Local Treasury Operations Manual (LTOM), 2nd Edition PDF

ONLINE EDITION - COMPLIMENTARY COPY ONLINE EDITION - COMPLIMENTARY COPY  LOCAL TREASURY OPERATIONS MANUAL 2ND EDITION DEPARTMENT OF FINANCE BUREAU OF LOCAL GOVERNMENT FINANCE Manila, Philippines ONLINE EDITION - COMPLIMENTARY COPY Local Treasury Operations Manual...

ONLINE EDITION - COMPLIMENTARY COPY ONLINE EDITION - COMPLIMENTARY COPY  LOCAL TREASURY OPERATIONS MANUAL 2ND EDITION DEPARTMENT OF FINANCE BUREAU OF LOCAL GOVERNMENT FINANCE Manila, Philippines ONLINE EDITION - COMPLIMENTARY COPY Local Treasury Operations Manual (LTOM), 2nd Edition Second Printing, 2020. Printed in the Philippines Published by the Bureau of Local Government Finance ISBN: 978-971-94098-8-5 Copyright © Bureau of Local Government Finance, 2019 Telefax: +632 522-8771 / 527-2803 Web: www.blgf.gov.ph E-mail: [email protected] All rights reserved. No part of this book may be reproduced in any form or by any means without the express permission of the copyright owner and the publisher. Cover design and layout by: Jane Dianne S. Gaylican ONLINE EDITION - COMPLIMENTARY COPY ONLINE EDITION - COMPLIMENTARY COPY ONLINE EDITION - COMPLIMENTARY COPY  ACKNOWLEDGMENT This Local Treasury Operations Manual (LTOM), 2nd Edition, is a product of collaboration of key stakeholders whose common goal is to improve the quality of local public financial management, particularly the treasury operations of local government units. The Technical Working Group, composed of BLGF Central and Regional Office Directors, technical staff, and selected provincial, city and municipal treasurers, in various consultation workshops and fora, helped bring about this new LTOM edition. The BLGF acknowledges the Department of Finance, through the Secretary of Finance and the Undersecretary for Revenue Operations, for the guidance and support in the updating and publication of this LTOM. The BLGF is likewise grateful for the support extended by the European Union’s Public Financial Management 2 (EU PFM 2) Project, entitled “Support to the LGUs for More Effective and Accountable Public Finance Management”, during the development phase of this LTOM, and to the Asian Development Bank (ADB) during the consultations and exposure workshops with key stakeholders and printing of the books. i ONLINE EDITION - COMPLIMENTARY COPY ii ONLINE EDITION - COMPLIMENTARY COPY  Republic of the Philippines DEPARTMENT OF FINANCE Roxas Boulevard Corner Pablo Ocampo, Sr. Street Manila 1004 MESSAGE The Department of Finance (DOF) has made great strides in building revenues and maintaining fiscal discipline in the Philippines. We paved the way toward increasing national tax effort, foreign direct investments and, more importantly, maintaining high growth over the past few years. These trends, in turn, ensured the roll out initiatives on social services, as well as big- ticket infrastructure projects to address gaps in economic development. Our Bureau of Local Government Finance (BLGF) played and continues to play a key and essential role to sustain all the gains we have achieved. Its strategies are focused on implementing a three-pronged approach to modernize local finance: (i) policy reforms and updating of regulations, (ii) improvements in systems and operations, and (iii) high-impact capacity development. This updated edition of the Local Treasury Operations Manual (LTOM) is indeed one that will contribute to our goals of improving local finance as it incorporates updates on relevant laws, policies, rules and regulations of the government. It seeks to address competency gaps by providing local treasurers relevant information in key areas, such as budgeting, accounting, auditing, supply management, real property assessment, financing, custody and disbursement of funds, among others. I believe this resource complements our strategy to professionalize the ranks of local treasurers, which is key to a more transparent, independent and sustainable local fiscal landscape. Equipping them with the right skills and ethical orientation to perform their jobs well will likewise increase tax collection and revenue generation, and reduce LGUs’ dependency on the internal revenue allotment. I have high hopes that local treasurers will adopt the LTOM and take on a proactive stance to further improve the efficiency of services provided by their respective LGUs. Cutting red tape and ensuring a business-friendly environment will not only reduce the stress and cost of tax-related processes, but also attract investments and ensure efficient delivery of social services. I am confident that our cumulative and collaborative efforts will enable us to achieve a long period of high and inclusive growth that leads to the economic inclusion of all Filipinos. Thank you. CARLOS G. DOMINGUEZ Secretary of Finance iii ONLINE EDITION - COMPLIMENTARY COPY  Republic of the Philippines DEPARTMENT OF FINANCE Roxas Boulevard Corner Pablo Ocampo, Sr. Street Manila 1004 MESSAGE Congratulations to the Bureau of Local Government Finance (BLGF) for the publication of this Local Treasury Operations Manual (LTOM), 2nd Edition. We, at the Department of Finance (DOF), recognize the achievements and accomplishments of your office to not only modernize local finance, but also to maintain excellence and integrity in local fiscal administration. Despite the challenges, the BLGF continues to put in place long-term policies and initiatives that seek to transform local government units (LGUs) into becoming more innovative and independent, able to respond to the growing demands to sustain our country’s thriving economy. The LTOM, thus, places clearer focus on the vital role played by local treasurers, and the contributions they make to build and drive LGUs’ capacities to allocate their own funds to where they are needed most. It reaffirms DOF’s policies on good fiscal governance and LGU fiscal autonomy, which are both critical and strategic in the achievement of our development goals. Through this Manual, local treasurers can now acquire the necessary knowledge, resource materials and technical know-how to boost collections, increase the tax base, and reinforce prudence in expenditure management. Over the long-term, this will redound to the benefit of the government and the general public as it allows LGUs to effectively meet local needs and priorities. However, much more work remains to be done. In this context, we count on local treasurers to diligently use the LTOM and be more efficient, progressive-minded, honest, transparent, accountable, and risk-averse, but willing to take daring and bold decisions, to ensure good fiscal governance. Local treasurers should build on and expand the progress the government has already made and help address the remaining challenges to bring about real change. After all, only against this backdrop can we effectively help the country leapfrog towards a more sustainable and inclusive development path. ANTONETTE C. TIONKO Undersecretary Revenue Operations Group iv ONLINE EDITION - COMPLIMENTARY COPY  Republic of the Philippines DEPARTMENT OF FINANCE BUREAU OF LOCAL GOVERNMENT FINANCE 8th Floor EDPC Building, BSP Complex, Roxas Boulevard, 1004 Manila MESSAGE Let me first congratulate the people behind the development and publication of the Local Treasury Operations Manual (LTOM), 2nd Edition, for their tireless work and invaluable dedication to update the basic reference for all local treasurers. The Bureau of Local Government Finance (BLGF) remains committed to undertake innovations and programs that continuously improve local finance to make it viable and dynamic, and therefore help empower local governments as critical partners in attaining our goal of sustainable and inclusive economic growth and development. More than a decade since our first publication of the LTOM, much has changed with the enactment of new laws, recent jurisprudence, and related rules and regulations of oversight agencies that affect local treasury functions. As such, this LTOM, 2nd Edition, provides a four-volume reference capturing the latest policy developments, legal references, practical illustrations, organizational improvements, and standard forms concerning local tax administration, revenue generation, tax information system management, custody and disbursement of funds, expenditure management, election- related responsibilities, internal controls and related fiduciary functions. The issuance of this LTOM is very timely to support our vision to professionalize the local treasury service under the Standardized Examination and Assessment for Local Treasury Service Program of the Department of Finance and the BLGF, in partnership with the Civil Service Commission. At the heart of this program lies the need to have a reliable, updated, complete, and instructive resource to improve the knowledge, skills, competencies and work-ethic in local treasury work and to be successful local fiscal advisers and managers. As local fiscal landscapes continuously evolve in pursuit of meaningful decentralization, may this Manual be an effective instrument to help transform the quality of local treasury work as an important dimension of a modern, responsive and inclusive local public financial management system, on which the public can repose greater trust and confidence. NIÑO RAYMOND B. ALVINA Executive Director v ONLINE EDITION - COMPLIMENTARY COPY  Republic of the Philippines DEPARTMENT OF FINANCE Roxas Boulevard Corner Pablo Ocampo, Sr. Street Manila 1004 DEPARTMENT ORDER NO. _______________ Local Treasury Operations Manual (LTOM), 2nd Edition 1. LEGAL BASES. This Department Order is issued to promulgate the Local Treasury Operations Manual (LTOM), 2nd Edition, pursuant to Article 456 of the Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 7160, otherwise known as the Local Government Code (LGC) of 1991, and in line with the mandates of the Department of Finance (DOF) to supervise the revenue operations of all local government units, under Executive Order (EO) No. 292, s. 1987, and of the Bureau of local Government Finance (BLGF) to exercise administrative and technical supervision, and coordination over treasury and assessment operations of local governments, under EO No. 127, s. 1987. 2. COVERAGE. The LTOM, 2nd Edition, consists of four (4) books, which form integral parts hereof, as follows: Book I Fiscal Organization of Local Governments and the Local Treasury Office; Book II Receipt and Collection of Income, Revenues and Other Fund Sources; Book III Fund Management Practices, Expenditures and Disbursement; and Book IV Detailed Procedures on the Administration and Collection of Real Property Tax, Business Tax, Fees and Charges and Other Fund Sources. 3. LIMITATIONS. The provisions contained in the LTOM, 2nd Edition, are adoption of pertinent provisions of relevant laws, jurisprudence, regulations, policies, issuances, opinions and rulings affecting local finance and treasury operations. The applicable portions of related provisions from various laws and issuances have been adopted into sections and/or discussions of specific topics in the LTOM, and structured accordingly to cover the different aspects of local treasury operations. Users of the LTOM, 2nd Edition, are encouraged to further refer to the LGC and its IRR, the Government Accounting and Auditing Manual, and the Manual on the New Government Accounting System for LGUs, both of the Commission on Audit, the Budget Operations Manual for LGUs of the Department of Budget and Management, cited jurisprudence, and other pertinent issuances of DOF and BLGF on local finance and treasury operations. 4. SEPARABILITY CLAUSE. Any portion or provision of the LTOM, 2nd Edition, that may be declared unconstitutional or invalid shall not have the effect of nullifying other portions and provisions thereof as long, as such remaining portion or provision can still subsist and be given effect in its entirety. vi ONLINE EDITION - COMPLIMENTARY COPY 5. REPEALING CLAUSE. This Order supersedes Department Order No. 10-08 dated 26 March 2008, and all Department issuances relative to the LTOM that are inconsistent herewith. However, the LTOM, 2nd Edition, does not seek to supersede the issuances and rulings of other oversight agencies, but only reiterates and amplifies their respective applications in local treasury operations. 6. EFFECTIVITY. This Order shall take effect fifteen (15) days after its publication in the Official Gazette and the University of the Philippines Office of the National Administrative Register (ONAR) or in a newspaper of general circulation in the Philippines. All BLGF Central and Regional Offices, and all local treasurers and assistant local treasurers are hereby directed to properly, efficiently and strictly implement the LTOM, 2nd Edition. CARLOS G. DOMINGUEZ Secretary vii ONLINE EDITION - COMPLIMENTARY COPY  OVERVIEW LOCAL TREASURY OPERATIONS MANUAL A. INTRODUCTION This LTOM, 2nd Edition, is a compendium of the latest laws, policies, rules and regulations of the government that affect the local finance and treasury operations of local government units (LGUs). It is a vital reference material for local treasurers, which is designed to be dynamic and responsive to the changing policy landscape and evolving local public financial management that affect local treasury operations. This publication was developed in consultation with local treasurers and key stakeholders, after various dialogues, meetings, exposure workshop, focus group discussions and management review, together with selected provincial, city and municipal treasurers forming the Technical Working Group. 1. Title. This Manual shall be known as the Local Treasury Operations Manual (LTOM), 2nd Edition, also herein referred to as the LTOM, 2nd Edition. 2. Background. Prior to this publication, the first edition of the LTOM was issued by the Secretary of Finance under Department Order No.10-08, dated 26 March 2008, pursuant to Article 456 of the Implementing Rules and Regulations (IRR) of the Local Government Code (LGC) of 1991. The LTOM has since been designed to serve as a handy reference material for all provincial, city and municipal treasurers in discharging their mandated functions. Since then, the LTOM has been a regular reference of local treasury offices in their day-to-day operations. B. RATIONALE In recent years, the DOF, through the BLGF, perceived the need to update, improve and enhance the first edition of the LTOM to be continuously relevant and attuned to recent laws, jurisprudence, and policies, rules and regulations issued by oversight agencies, and to be published in a user-friendly and easy to carry form. Developments over the past decade concerning local finance render some provisions of the first LTOM obsolete and irrelevant to local treasury offices, and there were cases or complaints wherein local treasurers and other officials unknowingly follow superseded provisions. Thus, this LTOM, 2nd Edition, adopted measures to address these issues and concerns, and strategically changed the content groupings and packaging into a four-volume manual to make it more functional for local treasurers and other stakeholders. 1. Major Changes in Fiscal Organization since the LTOM was Issued. The LTOM is guided by the LGC, which consolidated and adopted the various provisions of different laws expanding the fiscal decentralization and autonomy of local governments. These include Presidential Decree (PD) No. 231, as amended by PD No. 426, PD No. 464 and PD No. 477, which sought to improve the fiscal operations and organization of LGUs. viii ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION However, there are laws amending certain provisions of the LGC, as well as other laws providing for changes in the fiscal operations of LGUs, that have been issued after 2008. All these pertinent laws and policies are included in this LTOM and summarized in Annex 1 hereof. 2. Relationship of the LTOM to Existing Laws, Issuances and Pronouncements of Other Fiscal and Regulatory Agencies. The LTOM, 2nd Edition, is primarily based on the provisions of the LGC and its IRR, and relevant jurisprudence, particularly those that apply to LGU financial operations and fiscal management. This Manual also draws heavily from the Government Accounting and Auditing Manual (GAAM) and the New Government Accounting System for LGUs (NGAS- LGU) of the Commission on Audit (COA); the Budget Operations Manual (BOM) of the Department of Budget and Management (DBM); opinions/ rulings and issuances of the DOF and the BLGF; policies, regulations and opinions/rulings/ decisions of various bodies or agencies and authorities concerned with local fiscal management and operations, such as DOF, COA, DBM, National Economic and Development Authority (NEDA), and other authoritative expert references. Consequently, this Manual provides discussions, illustrations, forms and prescribed courses of action to supplement existing guidelines and regulations of the DOF and the BLGF. This Manual, however, does not seek to supersede issuances and rulings of other competent authorities, but rather aim to reiterate and amplify their respective implementation. C. OBJECTIVES OF THIS MANUAL The objectives of this Manual are as follows: 1. To provide Local Treasurers with an updated reference material that will guide them in discharging their duties and functions under the decentralized framework and environment of the LGC; 2. To equip Local Treasurers with necessary information to develop their own capabilities to respond to the demands of their roles within the LGU and fiscal management structures; 3. To enable Local Treasurers to fully appreciate their powers, functions, and authorities, and to relate these constructively with those of other officers concerned with fiscal functions; 4. To raise awareness of Local Treasurers on the basic concepts and tools of the non-traditional functions of LGUs that they may be involved in, whether as principals or as advisers; and 5. To serve as a guide to Local Treasurers and other fiscal officers in the management of the LGU’s financial affairs conforming to prescribed good governance practices and internal control measures for improved accountability and transparency. ix ONLINE EDITION - COMPLIMENTARY COPY  OVERVIEW D. BRIEF DESCRIPTION OF THIS MANUAL This publication consists of four (4) books forming integral parts of the LTOM, 2nd Edition, which are printed and packaged individually for easy reference. Each book contains important information and annexes, and is intended to be used as a stand- alone reference on local treasury operations. Some provisions contained in the Manual are closely paraphrased, if not quoted verbatim, from the relevant text of the laws, jurisprudence, regulations, policies, issuances, opinions, rulings and decisions. Valid portions of various laws and issuances were recast into a single provision, and parts of a single provision that apply to the different aspects of treasury operations are reflected separately in the appropriate topics. The sources of particular sections or topics in this Manual are reflected in the text itself, or set in parenthesis, to enable users to refer to the original provision if desired. Likewise, the location of provisions alluded to in another chapter or section are indicated in the respective portions. For more detailed reading and information, users of this Manual are encouraged to refer to the LGC and its IRR, the GAAM, the NGAS-LGU, the BOM and the myriad of compilation of rulings, issuances and circulars of concerned oversight agencieis. x ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION BOOK I Fiscal Organization of Local Governments and the Local Treasury Office xi ONLINE EDITION - COMPLIMENTARY COPY  TABLE OF CONTENTS TABLE OF CONTENTS ACRONYMS xv CHAPTER 1 1 FISCAL ORGANIZATION OF LOCAL GOVERNMENTS Section 1. Legal Framework 1 Section 2. Creation, Division, Merger, Abolition 3 and Conversion of LGUs Section 3. The Provincial/City/Municipal Treasury Office 7 Section 4. Organizational Structures: Models for the Local Treasury Office 8 CHAPTER 2 18 THE LOCAL TREASURER AND THE ASSISTANT LOCAL TREASURER Section 5. Authority of the Secretary of Finance to Appoint Local 18 Treasurer and Assistant Local Treasurer Section 6. Authority of the LCE over the Local Treasurer 19 and Assistant Local Treasurer Section 7. Qualifications of Local Treasurer 20 and Assistant Local Treasurer Section 8. Processing of the Appointments of Provincial, City, 20 and Municipal Treasurers and Assistant Provincial, City, and Municipal Treasurers Section 9. Designation of Acting/Officer-In-Charge (OIC)/In-Charge 26 of Office (ICO) Provincial/City/Municipal Treasurers and Assistant Treasurers Section 10. Automatic Succession of the Assistant Provincial/City/ 32 Municipal Treasurer Section 11. Designation in the Absence of an Assistant Local Treasurer 32 Section 12. Relief or Detail of Local Treasurers 32 and Assistant Local Treasurers Section 13. Other Personnel Actions for Local Treasurers 35 and Assistant Local Treasurers Section 14. Preventive Suspension of Local Treasurers 43 and Assistant Local Treasurers Section 15. Attendance to Administrative, Civil or Criminal Investigation 46 of Local Treasurers and Assistant Local Treasurers Section 16. Approval and Grant of Application for Leave of Absence 47 of Local Treasurers and Assistant Local Treasurers Section 17. Authority to Travel Abroad and Participate 50 in Training Programs xii ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION CHAPTER 3 52 ADMINISTRATIVE AND TECHNICAL SUPERVISION Section 18. Scope and Nature 52 A. Administrative and Technical Supervision by the BLGF 52 B. Technical Supervision by Provincial Treasurer 53 Over Municipal and Component City Treasurers Section 19. Fiscal Performance Evaluation of LGUs and Local Treasurers 54 A. Conduct of Local Treasury Operations Evaluation 54 B. LGU Financial Sustainability Score Cards (LGUFSS) 54 C. Performance Standards for Local Treasurers 55 and Assistant Local Treasurers Section 20. Turn-Over of Accountabilities to the Incoming 56 and Out-going Local Treasurers CHAPTER 4 60 ROLES, DUTIES, AND RESPONSIBILITIES OF THE LOCAL TREASURER Section 21. Powers and Duties of Local Treasurer 60 and Assistant Local Treasurer Section 22. The Local Treasurer’s Role in Boards and Committees 67 Created Pursuant to the LGC and Other Laws Section 23. Treasurer’s Role in National and Local Elections 70 Pursuant to the Omnibus Election Code CHAPTER 5 71 BONDING OF LOCAL TREASURERS AND OTHER LGU ACCOUNTABLE OFFICERS Section 24. Legal Basis for the Bonding of Local Treasurers 71 and Other LGU Accountable Officers Section 25. Guidelines on Bonding of Local Treasurers 71 and Accountable Officers Section 26. Schedule of Cash Accountability 73 and the Corresponding Bonds Section 27. Renewal 74 Section 28. Increase in the Amount of Accountability 75 Section 29. Accountable Officers Considered Unsafe Risks 75 Section 30. Cancellation of Bond 76 Section 31. Effect of Cancellation 76 Section 32. The Fidelity Fund 76 Section 33. Extent of Liability 76 Section 34. Validity of Fidelity Bonds. 77 Section 35. Adjudication and Payment of Claims against the Fidelity Fund 77 xiii ONLINE EDITION - COMPLIMENTARY COPY  TABLE OF CONTENTS FORMS AND ANNEXES 80 Annex 1 List of Laws that Shaped Fiscal Decentralization 81 in the Philippines Annex 2 DOF Department Order No. 031.2018 - Guidelines on the 119 Computation and Certification of Income for the Creation, Conversion, Merger or Abolition of a Local Government Unit (LGU) Annex 3 DOF Department Personnel Order No. 477-2019 124 - Guidelines on the Evaluation and Processing of Appointments of Local Treasurers and Assistant Local Treasurers Annex 4 BLGF Memorandum Circular No. 025-2019 - Guidelines on the 131 Evaluation and Processing of Appointments of Local Treasurers and Assistant Local Treasurers Annex 5 DOF Department Special Order No. 01-2018 - Updated Code 145 of Approving and Signing Authorities (CASA) of the Bureau of Local Government Finance (BLGF) Annex 6 BLGF Memorandum Circular No. 16-2015 - Local Public 149 Financial Management Tools for the Electronic Statement of Receipts and Expenditures Annex 7 DOF Department Order No. 075.2018 - Establishing the Local 151 Government Unit (LGU) Fiscal Sustainability Scorecard (FSS) in the Bureau of Local Government Finance (BLGF) Annex 8 DOF Department Order No. 006.2015 - Performance Standards 171 for Local Treasurers and Assistant Treasurers xiv ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION ACRONYMS AGDB Authorized Government Depository Bank AOM Audit Observation Memorandum ASPP Annual Supplies Procurement Plan ATAP Authority to Accept Payment BARMM Bangsamoro Autonomous Region in Muslim Mindanao BAC Bids and Awards Committee BIR Bureau of Internal Revenue BLGF Bureau of Local Government Finance BMBE Barangay Micro Business Enterprises BTr Bureau of the Treasury CESB Career Executive Service Board COA Commission on Audit COMELEC Commission on Elections CRAAF Consolidated Report of Accountability for Accountable Forms CSC Civil Service Commission CTOO Chief Treasury Operations Officer DILG Department of Interior and Local Government DBM Department of Budget and Management DepEd Department of Education DOF Department of Finance DO/PO District/Provincial Office DOST Department of Science and Technology EU PFM 2 European Union’s Public Financial Management 2 eSRE electronic Statement of Receipts and Expenditures GAAM Government Accounting and Auditing Manual GAD Gender and Development Fund GF General Fund GOCC Government Owned and Controlled Corporation GSIS Government Service Insurance System HUC Highly Urbanized City HoA Head of the Agency ICO In-Charge of Office IPCR Individual Performance Commitment and Review IRA Internal Revenue Allotment IRR Implementing Rules and Regulations JMC Joint Memorandum Circular LCE Local Chief Executive LDRRMF Local Disaster Risk Reduction and Management Fund LFC Local Finance Committee LGC Local Government Code LGU Local Government Unit LMB Land Management Bureau LTO Local Treasury Operations MC Memorandum Circular MMA Metro Manila Area xv ONLINE EDITION - COMPLIMENTARY COPY  ACRONYMS MMDA Metro Manila Development Authority MOOE Maintenance and Other Operating Expenses MTO Municipal Treasurer’s Office NAPOLCOM National Police Commission NCR National Capital Region NEDA National Economic and Development Authority NGAS New Government Accounting System NSO National Statistics Office OIC Officer-In-Charge OPCR Office Performance Commitment and Review PBL Public Bonding Law PCW Philippine Commission on Women PDS Personal Data Sheet PNB Philippine National Bank PPMP Project Procurement Management Plan PRC Professional Regulation Commission PS Personal Services PSA Philippine Statistics Authority PTO Provincial Treasurer’s Office RAAF Report of Accountability for Accountable Forms RATA Representation and Transportation Allowance RCI Report of Checks Issued RPT Real Property Tax RRACCS Revised Rules on Administrative Cases in the Civil Service SALN Statement of Assets, Liabilities and Net Worth SAM State Audit Manual SC Supreme Court of the Philippines SEAL Standardized Examination and Assessment for Local Treasury Service Program SEF Special Education Fund SPL Special Privilege Leave SPMS Strategic Performance Management System SRE Statement of Receipts and Expenditures SUC State Universities and Colleges TCT Transfer Certificates of Title TDS Tax Declarations TOP Treasurer of the Philippines UBOM Updated Budget Operations Manual xvi ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION INTRODUCTION LTOM Book I describes the key features of the local government unit’s fiscal organization and responsibilities, including the present requirements for the creation of local governments, pursuant to existing laws. Likewise, Book I discusses the policies and guidelines on the appointment and designation of local treasurers and assistant local treasurers, their general and specific roles, duties and responsibilities, as well as the scope and extent of administrative and technical supervision over local treasury operations of LGUs. LTOM Book I consists of five (5) Chapters, including Annexes, as follows: Chapter 1 Fiscal Organization of Local Government Units (LGUs) Chapter 2 The Local Treasurer and the Assistant Local Treasurer Chapter 3 Administrative and Technical Supervision by the BLGF Chapter 4 Roles, Duties and Responsibilities of the Local Treasurer Chapter 5 Bonding of Local Treasurers and Other LGU Accountable Officers xvii ONLINE EDITION - COMPLIMENTARY COPY  CHAPTER FISCAL ORGANIZATION OF LOCAL GOVERNMENT 1 UNITS (LGUS) SECTION 1. LEGAL FRAMEWORK A. The State shall ensure the autonomy of local governments. (Article II, Sec. 4, 1987 Phil. Constitution) B. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. (Article X, Sec. 4, 1987 Phil. Constitution) Each LGU shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. (Article X, Sec. 5, 1987 Phil. Constitution) LGUs shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. (Article X, Sec. 6, 1987 Phil. Constitution) C. LGUs shall have the power and authority to establish an organization that shall be responsible for the efficient and effective implementation of their development plans, program objectives and priorities; to create their own sources of revenues and to levy taxes, fees, and charges which shall accrue exclusively for their use and disposition and which shall be retained by them; to have a just share in national taxes which shall be automatically and directly released to them without need of any further action; to have an equitable share in the proceeds from the utilization and development of the national wealth and resources within their respective territorial jurisdictions including sharing the same with the inhabitants by way of direct benefits; to acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held by them in their proprietary capacity and to apply their resources and assets for productive, developmental, or welfare purposes, in the exercise or furtherance of their governmental or proprietary powers and functions and thereby ensure their development into self-reliant communities and active participants in the attainment of national goals. (Sec. 18, LGC) D. Local governments shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits. (Art. X, Sec. 7,1987 Phil. Constitution) Every LGU created or recognized under the LGC is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the National Government and as a corporate entity representing the inhabitants of its territory. (Sec. 15, LGC) E. When a new LGU is created, its corporate existence shall commence upon the 1 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION election and qualification of its chief executive and a majority of the members of its sanggunian, unless some other time is fixed therefor by the law or ordinance creating it. (Sec.14, LGC) F. Every LGU, as a corporation, shall have the following powers: 1. To have continuous succession in its corporate name; 2. To sue and be sued; 3. To have and use a corporate seal; 4. To acquire and convey real or personal property; 5. To enter into contracts; and 6. To exercise such other powers as are granted to corporations, subject to the limitations provided in the LGC and other laws. [Sec. 22 (a), LGC] G. LGUs shall enjoy full autonomy in the exercise of their proprietary functions and in the management of their economic enterprises, subject to the limitations provided in the LGC and other applicable laws. [Sec. 22 (d), LGC] H. Every LGU shall exercise the powers expressly granted and those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, LGUs shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. (Sec. 16, LGC) I. The financial affairs, transactions, and operations of LGUs shall be governed by the following fundamental principles and policies, to wit: 1. No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law [Sec. 305 (a), LGC]; 2. Local government funds and monies shall be spent solely for public purposes [Sec. 305 (b), LGC]; 3. Local revenue is generated only from sources expressly authorized by law or ordinance, and collection thereof shall at all times be acknowledged properly [Sec. 305 (c), LGC]; 4. All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds, unless otherwise provided by law [Sec. 305 (d), LGC]; and 5. Provinces, cities and municipalities shall maintain a General Fund which shall be used to account for such monies and resources as may be received 2 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) by and disbursed from the local treasury. The General Fund shall consist of monies and resources of the local government which are available for the payment of expenditures, obligations or purposes not specifically declared by law as accruing and chargeable to, or payable from, any other fund. (Sec. 308, LGC) SECTION 2. CREATION, DIVISION, MERGER, ABOLITION AND CONVERSION OF LGUs An LGU may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality, or any other political subdivision, or by ordinance passed by the sangguniang panlalawigan or sangguniang panlungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such limitations and requirements prescribed in the LGC. (Sec. 6, LGC) A. Common Requirements for Creation and Conversion of an LGU: 1. As a general rule, the creation of an LGU or its conversion from one level to another level shall be based on three (3) verifiable indicators of viability and projected capacity to provide services, to wit: Indicators It must be sufficient, based on acceptable standards, to provide for all essential government facilities and services and special functions Income commensurate with the size of its population, as expected of the LGU concerned. It shall be determined on the total number of inhabitants within the Population territorial jurisdiction of the LGU concerned. It must be contiguous, unless it comprises two or more islands or is separated by a LGU independent of the others; properly Land Area identified by metes and bounds with technical descriptions; and sufficient to provide for such basic services and facilities to meet the requirements of its populace. 2. Compliance with income, population and land area shall be attested to by the DOF, the National Statistics Office (NSO), now known as the Philippine Statistics Authority (PSA), and the Land Management Bureau (LMB), respectively. (Sec. 7, LGC) 3. The creation of a province, city or municipality shall not reduce the land area, population, and income of the original unit or units at the time of said creation to less than the minimum requirements prescribed by law. 4. Also, no creation, division, merger, abolition, or substantial alteration of boundaries of LGUs shall take effect unless approved by a majority of the votes cast in a plebiscite called for the purpose in the political unit or units directly affected. Said plebiscite shall be conducted by the Commission on 3 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION Elections (COMELEC) within one hundred twenty (120) days from the date of effectivity of the law or ordinance effecting such action, unless said law or ordinance fixes another date. (Sec. 10, LGC) B. Requirements for the Creation of Local Governments - Local government units may be created in accordance with the criteria provided for in the LGC, summarized as follows: Coverage/ Requisites for Creation Legal LGU Jurisdiction Income1 Population Land Area Basis Province Cluster of Average annual A population A contiguous Sec. municipalities, income, as certified of not less territory of at 461, or by the DOF, of not 250,000 least 2,000 LGC municipalities less than inhabitants sq. km.2 as and Php20,000,000.00 as certified certified by component based on 1991 by the NSO, the LMB. cities constant prices now known (See Annex 2), as the PSA; and either of the or following requisites: City3 Municipality Locally A population A contiguous RA or a cluster of generated of not less territory of No. barangays average 150,000 at least 100 9009 annual income, as inhabitants, sq. km. as certified by the DOF, as certified certified by of at least by the NSO, the 4 Php100,000,000.00 now known LMB. for the last two as the PSA; (2) consecutive or years based on 2000 constant prices (See Annex 2), and if it has either of the following requisites: 1 The average annual income shall include the income accruing to the general fund, exclusive of special funds, trust funds, transfers and non-recurring income. 2 The territory need not be contiguous if it comprises two (2) or more islands or is separated by a chartered city or cities which do not contribute to the income of the province. 3 A city may either be Component or Highly Urbanized. Provided, however, that the criteria established in the LGC shall not affect the classification and corporate status of existing cities. Independent component cities are those component cities whose charters prohibit their voters from voting for provincial elective officials. Independent component cities shall be independent of the province. (Sec. 451, LGC) 4 The territorial jurisdiction of a newly-created city shall be properly identified by metes and bounds. The requirement on land area shall not apply where the city proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. 4 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) Coverage/ Requisites for Creation Legal LGU Jurisdiction Income Population Land Area Basis Municipality5 A group of Average A population Contiguous Sec. barangays annual income,as of not less territory of 442, certified by 25,000 at least 50 LGC the provincial inhabitants, sq. km. as treasurer, as certified certified by the of at least by the NSO, LMB.6 Php2,500,000.00 now known as for the last two the PSA; and (2) consecutive years based on 1991 constant prices (See Annex 2); Barangay7 Out of a N/A A population N/A Sec. contiguous of at least 2,000 386, territory inhabitants as LGC certified by the NSO, now known as PSA, except in cities and municipalities within Metro Manila and other metropolitan political subdivisions or in HUCs where such territory shall have a certified population of at least 5,000 inhabitants. 5 A municipality may be created, divided, merged, abolished, or its boundary substantially altered only by an Act of Congress and subject to the approval by a majority of the votes cast in the plebiscite to be conducted by the COMELEC in the LGU/s directly affected. Except as may otherwise be provided in the said Act, the plebiscite shall be held within one hundred twenty (120) days from the date of its effectivity. (Sec. 441, LGC) 6 The territorial jurisdiction of a newly created municipality shall be properly identified by metes and bounds. The requirement on land area shall not apply where the municipality proposed to be created is composed of one (1) or more islands. The territory need not be contiguous if it comprises two (2) or more islands. (Sec. 442, LGC) 7 Creation of a Barangay i. To enhance the delivery of the basic services in the indigenous cultural communities, barangays may be created in such communities by an Act of Congress, notwithstanding the aforementioned requirement. ii. The territorial jurisdiction of the new barangay shall be properly identified by metes and bounds or by more or less permanent natural boundaries. The territory need not be contiguous if it comprises two (2) or more islands. iii. The governor or city mayor may prepare a consolidation plan for barangay, based on the foregoing criteria, within his territorial jurisdiction. The plan shall be submitted to the sangguniang panlalawigan or sangguniang panlungsod concerned for appropriate action. iv. In the case of municipalities within the Metropolitan Manila area and other metropolitan political subdivisions, the barangay consolidation plan shall be prepared and approved by the Sangguniang Bayan concerned. (Sec. 386, LGC) 5 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION Coverage/ Requisites for Creation Legal LGU Jurisdiction Income Population Land Area Basis Highly Cities Latest annual Minimum population N/A Sec. Urbanized income of at least of 200,000 452, Cities Php50,000,000.00, inhabitants, LGC (HUC)8 based on 1991 as certified by the constant prices,as NSO, now known as certified by the City the PSA. Treasurer (See Annex 2); and C. Requirements for the Merger/Consolidation or Abolition of LGUs 1. Division and merger of existing LGUs shall comply with the same requirements herein prescribed for their creation: provided, however, that such division shall not reduce the income, population, or land area of the LGU/s concerned to less than the minimum requirements prescribed in the LGC: provided, further, that the income classification of the original LGU/s shall not fall below its current classification prior to such division. (Sec. 8, LGC) 2. An LGU may be abolished when its income, population, or land area has been irreversibly reduced to less than the minimum standards prescribed for its creation under Book III of the LGC, as certified by the national agencies mentioned in Sec. 7 of the same, to Congress or to the sanggunian concerned, as the case may be. The law or ordinance abolishing an LGU shall specify the province, city, municipality, or barangay with which the LGU sought to be abolished will be incorporated or merged. (Sec. 9, LGC) D. Creation, Division, Merger or Alteration of Boundaries of Municipalities or Barangays in the Bangsamoro Autonomous Region pursuant to RA No. 11504 or An Act Providing for the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) 1. The Bangsamoro Autonomous Region is an integral, indivisible, and inseparable part of the territory of the Republic of the Philippines. The Bangsamoro people shall uphold the Constitution as the fundamental law of the land and unequivocally owe allegiance and fidelity to the Republic of the Philippines. (Art. IV, Sec. 1, RA No. 11504) 8 Highly Urbanized Cities (HUC): i. Cities which do not meet the above requirements shall be considered component cities of the province in which they are geographically located. If a component city is located within the boundaries of two (2) or more provinces, such city shall be considered a component of the province of which it used to be a municipality. Qualified voters of highly urbanized cities shall remain excluded from voting for elective provincial officials. [Sec. 452 (b)(c), LGC] ii. Unless otherwise provided in the Constitution or the LGC, qualified voters of independent component cities shall be governed by their respective charters, as amended, on the participation of voters in provincial elections. Qualified voters of cities who acquired the right to vote for elective provincial officials prior to the classification of said cities as highly urbanized after the ratification of the Constitution and before the effectivity of the LGC, shall continue to exercise such right. (Sec. 452, LGC) iii. It shall be the duty of the President to declare a city as highly urbanized after it shall have met the minimum requirements prescribed, upon proper application therefor and ratification in a plebiscite by the qualified voters therein. (Sec. 453, LGC) 6 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) 2. In the exercise of its right to self-governance, the Bangsamoro Autonomous Region is free to pursue its political, economic, social and cultural development as provided for in the Organic Law. (Art. IV, Sec. 2, RA No. 11504) 3. The authority of the Bangsamoro Government to regulate the affairs of its constituent local government units shall be guaranteed in accordance with the Organic Law and a Bangsamoro local government code to be enacted by the Parliament. The privileges already enjoyed by local government units under Republic Act No. 7160, otherwise known as the “Local Government Code of 1991,” as amended, and other existing laws shall not be diminished. The Parliament may create, divide, merge, abolish, or substantially alter boundaries of municipalities or barangays in accordance with a law enacted by the Parliament. The municipalities or barangays created, divided, merged, or whose boundaries are substantially altered, shall be entitled to their appropriate share in the national taxes or Internal Revenue Allotment: Provided, That the criteria laid down in Republic Act No. 7160, as amended, and other national laws shall be satisfied: Provided, further, That it shall be approved by a majority of the votes cast in a plebiscite in the political units directly affected. When such acts require the creation of a legislative district, the Bangsamoro Government shall cooperate and coordinate with the National Government through the Philippine Congress-Bangsamoro Parliament Forum to prioritize the deliberations on the creation of a legislative district. Nothing in the Organic Law shall be construed to allow the Bangsamoro Government to create legislative districts. (Art. Vl, Sec. 10, RA No. 11504) 4. The powers of government shall be vested in the Parliament which shall exercise those powers and functions expressly granted to it by the Organic Law, and those necessary for, or incidental to, the proper governance and development of the Bangsamoro Autonomous Region. (Art. Vll, Sec. 2, RA No. 11504) SECTION 3. THE PROVINCIAL/CITY/MUNICIPAL TREASURY OFFICE A. Pursuant to the provisions of the LGC, there shall be a municipal, city and provincial treasurer, as among the officials mandated to respectively govern each of the municipal, city and provincial governments. [Sec. 443(a), 454(a), 463(a), LGC] B. Pursuant to Sec. 470 (d) of the LGC, the treasurer shall take charge of the treasury office, perform the duties provided for under Book II of the LGC, among other powers and duties mentioned in Chapter 4 of this manual. C. The provisions under Book II of the LGC shall govern the exercise by provinces, cities, municipalities, and barangays of their taxing and other revenue-raising powers. (Sec. 128 to 383, LGC) 7 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION SECTION 4. ORGANIZATIONAL STRUCTURES: MODELS FOR THE LOCAL TREASURY OFFICE A. The Local Treasury Office, as the core administrator of LGU funds and finances, shall adopt appropriate and responsive organizational structure that takes into consideration the major divisions or functional units of the office that respond to the goals of the LGU and for the provision of efficient and quality services to its constituency and key stakeholders. Models of efficient and desirable organizational setup and structure of Provincial Treasury Office (PTO), City Treasury Office (CTO) and Municipal Treasury Office (MTO), according to specific considerations, are presented below. B. The Local Treasury Office is also encouraged to create an Information Technology (IT) Unit or IT plantilla positions to perform the following functions: 1. Handle the security and maintenance of digitized real property tax records of the local treasury office and assist in the posting of related tax information campaign materials; 2. Handle the maintenance and updating of systems applications and information technology requirements of the local treasury office and provide recommendations; 3. Prepare and submit reports as may be required by the BLGF; 4. Provide troubleshooting services in the local treasury office; and 5. Perform other related functions that may be assigned. C. For the PTO, the following basic functional units/divisions are directly under the Provincial Treasurer and may be assisted by an Assistant Provincial Treasurer, or two Assistant Provincial Treasuers (one for Operations, and the other for Administration). The Local Treasurers of component municipalities and cities are under the technical supervision of the PTO. The functions of the divisions under the PTO are provided below: 1. Administrative Division a. Ensure that all national and local circulars, memoranda and guidelines concerning local treasury operations are received, disseminated and acted upon/complied with; b. Maintain records of all communications and documents pertaining to local treasury operations; c. Prepare Office Performance Commitment and Review (OPCR) and ensure submission of the Individual Performance Commitment and Review (IPCR) of personnel, compliant to the approved Strategic Performance Management System (SPMS) of the LGU; 8 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) d. Maintain records of all pertinent information of PTO personnel (i.e., PDS, SALN, Leave Credits); e. Ensure the observance of R A No. 6713 or the “Code of Conduct and Ethical Standards for Public Officials and Employees,” and recommend disciplinary action when appropriate; f. Ensure that all accountable officers are properly bonded pursuant to the provisions of the Public Bonding Law (PBL); g. Draft reply/memo circulars pertaining to treasury matters; h. Conduct annual physical inventory of the following: unused accountable forms; office supplies; property, plant and equipment; Transfer Certificates of Title (TCTs)/Tax Declarations (TDs) of government- owned properties and pertinent documents to support ownership; and ensure that all buildings, property and equipment are insured annually; i. Prepare monthly report of accountable forms; j. Prepare and submit reports as may be required by the BLGF; k. Perform other duties and functions that may be assigned. 2. Treasury Operations and Review Division a. Assist in the conduct of public auction of delinquent real properties; b. Recommend strategies and revenue measures to increase collection; c. Assist the Provincial Treasurer in preparing proposed revenue ordinances; d. Prepare reports regarding collections on a regular basis; e. Prepare the annual estimated revenue of the province before July 15th of each year; f. Prepare Budget Proposals of the PTO, including the Project Procurement Management Plan (PPMP), Annual Supplies Procurement Plan (ASPP), and other related reports; g. Prepare and submit reports as may be required by the BLGF; and h. Perform other duties and functions that may be assigned. 3. Cash Division a. Disburse obligations, such as salaries and wages, allowances and honorarium; b. Prepare checks for disbursement of various obligations of the Province; 9 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION c. Receive daily collections including payments on real property tax paid by property owners, to the provincial treasurer of the province to which the municipality where the subject property is located; d. Prepare daily consolidated report of collections and deposits and attach the list of checks for deposit; e. Deposit daily to authorized government depository banks (AGDBs) all collections received from collectors or remitted by different collecting offices; f. Remit national and municipal shares; g. Prepare daily report of checks issued (RCI); h. Update cash books daily and prepare daily Cash Position Report; i. Prepare daily, weekly or monthly report of collections; j. Prepare and submit electronic Statement of Receipts and Expenditures (eSRE) quarterly reports and other reports required by the BLGF; k. Consolidate the eSRE quarterly reports of its component municipalities; and l. Perform other duties and functions that may be assigned. 4. Local Economic Enterprise Division. As may be necessary; refer to functions of this division under the CTO. Figure 1. Organizational Structure of the Provincial Treasury Office PROVINCIAL TREASURER Assistant Provincial Assistant Provincial Treasurer Treasurer (Operations) (Administration) Local Economic Administrative Treasury Operations Cash Enterprise Division and Review Division Division Division 10 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) D. The City Treasury Office (CTO), on the other hand, is viewed to be more complex in structure than that of the PTO. It has at least five major functional divisions, each of which may be divided into sections; provided, that it is in accordance with DBM and CSC rules and regulations. All the functional divisions of the CTO are directly under the supervision of the City Treasurer and may be assisted by one or two Assistant City Treasurers. The functions of the divisions under the PTO are provided below: 1. Administrative Division a. Ensure that all national and local circulars, memoranda and guidelines pertaining to treasury operations are received, disseminated and acted upon/complied with; b. Maintain records of all communications and documents pertaining to treasury operations; c. Prepare OPCR and ensure submission of the IPCR of personnel, compliant to the approved SPMS of the LGU; d. Maintain records of all pertinent information of CTO personnel (i.e. PDS, SALN, Leave Credits); e. Ensure the observance of RA No. 6713 or the “Code of Conduct and Ethical Standards for Public Officials and Employees,” and recommend disciplinary action, when appropriate; f. Ensure that all accountable officers are properly bonded pursuant to the provisions of the PBL; g. Draft reply/memo circulars pertaining to treasury matters; h. Conduct annual physical inventory of the following: unused accountable forms; office supplies; property, plant and equipment; TCTs/TDs of government-owned properties and pertinent documents to support ownership; and ensure that all buildings, property and equipment are insured annually; i. Prepare Budget Proposals of the CTO, including the PPMP, ASPP and other related reports; j. Prepare Estimated Revenue for submission before July 15th of each year; k. Issue accountable forms to accountable officers and prepare monthly reports pertaining thereto; l. Prepare and submit reports as may be required by the BLGF; and m. Perform other duties and functions that may be assigned. 11 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION 2. Cash Division. For clearer delineation of functions of personnel in the Cash Division, it may be subdivided into two sections: (i) Cash Receipts Section, and (ii) Cash Disbursement Section. a. Receive daily collections from all collection officers of the LGU; b. Prepare the daily consolidated report of collections and deposits and attach the list of checks for deposit; c. Deposit daily cash and check collections to AGDBs; d. Prepare daily, weekly and monthly report of collections; e. Update cash books and prepare daily cash position report; f. Prepare monthly report of used and unused accountable forms; g. Disburse salaries and wages, allowances and honorarium of employees; h. Prepare checks in payment of various obligations of the city; i. Remit national government and barangay shares; j. Prepare daily RCI; k. Prepare and submit quarterly eSRE reports, and other reports required by the BLGF; and l. Perform other duties and functions that may be assigned. 3. Real Property Tax Division a. Compute and collect payments on real property tax and issue Certificate of payments/tax clearance upon request; b. Update records of real property tax payments and prepare list of delinquent properties for posting and publication; c. Send notices of delinquency to delinquent real property owners; d. Assist in the conduct of public auction of delinquent real properties; e. Ensure that cash books of collectors are updated daily; f. Prepare monthly report of barangay share; g. Prepare monthly/quarterly report of real property tax collection; h. Recommend strategies to increase real property tax collection; i. Prepare and submit reports as may be required by the BLGF; and j. Perform other duties and functions that may be assigned. 12 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) 4. Business Tax and Miscellaneous Revenue Division a. Evaluate gross receipts of business establishments and assess the corresponding local business taxes, fees and charges, and other duly authorized local impositions; b. Collect and record payments on business taxes, fees and charges, and other taxes; c. Issue certificate of payment upon request; d. Prepare notice of delinquency on local business tax; e. Inspect business establishments within the jurisdiction of the city, relative to the implementation of approved tax ordinances, pursuant to the provisions of the LGC; f. Calibrate and seal all weights and measures used within the LGU jurisdiction; g. Receive, inspect and assess applications of retirement of business; h. Ensure that cash books of collectors are updated daily; i. Recommend strategies to increase collection of local business tax; j. Prepare and submit reports as may be required by the BLGF; and k. Perform other duties and functions that may be assigned. 5. Treasury Operations and Review Division a. Assist in the conduct of public auction of delinquent real properties; b. Prepare reports regarding collections on a regular basis; c. Recommend strategies and revenue measures to increase collection; d. Prepare the annual estimated revenue of the city before July 15th of each year; e. Prepare Budget Proposals of the CTO, including the PPMP, ASPP and other related reports; f. Conduct Examination of Books of Accounts on Business Establishments; g. Evaluate request on re-assessment and tax credit; h. Assist the City Treasurer in preparing proposed revenue ordinances; i. Prepare and submit reports as may be required by the BLGF; and j. Perform other duties and functions that may be assigned. 13 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION 6. Local Economic Enterprise Division a. Advise the LCE and the sanggunian, regarding the establishment of local economic enterprises, if the same is warranted, marketable, viable and self-liquidating; b. Ensure that setting up and operation of the local economic enterprises shall be included in the development planning and investment programming; c. Ensure that funding requirement for the creation of local economic enterprise is included in the annual budget of the LGU; d. Advise the LCE and sanggunian in the enactment of ordinances on local economic enterprises, which should be aligned to the LGU development goals and objectives and ensure that the same shall operate under the basic principle of financial self-sufficiency via cost recovery; e. Advise the LCE and sanggunian regarding the efficiency and effectiveness of its service delivery, that the same is responsive to the needs of the constituency and does not compete with the goods and services provided by the private sector; and f. Advise the LCE of delinquencies incurred by the local economic enterprise clients/lessees for the purpose of taking the necessary remedial measures and enforcing sanctions, if applicable. Figure 2. Organizational Structure of the City Treasury Office CITY TREASURER Assistant City Treasurer Assistant City Treasurer (Operations) (Administration) Real Business Treasury Local Adminis- Cash Property Tax and Operations Economic trative Division Tax Miscellaneous and Review Enterprise Division Division Revenue Division Division Division 14 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) E. For the Municipal Treasury Office (MTO), the organizational structure is simpler, with only two (2) functional divisions, i.e., the Cash Division, and the Revenue Division, whose functions are similar to that of the CTO’s, together with Administrative Section to provide administrative support to the operations of the office. 1. Administrative Section a. Ensure that all national and local circulars, memoranda and guidelines regarding treasury operations are received, disseminated and acted upon/complied with; b. Maintain records of all communications and pertinent documents on local treasury operations; c. Prepare OPCR and ensure submission of the IPCR of personnel, compliant with the approved SPMS of the LGU; d. Maintain records of pertinent information of all MTO personnel (i.e. PDS, SALN, Leave Credits); e. Ensure the observance of RA No. 6713 or the “Code of Conduct and Ethical Standards for Public Officials and Employees,” and recommend disciplinary action when appropriate; f. Ensure that all accountable officers are properly bonded pursuant to the provisions of the PBL; g. Draft reply/memo circulars pertaining to treasury matters; h. Conduct annual physical inventory of the following: unused accountable forms; office supplies; property, plant and equipment; TCTs/TDs of government-owned properties and pertinent documents to support ownership; and ensure that all buildings, property and equipment are insured annually; i. Prepare Budget Proposals of the MTO, including the Procurement Management Plan, Annual Supplies Procurement Plan and other related reports; j. Prepare the Estimated Revenue for submission before July 15th of each year; k. Issue accountable forms to accountable officers; l. Prepare monthly report of accountable forms; m. Prepare and submit reports as may be required by the BLGF; and n. Perform other duties and functions that may be assigned. 15 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION 2. Cash Division a. Receive daily collections from all collection officers of the LGU; b. Prepare the daily consolidated report of collections and deposits and attach the list of checks for deposit; c. Deposit daily collections of the municipality to AGDBs; d. Prepare daily, weekly and monthly report of collections; e. Update Cash Books and prepare daily cash position report; f. Assist the Municipal Treasurer in handling the disbursement of local government funds and such other funds entrusted by law or other competent authority; g. Disburse salaries and wages, allowances and honorarium of employees; h. Prepare checks in payment of various obligations of the municipality; i. Remit national and barangay shares; j. Prepare daily RCI; k. Prepare and submit quarterly eSRE reports required by the BLGF; and l. Perform other duties and functions that may be assigned. 3. Revenue Division a. Compute and collect payments on Real Property Tax (RPT); b. Prepare monthly/quarterly report of RPT collection; c. Update records of RPT payment and prepare list of delinquent properties; d. Send notices of delinquency to delinquent real property owners; e. Prepare notices of delinquency on RPT for posting and publication; f. Prepare monthly report of barangay share; g. Evaluate gross receipts of business establishments and assess local business taxes, fees and charges, and other duly authorized local impositions; h. Collect and record payments on business taxes, fees and charges, and other taxes; i. Prepare notice of delinquency on local business tax; 16 ONLINE EDITION - COMPLIMENTARY COPY  FISCAL ORGANIZATION OF LOCAL GOVERNMENT UNITS (LGUS) j. Inspect business establishments within the jurisdiction of the municipality relative to the implementation of approved tax ordinances pursuant to the provisions of the LGC; k. Receive, inspect and assess applications for retirement of business; l. Calibrate and seal all weights and measures within the jurisdiction of the LGU; m. Issue Certificate of payments/tax clearance, upon request; n. Ensure that cash books of collectors are updated daily; o. Recommend strategies to increase collection on RPT, business tax and other revenues; p. Prepare and submit reports as may be required by the BLGF; and q. Perform other duties and functions that may be assigned. Figure 3. Organizational Structure of the Municipal Treasury Office MUNICIPAL TREASURER Assistant Municipal Treasurer Administrative Section Cash Division Revenue Division Note: Administrative functions may be more of records management, supply management, bonding requirements, performance management and similar administrative support functions. HR functions may be limited to attendance monitoring, travel order and training, monitoring of personnel action, but maintenance of personnel records must still be lodged with the HR office or department of the LGU. 17 ONLINE EDITION - COMPLIMENTARY COPY  CHAPTER THE LOCAL TREASURER 2 AND THE ASSISTANT LOCAL TREASURER SECTION 5. AUTHORITY OF THE SECRETARY OF FINANCE TO APPOINT LOCAL TREASURER AND ASSISTANT LOCAL TREASURER A. The appointment of a Treasurer shall be mandatory for Provincial, City and Municipal Governments [Sec. 470 (c), LGC], while the appointment of an Assistant Local Treasurer shall be optional [Sec. 471(b), LGC]. B. The Treasurer shall be appointed by the Secretary of Finance from a list of at least three (3) ranking eligible recommendees of the Governor or Mayor, as the case may be, subject to civil service law, rules and regulations. [Sec. 470 (a), LGC] C. Nepotic Appointment 1. No person shall be appointed in the career service of the local government if he/she is related within the fourth civil degree of consanguinity or affinity to the appointing or recommending authority. (Sec. 79, Title III, LGC) 2. All appointments in the national, provincial, city and municipal governments or in any branch or instrumentality thereof, including government owned or controlled corporations, made in favor of a relative of the appointing or recommending authority or of the chief of the bureau or office or of persons exercising immediate supervision over him, are hereby prohibited. The word “relative” and members of the family referred to are those related within the third degree either of consanguinity or of affinity. (Sec. 59. Chapter VIII, Book V, Administrative Code of 1987) 3. The rule on Nepotic appointment under Sec. 79, Title III of the LGC applies to local treasurers and assistant treasurers in LGUs and not that under Sec. 59, Chapter VIII, Book V of the Administrative Code of 1987. (CSC Resolution No. 1000170 dated 06 October 2010 as affirmed by CA Decision dated 07 November, 2013 in CA G. R. S. P. No. 121404) 18 ONLINE EDITION - COMPLIMENTARY COPY  THE LOCAL TREASURER AND THE ASSISTANT LOCAL TREASURER SECTION 6. AUTHORITY OF THE LCE OVER THE LOCAL TREASURER AND ASSISTANT LOCAL TREASURER The Treasurer shall be under the administrative supervision of the Governor or Mayor, as the case may be, to whom he/she shall report regularly on the tax collection efforts in the LGUs. [Sec. 470 (b), LGC] The administrative supervision by the Local Chief Executive (LCE) over local treasurers shall be executed in close coordination with the Secretary of Finance being the appointing authority of treasurers. For this purpose, the treasurer shall be guided by the definition of administrative supervision as provided under Sec. 38(2), Chapter 7, Book IV of Executive Order 292 or the Administrative Code of 1987. “Administrative Supervision. - (a) Administrative supervision which shall govern the administrative relationship between a department or its equivalent and regulatory agencies or other agencies as may be provided by law, shall be limited to the authority of the department or its equivalent to generally oversee the operations of such agencies and to insure that they are managed effectively, efficiently and economically but without interference with day-to- day activities; or require the submission of reports and cause the conduct of management audit, performance evaluation and inspection to determine compliance with policies, standards and guidelines of the department; to take such action as may be necessary for the proper performance of official functions, including rectification of violations, abuses and other forms of maladministration; and to review and pass upon budget proposals of such agencies but may not increase or add to them; (b) Such authority shall not, however, extend to: (1) appointments and other personnel actions in accordance with the decentralization of personnel functions under the Code, except when appeal is made from an action of the appointing authority, in which case the appeal shall be initially sent to the department or its equivalent, subject to appeal in accordance with law; (2) contracts entered into by the agency in the pursuit of its objectives, the review of which and other procedures related thereto shall be governed by appropriate laws, rules and regulations; and (3) the power to review, reverse, revise, or modify the decisions of regulatory agencies in the exercise of their regulatory or quasi-judicial functions; and (c) Unless a different meaning is explicitly provided in the specific law governing the relationship of particular agencies, the word “supervision” shall encompass administrative supervision as defined in this paragraph.” The DOF shall maintain its focal role as the overseer of the operations of local treasury offices, both in administrative and technical aspects. 19 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION SECTION 7. QUALIFICATIONS OF A LOCAL TREASURER AND ASSISTANT LOCAL TREASURER A. No person shall be appointed Treasurer unless, he/she possesses the following qualifications: 1. A citizen of the Philippines; A person with dual citizenship shall not be appointed in government unless he/she renounces his/her foreign citizenship pursuant to the provision of RA 9225. (CSC Memorandum Circular No. 23, series of 2016) 2. A resident of the LGU concerned; One is a resident of a place from which his departure is indefinite as to time, definite as to purpose; and for this purpose he has made the place his temporary home. (Uytengsu vs. Republic of the Philippines, GR No. L-6379) 3. Of good moral character; 4. A holder of a college degree preferably in commerce, public administration or law from a recognized college or university; 5. A first grade civil service eligible or its equivalent; and 6. Must have acquired experience in treasury or accounting service for at least five (5) years in the case of the City or Provincial Treasurer, and three (3) years in the case of Municipal Treasurer. [Sec. 470 (c) and 471(b), LGC] B. The Secretary of Finance, in the exercise of his/her appointing power, may institute additional competency indicators as criteria in the selection process, subject to civil service rules and regulations. SECTION 8. PROCESSING OF THE APPOINTMENTS OF PROVINCIAL, CITY, AND MUNICIPAL TREASURERS AND ASSISTANT PROVINCIAL, CITY, AND MUNICIPAL TREASURERS Pursuant to Department Personnel Order (DPO) No. 477.2019 dated 04 June 2019, and its implementing guidelines, the appointments of the Provincial, City, or Municipal Treasurers or Assistant Treasurers shall be processed as follows: A. Criteria for Evaluation. ln evaluating all the recommendees of the LCE, the following qualifications and attributes shall be weighted: 1. Education: College degree, preferably in commerce, public administration or law, from a recognized college or university; 2. Experience in treasury or accounting service: Provincial and City Treasurers and Assistant Provincial and City Treasurers: At least five (5) years; Municipal Treasurers or Assistant Municipal Treasurers: At least three (3) years; 20 ONLINE EDITION - COMPLIMENTARY COPY  THE LOCAL TREASURER AND THE ASSISTANT LOCAL TREASURER 3. Performance: At least ‘Very Satisfactory’ rating in the last rating period prior to the assessment or screening; 4. Relevant Training: Completion of trainings, scholarships, and other capacity building interventions relevant to the duties and functions of the position undertaken within the last five (5) years reckoned from the date of LCE recommendation; and 5. Other Related Criteria and Attributes: To further establish competency and fitness, additional criteria and attributes shall be evaluated and weighted, namely: (i) Salary Grade/Rank; (ii) Previous Designation in the Local Treasury Service; (iii) Post-graduate Degree/s; (iv) Bar and/or Professional License; (v) SEAL certification; and (vi) Interview by the BLGF. The weights for SEAL certification shall be as follows: 10% for BCLTE, 15% for ICLTE, and 20% for ACLTE. The table of criteria and the respective weight allocations is attached as Annex 3 [Department Personnel Order (DPO) 477.2019]. All mandatory requirements required under the LGC and CSC rules that have no point allocation or determined on a pass-fail basis, such as citizenship, residency, good moral character, eligibility, and non-nepotic relationship, together with the applicable clearances and certifications, shall be fully evaluated by the BLGF. B. Appointment Requirements and Procedures 1. Publication and Posting of Vacancy. Per ltem Nos. 3.2 and 3.3 of DPO No. 477.2019, the publication and posting of the vacant position of Local Treasurer (LT) or Assistant Local Treasurer (ALT), in accordance with RA No. 7041, as amended, for at least fifteen (15) calendar days, shall first be complied with. The filling up of the vacant position shall be made after fifteen (15) calendar days from its publication, but shall not exceed nine (9) months from the date of publication. Such notice of vacancy shall strictly contain the qualification standards, as provided under Secs. 470 and 471 of Republic Act (RA) No. 7160 or the Local Government Code (LGC) of 1991, and shall be posted in at least three (3) conspicuous places within the concerned LGU, and shall be reported to the Civil Service Commission (CSC). 2. Prescribed Documentary Requirements. The basic documentary requirements for processing the appointments of LT and ALT are as follows: First Level Basic Documentary Requirements for Appointment of Local Treasurers and Assistant Local Treasurers Document Remarks A. Requirements from the Individual Recommendees 1. Personal Data Sheet (PDS) - CSC Form No. 212, with the 3 Originals* following: 1.1 Service Record 3 Originals 1.2 Work Experience Sheet 3 Originals 21 ONLINE EDITION - COMPLIMENTARY COPY  LTOM, 2ND EDITION Document Remarks 1.3 Previous Office Order of Designation as Treasurer/ 1 Certified Copy Assistant Treasurer each 1.4 Sworn Certificate of Employment (for private work 1 Photocopy experience) 1.4 Latest Approved Appointment (if applicable) 1 Certified Copy 1.5 Certificate of Residency9 1 Original 2. Certificate/s of Eligibilit