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LOCAL
TREASURY
OPERATIONS
MANUAL
BUREAU OF LOCAL GOVERNMENT FINANCE

DEPARTMENT OF FINANCE
Manila, Philippines
October 1, 2007
1
MESSAGE
I strongly believe that local treasurers play one of the most challenging roles in
local governance. Their awesome responsibilities include among others, their
involvement in every major LGU activity and concern, membership in various local
special bodies and committees addressing LGU financial commitments, custodians and
distributors of election paraphernalia, including the safekeeping of ballot boxes during
election period.
Their core function, however, revolves around the vital aspects of resource
generation, custody and proper disbursement and management of funds, maintaining and
operating the tax information system, and providing local policymakers with vital
information on matters relating to public finance. On their shoulders rest the financial
viability and sustainability of every LGU in this country. Their effectiveness in their jobs
contributes significantly to the increase in national income.
As a concrete demonstration of the support and commitment of the Department of

Finance, particularly the Bureau of Local Government Finance (BLGF) to the
improvement of the performance of local treasurers, this Local Treasury Operations
Manual has been developed and adopted. The Manual redefines and re-standardizes the
existing rules, regulations and guidelines governing the procedures in local treasury
operations. It embodies the key processes on tax administration, particularly the
enforcement of tax collections, duties of cashiering, proper custody of funds and the
institutionalization of internal controls. Likewise, this Manual discusses the
organizational responsibilities and inter-office linkages that will ensure coordination and
synergy in the financial teams. The local treasurers’ role in credit and other forms of non-
traditional financing is defined to avoid or substantially reduce confusion and
ambivalence in committing to borrowings.
Like all operating systems, this Manual has to be dynamic. Users of this Manual
have as much responsibility as those who developed it for its continuing improvement
and enhancement. This Manual should be a work in progress towards the migration to
automation of the local treasury operations, moving the treasury processes towards
minimal paper transactions with the least face to face contacts, ultimately providing
faster, responsible and accessible local finance operational services. There should be a
continuing evolvement of more efficient systems through the issuance of supplemental
rules and regulations, and capability and capacity building of local treasurers.
I envision standards of high excellence in local treasury operations with the help
of this Manual.
My congratulations to the BLGF!
MARGARITO B. TEVES
Secretary
Department of Finance
2
MESSAGE
I take pride for the long awaited realization of the Local Treasury Operations
Manual, particularly because it is the product of the meaningful partnership between
Bureau of Local Government Finance (BLGF) and the Local Government Units (LGUs).
The Manual is intended to serve as toolkit to local treasurers in the effective performance
of their multifaceted jobs under the local autonomy regime. It should likewise be useful
to the barangay treasurers who act as deputized agents of the local treasurers in the
collection of local taxes and in tax collection campaign activities of the LGUs. It
supersedes the Revised Manual of Instructions to Treasurers of 1954.
The Manual redefines and refocuses the duties and responsibilities of local
treasurers from being collector of taxes and custodian of funds to the broader, more
challenging role of revenue generator, resource mobilizer, and fund manager. Within this
new context, the local treasurer, as chair of the local finance team, is expected to show
greater flexibility and creativity in pursuing new, non-traditional ways of raising money
to support the needs of LGUs not only for its operating expenses, but for improving the
delivery of basic services and undertaking development projects.
The local treasurer’s job is exacting, and at times exasperating. But it could also
be exalting. As keeper of public funds, local treasurers are required to be cautious,
accurate, and like Caesar’s wife be beyond suspicion. They bear the brunt of blame and
unmerited graft charges for missing, misappropriated or mismanaged funds. Some have
succumbed to the temptation of custodianship of funds or from the rigors of accusations
and investigations that public officials especially those with fiduciary functions are
exposed to. It is gratifying to know, however, that majority of them have risen to the
demands of their duties and responsibilities and proven to be high performers, and
deserving of public trust.
I look forward to seeing more local treasurers evolve as real fiscal advisers to
their respective LGUs and agents of change towards making their LGUs less dependent
on the IRA and more financially capable to provide better service to the people.
MA. PRESENTACION R. MONTESA

Executive Director
Bureau of Local Government Finance
Department of Finance
3
FOREWORD
4
ACKNOWLEDGEMENT
5
LOCAL
TREASURY
OPERATIONS
MANUAL
BOOKS ONE TO SIX
6
ACRONYMS
ACR - Abstract of Collection Report
ADB - Asian Development Bank
ADP - Authority for Debit Payment
AGDB - Authorized Government Depository Bank
AJE - Adjusting Journal Entry
AO - Accountable Officer
AOM - Audit Observation Memorandum
APP - Annual Procurement Plan
ARMM - Autonomous Region in Muslim Mindanao
ARO - Allotment Release Order
BAC - Bids and Awards Committee
BEI - Board of Election Inspectors
BIR - Bureau of Internal Revenue
BLGF - Bureau of Local Government Finance
BLT - Build-Lease-and Transfer
BMBE - Barangay Micro Business Enterprises
BOO - Build-Own-and Operate
BOT - Build-Operate-and Transfer
BRK - Barangay Record Keeper
BSP - Bangko Sentral ng Pilipinas
BT - Barangay Treasurer
BT - Build-and Transfer
BTO - Build-Transfer-and Operate
BTR - Bureau of the Treasury
CA - Certificate of Authority
CAO - Contract-Add-and Operate
CDF - Cash Disbursement Forecast
CFA - Cash Flow Analysis
CFF - Cash Flow Forecast
CHBReg - Cash On Hand and in Bank Register
CM - Credit Memo
CN - Credit Notice
CO - Capital Outlay
COA - Commission on Audit
COE - Current Operating Expenses
COMELEC - Commission on Elections
CRAAF - Consolidated Report of Accountability for Accountable Forms
CRDReg - Cash Receipts and Deposits Register
CRF - Cash Receipts Forecast
CSB - Certificate of Settlement and Balances
CSC - Civil Service Commission
CT - Community Tax
CTC - Community Tax Certificate
DBC - Deputized Barangay Collector
i
DBM - Department of Budget and Management
DBP - Development Bank of the Philippines
DepEd - Department of Education
DM - Debit Memo
DOF - Department of Finance
DOH - Department of Health
DOJ - Department of Finance
DOST - Department of Science and Technology
DOTC - Department of Transportation and Communication
DV - Disbursement Voucher
FE - Financial Expenses
GAAM - Government Accounting and Auditing Manual
GDF - Gender and Development Fund
GF - General Fund
GOCC - Government Owned and Controlled Corporation
GSIS - Government Service Insurance System
HLURB - Housing and Land Use Regulatory Board
ICO - In-Charge of Office
ICS - Inventory Custodian Slip
IRA - Internal Revenue Allotment
IRR - Implementing Rules and Regulations
IT - Itinerary of Travel
IUEEU - Irregular, Unnecessary, Excessive, Extravagant or Unconscionable
JEV - Journal Entry Voucher
LBM - Local Budget Matrix
LBP - Land Bank of the Philippines
LCE - Local Chief Executive
LDP - Local Development Plan
LFC - Local Finance Committee
LGC - Local Government Code
LGU - Local Government Unit
LMB - Land Management Bureau
LO - Liquidating Officer
LOA - Letter of Authority
LR - Liquidation Report
LTO - Local Treasury Operations
MB - Monetary Board
MDF - Municipal Development Office
MDFO - Municipal Development Fund Office
MMA - Metro Manila Area
MMDA - Metro Manila Development Authority
MOA - Memorandum of Agreement
MOOE - Maintenance and Other Operating Expenses
MOU - Memorandum of Understanding
MTOP - Motorized Tricycle Operators Permit
NC - Notice of Charge
ii
NCA - Notice of Cash Allocation
ND - Notice of Disallowance
NEDA - National Economic and Development Authority
NGAS - New Government Accounting System
NIRC - National Internal Revenue Code
NPC - National Power Corporation
NPO - National Printing Officer
NPV - Net Present Value
NS - Notice of Suspension
NSO - National Statistics Office
ObR - Obligation Request
ODA - Official Development Assistance
OIC - Officer-In-Charge
OR - Official Receipt
PAR - Property Acknowledgement Receipt
PB - Punong Barangay
PCF - Petty Cash Fund
PCFReg - Petty Cash Fund Register
PCV - Petty Cash Voucher
PDAF - Priority Development Assistance Fund
PI - Public Infrastructure
PNB - Philippine National Bank
PO - Purchase Order
PPE - Plant, Property and Equipment
PS - Personal Services
RAAF - Report of Accountability for Accountable Forms
RAAO - Register of Appropriation, Allotments and Obligations
RAC - Registry of Appropriation and Commitments
RATA - Representation and Transportation Allowance
RCD - Report of Collections and Deposits
RCI - Report of Checks Issued
RIS - Requisition and Issue Slip
RMIT - Revised Manual of Instructions to Treasurers
ROO - Rehabilitate-Own-and Operate
ROT - Rehabilitate-Operate-and Transfer
RPT - Real Property Tax
RPTAR - Real Property Tax Register
RPTOP - Real Property Tax Order of Payment
SAM - State Audit Manual
SB - Sangguniang Bayan
SCD - Summary of Collections and Deposits
SCkI - Summary of Checks Issued
SCP - Summary of Cash Payments
SCR - Summary of Collections and Remittance
SEF - Special Education Fund
SIE - Statement of Income and Expenditures
iii
SKF - Sangguniang Kabataan Fund
SOE - Statement of Expenditures
SPL - Special Leave Privilege
SPPCV - Summary of Paid Petty Cash Vouchers
SRE - Statement of Receipts and Expenditures
SRS - Statement of Receipt Sources
TDAF - Tax Data and Assessment Form
TO - Travel Order
UBOM - Updated Budget Operations Manual
VAT - Value Added Tax
VDS - Validated Deposit Slip
WB - World Bank
iv
LOCAL TREASURY OPERATIONS MANUAL
TABLE OF CONTENTS
A. Introduction
1. Title 1
2. Overview 1
B. Rationale
1. Major Changes in Fiscal Organization Since the RMIT was Issued 2
2. The Local Government Code of 1991-RA 7160 2
3. The Present Role of Local Treasurers 3
C. Objectives of Manual 4
D. How to Use the Manual 4
E. Relationship to Existing Laws, Issuances And Pronouncements of Other Fiscal 6
and Regulatory Agencies
BOOK ONE
FISCAL ORGANIZATION OF LOCAL GOVERNMENTS AND THE
LOCAL TREASURER
Chapter 1. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS
Sec. 1. Political and Corporate Nature of Local Government Units 9

Sec. 2. Authority to Create Local Government Units 9
Sec. 3. Common Requirements for Creation and Conversion 9
Sec. 4. Division and Merger of Local Government Units 10
Sec. 5. Criteria for Creation of a Local Government Unit 10
Sec. 6. Abolition of Local Government Units 12
Sec. 7. Creation of Local Government Units in the Autonomous Region in 12
Muslim Mindanao (ARMM)
Chapter 2. APPOINTMENT, QUALIFICATIONS, POWERS AND FUNCTIONS OF

THE LOCAL TREASURER, THE ASSISTANT TREASURER, AND THE
BARANGAY TREASURER
Sec. 8. Appointment and Qualifications of the Local Treasurer 15

Sec. 9. Appointment and Qualifications of the Assistant Treasurer 16
v
Sec. 10. Designation of Officer-In-Charge/In-Charge of Office of Provincial, City 16
and Municipal Treasurers and Acting Assistant Provincial, City and
Municipal Treasurers
Sec. 11. Distinction Between Officer-In-Charge and In-Charge of Office 18
Sec. 12. Automatic Succession at the Provincial/City Treasurer’s Office 19
Sec. 13. Automatic Succession at the Municipal Treasurer’s Office 20
Sec. 14. Appointment and Qualifications of Barangay Treasurer 20
Sec. 15. Processing of Appointments of Provincial, City and Municipal 20
Treasurers and Assistant Provincial, City and Municipal Treasurers
Sec. 16. Salaries of Local Treasurers on Detail or Temporary Assignment 22
Sec. 17. Salaries of Local Treasurers During Suspension 22
Sec. 18. Salaries During Attendance in Administrative, Civil or Criminal 23
Investigation
Sec. 19. Approval of Application for Leave of Absence 24
Chapter 3. ADMINISTRATIVE AND TECHNICAL SUPERVISION BY THE BUREAU

OF LOCAL GOVERNMENT FINANCE (BLGF)
Chapter 4. THE ROLES AND RESPONSIBILITIES OF LOCAL TREASURERS
Sec. 20. Duties and Responsibilities of the Provincial, City and Municipal 29
Treasurer
Sec. 21. Duties and Responsibilities of the Assistant Local Treasurer 32
Chapter 5. OTHER ROLES OF THE LOCAL TREASURER
Sec. 22. The Role of Local Treasurers in the Enactment or Amendment of Revenue 34
Ordinance of Local Government Units
Sec. 23. The Role of Local Treasurers in the Collection of Delinquent Local Taxes, 35
Fees, Charges, and Related Surcharges
Sec. 24. The Role of Local Treasurers in Local Committees and Boards Created 35
Pursuant to the Local Government Code of 1991 and Other Laws
Sec. 25. The Role of Local Treasurers in National and Local Elections Pursuant to 38
the Omnibus Election Code
Chapter 6. BOND FOR LOCAL TREASURERS AND OTHER ACCOUNTABLE

OFFICERS OF LOCAL GOVERNMENT UNITS
vi
Sec. 26. Guidelines on Bonding of Local Treasurers 42
Sec. 27. Schedule of Bonds 43
Sec. 28. Accountable Officers Considered Unsafe Risks 44
Sec. 29. Cancellation of Bonds of Local Officials or Employees Which are No 44
Longer Necessary
Sec. 30. Extent of Liability of the Fidelity Bond 44
Sec. 31. Validity of Fidelity Bonds 45
Sec. 32. Adjudication of Claims Against the Fidelity Bond 45
BOOK TWO
RECEIPTS AND COLLECTION OF LOCAL INCOME, REVENUES AND
OTHER FUND SOURCES
Chapter 1. TYPES OF LOCAL INCOME AND REVENUES COLLECTED BY LOCAL

GOVERNMENT UNITS
Sec. 33. Definition of Income 47

Sec. 34. Power to Create Sources of Revenues 47
Sec. 35. Fundamental Principles 47
Sec. 36. Validity of Revenue Ordinance 48
Sec. 37. Local Taxing Authority 52
Sec. 38. Taxing Powers of Provinces 52
Sec. 39. Taxing Powers of Municipalities 53
Sec. 40. Taxing Powers of Cities 54
Sec. 41. Other Taxes that the Province, City and Municipality May Impose 55
Sec. 42. Taxing Powers of Barangays 55
Sec. 43. Common Limitations on the Taxing Powers of Local Government Units 56
Sec. 44. Non-Tax Revenues 56
Sec. 45. Fees and Charges 58
Sec. 46. Shares from the Proceeds of National Taxes 58
Sec. 47. The Internal Revenue Allotment (IRA) 60
Sec. 48. Share from Tobacco Excise Tax 60
Sec. 49. Share from the National Wealth 63
Sec. 50. Other Special Shares of Local Government Units from National Taxes 63
Sec. 51. Other Receipts 63
Sec. 52. Credit Financing
Chapter 2. COLLECTION OF REVENUES AND OTHER RECEIPTS
Sec. 53. Fundamental Principles on Collection of Local Taxes, Fees, Charges and 65
vii
Other Receipts
Sec. 54. General Controls on Collection 65
Sec. 55. Handling of Dishonored Checks Received as Collection 68
Sec. 56. Control and Accountability for Official Receipts and Other Accountable 71
Forms 77
Sec. 57. Daily Turnover and Verification of Collections 78
Sec. 58. Designation of Liquidating Officers for Collections 78
81
Sec. 59. Procedures and Controls on Deposit of Collections with Authorized
Sec. 59. Procedures and Controls on Deposit of Collections with Authorized
Depository Banks
Sec. 60. Maintenance and Use of the Cashbook by Local Treasurers, Cashiers,
Liquidating Officers, Tellers, Collectors and Other Local Accountable
Officers
Sec. 61. Forms and Reports Used by Local Treasury Officials 82
Sec. 62. Policies, Rules and Procedures on Barangay Collections and Remittances
and Deposit 84
Sec. 63. Direct Remittance to Barangay Bank Account 87
Sec. 64. Recording of Receipt, Deposits and Remittances of Barangay Collections 87
\
Chapter 3. EXAMINATION OF BOOKS OF ACCOUNTS AND

PERTINENT RECORDS OF BUSINESSMEN BY LOCAL TREASURERS
Sec. 65. General Provisions 91

Sec. 66. Guidelines in the Conduct of the Examination 92
BOOK THREE
EXPENDITURES AND DISBURSEMENTS
Chapter 1. CONCEPT OF FUNDS
Sec. 67. Definition of Fund 99

Sec. 68. General Classification of Funds 99
Sec. 69. Fundamental Principles Governing Utilization of Local Funds 100
Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT, OBLIGATION AND

EXPENDITURE
viii
Sec. 70. Definition and Types of Appropriation 102
Sec. 71. Use of Appropriated Funds 102
Sec. 72. The Allotments System 103
Sec. 73. Obligation of Local Funds 104
Sec. 74. Government Expenditures 104
Chapter 3. DISBURSEMENTS OF LOCAL FUNDS
Sec. 75. Definition of Terms 111

Sec. 76. General Principles Governing Fund Disbursements 111
Sec. 77. Basic Requirements on Disbursements from General Fund and SEF. 113
Sec. 78. Basic Requirements on Disbursements from Trust Funds 114
Sec. 79. Preparation of Disbursement Vouchers and Payrolls 114
Sec. 80. Modes of Disbursements 116
Chapter 4. BARANGAY APPROPRIATIONS, COMMITMENTS AND

DISBURSEMENTS
Sec. 81. Policies and Procedures on Barangay Appropriations and Commitments 127
Sec. 82. Registry of Appropriations and Commitment 129
Sec. 83. Basic Supporting Documents for Barangay Disbursements 130
Sec. 84. Barangay Disbursement by Checks Drawn Against Barangay Funds
Maintained with Depository Bank 131
Sec. 85. Barangay Disbursement by Checks Drawn Against Barangay Funds 132
Deposited with the City or Municipal Treasury
Sec. 86. Barangay Disbursement Out of Cash Advance for Payroll Charged 132
Against Barangay Funds Maintained with Depository Bank
Sec. 87. Barangay Disbursements Out of Cash Advance from Payroll Charged 133
Against Barangay Funds Deposited with the City or Municipal Treasury
Sec. 88. Disbursement Out of Cash Advance for Travel and Special Purpose/Time- 135
Bound Undertaking
Sec. 89. Barangay Disbursement Out of the Petty Cash Fund 136
Chapter 5. SANGGUNIANG KABATAAN BUDGET
Sec. 90. General Guidelines on the Preparation of the Sangguniang Kabataan (SK) 138
Budget
Sec. 91. SK Disbursements 138
ix
BOOK IV
FUND MANAGEMENT PRACTICES, ACCOUNTABILITY, CASH
EXAMINATION, SHORTAGES AND SETTLEMENT OF ACCOUNTS OF
LOCAL TREASURERS, AND LIABILITIES OF LOCAL TREASURERS IN
THE ADMINISTRATION OF LOCAL TAXES, FEES, AND CHARGES
Chapter 1. FUND MANAGEMENT PRACTICES
Sec. 92. Cash Flow Forecast (CFF) 140

Sec. 93. Cash Flow Analysis (CFA) 142
Sec. 94. Information Provided by the CFF and CFA 142
Sec. 95. Daily Cash Flow 143
Sec. 96. Number of Days’ Usage in Cash 144
Sec. 97. The Administrative Process for Capital Expenditures 144
Sec. 98. Payback Period 144
Sec. 99. Discounted Cash Flow (Present Value of Cash Returns) 145
Sec. 100. Purpose and Need for Debt 149
Sec. 101. Funding Competing Capital Projects 149
Sec. 102. Debt Management Policies 150
Sec. 103. Local Government Units Financing Modalities Manual and Debt 151
Management Manual
Chapter 2. ACCOUNTABILITY, RESPONSIBILITY, AND LIABILITY OF

LOCAL TREASURERS FOR FUNDS AND PROPERTY
Sec. 118. Death or Incapacity of a Local Treasurer or Accountable Officer 159

Sec. 119. Credit for Loss Occurring in Transit or Due to Casualty or Force 159
Majeure
Sec. 120. Basic Requirements for Request for Relief from Accountability 159
Sec. 121. Examination by the Commission on Audit 162
Sec. 122. Service of Demand upon the Accountable Officer to Produce His Cash 162
and Other Accountabilities
Sec. 123. Sealing of Safe 162
Sec. 124. The Count and Inventory of Cash 163
Sec. 125. Inspection of the Safe or Safes and Other Cash Receptacles 163
Sec. 126. Certification of the Cash books in the Course of Cash Examination 164
Sec. 127. Review of Transactions 164
Sec. 128. Certification in General Form No. 74 (A) 165
Sec. 129. Report of Cash Examination 165
x
Sec. 130. Shortages; Malversation 166
Sec. 131. Presentation of Formal Written Demand to the Accountable Officer 166
Sec. 132. Seizure of Office by the Examining Officer 167
Sec. 133. Notice to the Bureau of Local Government Finance in Case of Shortages 167
Sec. 134. Constructive Distraint of Property of Accountable Officer 167
Sec. 135. Withholding of Payment of Money to Accountable Officer 168
Sec. 136. Cash Overage 168
Sec. 137. Transcript of Auditor's Record as Evidence of Liability 167
Sec. 138. Auditor's Certificate of Balance 169
Sec. 139. Auditor's Notice to Accountable Officer of Balance Shown Upon 169
Settlement
Sec. 140. Certificate of Settlement and Balances (CSB) 169
Sec. 141. Notice of Suspension (NS) 170
Sec. 142. Notice of Disallowance (ND) 170
Sec. 143. Credit Notice (CN 170
Sec. 144. Notice of Charge (NC) 171
Sec. 145. Audit Observation Memorandum (AOM) 171
Sec. 146. Auditor's Order 171
Sec. 147. Grounds for Suspension 172
Sec. 148. Settlement of Suspensions 172
Sec. 149. Grounds for Disallowance 173
Sec. 150. Grounds for Charges 173
Sec. 151. Settlement of Disallowance and Charges 173
Sec. 152. Determination of Persons Liable for Audit Disallowances or Charges 173
Sec. 153. Finality of the Report, Certificate of Settlement and Balances, Order or 174
Decision
Sec. 154. Motion for Reconsideration 174
Sec. 155. Appeal from Auditor to Director 174
Sec. 156. Appeal from Director to Commission Proper 175
Sec. 157. Failure of a Responsible Public Officer to Render Accounts Before 175
Leaving the Country
Chapter 3. ADMINISTRATIVE, CIVIL, AND CRIMINAL LIABILITIES OF LOCAL

TREASURERS IN THE ADMINISTRATION OF LOCAL TAXES, FEES,
AND CHARGES
Sec. 158. Under the Local Government Code of 1991 176

Sec. 159. Under the Revised Penal Code and the Anti-Graft and Corrupt Practices Act 177
BOOK FIVE
DETAILED PROCEDURES ON REAL PROPERTY TAX BUSINESS TAX
FEES AND CHARGES AND OTHER RESOURCE MOBILIZATION
xi
Chapter 1. REAL PROPERTY TAXES
Sec. 160. Power to Levy Property Tax 181

Sec. 162. Fundamental Principles 184
Sec. 163. Administration of the Real Property Tax 184
Sec. 164. Rates of Levy 185
Sec. 165. Special Levies 185
Sec. 166. Exemption from Payment of the Real Property Tax 187
Sec. 167. Withdrawal of Exemptions from Payment of Real Property Taxes 190
Sec. 168. Accrual of the Real Property Tax 191
Sec. 169. Collection of the Real Property Tax 191
Sec. 170. Procedures for Collecting Real Property Tax 191
Sec. 171. Payment of Real Property Tax by Installments 193
Sec. 172. Tax Discount for Advanced or Prompt Payment 193
Sec. 173. Payment Under Protest 194
Sec. 174. Repayment of Excessive Collections 195
Sec. 175. Interest on Delinquent Real Property Tax 195
Sec. 176. Guiding Principles in Determining Delinquency 195
Sec. 177. Procedures for Computing Taxes, Interest and Discounts For Annual 196
Interest Payment Due
Sec. 178. Acceptance of Real Property Tax through Over-the-Counter Payment 198
in Accredited Banks
Sec. 179. Remedies for the Collection of the Real Property Tax 199
Sec. 180. Condonation or Reduction of Real Property Tax and Interest 201
Sec. 181. Levy on Real Property 202
Sec. 182. Prohibition of Action Assailing Validity of Tax Sale 206
Sec. 183. Collection of Real Property Tax through the Courts 206
Sec. 184. Payment of Delinquent Taxes on Property Subject of Controversy 207
Sec. 185. Compromise Agreement 207
Sec. 186. Sanctions 207
Sec. 187. Distribution of Proceeds 208
Sec. 188. General Assessment Revisions, Expenses Incident Thereto 209
Sec. 189. Condonation or Reduction of Real Property Tax and Interest 210
Sec. 190. Condonation or Reduction of Tax by the President 210
Sec. 191. Fees in Court Actions 210
Sec. 192. Fees in Registration of Papers or Documents on Sale of Delinquent 210
Real Property to Local Government Units
Chapter 2. BUSINESS TAXES AND OTHER LOCAL TAXES
Sec. 193. Nature 211
xii
Sec. 195. Tax on Transfer of Real Property Ownership 216
Sec. 196. Tax on the Business of Printing and Publication 217
Sec. 197. Franchise Tax 218
Sec. 198. Tax on Sand, Gravel, and Other Quarry Resources 219
Sec. 199. Professional Tax 220
Sec. 200. Amusement Tax 221
Sec. 201. Annual Fixed Tax on Delivery Vehicles of Manufacturers, Producers
Wholesalers, Dealers, and Retailers of Certain Products 223
Sec. 202. Scope of Taxing Powers of Municipalities 223
Sec. 203. Tax on Business 223
Sec. 204. Tax on Manufacturers, Assemblers, Repackers, Processors, Brewers,
Distillers, Rectifiers, and Compounders of Liquors Distilled Spirits, and
Wines or Manufacturers of Any Article of Commerce of Whatever Kind
or Nature
Sec. 205. On Wholesalers, Distributors, or Dealers in Any Article of Commerce 224
of Whatever Kind
Sec. 206. On Exporters and on Manufacturers, Millers, Producers, Wholesalers, 225
Distributors, Dealers, or Retailers of Essential Commodities Listed
Below
Sec. 207. On Retailers 225
Sec. 208. Contractors and Other Independent Contractors 227
Sec. 209. Banks and Other Financial Institutions 229
Sec. 210. Peddlers Engaged in the Sale of Any Merchandise or Articles of 231
Commerce 236
Sec. 211. Other Businesses
Sec. 212. Taxing Powers of Municipalities within Metro Manila 236
Sec. 213. Scope of Taxing Powers of Cities 237
Sec. 214. Professional and Amusement Tax Rates 237
Sec. 215. Sharing of Tax on Quarry Resources in Highly Urbanized Cities 238
Sec. 216. Scope of Taxing Powers of Barangays 238
Sec. 217. Related or Combined Businesses 240
Sec. 218. Situs of the Tax 241
Sec. 219. Retirement of Business 244
Sec. 220. Community Tax 245
Sec. 221. An Instance When a Corporation is Liable for Franchise Authorized under 249
Section 137 of the Local Government Code of 1991, Despite Exemption 250
Granted Under Its Charter
Sec. 222. Variations of the “In Lieu” Clause in the Terms of Franchise 251
Sec. 223. Uncollected Gross Receipts are Included in Computing Franchise Tax
Chapter 3. FEES AND CHARGES
xiii
Sec. 224. Authority to Impose and Collect Fees and Charges 252
Sec. 226. Common Revenue Raising Powers 253
Sec. 227. Criteria in Determining the Reasonableness of Fees and Charges 254
Sec. 228. Mayor’s Permit 254
Sec. 229. Fees for Sealing and Licensing Weights and Measures 258
Sec. 230. Fishery Rentals, Fees and Charges 259
Sec. 231. Fees and Charges that May be Imposed by Barangays 260
Sec. 232. Fees and Charges that May be Imposed by Local Government Units 260
Sec. 233. Fees and Charges Collected by Local Government Units for National 261
Government
Sec. 234. Building Permit 262
Sec. 235. Permit Fee for Zoning and Locational Clearance Permit 262
Sec. 236. Motorized Tricycle Operator’s Permit 267
Sec. 237. Registration and Transfer of Large Cattle 269
Sec. 238. Permit Fee for Excavation on Streets 270
Sec. 239. Permit Fee for Sealing and Licensing of Weights and Measures 271
Sec. 240. Permit Fee on Film Making within the Local Government Unit’s Territory 274
Sec. 241. Permit Fee on Agricultural Machinery and Other Heavy Equipment for
Lease 274
Sec. 242. Permit Fee on Occupation/Calling not Requiring Government
Examination
Sec. 243. Permit Fee for the Storage of Flammable and Combustible Materials 275
Sec. 244. Permit Fee on Certain Types of Machineries and Engines 278
Sec. 245. Permit Fee for temporary Use of Roads, Streets, Sidewalks, Alleys, 279
Patios, Plazas, and Playgrounds
Sec. 246. Permit Fee for the Conduct of Group Activities 279
Sec. 247. Secretary’s Fees 279
Sec. 248. Local Civil Registry Fees 280
Sec. 249. Police Clearance 280
Sec. 250. Sanitary Inspection Fee 281
Sec. 251. Service Fees for Health Examinations 282
Sec. 252. Dog Registration and Vaccination Fees 282
Sec. 253. Fishery Rentals, Fees, and Charges 283
Sec. 254. Service Charge for Garbage Collection 284
Sec. 255. Charges for Parking 286
Sec. 256. Cemetery Charges 287
Sec. 257. Slaughter and Corral Fees 287
Sec. 258. Toll Fees or Charges 287
Sec. 259. Permit for Cockpit Owners/Operators/Licensees/Promoters and 288
Personnel
Chapter 4. GOVERNMENT ENTERPRISE OPERATIONS
xiv
Sec. 260. Political and Corporate Nature of LGUs 291
Sec. 261. Nature of Government Enterprise 291
Sec. 262. Ordinance Establishing and Governing the Enterprise 291
Sec. 263. Basic Services and Facilities 292
Sec. 264. Examples of Government Enterprises 296
Sec. 265. Role of Treasurers in Government Enterprise Operations 296
Sec. 266. Private Sector Participation in the Operation and Management of Local 297
Government Unit Enterprises
Sec. 267. Common Modes of Contracting for Local Government Units 297
Sec. 268. Barangay Micro Business Enterprise (BMBE) 299
Sec. 269. Registration of BMBEs 299
Sec. 270. When is a business enterprise “barangay-based” 300
Sec. 271. Meaning of Micro-Business in Nature and Scope 300
Sec. 272. Registration of BMBEs 301
Sec. 273. Exemption of BMBEs from Taxes and Fees 301
Sec. 274. Submission of Documents for Registration of BMBE 301
Sec. 275. Verification of Qualifications 302
Sec. 276. Issuance of the Certificate of Authority 302
Sec. 277. Registration Fee 302
Sec. 278. List of Registered BMBEs to be Furnished the Bureau of Internal 302
Revenue
Sec. 279. Periodic Evaluation by the Local Treasurer 302
Sec. 280. Cancellation of Registration 303
Sec. 281. Exemption of BMBEs from Income 303
Sec. 282. Determination of the Value of Assets of the BMBE for Income Tax 304
Exemption Purposes
Sec. 283. Procedures in the Availment of Tax Incentives 304
Sec. 284. Filing of Annual Information Return 305
Sec. 285..Where and When to File the Annual Information Return 305
Sec. 286. Revocation of Income Tax Exemption Privilege 305
Chapter 5. CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Sec. 287. General Policy 306

Sec. 288. Credit and Other Sources of Funds Available to Local Government Units 306
Sec. 290. Duties and Responsibilities of Local Treasurer 310
Sec. 291. Provisions for the Servicing of Contractual Obligations of Local 311
Government Units
Sec. 292. Enforceability of Loan Obligations Notwithstanding the Expiration of the 311
Terms of the Elective Contracting Officials 311
Sec. 293. Guidelines on the Use of Funds Raised by Indebtedness 312
xv
Sec. 294. Tax Exemption Privileges of Local Government Units 313
Sec. 295. Limitations on the Use of Credit Lines to Stabilize Local Finance 315
Sec. 296. Common Requirement for Credit Financing of Local Development
Projects 315
Sec. 297. Acceptable Collateral
Sec. 298. Special Account for Loans, Interests, Bonds, and Contributions for 315
Specific Purposes 315
Sec. 299. Other Requirement for Loans, Deferred Payments and Other Financial 316
Schemes
Sec. 300. Inter-LGU Loans, Grants and Subsidies 316
Sec. 301. Joint and Several LGU Loan Arrangements 317
Sec. 302. Loans from Funds Secured by the National Government from Foreign 317
Sources 319
Sec. 303. Deferred Payments and Other Financial Schemes 322
Sec. 304. Bonds and Other Long Term Securities 323
Sec. 305. Private Sector Financing Under BOT Arrangement
Sec. 306. Authority to Negotiate and Execute
Sec. 307. Prohibited Acts
BOOK SIX
LOCAL TREASURY OPERATIONS (LTO) ANNEXES AND FORMS
LTO
Annex/Form
Number
BOOK ONE. Introduction
1 Laws and Policies Affecting Fiscal Organization and Functions
BOOK TWO. Receipt and Collection of Local Income, Revenues and Other Fund Sources
2 Notes on Supreme Court Ruling or the Substantive Requirements of

a Valid Ordinance
3 Local Revenue Tool Kit for Philippine LGUs
4 Process Flow on the Collection of Real Property Tax
5 Cashbook – Cash-in-Treasury
6 Cashbook – Cash-in-Bank
7 Cashbook – Cash Advances
8 Cashbook – Liquidating Officer
9 Cashbook – Tellers/Collectors
10 Report of Accountability for Accountable Forms
xvi
11 Consolidated Report of Accountability for Accountable Forms
12 Report of Collections and Deposits
13 Process Flow on LGU Receipts, Collections and Deposits
14 Statement of Receipts and Expenditures (SRE)
15 Barangay Cash Receipt and Deposit Register
16 Barangay Cash-on-Hand and in-Bank Register
17 Barangay Report of Accountability of Accountable Forms
18 Barangay Consolidated Report of Accountability of Accountable
Forms
19 Summary of Barangay Collections and Deposits
20 Summary of Barangay Collections and Remittances - BT
21 Summary of Barangay Collections and Remittances -DBC
22 Process Flow on the Receipt and Recording of Collection by
Barangay Treasurer
23 Process Flow on the Receipt and Recording of Collections by
Deputized Barangay Collectors
24 Process Flow on the Receipt and Recording of Collections by
Barangay Treasurer as Deputized by the City/Municipal Treasurer
25 Process Flow on the Receipt and Recording of Barangay Bank
Debit/Credit Memo and Bank Statement
26 Letter of Authority/Appointment
27 Tax Data Working Paper
28 Tax Data and Assessment Form
29 Letter of Assessment/Assessment Notice (Initial)
30 Letter of Assessment/Assessment Notice (Second Notice)
31 Letter of Assessment/Assessment Notice (Final Notice)
32 Final Notice Before Issuance of Warrant to Distraint and Levy
33 Non-Presentation of Documents
34 Final Notice on Non-Presentation of Documents
35 Letter of Confirmation
36 Certificate of Confirmation
37 Certificate of Examination
38 Assessment Notice (Initial)
39 Final Demand
BOOK THREE. Expenditures and Disbursements
40 Obligation Request
41 List of Minimum Documentary Requirements for Specific Expense
Items
42 Disbursement Voucher
43 General Payroll
44 Daily Wage Payroll
45 Check Register
46 Report of Checks Issued
47 Process Flow on Disbursement By Check
xvii
48 Accountant’s Advice of Local Check Disbursement
49 Report of Disbursement
50 Liquidation Report
51 Process Flow on Cash Disbursement
52 Process Flow on Disbursement Through Bank-Payroll Payment
53 Petty Cash Voucher
54 Petty Cash Replenishment Report
55 Procedures Flow on Petty Cash Fund Disbursement, Liquidation, and
Replenishment
56 Barangay Disbursement Voucher
57 Barangay Payroll
58 Barangay Purchase Order
59 Barangay Purchase Request
60 Summary of Barangay Checks Issued
61 Barangay Check Disbursement Register
62 Process Flow on Barangay Disbursement by Check
63 Summary of Barangay Cash Payments
64 Barangay Cash Disbursement Register
65 Barangay Liquidation Report
66 Process Flow on the Receipt of Barangay Cash Advance, Payment
and Liquidation of Payroll/Travel
67 Barangay Petty Cash Voucher
68 Summary of Barangay Paid Petty Cash Vouchers
69 Barangay Petty Cash Fund Register
70 Process Flow on the Establishment of Barangay Petty Cash Fund,
Payment and Liquidation
71 Barangay Inspection and Acceptance Report
72 Barangay Register and Issue Slip
73 Barangay Inventory Custodian Slip
74 Barangay Property Acknowledgement Receipt
75 Transfer of Barangay Money and Property Accountability
76 Barangay Waste Material Report
77 Barangay Supplies Logbook
78 Process Flow on Barangay Requisition, Issuance and Delivery of
Materials and Supplies
79 Process Flow on Barangay Requisition, Issuance and Delivery of
Property and Equipment
80 Process Flow on Barangay Reporting of Physical Count of PPE
BOOK FOUR. Fund Management Practices, Accountability, Cash Examination,

Shortages, and Settlement of Accounts of Local Treasurers and Liabilities of Local
Treasurers in the Administration of Local Taxes, Fees and Charges
81 Cash Flow Forecast

82 Cash Receipt Forecast
83 Cash Disbursement Forecast
xviii
84 Cash Flow Analysis
85 Present Value of an Annuity of 1 to be Received for a Year
86 Invoice Receipts of Transfer of Accountabilities
87 Internal Control Concepts, Policies and Procedures
88 Internal Control Questionnaire
BOOK FIVE. Detailed Procedures on Real Property, Business Tax, Business Tax, Fees and
Charges and Other Resource Mobilization
89 Real Property Tax Bill

90 Certified List of Real Property Tax Delinquencies
91 Notice of Realty Tax Delinquency
92 Warrant of Levy
93 Notice of Levy
94 Notice of Publication and Auction Sale
95 Proof of Service of Notice of Publication and Auction Sale
96 Certification of Sale of Delinquent Property
97 Certificate of Redemption
98 Notice of Redemption
99 Final Deed of Sale
100 Compromise Agreement
101 Certification of Tax Credit
102 Sample Cases of the Allocation of Gross Sales for the Situs of Tax
xix
FISCAL
ORGANIZATION
OF LOCAL
GOVERNMENT
AND THE LOCAL
TREASURER
BOOK ONE
1
LOCAL TREASURY OPERATIONS MANUAL
A. INTRODUCTION
1. TITLE
This Manual shall be known as the LOCAL TREASURY OPERATIONS MANUAL,

also herein referred to as the Manual. It is an exclusive issuance of the Bureau of Local
Government Finance (BLGF), Department of Finance (DOF), intended as a handy
reference for Provincial, City and Municipal Treasurers, including Barangay Treasurers.
It is designed to help them discharge their roles effectively and efficiently within their
respective Local Government Units (LGUs); and fully and responsively as demanded by
the new environment within which the LGUs and their fiscal officers must operate in
order to manage the resources needed to provide quality services and support the
development of their communities.
2. OVERVIEW
The need and importance of this updated Manual was realized when the Implementing
Rules and Regulations (IRR) of Republic Act No. 7160, otherwise known as “The Local
Government Code of 1991” (LGC) was prepared. Article 456 of the IRR provides the
mandate for the Department of Finance (DOF) and the Commission on Audit (COA) to
“promulgate a Treasury Operations Manual for local government units”. While the
Commission on Audit has issued the Manual on New Government Accounting System
(NGAS) for LGUs in September 2002, the DOF has yet to formally adopt an operating
manual for local treasury operations.
The “Revised Manual of Instructions to Treasurers” (RMIT) which was last published in
1954, could be considered as the predecessor of the present Manual. Although the RMIT
has not been updated since then, many Local Treasurers still refer from it – as well as
from some privately authored publications – to fill the need for references on topics not
specifically covered by subsequent laws, rules, regulations and issuances.
Since the last publication of the RMIT, however, major changes have taken place in the
organization of fiscal functions at all levels of government. These changes have had
major impact on the nature, scope, and operations of Local Treasurers, as well as on the
roles and relationships of practically all fiscal offices and officers. Thus, the RMIT had
2
been rendered obsolete except, perhaps, insofar as it touches on the more or less
permanent principles that underlie the functions and responsibilities of Local Treasurers.
This Manual seeks to provide local government treasurers with an updated reference.
Aside from being a replacement of the RMIT as a basic source of guidance in discharging
their functions, this Manual introduces them the new perspectives that they must adopt,
and the new tools that they must acquire in order to support the expanded role that local
governments have assumed in managing the development process in their respective
jurisdictions.
B. RATIONALE
Since the publication of the RMIT in 1954, the various financial responsibilities that have
been vested singularly in the Office of the Local Treasurer, including responsibilities in
budgeting, accounting, auditing, supply management, and real property assessment, as
well as financing, comptrollership, and custody and disbursement of funds – have been
reorganized. Some of the major functions have been separated from the treasury function
and distributed among different, albeit coordinated offices.
1. Major Changes in Fiscal Organization since the RMIT was Issued
Even before R.A. 7160 or “The Local Government Code of 1991” was promulgated and
became effective in January 1992, a number of laws preceding it had instituted significant
changes that laid the groundwork for the present fiscal system under a decentralized local
government system. Many of these changes, particularly those that sought to expand the
autonomy of local governments (R.A. 2264, R.A. 2370 and R.A. 5185) were eventually
adopted in the LGC, as well as provisions in those laws that sought to improve the fiscal
operations and organization of local governments (P.D. 231, as amended by P.D. 426;
P.D. 464 and P.D. 477).
These laws, and the provisions affecting fiscal organization and functions, are
summarized in Local Treasury Operations (LTO) Annex 1 of this Manual.
2. The Local Government Code of 1991 (R.A. 7160)
The most far-reaching and profound changes in local governance and fiscal organization
were instituted with the enactment of R.A. 7160 in 1991. When the LGC took effect on
January 1, 1992, it brought about a major shift in the relationships between the national
government and the local governments, establishing a new framework of decentralized
governance within which important powers, functions and responsibilities previously
exercised by the national government were assumed by the local government units
(LGUs). Within the decentralized framework, the LGUs took charge of directly
stimulating and managing local development, with the national government providing the
necessary environment and guidelines.
3
In a sense, the LGC incorporated and made permanent many of the fiscal measures that
had been introduced by the series of laws outlined in Annex 1 of this Manual that sought
to institute greater local autonomy and decentralization, as well as local fiscal reform.
However, the LGC went far beyond those previous laws, by establishing the LGUs as the
prime movers of local development fully defining their powers, responsibilities, and
authorities and placing at their disposal not only the resources needed to provide services
and promote development, but also the means to access additional resources for their
purposes.
The devolution of powers and resources has made the LGUS more fully responsible for
their financial management. During the transition when the LGC became operative in
1992 up to the present, the LGUs had to learn not only the basics of using fiscal
operations to support their mandates for service delivery and development, but also how
to avail of the innovative financial opportunities introduced by new legislation to improve
the resource-generating capacities of local governments.
3. The Present Role of Local Treasurers
Among their effects, the changes in fiscal organization that were instituted by the series
of laws served to focus the Office of the Local Treasurer on the functions of financial
advice; fund management; sourcing, collection, custody and disbursement of funds, with
some residual functions of comptrollership retained as necessary elements of the
financing and fund management functions.
With these responsibilities for local government financing and fund management, Local
Treasurers have become principals in the flux of fiscal changes and innovations taking
place among LGUs. They have to understand and assume their roles within the new set-
up and environment, and build their expertise in the innovative approaches that have
become available through legislation – such as the LGUs’ expanded authority to borrow,
to tap bond and treasury market facilities, and to deal with the increasingly direct flows
from foreign-assisted projects and programs.
At the same time, Local Treasurers have to enable LGUs, in their fiscal operations, to
balance the potentials of their taxing authority with the need to maintain an attractive and
conducive environment for local businesses; rationalize fees and charges, so that, services
can be viably sustained without rendering them unaffordable or oppressive to
constituents; and provide sustainable services under non-traditional approaches.
Amid these new dimensions and challenges in their work, it remains an all-important goal
for Local Treasurers to remain steadfast in discharging the core elements of their
traditional roles as repositories and guardians of public assets, and as advocates and
public advisers for soundness and sobriety in fiscal management. The measure of their
success remains to be their ability to conduct these core functions even as they adapt to
the new demands of proactive local governance and development.
4
C. OBJECTIVES OF THIS MANUAL
The objectives of this MANUAL are as follows:
1. To provide Local Treasurers with a single, updated reference that will guide
them in discharging their functions under the decentralized framework and
environment of the LGC;
2. To provide Local Treasurers with a basis for developing their own capabilities
to respond to the demands of their roles within the new LGU and fiscal
management structures;
3. To enable Local Treasurers to appreciate fully their powers, functions, and

authorities, and to relate these constructively with those of other officers
concerned with fiscal functions;
4. To introduce to Local Treasurers the basic concepts and tools of the non-
traditional functions of LGUs in which they may be involved in whether as
principals or as advisers.
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 greater, proper
accountability and transparency.
D. HOW TO USE THIS MANUAL
This MANUAL is organized into SIX (6) BOOKS. Under each Book are several
Chapters and Sections. The content and description of each Book is briefly presented
below:
BOOK ONE. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS AND

THE LOCAL TREASURER
This Book describes the fiscal organization or creation of provinces, cities and
municipalities and the qualifications, appointments, roles, responsibilities and functions
of the Local Treasurers. It consists of six (6) chapters.
Chapter 1. Fiscal Organization of Local Governments

Chapter 2. Appointment, Qualifications, Powers and Functions of the
Local Treasurer, Assistant Treasurer, and Barangay
Treasurer
Chapter 3. Administrative and Technical Supervision by the Bureau of
Local Government Finance (BLGF)
5
Chapter 4. The Local Treasurer’s Roles and Responsibilities
Chapter 5. Other Roles of the Local Treasurer
Chapter 6. Bonding of Local Treasurers and Other LGU
Accountable Officers
BOOK TWO. RECEIPT AND COLLECTION OF LOCAL INCOME,

REVENUES AND OTHER FUND SOURCES
This Book describes the taxing powers of provinces, cities, municipalities and barangays,
and the different types of taxes, fees, charges and other impositions levied and collected
by each LGU. More importantly, this Book details the fundamental principles of good
fiscal management, as well as principles on internal control, practices and procedures
governing the receipt, collection, custody, deposit, reporting and management of all
revenues and receipts of the LGUs. It consists of three (3) chapters.
Chapter 1. Types of Local Income and Revenues Collected by Local

Government Units
Chapter 2. Collection of Revenues and Other Receipts
Chapter 3. Local Treasurer’s Examination of Books of Accounts and
Pertinent Records of Businessmen
BOOK THREE. EXPENDITURES AND DISBURSEMENTS
This Book discusses the concepts of funds, appropriations, allotments,

obligations, expenditures and disbursements, and the governing principles and procedures
on the expenditure and disbursement of local government funds. It consists of five (5)
chapters.
Chapter 1. Concept of Funds

Chapter 2. Concept of Appropriation, Allotment, Obligation
and Expenditure
Chapter 3. Disbursement of Local Funds
Chapter 4. Barangay Appropriations, Commitments and
Disbursements
Chapter 5. Sangguniang Kabataan (SK) Budget
BOOK FOUR. FUND MANAGEMENT PRACTICES, ACCOUNTABILITY,

CASH EXAMINATION, SHORTAGES, AND SETTLEMENT
OF ACCOUNTS OF LOCAL TREASURERS, AND
LIABILITIES OF LOCAL TREASURERS IN THE
ADMINISTRATION OF LOCAL TAXES, FEES AND
CHARGES
6
This Book introduces to the Local Treasurer the different contemporary cash
management practices on cash flow forecasting, discounted cash flow, net present value
of money, debt and other credit financing packages, credit worthiness rating, financing
modalities, and debt management. This Book also incorporates the concepts and
guidelines on accountability and responsibility of Local Treasurers, procedures and
remedies on cash shortages, as well as the detailed examination by the Commission on
Audit (COA) of accounts of the Local Treasurers. Also included in this Book are the
administrative, civil and criminal liabilities of the Local Treasurer in the administration
and custody of local government funds. It consists of three (3) chapters.
Chapter 1. Fund Management Practices

Chapter 2. Accountability, Responsibility and Liability of Local
Treasurers for Funds and Property
Chapter 3. Administrative, Civil and Criminal Liabilities of Local
Treasurers in the Administration of Local Taxes, Fees and
Charges
BOOK FIVE. DETAILED PROCEDURES ON REAL PROPERTY TAX,

BUSINESS TAX, FEES AND CHARGES AND OTHER
RESOURCE MOBILIZATION
This Book contains the legal provisions, policies and procedures, remedies, forms and
reports on the collection of Real Property Taxes, Business and Local Taxes, Fees and
Charges, Local Government Business Enterprise Operations, Credit Financing and Other
Resource Mobilization. It consists of five (5) chapters.
Chapter 1. Real Property Taxes

Chapter 2. Business and Other Local Taxes
Chapter 3. Fees and Charges
Chapter 4. Local Government Enterprise Operations
Chapter 5. Credit Financing and Alternative Sources of Funds
BOOK SIX. LOCAL TREASURY OPERATIONS ANNEXES AND

FORMS
This Book contains the narrative flow of procedures, forms, reports, registries, schedules
and other documentary requirements of the different Books and Chapters of this Manual.
E. RELATIONSHIP TO EXISTING LAWS, ISSUANCES AND

PRONOUNCEMENTS OF OTHER FISCAL AND
REGULATORY AGENCIES
7
To a large extent, the text of this Manual is based from the provisions of the “Local
Government Code of 1991 – R.A. 7160” and its “Implementing Rules and Regulations,”
particularly those that apply to the fiscal and related operations of LGUs. It also draws
heavily from the Government Accounting and Auditing Manual (GAAM) and the New
Government Accounting System for LGUs (NGAS-LGU) of COA; the Updated Budget
Operations Manual (UBOM) of the DBM; opinions/rulings and issuances of the BLGF;
policies, regulations and opinions/rulings/decisions of various bodies or agencies and
authorities concerned with fiscal management and operations such as the DOF, COA,
DBM and NEDA and other authoritative private references. Consequently, this Manual
does not seek to supersede these issuances and rulings of the fiscal agencies, but rather to
reiterate and amplify their respective applications.
The user is encouraged to have on hand, as accompanying pieces to this Manual, the texts
of the LGC and its IRR, the GAAM, the NGAS-LGU, the UBOM and the myriad
compilation of rulings, issuances and circulars. While this Manual is intended to be a
stand-alone reference for Local Treasurers, the aforecited reference materials provide the
letter of the law, rules, and policies and procedures that were the basis thereof.
What this Manual sought to achieve and derive from its various sources, is focus and
specific utility in relation to the work of the Local Treasurer. To the extent practicable,
the relevant text of the laws, regulations, policies, issuances and
opinions/rulings/decisions are included in close paraphrase if not quoted verbatim. Where
necessary to achieve the purposes of this Manual, the valid portions of related provisions
from various laws and issuances are recast into a single provision, and parts of a single
provision that apply to different aspects of treasury operations, are reflected separately in
the appropriate topics.
The source or sources of particular sections or topics of this Manual are reflected in the
text itself, or set in parenthesis, to enable the user to refer to the original provision if
desired. Where a particular topic of this Manual refers to provisions quoted in another
Chapter or Section, the location of the provisions alluded to is indicated.
8
LOCAL TREASURY OPERATIONS
MANUAL
FISCAL ORGANIZATION OF LOCAL

GOVERNMENTS AND THE LOCAL
TREASURER
BOOK ONE
Chapter 1. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS
Section 1. Political and Corporate Nature of Local Government Units. – Every local
government unit created or recognized under the Local Government Code of 1991 (R. A.
7160) is a body politic and corporate endowed with powers to be exercised by it in
conformity with law. As such, it shall exercise powers as a political subdivision of the
National Government and as a corporate entity representing the inhabitants of its
territory. (Sec. 15, LGC)
Section 2. Authority to Create Local Government Units – A local government unit

may be created, divided, merged, abolished, or its boundaries substantially altered either
by law enacted by Congress in the case of a province, city, municipality, or any other
political subdivision, or by ordinance passed by the sangguniang panlalawigan or
sangguniang panlungsod concerned in the case of a barangay located within its territorial
jurisdiction, subject to such limitations and requirements prescribed in the Local
Government Code of 1991 (R. A. 7160). (Sec. 6, LGC)
Section 3. Common Requirements for Creation and Conversion – As a general rule,

the creation of a local government unit or its conversion from one level to another level
shall be based on verifiable indicators of viability and projected capacity to provide
services, to wit:
a. Income – it must be sufficient, based on acceptable standards, to provide

for all essential government facilities and services and special functions
commensurate with the size of its population, as expected of the local
government unit concerned;
b. Population – it shall be determined as the number of inhabitants, within

the territorial jurisdiction of the local government unit concerned; and
c. Land Area – it must be:
1) contiguous, unless it comprises two or more islands or is

separated by a local government unit independent of the
others;
2) properly identified by metes and bounds with technical

descriptions; and
3) sufficient to provide for such basic services and facilities to

meet the requirements of its populace.
Compliance with the foregoing indicators shall be attested to by the Department of

Finance (DOF), the National Statistics Office (NSO), and the Lands Management Bureau
(LMB) of the Department of Environment and National Resources (DENR). (Sec. 7,
LGC)
8
Section 4. Division and Merger – Division and merger of existing local government
units shall comply with the same requirements prescribed for their creation: Provided,
however, That such division shall not reduce the income, population, or land area of the
local government unit or units concerned to less than the minimum requirements
prescribed in the Local Government Code of 1991 (R. A. 7160): Provided, further, That
the income classification of the original local government unit or units shall not fall
below its current income classification prior to such division.
The income classification of local government units shall be updated within six (6)
months from the effectivity of the Local Government Code of 1991 to reflect the changes
in their financial position resulting from the increased revenues as provided in the Code.
(Sec. 8, LGC)
Section 5. Requisites for Creation of Local Government Units – A local government

unit may be created, classified, divided, merged, abolished, or their boundaries
substantially altered in accordance with the criteria provided for by the Local
Government Code of 1991 (R. A. 7160). (Sec. 460, Sec. 461 and Sec. 462, for the
Province; Sec 449, Sec. 450, as amended by R.A. 9009, and Sec. 451, for the City; Sec.
452 and Sec. 453, for the Highly Urbanized City; Sec. 441 and Sec. 442, for the
Municipality; and Sec. 385 and Sec. 386, for the Barangay,), as follows:
a. Creation of the Province – A province may be created, divided, merged,

abolished, or its boundary substantially altered only by an Act of Congress
and subject to approval by a majority of the votes cast in a plebiscite to be
conducted by the COMELEC in the local government unit or units directly
affected. The plebiscite shall be held within one hundred twenty (120)
days from the date of effectivity of said Act, unless otherwise provided
therein. (Sec. 460, LGC)
A province may be created if it has an Average Annual Income, as

certified by the Department of Finance, of not less than Twenty Million
Pesos (P = 20,000,000.00), for the immediately preceding two (2)
consecutive years based on 1991 constant prices. The Average Annual
Income shall include the income accruing to the General Fund, exclusive
of special funds, trusts funds, transfers, and non recurring income. It shall
further comply with either of the following requisites:
1) A contiguous territory of at least two thousand (2,000)

square kilometers, as certified by the Lands Management
Bureau; or
2) A population of not less than two hundred fifty thousand

(250,000) inhabitants, as certified by the National Statistics
Office.
9
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
creation to less than the minimum requirements prescribed.
The territory need not be contiguous if it comprises two (2) or more

islands or is separated by a chartered city or cities which do not contribute
to the income of the province. (Sec. 461, LGC)
b. Creation of the City – A city may be created, divided, merged, abolished,

or its boundary substantially altered, only by an Act of Congress, and
subject to the approval by a majority of the votes cast in a plebiscite to be
affected. Unless otherwise provided in such Act, the plebiscite shall be
held within one hundred and twenty (120) days from the date of its
effectivity. (Sec. 449, LGC)
A municipality or a cluster of barangays may be converted into a

component city if it has a locally generated Average Annual Income, as
certified by Department of Finance, of at least One Hundred Million Pesos
(P
= 100,000,000.00), for the last two (2) consecutive years based on 2000
constant prices. The Average Annual Income shall include the income
accruing to the General Fund, exclusive of special funds, transfers, and
non-recurring income. It shall further comply with either of the following
requisites:
1) A contiguous territory of at least one hundred (100) square

kilometers, as certified by the Land Management Bureau;
or
2) A population of not les than one hundred fifty thousand

(150,000) inhabitants as certified by the National Statistics
Office.
Provided, That, the creation thereof shall not reduce the land area,
population, and income of the original unit or units at the time of said
creation to less than the minimum requirements prescribed.
The territorial jurisdiction of a newly created city shall be properly

identified by metes and bounds. The requirements on land area shall not
apply where the city proposed to be created is composed of one (1) or
more islands. The territory need not be contiguous if it comprises two (2)
or more islands. (Sec. 450, LGC, as amended by R.A. 9009, effective June
30, 2001)
10
A city may either be component or highly urbanized: Provided, however,
That the criteria established in the Local Government Code of 1991 shall
not affect the classification and corporate status of existing cities.
Independent component cities are those component cities whose charters

prohibit their voters from voting for provincial elective officials.
Independent component cities shall be independent of the province. (Sec.
451, LGC)
c. Highly Urbanized Cities – Cities with a minimum population of two

hundred thousand (200,000) inhabitants, as certified by the National
Statistics Office, and with the latest Annual Income of at least Fifty
Million Pesos (P = 50,000,000.00), based on 1991 constant prices, as
certified by the City Treasurer, shall be classified as a highly urbanized
cities.
Cities which do not meet the above requirements shall be considered

component cities of the province in which they are geographically located.
If a component city is located within the boundaries of two (2) or more
provinces, such city shall be considered a component of the province of
which it is used to be a municipality.
Qualified voters of highly-urbanized cities shall remain excluded from

voting for elective provincial officials.
Unless otherwise provided in the Constitution or the Local Government

Code of 1991, qualified voters of independent component cities shall be
governed by their respective charters, as amended, on the participation of
voters in provincial elections.
Qualified voters of cities who acquired the right to vote for elective
provincial officials prior to the classification of said cities as highly-
urbanized after the ratification of the Constitution and before the
effectivity of the Local Government Code of 1991, shall continue to
exercise such right. (Sec. 452, LGC)
d. Creation of the Municipality – A municipality may be created, divided,

merged, abolished, or it boundary substantially altered only by an Act of
Congress and subject to the approval by the majority of the votes cast in
the plebiscite to be conducted by the COMELEC in the local government
unit or units directly affected. Except as may otherwise be provided in the
said Act, the plebiscite shall be held within one hundred twenty (120) days
from the date of its effectivity. (Sec. 441, LGC)
The requisites for the creation of a municipality are the following:
11
1) An Average Annual Income , as certified by the Provincial
Treasurer, of at least Two Million Five Hundred Thousand
Pesos (P= 2,500,000.00) for the last two (2) consecutive
years based on 1991 constant prices;
2) A population of at least twenty-five thousand (25,000)

inhabitants, as certified by the National Statistics Office;
and
3) A contiguous territory of at least fifty (50) square

kilometers, as certified by the Lands Management Bureau.
Provided, That the creation thereof shall not reduce the land area,
population or income of the original municipality or municipalities at the
time of said creation to less than the minimum requirements prescribed.
The Average Annual Income shall include the income accruing to the
General Fund of the municipality concerned, exclusive of special funds,
transfers and non-accruing income.
The territorial jurisdiction of a newly created municipality shall be

properly identified by metes and bounds. The requirement on land area
shall not apply where the municipality proposed to be created is composed
of one (1) or more islands. The territory need not be contiguous if it
comprises two (2) or more islands. (Sec. 442, LGC)
e. Creation of the Barangay – A barangay may be created, divided,

merged, abolished, or its boundary substantially altered, by law or by an
ordinance of the sangguniang panlalawigan or sangguniang panlungsod,
subject to approval by a majority of the votes cast in a plebiscite to be
affected within such period of time as may be determined by the law or
ordinance creating said barangay. In the case of creation of barangays by
the sangguniang panlalawigan, the recommendation of the sangguniang
bayan concerned shall be necessary. (Sec. 385,LGC)
A barangay may be created out of contiguous territory which has a

population of at least two thousand (2,000) inhabitants, as certified by the
National Statistics Office, except in cities and municipalities within Metro
Manila and other metropolitan political subdivisions or in highly
urbanized cities where such territory shall have a certified population of at
least five thousand (5,000) inhabitants; Provided, That the creation thereof
shall not reduce the population of the original barangay or barangays to
less than the minimum requirement prescribed.
12
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 above requirement.
The territorial jurisdiction of the new barangay shall be properly identified

by metes and bounds or by more or less permanent natural boundaries.
The territory need not be contiguous if it comprises two (2) or more
islands.
The governor or city mayor may prepare a consolidation plan for

barangay, based on the foregoing criteria, within his territorial
jurisdiction,. The plan shall be submitted to the sangguniang
panlalawigan or sangguniang panlungsod concerned for appropriate
action.
In the case of municipalities within the Metropolitan Manila area and

other metropolitan political subdivisions, the barangay consolidation plan
shall be prepared and approved by the Sanggunian Bayan concerned. (Sec.
386, LGC)
Section 6. Division and Merger of Local Government Units – Division and merger of
existing local government units shall comply with the same requirements prescribed for
their creation under the Local Government Code of 1991: Provided, however, That such
division shall not reduce the income, population, or land area of the local government
unit or units concerned to less than the minimum requirements prescribed in the same
Code: Provided, further, That the income classification of the original local government
unit or units shall not fall below its current income classification prior to such division.
The income classification of local government units shall be updated within six (6)
months from the effectivity of the Local Government Code of 1991 to reflect the changes
in their financial position resulting from the increase in revenues as provided in the same
Code. (Sec. 8, LGC)
Section 7. Abolition of Local Government Units – A local government unit may be

abolished when its income, population, or land area has been irreversibly reduced to less
than the minimum standards prescribed for its creation under Book III of the Local
Government Code of 1991, as certified by the national agencies mentioned in Section 7
of the same Code, to Congress or to the sanggunian concerned, as the case may be.
The law or ordinance abolishing a local government unit shall specify the province, city,
municipality, or barangay with which the local government unit sought to be abolished
will be incorporated or merged. (Sec. 9, LGC)
Section 8. Creation of Local Government Units in the Autonomous Region in

Muslim Mindanao (ARMM) - A local government unit under the Administrative
Region in Muslim Mindanao (ARMM) may be created and re-classified in accordance
13
with the provisions of the Muslim Mindanao Autonomy Act No. 25, provided they meet
the following criteria:
(a) Creation of the Province – A province may be created if it has an

Average Annual Income, as certified by the Department of
Finance, of not less than Twenty Million Pesos (P
= 20,000,000.00),
based on 1993 constant prices, which shall include the income
accruing to the General Fund, exclusive of special funds, trust
funds, transfers and non-recurring income; and either of the
following requisites:
(1) A contiguous territory of at least two thousand (2,000)

square kilometers, as certified by the Lands
Management Bureau; or
(2) A population of not less than two hundred fifty

thousand (250,000) inhabitants, as certified by the
National Statistics Office.
population, and income of the original unit or units at the time of
said creation to less than the minimum requirements prescribed.
The territory need not be contiguous if it comprises two (2) or

more islands or is separated by a chartered city or cities which do
not contribute to the income of the province. (Sec. 456, Chapter 1,
Title Four, Muslim Mindanao Autonomy Act No. 25)
(b) Creation of the City – A municipality or a cluster of barangays

may be converted into a component city if it has an Average
Annual Income, as certified by the Department of Finance, of at
least Twenty Million Pesos (P = 20,000,000.00) for the last two (2)
consecutive years based on 1993 constant prices, which shall
include the income accruing to the General Fund, exclusive of
special funds, trust funds, transfers and non-recurring income; and
either of the following requisites:
(1) A contiguous territory of at least one hundred (100)

square kilometers, as certified by the Lands
Management Bureau; or
(2) A population of not less than one hundred fifty

thousand (150,000) inhabitants, as certified by the
National Statistics Office.
14
population and income of the original unit or units at the time of
said creation to less than the minimum requirements prescribed.
The territorial jurisdiction of a newly-created city shall be properly

identified by metes and bounds. The 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. (Sec. 445, Chapter 1, Title
Three, Muslim Mindanao Autonomy Act No. 25)
Independent component cities are component cities whose charters

prohibit their voters from voting for provincial elective officials.
Independent component cities shall be independent of the
province. (Sec. 446, Chapter 1, Title Three, Muslim Mindanao
Autonomy Act No. 25)
(c) Classification of Highly Urbanized Cities – Cities with a minimum

population of two hundred thousand (200,000) inhabitants, as
certified by the National Statistics Office, and with the latest Annual
Income of at least Fifty Million Pesos (P = 50,000,000.00) based on
1991 constant prices, as certified by the City Treasurer shall be
classified as highly urbanized cities.
Qualified voters of highly urbanized cities shall remain excluded

from voting for elective provincial officials. (Sec. 447, Chapter I,
Title Three, Muslim Mindanao Autonomous Act No. 25)
(d) Creation of the Municipality – A municipality may be created if it

has an Average Annual Income, as certified by the Provincial
Treasurer of at least One Million Pesos (P
= 1,000,000.00) for the last
two (2) consecutive years based on 1993 constant prices; a
population of at least ten thousand (10,000) inhabitants, as certified
by the National Statistics Office; and a contiguous territory of at
least thirty (30) square kilometers, as certified by the Lands
Management Bureau.
population or income of the original municipality or municipalities at
the time of said creation to less than the minimum requirements
prescribed.
The Average Annual Income shall include the income accruing to

the General Fund of the municipality concerned, exclusive of special
funds, transfers and non-recurring income.
15
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. 437,
Chapter I, Title Two, Muslim Mindanao Autonomous Act No. 25)
Chapter 2. APPOINTMENT, QUALIFICATIONS, POWERS AND

DUTIES OF THE LOCAL TREASURER, ASSISTANT TREASURER,
AND BARANGAY TREASURER
Section 9. Appointment and Qualifications of the Local Treasurer -
(a) The Local Treasurer shall be appointed by the Secretary of Finance from
a list of at least three (3) ranking eligible recommendees of the governor
or mayor, as the case may be, subject to civil service law, rules and
regulations.
(b) The Local Treasurer shall be under the administrative supervision of the
governor or mayor, as the case may be, to whom he shall report
regularly on the tax collection efforts in the local government unit.
(c) No person shall be appointed Local Treasurer unless he is a citizen of

the Philippines, a resident of the local government unit concerned, of
good moral character, a holder of a college degree preferably in
commerce, public administration or law from a recognized college or
university, and a first grade civil service eligible or its equivalent. He
must have acquired experience in treasury or accounting service for at
least five (5) years in the case of the Provincial or City Treasurer, and
three (3) years in the case of the Municipal Treasurer. (Sec. 470, LGC)
(d) The position of Local Treasurer should be included in the plantilla of

personnel in the local government unit concerned, properly approved by
the DBM. The plantilla should show the following information:
1) Designation of Position.
2) Appropriation or Budget Item Number approved by the
sanggunian concerned.
3) Range/Salary Grade of the Position.
4) Authorized and Actual Salary per annum including the
emoluments therein.
The appointment of a Local Treasurer shall be mandatory for provincial, city and
municipal governments.
16
The Secretary of Finance shall appoint only from the list of qualified recommendees
nominated by the local chief executive, and if none is qualified, the Secretary of Finance
must return the list of recommendees to the LCE with the reason therefor, and the LCE
must give a new list of eligible qualified recommendees. (Sec. 470, LGC)
Section 10. Appointment and Qualifications of the Assistant Treasurer -
(a) An Assistant Treasurer may be appointed by the Secretary of Finance

from a list of at least three (3) ranking, eligible recommendees of the
governor or mayor, subject to civil service law, rules and regulations.
(b) No person shall be appointed Assistant Treasurer unless he is a citizen of

the Philippines, a resident of the local government unit concerned, of
good moral character, a holder of a college degree preferably in
commerce, public administration, or law from a recognized college or
university, and a first grade civil service eligible or its equivalent. He
must have acquired at least five (5) years experience in the treasury or
accounting service in the case of the Assistant Provincial or City
Treasurer, and three (3) years in the case of the Assistant Municipal
Treasurer.
The appointment of an Assistant Treasurer shall be optional for the provincial, city and
municipal governments. (Sec. 471, LGC)
Section 11. Delegation by the Secretary of Finance of the Appointing Authority to

the BLGF Executive Director – The Secretary of Finance delegated to the BLGF
Executive Director the appointing authority over Provincial, City and Municipal
Treasurers and their Assistants, except City and Municipal Treasurers of Metro Manila
and their Assistants. (DOF Personnel Order No. 305-2000, October 27, 2000)
Section 12. Designation of Officer-In-Charge/In-Charge of Office of Local Treasury

Offices and Acting Assistant Provincial/City/Municipal Treasurers -
a. Authority of BLGF Regional Directors to designate subject to

confirmation of the BLGF Executive Director - Whenever a vacancy
occurs in the positions of Provincial, City, and Municipal Treasurers and
Assistant Provincial, City, and Municipal Treasurers, whether of a
temporary or permanent nature, occasioned by the absence (official travel,
training or leave); relief, retirement, transfer, resignation or promotion,
illness or death, or any other form of sudden incapacity to perform official
duties of the regular incumbent, the Regional Director shall designate an
Officer-In-Charge/In-Charge of Office of the Office of the Provincial,
City, and Municipal Treasurer from the ranks of
Provincial/City/Municipal Treasurers, Assistant Provincial/City/Municipal
Treasurers, or the ranking officials/personnel of local treasury offices,
Regional Offices and the Central Office, as well as Acting Assistant
17
Provincial/City/ Municipal Treasurer, for the confirmation of the
Executive Director of the BLGF.
In addition, the designation of OIC/ICO-Municipal Treasurer and Acting

Assistant Provincial/City/Municipal Treasurer shall be recommended by
the Provincial/City Treasurer concerned and upon written consent and/or
recommendation by the Local Chief Executive.
b. Qualifications of the OIC/ICO-Provincial, City, and Municipal

Treasurer - The proposed designee should meet the minimum
qualification requirements of the position pursuant to the provisions of
Sections 470 and 471 of the Local Government Code of 1991 (R.A.
7160),* except the residence requirement, in case of dearth of
recommendees, and 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 service, the
ranking and qualified personnel from the local accounting office and other
related offices may be considered, but they must first be detailed by the
appointing authority concerned with the Local Treasury Office to which
the recommendee will be assigned before the designation can be effected.
c. Consent/Approval of Local Chief Executives Required - Designations

of OIC-Provincial/City/Municipal Treasurers to other local treasury
offices shall be with the written consent/approval of the Local Chief
Executives of both LGUs where the designate comes from and where said
designate is being designated, particularly as regard the continued
payment of the salaries and other benefits of the designate by the LGU
where he/she is regularly appointed and the subsequent return to his/her
regular station once deemed necessary and in the absence of any legal
impediment.
d. Requirements for the Relief, Transfer or Detail of Treasurers and

Assistant Treasurers - Designations of OIC/ICO-
Provincial/City/Municipal Treasurers and Acting Assistant
Provincial/City/Municipal Treasurers shall only be made under the
grounds cited under Section 10 (a) of this Manual. Requests for relief,
transfer, or detail of Treasurers and Assistant Treasurers shall be acted
upon only for justifiable reasons and after compliance with the requisites
of due process, i.e., the Treasurer consents thereto; there exists a final
audit finding of cash shortage properly validated by the Regional Director
and/or his duly authorized representative and the Treasurer is ordered
suspended pursuant to Section 348 of R. A. 7160; and the Treasurer has
been formally charged with a grave offence and the ninety (90) day
preventive suspension has expired, but formal investigation has not yet
been terminated.
18
e. Period of Designation - The designation shall be for a period of six (6)
months, unless sooner revoked, with a maximum of two (2) extensions
except in case where the Assistant Treasurer is the one designated
OIC/ICO-Treasurer and where the incumbent Treasurer has a pending
administrative and/or criminal case. For monitoring purposes, the Order
shall specifically state the effectivity and expiration dates thereof.
f. Extension of Designation - Extension of designation need not be

recommended by the Local Chief Executive, except as requested
otherwise, and conditioned upon a satisfactory performance by the
designate during the period of designation attested to by the immediate
supervisor, and the absence of any derogatory report and/or adverse
information against the designate received and verified by the Regional
Office or the Local Treasury Office.
g. Processing and Submission of Designation - Except in vacancies caused

by the sudden illness, death or absconding of the incumbent, designations
and extensions thereof shall be processed by the Regional Office within
fifteen (15) days before the expected temporary or permanent vacancy and
submitted to the Bureau of Local Government Finance for confirmation
within ten (10) days from the issuance of the Order. Non-submission of
the Order for confirmation and/or non-compliance thereof will render
subject Order ineffective.
h. Confirmation of Designation by the BLGF Executive Director -

Designation submitted by the Regional Director for confirmation shall be
acted upon by the Executive Director, Bureau of Local Government
Finance within fifteen (15) days from receipt thereof, otherwise, subject
designation is deemed approved.
i. Documentation - Designation submitted to the BLGF for confirmation

shall be accompanied by the following documents:
(1) Regional Special Personnel Order (RSPO) issued by the

BLGF Regional Director;
(2) Comments/recommendations of the BLGF Regional Director;
(3) Recommendation of the Provincial/City Treasurer, in the case
Of the OIC/ICO-Municipal Treasurer and Acting Assistant
Provincial/City/Municipal Treasurer;
(4) Written consent and/or recommendation of the Local Chief
Executives concerned; and
(5) Updated Personal Data Sheet (PDS), with passport size photo.
(DOF Personnel Order No. 335-03, October 1, 2003)
__________
*See Sec. 9, this Manual
19
Section 13. Distinction between Officer-in-Charge and In-Charge of Office -
a) Officer-in-Charge (OIC). An Officer-in-Charge (OIC) is an official or

employee designated by proper authority in a temporary capacity to discharge
fully the powers and responsibilities of the head of the Local Treasury Office
(Provincial, City or Municipal), with the same rights and prerogatives of the
latter, except the right to receive the salary appurtenant thereto. (Sec. 7.6,
Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of
Finance)
b) An OIC-Provincial/City/Municipal Treasurer shall, for a period of ninety

(90) days, continue to receive his/her salary from his/her regular station.
c) An OIC-Provincial/City/Municipal Treasurer, if so allowed under the

Order of Designation and by the sanggunian concerned, shall receive per
diems at a rate authorized under existing rules and regulations.
d) During the incumbency of the OIC-Provincial/City/Municipal Treasurer,

he/she shall be entitled to collect the representation allowances authorized
for the vacant position of Provincial/City/Municipal Treasurer. He/she
shall likewise be entitled to collect the Cost of Living Allowance (COLA),
bonus, hazard pay, and other emoluments that may be authorized. (Section
7.6, Local Administrative Regulations No. 1-85)
e) In-Charge of Office (ICO). An In-Charge of Office is an official or

employee designated by proper authority in a temporary capacity to
discharge the duties and functions of the head of the Local Treasury Office
(Provincial/City/Municipal) in a caretaker capacity and with certain
limitations of the powers, authority and prerogatives normally exercised
by the head of the office. (Sec. 7.7, Local Administrative Regulations No.
1-85, February 7, 1985, Ministry of Finance)
f) An ICO may be authorized to collect representation allowances only in

instances where his/her designation was occasioned by the temporary
disability, authorized prolonged leave of absence, or due to an
administrative action involving the relief or suspension of the regular
incumbent.
g) An ICO of a Provincial/City/Municipal Treasury Office shall not have the

power to appoint subordinate officers. (Sec. 7.7.4, Local Administrative
Regulations No. 1-85, February 7, 1985, Ministry of Finance)
Section 14. Automatic Succession of the Assistant Provincial/City Treasurer - In

cases where the BLGF has not issued an Order of Designation of the OIC/ICO of the
Provincial/City Treasury Office, the regularly appointed Assistant Provincial/City
20
Treasurer shall, unless otherwise incapacitated or precluded by legal impediments,
automatically assume the duties and functions of the Provincial/City Treasurer in a
caretaker capacity to prevent disruption in the normal and routinary operations of the
Local Treasury Office, until the return to duty of the regular incumbent, or the issuance
of the Order of Designation, with the confirmation of the BLGF Executive Director.*
(Sec. 7.4, Local Administrative Regulations No. 1-85, February 7, 1985, Ministry of
Finance)
The Assistant Provincial/City Treasurer who automatically assumes as ICO shall within
24 hours notify directly the BLGF Regional Director concerned of the absence, sickness,
death or other incapacity of the regular incumbent and of the date of his/her assumption
in a caretaker capacity. (Sec. 7.4.1, Local Administrative Regulations No. 1-85, February
7, 1985, Ministry of Finance)
Within 48 hours after receipt of the notice, the BLGF Regional Director shall issue the
Order of Designation of the Assistant Provincial/City Treasurer or any other competent
officer as ICO/OIC(Sec. 7.4, Local Administrative Regulations No. 1-85), subject to the
requirements therefor.**
Section 15. Automatic Succession of the Assistant Municipal Treasurer – In cases

where the Provincial/City Treasurer is unable or did not have the opportunity to
recommend the designation of an ICO/OIC, or the BLGF Regional Director has not
issued an Order for such designation, the regularly appointed Assistant Municipal
Treasurer, unless otherwise incapacitated or precluded by legal impediments, shall
automatically assume as ICO or in a caretaker capacity, until the return to duty of the
regular incumbent, or the issuance of an Order of Designation, with the confirmation of
the BLGF Executive Director.* (Sec. 7.5, Local Administrative Regulations No. 1-85,
February 7, 1985, Ministry of Finance)
The Assistant Municipal Treasurer who automatically assumes as ICO shall within 24
hours notify the BLGF Regional Director concerned, thru the Provincial Treasurer, of the
absence, sickness, death or other incapacity of the regular incumbent and of the date of
his/her assumption in a caretaker capacity. (Sec. 7.5.1, Local Administrative Regulations
No. 1-85, February 7, 1985, Ministry of Finance)
Within 48 hours after receipt of the notice, the Regional Director shall issue the Order of
Designation of the Assistant Municipal Treasurer or any other competent officer as
ICO/OIC (Sec. 7.5.2, Local Administrative Regulations No. 1-85, February 7, 1985,
Ministry of Finance), subject to the requirements therefor.**
__________
* See Sec. 11 (a), this Manual
**See Sec. 11, this Manual
Section 16. Appointment and Qualifications of Barangay Treasurer -
21
(a) The Barangay Treasurer shall be appointed by the punong barangay with
the concurrence of the majority of all the sangguniang barangay
members. The appointment of the Barangay Treasurer shall not be subject
to attestation by the Civil Service Commission.
(b) The Barangay Treasurer must be of legal age, a qualified voter, and an
actual resident of the barangay concerned.
(c) No person shall be appointed Barangay Treasurer if he is a sangguniang

barangay member, a government employee, or a relative of the punong
barangay within the fourth (4th) civil degree of consanguinity or affinity.
(Sec. 395, LGC)
Section 17. Processing of the Appointments of Provincial, City, and Municipal

Treasurers and Assistant Provincial, City, and Municipal Treasurers – The
appointments of the Provincial, City, or Municipal Treasurer shall be processed as
follows:
a. Nomination of at least three ranking eligible recommendees by the Local

Chief Executive;
b. Screening/evaluation of at least three recommendees by the respective

Selection and Promotion Board of the Regional and Central Offices of the
BLGF, to determine the best qualified candidate to the position involved;
c. The evaluation of the qualifications of the recommendees, shall be in

accordance with the following criteria:
1) Performance Rating – based on the last two (2)

Performance Ratings of the recommendees which should at
least be Very Satisfactory.
2) Work Experience – either in the local treasury or

accounting services for at least five (5) years in the case of
Provincial or City Treasurers and Assistant Provincial or
City Treasurers and three (3) years in the case of the
Municipal Treasurer and Assistant Municipal Treasurer
3) Education – at least college degree preferably in

Commerce, Public Administration or Law from a
recognized college or university.
4) Eligibility – First Grade civil service eligibility or its

equivalent
22
5) Relevant Training – includes the successful completion of
training courses, scholarships, training grants and others
relevant to the duties and functions of the position to be
filled-up.
6) Rank – the hierarchy of the vacant position in the

organization/office/unit.
d. Submission of the following required documents:
1) Nomination Letter by the LCE

2) Personal Data Sheet (CSC Form No. 212)*
3) Position Description Form (BC-CSC Form I)*
4) Latest Appointment of the recommendee
5) Diploma or Transcript of Records
6) Certification of Training/s completed
7) Performance Ratings for the last two (2) rating periods
prior to the effectivity date of appointment which should
be at least Very Satisfactory* (CSC MC No. 38 s. 1993)
8) Report of Civil Service (CSC) Ratings or its equivalent
9) Certification of Residency by the Barangay Chairman or
the LCE**
10) Certification by the Local Accountant on the availability
of funds for the position to be filled-up
11) Certification by the LCE that the recommendee is not
related to him/her within the fourth civil degree of
consanguinity or affinity
12) Copy of Publication of the vacant position
13) Certification of the BLGF Regional Director/Provincial
Treasurer that there is no pending administrative
case/complaint on record filed against the proposed
appointee
14) Other documents that may be required.
Section 18. Detail or Temporary Assignment of Local Treasurers and Assistant

Local Treasurers - A detail is the movement of an employee from one department or
agency to another which is temporary in nature, which does not involve a reduction in
rank, status or salary and does not require the issuance of another appointment.
The employee detailed receives his salary only from his mother unit/agency.
Detail shall be allowed only for a limited period in the case of employees occupying
professional, technical and scientific position. If the employee believes that there is no
justification for the detail, he may appeal his case to the Civil Service Commission.
Pending the appeal, the decision to detail the employee shall be executory unless
23
otherwise ordered by the Commission. (Sec. 8, Rule VII, Omnibus Rules Implementing
Book V of E. O. 292 and Other Pertinent Civil Service Laws)
Guidelines to be observed regarding the detail or temporary assignment of Local

Treasurers and Assistant Local Treasurers:
a. The salary of an employee detailed or temporarily assigned on a part-time

or full-time basis from a department, bureau or office of the National
Government to an LGU particularly the Local Treasury Office, or from
one LGU to another LGU shall be paid by the office requesting the detail
or temporary assignment.
b. The salary of an employee detailed or temporarily assigned on a part-time

or full-time basis from one LGU to another LGU shall be paid either by
the LGU requesting the detail or by the mother LGU depending on the
agreement mutually acceptable to both LGUs.
c. Service of an employee covered by items (a) and (b) above shall be

considered service rendered to the mother LGU. (Sec. 216, 2nd par., Vol. I,
GAAM)
d. The LCE requesting the detail or temporary assignment shall submit a

written request to the Executive Director of the Bureau of Local
Government Finance. The request shall state the name of the employee to
be detailed, the period of detail and the reasons for the detail.
e. In case of detail or temporary assignment from one LGU to another LGU,

the request for such detail or temporary assignment shall be approved only
upon the concurrence in writing of the LCE of the LGU where the Local
Treasurer or Assistant Local Treasurer sought to be detailed is
permanently appointed or stationed. (DOF Personnel Order No. 335-03,
October 1, 2003)
f. Clearance and approval of the Civil Service Commission shall be required

for details or temporary assignment requiring a period exceeding one (1)
year and involving the performance of regular and recurring functions in
the agency where the Local Treasurer or Assistant Local Treasurer is to be
detailed. (Sec. 216, Vol. I, GAAM)
g. No detail or reassignment shall be made within three (3) months before

any election. (Sec. 5, Rule XVIII, Omnibus Rules Implementing Book V of
E. O. 292 and Other Pertinent Civil Service Laws)
Section 19. Salaries of Local Treasurers and Assistant Local Treasurers Under
Preventive Suspension – The proper disciplining authority may preventively suspend
any subordinate officer or employee under his authority pending an investigation, if the
24
charge against such officer or employee involves dishonesty, oppression or grave
misconduct, or neglect in the performance of duty, or if there are reasons to believe that
the respondent is guilty of charges which would warrant his removal from office. (Sec.
51, Title I, Subtitle A, Book V, E. O. 292 or the Administrative Code of 1987)
Any public officer against whom any criminal prosecution under a valid information
under R. A. 3019 or the Anti-Graft and Corrupt Practices Act or under the provisions of
the Revised Penal Code on bribery is pending in court, shall be suspended from office.
Should he be convicted by final judgment, he shall lose all retirement or gratuity benefits
under any law, but if he is acquitted, he shall be entitled to reinstatement and to the
salaries and benefits which he failed to receive during suspension, unless in the meantime
administrative proceedings have been filed against him. (Sec. 13, R. A. 3019 or the Anti-
Graft and Corrupt Practices Act)
The Secretary of Finance through the BLGF Executive Director may temporarily relieve
or suspend Provincial, City and Municipal Treasurers and their Assistants (DOF Order
No. 305-2000, October 27, 2000, as amended by DOF Personnel Order No. 321-2000,
November 17, 2000), concurrently with the Civil Service Commission (Sec. 29, Rule XIV,
Omnibus Rules Implementing Book V of E. O. 292 and Other Pertinent Civil Service
Laws) and the Office of the Ombudsman (Sec. 24, R. A. 6770 or the Ombudsman Act of
1989), pending administrative investigation.
Other provisions applicable on the salaries of Local Treasurers and Assistant Local
Treasurers under preventive suspension:
a. When the administrative case against the officer or employee under

preventive suspension is not finally decided by the disciplining authority
within the period of 90 days after the date of suspension of the respondent
who is not a presidential appointee, the respondent shall be automatically
reinstated in the service: Provided, That when the delay in the disposition
of the case is due to the fault, negligence or petition of the respondent, the
period of delay shall not be counted in computing the period of suspension
herein provided. (Sec. 52, Bk. V, E. O. 292 or the Administrative Code of
1987)
b. A Local Treasurer who is reinstated after having been illegally dismissed

is considered as not having left his office and should be given comparable
compensation at the time of his reinstatement in an amount not exceeding
five (5) years salary regardless of whether the period of illegal dismissal
exceed five (5) years. Such Treasurer cannot be faulted for his inability to
work or render any service as a result of his illegal dismissal because this
was not his own making or liking. If dismissal was due to bad faith or
personal malice of superior officers, they (superior officers) will be held
accountable for the Treasurer’s back wages (Gabriel vs. Hon. Eufemio C.
Domingo, GR No. 87420, Sept. 17, 1990).
25
c. The death of a respondent Treasurer terminates administrative proceedings
against him and entitles his heirs to all the benefits due him together with
his unpaid salaries from the date of his suspension to the date of his death
(4th Ind. CSC, March 17, 1956).
All fringe benefits which do not form part of his salaries may not be
allowed.
d. Claims for salaries during preventive suspension shall be supported by the

following documents:
1) A certified true copy of the order of exoneration or of the

court’s order dismissing the criminal case against the
employee or absolving him; or
2) A certified true copy of the authority granted by the

department head for the payment of salary during
suspension; or
3) A certified true copy of the President’s order of exoneration

providing for payment of salary during suspension. (Sec.
220, Vol. I, GAAM)
Section 20. Salaries of Local Treasurers and Assistant Local Treasurers During
Attendance in Administrative, Civil or Criminal Investigation – Absence of a Local
Treasurer or Assistant Local Treasurer is considered service in regular course under the
following circumstances:
a. Witness in a criminal case – When a Local Treasurer or Assistant Local

Treasurer is summoned by the court or is required by lawful authority to
render service as a witness in a criminal case, such service shall be
deemed to be of service in the regular course of employment and the Local
Treasurer or Assistant Local Treasurer shall be entitled to his salary during
the period of such service payable by the office to which he pertains,
regardless of whether he has served for or against the prosecution in such
criminal case. (Sec. 226 (a), Vol. I, GAAM)
In case the hearing or trial is conducted outside the LGU where the Local
Treasurer or Assistant Local Treasurer is stationed, he shall automatically
be on official travel and shall be entitled to per diem and transportation
expenses, subject to the usual accounting and auditing rules and
regulations. The summons of the Court shall be sufficient evidence in lieu
of a Travel Order.
b. Witness in his own behalf in a criminal or administrative proceeding –

The attendance of a Local Treasurer or Assistant Local Treasurer in his
26
own behalf, to secure his exoneration from charges or matter alleged
against him is attendance of his own benefit. If he is not under suspension,
the time consumed in such attendance shall be charged to his leave, if he
has any. Upon exoneration, however, when the case in which he is the
accused or the respondent is the direct result of an act performed by him in
connection with his official duties, his absence charged to his leave may
be readjusted and his attendance in court considered as service in due
course. But when the criminal charges filed are not the direct act
performed by him in connection with his official duties, forced absences
from duty resulting from his arrest and required attendance in court may
not be considered official. He shall not in such case be entitled to salary.
c. Witness in a civil case between two private parties, and in which the
Government has no interest – A witness is not obliged to attend as such
in a civil action before any court, judge, justice, or other officer out of the
province in which he resides, unless the distance be less that fifty (50)
kilometers from his place of residence to the place of trial by the usual
course of travel. Therefore, a Local Treasurer or Assistant Local Treasurer
cited to appear in a civil case between two private parties wherein the
Government has no interest, in order to testify as to knowledge of fact
obtained by him in his official capacity, shall not be entitled to salary for
absence on account of such appearance if the distance from his place of
residence to the place of trial by the usual course of travel be more than
fifty (50) kilometers. If the distance involved is less than fifty (50)
kilometers, and the Local Treasurer or Assistant Local Treasurer is cited
as a witness in a civil case involving private persons as litigants for
knowledge or fact acquired by him in his private capacity, his absence will
be chargeable against him without prejudice to his right to seek
reimbursement from the party at whose instance he testified. If such
witness testifies on a case from knowledge or fact acquired by him in his
official capacity, or to produce official papers or documents, and the
distance between his place of residence and the place of trial is less than
fifty (50) kilometers, his appearance will be considered service in due
course, but in such a case the province, city or municipality to which he
pertains shall collect witness’ fees for his appearance under the conditions
prescribed by the Rules of Court. (Sec. 226, Vol. I, GAAM)
Section 21. Approval and Granting of Application for Leave of Absence of Local
Treasurers and Assistant Local Treasurers – The approval of application for leave of
Provincial, City and Municipal Treasurers and Assistant Provincial, City and Municipal
Treasurers shall be as follows:
a. All applications for leave of absence, i. e. vacation, sick,

maternity/paternity, and special privilege leaves and terminal leave of
Provincial, City, Municipal Treasurers and Assistant Provincial, City and
Municipal Treasures shall be approved by the BLGF Regional Directors,
27
copy furnished the BLGF Central Office. Where the applicant intends to
leave the country, the application shall be approved by the Department,
regardless of duration.
b. Application for vacation leave by the Assistant Treasurer for a period

exceeding 15 days shall be approved by the Regional Director. Leave
application for 15 days and below shall be approved by the
Provincial/City/Municipal Treasurer copy furnished the Regional Director
for information.
c. The application for vacation and sick leave by the Treasurer shall be
supported by a request for the designation of an Officer-in-Charge or In-
Charge of Office. Likewise the LCE shall recommend for approval of
said application for leave.
d. The Local Treasurer shall be entitled to special leave privileges as

mandated under existing laws (Sec. 21, Rule XVI, Omnibus Rules
Implementing Book V of EO 292). Likewise he/she can avail of
maternity/paternity leaves of not more than seven (7) days which shall be
non-cumulative/non-commutative, immediately before, during or after the
childbirth or miscarriage of his legitimate spouse (Sec. 20, Omnibus Rules
Implementing Book V of EO 292 as amended by MC No. 41 s. 1998). The
special leave privileges (SPL) to which the Local Treasurer shall be
entitled are the following:
1) Funeral/Mourning Leave
2) Graduation Leave
3) Graduation Leave
4) Enrollment Leave
5) Wedding/Anniversary Leave
6) Birthday Leave
7) Hospitalization Leave
8) Accident Leave
9) Relocation Leave
10) Government Transaction Leave
11) Calamity Leave
A maximum of three (3) days within a calendar year of any or

combination of special leave privileges of his choice may be availed by
the Local Treasurer. The SPL may be availed by the Local Treasurer
when the occasion is personal to him/her and that of his/her immediate
family.
e. Whenever a Treasurer retires, voluntarily resigns, or is allowed to resign,

or is separated from service through no fault of his own, he shall be
entitled to the commutation of all accumulated vacation and/ or sick leave
28
to his credit, exclusive of Saturdays, Sundays and holidays, without
limitation as to the number of days of vacation and sick leave that he may
accumulate provided his leave benefits are not covered by special law
(Sec. 26 Rule XVI, Omnibus Rules Implementing Book V of EO 292 as
amended by MC No. 41 s. 1998).
f. When a Treasurer whose leave credits have been commuted following his
separation from service is reemployed in Government before the
expiration of the leave commuted, he shall no longer refund the money
value of the unexpired portion of his leave. Insofar as his leave credit is
concerned, he shall start from a zero balance in his new government office
(Sec.26, Rule XVI of Omnibus Rules Implementing Book V of EO 292 as
amended by MC No. 41 s. 1998).
g. The Treasurer who has accumulated at least 15 days of vacation leave

credits shall be allowed to monetize a minimum of 10 days; provided, that
at least five (5) days are retained after monetization and, provided further,
that a maximum of 30 days may be monetized in a given year (Sec. 22,
Rule XVI of Omnibus Rules Implementing Book V of EO 292 as amended
by MC No. 41 s. 1998).
h. The Local Treasurer may be allowed to monetize 50% or more of his/her

accumulated vacation/sick leave credits for valid and justifiable reasons
such as the following:
1) Health, medical and hospital needs of the treasurer and

the immediate members of his family;
2) Financial aid and assistance brought about by force
majeure events such as calamities, typhoons, fire,
earthquakes and accidents;
3) Educational needs of the treasurer and immediate
members of the family;
4) Payment of mortgages and loans entered into for the
benefit of the treasurer and his/her immediate family;
5) Extreme financial needs of the treasurer or his/her
immediate family to fulfill basic needs for food, shelter
and clothing;
The monetization of 50% or more of the accumulated leave credits shall

be upon the favorable recommendation of the LCE and subject to
availability of funds. (Sec. 23, Omnibus Rules Implementing Book V of EO
292, as amended by MC No. 41 s. 1998).
i. The Local Treasurer with 10 days or more vacation leave credits shall be
required to go on vacation leave whether continuous or intermittent for a
29
minimum of five (5) working days annually (Sec. 25, Omnibus Rules
Implementing Book V of EO 292, as amended by MC No. 41 s. 1998).
Chapter 3. ADMINISTRATIVE AND TECHNICAL SUPERVISION BY THE

BUREAU OF LOCAL GOVERNMENT FINANCE
Section 21. Administrative and Technical Supervision - The Bureau of Local

Government Finance shall exercise administrative and technical supervision and
coordination over the treasury and assessment operations of local governments (Sec. 43,
EO 127). It shall provide consultative services and technical assistance to local treasurers
in the implementation of programs, policies and regulations on local fiscal matters such
as local taxation, local revenue mobilization, real property assessment as well as
administrative matters on the recruitment, selection and appointment of local treasurers.
The Regional Offices shall perform the following administrative and technical functions
involving local treasury operations:
(a). Supervise and coordinate the conduct of local treasury and assessment
operations of the provinces, cities and municipalities within the region
for the proper implementation of laws, decrees, rules, regulations and
administrative issuances of the Department of finance;
(b). Coordinate the plans, programs and activities of local treasury and
assessment offices in the conduct of tax collection drives and tax
information and education campaigns;
(c). Conduct regional training programs, seminars, workshops and other

allied activities fro the improvement of the administrative and technical
skills in the local treasury offices;
(d). Undertake measures that would lead to efficient administration of local

treasury operations through the following:
1) Periodic supervisory visits and inspections of the offices of the

provincial, city and municipal treasurers;
2) Periodic monitoring of progress of collections of Real Property

Tax, business taxes and other non-tax revenues;
3) Conduct of revenue audits to determine compliance by local

treasurers with applicable laws, rules and regulations;
4) Monitoring of the implementation by LGUs of national and

local tax ordinances and tax measures;
30
5) Review, evaluation and monitoring of LGU financial and fiscal
reports for timely and accurate submission which are crucial in
target-setting of tax and revenue collections;
6) Act on administrative matters such as authorization and

regulation of travel, approval of application for leaves of
absences, actions on Certificates of Settlements and Clearances
from money accountabilities of Local Treasurers and their
Assistants.
Chapter 4. THE ROLES, DUTIES, AND RESPONSIBILITIES OF THE LOCAL

TREASURERS
Section 22. Duties and Responsibilities of the Provincial, City and Municipal
Treasurer -
a. Collection of Local Revenues by Treasurer – All local taxes, fees and charges shall
be collected by the provincial, city, or municipal, or barangay treasurer, or their duly
authorized deputies.
The provincial, city or municipal treasurer may designate the barangay treasurer as
his deputy to collect local taxes, fees or charges. In case a bond is required for the
purpose, the provincial, city or municipal government shall pay the premiums thereon
in addition to the premiums of the bond that may be required under the Local
Government Code of 1991. (Sec. 170., LGC; (Sec 5, COA Circular No. 92-382, July
3, 1992)
b. Collection of Real Property Tax – The collection of the real property tax with
interest thereon and related expenses, and the enforcement of the remedies provided
for in Chapter 6, Title Two of the Local Government Code of 1991 or any applicable
laws, shall be the responsibility of the city or municipal treasurer concerned.
The city or municipal treasurer may deputize the barangay treasurer to collect all
taxes on real property located in the barangay: Provided, further, That the barangay
treasurer is properly bonded for the purpose: Provided, further, That the premium on
the bond shall be paid by the city or municipal government concerned. (Sec. 247,
LGC)
c. Custodianship and Requisition of Accountable Forms –The treasurer shall be the

custodian of all accountable forms requisitioned by the local government unit. He
shall maintain a complete record of the receipt, issue and transfer of accountable
forms. (Sec 24, COA Circular No. 92-382, July 3, 1992)
Collectors/Tellers shall file requisitions of accountable forms for their use with the
Treasurer through a Requisition and Issue Voucher. They shall be accountable for all
31
accountable forms issued to them. There shall be no transfer of accountable forms
between collectors/tellers. (Sec 25, COA Circular No. 92-382, July 3, 1992)
d. General functions - The treasurer shall take charge of the treasury office, perform the
duties provided for under Book II of the Local Government Code of 1991, and shall:
1) Advise the governor or mayor, as the case may be, the sanggunian,
and other local government and national officials concerned regarding
disposition of local government funds and on such other matters
relative to public finance (Sec. 470 (d) (1), LGC), including
amendments to local tax ordinances, identification of fiscal modalities,
development of debt management strategies, identification of
investment opportunities, and others;
2) Take custody and exercise proper management of the funds of the

local government unit concerned (Sec. 470 (d) (2), LGC), including
effective cash flow forecasting, analysis of liquidity position and
management of surplus cash positions;
3) Take charge of the disbursement of all local government funds and

such other funds the custody of which may be entrusted to him by law
or other competent authority (Sec. 470 (d) (3), LGC), to ensure an
effective and efficient management of expenditure and disbursement
levels;
4) Inspect private commercial and industrial establishments within the

jurisdiction of the local government unit concerned in relation to the
implementation of tax ordinances, pursuant to the provisions under
Book II of the Local Government Code of 1991; (Sec. 470 (d) (4)
5) Maintain and update the tax information system of the local

government unit; (Sec. 470 (d) (5), LGC)
6) In the case of the provincial treasurer, exercise technical supervision

over all treasury offices of component cities and municipalities (Sec.
470 (d) (6), LGC); and
7) Exercise such other powers and perform such other duties as may be
prescribed by law or ordinance (Sec. 470 (e), LGC).
e. Specific functions -
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
32
certifies the availability of funds for the purpose (Sec. 344, LGC; COA
Circular No. 2006-002, January 31, 2006). It is the primary duty of
the local treasurer to certify to the availability of funds prior to all
disbursements from the local treasury, in conjunction with the
certification of the local budget officer on the existence of an
appropriation for the purpose and the certification of the local
accountant on the obligation for the appropriation.
2) Implement tax collection and enforcement program- Local

Treasurers are 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 – Local Treasurers are required to

prepare and submit daily report of collections, together with the
supporting documents to the Local Accountant. Likewise, they are
required to accomplish and submit quarterly report of Statement of
Income and Expenditures (SIE), and other reports in forms prescribed
by BLGF.
4) Certify RPT Delinquencies Remaining Uncollected – The

provincial, city or municipal treasurers or his deputy shall prepare a
certified list of all real property tax delinquencies which remained
uncollected or unpaid for at least one (1) year in his jurisdictions, and a
statement of the reason for such non-collection or non-payment and
shall submit the same to the sanggunian concerned on or before the
thirty-first (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 Local Government Code of 1991. (Sec. 269, LGC).
5) Examine the Books of Accounts and Pertinent Records of

Businessmen – The provincial, city, municipal or barangay treasurer
may by himself or through any of his deputies duly authorized in
writing, examine the books, accounts, and other pertinent records of
any person, partnership, corporation, or association subject to local
taxes, fees and charges in order to ascertain, assess, and collect the
correct amount of the tax, fee, or charge. Such examination shall be
made during regular business hours, only once for every tax period,
and shall be certified to by the examining official. Such certificate
shall be made of record in the books of accounts of the taxpayer
examined.
In case the examination herein authorized is made by a duly authorized

deputy of the local treasurer, the written authority of the deputy
33
concerned shall specifically state the name, address, and business of
the taxpayer whose books, accounts, and pertinent records are to be
examined, the date and place of such examination, and the procedure
to be followed in conducting the same.
For this purpose, the records of the revenue district office of the
Bureau of Internal Revenue shall be made available to the local
treasurer, his deputy or duly authorized representative. (Sec. 171,
LGC)
6) Submit, on or before the 15th day of July of each year, to their

respective LCEs a certified statement covering the income and
expenditures of the preceding fiscal year, the actual income and
expenditures of the first two (2) quarters of the current year and the
estimated income and expenditures for the last two (2) quarters of the
current year. All statements of income and expenditures shall be
jointly certified by the local treasurer and the local accountant.
7) 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
statements, the barangay treasurer shall submit, on or before the
fifteenth (15th) day of September of each year, to the punong barangay
a statement covering the estimates of income and expenditures for the
past, current and ensuring fiscal years (Art. 423 (b), IRR, LGC).
Upon receipt of the statement of income and expenditures from the

barangay treasurer, the punong barangay shall prepare the barangay
budget for the ensuing fiscal year in the manner and within the period
prescribed in the Implementing Rules and Regulations of the Local
Government Code of 1991, and submit the annual barangay budget to
the sangguniang barangay for enactment (Art. 423 (c), IRR, LGC).
8) On the sealing of weights and measures, Municipal Treasurers are

required to 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 his deputies. In the case of violations,
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
34
payment of a compromise penalty of not less than Two Hundred Pesos
(P200).
9) 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, brands, 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 by the Municipal
treasurer, and attested by the Municipal Secretary (Sec. 517, Revised
Adm. Code). Upon every transfer of large cattle, the Municipal
Treasurer shall issue to the purchaser of the animal a certificate of
transfer showing the name and residence of the owner/vendor, name
and residence of the buyer, purchase price, identification marks of the
animal and the reference to the original certificate of ownership by
number, name of municipality which issued the certificate (Sec. 426,
Manual of Instructions to Treasurers).
10) See to it that Payment of Taxes of a Business is not Avoided by

Simulating the Retirement thereof and Recommend to the Mayor
the Disapproval of the Application for the Termination or
Retirement of the Business – 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 shall be observed: a) The local treasurer shall assign every
application for the termination or retirement of business to an inspector
in his office who shall go to the address of the business on record to
verify if it is 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 termination or retirement of said
business. Accordingly, the business continues 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 of the
business to him if there is an existing ordinance prescribing such
transfer tax. (Notes on Sec. 145, LGC, p. 120, Philippine Law on Local
Government Taxation , Annotated, 2000 Edition, Sofronio B. Ursal)
11) Attend sessions of the sanggunian when required upon prior approval
of the local chief executive.
35
12) Exercise such other powers and functions and perform such other
duties and responsibilities as may be prescribed by law or ordinance
such as the following:
a) Withholding Agents of the Bureau of Internal Revenue

(BIR), Government Service Insurance System (GSIS)
and Pag-ibig, Philhealth, and the Metro Manila
Development Authority (MMDA) for Metro Manila
local treasurers.
b) Deputies of the National Government to collect Fire

Fees and Alien Registration Fees.
c) Members in the following Local Committees and

Boards:
i. Local Finance Committee - There is hereby

created in every province, city, or municipality a
local finance committee to be composed of the
local planning and development officer, the
local budget officer, and the local treasurer.
(Sec. 316, LGC)
ii. Committee on Awards – There shall be in

every province, city or municipality a
Committee on Awards to decide the winning
bids and questions of awards on procurement
and disposal of property.
The Committee on Awards shall be composed

of the local chief executive as chairman, the
local treasurer, the local accountant, the local
budget officer, and the head of office or
department for whose the supplies are being
procured, as members. In case a head of office
or department would sit in a dual capacity, a
member of the Sanggunian elected from among
its members shall sit as a member. (Sec. 364,
LGC)
iii. Local Prequalification, Bids and Awards

Committee (Local PBAC) – (a) There is
hereby created a local prequalification, bids and
awards committee in every province, city, and
municipality, which shall be primarily
responsible for the conduct of prequalification
36
of contractors, bidding, evaluation of bids, and
the recommendation of awards concerning local
infrastructure projects. The governor or the city
or municipal mayor shall act as chairman with
the following as members:
(1) The chairman of the appropriations

committee of the sanggunian concerned;
(2) A representative of the minority party in
the Sanggunian concerned, if any, or if
there be none, one (1) chosen by said
Sanggunian from among its members;
(3) The local treasurer;
(4) Two (2) representatives of non-
governmental organizations that are
represented in the local development
council concerned, to be chosen by the
organizations themselves; and
(5) Any practicing certified public accountant
from the private sector, to be designated
by the local chapter of the Philippine
Institute of Certified Public Accountants,
if any. Sec. 37, LGC)
iv. Local School Boards

v. Appraisal Committee (for purposes of
expropriation and purchase of real
property)
d) Duties and functions under the Omnibus Election Code:
i. For City (not comprising at least one (1)

legislative district) and Municipal
Treasurers, vice-chairman in
City/Municipal Board of Canvassers
which shall canvass election returns
coming from the polling places within its
jurisdiction. (Sec. 2 (d), E. O. No. 144,
March 2, 1987)
Section 23. Duties and Responsibilities of the Assistant Treasurer -
a. The Assistant Treasurer shall assist the Treasurer and perform such duties as the
latter may assign to him;
37
b. The Assistant Treasurer shall have authority to administer oaths concerning notices
and notifications to those delinquent in the payment of the real property tax and
concerning official matters relating to the accounts of the treasurer or otherwise
arising in the offices of the treasurer and the assessor. (Sec. 471 (c), LGC); and
c. In case of the temporary absence of the Treasurer, the Assistant Treasurer shall
automatically perform his functions and shall be fully responsible thereof until the
designation of an Officer-In-Charge or In-Charge of Office by the Department of
Finance through the BLGF (Automatic Succession by the Assistant Treasurer at the
Provincial/City/Municipal Level under Sections 12 and 13 hereof).
Chapter 5. OTHER ROLES OF THE LOCAL TREASURER
Section 24. Specific Role of the Local Treasurer in the Enactment/Amendment of

Revenue Ordinance of Local Government Unit
The Local Treasurer advises/updates the local chief executive, the sanggunian, and other
local government and national officials concerned regarding the disposition of local
government funds and other matters relative to public finance such as those involving the
sourcing and management of funds that are needed to deliver the basic services and
implement developmental projects, as follows:
a. Update on the tax information system – The Treasurer regularly updates

the LGU tax information system, thus, has a first-hand statistical
information on the collections from taxes, fees and charges, upon which a
continuing evaluation on the adequacy of collections from said sources in
relation to the programs intended to be financed thereby and the cost of
administering taxes, fees and charges could be made.
b. Advice on the adequacy of taxes, fees and charges – The continuing

evaluation on the adequacy of collections will determine the need to
increase or decrease the rates of taxes, fees and charges, so that, the Local
Treasurer is duty-bound to advise the sanggunian on the need to increase the
rates of taxes, fees and charges to a level sufficient to cover the cost of
operations and developmental programs /projects.
c. Advice on continued relevance of certain impositions – The Treasurer

must also be able to advise the local chief executive and the sanggunian
when local impositions may be reduced or removed, such as when the
purpose of an existing imposition has ceased to exist, or if the costs sought
to be recovered by the fee imposed have decreased drastically, or as a matter
of strategy, the local chief executive or sanggunian wants to attract
businesses by reducing certain impositions.
d. Update on the adjustment of fees and charges – While the Local

Government Code of 1991, allows the rates of taxes to be adjusted only
38
once every five (5) years, there is no prohibition for such adjustment insofar
as fees and charges are concerned. The effect of inflation on collections
impacts on the capability of the local government unit to implement
programmed activities or to render mandated basic services. The rates of
fees and charges need to be adjusted regularly to offset the effects of
inflation. It is the duty of the Treasurer to advise the local chief executive
and the sanggunian on the matter to effect the necessary adjustment.
e. Dissemination of tax ordinances and revenue measures – Copies of all

provincial, city, and municipal and barangay tax ordinances and revenue
measures shall be furnished the respective local treasurers for public
dissemination. It is the duty of the local treasurer concerned to disseminate
to the public all newly approved tax ordinances and revenue measures.
(Relate to Sec.22 (d) of this Manual))
Section 25. Treasurer’s Role in the Collection of Delinquent Local Taxes, Fees,
Charges, and Related Surcharges:
a. Posting of notice of delinquency in the payment of real property tax –

When the real property tax or any other tax imposed under Title Two,
Chapter 6 of the Local Government Code of 1991, becomes delinquent, the
provincial, city, or municipal treasurer shall immediately cause a notice of
the delinquency to be posted at the main entrance of the provincial capitol,
or city or municipal hall and in a publicly accessible and conspicuous place
in each barangay of the local government unit concerned. (Sec. 254, LGC)
b. Issuance of a duly authenticated certificate for the distraint of personal

for the collection of delinquent local taxes, fees, or charges, and related
surcharges and interest - In the case of distraint of personal property as an
administrative remedy for the collection of taxes, fees or charges, and
related surcharges and interest resulting from delinquency, the local
treasurer or his deputy shall issue a duly authenticated certificate based upon
the records of his office showing the fact of delinquency and the amounts of
the tax, fee, or charge and penalty due. Such certificate shall serve as
sufficient warrant for the distraint of personal property, subject to the
taxpayer’s right to claim exemption under the provisions of existing laws.
(Sec. 175 (a), LGC)
In the case of levy on real property as an administrative remedy for the

collection of taxes, fees or charges and related surcharges and interest
resulting from delinquency, the provincial, city or municipal treasurer, as the
case may be, shall prepare a duly authenticated certificate showing the name
of the taxpayer and the amount of the tax, fee, or charge, and the penalty due
from him. Said certificate shall operate with the force of a legal execution
throughout the Philippines. A written notice of the levy shall be mailed to
or served upon the assessor and the Registrar of Deeds of the province or
39
city where the property is located, and to the delinquent taxpayer. (Sec. 176,
LGC)
c. Advertisement and sale of delinquent property - Within thirty (30) days

after levy, the local treasurer shall proceed to publicly advertise for sale or
auction the property or a usable portion thereof as may be necessary to
satisfy the claim and cost of sale; and such advertisement shall cover a
period of at least thirty (30) days. If the taxpayer fails to pay the taxes, fees,
charges, penalties and interests, the sale shall proceed and shall be held
either at the main entrance of the provincial, city, or municipal building, or
on the property to be sold, or at any other place as determined by the local
treasurer conducting the sale and specified in the notice of sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a
report of the sale to the sanggunian concerned, and which shall form part of his
records. The local treasurer shall make and deliver to the purchaser a certificate
of sale, showing the proceedings of the sale, describing the property sold, stating
the name of the purchaser and setting out the exact amount of all taxes, fees,
charges, and related surcharges, interests, or penalties. Any excess in the
proceeds of the sale over the claim and cost of sales shall be turned over to the
owner of the property (Sec. 178, LGC).
d. Issuance of Certified Statement of Delinquency to the Courts – In the case of

collection of real property tax or any other tax through the courts, the provincial
or city treasurer, or municipal treasurer shall furnish the provincial attorney or
city or municipal legal officer a certified statement of delinquency who, within
fifteen (15) days after receipt, shall file the civil action in the name of the
province, city or municipality in the proper court of competent jurisdiction. If the
delinquent tax due does not exceed Ten thousand pesos (P10,000), the competent
court is the municipal or city trial court, and if the amount due is in excess of Ten
thousand pesos (P10,000), the proper court is the regional trial court (Art. 357 (a),
IRR).
Section 24. Treasurer’s Role in Other Boards and Committees created pursuant to
the Local Government Code of 1991 and Other Laws -
I. Local Finance Committee –The local finance committee in each municipality,

city and province shall be composed of the local planning and development officer, the
local budget officer, the local treasurer, the local assessor and local accountant. It shall
exercise the following functions:
1) Determine the income reasonably projected as collectible for the ensuing

fiscal year;
2) Recommend the appropriate tax and other revenue measures or

borrowings which may be appropriate to support the budget;
40
3) Recommend to the local chief executive concerned the level of the annual
expenditures and the ceilings of spending for economic, social and general
services based on the approved local development plans;
4) Recommend to the local chief executive concerned the proper allocation

of expenditures for each development activity between current operating
expenditures and capital outlays;
5) Recommend to the local chief executive concerned the amount to be

allocated for capital outlay under each development activity or
infrastructure project;
6) 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;
7) Assist the sanggunian concerned in the analysis and review of annual

regular and supplemental budgets of the respective local government unit
to determine compliance with statutory and administrative requirements;
and,
8) Conduct semi-annual review and general examination of cost and

accomplishments against the performance standards applied in
undertaking development projects. A copy of this report shall be
furnished the local chief executive and the sanggunian concerned, and
shall be posted in conspicuous and publicly accessible places in the
provinces, cities, municipalities and barangays. (Art.412, IRR, LGC).
II. Local School Boards – (a) There shall be established in every province, city, or
municipality, a provincial, city, or municipal school board, respectively.
shall be composed of the LCE and the division/city superintendent of schools as co-
chairmen; the chairman of the education committee, the local treasurer, the
representative of the sangguniang kabataan, the president of the federation of
PTA, the representative of the teachers’ organizations and the representative of
the non-academic personnel of public schools, as members. It shall have the
following functions:
1) 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, 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
41
property constituting the Special Education Fund and such other sources
of revenue as the LGC and other laws and ordinances may provide;
2) Authorize the provincial, city or municipal treasurer to disburse funds

from the Special Education Fund pursuant to the budget prepared and in
accordance with existing rules and regulations;
3) Serve as an advisory committee to the sanggunian concerned on

educational matters such as, but not limited to, the uses of local
appropriation for educational purposes, and
4) Recommend changes in the names of public schools within the territorial

jurisdiction of the local government unit for enactment by the Sanggunian
concerned.
c. Bids and Awards Committee (BAC) – Each municipality, city or province shall
maintain a Bids and Awards Committee which shall be composed of one (1)
representative each from the regular offices under the Office of the LCE such as
but not limited to the following: Office of the administrator, Budget officer,
Legal Officer, engineering Office, General Services Offices. The end user office
shall always be represented in the BAC. The BAC members shall be at least five
(5) but not more than seven (7) and who shall be personnel occupying plantilla
positions of the LGU. The LCE shall designate the members of the BAC who
shall elect among themselves the Chairman and Vice-Chairman. In no case shall
the LCE and /or appointing authority be the Chairman or member of the BAC.
(Sec. 11.2.2, Rule V, IRR of RA 9184)
The BAC shall have the following functions:
 Advertise and/or post the invitations to bid;

 Conduct pre-procurement and pre-bid conferences;
 Determine the eligibility of prospective bidders;
 Receive bids and conduct the evaluation of bids;
 Undertake post-qualification proceedings;
 Resolve motions for reconsideration;
 Recommend award of contracts to the LCE or authorized representative.
The BAC shall also prepare the procurement monitoring report covering all
procurement activities specified in the Annual Procurement Plan (APP), whether
ongoing and completed, costing P50 million and above for goods and
infrastructure projects, and P5 million and above for consulting services. The
report shall cover all activities from pre-procurement conference to the issuance
of notice of award and approval of contract. The report shall be approved by the
head of the procuring entity, and submitted to the Government Procurement
Policy Board (GPPB) in printed and electronic format within ten (10) working
42
days after the end of each semester. The GPPB is an inter-agency board created
under the Government Procurement Reform Act or RA 9184 chaired by the
Secretary of the Department of Budget and Management to formulate and amend
the IRR and the corresponding standard forms for Procurement, ensure the regular
conduct by government entities of procurement training, preparation of
procurement operations manual for all government agencies, and conduct annual
review of the effectiveness of the Procurement Law and recommend amendments
thereto as necessary.
Section 25. Treasurer’s Role in the National/Local Elections pursuant to the

Omnibus Election Code. Local Treasurers are mandated under the Omnibus Election
Code to participate in the local elections in the following capacities:
a Custodianship of Ballot Boxes and Election Paraphernalia. The provincial, city

and municipal treasurer shall have custody of ballot boxes and such election
paraphernalia, supplies and materials as are entrusted to him under the law or
rules of the COMELEC and shall be responsible for their preservation and
storage, and for any loss, destruction, impairment or damage of any election
equipment, material or document in their possession furnished under the Omnibus
Election Code (Art. XIII, Sec. 162, Omnibus Election Code).
In case of destruction or disappearance of any ballot box on election day, the

board of election inspectors shall immediately report it to the city or municipal
treasurer who shall furnish another box or receptacle as equally adequate as
possible. The election registrar shall report the incident and the delivery of a new
ballot box to the COMELEC and to the provincial election supervisor (Art. XIII,
Sec. 160, Omnibus Election Code).
b. Preparation of Emergency Ballots. In the event of failure to receive the official

ballots on time, or where there are no sufficient ballots for all registered voters or
where they are destroyed and it is impossible to provide other ballots, the city or
municipal treasurer shall provide other ballots which shall be similar to the
official ones and which shall be uniform within each polling place. The
city/municipal treasurer shall immediately report such action to the COMELEC.
The city/municipal treasurer shall not undertake the preparation of emergency

ballots unless the political parties, candidates and the organizations authorized by
the COMELEC to designate watchers have been sufficiently notified to send their
representatives and have agreed in writing to the preparation and use of
emergency ballots (Art. XVI, Sec.182, Omnibus Election Code).
b. Record of Quantity and Serial Numbers of Official Ballots and Election

Returns. The provincial, city or municipal treasurer shall respectively keep a
record of the quantity and serial numbers of official ballots and election returns
furnished the various provinces, cities, municipalities and polling places, as the
case may be. Legible copies of such record shall be furnished the duly authorized
43
provincial, city or municipal representatives of the ruling party and the dominant
opposition party, and the COMELEC immediately after the distribution is made
of such official ballots and election returns (Art. XVI, Sec. 186, Omnibus election
Code).
c. Verification and Distribution of Official Ballots and Election Returns. The

provincial, city and municipal treasurers, together with the respective watchers of
the ruling party and dominant opposition party and COMELEC representatives,
shall verify the contents of the boxes containing the shipment of official ballots,
election returns and sample official ballots received by the said treasurers. The
provincial treasurers shall keep a record of their receipt and distribution to each
municipal treasurer, while the city and municipal treasurer shall each keep a
record of their distribution to the board of election inspectors (Art. XVI, Sec. 189,
Omnibus Election Code).
d. Certification of Serial Number of Election Returns. The provincial, city or

municipal treasurer shall issue a certification as to the serial number of the
election return assigned to a voting precinct in the case of an election return with
a separately printed serial number or which bears a different serial number from
that assigned to the particular polling place. Said election return shall not be
canvassed, unless the Commission shall order in writing for its canvassing, stating
the reason for the variance in serial number (Art. XVIII, Sec. 212, Omnibus
Election Code).
e. Delivery to and Preservation of Key to Ballot Box by, the Provincial

Treasurer. Upon the termination of the counting of the votes, the used ballots,
unused ballots, tally board or sheet, copy of the election returns and the minutes
of proceedings of the board of election inspectors shall be placed in the ballot
box. The ballot box shall be locked with three padlocks and the keys shall be
placed in separate envelopes, sealed and signed by all members of the board. Said
envelopes shall be delivered by a COMELEC representative to the following: one
envelope to the Provincial Treasurer, another to the Provincial Fiscal and the
other to the Provincial Election Supervisor (Art. XVIII, Sec. 217, Omnibus
Election Code).
The provincial election supervisor, the provincial treasurer and the provincial
fiscal shall keep the envelope containing the keys in their possession intact during
the period of three months following the election. After this period, unless the
COMELEC has ordered otherwise, the provincial election supervisor and the
provincial fiscal shall deliver to the provincial treasurer the envelopes containing
the keys under their custody. (Art. XVIII, Sec. 219, Omnibus Election Code).
f. Delivery, Preservation and Disposition of Ballot Boxes. The ballot box, all
supplies of the BEI and all pertinent papers and documents shall immediately be
delivered by the BEI and the watchers to the city or municipal treasurer who shall
keep his office open all night on the day of the election if necessary for the
44
purpose, and shall provide the necessary facilities for said delivery at the expense
of the city or municipality. The city or municipal treasurer shall on the day after
the election require the members of the BEI who failed to send the objects herein
referred to deliver the same to him immediately and acknowledge receipt thereof
in detail (Art. XVIII, Sec. 217, Omnibus Election Code).
The city and municipal treasurer shall keep the ballot boxes under their
responsibility for three months and stored unopened in a secured place, unless the
COMELEC orders otherwise or shall demand them sooner or shall order their
preservation for a longer time in connection with any pending contest or
investigation. Upon the lapse of three months and if there is no order to the
contrary, the COMELEC may authorize the city and municipal treasurer in the
presence of its representative to open the boxes and burn their contents, except the
copy of the minutes of the voting and the election returns deposited therein which
they shall keep (Art. XVIII, Sec. 219, Omnibus Election Code).
g. Membership in the Municipal Board of Canvassers. The municipal board of

canvassers shall be composed of the election registrar or a COMELEC
representative, as chairman, the municipal treasurer, and the district supervisor or
in his absence any public school principal in the municipality and one
representative from each of the ruling party and the dominant opposition political
party entitled to be represented, as members.
The chairman and the members of the board of canvassers shall not be related
within the fourth civil degree of consanguinity or affinity to any of the candidates
whose votes will be canvassed by said board, or to any member of the same board
(Art. XIX, Sec. 221, 222, Omnibus election Code).
h. Delivery and Transmittal of Election Returns. For the city and municipal
board of canvassers, the copy of the election returns of a polling place intended
for the city or municipal board of canvassers, duly placed inside a sealed envelope
signed and affixed with the imprint of the thumb of the right hand of all members
of the BEI, shall be personally delivered by the members of the BEI to the city or
municipal board of canvassers under the proper receipt to be signed by all the
members thereof (Art. XIX, Sec. 229, Omnibus Election Code).
i. Safekeeping of Transmitted Election Returns. The board of canvassers shall

keep the ballot boxes containing the election returns in a safe and secure room
before and after the canvass. The door to the room must be padlocked by three
locks with the keys kept as follows: one with the chairman, the other with the
representative of the ruling party, and the other with the representative of the
dominant opposition party (Art. XIX, Sec. 230, Omnibus Election Code).
j. Canvass by the Board of Canvassers. The board of canvassers shall meet not
later than six o’clock in the afternoon of election day at the place designated by
the COMELEC to receive the election returns and to immediately canvass those
45
received. It shall meet continuously from day to day until the canvass is
completed. Subject to reasonable exceptions, the board of canvassers must
complete their canvass within 36 hours in municipalities, 48 hours in cities and 72
hours in provinces (Art. XIX, Sec. 231, Omnibus Election Code). Violation
hereof shall be an election offense punishable with imprisonment of not less than
one year but not more than six years and shall not be subject to probation. In
addition, the guilty party shall suffer disqualification to hold public office and
deprivation of the right of suffrage (Art. XIX, Sec. 264, Omnibus Election Code).
46
Chapter 6 BONDING OF LOCAL TREASURERS AND OTHER LGU
ACCOUNTABLE OFFICERS -
Section 26. Guidelines on Bonding of Local Treasurers
a. Bonding of Accountable Officers – Every officer of the LGU whose duties

permit or required the possession or custody of local funds shall be properly
bonded, and such officer shall be accountable and responsible therefore and for
the safekeeping thereof in conformity with the provision of law.
b. Duty to Notify the Bureau of the Treasury for Bonding Purposes – LGUs
shall have the duty to notify the Bureau of Treasury of any appointment or lawful
accession by any person to a bonded or bondable position or office. The
notification shall be made immediately to the Bureau of Treasury Fiscal Examiner
IV of the province or region where the appointee is assigned.
c. Procedures for Bonding - Care should be exercised in accomplishing the

Request for Bonding (General Form No. 57(A) and the Application for Bond
(General Form No. 58(A) to ensure their correctness and thus accelerate action on
them. The following are the procedures for bonding.
1) Appointment or lawful accession by the Local Treasurer shall be furnished

immediately by the LGU to the Fiscal Examiner IV of the Bureau of the
Treasury of the province or region where the Local Treasurer is assigned;
2) Three copies of General Form No. 57(A), shall be used in the notification,
request for application, increase, reduction, cancellation or transfer of a
bond, duly signed by the LCE concerned;
3) Every applicant for bond shall accomplish General Form 58(A) in four (4)
copies, which shall be subscribed and sworn to before any officer duly
authorized by law;
4) The duly accomplished General Form 58(a) with three (3) copies of
photographs (3” x 4”) shall be indorsed by the LCE to the Bureau of
Treasury Fiscal Examiner IV in the province together with the request for
bonding, General Form No. 57(A), for approval; and
5) All applications for bonding shall be accompanied by the following:
i. Sworn Statement of Assets and Liabilities as of the date of

a application and request for bonding;
ii. Latest approved appointment to bondable position;
iii. If the position of the applicant is not bondable but applicant
is given bondable duties, Office Order or Designation;
47
iv. Proof of payment of bond premium deposited with an
Authorized Government Depository Bank (AGDB).
The barangay Treasurer shall be bonded in accordance with existing laws in the amount
to be determined by the sangguniang barangay but not to exceed Ten Thousand Pesos
(P10,000.00), the premiums of which shall be paid by the barangay. He shall be bonded
with the Fidelity Fund immediately upon assumption of office.
Section 27. Schedule of Bonds – The schedule of bonds for provincial, city and
municipal Treasurers and other officers and employees shall be as follows:
a. For Cash
Minimum Cash Maximum Cash

Accountability Accountability Amount of Bond Bond Premium
2,000.00 5,000.00 75% of their total Bond Premium

5,001.00 7,000.00 Cash shall not be less
7,001.00 9,000.00 Accountability than P 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
1,000,001.00 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
b. For Accountable Forms
(a) Cash Tickets

(b) Cattle Registration Certificates 10% of their total value rounded off to the
(c) Marriage Certificates nearest hundred
An official/employee who has both money and property accountability, shall be bonded
only once to cover both accountabilities, but the amount of the bond shall be in
48
accordance with the above schedule, provided however, that the amount of bond shall not
exceed Five Million (P 5,000,000.00) Pesos (Section 6.2 Treasury Order No. 1-99).
When the maximum amount of the bond is exceeded, the accountable officer and his
immediate supervisor shall take immediate steps to have the excess accountability
transferred to another official/employee who shall then be covered by another bond
(Sec. 6.3, Treasury Order No. 01-95).
A bond is personal and therefore not transferable (Sec. 7.9, Treasury Order No. 01-95).
Section 28. Accountable Officers Considered Unsafe Risks – When a bonded official
or employee or applicant for bonding is not, in the judgment, of the Bureau of the
Treasury Fiscal Examiner IV, a safe and conservative risk owing to character,
association, or habits, the fact shall be reported to the head of the concerned LGU who
shall cause the removal or relief of the official or employee of those duties requiring a
bond, The decision of the Bureau of Treasury Fiscal Examiner IV may be appealed to the
Treasurer of the Philippines through the Bureau of Treasury Regional Director whose
decision shall be final. (Sec. 3.1, Treasury Order No. 01-95)
Section 29. Cancellation of Bonds of Official or Employees Whose Bonds Are No

Longer Necessary – When an accountable officer or employee is no longer accountable
by reason of retirement, separation from the service, promotion, transfer to another
position or agency, suspension from office or for any other cause, a request for
cancellation of bond using General form No 57(A) (items 14 to 18 only) shall be
submitted immediately to the Bureau of National Treasury Fiscal Examiner IV in the
province or region of said accountable official or employee. No bonded official/employee
shall be given clearance by the LGU from money and property accountability without
proof of bond cancellation as herein required. (Sec. 5.1, Treasury Order No. 01-95)
Section 30. Extent of Liability of the Fidelity Bond – The Fidelity Fund shall answer
for defalcations, shortages and unrelieved accountability after all possible means of
recovery of the amount from the accountable official/employee have been exhausted or
his/her insolvency is declared by a competent court. The Fidelity Fund shall be available
for the payment of court fees incident to civil proceedings to recover the sum lost.
The Fidelity Fund shall not be used in 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 Treasury Order No. 01-95)
49
Section 31. Validity of Fidelity Bonds – Approved fidelity bonds are valid for one (1)
year. The bond shall be renewed by the LGU by submitting to the Bureau of the Treasury
the request together with the list of bonded officials and employees subject to renewal
and other attachments such as:
1) Copy of latest Bureau of the Treasury transmittal letter approving the

original/renewed application;
2) Latest copy of statement of Assets and Liabilities; and
3) Agency certification that applicant has not pending administrative and/or
criminal case
Bonds shall be automatically cancelled at expiration date unless renewed.
(Sec. 7.7, Treasury Order No. 1-99)
Section 32. Adjudication of Claims Against the Fidelity Bond – Any and all claims
against the Fidelity Fund together with all the evidences relating thereto shall be filed
with the Bureau of Treasury Regional Director who shall recommend appropriate action
to the Treasurer of the Philippines. Approval of a claim shall constitute a legal claim
against the Fidelity Fund. Only approved claims shall be paid from the Fidelity Fund.
50
MANUAL OF LOCAL GOVERNMENT
TREASURY OPERATIONS
RECEIPT AND COLLECTION OF LOCAL

INCOME, REVENUE AND OTHER FUND SOURCES
BOOK TWO
Chapter 1 - TYPES OF LOCAL INCOME AND REVENUES COLLECTED BY
LGUS
Section 33. Definition of Income - Income refers to all revenues and receipts collected
or received, forming the gross accretions of funds of the government. (Sec. 306 (i), RA
7160)
Section 34. Power to Create Sources of Revenues – Each LGU shall exercise its power
to create its own sources of revenue and to levy taxes, fees and charges subject to the
provisions of RA 7160, consistent with the basic policy of local autonomy. Such taxes,
fees and charges shall accrue exclusively to the LGU. (Sec. 129, LGC).
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)
Section 35. Fundamental Principles – The following fundamental principles shall

govern the exercise of the taxing and other revenue-raising powers of LGUs:
a. Taxation shall be uniform in each LGU. Uniformity in taxation means that all
taxable articles or kinds of property of the same class shall be taxed at the same
rate. The rule of uniformity. In taxation also extends to territorial uniformity, thus,
if the tax is a city tax, it must be uniform throughout the city; if municipal tax,
throughout the municipality (Local Government Taxation, Ursal). The uniformity
required is only within the territorial jurisdiction of a province, a city, a
municipality or a barangay (Sec. 219(a), IRR LGC).
b. Taxes, fees, charges and other impositions shall:
1). be equitable and based as far as possible on the taxpayer’s ability to

pay; It should be characterized by equity; being fair to all concerned
and without prejudice, favor or vigor entailing undue hardship; should
not discriminate; should not be in restraint of trade, that is, it
discourages investors. Ability to pay is more equated with the
progressive system of taxation, that is, the more you earn, the more tax
you pay (LGC Annotated by Nolledo).
2) be levied and collected only for public purposes. The tax should be
designed to support the services of the Government and the recognized
public needs. The tax must affect the area as a community rather than
as individual (LGC Annotated by Nolledo).
3) not be unjust, excessive, oppressive, or confiscatory The tax must

bereasonable in order not to be unjust or oppressive (LGC Annotated
by Nolledo).
44
4) not be contrary to law, public policy, national economic policy, or in
restraint of trade. A tax is contrary to law if it is a tax beyond the
authority of an LGU to impose (LGC Annotated by Nolledo). Thus, a
local ordinance, to be valid, must not contravene the Constitution or
any statute; not be unfair or oppressive; not be partial or
discriminatory; not prohibit but may regulate trade; be general and
consistent with public policy; and not unreasonable. (US vs. Abendan,
24 Phil.165). A 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 133(e) Annotated, Local Government Taxation, Ursal).
.
c. The collection of local taxes, fees, charges and other impositions shall in no case
be let to any private person. . The Supreme Court has said that entrusting the
collection of the fees to a private person does not destroy the public purpose of
the ordinance, stating that so long as the purpose is public, it does not matter
whether the agency through which the money is dispensed is public or private
(Bagatsing vs. Ramirez, L-41631, Dec. 17, 1976).
d. The revenue collected pursuant to the provisions of the LGC shall inure solely to
the benefit of, and be subject to disposition by, the LGU levying the tax, fee,
charge or other imposition unless otherwise specifically provided by law In no
case can the National Government share in local taxes even if provided by law.
The constitution provides that local taxes, fees and charges shall accrue
exclusively to the local governments (Sec. 5, Art. X, 1987 Constitution).
e. Each LGU shall, as far as practicable, evolve a progressive system of taxation. 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 (Sec. 130 (h), Annotated, Local
Government Taxation, Ursal).
Section 36. The Valid Revenue Ordinance – For any revenue ordinance to be valid, it
must conform with the provisions of the LGC, which defines both substantive and
procedural requirements.
a. Procedural Requirement for a Valid Revenue Ordinance – The procedural

requirements for a valid tax or revenue ordinance are as follows:
1) Pre-Publication or Posting – within ten (10) days from the filing of a

proposed tax ordinance, it shall first be published for three (3)
consecutive days in a newspaper of local circulation or shall be posted
simultaneously in at least four (4) conspicuous places within the
territorial jurisdiction of the LGU concerned. Conspicuous places may
45
include municipal halls, plazas, barangay halls, public markets,
churches and other public places where the constituents converge.
2) Written Notices to Interested or Affected Parties – Information

must reach those that shall be directly affected by the imposition. For
example, when the measure is on the business tax, the LGU may invite
the business community in the public hearing. To ensure compliance
with the requirement, sending of written notices is necessary. The
notice shall specify dates and venue of public hearing.
3) Public Hearing – Public hearing must be done at least ten (10) days
from the sending of notices or last day of publication, whichever is
later. During the public hearing, all participants are allowed to appear
and present or express their views and comments on the proposal. The
deliberations shall serve as inputs to the members of the Sanggunian.
After the Sanggunian members have considered the views and
comments, they may exercise their free choice to modify, pass or
suspend judgment on the issue.
4) Preparation of Minutes – The proceedings must be properly

documented so that the Sanggunian can readily access information on
the people’s reaction on the proposal. The Secretary to the Sanggunian
shall be tasked to prepare minutes of the public hearing.
(Article 276, IRR, LGC)
5) Approval – Once passed by the Sanggunian, the ordinance shall be

submitted to the local chief executive who expresses approval through
signing the proposed ordinance.
a) LCE’s Veto Power. The LCE is empowered to veto the

ordinance if it is ultra vires and or prejudicial to the public
welfare. The LCE required to state in writing the reasons for
vetoing the ordinance. The LCE may veto the ordinance once
(Sec. 55, LGC). In case of a veto of a revenue ordinance, the
LCE is mandated to communicate such veto to the Sanggunian
within fifteen (15) days in case of a province, and ten (10) days
in case of a city or municipality (Sec. 54(b), LGC).
b) Power to Override- The Sanggunian can override the veto by

two-thirds (2/3) votes of all its members, thereby making the
ordinance or resolution effective for all legal intents and
purposes (Sec. 54(a), LGC)
46
6) Publication. The ordinance must be published in full within ten (10)
days after approval for three (3) consecutive days in a newspaper of
local circulation. In case there are no newspapers of local circulation,
the same may be posted in at least two (2) conspicuous and publicly
accessible places. (Art. 276, IRR, LGC)
The ordinance takes effect after the above procedural requirements are
fulfilled. The LGC, however, has provided the following cautionary steps
under which ordinances of component cities and municipalities are reviewed
by the Sangguniang Panlalawigan, and ordinances of barangays by the
sangguniang panlungsod or sangguniang bayan. Thus,
7) Review by Sangguniang Panlalawigan. Within three (3) days from

the approval of an ordinance, the Sangguniang Panlungsod or Bayan
must forward to the Sangguniang Panlalawigan for review, a copy of
the approved revenue ordinance. The Sangguniang Panlalawigan is
required to act on the ordinance within thirty (30) days from receipt
thereof. The effectivity of the ordinance does not wait for the
completion of the review or the period set for the review of the
Sangguniang Panglungsod (Sec. 56, LGC).
a). Purpose – The Sangguniang Panlalawigan’s review is in the

nature of legislative check and is a measure by which a
provincial government exercises its power of general supervision
over component units;
b) Limitations – The scope of the Sangguniang Panlalawigan’s

review of the component city and municipal revenue ordinances
is limited to determining if the proposed ordinance exceeds the
powers conferred upon the Sangguniang Panglungsod or
Sangguniang Bayan. Surpassing this scope would amout to
usurpation of the legislative functions of the city or municipal
council;
c) Effectivity of Ordinance Under Review – Pending review by the

higher council, an ordinance continues to be in force and effect;
d) Approval – Approval comes in two ways: (1) formally, by way

of a resolution; or (2) informally, by inactions for 30 days. A
committee report or endorsement by the sanggunian secretary of
the committee report will not suffice;
e) Disapproval – Declaration of invalidity is equivalent to

disapproval of the subject ordinance;
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f) Governor must sign Resolution – The signature of the Governor
is required in relation to the resolution adopted by the
Sangguniang Panlalawigan approving or disapproving the
ordinance or resolution enacted by the Sangguniang Bayan or
Panlungsod.
8). Review of Barangay Ordinances. 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. Upon failure to take
action on the barangay ordinance within thirty (30) days from receipt
thereof, the same shall be deemed approved (Sec. 57, LGC).
b. Substantive Requirements for a Valid Revenue Ordinance. To be valid, an

ordinance must conform to the following conditions:
1) It must not contravene the Constitution or any statute;

2) It must not be unfair or oppressive;
3) It must not be partial or discriminatory;
4) It must not prohibit but may regulate trade;
5) It must be generally consistent with public policy;
6) It must not be unreasonable.
(US vs. Abendan, 24 Phil.165)
(Refer to LTO Annex 2: “Notes on Supreme Court Ruling on the Substantive

Requirements of a Valid Ordinance” for a detailed discussion on these
requirements).
c. Appeals on the Legality/Constitutionality of an Ordinance. Appeals on

the legality or constitutionality of an ordinance may be made to the
Secretary of Justice or through the regular judicial systems as follows:
Appeals to the Secretary of Justice:
1) Appeals on the constitutionality and legality of tax ordinances or revenue

measures may be raised to the Secretary of Justice within 30 days from the
effectivity of the ordinance in question. The DOJ shall render a decision
within sixty (60) days from the date of receipt of the appeal.
2) Appeals shall not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of taxes, fees or charges (Art. 275,
IRR, LGC)
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3) The DOJ’s review extends only to the determination if the ordinance is
legal or constitutional. The Secretary of Justice may not substitute his/her
own judgment nor replace the same with another version. This power is
one of supervision and not of control.
4). The decision of the DOJ could be subject of an appeal to the President.
This step, the exhaustion of administrative remedies, is in some cases,
necessary in order for the courts to take cognizance of the appeal on the
decision of the executive branch of the government.
Appeals through the Courts. The appeal on the constitutionality and legality
of a local revenue ordinance is available only within 30 days from its
effectivity. After the 30-day prescriptive period has lapsed, or after the lapse
of the sixty (60) days without the Secretary of Justice acting on the appeal, the
aggrieved party may file appropriate proceedings with a court of competent
jurisdiction (Art. 275, IRR, LGC).
d. Penalties for Violation of Tax Ordinances. The local sanggunian is

authorized to prescribe imprisonment or fines or other penalties for violation
of tax ordinances but in no case shall such imprisonment be less than one (1)
month nor more than six (6) months, or such fine be less than One Thousand
Pesos (P1,000) nor more than Five Thousand Pesos (P5,000), or both. The
sangguniang barangay may prescribe a fine of not less than One Hundred
Pesos (P100) nor more than One Thousand Pesos (P1,000). (Art. 279, IRR,
LGC).
Section 37. Local Taxing Authority. LGUs do not have the inherent power to tax. The
power inherently belongs to the State. However, the state may delegate this power
through legislation which, in this case, is through the LGC. As in all revenue measures, it
is up to the particular local government to enact the necessary tax ordinance that would
enable it to avail of its power to impose a given tax.
Section 38. Taxing Powers of Provinces. Except as otherwise provided in the LGC, the
province may levy only taxes, fees and charges as provided in this Article. (Sec. 134,
LGC)
The taxes, fees and charges specifically reserved by the Local Government Code to the
provinces are the following:
1) Tax on transfer of real property ownership;

2) Tax on the business of printing and publication;
3) Franchise tax;
4) Tax on sand, gravel and other quarry resources;
5) Tax on professional (with required government examination);
6) Amusement tax;
49
7) Annual fixed tax per every delivery truck or van of manufacturers or
producers, wholesalers of, dealers, or retailers in, certain products;
8) Service fees and charges;
9) Public utility charges;
10) Tool fees or charges;
11) Real property tax;
12) Additional levy on real property tax for the SEF;
13) Additional ad valorem tax on idle lands;
14) Special levy on lands benefited by public works
(Please refer to the Local Revenue Tool Kit for Philippine LGUs shown in Annex 3).
Full discussions on the different Taxes, Fees and Charges and other impositions by
provinces are found in BOOK V of the MANUAL.
Section 39. 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).
a. Taxes Specifically Reserved to Municipalities. Municipalities may impose

within their territorial jurisdictions the following taxes, fees and charges:
1) Tax on business;
2) Fees and charges on business and occupation;
3) Fees for sealing and licensing of weights and measures;
4) Fishery rentals, fees and charges;
5) Other service fees and charges;
6) Public utility charges;
7) Toll fees or charges;
8) Community tax;
10) Additional levy on real property for the SEF;

12) Special levy on lands specially benefited by improvements
(See Annex 3 for a description of the above taxes)
b. Rates for Municipality within the Metro Manila Area. The LGC allows
municipalities within the Metro Manila Area to impose tax rates “which shall not
exceed by fifty percent (50%) the maximum rates prescribed” for other
municipalities.
Full discussions on the different taxes, fees and charges, and other impositions of
municipalities are found in BOOK V of the MANUAL.
50
Section 40. Taxing Powers of Cities. Except as otherwise provided in the LGC, the
city may impose 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. 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, where the
maximum rates for provinces and municipalities cannot be exceeded by a city. (Sec. 151,
LGC).
The taxes, fees and charges commonly imposed by the cities in the light of the specific
powers granted by the LGC are the following:
1) Transfer of ownership of real property;

2) Business of printing and publication;
3) Franchise tax;
4) Tax on sand, gravel and other quarry resources;
5) Annual fixed tax for every delivery truck or van of manufacturers or
producers, wholesalers of, dealers, or retailers in, certain products;
6) Amusement tax;
7) Professional tax;
9) Additional levy on real property for the SEF;
11) Business tax;
12) Community tax;
13) Fees for sealing and licensing of weights and measures;
14) Fishery rentals, fees and charges;
15) Service fees and charges;
16) Public utility charges
17) Toll fees or charges
Detailed discussions on the different taxes, fees and charges, and other impositions of
cities are found in BOOK V of the MANUAL.
Section 41. Other Taxes that the Province, City and Municipality may Impose.
Provinces, cities and municipalities may exercise the power to levy taxes, fees and
charges on any base or subject not specifically enumerated herein subject to three
conditions:
1) The tax identified is not specifically allocated by the Local Government

Code, the National Internal Revenue Code, and such other laws;
2) The taxes, fees, or charges are not unjust, excessive, oppressive, confiscatory,
or contrary to declared national policy;
51
3) The ordinance levying such taxes, fees and charges shall not be enacted
without public hearing; and,
4) The procedure for the approval, effectivity and publication of tax ordinances
have been complied with.
Section 42. Taxing Powers of Barangays. The barangays may levy taxes, fees and
charges, as provided in this Article, which shall exclusively accrue to them. The
following impositions may be made by Barangays, details of which are presented in
BOOK V of the Manual:
a. Taxes on stores or retailers with fixed business establishments with gross sales
or receipts of the preceding calendar year of Fifty thousand pesos (P 50,000.00) or
less, in the case of cities and Thirty Thousand Pesos (P 30,000.00) or less, in the
case of municipalities, at a rate not exceeding one percent (1%) on such gross
sales or receipts; (Sec. 152 (a), LGC).
b. Service Fees or Charges for services rendered in the regulation or the use of
barangay- owned properties or service facilities such as palay, copra or tobacco
dryers. (Sec. 152 (b) LGC)).
c. Barangay clearance for businesses located in their territories. No city or

municipality may issue any license or permit for any business or activity unless a
clearance is first obtained from the barangay where such business is located or
conducted. For such clearance, the sangguniang barangay may impose a
reasonable fee. The application for clearance shall be acted upon within seven (7)
working days from the filing thereof. In the event that the clearance is not issued
within the said period, the city or municipality may issue the said license or
permit (Sec. 152(c), LGC).
d. Other fees and charges for various business activities within their territory such
as the following:
1) On commercial breeding of fighting cocks, cockfights and cockpits;

2) On places of recreation which charge admission fees;
3) On billboards, signboards, neon signs, and outdoor advertisements.
(Sec. 152 (d), LGC)
Section 43. Common Limitations on the Taxing Powers of LGUs. The exercise of
the taxing powers of provinces, cities, municipalities, and barangays shall not extend to
the levy of the following:
a. Income tax, except when levied on banks and other financial institutions;
b. Documentary stamp tax;
c. Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa,
except as otherwise provided therein;
52
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, fess and charges and other impositions upon goods carried into or out of,
passing through, the territorial jurisdictions of local government units in the
guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees
or charges in any form whatsoever upon such goods or merchandise;
f. Taxes, fees or charges on agricultural and acquatic products when sold by
marginal farmers or fishermen;
g. Taxes on business enterprises certified to the Board of Investments as pioneer of
non-pioneer for a period of six (6) and four (4) years, respectively, from the date
of registration;
h. Excise taxes on articles enumerated under the National Internal Revenue Code,
as amended, and taxes, fees, or charges on petroleum products;
i. Percentage of value added tax (VAT) on sales, barters, or exchanges or similar
transactions on goods or services except as otherwise provided therein;
j. Taxes on the gross receipts of transportation contractors and persons engaged in
the transportation of passengers or freight by hire and common carriers by air,
land or water, except as provided in this Code;
k. Taxes on premiums paid by way or reinsurance or retrocession;
l. Taxes, fees or charges for the registration of motor vehicles and for the issuance
of all kinds of licenses or permits for the driving thereof, except tricycles.
m. Taxes, fees or charges on Philippine products actually exported, except as
otherwise provided herein;
n. Taxes, fees, or charges on Countryside and Barangay Business Enterprises and
Cooperatives duly registered under R.A. 6810 (KALAKALAN) and R.A. 6938
(Cooperatives Code of the Philippines) respectively; and
o. Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities, and local government units. (Sec. 133 LGC)
Section 44. Non-Tax Revenues. Aside from revenues that they may generate through
their powers of taxation, the LGU enjoy or have access to non-tax revenues from the
following sources:
a. Proceeds of fees and charges that they impose in the exercise of their regulatory
and proprietary powers;
b. Shares in the revenues of the national government, including their share in
national wealth for resources within their territory and other sources defined by
law; and
c. Other receipts from disposal of assets and from donations and contributions.
Annex 3 shows the summary of the non-tax revenues that may be levied by provinces,
municipalities and cities.
Section 45. Fees and Charges. In the same manner as local taxes, it is the sanggunian
which is empowered to impose local fees and charges through appropriate ordinances.
53
a. Fees
1) Basis of Fees. Fees are collected by an LGU in the exercise of its police
powers. They are imposed in relation to the services rendered in regulating
business and other activities within its jurisdictions, such as the privilege
to operate an establishment or the practice of a profession. The imposition
of a fee must be accompanied by the performance of corresponding
regulatory functions, or else the fee is unjustified.
2) Amounts that May Be Imposed. Fees should be imposed at rates that are
considered reasonable. The reasonableness of a fee is commonly
understood to mean that which should be more or less equated to the cost
of issuing the permit or license and the cost of surveillance and services
rendered in relation to the business or activity regulated. It is therefore
important for LGUs to prepare cost-computation schedules to support the
rates of fees established. Business gross receipts and capitalization are not
allowed as basis for determining the amount of fees, since they are
unrelated to the cost of regulation.
3) Beneficiaries of Regulatory Services. There are two general categories

of regulatory services delivered by the LGUs:
a) Those whose beneficiaries are in mass, whose pricing therefore

can not be allocated to individual (for instance, traffic
enforcement); and
b) Those whose beneficiaries can be readily identified. The rates

under this category can be more easily determined and thus set at
reasonable levels. LGUs must be judicious, however, in selecting
and identifying the proper subjects for service fees.
b. Charges. LGUs can also impose charges for the use of their facilities. Many
LGUs own ferries, markets, slaughterhouses, hospitals, utilities, and toll roads and
bridges. While many such facilities and services have been assumed by the
private sector, some LGUs prefer to continue to operate them directly for two
reasons:
1) It is strategically beneficial to the community as a whole and/or

2) The private sector has not taken interest and prefers that these
responsibilities continue to be performed by LGUs
The different fees and charges that may be levied by provinces, municipalities and cities
have been presented in Sections 38, 39 and 40 of the Manual.
54
Section 46. Shares in the Proceeds of National Taxes. By provision of law, the LGUs
share in the income generated by the National Government from all taxes and revenue
sources:
a. Internal Revenue Allotment (IRA)

b. Tobacco Excise Tax
c. Proceeds from the utilization of National wealth in their territories and
d. Special shares from other national taxes, particularly on ecozones and on
specified portions of the Value Added Tax.
Section 47. The Internal Revenue Allotment (IRA)
a. General Provisions on the IRA – LGUs shall have a share in the national
internal revenue taxes based on the collections of the third fiscal year preceding
the current fiscal year as follows:
1) Thirty percent (30%) on the first year of the effectivity of this Code;
2) Thirty-five percent (35%) on the second year; and
3) Forty percent (40%) on the third year and thereafter.
In the event that the National Government incurs an unmanageable public sector
deficit, the President is authorized, upon the recommendation of the Secretary of
Finance, Secretary of Interior and Local Government, and Secretary of Budget and
Management, and subject to consultation with the presiding officers of both the
House of Congress and the presidents of the liga, to make the necessary adjustments
in the internal revenue allotment of local government units but in no case shall the
allotment be less than thirty percent (30%) of the collection of national internal
revenue taxes of 1989.
(Sec. 284, LGC)
Public sector deficit means the shortfall of revenues against disbursements of the
National Government, the 14 major government corporations, the government
financial institutions, all the LGUs, the Bangko Sentral ng Pilipinas, the social
security institutions (Notes to Sec.284, LGC, Local Government Taxation, Ursal)
b. Allocation of LGUs – The share of LGUs in the internal revenue allotment shall
be allocated as follows:-
1) General Allocation:
a) Provinces –Twenty-three percent (23%)

b) Cities – Twenty-three percent (23%)
c) Municipalities – Thirty-four percent (34%)
d) Barangays – Twenty percent (20%)
55
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 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) The share of a barangay with a population of not less than one

hundred (100) inhabitants shall not be less than Eighty Thousand
Pesos (P80,000.00) per annum chargeable against the twenty
percent (20%) share of the barangay from the internal revenue
allotment;
b) The balance shall be allocated on the basis of the following

formula:
i. On the first year of the effectivity of this code:

 Population – Forty percent (40%) and
 Equal Sharing – Sixty percent (60%)
ii. On the second year:

 Population – Fifty percent (50%)
 Equal Sharing – Fifty percent (50%)
iii. On the third year and thereafter:

 Population – Sixty percent (60%)
 Equal Sharing – Forty percent (40%)
c. Automatic Release of IRA Share– The share of each local government unit shall
be released, without the need of any further action, directly to the provincial, city,
municipal or barangay treasurer, as the case may be, on a quarterly basis within
five (5) days after the end of each quarter, and which shall not be subject to any
lien or holdback that may be imposed by the National Government for whatever
purpose (Sec. 286, LGC). For this purpose, the comprehensive Advice of
Allotment for IRA shares of LGUs for the whole year shall be released by the
DBM within the first ten (10) days of January of every year. The corresponding
Notices of Cash Allocation (NCA) and checks, however, may be released on a
monthly basis but in no case shall the total amount due any LGU for each quarter
be released beyond five (5) days after the end of the corresponding quarter (Art.
383(b), IRR).
56
d. Exemption to the Lien or Holdback of the IRA Share - Article 383 (c) of the
IRR to the LGC provides that 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 Code or other applicable laws and loan
contract 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.
e. Mandatory Appropriation for Local Development Projects – Each LGU shall

appropriate in its annual budget no less than twenty percent (20%) of its annual
internal revenue allotment for development projects. Copies of the development
plans of local government units shall be furnished the Department of Interior and
Local Government. (Sec 287, LGC)
Section 48. Share in Tobacco Excise Tax – Farmers in the provinces producing
Virginia tobacco shall receive, under R.A. 7171, the amount of fifteen percent (15%) of
excise taxes on local tobacco cigarettes for purpose of projects directly benefiting the
tobacco farmers. This is to be distributed to the provinces with at least 1 million kilos of
production volume.
Section 49. Share in the National Wealth – 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)
a. Amount of Share of LGUs from the National Government – LGUs shall, in

addition to the IRA, have a share of forty (40%) of the gross collection derived by
the national government during the preceding fiscal year from the following:
1). Mining taxes, fees, or charges, including related surcharges, interests, or

fines 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 (Sec. 290, LGC).
2) Administrative charges 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
LGU 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, LGC)
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b. Amount of Share of LGUs from Government Agencies and Government
Owned and Controlled Corporation – LGUs shall have a share based on the
preceding fiscal year from the proceeds derived by any national government
agency or government-owned and controlled corporation engaged in the
utilization and development of the national wealth within their territories. The
following formula shall apply, using the option that will produce a higher share
for the LGU:
1) One percent (1%) of the gross sales or receipts of the preceding calendar
year; or
2) Forty percent (40%) of the mining taxes, royalties, forestry and fishery
charges and such other taxes, fees or charges, including related surcharges,
interests, or fines that the government agency or government-owned and
controlled corporation would have paid if it were not otherwise exempt.
(Art. 388, IRR).
c. Allocation of Shares of LGUs from Government Agencies and Government

Owned and Controlled Corporations– LGU shares shall be distributed as
follows:
1) Where the natural resources are located in the province:
a) Province – Twenty percent (20%)

b) Component City/Municipality – Forty-five percent (45%) and
c) Barangay – Thirty-five percent (35%)
2) Provided, however, That where the natural resources are located in two (2)
or more provinces, or in two (2) or more component cities or
municipalities or in two (2) or more barangays, their respective shares
shall be computed on the basis of :
a) Population – Seventy percent (70%); and

b) Land area – Thirty percent (30%)
3) Where the natural resources are located in a highly urbanized or

independent component city:
a) City – Sixty-five percent (65%); and

b) Barangay – Thirty-five percent (35%)
4) Provided, however, That where the natural resources are located in such
two (2) or more cities, the allocation of shares shall be based on the basis
of :
58
a) Population –Seventy percent (70%); and
b) Land Area – Thirty percent (30%)
(Section 292, LGC)
d. Release of Shares of LGUs in the National Wealth – The computation and

release of the share of LGUs from collections derived by the National
Government shall be in accordance with the following procedures:
1) The computation of the forty percent (40%) share of each LGU in the
proceeds from the development and utilization of the national wealth from
the preceding year, indicating the corresponding share of each province,
city, municipality, and barangay where the national wealth is being
developed and/or utilized, shall be submitted by the revenue collecting
agencies to DBM not later than the fifteenth (15th) of March of each
ensuing year.
2) The allotment representing the share of each LGU shall be released

without need of any further action, directly to the provincial, city,
municipal, or barangay treasurers, as the case may be, on a quarterly basis
within five (5) days after the end of each quarter, and which shall not be
subject to any lien or holdback that may be imposed by the National
Government
(Art. 390 (a) & (b), IRR).
e. Remittance of Shares of LGUs from Government Agencies and Government-

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

The proceeds from the share of LGUs from the National Government under
Article 44(a) hereof shall be appropriated by their respective sanggunian to
finance local development and livelihood projects provided that at least eighty
percent (80%) of the proceeds derived from the development and utilization of
hydrothermal, geothermal, and other sources of energy shall be applied solely to
lower the cost of electricity in the LGU where such source of energy is located
(Art. 391, IRR).
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Section 50. Other Special Shares of LGUs from National Taxes –
a. Share of Ecozones – Businesses and enterprises in Special Economic Zones

shall pay gross income tax of five percent (5%) in lieu of all national and local
taxes. The equivalent of three percent (3%) shall accrue to the national
government and one percent (1%) to the host LGU. The remaining equivalent of
one percent (1%) is to be distributed to the areas contiguous to the economic
zone. (R.A. 7227)
b. Share from Excess Collection in Value Added Tax (VAT) – LGUs shall have
a share of twenty percent (20%) of the fifty percent (50%) of national taxes
collected in excess of the increase in collection for the immediately preceding
year. (Sec. 100, 102, 112-114, NIRC). The entitlement shall be distributed in
accordance with the situs rule, as provided in Section 50 of the LGC.
Section 51. Other Receipts – Other common sources of LGU revenues outside taxation,
fees and charges, and shares in national taxes and wealth are the following:
a. Sale of Fixed Assets – this pertains to the proceeds from the sale of fixed assets
like building, equipment machines, land and tangible assets.
b. Contributions – These include contribution in cash from any source.
c. Sales of Waste Materials – Proceeds from sales of waste materials such as office
records authorized to be disposed and other waste materials, except scrapped
fixed assets.
d. Interest Income – Interests earned by LGUs from bank deposits, and legitimate
loans and investments in interest-bearing instruments.
Section 52. Credit Financing .
a. General Policies –
1) LGUs may create indebtedness, and avail of credit facilities to finance

infrastructure and other socio-economic development projects in
accordance with the approved local development plan and public
investment program; (Sec 296, LGC)
2) LGUs may avail of credit lines from government or private banks and
lending institutions for the purpose of stabilizing local finances; (Sec 296,
LGC)
3) 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)
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b. Rationale of Credit Financing – Credit financing enables LGUs to pursue
development projects and benefits now, at current prices to be paid later. Socially
desirable projects generally require levels of funding that would take time to
accumulate if the LGU were to rely only on local savings. Given the pressure on
LGUs to constantly increase expenditures for the delivery of mandated services, it
is unlikely that many of them can actually accumulate the needed funds through
savings.
The legal basis for LGUs to avail of credit financing for local development is
embodied in Title Four, Book II of LGC, details of which are presented in BOOK V
of the MANUAL.
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Chapter 2. COLLECTION OF REVENUES AND OTHER RECEIPTS
Section 53. Fundamental Principles on Collection of Local Taxes, Fees, Charges

and Other Receipts
The following fundamental principles shall be applied in the collection of local taxes,
fees and charges and other impositions:
a. Local revenue is generated only from sources expressly authorized by law or
ordinance, and its collection shall at all times be acknowledged properly;
b. Collections shall, in no case, be let to any private person;
c. Revenues collected pursuant to the pertinent provisions of the LGC shall inure
solely to the benefit of, and be subject to disposition by, the LGU levying the
same unless otherwise specifically provided therein; and
d. 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 their safekeeping in conformity
with the provisions of law or ordinance.
Section 54. General Controls on Collection
a. Separation of Personal Money from Public Funds. – Local Treasurers and

other accountable officers shall keep personal monies separate and distinct from
local public funds in their custody and shall not make profit out of public money
or otherwise apply the same to any use not authorized by law or ordinance. Local
Treasurers/Cashiers are prohibited from holding positions as Cashiers or
Treasurers of savings and loan associations or any other association or
organization.
b. Acknowledgement of Collections/Issuance of Official Receipts. – No payment

of any nature shall be received by a collecting officer without immediately issuing
an official receipt in acknowledgement. The receipt may be in the form of cash
tickets and the like, or officially numbered receipts, subject to proper custody,
accountability, and audit. Where mechanical devices are used to acknowledge
cash receipts, the Commission on Audit may approve, upon request, exemption
from the use of accountable forms.
c. Prohibition against the Use of Temporary Receipts. – At no instance shall

temporary receipts be issued to acknowledge the receipt of public funds.
d. Collections Received Through the Mail and Procedures for Handling. –

Collections received through the mail shall be acknowledged, remitted or
deposited, and recorded just like other collections. Basic controls, however, shall
be maintained:
1) Incoming mail shall be opened by or under the supervision of a
responsible officer of the Records Section of the LGU. The Record
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Section shall prepare a list of all checks, money orders, or currency
received, listed individually and totaled, with spaces for information on
the acknowledgement of receipt of collections as well as its subsequent
remittance or deposit with authorized depositories. The copies shall be
certified correct by the Chief of the Records Section.
2) The duplicate copy shall be delivered immediately to the COA Auditor,
while the two (2) other copies and the covering letters shall be forwarded
directly to the Collecting Officer who shall verify the correctness of the
list, sign the acknowledgement portion on all copies and return the last
copy to the Record Section.
3) The Collecting Officer shall immediately issue an official receipt for each
and every collection in the list. The official receipt number and the date of
issue shall be recorded on the appropriate spaces of the original copy of
the list.
4) Collections arising therefrom shall also be included in the Report of
Collections and Deposits (RCD) 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.
5) The Treasurer shall insure that the official receipt was correctly and
properly recorded in the list. The payor’s copy of the official receipt shall
be forwarded to the Records Section which shall mail it to the payor with a
covering letter. The Treasurer shall, however, forward to the Records
Section for mailing, only the official receipts of cleared checks. In case of
dishonored checks, the procedures under the section on dishonored checks
herein shall be followed.
e. Acceptance of Checks in Payment for Taxes and the Government

Indebtedness. – Local Treasurers and other officers charged with the collection
of revenue or the receiving of monies payable to the government shall accept
payment for taxes due or other indebtedness to the government in the form of
checks issued in payment of government obligations upon proper endorsement
and identification of the payee or endorsee. Checks drawn in favor of the
government in payment of any such indebtedness shall likewise be accepted by
the officer concerned.
f. Drawing of Checks Payable to the LGU. – Checks in payment of taxes and

other indebtedness to the government must be drawn by the payor himself and
made payable to the LGU or LCE or Treasurer of the LGU. In the case of the
LCE or Treasurer, only the official title or designation of the LCE or Treasurer
concerned shall be stated as the payee. (Examples: City Government of Las
Pinas; City Mayor of Las Pinas, City Treasurer of Las Pinas). Under no
circumstance shall the following checks be accepted:
1) Checks drawn payable to the name of the Head of the LGU or any of its
officers;
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2) Checks drawn payable to “Cash” ;
3) Indorsed checks;
4) Post-dated checks; and
5) Stale checks.
g. Issuance of Official Receipts for Payment by Checks. – Before issuing an

official receipt, the collecting officer shall carefully scrutinize the check presented
to him and make sure that it is complete and correct particularly as to date,
signature or countersignature, and amount in words and figures. The collecting
officer shall, in all cases, indicate on the official receipt, the drawee bank,
number, date and amount of check as well as the complete name and address of
the payor to facilitate communication with him, if necessary. For purposes of
cross reference, the number and the date of the official receipt shall also be
indicated on the back of the check.
h. Issuance of a Separate Official Receipt in Case Amount Due is Less than the
Face Value of the Check. – No change shall be given to the payor in the event
that the amount of the taxes or dues is less that 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.
i. Payment by Private Check for Goods Delivered and Service Rendered by

Government Agencies. – When payment of goods or services is made by private
check, no such service shall be rendered or goods delivered by the LGU
concerned unless the check in payment thereof has been honored by the drawee
bank.
j. Prohibition Against Encashment of Private Checks with Public Funds. – At

no instance shall 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.
k. Transfer of Government Funds from One Officer to Another. – When

government funds are transferred from one accountable officer to another or from
an outgoing officer to his successor, it shall be done upon properly itemized
invoice and receipt which shall invariably support the clearance to be issued to the
relieved or outgoing officer.
l. Notification to the Auditor: Application for Relief from Accountability for

Government Funds. – When loss of government funds occurs while they are in
transit or the loss is caused by fire, theft, or other casualty or force majeure, the
officer accountable or having custody of the funds shall immediately notify the
Commission on Audit or the Auditor concerned, and within thirty (30) days or
such longer period as the Commission or Auditor may, in the particular case,
allow, shall present his application for relief, with the available supporting
evidence. Whenever warranted by the evidence, credit for loss shall be allowed.
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An officer who fails to comply with this requirement shall not be relieved of
liability or allowed credit for any such loss in the settlement of his accounts. The
procedures to be observed and the requirements in the application for relief from
accountability are discussed in the Section on Request for Relief from
Accountability in this Manual.
Section 55. Handling of Dishonored Checks Received as Collection

a. Dishonored Checks. – A check is said to be dishonored when upon its being duly
presented for payment, such payment is refused or cannot be obtained. Checks
may be dishonored for the following reasons:
1) Lack or insufficiency of funds
2) Format defects, such as, lack of countersignature, amount in words not the
same as amount in figures, etc. (GAO Circular 110)
b. Non-Acceptance of Check. – When a check is 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 payments. (Sec. 67 (2),
PD 1445; Sec. 79, GAAM, Vol. I)
c. Cancellation of Dishonored Checks - In case a check received as payment for

taxes or dues is dishonored, the official receipt covering the dishonored check
shall be immediately cancelled by the collecting officer and the fact of
cancellation noted by him on the duplicate (if no longer in his possession, by the
Accountant or Auditor, as the case may be) and the triplicate copies of the receipt,
in the following manner:
“Cancelled, ( date of notice of dishonor )

Check dishonored per Bank Debit Voucher/
Memo No. ___________ dated __________
The cancellation shall also be noted on all subsidiary records pertaining to the
transaction. The payor shall be immediately notified by the Treasurer concerned
of the cancellation and dishonor by means of a “Notice of Dishonor” as required
in the succeeding sections.
d. Notice of Dishonor - Section 89 of the Negotiable Instruments Law provides that

“xxx when a negotiable instrument has been dishonored by non-acceptance or
nonpayment, notice of dishonor must be given to the drawer and to each endorser,
and any drawer or endorser to whom such notice is not given is discharged.” It
is, therefore, indispensable that the notice of dishonor be given to the drawer (or
to the endorser-payor of the government check) to protect the interest of the
government. The local Treasurer neglecting or failing to give the required notice
of dishonor to the drawer (or to the endorser-payor of the government check)
who, as a result thereof is discharged from liability, shall be personally
answerable for the resulting loss suffered by the government.
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e. Form of Notice of Dishonor. – Ordinarily, a dishonored check is returned by the
depository bank concerned to the Treasurer who has deposited it, together with
the original of the debit memo. The Treasurer shall, within three (3) days,
accomplish the “Notice of Dishonor” and sign it in behalf of the LCE.
The notice of dishonor shall be prepared in five (5) copies and distributed as
follows:
Original - Drawer, delivered personally under receipt or sent by
registered mail with return card on the same day.
Duplicate - LCE
Triplicate - Local Accountant for the preparation of the required

Adjusting Journal Entry (AJE)
Quadruplicate - COA Auditor
Quintuplicate - Local Treasurer’s File
f. Action on Dishonored Checks. – Should the drawer of a dishonored check fail to

settle his account or deposit the amount sufficient to cover the same or to correct
the format defects, within five (5) days from receipt of the notice of dishonor, the
LCE upon the recommendation of the Treasurer, shall immediately transmit the
certified copies of dishonored check, debit memo from the bank and notice of
dishonor to the city or provincial prosecutor for the institution of the necessary
criminal or civil action as the circumstances may warrant.
g. Recording and Reporting of Dishonored Check by the Treasurer. – Upon

receipt of the debit memo and the dishonored check(s) from the bank, the
Treasurer shall cause the immediate photocopying of the dishonored checks and
recording in the cashbook. He shall record the dishonor by a credit in the
appropriate Cash in Bank cashbook with the following explanation: “To take up
the Journal Entry Voucher No. ______ dated ___________________, covering
dishonored check(s) No. ___________ for P_______________ acknowledged by
O.R. No. ______________ dated ______________.”
The dishonored checks shall be retained by the Treasurer who shall ensure its
safekeeping.
The Treasurer shall forward the debit memo and the photocopy of the dishonored
checks to the Accountant for the preparation of the journal entry voucher (JEV) in
three (3) copies. The Accountant shall furnish the Treasurer with a copy of the
duly approved JEV for the latter’s recording of the JEV No. in the entries
previously made in the appropriate Cash in Bank cashbook. The original copy of
the JEV taking up the dishonored checks and its supporting documents shall be
submitted to the Auditor and the duplicate copy shall be retained by the
Accountant.
The dishonored check(s) and corresponding cancelled official receipt shall also be
reflected in the individual taxpayer’s records/index cards and other records of
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collections maintained by the treasury. At the end of each month the Treasurer
shall prepare a report of dishonored checks in four (4) copies to be distributed as
follows:
Original - LCE
Duplicate - COA Auditor
Triplicate - Local Accountant
Quadruplicate - Local Treasurer’s file
h. Redemption of Dishonored Checks. – The following rules shall be observed

when a dishonored check is redeemed:
1) A dishonored check shall be redeemed by tendering payment in cash or by
certified check to the collecting officer concerned. No other mode of
payment shall be accepted.
2) Upon receipt of the cash or certified check, the collecting officer shall issue an
official receipt for the amount received by him. The nature of the payment to
be indicated shall be the same as that in the previous official receipt cancelled,
except that the following notation shall be placed on the receipt: “Previous
payment acknowledged by O.R. No. __________, dated ______________,
cancelled on (date of notice of dishonor).” Accordingly, the redemption of
the dishonored check shall be recorded in the cashbook together with other
collections.
3) 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.
The fine or penalty to be imposed shall be in pursuance to the duly approved
ordinance of the LGU concerned.
4) Upon redemption of the dishonored check in the manner herein prescribed, the
Treasurer shall return the check to the payor concerned only when the latter
first surrenders the previous official receipt therefor, provided that no case has
been filed yet. If the previous receipt is no longer available, a sworn
statement to the effect that it has been lost or misplaced should be submitted
by the payor. The official receipt surrendered shall forthwith be cancelled
and the same (or the affidavit) shall be forwarded to the accounting unit to be
attached to the corresponding JEV where the cancellation was recorded.
i. Custody of Dishonored Checks. – Pending their redemption, dishonored checks

shall remain in the custody of the 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 Treasurer shall immediately advise
the Auditor concerned with the transfer of custody of the checks.
j. Payors with Previously Dishonored Checks. – Whenever a payor has a record

of a previously dishonored private check drawn by him in payment of taxes and
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dues, even if such check has already been settled, any private check presented by
him shall no longer be accepted. In such cases, the payor shall be required to pay
only in cash or certified check.
The Treasurer shall make a list of payors whose checks have been dishonored and
shall circularize the list to all collecting officers under his jurisdiction.
Section 56. Control and Accountability for Official Receipts and Other
Accountable Forms
a. Revenue Collection and the Use of Accountable Forms. – The provincial, city,
municipal and barangay Treasurers will be responsible for the use of all
accountable forms invoiced to them and receipted by them in person or entrusted
by them to their designated collectors for care, custody and use. A Treasurer’s
accountability for accountable forms of all kinds is determined in connection with
the audit and examination of his accounts which show that each receipt is
properly accounted for:
1) By taking up in the accounts the amount shown to have been collected
therefrom;
2) By presenting the unissued and cancelled official receipts; and
3) By producing satisfactory evidence that they are in the hands of authorized
personnel.
b. Types of Accountable Forms. (Sec. 493, GAAM, Vol. II) – Accountable forms
used in acknowledging collections are of two classes: accountable forms with
money value, and accountable forms without money value.
1) The accountable forms with money value consist of the following:
Type of Form Utilization
(1) Cash Tickets, Accountable Forms For the temporary use of market spaces, parking
No. 55 (55A-F) areas and other income generating activities
where the issuance of a regular receipt is not
practicable
(2) Certificate of Transfer of Large Evidence of transfer of large cattle; when issued,
Cattle, Accountable Form No. 52 it supersedes the original certificate of ownership
(3) Certificate of Ownership of Large Evidence of original ownership of large cattle

Cattle, Accountable Form No. 53
(4) Marriage License Certificate, Issued to contract marriage

Accountable Form No. 54
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(2). The accountable forms without specific money value printed on the face
of each form consist of the following:
Type of Form Utilization
(1) Official Receipt, Accountable Form To acknowledge payment of taxes, licenses

No. 51 and other dues or fees to the government for
which no special accountable forms have been
authorized
(2) Real Property Tax Receipt, For acknowledgment of payment of real

Accountable Form No. 56 property taxes
(3) Slaughter Permit and Fee Receipt, Serves as permit, as well as official receipt
Accountable Form No. 57 acknowledging payment of fees for
slaughtering of large cattle
(4) City/ Municipal Burial Permit and Fee For the use as funeral permit, as well as
Receipt, Accountable Form No. 58 official receipt for fee collected
(5) Checks Serially numbered forms purchased from the

servicing bank for use in making
disbursements charged against the account
with the bank
(6) Community Tax Certificate, BIR For the use of individual taxpayers and
Form Nos. 0016 and 907 corporate entities, respectively
c. Issuance of Cash Tickets. LGUs shall devise their own system in the issuance of
cash tickets to ensure proper control, accounting and audit. Control measures
include but are not limited to the following:
1) Serial numbers may be assigned or the name or logo of the city or
municipality may be stamped at the back of the cash tickets before these
are issued to collectors assigned in public markets, parking areas or those
tasked to accept collections not acknowledged by the regular receipt or
other accountable forms;
2) The collector shall affix his initial and state the date of issuance in the cash
tickets before issuance;
3) The collector shall ensure the tearing off of cash tickets to avoid possible
re-issuance; and
4) Surprise inspection on the proper issuance of cash tickets shall be
conducted by the market administrator or his authorized representative.
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Cash tickets issued to transient vendors in the public market to acknowledge
market fees shall pertain only to the vendor buying the same and shall be good
only for the space or spaces of the market premises to which he is assigned. If the
vendor disposes of his merchandise by wholesale to another vendor, the latter
shall purchase new tickets if he desires to sell the merchandise even if in the same
space occupied by the previous vendor.
d. Issuance of Real Property Tax Receipts. Only one real property tax receipt
shall be issued to cover the payment of basic and additional tax accruing to the
Special Education Fund.
e. Name of Agency on the Face of Official Receipts. For purposes of control, all
official receipts being used by the LGU shall bear the name of the LGU printed or
stamped on the face thereof.
f. Preparation of Official Receipts. In preparing official receipts, all copies of

each receipt shall be exact copies or carbon reproductions in all respects of the
originals. Pre-numbered official receipts shall be issued in strict numerical
sequence.
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.
g. Accountability for Official Receipts. An official receipt is an accountable form

held in trust by the Treasurer or other person duly authorized to possess or have
custody thereof. He shall be responsible for its safekeeping, the proper and
authorized use or application thereof and the reporting of its use and condition,
and shall be liable for loss, damage or deterioration occasioned by negligence in
the keeping or use thereof.
h. Exclusive Jurisdiction of the National Printing Office. The National Printing

Office (NPO) shall have exclusive jurisdiction over the printing, binding and
distribution of all standard and accountable forms of provincial, city and
municipal government. Any requirement for printing services outside of the
exclusive jurisdiction of the NPO can be awarded by requiring the agency, subject
to government accounting and auditing regulations, to any private printer or may
be undertaken at the printing facilities of government agencies without the
necessity of securing a waiver or certification covering the same from the NPO.
i. Inspection of Accountable Forms Received from National Printing Office.

Upon receipt of accountable forms from the National Printing Office, the Local
Treasurer shall examine carefully each book or pad. He shall segregate any book
or pad found to contain defects, such as incorrect series of numbers, or missing
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leaves or sheets, etc. and present it to the Auditor/audit team together with a
statement of the defects and deficiencies noted.
The Auditor/audit team shall examine the book or pad and if he finds that they are
due to error in binding and printing which originated from the printing office, he
shall make proper notations on the book or on the defective sheet itself. He shall
also furnish immediately the Treasurer concerned with three copies of the
certification covering his action. The Treasurer shall use this certification in
support of a credit to his account for the missing or defective form thus noted by
the Auditor. The Treasurer, through the Auditor, shall send two copies of the
certificate to the head of the National Printing Office. These copies shall contain
the initials or numbers that are written on the respective card covers of the
defective books or pads, or on a slip covering in locating employees responsible
for the error or deficiency.
j. Use of Computer-Generated Official Receipts and Other Accountable Forms.

The use by LGUs of computer-generated official receipts and other accountable
forms in lieu of the NPO-printed forms shall require the prior approval of the
Commission on Audit. The reason for this requirement is to insure that all the
pertinent information and control features are substantially included on the face of
the computer-generated forms.
k. Custodianship of Accountable Forms. The Local Treasurer shall be the over-all

custodian of all accountable forms requisitioned by the LGU. He shall maintain
a complete record of the receipt, issue and transfer of accountable forms.
l. Permanent Record of Accountable Forms. Local Treasurers accountable for

receipts, and other accountable forms in their possession or in the hand of
deputies and other employee entrusted therewith, shall keep adequate permanent
record books which should show, among other things, the whereabouts of the
accountable forms with which they are charged, the name and title of the officer
or employee to whom such forms have been given, the evidence of the receipt and
subsequent sale and issuance of the same. The record books shall contain the
following column headings:
1) Booklet Number/Quantity (in case of official receipt without money
value)
2) Serial Number/Total Value (in case of official receipt with money value)
3) Name (in print) of accountable officer to whom issued
4) Signature of accountable officer
5) Date received by accountable officer
6) Date reported totally used, sold, issued
These columns will be utilized for recording consecutively all accountable forms
in the order that they are received by the Local Treasurer.
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m. Recording of Receipts of Accountable Forms in the Permanent Record Book.
When accountable forms are received in the Local Treasurer’s office, these will
be entered immediately after verification in the record book. The recording of
each batch of accountable forms received shall indicate the invoice number and
date, the date of receipt, quantity, inclusive serial number and/or total value of the
accountable forms.
n. Recording of Issues of Accountable Forms in the Permanent Record Book.

In the city and municipal treasuries where accountable forms are issued directly to
barangay Treasurers, collectors/tellers or other accountable officers, it is advisable
that only one unit of accountable form per denomination be recorded per line in
the record book. In other words, books of real property tax or other official
receipts, cattle registration certificates, burial permit receipts, etc., that are bound
as such, will be recorded in the record book one line per book per stub; and
unnumbered and unbound stock, as cash tickets, per quantity to each line in the
record book as in the opinion of the Treasurer will be sufficient to meet the daily
or weekly requirements of the particular barangay Treasurers, collector/teller or
other accountable officers, but with the total value per line. Recording in
provincial treasuries will be in larger quantities per line per denomination, since
issues will be mostly to municipal Treasurers for their stock and the provincial
collecting officers for their use.
When the column provided for ‘Date reported totally used, sold, issued’ of the
record book is not yet filled out, this indicates that the accountable forms are still
in the stock and the Treasurer concerned, or the officer in charge of the same, has
the said forms in his possession and is responsible for their safekeeping. When a
book or stub of receipts or sheet of cash ticket or any other quantitative unit of
other accountable forms in the hands of collector/teller or other accountable
officers has been partly issued and the balance is returned for any reason
whatsoever, the last column of the record book, ‘Date reported totally used, sold,
issued’, should be filled out, and the remaining unissued accountable forms
returned will again be entered in a new line in the record book as a new entry, in
the same way would it be entered if it were a new requisition.
o. Daily Issues of Accountable Forms. All accountable form beginning balances,

received, issued and on hand shall be reported in Box C of the Report of
Collections and Deposit. The collectors/tellers should submit to the provincial,
city and municipal Treasurer concerned, the stubs of the official receipts in their
hands for verification. The provincial, city and municipal Treasurer or his duly
authorized representative shall indicate his verification by affixing the signature at
the back of the triplicate copy of the last official receipt issued with the following
notation:
“Verified here: ______(Signature and Date)______.”
p. Requisition of Accountable Forms by Collectors/Tellers. Collectors and tellers

shall file requisitions of accountable forms for their use with the Treasurer
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through a Requisition and Issue Slip (RIS) (Annex 51). They shall be accountable
for all accountable forms issued to them. There shall be no transfer of
accountable forms between collectors and tellers.
q. Issuance of Accountable Forms to Accountable Officer. Accountable forms

shall be issued to bonded officers only in sufficient quantities based on their
actual needs but not to exceed three months use.
r. The Treasurer’s Reports of Accountability for Accountable Forms.

Collectors/tellers and other accountable officers shall render their report of
accountability for accountable forms in the Report of Accountability for
Accountable Forms at least once a month. Such report shall also be prepared in
the case of transfer of office or accountability by the accountable officer. The
Treasurer shall summarize these reports in the Consolidated Report of
Accountability for Accountable Forms.
The barangay Treasurer shall report on his accountability for accountable forms
using the Barangay Report of Accountability for Accountable Forms. The report
shall be prepared at the end of each month and upon transfer of accountability of
the barangay Treasurer. All accountable forms handled by him shall be reported
in the form, including under a separate caption, accountable forms issued to him
for his use as a deputized Treasurer and distributed in the manner prescribed in
the Barangay Accounting Manual.
s. Immediate Issuance of Notice of Loss of Accountable Forms. Any loss of

accountable forms shall immediately be reported be the accountable officer
concerned to the Treasurer who, at once, shall issue a circular or notice of loss for
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 exclusive serial numbers of the lost accountable forms and the place
or places where, and approximate dates, where the same were lost.
The circular or notice of loss shall be issued only for accountable forms specially
designed for the exclusive use of the LGU, the loss need not be circularized to
other units since said forms may not be used by these units.
The Treasurer is not precluded from undertaking other measures which in his
discretion may prevent the fraudulent use of the lost accountable forms, like the
publication of such loss in newspaper of general circulation.
An accountable officer found to have caused the issuance of official receipts

reported by him to have been lost in the performance of his duties, and for which
the money value of the official receipts in question was not remitted, shall be
liable therefor without prejudice to the filing of administrative and criminal
charges against him in accordance with the provisions of Civil Service rules and
regulations and penal laws.
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t. Submission to COA Auditor of Obsolete, Spoiled, Cancelled Accountable
Forms. Accountable officers shall submit to the unit Auditor all obsolete, spoiled,
and cancelled official receipts and other accountable forms for inspection and
destruction. Under no circumstances shall they destroy on their own, accountable
forms of any description then be relieved from any accountability.
In the case of obsolete accountable forms with or without fixed money value, the
accountable officer shall submit to the unit Auditor an inventory in four copies
showing the following:
1) The denomination and the total value of the forms; and
2) The reason for the damage or cancellation of the form, the name of the
officer or employee responsible.
The Auditor or his authorized representative shall promptly inspect and destroy
the accountable forms, and make a certificate on such actions below the affidavit
or inventory. He 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 and retain the other copy
for file. The unit Auditor shall retain the original copy.
In the case of spoiled or cancelled accountable forms which do not bear fixed
money value, such as printed official receipts, Gen. Form 51, etc., the accountable
officer shall also submit the cancelled original and duplicate copies with such
cancellation properly noted on the record or abstract of collection concerned.
Where the damage or cancellation of accountable forms is due to negligence or

lack of care, appropriate proceedings will be instituted against those responsible
as facts in each case may warrant.
Section 57. Daily Turnover and Verification of Collections.
a. Turnover of Collections - At the close of the business day, collectors/tellers shall

turn over all their collections intact to the Treasurer/Cashier. They shall
accomplish the Report of Collections and Deposits (RCD) in four copies.
Barangay Treasurers deputized to collect taxes imposed by provinces, cities, and
municipalities shall follow the same procedure in submitting their collections to
the Treasurer/Cashier concerned.
In the case of collectors assigned to the field, where travel time from their places
of assignment to the Treasurer’s office is more than one day, turn over of
collections shall be made at least once a week or as soon as the collections reach
P5,000.00.
b. Verification of Collections and Accountable Forms. – The Treasurer/Cashier

shall verify the RCD, check the statement of accountable forms as to initial
balances on hand, receipts, issues and the ending balances on hand; make a
physical count of the accountable forms remaining in the custody of the
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collector/teller and check the same against the new balances on hand column. He
shall indicate his verification by affixing his signature at the back of the triplicate
copy of the last official receipt issued. He shall count the money turned over to
him and sign the certification and receipt portion of all copies of RCD.
Section 58. Designation of Liquidating Officers for Collections. – The Local

Treasurer may designate liquidating officers from among the collectors/tellers whenever
necessary.
a. Collectors/tellers shall turn over their collections to their designated liquidating
officer. The 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. He shall also accomplish the RCD
in four copies to summarize the collections turned over to him by the
collectors/tellers as well as his own collections.
c. The liquidating officer shall turn over intact the cash collections to the
Treasurer/Cashier/Cash Receipts Division together with the original and two
copies of the RCDs of collectors/tellers and the duplicates of the official receipts
issued. The Treasurer/Cashier 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 copies of
the RCD of liquidating officer and RCDs of collectors/tellers shall be retained by
the liquidating officer.
d. The Treasurer/Cashier shall deposit all collections and prepare the RCD
summarizing the collections and deposits for recording in his cashbook and
submission to the Accountant, accompanied by all supporting documents.
Section 59. Procedures and Controls on Deposit of Collections with Authorized

Depository Banks
a. Depository Accounts in Banks. Provincial, city and municipal 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 accounts shall accrue exclusively
thereto.
b. Opening of Depository Accounts. Provincial, city and municipal Treasurers

shall open and maintain, in the name of their respective LGUs, separate
depository accounts for each fund with a government-owned bank located in or
nearest the locality. In case there is no government bank located in or nearest the
locality, depository accounts may be opened with a bank duly designated by the
Bangko Sentral ng Pilipinas as government depository, upon prior authority of the
Sanggunian and approval of the LCE.
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The barangay shall maintain only one depository account in the name of the
barangay, either as a trust fund with the city/municipal treasury, or in a current
account with a government-owned bank located within or nearest its area of
jurisdiction. In case there is no government bank located in or nearest the locality,
depository accounts may be opened with a bank duly designated as government
depository by the Bangko Sentral ng Pilipinas. The choice of a depository for
barangay funds shall be subject to the authorization of the Sangguniang barangay
and approval of the Punong Barangay.
c. Deposit of Collections with the Banks. The Treasurer/Cashier shall deposit

intact all his collections as well as all collections turned over to him by the
collectors/tellers with the authorized depository bank daily or not later than the
next banking day. He shall record all deposits made in the Cashbook- Cash in
Treasury and Cashbook-Cash in Bank.
d. The barangay Treasurer shall deposit all collections intact with the city/municipal
Treasurer, or in a depository bank account maintained in the name of the
barangay, within five (5) days from receipt thereof. He shall likewise record all
deposits in the Cashbooks maintained for Cash in Treasury and Cash in Bank.
e. Deposit of Field Collections. Collections made by field collectors shall be

remitted to 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 Treasurer, may deposit the
collections in the authorized depository bank near the field office of the LGU.
f. Time Deposit Accounts. Provinces, cities, municipalities and barangays may

deposit with duly authorized government depository banks idle funds in the
General Fund under time deposit accounts, upon prior authority of the Sanggunian
and approval of the LCE.
Idle funds shall mean available cash which the LGU can freely invest in
government securities and/or fixed term deposits with authorized government
depository banks, after having provided or earmarked funds for regular and
recurring operating expenses like salaries and wages, repairs and maintenance,
inventories and supplies, debt servicing, programmed disbursements for capital
outlays and other non-recurring expenses, within the context of the cash operating
cycle of the LGU. Unremitted collections and funds set aside for the payment of
obligations to other LGUs, government agencies and private entities shall not
form part of idle funds.
g. Bank Statements/Snapshots. – Bank statements and/or snapshots of bank

transactions transmitted to the Local Treasurer by the depository bank shall be
immediately forwarded to the Local Accountant who shall be responsible for the
preparation of the bank reconciliation statement. If the bank statements are sent
by the bank directly to the local accountant, a copy thereof should also be
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furnished immediately the local treasurer. In case the bank statements are not
readily available, a snapshot of the LGU transactions may be obtained by the local
treasurer from the bank as basis in updating/ recording of entries in the
Treasurer’s Cashbook and for reconciliation purposes.
h. Remittance of Collections to Other Government Units. – Collections made by

provincial, city, or municipal Treasurers for other government units shall be
promptly remitted to the government units concerned. At least once a week, the
Accountant concerned shall prepare the disbursement vouchers covering such
remittances and the supporting statements containing the complete descriptions of
the collections being remitted. The disbursement vouchers and their supporting
documents, duly certified by the Accountant, shall be forwarded to the LCE or the
duly authorized official for approval. The disbursement vouchers and statements
shall be submitted within two (2) days to the Treasurer for the preparation of the
checks to cover the remittances. The checks duly approved or signed, each
accompanied by a copy of the corresponding statements, shall be transmitted to
the government units concerned immediately but not beyond the period prescribed
by said units. The recipient LGUs/national agencies/financial institutions or their
duly authorized collecting agents shall acknowledge the remittances by the
issuance of official receipts.
i. Remittances of Collections to Other LGUs thru Inter-Bank Transfer – Aside

from check remittances, collections made by LGUs intended for other local
government units, such as the share of the municipality or province from the
collections of real property taxes, may be remitted to the concerned LGU by
means of bank-to-bank transfer. This method facilitates the transfer and receipt of
the LGUs’ corresponding shares in real property taxes and other taxes. The
procedure in the inter-bank transfer shall follow the same procedure as in the
remittance thru the check as follows:
1) Preparation of disbursement voucher with supporting documents by the

Accountant at least once a week;
2) Approval of the DV by the LCE or duly authorized official;
3) Preparation by the Cashier/Treasurer of the Advice for Bank Transfer,

duly approved by the LCE, authorizing the transfer of funds from the bank
account of the province/city/municipality for credit to the bank account of
the province/municipality/barangay.
4) Acknowledgment by the recipient LGU of the receipt of the fund transfer

by furnishing the remitting LGU a copy of the bank credit advice/memo.
To illustrate the process of tax collection, the narrative procedures on the collection,
remittance, deposit and recording of Real Property Tax is shown in LTO Annex 4 of the
Manual.
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Section 60. Maintenance and Use of the Cashbook by Local Treasurers, Cashiers,
Liquidating Officers, Tellers, Collectors and Other Local Accountable Officers
a. The Treasurer’s Cashbooks.– The Treasurer shall maintain the following

cashbooks:
1) Cashbook– Cash in Treasury (LTO Form 5). This cashbook shall be

used by the Treasurer/Cashier to record the daily collections (Debit
column), and deposits to the bank (Credit column) based on the Report of
Collections and Deposits (RCD). The cashbook shall be maintained by
fund and shall be updated and balanced daily.
2) Cashbook – Cash in Bank (LTO Form 6). This cashbook shall be used
by the Treasurer/Cashier to record all deposits of collections (Debit
column) and withdrawals from the bank thru issuance of checks (Credit
column) for the day. Separate cashbook shall be maintained for each
depository bank account and by fund, and shall be updated and balanced
daily. .
3) Cashbook–Cash Advances (LTO Form 7). This cashbook shall be used

by the Treasurer/Cashier/Disbursing Officer to record cash advances
received (Debit column) and payments, refunds and adjustments (Credit
column), and the balance (Balance column).
b. The Liquidating Officer’s Cashbook (LTO Form 8). This cashbook shall be
used by designated liquidating officers to record all collections turned over to
him/her by tellers and field/market collectors (Debit column), and remittances to
the Cashier/Treasurer (Credit column). Separate cashbook shall be maintained for
each fund, and shall be updated and balanced daily.
j. The Teller’s/Collector’s Cashbook (LTO Form 9). This cashbook shall be

maintained by individual tellers, market collectors, field collectors and other
authorized personnel receiving collections outside of the local government office,
to record all collections received (Debit column) and all remittances to the
designated Liquidating Officer (Credit column).
k. Daily Recording in the Cashbook. At the end of each day, all transactions shall
be entered in the appropriate cashbook. For Cashbook – Cash in Treasury,
Cashbook-Cash in Bank and Cashbook-Cash Advances, the balances obtained at
the end of the day shall be reconciled with the cash on hand. At the end of the
month or when required to do so by competent authority, the month’s account and
transactions shall be closed, ruled, and the accountable officers will accomplish
the certificate of transactions in the respective cashbooks.
a. Accountable Officer’s Certificate of Transactions in the Cashbook.

Treasurers/Cashiers entrusted by reason of their duties with collections, custody
and/or disbursement of local funds shall at the end of the month, or when required
to do so by proper competent authority, accomplish the following certificate:
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“I HEREBY CERTIFY that the foregoing is a correct and complete record
of all my cash and depository transactions had by me in my capacity
as_____(designation)______ of ______(Name of the LGU)_____, during the
period from ____________________, 200_, to _____________________, 200_,
inclusive, as indicated in the corresponding columns.
Signature Over Printed Name
________________________
Title
______________________, 2000”
b. Reconciliation of Cashbook Balances. All accountable officers required to

maintain a cashbook shall reconcile his cashbook balances every end of the month
or as the need arises with the subsidiary accounting records. A certification of
balances as appearing in the subsidiary accounting records shall be obtained from
the Accountant at the end of the month or as required by competent authority.
c. Safeguarding of Cashbook. At the close of office either for the noon break or at
the end of the day, all cashbooks shall be locked up in fire-proof vaults or safes.
This duty devolves upon the officer entrusted by law to keep such cashbooks
irrespective of whether he is or not the one personally making the entries of the
cash transactions which are to be recorded therein.
Section 61. Forms and Reports Used by Local Treasury Officials
a. Report of Collections and Deposits (LTO Form 12). The Report of Collections
and Deposits (RCD) shall be prepared daily by the following:
1). Tellers/Collectors – for collections received and remittances made to the
designated Liquidating Officer, if any, or to the Cashier/Treasurer.
2) Liquidating Officers – for collections received from tellers/collectors and

remittances made to the cashier/treasurer.
3) Treasurer/Cashier – for collections received from liquidating officers,

taxpayers and other sources, and deposits to the depository banks.
The RCD shall include a report of accountability for accountable forms showing
the name of forms and number, beginning balance, received, issued and ending.
Also, it shall contain summary of collections and remittances/deposits and
breakdown of collections as to cash and details of checks received.
The accountable officer shall certify as to the correctness of the report. The
liquidating officer/treasurer shall verify the report and acknowledge receipt of
collection and remittances.
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For real property tax payments, separate RCDs shall be prepared for collections
pertaining to the Basic Tax and the Additional Tax accruing to the Special
Education Fund. In case of real property tax payments in municipal treasuries,
additional copies of RCDs for the Basic and SEF shall be prepared for submission
to the Provincial Treasurer as reference in the computation of the province’s share
therefrom. The procedures to be followed in the filling-up the form shall be the
same.
The distribution of the RCD is as follows:

Original - Auditor
Duplicate - Treasurer
Triplicate - Collecting Officer
Quadruplicate - Liquidating Officer when one is so designated
Additional Copy - Local Treasurer
b. Report of Accountability for Accountable Forms (LTO Form 10). 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 as of the end of the month.
Treasurers, 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.
c. Consolidated Report of Accountability for Accountable Forms (LTO Form

11). The Consolidated Report of Accountability for Accountable Forms
(CRAAF) shall be prepared by the Treasurer to consolidate the RAAFs of
accountable officers. The consolidated report together with the individual reports
shall be submitted to the unit auditor concerned not later than the fifth day of the
ensuing month for verification.
d. Other Reports/Records Required by the Bureau of Local Government

Finance. – The following reports/records shall be prepared and submitted by the
Treasurer to the Bureau of Local Government Finance:
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Title of Report Frequency of
Submission
1. Statement of Receipts and Expenditures Quarterly

2. Statement of Receipt Sources Quarterly
3. Economic Enterprises Statement of Financial Operations Quarterly
4. Municipality/City Quarterly Report on Real Property Tax Quarterly
Collections
5. Provincial Quarterly Report on Real Property Tax Collections Quarterly
6. Statement of Expenditures Quarterly
7. Statement of Indebtedness, Payment and Balances Quarterly
8. Quarterly Report of Collections on Business Taxes, Fees and Quarterly
Charges and Economic Enterprise
The following financial records, however, should also be maintained by the Local
Treasurer for monitoring and control purposes:
1). Record of General Collections

 Tax on Business
 Regulatory Fees
 Other Taxes
 Service or User Charges
 Aids and Donations
 Loans and Borrowings
 Fund Transfers
2). Record of Real Property Tax Collections
3). Real Property Tax Account Register (RPTAR)
The detailed discussion on the preparation and submission of the Statement of

Receipts and Expenditures (SRE), formerly titled Statement of Income and
Expenditures or SIE, and all supporting schedules, reports, and records is
contained in a separate Manual entitled Manual on the Improved Statement on
Receipts and Expenditures. The format for the Statement of Receipts and
Expenditures is shown in Annex 14 of the Manual.
Section 62. Policies, Rules and Procedures on Barangay Collections and

Remittances and Deposit
a. Basic Policies on Receipt of Barangay Collections
1) The Barangay Treasurer (BT) shall be responsible in handling collections

of income and other receipts of the barangay and the deposit of the same
with Authorized Government Depository Bank (AGDB)
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2) All collections, either in cash or in check, shall be acknowledged by the
issuance a pre-numbered Official Receipt (OR) – General Form or its
equivalent like the Real Property Tax Receipts (RPTR) and Community
Tax Certificate (CTC) subject to property custody, accountability and
audit
3) Temporary or provisional receipts shall no be issued to acknowledge
collections
4) All accountable forms shall be secured from the City/Municipal Treasurer
5) All checks shall be in the name of the barangay
6) Endorsed checks shall not be accepted as payment of obligations to the
barangay
7) For checks received, the OR number and date of issue shall be indicated at
the back of the check for reference purposes
8) All particulars in the OR shall be filled out. Duplicate and triplicate copies
of the OR shall be the exact carbon copy of the original
9) Overages discovered during the cash count/cash examination shall be
receipted and added to the accountability of the BT
10) Cash shortages, including the loss of cash through firce majeure, theft,
robbery, fire, etc. shall be deducted from the total cash account and the
BT/Accountable Officer (AO) shall be held personally accountable,
pending the result of the Request for Relief from Cash Accountability
submitted to Commission on Audit (COA) and
11) All collection by the BT for the barangay shall be reported in the
Summary of Collections and Deposits (SCD)
b. Policies and Procedures or Deposit of Barangay Collection
1) The BT shall deposit all his collections including those turned over by the
Deputized Barangay Collection (DBC) with AGDB intact daily or not
later than the following banking day. In case of barangay where travel
time to the depository bank is more than one day, deposit of collections
shall be made at least once a week or as soon as the collections reach P
10,000.00
2) In the absence of an AGDB, deposits may be made in any bank nearest the
barangay authorized by the Monetary Board (MB) of the Bangko Sentral
ng Pilipinas (BSP)
3) The selection of a depository bank other than the AGDB shall be covered
by a Resolution of the Sanggunian Bayan (SB) and approved by the
Punong Bayan (PB). This Resolution shall indicate the name of the bank,
the type of deposit to be maintained, whether current, savings or time
deposit and the authorized signatories to the checks/fund withdrawals and
shall be attached to a letter of request signed by PB for authority from MB
of BSP to deposit to a bank other than the AGDB
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4) Funds earmarked for future operation which are not immediately needed
may be transferred to time deposits for the account of the barangay.
Placement in time deposits shall be duly authorized by the SB and
approbed by the PB. Certificate of time deposit/bank book shall be in the
name of the barangay. Upon maturity, the check for the proceeds shall be
issued in the name of the barangay. Pre-termination of time deposit or its
renewal/roll-over shall have prior authorization of the SB and approval of
the PB.
5) In case of dishonored check, Notice of Dishonor shall be immediately sent

to the payor upon receipt of the Debit Memo (DM) and the dishonored
check from the bank
6) The original of the dishonored check and a copy of the bank DM shall
remain with the BT, and
7) All deposit by the Barangay Treasurer for the barangay shall be reported
in the Summary of Collections and Deposits
c. Policies and Procedures on the Receipt and Remittance of Collections by the

Barangay Treasurer as deputized by the City/Municipal Treasurer
1) The City/Municipal Treasurer shall issue an Authority deputizing the

Barangay Treasurer to collect Real Property Tax (RPT), Community Tax
(CT), etc. on his behalf
2) Collections made by the Barangay Treasurer on behalf of the

City/Municipal Treasurer as deputized, shall be remitted intact daily to the
City/Municipal Treasurer.
3) For barangay where travel time to the City/Municipal Treasurer’s Office is

more than one (1) day, remittance of collections shall be made at least
once a week , or as soon as the collections reach P 5,000.00
4) All remittances shall be supported by a Summary of Collections and

Remittances (SCR), and
5) The Barangay Treasurer shall be accountable for all the forms received
from the City/Municipal Treasurer for use in the collection.
d. Policies and Procedures on the Receipt and Remittance of Collections by the

Barangay Collector as deputized by Sangguniang Bayan
1) The Sangguniang Bayan shall issue a resolution deputizing the barangay

collector to collect market fees, parking fees, community tax, etc. on
behalf of the Barangay Treasurer
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2) Collections of Deputized Barangay Collector shall be remitted daily to the
Barangay Treasurer
3) All remittances shall be supported with Summary of Collections Report

and Report of Accountability for Accountable Forms (RAAF), and
4) The Deputized Barangay Collector shall be accountable for all forms

received from the Barangay Treasurer.
Section 63. . Direct Remittance to Barangay Bank Account. Credit Memo (CM)
received from the bank for direct remittance made by Local Government Units (LGUs) or
the Department of Budget and Management (DBM) for the barangay share in Real
Property Tax (RPT) or the Internal Revenue Allotment (IRA), respectively, shall be
recorded direct to the Cash on Hand and in Bank Register (CHBReg) and in the Cash
Receipts and Deposits Register (CRDReg)
Section 64. Recording of Receipt, Deposits and Remittances of Barangay

Collections
a. Recording in the summaries
1) Summary of Collections and Deposits (SCD)
a) Collections and deposits by the barangay treasurer of the barangay

shall be recorded in the Summary of Collections and Deposits (LTO
Form 19) daily or the transaction occurs.
b) Issued official receipts including cancelled ones shall be recorded in
correct numerical sequence.
c) Deposits shall be based on validated deposit slip (VDS) which shall be
recorded as deposits are made.
d) Collections and remittances by the deputized barangay collector
recorded in the Summary of Collections and Deposits shall be
recorded in the Summary of Collections and Deposits of the Barangay
Treasurer daily or as transaction occurs.
e) Collections and remittances by the deputized barangay collector
recorded in the Summary of Collections and Remittances shall also be
recorded in the Summary of Collections and Deposits.
f) The Summary of Collections and Deposits shall be sub-totaled daily
g) The daily sub-totals of the Summary of Collections and Deposits shall
be recorded in the Cash on Hand and in Bank Registers maintained by
the Barangay Treasurer.
h) Weekly, the Summary of Collections and Deposits shall be totaled,
balanced and ruled and submitted to the BRK supported by the
duplicated copies of the official receipts issued and the original of the
validated deposit slips.
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i) Receipt of the certified Summary of Collections and Deposits and its
supporting documents shall be acknowledged by the BRK, and
j) The Summary of Collections and Deposits shall serve as basis of the
BRK in recording the weekly collections and deposits in the Cash
Receipts and Deposits Register.
2) Summary of Collections and Remittances (SCR)
a) Barangay Treasurer as deputized by City/Municipal Treasurer
i. Collections of Barangay Treasurer shall be recorded daily in

the Summary of Collections and Remittances-Barangay
Treasurer (LTO Form 20) or as a collection is made.
ii. Issued official receipts, community tax certificates, real
property tax receipts including cancelled ones shall be recorded
in correct numerical sequence.
iii. Remittance of collection to the City/Municipal Treasurer shall
be covered by a certified Summary of Collections and
Remittances supported by the duplicate copies of the issued
official receipts, and
iv. Remittances shall be done daily, which shall be acknowledged
by the City/Municipal Treasurer in the appropriate portion of
the Summary of Collection and Remittance. For a barangay
where the travel time to the City/Municipality is more than one
day, remittance of a collections shall be made at least once a
week or as soon as collection reaches P 5,000.00
b) Barangay Collector as deputized by Sangguniang Bayan (SB)
i. Collections of Deputized Barangay Collector as deputized by

the Sangguniang Bayan shall be recorded daily in the Summary
of Collections and Remittances-Deputized Barangay Collector
(LTO Form 21) as collections are made
ii. Issued official receipts and accountable forms with money
value shall be recorded in batches showing the inclusive serial
numbers (if available), quantity issued and the total amount
collected
iii. Remittance of collections to the Barangay Treasurer shall be
covered by the certified Summary of Collections and
Remittance supported by duplicate copies of the official
receipts issued, and
iv. Remittances shall be done daily which shall be acknowledged
by the Barangay Treasurer in the appropriate portion of the
Summary of Collections and Remittances
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b. Recording in the Registers
1) Cash Receipts and Deposits Registers (CRDReg)
a) The BRK shall record weekly all receipts in the Cash Receipts and
Deposits Register (LTO Form 15) based on the Summary of
Collections and Deposits (SCD.)
b) Bank credits and interest earned shall be recorded in the CRDReg by
the BRK, based on the bank Credit Memo (CM)
c) At the end of the month, the CRDReg shall be totaled, balanced, ruled
recapitulated and certified, and
d) The certified CRDReg together with the Summary of Collections and
Deposits shall be submitted to the City/Municipal Accountant on or
before the 5th day of the following month.
2) Cash on Hand and in Bank Register (CHBReg)
a) The Barangay Treasurer shall record all collections and deposits in the
Cash on Hand and in Bank Register (LTO Form 16) daily based on the
Summary of Collections and Deposits.
b) Bank credits/charges per Debit Memo (DM/CM), interests earned and
withholding taxes as reflected in the bank statement/passbook shall be
recorded in the CHBReg by the Barangay Treasurer
c) At the end of the month, the CHBReg shall be totaled, balanced, ruled
recapitulated and certified
d) The certified CHBReg shall be submitted to the City/Municipal
Accountant on or before the 5th day of the following month, and
e) Balance on hand and in bank shall be forwarded to the next month’s
CHBReg.
3) Report of Accountability for Accountable Forms (RAAF)
a) The Barangay Treasurer shall prepare the Report of Accountability for

Accountable Forms (LTO Form 17) to report the receipts and
issuances of accountable forms and the outstanding balance under his
custody.
b) The Deputized Barangay Collectors shall also prepare and submit their
individual RAAF daily to the Barangay Treasurer to summarize the
receipts and issuances of accountable forms under their custody.
c) The Barangay Treasurer shall consolidate the individual RAAF
submitted by the Deputized Barangay Collectors with his own RAAF
and shall submit the certified Consolidated Report of Accountability
for Accountable Forms (LTO Form 18) to the BRK.
d) The BRK shall certify the consolidated Report of Accountability for
Accountable Forms and submit to the City/Municipal Treasurer on the
5th of the following month.
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The detailed narrative flow of procedures on the receipt, deposit and recording of
Barangay collections are shown in LTO Annexes 22, 23, 24, and 25.
Chapter 3. TREASURER’S EXAMINATION OF BOOKS OF ACOUNTS AND

PERTINENT RECORDS OF BUSINESSMEN
Section 65. General Provisions – The following shall govern the examination by the
local treasurer of books of accounts and pertinent records of businessmen:
a. Person Responsible for the Examination of Books of Accounts and

Records – Only the Treasurer of the LGU imposing the tax, or his duly
authorized representative, may examine the books of accounts and pertinent
records of businesses in order to ascertain, assess and collect the correct
amount of tax. (Art. 259-a, IRR to LGC). Consequently, no personnel in the
Office of the LCE may inspect records of businessmen unless duly deputized
in writing by the local treasurer concerned.
The examination of the books of accounts and pertinent records of

businessmen is an inherent function of local treasurers and may be performed
or enforced without the need of an executive order from the LCE or an
implementing ordinance of the sanggunian (BLGF 1st Indorsement dated May
13, 1996 to the City Treasurer of Santiago City).
b. Authorization to Conduct Examination – The provincial, city, municipal or

barangay treasurer, himself or through any of his deputies duly authorized in
writing, may conduct the examination of the books, accounts and other
pertinent records of any person, partnership, corporation or association subject
to local taxes, fees and charges (Art. 259-b, IRR to LGC).
The LGC has not specified the rank of the officials who may be deputized to
examine books of accounts of business establishments. However, under the
Local Tax Code (PD 231, as amended), only the deputies duly appointed to,
and occupying positions in the plantilla of personnel as Administrative
Deputy, Supervising Deputy, Senior Deputy and Junior Deputy or similar
such other designations as deputy provincial and municipal treasurers of the
Office of the Provincial Treasurer; or the Administrative Deputy, Senior
Deputy and Junior Deputy of the Office of the City Treasurer, can be duly
authorized in writing by the provincial or city treasurers to examine the books
of accounts of business establishments in their respective jurisdictions.
Accordingly, a city treasurer may not deputize the Administrative Officer of
the local sangguniang panlungsod to examine the books of accounts of
business establishments (8th Indorsement dtd. 10-30-74 of the Secretary of
Finance to the Secretary of Local Government and Community Development).
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c. Written Authority to Conduct Examination – In case the examination is
made by a duly authorized deputy of the local treasurer, his/her written
authority shall specifically state the name, address, and business of the
taxpayer whose books, accounts and pertinent records are to be examined, and
the date and place and the procedure to be followed in conducting the
examination. (Art. 259-d, IRR to LGC)
d. Time, Frequency and Certification – The examination of the books of

accounts and pertinent records of taxpayers 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 by
the examining official. Such certification shall be made of record in the books
of accounts of the taxpayer examined. (Art. 259-c, IRR to LGC).
The BLGF holds the view that the tax period that may be examined by the
treasurer or his representative is limited to the year immediately preceding the
examination. The intent of the law is to remind local treasurers that they
should examine every year the books of accounts of the businesses to
ascertain the correctness of the amounts of business taxes paid. It may be
implied that past years’ accounts may no longer be looked into to prevent
undue harassment of the business sector by examiners (BLGF letter dated
August 27, 1997 to Republic-Asahi Glass Corp).
e. Access to BIR Records – The records of the revenue district office of the BIR
shall be made available to the treasurer, his deputy or duly authorized
representative. (Art. 259-e, IRR to LGC)
Section 66. Guidelines in the Conduct of the Examinations:
a. Administrative Preparation by the Treasurer/Head of Treasurer’s Office)

Prior to the conduct of any examination of the books of account of an
establishment, the Treasurer or the head of the Office of the Treasurer shall
take the following steps:
1. From the list of business taxpayers, The Local Treasurer chooses

the business entities that will be verified and examined based on
several factors such as: complexity of the business, materiality and
volume of prior years’ gross sales, number of sales/ distribution
outlets, delinquency in payment of business taxes and other
relevant factors.
2. The Local Treasurer shall create the Examination Team to be

composed of staff from the Treasurer’s Office and/or deputized
staff from other offices of the LGU. The Team shall preferably be
headed by a Certified Public Accountant or a Commerce graduate
major in Accounting.
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3. The Local Treasurer shall issue the Office Order designating the
team leader and members of the examination team, copy furnished
the LCE.
4. Preferably, a pair of deputized examiners shall conduct the

examination of the accounts of business establishments; however,
in order to cover more establishments, the examination may be
done by a lone deputy.
5. No deputized examiner shall be assigned to the same business

establishment he had examined the previous year.
6. The Local Treasurer shall prepare the notification letter addressed

to the business taxpayer informing him of the
examination/inspection to be conducted by the LGU Examination
Team. A formal reply from the business taxpayer should be
required before the examination date will be set.
7. The Local Treasurer shall prepare the Letter of Appointment

addressed to the business taxpayer indicating the exact date of the
examination visit, documents to be examined, year to be covered
by the examination, and the names and signatures of the
Examination Team members.
8. The Letter of Authority (LOA) (LTO Form 26) shall also be

prepared and signed by the local treasurer and shall serve as the
authority of the Examination Team to conduct the examination of
the business taxpayer’s records, and shall be signed by the Local
Treasurer and the members of the examination team. The LOA
shall be served to the taxpayer immediately after receipt thereof by
the deputized examiners.
9. In case the LOA cannot be served, the deputy concerned shall

report the matter to his Team Leader/immediate Supervisor citing
the reasons for his inability to serve the LOA. If the cause is
meritorious, the Team Leader/immediate supervisor shall request
for another business establishment to examine. All unserved LOAs
shall be returned within 10 days after the end of the examination
period.
b. Responsibilities of the Examination Team:
1. The Examination Team shall prepare the audit/examination

program detailing the objectives and procedures to be performed
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during the conduct of the examination, copy furnished the LCE for
his information.
2. The designated Team Leader shall exercise close supervision over

the team members in the conduct of the examination and shall
ensure that the Team conduct themselves at all times with proper
decorum.
3. Deputized examiners shall wear their prescribed uniforms, if any,

when conducting the examination. They shall identify themselves
to the owner or manager of the business by presenting their official
identification cards in serving the LOA together with the Letter of
Appointment.
4. In case the books of accounts and other records are not available
on the first visit, another appointment with the business
owner/representative should be made not later than three (3) days
after serving the LOA.
5. The books of accounts and pertinent records shall be handled with

care. Deputies 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
deputy after the last entry.
6. Where the examination of the books of accounts and other records

cannot be accomplished in one day, the examiner shall indicate
on the Data and Assessment Form the date and time when the
examination was started and when terminated.
7. If at the time of examination of a business entity, the owner or

representative cannot be contacted or could not produce the
pertinent records and books of accounts needed for the
examination, this fact must be noted by the Examination Team in
the Tax Data and Assessment Form. Should similar circumstances
occur during the second and third visits, the same facts should be
noted in the TDAF, indicating the time and date of each visit. The
notation shall also be made in the original copy of the LOA.
(Please refer to LTO Annexes 33 and 34 for the pro-forma notices
in case of non-presentation of documents for examination)
8. The deputies shall perform the following activities:
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 Review of pertinent records of the business establishment to
be examined such as Articles of Incorporation, By-Laws,
SEC/DTI Registration, minutes of board meetings, etc;
 Review of the working papers, if any, of the business
establishment if previously examined;
 Submission to the Owner/President of the business
establishment to be examined the Letter of
Appointment/Authority to conduct the examination;
 Acceptance of the following books of accounts and
documents for verification/examination:
a. Mayor’s Permit for current year;

b. Business License Receipts for current year;
c. Books of Accounts such as Sales Journals/Registers,
Purchase Journals/Registers, Cash
Receipts/Disbursement Journals/Registers, General
Ledgers, Subsidiary Ledgers;
d. Audited or Unaudited Financial Statements (Income
Statement, Balance Sheet and Cash Flow Statement);
e. Privilege Tax Receipt (PTR)
f. Community Tax Receipt
g. Official Receipts, Cash/Charge Sales Receipts/Invoices,
Order Slips, Delivery Receipts, Debit/Credit Memos,
Sales Returns
h. Purchase Receipts/Invoices
i. Articles of Incorporation
j. Quarterly non-VAT returns
k. Monthly VAT receipts
l. Others such as Beginning and Ending Merchandise
Inventory Reports, Stock Cards, and such other reports
relevant to the business taxpayer’s operations
9. Detailed audit activities:
a. For Sales Accounts:
 Compare/validate the amount of Gross Sales/Receipts

account on the Income Statement with the sales account in
the General ledger;
 Check posting to the general ledger from Sales Journals/Cash
Receipts Journals and other books where sales or service
income are reflected;
 Verify the entries in the sales journals/cash receipts journals
and other books of accounts from the sales invoices/delivery
receipts/provisional and/or official receipts and other
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documents showing the sales or receipts of income revenues
(at random);
 Confirm the income/revenues from the customers’ records of
sales/receipts (at random);
 Compute the correct Gross Receipts/Sales based on the sales
records examined.
b. For Purchase Accounts:
 Verify the amount of Purchases reflected in the Income

Statement from the General Ledger;
 Check posting to the general ledger from Purchases/Cash
Payments Journals;
 Verify entries in purchases/cash receipts journals with
purchase documents (at random);
c. For Inventory:
 Check beginning and ending inventory on Financial Statement

with General Ledger balance
 Verify computation of the ending balance of the Inventory
account by comparing it with the last physical inventory count
conducted;
 If warranted, inspect at random material items in the inventory
and check against the physical inventory count;
 Observe the volume of customers, sales activities and
deliveries of the business entity to have a sense of daily sales
volume.
10. 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
c. Verify the amount shown on the schedules of account
receivables/payables from the individual subsidiary ledgers
11. Preparation of Working Papers and Tax Data and Assessment

Form
 Tax Data Working Papers (LTO Form 27). 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.
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The amount of the understatement or overstatement in gross
receipts/sales is likewise presented in the working papers.
 Tax Data and Assessment Form (TDAF) (LTO Form 28).

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 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 TDAF shall be attached to the
Letter of Authority and shall be submitted to their immediate
supervisor for review before submission to the Local
Treasurer for approval. The original copy of the TDAF is
given to the business taxpayer concerned.
12. Issuance of the Letter of Assessment/ Assessment Notice (Initial)

(LTO Form 29) signed by the Local Treasurer to the business
taxpayer, showing the amount of tax deficiency inclusive of
penalties, surcharges and interest resulting from the conduct of the
examination. A second assessment notice (LTO Form 30) may be
sent to the taxpayer in case he fails to respond to the first notice. A
maximum of three (3) notices (LTO Form 31) may be sent before a
final demand for payment and possible foreclosure proceedings
(LTO Form 32) may be issued to the taxpayer. In accordance with
Section 195 of the LGC, the taxpayer, within 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.
13. Issuance of the Letter of Confirmation/Certificate of Examination

(LTO Forms 35,36,37) to the business taxpayer signed by the
Local Treasurer to signify the completion of the examination
conducted. The original copy of the Letter of
Confirmation/Certificate of Examination shall be issued to the
taxpayer concerned and the duplicate copy shall be attached to the
TDAF for file at the treasurer’s office.
14. Submission to the LCE by the Local Treasurer of the list of final
demand letters sent to business taxpayers for possible foreclosure
proceedings.
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TREASURY OPERATIONS
EXPENDITURES AND DISBURSEMENTS
BOOK THREE
Chapter 1. CONCEPT OF FUNDS
The discussion under expenditures and disbursements includes a brief but concise
discussion of the concept of funds which are the very subject of expenses and
disbursements, the concept of appropriations, allotments, and obligations which
constitute the budgetary stages before expenditures and disbursements take place, as well
as the related internal control guidelines to ensure good governance and accountability.
On the other hand, the revised complete budget process for LGUs is already thoroughly
discussed in the Updated Budget Operations Manual (UBOM)for LGUs promulgated and
issued by the Department of Budget and Management.
Section 67. Definition of Fund – A Fund is a sum of money or other resources set aside
for the purpose of carrying out specific activities or attaining certain objectives in
accordance with special regulations, restrictions or limitations, and constitutes an
independent fiscal and accounting entity (Sec. 2(1), Title I(B), Bk.V, 1987 Adm Code;
Sec.306(h), Ra 7160).
Government funds include public moneys of every sort and other resources pertaining to
any agency of the government (Sec. 3(2), PD 1445; Sec. 2(2), Title I(B), Bk V, 1987 Adm.
Code)
Section 68. General Classification of Funds – Government funds are generally

classified into General Fund, Special Fund and Trust Fund. In the Local Government
Units, the classification of funds is as follows:
a. Local Funds – Every local government unit 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, RA 7160).
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;
3) Development projects funded from the share of the local government unit
concerned in the internal revenue allotment and such other special
accounts which may be created by law or ordinance.
Receipts, transfers and expenditures involving the foregoing special accounts

shall be properly taken up in the accounts of the respective special accounts.
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Profits or income derived from the operation of public utilities and other
economic enterprises, after deductions for the cost of improvement, repair and
other related expenses of the public utility or economic enterprise concerned, shall
first be applied for the return of the advances or loans made therefor. Any excess
shall form part of the general fund of the local government unit concerned (Sec.
313, RA 7160).
b. Special Funds - Every provincial, city or municipal treasury shall maintain the
following special funds:
1) Special Education Fund (SEF) – This fund shall consist of the respective
shares of provinces, cities, municipalities and barangays in the proceeds of
the additional one percent (1%) tax on real property. The amount shall be
released automatically to the local school boards, however, in case of
provinces, the proceeds shall be divided equally between the provincial
and municipal school boards.
The SEF shall be allocated as determined and approved by the Local

School Boards concerned, only for the following purposes:
a) operation and maintenance of public schools;

b) construction and repair of school buildings, facilities and
equipment;
c) educational research;
d) purchase of books and periodicals; and
e) sports development
The corresponding budgets shall be prepared by the local school boards,

which shall authorize the local treasurers concerned to disburse the funds
from the SEF.
2) Trust Funds – These shall consist of private and public monies which
have officially come into the possession of the local government or of a
local government official as trustee, agent or administrator, or which have
been received as a guaranty for the fulfillment of some obligation. A trust
fund shall only be used for the specific purpose for which it was created or
for which it came into the possession of the local government unit (Sec.
309, RA 7160)
Section 69. Fundamental Principles Governing Utilization of Local Funds. – All

local treasury officers shall observe the following principles in the use of local
government funds:
a. No money shall be paid out of the local treasury or depository except in

pursuance of an appropriation ordinance or law;
b. Local government funds and monies shall be spent solely for public purposes;
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c. Fiscal responsibility shall be shared by all those exercising authority over the
financial affairs, transactions, and operations of the LGUs;
d. Claims against government funds shall be supported with complete
documentation;
e. No contract involving the expenditure of public funds shall be entered into unless
there is an appropriation thereof, the unexpended balance of which, free of other
obligations, shall be sufficient to cover the proposed expenditure.
f. Expenditures of government funds or uses of government property in violation of
law or regulations shall be the personal liability of the official or employee found
to be directly responsible therefor.
g. Disbursement of government funds shall invariably bear the approval of the
proper officials; and
h. All laws and regulations applicable to financial transactions shall be faithfully
adhered to.
i. Trust funds shall not be paid out of any public treasury or depository except in
fulfillment of the purpose for which the trust fund was received, and upon
authorization of the legislative body, or head of any other agency having control
thereof, and subject to pertinent budget laws, rules and regulations (Sec. 614,
Revised Adm Code).
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Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT AND
OBLIGATIONS/EXPENDITURES
Section 70. Definition and Types of Appropriation - Appropriation refers to an

authorization made by law or other legislative enactment, directing the payment of goods
and services out of government funds under specified conditions or for specified purposes
(Sec. 2(1). Bk.VI, 1987 Adm Code; Sec. 306(b), RA 7160).
Appropriations are classified as follows:
a. Annual appropriation – This consists of specified amounts for salaries, wages,

and sundry expenses authorized by the Local Sanggunian as necessary for the
regular operations of the Local government unit during s given year. This also
refers to the local financial plan embodying the estimates of income and
expenditures for one (1) fiscal year.
b. Continuing appropriation - This refers to 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. 2(6), Bk VI, 1987 Adm
Code; Sec. 306(c), RA 7160).
c. Supplemental appropriation – This appropriation is 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.
No local ordinance providing for a supplemental budget shall be enacted except

when supported by funds actually available as certified by the local treasurer or
by new revenue sources. A supplemental budget may also be enacted in times of
public calamity by way of budgetary realignment. Such ordinance shall clearly
indicate the sources of funds available for appropriations, as certified under oath
by the local treasurer and local accountant and attested by the local chief
executive, and the various items of appropriations affected and the reasons for the
change (Sec. 37, PD 1177).
Section 71. Use of appropriated funds - Funds shall be available exclusively for the
specific purposes for which they have been appropriated. No local ordinance shall be
passed authorizing any transfer of appropriations from one item to another. However, the
local chief executive or the presiding officer of the sanggunian concerned may, by
ordinance, be authorized to augment any item in the approved annual budget for their
respective offices from savings in other items within the same expense class of their
respective appropriations (Sec. 336, RA 7160).
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Section 72. The Allotment System – The local budget is based on estimated income
and program of expenditures for a given year. It specifies annual expenditure ceilings.
However, actual releases of funds and disbursements depend on the collection and receipt
of funds by the LGU. Since funds will have to be committed and disbursed even as
revenues are being collected, there is a need for a system to ensure that obligations and
payments will not exceed the approved budget and the amount ultimately collected is
available. Hence we use the allotment system to ensure that obligations incurred will not
exceed the appropriations enacted.
a. Definition of allotment - An allotment is an authorization issued by the Local

Chief Executive to a department/office of the LGU, which allows it to incur
obligations for specified amounts within its appropriations. The authorization is
called the Allotment Release Order (ARO), which is a specific authority to incur
obligations not exceeding the amount indicated in the ARO for the specific
purpose therein indicated.
b. Control devices used in the allotment system:
1) Local Budget Matrix (LBM) - This is the yearly overall financial plan of
the LGU equivalent to its approved appropriation disaggregated into
components or categories. The category of the expense item as reflected in
the LBM determines the timing and magnitude of the release of allotment.
Through the LBM, a comprehensive authority is issued to each
department/office to incur obligations not exceeding a certain amount for a
specified period usually for regular/current operating expenditures. This
device allows the imposition of reserves, non-release of any
unprogrammed portion of the appropriation, earmarking of funds for
clearance and withholding of funds for later release to provide for any
shortfall in the collection of anticipated revenues. The ABM classifies
budgetary items under Not-Needing Clearance (NNC), Needing Clearance
(NC), Reserve, Later Release, and Unprogrammed Appropriation
2) Cash Program - The use of a cash program ensures that cash is available
when it is needed for payment of obligations and at the same time
optimizes its utilization; ensures that released allotment are adequately
covered by available cash and/or future collections; and provides
information for control of expenditures and future planning of activities.
The tools used in cash programming are the Cash Flow Forecast (CFF)
and the Cash Flow Analysis (CFA). A detailed discussion of these tools is
presented in BOOK V of the MANUAL.
3) Physical Performance Targets. The physical performance targets reflect

the targeted units of work under each program/activity/project (P/A/P) for
each department/office based on the historical data of peaks and lows of
activities/tasks and the peculiar requirements of certain P/A/Ps. The plan
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is prepared for the entire calendar year with quarterly/semi-annual targets
for the departments/offices to achieve.
The detailed guidelines in the preparation of the Local Budget Matrix, Cash
Program and Performance Targets are contained in the Updated Budget
Operations Manual (UBOM) for Local Government Units issued by the
Department of Budget and Management.
Section 73. Obligation of Local Funds
a. Definition of Obligation – Obligation refers to the amount committed to be paid

by the LGU for any lawful act made by an accountable officer for and in behalf of
the LGU concerned. Obligations shall be limited to the available allotment for the
purpose. Consistent with the NGAS, obligations shall be taken up in the
Registries as they are incurred. Accordingly, expenditures and obligations
incurred during a fiscal year shall be taken up in the accounts of that year.
b. Steps in the obligation process:
1) The requesting department/office/unit in the LGU shall prepare the

Obligation Request (ObR) (LTO Form 40) and the Disbursement Voucher
(DV) and the Head of such office shall certify on the necessity and legality
of charges to appropriation and allotment under his direct supervision. He
shall also certify to the validity, propriety and legality of the supporting
documents (Box A of the ObR).
2) The Local Budget Officer shall certify the existence of available

appropriation (Box B of OBR) and shall maintain the appropriate
Registries of Appropriation, Allotments and Obligations (RAAO) as
prescribed under the NGAS;
3) The Local Accountant shall certify in the DV the obligation of allotment

and completeness of supporting documents (Box A of DV).
c. Adjustment/corrections of obligations – Any corrections/adjustments made

after the processing of the claims but before payment is made are effected thru
either a positive entry or negative entry in the Obligations Incurred column of the
RAAOs.
Section 74. Government Expenditures - Government expenditures include all charges

against the fund of the LGU 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.
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a. Classification of Expenditures – Government expenditures are classified as
follows:
1) Current operating expenditures – Current operating expenditures refer to

appropriations for the purchase of goods and services for current
consumption or for benefits expected to terminate within the fiscal year.
Current operating expenditures consist of:
a) Personal Services (PS)
b) Maintenance and Other Operating Expenses (MOOE)
2) Capital Outlays - Capital outlays refer to appropriations for the purchase

of goods and services, the benefits of which extend beyond the fiscal year
and which add to the assets of government, including investments in the
capital of government-owned and controlled corporations and their
subsidiaries as well as investments in public utilities such as markets and
slaughterhouses.
b. Liability for Illegal Expenditures. Every expenditure or obligation authorized

or incurred in violation of the provisions of the Administrative Code of 1987 or of
the general and special provisions contained in the annual budget shall be void.
Every payment made in violation of said provisions shall be illegal and every
official or employee authorizing or making such payment, or taking part therein,
and every person receiving such payment shall be jointly and severally liable for
the full amount so paid or received.
Any official or employee of the LGU knowingly incurring any obligation, or

authorizing any expenditure in violation of the provisions herein or taking part
therein, shall be dismissed from the service, after due notice and hearing by the
duly authorized appointing official. If the appointing official is other than the
President and should he fail to remove such official or employee, the President
may exercise the power of removal (Sec. 43, Bk VI, 1987 Ad. Code).
Expenditure of public funds or use of property in violation of law shall be a

personal liability of the official or employee directly responsible therefore (Sec.
58 PD 477; Sec. 103, PD 1445).
c. Prevention of Irregular, Unnecessary, Excessive or Extravagant or

Unconscionable (IUEEU) Expenditures. The following types of local
expenditures shall not be allowed:
1) Irregular Expenditures. These are expenditures incurred without

adhering to established rules, regulations, procedural guidelines,
policies, principles or practices that have gained recognition in law.
Irregular expenditures are incurred without conforming with 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
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an irregular expenditure. A transaction conducted in a manner that
deviates or departs from, or which does not comply with standards set, is
deemed irregular. An anomalous transaction which fails to follow or
which violates appropriate rules of procedure is likewise irregular.
Irregular expenditures are different from illegal expenditures since
illegal would pertain to expenses incurred in violation of the law
whereas regular means in violation of applicable rules and regulations
other than the law (COA Cir. 85-55A, Sept.8, 1985).
The following are examples of irregular expenditures:
a.) Payment of claims under a contract awarded not strictly in

accordance with the prescribed modes of procurement of
supplies, materials and equipment.
b.) Purchase of items from jobbers or middlemen in violation of a
government policy to acquire the same directly from reputable
manufacturers or their licensed distributors.
c.) Payment of allowances and other forms of additional
compensation without proper authority.
d.) Payment of repair of government property or equipment
undertaken by shops, mechanics or contractors not duly
accredited in accordance with an existing government policy
except in places where there is no accredited shop in the
locality, or where the accredited shop dose not have sufficient
facilities, or where the cost of services of the accredited shop is
relatively high, or completion of repairs will suffer delay as
certified to by the LCE or his duly authorized representative.
e.) Payment for emergency purchase, where there is no
emergency. As defined under the General Appropriations Act,
emergency involves the loss of, or danger to, life and/or
property or that which will cause detriment to the public
service.
f.) Reimbursement of expenses incurred by persons other than
authorized representatives of the LGU for attending
conferences, meetings and other official functions.
g.) Payment of salaries or wages of laborers under a labor payroll
to persons other than the payees unless properly authorized by
the payees.
h.) Payments made on the basis of split requisitions, purchase
orders, vouchers or checks, unless approved by proper
authority of the LGU.
i.) The use of government motor vehicles with an improperly
accomplished trip ticket, or without the marking “For Official
Use Only” and the name of the office except when appropriate
exemption is secured in accordance with existing regulations.
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j.) Bringing home government motor vehicles after office hours
by officials to whom these are assigned, except when the LGU
does not have a garage that could ensure the safety of the
vehicle, or when in terms of mileage/time it is more
economical for the official to park the vehicle at his residence.
k.) Office equipment and property without the proper
identification or inventory markings.
2) Unnecessary expenditures – These pertain to expenditures which could

not pass the test of prudence or the obligation of a good father of a
family, thereby non-responsive to the exigencies of the service.
Unnecessary expenditures are those not supportive of the
implementation of the objectives and missions of the agency relative to
the nature of its operation. This could also include incurrence of
expenditure not dictated by the demands of good government, and those
the utility of which cannot be ascertained at a specific time. The mission
and thrusts of the LGU incurring the expenditure must be considered in
determining whether or not the expenditure is necessary. An expenditure
that is not essential or that which can be dispensed with without loss or
damage to property is considered unnecessary (COA Circ.85-55A,
supra).
The following expenditures are considered unnecessary:
a.) Grant of overtime pay for work that is not urgent in nature as
to require completion within a specified time or that can be
undertaken during regular office hours.
b.) Expenses for advertisement of anniversaries, etc. in
newspapers, television or radio merely for publicity or
propaganda purposes except when the nature of the LGU’s
mission would require such expenses as in the case of
promotion of trade and business.
c.) Use of air conditioners when not needed, or even during the
absence of the official in whose room the air conditioner is
installed.
d.) Use of table lamps while working in the office where the room
is adequately illuminated from the ceiling lights.
3) Excessive expenditures - These are expenditures that are unreasonable

or expenses incurred at an immoderate quantity or exorbitant price.
They include expenses which exceed what is usual or proper as well as
expenses which are unreasonable high, and beyond just measure or
amount. They also include expenses in excess of reasonable limits
(COA Cir. 85-55A, supra).
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The term “excessive expenditures” pertains to the variables of Price and
Quantity.
 Price – The price is excessive if it is more than 10% allowable price

variance between the price for the item bought and the price of the
same item per canvass of the auditor.
 Volume Discounts – The price is deemed excessive if the discounts
allowed in bulk purchases is not reflected in the price offered or in
the award or in the purchase/payment document.
 Factors to be Considered – In determining whether or not the price is
excessive, the following factors may be considered:
a.) Supply and demand forces in the market – Where there is a

supply shortage of a particular product, such as cement or GI
sheets, prices of these products may vary within a given day.
b.) Government price quotations
c.) Warranty of products or special features – The price is not
necessarily excessive when the service/item is offered with
warranty or special features which are relevant to the needs of
the LGU and are reflected in the offer or award.
d.) Brand of products – Products of recognized brand coming from
countries known for producing such quality products are
relatively expensive. An example are Solingen scissors which
are made in Germany which are more expensive than scissors
which do not carry such brand are not made in Germany.
The following expenditures are considered excessive:
a.) Overpricing of purchases characterized by grossly exaggerated

or inflated quotations, in excess of the current and prevailing
market price by a 10% variance from the purchased item.
b.) Payment for repair of government equipment at a cost
exceeding 30% of the current market price of the same or
similar equipment.
c.) Expenditures for supplies and materials in quantities beyond
that required and needed by the LGU for a determinable
period, resulting in overstocking.
4) Extravagant expenditures -These include expenditures that are

incurred without restraint, judiciousness and economy. Extravagant
expenditures exceed the bounds of propriety. These expenditures are
immoderate, prodigal, lavish, luxurious, wasteful, grossly excessive, and
injudicious (COA Cir. 85-55A, supra).
Factors such as the nature of the LGU’s operations, missions,

profitability of past operational performance, and availability of
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financial resources derived from income or retained earnings, must be
taken into account in the matter of determining whether or not an
expenditure is extravagant. The term “extravagant expenditure” pertains
to the variables of quantity relative to the level or rank of the user and
the purpose for such expenditure.
The following expenditures may be considered extravagant:
a.) Purchase of luxurious and expensive office furnishings for

office buildings (e.g. rugs, carpets, draperies, wall decors,
utensils, desks, chairs, lamps) except for the Offices of the
President of the Philippines; Justices of the Supreme Court,
Intermediate Appellate Court and other courts of equivalent
rank; Speaker of the House of Representatives and Members;
Heads and Members of the Constitutional commissions;
Department Secretaries; Governors; Mayors; Bureau Directors
and their equivalent ranks in government corporations and
other agencies, as warranted by resources.
b.) Luxurious furnishings for government buildings except those
intended for showcase, trade and commerce, promotions of arts
and culture, and use of dignitaries.
c.) Purchase of expensive cars, except for the use of the following
officials:
 The President of the Philippines, Vice-President, Senate

President, Speaker of the House of Representatives, Justices of
the Supreme Court, and Heads of Constitutional Commissions
– Mercedes Benz or its equivalent kind.
 The Members of congress, members of the Constitutional
Commissions, Department Secretaries, Heads of Agencies,
Governors of Class A provinces, Mayors of Class A cities and
municipalities, Justices and Judges of Lower Courts – Heavy
and Medium cars.
d.) Installation of highly sophisticated outdoor signs, billboards

and neon signs advertising the office, except for banks, trading
corporations, hotels, or buildings used for culture and arts.
e.) Purchase of wines, liquors, cigars and cigarettes, except when
served to foreign dignitaries during state functions and
government-sponsored international conferences and
conventions.
f.) Payment for rent of expensive halls or rooms in luxury hotels
or restaurants used for meetings and other official functions
except when such hotels or restaurants are used for
government-sponsored international conventions, meetings and
the like.
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5) Unconscionable expenditures. These signify expenses without a
knowledge or sense of what is right, reasonable and just and not guided
or restrained by conscience. These are unreasonable and immoderate
expenses incurred in violation of ethics and morality by one who does
not have any feeling of guilt for the violation (COA Circular 85-55A
supra).
(COA Handbook on Government Expenditures, 2002)
As guide in the proper handling of expenditures, the list of minimum documentary

requirements for certain types of expense items is presented in Annex 41 of the Manual.
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Chapter 3. DISBURSEMENTS OF LOCAL FUNDS
Section 75. Definition- Disbursements constitute all payments made during a given
period either in currency, by check, through bank and electronic transfers, telegraphic
transfers, letters of credit, credit/debit cards and other non-conventional modes of
payment.
Disbursement of local funds or the settlement of government payables/obligations must

be made in accordance with the appropriation ordinance authorizing the annual or
supplemental appropriations without the prior approval of the Sanggunian concerned.
Section 76. General principles governing fund disbursements:
a. The official fiscal year – The official fiscal year of the LGUs is the period
beginning with the first day of January of a given year and ending with the 31 st
day of December of the same year.
b. Disbursements in accordance with Annual or Supplemental

Appropriations-Disbursements of local funds shall be made in accordance with
the ordinance authorizing the annual or supplemental appropriations without the
prior approval of the Sanggunian concerned. (Sec. 346, LGC).
The approved budget and/or appropriation and corresponding release of

allotments in LGUs shall be the basis for the disbursements of its funds for the
fiscal year. The appropriations insofar as practicable, shall be in a lump sum
amount set aside by programs and further subdivided into Current Operating
Expenditures composed of Personal Services and Maintenance and Other
Operating Expenses and Capital Outlays. Further, the object of expenditures for
each allotment class should be specified to be able to properly monitor
expenditures.
c. Use of appropriated funds and savings – Funds are available exclusively for
the specific purpose for which they have been appropriated. No ordinance can
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. (For purposes of this provision,
respective offices refer to the various departments/offices/units under either the
LCE or the Local Sanggunian).
d. Restrictions upon limit of disbursements – Disbursements in accordance with

appropriations in the approved annual budget may be made from any local fund
in the custody of the Local Treasurer. However, the disbursement from any
local funds must in no case exceed fifty percent (50%) of the uncollected
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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 emergencies arising from typhoons, earthquakes, or other calamities,

the Sanggunian concerned may authorize the local Treasurer to continue making
disbursements from any local fund in his possession in excess of the limitations
herein provided, but only for such purposes and amounts included in the
approved annual budgets. Any overdraft which may be incurred at the end of
the year in any local fund by virtue of the provisions hereof, shall be covered
within the first collections of the immediately succeeding fiscal year accruing to
such local fund. (Sec. 337, LGC)
e. Prohibitions on Disbursements. – Disbursements of public funds shall be

guided by the following prohibitions:
1) Prohibition against Advance Payments – No money shall be paid on

account of any contract under which no services have been rendered or
goods delivered. (Sec. 338, LGC)
2) Prohibition against Expenditures for Religious or Private Purposes –

No public money or property shall be appropriated or applied for religious
or private purposes. (Sec. 335, LGC)
3) Prohibition against Expenses for Reception and Entertainment – No

money shall be appropriated, used, or paid for entertainment or reception
except to the extent of the representation allowances authorized by law or
for the reception of visiting dignitaries of foreign governments or foreign
missions, or when expressly authorized by the President in specific cases.
(Sec. 343, LGC)
4) Prohibition against Cash Overdrafts in the Treasury. – An overdraft

existing in the accounts of a provincial, city, municipal or barangay
Treasurer signifies that funds belonging to other branches of government
or to private entities which have been deposited with the Treasurer for
safekeeping or for disbursement for certain specified purposes have been
used by him and diverted to purposes other than those for which they are
intended, in violation of the statutory provision that trust funds shall not be
paid out of any treasury except in fulfillment of the purpose for which the
trust was created or fund received. Since local Treasurers are financial
officers of their respective political divisions, it is their duty to make an
analysis of their financial status which shall, from time to time, be brought
to the attention of the LCE with the end in view of apprising them of the
actual financial condition of the LGU. This is important especially where
there is imminence of overdraft in any or all of the funds of the LGUs
concerned in order that budgets may be readjusted or an amended program
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of expenditures be adopted for the remaining months of the fiscal year.
(Sec. 612 and 615, RMIT)
“Any public officer who shall apply any public fund or property under his
administration to any public use other than that for which such fund or
property was appropriated by law or ordinance shall suffer the penalty of
prision correccional in its minimum period or a fine ranging from one-
half to the total value of the sum misapplied, if by reason of such
misapplication, any damage or embarrassment shall have resulted to the
public service. In either case, the offender shall also suffer the penalty of
temporary special disqualification. If no damage or embarrassment to the
service has resulted, the penalty shall be a fine from five to fifty percent of
the same misapplied." (Article 220, Revised Penal Code)
Section 77. Basic Requirements on Disbursements from General Fund and SEF. –
Disbursements from the General Fund and SEF shall require the following:
b. Certification as to existence of appropriation that has been legally made for the
purpose by the Local Budget Officer (Box B of OBR);
c. Certification as to necessity, legality and under direct supervision of the charges

to appropriation and allotment as well as to the validity, propriety and legality of
supporting documents (Box A of OBR) by the head of the requesting department
or office who has administrative control of the fund concerned for local funds. In
case of temporary absence or incapacity of the department head or chief of office,
the officer next-in-rank shall automatically perform his function and shall be fully
responsible therefore. For the Special Education Fund, the division/city
superintendent of schools or the district supervisor concerned, as the case may be,
shall make the certification.
d. Certification in the DV (Box A) by the Local Accountant that allotment has been
obligated for the purpose and supporting documents are complete;
e. Certification in the DV (Box B) by the Local Treasurer that funds are available
for the purpose;
f. Approval by the LCE himself, except for regularly recurring administrative

expenses such as: payrolls for regular or permanent employees, expenses for light,
water, telephone and telegraph services, remittances to government creditor
agencies such as GSIS, BIR, PHILHEALTH, LBP, DBP, NPO, PS of the DBM
and others, where the authority to approve may be delegated. The 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. The disbursements for Special Education Fund shall
be approved by the LCE concerned as co-chairman of the Local School Board.
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g. Necessary documents supporting the disbursement vouchers and payrolls are
reviewed by the Accountant/Head of Accounting Unit
Section 78. Basic Requirements on Disbursements from Trust Funds. Disbursements

from the Trust Fund shall require the following:
a. Certification by the Local Treasurer that Trust Funds are available for
disbursements (Box B of DV);
b. Certification by the Local Accountant that supporting documents are complete
(Box A of DV);
c. Approval by the LCE/authorized representative or the administrator of the Fund;
d. Necessary documents are attached to the disbursement vouchers/payrolls.
Trust Funds maintained for projects implemented by the LGU sourced from domestic or
foreign grants/loans (local/foreign-assisted projects) should be utilized strictly in
compliance with the provisions of any MOA, MOU or other agreements signed by the
LGU with other government agencies or private entities. In no case shall these trust
funds be used for purposes other than what is provided in the MOA/MOU, or temporarily
transferred to other funds of the LGU, since this constitutes violation of the grant/loan
agreements of the government with the local/foreign donors. Funds received from these
sources shall be maintained in separate bank accounts and shall never be commingled
with other LGU funds.
Section 79. Preparation of Disbursement Vouchers and Payrolls. Disbursements in

LGUs shall be covered by disbursement vouchers or payrolls supported with duly
approved OBR and adequate supporting documents. Disbursements made without the
required DVs/payroll shall not constitute a credit to the accountability of the accountable
officer concerned.
a. Disbursement Voucher (DV) – The Disbursement Voucher (LTO Form 42) shall
be used for all money claims. The following guidelines in the preparation of the
DV shall be observed:
1) The DV shall be printed in one whole sheet of legal size bond paper. This
shall be prepared in three copies to be distributed as follows:
Original – Accounting Unit
Duplicate - Cash Unit
Triplicate – Payee
2) The Accounting Unit shall stamp the date of receipt on the face of the DV
and shall assign the DV Number. The DV number shall also be stamped in
all pages of the supporting documents attached to the DV;
3) The number of the obligation request (OBR) shall be indicated in the DV;
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4) The responsibility center (Department/Office/unit/project and code) where
the disbursement shall be charged should be indicated;
5) Box A of the DV shows the certification of the Local Accountant or his

authorized representative as to the obligation of allotment for the purpose
as indicated, and completeness of supporting documents. The certifying
officer shall affix his signature, print his name, indicate his position, and
the date of his signing;
6) Box B of the DV is used for the certification by the Local Treasurer or his
authorized representative on the availability of funds. The certifying
officer shall affix his signature, print his name, indicate his position, and
the date of signing;
7) Box C of the DV (Approved for Payment) is for the approval of the LCE
or his authorized representative on the payment covered by the DV. The
approving officer shall affix his signature, print his name, indicate his
position, and the date of his signing;
8) Box D of the DV (Received Payment) shows the acknowledgment by the

claimant or his duly authorized representative for the receipt of the
check/cash and the date of such receipt. The claimant/payee shall affix his
signature on the spaces provided and shall indicate the number and date of
the check, bank name, and number and date of OR/other relevant
documents issued to acknowledge the receipt of payment;
9) The number and date of the Journal entry Voucher (JEV) shall likewise be
indicated in the DV.
After processing of the DV by the Accounting Unit as to completeness of

documentation, it shall be forwarded to the LCE/duly authorized official for
approval. Thereafter, the same shall be transmitted to the Local Treasurer for
payment.
b. Payroll. The Payroll is used for the payment of salaries and other emoluments of
government employees. It may be in the form of the General Payroll (LTO Form
43) or the Daily Wage Payroll (LTO Form 44). It shows the names of the
employees, their monthly salary/emolument, the amount earned for the period,
salary deductions and the net amount paid. The signatures of the employees on
the payroll are the evidence of payment. All unclaimed wages within a period of
fifteen (15) days shall be refunded to the collecting officer who shall issue an
official receipt in acknowledgment thereof. Subsequent payment for the
unclaimed wages must be made through individual DVs and checks.
The payroll shall be prepared in four copies. The original and another copy of the
paid payroll shall support the Report of Disbursements to be submitted to the
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Chief Accountant for entry in the Journal of Disbursements. The other two copies
of the payroll shall be submitted to the Local Administrative Officer, one copy for
his file and the other copy for the recording of payroll changes to serve as guide in
the preparation of the payroll for the subsequent period(s).
Section 80. Modes of Disbursements. Disbursements covered by disbursement

vouchers and/or payrolls are usually paid either by check or in cash. Other modes of
disbursements include direct payments and/or bank transfers. Cash shall be handled
under the general principles of the imprest system where all payments must be made by
check and only payments in small amounts may be made in cash through the petty cash
fund.
a. Disbursements by Checks. – Upon receipt of a voucher for payment, the Local

Treasurer shall verify the propriety of the certifications and approvals required on
the DV. If complete, he shall then draw a check in payment therefor.
1) Preparation and Signing of Checks- Checks shall be drawn by the Local

Treasurer and countersigned by the Local Administrator. In case of
temporary absence or incapacity of the aforesaid officials these duties
shall devolve upon their immediate assistants. In the case of municipalities
where no Administrator has been appointed, checks shall be countersigned
by the municipal mayor. However, in the case of expenditures
appropriated for the operation of the sanggunians, checks drawn thereon
shall be countersigned by the provincial Vice Governor, the city Vice
Mayor, or the municipal Vice Mayor, as the case may be. (Sec. 345,LGC
and Sec.43, COA Circular No. 92-382).
Checks shall always be made payable to a specific person or entity and

never to "Cash" or "Bearer". All checks shall be crossed for deposit to the
payee's account, except checks which are payable to government
employees. Unused checks shall be kept in the vault, which shall be
accessible only to the Treasurer. The signing or countersigning of blank
checks shall not be allowed.
2) Release of Checks - The Treasurer shall release the check only to the
payee or his duly authorized representative. It shall be released only when
the Accountant's Advice of Local Check Disbursements (Annex 48)
has been prepared and submitted to the bank. All checks issued shall be
recorded chronologically in the Control Book of Checks Issued/Check
Register (LTO Form 45). Upon release of the check, the payee shall be
required to issue an Official Receipt for the payment received and/or affix
his signature and the date of receipt of the check on the DV and the
Control Book of Checks Issued. The DV and supporting documents shall
be stamped "PAID" by the Treasurer immediately after claim is paid to
prevent their possible reuse.
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3) Preparation of Report of Checks Issued (RCI). The checks issued
including cancelled or voided ones shall be recorded chronologically in
the Report of Checks Issued (LTO Form 46) which shall be prepared by
the Local Treasurer for each fund weekly in three (3) copies. The original
and duplicate copies of the RCI together with the claimed
vouchers/payrolls and other supporting documents shall be submitted to
the accounting department. Unclaimed vouchers and all supporting
documents shall remain with the Treasurer until paid and duly noted as
“Unclaimed” in the RCI.
4) Spoiled and Stale Checks. – Checks may be cancelled when they

become spoiled or stale. A check is considered spoiled when it is torn,
mutilated, defaced, or contains erasures/errors affecting the genuineness of
material information. On the other hand, a check is considered stale when
it is outstanding for over six months from date of issue, or as prescribed by
the government authorized depository banks. A spoiled or stale check
shall be marked “CANCELLED” on its face and reported, as follows:
a) For checks immediately cancelled and for which the 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 Disbursement Voucher and supporting documents are
still with the Treasurer, the DV shall also be marked
“Cancelled.” The cancelled check shall be reported and attached
to the RCI prepared at the period of cancellation. 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 which require replacement, a new check may be
issued after the stale check has been submitted by the payee to
the Treasurer, marked “CANCELLED” and the authenticity of
the claim established. A certification from the Accountant that
the check has been outstanding as of date shall also be obtained.
A certified copy of the DV shall be requested from the Auditor
for presentation to the Administrator/Local Chief Executive who
shall countersign the check. The replacement check shall be
reported chronologically in the RCI and the words “Issued in
replacement of Check No. ______ dated _____ which has
become stale” shall be indicated in the report. The cancelled
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stale check shall be reported and attached to the RCI prepared at
the period of cancellation.
5. Lost Checks – 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. The treasurer shall forward the
sworn statement to the Accountant who shall prepare the JEV to cabcel
the payment made. A Copy of the JEV shall be furnished the treasurer
as basis for him to debit the amount in the Cashbook – Cash in Bank.
The narrative procedures flow on the disbursements through checks is presented

in LTO Annex 47. Likewise, the process flow on the payroll disbursements though
banks is shown in LTO Annex 52.
b. Disbursements through Cash Advances. – Cash payments shall be made only

on duly approved payrolls/disbursements vouchers/liquidation vouchers out of
regular cash advances or special cash advances. (Sec.45, COA Circular No. 92-
382)
Cash advances shall be of two types, namely, the regular cash advances, and the
special cash advances (COA Circular No. 97-002):
1) Regular Cash Advances – Regular cash advances are those granted to

permanently appointed and duly bonded officials (Cashiers, Disbursing
officers, Paymasters and/or Property/ Supply Officers) for any of the
following purposes:
a) Salaries and Wages;

b) Commutable Allowances;
c) Honoraria and other similar payments to officials and employees;
and
d) Petty operating expenses consisting of small payments for
maintenance and operating expenses.
2) Special Cash Advances – Special cash advances are those granted to the
LCE or upon his explicit authority to duly designated disbursing officers
or employees for other legally authorized purposes such as:
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a) 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 by check, such as:
i. salaries, wages and allowances
ii. maintenance and other operating expenses
b) Travel expenditures, including transportation fare, travel

allowance, hotel room/lodging expenses and other expenses
incurred by officials and employees in connection with official
travel.
(Sec. 47, COA Circular No. 92-382).
c. General Guidelines on Granting and Utilization of Cash Advances. – The

following are the general guidelines on the granting and utilization of cash
advances:
1) No cash advance shall be given unless for a legally specific purpose.

2) No additional cash advances shall be allowed to any official or employees
unless the previous cash advance given to him is first settled or a proper
accounting thereof is made.
3) Only permanently appointed officials shall be designated as Disbursing
officers. Elected officials may be granted a cash advance only for their
official traveling expenses. LCEs may be granted cash advances for
intelligence and confidential expenses
4) 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.
(Sec. 48(b), LGC)
5) Transfer of cash advance from one Accountable Officer to another shall
not be allowed. (Sec. 48(d), LGC)
6) 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. (Sec.
48(c), LGC)
7) The cash advance for petty operating expenses shall not be used for
payment or regular expenses, such as rentals, subscriptions, light and
water and the like. Payments out of the cash advance shall be allowed
only for amounts not exceeding Fifteen Thousand Pesos (P15,000.00) for
each transaction except when a higher amount is allowed by law and/or
specific authority by the COA. Splitting of transactions to avoid
exceeding the ceiling shall not be allowed. (Sec. 48(i) and (j), LGC)
8) A cash advance shall be reported on as soon as the purpose for which it
was given has been served.
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9) The Accountant shall obligate all cash advances granted. He shall see that
cash advances for a particular year are not used to pay expenses of other
years. (Sec. 48(f), LGC)
d. Specific Guidelines on Grant of Cash Advances for Payroll, Petty Operating

Expenses, Field Operating Expenses and Travel. –
1) Salaries, wages, allowances, honoraria and other similar payments. –
a) The cash advance shall be equal to the net amount of the payroll for a
pay period.
b) The cash advance shall be supported by the following documents:
i. copy of designation by the LCE in case the Accountable
Officer is not a disbursing officer by appointment
(attachment to initial cash advance)
ii. copy of approved application for bond (attachment to initial
cash advance)
iii. payroll or list of payees with their net payments
2) Petty Operating Expenses. –
a) The cash advance shall be sufficient for the recurring expenses of the
agency for one month. The AO may request replenishment of the cash
advance when the disbursements reach at least 75% or as the need
requires, by submitting a replenishment voucher with all supporting
documents duly summarized in a report of disbursements.
b) The cash advance shall be supported by the following documents:
i. copy of authority by the LCE (attachment to initial cash
advance)
cash advance)
iii. estimate of expenses.
3) Field/Activity Current Operating Expenses (COE). –
a) The special cash advance shall be used to pay the salaries and wages
of the employees and the miscellaneous operating expenses of the
activity. Payment for each transaction shall not be subject to amount
limitation. However, all payments shall be approved by the Head of
Office.
b) The amount of the cash advance shall be limited to the requirements
for two months. Within five 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.
c) The cash advance shall be supported by the following documents:
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i. copy of authority by the LCE (attachment to initial cash
advance)
cash advance)
iii. budget for COE of the agency field office or agency activity in
the field.
4) Official Travel. – The grant of cash advance for both official local and
foreign travel shall be governed by the provisions of COA Circular No. 96-
004 dated April 19, 1996.
e. Liquidation of Cash Advances for Payroll, Petty Operating Expenses, Field

Operating Expenses and Travel. –
1) The Accountable Officer shall liquidate his cash advance as follows:
a) Salaries, wages, etc. – within five days after each 15th day/end of
the month pay period.
b) Petty Operating Expenses and Field Operating Expenses – shall be
fully liquidated within 20 days after the end of the year; subject to
replenishment as frequently as necessary during the year.
c) Official Travel – within sixty (60) days after return to the
Philippines in the case of foreign travel or within thirty (30) days
after return to his permanent official station in the case of local
travel.
2) The AO shall prepare the Report of Disbursements (LTO Form 49) in

three (3) copies and submit the same with duly accomplished
vouchers/payrolls and supporting documents to the Accountant. For
payments based on receipts and invoices only, he shall also prepare a
Liquidation Report (LTO Form 50) which shall be submitted with the
report and supporting documents to the Accountant. He shall ensure that
receipt of the report is properly acknowledged by the Accountant. The
AO shall be deemed to have complied with the requirement of proper
accounting for the cash advance upon the receipt by the Accountant of the
liquidation documents referred to above. (COA Circular No. 97-002, 5.2)
3) When a cash advance is no longer needed or has not been used for a
period of two months, it must be returned to or refunded immediately to
the collecting officer, who shall issue the necessary official receipt. (COA
Circular No. 97-002, 5.7; COA Circular No. 92-382; and SEC. 48(n),
RA7160)
4) 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
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Cashier/Collecting Officer who will issue the necessary official receipt.
(COA Circular No. 97-002, 5.8; SEC. 48(o), RA7160)
5) At the start of the ensuing year, a new cash advance may be granted,
provided that a list of expenses against the previous cash advance is
submitted. However, when no liquidation of the previous cash advance is
received on or before January 20, the Accountant shall cause the
withholding of the AO’s salary. (COA Circular No. 92-382; SEC. 48(p),
RA7160)
6) The following reports and documents are required to support the liquidation:
a) Salaries, wages, etc. – Report of Disbursements with all duly signed

payrolls and/or vouchers and all pertinent supporting documents, such
as daily time records, approved leaves of absence, etc.
b) Petty Operating expenses:

i. Report of Disbursements with supporting documents
ii. Approved Requisition and Issue Voucher with the Certificate of
Emergency Purchase, if necessary
iii. Receipts, sales invoices
iv. Certificate of Acceptance/Inspection
v. Duly approved trip ticket, if for gasoline
vi. Such other supporting documents as are required by the nature
of the expense
c) Current Operating Expenses

i. Same requirements as those for salaries, wages, etc., and petty
operating expenses,
ii. Canvass of at least three suppliers (not required if purchase is
made while on official travel)
d) Official Travel:
i. Documents required to support the liquidation of cash advance for
official travel, both foreign and local, are listed under Annex 41 of
the Manual.
(COA Circular No. 97-002; and SEC. 59, RA7160
f. Guidelines on Cash Advances for Intelligence and Confidential Expenses. –
1) Intelligence and/or confidential expenses represent the amount of goods and

services used or consumed in connection with defense, security, peace and
order, internal security or counter insurgency, usually involving covert or
classified operations, psychological warfare and surveillance operation and
other specified intelligence and confidential operations of the LGUs including
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Civil Security Units of local government agencies in Metro Manila. These
may be in the form of the following:
a) Purchase of information relevant to security and peace and order

b) Payments of rewards.
c) Rentals and other incidental expenses related to the maintenance of
safe houses.
d) Purchase of supplies, materials and equipment necessary for
intelligence and confidential operations and/or projects.
e) Other incidental expenses related to intelligence and confidential
operation and/or projects.
f) Special projects as approved by the program director involving
covert or semi-covert psychological, counter-insurgency, and
peace and order activities.
2) Cash advances for intelligence and/or confidential activities shall be

sourced from the annual appropriations for discretionary purposes.
The annual %) of the actual receipts derived from basic real property tax
in the appropriations for discretionary purposes of the LCE shall not
exceed two percent (2next preceding calendar year. Discretionary funds
shall be disbursed only for public purposes to be supported by appropriate
vouchers and subject to such guidelines as may be prescribed by law. No
amount shall be appropriated for the same purpose except as authorized
under SEC. 325, LGC. (Sec. 325 (h), LGC)
3) It shall be the responsibility of the LCE to institute internal control

measures to discourage and prevent irregular, unnecessary, excessive,
extravagant and unconscionable expenditures in intelligence and
confidential operations by their personnel involved (refer to Section 74c
on these types of expenditures)
g. Liquidation of Cash Advances for Confidential/Intelligence Expenses. – The

LCE shall liquidate his cash advance for confidential/intelligence expenses as
follows:
1) All cash advances shall be liquidated within one (1) month from the date
the cash advance is received.
2) Disbursements from cash advances for confidential and/or intelligence

expenses shall be accounted for on the certification to be issued by the
LCE. He may also submit receipts and other evidences in support of the
expenses incurred.
3) The liquidation voucher together with the supporting papers shall be

submitted in a sealed envelope, directly to the Chairman, COA, for
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transactions in Metro Manila. For transactions outside Metro Manila, such
vouchers shall be submitted to the Regional Directors in their respective
jurisdiction.
4) The transmittal letter must be signed by the head of the agency. He shall
enumerate therein the type or nature of the document being submitted.
5) A copy of the transmittal letter duly acknowledged as received by the

Chairman or the Regional Director must be furnished the Accountant and
the resident Auditor of the LGU.
6) If the liquidation vouchers and supporting papers are in order, the COA
Chairman or authorized representative or Regional Director, as the case
may be, shall issue a credit advice addressed to Local Chief Executive
(LCE), attention the Chief Accountant, through the Auditor of the LGU
concerned, on the basis of which credits to the cash advance account of the
accountable officer concerned shall be recorded in the books of accounts
of the LGU.
7) All liquidated vouchers and supporting papers shall be retained by the

COA Chairman or Regional Director for safekeeping in his confidential
file. However, duplicate copies of all these records and documents must
be retained and filed by the LCE or the LGU concerned.
(COA Circular No. 92-385)
h. Handling, Custody and Disposition of Cash Book for Cash Advances.
1) A newly appointed or designated AO shall start with a new cash book.

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

allowances, etc. and for petty operating expenses. The AO shall record
the transactions in the prescribed cash book daily. He may record each
invoice/receipt/voucher individually or the total disbursements for the day
depending on the volume of the transactions.
3) The AO shall reconcile the book balance with the cash on hand daily. He
shall foot and close the books at the end of each month. The AO and the
Accountant shall reconcile their books of accounts at least quarterly.
4) The cash books 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
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custody only by the Auditor or an official duly authorized by the Agency
Head who shall issue the necessary receipt.
5) When the AO ceases to be one, the cash book shall be submitted to the
Accountant and shall form part of the Accounting records. No clearance
shall be issued to an AO if he fails to submit the cash book as required.
The format for the Cashbook for Cash Advances is shown in LTO Form 7 of the
Manual.
i. Disbursements out of Petty Cash Fund. Petty cash fund shall be maintained
under the imprest system. The fund should be sufficient for the non-recurring,
emergency and petty expenses of the LGU for one month. Disbursements from
the fund shall be through the Petty Cash Voucher (PCV) (LTO Form 53) which
shall be signed by the payee to acknowledge the amount received.
1) Petty cash fund shall be set up at the beginning of the year. An Obligation
Request (ObR) shall be prepared for the fund, recorded in the registers and
obligated as Other Expenses.
2) Payments out of the fund shall be made through the use of PCVs duly
supported by official receipts and other required documents. Each PCV
shall not exceed P1,000.00.
3) A Disbursement Voucher shall be prepared for the replenishment of the

petty cash fund during the year, duly supported by the Petty Cash
Replenishment Report (LTO Form 54), the PCVs and their supporting
documents. An ObR shall be prepared for each replenishment and
recorded in the registers based on the actual expenses.
4) At the end of the year, all balances of the Petty Cash Fund shall be
returned to the Treasurer together with the liquidation thereof.
The narrative flow of procedures for disbursements out of the Petty Cash Fund is
shown in Annex 55 of the Manual.
j. Disbursements through Direct Payment. – The direct payment scheme may be

adopted by the LGU whereby contract account/delivery of equipment is paid
directly to the bank account of the contractor/supplier from the proceeds of loan
or bond flotation deposited in the LGU servicing bank. The prior requirements
for obligation of the transaction in accordance with this Manual shall be followed.
A Disbursement Voucher shall be prepared for direct payments supported by all
required documents. The usual certifications by the requesting officer, Budget
Officer and Accountant, and the approval by the LCE on the OBR and DV shall
likewise be strictly followed.
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Under the direct payment system, the Local Treasurer shall prepare an Authority
for Direct Payment (ADP), which shall be signed by him/her and countersigned
by the Local Administrator. He shall forward the original copy of the ADP to the
LGU depository bank which will duly acknowledge receipt thereof. The bank
shall furnish the LGU the debit memo/advice or a snapshot of bank transactions
showing the direct payment made to the supplier/contractor. The Local Treasurer
shall then submit the acknowledged copy of the ADP, bank debit memo/advice or
bank snapshot and supporting documents to the Local Accountant for recording in
the JEV.
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Chapter 4. BARANGAY APPROPRIATIONS, COMMITMENTS AND
DISBURSEMENTS
Section 81. Policies and Procedures on barangay appropriations and commitments
a. Appropriations
1) The Kagawad, designated as Chairman, Committee on Appropriation

(CCA) shall be responsible in monitoring the approved appropriations and
the charges against the following funds
a) General fund
b) 20% Development Fund
c) Calamity fund
d) Sanguuniang Kabataan Fund
e) Gender and Development Fund
2) The Chairman Committee on Appropriations shall monitor the use of

appropriated funds thru the Registry of Appropriations and Commitments
(RAC) which shall be maintained by Fund, by class (PS, MOOE, FE and
CO) with breakdown as to account classification. The BRK shall prepare
the Registry of Appropriations and Commitments may examine/check
anytime, the balance of appropriations and the recording in the registries.
b. Commitments
1) Charges (deductions) against the appropriated funds shall be based on the

commitments made by the Barangay as shown in the Disbursement
Vouchers (LTO Form 56), Payrolls (LTO Form 57) for personal
services, Contracts or Purchase Orders (LTO Form 58), and Purchase
Requests (LTO Form 59).
2) In addition to the certification in the Disbursement Vouchers

(DVs)/Payrolls, the existence of available appropriations as reflected in
the SB Resolution shall also be shown on the face of the Contracts and
Purchase Orders (PO).
3) For all procurement including infrastructure projects, the Chairman

Committee on Appropriations shall certify the availability of funds by
stamping “Funds Available” on the face of the Purchase Request (PR) and
affix his signature indicting the estimated required amount on the available
appropriation on the PR based on the SB Resolution authorizing the
construction/procurement, and
4) Expenses for Personal Services (PS), Maintenance and other Operating

Expenses (MOOE) and Financial Expenses (FE) shall be charged against
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respective appropriation while investments, purchase of Property, Plant
and Equipment and construction of Public Infrastructure (PI) and
Reforestation Projects (RP) shall be charged against appropriations for
Capital Outlay (CO)
Note: “Commitment” shall be used synonymously with “Obligation”
c. Certification of the Chairman Committee on Appropriations on the Purchase

Orders/Contracts, etc.
The certification of the Chairman Committee on Appropriations on the “existence

of available appropriations” means the availability of appropriations to cover the
commitment.
d. Commitment/Charges against Appropriated Funds – Commitments/Charges

against the appropriations for the four major classes of expenditures shall
include but are not limited to the following:
1) Personal Services
a) Salaries and Wages –Regular
b) Salaries and Wages – Contractual
c) Honoraria
d) Cash Gift
2) Maintenance and Other Operating Expenses
a) Travelling expenses – Local
b) Training Expenses
c) Supplies and Materials Expenses
d) Utility Expenses
e) Communication Expenses
f) Membership Dues and Contributions to Organizations
g) Rent Expenses
h) Repairs and Maintenance of PPE
i) Repairs and Maintenance of Public Infrastructures
j) Taxes, Insurance Premiums and Other Fees
3) Capital Outlay
a) Investment in Treasury Bills
b) Purchase/Construction of the following PPE:
i. Land
ii. Land Improvements
iii. Buildings
iv. Leasehold Improvements
v. Office Equipment
vi. Furniture and Fixtures
vii. Books
viii. Motor Vehicles
ix. Other Equipment
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x. Public Infrastructures
xi. Reforestation Projects
e. Financial Expenses
1) Interest Expenses
2) Bank Charges (cost of checkbooks)
3) Other Financial Charges
Section 82. Registry of Appropriations and Commitment
a. The following registries shall be maintained by the Chairman Committee on

Appropriations/BRK for the five funds of the barangay by class and by object of
expenditures:
1) Registry of Appropriations and Commitments – General Fund

2) Registry of Appropriations and Commitments – Calamity Fund
3) Registry of Appropriations and Commitments – 20% Development Fund
4) Registry of Appropriations and Commitments – Sangguniang Kabataan
Fund
5) Registry of Appropriations and Commitments – Gender and Development
Fund
b. Postings in the appropriations columns of the Registry of Appropriations and

Commitments (RAC) shall be based on the General Appropriations Ordinance of
the Barangay.
c. Postings of commitments in the Registry of Appropriations and Commitments
shall be based on the amount of commitments/charges as certified in the
Disbursement Vouchers (DV), Payroll, Contract/Purchase Request (PR).
d. Commitments/Charges for Personnel Services (PS), Maintenance and Other
Operating Expenses (MOOE), Financial Expenses (FE) and Capital Outlay (CO)
shall be recorded in their respective Registry of Appropriation and Commitments
for the General Fund (GF).
e. Commitments/Charges against the Calamity Fund (CF), 20% Development Fund
(DF), Sangguniang Kabataan Fund (SKF) and Gender and Development Fund
(GDF) shall be recorded in their respective Registry of Appropriation and
Commitments with a detailed breakdown of expenditures.
f. The balance of appropriations for PS, MOOE, FE and CF shall be reverted/closed
at the end of the year and shall not made available for commitments/charges after
the calendar year unless otherwise authorized to be retained as continuing
appropriations, and
g. Balance of appropriations for Capital Outlay, 20% Develoment Fund and
Sanggunian Kabataan Fund, however, shall be valid until fully spent or until the
project is completer. The balance, if any, shall be forwarded to the RAC of the
following year.
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Section 83. Basic Supporting Documents for Barangay Disbursements
a. For payment of salaries/honoraria and other personal services:

1) Approved payroll supported by Daily Time Record (DTR)
2) Minutes of Meeting of the Sangguniang Barangay duly signed by the
members of the Sangguniang Bayan and Barangay Secretary
3) Approved application for leave (for leave with pay)
4) Approved Appointment, Oath of Office, Certificate of Assumption of
Office and Statement of Assets and Liabilities for newly hired employees
(for first claim)
b. For cash advance for payroll

1) Net amount of approved payroll for the period
c. For grant of cash advance for travel

1) Travel Order (TO)
2) Itinerary of Travel (IT)
d. Liquidation of cash advances

1) Payroll Fund – paid DVs/Payroll
2) Travel – original of the TO, plane/bus ticket or its equivalent, ORs, if any,
boarding pass, Certificate of Appearance and Liquidation Report (LR)
3) Training Expenses – Certificate of Appearance, Certificate of Training and
Invitation to attend the training
e. For payment of maintenance and other operating expenses

1) Membership dues – Statement of Account/Bill of the organization
2) Utility and Communication expenses – Bills
3) Repairs and Maintenance – Job Orders, Invoices, Certificate of
Warranty/Guarantee, Pre-repair Inspection Report and Post-Repair
Inspection Report, Inspection and Acceptance Report (IAR), labor payroll
(for repairs undertaken by administration) or contract (for repairs
undertaken by contract)
f. For purchase of equipment, supplies, materials and other items:

1) Purchase Request
2) Purchase Order
3) Bidding Documents (if through bidding)
4) Supplier’s Invoice
5) Delivery Receipt or the Receipt portion of the supplier’s invoice duly
signed
6) Inspection and Acceptance Report
g. For infrastructure and reforestation projects

1) By contract
a) Bidding Documents
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b)Plans and specifications
c)Notice of Bidding
d)Contract
e)Notice to Proceed
f)Billings of Contractors
g)Inspection and Acceptance Report
h)Duly verified Contractor’s Project Accomplishment/Completion
Report
i) Program of Work
2) By administration
a) Supplies – Purchase Orders, Invoice, Bidding documents or
equivalent (depending on the mode of procurement used), delivery
receipts and Inspection and Acceptance Report
b) Wages – Labor payroll, Daily Time Record and contract for labor
c) Plans/Programs of Work
h. For repairs and maintenance of Property Plant and Equipment

1) Pre-Repair Inspection Report
2) Job Order/Contract
3) Supplier’s Invoice
4) Post-Repair Inspection Report
5) Inspection and Acceptance Report
Section 84. Barangay Disbursement by Checks Drawn Against Barangay Funds

Maintained with Depository Bank
a. Policies and Procedures
1) All disbursement shall be covered with duly processed and approved

DVs/Payroll
2) The DVs/Payrolls shall be prepared by the BRK
3) The Barangay Treasurer shall be responsible for paying claims against the
barangay. All disbursement shall be in accordance with existing rules and
regulations
4) All claims shall be approved by the Punong Barangay and certified as to
the validity, propriety and legality of the claim. In case of claim
chargeable against Sanggunian Kabataan Fund (SKF) the Chairman,
Sangguniang Kabataan (SK) shall initial under the name of the Punong
Barangay
5) Payments shall be drawn against the depository account maintained with
depository bank by the barangay
6) The check shall be issued in the name of the payee as indicated in the
DV/Payroll
7) The check shall be signed by the Barangay Treasurer and countersigned
by Punong Barangay.
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8) All disbursements by check shall be reported in the Summary of Checks
Issued.
9) In case checks are waylaid, lost through theft or force majeure, etc., the
Barangay Treasurer shall immediately notify and issue a “Stoppage of
Payment” notice to the bank, and
10) Stale check shall be replaced only when the original is submitted to the
Barangay Treasurer for replacement
b. Recording
1) All checks issued including cancelled ones shall be recorded by Barangay

Treasurer in correct numerical sequence in the Summary of Checks
Issued (LTO Form 60).
2) Recordings shall be based on the original paid DVs/Payrolls supported
with carbon copy of the checks issued and other supporting documents
3) All the checks issued shall be recorded daily by the Barangay Treasurer in
the Summary of Checks Issued (SCkI)
4) The SCkI shall be sub-totaled and recorded in the Cash on Hand and in
Bank Registers daily and
5) The Summary of Checks Issued shall be submitted to the Barangay
Record Keeper for recording in the Check Disbursement Register weekly.
c. Reporting
1) The Barangay Record Keeper shall record check disbursement based

on the certified Summary of Checks Issued in the Check
Disbursements Register (LTO Form 61) weekly.
2) At the end of the month, the Check Disbursement Register shall be
totaled, balanced, ruled recapitulated and certified, and
3) The Barangay Record Keeper shall submit the Check Disbursement
Register together with the Summary of Check Issued to the
City/Municipal Accountant for recording of the checks issued in the
books on or before the 5th of the following month.
Section 85. Barangay Disbursement by Checks Drawn Against Barangay Funds

Deposited with the City/Municipal Treasury. –
a. The barangay Treasurer shall prepare in four (4) copies the barangay
disbursement voucher in the name of the payee. The DV shall be certified as
follows:
1) The barangay Treasurer certifies and approves the voucher or payroll as to
validity, propriety, and legality of the claim involved;
2) The punong barangay approves the disbursement voucher/payroll; and
3) The city/municipal Accountant certifies on the DV that the disbursement
is supported by documents evidencing completeness of requirements as
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well as other certifications that may be required by auditing and
accounting rules and regulations.
b. A copy of the duly certified and approved barangay disbursement voucher shall
be furnished the city/municipal Accountant who shall prepare a city/municipal
voucher in the name of the barangay Treasurer for the withdrawal of the amount.
c. The city/municipal disbursement voucher for the withdrawal of barangay funds

shall be certified and approved in accordance with existing regulations. A check
shall then be drawn by the city/municipal Treasurer and countersigned by the
proper city/municipal official. The check shall be in the name of the payee as
appearing in the barangay disbursement voucher
d. The barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt portion of the city/municipal disbursement voucher. He shall deliver the
check to the payee who shall acknowledge the receipt of the payment by signing
the receipt portion of the barangay disbursement voucher and/or issuing his
official receipt therefor. The barangay Treasurer shall record the transaction in
his cash book as a credit to the Cash in City/Municipal Treasury columns, and
transmit to the city/municipal Accountant, under proper acknowledgement, the
copies of the paid barangay disbursement voucher and its supporting papers for
recording in the barangay books.
e. The barangay disbursement voucher shall be distributed as follows:
Original - To the local Auditor concerned, through the

city/municipal Accountant.
Duplicate - To the city/municipal Accountant.
Triplicate - To be attached to the city/municipal
disbursement voucher for the withdrawal of
deposit.
Quadruplicate - To the barangay Treasurer.
f. Disbursements by check shall be recorded in the barangay books.
The narrative flow of procedures for Barangay disbursements by check is shown in

LTO Annex 62.
Section 86. Barangay Disbursement out of Cash Advance for Payroll Charged
Against Barangay Funds Maintained with Depository Bank
1) Cash payments shall be made out of the cash advance given to the
Barangay Treasurer/Accountable Officer
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2) The cash advance shall be used solely for payment of salaries, honoraria
and other allowances due the barangay officials and employees
3) The cash advance shall not be used for the encashment of checks or for
liquidation of previous cash advance
4) The cash advance shall be equal to the net amount of the payroll
corresponding to the pay period
5) The cash advance shall be liquidated within five (5) days after the end of
the pay period. Any unclaimed honoraria/salaries/allowances shall be
refunded to close the account
6) All paid DVs/ Payrolls shall be recorded in the Summary of Cash
Payments
7) The Summary of Cash Payments supported by paid DV/Payroll shall be
accomplished to support the liquidation of the cash advance for payroll. In
case the cash advance is more than the disbursements , the excess shall be
refunded and an official receipts shall be issued, and
8) Succeeding cash advance shall be granted only after full liquidation of the
previous cash advance.
b. Recording
1) Cash advance for payroll shall be recorded by the Barangay Record

Keeper in the Cash Disbursement Registers based on the Summary of
Check Issued submitted by the Barangay Treasurer
2) All payments out of cash advances for payroll shall be recorded by the
Barangay Treasurer/Accountable Officer in the Summary of Cash
Payments (LTO Form 63) based on the paid DVs/Payrolls
3) Submission of the Summary of Cash Payments to the Barangay Record
Keeper shall be supported with original paid DVs/Payrolls
4) Liquidation of cash advances shall be supported by Summary of Cash
Payments and paid DVs/Payrolls
5) The Barangay Record Keeper shall be responsible in recording
transactions in the Cash Disbursement Registers.
c. Reporting
1) The Barangay Record Keeper shall record the cash disbursement based on
the certified Summary of Cash Payments in the Cash Disbursement
Register (LTO Form 64))
2) At the end of the month, the Cash Disbursement Register shall be totaled,
balanced, ruled recapitulated and certified, and
3) The Barangay Record Keeper shall submit the certified Cash
Disbursement Registers to the City/Municipal Accountant for recording of
the payments made in the books and postings of the transactions to the
subsidiary ledger maintained for the Barangay Treasurer/Accountable
Officer on or before the 5th day of the following month
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Section 87. Barangay Disbursements out of Cash Advance from Payroll Charged
against Barangay Funds Deposited with the City/Municipal Treasury. –
a. The city/municipal Accountant shall prepare a disbursement voucher in the name

of the barangay Treasurer for the withdrawal of the amount of the payroll based
on duly certified and approved payrolls. At the same time, he shall prepare the
corresponding Debit Advice, Barangay Form No. 1.
b. The disbursement voucher for the withdrawal of barangay funds shall be certified
and approved in accordance with existing regulations. A check in the name of the
barangay Treasurer for the amount of the withdrawal shall then be drawn by the
city/municipal Treasurer and countersigned by the proper city/municipal official.
c. The barangay Treasurer shall acknowledge the receipt of the check by signing the
receipt portion of the city/municipal disbursement voucher, and shall record the
transaction in the barangay cash book as a debit in the Cash advances columns.
d. When the payments on the payrolls have been made, the barangay Treasurer shall
record in the barangay cash book the total amount paid as a credit in the Cash
Advances columns, and transmit to the city/municipal Accountant under proper
acknowledgment, the paid payrolls and their supporting papers, for recording in
the barangay books.
e. The unexpended cash from the cash advance shall be redeposited with the
city/municipal Treasurer following the same procedures as in the full liquidation
of the petty cash fund for barangay funds deposited with the city/municipal
treasury.
f. Copies of the paid payrolls shall be distributed as follows:
Original - To the local Auditor concerned, through the

city/municipal Accountant
Duplicate - To the city/municipal Accountant
Triplicate - To be attached to city/municipal disbursement
voucher for withdrawal of deposit
Quadruplicate - To the barangay Treasurer
The narrative flow of procedures for Barangay disbursements out of cash advances for
payroll/travel is shown in LTO Annex 66.
Section 88. Disbursement out of Cash Advance for Travel and Special
Purpose/Time-Bound Undertaking
1) For local/foreign travel, liquidation shall be done within a period of 30/60

days upon return to the personnel’s workstation
2) Cash advance for special purpose/time-bound undertaking shall be
liquidated upon accomplishment of the purpose for which it was granted
3) Excess cash advance shall be refunded and an official receipt shall be
issued by the Barangay Treasurer
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4) The Liquidation Report (LTO Form 65) with appropriate supporting
documents shall be submitted to the Barangay Record Keeper, who in turn
shall submit it to the City/Municipal Accountant for recording in the
books on or before the 5th day of the following month
b. Recording
1) Liquidation of cash advances shall be supported by Liquidation Report and

pertinent documents, and
2) The Liquidation Report shall be submitted by the Accountable Officer to the
City/Municipal Accountant, thru the Barangay Record Keeper, to serve as
basis in recording the liquidation in the books.
The narrative flow of procedures for Barangay disbursements out of cash advance for
travel is likewise shown in LTO Annex 66.
Section 89. Barangay Disbursement Out of the Petty Cash Fund
1) The Petty Cash fund shall be maintained using the Imprest System. The
balance of the Petty Cash Fund shall not be closed at the end of the year
2) The fund shall be kept separately from the regular collections and
advances granted for a particular purpose and shall not be used for
payment of regular expenses
3) The amount of the Petty Cash fund shall be determined by the
Sangguniang Bayan but “ not to exceed twenty percent (20%) of the funds
available and to the credit of the barangay treasury” (Sec. 334 (b) of R.A.
7160)
4) All disbursement out of Petty Cash Fund shall be covered by duly
approved and accomplished Petty Cash Vouchers (LTO Form 67)
supported approved and accomplished by cash invoice, official receipts or
other evidence of disbursements required under applicable accounting and
auditing rules and regulations
5) All paid petty cash vouchers shall be reported in the Summary of Paid
Petty Cash Vouchers to be certified by the Petty Cash Fund Custodian
6) The Petty Cash Fund shall be replenished as soon as disbursements reach
seventy five percent (75%) of as needed
7) Replenishment of the Petty Cash funds shall be made by submitting a
disbursement vouchers for the purpose supported by duly certified
Summary of Paid Petty Cash Vouchers, paid Petty Cash vouchers and
supporting documents
8) In case the Petty Cash Fund Custodian resigns or ceases as custodian of
the Fund, full accounting/liquidation of the Fund shall be made. Any
remaining cash shall be refunded to close the account, and
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9) In no case shall the remaining cash of the former Petty Cash Fund
Custodian be transferred to the incoming Petty Cash Fund Custodian. For
a completer accounting, the account of the former Petty Cash Fund
Custodian shall be closed and a new account shall be opened for the
incoming Petty Cash fund Custodian
b. Recording
1) Petty Cash Vouchers (PCVs) shall be recorded in the Summary of Paid

Petty Cash Vouchers (LTO Form 68) which shall be prepared by the
Petty Cash Fund Custodian to report all payments made out of the Petty
Cash Fund
2) Replenishment of the Petty Cash Fund shall be supported with the
Summary of Paid Petty Cash Vouchers and all the paid Petty Cash
Vouchers supporting the entries in the Summary of Paid Petty Cash
Vouchers
3) The submission of Summary of Paid Petty Cash Vouchers to the Barangay
Record Keeper shall be supported with original paid Petty Cash Vouchers
and their supporting documents
4) The establishment and replenishment of the Petty Cash fund shall be
recorded in the Petty Cash Fund Register
5) The Petty Cash fund Register which shall serve as the petty cash book
shall be maintained by the Barangay Treasurer/Petty Cash Fund Custodian
6) Recording of payments in the Petty Cash Fund Registers shall be based on
the Summary of Paid Petty Cash Vouchers shall be submitted to the
Barangay Record Keeper for submission to the City/Municipal Accountant
for recording in the books.
c. Reporting
1) The Petty Cash Fund Custodian shall record disbursements out of Petty
Cash Fund based on the certified Summary of Paid Petty Cash Vouchers
in the Petty Cash Fund Register (LTO Form 69).
2) At the end of the month, the Petty Cash Fund Register shall be totaled,
balanced, ruled, recapitulated, certified and submitted to the Barangay
Record Keeper
3) The Barangay Record Keeper shall submit the certified Petty Cash Fund
Registers to the City/Municipal Accountant to serve as basis in posting the
transaction to the subsidiary ledger of the Petty Cash Fund Custodian on
or before the 5th day of the following month, and
4) The Barangay Record Keeper shall submit the certified Summary of Paid
Petty Cash Vouchers for the unreplenished paid Petty Cash Vouchers to
the City/Municipal Accountant on or before the 5 th day of January of the
following year to take up expenses which remain unrecorded in the books.
The narrative flow of procedures on the establishment, payment, replenishment and
liquidation of Barangay petty cash fund is shown in LTO Annex 70 of the Manual.
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Chapter 5. SANGGUNIANG KABATAAN BUDGET
Section 90. General guidelines in the preparation of the Sangguniang Kabataan

(SK) budget
a. Ten percent (10%) of the general fund of the barangay shall be set aside for the
SK.
b. The proceeds of fund-raising activities shall be tax-exempt and shall accrue to the
general fund of the SK: Provided, however, That in the appropriation thereof, the
specific purpose for which such activity has been held shall be first satisfied.
c. The annual budget of the SK shall consist of two parts – the income portion and
the expenditure portion.
1) The income portion consists of the beginning balances, which are the
unappropriated and/or unexpended amounts of the revenues and receipts
of prior calendar years carried forward to the budget year, and estimates of
income certified collectible by the city/municipal Treasurer.
2) The expenditure portion consists of estimated expenditures which are the
total appropriations covering current operating expenditures and capital
outlays.
3) SK budgeting is the same as that of the other LGUs. The major phases
are: (a) budget preparation; (b) budget authorization; (c) budget review;
(d) budget execution; and (e) budget accountability and reporting.
Section 91. SK Disbursements. – SK disbursements shall conform to the procedures

for barangay disbursements outlined in this Manual except that in the preparation of the
OBR and Disbursement Voucher, the requesting official and signatory in box A of the
disbursement voucher, respectively, shall be the SK Chairman.
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TREASURY OPERATIONS
FUND MANAGEMENT PRACTICES,

ACCOUNTABILITY, CASH EXAMINATION,
SHORTAGES, SETTLEMENT OF ACCOUNTS, AND
LIABILITIES OF LOCAL TREASURERS IN THE
ADMINISTRATION OF LOCAL TAXES, FEES AND
CHARGES
BOOK FOUR
Chapter 1. FUND MANAGEMENT PRACTICES
In line with the increased fiscal responsibility of Local Treasurers and pursuant to good
governance of local funds, it is incumbent upon the Treasurers and other fiscal officers to
embrace and apply effective fund management practices benchmarked from the private
sector in the daily operations of the LGUs. Good governance, as defined under the
UNDP Policy Paper on Governance, is the exercise of economic, political and
administrative authority to manage local government affairs. It comprises the
mechanisms, processes and institutions through which citizens and groups articulate their
interests, exercise their legal rights, meet their obligations and mediate their differences.
Good governance is about efficiency in the management of public funds, demanding high
standards of integrity, transparency and accountability. Thus Local Treasurers need to
continuously update their knowledge and skills on their specific area of good governance,
which is fund or cash management.
A. Cash Management and Programming. Local Treasurers must be able to manage

the cash such that it is available when it is needed for payment of obligations and at the
same time optimize its utilization, ensure that released allotments are adequately covered
by available cash and/or future collections, and provide information to facilitate the
control of expenditures. An effective cash management may be achieved through the
following:
1. Forecasting cash requirements based on the overall local development plans;

2. Determining all the possible sources of cash and the cost involved;
3. Accelerating the collection of receivables;
4. Instituting control measures over cash receipts;
5. Instituting control measures over cash disbursements thereby being assured that
only legitimate obligations are paid; and
6. Investing temporarily idle cash in temporary investments to reduce the
opportunity cost of capital.
Cash programming tools. The following tools may aid the Local Treasurer in cash
management and programming:
Section 92. Cash Flow Forecast (LTO Form 81). The Local Treasurer uses the Cash
Flow Forecast (CFF) as a tool in estimating projected cash flows based on certain
assumptions. The CFF is a monthly schedule of anticipated receipts and disbursements of
the LGU for the fiscal year showing the beginning and ending cash balances of each
month. The cash flow forecast is prepared at the beginning of the year and revised
periodically depending upon the need of the LGU and when circumstances require its
revision. The CFF enables the LCE and the Local Treasurer to plan for an effective
management and utilization of cash of the LGU. (Updated Budget Operations Manual for
LGUs, DBM, June 2005).
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a. The Cash Flow forecast shows the estimated cash inflows and cash outflows of
the LGU classified according to three activities: operating activities, financing
activities and investing activities.
1) Cash flow from operating activities pertains to the receipts from, and
disbursements of cash out of, the regular and primary operations of the
LGU such as from collection of taxes, share from IRA, payment to
creditors and employees, etc. This also includes payment of interest on
bank loans and other loan-related charges.
2) Cash flow from financing activities includes receipt of cash from bank
loans, proceeds from the flotation of bonds and receipts from other types
of borrowings. This also includes payment of principal of loans and other
borrowings.
3) Cash flow from investing activities pertains to receipts from the sale,
acquisition or purchase of long term investments such as real estate,
machinery and other plant, property and equipment.
b. The CFF shall be supported by the following:
1) Cash Receipts Forecast (CRF) (LTO Form 82). This is a schedule of all
income collections and other receipts to be prepared by all collecting units
of the LGU. All receipts shall also be classified into operating, financing
and investing activities.
2) Cash Disbursement Forecast (CDF) (LTO Form 83). This is a schedule
of all expenditures to be prepared by the Treasury personnel in charge of
expenditures and disbursements. Under the CDF, all cash outflow shall be
presented according to operating, financing and investing activities of the
LGU.
c. The preparation of the Cash Flow Forecast involves the following activities:
1) Month-to-month estimates of receipts from taxes based on actual monthly

collection data and reports and historical trends on tax collection of the
LGU;
2) Monthly estimate of other revenues based on past collection performances
of the LGU and taking into account the irregularity and seasonality of the
collection of non-tax revenues;
3) Listing of all accounts payables and outstanding obligations to determine
when they will become due and demandable, that is upon completion or
rendition of services and delivery of goods. These accounts should be
grouped according to the month when they will become eligible for
payment;
4) Listing of all regular and recurring expenses such as payroll, rental or
lease, security and janitorial services, utilities, communication, etc;
5) Estimates and monthly schedule of variable expenses such as travel,
supplies and materials, service contracts and the like;
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6) Monthly estimates of payments for interest and principal on loans and
borrowings, capital outlay and other material expenses.
Section 93. Cash Flow Analysis (CFA) (LTO Form 84). The CFA is a cash flow
monitoring tool used to guide the LCE, the Local Treasurer and the Local Budget Officer
to control the release of allotment depending upon the efficiency of
collection/expenditure performance during the period. It provides information on the
cash surplus or cash deficit on a monthly or periodic basis so that timely decisions can be
made for wise and prudent cash utilization.
The preparation of the CFA requires the following information:
a. Actual cash receipts and disbursements of the month or period;

b. 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;
c. Year-to-date forecast or estimates which is the cumulative total of the projected
cash flow from the beginning of the year to the month under analysis, as indicated
in the Cash Flow Forecast;
d. Adjusted estimated annual amount (AEAA) is computed as follows:
AEAA = Year-to-Date Actual (YTDA) + Projected cash flow for remaining

months (P) + amounts not yet collected/disbursed but projected for previous/this
month and deemed to be collectible or payable (ANC/D) minus Amounts already
collected/disbursed but projected for next months (AAC/D).
e. Original Forecast Annual which is the annual total amount in the Cash Flow
Forecast;
f. 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.
Section 94. Information Provided by the CFF and CFA - The analysis of the Cash
Flow provides the following information to the LCE, the Sanggunian, the Local Finance
Committee and other fiscal officers of the LGU so that important fiscal decisions and
policies could be promptly introduced and implemented:
a. Excess in collection of taxes and other revenues – This is normally sound,

however, a regular and very substantial overage 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
reevaluation of the annual forecast may be required. If there is substantial net
annual overage in the receipts, the LCE may decide to increase the annual budget
for the succeeding year.
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b. Under-collection of taxes and other revenues – This may mean more efforts
should be exerted in the collection of such taxes or generation of such revenues.
A consistently big shortfall in collection should be cause for alarm for the LCE
and other LGU officials on possible problems in its collection efforts or in its
resource mobilization operations. In this instance, estimates should be adjusted to
a more realistic level. The shortfall in collection should be considered in deciding
any subsequent releases of allotment.
c. Excess in the disbursements – This means unplanned expenditures are being

paid. Consistent material disbursement overage should warn the LCE on the
possibility of imposing additional reserves, and suspension or postponement of
planned activities.
d. Under-disbursement – This may mean savings if the annual variance resulted

from the non-incurrence of certain regular expenses or project expenses costing
less than the estimated amounts. Under-disbursement may also result from
postponement of payments to contractors or for obligations that are not yet legally
due. Long-outstanding obligations should be investigated and proper action
should be taken 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 years. Long-
outstanding obligations should also warn local officers of indiscriminate
commitment or obligation of funds even without valid claimants or contracts.
e. Large amount of idle cash that could be invested – Idle cash is indicated by the
monthly ending cash balances. If the amount is more than next month’s estimated
disbursements, the excess is expected to be idle for at least the succeeding month
and may be invested in short-term investments. The most common investment of
idle funds is the time deposit placement with the LGU depository bank(s).
Depending upon the length of time that the LGU funds are expected to be idle,
that is, funds are not expected to be disbursed in the short term, such funds should
be invested in a risk-free investment with a higher interest yield. To obtain
maximum benefits, the Local Treasurer should select the government depository
bank with the best interest offering.
(Updated Budget Operations Manual for Local Government Units, DBM, June
2005)
Section 95. 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 balances. The Daily Cash Flow may be
prepared in addition to the monthly cash flow forecast and cash flow analysis.
Section 96. Number of Days’ Usage in Cash – The LGU may adopt a policy of
maintaining its cash at a level equal to a certain number of days’ requirement. This may
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be done by computing the average cash requirement per day and the number of days’
usage in cash. The following formulas are used in the computations:
Operating Expenses (net of depreciation and

other non-cash charges)
a. Average Cash Requirement = _______________________________________
Number of Working Days in One Year
Cash Balances
b. Number of Days’ Usage in Cash = _____________________________________
Average Cash Requirement per Day
The resulting number of days’ usage in cash will show how many days the LGU’s current
cash balances will be able to cover current operational requirements.
B. Capital Investment and Expenditure Assessment - With the expanded role of the
Local Treasurer as the financial adviser to the 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. This is so 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 97. The Administrative Process for Capital Expenditures – This involves
searching for capital investment opportunities, submission of project proposals to
prospective funders/underwriters, evaluation of various proposals, control of capital
expenditures and follow up of results. To be assured that capital investment proposals
would be consistent with the LGU long-term plans and programs and to avoid waste of
time, effort and resources, criteria for the project proposals must be established. The
criteria may include the objective, relevance, suitability to the LGU, and most
importantly, profitability or income-generation potential of the proposed project. To
guide the Local Treasurers in the evaluation and analysis of the different project
proposals the following methods may be employed:
Section 98. Payback Period - The payback period refers to the length of time or number
of years it will take to recover the initial outlay for a project. The formula is:
Investment
Payback Period = ________________________________
Annual Cash Inflow from Operations
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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.
1) Payback period is shorter than the economic life of the asset - If the
payback period is shorter than the economic life of the asset, the LGU is
expected to realize profit or investment return between the payback period and
the economic life.
2) Payback period is equal to the economic life of the asset - If the economic
life is just equal to the payback period, the investment would not be bringing
in any income and may even be considered a losing proposition since the time
value of money is disregarded.
3) Annual cash flow is uneven - If the annual cash inflows are uneven, the
payback period is computed by adding the annual cash inflows from year to
year until the accumulated amount becomes equal to the investment cost. If
the asset has a scrap value, the payback period may be computed by dividing
the investment (less scrap value) by the annual cash inflow from operations.
Section 99. Discounted Cash Flow (Present Value of Cash Returns) – The discounted
cash flow method in the evaluation of capital investment proposals consider the time
value of money. Time value of money refers to the expected increase in its peso value
considering the prevailing interest rates, the passage of time, and opportunity cost of
capital and similar factors.
In the evaluation of capital projects, it is important to compare the present value of future
cash inflows with the present value of the investment cost. The expected cash inflows of
a capital project represent future values since they are to be realized yet in the future. On
the other hand, the capital investment is an outlay generally made at the inception of the
project hence it is a present value. In order to assess the viability and profitability of an
investment or capital project, the present value of the expected cash inflow must therefore
be determined before they are compared with the present value of investment.
To illustrate, a peso invested today must be considered greater than P1 after one year. An
investment of P600 today would be greater than P700 to be collected after one year if the
cost of money is 25% per annum. This is because the P600 of today must amount to P750
after one year (P600 x 125%). In other words, P1 of today must be P1.25 after one year.
Thus, the ratio of the present value based on the future value is 1:1.25 or .8 (or 8%). In a
reverse case, P.80 of today must be worth P1 a year after. The present value of P700 to
be collected next year must be P560 (P700/125% or P700 x .8).
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a. Present Value of an Annuity of 1 – This refers to the total of all the present
values of 1 to be received (or paid) at regular intervals in the future. Thus the
present value of an annuity of I for three (3) years discounted at 25% is equal to
the total of the present values of 1 due after one year, after two years, and after
three years.
The factor to be used in the computation is found in the Annuity Table (See LTO
Annex 85 on the Present Value of an Annuity of 1 to be Received for n Year).
Illustration : The present value of an annuity of P700 for three (3) years
discounted at 25% will be computed as follows using the factor under Year 3
and under 25% as shown in the Annuity Table:
P700 x 1.952 = P1,366.40

This means that an investment of P1,366.40 today which brings in net cash
inflows of P700 for three consecutive years must be earning at the rate of 25%
per annum.
b. Present Value of Uneven Cash Returns – If the annual cash returns are
uneven, their present values are computed by multiplying each annual net cash
inflow by the factor for the corresponding year and adding the products.
Illustration: Assume that the net cash inflows are as follows and the cost of
money is 25%:
1st Year P 2,000

2nd Year 3,000
3rd Year 3,000
Solution: The net cash inflow of each year is multiplied by the present value of
1 discounted at 25% for one year, two years, and three years, as the case may be,
using the Annuity Table as follows:
P2,000 x .800 = P 1,600

P3,000 x .640 = 1,920
P3,000 x .512 = 1,536
P 5,056
This means that an investment of P5,065 is earning at 25% per annum based on
the given cash returns.
c. Discounted Rate of Return - The discounted rate of return is the rate at which
an investment is earning. It is the rate which equates the present value of cash
returns with the present value of the initial investment. In other words, if the cash
returns were discounted at this rate, their present value would be equal to the
present value of the investment.
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The discounted rate of return is computed as follows:
1) Determine the payback period.

2) With the payback period as the factor, locate the same in the present value
of the Annuity Table taking into account the economic life of the
investment.
Illustration: A machine costing P1,366.40 has an estimated economic

life of three years without scrap value. Annual cash returns have been
estimated at P700.
Solution: The discounted rate of return is computed as follows:
Step 1: Determine the payback period:
Investment
Payback Period = _________________
Annual Cash Returns
= P1,366.40
P700
= 1.952 years
Step 2: Locate 1.952 in the present value of the Annuity Table on line
three years, the economic life of the asset. This is found in column 25%.
The discounted rate of return or the rate at which the investment is earning
is 25%.
d. Net Present Value – This represents the excess of the present value of annual
cash returns (discounted at the lowest acceptable rate) over the present value of
the initial capital investment.
This method is based on the fact that with identical cash flows from two
alternatives, the project that is expected to earn a higher rate of return must
require a smaller amount of investment. In other words, a project which requires
a smaller amount of capital must be earning at a higher rate if it will bring in the
same amount of cash returns for the same number of years.
Illustration: From a proposed investment of P1,366.40, annual returns of P700

per annum are expected during its economic life of three years. Management has
adopted the policy of approving project proposals if the rate of return is 20% or
higher.
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Solution: The net present value is computed as follows:
Present value of annual cash returns

discounted at 20% (P700 x 2.106*) P 1,474.20
Less: Present value of investment 1,366.40
Net present value P 107.80
This means that a project from which annual cash returns are P700 for three years
and earning at the rate of 20% must require an investment of P1,474.20.
Inasmuch as the investment requirement in the project as proposed is P1,366.40
only or less by P107.80, the rate of return on the project being evaluated must be
higher than 205%. Therefore, the project should be approved based on the rate of
return criterion.
* Factor based on the Annuity Table under 3 years and under 20%
e. Present Value (Desirability or Profitability) Index – The present value index is

the ratio of the present value of annual cash returns discounted at the lowest
acceptable rate to the present value of the initial investment cost. It may also be
defined as the ratio of the required investment under the rate required by
management to the investment requirement for the project under evaluation. Thus,
the higher is the present value index, the higher must be the rate of return on
the project under review.
Illustration: Using the illustration in paragraph d, the present value index is

computed as follows:
Present value of annual cash returns discounted at

the lowest acceptable rate of 20% (P700 x 2.106) P 1,474.20
Divided by: Present value of the investment P 1,366.40
Present value index 108%
This means that under this method, the present value index must be at least 100%
for the proposed project to deserve an approval based on the rate of return
requirement.
Full discussion on the different information required to be prepared by LGUs in order for
them to be able to borrow funds, such as preparation of project proposal, financial
analysis, and other relevant project data, is contained in a separate manual entitled
Borrower Assessment and Project Evaluation Manual.
C. Debt Management. Since the Local Treasurer is the custodian of all funds of the
LGU including funds sourced from loans and other types of indebtedness, it is equally
important that he should be involved in the overall debt management strategy of the
LGU.
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Section 100. Purpose and Need for Debt – The LGU normally should rely on internally
generated funds or grants to finance its capital needs. However, with the enactment of the
LGC, more and more LGUs are financing acquisition or construction of projects and
capital assets through the incurrence of loans from government banks or issuance and
sale of bonds. The Local Treasurer should be able to advise the LCE on the propriety of
financing capital projects through bank loans or issuance of debt instruments such as
bonds. The LGU should consider long-term financing for the acquisition, maintenance m,
replacement or expansion of physical assets (including land) only if these assets have a
useful life of at least five years or if the economic enterprise would be expected to
generate revenue in the near term. Long-term loans should never be used to fund regular
operating expenses.
Section 101. 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 loans proceeds. In the selection of projects
to be funded, a balance will be established between the projects’ abilities to meet the
LGU’s priorities 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:
a. 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.
b. 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.
c. Expenditure plan and sources of debt servicing – A detailed plan for the funds
expenditure and debt repayment should be developed foe each project. The plan
should demonstrate the timely matching of funds availability with project
expenditures and that debt service should commence with the flow of revenues
needed to pay the interest and principal on the debt. The basis of the estimates for
the project cost expenditure plan and the basis of revenue cash flow estimates
should be documented and the risk associated with those revenue flows should be
analyzed.
Section 102. Debt Management Policies – The LGU should adopt and maintain
effective debt management policies that recognize the capital improvement needs of the
144
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;
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;
h. Type of debt to be incurred/issued;
The LGU may adopt a combination of the following debt management policies
depending upon its needs and situation:
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 markets, 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.
g. The LGU will, 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.
h. 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.
i. The LGU will 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.
j. Revenue sources will only be earmarked for debt service when legally available
and when there are sufficient revenue sources to fund the LGU’s regular
operational needs.
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k. 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.
l. 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
pretermination or early repayment of its debt when sufficient cost savings can be
realized.
In case the LGU issues bonds to finance its capital projects, it should stabilize its debt
service payments through the use of appropriate stabilization arrangements such as the
maintenance of a Sinking Fund or the establishment of Fund Reserves.
Section 103. LGU Financing Modalities Manual and Debt Management Manual -
To enable the LGUs to have a publication-ready and web-based manual that will cover
the description of the financing sources and a financing formulation guide to guide LGUs
in analyzing alternative funding sources vis-à-vis their funding requirements, and
selecting the appropriate funding source or sources, the LGU Financing Modalities
Manual is separately issued for use by the LGUs. Corollary to the LGU Financing
Modalities Manual is the Debt Management Manual that will serve as a guidebook for the
sound management of the LGU debts.
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Chapter 2. ACCOUNTABILITY, RESPONSIBILITY AND LIABILITY OF
LOCAL TREASURERS FOR FUNDS AND PROPERTY
Section 104. Definition of Terms. - The following terms shall be understood in the
sense as hereunder defined, unless the context otherwise indicates:
a. Accountability- Refers to the answerability of every public officer whose duties

permit or require the possession or custody of government funds or property and
who shall be accountable therefore and for the safekeeping thereof in conformity
with law.
b. Accountable Officer - The officer of any government agency whose duties
permit or require the possession or custody of government funds or property,
(such as the local treasurer, collecting officer, disbursing officer, cashier,
paymaster, property officer) who is required by law to render account to the
Commission on Audit.
c. Certificate of Settlement and Balances (CSB) - A written notification by the
Auditor to the agency head and the accountable officer concerned of the total
suspensions, disallowances and charges found in audit, as well as the settlements
thereof.
d. Disallowance - The disapproval in audit of a transaction, either in whole or in
part.
e. Fixed Assets - Fixed assets are items of property, plant and equipment and are
referred to as "fixed" because of their permanent nature and because they are not
subject to rapid turnover. They include equipment, furniture and fixtures, land and
buildings and any other property considered tangible or long-lasting. (Glossary of
Terms for State Auditors, p. 273-274.)
f. Liability - A personal obligation arising from an audit disallowance or charge in
the course of post audit of a transaction or examination of the cash and accounts
of an accountable officer, which may be satisfied thru payment or restitution as
determined by competent authority and in accordance with law.
g. Current Assets - Cash and other assets that are not earmarked for specific
purposes other than the payment of a current liability or a readily marketable
investment. (Glossary of Terms for State Auditors, p. 391)
h. Persons liable - The persons determined by the auditor to be answerable for an
audit disallowance or charge arising from the post-audit of transaction or
examination of the cash and accounts of an accountable officer.
i. Persons responsible - The persons determined by the auditor to be answerable
for compliance with the audit requirements as called for in the notice of
suspension.
j. Quick Assets- A holding that can be converted into cash within a short period of
time. An example would be a marketable security that is immediately saleable at a
quoted price on the open market. (Glossary of Terms for State Auditors, p. 541)
k. Reconsideration - The process whereby an aggrieved party requests the very
officer or body who made the decision, order or ruling to review the same with
the view of its modification or reversal. This should be distinguish from "appeal"
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which is the process of elevating to the next higher authority a decision, order or
ruling.
l. Responsibility- The obligation to prudently exercise assigned or imputed
authority attaching to the assigned or imputed role of an individual or group
participating in organizational activities or decision.
m. Settlement -The process of determining the status or balance of the accountability
of an accountable officer.
n. Suspension- The deferment of action to allow or disallow in audit a transaction
pending compliance with certain requirements.
Section 105. Accountability of government funds and property – Provincial, city and
municipal officers and employees whose duties permit or require the possession or
custody of government funds shall be accountable and responsible therefor and for the
safekeeping thereof in conformity with the provisions o the accounting law (Sec. 633,
Revised Administrative Code). The Treasurer of a province, city, municipality, barangay
or other political subdivision, shall be primarily accountable for all government funds
pertaining to his province, city, municipality, barangay or other local political subdivision
as the case may be. In case of LGUs who have not created the Office of General
Services, the local treasurers shall also be primarily accountable for all government
properties pertaining to the province, city, municipality, barangay or other local political
subdivision, as the case may be.
Primary and Secondary Responsibility.
a. The head of a local government unit is immediately and primarily responsible for
all government funds and property pertaining to his agency.
b. Persons entrusted with the possession or custody of the funds or property under
the LCE shall be immediately responsible to him without prejudice to the liability
of either party to the government. (Section 102, PD 1445)
In the effective discharge of the aforementioned responsibility and accountability, the

LCE should ensure that the following functions are performed:
a. Develop and install a sound internal control structure to include the internal
control and environment, accounting system and procedures.
b. Maintain the internal control environment in order to safeguard assets, produce
reliable financial information and promote operational efficiency.
To guide the LCE in the establishment of a good internal control system, a full discussion
on the concepts, policies and procedures on internal control structure is presented in
Annex 88 of the Manual. In addition, some basic Internal Control Questionnaires (ICQ)
on the proper management, handling, custody and disbursement of funds, as well as on
certain types of financial transactions, are presented in Annex 89.
Section 106. General Liability for Unlawful Expenditures. - Expenditures of

government funds or uses of government property in violation of law or regulation shall
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be a personal liability of the official or employee found to be directly responsible
therefor. (Section 103, PD 1445)
Section 107. Degree of Supervision Required of Primarily Responsible Officers. -

The Head of a local government unit shall exercise the diligence of a good father of a
family in supervising accountable officers under his control to prevent the incurrence of
loss of government funds or property, otherwise he shall be jointly and solidarily liable
with the person primarily accountable therefor. The local treasurer shall likewise exercise
the same degree of supervision over accountable officers under his supervision, otherwise
he shall be jointly and solidarily liable with them for the loss of government funds or
property under their control. (Section 104, PD 1445)
Section 108. Measure of Liability of Accountable Officers. –
a. Every officer accountable for government property shall be liable for its money
value in case of improper or unauthorized use or misapplication thereof, by
himself or any person for whose acts he may be responsible. He shall likewise be
liable for all losses, damages, or deterioration occasioned by negligence in the
keeping or use of the property, whether or not it be at the time in his actual
custody.
Money value, as used herein, means the book value of the lost property taking
into consideration the depreciation thereof. (COA Decision No. 742 dated Feb. 9,
1989)
b. Every officer accountable for government funds shall be liable for all losses
resulting from the unlawful deposit, use, or application thereof and for all losses
attributable to negligence in the keeping of the funds. (Section 105, PD 1445)
c. An officer who fails to notify and apply for relief from cash accountability within
the prescribed time, in time of loss, shall not be relieved of liability or allowed
credit for any such loss in settlement of his accounts (Sec. 73, PD 1445).
Section 109. Liability for Acts Done by Direction of Superior Officer. –
c. No accountable officer shall be relieved from liability by reason of his having

acted under the direction of a superior officer in paying out, applying or
disposing of the funds or property with which he is chargeable, unless prior to that
act, he notified the superior officer in writing of the illegality of the payment,
application, or disposition. The officer directing any illegal payment or
disposition of the funds or property shall be primarily liable for the loss, while the
accountable officer who fails to serve the required notice shall be secondarily
liable. (Section 106, PD 1445)
d. The local treasurer or any accountable officer is not relieved of liability for illegal
payment, application or disposition of public funds and property because such
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illegal acts were done under the direction of a superior. The superior officer is
primarily liable while the local treasurer or any accountable officer is secondarily
liable.
e. To relieve himself of liability, the local treasurer or accountable officer should

give a written notice to a superior officer stating his opinion on the illegality of
the payment, application or disposition of public funds or property being directed
by such superior officer. If the latter insists, then he is solely liable of the
consequences in the event that the opinion of the accountable officer is upheld.
(Handbook on Cash Management and Control System, COA, May 2004)
Section 110. Period of Accountability. -
a. As a general rule, the accountability of the general services officer, the provincial,
city, or municipal treasurer for government funds and property shall begin at the
time he actually assumes control of the transactions connected therewith and ends
at the time he actually ceases to have such control. As the responsibility of each
incumbent must be fixed definitely, complete inventories of all liquid assets,
quick assets, fixed assets, and accountable forms shall be accomplished upon each
transfer of such accountability, whether temporary or permanent. These
inventories shall invariably be dated as of the date of such transfer, although the
taking, checking and preparation of the same may be delayed for several days.
The invoice receipt shall similarly be dated but the date it is actually signed by the
outgoing and incoming officer shall be clearly stated.
b. It will, therefore, be noted that the actual signing of the invoice-receipt may be
made several days after the new incumbent has assumed control of the
transactions involving, funds, property and accountable forms. It will not,
however, be understood that because he has not receipted for the money, property
and accountable forms, he is not responsible for the interim transaction connected
therewith on which he has stamped his approval. His predecessor can only be
held responsible for the transactions occurring during the periods of the latter
accountability. Sometimes, there are transactions or expense vouchers that
pertain to the period of accountability or incumbency of an outgoing officer, but
which for one reason or another are not taken up in the books before the transfer
is effected. Although such transactions may already bear the approval of the
former treasurer, the new treasurer shall carefully investigate the circumstances
and examine the nature of the transactions before having them entered in his
accounts. Once these transactions are taken up in the new treasurer’s books, the
legal presumption is that he has also approved such transactions and assumed
responsibility therefor, even if the same does not bear his own approval on the
face of the voucher. In order to preclude misunderstanding between the outgoing
and incoming treasurers, the former shall ensure that all transactions for which he
is responsible shall be entered into his own accounts, prior to the assumption of
the latter.
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c. No clearance shall be granted the outgoing accountable officer, in case of willful
neglect of transfer of accountability. In such event, the incoming local treasurer
or accountable officer shall inform the local chief executive or his superiors, as
the case maybe of such failure. Consequently, he shall request the Secretary of
Finance, thru the local chief executive, or his immediate superior, as the case
maybe, for the creation of a committee to conduct inventory of the funds and
property under the accountability of the outgoing accountable officer.
d. A copy of such inventory shall be furnished the local auditor for his information
and audit.
Section 111. Advice of Retirement, Transfer and Settlement of Accounts. - Local

treasurers and accountable officers shall advise the corresponding local auditors
sufficiently in advance of the date of their relinquishment of office due to retirement,
resignation, leave of absence, or transfers, so as to enable the provincial or city auditor
to give preference to the audit of the treasurer's accountabilities and to give such officers
an opportunity to adjust the differences found in the settlement of accounts before
actually effecting the transfer of accountability, and minimize, if not obviate, unnecessary
delays and difficulties which might happen in connection with such transfer.
Immediately upon cessation/transfer of office, an outgoing local treasurer or accountable
officer shall settle any outstanding differences still existing in his accountabilities, so as
to clear the said differences therefrom.
Section 112. Closing of Books Preparatory to Transfer of Accountability.
a. Before the transfer of accountability is effected, all the books and accounts shall
be completely written up to date, including reports on accountable forms and
cashbooks as well as supplies adjustment sheets.
b. The cashbooks shall then be totaled and closed as of the date of the transfer, ruled,
and certified by the outgoing treasurer, showing the balance per book and the
amount transferred to his successor. The successor shall also certify therein
acknowledging the amount actually received by him/her from his/her predecessor.
c. All cash and cash items, checks, certificates of time deposit, stock certificates
shall be counted and listed in an inventory showing the denomination and amount
of each cash and cash item.
d. The inventory of checks shall also show the serial numbers, dates, amounts and
names of payees and of the banks on which drawn.
e. Investment certificates like time deposits, treasury bills and stock certificates
shall be inventoried showing their serial numbers, amounts and type of
investments.
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f. The inventory of cash and cash items shall be compared with the cashbook
balances, the ledger balances and other records.
(BLGF Memorandum Circular No. 03-2007)
Section 113. Preparation of Invoice Receipts.
a. The outgoing officer shall prepare invoice-receipts in quadruplicate covering his

entire accountability for money, property, unused accountable forms, and
unissued blank checks. These invoice receipts shall then be submitted to the
Provincial/City Auditor for verification. One duly verified set of invoice-receipt
shall be given to the incoming officer; the original set shall be submitted to the
Provincial/City Auditor, one set shall be placed in the files of the treasury; and the
remaining set shall be retained by the outgoing officer. Each invoice-receipt shall
bear the following certificate at the bottom of each sheet:
I hereby certify that I have this ______day of ___________, transferred to my

successor, Mr./Ms.___________________ the items described above, as of
________________, the date of transfer of accountabilities.
________________________________
Outgoing 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
b. In case of property, complete detailed inventories shall be made on the regular

form prescribed therefore in the Acknowledgement 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 the Consolidated Report of Accountability for Accountable
Forms (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, supported by the corresponding Report of
Accountability for Accountable Forms (RAAF) held by the Accountable Officer,
which were last submitted, duly signed by them.
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c. All other important documents such as stock certificates, certificate of time
deposits, treasury bills, duplicate combination of safe, etc., pertaining to the
Office, which are not included in the inventory aforementioned must also be listed
and invoiced by the outgoing treasurer and receipted for by the incoming
treasurer.
BLGF Memorandum Circular No. 003-2007
Section 114. Photographs of Accountable Officers. - The Commission on Audit shall

be furnished with the most recent photographs of duly appointed local treasurers,
collecting and/or disbursing officers upon filing and renewal of application for bond with
the Fidelity Fund of the Bureau of the Treasury on General Forms Nos. 57(A) and 58(A).
A copy of such photographs submitted by the accountable officer shall be furnished by
the Unit Auditor to the COA Director concerned, upon proper receipt who shall keep a
permanent confidential and systematic file thereof, in a locked cabinet. No photograph
shall be withdrawn from the file without the prior approval of the COA Director.
Section 115. Final Report of Accountable Officers. –
a. An accountable officer, upon ceasing to act in his official capacity as such, shall
submit to the Auditor of the agency concerned a report of his accountability.
b. Any remaining balance of such accountability shall be deposited in the proper
treasury without unnecessary delay. (Section 80, PD 1445)
Section 116. Clearance from Money and Property Accountability. - No local treasurer
or officer accountable for government funds and property shall relinquish their office due
to resignation, leave of absence, transfer or retirement until he shall have secured a
clearance from money and property accountability from the local government unit
concerned. In case of death, such clearance shall nevertheless be secured by his lawful
heirs.
No clearance shall be issued to the Local Treasurer or accountable officer concerned

without the outstanding differences in their accountabilities settled.
Section 117. Duty of Succeeding Accountable Officer to Assist in the Adjustment

of Predecessor's Differences in His Accounts. - Whenever by force of circumstances, a
provincial or city, municipal or barangay treasurer, or any other accountable officer
whose accounts are subject to audit dies, or is transferred or retires from office, it shall be
the duty of the succeeding officer to assist in the adjustment or settlement thereof through
the provision of available information and documents and/or creation of linkages with
appropriate offices to facilitate retrieval of information related thereto.
Section 118. Death or Incapacity of a Local Treasurer or Accountable Officer. -

When a local treasurer or officer accountable for government funds or property absconds
with them, dies, or becomes incapacitated in the performance of his duties, the Secretary
of Finance, in the case of funds and property of the province, city and municipalities,
shall designate a custodian to take charge of the funds or property until a successor shall
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have been appointed and qualified. In the case of barangays, the Barangay Chairman
shall designate the custodian. The local chief executive may appoint a committee to count
the cash and take an inventory of the property for which the officer was accountable and
to determine the responsibility for any shortage therein. One copy of the inventory duly
certified shall be filed with the Commission on Audit or its duly authorized representative
but the findings of the committee shall not be conclusive until approved by the latter.
If the absconding, deceased, incapacitated, or superseded officer is responsible to another

who is accountable, the latter may himself designate the committee or take other lawful
measures for the protection of his interest.
Section 119. Credit for Loss Occurring in Transit or Due to Casualty or Force
Majeure. - When a loss of government funds or property occurs while they are in transit
or the loss is caused by fire, theft, or other casualty or force majeure, the officer
accountable therefore or having custody thereof shall immediately notify the Commission
on Audit or the auditor concerned and, within thirty days or such longer period as the
Commission on Audit or auditor may in the particular case allow, shall present his
application for relief, with the available supporting evidence. Whenever warranted by the
evidence, credit for the loss shall be allowed. An officer who fails to comply with this
requirement shall not be relieved of liability or allowed credit for any loss in the
settlement of his accounts. (Section 73 (1), PD 1445)
Section 120. Basic Requirements for Request for Relief from Accountability. - The
following documents shall constitute the basic requirements for request for relief from
money or property accountability including accountability for accountable forms with
money value:
a. To be submitted by the Accountable Officer concerned –
1) The basic notice of loss to be filed immediately after the discovery of the
loss and the request for relief from accountability which should be filed by
the proper accountable officer within the reglementary period of thirty
(30) days from the occurrence of the loss, with the Auditor concerned or
the Commission;
2) In case of delay in the filing of the aforesaid notice and request,
satisfactory explanation or the reason/s for such delay should be submitted
after which the reason/explanation given should be verified or confirmed
by the Auditor concerned;
3) If the occurrence of the loss has also been reported to other police
agencies, like the National Bureau of Investigation (NBI), the
progress/final investigation report thereon should be submitted;
4) Affidavit or Sworn Statement of the local treasurer or the proper
accountable officer on the facts and circumstances surrounding the said
loss, supported by the Affidavit of two (2) disinterested persons who have
personal knowledge of such fact of loss. Affidavit executed by the
accountable officer should state the following facts:
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a) Exact or accurate amount of government cash , book value of the
property and money value of accountable forms, subject for
request for relief;
b) Actual date in which the loss was first noted;
c) Manner of disappearance;
d) Efforts put forth to recover the same;
e) Provisions made to safeguard the cash, property or accountable
forms; and
f) Date when the loss was reported to the auditor and the police
authorities
In case it is not possible to obtain the statement of two disinterested

persons and only one is available, or none at all, such fact should be set
forth in the affidavit of the person requesting relief, giving the reasons
therefor;
5) Comment and/or recommendation of the local chief executive or the

treasurer concerned on the request;
6) Memorandum Receipts covering the properties subject of the request, if
any; and
7) In case of accountable forms with money value, evidence of the immediate
issuance of the notice of loss of accountable forms as required under COA
Circular No. 83-233 dated August 24, 1984.
b. To be prepared and submitted by the COA Auditor concerned –
1) Copy of the Investigation, Inventory and Inspection report of the proper

COA personnel on the facts and circumstances surrounding the loss; and
2) Comment and/or recommendation of the COA Director/OIC and/or Unit
Head on the propriety of the request, together with the full statement of
material facts. This should contain a categorical determination by the
COA Director/Auditor concerned on the absence of fault or negligence on
the part of the accountable officer in the handling/safekeeping.
3) In addition to the basic requirements the following documents are required
for specific occurrences:
a) Fire –
i. Final report of the local Police/Fire Department or Station on

the incident.
ii. List or inventory of burned or destroyed properties as well as
those properties retrieved after the fire, stating thereon the
acquisition cost/book value of each item, duly verified by the
Auditor concerned.
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iii. Authenticated pictures showing the site/office or government
properties razed by the fire.
iv. Fire insurance policy, if any, covering the subject property.
If the property is insured, information as to whether or not
the Agency concerned has already been paid the proceeds of
the said insurance policy, shall be discussed. If in the
affirmative, evidence to this effect should be submitted. If
the property has not been insured, reasons to this effect shall
be submitted.
b) Theft Robbery/Hold-up
i. Final Police report on the theft or robbery case.

ii. In case of theft or robbery with force upon things (destruction
of padlocks, doors, window jalousies, etc.) information as to
whether or not the premises of the government agency or
office concerned are manned by security guards. If so, the
respective Sworn Statements or Affidavits of the guards
respecting the incident should be obtained and submitted.
iii. A certified copy of the contract of security services entered
into by and between the government office and the security
agency should also be submitted.
iv. If the security guards are found to be negligent in the
premises, a recommendation to the agency head should be
made that appropriate action be instituted to enforce the civil
liability of the security guard and/or security agency
concerned.
v. In cases of theft or robbery/hold-up of government
cash/funds to be deposited with or withdrawn from a
depository bank, information as to whether or not the proper
accountable officer was escorted by a policeman or security
guard, should also be submitted. In the negative, explanation
to this effect should be submitted.
vi. Detailed list of government properties lost or destroyed as
well as those properties retrieved after the robbery incident
disclosing the book value of each item or exact amount of
government money/cash involved, duly verified by the
Auditor concerned.
vii. Authenticated picture(s) taken relative to the robbery or theft
incident.
c. Force Majeure (Earthquake, Typhoons, Etc.) –
i. Detailed list/inventory of lost or destroyed government

properties or lost cash, as well as those properties retrieved
after the calamity, verified by the Auditor concerned.
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ii. Certification of the proper official of the local PAGASA or
other similar government agency on the actual occurrence
of the calamity specifying therein the approximate or exact
time the incident happened and the areas or places affected
thereby.
d. Death of Large Cattle and Other Livestock –
i. Certificate of Death of the large cattle issued by the proper

official, duly verified by the Auditor concerned.
ii. Autopsy report of the proper Veterinarian, if any.
Section 121. Examination by the Commission on Audit. - The books, accounts, papers,
and cash of all local treasurers and other accountable officers shall at all times be open to
the inspection and examination of the Commission on Audit or its duly authorized
representatives.
Section 122. Service of Demand upon the Accountable Officer to Produce His Cash
and Other Accountabilities. - All local treasurers and accountable officers shall produce
all cash, cash items and accountable forms in his possession upon service of demand or
cash production notice by the Auditor as incorporated in General Form No. 74 (A).
Failure on the part of the treasurer and other accountable officers to produce all the funds
and property in his charge, on demand of any officer authorized to examine such person
or treasury, shall be deemed to be prima facie evidence that such missing funds or
property have been put to personal use.
Section 123. Sealing of Safe. - The sealing of safe and other cash receptacles shall be
resorted to by the examining officer only in exceptional cases, such as:
a. The absence or non-appearance of the accountable officer for the count specially
when the intention of the auditor to examine the former has become obvious or
made known to other employees;
b. When the accountable officer refuses to submit himself to cash examination;
c. An interruption or the non-completion of the count during the day or the
necessity of controlling cash, cash items and records; and
d. In cases of deceased, incapacitated or absconding accountable officer pending the
cash count to be conducted by a committee created to make an inventory of his
cash, cash items and other accountabilities.
Section 124. The Count and Inventory of Cash. - All cash, cash items and accountable
forms shall be counted in the presence of the accountable officer who produced the same.
Cash shall be counted from the highest to the lowest denomination. Mutilated bills must
be examined for acceptability. Cash items such as, cash in pay envelopes, checks,
treasury warrants, money orders, paid voucher, partially paid payrolls, etc., shall be
segregated by groups.
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The following shall be disallowed as credit to accountable officer's accountability:
a. Post-dated checks and treasury warrants

b. Staled treasury warrants, checks and money orders
c. Chits, IOUs, vales or other forms of promissory notes
d. Private checks not made payable to the agency or the official title or designation
of the agency head as well as accommodated private checks.
e. Demonetized bills and coins
f. Unacceptable mutilated bills.
No accountable officer or employee may leave the desk while the count is in progress
until his own particular accountability have been counted, determined as to correctness,
and recorded by the examiner. Nor shall any one be permitted to approach the desk while
this count is going on. If for any reason, the cash cannot be counted without interruption,
immediately upon arrival of the examiner, the safe or safes, drawers, and other possible
cash receptacles in the office of the accountable officer shall be sealed securely, so that
when counted, the contents of the same will be in the same condition as when the
examining officer arrives.
At the end of the count, the grand total of all cash, checks, warrants, and cash items as
well as accountable forms presented will be taken and immediately the cash count
inventory and inventory of accountable forms will be certified and signed by the
accountable officer or employee concerned regardless of whether the grand total tallies or
not with the balance of accountability shown in the cash book of the accountable officer.
The signature of the accountable officer concerned shall be witnessed by at least two (2)
witnesses.
Section 125. Inspection of the Safe or Safes and Other Cash Receptacles. - Prior to
or simultaneous to the inventory of cash and accountable forms, the local treasurer and/or
accountable officer shall permit the auditors to inspect and examine minutely the total
contents of the safe or safes, drawers, boxes, and other possible cash receptacles in the
office of said accountable officer. If there are envelopes or bound packages inside the
safes or drawers or other containers in the office, the same shall be opened and the
contents inspected. Money or valuables found in a government safe and claimed by an
officer or employee as his own private property shall be segregated and marked as such.
Section 126. Certification of the Cash books in the Course of Cash Examination. –
a. When the inventories of cash and cash items, and accountable forms have been
made and certified, the local treasurer shall update recording of his
accountabilities in his cash books. As soon as all collections and remittances and
all paid vouchers will have been entered in the cash book as of the date of
examination and before the daily balances and daily totals thereof are actually
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verified by the examiner, the accountable officer keeping the same will be
required to foot, balance and rule it in ink and to make the following certificate on
the line immediately below the last balance to ascertain from him that the
transactions therein recorded are true and correct:
" I hereby certify on my official oath that all cash and depository
transactions had by me in my capacity as __________________of
_______________________ at the time of examination, showing a
balance of ____________________________(P______________) have
been correctly and completely recorded in this cash book.
______________________ ___________________________
(Date) (Signature)
b. If, after verification of the entries in the cash book, errors or omissions are found
therein, the accountable officer shall be required to effect the adjusting/correcting
entries and then to foot, balance and rule the cash book. The aforementioned
certification above shall likewise be required after the last entry.
c. After the completion of the cash examination, the following certification shall be
made by the auditor/examiner on the cashbook below the accountable officer's
certification:
"Examined and verified this __________________and arrived

at an audited balance of P____________________, of which the
amount of P______________________ was actually found on hand,
consisting of P___________________ in currency and P___________
in cash items, thereby showing __________________ difference/cash
shortage/overage.
_______________________
Signature
_______________________
Title
Section 127. Review of Transactions. - Review of transactions by the COA

Auditor/Examiner shall be from the date of last cash examination to the date of current
examination. Verification shall be limited to determining/establishing that disbursement
vouchers, as entered in the cashbook, are properly certified, approved and payments duly
acknowledged; that all cash advances, cash receipts, remittances/deposits and adjusting
entries are properly and correctly recorded; and that all cash balances as of date of
examination are reconciled with accounting and related records.
Section 128. Certification in General Form No. 74 (A). - After the balance of
accountability of the accountable officer has been finally determined, the Auditor shall
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compare such balance to the inventory of cash and/or allowed cash items to ascertain
shortage or overage, if any. The following certification shall then be executed by the
Accountable officer at the back of General Form No. 74 (A), as follows:
I HEREBY CERTIFY that my accountability for the above funds of

_________________________________ at the time of examination
(state the name of the Agency)
on ______________, 2001 is correctly stated above totaling _____________
_______________________________________ (P __________)
(amount in words)
________________________ ______________ _____________________

Accountable Officer’s Signature Designation Agency/Station
The Auditor/Examiner, on the other hand shall execute the following certification:
I HEREBY CERTIFY that the preceding is true and correct Report of

Examination of the cash and accounts of ____________________________,
(Name of Accountable Officer)
__________________, _______________________________.
(Designation) (Agency/Station)
_______________________
(Signature of Examiner)
Section 129. Report of Cash Examination. - After the cash examination is completed,
the auditor shall prepare and submit a final narrative report, whether or not there is a
shortage. The report shall contain all the important details, data and information
disclosed in the examination and usually consists of three parts, namely, the introduction,
the findings and the recommendations. It shall be supported with documentations
prescribed by the Commission on Audit.
Section 130. Shortages; Malversation..
a. Any public officer who, by reason of the duties of his office, is accountable for
public funds or property, shall appropriate the same, or shall take or
misappropriate or shall consent, or through abandonment or negligence, shall
permit any other person to take such public funds or property, wholly or
partially, or shall otherwise be guilty of the misappropriation or malversation
160
of such funds or property, shall suffer the corresponding penalties prescribed
by law.
b. The failure of a public officer to have duly forthcoming any public funds or
property with which he is chargeable, upon demand by any duly authorized
officer, shall be prima facie evidence that he has put such missing funds or
property to personal uses. (Article 217 of the Revised Penal Code)
c. The term public officer as used in the law is with reference to a person who, by
direct provision of the law, popular election or appointment by competent
authority, shall take part in the performance of public functions in the
government, or shall perform in said government or in any of its branches
public duties as an employee, agent, or subordinate official, of any rank or
class. (Article 203 of Revised Penal Code)
d. The relative importance of the office or employment held by an officer is not

the controlling factor; the nature of duties which he performs-the fact that, as
part of his duties, he receives public money or property for which he is bound
to account- is that which determines whether or not he is an accountable
officer. (U.S. vs. Velazquez, 32 Phil. 157)
Section 131. Presentation of Formal Written Demand to the Accountable Officer. –
a. The examining officer shall always make a formal written demand, in case of
shortage, upon the defaulting officer to produce the missing funds,
immediately upon the discovery of the same.
b. The demand shall be addressed to the defaulting officer in person; shall give
his title; shall notify him of the discovery and the amount of the shortage in
the examination of his cash, books, and account; shall specify by whom,
when, and where the examination was performed; shall fix the time and place
for restituting the amount of the shortage; and shall require him to submit
within the same period of time a written explanation why criminal prosecution
should not be filed against him in view of the shortage.
c. Receipt of the letter of demand served upon the defaulter shall be

acknowledged by him in writing, stating in such acknowledgment at what
time and on what date it was received by him.
Section 132. Seizure of Office by the Examining Officer.
a. In case an examination of the accounts of a local treasurer discloses a shortage

in cash which should be on hand, it shall be the duty of the examining officer
to seize the office and its contents, notify the Commission on Audit, the local
chief executive and the local accountant.
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b. Thereupon, the examining officer shall immediately turn over to the
accountable officer next-in-rank in the local treasury service, unless the said
office is likewise under investigation, the office of the treasurer and its
contents, and close and render his accounts on the date of turnover.
c. In case the accountable officer next in rank is under investigation, the auditor
shall take full possession of the office and its contents, close and render his
accounts on the date of taking possession, and temporarily continue the
public business of such office until such time that the local treasurer is
restored or a successor has been duly designated.
d. The local treasurer or accountable officer found with such shortage shall be
automatically suspended from office. (Section 348, RA 7160)
Section 133. Notice to the BLGF in Case of Shortages. - Immediately upon the
discovery of a shortage in the cash and accounts of a provincial, city and municipal
treasurer, the COA Auditor shall notify the Executive Director of the Bureau of Local
Government Finance (BLGF) of the Department of Finance, thru the appropriate
channels, of the fact, for their information and appropriate action. The notice shall
include information on the amount of shortage and the case/s filed with the Office of the
Ombudsman or the proper Courts, if any.
Section 134. Constructive Distraint of Property of Accountable Officer. -
a. Upon discovery in audit of a shortage in the accounts of any accountable

officer and upon finding of a prima facie case of malversation of public funds
or property against him, in order to safeguard the interest of the Government,
the Commission on Audit or its duly authorized representative/s may place
upon constructive distraint personal property of the accountable officer
concerned where there is reasonable ground to believe that the said officer is
retiring from the government service or intends to leave the Philippines or
remove his property therefrom or hide or conceal his property.
b. The constructive distraint shall be effected by requiring the accountable

officer concerned or any other person having possession or control of the
property to accomplish a receipt in the form prescribed by the Commission,
covering the property distrained and obligate himself to preserve the same
intact and unaltered and not to dispose of it in any manner whatever without
the express authority of the Commission.
c. In case the said accountable officer or other person having the possession and
control of the property sought to be placed under constructive distraint refuses
or fails to accomplish the receipt herein referred to, the representative of the
Commission effecting the constructive distraint shall proceed to prepare a list
of such property and in the presence of two witnesses leave a copy thereof in
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the premises where the property distrained is located, after which the said
property shall be deemed to have been placed under constructive distraint
Section 135. Withholding of Payment of Money to Accountable Officer. –
a. The Auditor may direct the proper officer to withhold the payment of any
money except retirement pay or gratuities, due the defaulting accountable
officer once his cash shortage is finally ascertained. The withholding order
shall be signed by the Auditor in the following manner:
"By Authority of the Chairman, Commission on Audit"
__________________
Auditor
b. The amount withheld shall be applied to the satisfaction of the accountable

officer's indebtedness to the Government arising from the cash shortage
pursuant to Section 37, PD 1445.
c. The withholding order shall be reported promptly to the COA Chairman by

the Auditor concerned.
Section 136. Cash Overage. – In case of cash overage, satisfactory explanation shall be
submitted by the accountable officer to the Auditor/Examiner. If the overage cannot be
satisfactorily explained by the accountable officer, the amount shall be forfeited in favor
of the government and an official receipt issued therefor by the collecting officer.
Examinations shall be extended, if necessary, for the purpose of ascertaining the cause of
the overage and any underlying irregularity.
Section 137. Transcript of Auditor's Record as Evidence of Liability. –
a. In any criminal or civil proceeding against an officer for the embezzlement or

misappropriation of government funds or property, or to recover an amount
due the government from an accountable officer, it shall be sufficient, for the
purpose of showing a balance against him, to produce the working papers of
the auditor concerned
b. A showing in this manner of any balance against the officer shall be prima
facie evidence of the misappropriation of the funds or property unaccounted
for or of civil liability of the officer as the case maybe.
c. 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
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production of the original when this appears to be necessary for the attainment
of justice.
Section 138. Auditor's Certificate of Balance. - Auditors of all government agencies

shall certify the balances arising in the accounts settled by them to the Commission on
Audit and to the proper treasurer, collecting officer, or disbursing officer, in such form as
the Commission on Audit may prescribe, within sixty (60) days from the date of receipt
of those accounts from the treasurer, collecting officer, or disbursing officer concerned.
Section 139. Auditor's Notice to Accountable Officer of Balance Shown Upon

Settlement. -
a. The Auditor concerned shall, at convenient intervals, send a written notice,

under a certificate of settlement to each officer whose accounts have been
audited and settled in whole or in part by him, stating the balances found due
thereon and certified, and the charges or difference arising from the settlement
by reason of disallowance, charges, or suspensions.
b. The certificate shall be properly itemized and shall state the reasons for
disallowance, charge, or suspension of credit.
c. A charge of suspension which is not satisfactorily explained within ninety

days after receipt of the certificate or notice by the accountable officer
concerned shall become a disallowance, unless the Commission or auditor
concerned shall, in writing and for good cause shown extend the time for
answer beyond ninety days.
Section 140. Certificate of Settlement and Balances (CSB) . –
a. This Certificate shall be issued by the Auditor to the agency head and the
concerned accountable officers of the audited agencies for all transactions
duly post-audited. The certificate summarizes all suspensions, disallowance
and charges found in audit, including the settlements thereof as of a given
date.
b. It shall be issued within ten (10) days after the end of each quarter, for every
accountable officer and for each fund. The Auditor is not, however precluded
from issuing the CSB as often as he deems it practicable.
c. The Certificate shall be supported by the Summary of Suspensions,

Disallowance and Charges; Summary of Suspensions Maturing into
Disallowance and Charge; and Summary of Settlements of Suspensions,
Disallowance and Charges, all of which shall form integral parts of the
Certificate of Settlement and Balances.
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Section 141. Notice of Suspensions (NS) –
a. This Notice shall be issued as often as suspensions are made by the auditor for
the purpose of notifying the agency head and the accountable officer
concerned on the suspended transactions.
b. The NS shall indicate the amount suspended, the reason/s for the suspensions
and the requirement/s to be complied with in order to lift the suspension.
c. The date of receipt of the NS by the agency head and responsible officer
concerned or their authorized representative shall be the reckoning date for
purposes of counting the 90 day period after which, the suspension shall
mature into disallowance.
Section 142. Notice of Disallowance (ND) –
a. This Notice shall be used and issued as often as disallowance are made by the
auditor in order to notify the agency head, the accountable officers concerned,
and the other persons liable for the disallowed transaction.
b. The date of receipt of the ND by the agency head and the persons liable
thereof or their authorized representative, shall be the reckoning date for
purpose of counting the period of appeal after which, the disallowance
becomes final and executory.
Section 143. Credit Notice (CN) –
a. This Notice is issued by the Auditor to the accountable officer concerned

within thirty (30) days from the receipt of report of disbursements for
liquidation of cash advances, to inform the latter of the amount allowed in
audit and any suspensions and/or disallowance made.
b. In case of disallowance, a copy of the Credit Notice shall be furnished the

Accountant who shall record the restoration of the cash advance for the
amount disallowed. The amount allowed in audit by the auditor as contained
in the Credit Notice shall be deemed to have been settled.
Section 144. Notice of Charge (NC) . –
a. This Notice shall be used and issued as often as charges are made by the
auditor to notify the agency head, accountable officer concerned and other
persons liable for the deficiencies noted in the audit of revenues and receipts.
The amount charged shall be indicated as well as the reasons therefor.
b. The date of receipt of the NC by the LCE and the persons liable thereof or
their authorized representative, shall be the reckoning date for purposes of
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counting the period of appeal after which, the charge becomes final and
executory.
Section 145. Audit Observation Memorandum (AOM) - This Memorandum shall be

issued to the agency head and/or other officials concerned relative to the
findings/observations/other deficiencies noted in the audit of accounts/transactions and
requiring comment/reply thereto within the period specified therein.
Section 146. Auditor's Order. –
a. This Order shall be used by the Auditor to enforce the settlement of audit
disallowance and charges, whenever the persons liable therefor refuse or fail
to voluntarily settle the disallowance and charges after the decision has
become final and executory.
b. The Auditor shall, through the agency head, order the Cashier/Treasurer/
Disbursing Officer to withhold the payment of any money due the person
found to be liable therefor, if no payment/refund is so far made.
c. In case the person liable is an employee/official of another government

agency, the auditor concerned, thru his Director, shall request the auditor of
the other government agency to order the Cashier/ Treasurer/Disbursing
Officer thereof, to withhold such claim or so much amount as may be
necessary to satisfy the obligation of the person concerned.
d. The Auditor shall send at least two memoranda (five days apart) requiring the
Cashier/Disbursing Officer/Treasurer to comply with the Auditors' Order.
e. After the lapse of five (5) days from receipt of the second memorandum
without complying with the Auditor's Order, the auditor shall submit a report
of such non-compliance to the COA Director concerned together with the
necessary supporting documents.
f. The COA Director concerned, after evaluation of the auditor's report, shall
call the attention of the local government unit head within the level of his rank
and within his audit jurisdiction regarding the non-compliance to the Auditor's
Order.
g. If still no action is taken thereon within a reasonable time, the Director shall
report to the COA Chairman the inaction of local government officials on the
Auditor's order.
h. The COA Chairman, based on the report of the Auditor and the
recommendation of the Director, is expected to communicate to theLCE
requesting that the persons liable be required to settle the disallowance and
charge, and to take such actions as are deemed necessary under the
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circumstances. A copy of this communication shall be furnished the auditor
thru the Director concerned.
i. In case the LCE fails to enforce the settlement within thirty (30) days from the
COA Chairman's request, the auditor shall submit a report to the Chairman,
thru the Director concerned. Thereafter, the Chairman thru the Legal Office
may cause the filing of the necessary administrative and/or criminal complaint
with the Civil Service Commission, Office of the Ombudsman or other
appropriate agencies concerned on the basis of the evidences/documents
presented.
Section 147. Grounds for Suspension. - The Auditor's Notice of Suspension is issued
for:
a. Transactions or accounts which could otherwise have been settled for some
documentary or technical requirements, like lack of supporting documents or
proper signatures.
b. Transactions or accounts the legality/propriety/regularity of which the Auditor
doubts, but which may possibly be allowed in audit after satisfactory explanation
or valid justification by the parties concerned.
The Auditor shall issue the ND or NC on the amount of the transaction suspended if he is
not satisfied with the explanation or justification submitted, in which case, said
disallowance or charge shall be reflected in the subsequent Certificate of Settlement and
Balances, even if the ninety day period has not yet elapsed.
Section 148. Settlement of Suspensions. –
a. Suspensions are deemed settled when the requirements of the auditor, as

contained in the Notice of Suspension are complied with. Such settlement shall be
reflected in the next CSB.
b. The auditor may, however, issue a separate memorandum notifying the local
government unit head and the accountable officer concerned of the settlement of
the suspensions prior to the issuance of the next CSB.
c. A suspension which is not settled within ninety (90) days from receipt of the
Notice of Suspension, or within such extended period as may be authorized by the
Auditor shall become a disallowance/Charge.
d. Consequently, the auditor shall issue the corresponding Notice of

Disallowance/Charge on the matured suspensions.
Section 149. Grounds for Disallowance. - All transactions which are irregular,
unnecessary, excessive and extravagant and those which are illegal and unconscionable
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shall be disallowed in audit. The description of these types of expenditures is found in
BOOK III of this Manual.
Section 150. Grounds for Charges. - In the determination of what constitutes an audit
charge in relation to the audit of revenues and receipts, the following shall be observed:
a. When there is error in the assessment which resulted in under collection, the
corresponding NC shall be issued to the assessing or appraising officer concerned.
Instances of over-collection shall be taken up in the books as payable to the payor
or proper party, and the corresponding AOM shall be issued.
b. When there is error in the computation of the amount due to the payor which may
either be over collection or under collection, the under collection shall be a proper
charge against the collecting officer, while the over collection shall be taken up in
the books as payable to the payor or proper party and the corresponding AOM
shall be issued.
If the amount collected is less than what is due for the period, the difference shall
constitute a charge against the collecting officer.
Section 151. Settlement of Disallowance and Charges. - Disallowance and charges

shall be settled through submission of the required explanation/justification and/or
documentation by the person or persons determined by the Auditor to be liable therefor;
or by payment of the amount disallowed in audit; or by such other applicable modes of
extinguishment of obligation as provided for by law.
Section 152. Determination of Persons Liable for Audit Disallowances or Charges.

- The liability of public officers and other persons for audit disallowances shall be
determined on the basis of: (a) the nature of the disallowance; (b) the duties,
responsibilities or obligations of the officers/persons concerned; (c) the extent of their
participation or involvement in the disallowed transaction; and (d) the amount of losses
or damages suffered by the government thereby. Illustrative examples are as follows:
a. Public officers who are custodians of government funds and/or property shall be
liable for their failure to ensure that such funds and properties are safeguarded
against loss or damage; that they are expended, utilized, disposed of or transferred
in accordance with law and regulations, and on the basis of prescribed documents
and necessary records.
b. Public officers who certify to the necessity, legality and availability of
funds/budgetary allotments, adequacy of documents, etc. involving the
expenditure of funds or uses of government property shall be liable according to
their respective certifications.
c. Public officers who approve or authorize transactions involving expenditure of
government funds and uses of government properties shall be liable for all losses
arising out of their negligence or failure to exercise the diligence of a good father
of a family.
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d. Public officers and other persons who confederated and conspired in a transaction
which is disadvantageous or prejudicial to the government, shall be held liable
jointly and severally, including those who benefited therefrom.
e. The payee/claimant of an expenditure shall be personally liable for the
disallowance where the ground thereof is his failure to submit the required
documents, and the auditor is convinced that the event relative to the disallowed
transaction did not occur, or has no basis in fact.
The liability for audit charges shall be measured by the individual participation or
involvement of persons in the charged transaction; i.e. public officers whose duties
require the appraisal/assessment/collection of government revenues and receipts shall be
liable for under-appraisal, under-assessment, and under-collection thereof.
Section 153. Finality of the Report, Certificate of Settlement and Balances, Order
or Decision. - Unless a request for reconsideration is filed or an appeal is taken, the
report , Certificate of Settlement and Balances, order or decision of the Auditor shall
become final upon the expiration of six (6) months after notice thereof to the parties
concerned.
Section 154. Motion for Reconsideration. - The Auditor shall entertain only one (1)
motion for reconsideration. If the Auditor reconsiders or modifies his original decision
disallowing a transaction, the same shall be automatically reviewed by the COA Director.
In this event, the Auditor shall, within ten (10) days, certify the case and elevate the
entire record to the Director for review.
Section 155. Appeal from Auditor to Director. –
a. An aggrieved party may appeal from an order or decision or ruling rendered by

the Auditor embodied in a report, memorandum, letter, notice of disallowances
and charges, Certificate of Settlement and Balances, to the COA Director who has
jurisdiction over the agency under audit.
b. The appeal maybe taken to the Director within six (6) months after notification to
the party of the report, notice of disallowance and charges, Certificate of
Settlement and Balances, order or decision complained of, by filing with the
Auditor a Notice of Appeal. The appellant shall file an appeal memorandum
within twenty (20) days from the receipt of the Order of the Director requiring the
same.
c. The Director may reverse, modify, alter, or affirm the decision or ruling of the
Auditor. However, should the Director render a decision reversing, modifying or
altering the decision or ruling of the Auditor, the Director shall, within ten (10)
days, certify the case and elevate the entire record to the COA Commission proper
for review and approval.
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d. Only one (1) motion for reconsideration of the order or decision of the Director
shall be entertained. The receipt of the Auditor of the Notice of Appeal and/or
Motion for reconsideration shall stop the running of the period of appeal to the
Commission Proper (6 months) and shall resume upon receipt by the Appellant of
the Director's final decision.
Section 156. Appeal from Director to Commission Proper. –
a. The party aggrieved by a final order or decision of the Director may appeal to the
COA Commission Proper by filing a petition for review in seven (7) legible
copies with the Commission Secretariat, a copy of which shall be served on the
Director.
b. The appeal shall be taken within the time remaining of the six (6) months period,
taking into account the suspension of the running thereof.
Section 157. Failure of a Responsible Public Officer to Render Accounts before

Leaving the Country. – Any public officer who unlawfully leaves or attempts to leave
the country without securing a certificate from the Auditor showing that his accounts
have been finally settled, shall be penalized under Article 219 of the Revised Penal Code
of the Philippines.
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Chapter 3. ADMINISTRATIVE, CIVIL AND CRIMINAL LIABILITIES
OF LOCAL TREASURERS IN THE ADMINISTRATION
OF LOCAL TAXES, FEES AND CHARGES
Section 158. Under the Local Government Code of 1991
a. Penalty for failure to issue and execute warrant – Without prejudice to criminal
prosecution under the Revised Penal Code and other applicable laws, any local
treasurer who fails to issue or execute the warrant of distraint or levy after the
expiration of the time prescribed, or who is found guilty of abusing the exercise
thereof by competent authority shall be automatically dismissed from the service
after due notice and hearing (Sec. 177, LGC).
b. Attempt to enforce void or suspended tax ordinances and revenue measures

– The enforcement of any tax ordinance or revenue measure after due notice of
the disapproval or suspension thereof shall be sufficient ground fro administrative
disciplinary action against the local officials and employees responsible therefore
(Sec. 190, LGC).
c. Penalty for failure to issue and execute warrant – without prejudice to criminal
prosecution under the Revised Penal code and other applicable laws, any local
treasurer or his deputy who fails to issue or execute the warrant of levy within one
(1) year from the time the tax becomes delinquent or within thirty (30) days from
the date of the issuance thereof, or who is found guilty of abusing the exercise
thereof in an administrative or judicial proceeding shall be dismissed from the
service (Sec. 259, LGC).
d. Failure to post and publish the itemized monthly collections and

disbursements – Failure by the local treasurer or the local chief accountant to
post the itemized monthly collections and disbursements of the local government
unit concerned within ten (10) days following the end of every month and for at
least two (2) consecutive weeks at prominent places in the main office building of
the LGU concerned, its plaza and main street, and to publish said itemization in a
newspaper of general circulation where available, in the territorial jurisdiction of
such unit, shall be punished by a fine not exceeding Five hundred pesos (P500) or
by imprisonment not exceeding one (1) month, or both, at the discretion of the
court (Sec. 513, LGC).
e. 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 (P1,000) nor
more than Five thousand pesos (P5,000), or by imprisonment of not less than one
(1) month nor more than six (6) months, or both, at the discretion of the court
(Sec. 517, LGC).
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f. Failure to dispose of delinquent real property at public auction – The local
treasurer concerned who fails to dispose of delinquent property at public auction
in compliance with pertinent provisions of the Local Government Code, 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 (P1,000) nor more than Five thousand
pesos (P5,000), or imprisonment of not less than one (1) month nor more than six
(6) months, or both, at the discretion of the courts (Sec. 519, LGC).
Section 159. Under the Revised Penal Code
a. Frauds against the public treasury and similar offenses – The penalty of
prision correccional in its minimum period, or a fine ranging from P200 to
P10,000 pesos, or both, shall be imposed upon any public officer who:
x x x x x x
being entrusted with the collection of taxes, licenses, fees and other imposts, shall
be guilty of any of the following acts or omissions:
1) Demanding, directly or indirectly, the payment of sums different from or

larger than those authorized by law.
2) Failing voluntarily to issue a receipt, as provided by law, for any sum of
money collected by him officially.
3) Collecting or receiving, directly or indirectly, by way of payment or
otherwise, things or objects of nature different from that provided by law
(Art. 213, Revised Penal Code).
b. Malversation of public funds or property. Presumption of Malversation- Any

public officer who, by reason of the duties of his office, is accountable for public
funds or property, shall appropriate the same, or shall take or misappropriate or
shall consent, or through abandonment or negligence, shall permit any other
person to take such public funds or property, wholly or partially, or shall
otherwise be guilty of the misappropriation or malversation of such funds or
property, shall suffer:
1) The penalty of prision correccional in its minimum and medium periods, if

the amount involved is more than two hundred pesos but does not exceed
two thousand pesos.
2) The penalty of prision mayor in its maximum and medium periods, if the
amount involved is more than two thousand pesos but does not exceed six
thousand pesos.
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3) The penalty of prision mayor in its maximum period to reclusion temporal
in its minimum period, if the amount involved is more than six thousand
pesos but is less than twelve thousand pesos.
4) The penalty of reclusion temporal in its medium and maximum periods, if
the amount involved is more than twelve thousand pesos but is less than
twenty-two thousand pesos. If the amount exceeds the latter, the penalty
shall be reclusion temporal in its maximum period to reclusion perpetua.
In all cases, persons guilty of malversation shall also suffer the penalty of
perpetual special disqualification and a fine equal to the amount of the funds
malversed or equal to the value of the property embezzled.
The failure of a public officer to have duly forthcoming any public funds or
property with which he is chargeable, upon demand by any duly authorized
officer, shall be prima facie evidence that he has put such missing funds or
property to personal use.
(Art. 217, Revised Penal Code).
Under the Anti-Graft and Corrupt Practices Act (RA 3019) – The following shall
constitute corrupt practices of any public officer and are thus declared unlawful under
Republic Act No. 3019:
a. Persuading, inducing or influencing another public officer to perform an act

constituting a violation of rules and regulations duly promulgated by competent
authority or an offense in connection with the official duties of the latter, or
allowing himself to be persuaded, induced or influenced to commit such violation
or offense.
b. Directly or indirectly requesting any gift, present, share, percentage, or benefit,
for himself or for any other person, in connection with any contract or transaction
between the LGU and any other party, wherein the public officer in his official
capacity has to intervene under the law.
c. Directly or indirectly requesting or receiving any gift, present or other pecuniary
or material benefit for himself or for another, from any person from whom the
public officer, in any manner or capacity, has secured or obtained, or will secure
or obtain, any LGU permit or license, in consideration for the help given or to be
given.
d. Causing any undue injury to any party, including the LGU, or giving any private
party any unwarranted benefits, advantage, or preference in the discharge of his
official administrative or judicial functions through manifest partially, evident bad
faith or gross inexcusable negligence. This provision shall apply to officers and
employees of offices charged with the grant of licenses and permits or other
concessions.
e. Neglecting or refusing, after due demand or request, without sufficient
justification, to act within a reasonable time on any matter pending before him for
the purpose of obtaining, directly or indirectly, from any person interested in the
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matter some pecuniary or material benefit or advantage, or for the purpose of
favoring his own interest or giving undue advantage in favor of or discriminating
against any other interested party.
f. Entering, on behalf of the LGU, into any contract or transaction manifestly and
grossly disadvantageous to the LGU, whether or not the public officer profited or
will profit thereby.
g. Directly or indirectly having financial or pecuniary interest in any business
contract or transaction in connection with which he intervenes or takes part in his
official capacity, or in which he is prohibited by the constitution or by any law
from having any interest.
h. Directly or indirectly becoming interested, for personal gain, or having a material
interest in any transaction or act requiring the approval of a board, panel or group
of which he is a member, and which exercises discretion in such approval even if
he votes against the same or does not participate in the action of the board,
committee, panel or group.
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TREASURY OPERATIONS
DETAILED PROCEDURES, REPORTS AND FORMS

ON REAL PROPERTY TAX, BUSINESS TAX,
FEES AND CHARGES AND OTHER FUND SOURCES
BOOK FIVE
Chapter I. REAL PROPERTY TAXES
Section 160. Power to Levy Property Tax – A province or city or municipality within
the Metropolitan Manila Area may levy an annual ad valorem tax on real property such
as land, buildings, machinery, and other improvement not specifically exempted under
the law. (Sec. 232, LGC)
The power to levy the ad valorem tax on real property may be exercised by the
sanggunian of the LGU concerned through an appropriate ordinance. (Art. 323, IRR of
LGC)
Section 161. Definition of Terms
a. “Acquisition cost” for newly acquired machinery not yet depreciated and
appraised within the year of its purchase, refers to the actual cost of the machinery
to its present owner, plus cost of transportation handling, and installation at the
present site;
b. “Actual use” refers to the principal purpose for which the property is principally
or predominantly utilized by the person in possession thereof;
c. “Ad Valorem Tax” is a levy on real property determined on the basis of a fixed
proportion of the value of the real property;
d. “Agricultural Land” land devoted principally to the planting of trees, raising of
crops, livestocks and poultry, dairying, salt making, inland fishing and similar
agricultural activities and other agricultural activities, commercial or industrial
land;
e. “Appraisal” is the act or process of determining the value of property as of a
specific date for a specific purpose;
f. “Assessment” the act or process of determining the value of a property or
promotion thereof subject to tax, including the discovery, listing, classification,
and appraisal of properties;
g. “Assessment Level” the percentage applied to the fair market value to determine
the taxable value of the property;
h. “Assessed Value” is the fair market value of the real property multiplied by the
assessment level. It is synonymous to taxable value.
i. “Commercial Land” is land devoted principally for the object of profit and is not
classified as agricultural, industrial, mineral timber, or resident land.
j. “Depreciated Value” is the value remaining after deducting depreciation from
the acquisition cost;
k. “Economic Life” is the estimated period over which it is anticipated that a piece
of machinery or equipment may be profitably utilized;
l. “Fair Market Value’ is the price at which a property may be sold by a seller who
is not compelled to sell and bought by a buyer who is not compelled to buy. As
defined by the courts, market value is the highest price estimated in terms of
money which a property will bring if exposed for sale in the open market allowing
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a reasonable time to find a purchaser who buys with knowledge of all the uses to
which it is adapted and for which it is capable of being used.
m. “Idle Lands” for purposes of real property taxation, idle lands shall include the
following:
1) Agricultural Lands, more than one (1) hectare in area, suitable for
cultivation dairying, inland fishery, or other agricultural uses, one half
(1/2) of which remains uncultivated or unimproved by the owner of
the property or person having legal interest therein.
Agricultural lands planted to permanent or perennial crops, with at

least fifty (50) tress to a hectare shall not be considered idle lands.
Lands actually used for grazing purposes shall likewise not be
considered idle lands.
2) Lands, other than agricultural, located in a city or municipality, more

than one thousand (1,000) square meters in area, one half (1/2) of
which remains unutilized or unimproved by the owner of the property
or person having legal interest thereon.
3) Residential lots in subdivisions duly approved by proper authorities,

regardless of land area, the ownership of which has been transferred to
individual owners, who shall be liable for the additional tax: Provided,
however, that individual lots of such subdivision, the ownership of
which has not been transferred to the buyer shall be considered as part
of the subdivision, and shall be subject to the additional tax payable by
subdivision owner or operator. (Sec. 237, LGC)
n. “Improvement” is a valuable addition made to a property or an amelioration in its

condition, amounting to more than a mere repair or replacement of parts, which
involves capital expenditures and labor, which is intended to enhance its value,
beauty or utility or to adapt it for new or further purposes.
Thus, the anti-pollution tailing dam structure of the Benguet Corporation-Dizon

copper Gold Operations is an improvement used in the operation of the
corporation and, therefore, taxable under the provisions of the LGC. The subject
dam falls within the definition of an improvement because it is permanent in
character and it enhances both the value and utility of the mine (DOF Opinion,
February 3, 1994);
o. “Industrial Land” is land devoted principally to industrial activity as capital

investment and is not classified as agricultural, commercial, timber, mineral, or
residential land;
p. “Machinery” embraces machines, equipment, mechanical contrivances,
instruments, appliances, or apparatuses which may or may not be attached,
permanently or temporarily, to the real property.
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1) It includes physical facilities for production, installations and
appurtenant service facilities, those which are mobile, self-powered, or
self-propelled, and those not permanently attached to the real property,
which are actually, directly, and exclusively used to meet the needs of
the particular industry, business, or activity and which, by their very
nature and purpose are designed for, or necessary to its manufacturing,
mining, logging, commercial, industrial, or agricultural purposes.
Thus, underground tanks, elevated tanks, elevated water tanks,
gasoline and computing pumps, car washers, car and tire hoists, air
compressors and tireflatros in gasoline stations are considered as
machinery or improvement (Supreme Court, G. R. No. L-50466, May
31, 1982).
2) On the other hand, gas turbine barges owned by the National Power
Corporation, although these are mobile, self-powered and self-
propelled, for practical reasons, could not be considered as real
property in the same manner that other mobile machineries/equipment
such as trucks, buses, ships, airlines, and the like, which require
registration with the proper agency of government, could not be
considered as real property subject to real property tax (DOF Opinion,
1st Indorsement, May 20, 1996).
3) Machinery which are of general purpose use including but not limited
to office equipment, typewriters, telephone equipment, breakable or
easily damaged containers (glass or cartons), micro computers,
facsimile machines, telex machines, cash dispersers, furniture and
fixtures, freezers, refrigerators, display cases or racks, fruit juice or
beverage automatic dispensing machines which are not directly and
exclusively used to meet the needs of a particular industry, business or
activity shall not be considered within the definition of machinery
under this rule.
4) Residential machinery shall include machines, equipment, appliances,

or apparatus permanently attached to residential land and
improvements or those immovable by destination.
5) When machineries are no longer used for its purpose by reason of

closure or cessation of production, the same should be transferred from
the taxable roll to the exempt roll and not subject to the payment of
real property taxes during the period of non-use (DOF Opinion, 9th
Indorsement, May 26, 1999).
q. “Mineral Lands” are lands in which minerals, metallic or non metallic, exist in
sufficient quantity or grade to justify the necessary expenditures to extract and
utilized such materials;
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r. “Reassessment” is the assigning of new assessed values to property, particularly
real estate, as the result of general, partial, or individual reappraisal of the
property;
s. “Remaining Economic Life” is the period of time expressed in years from the
date of appraisal to the date when the machinery becomes valueless;
t. “Remaining Value” the value corresponding to the remaining useful life of the
machinery;
u. “Replacement or Reproduction Cost” is the cost that would be incurred on the
basis of current prices, in acquiring an equally desirable property, or the cost of
reproducing a new replica of the property on the basis of current prices with the
same or closely similar materials;
v. “Residential Land” is land principally devoted to habitation;
w.“Special Classes of Real Property” are lands, buildings, and other improvements
actually directly and exclusively used for hospitals, cultural or scientific
purposes, and, those owned and used by local water districts and government-
owned or controlled corporations rendering essential public services in the
supply and distribution of water and/or generation and transmission of electric
power.
Section 162. Fundamental Principles – The appraisal, assessment, levy and collection
of the real property tax shall be guided by the following:
a. All property, whether taxable or exempt, shall be appraised at the current and fair
market value prevailing in the locality where the subject property is situated. (Sec.
198 and 201, LGC)
b. For purposed of assessment, real property shall be classified on the basis of its
actual use as follows: residential, agricultural, commercial, industrial, mineral,
timberland, or special. (Sec. 198, 215 and 217, LGC)
c. Real property shall be assessed on the basis of a uniform classification within
each LGU (Sec. 198, LGC). To this end, the assessor of each LGU concerned
shall prepare a schedule of fair market values for the different classes of real
property situated within the LGU for enactment by ordinance of the sanggunian
concerned. (Sec 212, LGC)
d. The appraisal, assessment, levy and collection of real property tax shall not be let
to any private person. (Sec. 198, LGC)
e. The appraisal and assessment of real property shall be equitable. (Sec. 198, LGC)
Section 163. Administration of the Real Property Tax – The provinces and cities,
including the municipalities within the Metropolitan Manila Area, shall be primarily
responsible for the proper, efficient and effective administration of the real property
situated within the LGU for enactment by ordinance of the sanggunian concerned. (Sec.
212, LGC). Municipalities outside Metro Manila shall have no power to pass tax
ordinances levying real property taxes, as such authority is vested only upon their
respective provinces (BLGF, DOF Opinion, May 5, 1994).
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Accordingly, the DOF and the provincial government shall exercise the authority to
review and examine on a continuing basis property, assessment, and real property tax
records to ensure the proper implementation of this Rule and determine compliance with
applicable laws, rules and regulations. (Sec 200, LGC and Art. 291, IRR of LGC)
Section 164. Rates of Levy – The LGU concerned shall fix a uniform rate of basic real
property tax applicable within their respective localities as follows:
a. Provinces – at the rate not exceeding one percent (1%) of the assessed value of
real property; and
b. Cities and Municipalities within the Metropolitan Manila Area – at the rate not
exceeding two percent (2%) of the assessed value of real property.
No public hearing shall be required before the enactment of a local tax ordinance levying
the basic real property tax. (Art. 324, IRR of LGC)
Section 165. Special Levies – Provinces, cities and the municipalities within the
Metropolitan Manila Area may also levy and collect the following special levies on real
properties within their jurisdiction:
a. Additional Levy on Real Property for the Special Education Fund (SEF) –
An annual rate of one percent (1%) on the assessed value of real property which
shall be in addition to the basic real property tax. The proceeds of the additional
levy shall accrue exclusively to the Special Education Fund (SEF). (Sec. 232,
LGC).
The BLGF, DOF has opined that the total three percent (3%) rate (2% basic and
1% SEF) of real property taxes imposed by Calbayog City is in accordance with
the provisions of RA 7160 (Letter dated May 22, 1998 to Mr. Eduardo B Gomez
of the National Food Authority).
A DOF Opinion dated March 18, 1996 on the authority of local governments to
impose the special education fund tax provides that a province city or
municipality within the Metro Manila Area (MMA) may levy and collect an
annual tax of one percent (1%) on the assessed value of the real property for
Special Education Fund (SEF) in addition to the basic real property tax.
However, the following rules apply to a municipality not located within the
MMA:
1) It is the province not the municipality, that has the authority to impose the
additional SEF tax;
2) the rate of the SEF tax shall not exceed one percent (1%) of the assessed
value of the subject property;
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3) while the SEF tax is imposed by the province, the municipal treasurers are
authorized to collect the said tax.
b. Additional Tax on Idle Lands – An annual ad valorem tax on idle lands at the
rate not exceeding five percent (5%) of the assessed value of the property which
shall be in addition to the basic real property tax. (Sec. 236, LGC)
For this additional tax, the following shall be observed:
1) The assessor concerned shall make and keep an updated record of all idle
lands located within the jurisdiction. For purposes of collection, the
assessor shall furnish a copy to the treasurer who shall, on the basis of the
record, notify the owner of the property or person with legal interest in it
of the imposition of the additional tax. (Sec. 239, LGC); and
2) In the case of subdivision lots;
a) Individual buyers shall be liable for the tax if the ownership of the
property has been transferred to them
b) Subdivision owners or operators shall be liable for the tax on lots

whose ownership has not been transferred to individual buyers,
these lots being considered still part of the subdivision. (Sec. 237,
LGC)
3) The LGU concerned may exempt idle lands from additional levy by
reason of force majeure, civil disturbance, natural calamity or any cause or
circumstance which physically or legally prevents the owner of the
property or person having legal interest in it from improving, utilizing or
cultivating it. (Sec. 238, LGC);
c. Special Levy on Lands Benefited by Development – A province, city or

municipality may impose a special levy on lands within their jurisdiction that are
specially benefited by public work projects or improvements funded by the LGU.
(Sec. 240, LGC)
The following provisions apply in the case of this special levy:
1) The special levy shall not exceed sixty percent (60%) of the actual cost of
such projects and improvements, including the costs of acquiring land and
such other property in connection therewith. (Sec. 240, LGC);
2) The special levy shall not apply to lands exempt from basic real property
tax, and the remainder of land portions of which have been donated to the
LGU for the construction of such projects and improvements. (Sec. 240,
LGC);
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3) The tax ordinance imposing the special levy shall:
a) Describe with reasonable accuracy the nature, extent, and location

of the public works projects or improvements to be undertaken;
b) State the estimated cost involved;
c) Specify the metes and bounds by monuments and lines; and
d) Specify the number of annual installments for the payments of the
special levy which in no case shall be less than five (5) nor more
than ten (10) years.
4) The saggunian concerned shall not be obliged, in the apportionment and

computation of the special levy, to establish a uniform percentage on all
lands subject to the payment of the tax for the entire district, but it may fix
different rates for different parts or sections thereof depending on whether
such land is more or less benefited by the proposed work. (Sec. 241,
LGC).
5) Before the enactment of an ordinance imposing a special levy, the

sanggunian concerned shall conduct a public hearing thereon; notify in
writing the owners of the real property to be affected or the person having
legal interest therein and place thereof and afford the latter the opportunity
to express their positions or objections relative to the proposed ordinance.
(Sec 242, LGC).
6) The special levy shall accrue on the first day of the quarter next following
the effectivity of the ordinance imposing the levy. (Sec. 245, LGC)
Section 166. Exemption from Payment of the Real Property Tax – The following are
exempted from payment of the real property tax (Sec. 234, LGC):
a. Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person. Political subdivisions of the
Republic of the Philippines refers to the autonomous regions, provinces, sub-
provinces, cities, municipalities and barangays (Book I, Administrative Code of
1987). Government–owned and controlled corporations are not considered

political subdivisions.
An installment purchaser of a parcel of land and its building and improvement

belonging to the GSIS is liable to pay the real property taxes thereon from the
time possession of such property was transferred to him, although pending full
payment of the purchase price, the seller GSIS retains ownership and title over the
property (Supreme Court, G.R. No. L-29772, Sept. 18, 1980). Moreover, the
exemption of the GSIS from the payment of all taxes, assessments, fees, charges
181
and duties of all kinds under section 33 of its Charter has not been superseded by
the Local Government Code of 1991 (DOJ Letter dated December 18, 1994 to
Mr. Cesar Sarino of GSIS),
ECOZONE operators are exempt from real property tax by virtue of Section 24 of
RA No. 7916 otherwise known as the Special Economic Zone Act of 1995
creating the EPZA, later renamed as PEZA, which states that: “... no taxes, local
and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned
by all businesses and enterprises within the ECOZONE shall be remitted to the
National Government.” The above-quoted exemption only applies to enterprises
under PEZA. Thus, with the enactment of RA 7160 or the LGC, it is believed that
PEZA is no longer exempt from payment of realty taxes (DOJ Letter dated Sept.
6, 1999 to Director General Lilia de Lima of PEZA, Pasay City).
b. Charitable institutions, churches, personages, or convents appurtenant thereto,

mosques, non-profit or religions cemeteries and all lands, buildings, and
improvements which are actually, directly and exclusively used for religious,
charitable or education purposes. 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 way
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. (Art. III, Part I, DOF Assessment Regulations No. 3-75).
Real properties actually, directly, and exclusively used for educational purposes
should be considered exempt from the payment of real property taxes (5 th
Indorsement dated Jan. 23, 1997 to the Provincial Assessor of Romblon). In the
case of the Development Academy of the Philippines (DAP), it was ruled that the
lands, buildings and improvement owned by the Academy in Tagaytay City are
actually, directly and exclusively used for educational purposes, hence, exempt
from real property taxes, however, said exemption does not include machineries
owned by DAP even if these are actually, directly and exclusively used for
educational purposes (2nd Indorsement dated July 30, 1998 to City Treasurer of
Tagaytay City). It was further ruled that the tax exemption granted to DAP
properties in Tagaytay City cannot be applied to DAP properties in Pasig City
(3rd Indorsement dated Feb. 9, 1999 to the City Assessor of Pasig City).
c. All machineries and equipments that are actually, directly and exclusively used by
local water districts and government-owned and controlled corporations engaged
in the supply and distribution of water and/or generation and transmission of
electric power.
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It has been opined by the BLGF, DOF that the compression, compressor house,
sub-station building, sub-station switchboard (control house) and steel tower
owned by the National Power Corporation (NAPOCOR), may be considered
exempt from the payment of real property taxes provided the same are actually,
directly and exclusively used in the generation and supply of electric power.
Moreover, only the machineries and equipment used in the generation and
transmission of electric power of GOCCs are exempt from real property taxes..
Thus, the machineries declared in the name of the Bauang Private Power
Corporation (BPPC) are subject to real property tax although engaged in the
generation of electric power, as the company is a private corporation and does not
fall under the category of a GOCC (Real Property Taxation, Book II, Atty.
Florecita Flores).
d. All real property owned by duly registered cooperatives as provided under the
Cooperative Code of the Philippines (R.A. 6938).
In its letter to the Municipal Secretary of Pagudpud, Ilocos Norte dated February
26, 1993, the BLGF opined that all real property owned by cooperatives duly
registered with the Cooperatives Development Authority (CDA), with a minimum
accumulated reserves and undivided net savings of ten million pesos
(P10,000,000) are exempt from payment of real property taxes in view of specific
provisions of RA 6938, known as the Cooperative Code of the Philippines. Also
covered by this exemption are electric cooperatives which are duly registered with
the CDA pursuant to RA 6938.
In addition to the exemption from the payment of real property taxes,

cooperatives are likewise exempt from the payment of local taxes, fees, or charges
as provided under Section 133 (n) of the LGC (1st Indorsement dated March 15,
1999 to the City Assessor of Manila).
e. Machinery and equipment exclusively used for pollution control and

environmental protection. It has been opined that the McArthur Park and Beach
Resort, although a subsidiary of the Philippine Tourism Authority, a GOCC, is
subject to the payment of real property taxes and the local taxes (BLGF, DOF 3 rd
Indorsement dated April 11, 1997 to the Provincial Assessor of Tacloban City).
On the other hand, the BLGF opined that the claim for exemption of DIGITEL
from payment of real property taxes on properties which are used in the operation
of its franchise is meritorious (2nd Indorsement dated Jan. 4, 1999 to the
Provincial Assessor of Batangas).
Section 167. Withdrawal of Exemptions from Payment of Real Property Taxes -

Unless otherwise provided in this Code, tax exemptions or incentives granted to, or
presently enjoyed by all persons, whether natural or juridical, including all government
owned and controlled corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit hospitals and educational
institutions, were withdrawn when the Code took effect on January 1 st 1992 (Sec. 193,
183
LGC). The phrase “Unless otherwise provided in this code” refers to Section 133 of the
LGC which exempts, among others, national government instrumentalities from the
taxing powers of local government units (DOJ Opinion, Letter dated May 13, 1993 to
Duty Free Philippines). Instrumentality is defined as an agency of National Government,
not integrated within the department framework, vested with special functions or
jurisdiction by law, endowed with some if not all corporate powers, administering special
funds, and enjoying autonomy, usually through a charter (Sec. 2(10), Introductory
Provisions, Adm. Code of 1987).
Thus, Local Governments do not have the authority to grant exemptions from real
property taxes to those which are not expressly exempted by the LGC. Otherwise they
will be exercising the power of amending laws or acts enacted by Congress (DOF
Opinion, 3rd Indorsement, May 27, 1998).
Section 234 of the LGC evidently withdrew the taw exemption privileges granted to
GOCCs like the Land Bank of the Philippines (LBP) and the GSIS. Accordingly, the
subject properties of the LBP and the GSIS are liable for the payment of real property tax
effective January 1, 1992 (1st Indorsement, Oct. 5, 1998; 1st Indorsement, Apr. 26, 1994;
2nd Indorsement, Feb 22, 1993).
Real properties of Philippine Telegraph and Telephone Corporation (PT&T) shall be

liable for the payment of real property taxes beginning January 1, 1992. However,
commencing January 1, 1993, the year after the franchise of SMART took effect, real
properties of PT&T which are directly used in the operation of its franchise are exempt
from payment of real property taxes in view of the equality of treatment clause found in
Section 14 of its franchise. RA 7294, 7692 and 7678 grant SMART, Bell
communications Philippines, Inc, and DIGITEL the privilege to enjoy real property tax
exemptions on their real properties used in connection with the operation of their
franchises. All other properties of these companies shall remain taxable (1st Indorsement,
Feb. 14, 1995; 2nd Indorsement, Jan. 4, 1999)
The withdrawal of exemptions by the LGC did not, however, affect the status of real
property owned by embassies, consulates, and other diplomatic offices. These are deemed
part of the territory of the country they represent and, therefore, are exempt from any
national or local taxes based on the generally accepted principle that the tax laws of one
country are not applicable in another. (2nd Ind., Feb.10 1993 addressed to the Municipal
Treasurer of Makati).
Section 168. Accrual of the Real Property Tax – The real property tax for any year
shall accrue on the first day of January and from that date it shall constitute a lien on the
property which shall be superior to any lien, mortgage, or encumbrance of any kind
whatsoever, and shall be extinguished only upon the payment of the delinquent tax. (Sec.
246, LGC).
Section 169. Collection of the Real Property Tax –
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a. Treasurers Are Responsible for Collection – The collection of the real property
tax with interest thereon and related expenses, and the enforcement of the
remedies provided for under the LGC, or any other applicable laws shall be the
responsibility of the provincial, city or municipal treasurer concerned. (Sec. 247,
LGC). The DOF has likewise opined that there is no real need for the
Sangguniang Bayan to enact a resolution for this purpose (4th Indorsement, June
2, 1994), and municipal treasurers of municipalities outside Metro Manila but
within a province are delegated the authority to collect realty tax pursuant to
Section 247 of the LGC (July 28, 1998).
b. Deputization of Barangay Treasurers – City or municipal treasurers may

deputized barangay treasurers, provided they are property bonded for the purpose,
to collect taxes on real property located in their respective barangays. Premiums
on the bond of barangay treasurers shall be paid by the city or municipal
government concerned. (Sec. 247, LGC)
The appropriate mechanisms and safeguards regarding collections, remittances

and other accountabilities of deputized barangay treasurers are discussed in full in
Chapter 2 of BOOK II of this MANUAL, consistent with the provisions of the
Systems and Procedures Manual on the Management of Barangay Funds and
Property issued by the Commission on Audit.
c. Assessor to Furnish 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).
Section 170. Procedures for Collecting Real Property Tax – The city and municipal
treasurers shall adopt the following procedures in the collection of real property taxes:
a. Posting of Collection Notices –
For Current Year – Notice of Time for Collection of Tax –
The city or municipal treasurer shall, on or before the thirty first (31 st) day of
January of each year, in the case of the basic real property tax and the additional
tax for SEF on or any other date to be prescribed under Title Two, post the notice
of the dates when the tax may be paid without interest at a conspicuous and
publicly accessible place at the city or municipal hall. Said notice shall likewise
be published in a newspaper of general circulation in the locality once a week for
two (2) consecutive weeks. (Sec. 249, LGC)
For previous year – Notice of Delinquency in Payment of Real Property Tax
185
1) When the real property tax or any other tax imposed under Title Two
becomes delinquent, the provincial, city or municipal treasurer shall
immediately cause a notice of the delinquency to be posted at the main
entrance of the provincial capitol or the city or municipal hall, and in
publicly accessible and conspicuous place in each barangay of the LGU
concerned. The notice of delinquency shall also be published once a week
for two (2) consecutive weeks, in a newspaper of general circulation in the
province, city or municipality.
2) Such notice shall specify the date upon which the tax become delinquent
and shall state that personal property may be distrained to effect payment.
It shall likewise state that any time before the distraint of personal
property, payment of the tax with surcharges, interests, and penalties may
be made in accordance with Section 255 of the LGC (see Subsection III-
19-c, this manual), and unless that tax, surcharges and penalties are paid
before the expiration of the year for which the tax is due, except when the
notice of assessment or special levy is contested administratively or
judicially pursuant to the provisions of Chapter 3, Title Two, Book II of
the LGC, 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 (Sec. 254, LGC)
b. Issuance of Notice to the Taxpayer – The treasurer concerned shall reflect in the
Real Property Tax Bill (LTO Form 89) to be sent to the taxpayer the real
property tax due for his property for the current year and the delinquent taxes due
for the previous year or years.
c. Where Real Property Taxes May Be Paid – For properties located in the
province, the real property taxes may be paid with the Municipal Treasurer’s
Office of the municipality where the property located or with the Office of the
Provincial Treasurer of the province where the municipality belongs. (Art. 338,
IRR of LGC). For properties located in a city or a municipality within the MMA,
the tax shall be paid with the Office of the City or Municipal Treasurer concerned.
Payment of Current Real Property Taxes -
Section 171. Payment of Real Property Tax by Installments – The owner of the real
property or the person having legal interest in it may pay the basic real property tax and
the additional tax for the SEF, without interest, in four (4) equal installments which shall
be due and payable as follows:
1st installments, on or before March thirty-first (31st)

2nd installments, on or before June thirtieth (30th)
3rd installments, on or before September thirtieth (30th)
186
4th and last installments, on or before December thirty-first (31st)
(Section 250, LGC)
The BLGF, DOF has ruled that the deadline for the payment of quarterly installments
having been fixed by law, cannot be extended by way of a local ordinance (2nd
Indorsement, June 14, 1994 to the City Treasurer of Iloilo City).
In implementing the installment scheme in the collection of real property taxes, the
following should be observed:
a. Payments of real property taxes shall first be applied to prior year’s

delinquencies, interests and penalties, if any and only after said delinquencies
are settled may tax payments be credited for the current year. (Sec. 250, LGC)
b. The date for the payment without interest of any other tax imposed under Real
Property Taxation of the LGC shall be prescribed by the sanggunian concerned.
c. Excluded from the above schedule of payments is the special levy on properties
benefited by development, the payments of which shall be governed by the
schedule specified in the enabling ordinance enacted by the sanggunian
concerned. (Sec. 250, LGC)
Section 172. Tax Discount for Advanced or Prompt Payment – If the basic real
property tax and the additional tax accruing to the SEF are paid in advance in accordance
with the prescribed schedule of payment as provided under Section 250, the sanggunian
concerned may grant a discount not exceeding twenty percent (20%) of the annual tax
due. (Sec 251, LGC)
a. The amount of discount to be given, if any, for prompt or advance payment shall
be implemented, subject to the discretion of the sanggunian concerned, as
follows:
(1) Up to ten percent (10%) tax discount may be granted for prompt payment,
(2) Up to twenty percent (20%) tax discount may be granted for advanced
Payment.
b. The grant of discounts should be effected only if the same are provided for in a
duly enacted Ordinance of the Sangguniang Panlungsod (1st Indorsement dated
Jan. 26, 1994 to the City Treasurer of Angeles City).
c. Advanced payment as distinguished from prompt payment –To be entitled to

tax discount, the basic real property tax and additional SEF tax must be paid on or
before the deadlines provided under Section 250 of the LGC. Under Section 246
thereof, the real property tax for any year accrues on the first day of January,
although the tax due for that year may be paid without interest or penalty on or
before March 31st, or in four (4) quarterly installments starting the said date. This
situation is not a case of “advanced payment” but simply prompt payment”.
Technically, advance payment of taxes refer to those made before the accrual of
187
the tax where the collections therefrom are required under existing COA
regulations to be taken up in the books of accounts of local governments as Real
Property Tax Receivable and Deferred Real Property Tax; whereas taxes collected
after they have accrued but made on or before the statutory installment deadlines
are to be taken up as Real Property Tax Income. (Notes to Section 251, LGC,
Local Government Taxation, Ursal)
d. In granting discounts, the basic real property tax and the SEF tax should be
treated separately and independently from each other (3rd Indorsement dated Aug.
12, 1997 to the Municipal Treasurer of Valenzuela, M.M.)
Section 173. Payment Under Protest – The following procedures are to be observed in
case a taxpayer decides to file a protest in relation to real property taxes:
a. No protest shall be entertained unless the taxpayer first pays the tax. There shall
be annotated on the tax receipt the words “Paid under protest”.
b. The taxpayer must file the protest in writing within thirty (30) days from payment
the tax to the provincial, city treasurer or municipal treasurer within the
Metropolitan Manila Area, who shall decide the protest within sixty (60) days
from receipt.
c. The tax or the portion of the tax paid under protest shall be held in trust by the
treasurer concerned; however, 50% of the tax paid shall be distributed in
accordance with Sec. 271 of the LGC.
d. If the protest is finally decided in favor of the taxpayer, the corresponding amount
or portion of the tax shall be refunded to the protestant or applied as tax credit
against his existing or future tax liabilities.
e. A cash refund is applicable only of the taxpayer has no tax liability on the subject
property.
f. If the protest is denied or upon the lapse of the sixty-day period as prescribed, the
taxpayer may avail of the remedies provided for in Chapter 3, Title Two, book II
of the LGC.
(Sec. 252, LGC)
Section 174. Repayment of Excessive Collections – When an assessment of the basic

real property tax, or any other tax levied under the LGC, is found to be illegal or
erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written
claim or refund or credit for taxes and interests with the treasurer concerned within two
(2) years from the date the taxpayer is entitled to such reduction or adjustment.
a. The provincial or city treasurer, or municipal treasurer in the case of Metropolitan

Manila Area municipalities, 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 provided under the LGC. (Sec.
253, LGC)
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b. In case of tax credit, a certificate of tax credit shall be issued to the property owner
or to the person with legal interest in the tax credit. The “Certificate of Tax
Credit” form used for the purpose is shown in LTO Annex 101 of the Manual.
c. In one instance, the BLGF, DOF finds merit in the request of the Asian Terminals,
Inc. for the recomputation of its real property tax and any excess payment should
be treated as tax credit against the future real property tax liabilities of the said
company (Letter dated Feb 24, 1997 to the City Treasurer of Manila).
Payment of Delinquent Real Property Taxes -
Section 175. Interest on Delinquent Real Property Tax – Failure to pay the basic real
property tax or any other tax levied under this provision upon the expiration of the
periods as provided in Sec. 250, or when due, as the case may be, shall subject the
taxpayer to the payment of interest at the rate of two percent (2%) per month on the
unpaid amount or a fraction thereof, until the delinquent tax shall have been fully paid:
Provided, however, that in no case shall the total interest on the unpaid tax or portion
thereof exceed thirty six (36) months. (Sec. 255, LGC)
Section 176. Guiding Principles in Determining Delinquency –
a. The accrual of the tax means that it has become due and payable. The words “due
and demandable” can merely denote the existence of a simple indebtedness
without reference to the time of payment; they do not necessarily have to refer to
the time limit or the date on which taxes must be paid. (Supreme Court in the case
of Commissioner of Internal Revenue v. Visayan Electric Co., L-22611, May 27,
1968)
b. A taxpayer is delinquent if he fails to pay his taxes within the period fixed by
statute or executive order. (U.S. v. Estavillo, 19 Phil. 478)
c. Tax delinquencies incurred before the effectivity of the LGC shall be governed by
the provisions of applicable laws then in force; the computation of penalties for
delinquent real property taxes for CY 1992 to 1994 should be based on the
provisions of Section 255 of the LGC of 1991, providing for a 2% interest rate per
month on the unpaid amount but in no case to exceed thirty-six (36) months (2nd
Indorsement dated Oct. 30, 1995 to the Provincial Treasurer of Koronadal, South
Cotabato).
Section 177. Procedures for Computing Taxes, Interest and Discounts – The
formulas to be used in computing the payments due for taxes are presented in this section.
a. Computation of the Basic Tax and SEF -. In computing the basic real property
tax and the tax accruing to the Special Education Fund, the following basic
components should be noted:
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1) The Assessed Value of the real property shall be taken from the
Assessment Roll submitted by the 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.
Following are the formulas for the Basic Tax and SEF:
a) For the Basic Tax:
TAX DUE = (Assessed Value) x (Applicable Tax Rate)
b) For the SEF:
SEF DUE = (Assessed Value x 1%)
b. Computation of the Tax Discount for Advanced and Prompt Payment – The
applicable Tax Discount Rates shall be those specified in the approved ordinance
of the LGU concerned. In the absence of an approved ordinance, the discounts
shall be granted. The formula for the tax discount is as follows:
TAX DISCOUNT = (Tax due) x (Applicable tax discounts rate/s)
c. Computation of the Interests Due on Unpaid Taxes – The following formula

shall guide the computation of interests to be paid on delinquent real property
taxes.
1) For Taxes Delinquent for any Period up to 36 Months:
INTEREST PAYMENT DUE FOR EACH MONTH OF

DELINQUENCY = (Tax Due) x (Interest Rate) x (No. of Months
Delinquent)
2) For Taxes Delinquent for any Period More than 36 Months:
INTEREST = (Tax or Taxes due) x 2% x 36 months
3) For Annual Interest Payment Due:
ANNUAL INTEREST PAYMENT DUE = Sum of Interest Payments

Due for months delinquent during the year
4) For Total Taxes and Interests to be Paid:
TOTAL TAX AND INTEREST DUE = (Total of Unpaid Taxes Due)

+ (Interests on Unpaid Taxes Due)
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d. Basis in the Computation of the 2% Interest on Unpaid Taxes – It was held
that the 2% interest (penalty) shall be computed only on amount of delinquent tax,
that is, on the installment due and not paid. The Supreme Court has said: Since a
realty taxpayer is allowed to pay his real property tax in four equal installments
due and payable on four specific dates, and having paid the first three installments
faithfully and religiously, it is manifest injustice, sheer arbitrariness and abuse of
power to penalize him for doing so, when he fails to pay the fourth and last
installment. Since the last installment is due and payable on or before December
31 of each year, it is only starting January 1 of the following year that
delinquency starts as to this final installment (Angel Quimpo vs. Leoncio
Mendoza, 107 SCRA 73)
On the other hand, in the case of a taxpayer who fails to pay his first quarterly tax
and pays instead during the month of April, together with the remaining three
quarters, the BLGF, DOF has ruled that the taxpayer is entitled to the 10%
discount on the amounts due for the remaining three quarters of the year,
considering that he ceased to be delinquent after paying the installment for the
first quarter with penalty and, further, that he is paying the balance for the last
three quarters before the deadline set therefor. In this case, the tax due is the sum
of the following:
(1). For the 1 st quarter – one- fourth (1/4) of the amount due for the entire
year plus an 8% penalty on the full amount due for the year;
(2). For the 2nd, 3rd and 4th quarters – three-fourths (3/4) of the full amount
due for the year less ten percent (10%) discount.
It is clear that the 2% per month interest should be applied on the amount of tax
due for the whole year if the delinquency includes the first quarter installment for
the year. It is only in cases where the first quarter installment has already been
paid that the 2% per month interest should be applied only on the quarterly
installment due. The decision of the Supreme Court in the Quimpo case is not in
conflict with the declaration of the BLGF, DOF on the imposition of the 2% per
month interest based on the whole year tax if the delinquency includes the first
quarter installment for the year. A careful reading of the Quimpo case shows that
the Supreme Court decision refers to subsequent quarterly real property taxes that
became delinquent after payment of the first quarter (2nd Indorsement dated Oct.
30, 1995 to the Provincial Treasurer of Koronadal, South Cotabato ).
Section 178. Acceptance of Real Property Tax through Over-the-Counter Payment

in Accredited Banks – With the passage of Republic Act No. 8792, otherwise known as
“ An act Providing for the Recognition and Use of Electronic, Commercial and Non-
Commercial Transactions, Penalties for Unlawful Use thereof, and Other Purposes”, the
government has recognized the use of electronic data messages or electronic documents
in facilitating and effecting its commercial and non-commercial transactions. Ever since
the government has institutionalized the present system of collecting Internal Revenue
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taxes and Customs duties through the banking facilities of authorized agent banks, it is to
be expected that the acceptance of local tax payments by selected depository banks would
eventually follow the same procedure. Thus, we may expect more LGUs to follow the
system pioneered by the Quezon City Government in the acceptance of its Real Property
Tax through its Over-the-Counter payment in accredited banks.
a. Guidelines in the acceptance of real property tax payments through the

banks:
1) Enactment of the Appropriate Local Ordinance – The Sanggunian

shall issue the appropriate Local Ordinance authorizing the Local treasurer
to accept, as an alternate mode of tax collection, the over-the-counter
payments by taxpayers in LGU-accredited government depository banks.
2) Accreditation by the LGU of the authorized agent bank – The banking

institution shall seek accreditation from the LGU to deliver the required
services provided in the Local Ordinance. The LGU shall consider the
stability and soundness of the bank as well as its efficiency in the
collection of taxes and promptness in the remittance of collections to the
LGU. Only authorized government depository banks or banks authorized
by the Banko Sentral ng Pilipinas (BSP) shall be allowed to participate in
the collection scheme.
3) Memorandum of Agreement between the LGU and the Bank – The

LGU shall enter into a Memorandum of Agreement with the accredited
bank which will be selected based on the terms and conditions that would
be most advantageous to the local government. The MOA shall set forth
in detail the responsibilities of the Bank in the receipt of tax payments,
custody of the funds and the prompt and proper turnover and remittance of
tax collections to the LGU. The MOA shall also spell out the number of
days, if any, that the collected funds shall remain with the bank before its
remittance to the LGU (holding period), and the related costs and charges,
if any.
b. Procedures in the Acceptance of Real Property Taxes through Over-the-

Counter Payments (OCP) in Accredited Banks (Acceptee Bank):
1) Only real property taxes for the current year shall be eligible for OCP in
the acceptee bank. All delinquent accounts shall continue to be paid
directly to the LGU cashiers/tellers.
2) The LGU shall send the Real Property Tax Bill (RPTB) to the taxpayer
either through the mail or courier, or through personal delivery, which
shall be the basis in the OCP in the acceptee bank. The RPTB may also be
obtained by the taxpayer or his duly authorized representative directly
from the LGU.
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3) The Bills Payment Slip (BPS) issued by the acceptee bank shall be duly
accomplished by the taxpayer for all payments to be made. The BPS shall
indicate the taxpayer’s name, the specific tax to be paid, the taxable year
and amount of tax. The BPS shall also contain the bank account number of
the LGU to which all tax payments shall be credited.
4) The taxpayer shall pay his tax to the acceptee bank teller supported by the
Real Property Tax Bill and the duly accomplished BPS.
5) The acceptee bank teller shall accept the tax payment and shall validate
the RPTB and BPS. The validated RPTB and BPS shall be returned to the
taxpayer.
6) The following banking day, the acceptee bank shall generate and send to
the LGU an Abstract of Collection Report of the day’s transactions via
email or FTP.
7) The LGU may then view and/or print the Abstract of Collection Report
(ACR).
8) The LGU may also be provided by the acceptee bank with an on-line
banking facility which can be used to view and download the LGU
Statement of Account (SOA) to enable the LGU to have real-time data on
all RPT collections made by the acceptee bank.
Remedies for Collection -
Section 179. Remedies for the Collection of the Real Property Tax – For the
collection of the basic real property tax and any other tax levied under the LGC, the LGU
concerned may avail of the remedies by administrative action through levy on real
property or by judicial action. (Sec. 256, LGC)
a. Local Government Units – The basic real property tax and any other tax levied
under the LGC constitute a lien on the property subject to tax, superior to all liens,
charges or encumbrances in favor of any person, irrespective of the of the owner
or possessor thereof, enforceable by administrative or judicial action, and ma only
be extinguished upon payment of the tax and the related interests and expenses.
(Sec. 257, LGC)
b. Treasurer to Certify Delinquencies Remaining Uncollected – The provincial,

city or municipal treasurer or his deputy shall prepare a certified list of all real
property tax delinquencies which have remained uncollected or unpaid for at least
one (1) year in his jurisdiction, and a statement of the reason or reasons for such
non-collection or non-payment. These shall be submitted to the sanggunian
concerned on or before the 31 st of December of the year immediately succeeding
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the year in which the delinquencies were incurred, with a request for assistance in
the enforcement of the remedies for collection (Sec. 269, LGC)
LTO Annex 90 shows the form for the “Certified List of Real Property Tax
Delinquencies” which shall be used for the purpose.
c. Availment of Remedies – When the real property tax and any other tax levied
under the LGC becomes delinquent upon the expiration of the one (1) year period
from the time the tax becomes due and payable, the LGU concerned, through the
office of the provincial or city treasurer, or the municipal treasurer of a
municipality of Metropolitan Manila, may avail of remedies by administrative or
judicial action.
1) The administrative remedies which are summarized in nature are:
a) Levy on real property; and

b) Sale of real property at public auction
2) The judicial remedy is availed of in the court of appropriate jurisdiction
These remedies may be applied cumulatively, simultaneously and

unconditionally. Any or all the remedies or combination of them may be applied,
and the use of one remedy shall not be a bar against the institution of the other
remedies.
Formal demand for the payment of the delinquent taxes and penalties due is not a
prerequisite to such remedies. The Notice of Delinquency shall be sufficient for
the purpose.
d. Period Within Which to Institute Remedies to Collect Real Property Taxes –

The basic real property tax and any other tax levied under Title 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.
1) The period of prescription within which to collect shall be suspended for

the time during which:
a) The local Treasurer is legally prevented from collecting the tax;

b) The owner of the property or the person having legal interest
therein requests for reinvestigation and executes a waiver before
the expiration of the period within which to collect; and
c) The owner of the property or the person having legal interest
therein is out of the country or otherwise cannot be located.
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(Sec. 270, LGC)
2) If the local treasurer sends notice of delinquency and/or demand letter for
the payment of the delinquent taxes in observance of due process
preparatory to the application of the administrative remedies in the
collection of delinquent taxes provided in the law, the prescriptive period
of five (5) years for the collection of taxes shall not as yet commence. It is
only when the treasurer concerned neglected to perform his mandated
duties that he shall be faulted giving rise to said prescriptive period under
the law. (BLGF Opinion, 2nd Indorsement, October 16, 1996)
3) The application of the provisions of Section 270 of the LGC is prospective

and shall not cover real property taxes that accrued prior to the effectivity
of the LGC on January 1, 1992. Such taxes and the collection thereof
shall be governed by the Real Property Tax Code or PD 464, as amended
(4th Indorsement dated June 2, 1994 to the Provincial Treasurer of
Pampanga).
e. Cost of Collections – If authorized by a duly approved ordinance, the local

Treasurer may advance an amount sufficient to defray the costs of collection
through the remedies provided in the LGC, including the expenses of
advertisement and sale. (Sec. 260, LGC). The cost of collections, however, shall
be recovered by the LGU from the proceeds of the sale or auction of the
properties levied.
Section 180. Condonation or Reduction of Real Property Tax and Interest- In case
of a general failure of crops or substantial decrease in the price of agricultural or
agribased 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 (Art. 367, IRR, LGC).
Section 181. Levy on Real Property – After the expiration of the time required to pay
the basic real property tax or any other tax levied under the LGC, real property subject to
such tax may be levied upon through the issuance of a Warrant of Levy on or before, or
simultaneously with the institution of the civil action for the collection of the delinquent
tax. (Sec. 258, LGC)
a. Effects of a Warrant of Levy – The Warrant of Levy (LTO Form 92) issued by
the treasurer for the collection of delinquent real property taxes and other
impositions under Title II, Book II of the LGC shall operate with the force of a
legal execution throughout the province, city or municipality within the
Metropolitan Manila Area. (Sec. 258, LGC)
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b. Penalty for Failure to Issue and Execute Warrant – Without prejudice to
criminal prosecution under the Revised Penal Code and other applicable laws, any
local Treasurer or his deputy who fails to issue or execute the warrant of levy
within one (1) year from the time the tax becomes delinquent or within thirty (30)
days from the date of issuance whereof, 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)
c. Notices Required Prior to Issuance of Warrant of Levy – Upon the tax

becoming delinquent, the provincial or city, or a treasurer of a municipality within
the Metropolitan Manila Area shall:
1) Immediately cause a notice of the delinquency to be posted at the main

entrance of the provincial capital, city or municipal hall and in publicly
accessible and conspicuous place in each barangay of the LGU concerned.
The Notice of Levy (LTO Form 93) shall contain the following
information:
a) Description of the property, including location and ownership

b) Specific date when the tax became delinquent
c) That if the delinquent taxes, surcharges, interests and penalties
are not paid before the prescribed period reflected in the Notice
lapses, the Warrant of Levy shall be issued.
2) Publish the same Notice of Tax Delinquency once a week for two (2)
consecutive weeks, in a newspaper of general circulation in the province,
city or municipality within MMA.
d. Procedures in Issuance of Warrant of Levy – If the delinquent taxes,

surcharges, interests and penalties remain unpaid after the lapse of the grace
period stated in the Notice of Delinquency, the following actions shall be taken:
1) The provincial or city treasurer, or municipal treasurer of a municipality

within the Metropolitan Manila Area concerned shall prepare a duly
authenticated certificate showing the following:
a) The name of the delinquent owner of the property or person having

legal interest in it,
b) The description of the property, and
c) The amount of the tax and interest due.
2) The Warrant of Levy and Notice of Levy shall be mailed to or served upon
the delinquent owner of the real property or person having legal interest in
it. In case he is out of the country or cannot be located, the warrant and
notice shall be served on the administrator or occupant of the property.
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3) Simultaneously, copies of the Warrant of Levy and Notice of Levy shall
be sent to or served upon the Assessor and the Registrar of Deeds of the
LGU where the property is located, who shall annotate the levy on the tax
declaration and certificate of title of the property, respectively.
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 therein. (Sec. 258,
LGC)
e. Advertisement and Sale – Within thirty (30) days after service of the warrant of
levy, the local Treasurer shall proceeds to publicly advertise for sale or auction
the property or a usable portion of the property as may be necessary to satisfy the
tax delinquency and expenses of sale. The following procedures shall be
observed:
1) Advertisement – The Notice of Sale shall be advertised as follows:

a) Posting a notice at the main entrance of the provincial, city or
municipal building, and in a publicly and conspicuous place in the
barangay where the real property is located, and
b) Publication once a week for two (2) weeks in a newspaper of
general circulation in the province, city or municipality where the
property is located.
2) The Notice of Sale shall specify the amount of the delinquent tax, interest
due and expenses of sale, the date and place of sale, the name of the owner
of the real property or person having legal interest in it, and a description
of the property to be sold.
3) Notice of Publication and Auction Sale – After the issuance of the

Warrant of Levy and the Notice of Levy, a Notice of Publication and
Auction Sale (LTO Form 94) shall be issued to taxpayer concerned to
inform him of which newspaper of general circulation and on what date
the auction of his delinquent property will be published, and the time, date
and place where the public auction will be conducted. The officer serving
the Warrant and the Notice shall accomplish a Proof of Service Notice of
Publication and Auction Sale (LTO Form 95) and submit this to the
treasurer concerned.
4) Date of the Auction – The auction shall be held not earlier than 20 days
after service of the Warrant of Levy.
5) Stay of Sale by Payment – At any time the date fixed for the sale, the
owner or person having legal interest in the real property may stay the
proceedings by paying the delinquent tax, interest due and the expenses of
sale.
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6) Site of Sale – 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 the sale. (Sec. 260, LGC)
7) Sale by Auction – On the date of the sale, the delinquent property shall be
auctioned at the appointed time and place. The property shall be sold to
the highest cash bidder whose bid is sufficient to pay the delinquent
property tax, the accrued interest, and the cost of the sale, the total of
which be the floor price for accepting any bid.,
f. Report to Sanggunian – Within thirty (30) days after the sale, the local Treasurer
or his deputy shall make a report of the sale to the sanggunian concerned, which
shall form part of his records. (Sec. 260, LGC)
g. Certification of Sale – The local Treasurer shall likewise prepare and deliver to
the purchases a Certificate of Sale which shall contain the name of the purchases,
a description of the property sold, the amount of the delinquent tax, the interest
due thereon, the expenses of sale and a brief description of the proceedings.
The form to be used shall be the Certification of Sale of Delinquent Property

prescribed by the DOF (LTO From 96).
h. Proceeds in Excess of Payment Due – Proceeds of the sale in excess of the

delinquent tax, the interest due, and the expenses of sale shall be remitted to the
owner or person having legal interest in the real property. (Sec. 260, LGC)
i. Redemption of Property Sold –
a). Within one (1) year from date of sale, the owner of the delinquent property
or person having legal interest therein, or his representative, shall have the
right to redeem the property upon payment to the local Treasurer of the
amount of the delinquent tax, including the interest due thereon and the
expenses of the sale from the date of delinquency to the date of sale, plus
interest of not more than two percent (2%) per month on the purchase
price from the date of sale to the date of redemption.
b) Such payment shall invalidate the certificate of sale issued to the

purchases and the owner of the delinquent real property or person having
legal interest therein shall be entitled to a Certificate of Redemption
(LTO Form 97) which shall be issued by the local Treasurer or his deputy.
c) From the date of sale until the expiration of the period of redemption, the
delinquent real property shall remain in the possession of the owner or
person having legal interest therein, who shall be entitled to the income
and other fruits of the property.
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d) Upon redemption of the delinquent real property by the owner or person
having legal interest in it, the local Treasurer or his deputy shall issue to
the purchases the Notice of Redemption (LTO Form 98) to inform him of
such redemption and request him to return the Certificate of Sale that had
been issued.
e) The local Treasurer or his deputy, upon receipt from the purchases of the
Certificate of Sale, shall forthwith return to the latter the entire amount
paid by him plus interest of not more than two percent (2%) per month.
Thereafter, the property shall be free from the lien of such delinquent tax,
interest due, and expenses of sale. (Sec. 261, LGC)
j. Final Deed to Purchaser – In case the owner or person having legal interest in
the real property fails to redeem it as provided, the local Treasurer shall execute a
deed conveying to the purchaser of the property, free from lien of the delinquent
tax, interest due, and expenses of sale. The deed shall briefly state the proceedings
upon which the validity of the sale rests. (Sec. 262, LGC)
The steps in executing the conveyance of the property shall be as follows:
1) The treasurer concerned shall request the owner of the auctioned property
to surrender the delinquent property and its duplicate title and tax
declaration.
2) The duplicate title and tax declaration shall be attached to the Deed of
Conveyance which shall be the same form as reflected in the “Final Deed
of Sale” (LTO Form 99).
3) The above documents shall be submitted to the Registrar of Deeds for the
consolidation of the title, after which the Assessor shall issue a new tax
declaration in the name of the new owner.
k. Purchase of Property by the LGU for Want of Bidder – In case in there is no

bidder for the real property advertised for sale, or where the highest bid is for an
amount insufficient to pay the real property tax and related interests and costs of
sale, the treasurer conducting the sale shall purchase the property in behalf of the
LGU concerned to satisfy the claim. The following provisions shall also apply:
1) Within two (2)days after the purchase make a report of the proceedings
which shall be reflected upon the records of his office.
2) It shall be the duty of the Registrar of Deeds concerned upon registration

with his office of any such Declaration of Forfeiture, to transfer the title of
the forfeited property to the LGU concerned without the necessity of an
order from a competent court.
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3) Within one (1) year from the date of such forfeiture, the taxpayer or any of
his representatives may redeem the property by paying to the local
treasurer the full amount of the real property tax and the related interest
and costs of the sale.
4) If the property is not redeemed as provided, the ownership shall be fully

vested on the LGU concerned. (Sec. 263, LGC)
l. Resale of Real Estate Taken for Taxes, Fees or Charges – The sanggunian
concerned may, by ordinance duly approved and upon notice of not less than
twenty (20) days, sell and dispose of the real property acquired under the Section
263 at public auction. The proceeds of the sale shall accrue to the general fund of
the LGU concerned. (Sec. 264, LGC)
m. Further Levy – Levy may be repeated if necessary until the full amount due,
including all expenses is collected. (Sec. 265, LGC)
Section 182. Prohibition of Action Assailing Validity of Tax Sale – No court shall
entertain any action assailing the validity of any sale at public auction of real property or
rights therein under Title Two, 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.
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 of the person having legal rights therein have been impaired. (Sec.
267, LGC)
Section 183. Collection of Real Property Tax through the Courts – The LGU may
enforce the collection of the basic real property tax or any other tax levied under Title
Two, Book II of the LGC by civil action in any court of competent jurisdiction. The civil
action shall be filed by the local Treasurer within the period prescribed in Section 270 of
the LGC.
The following shall be observed in the filing of civil action:
a. Basis of Civil Action: The delinquent basic real tax or any other tax levied under
Title II, Book II of 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.
b. Duty of Provincial Attorney/Legal Officer – The treasurer concerned shall

furnish a certified Statement of Delinquency to the provincial attorney or city of
municipal legal officer 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.
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Section 184. 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 treasurer concerned, 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.
Section 185. Compromise Agreement – In case the treasurer believes that a

Compromise Agreement on collection of delinquent taxes is warranted, he/she shall make
representations to the sanggunian concerned for a resolution or ordinance authorizing
him/her to enter into such agreement. The format for a Compromise Agreement is
shown in LTO Form 100.
Section 186. Sanctions – Treasurers and other officers who fail to fulfill their
obligations in the collection of real property taxes, abuse their authority, or hinder the
efforts to collect and enforce the payment of taxes are subject to the following sanctions:
a. A local Treasurer who fails to dispose of delinquent real property tax at public
auction in compliance with the provision of the LGC, and any other local
government official whose act hinders the prompt disposition of delinquent real
property at public auction shall, upon conviction, be subject to a fine of not less
than One Thousand Pesos (P 1,000.00) nor more than Five Thousand Pesos
(P5,000.00), 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)
b. Any local Treasurer or his deputy who fails to issue or execute the warrant of levy
within one (1) year from the time the tax becomes delinquent or within thirty (30)
days from the issuance of the warrant, or who is found guilty of abusing the
exercise of the warrant in an administrative or judicial proceedings shall be
dismissed from the service. (Sec. 259, LGC)
Disposition of Proceeds –
Section 187. Distribution of Proceeds – The following shall be observed in the

disposition of the proceeds of collections related to real property taxes:
a. Proceeds of the Basic Tax and Interests – The proceeds of the basic real
property tax, including interests, and proceeds from the use, lease or disposition,
sale or redemption of property acquired at public auction, and fifty percent (50%)
of the tax paid under protest collected by the local treasurer shall be distributed as
follows:
In the case of provinces:
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1) Province – thirty five percent (35%) shall accrue to its general fund;
2) Municipality – forty percent (40%) shall accrue to the general fund of the
municipality where the property is located; and
3) Barangay – twenty five percent (25%) shall accrue to the barangay where
the property is located.
In the case of cities:
1) City – seventy percent (70%) shall accrue to the general fund of the city;
and
2) Barangays – thirty percent (30%) shall be distributed among the
component barangays of the cities where the property is located in the
following manner
3) Fifty percent (50%) shall accrue to the barangay where the property is
located
4) Fifty percent (50%) shall accrue equally to all component barangays of the
city
In the case of Metro Manila Municipalities:
1) Metropolitan Manila Authority – thirty five percent (35%) shall accrue to

the general fund of the authority;
2) Municipality thirty five percent (35%) shall accrue to the general fund of
the municipality where the property is located;
3) Barangays – thirty percent (30%) shall be distributed among the
component barangays of the municipality where the property is located in
the following manner:
4) Fifty percent (50%) shall accrue to the barangay where the property is
located; and
5) Fifty percent (50%) shall accrue equally to all component barangays of the
municipalities (Sec. 271, LGC)
b. Provision on 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, subject to such rules as may
be prescribed by the Commission on Audit. (Sec. 271, LGC, Art. 362, IRR)
c. 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 the case of
provinces, the proceeds shall be divided equally between the provincial and
municipal 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 equipments, educations research, purchase of books and
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periodicals, and sports development as determined and approved by the local
school board. (Sec. 272, LGC)
d. Proceeds of the Tax on Idle Lands – The proceeds of the additional real
property tax on idle lands shall accrue to the respective general fund of the
province or city where the land is located. In the case of municipalities within the
Metropolitan Manila Area, the proceeds shall accrue equally to the Metropolitan
Manila Authority and the municipality where the land is located (Sec. 273, LGC)
e. Proceeds of the Special Levy – The proceeds of the special levy on lands
benefited by public works, project and other improvements shall accrue to the
general fund of the LGU which financed such public works, projects or
improvements. (Sec. 274, LGC)
SPECIAL PROVISIONS
Section 188. General Assessment Revisions, Expenses Incident Thereto – The

Sanggunian of provinces, cities and municipalities within the Metro Manila Area shall
provide the necessary appropriations to defray the expenses incident to the general
revision of real property assessment.
All expenses incident to the general provision of real property assessment shall, by
ordinance of the sanggunian panlalawigan, be apportioned between the province and the
municipality on the basis of the taxable areas of the municipality concerned. (Sec. 275,
LGC)
The barangays may be required by the sanggunian of the city or municipality to share in
the expenses to be incurred for the conduct of a general revision of real property
assessment. (Art. 366(c), IRR)
Section 189. Condonation or Reduction of Real Property Tax and Interest – In case
of a general failure of crops or substantial decrease in the price of agricultural or
agribased products, or calamity in any province, city or municipality, the sanggunian
concerned by ordinance passed prior to the first (1 st) day of January of any year and upon
recommendation of the Local Disaster Coordinating Council, may condone or reduce,
wholly or partially the taxes and interest thereon, for the succeeding year or years in the
city or municipality affected by the calamity.
Section 190. Condonation or Reduction of Tax by the President – The President of

the Philippines may, when public interest so requires, condone or reduce the real property
tax and interest for any year in any province, city or municipality within the Metropolitan
Manila Area. (Sec. 277, LGC)
Section 191. Fees in Court Actions – All court actions, criminals or civil, instituted at
the instance of the provincial, city or municipality Treasurer, Assessor under the
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provisions of the LGC, shall be exempt from the payment of court and sheriff’s fees.
(Sec. 280, LGC)
Section 192. Fees in Registration of Papers or Documents on Sale of Delinquent

Real Property to LGU – 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 tax and registration fees. ( Sec.
281, LGC)
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CHAPTER 2. BUSINESS AND OTHER LOCAL TAXES
Section 193. Nature – Business taxes are those imposed by an LGU on the privilege of
engaging in business, occupation and other business activities within its territorial
jurisdiction. Other local taxes other than those imposed by LGUs on real property and
business as authorized by law. The proceeds of these taxes shall accrue exclusively to the
LGU that imposes them, or, when provided by law, may be shared with other LGUs..
The power to impose a tax, fee, or charge or generate under this Code shall be exercised
by the Sanggunian by the local government unit concerned through an appropriate
ordinance. (Sec. 132, LGC)
Section 194. Definition of Terms
a. Agricultural product- includes the yield of the soil, such as corn, 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
the said products for the market;
2) To be considered as 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-product 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 of LGC 1991)
b. Amusement - a pleasurable diversion and entertainment. It is synonymous to

relaxation, avocation, pastime, or fun.
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c. Amusement places- include theaters, cinemas, concert halls, circuses and other
place of amusement where one seeks admissions to entertain onself by seeing or
viewing the show or performances;
d. Business – refers to a trade or commercial activity regularly engaged in as a

means of livelihood or with a view to profit;
e. Banks and other financial institutions – include non-bank financial

intermediaries, lending investors, finance and investment companies, pawnshops,
money shops insurance companies, stock markets, stock brokers and dealers in
securities and foreign exchange, as defined under applicable law, or rules and
regulations thereunder.
Credit card companies fall within the purview of banks and other financial
institutions contemplated under Section 143 (f) of LGC. (DOF Opinion, 15 March
1999)
f. Capital Investment – the capital which a person employs in any undertaking, or

which he contributes to the capital of a partnership, corporation, or any other
juridical entity or association in a particular taxing jurisdiction.
g. Charges – refer to pecuniary liabilities, as rents or fees against persons or

property;
h. Contractor – includes persons, natural or judicial, not subject to professional tax

under Article 299 of IRR of 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 the
contractor or his employees.
As used in this Chapter, the term “contractor” includes the following:
1) general engineering, general building and specialty contractors as defined

under applicable laws, filling demolition and salvage works contractors;
2) proprietors or operators of mine drilling apparatuses; proprietors or
operators of dockyards; persons engaged in the installation of water , gas
or electric light, heat, or power systems and connections;
3) proprietors or operators of smelting plants; engraving, plating, and plastic
lamination; establishments for repairing, repainting, upholstering, washing
or greasing of vehicles and heavy equipment, and vulcanizing, recapping
and battery charging;
4) 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;
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5) proprietors or operators of dry-cleaning or dyeing establishments, steam
laundries and laundries using washing machines;
6) proprietors or owners of shops for the repair of any kind of mechanical
and electrical devices, instruments, apparatuses, or furniture and shoe
repairing by machine or any mechanical contrivance;
7) proprietors or operators of establishments or lots for parking purposes;
8) proprietors or operators of tailor shops, dress shops, milliners, and hatters,
beauty shops, barbershops, massage clinics, sauna, Turkish and Swedish
baths, slenderizing and body-building saloons and similar establishments;
9) photographic studios;
10) funeral parlors;
11) proprietors or operators of hotels, motels, and lodging houses;
12) proprietors or operators of arrastre and stevedoring warehousing, or
forwarding establishments;
13) master plumbers, smiths, and house or sign painters; printers bookbinders,
lithographers;
14) publishers except those engaged in the publication or printing of any
newspaper, magazine, review or bulleting which appears at regular
intervals with fixed prices for subscription and sale and which is not
devoted principally to the publication of advertisements;
15) business agents, private detective or watchman agencies,
16) commercial and immigration brokers,
17) cinematographic owners, lessors and distributors.
i. Corporation – includes partnerships, no matter how crated or organized, joint-

stock companies, joint accounts (cuentas en participacion), associations or
insurance companies. This term does not include the following:
1) general professional partnerships and joint ventures or consortiums formed

for the purpose of undertaking construction projects or engaging in
petroleum, coal, geothermal, and other energy operations pursuant to an
operating or consortium agreement under a service contract with the
government;
2) general professional partnerships which are partnerships formed by
persons for the sole purpose of exercising their common profession, 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 organized under the laws of the Philippines but engaged in trade
or business within the Philippines;
j. Countryside and Barangay Business Enterprise – any business entity,

association or cooperative registered under the provisions of R.A. No. 6810 – the
“Magna Carta for Countryside and Barangay Business Enterprises” also referred
to as “Kalakalan 20”;
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k. Dealer – one whose business is to buy and sell merchandise, goods, and chattels
as a merchant. He stands immediately between the producer or manufacturer and
the consumer and depends for his profit not upon the labor he bestows upon his
commodities but upon the skill and foresight with which he watches the market;
l. Fee – a charge fixed by law or ordinance for the regulation or inspection of a

business or acivity. It shall also include charges fixed by law or agency for the
services of a public officer in the discharge of his official duties;
m. Franchise – a right or privilege, affected with public interest which is conferred

upon private persons or corporations, under such terms and conditions as the
government and its political subdivision may impose in the interest of public
welfare, security, and safety;
n. Gross Sales or Receipts – the total amount of money or its equivalent

representing the contract price, compensation or service fee, including the amount
charged for materials supplied with the services and the deposits or advance
payments actually or constructively received during the taxable quarter for the
services performed or to be performed for another person, excluding discounts
that can be determined at the time of sale, sales returns, and the excise taxes and
the value-added tax (VAT) due on the transaction.
In consonance with the above provision of the IRR, the DOF has further clarified
that the term “gross receipts” as applied to contractors, is the total amount of
service fees, including the advance payments or deposits actually or
constructively received during the taxable year. The tax base should exclude
payments or deposits which were not actually or constructively received by the
contractor during the taxable year and materials or equipment that do not form
part of the things to be constructed – even if they were supplied during the said
year. (DOF Opinion, 4 March 1994; DOF Opinion, 1st Indorsement, 10 August
1998)
o. Manufacturer – includes the following:
1) every person who, by physical or chemical process, alters the exterior

texture or form or inner substance of any raw material or manufactured or
partially manufactured product in such manner as to prepare it for special
use or uses to which it could not have been put in its original condition,
2) or who by any such process, alters the quality of any such raw material or
manufactured or partially manufactured products so as to reduce it to
marketable shape or prepare it for any or the use of industry,
3) or who by any such process, combines any such raw material or of
different kinds and in such manner that the finished products of such
process or manufacture can be put to a special use or uses to which such
raw material or manufactured or partially manufactured in their original
condition could not have been put, and
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4) who, in addition, alters such raw material or manufactured or partially
manufactured products, or combines the same to produce such finished
products for the purpose of their sale or distribution to others and not for
his own use or consumption.
p) Marginal Farmer or Fisherman – refers to individual engaged in subsistence

farming or fishing which sale be limited to the sale, barter or exchange of
agricultural or marine products produced by himself and his immediate family,
and whose annual net income from such farming or fishing does not exceed Fifty
Thousand Pesos (P 50,0000.00) or the poverty line established by NEDA for the
particular region or locality, whichever is higher;
q) Motor Vehicle – any vehicle propelled by any power other than muscular power
using the public roads, by excluding road rollers, trolley cars, street sweepers,
sprinklers, lawn movers, bulldozers, graders, forklifts, amphibian trucks, and
cranes if not used on public roads, vehicles which run only on rail or tracks, and
tractors, trailers, and traction engines of all kinds used exclusively for agricultural
purposes;
r) Municipal Waters – include not only streams, lakes and tidal waters within the
municipality, not being the subject of private ownership and not comprised within
the national parks, public, forest, timber lands, forest reserves or fishery reserves,
but also marine waters included between two lines drawn perpendicularly to the
general coastline from points where the boundary lines of the municipality or city
touch the sea at low tide and a third line parallel with the general coastline and
fifteen (15) kilometers from it. Where two (2) municipalities are so situated on the
opposite shores that there is less than fifteen (15) kilometers of marine waters
between them, the third parallel line shall be equally distant from opposite shores
of the respective municipalities.
s) Operator – includes the owner, manager, administrator, or any other person who
operates or is responsible for the operation of a business establishment or
undertaking;
t) Peddler – means any person who, either for himself or on commission, travels
from place to place and sells his goods or offers to sell and deliver the same.
Whether a peddler is a wholesale peddler or a retail peddler of a particular
commodity shall be determined from the definition of wholesale dealer or retail as
provided in Rule XXX of IRR implementing the LGC.
u) Residents – refer to natural persons who have their habitual residence in the
province, city or municipality where they exercise their civil rights and fulfill
their civil obligations, and to juridical persons for which the law or any other
provision crating or recognizing them fixes their residence in a particular
province, city or municipality. In the absence of such law, juridical persons are
residents of the province, city, or municipality where they have their legal
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residence or principal place of business or where they conduct their principal
business or occupation;
v) Person – every natural or juridical being, susceptible of rights and obligations or

of being the subject of legal relations;
w) Retail – means a sale where the purchases buys the commodity for his own
consumption irrespective of the quantity of the commodity sold;
x) Vessel – includes every type of boat, craft, or other artificial contrivance used, or
capable of being used, as a means of transportation on water;
y) Wharfage – means a fee assessed against the cargo of a vessel engaged in foreign
or domestic trade based on quantity, weight or measure received and/or
discharged by vessel, and
z) Wholesale – means a sale where the purchaser buys or imports the commodities
for resale to persons other than the end user regardless of the quantity of the
transaction.
A. PROVISIONS ON THE TAXING POWERS OF PROVINCES
Section 195. Tax on Transfer of Real Property Ownership – The province may
impose a tax on the sale, donation, barter, or any other mode of transferring ownership or
title of real property.
a. Rate and Base of Transfer Tax - The rate shall not be more than fifty (50%) of
one percent (1%) of the total consideration involved in the acquisition of the
property, or of the fair market value in case the monetary consideration involved
in the transfer is not substantial, whichever is higher.
b. The fair market value shall be that reflected in the prevailing schedule of fair
market values enacted by the Sanggunian concerned. (Art. 224, IRRR of the LGC)
c. 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, LGC)
d. Duties of Responsible Officers to Ensure Payment of Transfer Tax –
1) The Register of Deeds of the Province concerned shall, before registering

any deed, require the presentation of the evidence of payment of this tax. (
Sec. 135, LGC)
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2) The Provincial Assessor shall likewise make the same requirement before
canceling an old tax declaration and issuing a new one in place thereof.
(Sec. 135, LGC)
3) 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. (Sec. 135, LGC)
e. Exemption from Payment of Tax on Transfer of Real Property Ownership
1) The sale, transfer or other disposition of real property pursuant to R.A. No.
6657 shall be exempt from this tax (Sec. 135, LGC). However, transfer of
ownership over a land pending issuance of a free patent under the Public
Land Act (C.A. No. 141, as amended) by the Bureau of Lands is subject to
this tax.
2) Private sector entities and individuals engaged in developing socialized

housing projects under the Socialized Housing Act for the benefit of the
underprivileged and homeless are exempted from payment of transfer tax
for both raw and completed projects. (Sec. 20 of RA 7279)
Section 196. Tax on the Business of Printing and Publication – The Province may
impose a tax on the business of persons engaged in the printing and/or publication of
books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of
similar nature. (Sec. 136, LGC)
The following guidelines shall govern the administration and collection of this tax:
a. Rate and Base of Tax – The rate shall not exceed fifty percent (50%) of one
percent (1%) of the gross annual receipts of the business for the preceding
calendar year. (Sec. 136, LGC)
b. Rate of 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, regarless of when the
business started to operated, the tax shall be based on the gross receipts for the
preceding calendar year, or any fraction thereof, as provided herein. (Sec. 136,
LGC)
c. Tax on the Business of Printing and Publication of Newspapers and

Magazines, etc. – The business of printing newspapers and magazines is included
in the clause “and others of similar nature” and therefore subject to this local tax.
(DOF Opinion, 1st Indorsement, 19 February 1996)
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d. Exemption from the Tax – The receipts from the printing and/or publishing of
books or other reading materials prescribed by the Department of Education as
school references shall be exempt from the said tax. (Sec. 136, LGC)
Section 197. Franchise Tax – Notwithstanding any exemption granted by any law or
other special law, the Province may impose a tax on a business enjoying a franchise. (Art.
226-a, IRR of LGC)
The administration and collection of franchise tax shall be governed by the following:
a. Tax Rate and Base of Franchise Tax – The rate of franchise tax shall not exceed
fifty percent (50%) of one percent (1%) of the gross annual receipts of the
franchise business, which shall include both cash sales and sales on account
realized during the limits of any city located within the province. (Art. 226-a, IRR
of LGC)
b. Limitation of the Province to Impose Franchise Tax – The Province, shall not
impose the tax on business enjoying franchise operating within the territorial
jurisdiction of any city located within the province. (Art. 226-b, IRR of LGC)
c. Exemption of Public Utility Vehicle Operators with Certification of Public

Convenience – The term “business 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 franchises. (Art. 226-c, IRR of
LGC)
d. Rate and Base of Franchise Tax for Newly Started Business – In the case of a
newly started business, the tax shall not exceed one-tweentieth (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 of LGC)
e. Capital Investment as basis of the franchise tax of a newly started business –

The capital investment to be used as basis of the tax of a newly started business
herein provided shall be determined in the following manner.
1) In the locality where the principal office of the business is located, the
paid up capital stated in the articles of incorporation, in case of
corporations, or in any similar document in case of other types of business
organizations or enterprises, shall be considered as the capital investment.
2) Where there is a branch or sales office which commences business

operations during the same year as the principal office but which is located
in another province or a city outside the province, the paid up capital
referred to above shall be reduced by the amount of the capital investment
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made for the said branch of sales office which shall be taxable instead by
the province or city where it is situated.
3) Where the newly-started business is a branch or sales office commencing

business operations at a year later than that of the principal office, the
capital investment shall mean the total funds invested in the branch or
sales office. (Art. 226, IRR of LGC)
Actual and specific applications of authority to tax franchises are illustrated in Section
221 of the Manual.
Section 198. Tax on Sand, Gravel, and Other Quarry Resources – The Province may
levy and collect a tax on sand , gravel and other quarry resources extracted within the
territorial jurisdiction. (Art. 227-a, IRR of LGC)
The following shall govern the administration and collection of this tax:
a. Rate and Base of Tax – The rate of the tax shall not be more than ten percent
(10%) of the fair market value in the locality per cubic meter of ordinary
stones, sand, gravel, earth, an 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 of LGC)
b. Authority to Grant Permit to Extract – The permit to extract sand and

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 of LGC)
c. Distribution of Proceeds from Tax – the proceeds of the tax on sand, gravel
and other quarry resources shall be distributed as follows:
1. Province – Thirty Percent (30%)

2. Component City or Munincipality where the sand, gravel and other
quarry resources are extracted – Thirty Percent (30%); and,
3. Barangay where the sand, gravel and other quarry resources are
extracted- Forty percent (40%) (Art. 227-c, IRR of LGC)
d. Determination of Fair Market Value of Quarry Resources – The fair

market value shall be the market value of the minerals as extracted in site and
not when delivered to the end users. The assessment of the tax is done on or
before extraction of said materials and not upon the sale thereof to end users.
(DOF-BLGF 1st Ind., 5/24/93)
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e. Non-taxability of Quarry Resources Extracted from Private Lands – Only
quarry resources extracted from public lands are subject to local taxes, Quarry
resources extracted from private lands are not within the taxing power of the
local government.
Section 199. Professional Tax – The Province may levy an annual professional tax on
each person engaged in the exercise or practice of professions requiring government
examination at such amount and reasonable classification as the sangguniang
panlalawigan may determine but shall in no case exceed Three Hundred Pesos (P 300.00)
(Sec. 139-a, LGC). The collection and administration of the professional tax shall be
guided by the following:
a. Persons Liable to Pay Professional Tax – The professional subject to tax

herein imposed are only those who have passed the bar examinations, or any
board or other examinations conducted by the Professional Regulation
Commission (PRC). (Art. 228-f, IRR of LGC)
b. Place of Payment of Professional Tax – Every person legally authorized to

practice his profession shall pay the professional tax to the province where he
practices his profession or where he maintains his principal office in case he
practices his profession in several places, provided, however, Tht such person
who has paid the corresponding professional tax shall be entitled or practice
his profession in any part of the Philippines without being subjected to any
other national or local tax, license, or fee for the practice of such profession.
(Sec. 139-b, LGC)
c. Time of Payment of Profession Tax – The professional tax shall be payable

annually, on or before the thirty first (31 st) day of January. Any person first
beginning to practice a profession after the month of January must, however,
pay the full tax before engaging therein. (Sec. 139, LGC)
d. Responsibility of Employers in Ensuring Payment of Professional Tax –

Any individual or corporation employing a person subject to professional tax
shall require payment by that person of the tax on his profession before
employment and annually thereafter. (Sec 139-c, LGC)
e. Tax is Due for Each Profession Practiced – A line of profession does not
become exempt even if conducted with some other profession for which the
tax has been paid. (Sec. 139-d, LGC). Thus, a lawyer who is also a Certified
Public Accountant (CPA) must pay professional tax imposed on lawyers and
that fixed for CPAs, if he is to practice both professions.
f. Exemption of Professional Exclusively Employed in the Government –

Professional exclusively employed in the government shall be exempt from
the payment of this tax. (Sec. 139-d, LGC)
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g. Documentation Requirements:
1. Upon Payment of Tax – For the purpose of collecting the tax, the
provincial treasurer or his duly authorized representative shall required
from such professionals their current annual registration cards issued
by the competent authority before accepting payment of their
professional tax for the current year. The PRC likewise shall require
the professional presentation of proof of payment before registration of
professionals or renewal of their licenses. (Art. 228-f, IRR of LGC)
2. On Transaction Documents of Practicing Professionals – Any

person subject to the professional tax shall write in deeds, receipts,
prescriptions, reports, books of accounts, plans and designs, surveys
and maps, as the case may be, the number of the official receipts
issued to him. (Sec 140-a, LGC)
Section 200. Amusement Tax – The Province may levy an amusement tax to be
collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadiums, and other places of amusement.
The collection and administration of the amusement tax shall be guided by the following:
a. Rate and Base of Amusement Tax – The rate shall not be more than thirty
percent (30%) of the gross receipts from admission fees. (Sec. 140-a, LGC)
b. Procedure for Determining Amusement Tax Payable by Proprietors,

Lessees, or Operators and Distributors of Cinematographic Films – In the
case of theaters or cinemas, the tax shall first be deducted and withheld by
their proprietors, lessees or operators and paid to the provincial treasurer
before the gross receipts are divided between said proprietors, lessees, or
operators and the distributors of the cinematographic films. (Sec. 140-b, LGC)
c. Exemption from Payment of Amusement Tax – The holding of operas,

concerts, dramas, recitals, paintings, and art exhibitions, flowers shows,
musical programs, literary and oratorical presentations except pop, rock or
similar concerts shall be exempted from the payment of the amusement tax,
subject to guidelines issued by the Department of Finance (DOF) (Art. 229-c,
IRR of LGC)
d. Procedures in Payment of Amusement Tax – The sangguniang

panlalawigan may prescribe the time, manner, terms and conditions including
the issuance by the proprietor, lessee, or operator of the theater or amusement
place of admission tickets for the payment of tax. In case of fraud or failure to
pay the tax, the sangguniang panlalawigan may impose such surcharges,
interests, and penalties as it may deem appropriate. (Art. 229-d, IRR of LGC)
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e. Distribution of Proceeds of Amusement Tax – The proceeds of the
amusement tax shall be shared equally by the province and the municipality
where the amusement placed are located. (Sec. 140-e, LGC)
f. “Other Places of Amusement” Construed – Not only theaters and cinema

houses, but all “places of amusement” such as night clubs, cockpits, and the
like, are subject to the amusement tax on admission if any amount is charged
as entrance fee to the patrons. (Ursal, p77, Phil Law on Local Government
Taxation, Annot. 2000 ed)
g. Token/Coin-Operated Video Machines Not Subject to Amusement Tax –

Amusement tax is not collectible from business establishments that operate
token and coin-operated video and similar machines that do not charge
admission fees. The purchase of token is for the purpose of playing games on
or operating the machines installed in the amusement place, not to gain
admission to the premises, and therefore does not constitute the payment of
admission fees on which an amusement tax may be levied and collected. A
person may enter the place without paying anything and leave without
operating any machine, in which case, he does not even have to purchase
tokens.
However, the operator of the said business establishment shall be taxable

under Sec. 143(h) of LGC, on the basis of the gross receipts from the sale of
tokens. (BLGF Ind., 02-27-1996, to SePhil Amusement and Recreation
Corporation-SPARC)
h. For the effective administration of the amusement tax, an administrative

provision may be provided in the tax ordinance requiring proprietors,
lessees or operators liable to the amusement tax on admission to:
1) Number the admission tickets consecutively and serially;

2) Reflect in the admission tickets the name of the amusement place and
fee charged for admission;
3) Register ticket rolls or booklets with the provincial/city treasurer of the
locality where the amusement place is located before issuing the
tickets;
4) Tear admission tickets into halves, once issued, the first half to be
given by the gatekeepers to the customers or patron and the other half
to be deposited in a ticket box to be made available for inspection by
the treasurer or his deputy; and
5) 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 treasurer concerned.
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Section 201. Annual Fixed Tax on Delivery Vehicles of Manufacturers, Producers
Wholesalers, Dealers and Retailers of Certain Products – The Province may levy an
annual fixed tax for every truck, van or any vehicle used by manufacturers, producers,
wholesalers, dealers or retailers in the delivery or distribution of distilled spirits,
fermented liquors, soft drinks, cigars and cigarettes, and other products as may be
determined by the sangguniang panlalawigan, to sales outlets or consumers, whether
directly or indirectly, within the province, in an amount not exceeding Five Hundred
Pesos (P 500.00).
The manufacturers, producers, wholesalers, dealers, and retailers referred to in the

immediately foregoing paragraph shall be exempt from tax on peddlers referred to in
Section 210 of this Chapter (Sec. 141-b, LGC).
The annual fixed tax is applicable per province. If the same truck is used to deliver goods
in several provinces, the owner of the truck is liable to pay the said tax to each province
where he/she delivers goods, provided that the province concerned has enacted the
ordinance necessary to impose the tax.
B. PROVISIONS ON THE TAXING POWERS OF MUNICIPALITIES
Section 202. Scope of Taxing Powers of Municipalities – Except as otherwise

provided in the LGC, municipalities may levy taxes, fees and charges not otherwise
levied by the provinces. (Sec. 142, LGC)
Section 203. Tax on Business – The Municipality may impose the taxes described in
the indicated sections of this Chapter on the following businesses operating within its
jurisdiction:
a. 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. (Section
204 of this Chapter)
b. Wholesalers, distributors, or dealers in any article of commerce of whatever
kind or nature. (Section 205 of this Chapter)
c. Exporters, and manufacturers, millers, producers, wholesalers, distributors,
dealers, or retailers of essential commodities (Section 206 of this Chapter);
d. Retailers (Section 207 of this Chapter)
e. Contractors and other independent contractors (Section 208 of this Chapter)
f. Banks and financial institutions (Section 209 of this Chapter)
g. Peddlers engaged in the sale of any merchandise or article of commerce
(Section 210 of this Chapter;
h. Any business not specified in the above enumeration, as provided in Section
211 under this Chapter..
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Section 204. On Manufacturers, Assemblers, Repackers, Processors, Brewers,
Distillers, Rectifiers, and Compounders of Liquors Distilled Spirits, and Wines or
Manufacturers of Any Article of Commerce of Whatever Kind or Nature – In
accordance with the following:
With gross sales or receipts for the preceding Amount of Tax,

Calendar year in the amount of (Pesos) Pesos per annum
Less than 10,000.00 165.00
10,000.00 or more but not less than 15,000.00 220.00
50,000.00 or more but not less than 75,000.00 1,320.00
750,000.00 or more but not less than 1,000,000.00 10,000.00
1,000,000.00 or more but not less than 2,000,000.00 13,750.00
3,000,000.00 or more but not less than 4,000.000.00 19,800.00
6,500,000.00 or more at a rate not exceeding
Thirty-seven and a
Half percent
(37-1/2%) of one
Percent (1%)
(Sec. 143-a, LGC)
The preceding rates shall apply only to domestic sales of manufacturers, assemblers,
repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled
spirits, and wines or manufacturers of any article of commerce of whatever kind or nature
other than those enumerated in Section 206 under this Chapter (Sec. 143(c) of the LGC,
and to paragraph (c) of Art. 232 of the IRR).
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Section 205. On Wholesalers, Distributors, or Dealers in any article of commerce
of whatever kind or nature in accordance with the following graduated schedule of
taxes:
With gross sales or receipts for the preceding Amount of Tax

Calendar year in the amount of (Pesos) (Pesos per annum)
Less than 1,000.00 18.00
Fifty percent (50%)
Of one percent (1%)
(Sec. 143-b, LGC)
The business enumerated in Section 204 under this Chapter shall no longer be subject to
the tax on wholesalers, distributors, or dealers as aforementioned. (Art. 232(b) of the IRR)
Section 206. 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 reflected in Sections 204, 205 and 207 under this Chapter:
219
a. List of Essential Commodities –
1) Rice and corn;

2) Wheat or cassava flour, meat, dairy products, locally manufactured,
processed or preserved, food, sugar, salt and other agricultural, marine
and fresh water products, whether in their original state or not;
3) Cooking oil and cooking gas;
4) Laundry soap, detergents and medicine;
5) Agricultural implements, equipments and post harvest facilities,
fertilizers, pesticides, insecticides, herbicides and other farm inputs;
6) Poultry feeds and other animal feeds;
7) School supplies; and
8) Cement
(Sec. 143-c, LGC)
b. Determination of Gross Receipts of Rice and Corn Millers – For the

purpose of imposing the business tax, the gross receipts of rice and corn
millers shall be the total of fees paid to the miller by the owners of palay or
corn without deducting the cost and other maintenance and operating
expenses. (BLGF 1st Indorsement, 24 March 1995)
c. Additional Taxes on Millers Who Also Buy Grains and Sell These After
Milling – Mill operators who also buy palay or corn grains and then sell these
after milling, are also subject to the tax for engaging in other business such as
dealers. The gross receipts shall be the actual sale of rice or corn without
deducting the cost of palay, labor and other maintenance and operating
expenses. The gross sales or receipts for each business shall be separately
recorded and reported for purposes of computing the business taxes due from
each business. (BLGF, 1st Indorsement, 24 March 1995)
d. Procedure for Imposing Business Tax on Exporters – 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 sold domestically and abroad. (Art. 232(c) of the IRR)
Exporters shall be subject to the business tax as follows:
1) The gross sales or receipts on goods or products sold domestically

shall be subject to the business tax at rates reflected in Sections 204,
205 and 207 of this Chapter;
2) Taxable export sales shall be subject to the business tax at a rate not
exceeding ½ of the rates of domestic sales; and
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3) The amount of export sale shall be excluded and declared separately
from the total sales and shall be subject to the rates reflected in Section
205 of this Chapter. Failure to make this separate declaration of export
sales shall subject the total sales to the rates prescribed in Section 204
under this Chapter.
(DOF Local Finance Circular 4-93)
Section 207. On Retailers – The following guidelines shall govern the administration
and collection of the business tax on retailers:
a. Rate of Tax – Except for the taxes to be imposed exclusively by barangays as

provided in subsection (b) below, the taxes to be imposed on retailers by
municipalities shall be as follows:
1) The rate of two percent (2%) per annum shall be imposed on sales not
exceeding Four Hundred Thousand Pesos (P 400,000.00),
2) The rate of one percent (1%) per annum shall be imposed on sales in
excess of the first Four Hundred Thousand Pesos (P 400,000.00).
b. Imposition by Barangay of Business Tax on Retailers – Barangays,

however, shall have the exclusive power to levy taxes, as provided under Art.
241 of the IRR, on gross sales or receipts of the preceding calendar year of
Fifty Thousand Pesos (P 50,000.00) or less in the case of cities, and Thirty
Thousand Pesos (P 30,000.00) or less in the case of municipalities. (Art.
232(d), IRR)]
The barangays shall impose such taxes based on the following guidelines:
1) Stores or retailers with fixed business establishments in a barangay

within a city whose gross sales or receipts for the preceding year do
not exceed P 50,000.00 shall be taxable exclusively by the barangay.
Those whose gross sales or receipts exceed P 50,000.00 shall be
taxable by the city.
2) Stores or retailers with fixed business establishments in a barangay

within a municipality whose gross sales or receipts for the preceding
year do not exceed P 30,000.00 shall be taxable exclusively by the
barangay. Those whose gross sales or receipts exceed P 30,000.00
shall be taxable by the municipality.
3) The barangay shall have the power to collect the business tax on
retailers only if it had levied the tax pursuant to an ordinance duly
enacted by its sanggunian. Otherwise, the tax shall be collected by the
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municipality or city where the barangay is located, provided they have
enacted the required ordinance levying the tax.
c. Determination of Business Tax of Retailer Selling both Essential and

Non-Essential Commodities – The following rule shall apply to a retailer of
both essential and non-essential commodities:
1) A retailer who sells essential and non-essential commodities shall

segregate his sales accordingly;
2) The gross sales from essential commodities of the preceding year shall
be subject to the tax provided under Section 206 of this Chapter
(Section 143 (b), LGC);
3) The gross sales on non-essential commodities of the preceding year

shall be subject to the retailer’s tax provided under Section 207 of this
Chapter. ( Sec. 143(b), LGC).
(Ursal. “Phil. Law on Local Govt. Taxation”, Ann. 2000 Ed.)
d. Determination of Taxes Payable by a Retailer Who Is Also a Wholesaler

Dealing Both in Essential and Non-Essential Commodities – The following
rules shall apply in the case of a retailer who is also a wholesaler dealing both
in essential and non-essential commodities:
1) A wholesaler who is at the same time a retailer and who deals in both
essential commodities and non-essential commodities shall segregate
his sales accordingly;
2) The gross sales for essential commodities shall be subject to the tax
reflected in Section 206 of this Chapter ( Sec. 143(b), LGC), and
3) If the wholesaler who is at the same time a retailer fails to keep a

separate account for the different sales or receipts, he/she shall be
liable as a wholesaler at the rates reflected under Section 205 of this
Chapter and as a retailer at the rates provided under Section 207 of this
Chapter ( paragraphs (b) and (d) of Sec. 143, LGC)
(Ursal, “Philippine Law on Local Govt. Taxation”, Ann. 2000 Ed.)
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Section 208. Contractors and Other Independent Contractors – The taxes shall
apply in accordance with the following:
a. Graduated Schedule of Tax –
With gross sales or receipts for the preceding Amount of Tax,

Calendar year in the amount of (Pesos) Pesos per Annum
Less than 5,000.00 27.50

Fifty percent (50%)
Of one percent (1%)
(Sec. 143-e, LGC)
b. Taxable Gross Receipts of Construction Contractors –
1) 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 subcontract arrangements, if there are any. (The
gross receipts of sub-contractors are in turn subject to the same
business tax as construction contractors.)
2) 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:
a) The contract price;
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b) The compensation or service fee, including the amount charged for
materials installed or used in conjunction with the services, and
c) Deposits or advance payments
3) Taxable gross receipts exclude discounts that can be determined at the

time of sales, sales returns, and the excise taxes and value added tax
(VAT) paid by the contractor. (DOF Local Finance Circular 3-95)
c. Business Tax on Sub-Contractors – Local governments may impose a

business tax on contractor and independent contractors (DOF Opinion, 1st
Indorsement, 10 August 1998). However, subcontractors shall not be liable for
business tax if the total contract price for the project is embodied in the
contract between the primary contractor and the client. On the other hand, if
the cost of the portion of the project that is sub- contracted is paid directly by
the client to the sub-contractor, the sub-contractor becomes an independent
contractor subject to the same business tax (DOF Opinion, 1st Indorsement, 13
July 1993).
d. Situs or Place of Payment of Business Tax on Construction Contractors –

For the purpose of collection of the business tax on construction contractors,
the following rules shall apply:
1) On Domestic Construction Projects -. For projects bid out and

implemented within the territorial jurisdiction of the Philippines:
a) All gross receipts realized from domestic project 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;
b) In cases where there in 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:
 30% of the gross receipts shall be taxable by the city or

municipality where the principal office is located; and
 70% of the gross receipts shall be taxable by the city or
municipality where the project office is located
2) On Overseas Construction Projects – For construction projects

undertaken by a Philippine-based construction contractor outside the
territorial boundaries of the Philippines, as well as construction
contracts involving fabrication works with attendant installation works
outside the Philippines, which are paid for in accepted freely
convertible foreign currency, the following shall apply:
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a) In the case of overseas construction projects, the construction
contractors shall declare separately the gross receipts realized
therefrom, which shall not be subject to the business tax.
b) In the case of pre-fabricated works which are paid for in accepted

freely convertible foreign currency with attendant installation
works outside the Philippines, the gross receipts realized therefrom
shall be subject to not more than one half (1/2) of the rate
prescribed in Sec. 143(e) of the LGC).
c) In case there is transfer or relocation of the Head/Principal Office

or of any branch to another city or municipality, the construction
contractor shall give due notice of such transfer or relocation to the
cities or municipalities concerned at least 15 days before such
transfer or relocation is effected.
DOF Local Finance Circular 3-95)
Section 209. Banks and Other Financial Institutions –
a. Rate and Base of Tax - Banks and other financial institutions are subject to a
tax at a rate not exceeding fifty percent (50%) of one percent (1%) on the
gross receipts of the preceding year derived from interests, commissions and
discounts from lending activities, income from financial leasing, dividends,
rentals on property and profits from exchange or sales of property, insurance
premiums. (Art. 232-f, IRR)
All other income and receipts of banks and financial institutions not otherwise
enumerated above shall be excluded from the taxing authority of the LGU
concerned. (Art. 232-f, IRR)
The taxes imposed on banks, insurance companies, and financing companies

accruing the local governments shall be paid within the first 20 days of
January or of each subsequent quarter, as the case may be, unless otherwise
fixed in the local tax ordinance. (DOF Local Finance Circular Nos. 1-93, 2-
93, 3-93)
b. Guidelines Applicable to Banks –
1) Gross Receipts of Banks Subject to Tax – For the purpose of

imposing the tax on gross receipts of banks, the term gross receipts
shall include only the following:
a) Interest from loans and discounts – this represents interest earned

and actually collected on loans and discounts such as::
225
 Discounts earned and actually collected in advance on bills
discounted;
 Interest earned and actually collected on demand loans;
 Interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance;
 Interest earned and actually collected on mortgage
contracts receivables
b) Interest earned and actually collected on inter-bank loans.

c) Rental of property – this represents the following rental income:
 Earned portion of rental collected in advance from lessees

of sale deposit boxes;
 Rental earned and actually collected from lessees of bank
premises and equipment
d) Income earned and actually collected from acquired assets.

e) Income from sale or exchange or assets and property
f) Cash dividends earned and received on equity investments
g) Bank commissions from lending activities
h) Income component of rentals from financing leasing
2) Income and Receipts of Banks Not Subject to Tax – All other

incomes and receipts of banks and banking institutions not enumerated
above shall be excluded from the taxing authority of LGUs, such as:
a) Interest earned under the expanded foreign currency deposit

system;
b) Interest accumulated by lending institutions, or mortgages insured
under R.A. No. 480, as amended, otherwise known as Home
Financing Act;
c) Receipts from filing fees, service and other administrative charges
(DOF Local Finance Circular No. 1-93)
3) Situs or Place of Payment of Tax on Banks – The situs of tax on

banks shall be in accordance with the following:
a) All transactions filed with or negotiated in a branch shall be

recorded in the same branch and the gross receipts derived from
these transactions shall be applied to:
 Transactions negotiated wit and approved by the branch

manager under his own authority; or
226
 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.
 The gross receipts derived from transactions made by the

Head Office, except gross receipts recorded in the branches
shall be taxable by the city or municipality where that Head
Office is located.
 In case of transfer or relocation of the Head Office or of

any branch to another city or municipality, the bank shall
give due notice of such transfer or relocation to the chief
executives of the cities or municipalities concerned within
15 days after transfer or relocation is effected.
b. Guidelines Applicable to Insurance Companies
1) Gross Receipts of Insurance Companies Subject to Tax – For the

purpose of imposing the tax on gross receipts of insurance companies,
the term gross receipts shall include only the following:
a) Insurance premiums actually collected, except the following tax

exempt premiums which must be recorded and declared separately:
aa. premiums collected before the effectivity of the ordinance

imposing the tax;
bb. 2% of all premiums for the sale of fire, earthquake, and
explosion hazard insurance pursuant to Fire Code of the
Philippines (P.D. No. 1185);
cc. Premiums refunded within 6 months after payment of the
account;
dd. Premiums collected or received by any branch of a
domestic corporation, firm, or association doing business
outside the Philippines on account of a life insurance of the
insured who is non-resident;
ee. Premiums collected or received on account of any
reinsurance, if the risk insured against covers property
located outside the Philippines, of the insured, in the case
of personal insurance, resided outside the foreign country
where the original insurance has been issued or perfected;
ff. Portions of the premiums collected or received by
insurance companies pertaining to variable contracts; and
gg. The excess of the amount necessary to insure the lives of
variable contracts.
227
b) Interest earnings on loans and discounts actually collected,
c) Rentals actually collected from property owned by insurance
companies;
d) Income actually collected from acquired assets;
e) Cash dividends received on equity investment
2) Income and Receipts of Insurance Companies Not Subject to Tax.

All other incomes and receipts of insurance premiums not enumerated
in the preceding paragraph shall be excluded from the taxing authority
of LGUs, such as service fees received from fire, earthquake, and
explosion pre-insurance adjustment business directly to agents,
pursuant to P.D. No. 1185. (DOF Local Finance Circular No. 2-93).
3). Situs or Place of Payment of Tax on Insurance Companies – The

situs of tax on insurance companies shall be in accordance with the
following:
a) Insurance contract or policies shall be recorded in the issuing head

office or branch, However, the taxes shall be collected by the city
or municipality where the office or branch to which the premiums
or gross receipts were actually paid is located. This rule shall be
applied irrespective of whether the insurance contracts/policies
were solicited or negotiated by insurance agents or brokers who are
not residents of the city or municipality where the branch is
located, or who are not affiliated with or assigned to such branch.
b) The offices of an insurance agent or broker shall not be considered

a branch and shall be subject to the situs of taxation rule.
c) All insurance premiums and/or gross receipts from transactions not

recorded in the branches or the insurance companies shall be
recorded in the head office and taxable by the city or municipality
where the said head office is located.
d) In case there is transfer or relocation of the head office or of any

branch to another city or municipality, the insurance company shall
give due notice to the chief executives of the cities or
municipalities concerned within the 15 days after such transfer or
relocation is effected.
(DOF Local Finance Circular 2-93)
228
c. Guidelines Applicable to Financing Companies
1) Definition of Financing Companies – The term financing companies

shall refer to corporations or partnerships, except those regulated by
the Central Bank of the Philippines, the Insurance Commission, and
the Cooperatives Development Authority, which are primarily
organized for the purpose of extending credit facilities to consumers
and to industrial, commercial and agricultural enterprises, either by
discounting or factoring commercial papers or account receivables, or
by buying and selling contracts, leases, chattel mortgages, or other
evidences of indebtedness, or by leasing of motor vehicles, heavy
equipment and industrial machinery, business and office machines and
equipment, appliances and other movable property.
2) Gross Receipts of Financing Companies Subject to Tax – For the

purpose of imposing the tax on gross receipts of financing companies,
the term gross receipts shall include only the following:
a) Interest from loans and discounts – this represents interest earned

and actually collected on loans and discounts; viz:
aa. discounts earned and actually collected in advance on bills

discounted;
bb. interest earned and actually collected on demand loans;
cc. interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance;
dd. interest earned and actually collected on mortgage contract
receivables.
b) Interest earned and actually collected on inter-bank loans.

c) Rental of property – this represent the following rental income:
aa. Earned portion of rental collected in advance from lessees

of safe deposit boxes
bb. Rental earned and actually collected from lessees of bank
premises and equipment
d) Income earned and actually collected from acquired assets.

e) Income from sale or exchange or assets and property
f) Cash dividends earned and received on equity investments
g) Income component of rentals from financing leasing
3) Income and Receipts of Financing Companies Not Subject to Tax.

All other incomes and receipts of financing companies not enumerated
229
in the preceding paragraph shall be excluded from the taxing authority
of LGUs.
4) Situs or Place of Payment of Tax on Financing Companies – The

situs of tax on financing companies shall be in accordance with the
following:
a) All transactions filed with or negotiated in the branch shall be

recorded in said branch and the gross receipts derived from said
transactions shall be applied to:
aa. Transactions negotiated with and approved by the branch

manager under his own authority; or
bb. Transactions filed and negotiated in the branch but being
beyond the approving authority of the branch manager, are
forwarded to the head office for final approval.
b). The gross receipt derived from transactions made by the head
office, except gross receipts recorded in the branches, shall be
taxable by the city or municipality where said head office is
located.
c) In case of transfer or relocation of the head office or of any branch

to another city or municipality, the insurance company shall give
due notice to the chief executives of the cities or municipalities
concerned within 15 days after transfer or relocation is effected.
d. Guidelines Applicable to Credit Card Companies – Credit card companies

fall within the purview of banks and other financial institutions contemplated
under Section 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. (DOF Opinion, 15 March
1999)
Section 210. Peddlers Engaged in the Sale of Any Merchandise or Articles of

Commerce – Peddlers shall be taxed at a rate not exceeding Fifty Pesos (P50.00) per
peddler annually. Delivery trucks, vans or motor vehicles used by manufacturers,
producers, wholesalers, dealers or retailers covered under Section 201 of this Chapter
shall be exempt from the peddler’s tax. (Art. 232-g, IRR of LGC).
Section 211. Other Businesses – Municipalities may also impose taxes on any business
not otherwise specified in the preceding paragraphs which the Sanggunian concerned
may deem proper to tax subject to the following:
230
a. The rate of tax on any business subject to the excise, value added or
percentage tax under the National International Revenue Code, as amended,
shall not exceed two percent (2%) of gross sales or receipts of the preceding
calendar year; (Art. 232-h, IRR of LGC). In line with the existing national
policy, any business engaged in the production, manufacture, refining,
distribution or sale of oil, gasoline and other petroleum products shall not be
subject to any local tax imposed in this Article. (Art. 232-h, IRR of LGC).
b. The Sanggunian may prescribe a schedule of graduated tax rates, in no case

exceeding the rates prescribed under Sections 204, 205, 206, 207, 208, 209
and 210 of this Chapter.
Section 212. Taxing Powers of Municipalities within Metro Manila – The

municipalities within the Metropolitan Manila Area may levy taxes on the businesses
enumerated under Sections 204, 205, 206, 207, 208, 209, and 210 of this Chapter at rates
which shall not exceed by fifty percent (50%) the maximum rates prescribed for said
businesses. (Sec. 144, LGC and Art. 236a, IRR of LGC)
The said municipalities within the MMA, pursuant to Article 275 of IRR, may levy and
collect the taxes which may be imposed by the provinces enumerated under Sections 105,
196, 197, 198, 199, 200, and 201 of this Chapter at rates not exceeding those prescribed
under the LGC (Art. 236-b, IRR of LGC).
C. PROVISION ON THE TAXING POWERS OF CITIES
Section 213. Scope of Taxing Powers of Cities – The City may levy and collect the
following:
a. Any of the taxes, fees, charges and other impositions that provinces and the
municipalities may impose the rates of taxes that the City may levy may
exceed the maximum rates allowed for provinces or municipalities by not
more than fifty percent (50%), except the rates of professional and amusement
taxes; and (Art. 237-a, IRR of LGC)
b. A percentage tax on any business not specified under the provisions of Section
204 up to Section 210 of this Chapter at rates not exceeding three percent
(3%) of the gross sales or receipts of the preceding calendar year. (Art. 237-b,
IRR of LGC)
Section 214. Professional and Amusement Tax Rates – The rates of the following
taxes shall be uniform for the City and the Province:
a. The Professional Tax under Article 299 of the IRR (Section 199 of this
Chapter) shall not exceed Three Hundred Pesos (P 300.00); and
231
b. Amusement Tax on paid admission under Article 230 of the IRR (Section 200
of this Chapter), the rate of which shall not be more than thirty percent (30%)
of the gross receipts from admission fees.
Section 215. Sharing of Tax on Quarry Resources in Highly Urbanized Cities. The
proceeds of the tax on sand, gravel, and other quarry in highly urbanized cities shall be
distributes as follows:
Highly Urbanized City - Sixty percent (60%)

Barangay where the sand, gravel
and other quarry resources are extracted - Forty percent (40%)
D. PROVISIONS ON THE TAXING POWERS OF BARANGAYS
Section 216. Scope of Taxing Powers of Barangays – The Barangay may levy taxes,
fees and charges, the proceeds of which shall accrue exclusively to them as follows:
a. Taxes - They shall have the exclusive power to levy taxes on stores or
retailers with fixed business establishments with gross sales or receipts of the
preceding calendar year of Fifty Thousand Pesos (P 50,000.00) or less in the
case of a barangay within a city, and Thirty Thousand Pesos (P 30,000.00) or
less in the case of a barangay within a municipality, at rates not exceeding one
percent (1%) on such gross sales or receipts. (Sec. 152, LGC and Art. 232(d)
and 240, IRR)
The following guidelines shall be observed in the imposition by Barangays of

the business tax on retailers:
1) Stores or retailers with fixed business establishments in a barangay or

a city whose gross sales or receipts for the preceding year do not
exceed P 50,000 shall be taxable exclusively by the barangay. Those
whose gross sales or receipts exceed P 50,000.00 shall be taxable by
the city.
2) Stores or retailers with fixed business establishments in a barangay or

a municipality whose gross sales or receipts for the preceding year do
not exceed P 30,000.00 shall be taxable exclusively by the barangay.
Those whose gross sales or receipts exceed P 30,000.00 shall be
taxable by the municipality.
3) The barangay shall have the power to collect the business tax on
retailers only if it had levied the tax pursuant to an ordinance duly
enacted by its sanggunian. Otherwise, the tax shall be collected by the
municipality or city where the barangay is located, provided that they
have enacted the required ordinance levying the tax.
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b. Service Fees – for services rendered in connection with the regulation or use
of barangay owned properties or service facilities such as palay, copra, or
tobacco dryers.
c. Barangay Clearance Fee – for any business or activity located or conducted

within the territorial jurisdiction of the barangay before the city or
municipality may issue a license or permit to said business or activity,
provided that the application for barangay clearance shall be acted within
seven (7) working days from its filing. In the event that a clearance is not
issued or the application is denied within the said period, the city or
municipality may issue the license to the applicant.
d. Other Fees and Charges On:
1) Commercial breeding fighting cocks. For purposes of imposing

barangay fees and charges on the commercial breeding of fighting
cocks, commercial breeding shall mean an annual sale of more than
five (5) fighting cocks of a duly registered breeder;
2) Cockfights and cockpits;
3) Places of recreation which charge admission fees. Place of recreation

shall include places of amusement where one seeks admission to
entertain himself by seeing or viewing the show or performance or
those where one amuses himself by direct participation;
4) Billboards, signboards, neon signs, and outdoor advertisement at rates

not less that the following :
a) Billboards or signboards for advertisement of business, per

square meter or fraction thereof:
aa. Single Faced - Ten Pesos (P10.00)

bb. Double Faced - Twenty Pesos (P 20.00)
b) Billboards or signs for professional. Per square meter or fraction

thereof: Eight Pesos (P8.00);
c) Billboards, signs, or advertisement for business and professions

painted on any building or structures or otherwise separated or
detached therefrom, per square meter thereof: Nine Pesos (P 9.00);
d) Advertisement for business or professions by means of slides in

movies payable by the advertisers: One Hundred Pesos (P 100.00);
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e) Advertisement by means of vehicles, balloons, kites, etc.
 Per day or fraction thereof: Forty Pesos (P40.00)

 Per week or fraction thereof: Sixty Pesos (P 60.00)
 Per mo. or fraction thereof: Eighty Pesos (P 80.00)
 For use of electric or neon lights in billboards under items
a) to d) hereof, the amount of Ten Pesos (P10.00) per
square meters or fraction thereof shall be imposed in
addition to the above prescribed rates.
f) Signs, signboards, billboards, advertisements, including stickouts,

streamers, lighted signs, and other electronic media, posters,
privilege panels, store signs, placards, price strips, bunting, and the
like, belonging to manufacturers or producers or professionals, but
displayed at the place where a business or profession is conducted,
or displayed on delivery or other service and public utility
vehicles, shall be exempt from such fees or charges provided in
paragraphs a) to e) hereof and other impositions that may be
imposed by the barangay.
g) Privilege panels shall be subject to one half (1/2) of the rates herein
prescribed.
h) For purposes of this Article, the new rates to be adopted by the

barangays shall apply only to bill boards, privilege panels, signs,
and outdoor advertisements which shall be constructed or installed
after the effectivity of the Code.
E. GENERAL GUIDELINES ON THE APPLICATION OF BUSINESS AND

OTHER LOCAL TAXES
Section 217. Related or Combined Businesses – The following guidelines shall

govern the payment of business taxes for related or combined businesses:
a. The conduct of operation of two or more related businesses by any one

person, natural or juridical shall require the issuance of a separate permit or
license for each business. (Art. 242-a, IRR of LGC)
b. If a person conducts or operates two or more related business which are

subject to the same rate of imposition, the tax shall be computed on the basis
of the combined total gross sales or receipts of the said two or more related
businesses. (Art. 242-b, IRR of LGC)
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c. However, if the businesses operated by one person are governed by separate
tax schedules or the rates of the taxes are different, the taxable gross sales or
receipts of each business shall be reported independently and the respective
taxes shall be computed separately on the basis of the appropriate schedule.
(Art. 242-c, IRR of LGC)
Section 218. Situs of the Tax – For the purpose of collection of business taxes the
following definition of terms and guidelines stated in Article 243 of the IRR of the LGC
shall be strictly observed:
a. Definition of Terms
1) Principal Office – The main or head office of the business as reflected

in the pertinent documents submitted to the Securities and Exchange
Commission, the Department of Trade and Industry, or other
appropriate agency as the case may be.
a) The city of municipality specifically mentioned in the Articles of

Incorporation or official registration papers as being the official
address of said principal office shall be considered the situs for tax
purposes.
b) In case there is a transfer or relocation of the principal office to

another city or municipality, it shall be the duty of the owner,
operator or manager or the business to give due notice of such
transfer or relocation to the local chief executives of the cities of
municipalities concerned within fifteen (15) days after such
transfer or relocation is effected unless otherwise provide by law.
2) Branch or Sales Office – The fixed place in a locality which conducts

the operations of the business as an extension of the principal office.
a) Offices used only as display areas of the products, where stocks or

items are not stored, are not considered branch or sales offices
even if orders for the products may be received in them.
b) On the other hand, a warehouse which accepts orders and/or issues

sales invoices independently of a branch or sales office shall be
considered a separate sales office.
3) Warehouse – A building or site 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.
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a) A warehouse that does not accept orders, and/or does not issue
sales invoices independently of a branch or sales office, shall not
be considered a branch or sales office.
b) Provincial depots where products are stored for sale are

considered warehouses. (DOF Opinion, 26 August 1996)
4) Plantation – A tract of agricultural land planted to trees or seedlings,

whether fruit bearing or not, uniformly spaced or seeded by the
broadcast methods or otherwise arranged to allow highest production.
For this purpose, inland fishing grounds shall be considered as
plantations.
5) Experimental Farms – Agricultural lands utilized by a business or

corporation to conduct studies, test, researches or experiments
involving agricultural, agri-business, marine or aquatic, livestock,
poultry, dairy and other similar products for the purpose of improving
the quality and quantity of goods or products.
b. Recording of Sales in Branches or Sales Offices, Warehouses, Plantations,

etc.
1) All sales made in a locality where there is a branch or sales office or

warehouse shall be recorded in said branch, sales office or warehouse,
and the tax shall be payable to the city or municipality where it is
located.
2) In case there is no branch, sales office or warehouse in the locality the

sale is made, the sale shall be recorded in the principal office along
with its other sales and the tax shall accrue to the city or municipality
where it is located.
3) In case the business has 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,
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. LGUs where
only experimental farms are located shall not be entitled to the
foregoing sales allocation.
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c) On-site sales of commercial quantities made in experimental
farms shall be imposed the corresponding tax under Article 232
of the IRR to the LGC (Section 203 of this Chapter).
4) In the case of a plantation located in a locality other than that where

the factory is located, the seventy percent (70%) portion of the sales
allocation 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 there are two or more factories, project offices, plant or
plantations located in different localities, the seventy percent (70%)
portion of the sales allocation shall be prorated among the localities
where they are located based on 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) In the case of manufacturers or producers which engage the services of

an independent contractor to produce or manufacture some of their
products, the rules on situs of taxation shall apply, except that the
factory or plant and warehouse of the contractor utilized for the
production and storage of the manufacturers products shall be
considered as the factory or plant and warehouse of the manufacturer.
c. Port of Loading – The city or municipality where the port of loading is located
shall not levy and collect tax imposable under Article 232 of the IRR to the LGC
unless the exporter maintains in said city or municipality its principal office, a
branch, sales office or warehouse, or factory, plant, or plantation in which case
the foregoing rules on the matter shall apply accordingly.
d. Sales Made by Route Trucks, Vans or Other Vehicles – The following

guidelines apply to route sales:
1) For route sales made in the locality where a manufacturer, producer,

wholesaler, retailer or dealer has a branch of sales office or warehouse,
the sales shall be recorded in that branch, sales office or warehouse
and the tax due paid to the LGU where it is located.
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2) For route sales made in a locality where a manufacturer, producer,
wholesaler, retailer or dealer has no branch, sales office or warehouse,
the sales shall be recorded in the branch, sales office or warehouse
from where the route trucks withdraw their products for sale, and the
tax due paid to the LGU where it is located.
3) Based on the foregoing, LGUs where route trucks deliver merchandise

cannot impose any tax on said trucks except the annual fixed tax on
delivery vehicles which provinces are authorized to impose under
Section 141 of the LGC, which cities may likewise impose under
Section 151. of the LGC.
4) In addition to this annual fixed tax, cities may also collect a mayor’s
permit fee from same manufacturers, producers, wholesalers, retailers,
and dealers using route trucks.
Section 219. Retirement of Business – The following guidelines shall govern the
retirement of business:
a. Submission of Sworn Statement of Gross Sales of Receipts – Any person,

natural or juridical, subject to the tax on businesses shall, upon termination of
the business, submit a sworn statement of the gross sales or receipts for the
calendar year. (Art. 241-a, IRR to LGC)
b. Termination of Business Construed – 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 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. ( Art. 241-a, IRR
to LGC)
A transfer in ownership does not mean the retirement or termination of a

business. The retirement of business, as contemplated by law, means a
complete cessation or stoppage of business operations. In a change of
ownership, the business continues under the stewardship of another set of
owners. (DOF Opinion, 12 August 1993)
c. Confirmation of Retirement of Business and Taxation – The local treasurer

concerned shall see to it that the termination or retirement of business is not
merely simulated to avoid payment of taxes. For this purpose, the following
procedural guidelines provided under Article 241-a of the IRR to the LGC
shall be strictly followed:
238
1) The local treasurer shall assign every application for the termination or
retirement of a business to an inspector in his office who shall go to
the address of the business on record to verify if it is really no longer
operating. If the inspector finds that the business is simply placed
under a new name, manager and/or new owner, the local treasurer
shall recommend to the Mayor the disapproval of the application for
the termination or retirement of the business. 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.
2) In the case of a new owner to whom the business was transferred by

sale or other form of conveyance, he shall be liable to pay the tax or
fee for the transfer if there is an existing ordinance prescribing such a
transfer tax;
3) If the retirement or termination of the business is found to be

legitimate, and the tax due from it is 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; and (Art. 241-b, IRR to LGC)
4) The permit is issued to a business retiring or terminating its operation

shall be surrendered to the local treasurer who shall forthwith cancel
the permit and record the cancellation in his books (Art. 241-c, IRR to
LGC)
F. THE COMMUNITY TAX
Section 220. Community Tax – Cities of municipalities may levy a Community Tax in
lieu of the former Residence Tax levied and collected under Section 38 of PD No. 231, as
amended. Accordingly, all cities and municipalities shall enact, for the purpose, a local
tax ordinance. For purposes, of enacting a local tax ordinance levying the Community
Tax, a public hearing shall be dispensed with. (Art. 245, IRR to 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 - (Art.

246-a of IRR to LGC)
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;
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b) An individual who is engaged in business of occupation;
c) An individual who owns real property with an aggregate assessed
value of One Thousand Pesos (P 1,000.00) or more;
d) An individual who is required by law to file an income tax return
2) Rate of Community Tax Payable by Individuals (Art. 246-b, IRR to

LGC)
a) The rate of the annual community tax that may be levied and
collected from said individuals shall be five pesos (P5.00) plus
an annual additional tax of One Peso (P1.00) for every One
Thousand Pesos (P1,000.00 of income regardless of whether
from business, exercise of profession, or from property but which
in no case shall exceed Five Thousand Pesos (P 5,000.00).
b) In case of husband and wife, each of them shall be liable to pay

the basic annual tax of Five Pesos (P5.00), but the additional tax
imposable on the husband and wife shall be One Peso (P1.00) for
every One Thousand Pesos (P1,000.00) of income from the total
property owned by them and/or the total gross receipts or
earnings derived by them.
3) Juridical Persons Liable for the Payment of the Community Tax

(Art. 246-c, IRR to LGC) – Every corporation, no matter how created
or organized, whether domestic or resident foreign, engaged in or
doing business in the Philippines shall pay an annual community tax of
Five Hundred Pesos (P500.00) and an annual additional tax, which, in
no case, shall exceed Ten Thousand Pesos (P10,000.00) in
accordance with following schedule:
a) For every Five Thousand Pesos (P5,000.00) worth of real

property in the Philippines, owned by the judicial entity during
the preceding year, based on the assessed value used for the
payment of the real property tax under existing laws – Two Pesos
(P2.00); and
b) For every Five Thousand Pesos (P5,000.00) of gross receipts or

earnings derived from the business in the Philippines during the
preceding year – Two Pesos (P2.00). The dividends received by
a corporation from another corporation shall, for the purpose of
the additional tax, be considered as part of the gross receipts or
earnings of said corporation.
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b. Exemptions from Payment of Community Tax – The following are exempt
from payment of the community tax:
1) Diplomatic and consular representatives; and

2) Transient visitors when their stay in the Philippines does not exceed
three (3) months.
(Art. 246-d, IRR to LGC)
c. Place of Payment of Community Tax –
1) The community tax shall be paid and be collected only 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. Thus, a sales office or branch office is not liable to pay
community tax in the city of municipality where it is located. (Sec. 2,
Memorandum Circular 153)
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.
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
residence, or principal office in the case of juridical persons, is located
shall remain liable to pay the tax to the city or municipality concerned.
(Art. 246-e, IRR)
d. Time of payment of Community Tax – Article 245-e of the IRR to the LGC
provides 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 shall be
liable for the community tax on the day he reaches such age or upon
the day the exemption ends. However, if a person reaches the age of
eighteen (18) years or loses the benefit of exemption on or before the
last day of March, he shall have twenty (20) days to pay the
community tax without becoming delinquent.
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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.
e. Penalties for late payment of community tax. If the tax is not paid within
the time prescribed above, there shall be added to the unpaid amount and
interest of twenty-four percent (24%) per annum from the due date until it is
paid. (Art. 246-g, IRR to LGC)
f. Issuance of Community Tax Certificate – A community tax certificate shall

be issued to every person or corporation upon payment of the community tax.
A community tax certificate may also be issued to any person or corporation
not subject to the community tax (diplomatic and consular representatives and
transient visitors when their stay in the Philippines does not exceed three
months) upon payment of One Peso (P1.00) (Art. 247, IRR to LGC)
g. Printing of Community Tax Certificate – The Bureau of Internal Revenue

(BIR) shall cause the printing of community tax certificates and distribute the
same to the cities and municipalities through the city and municipal treasurers
in accordance with prescribed regulations.
1) In order to facilitate distribution, the BIR, however, may send on

consignment to the provincial treasurers, blank forms of the community
tax certificates, in which case the municipal treasurers of the province
shall secure their requirements through the provincial treasurer.
2) The city or municipal treasurer concerned shall remit to the National

Treasurer, for the account of the BIR, the cost of printing and distribution,
within ten (10) days after the end of each quarter.
3) In cases the certificates were secured or requisitioned from the provincial

treasurer, the municipal treasurer shall remit payments to the provincial
treasurer who shall, in turn, effect the remittance to the National Treasurer
as required. (Art. 249, IRR to LGC)
242
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 to 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:
a) Fifty percent (50%) shall accrue to the general fund of the city or
municipality concerned and
b) Fifty percent (50%) shall accrue to the barangay where the tax is collected
(Art. 251, IRR to LGC)
G. SPECIFIC APPLICATIONS OF AUTHORITY TO TAX FRANCHISES
Section 221. An instance when a corporation is liable for franchise authorized in

Sec. 137, LGC despite exemption granted under its charter.
The National Power Corporation (NPC), a government corporation, maintain that it does
not fall within the purview of business enjoying a franchise since its operation is not for
profit but for public service, and further that is exempt from all forms of taxes under its
Charter, P.D. No. 938
In reply to a query, the DOF has issued an opinion that Sec. 137 of the LGC clearly and
specifically declares that notwithstanding any exemption granted by law or other special
law, the province may impose a tax on business enjoying a franchise, at a rate not
exceeding 50% of 1% of the gross annual receipts for the preceding calendar year based
on the incoming receipts realized within its territorial jurisdiction.
As to the conflict between the provisions of the LGC, a general law, and the NPC
Charter, a special law, the DOF holds that while admittedly the established jurisprudence
is that if a general law is enacted after the special law, the special law nevertheless
remains, this admits of exemptions. One such exception is the cited case of Compania
General vs. Collector of Customs, 46 Phil. 8 in which it was ruled that when there is a
clear, necessary and irreconcilable conflict between the general and special law, the
general law shall prevail. (DOF, Ltr. Dtd. 9-4-95 to NPC, Baguio City)
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Section 222. Variations of the “In Lieu” clause in the terms of franchise
It devolves upon provincial and city treasurers to examine the terms of franchise holders
operating in their respective jurisdictions, inasmuch as the terms of franchises vary such
that while some admit of the local impost, others do not.
a. Illustrative case of franchises which are subject to the tax:
In one case, the franchise proviso stipulates that “This (national government
franchise) tax shall be in lieu of all other taxes on all properties except real
property, used by the grantee under this franchise”. Accordingly it was opined
that such exemption “is limited to the taxes on personal property (e.g. poles,
wires, insulators, transformers, conductors, xxx) used by the grantee, and does
not confer a blanket exemption” (Opinion No. 89, S. 1974, Secretary of
Justice) Such type of franchise proviso does not exempt the holder from the
franchise tax which a city may impose. (Opinion No. 116, 1974 Secretary of
Justice)
b. Illustrative Case 1 of franchise not subject to tax.:
Where the franchise terms provide that it “shall be in lieu of all other taxes
and assessments of whatever nature and by whatever authority upon the
privilege, earnings, income franchise xxx”, it was held to be not subject to the
local franchise tax. (Letter dtd. 3-19-75 of the Secretary of Finance to Messrs.
Quimzon, De Guzman, Makalintal and Veneracion, of Greenhills, Rizal)
c. Illustrative Case 2 of franchise not subject to tax:
In another case, the franchise provides that, “ Such annual xxx payments shall
be in lieu of all taxes of every name and nature – municipal, province or
central upon the capital stock, franchises, right of way, earnings and all other
property owned or operated by the grantee xxx”. Clearly this may not be
subject to the additional provincial franchise tax. Thus, business
establishments with franchises containing the “In lieu of all taxes” proviso are
not subject to the said local tax, such as those of the Radio Communications
of the Phil., Inc. (RCPI), The Manila Electric Co (Meralco), and the
Philippine Long Distance Telephone Co. (PLDT). (Department of Finance
Local Tax Regulations 3-75)
Section 223. Uncollected gross receipts are included in computing franchise tax:
The uncollected amounts due from customers should be included in computing the
franchise tax payable, which is based on gross receipts. The terms “gross receipts” means
“gross earnings”. A person may have earned his salary but may not have collected it,
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thereby showing that “to collect” is a different act from “to earn”. Consequently, the
uncollected “gross receipts” which should be construed as meaning the same thing as
“gross earnings” should be subject to the franchise tax. (Escudero Electric Service vis. Tabios,
33 SCRA 547)
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Chapter 3. FEES AND CHARGES
Section 224. Authority to Impose and Collect Fees and Charges – Every LGU is a
body politic and corporate endowed with powers to be exercised 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)
a. Every LGU shall exercise the powers expressly granted under the law, those
necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental to its efficient and effective governance and those which are
essential to the promotion of the general welfare. (Sec. 16, LGC)
b. LGU shall have the power and authority, among others:
1) To create their own sources of revenue and to levy taxes, fees and charges
which shall accrue exclusively for their own use and disposition and
which shall be retained by them;
2) To have an equitable share in the proceeds from the utilization and

development of the national wealth and resources within their respective
territorial jurisdictions including sharing the same with the inhabitants by
way of direct benefits.
3) To acquire, develop, lease, encumber, alienate, or otherwise dispose of

real or personal property held by them in their propriety capacity and to
apply their resources and assets for productive developmental or welfare
purposes, in the exercise or furtherance of their governmental or
proprietary functions. (Sec. 18, LGC)
c. In the exercise of their governmental functions, LGUs are endowed with police
powers, under which they may regulate and inspect businesses and their
activities and the practice of any profession or calling, and collect fees
commensurate to the cost of regulation, inspection, and licensing. Police
powers are defined as the power to prescribe regulations to promote the
health, morals, peace, education , good order or safety and general welfare of
the people (Sangalang et al.v IAC, 176 SCRA 179 (1989).
d. LGUs are also authorized to levy and collect charges in the exercise of its
proprietary functions. Proprietary functions are exercised not for regulatory
purposes but for the peculiar benefit and advantage of citizens. (City of Pueblo
v. Weed, Colo. App. 570 p.2d 15, 18)
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Section 225. Definition of Terms:
a. Charges – pecuniary liabilities, as rents or fees against persons or property.

(Sec. 131g)
b. Fee – a charge fixed by law or ordinance for the regulation or inspection of a
business or activity (Sec. 131(l), LGC). It shall also include charges fixed by
law or agency for the services of a public officer in the discharge of his
official duties. (Art. 220(I), IRR).
c. Franchise – a right or privilege affected with public interest, which is
conferred upon private person or corporations under such terms and
conditions as the government and its political subdivisions may impose in the
interest of public welfare, and safety. (Sec. 131(m), LGC)
d. Gross Sales or Receipts – the total amount of money or its equivalent
representing the contract price, compensation or service fee, including the
amount charged or materials supplied with the services, and the deposits or
advance payments actually or constructively received during the taxable
quarter for the services performed or to be performed for another person.
“Gross Sales or Receipts” exclude discounts that can be determined at the
time of sales, sales returns and the excise taxes and value-added tax (VAT).
(Sec. 131(n), LGC).
e. Permit fee – the allowable local government imposition intended to cover the
cost of regulation, inspection, and surveillance of a business or occupation.
(Ursal 2000:126).
f. Police Power – the power to prescribe regulations to promote the health,
morals, peace, education, good order or safety and general welfare of the
people (Sangalang et al.v. IAC, 176 SCRA 179 (1989)).
g. Service Charges – impositions for services rendered by local governments, or
for conveniences furnished. (Ursal 2000:126)
h. Toll fee – a sum of money for the use of something, generally applied to the
consideration which is paid for the use of a road, bridge, or the like, of a
public nature. (Cooley on Taxation 4th ed. Sec. 14)
i. User’s Charges – prices charged by local governments for the use of public
utilities.
Section 226. Common Revenue Raising Powers – The LGUS have common revenue
raising powers that allow them to impose the following:
a. Service Fees and Charges – LGUs may impose and collect such reasonable
fees and charges for services rendered. (Sec. 153, LGC)
b. Public Utility Charges – LGUs may fix the rates for the operation of public
utilities owned, operated and maintained by them within their jurisdiction.
(Sec. 154, LGC)
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c. Toll Fees or 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 LGU concerned:
Provided, that no such toll fees or charges shall be collected from officers and
enlisted men of the Armed Forces of the Philippines and members of the
Philippine National Police on mission, post office personnel delivering mail,
physically-handicapped, and disabled citizens who are sixty five (65) years or
older.
When public safety and welfare so require, 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 227. Criteria in Determining the Reasonableness of Fees and Charges – All
fees and charges imposed and collected shall be fixed in an appropriate and duly enacted
Ordinance (Sec. 132, LGC).
Fees and charges shall be reasonable and commensurate with the cost of regulation,
inspection and licensing. In fixing the amount of fees and charges the following shall be
considered:
a. In the absence of special authority to impose a tax to raise revenues, the fee
for regulation of useful occupations may only be of an amount sufficient to
cover the expenses of issuing the license (permit fee) and the cost of the
necessary inspection or police surveillance, taking into account not only the
expense of direct regulation but also all other incidental consequences.
b. While LGUs are allowed much wider discretion in fixing the amount of
license fees in the case of non-useful occupations, fees and charges must not
be unreasonable, oppressive, or tyrannical.
Section 228. Mayor’s Permit – All businesses are required to obtain Mayor’s Permit
before they engage in any business within a city or municipality. This permit allows them
the privilege of conducting their business within the jurisdiction of the city or
municipality.
The following procedures shall be observed in securing Mayor’s permit:
a. Application for Mayors’ Permit – An application for a Mayor’s Permit shall

be filed with the Office of the City/municipal Mayor. The form for the
purpose shall be issued by the Mayor’s Office and shall set forth the requisite
information, including the name and residence of the applicant, the description
of business or undertaking that is to be conducted, and such other data or
information as may be required. (DOF Local Tax Regulation No. 1-77/Ursal
2000:138)
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1) Documentation Requirements – The following documents may be
required, if applicable:
a) For a newly started business:
aa. Location sketch of the new business

bb. Department of Trade and Industry (DTI) Registration
Certificate with approved Application Form, in case of
single proprietorship
cc. Securities and Exchange Commission (SEC)
Registration and Articles of Incorporation and By Laws,
in case of partnership or corporation
dd. A certificate attesting to the tax exemption if the business
is tax exempt.
ee. Certification from the officer in charge of the zoning that
the location of the new business is in accordance with
zoning regulations
ff. Tax clearance showing that the operator has paid all tax
obligations in the municipality
gg. Barangay clearance/proof of filing (In case of non-
issuance of barangay clearance within seven (7) working
days from the date of filing, the City/Municipality may
issue the permit to the applicant.) {240©, IRR of LGC}
hh. Three (3) passport size pictures of the owner or operator
or in cases of a partnership or corporation the picture of
the senior or managing partners and that of the President
of General Manager.
ii. Health certificate for all food handlers, and those required
under the provisions of duly-enacted revenue code
jj. Community tax certificate
kk. Contract of Lease, if renting
b) For renewal of existing business permit:
aa. Previous year’s Mayor’s Permit

bb. Copies of the annual or quarterly tax payments
cc. Copies of all receipts showing payment of all regulatory
fees as provided for in the Code
dd. Certificate of tax exemption from local taxes or fees, if
exempt
ee. Audited Financial Statement with a gross income
prescribed by the BIR for the next preceding year
ff. BIR registration certificate and annual registration fee
payment
gg. Barangay Clearance (240©, IRR of LGC)
hh. Declaration of previous year’s gross sales/receipts
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2) Inspection and other Requirements – Upon submission of the
application, it shall be the duty of the proper authorities to verify if other
city/municipal requirements regarding the operation of the business or
activity such as sanitary requirements, installation or power and light
requirements, as well as other safety requirements are complied with. The
permit to operate shall be issued only upon compliance with such safety
requirements and after the payment of the corresponding inspection fees
and other impositions required by the Revenue Code and other
city/municipal tax ordinances.
3) Time and Manner of Payment – The fee for the issuance of a Mayor’s
Permit shall be paid to the City/Municipal Treasurer upon application
before any business or undertaking can be lawfully begun or pursued, and
within the first twenty (20) days of January of each year in case of renewal
of the permit.
4) Issuance of Permit – A Mayor’s Permit shall be secured for every

separate or distinct establishment or place where business is conducted.
(Sec. 146(a), LGC)
a) The Mayor’s Permit shall be issued by the City/Municipal

Mayor’s Office upon submission of official receipt issued by the
City/Municipal Treasurer for the payment of the business tax.
b) Every permit issued by the Mayor shall show the name and
residence of the applicant, his nationality and marital status;
nature of the organization (whether the business is a sole
proprietorship, corporation or partnership, etc); location of the
business; date of issue and expiration of the permit; and other
information as may be necessary.
c) The City/Municipality shall, upon submission of satisfactory

proof that the original of the permit has been lost, stolen or
destroyed, issue a duplicate of the permit upon the payment of a
fee prescribed by ordinance.
b. Posting of Permit – Every business owner shall keep his permit conspicuously
posted at all times in his place of business or office or if he has no place of
business or office, he shall keep the permit on his person. The permit shall be
immediately produced upon demand by the City/Municipal Mayor, the
City/Municipal Treasurer or any of their duly authorized representatives.
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c. Duration of Permit and Renewal – The Mayor’s Permit shall be valid for a
period of not more than one (1) year and shall expire on the thirty first (31 st)
of December following the date of issuance unless revoked or surrendered
earlier. Every permit shall cease to be in force upon revocation or surrender
thereof. The permit issued shall be renewed within the first twenty (20) days
of January. It shall have a continuing validity only upon renewal and payment
of the corresponding fee.
d. Revocation of Permit – The Mayor’s Permit may be revoked on the

following grounds:
1) When a person doing business under the provisions of the revenue code of
the city or municipality violates any or its provisions;
2) When the person refuses to pay any indebtedness or liability to the
city/municipality;
3) When the person abuses his privilege to do business to the injury of the
public moral or peace;
4) When such business is being conducted in a disorderly or unlawful
manner, is a nuisance or allows its premises to be used as a resort for
disorderly characters, criminal or women of ill-repute.
Such revocation shall operate to:
1) forfeit all sums which may been paid in respect to said privilege, in
addition to the fines and imprisonment that may be imposed by the Court
of any provision of an enabling ordinance governing the establishment and
maintenance of business; and
2) prohibit the exercise of the business by the person whose privilege is
revoked, until restored.
e. Sanctions – Any business establishments operating without Mayor’s Permit

shall be subjected to penalties provided by law or ordinance.
1) Any false statement deliberately made by the applicant shall constitute

ground from denying or revoking the permit issued by the Mayor, and the
applicant or licensee may be prosecuted in accordance with the penalties
provided by Ordinance.
2) A Mayor’s Permit shall not be issued to the following persons:
a) Any person who previously violated any ordinance or regulation

governing permits granted
b) Any person whose business establishment or undertaking does not
conform with zoning regulations, and safety, health and other
requirements of the city/municipality
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c) Any person who has unsettled tax, obligation, debt or other liability to
the government
d) Any person who is disqualified under any provision of law or
ordinance to establish or operate the business applied for.
e) Any person or applicant for a business who declares an amount or
gross sales or receipts that are manifestly below industry standards or
the Presumptive Income Level of gross sales or receipts as established
in the city/municipality for the same or a closely similar type of
activity or business.
f. Computation of Fee for Mayor’s Permit –
1) The rates of Mayor’s Permit Fees shall not be based on capital investment
or gross sales or receipts of the person or business. (233, IRR of LGC)
2) The Mayor’s Permit fee may based on various schemes, among them the
following:
a) Fixed rates for each kind of business activity;

b) A schedule of graduated fixed rates for each kind of business activity;
c) Grouping similar businesses or occupations and assigning a fixed rate
of permit fee for each group;
d) Fixing or graduating the permit fee based on the number of employee
of business establishments. (A variation of the first and second
schemes)
e) Graduated rate based on the area being used by the business
3) For a newly started business or activity that starts to operate after January
20, the fee shall be reckoned from the beginning of the calendar quarter.
4) When the business or activity is abandoned, the fee shall not be exacted
for a period longer than the end of the calendar quarter. If the fee has been
paid for a period longer than the current quarter and the business activity
is abandoned, no refund of the fee corresponding to the unexpired quarter
or quarters shall be made.
Section 229. Fees for Sealing and Licensing Weights and Measures – Municipalities
may levy fees for the sealing and licensing of weights and measures at such reasonable
rates as shall be prescribed by the Sanggunian Bayan. (Sec. 147, LGC) Cities are
similarly empowered. (Sec. 151, LGC)
a. The sanggunian concerned shall prescribe the necessary regulations for the use
of such weights and measures, subject to the guidelines prescribed by the
Department of Science and Technology.
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b. The sanggunian concerned shall, by appropriate ordinance, penalize fraudulent
practices and unlawful possession or use of instruments of weights and
measures and prescribed the criminal penalty in accordance with the
provisions of the LGC. However, the sanggunian may authorize the treasurer
to settle an offense not involving the commission of fraud before a case is
filed in court, upon payment of a compromise penalty of not less than Two
Hundred Pesos (P 200.00).
Section 230. Fishery Rentals, Fees and Charges – Municipalities shall have the
exclusive authority to grant fishery privileges in the municipal waters and impose rentals,
fees and charges. (Sec. 149, LGC) Cities shall have similar authority. (Sec 151, LGC)
Such rentals, fees and charges shall be imposed in accordance with the following
provisions:
a. Fishery Privileges – The sanggunian may grant fishery privileges to erect fish,
corrals, oyster, mussel or other aquatic beds or bangus fry areas, within a
definite zone of the municipal waters as it may determine, provided:
1) That duly registered organization and cooperatives of marginal fisherman

shall have the preferential right to such fishery privileges;
2) That the sanggunian may require a public bidding in conformity with, and
pursuant to, an ordinance for the grant of such privileges; and
3) That in the absence of such organization and cooperatives or their failure
to exercise their preferential right, other parties may participate in the
public bidding.
b. Fishing Privileges for Marginal Fisherman – The sanggunian may grant the
privilege to gather, take or catch bangus fry, prawn fry, or kawag-kawag or fry
of other species and fish from the municipal waters by nets, traps, or other
fishing gears to marginal fisherman free from any rental or any other
impositions whatsoever.
c. Licensing of Fishing Vessels – The sanggunian may issue licenses for the
operation of fishing vessels of three (3) tons or less which purpose it shall
promulgate rules and regulations regarding the issuances of such licenses to
qualified applicants under existing laws.
d. Illegal Activities – The sanggunian concerned shall, by approved ordinance,

penalize the use of explosives, noxious or poisonous substances, electricity,
mur-ami, and other deleterious methods of fishing and prescribe criminal
penalties in accordance with the provisions of the LGC. The sanggunian
concerned shall have the authority to prosecute the violation of the provisions
of applicable fishery laws.
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Section 231. Fees and Charges that May Be Imposed by Barangays – Barangays
may impose reasonable fees and charges which shall accrue exclusively to them, as
follows:
a. Service Fees and Charges – for services rendered in connection with the
regulation or use of barangay-owned properties or service facilities such as
palay, copra, or tobacco dyers.
b. Barangay clearance – No city or municipality may issue any license or permit

for any business activity unless a clearance is first obtained from the barangay
where the business or activity is located or conducted. For such clearance, the
sanggunian barangay may impose a reasonable fee. The application for
clearance shall be acted upon within seven (7) days from filing. In the event
that the clearance is not issued within the said period, the city or municipality
may issue the said license or permit.
c. Other Fees and Charges – The barangay may also levy fees and charges on:
1) Commercial breeding of fighting cocks, cockfights and cockpits

2) Places of recreation which charge admission fees; and
3) Billboards, signboards, neon signs, and outdoor advertisements
Section 232. Fees and Charges that may be Imposed by LGUs – Some of the fees
and charges that may be imposed by LGUs are the following:
a. Registration and Transfer of Large Cattle

b. Permit Fee for Excavations on Streets
c. Fee for the Sealing and Licensing of Weights and Measures
d. Permit Fee on Film Making Within LGUs Territory
e. Permit Fee for Agricultural Machinery and Other Heavy Equipment for Rent
f. Permit Fee on Occupations/Callings Not Requiring Government Examination
g. Permit Fee for the Storage of Flammable and Combustible Engines
h. Permit Fee on Certain Types of Machinery and Engines
i. Permit Fee for Temporary Use of Roads, Streets, Sidewalks, Alleys, Patios
j. Secretary’s Fee
k. Local Civil Registry Fees
l. Police Clearance Fees
m. Sanitary Inspection Fees
n. Service Fees for Health Examinations
o. Dog Registration and Vaccination Fees
p. Fishery Rentals, Fees and Charges
q. Service Charge for Garbage Collection
r. Charges for Parking
s. Cemetery Charges
t. Slaughter and Corral Fees
u. Toll Fees or Charges
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v. Permit Fee for Cockpit Owner/Operators/Licensees/Promoters and Cockpit
Personnel
w. Permit Fee for Conduct of Group Activities
For reference, typical approaches in imposing and administering the fees and charges
aforementioned are presented under Section 237 up to Section 259 of the Manual
Section 233. Fees and Charges Collected by LGUs for National Government –
Certain fees and charges imposed by the National Government on businesses and
activities are collected on its behalf by the LGUs. It is the duty of the local treasurer
concerned to collect fees and charges and to remit collections promptly in accordance
with the law or issuance authorizing the LGU to undertake the collection.
a. Fire Safety Inspection Fee –
1) The fire safety inspection certificate shall be issued upon payment by

the applicant of a fee equivalent to ten (10%) of all fees charged by the
Building Official, government agencies concerned in the granting of
pertinent permits or licenses (Sec. 1, 206, P.D. No. 1185, the Fire
Code of the Philippines and Regulations)
2) The Annual Fire Inspection Fee should not exceed the amount
equivalent to 0.01% of the assessed value of the building or structure.
To partially provide for the funding of the Fire Service, the following
taxes and fees are imposed. (Sec. 13(b) of the Fire Code).
a) One-tenth of one per centum (0.01%) of the verified estimated

value of buildings or structures to be erected, to be collected from
the owner, but not to exceed fifty thousand (P50,000.00) pesos,
one half to be paid prior to the issuance of the building permit, and
the balance after final inspection and prior to the issuance of the
use and occupancy permit;
b) One-hundredth of one per centum (0.01%) of the assessed value of

buildings or structures annually payable upon payment of the real
estate tax except on structures used as single family dwellings.
(Cited in BLGF, 3rd Ind., dated 6-15-95 to the Municipal
Treasurer, Ipil Zamboanga del Sur)
b. Fees and Charges for NIMC Services – The fees and charges for services
rendered by the National Meat Inspection Commission (NMIC) are subject to
the rates prescribed under the Article 17(d) of Republic Act 7394 on the
following:
1) Ante-Mortem Inspection Fees

2) Post-Mortem Inspection Fees
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3) Accreditation Fees of Slaughterhouses, Poultry Dressing Plants, Meat
Processing Plants, Meat Cold Storage and Meat Delivery Van
4) Meat Import and Export Clearance and Inspection Fees
5) Laboratory Fees for the Examination of Meat and Meat Products
a) Pathological Examination
b) Parasitological Examination
c) Microbiological Examination
d) Chemical Examination
e) Oranoleptic Examination
6) Fees for the Issuance of License to Meat Handlers
Section 234. Building Permit – No person, firm or corporation – including any agency
or instrumentality of the government – shall erect, construct, alter, repair, move, convert,
or demolish any building or structure or cause the same to be done without first obtaining
a building permit from the Building Official assigned in the place where the subject
building is located or the building work is to be done. (Sec. 301, PD, 1096 – the National
Building Code)
a. Payment of Related Fees and Charges – The corresponding fees and charges
shall be collected for services rendered in connection with the processing and
issuance of building permit fees, signboard permit fee, plumbing inspection
permit fee, sanitary inspection fees, mechanical installation and inspection
fees and such other impositions as may be prescribed by the Department of
Works and Highways from persons, firms and corporations before they are
allowed to erect, construct, alter, move, convert or demolish any public or
private building or structure within the city/municipality in the exercise of
regulatory powers over public buildings and structures.
b. Issuing Official – The City/Municipal Engineer shall be responsible for the

issuance of building and other permits and the computation of the correct
regulatory fees. Payments shall be paid at the Treasurer’s Office.
Section 235. Permit Fee for Zoning and Locational Clearance Permit – There shall
be collected a Mayor’s Permit Fee for Zoning/Locational Clearance for all structures to
be constructed in the city/municipality in accordance with existing ordinances and
Housing and Land Use Regulatory Board (HLURB) guiding rates.
a. Time and Manner of Payment – The fees shall be paid by the applicant or his
representatives to the City/Municipal Treasurer when zoning/locational
clearance is granted.
256
b. Administrative Provisions – The City/Municipal Mayor shall administer the
provision of existing ordinances, executive orders, laws relating to and
governing zoning/locational clearance.
c. Coverage – The following developments and activities are covered:
12) Zoning/Local Clearance
a) Residential structure, single or detached other than

apartments/townhouses, dormitories, and
subdivisions/condominium projects
b) Apartments
c) Dormitories
d) Institutional
e) Commercial, industrial, agro-industrial projects
f) Special uses/special projects
g) Alterations/Expansions (affected areas/cost of expansion only)
13) Subdivisions and Condominium Projects/Activities (PD 957)
(a) Approval of Subdivision Plan (including Townhouse)
aa. Preliminary Approval & Locational Clearance - For every

additional hectare or a fraction thereof;
bb. Final Approval and Development Permit - Additional fee
on floor area of houses/building sold with the lot
cc. Inspection Fee
dd. Alteration of Plans (affected areas only)
ee. Certificate of Registration & License to Sell (per saleable
lot)
ff. Additional fee on floor area of house/buildings sold with
the lot
gg. Certificate of Completion (per hectare)
(b). Approval of Condominium Project (under PD 957)
aa. Preliminary Approval & Locational Clearance (PA/LC)

 Land Area
 Building
bb. Final Approval & Development Permit
 Per sq. m. of the total land area
 Additional cost on the area of the building
cc. Inspection Fee
dd. Alteration (affected areas only)
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ee. Conversion (affected areas only)
ff. Certificate of Registration & License to Sell:
 Residential (per sq.m. of saleable area)
 Commercial/office (per sq.m. of saleable area)
gg. Certificate of completion
14) Projects under BP 220
a). Subdivision
aa. Preliminary Approval & Locational Clearance

 Socialized Housing
 Economic Housing
bb. For every additional hectare or a fraction thereof
cc. Final Approval & Development Permit
dd. Inspection Fee
ee. Alteration of plan (affected areas only)
ff. Building permit (per sq.m. of floor area of housing unit)
gg. Certificate of Registration & License to Sell
ee. Certificate of Completion (per ha. or a fractions of land
area)
ff. Certificate of Occupancy (per sq.m. of floor area of the
housing unit)
b). Simple Subdivision
aa. Approval
bb. Inspection Fee
c).Condominium
aa. Preliminary Approval & Locational Clearance

bb. Final Approval & Development Permit
 Per sq.m. of total land area
 Additional cost per sq.m. of housing unit
cc. Inspection fee (per sq.m. of total saleable floor area)
dd. Alteration of Plan (affected areas only)
ee. Building permit (per sq.m. of housing unit)
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ff. Certificate of Registration & License to Sell
gg. Certificate of Completion
hh. Certificate of Occupancy
15) Approval of Industrial Subdivision
a). Preliminary Approval & Locational Clearance

aa. First five (5) hectares
bb. Every additional ha. Or fraction thereof
b) Final Approval & Development Permit of location Inspection

Fee
aa. Alteration of Plan (affected areas only)
bb. Certificate of Registration & License to Sell
cc. Certificate of Completion
16) Approval of Commercial Subdivision

aa. First two (2) hectares
bb. Every additional ha. or fraction thereof
b) Final Approval & Development Permit

c). Inspection Fee
d). Alteration of Plan (affected areas only)
e) Certificate of Registration & License to Sell
f). Certificate of Completion
6) Approval of Farmlot Subdivision

aa. First five hectares
bb. Every additional ha
b) Final Approval & Development Permit

c) Inspection Fee
d) Alteration of Plan (affected areas only)
e) Certificate of Registration & License to Sell
f) Certificate of Completion
7) Approval of Memorial Park/Cemetery Project

aa) Memorial Projects
bb) Cemeteries
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b). Every additional ha. or a fraction thereof
aa. Memorial Project
bb. Cemeteries
c). Final Approval & Development Permit

aa. Memorial Projects
bb. Cemeteries
d). Inspection Fees

bb. Cemeteries
cc.
e). Alteration of Plan (affected areas only)
f). Certificate of Registration & License to Sell (per saleable plot)
bb. Cemeteries
g). Certificate of Completion

bb. Cemeteries
8) Other Transactions/Certifications
a). Application/Request for:
aa) Advertisement Approval

bb) Cancellation/Reduction of Performance Bond
cc) Lifting of Suspension of License to Sell
dd) Extension of Time to Complete Development
ee) Exemption from Cease and Desist Order
ff) Clearance to Mortgage
gg) Lifting of Cease and Desist Order
hh) Change of Name/Ownership
ii) Voluntary Cancellation of CR/LS
jj) Revalidation/Renewal of Permit (condominium)
b). Other Certifications:
aa. Zoning Certifications

bb. Certificate of Town Plan/Zoning Ordinance Approval
cc. Certificate of New Rights/Sales
dd. Certificate of Locational Viability
ee. Certificate of Registration & License to Sell (form)
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ff. Others to include:
 Availability of records/public request of
copies/research works
 Certificate of no records on file
 Certificate of with or without CR/LS
 Certified true copies of documents
9) Registration of Dealers/Brokers/Salesmen
a). Dealers/Brokers
b) .Salesmen/Agent
Section 236. Motorized Tricycle Operator’s Permit – The Sangguniang Bayan or

Panglungsod shall, subject to the guidelines prescribed by the Department of
Transportation and Communications (DOTC), grant the franchise for and regulate the
operation of motorized tricycles within the territorial jurisdiction of the municipality.
(Sec. 447(a) (3)(vi), LGC of 1991).
The issuance of licenses to tricycle drivers and charging of fees for the tricycle’s
registrations are under the jurisdiction of the Land Transportation Office (LTO).
a. Definition of Terms – The following terms are used in relation top the
regulation of the operation of motorized tricycles:
1) Motorized Tricycle - is a motor vehicle propelled other than by muscular

power, composed of a motorcycle fitted with a single wheel sidecar or a
motorcycle with a two-wheeled cab, the former having a total of four
wheels, otherwise known as the motorela.
2) Tricycle Operators - are persons engaged in the business of operating
tricycle.
3) Tricycle for hire – is a motorized tricycle operated to render transport
services to the general public for a fee
4) Motorized Tricycle Operator’s Permit (MTOP) is a document granting
franchise or license to a person, natural or juridical, allowing him to
operate tricycle for hire. Over specified zones.
5) Zone is a contiguous land area or block, say a subdivision or barangay,
where tricycle for hire may operate without a fixed origin and destination.
b. Annual Franchise Fee – The city or municipality may, through a duly

approved ordinance, fix, impose and collect an annual franchise fee for the
operation of motorized tricycle for hire.
c. Other Fees on Motorized Tricycle Operations – In addition to the annual

franchise fee, the city or municipality may, also by passing the appropriate
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legislation, fix and collect other fees on motorized tricycle for hire operations,
such as but not limited to the following:
1) Filing fee (when applying for franchise)

2) Fare adjustment fee for fare increase
3) Filing fee for amendment of MTOP
d. Guidelines in the Payment of Fees –
1) Prospective operators of tricycle should first secure Motorized Tricycle

Operator’s Permit (MTOP) from the Sanggunian;.
2) The fee shall be paid to the City/Municipal Treasurer upon application or
renewal of the permit;
3) The filing fee shall be paid upon application for an MTOP based on the
number of units;
4) Filing fee for amendment of MTOP shall be paid upon application for
transfer to another zone, change of ownership of unit or transfer of MTOP.
e. Scope of Sanggunian’s Franchising Powers – The sanggunian of the

city/municipality shall:
1) Issue, amend, revise renew, suspend, or cancel the MTOP;

2) Prescribe the appropriate terms and conditions of the MTOP;
3) Prescribe and regulate zones of service in coordination with the barangays;
4) After public hearing, determine, fix, prescribe or periodically adjust fares
or rates for the service provided in a zone;
5) Fix, impose and collect, and periodically review and adjust but not oftener
than once every three (3) years, reasonable fees and other related charges
in the regulation of tricycle for hire and;
6) Establish and prescribe the conditions and qualifications of service
f. Other Provisions. In the exercise of the sanggunian’s regulatory powers, the

following additional provisions are to be observed:.
1) Fares – The sanggunian shall establish a fare structure that will provide
the operator a reasonable return or profit and still be affordable to the
general public:
a) The fare structure may either be flat (single fare regardless of

distance) or a minimum amount plus a basic rate per
kilometer;
b) The official rate to be initially adopted shall be minimum fee
fixed under an Ordinance;
c) Operators of tricycle for hire are required to post in a
conspicuous part of the tricycle the schedule of fares.
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2) Zoning and Coding – The Sanggunian may impose a common color for
tricycles for hire in the same zone. Each tricycle shall be assigned and bear
an identification number, aside from its LTO license plate number.
Any zone must be set within the boundaries of the city/municipality.

Existing zones that extend beyond the territorial limits of the
city/municipality to other adjoining municipalities or cities shall be
maintained provided the operator serving the said zone secures the
MTOPs that may be required by the sharing municipalities.
3) Registry of Operators: The City/Municipal Treasurer shall keep a
registry of all tricycle operators which shall among others, the name and
address of the operators and the number and brand of tricycles owned and
operated by the said operators.
4) Regulatory Board: A City/Municipal Tricycle Operator’s Permit
Regulatory Board shall be constituted, the membership of which shall be
determined by the sanggunian.
Section 237. Registration and Transfer of Large Cattle
a. Registration Requirements:
1) Certificate of Ownership: The owner of a large cattle is hereby required

to register ownership of said cattle with the City/Municipal Treasurer for
which a Certificate of Ownership shall be issued to the owner upon
payment of a registration fee fixed by an Ordinance.
2) Certificate of Transfer: When large cattle is sold or its ownership is

transferred to another person, the sale or transfer shall be registered with
the City/Municipal Treasurer, for which a Certificate of Transfer shall be
issued to the purchaser or new owner upon payment of a Transfer
Certificate Fee in the amount fixed by ordinance.
3) Registration of Owner’s Brand: The owner of large cattle shall register

his owner’s brand with the City/Municipal Treasurer and pay the Brand
Registration Fee provided by ordinance.
b. Guidelines in the Registration of Large Cattle:
1) Large cattle shall be registered with the Office of the City/Municipal

Treasurer upon reaching the age of two (2) years.
2) The ownership of a large cattle or its sale or transfer of ownership to

another person shall be registered with the Office of the City/Municipal
Treasurer. All branded and counter-branded large cattle presented to the
City/Municipal Treasurer shall be registered in a book showing among
others, the name and residence of the owner, the consideration or purchase
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price of the animal in cases of sale or transfer, and the class, color, sex,
brands and other identification marks of the cattle. These data shall also be
stated in the certificate of ownership issued to the owner of the large
cattle.
3) The transfer of the large cattle, regardless of its age, shall be entered in
the registry book setting forth, among others, the names and the residence
of the owners and the purchase, the consideration or purchase price of the
animal for sale or transfer, class, sex, brands and other identifying marks
of the animals; and a reference by number to the original certificate of
ownership with the name of the city/municipal issued to it.
No entries of transfer shall be made or certificate of transfer shall be

issued by the City/Municipal Treasurer except upon the production of the
original certificate of ownership and certificate of transfer and such other
documents that show title to the owner.
4) All other matters relating to the registration of large cattle shall be

governed by the pertinent provisions of the Revised Administrative Code
and other applicable laws, ordinances and rules and regulations.
Section 238. Permit Fee for Excavation on Streets
a. General Provision – There shall be collected a fee on every person who shall
make or cause to be made any excavation on public or private streets within
the city/municipality, such as:
1) For crossing streets with concrete pavement

2) For crossing streets with asphalt pavement
3) For crossing the streets with gravel pavement
4) For crossing existing curbs and gutters resulting in damage
5) Additional fee for every delay in excess of excavation period provided in
the Mayor’s Permit.
b. Guidelines for Excavation on Public or Private Streets
1) No person shall undertake or cause to undertake any digging or

excavation, on any part or portion of the municipal streets unless a permit
shall have been first secured from the Office of the City/Municipal Mayor
specifying the duration of the excavation.
2) The City/Municipal Engineer/Building Official shall supervise the digging

and excavation and shall determine the necessary width of the streets to be
dug or excavated. Said official shall likewise inform the City/Municipal
Treasurer of any delay in the completion of the excavation work for
purposes of collection of the additional fee.
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3) In order to protect the public from any danger, appropriate signs must be
placed in the area where work is being done.
Section 239. Permit Fee for Sealing and Licensing of Weights and Measures
a. General Provision – Every person before using instruments of weights and

measures for business, service, commercial, or other transactions with the
public within the city/municipality, shall first have them sealed and pay the
corresponding fee, fixed under an Ordinance, to the City/Municipal Treasurer.
b. Instruments Usually Covered – Sealing shall include the following

instruments.
1) linear metric measures

2) metric measure of capacity
3) metric instruments of weights
4) apothecary balances of precision
5) scales or balances with complete set of weights
For each and every re-testing and re-sealing of weights and measuring
instruments including gasoline pups outside the office upon request of the owner
or operator, an additional service charge to be fixed by ordinance for each
instrument shall be collected.
c. Exemptions:
1) All instruments for weights and measures used in government work of or

maintained for public use by any instrumentality of the government shall
be tested and sealed free.
2) Dealers or weights and measuring instruments intended for sale.
d. Administrative Provisions:
.
1) Unless otherwise provided by ordinance, law or other valid order, the
official receipt for the fee issued for the sealing of a weight or measure
shall serve as a license to use such instrument for one (1) year from the
date of sealing unless deterioration or damage renders the weight or
measure inaccurate within the period.
Unless otherwise provided, the license shall be preserved by the month of

the year following its original issuance. Such license shall be preserved by
the owner and together with the weight or measure covered by the license,
shall be presented (exhibited) on demand by the City/Municipal Treasurer
or his deputies.
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2) The City/Municipal Treasurer is hereby required to keep full sets of
secondary standards which shall be compared with the fundamental
standards in the Department of Science and Technology annually. When
found to be within accepted tolerances, the secondary standards shall be
distinguished by label, tag or seal and shall be accompanied by a
certificate showing the degree of their variation from the fundamental
standards. If the variation is of sufficient magnitude to impair the utility of
instrument, it shall be destroyed at the Department of Science and
Technology.
3) The City/Municipal Treasurer or his deputies shall conduct period

physical inspection and test weights and measures instruments within the
locality;
4) Instruments of weights and measures found to be defective beyond repair

shall be confiscated in favor of the government and shall be destroyed by
the City/Municipal Treasurer in the presence of the City/Provincial
Auditor or his representative.
e. Fraudulent Practices and Corresponding Penalties
1) Fraudulent practices relative to weights and measures: It shall be

considered a fraudulent practice for any person other than the official
sealer of weights and measures to:
a) Place an official tag or seal upon any instrument of weights and

measures or attaches it thereto; or
b) Fraudulently imitate any mark, stamp or brand, tag or other
characteristic sign used to indicate the weights and measures have
been officially sealed; or
c) Alter in any way the certificate given by the sealer as an
acknowledgement that the weights and measures mentioned therein
have been duly sealed; or
d) Makes or knowingly sell or use any false or counterfeit stamps, tag,
certificate, license, or any dye for printing or making stamps, tags,
certificates, or licenses which is an imitation of or purports to be a
lawful stamp, tag, certificate or license required; or
e) Alter the written or printed figures or letters on any stamp, tag,
certificate of license used or issued; or
f) Have in his possession any such false, counterfeit restored or altered
stamp, tag, certificate, or license for the purpose of using or reusing
the same in payment of fees or charges; or
g) Procure the commission of any such offense by another.
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A person who commits any of the offences above shall, for each offense, be
fined an amount or imprisoned or, at the discretion of the Court, both fined
and imprisoned in accordance with the amounts and terms imposed under an
Ordinance duly enacted by the LGU.
2) Unlawful possession or use of instrument not sealed before using and

not sealed within the period prescribed. Any person making a practice
of buying or selling goods by weights and/or measures, or of furnishing
services the value of which is estimated by weight or measure who has in
his possession, without permit, any unsealed scale, balance, weight or
measure, and any person who uses in any purchase or sale or in estimating
the value of any service furnished, any instrument of weight or measure
that has not been officially sealed, or if previously sealed, the license
therefore 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 of a period prescribed therein, or both at the discretion of
the Court.
If, however, such scale , balance, weight or measure, has been officially
sealed at some previous time and the seal and tag officially affixed thereto
remain intact and in the same position and condition in which they were
placed by the official sealer, and the instrument is found not to have been
altered or rendered inaccurate but still to be sufficiently accurate to
warrant its being sealed without repairs or alterations such instruments
shall, if presented for sealing promptly on demand of an authorized sealer
or inspector of weights and measures, be sealed, and the owner, possessor,
or user of the same shall be subject to no penalty except a surcharge to be
fixed by ordinance plus the regular fee fixed by law for the sealing of an
instrument of its class, this surcharge to be collected and accounted for by
the City/Municipal Treasurer in the same manner as the regular fees for
sealing such instruments.
3) Any person with fraudulent intent, alters any scale or balance, weight or
measure after it is officially sealed or who knowingly uses any false scale
or balance, weight or measure, whether sealed or not shall be punished by
a fine of an amount fixed in the Ordinance or by imprisonment for period
prescribed therein, or both, at the discretion of the Court.
4) Any person who fraudulently gives short weight or measure in the making
of a sale, or who fraudulently takes excessive weight or measure in the
making of a purchase, or who, assuming to determine truly the weight or
measure of any article bought or sold by weight or measure, fraudulently
misrepresents the weights or measures thereof shall be punished by a fine
of an amount fixed by an Ordinance or by imprisonment prescribed
therein, or both at the discretion of the Court.
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f. Administrative Penalties
1) Any person making a practice of buying or selling by weight and measure

using unsealed and/or unregistered instrument shall be penalized an amount
fixed in an Ordinance.
d) When correct
e) When incorrect but within tolerable allowance of defect or short
measure
2) Failure to produce weight and measure tag or license or certificate upon

demand but the instrument is duly registered
a) When correct
b) When incorrect but within tolerable allowance of defect or short
measure
3) Any person found violating any of the above two (2) provisions for the
second time shall be fined twice the above penalty.
4) Recommendation shall be made to the Mayor for the closure of business
establishments using fraudulent weights and measures.
Section 240. Permit Fee on Film Making within the LGU’s Territory - There may
be collected the permit fee from any person who shall go on location filming within the
territorial jurisdiction of the city/municipality, such as:
a. Commercial movies
b. Commercial advertisements
c. Documentary film
d. Videotape coverage
Section 241. Permit Fee on Agricultural Machinery and Other Heavy Equipment
for Rent - There may be collected an annual fee for each agricultural machinery or heavy
equipment from operators of said machinery, renting out said equipment in the
city/municipality such as but not limited to the following:
a. Hand tractors
b. Light Tractors
c. Heavy Tractors
d. Bulldozers
e. Forklifts
f. Heavy Graders
g. Light Graders
h. Mechanized Threshers
i. Manual Threshers
j. Cargo Trucks
k. Dump Trucks
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l. Payloaders
m. Prime Movers/Flatbeds
n. Backhoes
o. Rock Crushers
p. Batching Plants
q. Transit/Mixer Trucks
r. Cranes
s. Other Agricultural Machinery and Heavy Equipment
Section 242. Permit Fee on Occupation/Calling not Requiring Government

Examination
a. General Provision – There may be collected an annual fee for the issuance of
Mayor’s Permit to every person who shall be engaged in the practice of the
occupation or calling not requiring government examination.
b. Common Occupations or Callings – The application of these fees generally are

applied but need not cover, nor are limited – to the following common
classifications or groups of occupations and callings:
1) Employees and workers in generally considered “offensive and dangerous

business establishments”
2) Employees and workers in commercial establishments who cater or attend to
the daily needs of the inquiring or paying public
3) Employees and workers in food or eatery establishments
4) Employees and workers in night of night and day establishments
5) All occupations or callings subject to periodic inspection, surveillance
and/or regulations by the City/Municipal Mayor, Examples are: animal
trainer, auctioneer, barber, bartender, beautician, bondsman, bookkeeper,
butcher, blacksmith, criminologist, electrician, electronic technician,
club/floor manager, forensic electronic expert, fortune teller, guest relation
officer, hair stylist, handwriting expert, hospital attendant, lifeguard,
magician, make-up artist, manicurist, masonry worker, masseur attendant,
mechanic, certified “Hilot”, painter, musician, pianist, photographer,
(itinerant), professional boxer, private ballistic expert, rig driver (kutsero),
taxi driver, stage-performer, salesgirl, sculptor, waiter or waitress, and
welder and other occupation/calling.
c. Exemptions – All professional who are subject to the City/Provincial Tax

imposition pursuant to Section 139 of the Local Government Code, and
government employees are exempted from payment of this fee
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d. Persons Usually Covered: The following workers or employees whether
working on temporary or permanent basis, shall secure the individual’s Mayor’s
Permit prescribed under the Ordinance.
1) Employees or workers in generally considered offensive and dangerous

business establishments such as but not limited to the following:
a) Employees or workers in industrial or manufacturing establishment

such as aerated water and soft drink factories, air rifle, and pellets
manufacturing, battery charging shops, blacksmith, breweries,
candy and confectionery factories, canning factories, coffee, cocoa
and tea factories, cosmetics and toiletries factories, cigar and
cigarette factories, construction and/or repair shops of motor
vehicles, carpentry shop, drug manufacturing, distillers, edible oils
or lard factories, electric bulbs or neon lights factories, electric
plant, electronics manufacturing, oxidizing plants, food an flour
mills, fish curing and drying shops, footwear factories, foundry
shop, furniture manufacturing, garments manufacturing, general
building and other construction jobs during the period of
construction, glass and glassware factories, handicraft
manufacturing, hollow block and tile factories, ice plants, milk, ice
cream and other allied product factories, metal closure
manufacturing, iron steel plants, leather and leatherette factories,
machine shops, match factories, paints and allied products
manufacturing, plastic products factories, perfume factories,
plating establishment, pharmaceutical laboratories, repair shop of
whatever kind and nature, rope and twine factories, sash factories,
smelting plants, tanneries, textile and knitting mills, upholstery
shops, vulcanizing shops and welding shops;.
b) Employees and workers in commercial establishments

cinematography film storage, cold storage or refrigerating plants,
delivery and messengerial services, elevator and escalator services,
funeral parlors, janitorial services, junk shop, hardware, pest
control services, printing and publishing houses, service stations,
slaughterhouses, textile stores, warehouses and parking lots;
c) Employees and workers on other industrial and manufacturing firm

or commercial establishments who are normally exposed to
excessive heat, light, noise, cold and other environmental factors
which endanger their physical and health well-being.
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2) Employees and workers in commercial establishment who generally enter or
attend to the daily needs of the general public such as but not limited to the
following: Employees and workers in drugstores, department stores, groceries
supermarkets, beauty saloons, tailor shops, dress shop, bank teller,
receptionist, receiving clerk in paying outlets of public utilities corporation
except transportation companies, and other commercial establishment whose
employees and workers attend to the daily needs of the inquiring or paying
public.
3) Employees and workers in food or eatery establishments such as but not

limited to the following:
a) Employees and workers in canteen, carinderia, catering services,

bakeries, ice cream or ice milk factories, refreshment parlor,
restaurants, sari-sari stores, and soda fountains
b) Stallholders, employees and workers in public markets
c) Peddlers of cooked or uncooked foods
d) All other food peddlers, including peddlers of seasonal
merchandise
4) Employees or workers in night and day establishments such as but not limited
to the following:
a) Workers or employees in bars, boxing stadium, bowling alleys,

billiards ad pool halls, cinema houses, cabarets and dance halls,
cocktails lounges, circus halls, carnivals and the like, day clubs and
night clubs, golf clubs, massage clinics, sauna baths, or similar
establishments, hotels, motels, horse racing clubs, pelota courts,
polo clubs, private detective or watchman security agencies, supper
clubs and all other business establishments whose business
activities are performed and consumed during night time.
b) Provided, that in the case of night and day clubs, night clubs, day
clubs, cocktail lounges, bars, cabarets, sauna bath houses and other
similar places of amusements, they shall under no circumstances
allow hostesses, waitresses, waiters, entertainers, or hospitality
girls below 18 years of age to work as such. Workers who shall
secure the individual Mayor’s permit on their 18th birth year, shall
present their baptismal or birth certificate duly issued by the local
civil registrar concerned.
5) All other employees and persons who exercise their profession, occupation or
calling within the jurisdiction limits of the City/Municipality aside from those
above mentioned.
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e. Surcharge for Late Payment – Failure to pay the fee within the time prescribed
shall subject a taxpayer to a surcharge of twenty five percent (25%) of the original
amount of the fee due, such surcharge shall be paid at the same time and in the
same manner as the tax due.
f.. Other Provisions
1) In the case of single proprietorships, if the business changes ownership or

relocates from one city/municipality to another, it shall be the duty of the new
owner, agent or manager of such business to secure a new permit as required
and pay the corresponding permit fee as though it were new business
2) Newly hired workers and/or employees employed in the covered occupations

shall secure their individual Mayor’s Permit from the moment they are
actually accepted by the management of any business or individual
establishments to start working.
3) The Treasurer shall keep a record of persons engaged in occupation and/or

calling not requiring government examination and the corresponding payment
of fees required under personal date for reference purpose.
Section 243. Permit Fee for the Storage of Flammable and Combustible Materials
a. Basic Provisions – There shall be collected an annual permit fee for the storage of
combustible materials at the rates fixed by an Ordinance on the following:
1) Storage of gasoline, diesel, fuel, kerosene and similar products

2) Storage of cinematographic film
3) Storage of celluloid
4) Storage of calcium carbide
5) Storage of tar, resin, and similar materials
6) Storage of coal deposits
7) Storage of combustible, flammable or explosive substance not mentioned
above
No person shall keep or store at his place of business any of the above cited
flammable, combustible or explosive substance without securing a permit
therefore.
b. Exemption – Gasoline or naptha not exceeding the quantity of One Hundred (100)
gallons, kept and used by launches or motor vehicles, shall be exempt from the
permit fee herein required.
c. Monitoring/Compliance – The Mayor shall promulgate regulations for the proper

storing of said substances and shall designate the proper official who shall be in
charge of ensuring compliance with the provisions of the Ordinance.
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Section 244. Permit Fee on Certain Types of Machineries and Engines -There shall
be imposed an annual fee fixed by an Ordinance on the following but not limited to:
1) Internal combustion engines

2) Other stationary engines or machines
3) Electrical generators
The basis for the fee generally is the need to regulate machinery and equipment that may
be considered pollutive, or hazardous when operated without care or in certain locations
or under certain conditions, or that may create a nuisance (e.g., noise, vibrations). Other
reasonable bases for regulation may also be considered
Section 245. Permit Fee for temporary Use of Roads, Streets, Sidewalks, Alleys,
Patios, Plaza and Playgrounds
a. General Provision – Any person who shall temporarily use and/or occupy a
street, sidewalk, or alley or portion thereof in the city/municipality in connection
with their construction works and other purposes, shall first secure a permit from
the Mayor and pay a fee in accordance with the Ordinance.
b. Exemptions – For wakes and other charitable, religious and educations purposes,
use and/or occupancy is exempted from the payment of permit fee provided the
proper permit is secured before such use and/or occupancy.
Section 246. Permit Fee for the conduct of Group Activities
a. Provision – Every person who shall conduct or hold any program or activity
involving the grouping of people within the jurisdiction of the city/municipality
shall obtain Mayor’s Permit for every occasion and pay to the City/Municipal
Treasurer the corresponding fee imposed under an Ordinance.
1) Conference, meetings, rallies and demonstrations in outdoor, in parks, plazas,

roads/streets
2) Dances
3) Coronation and ball
4) Premiere Showing
5) Pop/rock concerts
6) Promotional sales
7) Other Group Activities
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b. Exemptions – Programs or activities conducted by educations, charitable,
religious and governmental institutions free to the public shall be exempted from
the payment of the fee herein imposed, provided, that the appropriate Mayor’s
Permit shall be secured beforehand. However, programs or activities requiring
admission fees for attendance shall be subject to the fees herein imposed even if
they are conducted by exempt entities.
Section 247. Secretary’s Fees
a. Provision – There shall be collected the fees fixed in an Ordinance from every
person requesting for copies of official records and documents from the offices of
the city/municipality.
b. Usual Coverage
1) For every page or fraction thereof, typewritten (not including the certification
and notation
a) Typewritten
b) Computerized print-out
2) For each certificate of correctness (with seal of office) written on the copy or
attached thereto
3) For certifying the official act of the City/Municipal Judge or other judicial
certificate with seal
4) For certified copies of any papers, records, decrees, judgment or entry of
which any person is entitled to demand and received a copy (in connection
with judicial proceeding) for each page
5) Photocopy or any other copy produced by copying machine, per page
c. Exemption. The fees imposed shall not be collected for copies furnished to other
offices and branches of the government for official business, except, except for
those copies required by the Court at the request of the litigant in which case,
charges shall be in accordance with the prescribed rates under an Ordinance.
Section 248. Local Civil Registry Fees
a. Provision – There shall be collected for services rendered by the Local Civil
Registrar of the City/Municipality the fees, fixed under an Ordinance, on the
following:
1) Marriage Fees
a) Application for marriage license

b) Marriage License Fee
c) Marriage Solemnization Fee
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2) For Registration of the following:
a) Legitimation
b) Adoption
c) Annulment of Marriage
d) Divorce/Legal Separation
e) Naturalization
f) Change of Name
g) Other legal documentation for record purposes
3) For certified copies of any document in the register, for each page
4) Burial fees
a) Burial Permit Fee or transfer of cadaver

b) Fee for exhumation of cadaver
c) Fee for removal of cadaver
b. Exemption – The fee herein imposed shall not be collected in the following
cases:
1) Issuance of certified copies of documents for official use at the request of a

competent court or other government agency, except those copies required by
courts at the request of litigants, in which case the fee should be collected.
2) Issuance of birth certificates of children reaching school age when such
certificates are required for admission to the primary grades in a public
school.
3) Burial permit of a pauper, per recommendation of the City/Municipal Mayor.
Section 249. Police Clearance
a. Purpose – Fees shall be fixed by Ordinance and paid for each police clearance
certificate obtained from the Station Commander of the PNP of the
City/Municipality for the following purposes:
1) Change of name
2) Application for Filipino Citizenship
3) Passport or visa application
4) Firearms permit application
5) PLEB clearance
6) Employment, scholarship, study grant and other purposes specified by
ordinance.
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b. Collection of Fees – The fees shall be collected by the City/Municipal Treasurer
Section 250. Sanitary Inspection Fee
a. Provision – There shall be collected an annual fee from each business

establishment and house for rent in the City/Municipality, for the purpose of
supervision and enforcement of existing rules and regulations on sanitation and
safety of the public.
1) For houses for rent

2) For each business, industrial, and agricultural establishment
b. Provisions on Inspection and Payment
1) The City/Municipal Health Officer or his duly authorized representative shall

conduct an annual inspection of all establishment and buildings, and
accessories and houses for rent, in order to determine their adequacy of
ventilation, general sanitary conditions and proprietary for habitation.
2) The City/Municipal Health Officer shall require evidence of payment of the

fee imposed herein before he issues the sanitary inspection certificate.
Section 251. Service Fees for Health Examinations
a. Provisions – There shall be collected a fee from any person who is given a
physical examination by the City/Municipal Health Officer or his duly authorized
representative, as required by existing ordinances.
b. Usual Coverage – Individuals engaged in an occupation or working in the

following establishments are hereby required to undergo physical and medical
examination before they can be employed and once every six (6) months
thereafter.
1) Food establishments – where food or drinks are manufactured, processed,

stored, sold, or served.
2) Public swimming or bathing places
3) Dance schools, dance halls and nightclubs – include dance instructors,
hostess, cooks, bartenders, waitresses, etc.
4) Tonsorial and beauty establishment – include employees of barber shops,
beauty parlors, hairdressing and manicuring establishments, exercise gyms
and figure slenderizing saloons, facial centers, aromatherapy establishments
etc.
5) Massage clinics and sauna bath establishments – include masseurs, massage
clinic/bath attendants, etc.
6) Hotels, motels and apartments, lodging, boarding, or tenement houses, and
condominiums.
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c. Responsibility of Employers – Owners managers or operators of the
establishment shall see to it that employees who are required to undergo physical
and medical examination have been issued the necessary medical certificates.
Section 252. Dog Registration and Vaccination Fees
a. General Provision – There shall be collected/imposed from every owner of the

dog a vaccination fee imposed under the ordinance for every dog vaccinated
within the territorial jurisdiction of the City/Municipality.
b. Provision on Vaccination Against Rabies
1) “Vaccination” means the inoculation of a dog with rabies vaccine licensed for
the species by the Bureau of Animal Industry, Department of Agriculture.
2) Such vaccination must be performed by trained individual from BAI,
City/Municipal Veterinarian Office and City/Municipal Agriculture Office.
3) The dog owners shall be provided with a copy of the vaccination certificate.
The veterinarian/vaccinator will retain one copy for the duration of the
vaccination. A durable mental or plastic tag, serially numbered issued by the
veterinarian/vaccinator, shall be securely attached to the collar of the dog.
The above provision may not apply in a mass vaccination program. During a free
mass vaccination, the cost shall be borne by the owner after the scheduled date
c. Provisions on Dog Registration of Licensing – Every dog shall be registered by

its owner upon reaching the age of three (3) months and every year thereafter.
Unvaccinated dogs registered after reaching the age of 3 months and dogs 3
months old and above not previously registered shall be vaccinated upon
registration. The dog owner shall pay such registration fee as may be determined
by the Sanggunian. The registration officer shall provide with a certificate of
registration of the dog and affix to a distinguished collar tag as proof of
registration.
d. Responsibility for Enforcement – It shall be the responsibility of the

City/Municipality Rabies Control Authority to administer the ordinance and to
promulgate the necessary rules and regulations for its implementation.
Enforcement shall be the responsibility of the City/Municipality Rabies Control
Authority.
e. Other Provisions.
1) Elimination of Unregistered Dog – Unregistered dogs over the age of 4

months shall be seized and humanely exterminated under the supervision of a
licensed veterinarian or the City/Municipal Rabies Control Authority or
vaccinated under the above provision.
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2) Reporting of Biting Incidents – The owner of a dog which has bitten any
person and the person who has been bitten shall, within 24 hours of the
occurrence, report the incident to the City/Municipal Rabies Control
Authority, a health care worker or a police officer. On receiving such
information, the health care worker or police officer shall immediately
transmit it to the City/Municipal Rabies Control Authority for investigation.
Section 253. Fishery Rentals, Fees and Charges
a. Purpose – The purpose of this Ordinance is to enable the City/Municipality to

exercise its exclusive rights to grant certain fishery privileges within its municipal
waters.
b. Definition of Terms
1) Marginal Fisherman refers to an individual engaged in subsistence fishing

which shall be limited to the sale, barter or exchange of marine products
produced by himself and his immediate family, and whose annual net income
from fishing does not exceed Fifty Thousand Pesos (P 50,000.00) or the
poverty line established by NEDA for the particular region or locality
whichever is higher. (Sec. 131 (p), LGC)
2) Municipal Waters include the following:
a) Streams, lakes, and tidal waters within the municipality, not

being the subject of private ownership and not comprised within
national parks, public forest, timber lands, forest reserves, or
fishery reserves;
b) Marine waters included between two (2) lines drawn

perpendicularly to the general coastline from points where the
boundary lines of the municipality or city touch the sea at low
tide and third parallel with the general coastline and fifteen (15)
kilometers from it.
c) Where two (2) municipalities are so situated on the opposite

shores that there in less than fifteen (15) kilometers of marine
waters between them, the third line shall be equally distant from
opposite shores of the respective municipalities. (Sec 131, LGC)
3) Vessel include every sort of boat, craft or other artificial contrivance used as
means of transportation.
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c. Coverage – The municipality shall have the exclusive authority to grant the
following fishery privileges within its municipal waters and impose rentals, fees
or charges therefore; (Sec. 149, LGC)
1) To erect fish corals, oyster, mussel, or other aquatic beds or bangus fry areas.
2) To gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other
species and fish from municipal waters by nets, traps or other fishing gears.
However, marginal fishermen shall be exempt from any rentals, charge or any
other imposition whatsoever.
3) Duly registered organizations and cooperatives of marginal fishermen shall

have the preferential right to such fishery privileges without being required to
undergo public bidding. In the absence of such organizations and cooperatives
or upon failure to exercise their preferential right, other parties may participate
in the said public bidding.
d. Public Bidding Committee – For this purpose, there is hereby created a

committee to be determined by local sanggunian to conduct the public auction.
1) Membership:
a) The Mayor of his duly authorized representative as Chairman;

b) Three (3) members of the Sanggunian to be designated by said
Body;
c) The Municipal Treasurer
2) The Committee shall advertise the call for sealed bids for the leasing of a zone
or zones of municipal waters in public auction for two (2) consecutive weeks
in the bulletin board of the city/municipal hall. If no bids are received within
two (2) weeks, such notice shall be posted for another two (2) weeks. If after
said two (2) notices for the grant of exclusive fishery rights through public
auction, there are no interested bidders, the Sanggunian shall grant the rights
within the definite area or portion of the municipal waters to any interested
individual upon payment of a license fee fixed herein.
3) The notice advertising the call for bids shall indicate the date and time when
such bids shall be filed with the City/Municipal Treasurer.
4) An application to participate in the public bidding shall be submitted to the

City/Municipal Mayor in a form prescribed therefore. Upon submitting a
sealed bid, a person shall accompany such bid with a deposit of an amount
fixed by an Ordinance which shall be deducted from the first rental by the
person should the bid be awarded to him.
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5) At the time and place designated in the notice, the Committee sitting en banc
shall open all the bids and award the lease to the qualified bidder offering the
highest bid. The lease shall be executed within ten (10) days after the award is
made by a committee and if the successful bidder refuses to accept, or fails or
neglects to execute the lease within such time, his deposit shall be forfeited in
favor of the city/municipal government in such a case another bidding shall be
held in the manner provider above.
6) The deposits of the unsuccessful bidders shall be returned upon the execution
of the lease contract by the successful bidder or before the calling of another
bid.
e. Duration of Lease – The grant of fishery rights through public auction shall be
for a period prescribed under an Ordinance.
f. Zoning of Municipal Waters – The municipal waters of the municipality are

hereby divided and classified into zones for purposes of granting a lease or
exclusive fishery rights through public auction as prescribed in the Ordinance
g. Privilege of Residents to Take Fish in Municipal Waters – Any person who is

not a grantee of license or privilege to engage in commercial fishing is hereby
allowed to fish for domestic use, in every municipal water, for as long as no
commercial fishery therein is yet established,
Provided, That such fishing shall not take place within Two Hundred (200) meters
from a fish corral licensed by the city/municipality; and that such fish caught
under this privileges shall not be sold.
Furthermore, no rental fee, charge, or any other imposition whatsoever shall be

collected from marginal fishermen.
h. Applicability of Pertinent Provisions of Laws – All existing laws, rules and

regulations governing municipal waters and municipal fisheries are hereby
adopted.
Section 254. SERVICE CHARGE FOR GARBAGE COLLECTION
a. Provision for Charges – There shall be collected from every owner or operator
of a business establishment an annual garbage fee fixed in an Ordinance on the
following:
1) Manufacturers, Millers, Assemblers, Processors, and Similar Business

2) Hotels, Apartments, Motels and Lodging Houses
3) Restaurants, Day and Night Clubs, Cafes and Eateries
4) Hospitals, Clinics, Laboratories and similar businesses
5) Movie Houses and Retailers
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6) Other Businesses not mentioned above
7) Residential. Establishments
Section 255. Charges for Parking
a. Provision for Charges – There shall be collected fees for the use of
city/municipality owned parking areas or designated streets for pay parking in
accordance with the following:
1) Day Parking Rates for the following types of vehicles:

a) Tricycles
b) Private Cards and Service Vehicles
c) Passengers Jeepneys
d) Cargo Truck/Delivery Vans
e) Passenger Buses
f) Other Vehicles
2) Overnight Parking Rates/Night Parking Rates for all types of vehicles
3) Towing fee and impounding fee fixed under an Ordinance shall be
collected from owners of vehicles who shall violate the rules/regulations
on parking.
b. Time and Manner of Payment – The fees fixed by an Ordinance shall be paid to
the City/Municipal Treasurer or his duly authorized representative upon parking
thereat.
Section 256. Cemetery Charges
b. Provision for Charges – There shall be collected rentals for the City/Municipal
Cemetery lots at the rates prescribed under the Ordinance.
Section 257. Slaughter and Corral Fees
a. General Provision – Before any animal is slaughtered for public consumption, a

permit therefore shall be secured from the Office of the City/Municipal
Veterinarian/Health Officer or his duly authorized representative who will
determine whether the animal is fit for human consumption, thru the
City/Municipal Treasurer upon payment of the corresponding fee, prescribed by
an ordinance on the following animals:
1) Large cattle
2) Hogs
3) Goats
4) Sheep
5) All Others
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b. Slaughter Fee – The fee fixed by an Ordinance shall be paid to cover the cost of
service in the slaughter of animals at the city/municipal slaughterhouse.
c. Corral Fee – The fee fixed by an Ordinance, may be collected for the animals to
be slaughtered which are deposited and kept in a corral owned by the local
government ( Sec. 31, PD 231)
d. Condemned Animals – No permit to slaughter shall be granted nor the

corresponding fee collected on any animals condemned by the City/Municipal
Veterinarian.
Section 258. Toll Fees or Charges
a. Nature and Purpose of Tolls – There may be collected fees or charges for the
use of certain utilities owned and operated by the city/municipality as a means to
recover parts of the public investments to construct/acquire them, to cover
maintenance or operating costs, and for similar reasonable purposes. Piers, ferries,
bridges and roads are only some examples of utilities that may be subject to toll
charges.
b. Exemptions – No such tolls or fees or charges shall be collected from officers

and enlisted men of the Armed Forces of the Philippines and members of the PNP
on missing, ambulances, post office personnel delivering mails, physically
handicapped and disabled citizens who are sixty five (65) years or older.
Section 259. Permit for Cockpit Owners/Operators/Licensees/Promoters and

Personnel
a. Powers and Relevant Provisions of Law – The provisions of PD 449, otherwise

known as the Cockfighting Law of 1974, PD 1802 (Creating the Philippine
Gamefowl Commission), and such other pertinent laws shall apply to all matters
regarding the operation of cockpits and the holding of cockfighting in the
City/Municipality.
The power to authorize the establishment, operation and maintenance of cockpits

and to regulate cockfighting has been lodged with the city/municipal government
even before the LGC of 1991. (GAB Opinion unnumbered February 3, 1995).
Considering that the functions of the Philippine Gamefowl Commission (PGC)
have been devolved to the cities and municipalities, there is no need to issue the
rules governing the PGC. The power to regulate the importation of gamefowls
shall be left to the LGUs subject to quarantine laws and regulations (OC
Resolution No. 95-05 May 19, 1995). Although regulation of cockfighting has
been developed to local governments, a municipal government cannot issue a
permit to a promoter to hold cockfights in places other than a licensed cockpit
since this would violate said law. (DILG Opinion Nos. 296-1993, 31-1194, PNP
Opinion OLS/LO No. 352-1994 March 22, 1994)
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b. Application, Payment and Issuance of Mayor’s Permit
1) The application filing fee is payable to the City/Municipal Treasurer upon

application for a permit or license to operate and maintain cockpit;
2) The cockpit registration fee is also payable upon application for a permit
before a cockpit can operate and within the first twenty (20) days of
January of each year in case of renewal thereof, January 20.
3) The permit fees on cockpit personnel shall be paid before they participate
in a cockfight and shall be paid annually upon renewal of the permit on the
birth month of the permitee.
4) Upon payment of the fees imposed, the corresponding Mayor’s Permit

shall be issued.
c. Ownership Operation and Management of Cockpit – Only Filipino citizens

not otherwise inhibited by existing ordinances or laws shall be allowed to own,
manage and operate cockpits. Cooperative capitalization is encouraged.
d. Establishment of Cockpit – The Sanggunian concerned shall determine the

number of cockpits to be allowed in the city/municipality.
e. Cockpit Size and Construction – Cockpits shall be constructed and operated

within the appropriate areas as prescribed in the Zoning Law or ordinance. In the
absence of such law or ordinance, the City/Municipal Mayor shall see to it that no
cockpits are constructed within or near existing residential or commercial areas,
hospitals, school buildings, churches or other public buildings. Owners, lessees,
or operators of cockpits which are now in existence and don not conform to this
requirement are required to comply with theses provisions within a period to be
specified by the City/Municipal Mayor. The City/Municipal Engineer shall
approve and issue building permits for the construction of cockpit in accordance
with the existing ordinance, laws and practices.
f. Cockfighting Officials – Gaffers, referees, bet managers, bet takers, cashiers, pit
referees, and promoters shall not act in any cockfight in the city/municipality
without first securing a license renewable every year on their birth month from
the city/municipality where such cockfights is held. Only gaffers, referees, bet
takers, or promoters licensed by the city/municipality shall officiate in all kinds of
cockfighting authorized. No operator or owner of a cockpit shall employ or allow
any of the mentioned personnel to participate in a cockfight unless they have
registered and paid in the imposed fee.
g. Cockfighting for Entertainment of Tourists or for Charitable Purposes –

Subject to the preceding subsection hereof, the holding of cockfights may also be
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allowed for the entertainment of foreign dignitaries or for tourists, of for returning
Filipinos, commonly known as “Balikbayans” or for the support of national fund-
raising campaigns for charitable purpose as may be authorized upon resolution of
the local Sanggunian, in licensed cockpits, or in playgrounds or parks. This
privilege shall be extended for only one (1) time for a period not exceeding thee
(3) days, within a year.
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Chapter 4. GOVERNMENT ENTERPRISE OPERATIONS
Section 260. Political and Corporate Nature of LGUs – 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 directory. (Sec. 15, LGC)
LGUs shall enjoy full autonomy in the exercise of their proprietary functions and in the
management of their economic enterprise, subject to the limitations provided in the LGC
and other applicable laws
Section 261. Nature of Government Enterprise – A Government Enterprise is a

project or undertaking of the government that is more or less permanent in nature, with
the objective of promoting public health, safety, morals, general welfare, security,
prosperity and contentment of the inhabitants. (Black’s Law Dictionary)
Section 262. Ordinance Establishing and Governing the Enterprise – An enterprise

may only be established and operated by virtue of an ordinance duly enacted by the
Sanggunian.
a. In relation to the imposition and collection of fees and charges, the ordinance shall
include provisions on the following:
1) Public utility charges/rates for the operation of public utilities owned,

operated and maintained by the LGUs within their jurisdiction. ( Sec. 154,
LGC);
2) Toll fees or charges for the use of any public road, pier or wharf,
waterway bridge, ferry or telecommunications systems, etc. (Sec. 155,
LGC and Sec. 47 GAAM Vol. 1)
c. 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 65 years or older shall not
be collected the toll fees or charges. (Sec. 155, LGC);
d. 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 263. Basic Services and Facilities – LGUs shall endeavor to be self-reliant
and, aside from discharging the functions and responsibilities of national agencies and
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offices devolved to them by the LGC, shall continue exercising the powers and
discharging the duties and functions already vested upon them prior to the LGC.
The 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 basic services and facilities to their constituents. (Sec. 17, LGC)
a. Basic Services to Be Provided by LGUs – The basic services and facilities to be

provided by the different levels of LGUs shall include, but not limited, to
following:
1) For a Barangay
a) Agricultural support services which include planting materials,

distribution system and operation of farm produce collection
buying stations;
b) Health and social welfare services which include maintenance

barangay health center and day-care center;
c) Services and facilities related to general hygience 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, municipal

purpose pavement, plaza, sports center, and other facilities;
g) Information and reading center; and
h) Satellite or public market, where viable
2) For a Municipality
a) Extension and on-site research services and facilities related to

agriculture and fishery activities which include dispersal
livestock and poultry, fingerling, and other seeding materials for
aquaculture, palay, corn, and vegetable seed farm, medicinal
plant gardens, fruit trees, coconut, and other kinds of seedlings
nurseries, demonstration farms; quality control of copra and
improvement and development of local distribution channels
preferably through cooperatives; interbarangay irrigation
systems, water and soil resources utilization and conservation
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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 DENR, implementation of community-based
forestry projects which include integrated forestry programs and
similar projects, management and control of communal forests
with an area not exceeding fifty (50) square kilometers,
establishment of tree parks, and similar forest development
projects;
c) Subject to the relevant provisions of the LGC (Title Five Book

1), health services which include the implementation of programs
and projects on primary health care, maternal and child care, and
communicable and non-communicable diseases 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 person,
community-based rehabilitation programs for vagrants, beggar,
street children, scavengers, juvenile delinquents, and victims of
drug use, 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 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,
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rain water collectors and water supply systems, seawalls, dikes,
drainage and sewerage, and flood control, traffic signals and road
signs and similar facilities;
i) Public markets slaughterhouses and other municipal enterprises;
j) Public cemetery;
k) Tourism facilities and other tourist attractions, including the

acquisition of equipment, regulation and supervision of business
concessions and security services for such facilities; and
l) Sites for police and fire stations and substations 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, animals
breeding stations, and artificial insemination centers, and
assistance in the organization of farmers and fisherman’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 Five Book 1 of the LGC, health

services which include hospitals and other tertiary health
services;
e) Social welfare services which include programs and projects or

revel 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;
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g) Infrastructure facilities intended to service the need 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 project for low-cost housing and other mass

dwellings, except those funded by the Social Security Services
(SSS), government Service Insurance System (GSIS) and the
Home Development Mutual Fund (HMDF), Provided, that
national funds for these programs and projects shall equitably
allocated among the regions in proportion to the ratio of the
homeless to the population;
i) Investment support services, including access to credit financing;
j) Upgrading and modernization of tax information and collection

services through the use of computer hardware and software and
other means;
k) Inter-municipal telecommunications services, subject to national

policy guidelines; and
l) Tourism development and promotion programs.
4) For a City – All the services and facilities of the municipality and
province, and in addition thereto, the following:
a) Adequate communication and transportation facilities;
b) Support for education, police and fire services and facilities;
Notwithstanding the provisions of subsection (b) hereof, public works

and infrastructure projects and other facilities, programs and services
funded by the National Government under the Annual General
Appropriation Act (GAA), other special laws, pertinent executive orders,
and those wholly or partially funded from foreign sources, are not
covered under this Section, except in those cases where the local
government unit concerned is duly designated as the implementing
agency for such projects, facilities, programs and services.
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
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facilities shall be undertaken by the local government unit concerned
based on national policies standards and guidelines (Sec. 17, LGC)
Section 264. 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
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 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 265. Role of Treasurers in Government Enterprise Operations – The

Treasurer of the LGU operating a public enterprise shall have the following functions in
its establishment and operations:
a. Advise the LCE, the Sanggunian, and the management of the public enterprise on
its financing aspects;
b. Advise the Sanggunian in the enactment of ordinances on public enterprises,

especially in relation to their financial management;
c. Take charge of the collections and take custody of funds of all government
enterprises;
d. Ensure that payments are made on duly certified and approved disbursement
vouchers;
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e. Advise the LCE of delinquencies of government enterprise clientele for purposes
of enforcing sanctions and taking the necessary remedial measures;
f. Recommend qualified persons for designations as collectors;
g. Maintain records of payments of market stall holders and of other government

enterprise’s lessors;
h. Prepare periodic financial reports for each government enterprise as required by

BLGF rules and regulations.
Section 266. Private Sector Participation in the Operation and Management of

LGU Enterprises – The participation of the private sector in local governance,
particularly in the delivery of basic services, shall be encouraged to ensure the viability of
local autonomy as an alternative strategy for sustainable development (Sec. 3-l, LGC)
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, LGC)
Section 267. Common Modes of Contracting for LGUs – The LCE may be authorized
through a Sanggunian Resolution to enter into a contract with the private sector for the
management and operation the government enterprise.
The Treasurer shall advise the LCE and sanggunian on the relative advantages and
propriety of the following, as well as other, common modes of contracting by which
LGUs might engage the private sector:
a. Service contract – This is appropriate when the LGU requires the assistance of a
private entity to perform specific tasks.
1) The contract is generally short-term (usually less than one year, and not
more than 2 years);
2) The responsibility for fixed investment fund and working capital remains
in the LGU;
3) The contractor is assured of a fixed fee from the LGU budget or from the
revenues of the enterprise;
4) This scheme provides an avenue for tapping private sector expertise for
the performance of specialized, particular tasks.
b. Management Contract – In this type of contract, the LGU transfers the entire
management, including the operating and maintenance of the facility, to the
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private operator. The contract may have a duration of three to five years, but the
LGU should provide for earlier termination, in case this is needed to protect its
interests.
The following are the features of a management contract:
1) Fixed investments continue to be borne by the LGUs, but the working

capital is often but not always provided by the private proponent;
2) To encourage efficiency, the payment for services in management

contracts is often a combination of a fixed fee and a success fee.
The success fee is based primarily on the performance of the enterprise in

relation to profit targets, although other factors may also be used as part of
the criteria.
The fixed fee may come from the LGU budget or from the enterprise
revenues. The success fee, which is contingent in nature, invariably comes
from enterprise revenues.
c. Lease Contract – Under this type of arrangement, the private firm leases an asset
of an LGU for a fixed lease payment, and assumes the responsibility for
operating, maintaining, and managing the asset, aside from the commercial risks
of the operations. It effectively buys the rights to the income stream of the leased
asset.
1) Lease contracts are generally long-term, usually 8 to 15 years;
2) Lease arrangements are appropriate for government enterprises whose

operations have a wide latitude for improving efficiency;
3) The ownership of the asset and the improvements made generally revert to
the LGU at the end of the lease.
c. Concession Agreement – under this kind of contract, a private sector proponent

is allowed to manage, operate, maintain, and introduce investments on the assets
of the contracting government entity. The concession agreement has the following
features:
1) The concession agreement generally involves large government

enterprises and long-term contracts typically lasting 20 to 30 years;
2) The concession contract specifies the performance targets, mechanisms for

setting and adjusting tariffs, schedule of concession fees, income sharing
etc.
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3) Since the responsibility for putting new investments in concessions is with
the private operator the government does not need to raise financing.
4) The government can generally expect greater efficiency and improved

service since the commercial risks are borne by the concessionaire.
5) Any improvements or additional assets brought in by the proponent accrue

to the government when the contract ends.
Responsibilities of the LGU. Concessions involve large enterprises and long-

term contract that often are related to the delivery of important services to the
public. They generally confer monopolistic powers on concessionaire. For these
reasons, it is essential for responsibilities and accountabilities to be carefully
defined, and for the LGU to set into place, as an integral feature of the
arrangements, a well-designed, effective regulatory framework that will protect
the public from possible predatory practices and poor services.
Section 268. Barangay Micro-Business Enterprise (BMBE) – Section 2 of RA 9178,

otherwise known as the BMBE Act of 2002, provides that it is the policy of the State to
hasten the country’s economic development by encouraging the formation and growth of
barangay micro-business enterprises which effectively serve as seedbeds of Filipino
entrepreneurial talents, and integrating those in the informal sector with the mainstream
economy, through the rationalization of bureaucratic restrictions, active intervention of
the government specially in the local level, and granting incentives and benefits to
generate much-needed employment and alleviate poverty. (Sec. 1, Rule 1, DOF Order
No. 17-04)
Section 269. Registration of BMBEs – Any business entity or enterprise falling under
the following conditions, whether operated as a sole proprietorship or a corporation,
partnership, cooperative or association, organized/incorporated and existing under
Philippine laws can register as a BMBE:
a. Those engaged in the production, processing or manufacturing of products or

commodities, including agro-processing, trading and services, and which
activities are barangay-based and micro-business in nature and scope: Provided,
that “services” shall exclude those rendered by the following:
1) Natural persons who are duly licensed by the government after having
passed a government licensure examination in connection with the
exercise of one’s profession;
2) Juridical persons such as partnerships or corporations engaged in

consultancy, advisory and similar activities where the performance of such
services are essentially carried out through licensed professional;
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b. Those whose total assets, real or personal, inclusive of those arising from loans but
exclusive of the land on which the particular business entity’s office, plant and
equipment are situated, shall not be more than Three Million Pesos (P3,000,000)
or as may be adjusted by the Small and Medium Enterprises Development
(SMED) Council as mandated under RA 6977 as amended by RA 8289: Provided,
that for the purpose of registering as a BMBE, the assets must be owned and used
for the conduct of its business as such BMBE.
Section 270. When is a business enterprise “barangay-based” – A business enterprise

shall be considered barangay-based under the following conditions:
a. The majority of its employees are residents of the municipality where its principal
place of business is located; or
b. Its principal activity consists in the application/use of a particular skill peculiar to

the locality or of raw materials predominantly sourced from the area; or
c. Its business operations are confined within the territorial jurisdiction of the
municipality or LGU in which its principal place of business is located: Provided,
however, that the enterprise may establish warehouses, buying stations, sales
outlets, and booking or administrative offices anywhere in the Philippines, subject
to pertinent rules and registration requirements of the concerned LGUs and other
government agencies where such warehouses, outlets, stations or offices are
established.
Section 271. Meaning of Micro-Business in Nature and Scope – A business is

considered a micro-business in nature and scope if:
a. Its principal activity is primarily for livelihood or determined by the SMED

Council or DTI as a priority area for development or government assistance;
b. The enterprise is not a branch, subsidiary, division or office of a large enterprise;

and
c. Its policies and business modus operandi are not determined by a large scale
enterprise or by persons who are not owners or employees of the enterprise.
Section 272. Registration of BMBEs – The Office of the Treasurer of each City or
Municipality shall register BMBEs and issue a Certificate of Authority to enable the
BMBE to avail of incentives under this Act: Provided that only one Certificate of
Authority shall be issued for each BMBE and only by the Office of the Treasurer of the
City or Municipality that has jurisdiction over the principal place of business of the
BMBE. (Sec. 2, IRR, RA 9178)
Section 273. Exemption of BMBEs from Taxes and Fees – All BMBEs shall be
exempted from income tax for income arising from the operation of the enterprise.
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Interest, commissions and discounts derived from the loans by the Land Bank of the
Philippines, Development Bank of the Philippines, People’s Credit and Finance
Corporation and Small Business Guarantee and Finance Corporation granted to BMBEs
as well as loans extended by the GSIS and SSS to their respective member-employees
under the BMBE Act of 2002 shall be exempt from gross receipts tax (GRT)
(Sec. 9, IRR, RA 9178)
Section 274. Submission of Documents for Registration as BMBE – The application

for registration as BMBE shall be processed by the Office of the Treasurer upon
submission of all of the following documentary requirements:
a. For new applicant:
1) Application for Registration (BMBE Form 01);

2) Registration as a business entity or enterprise from the appropriate
government agency, such as the following:
a) SEC registration in the case of corporations, partnerships or
associations;
b) Cooperatives Development authority (CDA) in the case of
cooperatives;
c) Department of Trade and Industry (DTI) for registration of
business name in the case of sole proprietorship;
3). Tax Identification Number (TIN);

4). Certificate of Registration from the BIR;
5). Mayor’s Permit or City/Municipal Business Permit;
6). Sworn affidavit executed by the sole proprietor or the president of the
enterprise, as the case may be, that the enterprise is barangay-based
and micro-business in nature and scope;
7). Sworn Statement of Assets and Liabilities showing the value of the
assets owned and to be used in the conduct of business which shall be
supported by pertinent information such as the date of acquisition,
acquisition cost and depreciated value. In the case of assets acquired in
the year of registration, it shall be supported by either the invoice or
official receipt or the contract document or deed;
8). Pictures of the place of business and its assets, other than cash,
receivables and intangibles;
9). Copy of loan contracts, if any, and duly-notarized certification of
amortization payments on the loan;
10). Income Tax Return with proof that it has been filed with the BIR,
including attachments, if any (for existing business only).
b. For renewal of registration:
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1). Documents listed in a 1) to 9), inclusive; and
2). Annual Information return (for the year immediately preceding the
renewal of registration) duly filed with the BIR, together with
attachments.
Section 275. Verification of Qualifications – The City or Municipal Treasurer must

conduct a verification of the physical existence of the business and the true amount of its
assets. A sworn certification shall be executed by the Treasurer that such verification has
been conducted, and which shall form part of the records of the application for
registration.
Section 276. Issuance of the Certificate of Authority – After determining the

eligibility of the business enterprise, the Office of the City or Municipal Treasurer shall
register the business entity as a BMBE and issue a Certificate of Authority using BMBE
Form 02. The CA shall be effective for a period of two (2) years and renewable for a
period of two (2) years for every renewal. The Treasurer shall indicate in the CA the date
when the registration of the BME commences.
Section 277. Registration Fee – The Office of the Treasurer shall issue the Certificate
of Authority promptly and free of charge, unless a fee therefore, not exceeding One
Thousand Pesos (P1,000) is imposed by the LGU through a properly enacted ordinance.
Section 278. List of Registered BMBEs to be Furnished the BIR - The Office of the
City/ Municipal Treasurer shall furnish the Revenue District Officer of the BIR in the
locality concerned on a quarterly basis, the list of all registered BMBEs of good standing.
Said List of Registered BMBEs shall be one of the bases of the BIR in granting the
income tax exemption to the BMBE.
Section 279. Periodic Evaluation by the Local Treasurer – The Office of the
City/Municipal treasurer shall conduct an evaluation and verification of the BMBE’s
financial status, including the amount and condition of its assets within 30 days from the
close of the year after a BMBE’s initial registration, and within 30 days from the close of
each year thereafter. The Treasury officials conducting the verification must be
authorized in writing by the City/Municipal Treasurer. The written authority should
include the name of the official(s) who will conduct the verification, the address of the
place of business to be verified, and the duration of the written authority which should
not exceed a period of one week from its issuance.
Section 280. Cancellation of Registration – The Office of the City/Municipal
Treasurer shall cancel the registration of a BMBE under the following conditions:
a. When the BMBE transfers its place of business to another locality;

b. When the value of its total assets as determined pursuant to this Order exceeds
Three Million Pesos (P3,000,000);
c. When the BMBE voluntarily surrenders its Certificate of authority to the Office of
the City/Municipal Treasurer;
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d. In case of death of the registered individual owner of the BMBE, in the case of
a sole proprietorship;
e. In case of violation or non-compliance with the provisions of RA 9178 and the
IRR, and DOF Department Order 17-04;
f. In case of merger or consolidation with an entity which is not eligible to be a
BMBE;
g. In case of sale or transfer of the BMBE, if it is a sole proprietorship, without
prejudice to the transferee applying for registration should it be qualified under
the provisions hereof;
h. Submission of fake, false or falsified documents;
i. In case of retirement from business or cessation/suspension of operations for one
year; and
j. Making false or omitting required declarations or statements.
In cases under letters e, h and j as aforementioned, the City/Municipal Treasurer should

initiate the filing of appropriate criminal complaints before the Office of the Public
Prosecutor.
In a cancellation of registration, the BMBE shall surrender its Certificate of Authority to

the Treasurer. The Treasurer shall immediately notify the BIR of any cancellation of
registration of a BMBE.
Section 281. Exemption of BMBEs from Income Tax – All duly registered BMBEs
shall be exempt from income tax arising purely from their operations as such BMBE:
Provided that such exemption shall not apply to the following:
a. Interest, including those from any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust funds and similar
arrangements;
b. Royalties;
c. Prizes and other winnings;
d. Cash and/or property dividends;
e. Capital gains from the sale of shares of stock not traded through the stock
exchange;
f. Capital gains from the sale of shares of stock not traded through the stock
exchange;
g. The share of an individual in the net income after tax of a taxable partnership of
which he is a partner;
h. Income from the practice of profession received directly from the clients or from
the professional partnership of which the individual is a partner;
i. Compensation; and
j. All other forms of passive income and income from revenues not effectively
connected with or arising from operations of the BMBEs as such.
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Section 282. Determination of the Value of Assets of the BMBE for Income Tax
Exemption Purposes – For the purpose of exemption from income tax, the following
conditions shall be met:
a. The total assets of the BMBE, which shall not exceed Three Million Pesos
(P3,000,000), shall include all kinds of properties, both personal properties and
real properties (but excluding land on which the particular business entity’s office,
plant and equipment are situated) that are owned and used/to be used, or even if
not owned but used/to be used, by the BMBE and/or its affiliates for the conduct
of its/their business/es:
b. Provided, that the term “affiliate” shall refer to any person or business
enterprise/entity that, directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the BMBE
concerned.
Section 283. Procedures in the Availment of Tax Incentives – For purposes of

availing of the tax incentives, the BMBE shall register as such BMBE with the BIR RDO
where the principal office or place of business of the BMBE is located.
Its application for registration shall be supported by the following documents:
a. Copy of the BMBE’s Certificate of authority duly authenticated by the Office of

the City/Municipal Treasurer;
b. Sworn Statement of the values of the assets owned and/or used/to be used by the
BMBE and/or its affiliates reflecting the current values thereof. The sworn
statement shall be supported by the following:
1) Acquisition cost, date of acquisition and depreciated value for existing

assets;
2) Invoices and/or official receipts for newly-acquired assets not yet
depreciated;
3) Duly-notarized copy of the Contract of Lease for assets used in the
conduct of business covered by lease agreement; and
4) Copy of Loan Contract, if any, and duly-notarized certification of
amortization payments on the loan.
c. Certified list of branches, sales outlets, places of production, warehouse and

storage places, or such other facility owned and/or operated by the BMBE
indicating their respective addresses, whether located in the same municipality or
city where the principal place of business is located, or elsewhere;
d. Certified list of affiliates, indicating addresses, line of business and responsible

officers thereof;
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e. Latest audited financial statements, or account information form or its equivalent
containing data lifted from the audited financial statements.
Section 284. Filing of Annual Information Return – Every BMBE entitled to full
income tax exemption is required to file an Annual Information Return, together with an
Account Information Form, or its equivalent, containing data lifted from the audited
financial statements and a sworn statement of assets owned and/or used in the business.
Section 285. Where and When to File the Annual Information Return – Except in
cases where the BIR Commissioner otherwise permits, the return shall be filed with the
Revenue District Officer or the Revenue Collection Officer or the duly authorized
Treasurer of the city or municipality in which the BMBE has its principal place of
business. The return shall be filed on or before the fifteenth (15 th) day of the fourth
month following the close of the taxable year.
Section 286. Revocation of Income Tax Exemption Privilege –
a. The BIR shall revoke the income tax exemption privilege of a BMBE for any of
the causes set forth in Section 280 of this Manual on the cancellation of
registration of a BMBE.
b. The BIR shall notify the BMBE in writing of its findings and require the BMBE
to pay the corresponding income tax, without prejudice to the filing of
administrative or criminal complaints if warranted.
c. The BIR shall also notify the Office of the City/Municipal Treasurer concerned of
its action, whereupon the City/Municipal Treasurer shall make a determination
within fifteen (15) days from receipt of the BIR notice, whether or not the
BMBE’s Certificate of Registration issued by the treasurer must likewise be
cancelled.
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Chapter 5. CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Section 287. General Policy – 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.
An LGU may also avail of credit lines from government or private banks and lending
institutions for the purpose of stabilizing local finances.
Section 288. Credit 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;

b. Deferred payment and other credit schemes;
c. Loans, grants and subsidies to other LGUs;
d. Joint and several loans with other LGUs;
e. Loans from funds secured by National Government from foreign sources;
f. Bonds and other long-term securities;
g. Private sector financing, construction, maintenance operations, and management
of infrastructure projects under BOT arrangements;
h. Grants
Section 289. Definition of Terms:
a. Assignment – a transfer or making over to another of the whole of any property,

real or personal, in possession or in action, of any estate or right therein. It
includes transfers of all kinds of property (Higgins V. Morckton, 28 Cal. App. 2d
723, 83 P. 2d 516, 519), including negotiable instruments. (Black’s Law
Dictionary, 5th ed., (1979).
b. Bond – A certificate or evidence of a debt on which the issuing company or

governmental body promises to pay the bondholders a specified amount of
interest for a specified length of time, and to repay the loan on the expiration date.
In every case, a bond represents debt. (Philippine Law Dictionary, 3rd edition,
Federico B. Moreno).
c. Build-Operate-and Transfer (BOT) – Strictly construed, BOT is a contractual

arrangement under which the project proponent is authorized to finance,
construct, and subsequently operate and maintain an infrastructure facility.
However, the term is often also used to refer to other types of private participation
in the financing and management of public sector projects.
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Under BOT in its original sense, ownership of the facility is vested in the
project sponsor, but the project proponent operates the facility for a contractually
set fixed term during which it is allowed to charge facility users tolls, fees,
rentals, or other appropriate charges based on the approved contract. These
charges are the means by which the project proponent recovers its investments,
covers the costs of maintaining and operating the project, and realizes a
reasonable return. At the end of the contracted period, which by law should not
exceed 50 years, the project proponent transfers the facility to the sponsor agency
or LGU.
Also classified as BOT are supply-and-operate contracts under which the

government finds it in its interest to allow the supplier of equipment and
machinery for a given facility to operate these, provided that the process involves
technology transfer and training of Filipino nationals.
d. Other BOT 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, although they have some features that are different from those described in
Item c above, are the following
1) Build-and-Transfer (BT)
a) 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;
b) The LGU shall pay the proponent on an agreed schedule its
total investment plus a reasonable rate of return.
c) 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.
2) Build-Lease-and Transfer (BLT)
a) 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.
b) The terms and fixed period of the lease enable the proponent
to recover its investments and make a reasonable profit.
c) Title of the facility is transferred to the sponsor agency or
LGU at the end of the contracted lease period.
3) Build-Own-and-Operate (BOO)
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a) A contractual arrangement under which a project proponent
is authorized to finance, construct, own, operate and maintain
an infrastructure or development facility.
b) 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.
c) Under this scheme, the proponent, as project owner, may
assign its operation and maintenance to a facility operator.
4) Build-Transfer-and-Operate (BTO)
a) A contractual arrangement under which the sponsor
government agency or LGU contract a private entity to build
an infrastructure facility on a turn-key basis.
b) The contractor assumes cost overruns, delays, and specified
performance risks.
c) 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.
5) Contract-Add-and-Operate (CAO
a) 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.
b) Any transfer arrangement as regards the added facility
depends on the specific agreements and approved contractual
arrangements.
6) Rehabilitate-Operate-and-Transfer (ROT)
a) A contractual arrangement which an existing facility is

turned over to the private sector to refurbish, operate and
maintain for a franchise period, at the expiry of which it is
turned to the Government.
7) 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.
d. Collateral – property pledged as security for a debt. It is additional security for

performance of principal obligations.
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e. Construction – refers to new construction, rehabilitation, improvement,
expansion, alteration and related works and activities. The term includes the
necessary supply of services and labor, equipment, materials, and related items
needed to build or rehabilitate an infrastructure or development facility.
f. Credit Line – in banking and commerce, the amount of money or merchandise

which a banker or supplier agrees to supply to a person on credit, which is
generally agreed to in advance. Thus it also refers to the agreed limit of the money
which may be borrowed or of the value of merchandise that may be purchased on
credit. ( Philippine Law Dictionary, 3rd edition, Federico B. Moreno)
g. Deferred Payment – payments or principal or interest postponed to and

scheduled for a future time; installment payments
h. Development Programs – usually, the terms refers to the plans and programs
included in the Medium-Term Philippine Development Plan, the Regional
Development Plans and Local Development Plans. It may, however, also refer to
other plans and programs not included in these.
i. Investment – 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, Federico B. Moreno)
j. Loan – in reference to money, is a contract under which one of the parties

delivers to another a sum of money on the condition that the same amount shall be
paid. (Article 1933, Civil code). 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)
k. Mortgage – the conveyance of an estate or pledge of property as security for the

payment of money or the performance of some other act, and conditioned to
become void upon such payment or performance. (Real estate mortgage – refers
to mortgage on land or other real property. Chattel mortgage refers to mortgage
on personal property which is recorded in the chattel mortgage register)
l. Regular Income – comprises all recurring income from local sources or revenues
plus regular share of LGUs in the proceeds of national taxes.
m. Securities – evidences of debts or property, of obligations to pay money, or of

rights to participate in earnings and distribution of corporate, trust and other
property.
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n. Sinking Fund – assets and their earnings earmarked for the retirement of bonds
or other long-term obligations. Most commonly set aside from income of revenue-
earning property.
Section 290. Duties and Responsibilities of Local Treasurer – The Local Treasurer
has the following duties and responsibilities that relate to the LGUs powers 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 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 LGUs area of jurisdiction;
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 20% of its annual regular income for each
year until the loan is fully paid. (Sec. 324, 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. Upon authorization of the sanggunian concerned:
1) Establish a sinking fund for the repayment of bond issues or maintain

Trust Funds for the purpose;
2) Maintain special accounts in the general fund for loans, interest, bond
issues, receipts arising from BOT transactions, such as toll fees,
charges, and other mandatory contributions for specific purposes. (Sec.
313, LGC);
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;
4) If required, provide financial data about the LGU that may be needed
in relation to its availment of the funding sources and mechanisms
described in this Chapter.
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Section 291. Provisions for the Servicing of Contractual Obligations of LGUs:
a. Using of Portion of IRA Shares as Payment of Contractual Obligations – Any

LGU, through its LCE and upon authorization by the Sanggunian concerned, may
authorized the National Government to deduct or withhold a portion of its IRA
share for the payment of a contractual obligation, subject to the limitations
defined in Letter c hereof. (Article 401, Par. 2 IRR)
b. Mandatory Appropriations for Repayment of Loans – LGUs shall appropriate

in their respective annual budgets such amounts as are sufficient to pay loans and
other indebtedness incurred or redeem or retire bonds, debentures, securities,
notes and other contracted obligations as they become payable until the total
obligations shall have been paid in full. Failure to provide these required
transactions shall render their annual budgets inoperative. (Sec. 303, LGC)
c. Mandatory Requirements and Limitations on Debt Service – LGUs shall

make full provisions for all statutory and contractual obligations, provided that the
amount of appropriations for debt servicing shall not exceed twenty percent
(20%) of their regular income
d. Regular income shall refer to revenues and receipts realized by provinces, cities
and municipalities from regular sources of the local General Fund including the
internal revenue allotment and other shares provided for under the Code, but
exclusive of non-recurring receipts such as other national aids, grants, financial
assistance, loan proceeds, sale of fixed assets and other similar receipts.
(Art. 419(b), IRR)
Section 292. Enforceability of Loan Obligations Notwithstanding of the Expiration

of the Terms of the Elective Contracting Officials – Loan obligations contracted by the
LGUs will subsist and remain binding and enforceable notwithstanding the expiration of
the terms of the elective 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 of loan obligations binds the succeeding
Sanggunian for LGU which is separate and distinct from the personality of its officials.
(DOJ Opinion No. 160, series of 1994)
Section 293. 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;
305
2) Acquisition of real property;
3) Implementation of other capital investment projects, subject to such
terms and conditions as may be agreed upon by the LGU and the
lender
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;
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 under the foregoing paragraphs.
(Sec. 297, LGC)
Section 294. 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 auctions or negotiated sale, within five (5) years from their importations.
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 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;
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 Order No. 21.92)
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Section 295. 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;

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 LGU budget for the current year.
Section 296. Common Requirement for Credit Financing of Local Development

Projects – LGUs shall observe the following common requirements (Sec. 296 (a), LGC)
in the use of credit financing for their development projects:
a. Inclusion of the proposed project in the approved Local Development Plan

and the Local Development Investment Program;
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. Sworn Statement of the local Treasurer and Accountant as to the following

outstanding debts and obligations of the LGU, if any:
1) kinds of loans;
2) purpose of loans and other obligations;
3) lending agencies/institutions;
4) dates approved/granted and maturities;
5) terms and conditions;
6) annual amortizations (please segregate/specify principal and interest);
7) remaining balances (principal and interest)
 current
 arrears
8) assignments/collaterals
d. Current year budget together with the 20% development fund program;
e. Financial data on the LGUs financial and other operations, as well as the socio-
economic climate within its territory. The more common financial data are
shown in the next table. Other financial data are also contained in the
Statement of Receipts and Expenditures (SRE) shown in LTO Form 14 of the
Manual.
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TABLE ON LGU FINANCIAL DATA COMMONLY REQUIRED WHEN
AVAILING OF INDEBTEDNESS AND OTHER FINANCING
MECHANISMS
LGU INCOME Social Security /Social Services and
Welfare
Local Sources Economic Services
Tax Revenue Debt Servicing
Real Property Taxes Other Purposes
Business Taxes and Licenses Special Education Fund
Other Taxes Education, Culture and Sports/Manpower
Development
Non Tax Revenue 2.2 By Sector
Operations of Economic Enterprises - Economic Services
Regulatory Fees - Social Services
Service/users Charges - General Public Services
Other Receipts - Debt Burden
Shares from National Tax Collections/ 2.3 By object
Grants/Aids - Personnel Services (PS)
Internal Revenue Allotment (IRA) - Maintenance and Other Operating
Share in National Wealth Services (MOOE)
Share in tobacco Excise Tax - Capital Outlay
Grants - 20% Development Fund
Domestic - Other Capital Outlay
Foreign - Liabilities Being Serviced
National Aid
Loans, Borrowing, and Transfers 3.0 TAX BASE
Loans 3.1 Potential Collection
Transfers 3.2 Actual Collection
Inter-Local Transfers
LGU EXPENDITURES 4.0 VALUE ASSETS
4.1 Equipment
2.1 By Function 4.2 Buildings
- General public services 4.3 Land
- Education, culture and sports
- labor and employment 5.0 PROJECTIONS OF INCOME AND
- Housing and Community Development EXPENDITURES
6.0 ECONOMIC ENTERPRISES

6.1 Service/commodity
6.2 Capacity
6.3 Summary of Operations
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.
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Section 297. Acceptable Collateral – The most common securities or collaterals which
LGUs might offer for loans to satisfy the lending institutions requirements are any one of
a combination of the following:
a. Assignment of a portion of the share from the IRA of the LGU concerned.
Any LGU through the LCE and upon authorization by the local 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 Code.
The Resolution of Local 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 IRA shares shall be made.
b. Chattel mortgage of equipment financed by the loan;
c. Real estate mortgage or patrimonial property of the LGU;
d. Net profit from the project financed by the credit.
Section 298. 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 299. Other Requirement for Loans, Deferred Payments and Other
Financial Schemes – The officials of LGUs contracting loans and other forms of
indebtedness under the provisions of his 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 realized it;
b. The rules and regulations on property and supply management, which shall be
applied in the acquisition of equipment or machinery under the loans, deferred
payment and other financial schemes;
c. All applicable accounting and auditing policies and regulations;
Section 300. Inter-LGU Loans, Grants and Subsidies – Provinces, cities and
municipalities may, upon approval the of the majority of all members of the sanggunian
concerned and in amount 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, LGC)
309
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 Resolution
and/or Ordinances signed/approved by majority of all members of their
respective sanggunian, stipulating the terms and conditions that should 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;
5) automatic budget allocation of the necessary amount for repayment
c. Ratification of the loan contract by the Sanggunian of both parties, which is

needed for the loan agreement to become valid and enforceable.
d. Certification by the lending LGUs Treasurer, attested to by its Auditor, of the

accumulated surpluses eligible for lending, grants or subsidies.
Section 301. Joint and Several LGU Loan Arrangements- LGus may, upon approval
of their respective sanggunians, jointly or severally contract loans, credits, and other
forms of indebtedness for purposes mutually beneficial to them. (Sec. 300, LGC)
Section 302. Loans from Funds Secured by the National Government from Foreign
Sources – The President or his duly authorized representative may, through any
government financial or other lending institution, relend to any province, city,
municipality, or barangay, the proceeds of loans from foreign financial institutions or
other international funding agencies.
a. Guidelines:
1) The loans shall be used for the following purposes:
a) To finance the construction, installation, improvement,

expansion, operation or maintenance of public facilities,
infrastructure facilities, or housing projects;
b) To acquire real property; and
c) To implement 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.
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3) The President may likewise authorize the lending to LGUs of the
proceeds of grants secured from foreign sources, subject to the
provisions of existing laws and the applicable grant agreement.
4) The repayment or amortization of loans and their accrued interest may

be financed partly from the income of the project or services and from
the regular income of the LGU, which must be provided for and
appropriated regularly in its annual budget until the principal and
interest on the loan shall be been fully paid.
b. The Municipal Development Fund ((MDF) as Conduit – The Municipal

Development Fund (MDF), created under PD 1914, operates for the above
purposes with the DOF as administrator. Provinces, cities and municipalities
may tap the MDF for loans through agreements with the DOF setting the
terms and conditions of the loan. (Sec. 1, PD 1914)
The different MDFO new loan /grant financing packages that may be availed
by the LGUs are discussed in a separate manual on the Proposed New MDFO
Lending Programs and Products.
Section 303. Deferred Payments and Other Financial Schemes – Provinces, cities
and municipalities may acquire property, plant, machinery, equipment, and such
necessary accessories under a supplier’s credit, deferred payments plan, or other financial
schemes under the following conditions:
a. That the acquisition of such equipment, machinery, and their accessories shall
be governed by the pertinent provisions of the IRR to 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 sanggunian resolution, is authorized to negotiate the

contract executed under the deferred payment scheme.
Section 304. Bonds and Other Long Term Securities – Subject to the rules and
regulations of the Central Bank and the Securities and Exchange Commission, provinces,
cities and municipalities are authorized to issue bonds, debentures, securities, collaterals,
notes and other obligations to finance self-liquidating, 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 and required by Section 303 of the
LGC and the debt service limitations under Section 324(b) of the LGC and the
related provisions in Article 419(b) of the IRR.
311
The BLGF’s certifications as to the LGUs maximum borrowing or debt
service capacity is part of the documentation required for the issuance of local
government bonds. (Art. 18(f) of this Chapter)
b. Sanggunian Approval – The Sanggunian concerned shall, through an

ordinance approved by a majority of all its members, declare and state the
terms and conditions of the bonds and the purpose for which the proposed
indebtedness is to be incurred.
c. National Government Guarantee – In cases where the bond issue shall bear
the guarantee by a majority of the National Government, the approval of the
Secretary of Finance shall be required. (Art. 397, IRR).
d. LG Bond Issuances are Subject to BSP Rules and Regulations – Whenever

the LGUs contemplate borrowing within the Philippines, the prior opinion of
the Monetary Board shall be requested in order that the Board 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,
RA 7653-the BSP Chapter)
Moreover, relative to Section 299 of the LGC, the BSP has issued rules and
regulations under BSP Circular No. 41, dated August 29, 1994 for bond
issuances which do not require national government guarantee and BSP
Circular No. 44 for bond issuances which require full national government
guarantee.
e. LG Bonds are Exempt from SEC Registration Requirements – Local

government bonds are exempt from the SEC registration requirements.
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 LG Bonds – In addition to the

common requirements reflected in Article 14 of this Chapter, the following
documentary requirements specifically need to be complied with in the
issuance of local government bonds:
1) BLGF Certification as to the Debt Service Capacity of the LGU

concerned (BSP Letter, Nov 27, 2000);
2) DOF Certification as to the national government guarantee in case the

flotation requires national government guarantee. (BSP Circular No.
44);
312
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 authorizing the following:
a) Establishment of sinking fund for the payment of retiring or

maturing bonds;
b) Authorizing the Local Chief Executive to enter into
Agreement with the Financial Advisor/Trustee;
c) Certifying that the LGU will or will not seek any national
government guarantee for the bond’
5) Annual Audit Report for the immediate preceding year;
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 305. Private Sector Financing (under (BOT Arrangement) – LGUs may
avail of the several variations of BOT arrangements to finance, construct, maintain,
operate and manage infrastructure projects.
a. General Provisions:
1) Authorization – LGUs may enter into contracts with duly pre-

qualified individual contractors for the financing, construction,
operation, and maintenance of financially viable infrastructure
facilities, under build-operate-and-transfer agreements. The
arrangement shall be issued for its implementation, as well as other
terms and conditions provided in the LGC, particularly in Section 302
2) Inclusion in Development and Investment Plans – To avail of this

authority, the LGU concerned must identify in its local development
plan and public, investment program. The priority projects that may be
finance, constructed, operated and maintained by the private sector
under this Article.
3) 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 Article, including official notification of duly
registered contractors and publications in newspapers of general or
local circulation and in conspicuous and accessible public places.
Local projects under the build-operate-and-transfer agreement shall be
confirmed by the local development councils.
313
b. Terms and Conditions – Projects implemented under the provisions of
Section 302 of the LGC are 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.
2) Upon approval by the sanggunian of the project plans and

specifications, the LGUs engineer shall cause to be published once
every week for two consecutive weeks in at least one local newspaper
circulated in the region, province, city or municipality where the
projects is to be implemented, a notice inviting all duly qualified
contractors to participate in public bidding for the approved project.
The public bidding and award of contracts for LGU projects under this
Article shall be conducted in accordance with the LGC and other
applicable laws, rules and regulations.
a) In the case of a build-operate-and transfer agreement, the

contract shall be awarded to the lowest complying bidder
whose offer is deemed most advantageous to the local
government and based on the present value of its proposed
tolls, fees, rentals, and charges over a fixed term for the facility
to be constructed, operated, and maintained according to the
prescribed minimum design and performance standards, plans
and specifications. For this purpose, the winning contractor
shall be automatically granted by the LGU concerned the
franchise to operate and maintain the facility, and collect tolls,
fees, rentals, and charges, in accordance with the terms and
conditions stated in this provision.
b) In the case of a build-operate-and transfer agreement, the

contract shall be awarded to the lowest complying bidder based
on the present value of its proposed schedule of amortization
payments for the facility to be constructed according to the
prescribed minimum designs and performance standards, plans
and specifications.
3) Any contractor who shall undertake any project under this scheme
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.
314
4) The provincial, city, municipal engineer shall, as the case may be, not
allow any contractor to initiate projects under this Article unless such
contract presents proof or evidence that he has posted the required
bond.
5) The contractor shall be entitled to a reasonable return of its investment

in accordance with its bid proposals as accepted by the local
government unit concerned.
a) In the case of build-operate-and-transfer agreement, repayment

shall be made by authorizing the contractor to charge and
collect reasonable tolls, fees, rentals, charges for the use of the
project facility not exceeding those proposed in the bid and
incorporated in the contract. However, the following conditions
must be observed:
aa. The LGU shall approve the tolls, fees, rentals and
charges based on reasonableness and equity;
bb. 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;
cc. 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.
b) In the case of build-operate-and-transfer agreement, the

repayment shall be made through amortization payments in
accordance with the schedule proposed in the bid and
incorporated in the contract.
c) For 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.
6) Every infrastructure project undertaken under this Article 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.
315
7) The provincial, city, municipal legal officer concerned shall review the
contracts executed pursuant to this Article to determine their legality,
validity, enforceability and correctness of form.
c. BOT Project Formulation and Proponent Selection – The existing BOT

legal framework based on R.A. 7718 (BOT Law) recognizes two modes for
identifying projects and selecting proponents, which affect the processes
involved in the early phrases 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 306. Authority to Negotiate and Execute Grants – The LCE of an LGU may,
upon authority of the sanggunian, negotiate and secure financial grants or donations in
kind from local and foreign assistance agencies, in support of the basic services or
facilities enumerated under Section 17 of the LGC, without the need to secure clearance
or approval from any department. agency, or office of the National Government or from
any higher LGU. (Sec. 23 LGC)
a. Projects with National Security Implications – The only exception to the

LCEs authority to act without clearance is in the case of projects with national
security implications. Such projects shall first be approved by the national
agency concerned. However, if the national agency concerned fails to act on
the LGUs request for approval within 30 days from its receipt, the request
shall be deemed approved.
b. Required Report to Congress and the President – The LCE, within thirty
(30) day upon signing any such grant agreement or deed of donation, shall
report the nature amount, and terms of such assistance to both Houses of
Congress and the President. (Sec. 23, LGC)
c. Formal Procedural Requirements – In availing of the Official Development

Assistance (ODA) facilities, the LGU will need t consider that ODA donors as
a matter of procedure coordinate regularly with the NEDA, which in turn
coordinates local government matters with the DILG. For this reason, the
following formal procedures will need to be observed:
316
1) The LGU prepares the project proposal using the required NEDA
forms in consultation with the DILG and NEDA and with other NGAs
as appropriate;
2) The Local Development Council (LDC) evaluates the project proposal

for consistency with its Local Development Plan and the Annual
Investment Progra;.
3) Upon satisfactory evaluation of the proposal, the Local 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 30 days
inform the DILG and the LGU concerned of the result of the review.
As appropriate, the proposal may be approved, objected to due to
security implications, or referred back for revisions;
8) LGU coordinates directly with the ODA grant funding institutions in

monitoring the latter’s processing of the proposal and regularly
informs the DILG and the NEDA of the status of the proposal;
9) NEDA coordinates regularly with the ODA grand 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 307. Prohibited Acts. It shall be unlawful for any public official or employee
in the provincial, city, 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 this Chapter, or for the procurement of any
supplies, materials, or equipment of any kind to be used in the said project.
317
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 and Art. 402, IRR)
318
FISCAL ORGANIZATION OF LOCAL GOVERNMENT
AND THE LOCAL TREASURER
BOOK SIX
ANNEXES AND FORMS

LTO Annex 1
LAWS THAT HAVE HAD MAJOR INFLUENCE ON PRESENT FISCAL

ORGANIZATION IN THE PHILIPPINES
June 19, 1959 1. Secretary of Finance Reviews provincial

R.A. 2264 – “An act Amending the Laws and city budgets (Sec. 1, RA 2264).
Governing Local Governments by Increasing 2. Provincial Treasurer reviews Municipal
their Autonomy and Reorganizing Provincial District budgets (Sec. 1, RA 2264)
Governments” 3. Secretary of Finance reviews tax ordinances
and has the authority to suspend the
effectivity of the ordinance if in his opinion,
the tax or fee therein levied or imposed is
unjust, excessive, oppressive, or
confiscatory. (Sec. 2, RA 2264)
4. Appointments by Provincial Governors,
City Mayors and Municipal Mayors
become effective upon the issuance of such
appointments and attestations by the
provincial treasurers of provinces, in case
of appointments made by provincial and
municipal mayors, and by the city
treasurers in case of appointments made by
city mayors. Provincial treasurers and city
treasurers are deputized by the
Commissioner of Civil Service for the
purpose of attesting appointments made by
provincial governors, city mayors and
municipal mayors. (Sec. 8, RA 2264)
January 1, 1960 1. Ten percent of all real estate taxes collected
R.A. 2370 – “Barrio Charter” within the barrio 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. (Sec. 15, RA 2370)
2. The barrio council with the approval of a
two-thirds vote of the barrio assembly, xxx,
may raise, levy, collect and/or accept
monies and other contributions from the
following sources
 Voluntary contributions
annually from each male or
female resident twenty one years
of each or over
 Licenses on stores, signs,
signboards and billboards
displayed or maintained in any
place exposed to public view
319
except those displayed at the
place or places where profession
or business advertised thereby is
R.A. 2370 – “Barrio Charter” (cont.) in whole or in part conducted
 A tax on gamecocks owned by
residents of the barrio and on the
cockfights conducted therein.
Provided, that nothing herein
shall authorize the barrio council
to permit cockfights
 Monies, materials and voluntary
labor for specific public works
and cooperative enterprises of
the barrio raised from residents
landholders, produces and
merchants of the barrio
 Monies from grants-in-aids,
subsidies, contributions and
revenues made available to
barrios from municipal,
provincial or national funds
 Monies from private agencies
and individuals
 An additional percentage, not
exceeding one fourth of one
percent of the assessed valuation
of the property within the barrio,
collected by the municipal
treasurer along with the tax on
real property levied for
municipal purposes by the
municipality and deposited 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 cetrum of a
similar tax or fee levied,
assessed or imposed by the
municipal council. (Sec. 14, RA
2370
3. The Barrio treasurer collects all taxes
existing (except real property taxes), fees
and contributions due the barrio treasury for
which he shall issue official receipts. Xxx
(2nd par. Sec. 16, RA 2370)
September 12, 1967 1. Grants local governments greater freedom
R.A. 5185 – “Decentralization Act of 1967” and ampler means to respond to the needs
of their people and promote their prosperity
and happiness and to effect a more
equitable and systematic distribution of
governmental powers and resources. (Sec.
320
2, RA 5185)
2. Provincial treasurers are agent of the
Philippine National Bank (Sec. 11(I-d), RA
5185)
3. The allotment share of provinces and cities
is increased from ten to thirteen per centum
and the allotment share of municipalities is
increased from two to four per centum. The
basis of the allotment shall be the
collections during the preceding fiscal year,
to be distributed among the provinces,
cities, municipalities as follows: a) seventy
per centum on the basis of population as
shown by the latest official census, and b)
thirty per centum in proportion to the land
area. (Sec. 13, RA 5185)
June 28, 1973 The Secretary of Finance and the provincial
P.D. – “Local Tax code” (amended March 20, treasurer or the city treasurer are given
1974 by PD 426) authority to review tax ordinances and to
suspend the effectivity of any tax ordinances.
(provincial & city ordinances – Secretary of
Finance, municipal ordinances – provincial
treasurer, barrio ordinances – city treasurer.
(Sec. 44 of PD 231)
May 20, 1974 1. Code governing the appraisal and
P.D. 464 – “Real Property Tax Code” assessment of real property for purposes of
taxation by provinces, cities and
municipalities, as well as the levy,
collection and administration of the real
property tax. (Sec. 1, PD 464)
2. Provides for the levy, assessment and
collection in the provinces, cities, and
municipalities an annual ad valorem tax on
real property , such as land, buildings,
machinery and other improvements affixed
or attached to real property not specifically
exempted. (Sec. 38, PD 464)
3. Empowers provincial, city or municipal
boards or councils to fix uniform rate of
real property tax applicable to their
respective localities as follows
 In the case of the province, the
tax shall be fixed by ordinance
of the provincial board at the
rate of not less than one fourth
of one percent but not more than
one half of one percent of the
assessed value of real property
 In the case of a city, the tax shall
be fixed by ordinance of the
provincial board or city council
at the rate of not less than one
Cont May 20, 1974
321
P.D. 464 – “Real Property Tax Code” half of one percent but not more
than two percent of the assessed
value of real property. (Sec. 39,
PD 464)
4. Imposes annual tax of one percent on real
property that accrues to the Special
Education fund created under R.A. No.
5447, and is in addition to the basic real
property tax which local governments are
authorized to levy, assess and to collect
under this Code xxx (Sec. 41, PD 464)
5. Imposes an additional real property tax on
idle lands at the rate of five percent per
annum based on the assessed value of the
property as determined by the Provincial or
City Assessor of the Province or City where
the property is located, or by the Municipal
Assessor in the case of idle lands situated in
the municipalities of Metropolitan Manila.
(Sec. 42 (a), PD 464)
6. The provincial, city, municipal boards or
council may, by ordinance, provide for the
imposition and collection of a special levy
on the lands comprised within the province,
city or municipality xxx especially
benefited by the laying out, opening,
constructing, straightening, widening,
grading, paving, curbing, walling,
deepening,, or otherwise establishing,
repairing, enlarging,, or improving public
avenues, roads, streets, alleys, sidewalks,
parks, plazas, bridges, landing places,
wharves, piers, docks, levees, reservoirs,
waterworks, water courses, esteros, canals,
drains and sewers: xxx Within the meaning
of this Section, all lands comprised within
the district benefited, except lands exempt
from the real property tax under Section
forty hereof, shall be subject to the payment
of the special levy. (Sec. 47, PD 464)
7. The real property tax for any year shall
attach and become due and payable on the
first of January and from the same date said
tax and all penalties subsequently accruing
thereto shall constitute a lien upon the
property subject to such tax. Said lien shall
be superior to all other liens, mortgages, or
encumbrances of any kind whatsoever, shall
be enforceable against the property whether
in the possession of the delinquent or any
subsequent owner or possessor, and shall be
removable only by the payment of the
Cont May 20, 1974 delinquent taxes and penalties.
322
P.D. 464 – “Real Property Tax 8. The real property tax on properties actually,
directly and exclusively used for education
purposes as provided under Presidential
Decree No. 261 shall begin to accrue on
January 1, 1975. (Sec. 56, PD 464)
9. The collection of the real property tax and
all penalties accruing thereto, and the
enforcement of the remedies provided for in
this Code or any applicable laws, shall be
the responsibility of the treasurer of the
province, city or municipality where the
property is situated. (Sec. 57, PD 464)
10. The provincial or city assessor shall prepare
and submit to the treasurer of the province,
city or municipality, on or before the thirty-
first day of December of each year, an
assessment roll containing a list of all
persons to whom real properties have been
newly assessed or reassessed and the values
of such taxable properties. (Sec 58, PD 464)
11. The provincial or city treasurer shall, on or
before the thirty first of January each year,
cause notice of the periods during which
real property tax may be paid without
penalty.
12. The notices in their respective jurisdiction
shall be posted at the main entrance of the
provincial building or city hall of all
municipal buildings and in public
conspicuous place in each barrio, and
published in a newspaper and announced by
crier at least three times.
13. The form and detail shall be prescribed by
the Secretary of Finance: Provided,
however, that in lieu of or in addition to
such notice, the Secretary of Finance may
require notification in any province,
municipality , or city to be accomplished
through the mailing of individual tax bills
stating the amount of the annual tax due,
the quarterly installments, its due date, the
delinquency and the applicable penalty.
(Sec. 59, PD 464)
14. Real Property taxes may, in the discretion
of the taxpayer, be paid without penalty in
four installments, xxx except the special
levies authorized under Sections forty seven
and fifty five of this Code which shall be
governed by the local ordinance or
Department Order issued by the Secretary
of Finance, as the case may be.
15. Beginning with calendar year 1978 and
Cont May 20, 1974 thereafter, the President of the Philippines
323
P.D. 464 – “Real Property Tax may, at his discretion or upon
recommendation of the Secretary of
Finance, authorized the grant of discounts
on taxes due on real property at such rates
and for such periods as he may fix, if he
deems that the public interest so requires.
(Sec. 61, PD 464)
June 3, 1974 1. The provincial, city and municipal treasurer

P.D. 477 – “Decree on Local Fiscal shall be the chief financial officer of their
Administration” respective local governments and in such
capacity shall provide technical and staff
services to the chief executive and other
local officials in budget preparation,
authorization, execution and accountability
(Sec. 24, PD 477
2. Monies shall not be disbursed unless the
treasurer concerned certifies that
appropriations and funds are available for
the purpose. (Sec. 51, PD 477)
3. Checks in settlement of obligation shall be
drawn by the Provincial and City Treasurer,
as the case may be, and shall be
countersigned by the Provincial or City
Auditor. (Sec. 52, PD 477)
4. Provincial or City Treasurer shall be
appointed by the President of the
Philippines upon recommendation of the
Secretary of Finance. (Sec. 60, PD 477)
5. The provincial or city treasurer exercises
direct and immediate supervision,
administration and control over public
markets and the personnel thereof xxx. The
provincial treasurer shall exercise general
supervision over municipal public markets.
(Sec. 60 © of PD 477)
6. The Secretary of Finance reviews or city
budgets (Sec. 2, PD 477)
7. The Secretary of Finance reviews
provincial or city budgets (Sec. 29, PD 477)
8. The provincial treasurer reviews municipal
budgets. (Sec. 30, PD 477)
9. The Secretary of Finance may authorize
appropriations in excess of the percentage
(45% - 55%) which shall not be more than
25% of the maximum expendable amounts
nor shall such exemptions be granted in
case of overdrafts or imminence thereof.
(Sec. 28, PD 477)
August 2, 1974 The local treasurer shall prepare, for the

P.D. 526 – “Supply Management” approval of the local chief executive, an annual
August 2, 1974 procurement program for the ensuing fiscal
324
P.D. 526 – “Supply Management year. (Sec. 19, PD 526)
June 25, 1975 Loan applications of LGUs are submitted to the

P.D. 752 – “Credit Financing for Local Secretary of Finance for review and guarantee
Governments the loans.
November 7, 1975 1. Creates a public corporation, to be known
P.D. 827 – “Creating the Metropolitan Manila as the Metropolitan Manila, vested with
and the Metropolitan Manila Commission” powers and attributes of a corporation
including the power to make contracts, sue
and be sued, acquire, purchase, expropriate,
hold transfer and dispose of property and
such other powers as are necessary to
carryout its purposes. The corporation shall
be administered by a Commission created
under this Decree. (Sec. 1, PD 824)
2. The Commission is given jurisdiction over
the cities of Manila, Quezon, Pasay and
Caloocan and the municipalities of Makati,
Mandaluyong, San Juan, Las Pinas,
Malabon, Navotas, Pasig, Pateros,
Paranaque, Marikina, Muntinlupa and
TAguig in the province of Rizal, and the
municipality of Valenzuela, in the province
of Bulacan, all of which together shall
henceforth be known as Metropolitan
Manila
3. All the city or municipal treasurers of the
local government units placed under the
Commission shall close their respective
books of accounts for submittal to the
Commission not later than December 15,
1975. Thereafter, their functions and
responsibilities shall be performed or
discharged by the Commission for Finance.
(Sec. 11, PD 824)
April 12, 1976 1. Division of Metropolitan Manila into Local
P.D. 921 – “Providing for the Administration of Treasury and Assessment Districts
Local Financial Services in Metropolitan  First District – Manila
Manila, creating Local Treasury and  Second Distric – Quezon City,
Assessment Districts therein” Pasig, Marikina, Mandaluyong
and San Juan
 Third District – Caloocan City,
Novotas and Valenzuela
 Fourth District – Pasay City,
Makati, Paranaque, Muntinlupa,
Las Pinas, Pateros and Taguig
(Sec. 1, PD 921)
2. Under the general direction of the
Commissioner for Finance of the MMC, the
City Treasurers of the Treasury districts
shall exercise general supervision over the
April 12, 1976 local treasury offices of the municipalities
325
P.D. 921 – “Providing for the Administration of belonging to their respective districts. (Sec.
Local Financial Services in Metropolitan 2, PD 921)
Manila, creating Local Treasury and 3. The power to appoint the Municipal
Assessment Districts therein” Treasurers, Assistant Municipal Treasurer
of the municipalities within the MMA shall
be vested upon the Commissioner for
Finance upon recommendation of the City
Treasurer. (Sec. 3, PD 921)
4. The City Treasurers of MMA shall be
appointed by the President of the
Philippines upon recommendation of the
Secretary of Finance. (Sec. 5, PD 921)
May 16, 1978 The Budget Commission is made responsible
P.D. 1375 – “Transferring to the Budget for the review and evaluation on the annual
Commission the functions of Local principal and supplemental budgets and other
Government Budget Administration” financial statements covering all funds of local
governments, and the review and formulation
of recommendations on resolutions of local
legislative bodies involving appropriation of
local funds. These functions presently
performed by the DOF, are hereby transferred
to the Budget Commission. (Sec. 1, PD 1373)
February 10, 1983 1. The Sangguniang Panlalawigan reviews
Batas Pambansa 337 – “The Local Government municipal ordinances, resolutions and
Code” executive orders. (Sec. 153, BP 337)
2. The Municipal Treasurer is appointed by
the Minister of Finance upon
recommendation of the Municipal Mayor,
takes charges of the municipal treasury
office and acts as the chief financial officer
of the municipality.
3. The City Treasurer is appointed by the
President of the Philippines upon
recommendation of the Minister of Finance,
takes charges of the city treasury office and
acts as the chief financial officer of the city.
(Sec. 181, BP 337)
4. The Assistant City Treasurer is appointed
by the Ministry of Finance upon
recommendation of the City Mayor.
5. The Provincial Treasurer is appointed by
the President of the Philippines upon
recommendation of the Minister of Finance.
6. The Provincial Treasurer takes charge of
the disbursement and accounting of all
provincial funds and other funds the
custody of which may be entrusted to him
by law or other competent authority. (Sec.
212, BP 337)
7. The Assistant Provincial Treasurer is
appointed by the Minister of Finance upon
recommendation of the Provincial
Governor. (Sec. 213, BP 337)
326
January 9, 1990 1. The Metropolitan Authority is constituted
E.O. 392 – “Constituting the Metropolitan to cover the four (4) cities and thirteen (13)
Manila Authority” municipalities comprising the Metropolitan
Area.
2. The Authority is given jurisdiction over the
delivery of basic urban services requiring
coordination in the Metropolitan Manila.
Covered among the basic urban services are
land use, planning and zoning, traffic
management, public safety, urban
development and renewal, an management
control of operations during calamities and
emergencies affecting public welfare and
safety, and sanitation and waste
management. (Sec. 1, EO 392)
3. The authority is governed by the
Metropolitan Manila Council composed of
the Mayors of the four (4) cities and
thirteen (13) municipalities of Metropolitan
Manila. (Sec. 2, EO 392)
4. City and municipal treasurers of the local
government units comprising Metropolitan
Manila continue to collect all revenues and
receipts accruing to the Metropolitan
Manila Commission and remit the same to
the Authority. (Sec. 7, EO 392)
5. All city and municipal treasurers, municipal
assessors, their assistants, and all other
officials whose appointment was vested
upon the Metropolitan Manila Commission
shall be appointed by the President of the
Philippines, upon recommendation of the
Council, subject to the civil service law,
rules and regulations. (Sec. 8, EO 392)
January 1, 1992 1. Major powers, functions and services
R.A. 7160 – “The Local Government Code of therefore exercised by the national
1991” of “LGC” government are devolved to the LGUs.
(Sec. 17, LGC)
2. Provinces are given taxing powers. (Sec.
134, LGC)
3. Rates of levy are expanded and increased.
4. The LGUs sharing in the proceeds of real
property tax is increased.
5. IRA shares of LGUs are increased and the
formula for distribution to the LGUs
revised.
6. The power of review of local tax ordinances
by the Secretary of Finance are removed
and transferred to the Sangguniang
Panlalawigan.
7. The power to appoint local treasurers is
retained by the Secretary of Finance.
327
March 1, 1995 1. The affairs of Metropolitan Manila are to be
R.A. 7924 – “Creating the Metropolitan Manila administered by the Metropolitan Manila
Development Authority” or “MMDA” Development Authority (MMDA), which
replaces the Metro Manila Authority.
(MMA)
2. The MMDA continues to receive the
Internal Revenue Allotment (IRA)
previously allocated to the MMA (Sec.
10(b), RA 7924)
3. The MMDA is likewise empowered to levy
fines, and impose fees and charges for
various services rendered. (Sec. 10©, RA
7924)
4. Five percent of the total gross revenue of
the preceding year, net of the internal
revenue allotment, of each LGU covered
(per Section
328
LTO Annex 2
NOTES ON SUPREME COURT RULING ON SUBSTANTIVE REQUIREMENTS OF A

VALID ORDINANCE
In case of Magtajas Cagayan De oro vs. Pryce Properties Corp. & PAGCOR 234 SCRA
255, the Supreme Court ruled that an ordinance in order to be valid must conform to the following
substantive requirements.
1.It must not contravene the Constitution or any statute
LGUs not have the Inherent power to tax. The inherent power belongs to the State and is
merely a legislative. As such, tax ordinances must always yield to a legislative act which is
superior, having been enacted been enacted by the State (Bermas, The Revised Philippine
Constitution, Vol. 1 1983 ed. P. 445)
The sanggunian exercises only delegated legislative powers conferred on them by Congress
as the National lawmaking body. As mere agents, LGUs are vested with the power of
subordinate legislation. The delegate cannot be superior to not exercise powers higher than
those of the principal. Local government cannot undo acts of Congress from which they
derived their powers and negate by mere ordinance the mandate of the statute (Magtajas vs.
Pryce)
The constitution is a written instrument agreed upon by the people as the absolute rule of
action and decision for all departments and officers of the government and in the opposition
to which any act or rule of any department or officer of the government, or even of the
people themselves, will altogether be void (Cooley, Constitutional Limitation 3)
Underscoring supplied “It is, in other words the supreme written law of the land” (Bermas,
The 1987 Constitution of the Republic of the Philippines: A Commentary, 1996)
2.It must not be unfair or oppressive
A tax ordinance is fair when it is equitable. It is equitable when it is just, reasonable, and
proportionate to one’s ability to pay. The progressive system of taxation is one good
example of equitable taxation since the increases as the tax base increases. It is oppressive
when it is unreasonably burdensome, unjustly severe, or harsh.
3.It must not be partial or discriminatory
What is being espoused is uniformity of tax application. A tax uniform when it operates
with the same force and effect in every place where the subject of it is sound. The
uniformity rule requires merely a geographical and not intrinsic uniformity. A tax is not
unconstitutional simply because it is not intrinsically equal and uniform in its operation
upon individuals. In other words, the uniformity rule does not prohibit classification for
purposes of taxation (Bernas, The Constitution of the Republic of the Philippines: A
Commentary, 1988). However, the classification must be based upon real and substantial
differences between the persons, property or privileges and those not taxed must bear some
reasonable relation to the object or purpose of legislation or to some governmental policy of
legitimate end of governmental action (See Tomas P. Matic, Taxation in the Philippines,
Vol. 1 pp. 79-80).
In Pepsi Cola vs. Butuan, the Supreme Court ruled that classification is permitted if (1) the
standards used are not arbitrary but reasonable and substantial (2) the classification is
329
germane to achieve the purpose of the legislation, (3) the classification present and future
conditions, other circumstances being equal, and (4) the classification applies equally to all
those belonging to one class;
4.It must not prohibit but only regulate trade
A provision under Section 133 (e) of the LGC prohibits LGUs from imposing taxes on
goods carried in or out of the municipalities. The rationale is to allow the free flow of
commerce in the country and thus, avoid causing an increase in the prices of commodities
to the of the consuming public (DOF Provincial Circular, Unnumbered, dated 4-17-47 cited
in Ursal, Philippine Law on Taxation, 2000 Ed.)
 In the case of Wise & Co. vs. City of Manila, G.R. No. L9957, April 25, 1958, the
Court declared as invalid a tax ordinance requiring the inspection of, and charging of
a fee therefore, meat coming from outside city limits.
 In Saldana vs. City of Iloilo, G.R. No. L-10470, September 27, 1957, the Court
declared as a forbidden export tax an inspection fee on every hog, cattle and carabao
transported to other places
 The DOF likewise had directed municipal treasurers of Palawan to desist from
charging outgoing fee n the transport of rice and corn from one municipality to
another, (DOF, 3rd Indorsement dated July 7, 1987 to the Provincial Treasurer of
Palawan)
5.It must be generally consistent with public policy
Public policy is defined in Black’s Law Dictionary as “that principle of the law which holds
that no subject can lawfully do that which has a tendency to be injurious or against the
public good.” The term “policy” in turn is defined as “the general principles by which
government is guided in the management of public affairs, or the legislature, in its
measures”.
Thus, since the local councils exercise only delegated legislative powers conferred on them
by Congress as the national lawmaking body, the ordinances they enact must be consistent
with the policies declared by Congress through the measures it enacted, as well as be
reconciled with the national government’s policies manifested through executive orders and
other administrative issuances.
6.It must not be unreasonable
A tax is said to be unreasonable when it is unjust, excessive, oppressive or confiscatory. It is

 Unjust when it is deficient in justice and fairness
 Excessive when it is characterized by whatever is notably higher than what is,
reasonable, proper, usual, necessary and equitable
 Oppressive when is unreasonably burdensome, unjustly severe, or harsh, and
 Confiscatory when it amounts to undue seizure or forfeiture of private property in
favor of the public treasury (Section 3, P.D. 231)
The question of reasonableness of tax rates is open to judicial inquiry, but, much is left to
the discretion of the municipal authorities in setting the tax rates. Courts in fact go slow in
writing off an ordinance as unreasonable unless the amount is so excessive as to be
prohibitive. As a rule, Courts consider the municipal conditions as a whole and the nature of
business made subject to the imposition as factors in determining the reasonableness of tax
330
rates (Victorias Milling Co. Inc. vs. Municipality of Victorias, G.R. No. L-21183,
September 27, 1969)
A tax ordinance, however, does not become oppressive simply because it carries a penal
clause imposing a fine or imprisonment, neither does it become unconstitutional because it
subjects the taxpayers to criminal prosecution for non-payment (Villanueva vs. City of
Iloilo, G.R. No. L-262521, December 28, 1968).
331
LTO Annex 3
LOCAL REVENUE TOOL KIT FOR PHILIPPINE LGUs
The 1992 LGC provides LGUs with powerful resource mobilization tools that can be grouped
into five distinct classes of potential revenue sources. These are:
I. Land-based Tools;
II. Community Activity-based Tools;
III. Infrastructure-based Tools;
IV. Debt-based Tools; and
V. Revenue sharing Tools.
Most of these tools are being effectively used by rapidly growing LGUs in the Philippines,
Thailand and Indonesia.
Under the 1992 LGC, the province, as a political and corporate unit of government serves as a
dynamic mechanism for the “effective governance” and development of component cities and
municipalities within its territorial jurisdiction.
I. Land-Based Tools
These are potential revenue sources that rely on the real property (land and
improvements) resources of LGUs.
A. Basic Real Property Tax (Sec. 232). This is a yearly ad valorem tax on real
property such as land, building, machinery, and other improvements. The
maximum tax is 2% of the assessed value which is a percentage of the fair market
value of real property. The LGC prescribes the graduated schedule of assessment
for agricultural, residential, and other real property classification. LGUs are
required to prepare and update every three years a schedule of fair market values
for all classes of real property.
B. Special Education Fund – SEF Real Property Tax (Sec. 235). This is an
additional yearly ad valorem tax on real property. The amount of tax is 1% of the
assessed value of real property and is collected together with the basic real
property tax.
C. Land Transfer Tax (Sec. 135). This tax is imposed on any mode of transferring
title of ownership of real property from one person to another, such as through
sale, barter or donation. The amount of tax is 75% of 1% of the total consideration
or fair market value, whichever is higher, and is payable within 60 days from the
execution of the deed. Sale or transfer under the Comprehensive Agrarian Reform
Program is exempt from this tax. (Applicable only to cities and provinces).
D. Idle Land Tax (Sec. 236). This is a yearly ad valorem tax on idle land and is in
addition to the basic real property tax and SEF. The maximum amount of tax is
5% of the assessed value of property. Idle lands include agricultural lands more
than one hectare in area, one half of which remains uncultivated or unimproved;
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 municipalities)
332
E. Public Land Use Tax (Sec. 235a). 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). Local taxes,
fees and charges constitute a lien on real properties owned by a taxpayer. An LGU
may foreclose on the properties of delinquent taxpayers and sell these properties
through public auction. In the absence of bidders, or if the bids are not enough to
pay the tax obligation, including interests and penalties, the LGU treasurer will
purchase the property for the LGU.
G. Land Investment. An LGU may acquire and develop land using its ordinary
corporate powers (Sec. 18), though purchase of foreclosed real properties (Sec.
263) or through joint ventures (Sec. 302) with the private sector, or through build-
operate and transfer scheme (BOT). Such investment in land development
provides direct revenues to the LGU in terms of profits upon disposition and also
in terms of enhanced property value and higher property tax base.
H. Land Reclassification (Sec. 20). An LGU may reclassify at most 15% (for highly
urbanized and independent component cities), 10% for component cities and first
to third class municipalities, 5% for fourth to sixth class municipalities of existing
agricultural lands for other uses which are deemed to have greater economic value.
I. Land Development Permit Fee (557 and 558). The regulation of land
development and subdivisions is one of the devolved functions to LGUs. In the
exercise of the functions, LGUs may impose development permit fees, to cover the
cost service in the process of issuance of a permit. Alternatively, LGUs may base
the development permit fee on the financial impact or economic benefits to be
derived from such a permit.
J. Tax on Sand, Gravel and other Quarry Resources (Sec. 138). This is an ad
valorem tax on ordinary stones, sand, gravel, earth and other quarry resources
extracted from public lands or from beds of seas, lakes, rivers, streams, creeks, and
other public waters within an LGU’s territorial jurisdiction. The tax should be no
more than 10% of the fair market value in the locality per cubic meter. (Applicable
only to cities and provinces)
II. Community Activity-Based Tools
These are potential revenue sources that rely on the flow of economic activity within the
territorial jurisdiction of an LGU.
A. Business Tax (Sec. 143). Description: This is a tax imposed on various

categories of business operations (manufacturer, retailer, exporter, service, etc.).
The tax follows a graduated schedule based on sales or receipts of the preceding
year. The LGC prescribes the graduated schedule of tax rates for the categories of
business. (Applicable only to cities and municipalities)
B. Community Tax (Sec. 156). This is a yearly tax on individuals and juridical
persons. An individual who is at least 18 years old and is gainfully employed or
is engaged in business or occupation or owns real property with assessed value of
at least Php 1,000, pays the community tax to the LGU where he resides. The
333
amount of tax is Php 5 plus Php 1 for every Php 1,000 of income from all sources,
but not exceeding Php 5,000. In the case of husband and wife, the additional tax
is based on their total combined properties and gross income. (Applicable only to
cities and municipalities)
C. Franchise Tax (Sec. 137). This is a yearly tax imposed on a business enjoying a
franchise within the territorial jurisdiction of the LGU. The amount of tax is 75%
of 1% of gross receipts realized within the territorial jurisdiction of the LGU
during the preceding calendar year, payable within the first 20 days of January
and quarterly thereafter. For a newly started business, the amount of tax is 1/20
of 1% of capital investment. (Applicable only to cities and provinces)
D. Tax on Business of Printing and Publication (Sec. 136). This is a yearly tax on
the business of persons engaged in the printing and/or publication of books, cards,
posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar
nature. The amount of tax is 50% of 1% of the gross annual receipts of the
preceding calendar year. For a newly started business, the amount of tax is 1/20
of 1% of capital investment. (Applicable only to cities and provinces)
E. Professional Tax (Sec. 139). This tax is imposed on the practice of a profession
requiring government examination. The tax is for every profession practiced, i.e.,
a CPA-lawyer who practices both professions must pay for two professions.
Professionals working exclusively for the government are exempt. The amount of
tax is Php 300 per year and may be paid to the LGU where the professional
resides. (Applicable only to cities and provinces)
F. Amusement Tax (Sec. 140). This is a percentage tax on gross receipts from
admissions of amusement places such as movie houses, clubs and other places of
entertainment. The amount of tax should not exceed 30% of gross receipts. The
time, manner, terms and conditions for payment are to be prescribed by
ordinance. (Applicable only to cities and provinces)
G. Annual Fixed Tax on Delivery Trucks or Vans (Sec. 141). This is an annual
fixed tax for every truck, van or any vehicle used by manufacturers, producers,
wholesalers, dealers or retailers in the delivery or distribution of products as may
be determined by the local legislative council to sales outlets or consumers
whether directly or indirectly within the LGU’s jurisdiction in an amount not
exceeding Php 500. (Applicable only to cities and provinces)
H. Fees and Charges (Sec. 147). Municipalities and cities may impose such
reasonable fees and charges on business and occupation except those reserved to
the province under Sec. 139 commensurate with the cost of regulation, inspection
and licensing.
I. Fees for Sealing and Licensing of Weights and Measures (Sec. 148). The local
legislative council may impose may levy reasonable fees for the sealing and
licensing of weights and measures. (Applicable only to cities and municipalities)
J. Fishery Rentals, Fees and Charges (Sec. 149). The local legislative council may
grant fishery privileges within its territorial waters and impose rentals, fees or
charges. (Applicable only to cities and municipalities)
K Service Fees and Charges (Sec. 153). LGUs may impose and collect such
reasonable fees and charges for services rendered.
334
III. Infrastructure-Based Tools
These are potential revenue sources that are based on the “user” or “beneficiary”-pay
principle that is people or entities like corporations should pay for the use of or benefits
derivable from public infrastructure.
These tools are primarily cost recovery mechanisms for infrastructure projects. However,
they can be converted to loan equivalents for purposes of raising credit finance for
infrastructure projects.
A. Special Levy (Sec 250). This is a tax imposed on lands specially benefited by
public works projects which are funded by the local government. Public works
projects which provide benefits to adjacent lands are roads, drainage, power
transmission lines, water distribution lines, telecommunication lines. Benefits
include appreciation in value, increased economic/commercial activities, reduced
maintenance costs of property improvements, etc. The maximum amount of tax to
be generated from a special levy is 60% of the actual project costs, which include
cost of land and other real properties acquired in connection with the project. The
tax liability is allocated among the real properties affected by the project in
proportion to the benefits to be derived. The tax may be paid in yearly installment
over at least 5 years but not more than 10 years.
B. Toll Fees or Charges (Sec. 155). The local legislative body may prescribe the
terms and conditions and fix the rate of toll fees or charges for the use of any
public road, pier, waterway, bridge, ferry, including telecommunication systems
funded and constructed by the local government unit. Toll fees should be
commensurate with the economic benefits derived by users of the facilities.
C. Public Utility Charges (Sec. 155). LGUs may fix the rates for the operation of
public utilities owned, operated and maintained by them within their jurisdiction.
IV. Debt-Based Tools
These are tools that allow LGUs to secure debt finance for so-called “income-generating
projects” and to make investments in financial debt instruments like securities – Treasury
bills, commercial papers, and shares of stocks.
A. Debt Financing (Sec. 297-302). LGUs may borrow money directly from the
financial/banking system- commercial or government - or other sources or through
the flotation of bonds in the financial markets to fund development projects. A
LGU may use its real property as collateral for such loans. In addition to loans,
credits, deferred payment schemes, bond and security issues, and other forms of
indebtedness, cities are now allowed to enter into BOT agreements with the private
sector.
B. Financial Investment (Sec 18). LGUs may invest in public or private financial
instruments. Excess 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 1992 LGC.
335
A. Share in Mining, Fishery, and Forestry Taxes (Sec. 290). In addition to its IRA,
LGUs shall have a 50% 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 Government-Owned and Controlled

Corporations (Sec. 291). LGUs may share in the gross sales or taxes of a
government-owned and controlled corporation (GOCC), if it is engaged in the
development and exploitation of natural resources located in a LGU.
1. Eighty percent, however, of the proceeds derived from the development

and utilization of hydropower, geothermal, and other sources of energy
shall be applied solely to lower the cost of electricity in the LGU where
such energy sources are located.
2. The share of the LGU is 1% of the gross sales of the preceding year or 50%
of the mining taxes, royalties, forestry and fishery charges, and such other
taxes, fees and charges, including related surcharges, interests, or fines the
government agency or GOCC would have paid if it were not exempt.
C. Congressional funds. Members of the House of Representatives as well as

members of the Senate are allocated funds that they may allocate for development
projects within their respective districts or in the case of the Senators, in any
location within the country that they may so choose. Congressional funds have
both “hard” and “soft” components. The infrastructure funds are for identified
hard capital projects such as roads, bridges, schools, hospitals, etc. while the
Priority Development Assistance Funds (PDAF) are for soft type projects such as
medical expenses of indigent patients or for scholarship funds.
Table G.1. Probable Infrastructure Financing Options for Philippine LGUs
Over the Next 3 Years Next 6 Years Over 6 Years

Regular Tax Sources Concessions Additional National
(Property and Business Taxes) Revenue Sharing
Conveyance of Development Special Assessments Other Special Taxes and
Rights Charges like congestion
charges, higher vehicle
ownership fees
Debt Instruments including Development Impact
Bonds Fees
Tax Incentives and Land Readjustment
Government Guarantees
User Fees and Charges
Source: Annex G of N. R. Ramos, Investment Programming and Revenue Generation Guidelines,

ADB, 2007
336
LTO Annex 4
PROCESS FLOW IN THE RECEIPT AND COLLECTION OF REAL PROPERTY TAX
Sequence Process Person/Unit Responsible

No.
1 Receives payment from taxpayer and verifies Collector/Teller/Deputized

correctness of amount by checking against the ff. Barangay Treasurer (BT)
documents presented by the taxpayer:
- RPT Order of Payment (RPTOP)

- OR issued for last payment of RPT
- Tax Roll from Municipal Assessor
- Latest tax declaration
2 Checks computation of tax amount as to discounts Collector/Teller/Deputized

and penalties. Issues official receipt or Real Property Barangay Treasurer
Tax Receipt (RPTR) to the taxpayer for the payment.
Note: ORs/RPTARs are prepared in 3 copies:

Original to taxpayer, duplicate to be attached to the
RCD, and triplicate for file to be posted to the
individual taxpayer’s Real Property Tax Register
(RPTAR)..
3 After designated cut-off time, prepares the Report of Collector/Teller

Collections and Deposits (RCD) in 5 copies to be
distributed as follows:
Original – Accounting Unit

2nd copy – Treasurer/Cashier
3rd copy – Liquidating Officer
4th copy – Local Internal Control Officer
5th copy – Collector/Teller’s file
Note 1: Individual collectors/tellers shall indicate in

the RCD the sharing of the RPT collections: Basic
Tax, SEF, Provincial Share, LGU Share and
Barangay Share.
Note 2: Turns over to LO or Cashier for safekeeping

all collections after cut-off time and after
preparation of the RCD, supported by a list of
denominations
4 Prepares the Summary of Collections and Deputized Barangay

Remittances (SCR) in 3 copies to be distributed as Treasurer
follows:
Original - City/Municipal Treasurer/Cashier
Duplicate – Barangay Record Keeper (BRK)
Triplicate - File of BT
337
5 Turns over intact all collections to the Liquidating Collector/Teller
Officer (LO) supported by the RCD (all copies) and
duplicate ORs.
6 Turns over intact all RPT collections to the Deputized Barangay

City/Municipal Treasurer supported by the 1 st and Treasurer
2nd copies of the SCR and duplicate ORs/RPTRs.
7 Posts total RPT collections and amounts remitted to Collector/Teller/Deputized

the LO/City/Municipal Treasurer to Cashbook. Barangay Treasurer
8 Gives triplicate copy of ORs/RPTRs to Subsidiary Collector/Teller/Deputized

Clerk for posting of payments to individual Barangay Treasurer
taxpayer’s Real Property Tax Register (RPTAR).
9 Receives remittances and supporting documents Liquidating Officer

from collector/teller. Checks remittances against
duplicate ORs and RCDs. Checks RCD for
correctness of computations and distribution of RPT
collections.
10 Acknowledges remittances of RPT collections by Liquidating Officer

signing the Verification and Acknowledgment
portion in all copies of RCDs of collectors/tellers.
Verifies accountable forms (ORs/RPTRs) used by
collectors/tellers by affixing his signature at the back
of the 3rd copy of the last OR issued by the
collectors/tellers. Returns one copy of signed RCD to
Collector/Teller.
11 Receives for safekeeping RPT collections by Liquidating Officer

collectors/tellers beyond cut-off time, either places
them in his own safe or turns them over to the
Treasurer/Cashier for safekeeping. Issues an
acknowledgment slip for amounts received.
12 Based on RCDs of collectors/tellers, prepares RCD Liquidating Officer

in 4 copies to summarize all collections and reports
turned over by collectors/tellers, including his own
collections, if any.
13 Turns over intact all collections remitted by Liquidating Officer

collectors/tellers and his own collections, if any, to
the Treasurer/Cashier supported with the following:
- All copies of RCDs of Liquidating Officers

- Duplicate ORs
- Original and 2 copies of RCDs of
collectors/tellers
14 Posts amount of collections remitted to the Liquidating Officer

Treasurer/Cashier in his Cashbook.
338
15 Receives RPT collections and supporting documents Treasurer/Cashier
from the LO(s). Test-checks accuracy and
completeness of remittances by comparing the RCD-
16 LO to the RCDs of collectors/tellers and duplicate
ORs. To insure that all collections and RCDs
submitted by collectors/tellers are included in the
RCD-LO, regularly confirms remittances directly
from the collectors/tellers.
17 Receives RPT collections and supporting documents Treasurer/Cashier

from the Deputized Barangay Treasurer(s).
Examines the SCR as to completeness of supporting
documents and correctness of recording of the
ORs/RPTRs.
18 Acknowledges remittance of collections from LOs Treasurer/Cashier

by signing the Verification and Acknowledgment
portion in all copies of the RCD-LO. Returns one
signed copy of RCD to Liquidating Officer.
19 Acknowledges remittance of collections from Treasurer/Cashier

Deputized BT by signing the Verification and
Acknowledgment portion of the SCR. Verifies the
accountable forms (ORs/RPTRs) used by the
Deputized BT by affixing his signature at the back of
the 3rd copy of the last OR/RPTR issued. Returns 2nd
and 3rd copies of the SCR to the Deputized BT.
20 Posts amounts remitted by LO(s) and Deputized Treasurer/Cashier

BT(s) to the Treasurer’s Cashbook-Cash in Treasury.
21 After the day’s cut-off time or the next banking day, Treasurer/Cashier
prepares deposit slip in 3 copies and deposits intact
collections to the LGU’s depository bank. The
deposit slip shall be distributed as follows:
Original – Depository Bank
Duplicate – to be attached to the Report of
Collections and Deposits
Triplicate – Treasurer/Cashier file
22 Obtain validated deposit slip from the LGU’s Treasurer/Cashier

depository bank.
23 Based on the bank-validated deposit slip, posts Treasurer/Cashier

amounts deposited in the Treasurer’s Cashbook-Cash
in Treasury and Cashbook – Cash in Bank.
24 Based on the RCD-LOs and SCRs, prepares the Treasurer/Cashier

Report of Collections and Deposits in 3 copies to
consolidate all remittances of LOs and Deputized
BTs as basis in the recording of total RPT collections
by the Accounting Unit.
339
25 Submits 2 copies of the Report of Collections and Treasurer/Cashier
Deposits to the Accounting Unit supported by the
following:
- Duplicate ORs
- Bank-validated Deposit Slip
- RCD of Liquidating Officer (s)
- RCD of Collectors/Tellers
- SCR of Deputized Barangay Treasurer
26 At the end of each quarter, prepares the Quarterly Treasurer/Cashier

Report of Real Property Tax Collections for
submission to the BLGF Regional Office.
340
LTO Form 5
CASHBOOK
LGU
Fund: _______________
CASH IN TREASURY
Date Particulars Reference Debit Credit Balance
341
CASH BOOK
(Cash in Treasury)
INSTRUCTIONS
A. This form shall be accomplished as follows:
1. LGU – name of the province/city/municipality

2. Fund – fund name/code
3. Date – date of the source documents
4. Particulars – details or nature of transactions
5. Reference – the number of Report of Collections and Deposits
6. Debit – the amount of collections based on RCD
7. Credit – the amount deposited with the banks based on the RCD’s attached deposit slips
8. Balance – the difference between the Debit and Credit columns which shall be equal to
the amount of cash in the hands of the Treasurer.
B. The Treasurer shall maintain this record to monitor the cash in treasury balance as of
specific 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.
342
LTO Form 6
CASHBOOK
LGU
Bank Account No.: Fund: _______________
CASH IN BANK
343
CASH BOOK
(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.
E. The Treasurer shall maintain this record to monitor the cash in bank balance as of specific
date. All transactions for the day shall be recorded immediately.
F. At the end of each day, the debit and credit shall be ruled and closed. All totals shall be
G. The difference of the totals of Debit and Credit columns should tie-up with the running
balance column.
344
LTO Form 7
CASHBOOK
LGU
Disbursing Officer: Fund: _______________
CASH ADVANCES
345
CASH BOOK
(Cash Advances)
INSTRUCTIONS

2. Disbursing Office – 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 column which shall be
equal to the amount of cash in hand of Disbursing Officers.
B. The Treasurer shall maintain this record to monitor the cash advances balance as of specific
date. All transactions for the day shall be recorded immediately.
C. At the end of each day, the debit and credit shall be ruled and closed. All totals shall be
D. The difference of the totals of Debit and Credit columns should tie-up with the running
balance column.
346
LTO Form 8
CASHBOOK LIQUIDATING OFFICER

_________________________________________
LGU
Liquidating Officer:____________________________ Fund:_______________________
Collections Unremitted
Collections
Remitted to Collections
Date Particulars Reference Received
Cashier/Treasurer (Balance on
(DR)
(CR) Hand
347
CASHBOOK – LIQUIDATING OFFICER
INSTRUCTIONS

2. Liquidating Officer – name of the designated liquidating officer
6. Debit – collections remitted by the tellers and market/field collectors and base on RCD.
7. Credit – amounts remitted or turn-over to the treasurer/cashier supported by RCDs and
duplicate Ors of tellers/collector
8. Balance - the difference between the Debit and Credit column which shall be
equal to the amount of cash on hand not yet turned over to the treasurer/cashier.
348
LTO Form 9
CASHBOOK-TELLER/COLLECTOR
_________________________________________
LGU
Liquidating Officer:____________________________ Fund:_______________________
Collections Unremitted
Collections
Remitted to Collections
Date Particulars Reference Received
Liquidating Officer (Balance on
(DR)
(CR) Hand
349
CASH BOOK – TELLER/COLLECTOR
INSTRUCTIONS

2. Teller/Collector – name of the designated teller/collector
6. Debit – collections received by individual tellers and market/field collectors and base on
individual RCDs.
7. Credit – collections remitted to the designated liquidating officers supported by ORs/Cash
tickets
8. Balance - the difference between the Debit and Credit column which shall be
equal to the amount of cash on hand not yet remitted to the designated liquidating
officer.
350
LTO Form 10
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS

LGU
Month of ____________________ 20 _____
Accountable Officer: Designation: _______________________ Report No.:
Beginning Balance Receipt Issued Ending Balance

Name of Form & No. Inclusive Serial Nos Inclusive Serial Nos
Qty.
Inclusive Serial Nos
Qty.
Inclusive Serial Nos.
Qty. Qty.
From To From To From To From To
CERTIFICATION:
I hereby certify that the foregoing is a true statement of all accountable forms received, issued and transferred by me
during the period above-stated and the correctness of the beginning balances.
Name and Signature of the Accountable Officer Date
351
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 month.
Indicate inclusive serial number.
10. Ending Balance – remaining units of the accountable forms still in the custody of
the accountable officers at the end of the month. Indicate inclusive serial number.
B. The report shall be prepared in two copies and to be distributed as follows:
Original - Treasurer
2nd copy - Accountable Officer’s file
C. Treasurers, collectors/tellers and other accountable officers shall render this report of
accountability for accountable forms at the end of each month for consolidation by the local
treasurer.
D. The report shall be certified correct by the Treasurer/Accountable Officers.
352
LTO Form 11
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS
LGU
Month of ____________________ 20 _____
Treasurer: Designation: _______________________ Report No.:

Name of Form AF Inclusive Serial Nos Inclusive Serial Nos Inclusive Serial Nos Inclusive Serial Nos.
Qty. Qty. Qty. Qty.
No. From To From To From To From To
Certified Correct:
Treasurer Date
353
(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 month.
Indicate inclusive serial numbers.
9. Issued – number of units issued by the accountable officers during the month.
Indicate inclusive serial number.
10. Ending Balance – remaining units of the accountable forms still in the custody of
the accountable officers at the end of the month. Indicate inclusive serial number.
B. The report shall be prepared in two copies and to be distributed as follows:
Original – COA through the Accounting Office

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
354
LTO Form 12
Page 1 of 2
REPORT OF COLLECTIONS AND DEPOSITS

LGU
Fund: Date:
Name of Accountable Officer: Report No.:
A. COLLECTIONS
1. For Collectors
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
355
page 2 of 2
C. ACCOUNTABILITY FOR ACCOUNTABLE FORMS

Name of Form & No. Inclusive Serial Nos Inclusive Serial Nos Inclusive Serial Nos Inclusive Serial Nos.
Qty. Qty. Qty. Qty.
From To From To From To From To
D. SUMMARY OF COLLECTIONS AND REMITTANCES / DEPOSITS
List of Checks :
Beginning Balance ___________ 20 ___ P xxx Check No. Payee Amount
Add: Collections
Cash xxx
Check/s xxx xxx
Total xxx
Less: Remittance/Deposit to Cashier/
Treasurer/Depository Bank xxx
Balance P xxx
NOTE: Use additional sheet if necessary.
CERTIFICATION: VERIFICATION AND ACKNOWLEDGMENT:

I hereby certify that the foregoing report of collections I hereby certify that the foregoing report of collections has
and deposits, and accountability for accountable forms been verified and acknowledge receipt of ________________
is true and correct. (P___________).
Name and Signature Date Name and Signature Date

Accountable Officer Cashier/Treasurer
356
REPORT OF COLLECTIONS 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
5. Report No. – shall be numbered one series per year
6. COLLECTIONS –
For Collectors
a. Type (Form No.) - type of official receipts used
b. Official Receipt No.(From ___ To ___ ) – serial number of the Official
Receipts issued by the Treasurer/Accountable Officer including the
cancelled ones in chronological and numerical sequence
c. Amount – amount of collections received

For Liquidating Officers/Treasurers
a. Name of Accountable Officer – the name of collector/accountable officer
remitting the collections
b. Report No. – the reference number of the Report of Collections and Deposits of
the Collector, bearing the collector no. and the series
c. Amount – amount of collections received from collectors/liquidating officers,
taxpayers and other sources
7. REMITTANCES/DEPOSITS
a. Accountable Officers/Bank – the name of the liquidating officer to whom the
collections were remitted or the name of the depository bank
b. Reference – reference documents used as basis in the remittance/deposit of the
collections like the RCD number/deposit slip.
c. Amount – amount of remittances/deposits
8. ACCOUNTABILITY FOR ACCOUNTABLE FORMS
a. Name of Forms & No. - the name(s) of the form(s) (checks/official receipts/etc.)
for which this report is being made shall be written in the boxes provided
b. Qty. and Serial no. – the quantity and the corresponding serial numbers of the
forms on hand at the start of the period; those received, and those issued or
transferred during the period covered; and the balance at the end of the period
shall be entered in these columns.
9. SUMMARY OF COLLECTIONS AND REMITTANCES/DEPOSITS - A summary shall
be prepared as shown in the report.
10. Certification – shall be signed by the Accountable Officer preparing the report.
11. Verification and Acknowledgement – shall be signed by the Treasurer/Liquidating Officer
receiving the RCD and corresponding remittances. In case of RCD of the Local
Treasurer, this portion shall no longer be filled up. However, the validated deposit
slip/remittance advice from the bank shall be attached to the report.
B. This report shall be prepared in four (4) copies and to be distributed as follows:
357
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.
358
LTO Annex 13
Process Flow on LGU Receipts, Collections and Deposits
Area of
Responsibility/Person Seq. Activity
Responsible
Collector/Teller 1 Receive payment from taxpayers/ creditors and

issue Official Receipt (OR). Prepare Report of
Collections and Deposits. Remit to the Liquidating
Officer (if one is designated) or Treasurer.
Liquidating Officer 2 Check remittances and verifies accountable forms

of collectors/tellers. Consolidates collections and
remits to the Treasurer/Cashier. Prepares RCD
Receive remitted collections, consolidates the same

Treasurer 3 and prepares RCD. Records in the Cashbook –
Cash in Treasury.
Deposit collections in the appropriate bank account

Treasurer 4 per authorized depository bank. Records deposit in
the Cashbook – Cash in Bank.
Forward RCD to Accounting Unit with copies of

Treasurer 5 ORs and validated deposit slips.
Prepare Journal of Entry Voucher and record in the

Accountant 6 Cash Receipt Journal.
359
LTO Form 14
Exhibit 1
Statement of Receipts and Expenditures
1 Province/City/Municipality
2 Period Covered Population:
Inc o m e % o f G e ne ra l
T a rge t / Ge ne ral Total + SEF to
Particular B udge t
SEF T o tal
Fund (C + D)
3 A ppro . Inc o m e *
4 A B C D E F
5 LOCAL SOURCES (6+10)
6 TAX REVENUE (7+8+9)
7 Real Property Tax
8 Tax on Business
9 Other Taxes
10 NON-TAX REVENUE (11+12+13+14)
11 Regulatory Fees (Permit and Licenses)
12 Service/User Charges (Service Income)
13 Income f rom Economic Enterprise (Business Income)

14 Other Receipts (Other General Income)
15 EXTERNAL SOURCES (16+17+18+19)
16 Internal Revenue Allotment
17 SHARES FROM NATIONAL TAX COLLECTIONS
18 INTER-LOCAL TRANSFER
19 EXTRAORDINARY RECEIPTS/GRANTS/DONATION/AIDS
20 TOTAL CURRENT OPERATING INCOM E (5+15)
21 LESS: CURRENT OPERATING EXPENDITURES (PS + M OOE+FE)
22 General Public Service
23 Department of Education
24 Health, Nutrition & Population Control
25 Labor & Employment
26 Housing & Community Development
27 Social Services & Welf are
28 Economic Services
29 Debt Service (FE) (interest Expenses & Other Charges)
30 Other Services
31 TOTAL CURRENT OPERATING EXPENDITURES (22 to 30)
32 NET OPERATING INCOM E/(LOSS) FROM CURRENT OPERATIONS(20-31)
33 ADD: NON INCOM E RECEIPTS
34 CAPITAL/INVESTM ENT RECEIPTS (35+36+37)
35 Proceeds f rom Sale of Property, Plant & Equipment
36 Proceeds f rom Sale of Debt Securities of Other Entities
37 Collection of Loans Receivables
38 RECEIPTS FROM LOANS AND BORROWINGS (39+40)
39 Acquisition of Loans
40 Issuance of Bonds
41 TOTAL NON-INCOM E RECEIPTS (34+38)
42 LESS: NON OPERATING EXPENDITURES
43 CAPITAL/INVESTM ENT EXPENDITURES (44+45+46)
44 Purchase/Construct of Property Plant and Equipment ( Capital Outlay)
45 Purchase of Debt Securities of Other Entities (Investment Outlay)
46 Grant/Make Loan to Other Entities (Investment Outlay)
47 DEBT SERVICE (48+49) (Principal Cos t)
48 Payment of Loan Amortization
49 Retirement/Redemption of Bonds/Debt Securities
50 TOTAL NON-OPERATING EXPENDITURES (43+47)
51 NET INCREASE/(DECREASE) IN FUNDS (32+41-50)
52 ADD: CASH BALANCE, BEGINNING
53 FUNDS AVAILABLE (51+52)
54 Le s s : Paym e nt of Prior Ye ar Accounts Payable
55 FUND BALANCE, END (53-54)
Fund Balance Com pos ition:

Amount set aside to f inance projects w ith appropriations GF SEF Total
provided in the previous years (Continuing appropriations)
Amount set aside f or payment of Prior Ye ar Accounts Payable
Amount set aside f or Obligation not yet Due and Demandable
Am ount Available for appropriations /ope rations
Fund Balance , End (should be reconciled w /cash f low statement)
Certified Correct:
Provincial/City/Municipal Treasurer
360
Exhibit 1-a
Guidelines on the Preparation of the Statement of Receipts and Expenditures
Item
No. Field Instructions Source
1 Province/City/ Indicate the name of Local Government LGU
Municipality Unit.
2 Period Indicate the period covered by the report LGU
(i.e., January 1 to March 31 for the First
Quarter Report, January 1 to June 30 for the
Second Quarter Report; etc.)
3 Population The LGU population based on the official BLGF - CO
record of the National Statistic Office
(NSO) is provided by the system.
4-B Income The amount is based on the annual budget Budget
Target/Budget approved by the Sanggunian. This column Office
Appropriation can be used to determine the projected cash Approved
Column flow based on the approved budget. Budget
4-C General Fund These are actual receipts and expenditures SRS Actual
Column lifted from the Statement of Receipt Column and
Sources (SRS) and Statement of SOE Actual
Expenditures (SOE) for the General Fund Expenditures
Column
4-D SEF Column They are receipts and expenditures lifted
from the Statement of Receipt Sources and
Statement of Expenditures (SOE)
appropriate to the Special Education Fund
(SEF)
4-E Total Sum of General Fund and SEF
4-F % of General + Sum of General Fund and SEF divided by
SEF to Total Total. The sum determines the % of each
Column income or expenditure category in relation
to the total.
5 Local Sources Sum of Tax Revenue and Non-Tax Revenue
6 Tax Revenue Sub-total of Real Property Tax, Tax on
Business and Other Taxes.
7 Real Property The amount should be lifted from the SRS SRS
8 Tax on Business The amount should be lifted from SRS SRS
9 Other Taxes The amount should be lifted from SRS SRS
10 Non-Tax Revenue Sum of Regulatory fees, Service/User
Charges, Income from Economic Enterprise
and Other Receipts
11 Regulatory Fees The amount should be lifted from SRS SRS
12 Service/User The amount should be lifted from SRS SRS
361
13 Income from The amount should be lifted from SRS. SRS
Economic
Enterprises
14 Other Receipts The amount should be lifted from SRS SRS
15 External Sources Sum of Internal Revenue, Shares from
Other National Tax Collections, Inter-Local
Transfer and Extraordinary
Receipts/Grants/ Aids/Donations
16 Internal Revenue The amount should be lifted from SRS SRS
Allotment
17 Shares from Other The amount should be lifted from SRS SRS
National Tax
Collections
18 Inter-Local The amount should be lifted from SRS SRS
Transfer
19 Extraordinary The amount should be lifted from SRS SRS
Receipts/Grants/
Aids/Donations
20 Total Current Sum of Local Sources and External Sources
Operating Income
22 General Public The amount should be lifted from the SOE
Service General Public Services sub total of the
Statement of Expenditures (SOE)
23 Department of The amount should be lifted from the SOE
Education Department of Education sub-total of the
SOE
24 Health, Nutrition The amount should be lifted from Health, SOE
& Population Nutrition & Population Control sub-total of
Control the SOE
25 Labor and The amount should be lifted from the Labor SOE
Employment and Employment sub-total of the SOE
26 Housing and The amount should be lifted from the SOE
Community Housing & Community Development sub-
Development total of the SOE
27 Social Services The amount should be lifted from the Social SOE
and Welfare Services and Welfare sub-total of the SOE
28 Economic The amount should be lifted from Economic SOE
Services Services sub-total of the SOE
29 Debt Service The amount should be lifted from Debt SOE
Service sub-total of the SOE
30 Other Services The amount should be lifted from Other SOE
Services SOE
362
31 Total Current Sum of General Public Service, Department --
Operating of Education, Health, Nutrition &
Expenditures Population Control, Labor and
Employment, Housing and Community
Development, Social Services and Welfare,
Economic Services, Debt Service and Other
Services.
32 Net Operating The difference between Total Current
Income (Loss) Operating Income and Total Current
from Current Operating Expenditures.
Operation
34 Capital/ Sub-total of Receipts from Sale of Property,
Investment Plant and Equipment, Receipt from Sale of
Receipts Debt Securities of Other Entities, and
Collection of Principal on Loans to Other
Entities
35 Proceeds from The amount should be lifted from SRS SRS
Sale of Property,
Plant and
Equipment
36 Proceeds from The amount should be lifted from SRS SRS
Sale of Debt
Securities of
Other Entities
37 Collection of The amount should be lifted from SRS SRS
Loans
Receivables
38 Receipts from Sub-total of Acquisition of Loans and
Loans and Issuance of Bonds
Borrowings
39 Acquisition of The amount should be lifted from SRS SRS
Loans
40 Issuance of Bonds The amount should be lifted from SRS SRS
41 Total Non- Sum of Capital/Investment Receipts and
Income Receipts Receipts from Loans and Borrowings
43 Capital/ Sub-total of Purchase/Construct of
Investment Property, Plant and Equipment (Capital
Expenditures Outlay expenditures), Purchase of Debt
Securities of Other Entities, and
Grant/Make Loan to Other Entities
44 Purchase/ Capital Outlay expenditures – The amount SOE
Construct of should be lifted from SOE
Property, Plant
and Equipment
45 Purchase of Debt The amount should be lifted from SOE SOE
Securities of
363
47 Debt Service Sub-total of Payment of Loan Amortization
and Retirement/Redemption of Bond/Debt
Securities
48 Payment of Loan The amount should be lifted from SOE SOE
Amortization
(Principal)
49 Retirement/Rede The amount should be lifted from SOE SOE
mption of
Bond/Debt
Securities
50 Total Non- Sum of Capital/Investment Expenditures

Operating and Debt Service
Expenditures
51 Net Increase Sum of Net Operating Income, Total Non-
(Decrease) in Income Receipts less Total Non-Operating
Funds Expenditures
52 Cash Balance The amount is the ending cash balance per Treasurer Cash
Beginning Balance Sheet of last year (Dec. 31,) or Book
reconciled
Cash Flow Statement. The ending cash with
balance per cash flow is assumed to be Accounting
reconciled with the Cash Book maintained Cash
by the Treasurer Flow/Balance
Sheet
53 Funds Available Sum of Net Increase (Decrease) in Funds
and Cash Balance Beginning
54 Payment of Prior The amount should be lifted from SOE SOE
Year Accounts
Payable
55 Fund Balance, Sum of Fund Balance Available less
End Payment of Prior Year Accounts Payable
Fund Balance Reported at year end. The breakdown of Accounting
Composition funds/cash shall be source from the Office
Accounting office since this information is Notes to
included in the annual report submitted to Financial
COA specifically in the Notes to Financial Statement at
Statements. Fund balance breakdown is not year-end
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
Other important information that needs to be disclosed should be made as Notes to
SRE
364
LTO Form 15
CASH RECEIPTS AND DEPOSITS REGISTER

____________________________________________________
Barangay: City/Municipality: CRDReg No.:

Barangay Treasurer: Province: Page:
Distribution of Receipts
Undeposited/
Date Remittance Clearance Business
Particulars Ref. Receipts Deposits Unremitted Garbage Rent Misc. OTHERS (See List at the Back)
C/MT Collection IRA RPT Market Fees & Cert. Permit
Fees Income Income
Fees Fee Account Classification Amount
Certification:
I hereby certify to the correctness of the above data. Recordings are based on the certified SCDs supported
with duplicate ORs and VDS submitted by the BT, CMs, and bank statements which are all in my file.
Barangay Record Keeper Date
365
CASH RECEIPTS AND DEPOSITS REGISTER
INSTRUCTIONS
A. This form shall be 12. Others – collection which could

accomplished as follows: not be accommodated in the
specific columns
1. Month – the month covered  Account Classification –
by the Register account used
2. CDRReg No – The CDRReg  Amount – amount
shall be numbered as received
follows: B. At the end of the month, the Register
shall be totaled, balanced, ruled,
00 00 0000 recapitulated and certified as to correctness.
Serial number The ruling shall be made on the line
(one series per year ) immediately after the last entry.
Month of Issue
Year of Issue
C. At the start of each month, the
3. Page – number assigned to Register shall be used. In case where
the sheet more than one sheet shall be utilized,
4. Date – reference date of the each sheet shall be totaled and the
document totals shall be carried forward to the
5. Particulars – brief next sheet. The succeeding sheets shall
description of the start with the totals brought forward
collections/income received D. The Register shall be certified and
6. Reference – the SCE, CM distributed as follows:
number and bank statement Original – City/Municipal Accountant
supporting and recording 2nd copy – BRK
7. Receipts – total receipts as E. The certified Register shall be
indicated in the SCD, CM submitted to the City/Municipal
and Bnks Accountant on or before the 5 th day of
8. Deposits – total deposits the following month supported with
made per SCD the certified SCDs
9. Remittances – total All supporting documents to the SCDs
remittances to C/MT per shall remain with the BRK and
SCD shall be made available to COA
10. Undeposited/Unremitted representative anytime for
Collections – beginning examination/audit.
balance plus receipts less .
deposits/remittance
11. Distribution of Receipts –
amount received and
distributed to the
appropriate income account
366
LTO Form 16
CASH ON HAND and IN BANK REGISTER

__________________________________________________
Barangay: City/Municipality: CHBReg No. :

Barangay Treasurer: Province: Page No.
Cash on Hand Cash in Bank
Date Receipt Deposit Deposits/CM/BnkS Checks/DM/BnkS
Particulars Ref Balance Balance
(In) (Out) (In) (Out)
Certification: Acknowledgement:
I hereby certify to the correctness of the above data. Recording This is to acknowledge that I have received from BT the CHBReg
is based on the SCDs, SCkIs, Debit/Credit Memos and Bank supported with SCDs, SCkIs, Credit/Debit Memos and Bank Statements
Statement received which are all submitted to the BRK. together with all the supporting documents.
___________________ ___________ ____________________ __________

Barangay Treasurer Date Barangay Record Keeper Date
367
CASH ON HAND AND IN BANK REGISTER
INSTRUCTIONS
A This Register shall be  Deposit (In) – the deposit made as

accomplished as follows: reported in the SCD and
CM/Bnks shall be recorded in this
1. Month – month covered by column
the Registe  Check Issued (Out) - all checks
2. CHBReg No – The CHBReg issued reported in the SCkI and
shall be numbered as bank charges per DMs as shown
follows: in the Bnks shall be recorded in
this column
00 00 0000  Balance – running balance of the
Serial number cash in bank available for
(one series per year )
Month of Issue
withdrawal (Beg. Balance +
Year of Issue Deposits (In) – Checks Issued
(Out)
3. Page – number assigned to A. Daily, the BT shall record all the
the sheet receipts and deposits based on the
4. Date – date of the SCD, SCD, all checks issued based on the
SCkI and Bank/DM/CM SCkI and DM
5. Particualrs – details or B. At the end of he month, the amount
nature of receipts and columns shall be totaled, balanced and
payments ruled. The balance shall be forwarded
6. Reference – reference to the next month as beginning
number of the documents balance. The ruling shall be made on
7. Cash on Hand the line immediately after the last
 Receipts (In) – entry.
collections per C. At the start of each month, a new sheet
SCD shall be shall be used. In cases where more
recorded in this than one sheet shall be utilized for the
column month, each sheet shall be totaled and
 Deposit (out) – the the totals shall be carried forward to
deposit of the next sheet. The succeeding sheet
collection as shall start with the totals brought
reported in the forward.
SCD shall be D. The certification shall be signed by the
recorded in this BT and the acknowledgement shall be
column signed by the BRK
 Balance – the E. The certified report shall be distributed
running balance of as follows:
the cash on hand Original – City/Municipal Accountant
representing the 2nd copy – BT
undeposited 3rd copy – BRK
collection (Beg. F. On the 5th day of the following month,
Balance + Receipts the certified report shall be distributed
(In) – to the City/Municipal Accountant
Deposits(Out) G. All supporting documents to the SCD
8. Cash in Bank and SCkI shall remain with the BRK
and shall be made available anytime to
the COA for examination/audit
368
LTO Form 17
REPORT OF ACCOUNTABILITY FOR ACCOUNTABLE FORMS
For the period ______________________________
Barangay City/Municipality: RAAF No.

Barangay Treasurer Province
Accountable Forms Beginning Balance Receipt Issuance Ending Balance

Name of GF Face Inclusive Serial No. Inclusive Serial No. Inclusive Serial No. Inclusive Serial No.
Qty Qty Qty Qty
Form Number Value From To From To From To From To
A. WITH FACE VALUE
B. WITHOUT FACE VALUE
A. CERTIFICATION B. ACKNOWLEDGEMENT C. CERTIFICATION

I hereby certify that the foregoing is a true statement I hereby acknowledge receipt of the RAAF for the above stated I hereby certify that all items enumerated
of all accountable forms received and issued during the in the "receipt" portion are the only items
perio above stated and that the beginning and ending issued by this office.
balance are correct
_______________________ __________ _______________________ __________ _______________________ ________

Signature over Printed Name Date Signature over Printed Name Date Signature over Printed Name Date
Barangay Treasurer Barangay Record Keeper City/Municipal Treasurer
369
REPORT ON ACCOUNTABILITY FOR ACCOUNTABLE FORMS
INSTRUCTIONS
A This Report shall be E. Accountable Forms shall be grouped as

accomplished as follows: follows:
 With face value
1. Month/Year – month/year on  Without face value
which the report is made C. This report shall be prepared in
2. RAAF No – The RAAF shall three copies to be distributed as follows:
be numbered as follows: Original – city/municipal treasurer (to be
attached in the consolidated RAAF)
00 00 0000 2nd copy – BRK
Serial number 3rd copy – BT
G. This shall be prepared monthly by the
Month of Issue
Year of Issue
BT having custody of any accountable
forms
3. Accountable forms – name
of form, General form (GF)
number and face value of
accountable forms under the
custody of the accountable
officer
4. Beginning Balance –
quantity of accountable
forms available at the
beginning of the month
(indicate inclusive serial
number)
5. Receipt – number of units
received during the month
numbers)
6. Issuance – number of units
received during the month (
indicate inclusive serial
numbers)
7. Ending Balance –
accountable forms still in
the custody of the
accountable officers at the
end of the month (indicate
inclusive serial numbers)
B. Box A Certification – to be signed
by the BT
C. Box B Certification – to be signed
by the BRK
D. Box C Acknowledgement – to be
signed by the City/Municipal
Treasurer
370
LTO Form 18

For the period ______________________________
Barangay City/Municipality: RAAF No.

Barangay Treasurer Province
Accountable Forms Beginning Balance Receipt Issuance Ending Balance

Name of GF Face Inclusive Serial No. Inclusive Serial No. Inclusive Serial No. Inclusive Serial No.
Qty Qty Qty Qty
Form Number Value From To From To From To From To
A. WITH FACE VALUE
B. WITHOUT FACE VALUE
A. CERTIFICATION B. ACKNOWLEDGEMENT C. CERTIFICATION

I hereby certify that the foregoing is a true statement I hereby acknowledge receipt of the RAAF for the above stated I hereb certify that the above
of all accountable forms received and issued during the accountable form were issued by this office
perio above stated and that the beginning and ending
balance are correct
_______________________ __________ _______________________ __________ _______________________ ________

Signature over Printed Name Date Signature over Printed Name Date Signature over Printed Name Date
Barangay Treasurer Barangay Record Keeper City/Municipal Treasurer
371
CONSOLIDATED REPORT OF ACCOUNTABILITY FOR
ACCOUNTABILITY FORMS
INSTRUCTIONS
A This Report shall be D. Box C Certification – to be signed by

accomplished as follows: the City/Municipal Treasurer
E. Accountable Forms shall be grouped as
1. Month/Year – month/year on follows:
which the report is made  With face value
2. RAAF No – The RAAF shall  Without face value
be numbered as follows: C. This report shall be prepared in
three copies to be distributed as follows:
00 00 0000 Original – City/Municipal Treasurer
Serial number 2nd copy – BT/DBC
(one series per year ) 3rd copy – BRK
Month of Issue
Year of Issue
3. Accountable forms – name

of form, General form (GF)
number and face value of
accountable forms under the
custody of the accountable
officer
4. Beginning Balance –
quantity of accountable
forms available at the
beginning of the month
number)
5. Receipt – number of units
received during the month
numbers)
6. Issuance – number of units
received during the month (
indicate inclusive serial
numbers)
7. Ending Balance –
accountable forms still in
the custody of the
accountable officers at the
end of the month (indicate
inclusive serial numbers)
B. Box A Certification – to be signed
by the bt
C. Box B Acknowledgement – to be
signed by the BRK
372
LTO Form 19
Summary of Collections and Deposits

For the period ____________________
Barangay: City/Municipality: SCD No.:

Barangay Treasurer: Province: Bulacan Page:
Date
OR/VDS/SCR No. Payor/Bank Particulars Barangay As deputized by City/Municipality
Collections Deposit Balance Collection Remittance Balance
Certification: Acknowledgment:
I hereby certify that the foregoing is the complete and correct I hereby acknowledge to have received the SCD
records of all my collections and deposits from _______ to _____, complete with the duplicate copies of the ORs issued,
2007. The duplicate copies of the ORs issued, SCRs and the SCRs and the VDS covering deposits as reported.
originals of the VDS are hereto attached.
_____________ _________________
Barangay Treasurer Barangay Record Keeper
373
SUMMARY OF COLLECTIONS AND DEPOSITS
INSTRUCTIONS
A. This form shall be 7. Particulars – brief
accomplished as follows: description of the
transaction
1. Period – the covering period 8. Barangay – amounts of
of the report collections, deposits and
2. SCD No. – the SCD shall be balance for the barangay
numbered as follows:  Collections –
amount received
00 00 0000  Deposits –
Serial number amount deposited as
(one series per year ) evidence by VDS
Month of Issue
Year of Issue  Balance –
3. Page – where the page collections less deposits
number is indicated. In case 9. As deputized by
more than one sheet is used City/Municipality –
for the week, the first page amounts of collections,
shall be numbered 1 of 3 remittances and balance
and the next page is page 2 of funds held by the BT
of 2 to fully account all the  Collecions – amount
sheets used. received
4. Date – date of the receipt of  Remittances –
the collections/deposits amounts remitted to
5. Reference – The source City/Municipal
documents shall support the Treasurer
entries to be made  Balance – collections
 OR No. – serial less remittances
number of the OR 10. Certification – to be
issued including signed by the Barangay
the cancelled ones. Treasurer
For collections of 11. Acknowledgement – to be
DBT or DBC, Ors signed by the BA\arangay
shall be shown in Record Keeper
batch. B. The daily sub-total of he SCD
 VDS No. – number shall be recorded in the CHBReg
of the validated by the BT and the weekly total in
deposit slip the CRDReg by the BRK
 SCR No. – number
of the SCR C. This report shall be prepared in
6. Payor/Bank – name of the three copies to be distributed as
payor or name of DBC and follows:
the Bank. For collections of Original – City/Municipal
DBT or DBC, “Various” Accountant
shall be used. 2nd copy – BRK
3rd copy – BT
D. Any undeposited amount shall
be forwarded to the balance
column of the following weekly’s
summary.
374
LTO Form 20
Summary of Collections and Remittances-BT
_________________________
Date
Barangay: City/Municipality: SCR(BT) No.:

Deputized Collector: Province: Page:
Date RPTR/CTC Nature of Collections
Payor Amount
No. CTC- Indv CTC-Corp. RPT Others
I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SCR
and correct record of all my collections for Jan. _______. complete with duplicate copies of the ORs and the
Duplicate copies of ORs and the remittance of ________ remittances of ______________________________
are hereto attached. ___________ (P________).
____________ _________
Barangay Treasurer Date City/Municipal Treasurer Date
375
SUMMARY OF COLLECTIONS AND REMITTANCES-BT
INSTRUCTIONS
A. This form shall be
accomplished as follows:
1. SCR No. – the SCR shall be

numbered as follows:
00 00 0000
Serial number
Month of Issue
Year of Issue
2. Page – the page number per
sheet
3. Date – date of receipt of
collections/remittances
4. OR No. – no. of
OR/CTC/RPTR issued
including cancelled ones.
For collections of DBC,
Ors, shall be shown in
batch.
5. Payor – name of the payor.
For collections of DBC,
“Various” shall be used
6. Nature of Collections –
amount collected by nature
of collections
7. Amount – total amount
collected
8. Certification – to be signed
by the BT
9. Acknowledgement – to be
signed by the
City/Municipal Treasurer
B. This summary shall be prepared
daily in three copies to be distributed
as follows:
Original – City/Municipal
Accountant
2nd copy – BRK
3rd copy – BT
376
LTO Form 21
Summary of Collections and Remittances-DBC

________________________
Date
Barangay: City/Municipality: SCR(DBC) No.:
Deputized Collector: Province: Page:
Area:
Date
Qty Denomination Payor Nature of Collections Amount
Ticket Series
I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the
and correct record of all my collections for ________ SCR complete with the remittances of
The remittances of P______ are hereto attached. _____________________ ( P ).
_________________ ____________ ______________ ____________

Deputized Barangay Collector Date Barangay Treasurer Date
377
SUMMARY OF COLLECTIONS AND REMITTANCES -DBC
INSTRUCTIONS
1. SCR No. – the SCR shall be
00 00 0000
Serial number
Month of Issue
Year of Issue
2. Page – the page number per
sheet
3. Date – date of receipt of
collections/remittances
4. Ticket Series – the inclusive
series of the ticket issued
5. Qty. – quantity of ticket
issued based on the
inclusive serial number
6. Denomination – the face
value of the ticket
7. Payor – name of the payor.
For accountable forms
entered in batches, the term
various shall be used
8. Nature of collections – brief
description of the nature of
collections
9. Amount – total amount
collected
10. Certification – to be
signed by the DBC
11. Acknowledgement – to
be signed by the BT
in three copies to be distributed as
follows:
Original – BT
2nd copy – BRK
3rd copy – DBC
378
LTO Annex 22
Process Flow on the Receipt and Recording of Collections By Barangay Treasurer

Area of
Responsible
Barangay Treasurer 1 Receives cash/check from payor representing collections of

income/other receipts
2 Prepares the OR
Note 1. The OR shall be prepared in three copies to be distributed as
follows:
Original – Payor
2nd copy – Barangay Record Keeper (BRK) to support the SCD
3rd copy – BT (retained in the booklet)
3 Issues and forwards OR to the payor to acknowledge collection
4 Forwards the 2nd copy to the Barangay Record Keeper for

recording in the SCD and retains 3rd copy for file
5 Counts collections (cash and checks)
6 Prepares Deposits Slips

Note 1. The Deposits Slips shall be prepared in three copies for bank
validation to be distributed as follows:
Original – Bank
2nd copy – Barangay Record Keeper
3rd copy – Barangay Treasurer
7 Deposits collections intact with the depository bank daily or not

later than the following banking day
8 Receives 2nd and 3rd copies of the Validated Deposit Slips

from the bank and files
Barangay Record 9 Records the ORs issued including the cancelled ones in correct
Keeper numerical sequence in the SCD. Records the deposits based on
the Validated Deposits Slips.
Note 1. The SCD shall be prepared in three copies to be distributed as
follows:
Original – City/Municipality Accountant
2nd Copy – Barangay Bookkeeper
3rd Copy – Barangay Treasurer
10 Records the collections and remittances reported in the

11 Sub-totals the columns for collections, deposits and remittance

for the day
12 Totals and certifies the Summary of Collections and Deposits

weekly
379
Area of
Responsibility/Perso Seq. Activity
n Responsible
Barangay Record 13 Forwards three copies of the Summary of Collections and
Keeper Deposits to the Barangay Bookkeeper together with the
duplicate copies of the ORs Validated Deposits Slips and
Summary of Collections and Remmitances.
14 Receives the Summary of Collections and Deposits and checks

supporting documents. Returns the 3rd copy to the BT and
retains the original (for City/Municipal Accountant) and 2 nd
copy for file
15 Retrieves the Summary of Collections and Deposits from file
16 Records in the Cash Receipts and Deposits Registers

collections, deposits and remittances based on the SCD. Fills
out the “Distribution of Receipts” portion in the sources of
collections
17 Retrieves the Credit Memo from file
18 Records the Credit Memo in the “Receipts and Deposits”

column of the Cash Receipts and Deposits Registers
18 Retrieves the Bank Statement from file
20 Records the interest earned in gross

Note 1. The Cash Receipts and Deposits Registers shall be prepared in two
copies to be distributed as follows:
Original – City/Municipal Accountant
21 At month end, totals, balances and rules all the columns of the
Register. Recapitulates all the entries in the “Others” column.
Certifies the Cash Receipts and Deposits Register. Submits the

22 original together with the Summary of Collections and
Deposits to City/Municipal Accountant and keeps the 2nd copy
for file.
380
LTO Annex 23
Process Flow on the Receipt and Recording of Collections By Deputized Barangay Collectors
Area of
Responsibility/Perso Seq. Activity
n Responsible
Deputized Barangay A Collections
Collector 1 Receives the accountable forms from the Barangay Treasurer to
be used/issued to acknowledge collections.
2 Collects fees by issuing cash tickets to market peddlers or

parking fee tickets on the use of barangay pay parking lots.
3 Prepares and certifies the Summary of Collections and

Remittance
Note 1: The Summary of Collections and Remittance shall be prepared in
Original – Barangay Bookkeeper
2nd copy – Barangay Treasurer
3rd copy – Deputized Barangay Collector
B Remittance of Collections
4 Remits collections together with three copies of duly certified
Summary of Collections and Remittance to the Barangay
Treasurer
5 Receives remittance together with three copies of the Summary

of Collections and Remittance
6 Reviews the Summary of Collections and Remittance and

checks the completeness of data. Checks computation of
accountable forms issued/sold as against the reported
collections.
Note 2. In case of discrepancy, informs the Deputized Barangay Collector
immediately
7 Acknowledges the remittances by signing the

acknowledgement portion of the Summary of Collections and
Remittances
Note 3. The Acknowledgement portion of the Summary of Collections and
Remittances shall be filled out by recording the amount received and date of
receipts
8 Returns the 3rd copy of the Summary of Collections and

Remittances to the Deputized Barangay Collector and keeps the
original and 2nd copy.
Deputized Barangay 9 Receives the 3rd copy of the Summary of Collections and
Collector Remittances for his file
Records daily collections in the Summary of Collections and

Remittances based on ORs issued including cancelled ones in
correct numerical sequence.
381
Area of
Responsible
Deputized Barangay 10 Records the accountable forms issued in batches (showing the
Collector denomination, quantity and sold and total amount collected)
Note 1. The Summary of Collections and Remittances shall be prepared in
Original – Barangay Bookkeeper
2nd Copy – Barangay Treasurer
3rd copy – Deputized Barangay Collector
11 Total the amount column of the Summary of Collections and

Remittances to determine the amount due for remittance
12 Tallies the cash on hand with the amount collected as reported

in the Summary of Collections and Remittances
13 Certifies the Summary of Collections and Remittances
14 Attaches the duplicate copies of the ORs issued to the original

Summary of Collections and Remittances to support the
remittances
15 Submits the three copies of the certified Summary of

Collections and Remittances complete with the supporting
documents to the Barangay Treasuer for acknowledgement
together with the full remittance
Barangay Treasurer 16 Receives the Summary of Collections and Remittances and

cash collections. Checks correctness of remittance and
completeness of supporting documents. Acknowledges receipt
by signing the acknowledgement portion. Retains the 2 nd copy
and sends the original to Barangay Bookkeeper and 3rd copy to
the Deputized Barangay Collector.
17 Records the Summary of Collections and Remittances in the

Deputized Barangay 18 Receives the 3rd copy of the Summary of Collections and
Collector Remittances and files
Barangay Treasurer 19 Counts collections (cash and checks)
20 Prepares Deposits Slips

Note 1. The Deposits Slips shall be prepared in three copies for bank
validation to be distributed as follows:
Original – Bank
382
Area of
Responsible
Barangay Treasurer 20 Deposits collections intact with the depository bank daily or not
later than the following banking day
21 Receives 2nd and 3rd copies of the Validated Deposit Slips

from the bank and files
22 Records the ORs issued including the cancelled ones in correct

numerical sequence in the Summary of Collections and
23 Deposits. Records the deposits based on the Validated Deposit
Slips.
Note 1. The Summary of Collections and Deposits shall be prepared in three
24 Records the collections and remittances reported in the SCR

for the day
26 Totals and certifies the SCD weekly
27 Forwards three copies of the SCD to the Barangay Bookkeeper

together with the duplicate copies of the ORs VDS and SCR
Barangay Record 28 Receives the Summary of Collections and Deposits and checks
Keeper supporting documents. Returns the 3rd copy to the BT and
retains the original (for City/Municipal Accountant) and 2 nd
copy for file
29 Retrieves the Summary of Collections and Deposits (SCD)

from file

collections


383
Area of
Responsible
Barangay Record 35 At month end, totals, balances and rules all the columns of the
Keeper Register. Recapitulates all the entries in the “Others” column.
36 Certifies the Cash Receipts and Deposits Register. Submits the

original together with the Summary of Collections and
for file.
384
LTO Annex 24
Process Flow on the Receipt and Recording of Collections By Barangay Treasurer as Deputized
by the City/Municipal Treasurer
Area of
Responsible
A Collections
Barangay Treasurer 1 Receives the accountable forms from City/Municipal Treasurer
to be used/issued to acknowledge collections
2 Collects Real Property Tax, Community Tax and other

authorized receipts
3 Issues Real Property Tax Receipt and Community Tax

Certificates to payor, retains the 2nd copy to support the
Summary of Collections and Remittances and the 3 rd copy for
file.
4 Prepares and certifies Summary of Collections and Remittances
B Remittance of Collections
5 Remits the collections to the City/Municipal Treasurer together
with the three copies of the certified Summary of Collections
and Remittances supported by the duplicate copies of the Real
Property Tax Receipt/Community Tax Certificate
City/Municipal 6 Checks correctness of amount received against the actual

Treasurer remittance in the Summary of Collections and Remittances
7 Examines the Summary of Collections and Remittances as to

completeness of supporting documents and correctness of
recording of the Real Property Tax Certificates/Community
Tax Certificates issued
8 Acknowledges receipt of the Summary of Collections and

Remittances and the remittance. Signs the acknowledgement
portion of the Summary of Collections and Remittances
Note 1. The acknowledgement portion of the Summary of Collections and
Remittances shall be filled out, indicating the amount received and date of
receipt.
9 Returns 2nd and 3rd copies of the Summary of Collections and

Remittances to the Barangay Treasurer and retains the original
for file
Barangay Treasurer 10 Receives and files the Summary of Collections and
Remittances
385
Area of
Responsible
Barangay Treasurer 11 Records daily collections in the Summary of Collections and
Remittances based on ORs, Community Tax Certificates and
Real Property Tax Certificates issued in correct numerical
sequence including cancelled ones.
Note 1. The Summary of Collections and Remittances shall be prepared in
three copies to be distributed as follows
Original – City/Municipal Treasurer
2nd copy – Barangay Record keeper
12 Totals the amount column to determine the amount due for

remittance
13 Tallies the cash on hand with the collections as reported in the

14 Certifies the Summary of Collections and Deposits
15 Attaches duplicate copies of the ORs, Community Tax

Certificates and Real Property Tax Certificates to the original
Summary of Collections and Remittances to support the
remittances
16 Records the Summary of Collections and Remittances in the

17 Records the ORs issued including the cancelled ones in correct

numerical sequence in the SCD. Records the deposits based on
the VDS.
Note 1. The SCD shall be prepared in three copies to be distributed as
follows:
18 Records the collections and remittances reported in the SCR

for the day
20 Totals and certifies the SCD weekly
21 Forwards three copies of the SCD to the Barangay Bookkeeper

together with the duplicate copies of the ORs VDS and SCR
Barangay Record 22 Receives the SCD and checks supporting documents. Returns
Keeper the 3rd copy to the BT and retains the original (for
City/Municipal Accountant) and 2nd copy for file
386
Area of
Responsible
Barangay Record 23 Retrieves the Summary of Collections and Deposits (SCD)
Keeper from file

collections


29 At month end, totals, balances and rules all the columns of the
Register. Recapitulates all the entries in the “Others” column.
30 Certifies the Cash Receipts and Deposits Register. Submits the
original together with the Summary of Collections and
for file.
387
LTO Annex 25
Process Flow on the Receipt and Recording of Bank Debit/Credit Memo and Bank Statement
Area of
Responsible
A Receipt of Debit/Credit Memo
Barangay Treasurer 1 Receives the Credit Memo on the receipt of Internal Revenue
Allotment/Real Property Tax due the barangay
Receives Debit Memo on the dishonored checks and other bank

charges
Photocopies Debit/Credit Memo. Submits the original

Debit/Credit Memo to the Barangay Record Keeper and keeps
Xerox copies for file
Receives and files the Debit/Credit Memo

Receipt of Bank Statement
Receives the bank statement from the bank
Forwards the Bank Statement to the Barangay Record Keeper
Receives the Bank Statements for submission to the

City/Municipal Accountant
Note 1 The Barangay Record Keeper shall furnish the Barangay Treasurer
wit a Xerox copy of the Bank Statements.
Records the deposits per Credit Memo received under the

“Deposits (In)” column of the “Cash in Bank” section of the
Cash on Hand and in Bank Registers.
Records the interest earned at gross in the “Deposit (In)”

column of the “Cash in Bank” section of the Cash on Hand and
in Bank Register and the withholding taxes under the
“Check/Debit Memo/Bank Statements (out)” column.
Records the disbursement of checks per Summary of Check

Issued in the ‘Check/Debit Memo/Bank Statement (Out)”
column under the “Cash in Bank” section of the Cash on Hand
and in Bank Register.
Totals, balances and rules the Cash on Hand and in Bank

Register at the end of the month
Note 2. The difference between the totals of the “Receipts” column plus the
beginning balance less the “Deposit” column shall equal the “Balance” in
the “Cash on Hand” section.
Note 3. The difference between the totals of the deposits, credit memo and
interest earned plus the beginning balance less checks/Debit Memo and
withholding taxes shall equal the “Balance” in the “Cash in Bank” section.
388
Area of
Responsible
Barangay Treasurer Note 4. The Cash on Hand and in Bank Register shall be prepared in three
3rd copy – Barangay Record Keeper
Signs the certification portion of the Cash on Hand and in Bank

Register and forwards to the Barangay Record Keeper
Barangay Record Examines the Credit Memo and Bank Statement attached to it.
Keeper Acknowledges the receipt of the Credit Memo and Bank
Statement.
Submits the certified Cash on Hand and in Bank Register to the

City/Municipality Accountant. Forwards the 2nd copy to the
Barangay Treasurer and retains 3rd copy for file
389
LTO Annex 26
Republic of the Philippines
Province/City/Municipality of _____________________
Office of the Provincial/City/Municipal Treasurer
LETTER OF AUTHORITY/APPOINTMENT
No. ____________
__________, 20_____
________________________
________________________
________________________
Sir/Madam/Gentlemen:
Pursuant to Section 171 of RA No. 7160, otherwise known as the Local Government Code
of 1991, which has for its purpose the enforcement and collection of taxes, fees and charges
authorized thereunder, please be advised that the bearers hereof, from this office and as deputies
thereof, are hereby authorized to examine your books of accounts and other pertinent records of
your business , to verify, assess and collect the true and correct amount of tax or taxes, fees and
charges due from you during the period from ____________________________, to
_________________, 19___________.
Messrs. ___________________________ and ____________________ whose signatures

appear below, are provided with identification cards by this office and they are under instruction
to properly identify themselves and present their identification cards upon demand.
As provided for in Section 171 of this Code cited above, the examination of your books of
accounts and other pertinent records shall be made during regular business hours not oftener than
once a year.
The examination made pursuant hereto shall be certified to by the above named deputies
and such certification shall be made of record in your books of accounts.
Your cooperation in this regard will be highly appreciated.
Very truly yours
_____________________________
___________________________
__________________________
___________________________
(Signatures of Examination Team)

ACKNOWLEDGMENT:
Received by: ______________________ Date: ___________________

Name and Signature
_____________________ ___________________
Position/Designation Telephone No.
390
NAME OF TAXPAYER : ____________________________

LETTER OF AUTHORITY NO : ____________________________
Date Issued : ____________________________
DOCUMENTS TO BE EXAMINED
Sir/Madam::
Pursuant to Letter of Authority attached hereto, please prepare the following pertinent
business records of your establishment/company, viz:
1. Business Permit _______to________ (Xerox)
2. Business License Receipts _______to____ (Xerox)
3. Latest Letter of Authority and Letter of Confirmation (proof of examination) issued.
4. Audited Financial Statement _____to_______ (Xerox)
5. Books of Accounts _____to______
6. Purchases, Sales and Delivery Invoices
7. Value Added Tax (VAT), Percentage, Excise or Quarterly payments to Bureau of
Internal Revenue (BIR) (Xerox)
8. Business Permit and Taxes paid in other cities or municipalities if the
establishment/company has branches outside Quezon City (Xerox)
9. Schedule of Gross Sales/Receipts for every branch duly certified by an authorized
official or representative of the establishment/company
10. Articles of Incorporation/Partnership
11. Contract of Lease (if place of business is rented)
12. List of employees submitted to Social Security System (SSS)
13. Letter of Credit/Bill of Lading (for importers & exporters)
14. POEA license, Deployment reports (for manpower agencies)
15. DOT Accreditation (for tourist oriented and related business)
16. Contract of Agreement on Projects (for general building and engineering contractors)
17. Community Tax Certificate ________ (Xerox)
Very truly yours
Revenue Examiner
391
LTO Form 27
TAX DATA SHEET
Letter of Authority No. __________________

Date Examination Started _______________
Date Examination Finished _______________
Period/Year Covered ____________________
Name of Business Establishment __________________

Business Address ______________________________
Owner/Licensee _______________________________
Citizenship ___________________________________
Capital Investment _____________________________
Mayor’s Date of Type of Gross Gross Understate Overstate

Permit Issue Business Sales/Receipts Sales/Receipts ment of Sales ment of Sales
No. per Permit per
Examination
PAYMENTS
Kind of Business Official Annual/Semi Date of
Taxes/Fees/Charges Receipt No. Amount Paid Annual/Quarterly Issue
REMARKS
_______________________________________________________________________
________________________________________________________________________
______________________________________________________________________
CERTIFIED CORRECT:
____________________________________
____________________ ________________
____________________________________
Names and Signatures of Examination Team
392
LTO Form 28
Province/City/Municipality of___________________________________
TAX DATA AND ASSESSMENT FORM
Name of Company President____________________ Mayor's Permit No.________________

Business Name_______________________________ Area____________________________
Address_____________________________________ Nature of Business________________
LOA#_______________________________________ Date Issued________ Date Examined___________________
Community Tax Certificate No.__________________ Date Issued________ Place of Issue____________________
Particulars Actual Sales Declared Sales Year Tax Due Tax Paid Difference Surcharge Interest
Findings and Recommendations We have examined, reviewed and evaluated the foregoing
__________________________________________________ accomplished data and assessment form concurs with the
__________________________________________________ findings and recommendations of the deputy
__________________________________________________
__________________________________________________
_________________ _________________
Revenue Examiner Sr. Revenue Examiner Approved by:
_______________________
393
LTO Form 29
REPUBLIC OF THE PHILIPPINES

Province/City/Municipality of _____________
____________
LETTER OF ASSESSMENT (1st Notice)
_____________________
_____________________
Sir:
Please be advised that the report of my deputy MR. _________________ has been submitted to
this office pursuant to Letter of Authority No. ___________ dated ___________, as a result of his
examination, you are hereby requested to pay the amount of Php __________ representing
additional business tax including surcharges and penalties for the years ___________.
To avoid the inconveniences of a legal action to enforce payment of your deficiency, it is hereby
required that you pay it within five (5) days from your receipt hereof.
Very truly yours
_____________________
Note: Subject to adjustment upon presentation of pertinent documents
394
LTO Form 30

Province/City/Municipality of ___________
__________________
SECOND NOTICE
_____________________
_____________________
_____________________
Sir/Madam:
Records show that you failed to settle the remaining deficiencies discovered during the
examination of your books pursuant to Letter of Authority No.________ dated ________.
As per our computation your are hereby requested to pay the amount of Php _______
covering the period of ____________.
Your are hereby required to pay the aforesaid amount within three (3) days from receipt
hereof. Your failure to do so will constrain us to cause the institution of appropriate legal action
against you.
Very truly yours,
Provincial/City/Municipal
Treasurer
395
LTO Form 31
__________________
FINAL NOTICE
_____________________
_____________________
_____________________
Sir/Madam:
Records show that a Notice of Assessment in the amount of Php _________ was issued by
this Office, which was duly received by your company on ________. However, in spite of these
notices, no reply or attempt to settle this obligation was made by your company.
Pursuant to Section 195 of the Local Government Code of 1991, x x x. Within sixty (60)
days from the receipt of the Notice of Assessment, the taxpayer may file a written protest with the
local treasurer contesting the assessment, otherwise the assessment shall become final and
executory x x x”.
In view of the foregoing and it appearing that the sixty (60) day period within which to
protest the tax assessment has already prescribed, the subject assessment becomes final and
executory and therefore, the immediate settlement of your tax obligation is requested, otherwise,
this Office will be constrained to cancel your Mayor’s Permit or effect the civil remedies provided
for under Section 174 of the Code by enforcing the collection thru distraint and levy or by judicial
action.
Very truly yours,
Provincial/City/Municipal
Treasurer
396
LTO Form 32

__________________
FINAL NOTICE BEFORE ISSUANCE OF WARRANT OF DISTRAINT AND LEVY
The President
_____________________
_____________________
Subject : Tax Deficiency Discovered During Examination of your Books Pursuant to Letter of
Authority No. ________________
Amount : PHP ______________
Year : ___________________
Gentlemen/Madam:
Despite several notices served and duly receipted on your business establishment and the
considerable length of time that had lapsed, we have not been favored with your reply.
In this connection, we would like to inform you that we are giving you the LAST
OPPURTUNITY to make the necessary settlement of your business tax liabilities within five (5)
days from receipt of this NOTICE.
Pursuant to Section 195 of the Local Government Code of 1991, “ x x x. Within sixty (60)
days from the receipt of the Notice of Assessment, the taxpayer may file a written protest with the
local treasurer contesting the assessment; otherwise, the assessment shall become final and
executory. X x x”.
In view of the foregoing, and it appearing that the sixty (6) day period within which to
protest the tax assessment has already prescribed, the subject assessment becomes final and
executory and therefore, the immediate settlement of your tax obligation is requested, otherwise,
this Office will be constrained to cancel your Mayor’s Permit or effect the civil remedies provided
for under Section 174 of the Code by enforcing thru distraint and levy or by judicial action
Very truly yours
Provincial/City/MunicipalTreasurer
397
LTO Form 33

__________________
NON-PRESENTATION OF DOCUMENTS NPS
_____________________
_____________________
_____________________
Sir/Madam:
Records that you failed to present for examination your books of accounts and other
pertinent documents notwithstanding service to you or LETTER OF AUTHORITY No ____ on
_____ and repeated demands thereof in violation of Section 220 of the Revenue Code of
_______.
You are hereby given three (3) days from receipts hereof to present for examination your
books of accounts and other pertinent documents to this Office during office hours. Your failure
to do so will constrain this office to resort to the legal remedies provided by law, including action
for the revocation of your business permit to effect the desired examination.
Very truly yours,
398
LTO Form 34

__________________
FINAL NOTICE OF NON-PRESENTATION OF DOCUMENTS NPS
_____________________
_____________________
_____________________
Sir/Madam:
Records show that you failed to present for examination your books of accounts and other
pertinent documents notwithstanding service to you of LETTER OF AUTHORITY NO. _______
on ______________ and repeated demands thereof in violation of Section 220 of the Revenue
Code of ______________.
You are hereby given three (3) days from receipts hereof to present for examination your
books of accounts and other pertinent documents to this Office during officer hours. Your failure
to do so will constrain this office to resort to the legal remedies provided by law, including action
for the revocation of your business permit to effect the desired examination.
Very truly yours
399
LTO Form 35

__________________
LETTER OF CONFIRMATION
_____________________
_____________________
_____________________
Sir/Madam/Gentlemen:
With reference to our Letter of Authority No. _____________________________ dated

______________________________________________, please be informed that the
examination / investigation thereof has been terminated and the corresponding report(s) of
Revenue Examiner ______________________________ under the supervision of Senior
Revenue Examiner _______________________ of this office has been submitted for the calendar
year ______________________.
Very truly yours
400
LTO Form 36
CERTIFICATE OF CONFIRMATION
This is to certify that on _____________________, 20_____________, the books, accounts and

other pertinent records covering the period from _____________________, 20______ to
________________, 20_______, of the business/businesses indicated above have been examined
by the undersigned whose findings and recommendations are stated herein.
A similar certification has been made in the books of same business on _________, 20__.
_____________________________ ________________________
Examining Deputy Examining Deputy
I.D. No._____ I.D. No. ______
VERIFIED AND CONCURRED IN:
_________________________________
Supervisor/In Charge
NOTE:
This is not a collection notice. This is simply an evidence that the business indicated
above has been inspected pursuant to Section 171 of R.A. 7160. Should there be any tax due as a
consequence hereof, the owner/operator of the business will be advised in writing accordingly.
Original Received:
_________________
401
LTO Form 37
CERTIFICATE OF EXAMINATION
____________________
Date
TO WHOM IT MAY CONCERN:
This is to certify that according to the records , the books of accounts and other pertinent records
for the year ________ of _____________________________ located at
______________________________ have been examined by the Examination Team from this
Office whose signatures appear at the lower left hand corner hereof under Authority No.
________ dated ________________. It is further certified that the gross
sales/receipts of the above-named establishment for Calendar Year _________ had been
determined by virtue of this examination.
This certificate is issued to confirm the authenticity of the gross sales/receipts mentioned above in
the total amount of P ________________ which shall be the basis in the computation of the taxes,
fees and other charges due from ______________________
for the current year.
__________________________________
Examined by:
____________________________
____________________________
____________________________
Examination Team
402
LTO Form 38

Province/City/Municipality of ______________________
ASSESSMENT NOTICE (Initial)
License Case No. _____________

____________________________
Date
___________________________
___________________________
___________________________
S i r:
After an examination of your books of accounts and other pertinent documents for the year
__________ and a verification of your business tax payments by the examination Team duly
deputized by this Office, it has been found out that you have a business tax deficiency in the
amount of P _____________ including surcharges, interests and penalties, as shown on the
assessment sheet hereto attached.
In view hereof, you are requested to pay the amount abovementioned within three (3) days from
receipt hereof in order that a CERTIFICATE OF EXAMINATION may be issued to consider this
matter settled and closed.
Your preferential attention hereof is highly appreciated.
Very truly yours,
_________________________________
NOTE: Certificate of Examination will be required in the renewal of your business permit for
the calendar year __________
403
LTO Form 39

Province/City/Municipality of __________________________
FINAL DEMAND
License Case No. _________
________________________________
________________________________
________________________________
A review of our records showed that you have neither replied to, nor paid the amount indicated in
our assessment notice to you dated __________________________.
We give you again below the itemized statement of the amount due as assessed by our deputies
who inspected your business establishment.
Please give this matter your preferential attention because if we do not hear from you within three
(3) days from your receipt of this letter, we shall have to elevate your case to the Office of the
Mayor with our recommendation for the institution of such legal action as may lie against you.
Very truly yours,
_____________________________
Provincial/City/Municipal. Treasurer
404
LTO Form 40

__________________________________________
Provincial/City Municipality Name
OBLIGATION REQUEST No.
Payee
Office
Address
Responsibility Account
Particulars FPP Amount
Center Code
Total -
A. Certified B. Certified
Charges to appropriation/allotment necessary, lawful Allotment available and obligated for the purpose
and under my direct supervision as indicated above
Supporting documents valid, proper and legal
Signature Signature
Printed Name Printed Name
Position Position
Date Date
405
OBLIGATION REQUEST
INSTRUCTIONS
A. The Obligation Request shall be prepared in three copies, to be distributed as

follows:
Original – to be attached t the DV
Duplicate – Budget Unit
Triplicate – Accounting Unit
B. The Budget Unit shall stamp the date of receipt on the date of this form
C. This form shall be accomplished in the following manner
1. No. – number assigned to the Obligation Request by the Budget Unit or
its equivalent. The numbering shall be as follows:
00 00 00 0000
Serial number
Month of Issue
Year of Issue
Allotment Class
2. Payee – name of payee or creditor
3. Office – name of the office of payee or creditor
4. Address – address or location of the office of the payee or creditor
5. Responsibility Center – code of the cost center where expenses shall be
charged
6. Particulars – brief description of the obligation request
7. FPP – code for function/program/project as shown in the approved
appropriation allotment
8. Account Code – expense/asset/liability account code where the
obligations shall be charged
9. Amount – amount of obligation/adjustment
10. Certified (Box A) – Certification by the Head of the Requesting Office or
his authorized representative on the necessity and legality of charges to
the appropriation/allotment under his direct supervision, and validity,
propriety and legality of supporting documents.
The certifying officer shall affix his signature, print his name, indicate his
position, and the date of his signing on the space provided.
11. Certified (Box B) – Certification by the Head of the Budget Unit or his
authorized representative on the existence of available appropriation
The certifying officer shall affix his signature, print his name, indicate his
position, and the date of his signing on the space provided.
D. Any correction/adjustment by the accounting unit which will require the

corresponding adjustment in the appropriate RAAO shall be coordinated with the
Budget Unit.
406
LTO Annex 41
MINIMUM DOCUMENTARY REQUIREMENT FOR SPECIFIC EXPENSE ITEM
I. PERSONNEL SERVICES (PS)

1) Salaries
a) First salary under an Original Appointment (Sec. 197 GAAM I)
 Certified True Copy of Appointment duly approved by the appointing authority
 Certified true copy of Oath of Office
 Statement of Assets and Liabilities
 Evidence of Service Rendered (Certificate of Service/Daily Time Record)
 Certificate/Notice of Assumption to Office
 Evidence or Certificate showing compliance with conditions set forth in the
approval of the appointment, if any
b) Salary under an Appointment by Transfer (Sec. 200 GAAM I)

 Certified True Copy of Appointment duly approved by the Appointing Authority
 Certified copy of oath of office
 Evidence of Service Rendered/Daily Time Record
 Certificate/Notice of Assumption to Office
 Clearance from money and property accountability from previous office
 Certificate of last salary received from former office
 Approval of authority to transfer of employee
 Certificate of last day of service from former office
c) Salary Differentials under promotional appointment (Sec. 119 GAAM I)

 Approved Appointment/Notice of Salary Adjustments
 Evidence of Service Rendered (Certificate of Service/Daily Time Record)
 Certificate/Notice of Assumption to position Salaries/Wages of Temporary, Casual
or Emergency Employees (CAO Cir. 81-155, Feb. 23, 1981)
- Authority or basis of employment
- Evidence of Service Rendered/Daily Time Record
d) Salaries of Persons Employed on Contract Basis (COA Cir. 81-155, Feb. 23, 1981)
 Contract of services duly noted by DBM and CSC
 Evidence of Service rendered/Daily Time Record
e) Salary upon Termination of Service

 Employee’s Letter of Resignation and acceptance of Resignation
 Certificate of Clearance from money and property accountability
 Certificate of clearance from GSIS
f) Salary Due Heirs of Deceased Employees

 Death Certificate or Affidavit of attending physician
 If married, marriage certificate or in its absence an affidavit of surviving spouse
supported by affidavits of two (2) disinterested persons having knowledge of the
marriage relationship
 Designation of next of kin
 Clearance of the deceased from money and property accountability
407
g) Salary Accruing Pending Suspension (Sec. 220 GAAM I)
 Certified true copy of exoneration or of court’s order dismissing the criminal case
against the employee or absolving him; or Certified True Copy of authority
granted by the department head for payment of salary during suspension; or
 Certified true copy of the President’s order of suspension providing for payment of
salary during suspension.
2) Commutation of Leave of Absence

a) Vacation or Sick Leave
 Application for leave approved by the proper head of agency or his duly authorized
representative
 Clearance certificate from money and property accountability, if absence is in
excess of thirty days
 Medical certificate in case of sick leave, except where leave not exceeding five (5)
days had already been enjoyed
 Statement showing the balance of leave standing to the credit of the employee
b) Entitlement of Leave Privileges

As a general rule all officers and employees who have rendered at least six (6) months of
continuous service, faithful and satisfactorily service, and whose office hours as so fixed
that they are on duty the number of hours required by law, are entitled to 15 days vacation
and 15 days sick leave with full pay exclusive of Saturdays and Sundays and holidays
without limitation as to the number of days of vacation and sick leave that they may
accumulate.
c) Maternity Leave
 Approved application for leave, accompanied by a medical certificate showing that
the married woman is on the family way and nearing delivery, or Medical
Certificate showing actual child delivery or natural abortion not covered by
illegitimate union or immortality, if leave applied for its submitted after delivery or
abortion
 Marriage Certificate for first maternity leave claim
 Certificate of clearance from money and property accountability (Sec. 235 GAAM
I)
Married women in the government service who have rendered two years or more of
continuous service shall be entitled to maternity leave of 60 days with full pay. For those
who have rendered less than two (2) years of government service at the time of the
enjoyment of maternity leave, the computation of their maternity leave shall be
proportionate to their length of service (Sec. 17 Rule XVI Omnibus Rules Implementing
Book V of EO No. 292)
When an employee wants to report back to duty before the expiration of her maternity
leave, she may be allowed to do so without refunding the commuted money value of the
unexpired portion of her maternity leave and she shall be paid the corresponding salary for
the service rendered
The foregoing provision shall be subject to a certification of a physician that the subject
employee is physically fit for work (Sec. 14 Rule XVI Omnibus Rules Implementing
Book V of EO 292)
d) Monetization of Leave/Service Credits
408
 Duly approved application for monetization of leave credits. However, no inclusive
dates shall be indicated except the number of days applied for
 Certification/Statement showing the balance of leave standing for the credit of
employee , which shall not be less than 15 days
e) Entitlement of monetization of leave credits

Government officials and employees in the career of non-career service whether
permanent, temporary of provisional or casual may be allowed to monetize a maximum of
ten (10) days leave credits provided they have already accumulated at least fifteen (15)
day vacation leave/service credits at the time of application.
f) Terminal Leave (COA Cir. 81-55, Feb. 23, 1981)

 Approved application for Terminal Leave
 Complete Service Record
 Clearance from Money and Property Accountability
 Clearance from the Ombudsman
 Copy of last appointment and appointment showing highest salary received if the
salary under last appointment is not the highest
 Clearances from fiscal’s office, places of residence and place of last assignment
 Claimant’s affidavit, that there is no pending case against him (RA 3019)
g) Overtime Pay (COA Cir. 81-155, Feb. 23, 1981)

 Authority of the Department Head
 Accomplishment Report
 Daily Time Record
h) Payment of Overtime Compensation

Overtime compensation by the hour shall be computed on the basis of the authorized
monthly basic salary of the officer or employee authorized to render overtime services.
However, as a general rule, the amount of overtime compensation, which may be allowed
an employee for a given calendar year, shall not exceed fifty percent (50%) of his basic
salary (Sec. 282(a) GAAM I)
Meal allowance in kind at P 20.00 per meal may be granted to officials and employees
who have rendered at least three (3) hours of overtime service before mealtime. However,
availment of the meal allowance in kind herein authorized shall constitute a bar from
collecting the overtime compensation authorized (Sec. 282, GAAM Vo. II)
i) Officials and Employees not entitled to Overtime

The payment of overtime service shall not apply to officials occupying positions
enumerated hereunder:
 Department Secretaries
 Department Undersecretaries
 Department Assistant Secretaries
 Bureau Directors and Regional Directors
 Assistant Bureau Directors and Assistant Regional Directors
 Department Service Chief and Assistant Department Service Chiefs
 Positions of equivalent category as an State Universities and Government-Owned
and Controlled Corporation
409
 Intermediate positions and created in between the above enumerated positions and
inasmuch as these positions involve coordinative and integrative functions and in
some cases exercising general supervision over the line divisions and units (Sec.
284 GAAM I)
j) Honorarium
 Authority to collect honorarium
 Certification of service rendered
 Copy of contract, if any, between the agency and the personnel if latter is not an
employee of the agency
 Accomplishment report
k) Subsistence Allowance
 Daily Time Record/Evidence of Service Rendered

 Duly approved request for commutation
l) Entitlement/Non-Entitlement to Subsistence Allowance
Subsistence allowance shall mean all allowance for meal or subsistence for an official or
employee who, by the nature of his duties and responsibilities has to make his services
available in his place of work even during mealtime. (Sec. 243 GAAM Vol. II)
In all cases, officials and employees who are on maternity leave, sick or vacation leave,
whether with or without pay, or on full time or part time detail with another organizational
unit of same agency, another agency or special project, or attending training
course/scholarship grant/seminar or any other similar activity or on official travel shall no
be entitled to subsistence allowance for the duration of their official leaves, detail,
attendance in a training course/scholarship grant/seminar, or any other similar activity, or
official travel (Sec. 296 (e) GAAM Vol. I)
m) Hazard or Hardship Allowance (Sec. 313 GAAM II)

 Evidence from the department of National Defense the place of assignment/travel in a
strife torn/hazardous area, or Certification from the Regional Director concerned in
case of assignment in mental hospital, radiation exposed clinic and laboratories or
disease infested areas, or Certification from the Philippine Institute of Volcanology
and Seismology in case of volcanic activity and/or eruption
 Duly accomplished time record of employee or travel report
 Certification of the accountant that funds are available for the purpose
 A copy of special order from the agency department head covering the assignment to
hazardous/difficult areas
n) Representation and Transportation Allowance (RATA)

 Approved resolution/law authorizing grant of RATA
 Certification that recipient does not use government vehicles and that said amount was
incurred in the performance of his duties.
410
II. MAINTENANCE AND OTHER OPERATING EXPENSES (MOOE)
1) Travel Expenses
a) Local Travel (E.O. No. 298, March 23, 2004)
 Travel Order or Authority to Travel approved by the Agency Head or his duly
authorized representative, or by the Department Head for travel exceeding One (1)
month but not less that three (3) months, or by President, if travel exceeds three (3)
months.
 Approved Itinerary of Travel
 Certificate of Travel Completed
 Certificate of Appearance
 Tickets for place, bus, ship fare or its equivalent
 Receipts, in case entitled to travel representation allowance
 Reimbursement Expense Receipt (RER), if necessary
For Department of Health Field Personnel

 Itinerary of Daily Activities of Field Employees (IDAFE) (which consolidates
Itinerary of Travel, Certificate of Travel completed, Certificate of Appearance and
Monthly Activity Report)
 Summary of Travel Expenses Claim (STEC) (COA Cir. 89-306, May 5, 1989)
For Travel in Connection with Appearance in Court

 Certificate of Attendance in court and copy of subpoena
 Certificate to effect that he is a witness for the government and not a party in a civil
case
 If claimant is an ex-employee, Certificate that he was cited by reason of knowledge of
the case while he was still in the service
 Rates shall follow the existing authorized rates
Limitations in payment of Traveling Expenses

A full travel allowance is allowed only in cases of absence from the permanent station
One (1) full day. For less than a full day, only the corresponding fractional part of the
allowance. To determine fractional part, divide allowance equally into four (4) units
corresponding to breakfast, lunch, dinner and lodging
b) Foreign Travel
Types of foreign travel
 Scholarship, fellowship, and training or study grants to be approved by the special
committee on scholarship created for the purpose
 Conferences, special missions and other non-study trips
 Assignment to Foreign service posts such as officials and employees of the
Department of Foreign Affairs, Trade and Labor Attaches etc.
Allowable travel expenses
 Scholarship, fellowship and training or study grants
- living allowance and per diems
- transportation
- clothing allowance
- tuition and matriculation fees, books and supplies
- medical and dental care
- insurance
411
(Note: For further discussion of the above enumerated allowances the lecturer
should refer to EO 129, S. 1968 and EO 367, 2. 1989)
 Conference, missions and other study trips (Sec. 351 GAAM I)
- Transportation
- Clothing allowance
- Representation expenses
- Daily allowance and reimbursable limit for hotel room rate
- Insurance
Documentary requirements
 Approval of the President for Department Secretaries/Undersecretaries/Assistant
Secretaries and other officials of equivalent rank, or of the Department Head for all
other positions
 Approval of Special Committee on Scholarships – for scholarship, fellowship,
training and study grant
 Travel Order
 Approved Itinerary of Travel
 Authority from the Office of the President for representation allowances
 Certification that no clothing allowances has been received during the next
preceding twenty four (24) months for claims for clothing allowance
 Certificate of Travel Completed
 Tickets
 Receipts, in case of pre travel expenses
 For representation expenses, Certification under oath that expenses incurred were
pursuant to Title II (Conferences, Special Missions and Other Non-Study Trips)
Section 17 of EO 129, as amended in accordance with prior authority obtained
from the Office of the President
 Report on Travel
2) Communication Services
a) Telephone Charges
 Receipts/Invoices/Bill (Original Copy)
 Certification of the Head of the agency concerned or his authorized representative
that there was no service interruption and that all telephone numbers covered are
properly indicated on company’s bill
 For long distance calls, certification of the Head of the agency that the long
distance calls was strictly official in nature, exceptionally urgent and absolutely
necessary
b) Telegrams, Cables and Wireless Charges (GAAM)

 Invoices/Receipts (original copy)
 Copy of messages/telegrams/radiogram/cablegrams and all other wireless messages
c) Postage charges (SAM)

 Duly approved requisition /PO
 Statement showing by denomination the balance on the date of the last purchase, the
issues since then, and the balances on the date of new purchase
 Evidence of Payment/OR
3) Repairs and Maintenance of Government Facilities

a) By Administration
412
 Authority to undertake project
 Program of work/detailed cost estimates approved by proper authorities
b) By Contract
 Contract signed by the parties and witnessed by Chief Accountant/Treasurer
 Plans, Programs of Work, Detailed Cost Estimates approved by proper authorities
 Certificate of availability of Funds, duly verified by the Auditor
 Accomplishment Report
 Affidavit of contractor that all bills for materials used and labor employees have been
paid as corroborated by a certificate of project engineer
Thru Public Bidding (First Payment)
 Advertisement/Call for Bids
 Winning Bidders offer and Bid Tender of other participants/abstract of bids
 Letter of Award Acceptance of Bid proposal
 Contract Documents and Performance Bond
 Plans and Specifications
 Notice to Commence Work
 Inspection report and Contractor’s accreditation Succeeding Payment (additional)
 Bill of Creditor
 Progress Report of Accomplishment
 Inspection Report
Final Payment (Additional)

 Certificate of Completion and Final Acceptance
 Certificate of Final Inspection
 Affidavit of the contractor stating that all materials used and laborers employed have
been paid
Negotiated Contract (First Payment)

 Authority to enter into negotiated contract
 Contract documents and performance bond
 Program of Work and Detailed Cost Estimates
 Notice to Commence Work
 Inspection Report and Contractor’s accreditation
Succeeding Payment (Additional)
 Bill of Creditor
 Progress Report of Accomplishment
 Inspection Report
Final Payment (Additional)
 Certificate of completion and final acceptance
 Certificate of final inspection
 Affidavit of the contractor stating that all bill of materials used and laborers employed
have been paid
Payment of Change or Extra Work Order and Contract Price Adjustment

 Same as by Administration and by contract if not yet submitted
 Approved change order or extra work and approval by the proper authorities of price
adjustment
 Breakdown of total addition/ deduction amount involved into work items and cost
components including detailed quantity estimates of any additional work
413
 Cost estimate showing in sufficient detail the derivation of all prime/direct cost and
overhead/indirect cost of new items of work not included in original contract
 Duly approved revised plans indicating changes made
- inspection report
4) Maintenance of Motor Vehicles Used for Official Travels of Officials and Employees
a) Repair and/or servicing
 Approval request for repair and/or servicing
 Pre-repair inspection (COA Cir. 89-229 A, 9/8/99)
 Certificate of the Property Officer stating the vehicle belongs or is used by the agency,
and the repair is necessary and that the defects in the vehicle was incurred through
normal wear and tear and not due to the fault or negligence of any official or employee
 Report of Waste Materials for replacement of spare parts
 Official receipts for expenses incurred for repair and servicing and spare parts
b) In case of Major Repair

 Canvass from at least three (3) contractors, or public bidding if amount involved is
more than P 50,000.00
 Certificate of Accreditation of repair shop issued by Accreditation Board
 Job Order/Contract
 Guaranty Certificate of Contractor
 Certificate of Acceptance by Property Officer of the work or service done in
conformity with specifications of contract and accomplished within the specific period
of time
5) Transportation Services
a) Hauling Services
 Contract of Service
 Certificate of Receipts of Agency – consignee of articles in good order and condition
b) Shipment
 Copy of bills of lading and/or airway bill as the case may be, signed by consignee or
his representative
 Certificate of Receipt of agency – consignee of articles in good condition
6) Supplies and Materials

a) Common to all kinds of Purchase or Contracts
 Requisition and Issue Slip (RIS) duly approved by proper authorities
 Purchase/Letter Order/ Contract, duly approved by proper officials
 Original copy of the dealer’s/supplier’s invoice duly signed by the dealer or his
representative
 Inspection report or waiver of inspection
 Results of tests or analysis by proper government agency if articles are subject to test
 Certificate of availability of funds
 Memorandum Receipts signed by officials or employees to whom semi-expendable
supplies had been issued
 Stock position sheet in case any single commodity requisitioned exceeds P 1,000.00 in
value
 Evidence of acceptance and receipt by the agency
Thru Public Bidding (additional)
414
 Copy of advertisement
 Winning bidder’s offer
 Bid tenders of other participants
 Letter of award of acceptance and
 Performance bond of winning bidder
Thru Emergency Purchase (additional)

 Canvass papers from at least three (3) bonafide suppliers
 Certificate of head of agency or his duly authorized representative as to the necessity
and jurisdiction for emergency purchase, and that the price paid or contracted for is
reasonable and that it was the lowest obtainable at the time of purchase or order
Thru Exclusive Distributors (additional)

 Certificate of exclusive distributorship
 Certificate that there are no sub dealers selling at lower prices and that no suitable
substitute are available
b) For Gasoline and Oil

 Driver’s Trip Ticker duly accomplished and approved
 Requisition and Issue Voucher
 Invoices
 Fuel consumption report
7) Rents
 Contracts of Lease
 Statement of Account/official receipt
8) Interest
 Authority for incurrence of obligations together with the terms and conditions for
repayment and the rates of interest charged (SAM)
9) Grants, Subsidies and Contributions

 Memo of Agreement/Authority for grants, subsidies and contributions (SAM)
10) Awards and Indemnities

 Indemnify for injuries/sickness/death
- Evidence showing that death, sickness or injury as the case may be,
occurred or was contracted in line of duty
- Certificate of Award issued by committee as Physical examination of the
agency concerned (SAM)
 Indemnify for damages to property
- Indemnity Bond, in case property being conveyed is unregistered or
untitled (SAM)
- Deed of absolute Sale or Conveyance (SAM)
- Deed of Conveyance or agreement to Demolish and Remove Improvement
- Certificate of Title (SAM)
11) Water Illumination and Power Service

 Bill/Official Receipts
12) Social Security Benefits, Awards and Other Claims
415
 Retirement Claims
- Application in writing duly endorsed to the system by the Head of Agency
concerned
- Complete service record including statement of leave of absence without
pay
- Clearance from money, property and legal accountability
- Approval of retirement by the employer or agency and adjudication by the
GSIS
- Clearance from GSIS
- Fiscal’s clearance – place of assignment and place of residence
- Affidavit of applicant that he has no pending criminal case
- Statement of Assets and Liabilities (COA Cir. 81-155, 2/23/81)
 Separation Pay
- Copy of pertinent law/authority
- List of employees lay off showing the names designations and last salary
received
- Service record of each employee duly certified by Head of Agency or his
duly authorized representative
- Certificate of Clearance from agency concerned
- Certificate of Clearance from GSIS
- Certificate of Clearance from PAGIBIG
- Statement of Assets and Liabilities
13) Training and Seminar Expenses

 Purchase of supplies and materials shall be in accordance with the procurement
requirement for “Supplies and Materials” particularly on emergency purchase
 Receipts for other expenses incurred
14) Extraordinary and Miscellaneous Expenses

 Receipts and/or other document evidencing disbursement
 Certificate executed by the official concerned that the expenses sought to be
reimbursed have been incurred for the purpose (in case of extraordinary and
miscellaneous expenses)
15) Confidential and Intelligence Expenses

The confidential and intelligence funds shall be utilized for the following purposes:
 National defense, peace and order, intelligence, counter intelligence programs of the
Department of National Defense and related agencies
 For specific intelligence and/or confidential operation of the National Government
agencies and government owned or controlled corporations with appropriation for
intelligence and/or confidential funds
 In the case of the national security fund, for undertaking national security missions,
and
 For police investigation and detection activities, policies intelligence and arson
investigation activities. (COA Cir. 88-293 12/12/88)
- Certified Xerox copy of pre-audited cash advance vouchers
- Certified Xerox copy of request for obligation of allotment
- Certified Xerox copy of allotment advice
- Undertaking of the summary of expense – Form No. 1
- Certified Xerox copy of ( face of the paid check, reverse side of paid check
indicating endorsement made, itemized list of disbursement)
 Additional documents required to support ordinary disbursements
416
- For incidental expenses such as transportation and entertainment of
assets/informers vouchers shall be supported by receipts, invoices, bill for
board and lodging, itinerary of travel, travel order, certificate of travel
completed, and certificate of appearance
- For purchase of supplies and materials and equipment, vouchers shall be
supported by purchase/letter orders, report of canvass, delivery receipts,
waste material report and other pertinent documents
- For purchase of information or payment or reward vouchers shall be
supported by documents evidencing receipt of payment
16) Advertising and Publication Expenses

 Statement of Account
 Clippings of the advertisement and notices published
17) Other Services

 Repair and Maintenance Done by Private Contractor
- Repairs thru negotiated contracts and public bidding same as by
administration and by contract
- Job Order/Contract
- Report of Waste Materials
- Certificate of Property Officer that equipment belong to or is used by the
agency concerned that repair is necessary through normal wear and tear and
not due to the fault or negligence of an employee or official
- Guaranty/Warranty/Certificate of repairman
- Pre-repair inspection
 Subscription to Periodicals and Technical Magazines
- Copy of subscription
- Evidence of receipt of payment
 Radiocast and Telecast, Video Coverage and Documentary Films
- Contract between agency and radio or TV station specifying conditions or
radio cast or telecast (SEC. 415(a) GAAM Vol. I)
- Evidence of receipt of paymen
 Payment of Legal Expenses
- Application of official or employee concerned giving the facts of offence
he was charged with and approved by proper Department Head concerned
and passed upon by the COA Chairman
- Copies of decision exonerating him from administrative or criminal
liability
- Receipts of actual and related expenses incurred
- Certificate of availability of funds (SEC. 4.16(a) GAAM Vol. 1)
 Security and Janitorial Services
- Contract executed between agency and private firm
- Copy of bond which is equal to the cost of labor under contract
417
LTO Form 42

Name of Province/City/Municipality
Address
No.
DISBURSEMENT VOUCHER
Mode of
MDS Check Commercial Check ADA Others
Payment
TIN/Employee No. OR/BUR No.
Payee
Responsibility Center
Office/Unit/Project Code
Address
EXPLANATION AMOUNT
A. Certified B. Approved
Approved for
for Payment
Payment
Cash available
Subject to Authority to Debit Account (when applicable)
Supporting documents complete
Signature Signature
Printed Printed
Name Name
Position Position
Head, Accounting Unit/Authorized Representative Agency Head/Authorized Representative
Date Date
C. Receipt
Receivedof Payment JEV No.
Check/ Date Bank Name
ADA No.
Signature Date Printed Name Date
Official Receipt/Other Documents
418
DISBURSEMENT VOUCHER (DV)
INSTRUCTIONS
A. The Obligation Request shall be prepared in three copies, to be distributed as

follows:
Original – to be attached t the DV
Duplicate – Budget Unit
Triplicate – Accounting Unit
B. The Accounting Unit shall stampt 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
00 00 0000
Serial number
Month of Issue
Year of Issue
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 B) certification of the Head of the Accounting Unit or his
authorized representative as to obligation of allotment for the purpose as
indicated and completeness of supporting documents. The certifying
officer shall affix his signature, print his name, indicate the his position,
and the date of his signing on the space provided.
11. Certified (Box B) – certification by the Treasurer or his duly authorized
representative on the availability of fund.
The certifying officer shall affix his signature,print his name, indicate his
position and the date of his signing on the space provided.
12. Approved for Payment © - approval by the Agency Head or his duly
authorized representative on the payment covered by the DV.The
approving officer shall affix his signature, print his name and indicate his
position and the date of his signing on the space provided.
13. Received Payment (Box D) – acknowledgement by the claimant or his
duly authorized representative for the receipt of the check/cash and the
date of receipt. The claimant/payee shall affix his signature on the space
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
419
LTO Form 43
GENERAL PAYROLL Sheet ______of ____Sheets
LGU
Period
No.: _____________________
We acknowledge receipt of the sum shown opposite our names as full compensation for services rendered for the perido stated:
DEDUCTIONS
No. NAME ID No. Position Monthly Allowance Amount Absences Life & Withholding Medicare Pag-ibig Salary No. Net Amount SIGNATURE
Salary Earned w/o pay Retirement Tax Loan Received OF PAYEE
4
66
*10
CERTIFIED: Services have been duly rendered as stated APPROVED FOR PAYMENT:
Name & Signature of Supervisor Name & Signature of Officer
CERTIFIED: Funds available in the amount of P _____________ CERTIFIED: Each employee whose name appears above has been
paid the amount indicated opposite his/her name.
Name & Signature of Treasurer Disbursing Officer Date
420
GENERAL PAYROLL
INSTRUCTIONS
1. This form shall be used for claims for salaries of permanent/regular employees of
national government agencies, local government units as well as government
corporations.
2. The used of this form should indicate on its heading not only the Agency name but
also the name of the office where the claimants/employees are assigned.
3. The shall be numbered as follows:
00 00 00 0000
Serial number
Month of Issue
Year of Issue
Fund
4. The identification no. of the employees shall be entered in column 2.

5. The position to be shown in column 3 shall be the same as that appearing in the
employee’s appointment.
6. The monthly salary shall be the amount corresponding to one-twelfth of the annual
salary stated in the appointment and shall be entered in column 4.
7. If allowance is being paid together with the salary, the amount thereof shall be entered
in the allowance column (column 5).
8. The total amount earned (column 6) shall be the total amount of salary earned for the
stated period plus the allowance stated in column 5.
9. Absences without pay, life and retirement, withholding tax, Pag-ibig, salary loan, etc.
(column 7-14) shall be deducted from the amount earned to get the net amount to be
received.
10. Employees shall affix their signatures on the last column to acknowledge receipt of the
net salaries and allowances.
11. The certification that services have been rendered as stated shall be signed by the
immediate supervisor/head of office.
12. The certification as to completeness and propriety of supporting documents/previous
cash advance liquidated/ existence of funds held in trust shall be certified/signed by the
Accountant.
13. The certification as to availability of funds shall be accomplished/signed by the
Treasurer.
14. Payment shall be approved by the head of office or his authorized representative.
15. The certificate of payment shall be accomplished by the Disbursing Officer/Cashier.
16. Blank columns shall be used for other authorized salary deductions and government
shares for GSIS and PAG-IBIG.
421
LTO Form 44
Sheet ___ of ___ Sheets
DAILY WAGE PAYROLL

Project
LGU Period:
Number Rate DEDUCTIONS Community Tax

NAME Designation of Days Per GROSS NET Signature or Place of
Number Date
Worked Day SALARY PAY Thumbmark Issue
1 1
2 2
3 3
4 4
68
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
TOTA L
CERTIFIED: Approved for Payment: CERTIFIED:
Each person whose name appears on this Each person whose name appears on
roll had rendered services for the time stated. the above roll has been paid the amount stated
opposite his name ater identifying him.
Name & Signature of Name & Signature of Approving Officer Name & Signature of Disbursing
Foreman/Supervisor Officer
422
DAILY WAGE PAYROLL
INSTRUCTIONS
1. This form shall be used for claims of laborers/casual employees and other daily wage
earners.
2. It shall be accomplished in at least three copies to be distributed as follows:
Original copy - to the Auditor
Duplicate copy - to the Accountant
Triplicate copy - to be retained by the Paymaster or
Disbursing Officer
3. The designation of the claimant shall be indicated under “DESIGNATION” column

(column 2).
4. The number of days worked for the stated period shall be indicated in column 3.
5. The daily rate of each worker shall be indicated in column 4.
6. The amount computed based on columns 3 and 4 shall be indicated in column 5.
7. Authorized deductions shall be indicated in columns 6-8.
8. The net pay (gross salary less deductions) shall be indicated in column 9.
9. Workers receiving payment hereon shall affix their signature or thumb mark in
column 10 to acknowledge receipt of payment.
10. The Disbursing Officer shall indicate the number, date and place of issue of the
Community Tax Certificate presented by the claimants (columns 11, 12 and 13).
11. This payroll shall be certified as to services rendered by the Foreman/Supervisor.
12. The authorized official shall approve the payroll for payment.
13. The disbursing officer shall certify payment of each person indicated in the payroll.
423
LTO Form 45
CHECK REGISTER
LGU
Fund ______________________ Bank Account No. __________
Accountable Officer Official Designation Station

CHECK Received by:
Date Date Name of Payee Amount Name/
Number
Issued Released Signature Date
For Accountable Officers' Use
424
CHECK REGISTER
INSTRUCTIONS
A. The Check Register shall be accomplished as follows:
1. LGU – name of the municipality/province/city

2. Fund – fund name/code
3. Bank Account No. – name of Bank
4. Date – date of check issued
5. Check Number – serial number of the MDS checks drawn shall be
entered in numerical sequence, including cancelled ones.
6. Check – Date Released – date when the check is released to the payee.
7. Name of Payee – name of the payee/claimant
8. Amount – amount of check issued by the Accountable Officer.
9. Received by – name and signature of the payee/claimant and the date
received.
B. Each Disbursing Officer/Accountable Officer shall maintain this record. All transactions for
the day shall be recorded immediately.
425
LTO Form 46
REPORT OF CHECK ISSUED

LGU
Bank Name/Acct Name:_____________ Report No.:_______________

Sheet No:_________________
Checks Nature of
DV No. Responsibility Center Payee Amount
Date No. Payment
TOTAL
Certified Correct: Received by:
_________________________
Disbursing Officer Accounting Clerk
_________________________
Date Date
426
REPORT OF CHECKS ISSUED (RCI)
INSTRUCTIIONS
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. It shall be
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 PCF and supporting
documents
2nd copy – Accounting Unit

3rd copy – Treasurer’s file
b. One (1) RCI shall be prepared for each bank account and it shall be the basis for
the preparation of Journal Entry Voucher (JEV).
This report shall be prepared chronologically including cancelled/voided check
427
LTO Annex 47
Process Flow on Disbursement By Checks
Area of
Responsible
Concerned Office Gather supporting documents, and approved ALOBS, prepare
1 DV and forward to Head of Department.
Supervisor/Head of 2 Sign Box A of DV and submit to the Accounting Unit.

Department
Check completeness of documents, assign number to DV, sign
Accounting Unit 3 Box B and forward to Treasurer.
Verify claim, certify cash availability (Box C) and forward to

Treasurer 4 approving officer.
Note: If funds are not available, return to Accountant for

recording in the books as Accounts Payable (AP). For AP, JEV
shall be prepared by Accounting Unit and JEV number
reflected in the DV. JEV for AP is recorded in General Journal.
Accountant retains copy of DV and forwards to Treasurer
Local Chief Executive 5 Approve transaction (Box D) and forward DV to Cashier.

or authorized
approving officer
Treasurer 6 Prepare, sign check and forward check with DV to

countersigning officer.
Administrator/ Vice- 7 Countersign check and forward to Accountant for preparation

Mayor for the Local of the Accountant’s Advice of Local Check Disbursements.
Sanggunian
Disbursements
Accountant 8 Prepare Accountant’s Advice of Local Check Disbursements
and submit to bank. Return DV, check and supporting
documents to Cashier/Treasurer.
Treasurer 9 Record check in the Check Register and release check to

claimant. Record disbursement in Cashbook – Cash in Bank.
Prepare Report of Checks Issued. Forward RCI with DV and
supporting documents to Accounting Unit.
Accounting Unit 10 Prepare the JEV based on individual checks/voucher; sign

"Prepared By" portion (approved by Chief Accountant), and
record JEV in the Check Disbursements Journal. Post monthly
to the General Ledger/Subsidiary Ledgers.
Accountant 11 Forward RCI, DV, supporting documents and JEV to the Office
of the Auditor.
428
LTO Form 48
PROVINCE/CITY/MUNICIPALITY
ACCOUNTANT'S ADVICE OF LOCAL

CHECK DISBURSEMENT
ADVICE NO.
DATE:
To: The Bank Manager
Please be informed that the following checks were issued by this Office:
Bank Account Check

Date Payee Amount
Number Number
TOTAL AMOUNT
Amount in Words ____________________________________________

__________________________________________________________
___________________________________________________________
Certified Correct:
Prov./City/Mun. Accountant
(Signature over Printed Name)
Delivered by:
Bank Representative
(Signature over Printed Name)
Accountant's Representative
(Signature over Printed Name) Date Received: _______________
429
LTO Form 49
REPORT OF DISBURSEMENTS
LGU
Accountable Officer: Report No.

Designation: Sheet No. :
Date Payee Reference Amount
TOTAL
Certified Correct: Received by:
Disbursing Officer Accounting Clerk
Date Date
430
REPORT OF DISBURSEMENTS (RD)
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 month)

month
year
Disbursing Officers/Paymasters’ Code
Fund
5. Sheet No – page number of the report
6. Date – date of the DV/source documents
7. DV No. – assigned DV number
8. Payee – name of the person/office to whom payment is
made
9. Nature of Payment – nature of claims paid
10. Responsibility Center – code assigned to each cost
center
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 ca sh advance
such as cash advance for salaries and field operating expenses
and petty cash fund (at end of year)
C. This report shall be prepared in three (3) copies and to be
Original – COA thru the Accounting Unit together
with the original copy of the paid
vouchers/payroll and supporting
documents
2nd copy – Accounting Unit
431
LTO Form 50
LIQUIDATION REPORT No.:
Date:
LGU Responsibility Center
PARTICULARS 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
432
LIQUIDATION REPORT (LR)
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
4. Responsibility Center – code assigned to each cost
center
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 prepared by the employees/officers who
made the cash advance. It shall be prepared in three
copies:
Original – COA Auditor thru the
Accounting Officer
Duplicate – Accounting Officer
Triplicate – employees/officer concerned
433
LTO Annex 51
Process Flow on Cash Disbursement

Area of
Responsible
Concerned offices 1 Processing of Payrolls to be paid by cash is the same as that of
steps (a) to (e) for check disbursements.
Office of the Treasurer 2 Gather duly certified and approved payrolls to be paid out of
cash advance. Prepare DV for cash advance corresponding to
the net amount of payroll/s. Sign Box A of DV and submit to
the Accounting Unit.
Accounting Unit 2 Check completeness of documents/ previous cash advance

liquidated, assign number to DV, sign Box B and forward to
Approving Officer.
Local Chief Executive 4 Approves DV and forward to Treasurer for preparation of

checks.
Treasurer 5 Prepare and sign check, and forward check with DV to

countersigning officer.
Administrator 6 Countersign check and forward to Accountant for preparation

of Advice.
Accountant 7 Prepare Accountant’s Advice of Local Check Disbursements

and return DV, check and supporting documents to
Cashier/Treasurer.
Treasurer/ Disbursing 8 Encash check and pay claimants. Record disbursement in

Officer Cashbook – Cash Advances.
Note: Employees/payee shall sign on the received portion of the payroll/DV to

acknowledge receipt of payment.
Disbursing Officer 9 If there are unclaimed salaries, return unused cash to the
Treasurer/ Cashier. An official receipt (OR) shall be issued by
the Treasurer/Cashier to acknowledge the return of unused cash
and indicate check no. of cash advance granted on the face of
OR. Record the refund as credit to cash advance and attach OR
to the Cashbook – Cash Advances.
Disbursing Officer 10 Prepare Report of Disbursement, attach paid payrolls/

supporting documents and copy of OR for unused cash advance
returned to Treasurer/Cashier. Sign "Certified Correct" portion
of Report of Disbursement and submit to Accounting Unit.
Note: The RD shall serve as the liquidation report of the cash advance
granted to the Disbursing Officer. The RD shall be distributed as follows:
Original – Accountant together with the original of the paid DVs/Payroll

and supporting documents
434
Copy 2 – File
Accountant 11 Prepare JEV to record the liquidation of cash advance. Record

JEV in the Cash Disbursements Journal (CDJ). Post monthly to
the General Ledger/ Subsidiary Ledger.
Accountant 12 Forward Report of Disbursement and supporting documents

including JEV to the Office of the Auditor.
435
LTO Annex 52
Process Flow on Disbursements Through Bank – Payroll Payment
Area of
Responsible
Cash Unit/Cash Staff 1 Receive the approved check, DV and Following Months
Payroll (FMP), sign the logbook of the releasing office, and
forward the documents to the Cashier.
Cash Unit/Cash Staff 2 Deposit the check to the Bank Payroll Account together with
the original of the Summary of Employees Net Earnings
(SENE) received from Accounting Unit. File temporary copies
1-2 of FMP, copy 2 of the check, and copies 1-3 of DV for the
preparation o RCI.
Note: The payee of the check is the Servicing Bank whose

authorized representative shall acknowledge receipt of the
check by signing on the original of the DV
436
LTO Form 53
PETTY CASH VOUCHER

No.:
LGU Date:
Payee/Office : Responsibility Center:
Address :
I. To be filled up upon request II. To be filled up upon liquidation

Particulars Amount
Total Amount Granted
Total Amount Paid per

OR No. ____________
Amount Refunded/
(Reimbursed)
A Requested by: C
Received Refund
Name of Requestor Reimbursement Paid
Approved by:
Disbursing Officer
Immediate Supervisor Disbursing Officer
B Paid by: D
Liquidation Submitted:
Disbursing Officer Reimbursement Received by:
Cash Received by:
Signature over Printed Name of Payee Signature of Payee
Date: _________________ Date: ___________________
437
PETTY CASH VOUCHER (PCV)
INSTRUCTIONS
A. The form shall be accomplished 11. Box B – Cash Received by –

as follows: shall be signed by the recipient
1. LGU – name of the agency of cash.
2. No. – number and date
assigned to the PCV by the
Accounting Section/Unit, it II. To be filled up upon
shall be numbered in the liquidation
following manner:
00 - 00- 00 – 000 12. Total Amount Granted – the
serial number amount of cash received by the
(one series claimant.
for each year) 13. Total Amount Paid Per OR No.
month ___ - the total amount paid as
year
shown in the invoice presented.
Fund
3. Date – date of the preparation 14. Amount Refunded/Reimbursed –
of PCV. the difference between the total
amount granted less amount
4. Payee/Office & Address –
name/office/ address of payee spent .
requesting for petty cash 15. Box C – the DO shall check the
advance. appropriate box and affix his
5. Responsibility Center – code signature.
of the requesting office as 16. Box D – the payee shall check
assigned by the COA. the appropriate box and affix
his signature.
I. To be filled up upon request
B. Part I shall be filled up upon
6. Particulars – purpose of the request of the petty cash
petty cash advance request. advance and Part II shall be
7. Amount – amount of petty filled up upon liquidation.
cash requested.
8. Box A – Requested by – shall C. The PCV shall be prepared in
be signed by the requestor. two copies distributed as
9. Box A – Approved by – shall follows:
be signed by the Immediate Original – Auditor thru the
Supervisor of the Requestor. Chief Accountant together with
10. Box B – Paid by – shall be the supporting documents
signed by the Disbursing Duplicate – retained by the
Officer (DO). DO for his file
438
LTO Form 54
PETTY CASH REPLENISHMENT REPORT
_______________________________
Name of Province/City/Municipality
Period Covered:________________
Report No.:_________________
Sheet No.:__________________
Petty Cash
Date Particulars Amount
Voucher
CERTIFICATION
I hereby certify to the correctness of the above information
__________________ _________
Petty Cash Custodian Date
439
PETTY CASH REPLENISHMENT REPORT
INSTRUCTIONS
1. LGU – name of agency

2. Period covered – the period covering the duration of the replenishment
of the petty cash fund
3. Report No. – number of the PCRR
4. Sheet No. – page of the report
5. Date – date of the source document
6. Petty Cash Voucher No. – the number of the PCV
7. Particulars – purpose of the petty cash disbursement
8. Amount – amount appearing in the PCV
9. Certification – the signature of the petty cash custodian
10. Date – date when the PCRR was signed
440
LTO Annex 55
Process Flow on Petty Cash Fund Disbursements, Liquidation and Replenishment
Area of
Responsible
I. Establishment/Replenishment of Petty Cash Fund
Petty Cash Custodian 1 Receive check from Cashier for the

establishment/replenishment of petty cash fund. Record in the
CDR the date, reference and the amount of check in the
“Disbursements” column.
2 Encash check in GSB and keep the cash in a safety vault.
II. Utilization of Petty Cash Fund
Requesting Personnel 1 Accomplish Box A “Requested by” portion of the PCV
Immediate Supervisor 2 Sign Box A “Approved b” portion of the PCV and return to
Requesting Personnel
Requesting Personnel 3 Submit to the Petty Cash Custodian for the release of fund
Petty Cash Custodian 4 Receive from the Requesting Personnel the PCV duly approved
by concerned official
Petty Cash Custodian 5 Upon granting of the petty cash advance, sign in Box B “Paid
by” potion of the PCV
Requesting Personnel 6 Receive petty cash and signs in Box B “Cash Received by”
portion of the PCV
Petty Cash Custodian 7 Issue copy 2 of the PCV to requesting personnel
Petty Cash Custodian 8 Record paid PCVs in the CDR. Fill-up the following columns:
date, reference, name of payee, nature of payment, amount in
the credit column and cash advance balance.
Petty Cash Custodian 9 File the original of the PCV awaiting liquidation
Liquidation of Petty Cash Advance
Petty Cash Custodian 1 Receive from Requesting Personnel copy 2 of the PCV together
with supporting documents. Check and review completeness of
documents such as the date, amount and nature of expenses
paid as shown in the supporting documents
Petty Cash Custodian 2 If incomplete, return to Requesting Personnel for completion of

needed supporting documents
If complete, retrieve the original of PCV from file and fills up

Box D “Liquidation Submitted” portion of the original and
441
copy 2 of PCVs.
Petty Cash Custodian 3 Check the appropriate boxes for “Received Refund” of
“Reimbursement Paid” portion and sign Box C of the PCV
Requesting Personnel 4 Check and fill up the appropriate boxes for “Liquidation
Submitted” and “Reimbursement Paid” upon submission of
necessary supporting documents and receipt or reimbursements
of cash, if any, and sign the PCV
Petty Cash Custodian 5 Return copy 2 of the PCV to the Requesting Personnel
Petty Cash Custodian 6 If the amount granted is equal to the amount paid as shown in
the liquidated PCV, proceeds to No. 7
If the amount is not equal to the amount paid, retrieve from file
the CDR and record the necessary adjustments based on the
liquidated PCV. Fill up the following columns: date, reference,
name of payee, and nature of payment, amount in the
appropriate debit, credit and balance column.
Petty Cash Custodian 7 File the original of the PDV together with the supporting
documents awaiting replenishment.
Replenishment of Petty Cash Fund
Petty Cash Fund 1 Retrieve from file the original of the PCV together with the
Custodian supporting documents. Check the completeness of all PCVs for
replenishment.
Petty Cash Fund 2 Prepare the Petty Cash Replenishment Report (PCRR) in two
Custodian copies based on PCVs in numerical sequence and fills up the
following columns: date, PCV No. particulars and amount.
Petty Cash Fund 3 Sign in the “Certified Correct by” portion of the PCRR
Custodian
Petty Cash Fund 4 Based on the PCRR, prepare DV in three copies, and forward
Custodian copies of the DV, original of the PCRR and PCV, and
supporting documents to Authorized Official for review and
signature
Authorized Official 5 Sign in Box A portion of the DV
Petty Cash Fund 6 Forward Copies 1-3 of the DV, originals of PCRR and PCVs
Custodian and supporting documents to Budget Division for preparation
of the Obligation Request (ObR)
442
LTO Form 56
DV No.:
DISBURSEMENT VOUCHER
Date:
Barangay City/Municipality:
Tel No. Province:
Payee: Employee No.: Fund:
Address: TIN No.:
Particulars Amount
A Certified B Certified: C Certified :

Existence of available appropriations for the Funds (Cash available) As to validity, propriety, and legality of claim
changes/expenses indicated above Approved:
For payment
Signature:______________________ Signature:______________________ Signature:______________________
Printed Name:___________________ Printed Name:___________________ Printed Name:___________________
Position:________________________ Position:________________________ Position:________________________
Date:__________________________ Date:__________________________ Date:__________________________
D. Received Payment:
__________________________________ Check No.:_________________ Date:____________

Signature Over Printed Name/Date Bank Name:________________
Date OR Number:________________ Date:____________
443
LTO Form 57
Payroll
_____________________________________
Period Coverend
Barangay: City/Municipality: Payroll No. ________
Te. No. Province:
Compensation Deductions
Salaries & BIR Net Signature
No: Name Position
Wages Honoraria Total withholding Others Total Amount of
Regular Tax Due Recipient
A. Certified B. Certified C. Certified D. Paid by:

Existence of available appropriations for the Funds (cash) available As to validity, propriety and
changes/expenses indicated above legality of claim
For payment
Signature:______________________ Signature:______________________ Signature:___________________ Signature:_________________
Printed Name:___________________ Printed Name:___________________ Printed Name:_______________ Printed Name:_____________
Position:________________________ Position:________________________ Position:___________________ Position:__________________
Date:__________________________ Date:__________________________ Date:______________________ Date:____________________
444
PAYROLL
INSTRUCTIONS
A. This form shall be 13. Net Amount Due – gross

accomplished as follows: income less total deductions
14. Signature of Recipient –
1. Period Covered – period signature of officer/employee
covered by payroll receiving the net amount due
2. Payroll Number – the payroll 15. Box A – certification by the
shall be numbered as follows: CCA on the existence of
available appropriations for
00 00 0000 the expenses stated
Serial number 16. Box B – certification by the BT
(one series per year ) on the availability of funds
Month of Issue (cash)
Year of Issue
17. Box C – certification by the
3. Barangay – Name of Barangay PB on the validity, propriety
4. Telephone Number – tel. no of and legality of the claim and
barangay approval for payment
5. City/Municipality – 18. Bod D – to be signed by the
city/municipality where the BT/Disbursing Officer
barangay is located
6. Province – Province where the
barangay is located B. This form shall be prepared in
7. No. – entry number in the triplicate copies to be
payroll distributed as follows:
8. Original – BRK to support
9. Name – complete name of the the SCP
officers/employees covered by 2nd copy – BT
the payroll 3rd copy – BRK
10. Position – position of .
officer/employees
11. Compensation:
 Salaries and Wages –
amount of salaries and
wages due the
employees
 Honoraria – amount
corresponding to the
honoraria for the period
 Blank Space – for other
benefits and allowances
due the employees
 Total – total amount of
salaries/honoraria and
other compensation due
for the period.
12. Deductions – amount of
deductions from the employees
such as BIR withholding tax,
others
deductions
445
LTO Form 58
PURCHASE ORDER
Tel No. Province:
Supplier: PO No.:
Address: Date:
Mode of Procurement
TIN: __Bidding ___Negotiated __Over the Counter
Gentlemen:
Please deliver to this office the following articles subject to the terms and conditions contained herein
Place of Delivery: Delivery Term:
Date of Delivery: Payment Term:
Unit Particulars Quantity Unit Cost Amount
(Total Amount In Words)

Purpose:
In case of failure to make full delivery within the time specified above, a penalty on one-tenty (1/10)
of one percent for everyday of delay shall be imposed
Very truly yours
_______________________________
Sinature over Printed Name
Punong Barangay
_______________________________
Date
Conforme: Existence of Available Appropriations of ______________
(amount in workds/figures)
____________________________ ____________________________
Signature over Printed Name Signature over Printed Name
Supplier Supplier
___________ ___________
Date Date
446
PURCHASE ORDER
INSTRUCTIONS
A. This form shall be 15. Unit Cost – cost per unit of the
accomplished as follows: supplies/goods ordered
16. Amount – total amount of the
1. Supplier/Address/TIN – name, goods ordered (quantity
address and TIN of the supplier multiplied by unit cost)
2. PO No. – the PO shall be 17. Penalty Clause – penalty
numbered as follows:: imposed by the barangay in
case of non-compliance with
00 00 0000 the terms of the PO
Serial number 18. Signed by – signature of the
(one series per year ) PB
Month of Issue 19. Conforme – signature over
Year of Issue
printed name of supplier or his
3. Barangay – Name of Barangay representative signifying his
4. Telephone Number – tel. no of approval to the terms set by
barangay the barangay and the date of
5. City/Municipality – signing
city/municipality where the 20. Existence of Available
barangay is located Appropriation – the amount of
6. Province – Province where the available appropriation
barangay is located committed for the purchase.
7. Date – date of PO preparation This shall be signed by the
8. Mode of Procurement – mode of CCA
procurement used such as public
bidding, negotiated purchase, B. This form shall be prepared in
procurement service, etc. as triplicate copies to be
provided under RA 9184 distributed as follows:
9. Place/Date f Delivery – place Original – Supplier for
and definite date/s of delivery. If conforme to the
not stated, it shall mean the terms of the PO
office of the official making the and attachment to
order and the date shall be seven the DV upon
days after receipt of the PO by request for
the supplier payment
10. Delivery Term – delivery Term 2nd copy – BT
i.e. Free on Board (FOB) 3rd copy – BRK
destination, FOB shipping point, .
etc. In the absence of such term, C. In case of negotiated purchase,
it shall mean FO destination the Barangay Secretary shall
11. Payment Term – specified indicate the Sangguniang
period required when the Resolution No. under which the
delivered goods shall be paid SB approved the contract.
and discounts allowed, if any,
such as 2/10, n/30
12. Unit – unit of measure of the
supplies (i.e. box, bottle etc.)
13. Particulars – brief description of
the supplies/goods ordered
14. Quantity – quantity of goods
ordered
447
LTO Form 59
PURCHASE REQUEST
Barangay PR No.:
City/Municipality Date:
REQUISITION
Estimated
Item Number Unit of Measurement
Unti Cost
Qty. Item Desciption Estimated Amount
Total Estiimated Amount

Purpose:
For use by the Barangay Treasurer

Requested by: Approved by:
____________________________ ____________________________
Requisitioner Requisitioner
___________ ___________
Date Date
448
PURCHASE REQUEST
INSTRUCTIONS
B. This form shall be prepared in

A. This form shall be triplicate copies to be
accomplished as follows: distributed as follows:
Original – Supplier for
1. PR No. – the PR shall be conforme to the
numbered as follows:: terms of the PO
and attachment to
00 00 0000 the DV upon
Serial number request for
(one series per year ) payment
Month of Issue 2nd copy – BT
Year of Issue
3rd copy – BRK
2. Barangay – Name of Barangay .
3. City/Municipality – .
city/municipality where the
barangay is located
4. Date – date of RO preparation
5. Item number – code of requested
goods
6. Quantity – quantity of goods
requested
7. Unit – unit of measure of the
goods requested (i.e. box, bottle,
etc.)
8. Item Description – brief
description of the goods
9. Estimated Unit Cost – the
estimated cost per unit of the
goods being requested
10. Estimated Amount – estimated
total amount of the goods
requested (est. quantity
multiplied by est. unit cost)
11. Total Estimated Cost – total
estimated amount of all the
goods specified in the request
12. Purpose – a brief explanation on
the purpose of the request
13. Requested by – name and
signature of the person
requesting the purchase of goods
14. Approved by – signature of the
PB
449
LTO Form 60
Summary of Checks Issued

____________________________________
Barangay: City/Municipality: SCkI No.:

Barangay Treasurer: _____________ Province: Page:
Deductions
Check Gross
Date DV No Fund Payee Particulars Witholding Final VAT Net Amount
No. Amount EWT 2% EWT 1% EVAT 1 Others
Tax 5%
I hereby certify that the foregoing is the complete and correct records I hereby acknowledge receipt of the SCkI complete with carbon
of all checks issued from ________ to _________. The carbon copies of the copies of all checks issued and originals of all paid DVs/payrolls
checks issued and originals of all paid DVs/payrolls are hereto attached. and supporting documents.
___________________ _______________ __________________ ____________

Barangay Treasurer Date Barangay Record Keeper Date
450
SUMMARY OF CHECKS ISSUED
INSTRUCTIONS
1. Period the inclusive period
covered by the report
2. SCkI No. – the SCkI shall be
00 00 0000
Serial number
Month of Issue
Year of Issue
3. Barangay – name of
barangay
4. Barangay Treasurer – name
of designated brgy treasurer
5. Date – date of the check
6.
7. Check No – serial number
of the check. The check
issued including the
cancelled ones shall be
listed in correct numerical
sequence
8. DV/Payroll – number of the
DV/Payroll
9. Fund – name of the fun to
which the payment was
charged. Example – GF, CF,
etc.
11. particulars – brief
disbursements
12. Gross Amount – gross
amount of the claim
13. Deductions – deductions on
the total claim
14. Net Amount – amount of
the check
by the BT
signed by the BRK
B. The SCkI shall be prepared in

three copies to be distributed as
follows:
Accountant
2nd copy – BRK
3rd copy – DBC
451
LTO Form 61
CHECK DISBURSEMENTS REGISTER

____________________________________
Barangay: City/Municipality: CDReg No.

BREAKDOWN OF EXPENDITURES
Deductions
Maintenance and Other Operating Expenses FE Capital Outlay Others (See List at the Back
Date Salaries & Gross Amount of
Particular Ref. Payroll Honoraria
2007 Wages Gas, Oil & Telephone Office Furniture & Account Amount Checks Issued
Office Supplies Water Electricity Interest Expense Amount Due to BIR Others
Lubricants Expenses Equipment Fixtures Classification
Certification :
I hereby certify to the correctness of the above data. Records are based
on the SCkI submitted by the B and that the carbon f the checks and all the
original of the paid DVs/payroll supporting the entries are in my file
______________________ ___________
452
CHECK DISBURSEMENT REGISTER
INSTRUCTIONS
A This shalll be accomplished as  Financial Expenses – payments

follows: for capital outlay
 Others – accounts which could not
1. Month – month covered by be accommodated in the specific
the Register columns shall be recorded in this
2. Page – number assigned to column
the sheet
3. CkDReg No – The CkDReg 13. Gross amount – gross amount of
shall be numbered as expenditures as indicated in the
follows: DV
14. Deductions – amount of deductions
00 00 0000 as indicated in the DV
Serial number 15. Amount of checks – amount of
disbursement per SCkI
Month of Issue
Year of Issue
B. A recapitulation of the “Others”
4. Date- date of DV columns shall be made at the bottom of
preparation the page
5. Barangay – Name of the C. At the end of the month, the amount
Brgy columns in this Register shall be totaled,
6. Telephone Number – tel. no. balanced and ruled.
of barangay D. The register shall be certified and
7. City/Municipality – distributed as follows:
city/municipality where the Original – City/Municipal Accountant
barangay is located 2nd copy – BRK
8. Province – Province where E. The certified register shall be submitted
the barangay is locatedDate on or before the 5th day of the following
– date of the transaction month supported with the certified SCkI
9. to the City/Municipal Accountable.
10. Particulars – details or F. \All supporting documents to the SCkI
nature of payments shall remain with the BRK and shall be
11. Reference – the number made available to COA representative
assigned to the SCkI where anytime for examination/audit.
the entry was taken
12. Breakdown of Expenditures
– indicate amount under the
applicable column provided
for the following class
 Personal Services –
payments for PS
(i.e. payroll fund,
salaries or
honoraria
 Maintenance and
Other Operating
Expenses –
payments for
MOOE
453
LTO Annex 62
Process Flow on Barangay Disbursement By Check
Area of
Responsible
Barangay Record 1 Prepares Disbursement Vouchers in three copies. Forwards the
Keeper DV together with all supporting documents to the Barangay
Treasurer.
Barangay Treasurer
2 Receives Disbursement Voucher in three copies duly certified
in Box A by the Chairman of Committee on Appropriation as
to availability of appropriations together with all supporting
documents.
3 Checks the availability of fund (cash) to support the claim
4 Signs Box B of the Disbursement Voucher/Payroll certifying in

the availability of fund (cash)
5 Forwards the signed Disbursement Voucher/payroll to the

Punong Barangay together with the supporting documents for
certification and approval.
6 Certifies the Disbursement Voucher/Payroll as to validity,

propriety and legality and approves it by signing in Box C.
7 Forwards the approved Disbursement Voucher/payroll to the

Barangay Treasurer for the preparation of the check
8 Receives the approved Disbursement Voucher/Payroll
9 Verifies completeness of signatures on the Disbursement

Vouchers/Payroll
10 Prepares the check in the name of the payee for the amount
indicated in the Disbursement Voucher/Payroll
Note 1. The check shall be prepared with a carbon copy, to be distributed as
follows:
Original – Payee
Carbon copy – attached to Disbursement Voucher/Payroll
11 Signs the check
12 Forwards the check together with the Disbursement

Voucher/Payroll and supporting documents to the Punong
Barangay for countersignature on the check
Punong Barangay 13 Countersigns the check and returns it to the Barangay Treasurer
together with the supporting documents for release.
454
Area of
Responsible
Barangay Treasurer 14 Receives and releases the check to the payee. Attaches the
carbon copy of the check to the paid Disbursement
Voucher/Payroll
Payee/Supplier 15 Acknowledges the receipt of payment by signing in Box D of

the Disbursement Voucher and retains 3rd copy for his file
16 Issues an Official Receipt, if applicable, to acknowledge the

payment received.
17 Returns the signed Disbursement Voucher to the Barangay

Treasurer with the Official Receipt to the Barangay Treasurer
Note 2. The official receipt (if applicable) shall be made as an additional
supporting document to the disbursements.
Barangay Treasurer 18
Attaches the official receipt issued by the payee/supplier to the
original DV together with the carbon copy of the check.
Retains the 2nd copy of the DV for file.
Records all the checks issued, including cancelled ones, in

19
correct numerical sequence in the Summary of Checks Issued
daily
Note 1. The Summary of Check Issued shall be prepared in three copies to
be distributed as follows:
Fills out the appropriate columns of the Summary of Check

20
Issued based on the paid Disbursement Vouchers/Payrolls.
21
Sub totals the amount of the checks issued for the day
22
Records the disbursements of checks per Summary of Check
Issued in the “Checks/Debit Memo/Bank Statements (Out)”
column under the ‘Cash in Bank” section of the Cash on Hand
and in Bank Register
23
Totals and certifies the Summary of Check Issued weekly
Forwards three copies of the duly certified Summary of Check

24
Issued supported by paid Disbursement Vouchers/Payrolls,
carbon copies of the checks and supporting documents to the
Barangay Record Keeper
Receives the certified Summary of Check Issued and checks

Barangay Record 25
completeness of supporting documents, accuracy of recording
Keeper
and correctness of totals
455
Area of
Responsible
Barangay Record 26 Acknowledges receipt of the three copies of the Summary of
Keeper Check Issued with supporting documents and returns the 3rd
copy to the Barangay Treasurer for his file
27 Files the original (for City/Municipal Accountant) and 2 nd copy

and the supporting documents for recording in the Check
Disbursement Register
28 Retrieves the Summary of Check Issued. Records the total

checks issued in the Check Disbursement Register, using the
Summary of Check Issued as reference and distributes the
payments made in the appropriate columns under the
“Breakdown of Expenditures” section.
Note 1. The Check Disbursement Register shall be prepared in two copies to
29 At month end, totals, rules and balances the Check

Disbursement Register
30 Retrieves the Cash on Hand and in Bank Register previous
submitted by the Barangay Treasurer
31 Reconciles the total checks issued in this register with the totals
of checks issued under column “Out” per Cash on Hand and in
Bank Register.
32 Certifies the Check Disbursement Register
33 Submits the certified Check Disbursement Register together
with the Summary of Check Issued to the City/Municipal
Accountant on or before the 5th day of the following month.
Keeps 2nd copy for file
456
LTO Form 63
Summary of Cash Payment

___________________________________
Barangay: City/Municipality: SCP No.:

Barangay Treasurer: Province:
Date DV/ Withholding
Payee Particulars Gross Amount Net Amount
Payroll No. Tax
I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SCP complete with
and correct records of all cash payments for the the originals of the paid DVs/Payrolls and supporting documents.
period ______ to _______. The originals of all paid
DVs/payrolls are hereto attached.
___________________ ____________________________
Barangay Treasurer Barangay Record Keeper
457
SUMMARY OF CASH PAYMENTS
INSTRUCTIONS
1. SCP No. – the SCP shall be
00 00 0000
Serial number
Month of Issue
Year of Issue
2. Barangay – Name of the
Brgy
3. Telephone Number – tel. no.
of barangay
4. City/Municipality –
barangay is located
5. Province – Province where
the barangay is located
6. Date – date payment was
made
7. DV/Payroll No. – number of
the paid DV/payroll
as indicated in the DV or the
first name appearing in the
payroll followed by the
word “et al”
9. Particulars – brief
payments
10. Gross amount – gross
amount of DV/Payroll
11. Withholding Tax – amount
of taxes withheld
12. Net Amount – amount
actually paid
by the BT
signed by the BRK

every time a liquidation of the
payroll fund is to be made in three
Accountant
2nd copy – BT/AO
3rd copy – BRK
458
LTO Form 64
CASH DISBURSEMENTS REGISTER

For the Month of January, 2007
Barangay: City/Municipality: CDReg No.

Payroll Fund Breakdown of Payments Deductions
Date
Particular Reference Salaries and
2007 Cash Advance Disbursements Balance Honoraria Withholding Tax
Wages - Regular
Certification :
I hereby certify to the correctness of the above data. Records are based
on the SCP submitted by the AO and that all the originals of the paid DVs/
payroll are all in my file.
______________________ ___________
459
CASH DISBURSEMENT REGISTER
INSTRUCTIONS
A This shall be accomplished as  Honoraria – amount paid

follows: to barangay officials
 Blank Columns – for
1. Month – month covered by other expenditures where
the Register no special columns have
2. CDReg No – The CDReg been provided
shall be numbered as 13. Deductions – tax withheld from
follows: salary
B. In case where more than one sheet is
00 00 0000 utilized, each sheet shall be totaled and
Serial number the totals shall be carried forward to the
next sheet. The succeeding sheet shall
Month of Issue
Year of Issue
start with the totals brought forward.
C. Entries in the Register shall be based on
3. Barangay – Name of the the SCP submitted by the BT/Disbursing
Brgy Officer together with original paid
4. Telephone Number – tel. no. DV/Payroll and the SCkI for cash
of barangay advance received.
5. City/Municipality – D. At the end of the month, the amount
city/municipality where the column in this Register shall be totaled,
barangay is located balanced and ruled.
6. Province – Province where E. The Register shall be certified and
the barangay is located distributed as follows
7. Page – number assigned to Original – City/Municipal Accountant
the sheet 2nd copy – BRK
8. Date – date of the F. The certified Register shall be submitted
transaction on or before the 5th of the following
9. Particulars – brief month supported with the certified
description/nature of the SPPVC
disbursement
10. Reference –numbers of DV,
SCP as basis for the entry
11. Payroll fund
 Cash Advances –
amount received
 Disbursements –
amount disbursed
out of the cash
advance
 Balance – the
difference between
the cash advance
and disbursements
made
12. Breakdown of Expenditures
 Salaries and Wages
– Regular – amount
paid to regular
employees
460
LTO Form 65
LIQUIDATION REPORT
Barangay City/Municipality: LR No.:
Accountable Officer Province: Date:
Particulars Amount
Total amount spent

Amount of cash advance per DV No.______ dated _________
Amount refunded per OR No. ______ dated __________
Amount to be reimbursed
A Certified B Certified : B Certified :
Correctness of the above data Purpose of travel/cash advance duly Supporting documents complete
accomplished
Signature:______________________ Signature:______________________ Signature:______________________

Printed Name:___________________ Printed Name:___________________ Printed Name:___________________
Position:________________________ Position:________________________ Position:________________________
Date:__________________________ Date:__________________________ Date:__________________________
461
LIQUIDATION REPORT
INSTRUCTIONS
14. Box B Certified – purpose of

A. This form shall be travel/cash advance duly
accomplished as follows: accomplished – name and
signature of the PB and the
1. lR No. – the PR shall be date it was signed
numbered as follows:: 15. Box C Certified – supporting
documents complete – name
00 00 0000 and signature of the BRK and
Serial number date it was signed.
Month of Issue A. This form shall be prepared in
Year of Issue
triplicate copies to be
2. Barangay – Name of the Brgy distributed as follows:
3. Telephone Number – tel. no. of Original – City/Municipal
barangay Treasurer to
4. City/Municipality – support the
city/municipality where the liquidation of the
barangay is located cash advance
5. Province – Province where the 2nd copy – BT
barangay is located 3rd copy – BRK
6. Date – date of LR preparation
7. Particulars – brief description of A. Supporting Documents
expenses incurred and detailed Invoices or OR
amount of expenses covered by
the report, as recapitulated in the B. In Case of cash advance for
CDReg travel, supporting documents
8. Amount – detailed payments shall include:
made out of the cash advance Plane/bus/boat tickets or
9. Total Amount Spent – total equivalent
payments Boarding pass
10. Amount of Cash Advance – Certificate of Appearance
amount of cash received (the
date and number of DV granting C. All advances received shall
the cash advance shall be be fully liquidated before a
indicated) new one shall be granted. Full
11. Amount Refunded – amount due accounting shall be made
for refund (amount of cash before a new/additional cash
advance less the total amount advance.
spent). An OR shall be issued for
the refund and such shall be .
recorded in the CRDReg.
12. Amount to be reimbursed –
when total payment is more than
the amount received, a new DV
shall be prepared for the
reimbursement
13. Box A certified – correctness of
the data – name and signature of
the BT-AO and the date it was
signed
462
LTO Form 66
Process flow on Receipt of Barangay Cash Advance, Payment and Liquidation of Payroll/Travel
Area of
Responsible
Treasurer.
Barangay Treasurer
documents.





Vouchers/Payroll
follows:
Original – Payee
11 Signs the check

463
Area of
Responsible
Treasurer.
Barangay Treasurer
documents.





Vouchers/Payroll
follows:
Original – Payee
11 Signs the check

464
Area of
Responsible
Area of
Responsible
Barangay Record 25 Records all the payments made in the “Disbursement” column
Keeper under the “Payroll Fund” section and shows the “Breakdown of
Expenditures”.
Note 1. The Cash Disbursement Register shall be prepared in two copies to
2nd copy – Barangay Record keeper
27 Totals, balances and rules the Cash Disbursement Register at

the end of the pay period
28 Submits the certified Cash Disbursement Register together with

the Summary of Cash Payments to the City/Municipal
Accountant on or before the 5th day of the following month.
Keeps a 2nd copy for file.
465
LTO Form 67
PETTY CASH VOUCHER

No.:
LGU Date:
Barangay : City/Municipality:
Petty Cash Cust.: Province:
I. To be filled up upon request II. To be filled up upon liquidation

Particulars Amount
Total Amount Granted
Total Amount Paid per

OR No. ____________
Amount Refunded/
(Reimbursed)
A Requested by: C
Received Refund
Name of Requestor Reimbursement Paid
Approved by:
Disbursing Officer
Punong Barangay Petty Cash Custodian
B Paid by: D
Liquidation Submitted:
Disbursing Officer Reimbursement Received by:
Cash Received by:
Signature over Printed Name of Payee Signature of Payee
Date: _________________ Date: ___________________
466
PETTY CASH VOUCHER
INSTRUCTIONS
15. Box C – the PCFC shall check

A. This form shall be the appropriate box and affix
accomplished as follows: his signature
16. Box D – the payee shall check
1. PCV No. – the PR shall be the appropriate box and affix
numbered as follows:: his signature.
00 00 0000 B. Part I shall be filled out upon

Serial number request of cash and Part II
(one series per year ) shall be filled out upon
Month of Issue liquidation:
Year of Issue
2. Date – date of PCV preparation C. The PCV shall be prepared in

two copies to be distributed
I. To be filled out upon request as follows:
Original –BRK to
3. LGU – name of LGU support the
4. Barangay – Name of Barangay SPPCV
5. Petty Cash Custodian – name of 2nd copy – Requesting
designated petty cash custodian Official
6. City/Municipality – .
barangay is located
7. Province – province where the
barangay is located
8. Particulars – brief description of
the nature of
disbursement/expense and
amount of petty cash requested
9.
10. Box A – Requested by – shall be
signed by the requestor
Approved by: - shall be signed
by the PB
11. Box B Paid by – shall be signed
by the PCFC
Cash Received by – shall be
signed by the recipient of cash
II. To be filled out upon

liquidation
12. Total Amount Granted – the

amount of cash received by the
claimant
13. Total Amount Paid Per
OR/Invoice NO. – the total
amount paid as shown in the
invoice presented
14. Amount Refunded/Reimbursed –
the difference between the total
amount granted less amount
spent.
467
LTO Form 68
Summary of Paid Petty Cash Vouchers

____________________________________
Barangay: City/Municipality: SPPCV No.:

Barangay Treasurer: Province: Page:
Date
PCV No. Payee Particulars Amounts
Certification: Acknowledgment :
I hereby certify that the foregoing is the complete I hereby acknowledge receipt of the certified SPPCVs
and correct records of all payments from the Petty Cash complete with the originals of the paid PCVs and
Fund for period ______ to _________. The originals of supporting documents.
the paid PCVs and supporting documents are hereto
attached.
__________________ __________________
Petty Cash Fund Custodian Barangay Record Keeper
468
SUMMARY OF PAID PETTY CASH VOUCHERS
INSTRUCTIONS
1. SPPCV No. – the SPPCV
shall be numbered as
follows:
00 00 0000
Serial number
Month of Issue
Year of Issue
2. Page – page number
3. Barangay – name of
barangay
4. Barangay treasurer – name
of designated barangay
treasurer
barangay is located
6. Province – province where
the barangay is located
7. Date – date the PCV was
paid
8. PCV No. – number of the
paid PCV
10. Particulars – brief
payments
11. Amount – amount paid
by the PCFC
by the PCFC
signed by the BRK
B. It shall be prepared in three

copies to be distributed as
follows:
Accountant
2nd copy – BRK
3rd copy – PCFC
469
LTO Form 69
PETTY CASH FUND REGISTER

_______________________________________
Period
Barangay: City/Municipal: PCFReg No.

Tel. No.: Province: B Page
PETTY CASH FUND Breakdown of Disbursements

(104) MAINTENANCE AND OTHER OPERATING EXPENSES OTHERS (See List at the Back)
Ref. Particulars
Traveling Office Gasoline, Telephone
Receipts Payments Balance Expenses - Supplies Oil & Expenses - ACCOUNT CLASSIFICATION Amount
Local Expenses Lubricants Mobile
Date
Certification: Acknowledgement:
I hereby certify to the correctness of the above data. Entries are
based on the certified SPPCVs. Original of the unreplenished PCVs are all in my file. I hereby acknowledge receipt of the PCFReg.
_____________________ _____________________
Petty Cash Fund Custodian Date Barangay Record Keeper
470
PETTY CASH FUND REGISTER
INSTRUCTIONS
A This shall be accomplished as  Travelling expenses local

follows: – amount paid for local
travel
1. Month – month covered by  Office supplies expense –
the Register amount paid for office
2. PCFRReg No – The supplies purchased
PCFRReg shall be  Fuel, oil and lubricants
numbered as follows: expenses – amount paid
for fuel, oil & lubricants
00 00 0000  Telephone expense
Serial number mobile – amount paid for
Month of Issue mobile phone
Year of Issue 13 Others – accounts classification –
specific account title and amount –
3. Page – number assigned to amount paid
the sheet B. A recapitulation of “others” column shall
4. Barangay – name of be made at the bottom of the page
barangay C. Enrtries in the PCFReg shall be based on
5. Telephone number – the SPPCV together with the original paid
telephone number of PCVs and its supporting documents
barangay D. In cases where more than one sheet shall
6. City/Municipality – be utilized, each sheet shall be totaled and
city/municipality where the the totals shall be carried forward to the
barangay is located next sheet. The succeeding sheet shall start
7. Province – province where with the totals brought forward.
the barangay is located E. At the end of the month, the amount
8. Date – date of the PCV and columns in the Register shall be totaled,
replenishment balanced and ruled
9. Reference – number of F. The registers shall be certified and
SPPCV/SCkI distributed as follows:
10. Particulars – details or Original – City/Municipal Accountant
nature of transactions 2nd copy – PCFC
11. Petty Cash Fund 3rd copy – BRK
 Receipts – amount G. The certified Register shall be submitted
of PCF to the City/Municipality Accountant on or
established/replenis before the 5th of the following month
hed supported with the certified SPPCV
 Payments – amount
of disbursed out of
the PCF
 Balance – the
difference between
the receipts and
payments
12 Breakdown of Expenses
 Maintenance and
Other Operating
Expenses
471
LTO Annex 70
Process Flow on Establishment of Petty Cash Fund, Payment and Liquidation of PCF
Area of
Responsible
A Receipt of the authority as Petty Cash Fund Custodian and

Establishment of Petty Cash Fund
Petty Cash Fund 1 Receives the approved Sangguniang Bayan Resolution

Custodian designating the Barangay Treasurer or an official as Petty Cash
Fund Custodian
2 Forwards the documents to the Barangay Record Keeper for the

preparation of the Disbursement Voucher for the establishment
of Petty Cash Fund.

Treasurer.
Barangay Treasurer 4 Receives Disbursement Voucher in three copies duly certified

documents.


Punong Barangay 8 Certifies the Disbursement Voucher/Payroll as to validity,


Barangay Treasurer 10 Receives the approved Disbursement Voucher/Payroll

Vouchers/Payroll
472
Area of
Responsible
Barangay Treasurer 12 Prepares the check in the name of the payee for the amount
follows:
Original – Payee
13 Signs the check

together with the supporting documents for release
Barangay Treasurer 16 Receives and releases the check to the payee. Attaches the
carbon copy of the check to the paid Disbursement
Voucher/Payroll
Petty Cash Fund 17 Receives and encashes the check

Custodian
Requesting B Request for cash from Petty Cash fund

Official/Staff 18 Prepares the Petty Cash Voucher and signs the requested by
portion of Box A
Note 2. The Petty Cash Vouchers shall be prepared in two copies to be
Original – to support the Summary of Paid Petty Cash Vouchers
2nd copy – Requesting Official
Forwards the signed Petty Cash Voucher to the Punong

19
Barangay for approval.
Punong Barangay
20 Signs the approved by portion of Petty Cash Vouchers
21 Forwards the Petty Cash Vouchers to the Petty Cash Fund
Custodian for payment
Petty Cash Fund
Custodian 22 Pays the amount and signs the paid by portion of Box B
Requesting Receives the amount and signs the received by portion of Box
Official/Staff 23 B
Returns the signed Petty Cash Voucher to Petty Cash Fund

24 Custodian and retains 2nd copy for file
473
Area of
Responsible
Requesting 25 Submits to the Petty Cash Fund Custodian the Invoice/Official
Official/Staff Receipt and other evidence supporting the disbursement
Petty Cash Fund 26 Retrieves documents and other evidence of

Custodian payments/disbursements
27 Retrieves the original petty cash vouchers and computes the

amount due to/from the recipient of the fund
28 Reimburses the requesting official/staff for the advances made,

if any and signs Box C
Note 3. In case the PCF received exceeds the disbursements
made, the requesting officials shall return the excess to the
PCFC and signs Box C.
29 Signs Box D for the reimbursement received or liquidations

made and returns the original of PCV to PCFC
Records all paid PCVs in the Summary of Paid Petty Cash

Vouchers in chronological orders
Note 1. The Summary of Paid Petty Cash Vouchers in three
Original – attached to DV for replenishment
3rd copy – Petty Cash Fund Custodian
30 Records Payments made in the amount column of the Summary

of Paid Petty Cash Vouchers
31 Totals, rules and certifies the Summary of Paid Petty Cash

Vouchers
32 Records the checks received for petty cash under the

“Receipts” column in the “Petty Cash Fund” section of the
Petty Cash Fund Register. Fills out the date and reference
columns for the date and the Summary of Check Issued check
numbers
33 Records the paid Petty Cash Vouchers as shown in the

Summary of Paid Petty Cash Vouchers in the “Payment”
column under the Petty Cash Fund section of the Petty Cash
Fund Registers. Distributes the breakdown of expenses in the
appropriate columns.
34 Totals, rules and balances the Petty Cash Fund Registers at

month end
35 Recapitulates all entries in the “Others” column
Note 1. the Petty Cash fund Register shall be prepared in three
474
LTO Form 71
INSPECTION AND ACCEPTANCE REPORT

Tel No.: Province:
Supplier: Invoice No.: IAR No.: RIS No.:
PO NO.: Date: Date: Date: Date:
Unit Description Quantity
Inspection Acceptance
Date inspected: Date received:
_____ Inspected, verified as to quantity and specifications ______ Complete

______ Partial (Pls. specify quantity received)
_______________________________ _______________________________
Authorized Inspector Authorized Inspector
475
INSPECTION AND ACCEPTANCE REPORT
INSTRUCTIONS
A. This form shall be B. The receiving Barangay

accomplished as follows: Official shall acknowledge
receipt of the items by
1. Supplier – name of the supplier placing his name and
2. PO No. – number of the PO signature on the
3. Date – date of the PO “Acceptance” box. He shall
4. Invoice No. – number of the indicate whether the delivery
suppliers invoice is complete or partial by
5. Date – date of the invoice putting a check mark on the
6. IAR No. – the IAR shall be boxes provided. The date of
numbered as follows: receipt shall also be indicated
00 00 0000 C. The IAR shall form part f the

Serial number supporting documents to the
(one series per year ) claim of the supplier for
Month of Issue payment
Year of Issue
7. Date – date of IAR preparation D. Disbursement Voucher shall

8. RIS No. – the number of the RIS be prepared only for the items
9. RIS Date – the date of the RIS delivered. Undelivered items,
10. Unit – unit of measurement such although covered by PO,
as ream, box roll, etc. for the shall not paid.
items delivered
11. Description – brief description
or details of the items delivered
12. Quantity – number of units
delivered
B. This form shall be prepared in

triplicate copies to be
Original – BRK to support the
DV for payment
2nd copy – City/Municipal
Accountant
3rd copy – BRK
4th copy – BT
C. The “Inspection” box shall be
signed by the authorized
Inspection Officer who conducted
the inspection. The date of
inspection shall also be indicated.
476
LTO Form 72
REQUISITION AND ISSUE SLIP
Barangay
Barangay: City/Municipality RIS No.: Date:

Tel No: Province SAI No.: Date:
Requisitio n Issuan ce
Stock No. Unit Description Quantity Quantity Remarks
Purpose: _________________________________________________________
_________________________________________________________________________
Requested by: Approved for Issuance: Received Issued by:

by:
Signature :
Printed Name :
Designation :
Date :
477
REQUISITION AND ISSUE SLIP
INSTRUCTIONS
11. Purpose – brief explanation f
A. This form shall be the purpose of the requisition
accomplished as follows: 12. Requested by – signature,
name and designation of the
1. RIS No. – the RIS shall be person who requested the item
numbered as follows: and date of request
13. Approved for Issuance
00 00 0000 by – signature, name and
Serial number
(one series per year ) designation of the person
Month of Issue who approved the
Year of Issue
issuance and date of
2. Date – date of the preparation of approval of PB
RIS 14. Received by – signature, name
3. SAI No. –control number of and designation of the person
SAI who received the item and
4. Date – date of preparation of date of receipt
SAI 15. Issued by – signature, name
5. Barangay – name of barangay and designation of the official
6. Telephone Number – tel. no. of who issued the item
Barangay requisitioned and date of issue
city/municipality where the B. This form shall be used to
barangay is located request for
8. Province – province where the goods/supplies/property
barangay is located needed
9. Requisition C. This form shall be prepared
 Unit – unit of in three copies to be
measurement of the distributed as follows:
stock being
requisitioned such as Original – BRK to support
ream, box, etc. the PO or the
 Particulars – description issuance
of the item being 2nd copy – BT
requisitioned 3rd copy – BRK
 Quantity –
number/quantity of the
stock being
requisitioned
 Stock No. – no of the
item being
requisitioned
 Description – brief
description of the item
requisitioned
10. Issuance
 Quantity – actual
quantity issued/status
of stock
 Remarks – comments,
if any
478
LTO Form 73
INVENTORY CUSTODIAN SLIP

Barangay City/Municipality: ICS No.
Tel No.: Province:
Unit Description Quantity Estimated Useful Life
Received by: Issued by:
_________________ _________________
Barangay Tanod Barangay Tanod
______________ ______________
Date Date
479
LTO Form 74
PROPERTY ACKNOWLEDGEMENT RECEIPT
Barangay: City/Municipality: PAR No:
Tel No.: Province:
Quantity Unit Description Property No. Date Acquired Cost
Received by:
_________________ _________________
Recepient/User Barangay Treasurer
______________ ______________
Date Date
480
LTO Form 75
TRANSFER OF MONEY AND PROPERTY ACCOUNTABILITIES

Barangay: City/Municipality:
Tel No.: Province:
A. Money
Cash:
No. of Pieces Denomination Amount
Checks
Drawee Number Date Amount
B. Accountable Forms
Inclusive Serial Nos.
Quantity Name of Forms
From To
C. Property
Quantity Unit Description Property No.
D. Documents
Transferred by: Received by:

I hereby CERTIFY that the I hereby ACKNOWLEDGE receipt from
above listed items/were acted ________________________ the following
upon as follows: (Name of Accountable Officer)
a. Cash-refunded under OR No. ___ dtd ____ a. Property __________________________
b. Accountabile Forms turned over to _____________ b. Accountable Forms _________________ and
(name of recipient) c. Financil documents __________________
c. Property-retuned/turned over to ________________
(name of recipient)
d. Documents - all documents turned over to
(see certified list)
Witnessed by: Approved by:
__________________ __________________
Barangay Official Punong Barangay
481
TRANSFER OF MONEY AND PROPERTY ACCOUNTABILITY
INSTRUCTIONS
A. This form shall be  Description – brief
accomplished as follows: description of the
PPE being
1. Money: transferred/received
Cash  Property No.
 No. of pieces – quantity assigned property
 Denomination – number of the PPE
example: P1,000, P500,
etc. 4. Documents – lists of all
 Amount – no o pieces documents under the custody
multiplied by the of AO
denomination 5. Transferred by – certification
 Total – total amount of of the outgoing AO on the
cash surrender of the money,
Checks property, accountable forms
 Drawee Bank – name and documents under his
of the drawee bank custodianship
 Number – check 6. Received by –
number acknowledgement of the
 Date – date of the Incoming barangay official on
check the receipt of the money,
 Amount – amount of property, accountable forms
the check and documents surrendered by
the outgoing AO
the checks listed 7. Witnessed by – to be signed
2. Accountable forms by the Barangay Official who
witnessed the turnover
 Quantity – quantity of
8. Approved by – to be approved
forms
by the PB. In case the PB is
 Name of forms – name
the AO, the transfer shall be
of accountable forms
approved by the
under his custody
Ciy/Municipal Mayor
 Inclusive Serial Nos.
the beginning balance B. The TMPA shall be prepared
and ending serial in four copes every time an
numbers accountable officer ceases to
3. Property: be one to be distributed as
 Quantity – number of follows:
pieces/units of PPE Original – Incoming
 Unit – unit of Barangay Official
measurement 2nd copy – BT
3rd copy – Outgoing
Barangay Official
4th copy – COA
482
LTO Form 76
WASTE MATERIAL REPORT

_____________________________________
Barangay
Place of Storage Date:
ITEM FOR DISPOSAL
RECORDS OF SALES
ITEM QTY. DESCRIPTION
OR NO. AMOUNT
Certified correct by: Approved by:
_____________________
Signature Over Printer Name Signature Over Printer Name
Barangay Treasurer Barangay Treasurer
CERTIFICATE OF INSPECTION
I hereby certify that the property enumerated above were disposed of as follows:
Item ___________________________ Destroyed

Item ___________________________ Sold at private sale
Item ___________________________ Sold at public auction
Item ___________________________ Transferred without cost to ____________
Property Inspector: Witness to Disposition:
________________________ ________________________
Name and Signature Name and Signature
483
WASTE MATERIAL REPORT
INSTRUCTIONS
A. This form shall be 3. Witness to disposition – name
accomplished as follows: and signature of the person
1. Barangay – name of the authorized to witness the
barangay disposition of the waste property.
2. Place of Storage – exact
location of the items for C. This report shall be prepared in
disposal three copies to be distributed as
3. Date – date of the preparation follows:
of the report Original – Incoming
4. Item – entry number in the Barangay Official
report 2nd copy – BT
5. Quantity – number of items 3rd copy – Outgoing
being reported as waste Barangay Official
materials 4th copy – COA
6. Unit – unit of measurement
7. Description – name and
description of item being
reported
8. Record of Sales
 OR No. – official
receipt number
covering the sale of
waste materials
 Amount – amount of
waste materials sold
based on the OR
9. Total – total amount of sale
10. Certified Correct – name and
signature of the Property
Officer
11. Approved for Disposal –
name and signature of the
Punong Barangay
B.CERTIFICATE OF INSPECTION
1. Indicate the corresponding item
number of the waste material in
the line opposite the mode of
disposition made
2. Property Inspector – name and
signature of the concerned
Property Inspector.
484
LTO Form 77
SUPPLIES LOGBOOK
Qty Issuance
Date Reference Description Balance
Received Qty Received by
485
SUPPLIES LOGBOOK
INSTRUCTIONS
1. Date – date of entry
2. Reference – document used
as a basis in recording the
receipt or issuance of
supplies and materials
3. Description – description of
the item being received (i.e.
type, brand etc.)
4. Quantity Received – actual
quantity received
5. Issuance
 Quantity – actual
quantity received
 Received by –
signature, name
and description of
the person who
received the item
and date of receipt
6. Balance (Qty) – Running
balance of the quantity of
supplies on stock
B. A separate sheet/page shall be

maintained for each item to
monitor the stock balance.
486
LTO Annex 78
Requisition, Issuance and Delivery of Materials and Supplies
Area of
Responsible
Requisitioner 1 Prepares the Requisition and Issue Slip (RIS) by filling out
information in the Requisition portion
Note 1. The RIS shall be prepared in three copies to be
Original – Barangay Treasurer
3rd copy – Requisitioner
2 Signs the Requested by portion
3 Forwards the signed RIS to the Barangay Treasurer
4 Receives the RIS
5 Checks the availability of stock. If not available, returns the

RIS to the requisitioner for preparation of the purchase request.
Bids and Award 6 Based on the approved purchase request makes a reasonable
Committee (BAC) estimate of the cost of the items to come up with the Approved
Budget for the
7 Contract (ABC).
8 Forwards the approved purchase request and the estimate or

ABC to the Chairman , Committee on Appropriation (CCA) for
earmarking of appropriations.
Chairman, Committee 9 Receives the purchase request and ABC for earmarking
on Appropriation
10 Forwards the purchase request and ABC to the BArangay
Record Keeper for earmarking of the funds needed.
Barangay Record 11 Checks the Registry of Appropriation and Commitments

Keeper (RAC) and verifies the availability of funds
12 Earmarks the needed amount
13 Sends back the purchase request to the CCA for certification on
the availability of appropriations
Chairman, Committee 14 Receives the purchase request and certifies the availability of
on Appropriation appropriations and returns the same to the BAC with the
amount needed duly earmarked.
Bids and Award 15 Conducts bidding or adopts alternative mode of procurement

Committee (BAC required under RA 9184.
16 Forwards the result of recommendation for award of

Contract/PO to the Punong Barangay for approval
487
Area of
Responsible
Punong Barangay 17 Approves the result of the bidding
18 Sends the approved result of the bidding to Barangay Record

Keeper for the preparation of Purchase Order
Barangay Record 19 Receives and prepares contract/Purchase Order

Keeper
20 Initials below the name of the CCa under the funds available
portion of the contract/purchase order
21 Forwards the contract/purchase order together with the

purchase request duly earmarked to the CCA for certification
on the availability of appropriations
Chairman, Committee 22 Signs the certification of funds available

on Appropriations
23 Forwards the contract/purchase order to the Punong Barangay
for approval.
Punong Barangay 24 Approves or signs the contract/purchase order
25 Forwards the contract/purchase order to the Barangay Treasurer

for release
Barangay Treasurer 26 Receives the signed contract/purchase order and releases it to

contractor/supplier. Retains a copy for file. (go to seq. 41)
27 Forwards the RIS to the Punong Barangay for approval if stock

is available
Punong Barangay 28 Approves the RIS by signing the approved by portion
29 Returns the approved RIS to the Barangay Treasurer for the

issuance of the supplies, materials and Property, Plant and
Equipment.
A Issuance of Supplies and Materials

Barangay Treasurer 30 Receives the approved RIS from the requisitioner
32 Fills up the issuance section of the

RIS, on the quantity issued and the remarks, if needed
33 Issues the items requested and signs Box D
Requisitioner 34 Receives the items requisitioned and signs Box C of the RIS
488
Area of
Responsible
B Issuance of small items with serviceable life of more than
one year
Barangay Treasurer 35 Prepares the Inventory Custodian Slip (ICS) for the issuance of
small items
Note 1. The ICS shall be prepared in three copies to be
Original – Barangay Treasurerr
3rd copy – recipient or user of the small item
36 Forwards the ICS to the requisitioner for signature
37 Issues the items requisitioned
Requisitioner 38 Signs the received by portion of the ICS
39 Returns the signed ICS to the Barangay Treasurer
Barangay Treasurer 40 Signs the issued by portion of the ICS. Files the original and 2 nd
copy and forwards the 3rd cop to the requisitioner.
41 Receives deliveries for inspection and signs the received by

portion of the supplier’s invoice/delivery receipt
42 Retrieves purchase order/contract
43 Prepares the Inspection and Acceptance Report (IAR) and

forwards to Inspection Committee
Note 1. The IAR shall be prepared in four copies to be
Original – to support the DV for payment
2nd copy – City/Municipal Accountant
4th copy – Barangay Treasurer
Note 2. In case of partial delivery, onl the quantity actually
delivered and accepted shall be indicated in the IAR.
Inspection Team 44 Inspects deliveries and checks conformity with the

specifications stated in the purchase order.
45 Forwards all copies of the duly accomplished IAR to Barangay

Record Keeper.
Barangay Record 46 Attaches the original to the disbursement voucher. Forwards

Keeper the disbursement voucher together with the 4th copy of the IAR
for Barangay Treasurer file.
47 Submits the 2nd copy of IAR together with a copy of delivery
receipts to the City/Municipal Accountant. Retains the 3rd copy
for file.
489
Area of
Responsible
Barangay Treasurer 48 Retrieves copy of Inspection and Acceptance Report (IAR) and
invoices from file
50 Records supplies and materials received in the appropriate

column of the supplies logbook
51 Forwards the copies of IAR and invoices to the barangay

record keeper
Barangay Record 52 Receives the copies of IAR and invoices

Keeper
53 Records the cost of the delivered Supplies and Materials
purchased on account in the charges column of the creditor’s
card based on the IAR supported with invoices.
Note 1 Each supplier shall have an individual creditor’s card
54 Retrieves the Summary of Check Issued
55 Records checks issued in the payment column of the creditor’s

card based on the paid disbursement voucher as reported in the
Summary of Check Issued.
56 Extracts the balance due the suppliers as transactions are

recorded in the creditor’s card
57 Files the Summary of Check Issued
Barangay Treasurer 58 Retrieves the original copy of the RIS from file
59 Records the issuance of supplies and materials in the

appropriate column in the supplies logbook based on the RIS.
490
LTO Annex 79
Requisition, Issuance and Delivery of Property and Equipment
Area of
Responsible
Requisitioner 1 Prepares the Requisition and Issue Slip (RIS) by filling out
information in the Requisition portion
Note 1. The RIS shall be prepared in three copies to be
3rd copy – Requisitioner
2 Signs the Requested by portion
3 Forwards the signed RIS to the Barangay Treasurer
4 Receives the RIS
5 Checks the availability of stock. If not available, returns the

RIS to the requisitioner for preparation of the purchase request.
Bids and Award
Committee (BAC) 6 Based on the approved purchase request makes a reasonable
estimate of the cost of the items to come up with the Approved
Budget for the
7 Contract (ABC).
8 Forwards the approved purchase request and the estimate or

ABC to the Chairman , Committee on Appropriation (CCA) for
earmarking of appropriations.
Chairman, Committee
on Appropriation 9 Receives the purchase request and ABC for earmarking
10 Forwards the purchase request and ABC to the BArangay

Record Keeper for earmarking of the funds needed.
Barangay Record
Keeper 11 Checks the Registry of Appropriation and Commitments
(RAC) and verifies the availability of funds
12 Earmarks the needed amount
13 Sends back the purchase request to the CCA for certification on

the availability of appropriations
Chairman, Committee
on Appropriation 14 Receives the purchase request and certifies the availability of
appropriations and returns the same to the BAC with the
amount needed duly earmarked.
Bids and Award
Committee (BAC 15 Conducts bidding or adopts alternative mode of procurement
required under RA 9184.
16 Forwards the result of recommendation for award of

Contract/PO to the Punong Barangay for approval
491
Area of
Responsible
Punong Barangay 17 Approves the result of the bidding
18 Sends the approved result of the bidding to Barangay Record

Keeper for the preparation of Purchase Order
Barangay Record 19 Receives and prepares contract/Purchase Order

Keeper
20 Initials below the name of the CCa under the funds available
portion of the contract/purchase order
21 Forwards the contract/purchase order together with the

purchase request duly earmarked to the CCA for certification
on the availability of appropriations
Chairman, Committee 22 Signs the certification of funds available

on Appropriations
23 Forwards the contract/purchase order to the Punong Barangay
for approval.
Punong Barangay 24 Approves or signs the contract/purchase order
25 Forwards the contract/purchase order to the Barangay Treasurer

for release
Barangay Treasurer 26 Receives the signed contract/purchase order and releases it to

contractor/supplier. Retains a copy for file. (refer to seq. 37)
27 Forwards the RIS to the Punong Barangay for approval if stock

is available
Punong Barangay 28 Approves the RIS by signing the approved by portion
29 Returns the approved RIS to the Barangay Treasurer for the

issuance of the supplies, materials and Property, Plant and
Equipment.
Barangay Treasurer 30 Prepares the Property Acknowledgement Receipt (PAR)

Note 1. The PAR shall be prepared in three copies to be
3rd copy – recipient/user of the property
31 Issues the item to the requisitioner together with the PAR for
signature
Requisitioner 32 Signs the received by portion of the PAR and receives the items
requisitioned. Returns the 2nd and 3rd copy of the signed PAR to
492
Area of
Responsible
Barangay Treasurer 33 Receives the Property Acknowledgement Receipt (PAR) and
signs the issued by portion
34 Furnishes the requisitioner the 3rd copy of the PAR for his file
35 Forwards the 2nd copy of the PAR to the Barangay Record

Keeper and retains the original copy for his file
Barangay Record 36 Receives and files the 2nd copy of the PAR
Keeper
A Receipts of Property, Plant and Equipment and recording
the amount due the suppliers in the creditor’s card
Barangay Treasurer 37 Receives deliveries for inspection and signs the received by
portion of the supplier’s invoice/delivery receipt
38 Retrieves purchase order/contract
39 Prepares the Inspection and Acceptance Report (IAR) and

forwards to Inspection Committee
Note 1. The IAR shall be prepared in four copies to be
Original – to support the DV for payment
2nd copy – City/Municipal Accountant
4th copy – Barangay Treasurer
Note 2. In case of partial delivery, onl the quantity actually
delivered and accepted shall be indicated in the IAR.
Inspection Team 40 Inspects deliveries and checks conformity with the

specifications stated in the purchase order.
41 Forwards all copies of the duly accomplished IAR to Barangay

Record Keeper.
Barangay Record 42 Attaches the original to the disbursement voucher. Forwards

Keeper the disbursement voucher together with the 4th copy of the IAR
for Barangay Treasurer file.
43 Submits the 2nd copy of IAR together with a copy of delivery

receipts to the City/Municipal Accountant. Retains the 3 rd copy
for file.
493
Area of
Responsible
Barangay Record 44 Retrieves copies of the Inspection and Acceptance Report
Keeper (IAR) and invoices from file
44 Records the cost of the delivered PPE purchased on account in

the Charges column of the creditor’s card based on the IAR
supported with invoices
Note 1. Each supplier shall have an individual creditor’s card
45 Records PPE received in the appropriate column of the

Property, Plant and Equipment Register
46 Files the copies of IAR and invoices
47 Retrieves the Summary of Check Issued
48 Records checks issued in the payment column of the creditor’s

card based on the paid disbursement voucher as reported in the
Summary of Check Issued
49 Extracts the balance due the supplier as transactions are

recorded in the creditor’s card
50 Files the Summary of Check Issued.
B Issuance of PPE
Barangay Treasurer 51 Prepares the Property Acknowledgement Receipt (PAR)
Note 1. The PAR shall be prepared in three copies to be
3rd copy – recipient/user of the property
52 Issues the item to the requisitioner together with the PAR for
signature
Requisitioner 53 Signs the received by portion of the PAR and receives the items
requisitioned. Returns the 2nd and 3rd copy of the signed PAR to
Barangay Treasurer 54 Receives the Property Acknowledgement Receipt (PAR) and

signs the issued by portion
55 Furnishes the requisitioner the 3rd copy of the PAR for his file
56 Forwards the 2nd copy of the PAR to the Barangay Record

Keeper and retains the original copy for his file
Barangay Record 57 Receives and files the 2nd copy of the PAR
Keeper
494
Area of
Responsible
Barangay Record 58 Retrieves the Property Acknowledgement Receipt (PAR)
Keeper submitted by the Barangay Treasurer
59 Records the issuance of PPE in the Property, Plant and

Equipment Register to monitor its location based on the PAR
60 Files the PAR
C Disposal of PPE
Unserviceable Property
Barangay Record 61 Records all unserviceable property and returned small tangible
Keeper items in the “inventory” section of the Inventory and Inspection
Report of Unserviceable Property (IIRUP)
Note 1. The IIRUP shall be prepared in three copies to be
Original City/Municipal Accountant
2nd copy – Inspection Team
62 Signs the prepared by portion
63 Forwards IIRUP to the inspection team for certification in the

“Inspection” portion
Inspection Team 64 Certifies the IIRUP
65 Returns the certified IIRUP to the Barangay Record Keeper
Barangay Record 66 Forwards the IIRUP to the City/Municipal Accountant for the
Keeper filling out of the columns on the cost, accumulated depreciation
and net book value of PPE
City/Municipal 67 Fills out the columns pertaining to the cost of the item for
Accountant disposal and returns the IIRUP to Barangay Record Keeper
Barangay Record 68 Receives the signed IIRUP and forwards it to the punong
Keeper barangay for approval
Punong Barangay 69 Receives the IIRUP and signs the approved portion. Returns
the IIRUP to the BArangay Record Keeper.
Barangay Record 70 Disposal of Unserviceable Property

Keeper Retrieves and forwards the IIRUP to Inspection Team to report
disposal of unserviceable property.
Inspection Team 71 Accomplishes the portion on disposal in the IIRUP to the

495
Area of
Responsible
Inspection Team 72 Returns the accomplished Inventory and Inspection Report of
Unserviceable Property (IIRUP) to the Barangay Record
Keeper
Barangay Record 73 Acknowledges receipt of the original and 3rd copy of the IIRUP
Keeper
74 Records the item disposed as deduction from the Property,
Plant and Equipment Register
75 Submits the original of the IIRUP to the City/Municipal

Accountant. Retains 3rd copy for file.
76 Retrieves the IIRUP previously submitted by the Barangay

Treasurer
77 Records the disposal in the Property, Plant and Equipment

Register as a reduction from the balance of PPE
78 Files the IIRUP
D Loss of PPE
Accountable Officer 79 Submits a Notice of Loss and other supporting documents to
the Punong Barangay through the Barangay Treasurer, copy
furnished the Auditor
Punong Barangay 80 Receives the notice and causes the conduct of an immediate
investigation
81 Receives the result of investigation
82 Forwards the notice of loss and result of investigation to the

Barangay Record 83 Prepares transmittal letter to GSIS and forwards to Punong

Keeper Barangay for signature
Punong Barangay 84 Signs transmittal letter and returns to the Barangay Record
Keeper
Barangay Record 85 Submits the transmittal letter and the notice of loss together
Keeper with the result of investigation to GSIS for indemnification of
the lost property
86 Forwards copies of all the documents to City/Municipal

Accountant and retains a copy for his file
Retrieves the notice of loss received from Punong Barangay

thru the Barangay Treasurer
496
Area of
Responsible
Barangay Record 87 Records the loss as a reduction from the balance of the
Keeper Property, Plant and Equipment Register
88 Files the notice of loss
497
LTO Annex 80
Reporting the Physical Count of PPE
Area of
Responsible
Barangay 1 Requests the Barangay Record Keeper for copies of the
Treasurer/Inventory Property, Plant and Equipment Register and Report on the
Team Physical Count of PPE (PRCPPE)
2 Conducts a physical inventory of all PPE

Note 1. Any unserviceable equipment shall be duly noted in the
report
3 Fills-up columns 7-9 of RPCPPE
4 Submits the RPCPPE to the Barangay Treasurer

Note 2. The RPCPPE shall be prepared in three copies to be
3rd copy – Barangay Treasurer/Inventory Team
Barangay Record 5 Receives the RPCPPE and reconciles details with the Property,
Keeper Plant and Equipment Register
6 In case of discrepancies informs the Punong Barangay and

requires explanation from the Barangay Treasurer of the
discrepancies noted
7 Attaches to RPCPPE the explanation given by the Barangay

Treasurer on the discrepancies and signs Box A
8 Forwards the RPCPPE to the Inventory Team for certification

in Box B
Barangay
Treasurer/Inventory 9 Reviews the entries and certifies in Box B of the RPCPPE
Team
10 Forwards the RPCPPE to the Punong Barangay for approval in
Box C
Punong Barangay 11 Approves the RPCPPE signs in Box C and returns it back to the
Inventory Team
498
Area of
Responsible
Barangay 12 Certifies the Report on the Physical Count of PPE (RPCPPE)
Treasurer/Inventory and forwards the original and 2nd copy to the Barangay Record
Team Keeper. Retains 3rd copy for file
Barangay Record 13 Acknowledges receipt of the certified RPCPPE, submits the

Keeper original to the City/Municipal Accountant and keeps 2 nd copy
for file
499
LTO Form 81
LGU:__________________________________________________
Cash Flow Forecast
For FY ______________________________________________
Particulars Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Cash Flows from Operating Activities
Cash Inflows
Collection from taxpayers
Share from Internal Revenue Collections
Receipts from sale of goods or services
Interest Income
Other Receipts
Cash Outflows
Payments for Personnel Services
Payment for Miscellaneous and Other Operating Expenses
Payment for Capital Outlays
Other Expenses
Total Cash Outflow
Net Cash From Investing Activities
Cash Flows From Financing Activities

Cash Inflows
From issuance of Debt Securities
Payment of Loan Amortization
Total Cash Flow
Net Cash From Financing Activities

Net Increase in Cash
Cash at the beginning of the period
Cash at the end of the period
Prepared by Approved by
__________________________________________ _________________________________________________
Local Chief Executive
500
CASH FLOW FORECAST
INSTRUCTIONS
1. The Cash Flow Forecast (CFF) shall be prepared for the whole year.
2. Cash Flow From Operating Activities – Pertains to the receipts (inflow) and disbursement
(outflow) of cash out of the primary/regular operations of the Local Government Units,
e.g. Collection of taxes, share from IRA, payments to creditors, employees, payment of
interests.
3. Ner Cash From Investing Activities – Pertains to the difference between receipts
(inflows) and disbursement (outflows) from investing activities such as sale/purchase of
PPE
4. .Net Increase in Cash – Refers to the overall cash effect of the various activities of the
LGU (Inflows-Outflows). If the cash inflow is greater than the cash outflow, there is an
increase in cash, vice versa.
5. Cash at the Beginning of the Period – This pertains to the ending cash balance of the
preceding year carried over to the current year.
6. Cash at the End of the Period – This is equal to the sum of the net increase in cash and the
beginning cash. This becomes the beginning balance of the succeeding month.
7. Prepared by – Name of the person preparing the CFF
501
LTO Form 82
`
CASH RECEIPTS FORECAST
For FY ______________________________________________
Cash Inflows
Collection from taxpayers
Interest Income
Other Receipts
Total Cash Inflow from Operating Activities
Cash Inflows from Investing Activities

From Sale of Property, Plant and Equipment
From sale of Debt Securities of other Entities
From Collection of Principal on Loans to Other Entities
Total Cash Inflow form Investing Activities
Cash Inflows from Financing Activities

From Issuance from Financing Activities
From Acquisition of Loans
Total Cash Inflow from Financing Activities
Cash Receipts - This Month

Cash Receipts - Prior Month
Total Cash Receipts - As of this Month
Prepared by
__________________________________________ _________________________________________________
Head of Collecting Department Local Chief Executive
502
CASH RECEIPTS FORECAST
INSTRUCTIONS
1. The Cash Receipts Forecast (CRF) shall be prepared for the whole year.
2. Cash Inflow from Operating Activities – This pertains to the inflow of cash out
of the primary/regular operations of the LGUs e.g. collection of taxes, share
from the IRA< receipt from the sale of goods or services
3. Cash Inflow from Investing Activities – Pertains to inflow of cash from the
sale (issuance) or purchase of long term investments. For example e.g. sale of
real estate.
4. Cash Inflow from Financing Activities – This includes receipts or inflows of
cash out of the borrowings/loans of the LGU e.g. issuance of debt securities,
loan.
5. Cash Receipts This Month – This is the total of all cash inflows for the current
month
6. Cash Receipts Previous Month – This is the total of all cash inflows for the
previous month
7. Total Cash Receipts as of this Month – Total of cash inflows beginning of the
year to current month
8. Prepared by – Name of persons preparing the CRF
9. LCE Name of the Municipal/City Mayor or Provincial Governor
503
LTO Form 83
LGU:__________________________________________________
CASH DISBURSEMENT FORECAST
For FY ______________________________________________
Cash Outflows from Operating Activities
Payments for Personnel Servicies
Payments for Maintenance and Other Operating Expenses
Payments for Capital Outlay
Payment for Other Expenses
Total Cash Outflows from Operating Expenses
Cash Outflows from Investing Activities

To Purchase Property, Plant and Equipment
To Purchase Debt Securities of Other Entities
To Grant/Make Loans to Other Entities
Total Cash Outflow from Investing Activities
Cash Outflows from Financing Activities

Retirement/Redemption of Debt Securities
Total Cash Outflow from Financing Activities
Cash Disbursement - This Month

Cash Receipts - Prior Month
Total Cash Disbursements - As of this Month
Prepared by
__________________________________________ _________________________________________________
Local Chief Executive
504
CASH DISBURSEMENT FORECAST
INSTRUCTIONS
1. The Cash Disbursement Forecast (CDF) shall be prepared for the whole year
2. Cash Outflow from Operating Activities – Pertains to the disbursement (outflow) of cash
out of the primary/regular operations of the Local Government Units e.g. payments to
creditors, employees, interests payments
3. Cash Outflow from Investing Activities – Pertains to disbursement (outflow) of cash from
the purchase (acquisition) of long term investments.
4. Cash Outflow from Financing Activities – Pertains to the disbursement (ouflow) of cash
out of the LGUs borrowing
5. Cash Disbursement This Month – total cash outflow for the current month
6. Cash Disbursement Previous Month – total cash outflow for the previous month
7. Total Cash Disbursement As of This Month – total cash outflow from beginning of the
year up to current month
8. Prepared by – Name of person preparing the CDF
9. LCE – Name of Head of LGU
505
LTO Form 84
LGU:__________________________________________________
Cash Flow Analysis
Actual Forecast To Date Variance Adjusted Original

Annual Varian
Prior Month This Year to Year to (3- Estimated Forecast
Particulars Over(Under
Balance Month Date Date 4)=Over(Under) Annual Annual
(1) (2) (3) (4) (5) (6) (7) (8)=(6-7)
Cash Inflows
Collections from taxpayers
Interest Income
Other Receipts
Total Cash Inflow
Cash Outflow
Payments for Personnel Services
Payment for Maintenance and Other Operating Expenses
Payments for Capital Outlays
Payments for Other Expenses
Total Cash Outflow
Net Cash from Operating Activities
Cash Flows from Investing Activities

Cash Inflows
From sale of Property, Plant and Equipment
From sale of Debt Securities of Other Entities
From collection of Principal on Loans to Other Entities
Total Cash Inflows
Cash Outflow
To Purchase Property, Plant and Equipment
To Purchase Debt Securities of Other Entities
Total Cash Outflow
Net Cash From Investing Activities
Cash Flows from Financing Activities

Cash Inflows
From Issuance of Debt Securities
From Acquisition of Loan
Total Cash Inflow
Cash Outflows
Retirement/Redemption of Dept Securities
Total Cash Outflow
Net Cash From Financing Activities

Net Increase in Cash
Cash at the Beginning of the Period
Cash at the End of the Period
Prepared by
_______________________ ______________________________ ________________________________________________

Treasurer Accountant Local Chief Executive
506
Instructions in Accomplishing LBE Form
Column 1 – Indicate actual cash flow of the previous month

Column 2 – Indicate actual cash flow for the current month
Column 3 – Indicate the cumulative cash flow of the previous and current month cash
Flow
Column 4 – Indicate here the projected cash flow for the month
Column 5 – Indicate in this column the difference between column 3 and column 4
Column 6 – Indicate here the adjusted annual estimate by increasing on reducing the estimated
annual amount with to-date variance. The estimated annual amount is 10 and the variance
between the year to date and forecast to date is +15 then the adjusted is 15, however, if the annual
if the assigned is -5 the adjusted estimate annual is 5
Column 7 – Indicate in this column the original forecast for the year
Column 8 Determine the variance between the adjusted estimate annual and the original forecast
by subtracting column 7 and column 6
507
LTO Form 85
Present Value of an Annuity of 1 to be Received for n Year -----I)
Years 1% 8% 10% 12% 14% 15% 16% 18% 20% 22% 24% 25%
1 .990 .926 .909 .893 .877 .870 .862 .847 .833 .820 .806 .800
2 1.970 1.783 1.736 1.690 1.6347 1.626 1.605 1.566 1.528 1.492 1.457 1.440
3 2.941 2.577 2.487 2.402 2.322 2.283 2.246 2.174 2.106 2.042 1.981 1.952
4 3.902 3.312 3.170 3.037 2.914 2.855 2.798 2.690 2.589 2.494 2.404 2.362
5 4.853 3.993 3.791 3.605 3.433 3.352 3.274 3.127 2.991 2.864 2.745 2.689
6 5.795 4.623 4.355 4.111 3.889 3.784 3.685 3.498 3.326 3.167 3.020 2.951
7 6.728 5,206 4.868 4.564 4.288 4.160 4.039 3.812 3.605 3.416 3.242 3.161
8 7.652 5.747 5.335 4.968 4.639 4.487 4.344 4.078 3.837 3.619 3.421 3.329
9 8.566 6.247 5.759 5.328 4.946 4.772 4.607 4.303 4.031 3.786 3.566 3.464
10 9.471 6.710 6.145 5.650 5.216 5.019 4.833 4.494 4.192 3.923 3.682 3.572
11 10.368 7.139 6.495 5.941 5.453 5.234 5.029 4.656 4.327 4.035 3.776 3.656
12 11.255 7.536 6.814 6.194 5.66 5.421 5.197 4.793 4.439 4.127 3.851 3.725
13 12.134 7.904 7.103 6.424 5.842 5.583 5.342 4.91 4.533 4.203 3.912 3.78
14 13.004 8.242 7.367 6.628 6.002 5.724 5.468 5.008 4.611 4.265 3.962 3.824
15 13.865 8.559 7.606 6.811 6.142 5.847 5.575 5.092 4.675 4.315 4.001 3.859
16 14.718 8.851 7.824 6.974 6.265 5.954 5.669 5.162 4.73 4.357 4.031 3.887
17 15.562 9.372 8.022 7.12 6.373 6.047 5.749 5.222 4.775 4.391 4.059 3.91
18 16.395 9.372 8.201 7.25 6.467 6.128 5.818 5.273 4.812 4.419 4.08 3.928
19 17.226 9.604 8.365 7.366 6.55 6.198 5.877 5.316 4.844 4.442 4.097 3.942
20 18.046 9.818 8.514 7.469 6.623 6.259 5.929 5.353 4.87 4.46 4.11 3.954
21 18.857 10.017 8.649 7.562 6.687 6.312 5.973 5.384 4.891 4.476 4.121 3.963
22 19.66 10.201 8.772 7.645 6.743 6.359 6.011 5.41 4.909 4.488 4.13 3.97
23 20.456 10.371 8.883 7.718 6.792 6.399 6.044 5.432 4.925 4.499 4.137 3.976
24 21.243 10.529 8.985 7.784 6.835 6.434 6.073 5.451 4.937 4.507 4.143 3.981
25 22.023 10.675 9.077 7.843 6.873 6.464 6.097 5.467 4.948 4.514 5.147 3.985
508
LTO Form 86
INVOICE-RECEIPTS OF TRANSFER OF ACCOUNTABILITIES
I. Depository Accounts
Amount Total
A. Cash in Treasury or Cash in Vault
General Fund _________________
Trust Fund _________________
Special Fund _________________ __________________
B. Cash in Banks:
General Fund Acct. No. ______ _________________
Trust Fund Acct. NO. ________ _________________
SEF Acct. NO. _____________ _________________ __________________
II. Investment Accounts
A. Certificate of Time Deposits

Date of Placement Security Term/Rate Maturity Date Principal
_________________ _________________
_________________ _________________
_________________
_________________ _________________
_________________ _________________
_________________
_________________ _________________
_________________ _________________
_________________
B. Treasury Bills
Date of Placement Term / Rate Maturity
_________________ _________________ _________________
_________________ _________________ _________________
C. Stocks Certificates
Name of Stock Certificate No. No. of Shares Amount
III. Accountable Forms

Serials
Accountable Form No. 51 __________________
Community Tax Certificate (Ind.) __________________
Community Tax Certificate (Corp.) __________________
Cash tickets __________________
Parking tickets __________________
Others Afs (pls. specify) __________________
509
Blank Unissued Checks Serial Number
Acct. No. _________Gen. Fund-LBP __________________
Acct. No. _________Gen. Fund-LBP __________________
Acct. No. _________Gen. Fund-Other Banks __________________
Acct. No. _________Trust Fund-LBP __________________
Acct. No. _________Trust Fund-PNB __________________
Acct. No. _________Trust Fund-Other Banks __________________
Acct. No. _________SEF-LBP __________________
Acct. No. _________SEF-PNB __________________
Acct. No. _________SEF-Other Banks __________________
IV. Others
1. Property (Refer to Acknowledgement Receipt for Equipment - (ARE)
2. Duplicate Combinations of Accountable Officer's Safe
3. Outstanding Checks
Check No./Date Payee Amount
_________________________ ____________ ____________
_________________________ ____________ ____________
_________________________ ____________ ____________
_________________________ ____________ ____________
_________________________ ____________ ____________
_________________________ ____________ ____________
CERTIFICATION
I herebey certify that I have this _________ day I hereby certify that I have this _______ day of
of _____________ transferred to my successor ________________ actually received from my
Mr./Mrs. ______________________, the items predecessor, Mr./Mrs. __________________________
described above, as of _____________________ all the items described above, as of _______________,
the date of the transfer of accountability. the date of transfer of acountability, except__________
_________________________ _________________________
Outgoing P/C/M Treasurer Incoming P/C/M Treasurer
_____________ __________________
Date Date
Verified Correct:
Witnessed by:
__________________________
COA Representative _________________________
BLGF/RO/PTO Representative
510
LTO Annex 87
INTERNAL CONTROL CONCEPTS, POLICIES AND ELEMENTS
A. Basic Concepts
1. What are controls?
Control in general is the process of exercising or directing influence over the activities of an
object, organism or a system. The goal of control is to prevent losses to the organization arising
from the different hazards in government business operations.
2. 3 Basic Types of Control
There are three basic types of control:
 Preventive Controls – are designed to prevent the adverse actions or risk from occurring
 Detective Controls – are designed to detect an error or adverse event after it occurs but
within a reasonable time to permit correction and through awareness of the problem, help
prevents other errors from occurring.
 Corrective Controls – are designed to identify a problem and bring it to management’s
attention for resolution and correction.
The term internal controls, on the other hand, refer to “an organization’s whole system or network
of methods, procedures, and plans which govern its activities to accomplish its goals and
objectives. “Such system is generally known as the Internal Control System or Structure (ICS).
3. Sub-sets of Internal Control System
The following sub-sets usually comprise the ICS:
 Financial controls or accounting controls

 Administrative controls
 Program Controls
 Budget Controls
 Management Controls
Financial Controls or the accounting controls, relate to those methods and procedures used to
produce accurate records and safeguard assets. They should be designed to ensure that:
 Specified individuals are held accountable for transactions under their control
 Accounting records are accurately and reliably maintained
 There is adequate segregation of record keeping duties from custodianship of the agency’s
authorized
 There is adequate segregation of incompatible duties and
 There are adequate checking and reconciling procedures
The concept of accountability is an important element in financial controls. Without it, it would
be difficult to implement financial controls. Accountability is the practice that holds each
employee accountable for those areas for which he/she has been delegated responsibility. It is this
aspect of accountability that a public manager has a mechanism ensuring to discharge their
responsibilities as required.
511
Administrative Controls – are primarily established to create a sound environment within which
accounting controls may efficiently operate. They encompases all those organizational plans,
methods and procedures that help entities achieve operational efficiency and adherence to
management policies. They are designed to ensure that:
 Assets are safeguarded and access to those assets is restricted

 The agency operation is conducted in an orderly and efficient manner that includes a
detailed organizational structure that highlights lines of responsibility,, or centers of
responsibility
 Staff and team responsibilities match their ability
 Management has the necessary information to exercise sound decisions, and
 Transactions and other decisions are properly authorized.
Program Controls are put in place to ensure that the programs/projects of the government agency
achieve their goals and objectives. The controls should be able to ensure the following:
 Responsiveness of the programs/projects to the needs of the client/beneficiaries and

stakeholders
 Sustainability of the program/project, and
 Those alternative courses of actions have been considered in the implementation of the
program/project
Budget Controls – are established to ensure that funds are properly allocated and utilized solely
for the purpose for which they have been appropriated. Specifically, the system of budgetary
controls shall:
 Establish and maintain the accountability of public officers

 Ensure that funds are used only for the intended purpose, and
 Ensure the disclosure of material errors in the accounts and unauthorized transactions or
loss of assets
Management Controls – have been broadly defined as “a process effected by management and
other personnel designed to provide reasonable assurance regarding the achievement of
objectives” with the following objectives:
 To keep the organization on course toward achievement of its mission, goals and
objectives while minimizing surprises along the way
 To enable management to cope with rapidly changing economic and political
environment, shifting service demands and priorities and the inevitable organizations
restructuring that accompanies them, and
 To promote efficiency, reduce risk or resource loss, increase reliability of management
data, and ensure compliance with laws, and regulations
B. Objectives of Internal Controls
1. To safeguard the reliability of data
ICS policies and procedures are designed to safeguard the accuracy and reliability of the
information by preventing and detecting errors on a timely basis. Management needs
accurate information for carrying out the operation since reliable information is used in
making critical management decisions.
512
2. To safeguard assets and records
ICS policies and procedures are designed to prevent and detect loss of assets and records
on a timely basis. The physical assets of the agency can be stolen, misused or accidentally
destroyed. The same is true with non-physical assets such as accounts receivable ledger,
accountable forms and financial records.
3. To promote operational efficiency, and
ICS policies and procedures are meant to prevent unnecessary duplication of effort,
protect against waste in all aspects of operation and discourage of inefficient use of
resources.
4. To encourage adherence to prescribed policies
ICS policies and procedures are meant to provide reasonable assurance that those
procedures and rules are adhered to by the agency personnel. The concept of reasonable
assurance recognizes that the cost of agency’s internal control structure should not exceed
the benefits that are expected t be derived.
C. Importance of Internal Control
1. Errors in financial and other forms of information

2. Inaccurate financial information normally leads to poor decision-making
3. Irregularities waste, and fraudulent transactions cannot readily be detected
4. Programs/Projects do not address the needs, demands and priorities
D. General and Specific Standards of Internal Control
General Standards
1. Personnel Competence – Officers and employees should posses technical competence and
professional integrity commensurate with their assigned responsibilities
2. Control Techniques – Internal control techniques are to be designed for and operated in all
agency activities to accomplished the control objectives consistently, efficiently and
effectively
3. Reasonable assurance and cost – Internal control systems are to provide reasonable
assurance that the objectives of the systems will be accomplished at a reasonable cost.
Specific Standards
1. Documentation – the agency’s ICS, policies, procedures, accountability for resources and
all financial transactions shall be clearly documented and adequately supported.
2. Recording of transactions and events – financial transactions and events shall be promptly
recorded in accordance with state accounting standards
3. Authorization and execution of transactions – all transactions shall be executed by persons
acting within the scope of their authority
4. Segregation of duties and functions – Key duties and functions such as authorization,
custody and accounting shall be assigned to separate offices and individuals to eliminate
opportunities to conceal errors and irregularities
513
5. Supervision Scheme – Qualified and continuous supervision of subordinates shall be
provided to assure adherence to approved policies and procedures
6. Physical control and access to agency resources – Tangible assets and records should be
physically safeguarded. Access to these and records, both direct physical access through
document processing, shall be in accordance with management’s authorization.
7. Asset Accountability – Accountability for the custody and use of an asset is to be assigned
and maintained and periodic comparison shall be made of the existing assets with the
recorded accountability and appropriate action taken on any differences.
8. Built in checks – proofs of accuracy and documented trail of transactions are features that
should be built into the execution and recording of transactions to assure their correctness.
9. Presence of appraisal activity – Reviews of transactions and internal control shall be
performed on an on-going basis for proper monitoring of adherence to prescribed policies
and procedures
10. Prompt resolution of audit findings – Officers shall promptly evaluate findings and
recommendations reported by auditors, determine proper actions in response to audit
findings and recommendations, and complete within established time frames all actions
that correct or otherwise resolve the matters to management’s attention.
E. Limitations of Internal Control
1. Internal control must be attained at reasonable cost. Some necessary controls maybe
sacrificed to avoid additional costs in terms of personnel, time and materials,
2. Good internal control methods and measures are not foolproof. They are vulnerable to
collusion.
3. Strong internal controls are still subject to human fallibility such as negligence, errors in
judgment and lack of complete understanding;
4. Organizational changes may render internal control systems and manuals obsolete, and
5. The degree of compliance with internal control systems strongly influences their
effectiveness.
F. Some factors that may reduce the effectiveness of ICS
1. Misunderstanding of instructions
2. Mistakes in judgment
3. Personal carelessness
4. Distraction, personal problems or fatigue on the part of the person responsible for
performing a control procedure
5. Collusion among individuals, circumventing control procedures whose effectiveness
depends on segregation of duties, and
6. Management override of certain control policies and procedures
G. Control Environment
This sets the tone of the organization and is the foundation for all other components of controls.
The control environment includes the following
 Integrity
 Ethical Values
 Competence of the entity’s people
 Management philosophy and operating cycle
 The way management assigns authority and responsibility
514
 The way management organizes and develop its people, and
 Attention and direction provided by senior management.
Some criteria in assessing whether or not the agency has put in place the foregoing factors
 Shared ethical values, including integrity, should be established, communicated and

practiced throughout the agency
 Human resource policies should be consistent with the agency’s ethical values and with
the achievement of its objectives
 Authority, responsibility and accountability should be clearly defined and consistent with
the agency’s objectives so that decisions and actions are undertaken by the appropriate
people
 An atmosphere of mutual trust should be fostered to support the flow of information
between people and their effective performance toward achieving the agency’s objectives;
and
 People should have the necessary knowledge, skills and tools to support the achievement
of he agency’s objective.
H. Risk Assessment
Risk is a probability of an event or action having an adverse effect on the organization. It is

directly tied up to control objectives and those events or action that can prevent the agency from
achieving these objectives.
Probable Risks in an Agency
 Operations are not carried out effectively and efficiently

 Assets (data financial resources, inventory, property, or personnel) are not adequately
safeguarded against loss
 Financial and operating reports are unrealiable
 Operation are not in compliance with laws and rules; and
 Agency’s mission or goals are not achieved
Factors that Affect Risk
 Ethical eliminate maintained by management

Higher ethics – lower risk
 Competency, adequacy and integrity of personnel
Overworked or under trained – more errors
Unethical personnel – more irregularities
 Adequacy and effectiveness of the system of internal control
More effective ICS –lower opportunity for errors and irregularities
 Degree of computerization
Higher/reliable automation – lower risk of human error and hopefully the more corrective
controls
 Size, complexity, volatility, geographical dispersion of operations
Larger, more complex – more volatile
More dispersed – higher risk
 Degree of regulation
515
 Impact customers have on the operations
Greater the impact – higher the risk of negative publicity or financial loss
Effects of Uncontrolled Risks
 Resources are acquired or used inefficiently or ineffectively resulting in shortages of funds

of failure of the agency to meet goals
 Loss of assets due to theft or unintentional errors
 Unreliable financial and operational reports (incorrect, untimely, or incomplete) result in
poor decision making by management
 Non compliance with laws, rules or regulations result in financial penalties or damage to
the reputation or goodwill of the agency, and
 Customer’s dissatisfaction due to ineffective operations resulting in loss of customers or
negative publicity
Factors to Ensure that Risks are Addressed
 Risk assessment objectives

 Risk identification and assessment, and
 Mechanisms to respond to the changes in the agency
Some of the factors to ensure that risks are addressed
 There should be a clear set of operational objectives with appropriately linked sub-
objectives
 The significant internal and external risks faced by the agency in the achievement of
its objectives should be identified and assessed
 Objectives and related plans should include measurable performance targets, and
 External and internal environment should be monitored to obtain information that may
signal a need to re-evaluate the objectives and/or controls.
I. Control Activities
These are the policies and procedures that help ensure that management actions identified to
assess risks are carried out. They help to ensure that necessary actions are taken to address risks.
They include measures to motivate staff as well as traditional financial, administrative and
procedural controls.
Are integral part of an entity’s planning, implementing, reviewing and accountability for
stewardship of government resources and achieving effective results.
They include approvals, authorizations, reconciliation and performance reviews, maintenance of

security and the creation and maintenance of related records, which provide evidence of execution
of these activities as well as appropriate documentation.
It is important to always remember VACA of controls:
V – Validity
A – Authorization
C - Completeness
A – Accuracy
516
List of Control Activities
 Top level reviews of actual performance
Management should track major agency achievements and compare these to the plans,
goals and objectives established by the agency
 Reviews by management at the functional or activity level.
Managers need to compare actual performance to planned or expected results throughout

the organization and analyze significant differences.
 Management of human capital
Management should consider human capital as an asset rather than costs. Operational
success is possible only when the right personnel for the job are on board and are provided
with the right training, tools, structure, incentives, and responsibilities. Performance
evaluation and feedback, supplemented by an effective reward system, should be designed
to help employees understand the connection between their performance and the
organization’s success. Management should also consider how best to retain valuable
employees, plan for their eventual succession, and ensure continuity of needed skills and
abilities.
 Controls over information systems processing
In an computerized environment, these are two broad groups of information systems

control:
1. General controls – include entity wide security program planning, management,
control over data center operations, system software acquisition and maintenance,
access security, and application system development and maintenance
2. Application controls – are controls designed to help ensure completeness,
accuracy, authorization, and validity of all transactions during application
processing. These include edit checks on data entered, accounting for transactions
in numerical sequence, comparing the file totals with control accounts and
controlling access to data, files and programs.
 Physical control over vulnerable assets
Management should establish physical control to secure and safeguard vulnerable assets.
These include security for and limited access to assets such as cash securities, inventories,
and equipment, which might be vulnerable to risk of loss or unauthorized use. It is also
important that these assets should periodically be counted and compared to control records
 Establishment and review of performance measures and indicators
This control calls for comparisons and assessments relating difference sets of data to one
another so that analyses of the relationships can be made and appropriate actions taken. It
also aims to validate the propriety and integrity of both organization and individual
performance measures and indicators.
517
 Segregation of duties
Key duties and responsibilities need to be divided or segregated among different people to
reduce the risk of error or fraud. This includes separating the responsibilities for
authorizing transactions, processing and recording them, reviewing the transactions, and
handling any related assets.
 Proper execution of transactions and events
Transactions and other significant events should be authorized and executed only by
persons acting within the scope of their authority. This is the principal means of assuring
that only valid transactions to exchange, transfer, use or commit resources and other
events are initiated or entered into. Authorizations should be clearly communicated to
managers and employees.
 Accurate and timely recording of transactions and events
Transactions should be promptly recorded to maintain their relevance and value to

management in controlling operations and making decisions. This applies to the entire
process or life cycle of a transactions or event from initiation and authorization through its
final classification in summary records.
 Access restrictions to an accountability for resource and records
Access to resources and records should be limited to authorized individuals, and

accountability for their custody and use should be assigned and maintained. Periodic
comparison of resources with the recorded accountability should be made to help reduce
the risk of errors, fraud, misuse or unauthorized alteration.
 Appropriate documentation of transactions and internal control
Internal control and all transactions and other significant events need to be clearly
documented, and the documentation should be readily available for examination. The
documentation should appear in management directives, administrative policies, or
operating manuals and may be in paper or electronic form. All documentations and
records should be properly managed and maintained.
Criteria in Assessing the Factors
 Policies designed to support the achievement of objectives and the management of its risks
should be established communicated and practiced so that people understand what is
expected of them and the scope of their freedom to act
 The decisions and actions of different units of the agency should be coordinated, and
 Control activities should be designed as an integral part of the agency taking into
consideration its objectives; the risks of their achievements and inter-relatedness of control
elements
518
J. Information and Communication
This component spans across all the other components of internal controls. These two elements
are related where information must be communicated up and down through the agency in a
manner and time frame that allow people to carry put their various responsibilities.
Information and communication processes consist of the methods and records established to
record, process, summarize and report agency’s data. They are used to identify the significant
classes of transactions and how they are initiated, processes, controlled, and reported.
This component ensures that:
 Information resulting from agency’s operations are provided to appropriate individuals on

a timely basis
 Financial information regarding legislation, regulatory developments, economic changes,
or similar external factors that may affect the department, and
 Emerging information needs are identified on a timely basis.
Elements of Information and Communication
 Strategic and integrated system – By strategic means that management should consider the
planning, design and implementation of the information system as part of its overall
agency strategy. On the other hand, it should ensure that the automated information
systems is integrated with the other operations.
 Quality of information – this pertains to the appropriateness, timeliness and availability,
correctness and accessibility of the information
 Existence of appropriate channels of communication including interested parties outside
the agency
Criteria in assessing the component
 Communication process should support agency’s values and the achievement of its
objectives
 Sufficient and relevant information should be identified and communicated in a timely
manner to enable people to perform their assigned responsibilities
 Plans to guide efforts in achieving objectives should be established and communicated,
and
 Information needs and related information system should be reassessed as objectives
change or as reporting deficiencies are identified.
K. Monitoring
This is the process put in place to assess the effectiveness of established internal control
components and to make corrective action when appropriate. Although this is a function of the
internal audit function of the agency, management has a responsibility to establish a variety of
monitoring activities to measure the effectiveness of its internal controls.
Internal control should generally be designed to assure that ongoing monitoring occurs in the
course of normal operations.
519
In includes regular management and supervisory activities, comparisons, reconciliation and other
actions people take in performing their duties.
Monitoring of internal control should include policies and procedures for ensuring that the
findings of audits and other reviews are promptly resolved.
Managers are to:
 Promptly evaluate findings from audits and other reviews including those showing
deficiencies and recommendations reported by auditors and others who evaluate agency’s
operations
 Determine proper actions in response to findings and recommendations from audits and
reviews
 Complete, within established timeframes, all actions that correct or otherwise resolve the
matters brought to management’s attention
Elements of Monitoring
 Operating management normal activities – normal management reviews of operation and

financial reports
 Communication from external parties – this includes complaints from clients/customers
 Agency structure and supervisory activities – these are the routine review of subordinates
work/reports by the supervisors.
 Internal and external audit reports
 Physical inventories and asset reconciliation
Criteria in assessing the monitoring component
 Performance should be monitored against the targets and indicators identified in the
agency objectives and plans
 The assumptions behind the agency objectives should be periodically challenged
 Follow-up procedures should be established and performed to ensure appropriate change
action occurs, and
 Management should periodically assess the effectiveness of controls and communicate the
results to which it is accountable.
L. Evaluation of ICS
The management of any organizations, be it private or public, has the responsibility in installing
the agency internal controls. Management must also evaluate internal controls to “provide a
framework for reviewing operating procedures”. In evaluating internal controls, management may
be able to identify procedural problems that underlie perceived symptoms of
inefficiencies/deficiencies and abuses.
The auditors, on the other hand, evaluate internal controls as a compliance with generally
accepted auditing standards to enable him/her to focus the audit on risk areas.
Depending on the objectives, evaluation may be conducted on the following:
 Organizational unit(s)
 Financial statement accounts, and
 Cycle/Process/System.
520
LTO Form 88
QUESTIONNAIRES FC YES/NO REMARKS

REF. OR N/A
NO
CONTROL ENVIRONMENT
A. Integrity and Ethical Values
1. Does management set the “tone at the top”

by demonstrating a commitment to integrity
and ethics through both in words and in
deeds?
2. Have appropriate agency policies regarding
business practices, conflicts of interest, and
code of conduct been established and
communicated?
3. Have incentives and temptations that might
lead to unethical behavior been reduced or
eliminated?
4. Are all employees made aware that all forms
of fraudulent acts against the agency will
result in administrative and criminal and
criminal investigations?
B. Management philosophy and operating

cycle
1. Is top management strongly committed to a

system of internal control?
2. Are business risks carefully considered and
adequately monitored?
3. Is management's selection of accounting
principles and development of accounting
estimates consistent with objective and fair
reporting?
4. Has management demonstrated a willingness
to adjust the financial statements for material
misstatements?
5. Are important management and operating
decisions dominated by one or two
individuals?
6. Is the organizational structure clearly defined
by use of a current organizational chart
indicating lines of authority and
responsibility?
7. Are manual of procedures in use?
 If so, do you maintain copies on file?
 Is somebody responsible for carrying out
the procedures provided?
8. Does the company have written policies:
 Delegation or assumption of duties
521
REF. OR N/A
NO
 Annual vacations for all staff?
 Obtaining background or reference for
new staff?
 Training programs for employees?
 Rotation of employees?
9. Does the agency maintain files of names and
specimen signatures or initials of all persons
authorized to approved transactions?
10. Does the agency have clearly defined
requirements for the authorization and
executing of significant contracts and other
agreements not in the ordinary course of
business?
11. Does the agency keep minutes of the
meetings of the stockholders/board of
directors/committees to record the decisions
made in such meetings?
12. Does the agency require regular monitoring
or review of compliance with the
requirements of loan contracts, trust
agreements, and similar contracts by
designated officials?
13. Do related employees, if any, have job
assignments that minimize the likelihood of
collusion?
14. Does the agency employ security measures to
check persons and vehicles coming in and
out of its compound of premises?
15. Does the agency's system, physical layout
and office routine provide for the proper
safekeeping or safeguarding (e.g. through the
use of safes, vaults, locked cabinets,
restricted areas, etc.) of the following:
 Assets that are easy to pilfer (e.g. cash on
hand, inventories and certain property,
plant and equipment)
522
REF. OR N/A
NO
 Documents of title or of ownership of

investments (e.g. Certificates of Land
Titles, stock certificates, bonds, interest,
coupon, notes receivables)
 Unused critical forms (e.g. purchase
orders, receiving report, debit/credit
memo, etc.)
 Company records when they are not in
use (e.g. general ledger, general and
special journal/registers, subsidiary
records for accounts receivable, account
payables, inventories, property, plant and
equipment, securities, etc.)
16. In addition to the physical control in No.
12(c) does the agency account for the unused
forms (e.g. recording them on up-to-date
basis in a form register of similar control
listing, periodically counting and reconciling
the unused to such register)?
C. Manner of assigning authority and

delegating responsibility
1. Are levels of authority and responsibility

documented by way of written policy and
more generally through the entity's
organizational chart?
2. Do employee job descriptions clearly
document the authority level of each
employee?
3. Where possible, have policies been put into
place that:
 Separate accounting and operating
functions?
 Separate accounting and custody
functions?
 Separate authority and custody functions?
 Separate accounting functions?
 Separate functions within the ECP
department?
523
REF. OR N/A
NO
4. Have employees been issued with guidelines
in relation to their authority levels?
 Do check payments need a second
signature?
 Do check-signing limitations exist?
5. Does management monitor the activities of
those employees who have been assigned
authority and delegated responsibility?
D. Competence of People
1. Do existing policies and procedures result in
recruiting and developing competent and
trustworthy people necessary to support an
effective internal control structure?
2. Do the personnel understand the duties and
procedures applicable to their jobs?
3. Is the turnover of personnel in key positions
at an acceptable level?
4. Do they undergo relevant training?
5. Is there proper supervision of less
experienced staff?
6. Are the mission, goals, and objectives of the
organization made clear to them?
7. Are manuals of operations made available to
them?
E. MONITORING
1. Is there an internal audit unit?
 Does it regularly assess the effectiveness
of internal controls?
2. If there is not internal audit unit, who
evaluates the effectiveness of the controls?
F. CONTROL ACTIVITIES
Specific policies
1. Do specific authorization procedures exist
where transactions can only be examined on
an individual basis?
 Are bad debts written off only after
proper authorization?
524
REF. OR N/A
NO
G. Proper documentation and records
1. Do documents and records provide an
adequate base for a transaction trail?
2. Where appropriate, are documents pre-
numbered?
3. Does adequate documentation exist for those
goods that have been returned to suppliers?
4. Are non-current assets recorded in a non-
current assets register and periodically
reconciled with the control account?
H. Control over access
1. Is there restricted access to the premises?
2. Is access to sensitive areas protected by
security devices?
3. Is there restricted access to an organization's
documents and records?
4. Is access denied to suspended or sacked
employees?
5. Do all assets carry some form of individual
identification?
I. Independent internal checks
1. Are independent checks carried out on the
following account balances?
 Bank
 Account receivable
 Inventory
 Non-current assets, and
 Account payable
J. Cash Receipts
1. Does the organization structure provide a
clear-cut separation of cashiering function
from accounting function?
2. Are the employees of the cashier's office
denied access to, Is the collecting officer
closely supervised by a responsible officer of
the agency?
3. Are all accountable officers given
instructions regarding their duties and
responsibilities?
525
REF. OR N/A
NO
4. Do accountable officers keep a file of COA
and other circulars pertaining to their work?
5. Are the collecting officer and other
employees handling cash provided with safe?
6. If so, is the duplicate combination of the safe
filed with an authorized official?
7. Is the combination of the safe changed
whenever there is a change of custodian?
8. Is the cashier office amply protected against
intrusion by unauthorized persons?
9. Are all employees handling cash adequately
bonded?
10. If so, how much?
11. Are surprise cash counts frequently made by
department examiners?
12. Are official receipts booklets used? If so,
 Are these pre-numbered?
 Are the booklets issued in numerical
sequence?
 Is the form of payment indicated in the
receipts?
 Is the numerical sequence of issued
officials receipts and booklets checked by
the accounting department?
 Is a register of forms maintained? If so, is
it kept up-to-date?
 Are unused booklets physically
safeguarded? State how?
13. Are official receipts issued for every receipt
of payment?
14. Is it the practice of collecting officer not to
accept postdated checks payment of charges
or fees?
15. Is the cashing of checks from collections
prohibited? If not:
 Is the prior approval or an authorized
person required before a check is cashed?
526
REF. OR N/A
NO
 Are such checks deposited promptly?
16. Are collections deposited intact and as
frequently as required by regulations?
17. Is the person making deposit escorted by
armed guards and provided with
transportation facilities?
18. Are all checks endorsed for deposit and
deposited in appropriate banks?
19. Are items of deposits subsequently
dishonored by the Bank/Treasury promptly
adjusted in the collecting officer's records?
20. Are both the totals and details of bank
authenticated duplicate deposit slip matched
by the accounting department against the
corresponding official receipts?
21. Are totals of bank-authenticated deposit slips
compared with the debit to respective bank
accounts in the book of original entry?
22. Are all cash funds and cash receipts in the
debit to respective bank accounts in the book
of original entry?
23. Are acknowledged deposits or deposits in
transit invariably cleared the following
month?
24. Are collection and deposits recorded daily in
the cash book?
25. Is the cash book balance compared daily with
the cash on hand?
26. Are collection reports submitted regularly to
the accounting division?
27. Is reconciliation made monthly of the
collecting officer's book balance and the
accounting subsidiary ledger balance?
K. Mail Remittance
Is the mail opened by an employee who is
independent of either cashier's office and the
accounting office?
1. Are mail remittances recorded or listed by
the person opening the mails?
527
REF. OR N/A
NO
2. If so, is the record or list given to someone
other than the collecting officer for follow-up
to see that all remittances have been
receipted for an deposited?
3. Is the foregoing information considered
adequate as basis for our evaluation of
internal control—in that there are no other
additional auditing procedures, accounting
controls or other circumstances that mitigate
weaknesses indicated above, or in that there
are no other circumstances that impair any
control?
List down any additional controls and/or
weaknesses not covered by the foregoing
and/or answers:
L. Disbursements
1. Are all payments except petty cash fund
disbursements and payroll made by checks?
2. Are checks pre-numbered?
3. Are checks issued in numerical sequence?
4. Is the stock of unused checks accessible only
to the custodian and to those who prepare
and sign checks?
5. Are all checks drawn countersigned by
another responsible officials?
6. Is the bank furnished of the name and
specimen signatures of officials authorized to
sign checks?
7. Is the signing of checks limited to officers or
employees who have no access to accounting
records or to cash?
8. Are all checks for signature and
countersigned always accompanied by
approved voucher and supporting
documents?
528
REF. OR N/A
NO
9. Are disbursements vouchers, supporting
and account distribution reviewed by an
authorized accounting staff? If so, is the
covering voucher signed by the person
who made the review?
10. Are Dvs and other supporting documents
reviewed by at least one signatory
preparatory to the signing of the check?
11. Is the signing and countersigning of
checks in advance or in blank prohibited?
12. Is the drawing of checks to cash or bearer
(except for revolving funds
replenishments and total payroll)
prohibited?
13. Are voided or spoiled checks, all
properly cancelled and held available for
subsequent inspeciton?
14. Are the supporting documents all
stamped “Paid” or marked with similar
indications immediately after the check is
signed to prevent their possible reuse?
15. Are checks drawn recorded promptly?
16. Is the payee's signature or receipt secured
before the check is delivered?
17. Are Bank accounts reconciled at least
once each month?
18. Are bank statements and paid checks all
sealed by the bank and delivered directly
to the person preparing the
reconciliation?
19. Is the reconciliation done by an employee
whose duties do not involve:
 Signing the checks?
 Recording cash transactions?
 Handling cash?
20. Does the person who reconciles bank
accounts: account for all check numbers,
examine signatures, endorsements
payee's name and date and compare with
the records?
529
REF. OR N/A
NO
21. Are checks bearing improper
endorsements returned to the bank for
corrections?
22. Are long outstanding checks properly
followed and controlled?
23. Are “stop payments” on outstanding
checks properly controlled?
24. Are reconciling items systematically
followed up and promptly cleared?
By currency:
25. Are those give cash advances duly
designated as disbursing officers and
adequately bonded?
26. Are all advances properly authorized and
not excessive in amount?
27. Are all previous advances liquidated
before a new cash advance is given?
28. Are advances liquidated by the officials
within a reasonable time after the purpose
of such advances has been accomplished?
29. Are cash payments always supported by
approved vouchers and supporting
documents?
30. Are expense vouchers and supporting
documents stamped “Paid” to prevent
their possible reuse?
31. Are entries in the cash up to date?
32. Are reports of disbursements regularly
submitted?
33. Are subsidiary records for cash advance
kept and reconciled with the control
account periodically?
34. Is there conformation of outstanding
balances at least once a year?
530
REF. OR N/A
NO
internal control—in that there are no
other additional auditing procedures,
accounting controls or other
circumstances that mitigate weaknesses
indicated above, or in that there are no
other circumstances that impair any
control?

and/or answers:
M. Petty Cash Fund

1. Are there no cash on hand except for
Petty Cash Funds and remittances
received after daily deposit is made?
2. Is the Imprest Fund system used?
3. Is access to and responsibility for the
fund vested in one person?
4. If custodian of other funds, are these
segregated and accounted for separately?
5. Does the custodian of the fund have no
access to:
 Cash receipts?
 General accounting records?
6. Are changes made in the stated amount of
the fund authorized?
7. Are funds reimbursement checks made
payable to the order of the custodian?
8. Does proper internal audit exist for petty
cash vouchers and supporting documents
at the time of reimbursing the fund?
9. Is the fund reasonable in amount?
10. Is there a “ceiling” for individual
payments from the fund/funds? If so,
indicate the limits
11. Are all significant petty cash funds
counted periodically on a surprise basis?
Indicate who counts
531
REF. OR N/A
NO
control?

and/or answers:
N. Account receivables
1. Are credit extended only with the
approval of responsible officials?
2. Are receivables supported with
documents to justify claim against
debtors?
3. Are bills reviewed and checked by the
accounting division?
4. Are billing documents properly
approved?
5. Are forms used in billing pre-numbered?
6. Are bills numerically accounted for and
properly recorded?
7. Are voided bills cancelled and preserved
for reference?
8. Are bills properly filed and controlled to
prevent loss and tampering?
9. Are subsidiary ledgers maintained?
10. Are subsidiary ledgers regularly balanced
with the contolling accounts?
11. Are receivables aged periodically?
12. Are delinquent accounts periodically
reviewed by proper officials
13. Are statements of accounts regularly sent
to all debtors?
532
REF. OR N/A
NO
14. Are the statements prepared or checked
by someone no having access to the cash
receipts journal or accounts receivable
credits?
15. Are statements mailed by someone other
than the account receivable bookkeepers?
16. Are statements controlled to prevent
interception prior to mailing?
17. In case of differences reported, are the
difference promptly acted upon and
corrected?
18. Are uncollectible accounts write-offs
approved by proper official?
19. Is a record maintained of accounts
written off?
20. Are credit adjustment approved by a
proper officials?
21. Are accounts with credit balances
investigated, adjusted, or otherwise
settled?
22. The approval of an unauthorized official
a pre requisite to the payment of an
account receivable credit balance?
23. Are duties of accounts receivable clerk
divorced from any cash function?
24. Are account receivable bookkeepers
rotated on their jobs?
25. Is there confirmation of accounts at least
once a year?
control?
533
REF. OR N/A
NO
and/or answers:
O. Prepayment and Deposits

1. Are schedules or details kept for
prepayments and deposits?
2. If so, are they reconciled with the control
account regularly?
3. Are monthly or periodic balances of
prepayments analyzed to determine
correct balances that will benefit future
periods?
4. If possible, is the total amortization of
prepayments made to reconcile with
totals of charge to certain expense
accounts?
5. Are receipts and other evidences of
deposits well kept and placed under
control?
6. Are deposits periodically reviewed to see
if any are no longer required?
7. Are refunds of deposits always taken into
account in the books?
control?

and/or answers:
534
REF. OR N/A
NO
P. Miscellaneous Liabilities and Deferred
Credits
1. Are there adequate subsidiary records for
miscellaneous deposits, deferred
collections, trust liabilities and
miscellaneous liabilities and credits?
2. If so, are they periodically reconciled
with the control account?
3. Are miscellaneous liabilities and credits
occasionally confirmed?
4. Are there written instructions governing
miscellaneous deposits, if so, are they
strictly followed?
5. Is there adequate review of the transfer of
deferred credits to income, to income
accounts?
6. Is it the tendency of the balances of
undistributed collection to decrease in
amount?
control?
Q. Payroll
1. Is a personnel division maintained? If so,
 Do all hiring, changes in rates,
dismissals and resignations pass
through this division?
 Does the division kept a complete and
up to date record of personnel and
rates?
 Are resignations immediately
reported to the Accounting Division?
2. Are time record books properly
safeguarded or controlled to avoid
alterations?
535
REF. OR N/A
NO
3. Is the total time worked by each
employee approved by an authorized
official?
4. Are payrolls prepared by persons
independent of those who the paying?
5. Is the time worked by each employee as
stated in the payroll always checked
against official time record book?
6. Is a permanent and up to date record kept
of each employee showing all
information needed in the verification of
payroll?
7. Are changes in rates and additions of
persons to payrolls always verified
against written authority or new
appointments?
8. Are accumulation of payroll date,
computation of individual pay and
summarization of the total payroll
rechecked by another employee before
payment?
9. Are officers and employees required to
acknowledge receipts of their salary pay?
10. Is it the practice of employees to sign the
payroll only at the time payment?
11. Are the acknowledgement signatures
compared with those in the personnel file
by a person not connected with the
preparation and disbursement of the
payroll?
12. If certain officers and employees are paid
by checks:
 Are individual payroll check signed
by one who does not participate in
 Preparation of the payroll?
 Preparation of the payroll check?
 Recording of payroll transactions in
the books of accounts?
13. If an employee cannot collect his pay
personally, is his written authority always
required before allowing another person
to collect it for him?
536
REF. OR N/A
NO
14. Are applicable legal requirements
(withholding tax, GSIS, and Medicare
premiums, etc.) complied with?
15. Are unclaimed wages deposited and
liability set up within a reasonable time?
16. Is authority secured first before any
overtime work is rendered?
17. Are salary index cards for all employees
maintained?
18. If so, are postings there up to date?
control?
537
LTO Form 89
BLGF Form No. ________________________

PROVINCE/CITY __________________________, Municipality of ___________________
Office of the Treasurer
REAL PROPERTY TAX BILL
NO._________________________________
M______________________________
________________________________
Sir/Madam:
This is to inform you that per records of this Office the taxes due on the real property/ies described hereunder as of _____________ amount to
P_____________.
Name of Location Tax Dec. ASSESSED VALUE Annual Year BASIC SEF Grand
Declared (Number No/ARP Land Imp. Mach Tax Tax Discount Interest Sub-total Tax Discount Int. Sub-total Total
Owner & Street No. . (9-10)C (9-10)C (12=16)
of Brgy) (9-11)P (9-11)P
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17)
TOTAL
NOTE:
1. Kindly inform this office of any error or omission that you may have discovered in this Bill.
2. Please present this Bill to this Office when payment is made
3. Payment of the said taxes/discounts/interest is up to ____________________.
4. Failure to pay the aforementioned real property taxes within twenty (20) days from receipts hereof of will force this office to apply the remedial measures
provided under Sec. 256 of R.A. 7160 to enforce collection of the same
5. Please disregard this Bill in case you have paid your taxes. Very truly yours,
Legend:
C - Current Year CITY/MUNICIPAL ACCOUNTANT
P - Previous Year
538
FORM TITLE : REAL PROPERTY TAX BILL
PREPARED BY : Billing Clerk, Municipal/City
FREQUENCY : Annually
 Current Year - Before end of 1st Quarter
 Previous Years - Before end of the 2nd Quarter
NO OF COPIES : three (3)
PURPOSE OF FORM 1. To inform the taxpayer of his current tax (for up-to-date
taxpayer) and of his delinquent taxes (for delinquent taxpayer)
which he has to pay within a specified period of time.
2. To indicate breakdown of his –
(a) Up-to-date
(b) delinquent
Current year tax - Delinquent tax -Tax Discounts - Interest
3. To record the owner of the possible consequences of failure to
settle tax obligations
INSTRUCTIONS:
1. Look into the RPTAR of up-to-date/delinquent accounts filed alphabetically
2. Prepare the Real Property Tax Bill.
a. Assign RPTB Number.
b. Enter the date when the bill is prepared
c. Indicate the name of owner and mailing address
d. Indicate date when the computation of tax, tax discounts and interest in unpaid tax
was made.
e. Indicate the total amount of taxes billed on the line provided for the same
3. Make appropriate entries in the following Columns:
1. Indicate the name of the owner
2. Indicate Location
3. Enter the Tax Declaration No. (TD No.)
4. Enter the amount of the RPU as the Bill
5. Land, Improvement, Machinery
6. Enter the Annual Tax
7. Indicate the tax year
BASIC
8. Enter the tax (for up-to date)
9. Enter the tax (for up-to-date)
10. Enter the tax discount (property owner)
11. Enter the interest(for delinquent taxpayers)
12. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the
tax and interests (Delinqunet)
SEF
13. Enter the tax (for-up-to-date)
14. Enter the tax discount (property owner)
15. Enter the interest ( for delinquent taxpayer)
16. Enter the difference of the tax and tax discounts (Up-to-date) Enter the sum of the
tax and interests (delinquent)
17. Enter the sum of Columns 12 and 16
539
LTO Form 90

City/Municipality of _________________________
CERTIFIED LIST OF ALL REAL PROPERTY TAX DELINQUENCIES

As of December 31, ___________________________
BARANGAY
ASSESSED BASIC SEF
Grand
Tax Name VALUE
Mailing Classification Annual Total
No. Dec. of Land Imp. Mach Year Tax Penalty Sub- Tax Penalty Sub- Remarks
Address of Property Tax (13-
No./AR Owner total total
16)
(11+12) (14+15)
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
TOTAL
PREPARED BY CERTIFIED CORRECT
______________________________
___________________________________
CITY/MUNICIPAL TREASURER
540
FORM TITLE : Certified List of All Real Property Tax Delinquencies
PREPARED BY : Records Clerk, Municipal/City Treasurer’s Office
FREQUENCY : Yearly, before the end of December
NO. OF COPIES : four (4)
PURPOSE OF FORM
a. To record all pertinent information on individual real property unit (i.e., owners name,
mailing address, location of property).
b. To reflect each real property unit’s assessed value as well as the owner’s taxes due for
a particular year.
c. To reflect the total number of owners of delinquent real properties as well as the total
tax collectibles in each barangay.
d. To provide data for the identification of real property units to be subject for remedial
measures.
RECIPIENTS:
Original copy – Local Sanggunian
Duplicate copy – Provincial Treasurer’s Office (In case of __________? Mun. Treasurer’s
Office)
Third copy – Barangay Captain
Fourth copy – Office
INSTRUCTIONS:
Column:
1. Enter the name of the Municipality/city/Barangay as well as the year on the lines
provided in the upper portion of the list
2. Assign a number for each property owner irrespective of the number of real property
units he/she has in the barangay;
3. Indicate the name of property owner
4. Indicate the mailing address of the property owner
5. Indicate the location of the real property unit
6. enter the assessed value of
7. the real property unit as to kind
8. land, improvement, machineries
9. Enter annual tax
10. Enter the tax year
BASIC
11. Enter the basic tax
12. Enter penalty
13. Enter the sum of columns 11 and 12
SEF
14. Enter the SEF tax
15. Enter the penalty
16. Enter the sum of columns 14 and 15
17. Enter the sum columns 13 and 16
Whenever payment is made, the records clerk should draw a red line across the number assigned
to the property owner (column 1 up to column 17). Under the column Remarks, the official
receipt number and date of issue should be entered by the records clerk.
541
LTO Form 91
Prov/City/Mun. (MMA) of _______________________
NOTICE OF REALTY TAX DELINQUENCY
Date ______________
Mr/Ms.____________________________
Address____________________________
Dear Sir/Madam:
In compliance to the requirement of Sec. 254 of R.A. 7160 (local Government Code of
1991) you are hereby informed of the tax delinquency on your property described as follows:
Lot No.:__________________ Block No. __________________________

TD No./ARPN_______________________________________
Location ______________________________________________
Assessed Value _________________________________; Area _______________sq.m./ha.
Residential/Commercial/Industrial/Educational
Land_____________________________
Improvement______________________
Machinery _______________________
Total ________________________
For the year(s) in the total amount of P ________________ including penalties computed as
follows:
19____ & previous years taxes P _____________________ & ______________% penalty of P

_______________
20____ tax of P _______________ & ________________% penalty of P __________________
20____ tax of P _______________ & ________________% penalty of P __________________
Total Amount Due P ________________________________
In case any of the above stated taxes has already been paid, please furnish us with the
number of the official receipt and the date of payment or Xerox copy of your receipt, otherwise
we shall appreciate very much your early remittance of the aforestated total amount of P
___________. If after fifteen (15) days from your receipt hereof you failed to remit or pay the
said amount, the remedies provided for under the law for the collection of delinquent taxes, shall
be applied to enforce collection.
Very truly yours,
_____________________
PROVINCIAL/CITY/MUN.
TREASURER
542
LTO Form 92
Prov./City/Mun. of _______________________
WARRANT OF LEVY
(Pursuant to Section 258 of LGC)
Date:_______________________
Mr./Ms.__________________________
_________________________________
Sir/Madam:
On the basis of the records of this Office, the undersigned hereby certifies that the
following described real property/properties., is/are delinquent in the payment of real property
taxes for the year/s and in the amount/s indicated, hereunder:
Declared Owner : _______________________________________________

TD No./ARP No. : __________________________ PIN _________________
Kind of Property : _______________________________________________
(Land, Building/Machinery/Improvement)
Classification Area Market Assessment Assessed

(sq.m./ha) Value Level Value
___________ _________ P______ ___________ P___________

___________ _________ _______ ___________ _____________
Total _________ P______ ___________ P____________
Taxes due: Add:Interest due: Totals
___________ ______________ _________________

WHEREFORE, this Warrant of Levy is hereby issued on the property/properties described
above pursuant to Section 258 of the Local Government code of 1991 (R.A. 7160) for the total
amount of the tax delinquency of P___________, covering the tax years period from
_________________ to ______________, for all intents and purposes therein provided.
Issued this ________________ day of _________________ 19_________ at the Province

/City/Municipality of ______________________.
__________________________________
(Provincial/City/Municipal Treasurer)
ACKNOWLEDGEMENT:
Date:______________________
Signature : ________________________
Printed Name ________________________
Property Owner/Administrator or Representative
Cc:
Provincial/City/Municipal Assessor
543
LTO Form 93
The Registrar of Deeds/Provincial/City

Municipal Assessor
_________________________________________
NOTICE OF LEVY
Sir/Madam:
Please take notice that a Warrant of Levy, copy hereto attached has been issued pursuance
to the provision s of Section 258 of the Local Government Code of 1991 (R.A. 7160) and served
upon Mr/Ms _____________________ of ________________________, as
owner/administrator/mortgagor/leases of the real property/ies described as follows:
TD. No. ______________________________

ARP ______________________________
PIN ______________________________
Kind of Property ______________________________
Location ______________________________
OCT/TCT No. ______________________________
Very truly yours
_____________________________
(PROVINCIAL/CITY/MUN.
TREASURER)
544
LTO Form 94
Prov/City/Mun of _____________________
NOTICE OF PUBLICATION AND AUCTION SALE
Date ___________________________
Mr/Ms ______________________________
____________________________________
Sir/Madam:
Records in this Office show that in spite of our letter to you dated ______________,
19_________, the delinquent realty taxes due on your property described hereunder have
remained unpaid:
Lot No. ________________; Block No. _______________________:
TD No./ARPN ____________________________
Location ___________________________________________
Area __________________sq. m/ha.
Assessed Value
Land __________________________
Improvement ___________________________
Machinery ___________________________
Total ___________________________
COMPUTATION OF TAX DELINQUENCY:

Total Taxes _______________________
Penalties _______________________
Total Amount Due _______________________
Because of said tax delinquency, your property is now included in the list of delinquent
real property which will be published in the (name of newspaper) a newspaper of general
circulation in the Prov/City/Municipality of _____________ pursuant to Sec. 260 of R.A. 7160
(Local Government Code of 1991), once a week for three (3) consecutive week on the dates of
_____________, and _____________, after which the property will be sold at public auction on
_____________________, 19_______________; otherwise, we will proceed with the publication
preparatory to auction sale. Thereafter, you will be required to pay the costs thereof in the amount
of P __________ in addition to the total amount due as taxes and penalties.
It is therefore, urged that you pay the delinquent taxes and penalties as soon as possible
but not later than __________, 19__ to avoid the inclusion of your name in the publication and
the additional charged for the costs, the eventual sale of your property at public auction.
In case payment/s for any of the above stated taxes has/have been made already, please
furnish us with the number of the official receipt and date of payment or Xerox copy thereof in
order that the same could be reflected in your record, if omitted or neglected; otherwise we shall
consider you to have confirmed our statement of your tax liability.
Very truly yours
_____________________________
(PROVINCIAL/CITY/MUN.
TREASURER
545
LTO Form 95
REPUBLIC OF THE PHILIPPINES)
Prov/City/Mun of _____________________)S.S.
PROOF OF SERVICE
OF “NOTICE OF PUBLICATION AND AUCTION SALE”
I, _______________, of legal age, Filipino, single/married and resident of

___________________________________, after being sworn in accordance with the law, depose
and say:
1. That I am an employee of the Provincial/City/Mun. Treasurer’s Office,

assigned as __________________;
2. That on _____________, 19____, at about _______ AM/PM, I served the

attached “Notice of Publication and Auction Sale” dated ___________ to
Mr/Ms ___________ being the addressee thereof at his/her residence/office
located at ______________, his/her address of record;
3. That as proof thereof, he/she has affixed his/her signature at the bottom of the
attached notice as admission of such serve;
OR
4. That she/he was out then, I left a copy thereof to a certain Mr/Ms
____________________, a person of sufficient discretion found in his/her
residence/office who signed/refused to sign the acknowledgement of receipt.
SUBSCRIBED AND SWORN TO BEFORE ME this day of _______________, 19____,

at the Provincial/City/Municipality of ____________________, Philippines, affiant
exhibiting to me his, her Community Certificate No. __________, issued on
_______________, 19___ at the Provincial/City/Municipality of
____________________________.
_____________________________
(PROVINCIAL/CITY/MUN. TREASURER)
(or Officer Authorized to Administer Oath)
546
LTO Form 96
Prov/City/Mun (MMA) of _____________________
Office of the Provincial/City/Mun. Treasurer
CERTIFICATE OF SALE OF DELINQUENT PROPERTY
I HEREBY CERTIFY THAT after having been advertised for sale in accordance with
Section 260 of R.A. 7160 (Local Government Code of 1991) and subject to the conditions set
forth therein, the delinquent real property (land, machiner/improvement) described as follows:
Declared Owner : ____________________________________

Location : ____________________________________
TD No. ARPN : ________________; Area_____________sq.m/ha.
Lot No : ________________; Block No. ________________
Assessed Value:
Land ______________________; Machinery ________________________
Improvement __________________________________________________________
Has been sold at the public auction held today at the (place) to
Mr/Ms________________________ a citizen of the Philippines, of legal age, single/married to
____________________________________ and a resident of ________________being the
highest bidder thereof, for the total consideration of __________________________ payment of
which is hereby acknowledge to have been received from him/her as for Official Receipt NO.
______________ dated __________. 19__, sufficient to satisfy the amount of taxes, penalties and
costs due thereon itemized as follows:
Taxes : ___________________________
Penalties : ___________________________
Cost of Sale : ___________________________
Total ___________________________
BOUNDERIES:
North ____________________________; South ______________________.
East _____________________________; West _______________________.
NOTE: If covered by Torens Title indicate technical description therein
This certification is issued in pursuant to provisions of Section 260 of R.A. 7160

__________________, Philippines, _____________________________.
Attested:
______________________________
Prov./City/Mun. Treasurer
Copy furnished: Mr./Ms.________________________

Owner/Admin./Occupant
_________________________
_________________________
_____________________________
(PROVINCIAL/CITY/MUN. TREASURER)
(or Officer Authorized to Administer Oath)
547
LTO Form 97
Prov./Mun./City of ______________________
OFFICE OF THE PROV’L/MUN./CITY TREASURER
CERTIFICATE OF REDEMPTION
Date ______________________
TO WHOM IT MAY CONCERN:
This is to certify that the real property (land, machinery, and/or improvement) described as
follows:
Declared Owner ___________________________
TD No./ARPN__________________: Area _______________sq.m./ha
Location __________________________________________________
Lot No. _________________________: Block No._________________
Assessed Value:
Land P____________________
Machinery ____________________
Improvement ____________________
which was sold to Mr./Ms. ______________________________________ for the price of P

_________________ at the public auction conducted by this Office on ______________ was
redeemed on ________________, _______________, by Mr./Ms.
______________________who was ascertained to be the ( ) delinquent taxpayer, ( )
representative of the delinquent taxpayer, ( ) person holding a lien or claim over the property by
paying the total amount of P ______________ as redemption cost and acknowledged under
Official Receipt No. _______________ dated _________________.
At any time upon surrender to this Office of the Certificate of Sale dated
_______________ and Official Receipt No. ________________ dated ___________________ of
the purchase price, including the 20% interest corresponding thereto which is from date of sale to
the date of redemption shall be refunded to the purchaser.
This certificate is issued pursuant to Sec. 261 of Republic Act No. 7160, otherwise known
as the Local Government Code of 1991.
Very truly yours,
Prov’l/mun./City Treasurer
Copy furnished: Mr./Ms. (purchaser)
Note: The municipal treasurer refers to the Municipal Treasurers in municipalities within Metro Manila Area which do not belong to any province.
548
LTO Form 98
Prov./Mun./City of ______________________
OFFICE OF THE PROV’L/MUN./CITY TREASURER

Date ______________________
NOTICE OF REDEMPTION
Mr./Ms. ____________________________
___________________________________
Sir/Madam:
I have the honor to inform you that the real property ( ) land, ( ) machinery and/or ( )
improvement described as follows:
Declared Owner: _______________________________
TD No./ARPN _________________:Area ____________sq./m/ha.
Location ______________________________________________
Lot No. ______________________; Block No. _______________
Assessed Value
Land ________________________
Machinery ________________________
Improvement ________________________
which you purchased for the price of P ____________ at the public auction conducted by this
Office on __________________ upon payment of the total amount of P___________ as
redemption cost acknowledge under Official Receipt No. ___________ dated
________________, ______________, was redeemed on ________, _____________, pursuant to
Sec. 261 of Republic Act No. 7160, otherwise known as the Local Government Code of 1991. By
virtue of the said redemption, the Certificate of Sale issued to you on _________, __________, is
hereby invalidated.
It is requested that the Official Receipt No. __________ be returned to this Office at your
earliest convenience, duly endorsed by signing your name at the backside thereof, together with
the original of the Certificate of Sale if still in your possession or, if already registered, a
certification by the Register of Deeds of the concerned locality that the same is now on file with
said office, so that the amount of P ________ covered thereby may be refunded to you with the
corresponding accrued interest.
Very truly yours,
Prov./mun./city Treasurer
Enclosed : Copy of Certificate of Redemption
Date _______________________
549
LTO Form 99
Prov./Mun./City of ______________________
FINAL DEED TO SALE
KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the real property declared in the name of ________________ under ARP No.
__________ (OCT/TCT) OCT. No. __________________ has been delinquent in the payment of
taxes for the year (or years) ________________; Ref. Number ___________.
WHEREAS, on account of said delinquency, the above-mentioned real property was
advertised for sale at public auction to satisfy, all taxes and penalties due and the costs of sale in
the total amount of ______________, by posting on ____________ 20______, a NOTICE OF
SALE for two (2) consecutive weeks at the main entrances of the City Hall, the provincial
building and all municipal buildings in province, and in a public and conspicuous place in the
barangay wherein the property is situated, in English and the local dialect commonly used, a copy
of which was sent by registered mail messenger to the delinquent at his residence.
WHEREAS, at the public auction held on ______________. 20_____, pursuant to said
NOTICE OF SALE the property as herein below described was sold to _____________, and
___________________ citizenship, of legal age, married to ________________. Widow or
widower, with residence and postal address at ____________________________;
Description of the Property Sold
ARP No. ____________; Name of Owner ______________________

Area _____________SW.M;
Assessed Value P _________________________ Location ________________________
(North __________________________________
(East __________________________________
(South __________________________________
(West __________________________________
Improvement ____________________________________________________________
(if covered by Torrens Title, indicate technical description)
WHEREAS, the delinquent taxpayer or any other person in his behalf has not, within the
period of one year from the date of sale, redeemed the property sold by paying to this Office the
total amount of taxes and penalties due up to the date of redemption, the costs of sale and the
interest at the rate of twenty four percent (24%) per annum on the purchase price;
NOW THEREFORE, pursuant to the provisions of R.A. 7160 (Local Government Code
of 1991), the real property above described, free from any encumbrance or third party claim
whatsoever, is hereby conveyed on _________________, the holder of the CERTIFICATE OF
SALE issued on ______________, 20 ______ covering said property.
WITNESS:
____________________________________ ________________________
Municipal/city Treasurer Provincial Treasurer
____________________________________ ________________________
Municipal/city Assessor Provincial Assessor
____________________________________ ________________________
Municipal/city Secretary S.B./SP Provincial Secretary, S.P.
____________________________________ ________________________
Municipal/city Mayor Provincial Governor
550
REPUBLIC OF THE PHILIPPINES)
_____________________________) S.S.
In the municipality/province of _________________ this day of _________, 20 ______,

personally appeared before me Mr.?Ms. ____________, Provincial/City/Municipal Treasurer of
________________, who is known to me to be the same person who executed the foregoing
document and acknowledged same as his free act and deed. Said Provincial Treasurer exhibited to
me his Residence Certificate No. _______________ issued at _____________ on ____________,
20 ________.
This document consists of two (2) pages, including this one, each page having been signed
by the Provincial/City/Municipal Treasurer and his witnesses and said document refers to the
absolute sale of property therein described to ___________, a citizen of _____________.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal at
the ______________ and on the date abovementioned.
______________________________
Notary Public
My commission expires on December 31, 20______
Doc. No. __________________;

Page No. __________________;
Book No. __________________;
Series of ___________________.
551
LTO Form 100
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This COMPROMISE AGREEMENT is entered into by and between

____________________ in his capacity as Prov/City/Mun. (of MMA) of ________________,
Philippines, hereinafter referred to as PARTY OF THE FIRST PART and resident of and with
postal address at ____________________, hereinafter referred to as PARTY OF THE SECOND
PART.
WITNESSETH:
That the PARTY OF THE FIRST PART is the Provincial/City/Municipal (MMA)

Treasurer of _________________ whose office address is located at
_____________________________________.
That the PARTY OF THE SECOND PART is/are/owner(s) of real property, delinquent
on realty tax located at barangay _______________________ Municipal/City, Province of
___________________ which property of properties is/are described as follows:
C.T. No. TAX DEC. No. Lot No. Location Assessed Value
_________ _____________ __________________ __________________
_________ _____________ __________________ __________________
That the PARTY OF THE SECOND PART voluntarily agreed to pay ____________ of
the total delinquent taxes due on the above-described property/properties upon the execution of
this agreement and the remaining balance in installment of equal amount within a period of
________________ months from the date of this agreement without necessity of demand, to the
PARTY OF THE FIRST PART, in the following manner:
Term Month Amount

1st installment ____________ _________________
2nd installment ____________ _________________
That in case of default of the PARTY OF THE SECOND PART in settling in full the
obligation within the stipulated period, the PARTY OF THE FIRST PART shall have the right
over the above described property/properties, together with all the existing improvements thereon,
to sell at public auction in accordance with the provisions of R.A. 7160.
552
LTO Form 101
BLGF Form No. ______________________

PROVINCE/CITY/MUNICIPALITY
CERTIFICATE OF TAX CREDIT
M__________________________________ CTC No. _____________

____________________________________
____________________________________
Date_________________
Sir/Madam:
Please be informed that this Certificate of Tax Credit No. _______________ in the
amount of ___________________, is issued on even date in your favor, covering
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
____________________________________________.
It is further informed that this tax credit may be applied to future payments of the taxes
due on the real property described hereunder:
Name of Declared
Owner:____________________________________________________________
Kind:_________________________________________Classification ____________________
Location_______________________________________________________________________
Barangay Municipality/City Province
Tax Dec. No. __________________________________________

Assessed Value: ________________________________________
Very truly yours,
___________________________
553
LTO Annex 102
SAMPLE CASES OF THE ALLOCATION OF GROSS SALES FOR THE SITUS OF TAX
(Celestino eta, p130-132, Handbook on Local Fiscal Administration in the Philippines)
MI M2 M3
(BI) (P)
M4 M5 M6
(B2)
Case 1: Given a business establishment selling commodities in 6 municipalities M1 to M6. M3 is

the allocation of the principal office (P) and branches (B1 and B2) are located in Municipalities 1
and 6.
Allocation of Gross Sales
One hundred percent (100%) of gross sales in Municipality 1 where Branch 1 is located
shall be allocated in that Municipality and the tax shall accrue to Municipality 1. The rule shall
apply to B2 on sales in M6. All sales of the business establishment in M2, M3, M4 and M5 shall
be allocated to the principal office in M3 and the business tax shall accrue to that municipality.
554
MI M2 M3
(B) (L) (P)

(W)
M4 M5 M6
(F) (W) (B)
Case 2: A principal office (P) located in Municipality 3, with branches located in Municipalities 1
and 6, factory (F) and the warehouse (W) located in Municipality 4 and a plantation (L) and
warehouse (W) in Municipality 2.
Allocation of Gross Sales
One hundred percent (100%) of gross sales in municipalities M1 and M6 where the
branches are located shall
Accrue to the municipalities where the branches are located, respectively. The gross receipts in
municipalities M2, M3, M4 and M6 shall be taken up in Municipality 3 where the principal office
is located. The said gross receipt shall be located as follows:
 30& to Municipality 3 where the principal office is located
 60% of the remaining 70% to Municipality 4 or where the factory is located. Municipality
3 shall not be entitled to a share for the location of a warehouse. It can be entitled to a
share if and only if the warehouse is also a branch or sales office, meaning the warehouse
and conduct sales
 40% of the remaining 70% to Municipality 2 where the plantation is located
 Municipality 5 has no share.
555
M2 M3
M1 (B) M7
(L) (L) M8 M9
(L) (F)
(E) (P)
M4 M5 M6 M10 M11
(F) (W) (B) (PL) (W) (PL) (D) (B)
Case 3: Consider the above diagram on two islands where a big business firm operates the
following:
Principal Office (P) in M3
Branches/Sales Office (B) in M1, M5 and M11
Factories (F) in M4 and M7
Plantations (L) in M1, M2 and M3
Warehouse (W) in M4 and M10
Display Center (D) in M11
Port of Loading (PL) in M6 and M10
Experimental Farm (E) in M2
Sales Allocation
Sales in the Municipalities where the branches are located shall be 100% allocated to M1,
M5 and M11, respectively.
All sales outside the municipalities where the branches are located shall be recorded in the
principal office and consequently allocated as follows:
 M3 which hosts the principal office gets 30%

 M1 and M4 which host the factories will be allocated 60% of the remaining 70%.
Since there are two factories they shall share the 60% of 70% which will be
apportioned on the basis of volume of production.
 M1, M2 and M3 of the location of plantation shall get 40% of the 70%. The sales
allocation shall be on the basis of volume of production in each municipality.
 The LGU where the warehouse is located will not be allocated any gross sales for
hosting the warehouse unless the warehouse is simultaneously a branch. This will be
the same predicament faced by LGUs hosting the display centers and port of loading.
Experimental farms will be treated as factory if the production is already of economic
quantity
556
REFERENCES
1. The Local Government Code of 1991, Annotated, Jose A. Nolledo, 1993 Reprint with
August 1993 Addendum;
2. Local Government Taxation ( Philippine Laws on Local Government Finance),

Vol. III, Annotated, Sofronio B. Ursal, 1992;
3. Philippine Law on Local Government Taxation, Annotated, Sofronio B. Ursal, 2000;
4. Real Property Taxation, Annotated, Atty. Florecita P. Flores and Antonio A. Avila,
Jr., First Edition, 2002;
5. Local Taxation and Fiscal Matters, Book II, LGC of 1991, PACTAA, Inc., 1992;
6. Local Government Code of the Autonomous Region in Muslim Mindanao (Muslim

Mindanao Autonomy Act No. 25);
7. Decentralization in the Philippines – Strengthening Local Government Financing

and Resource Management in the Short-Term, Joint Document of the World Bank
and Asian Development Bank, March 31, 2005;
8. Omnibus Election Code of the Philippines (BP 881), Commission on Elections

(COMELEC), 1992;
9. Omnibus Rules Implementing Book V of EO 292, as Amended by MC No. 41, s.

1998, Civil Service Commission (CSC);
10. State Audit Code (Government Auditing Code of the Philippines or PD 1445),
Reprinted 1999, Accounting and auditing Development Office, Commission on Audit
(COA);
11. Government Accounting and Auditing Manual (GAAM), Vol. 1, Government

Auditing Rules and Regulations, COA, 1992;

Accounting, COA, 1992;

Auditing Standards and Procedures, and Internal Control System, COA, 1992;
14. Manual on the New Government Accounting System (NGAS) for Local
Government Units, Vol. I – III, Professional Development Center, COA, 2002;
15. Updated Description of Accounts under the NGAS (COA Circular No. 2004-008),
Sept. 20, 2004;
16. 2005 IFAC Handbook of International Public Sector Accounting Standards

(IPSAS);
17. Handbook on the Implementing Rules and Regulations (IRR) to the Government
Procurement Reform Act (RA No. 9184);
18. Updated Budget Operations Manual (UBOM) for Local Government Units,
Department of Budget and Management (DBM), June 2005;
19. Management Services, Part II, 2nd Ed., Nenita Angeles Deaño-Mejorada, 1993;
20. Manual on Certificate of Settlement and Balances, Revised 1993, COA, 1993;
21. Rules Implementing the Barangay Micro-Business Enterprises (BMBE Act of 2002
or RA 9178), Department of Finance (DOF) Order No. 17-04;
22. Local Administrative Regulation (LAR) No. 1-85, DOF, 1985;
23. Training Handbook on Cash Management and Control System, Professional

Development Center, COA, May 2004;
24. Training Handbook on Internal Control Structure, Professional Development

Center, COA, Nov. 2002;
25. Training Handbook on Risk Management, Professional Development Center, COA,

Dec. 2004;
26. Revenue Audit Manual for Local Governments, Vol. I, COA, 1997;
27. DOF Circulars, Memoranda, Opinions, and Rulings, various years;
28. BLGF Circulars, Memoranda, Circular Letters, Opinions, and Rulings, various
years;
29. COA Circulars and Memoranda, various years.
558

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LOCAL

BUREAU OF LOCAL GOVERNMENT FINANCE

As a concrete demonstration of the support and commitment of the Department of

My congratulations to the BLGF!

MA. PRESENTACION R. MONTESA

BOOKS ONE TO SIX

Chapter 1. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS

Sec. 1. Political and Corporate Nature of Local Government Units 9

Chapter 2. APPOINTMENT, QUALIFICATIONS, POWERS AND FUNCTIONS OF

Sec. 8. Appointment and Qualifications of the Local Treasurer 15

Chapter 3. ADMINISTRATIVE AND TECHNICAL SUPERVISION BY THE BUREAU

Chapter 4. THE ROLES AND RESPONSIBILITIES OF LOCAL TREASURERS

Chapter 5. OTHER ROLES OF THE LOCAL TREASURER

Chapter 6. BOND FOR LOCAL TREASURERS AND OTHER ACCOUNTABLE

Chapter 1. TYPES OF LOCAL INCOME AND REVENUES COLLECTED BY LOCAL

Sec. 33. Definition of Income 47

Chapter 2. COLLECTION OF REVENUES AND OTHER RECEIPTS

Chapter 3. EXAMINATION OF BOOKS OF ACCOUNTS AND

Sec. 65. General Provisions 91

Chapter 1. CONCEPT OF FUNDS

Sec. 67. Definition of Fund 99

Chapter 2. CONCEPT OF APPROPRIATION, ALLOTMENT, OBLIGATION AND

Chapter 3. DISBURSEMENTS OF LOCAL FUNDS

Sec. 75. Definition of Terms 111

Chapter 4. BARANGAY APPROPRIATIONS, COMMITMENTS AND

Chapter 5. SANGGUNIANG KABATAAN BUDGET

Chapter 1. FUND MANAGEMENT PRACTICES

Sec. 92. Cash Flow Forecast (CFF) 140

Chapter 2. ACCOUNTABILITY, RESPONSIBILITY, AND LIABILITY OF

Sec. 118. Death or Incapacity of a Local Treasurer or Accountable Officer 159

Chapter 3. ADMINISTRATIVE, CIVIL, AND CRIMINAL LIABILITIES OF LOCAL

Sec. 158. Under the Local Government Code of 1991 176

Sec. 160. Power to Levy Property Tax 181

Chapter 2. BUSINESS TAXES AND OTHER LOCAL TAXES

Sec. 193. Nature 211

Chapter 3. FEES AND CHARGES

Chapter 4. GOVERNMENT ENTERPRISE OPERATIONS

Chapter 5. CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS

Sec. 287. General Policy 306

BOOK ONE. Introduction

1 Laws and Policies Affecting Fiscal Organization and Functions

2 Notes on Supreme Court Ruling or the Substantive Requirements of

BOOK THREE. Expenditures and Disbursements

BOOK FOUR. Fund Management Practices, Accountability, Cash Examination,

81 Cash Flow Forecast

89 Real Property Tax Bill

This Manual shall be known as the LOCAL TREASURY OPERATIONS MANUAL,

1. Major Changes in Fiscal Organization since the RMIT was Issued

2. The Local Government Code of 1991 (R.A. 7160)

3. The Present Role of Local Treasurers

The objectives of this MANUAL are as follows:

3. To enable Local Treasurers to appreciate fully their powers, functions, and

5. To serve as a guide to Local Treasurers and other fiscal officers in the

D. HOW TO USE THIS MANUAL

BOOK ONE. FISCAL ORGANIZATION OF LOCAL GOVERNMENTS AND

Chapter 1. Fiscal Organization of Local Governments

BOOK TWO. RECEIPT AND COLLECTION OF LOCAL INCOME,

Chapter 1. Types of Local Income and Revenues Collected by Local

BOOK THREE. EXPENDITURES AND DISBURSEMENTS

This Book discusses the concepts of funds, appropriations, allotments,

Chapter 1. Concept of Funds

BOOK FOUR. FUND MANAGEMENT PRACTICES, ACCOUNTABILITY,

Chapter 1. Fund Management Practices