIELD INSTRUCTIONS SOURCE
NO.
1 LGU Indicate the name of LGU LGU
2 Period Covered Indicate the period covered by the report LGU

(i.e., January 1 to March 31 for the First
Quarter Report, January 1 to June 30 for
the Second Quarter Report; etc.)
4-B Income Target/ The amount is based on the annual budget Budget Office
Budget approved by the Sanggunian. This column Approved
Appropriation can be used to determine the projected Budget
Column cash flow based on the approved budget
4-C General Fund These are actual receipts and expenditures SRS Actual
Column lifted from the SRS and SOE for the Column and
General Fund SOE Actual
Expenditures
Column
4-D SEF Column These are receipts and expenditures lifted SRS Actual
from the SRS and SOE appropriate to the Column and
Special Education Fund (SEF) SOE Actual
Expenditures
Column
4-E Total Sum of GF and SEF
4-F % of General + SEF Sum of GF and SEF divided by Total.

to Total Income (GF Determine the % of each income or
+ SEF) expenditure category in relation to total
5 Local Sources Sum of Tax Revenues and Non-Tax

Revenues
6 Tax Revenues Sub-total of RPT, Tax on Business and
Other Taxes
7 Real Property Tax The amount should be lifted from the SRS SRS
8 Tax on Business The amount should be lifted from SRS SRS
9 Other Taxes The amount should be lifted from SRS SRS
10 Non-Tax Revenues Sum of Regulatory Fees, Service/User

Charges, Receipts from Economic
Enterprises and Other Receipts
121
FORMS AND ANNEXES
ITEM
NO.
11 Regulatory Fees The amount should be lifted from SRS SRS
(Permits and
Licenses)
12 Service/User The amount should be lifted from SRS SRS
Charges (Service
Income)
13 Receipts from The amount should be lifted from SRS SRS
Economic
Enterprises
(Business Income)
14 Other Receipts The amount should be lifted from SRS SRS
(Other General
Income)
15 External Sources Sum of Internal Revenue Allotment, Other
Shares from National Tax Collections,
Inter-Local Transfers and Extraordinary
Receipts/Grants/ Donations/Aids
16 Internal Revenue The amount should be lifted from SRS SRS

Allotment
17 Other Shares The amount should be lifted from SRS SRS
from National Tax
Collections
18 Inter-Local Transfers The amount should be lifted from SRS SRS
19 Extraordinary The amount should be lifted from SRS SRS

Receipts/Grants/
Donations/Aids
20 Total Current Sum of Local Sources and External
Operating Income Sources
21 Supplemental Approved Supplemental Budget during the Budget Office
Budget year from unappropriated surplus (Budget Approved
(Unappropriated Column only) Budget
Surplus)For
Current Operating
Expenditures
22 Total Available for Sum of Current Operating Income and
Current Operating Supplemental Budget
Expenditures
24 General Public The amount should be lifted from the SOE
Services General Public Services sub-total of the
Statement of Expenditures (SOE)
25 Education, The amount should be lifted from the SOE
Culture and Education, Culture and Sports/ Manpower
Sports/ Manpower Development sub-total of the SOE
Development
122
LTOM, 2ND EDITION
ITEM
NO.
26 Health, Nutrition & The amount should be lifted from Health, SOE
Population Control Nutrition and Population Control sub-total
of the SOE
27 Labor and The amount should be lifted from the Labor SOE
Employment and Employment sub-total of the SOE
28 Housing and The amount should be lifted from the SOE
Community Housing and Community Development
Development sub-total of the SOE
29 Social Services and The amount should be lifted from the Social SOE
Social Welfare Services and Social Welfare sub-total of
the SOE
30 Economic Services The amount should be lifted from Economic SOE
Services sub-total of the SOE
31 Debt Service (FE) The amount should be lifted from Debt SOE
(Interest Expense & Service (FE) (Interest Expense & Other
Other Charges) Charges) sub-total of the SOE
32 Total Current Sum of General Public Services, Education,
Operating Culture and Sports/Manpower Development
Expenditures , Health, Nutrition & Population Control,
Labor and Employment, Housing and
Community Development, Social Services
and Social Welfare, Economic Services
and Debt Service
33 Net Operating The difference between Total Current
Income (Loss) from Operating Income and Total Current
Current Operations Operating Expenditures
34 Non-Income The amount should be lifted from SRS SRS
Receipts
35 Capital/ Investment Sub-total of Proceeds from Sale of Assets,
Receipts Proceeds from Sale of Debt Securities
of Other Entities, and Collection of Loans
Receivables
36 Proceeds from Sale The amount should be lifted from SRS SRS
of Assets
37 Proceeds from Sale The amount should be lifted from SRS SRS
of Debt Securities of
Other Entities
38 Collection of Loans The amount should be lifted from SRS SRS
Receivables
39 Receipts from Loans Sub-total of Acquisition of Loans and
and Borrowings Issuance of Bonds
40 Acquisition of Loans The amount should be lifted from SRS SRS
123
FORMS AND ANNEXES
ITEM
NO.
41 Issuance of Bonds The amount should be lifted from SRS SRS
42 Other Non-Income The amount should be lifted from Non- SRS

Receipts Income Receipts
43 Total Non-Income Sum of Capital/Investment Receipts,
Receipts Receipts from Loans and Borrowings and
Other Non-Income Receipts
44 Supplemental Approved Supplemental Budget for Capital Budget Office
Budget for Capital Outlay (Budget Column Only) Approved
Outlay Budget
45 Total Amount Sum of Supplemental Budget for Capital
Available for Capital Outlay
Expenditures
47 Capital/ Investment Sub-total of Purchase/Construct of
Expenditures Property, Plant and Equipment, Purchase
of Debt Securities of Other Entities, and
Grant/Make Loan to Other Entities
48 Purchase/ Construct Capital Outlay Expenditures – The amount SOE

of Property, Plant should be lifted from SOE
and Equipment
(Assets/Capital
Outlay)
49 Purchase of Debt The amount should be lifted from SOE SOE
Securities of Other
Entities (Investment
Outlay)
50 Grant/Make Loan The amount should be lifted from SOE SOE
to Other Entities
(Investment Outlay)
51 Debt Service Sub-total of Payment of Loan Amortization
and Retirement/Redemption of Bond/Debt
Securities
52 Payment of Loan The amount should be lifted from SOE SOE
Amortization
(Principal)
53 Retirement/ The amount should be lifted from SOE SOE
Redemption
of Bond/Debt
Securities
54 Other Non- Other Non-Operating Expenditures from SOE
Operating SOE
Expenditures
55 Total Non-Operating Sum of Capital/Investment Expenditures,
Expenditures Debt Service and Other Non-Operating
Expenditures
124
LTOM, 2ND EDITION
ITEM
NO.
56 Net Increase Sum of Net Operating Income, Total Non-
(Decrease) in Funds Income Receipts less Total Non-Operating
Expenditures
57 Cash Balance The amount is the ending cash balance Treasurer

Beginning per Balance Sheet of last year (Dec. 31,) Cash Book
or Cash Flow Statement. The ending cash reconciled with
balance per cash flow is assumed to be Accounting
reconciled with the Cash Book maintained Cash Flow/
by the Treasurer Balance Sheet
58 Fund/Cash Available Sum of Net Increase (Decrease) in Funds
and Cash Balance Beginning
59 Payment of Prior The amount should be lifted from SOE SOE
Year/s Accounts
Payable
60 Continuing Payment for Continuing Appropriations SOE
Appropriation expenses
61 Advance Payment Advance Payment for RPT SRS
for RPT
62 Fund/Cash Balance, Sum of Fund/Cash Balance Available less
End Payment of Prior Year/s Accounts Payable
LESS Continuing Appropriation and add
Advance Payment
Fund Balance Composition Reported at year end. The breakdown of Refer to
funds/cash should be sourced from the Section 27
Accounting office since this information is SRE Manual
included in the annual report submitted to for the source
COA specifically in the Notes to Financial documents.
Statements.
• Fund balance breakdown is

not limited to the format shown
in Exhibit 1 but the important
information required is how much
fund/cash is available or free for
appropriations as of the reporting
date
Total Assets - total assets net of depreciation lifted from Accounting Balance Sheet
NOTE: Other important information that need to be disclosed

should be made as Notes to SRE.
125

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LOCAL TREASURY

First Printing, 2019.

Printed in the Philippines

Published by the Bureau of Local Government Finance

Copyright © Bureau of Local Government Finance, 2019

All rights reserved.

Cover design and layout by: Jane Dianne S. Gaylican

Congratulations to the Bureau of Local Government Finance (BLGF) for the

NIÑO RAYMOND B. ALVINA

DEPARTMENT ORDER NO. _______________

Local Treasury Operations Manual (LTOM), 2nd Edition

Book III Fund Management Practices, Expenditures and Disbursement; and

Book IV Detailed Procedures on the Administration and Collection of Real Property

LOCAL TREASURY OPERATIONS MANUAL

2. Relationship of the LTOM to Existing Laws, Issuances and Pronouncements

C. OBJECTIVES OF THIS MANUAL

D. BRIEF DESCRIPTION OF THIS MANUAL

FORMS AND ANNEXES 80

MMDA Metro Manila Development Authority

LTOM Book I consists of five (5) Chapters, including Annexes, as follows:

Chapter 1 Fiscal Organization of Local Government Units (LGUs)

Chapter 2 The Local Treasurer and the Assistant Local Treasurer

Chapter 3 Administrative and Technical Supervision by the BLGF

Chapter 4 Roles, Duties and Responsibilities of the Local Treasurer

Chapter 5 Bonding of Local Treasurers and Other LGU Accountable Officers

SECTION 1. LEGAL FRAMEWORK

SECTION 2. CREATION, DIVISION, MERGER, ABOLITION

It must be sufficient, based on acceptable standards, to provide for

2. Compliance with income, population and land area shall be attested to by

Coverage/ Requisites for Creation Legal

Coverage/ Requisites for Creation Legal

Coverage/ Requisites for Creation Legal

C. Requirements for the Merger/Consolidation or Abolition of LGUs

8 Highly Urbanized Cities (HUC):

2. In the exercise of its right to self-governance, the Bangsamoro Autonomous

SECTION 3. THE PROVINCIAL/CITY/MUNICIPAL TREASURY OFFICE

SECTION 4. ORGANIZATIONAL STRUCTURES:

B. The Local Treasury Office is also encouraged to create an Information Technology

4. Provide troubleshooting services in the local treasury office; and

d. Maintain records of all pertinent information of PTO personnel (i.e.,

2. Treasury Operations and Review Division

c. Receive daily collections including payments on real property tax paid

i. Prepare daily, weekly or monthly report of collections;

j. Prepare and submit electronic Statement of Receipts and Expenditures

k. Consolidate the eSRE quarterly reports of its component municipalities;

l. Perform other duties and functions that may be assigned.

4. Local Economic Enterprise Division. As may be necessary; refer to

Figure 1. Organizational Structure of the Provincial Treasury Office

Assistant Provincial Assistant Provincial

2. Cash Division. For clearer delineation of functions of personnel in the Cash

3. Real Property Tax Division

4. Business Tax and Miscellaneous Revenue Division

5. Treasury Operations and Review Division

b. Prepare reports regarding collections on a regular basis;

c. Recommend strategies and revenue measures to increase collection;

6. Local Economic Enterprise Division

Figure 2. Organizational Structure of the City Treasury Office

Assistant City Treasurer Assistant City Treasurer