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 LOCAL TREASURY
OPERATIONS MANUAL
2ND EDITION

DEPARTMENT OF FINANCE
BUREAU OF LOCAL GOVERNMENT FINANCE
Manila, Philippines

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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

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 LTOM, 2ND EDITION

BOOK IV
Detailed Procedures on the Administration
and Collection of Real Property Tax, Business Tax,
Fees and Charges, and Other Fund Sources

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 TABLE OF CONTENTS

TABLE OF CONTENTS
Section 146. Definition of Terms vi

CHAPTER 1 1
REAL PROPERTY TAX
Section 147. Procedures in Computing Real Property Taxes (RPT), 1
Interests and Discounts
Section 148. Treatment of Real Property Tax Payment under Protest 5
Section 149. Periods of Assessment and Collection 5
Section 150. Procedures in the Conduct of Administrative Action through 6
Levy on Real Property and Judicial Action
Section 151. Compromise Agreement in the Payment of Real Property Tax 15

CHAPTER 2 17
BUSINESS AND OTHER LOCAL TAXES
Section 152. Schedule on Business Tax 17
Section 153. Sample Illustrations of Other Local Taxes Imposed by 29
Provinces, Cities and Municipality within Metro Manila
Section 154. Sample Illustrations of Situs of Tax on Businesses 33
Section 155. Mayor’s Permit to Operate Business 41
Section 156. Examination of Books of Accounts 43
and Pertinent Records of Businessmen
Section 157. Guidelines in the Conduct of Examination of Book 44
of Accounts
Section 158. Retirement of Business 48

CHAPTER 3 50
CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS
Section 159. General Policy 50
Section 160. Credits and Other Sources of Funds Available to LGUs 50
Section 161. Other Build-Operate-Transfer Arrangements 50
Section 162. Duties and Responsibilities of Treasurers Relative 52
to Credit Financing
Section 163. Provisions for the Servicing of Contractual Obligations 53
of LGUs
Section 164. Enforceability of Loan Obligations Notwithstanding 53
the Expiration of the Terms of the Elective Contracting
Officials
Section 165. Guidelines on the Use of Funds Raised by Indebtedness 54
Section 166. Tax Exemption Privileges of LGUs 54
Section 167. Limitations on the Use of Credit Lines to Stabilize Local 55
Finance
Section 168. Common Requirements for Credit Financing of Local 55
Development Projects

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 LTOM, 2ND EDITION

Section 169. Acceptable Collateral 56

Section 170. Special Account for Loans, Interest, Bonds, and Contributions 57
for Specific Purposes
Section 171. Other Requirements for Loans, Deferred Payments, 57
and other Financial Loans, Schemes
Section 172. Inter – LGUs Loans, Grants, and Subsidies 57
Section 173. Joint and Several LGU Loan Arrangements 58
Section 174. Loans from Funds Secured by the National Government 58
from Foreign Sources
Section 175. Deferred Payments and Other Financial Schemes 59
Section 176. Bonds and Other Long Term Securities 59
Section 177. Private Sector Financing under the Build-Operate-Transfer 60
(BOT) Arrangement
Section 178. Authority to Negotiate and Secure Grants 63
Section 179. Prohibited Acts Related to the Awards of Contracts under 64
the Provisions on Credit Financing
Section 180. Debt Management 65

CHAPTER 4 71
THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND
ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES
(eSRE) FINANCIAL MANAGEMENT REPORTING SYSTEM
Section 181. Statement of Receipts Expenditures (SRE) Financial Report 71
System: Definition, Composition, and Legal Basis
Section 182. Statement of Receipts Expenditures (SRE): Purpose and Use 72
Section 183. Electronic Statement of Receipts and Expenditures (eSRE) 73
Section 184. Guidelines and Manuals for the Preparation and Submission 75
of the eSRE Reports
Section 185. Submission of SRE Report 75
Section 186. Responsibilities and Sanctions 76
Section 187. Environment and Natural Resources Data Management Tool 77
(ENRDMT) Reports
Section 188. Submission of ENRDMT Reports 77
Section 189. Responsibilities and Sanctions 77

FORMS AND ANNEXES 79

LTOM Form No. 3 Letter of Authority 80
LTOM Form No. 4 List of Documents to be Examined 81
LTOM Form No. 5 Tax Data Sheet 82
LTOM Form No. 6 Tax Data Sheet and Assessment Form 83
LTOM Form No. 7 Letter of Assessment (First Notice) 84
LTOM Form No. 8 Letter of Assessment (Second Notice) 85
LTOM Form No. 9 Letter of Assessment (Final Notice) 86
LTOM Form No. 10 Final Notice Before Issuance of Warrant 87
of Distraint and Levy

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 TABLE OF CONTENTS

LTOM Form No. 11 Non-presentation of Documents 88

LTOM Form No. 12 Final Notice of Non-presentation of Documents 89
LTOM Form No. 13 Letter of Confirmation 90
LTOM Form No. 14 Certificate of Confirmation 91
LTOM Form No. 15 Certificate of Examination 92
LTOM Form No. 16 Notice of Delinquency in the Payment 93
of Real Property Tax
LTOM Form No. 17 Notice of Real Property Tax Delinquency 94
(First Notice)
LTOM Form No. 18 Notice of Real Property Tax Delinquency 95
(Second Notice)
LTOM Form No. 19 Notice of Real Property Tax Delinquency 96
(Final Notice)
LTOM Form No. 20 Warrant of Levy 97
LTOM Form No. 21 Notice of Levy (Local Assessor 98
and Registrar of Deeds)
LTOM Form No. 22 Report of Levy (Sanggunian) 100
LTOM Form No. 23 Notice of Auction Sale 102
of Delinquent Real Properties
LTOM Form No. 24 Notice of Sale 103
LTOM Form No. 25 Public Auction Registration Form 104
LTOM Form No. 26 List of Registered Bidders 105
LTOM Form No. 27 Undertaking and Waiver of Bidders 106
LTOM Form No. 28 Rules and Regulations of Public Auction 107
LTOM Form No. 29 Certificate of Sale 111
LTOM Form No. 30 Declaration of Forfeiture of Delinquent Property 112
LTOM Form No. 31 Report of Sale 113
LTOM Form No. 32 Certificate of Redemption 114
LTOM Form No. 33 Cancellation of Warrant of Levy 115
(Local Assessor and Registrar of Deeds)
LTOM Form No. 34 Final Deed of Sale 116
LTOM Form No. 35 Statement of Receipts and Expenditures 118
(Exhibits1 and 1-a of BLGF SRE Form No. 1)

Notes on the Second Printing of LTOM, 2nd Edition 126

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 LTOM, 2ND EDITION

INTRODUCTION
LTOM Book IV contains procedures, remedies and forms in the collection of real
property-related taxes, business and other local taxes, fees and charges. It also features
the policies, rules and procedures on credit financing and other resource mobilization
mechanisms, as well as the DOF-BLGF financial reporting requirements for LGUs.
This Book consists of four (4) chapters, including Forms and Annexes, viz:
Chapter 1 Real Property Taxation
Chapter 2 Business and Other Local Taxes
Chapter 3 Credit Financing and Alternative Sources of Funds
Chapter 4 The Statement of Receipts and Expenditures (SRE)
and the Electronic Statement of Receipts and Expenditures
(eSRE) Financial Management Reporting System

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 DEFINITION OF TERMS

SECTION 146. DEFINITION OF TERMS

A. Amusement is a pleasurable diversion and entertainment. It is synonymous to
relaxation, avocation, pastime, or fun. [Sec. 131 (b), Local Government Code
(LGC)]
B. Amusement places include theaters, cinemas, concert halls, circuses and other
places of amusement where one seeks admission to entertain oneself by seeing
or viewing the show or performances. [Sec. 131 (c), LGC]
C. Capital Investment is the capital which a person employs in any undertaking, or
which he/she contributes to the capital of a partnership, corporation, or any other
juridical entity or association in a particular taxing jurisdiction. [Sec. 131 ( f ) , LGC]
D. Corporation includes partnerships, no matter how created or organized, joint-
stock companies, joint accounts (cuentas en participacion), associations or
insurance companies, but does not include eneral professional partnerships and
joint venture or consortium formed for the purpose of undertaking construction
projects or engaging in petroleum, coal, geothermal, and other energy operations
or consortium agreement under a service contract with the government.
General partnerships are partnerships formed by persons for the sole purpose
of exercising their common profession, no part of the income of which is derived
from engaging in any trade or business;
The term “resident foreign” when applied to a corporation means a foreign
corporation not otherwise organized under the laws of the Philippines but engaged
in trade or business within the Philippines.
[Sec. 131 (i), LGC]
E. Dealer means one whose business is to buy and sell merchandise, goods and
chattels as a merchant. He/she stands immediately between the producer or
manufacturer and the consumer and depends for his/her profit not upon the labor
he bestows upon his commodities but upon the skill and foresight with which he/
she watches the market [Sec. 131 (k), LGC].
F. Investment is the placing of capital or laying out of money in a way intended
to secure income or profit from its employment. (Philippine Law Dictionary, 3rd
edition, Moreno)
G. Loan – in reference to money, it is a contract under which one of the parties
delivers to another a sum of money on the condition that the same amount shall be
paid (Art. 1933, Civil Code of the Philippines). It involves the delivery by one party
and the receipt by the other party of a given sum of money, upon an agreement,
express or implied, that the recipient will repay the same sum, with or without
interest. [People v. Concepcion, 44 Phil 129]

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 CHAPTER REAL PROPERTY TAX
1
SECTION 147. PROCEDURES IN COMPUTING REAL PROPERTY
TAXES (RPT), INTEREST AND DISCOUNTS
A. Computation of the Basic Tax and Special Education Fund (SEF) Tax – In
computing the basic RPT and the tax accruing to the SEF, the following basic
components should be noted:
1. The assessed value of the real property shall be taken from the Assessment
Roll submitted by the Local Assessor concerned.
2. The applicable tax rate shall be the rate fixed for the subject property by the
approved tax ordinance of the LGU concerned.
3. Formula for the computation of RPT
i. Basic Tax:
Tax Due = (Assessed Value) (Basic Tax Rate) - Discount + Interest
ii. SEF Tax:
Tax Due = (Assessed Value) (SEF Tax Rate) - Discount + Interest
iii. Total Tax Due
Tax Due = Basic Tax Due + SEF Tax Due
B. Formula for the Computation of the Tax Discount for Advanced and Prompt
Payment
Discount = [ (Assessed Value) (Tax Rate) (Tax Discount Rate) ]
C. Formula for the Computation of the Interest Due on Unpaid Taxes
Interest = [ (Assessed Value) (Tax Rate) (Number of Months Delinquent1) ]

Sample Computations
Sample A. A property with an Assessed Value (AV) of ₱1,000,000.00. Basic and SEF
Tax rates is at 1%.
Case 1: Establish the Basic Tax, SEF Tax and the Total Tax Due of the property.
Illustration:
a. Basic Tax Due = [ (Assessed Value) (Basic Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (0) + (0) ]
Basic Tax Due = ₱ 10,000.00

1 Maximum of 36 months.

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 REAL PROPERTY TAX

b. SEF Tax Due = [ (Assessed Value) (SEF Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (0) + (0) ]
SEF Tax Due = ₱ 10,000.00

c. Total Tax Due = [ (Basic Tax Rate) + (SEF Tax Rate) ]

= [ (₱ 10,000.00) + (₱ 10,000.00) ]
Total Tax Due = ₱ 20,000.00
Case 2: Assuming the Total Tax Due established in Case 1 is for Calendar Year (CY)
2019 and the local ordinance provides for 20% Discount for Advance Payments, what
is the new Total Tax Due in case the owner would want to pay in full before 2019?

Discount = [ (Assessed Value) (Tax Rate) (Tax Discount Rate) ]

= [ (₱ 1,000,000.00) (1.0%) (20%) ]
Discount = ₱ 2,000.00
a. Basic Tax Due = [ (Assessed Value) (Basic Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
Basic Tax Due = ₱ 8,000.00
b. SEF Tax Due = [ (Assessed Value) (SEF Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 2,000.00) + (0) ]
SEF Tax Due = ₱ 8,000.00

c. Total Tax Due = [ (Basic Tax Rate) + (SEF Tax Rate) ]

= [ (₱ 8,000.00) + (₱ 8,000.00) ]
Total Tax Due = ₱ 16,000.00
Case 3: Supposing the owner pays his Real Property Tax (RPT) during the 1st quarter
of 2019. What is the new Total Tax Due if the local tax ordinance provides for a 10%
discount on full payment made during the 1st quarter?
First, determine the discount as follows:
Discount = [ (Assessed Value) (Tax Rate) (Tax Discount Rate) ]
= [ (₱ 1,000,000.00) (1.0%) (10%) ]
Discount = ₱ 1,000.00
Then compute the taxes due.
a. Basic Tax Due = [ (Assessed Value) (Basic Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 1,000.00) + (0) ]
Basic Tax Due = ₱ 9,000.00
b. SEF Tax Due = [ (Assessed Value) (SEF Tax Rate) - (Discount) + Interest ]
= [ (₱ 1,000,000.00) (1.0%) - (₱ 1,000.00) + (0) ]
SEF Tax Due = ₱ 9,000.00

c. Total Tax Due = [ (Basic Tax Due) + (SEF Tax Due) ]

= [ (₱ 9,000.00) + (₱ 9,000.00) ]
Total Tax Due = ₱ 18,000.00

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 LTOM, 2ND EDITION

Case 4: Assume that the same property has been delinquent since CY 1988 and its
owner asked for a computation if he /she is to pay in January 2019, to include taxes
due for 2019 and 2020. Assume further that no general revision was ever conducted
since 1988. Rates of Discount for Advance and Prompt payment are 20% and 10%,
respectively.
a. For 1988 to 1991, in determining the maximum allowable interest for late payment,
the provisions of PD 464 shall apply.
Interest (Annual)
= [ (Assessed Value) (Tax Rate) (Interest Rate) (Number of Months Delinquent) ]
= [ (₱ 1,000,000.00) (1.0%) (2%) (12) ]
= ₱ 2,400.00

Applicable Basic Interest/ Interest/ Total Tax

Year SEF Tax
Penalty Tax (discount) (discount) Due
1988 24% 10,000 2,400 10,000 2,400 24,800
1989 24% 10,000 2,400 10,000 2,400 24,800
1990 24% 10,000 2,400 10,000 2,400 24,800
1991 24% 10,000 2,400 10,000 2,400 24,800
SUBTOTAL (1988-1991) 99,200

For delinquency from 1992 onward, the impositions under the LGC shall apply at
2% per month, with a maximum of 36 months that is equivalent to 72% of interest
annually.
Interest (2016)
= [ (Assessed Value) (Tax Rate) (Interest Rate) (Number of Months Delinquent) ]
= [ (₱ 1,000,000.00) (1.0%) (2%) (36) ]
= ₱ 7,200.00

Applicable Basic Interest/ SEF Interest/ Total Tax

Year
Penalty Tax (discount) Tax (discount) Due
1992 72% 10,000 7,200 10,000 7,200 34,400
1993 72% 10,000 7,200 10,000 7,200 34,400
1994 72% 10,000 7,200 10,000 7,200 34,400
1995 72% 10,000 7,200 10,000 7,200 34,400
1996 72% 10,000 7,200 10,000 7,200 34,400
1997 72% 10,000 7,200 10,000 7,200 34,400
1998 72% 10,000 7,200 10,000 7,200 34,400
1999 72% 10,000 7,200 10,000 7,200 34,400
2000 72% 10,000 7,200 10,000 7,200 34,400
2001 72% 10,000 7,200 10,000 7,200 34,400
2002 72% 10,000 7,200 10,000 7,200 34,400
2003 72% 10,000 7,200 10,000 7,200 34,400

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 REAL PROPERTY TAX

Applicable Basic Interest/ SEF Interest/ Total Tax

Year
Penalty Tax (discount) Tax (discount) Due
2004 72% 10,000 7,200 10,000 7,200 34,400
2005 72% 10,000 7,200 10,000 7,200 34,400
2006 72% 10,000 7,200 10,000 7,200 34,400
2007 72% 10,000 7,200 10,000 7,200 34,400
2008 72% 10,000 7,200 10,000 7,200 34,400
2009 72% 10,000 7,200 10,000 7,200 34,400
2010 72% 10,000 7,200 10,000 7,200 34,400
2011 72% 10,000 7,200 10,000 7,200 34,400
2012 72% 10,000 7,200 10,000 7,200 34,400
2013 72% 10,000 7,200 10,000 7,200 34,400
2014 72% 10,000 7,200 10,000 7,200 34,400
2015 72% 10,000 7,200 10,000 7,200 34,400
2016 72% 10,000 7,200 10,000 7,200 34,400
SUBTOTAL (1992-2016) 516,000

For delinquencies less than 36 months:

Interest (2017)
= [ (Assessed Value) (Tax Rate) (Interest Rate) (Number of Months Delinquent) ]
= [ (₱ 1,000,000.00) (1.0%) (2%) (25) ]
= ₱ 5,000.00
Interest (2018)
= [ (Assessed Value) (Tax Rate) (Interest Rate) (Number of Months Delinquent) ]
= [ (₱ 1,000,000.00) (1.0%) (2%) (13) ]
= ₱ 2,600.00
To compute for advance payment Discount, which is applicable for the 2020 tax
dues:
Discount = [ (Assessed Value) (Tax Rate) (Tax Discount Rate) ]
= [ (₱ 1,000,000.00) (1.0%) (10%) ]
Discount = ₱ 2,000.00

Rate of Tax Due

Basic Penalties/ SEF Penalties/
Year Interest/ Basic &
(discount) Tax (discount) Tax (discount)
SEF
2017 50% 10,000 5,000 10,000 5,000 30,000
2018 26% 10,000 2,600 10,000 2,600 25,200
2019 (10%) 10,000 (1,000) 10,000 (1,000) 18,000
2020 (20%) 10,000 (2,000) 10,000 (2,000) 16,000
SUBTOTAL (2017-2019) 89,200
TOTAL TAX DUE (1988-2020) 704,400

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 LTOM, 2ND EDITION

SECTION 148. TREATMENT OF REAL PROPERTY TAX PAYMENT

UNDER PROTEST
A. No protest shall be entertained unless the taxpayer first pays the tax. There shall
be annotated on the tax receipt the words "paid under protest".
The protest in writing must be filed within thirty (30) days from payment of the tax
to the provincial, city treasurer or municipal treasurer, in the case of a municipality
within Metropolitan Manila Area, who shall decide the protest within sixty (60)
days from receipt. [Sec. 252 (a), LGC]
B. The tax or a portion thereof paid under protest shall be held in trust by the Local
Treasurer concerned. However, fifty percent (50%) of the tax paid under protest
shall be distributed in accordance with Sec. 271 of the LGC, on the distribution of
proceeds. [Art. 343 (b), IRR, implementing Sec. 252 (b), LGC]
C. In the event that the protest is finally decided in favor of the taxpayer, the amount
or portion of the tax protested shall be refunded to the protestant, or applied as
tax credit against his/her existing or future tax liability. [Sec. 252 (c), LGC]
D. In the event that the protest is denied or upon the lapse of the sixty (60)-day
period prescribed in sub-paragraph (a) of Sec. 252 of the LGC, the taxpayer may
avail of the remedies as provided for in Chapter 3, Title Two, Book II of the same
Code. [Sec. 252 (d), LGC]
E. Should the taxpayer find the action on the protest unsatisfactory, the taxpayer
may appeal with the Local Board of Assessment Appeal (LBAA) within sixty (60)
days from receipt of the decision on the protest. (Sec. 226, LGC)
F. If the taxpayer is still unsatisfied with the decision of the LBAA, the taxpayer may
appeal with the Central Board of Assessment Appeals (CBAA) within thirty (30)
days from receipt of the LBAA’s decision. (Sec. 229, LGC)

NOTE

Payments under protest and appeal to the LBAA are “successive

administrative remedies to a taxpayer who questions the correctness of an
assessment.” The LBAA shall not entertain any appeal “without the action of
the local assessor” on the protest. (GR No. 184203, 26 Nov. 2014)

SECTION 149. PERIODS OF ASSESSMENT AND COLLECTION

A. All assessments or reassessments made after the first (1st) day of January of
any year shall take effect on the first (1st) day of January of the succeeding year.
Provided, however, That the reassessment of real property due to its partial or
total destruction, or to a major change in its actual use, or to any great and sudden
inflation or deflation of real property values, or to gross illegality of the assessment
when made or to any abnormal cause, shall be made within ninety days (90) days

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 REAL PROPERTY TAX

from the date any such cause or causes occurred, and shall take effect at the
beginning of the quarter next following the reassessment. (Sec. 221, LGC)
B. The basic real property tax 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.
C. 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.
D. The period of prescription within which to collect shall be suspended for the time
during which:
1. The local treasurer is legally prevented from collecting the tax;
2. The owner of the property or the person having legal interest therein requests
for reinvestigation and executes a waiver in writing before the expiration of
the period within which to collect; and
3. The owner of the property or the person having legal interest therein is out
of the country or otherwise cannot be located.
(Sec. 270, LGC)

SECTION 150. PROCEDURE IN THE CONDUCT OF ADMINISTRATIVE

ACTION THROUGH LEVY ON REAL PROPERTY
AND JUDICIAL ACTION
A. Administrative Action as Remedy for the Collection of Real Property Tax
1. Pre-Auction Sale Activities
a. Notice of the Delinquency in the Payment of Real Property Tax2
i. When the real property tax or any other tax imposed becomes
delinquent, the provincial, city or municipal treasurer shall issue
the Notice of Delinquency with the following specifications:
1. Description, location, and owner of the real property subject
to delinquent tax;
2. Date upon which the tax became delinquent;
3. That personal property may be distrained to effect payment
of the delinquent tax;
4. That at any time before the distraint of personal property,
payment of the tax with surcharges, interests and penalties
may be made; and

2 LTOM Form No. 16 - Notice of Deliquency in the Payment of Real Property Tax

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 LTOM, 2ND EDITION

5. Unless the tax, surcharges and penalties are paid before

the expiration of the year for which the tax is due, the
delinquent real property will be sold at public auction, and
the title to the property will be vested in the purchaser,
subject however to the right of the delinquent owner of
the property or any person having legal interest therein to
redeem the property within one (1) year from the date of
sale.
ii. Post the notice of delinquency at the main entrance of the
provincial capitol, city or municipal hall and in a publicly accessible
and conspicuous place in each barangay of the LGU concerned.
iii. The notice of delinquency shall also be published once a week for
two (2) consecutive weeks, in a newspaper of general circulation
in the province, city or municipality.
(Sec. 254, LGC)
iv. Serve a copy of the Notice of Real Property Tax Delinquency3
either by registered mail with return card or by personal service
to the delinquent real property owner or any person having legal
interest therein at the address appearing in the records of the
local treasury office or known personally by the Local Treasurer
concerned.

NOTE
xxx, we note that unlike land registration proceedings which are in rem, cases
involving an auction sale of land for the collection of delinquent taxes are in personam.
Thus, notice by publication, though sufficient in proceedings in rem, does not as a
rule satisfy the requirements of proceedings in personam. As such, mere publication
of the notice of delinquency would not suffice, considering that the procedure in tax
sales is in personam. It was, therefore, still incumbent upon the city treasurer to send
the notice of tax delinquency directly to the taxpayer in order to protect the interests
of the latter. (GR No. 133698, 4 April 2001)

b. Levy on Real Property

i. After the expiration of the time required to pay the basic real
property tax or any other tax levied under Title Two, Book II of
the LGC, real property subject to such tax may be levied upon
through the issuance of a warrant on or before, or simultaneously
with the institution of the civil action for the collection of delinquent
tax.
ii. Warrant of Levy4 – When issuing a warrant of levy, the local
treasurer shall prepare a duly authenticated certificate showing
the following:
3 LTOM Form No. 17 - Notice of Real Property Tax Delinquency (First Notice); LTOM Form No. 18 - Notice of
Real Property Tax Delinquency (Second Notice); LTOM Form No. 19 - Notice of Real Property Tax Delinquency
(Final Notice)
4 LTOM Form No. 20 - Warrant of Levy

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 REAL PROPERTY TAX

1. Name of the delinquent owner of the property or person

having legal interest therein;
2. Description of the property; and
3. Amount of the tax due and the interest thereon.
iii. The warrant shall operate with the force of a legal execution
throughout the province, city or municipality within the Metropolitan
Manila Area (MMA). The warrant shall be mailed or served upon
the delinquent owner of the real property or person having legal
interest therein, or in case he/she is out of the country or cannot
be located, to the administrator or occupant of the property.
iv. Notice of Levy5 – At the same time, written notice of levy with
the attached warrant shall be mailed to or served upon the
assessor and the Registrar of Deeds (RoD) of the province, city
or a municipality within the MMA where the property is located,
who shall annotate the levy on the tax declaration (TD) and the
certificate of title to the property, respectively.
v. The levying officer shall submit a report on the levy to the
sanggunian concerned within ten (10) days after the receipt of
the warrant by the owner of the property or person having legal
interest therein6.
(Sec. 258, LGC)

c. Advertisement of Sale
i. Within thirty (30) days after the service of the warrant of levy,
the local treasurer shall proceed to publicly advertise for sale
or auction the property or a usable portion therof as may be
necessary to satisfy the tax delinquency and expenses of sale.
ii. The advertisement shall be effected by posting a notice at the
main entrance of the provincial, city or municipal building, and
in publicly accessible and conspicuous place in the barangay
where the real property is located.
iii. The Notice of Sale shall be published once a week for two (2)
weeks in a newspaper of general circulation in the province, city
or municipality where the property is located.7
iv. The advertisement shall specify the following:
1. Amount of the delinquent tax, interest due thereon and
expenses of sale;
2. Date and place of sale;
5 LTOM Form No. 21 - Notice of Levy
6 LTOM Form No. 22 - Report of Levy (Sanggunian)
7 LTOM Form No. 23 - Notice of Auction Sale of Delinquent Real Properties

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 LTOM, 2ND EDITION

3. Name of the owner of the real property or person having

legal interest therein; and
4. Description of the property to be sold.
v. At any time before the date fixed for the sale, the owner of the
real property or person having legal interest therein may stay
the proceedings by paying the delinquent tax, the interest due
thereon and the expenses of sale.
(Sec. 260, LGC)
vi. Service of Notice of Sale (NS)8 – In addition to the publication,
the local treasurer may serve the NS through registered mail with
return card or personally upon the owner of the delinquent real
property or person having legal interest therein, at the address
appearing in the records of the local treasury office or known
personally by the Local Treasurer. In the event that the real
property owner is out of the country or cannot be located, the
warrant shall be served upon the duly appointed administrator of
the delinquent real property or the occupant thereof who must be
of sufficient age and discretion.
vii. The local treasurer may, by ordinance duly approved advance
an amount sufficient to defray the costs of collection through
administrative and judicial remedies, including the expenses of
advertisement and sale. (Sec. 260, LGC)
viii. In the conduct of auction sale, the local treasurer may recommend
to the local chief executive (LCE) the creation of an auction
committee. The committee may be created for the purpose of
formulating the rules and regulations of the auction and may be
composed of the Local Treasurer, Legal Officer, Local Assessor,
and a representative of the Office of the LCE, of the LGU
undertaking the public sale or auction.
ix. The rules and regulations in the conduct of public auction on
delinquent real properties may include the qualifications of those
who are allowed to participate in the auction. The rules and
regulations set shall be disseminated before the conduct of sale.
Based on Article 1491 of the Civil Code of the Philippines (RA
No. 386) as amended, the following persons are disqualified to
purchase a property at public auction9.
1. The guardian, the property of the person or persons who
may be under his/her guardianship;

8 LTOM Form No. 24 - Notice of Sale

9 LTOM Form No. 28 - Rules and Regulations of Public Auction

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 REAL PROPERTY TAX

2. Agents, the property whose administration or sale may

have been entrusted to them, unless the consent of the
principal has been given;
3. Executors and administrators, the property of the estate
under administration;
4. Public officers and employees, the property of the State
or any of the subdivision thereof, or of any government
owned or controlled corporation (GOCC), or institution, the
administration of which has been entrusted to them; this
provision shall apply to judges and government experts
who, in any manner whatsoever, take part in the sale;
5. Justices, judges, prosecuting attorneys, clerks of superior
and inferior courts, and other officers and employees
connected with the administration of justice, the property
and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise
their respective functions; this prohibition includes the act
of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object
of any litigation in which they may take part by virtue of
their profession; and
6. Any others specially disqualified by law.

2. Auction Proper Activities

a. The sale shall be held either at the main entrance of the provincial,
city or municipal building, or on the property to be sold, or at any other
place as specified in the notice of sale. (Sec. 260, LGC)

NOTE

The public auction of land to satisfy delinquency in the payment of real

estate tax derogates or impinges on property rights and due process. Thus,
the steps prescribed by law are mandatory and must be strictly followed; If
not, the sale of the real property is invalid and does not make its purchaser
the new owner. Strict adherence to the statutes governing tax sales is
imperative not only for the protection of the taxpayers, but also to allay any
possible suspicion of collusion between the buyer and the public officials
called upon to enforce the laws. (GR No. 220440, 8 November 2017)

b. Registration of Bidders10 – Any qualified person interested to

participate in the public auction shall register with the local treasurer.
Bidders shall be assigned a number which shall be called or referred
to during the entire proceedings.

10 LTOM Form No. 25 - Public Auction Registration Form; LTOM Form No. 26 - List of Registered Bidders; LTOM
Form No. 27 - Undertaking and Waiver of Bidder

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c. The property shall be sold to the highest bidder. No bid lower than the
floor price shall be admitted. The floor price shall be equivalent to the
sum of delinquent tax, the interest due thereon and expenses of sale.
The highest bidder, within two (2) hours after award shall pay the bid
price in cash or in manager’s check.
d. Certificate of Sale (CS)11 – The local treasurer shall prepare and
deliver to the purchaser of the delinquent real property a CS containing
the name of the purchaser, a description of the property sold, the
amount of the delinquent tax, the interest due thereon, the expenses
of sale and a brief description of the auction proceedings. (Sec. 260,
LGC)
e. Declaration of Forfeiture12 – In case there is no bidder for the real
property advertised for sale, or if the highest bid is for an amount
insufficient to pay the real property tax and the related interest and
costs of sale, the local treasurer conducting the sale shall purchase
the property in behalf of the local government unit concerned to satisfy
the claim.
Within two (2) days thereafter, the local treasurer shall make a report
of his proceedings which shall be reflected upon the records of his/her
office.
It shall be duty of the Registrar of Deeds concerned, upon registration
with his/her office of any such declaration of forfeiture to transfer the
title of the forfeited property to the local government unit concerned.
Within one (1) year from the date of such forfeiture, the taxpayer or
any of his/her representative, may redeem the property by paying to
the local treasurer the full amount of the real property tax and the
related interest and the cost of sale.
(Sec. 263, LGC)
3. Post-Auction Sale Activities
a. Report of Sale13 – Within thirty (30) days after the sale, the local
treasurer or his/her deputy, make a report of the sale to the sanggunian
concerned, and which shall form part of his/her records.
b. The local treasurer shall remit to the owner of the real property or
person having legal interest therein the proceeds of the sale in excess
of the delinquent tax, the interest due thereon, and the expenses of
the sale.
c. Certificate of Redemption14 – Within one (1) year from the date of
sale, the owner of the delinquent real property or person having legal

11 LTOM Form No. 29 - Certificate of Sale

12 LTOM Form No. 30 - Declaration of Forfeiture of Delinquent Property
13 LTOM Form No. 31 - Report of Sale
14 LTOM Form No. 32 - Certificate of Redemption

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interest therein or his representative, shall have the right to redeem

the property upon payment to the local treasurer of the amount of
delinquent tax, including the interest thereon, and the expenses of
sale from the date of delinquency to the date of sale, plus interest of
not more than two percent (2%) per month on the purchase price from
the date of sale to the date of redemption.

ILLUSTRATION
It must be noted that within the 1-year redemption period, possession of the
property auctioned is retained by the owner or person having legal interest
therein and will continue to enjoy the income or fruits thereof. The reason is that,
redemption period affords the owner an extended chance to pay the delinquent
tax. Hence, ownership of the property is not vested upon the purchaser
immediately after the public auction. In the event the owner exercises such
right of redemption by paying the redemption price, that is, the amount of the
delinquent tax, the interest due thereon, and the expenses of sale, plus interest
of not more than 2% per month on the purchase or bid price, the amount of the
purchase or bid price should be readily available to be returned to the purchaser
upon surrender of the Certificate of Sale.
Therefore, in the meantime, the local treasurer should hold in trust the excess
amount until the expiration of the 1-year redemption period. If the owner or
person having legal interest fails to redeem the property, the excess amount may
then be remitted. Henceforth, ownership shall be vested upon the purchaser in
auction through the execution of the Final Deed of Sale.
(BLGF Letter to the ICO-City Treasurer of Pasig, 05 January 2013)

NOTE

The counting of one (1) year redemption period of property sold at public auction
for its tax delinquency should be counted from the date of annotation of the
Certificate of Sale in the proper Register of Deeds if such is provided in the local
government unit’s ordinance.
(GR No. 171033, 03 August 2010 - City Mayor, City Treasurer,
City Assessor All of Quezon City, and Alvin Emerson S. Yu, vs. Rizal
Commercial Banking Corporation)

The distinct feature of Section 263 is when, in the absence of the public impels
the Treasurer to purchase the property in behalf of the LGU. Reason would,
therefore, dictate that this purchase by the City is the very forfeiture mandated
by the law. The contemplated “forfeiture” in the provision points to the situation
where the local government ipso facto “forfeits” the property for want of a bidder.

Therefore, in cases covered by these pertinent provisions in the LGC, the

date of the “sale” or “forfeiture” is rightfully the point in time when the owner is
divested of certain attributes of ownership over the property albeit only until the
redemption of the property. This translates to no other event but to the date of
the public auction.

(GR No. 207791, 15 July 2015 - The City of Davao, Represented by the
City Treasurer of Davao City, vs The Intestate Estate of Amado S. Dalisay,
Represented by Special Administrator Atty. Nicasio B. Paderna)

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Such payment shall invalidate the Certificate of Sale issued to the

purchaser and the owner of the delinquent real property or person
having legal interest therein shall be entitled to a Certificate of
Redemption which shall be issued by the local treasurer or his/her
deputy.
The local treasurer or his/her deputy, upon receipt from the purchaser
of the Certificate of Sale, shall forthwith return to the latter the entire
amount paid by him/her plus interest of not more than two percent
(2%) per month. Thereafter, the property shall be free from the lien of
such delinquent tax, interest due thereon and expenses of sale.
(Sec. 261, LGC)
d. The local treasurer shall inform the assessor and the registrar of
deeds of the cancellation of the warrant of levy due to the exercise of
redemption by the property owner15.

e. Final Deed of Sale16 – In case the owner or person having legal interest
therein fails to redeem the delinquent property as provided herein, the
local treasurer shall execute a deed conveying to the purchaser said
property, free from lien of the delinquent tax, interest due thereon and
expenses of sale. The deed shall briefly state the proceeding upon
which the validity of the sale rests.
(Sec. 262, LGC)
f. Upon execution of the Final Deed of Sale (FDS) of the auctioned real
property in favor of the purchaser, the local treasurer shall require the
owner of the auctioned property to surrender possession of deliquent
real property and the corresponding owner’s duplicate copy of the
Transfer Certificate of Title (TCT) and the Tax Declaration (TD). These
will be attached to the FDS which shall be submitted to the Register
of Deeds (RoD).
g. The RoD having jurisdiction over the place where the property is
located shall consolidate the title in the name of the purchaser who
shall be entitled to a copy of a new TCT.
h. The purchaser as the new owner, shall be issued the corresponding
TD. It shall be the duty of the local assessor to issue a new TD in the
name of the purchaser as the new owner of the auctioned property.
The new owner shall be liable to pay the annual ad valorem tax and
other taxes that will thereafter become due thereon.
i. If the property is not redeemed, the ownership thereof shall be fully
vested on the local government unit concerned. (Sec. 263, LGC)

15 LTOM Form No. 33 - Cancellation of Warrant of Levy (Assessor and Registrar of Deeds)
16 LTOM Form No. 34 - Final Deed of Sale

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j. Resale of Real Estate Taken for Taxes, Fees, or Charges – The

sanggunian concerned may, by ordinance duly approved and upon
notice of not less than twenty (20) days, sell and dispose of the real
property acquired through purchase/forfeiture at public auction. The
proceeds of the sale shall accrue to the general fund of the local
government unit concerned. (Sec. 264, LGC)

NOTE

By virtue of the foregoing provisions of Secs. 263 and 264 of the LGC, the
City exercised its right of forfeiture over the delinquent property for want of
bidder. The owner of the delinquent property had one year from the date of
forfeiture to redeem the property by paying the full amount of the delinquent
tax, interest and expenses incurred related to the auction sale. However,
the delinquent owner failed to exercise his statutory right to redeem the
property. Thereafter, following the procedures, a Transfer Certificate of Title
was issued to the City as the new absolute owner in fee simple.

Therefore, this Bureau sees no injustice against the former if the forfeited
property is subsequently sold at the prevailing market price which appears
to be the most advantageous to the interest of Caloocan City as the owner.
Suffice it to say that, as owner of the property, the city has both the right and
duty to sell the same at a price or consideration most advantageous and
beneficial to its interest which is in line with the opinion of COA to base the
selling price of the property from the prevailing market value. (BLGF Letter
to the OIC City Assessor of Caloocan, 28 January 2013)

B. Collection of Real Property Tax Through the Courts

1. The delinquent RPT or any deficiency thereof after public sale or auction
may be collected by civil action in a court of competent jurisdiction which
shall be filed by the local treasurer within the period prescribed under Sec.
270 (Periods Within Which to Collect Real Property Taxes), Chapter 6, Title
Two, Book II of the LGC. The institution of the civil action may be done
simultaneously with the administrative remedy of collection. (Sec. 266, LGC)
2. The delinquent basic RPT or any other tax levied under Title 2, Book II of
the LGC, shall constitute indebtedness of the taxpayer to the LGU, hence,
collection of such indebtedness can be enforced through civil action in any
court of competent jurisdiction, observing the following:
a. The local treasurer shall furnish the provincial attorney or city or
municipal legal officer a certified statement of delinquency who,
within fifteen (15) days after receipt, shall file the civil action
in the name of the province, city or municipality in the proper
court of competent jurisdiction. The jurisdiction of the court is
determined by the amount sought to be recovered exclusive of
interests and costs. Thus, where the delinquent tax due does not

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 LTOM, 2ND EDITION

exceed Ten Thousand Pesos (Php10,000.00), the competent

court is the municipal or city trial court, and where the amount
due is in excess of Ten Thousand Pesos (Php10,000.00), the
proper court is the regional trial court;
b. Where cognizable in an inferior court, the action must be filed in
the municipality or city where the delinquent property is located.
Where the regional trial court has jurisdiction, the plaintiff LGU
shall file the complaint in the city or province where the property
is situated; and
c. In both cases, that is, where the claim is either cognizable by
an inferior court or by the regional trial court, the local treasurer
shall furnish the provincial attorney or the city or municipal legal
officer concerned the exact address of the defendant where he/
she may be served with summons.
(Art. 357, IRR implementing Sec. 266, LGC)

SECTION 151. COMPROMISE AGREEMENT IN THE PAYMENT

OF REAL PROPERTY TAX
The compromise agreement does not operate to defeat effective tax administration of
the LGU or serve to discourage diligent taxpayers but rather a mechanism by which
the property owners may avail of, in case the delinquent tax is beyond the capacity of
the taxpayer to pay the whole amount within the required payment period.

A. Compromise agreement in the payment of real property tax (RPT) may be allowed
at any time prior to the issuance of the warrant of levy. Payment of RPT thru
compromise agreement shall be in accordance with Sec. 255 of the LGC.
Real properties covered by a compromise agreement shall not be included in the
administration of judicial and administrative remedies.

B. Authority to Enter into a Compromise Agreement - The Local Chief Executive

(LCE), thru a sanggunian resolution of the Provincial/City or Municipality within
MMA, shall have the authority to enter into a compromise agreement.
The concerned sanggunian, upon evaluation of the recommendation of the Local
Treasurer, shall determine the terms and conditions of the compromise agreement
such as:
1. amount and period of payment
2. number of installments; and
3. penalty in case of non-compliance with the terms and conditions of the said
agreement.

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C. Guide to Compromise Agreement – A compromise agreement may be resorted

to by the delinquent taxpayer in the settlement of delinquent RPT obligations, as
may be justified as follows:
1. The delinquent RPT has accumulated and is beyond the capacity of the
taxpayer to pay the whole amount in one payment within the required
payment period.
2. The accumulated delinquent RPT shall be paid within the terms and
conditions of the compromise agreement and no penalties or interest shall
be waived.
3. The amount to be paid in the compromise agreement shall cover current
year taxes and prior year/s delinquencies.
D. The Local Treasurer concerned shall maintain a copy of all compromise
agreements entered into by the LGU.

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 CHAPTER BUSINESS AND OTHER LOCAL TAXES
2
SECTION 152. SCHEDULE ON BUSINESS TAX
A. Business Taxes on manufacturers, assemblers, repackers, processors, brewers,
distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or
manufacturers of any article of commerce of whatever kind or nature shall be
imposed in accordance with the following schedule:

With gross sales or receipts for the preceding calendar Amount of Tax
year in the amount of Per Annum
Less than ₱ 10,000.00 ₱ 165.00
₱ 10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 302.00
20,000.00 or more but less than 30,000.00 440.00
30,000.00 or more but less than 40,000.00 660.00
40,000.00 or more but less than 50,000.00 825.00
50,000.00 or more but less than 75,000.00 1,320.00
75,000.00 or more but less than 100,000.00 1,650.00
100,000.00 or more but less than 150,000.00 2,200.00
150,000.00 or more but less than 200,000.00 2,750.00
200,000.00 or more but less than 300,000.00 3,850.00
300,000.00 or more but less than 500,000.00 5,500.00
500,000.00 or more but less than 750,000.00 8,000.00
750,000.00 or more but less than 1,000,000.00 10,000.00
1,000,000.00 or more but less than 2,000,000.00 13,750.00
2,000,000.00 or more but less than 3,000,000.00 16, 500.00
3,000,000.00 or more but less than 4,000,000.00 19,800.00
4,000.000.00 or more but less than 5,000,000.00 23,100.00
5,000,000.00 or more but less than 6,500,000.00 24,375.00
at a rate not
exceeding thirty
seven and a half
6,500,000.00 or more
percent (37-1/2%)
of one percent
(1%)

Illustrative Case 1a. Compute the tax on business of a repacker if the total annual
gross sales for the preceding year 2018 amounted to ₱3,500,000.00 and to be
paid on the first working day of January 2019.

Referring to the schedule, the gross sales of ₱3,500,000.00 falls under the
bracket “3,000,000.00 or more but less than 4,000,000.00”, therefore, the
business tax for CY 2019 is ₱19,800.00.

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Illustrative Case 1b. Compute the tax on business of a repacker if the total annual
gross sales for the preceding years 2017 and 2018 amounted to ₱3,500,000.00
and ₱7,000,000.00, respectively, and paid on 31 July 2019.

Referring to the schedule, the gross sales of ₱3,500,000.00 falls under the
bracket “3,000,000.00 or more but less than 4,000,000.00”, therefore, the
business tax due, including surcharge and interests is computed as follows:

Tax Due for 2018:

Gross Sales for 2017 = ₱3,500,000.00

Tax based on the schedule ₱19,800.00
Surcharge ₱19,800.00 x 25% 4,950.00
₱24,750.00
Interest
January to December 2018 12 mos. x 2%=24%
January to July 2019 7 mos. x 2%=14%
38%

₱24,750.00 x 38% ₱ 9,405.00

Total Tax Due for 2018 ₱34,150.00

Referring to the schedule, the gross sales of ₱7,000,000.00 falls under the
bracket “6,500,000.00 or more,” therefore, the business tax due including
surcharge and interests, is computed as follows:

Tax Due for 2019:

Gross Sales for 2018 ₱7,000,000.00

Tax Rate (37.5% of 1%) 0.00375 ₱26,250.00

Surcharge ₱26,250.00 x 25% 6,562.50
Tax for 2019 ₱32,812.50
Plus Interest (Jan-Jul 2019) ₱32,812.50 x 14% 4,593.75

Total Tax Due for 2019 ₱37,406.25

Illustrative Case 2. If the total annual gross sales of an assembler for the
preceding year is ₱7,000,000 and payment is made in January 2019, compute
for the total tax due.
Gross Sales for 2018 ₱7,000,000.00
Tax Rate (37.5% of 1%) 0.00375
Tax Due ₱ 26,250.00

B. Business tax on wholesalers, distributors, or dealers in any article of commerce

of whatever kind or nature shall be imposed in accordance with the following
schedule:

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 LTOM, 2ND EDITION

With gross sales or receipts for the preceding calendar Amount of Tax
year in the amount of Per Annum
Less than ₱ 1,000.00 ₱ 18.00
₱ 1,000.00 or more but less than 2,000.00 33.00
2,000.00 or more but less than 3,000.00 50.00
3,000.00 or more but less than 4,000.00 72.00
4,000.00 or more but less than 5,000.00 100.00
5,000.00 or more but less than 6,000.00 121.00
6,000.00 or more but less than 7,000.00 143.00
7,000.00 or more but less than 8,000.00 165.00
8,000.00 or more but less than 10,000.00 187.00
10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 275.00
20,000.00 or more but less than 30,000.00 330.00
30,000.00 or more but less than 40,000.00 440.00
40,000.00 or more but less than 50,000.00 660.00
50,000.00 or more but less than 75,000.00 990.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,870.00
150,000.00 or more but less than 200,000.00 2,420.00
200,000.00 or more but less than 300,000.00 3,300.00
300,000.00 or more but less than 500,000.00 4,400.00
500,000.00 or more but less than 750,000.00 6,600.00
750,000.00 or more but less than 1,000,000.00 8,800.00
1,000,000.00 or more but less than 2,000,000.00 10,000.00
at a rate not
exceeding fifty
2,000,000.00 or more
percent (50%) of one
percent (1%)

Illustrative case: Compute the tax on business of a wholesaler if the annual

gross sales for the preceding year amounted to ₱5,000,000.00.
Gross Sales ₱5,000,000.00
Tax Rate (50% of 1%) 0.005
Tax Due ₱ 25,000.00

The city may exceed the maximum rates allowed for the province or
municipality by not more than 50%.

The business enumerated in paragraph (a) of Sec. 143 of the LGC shall no longer
be subject to the tax on wholesalers, distributors, or dealers herein provided for.
[Art. 232 (b), IRR implementing Sec. 143 (b), LGC]

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C. Business tax on exporters, and on manufacturers, millers, producers, wholesalers,

distributors, dealers, or retailers of essential commodities at a rate not exceeding
one-half (1/2) of the rates prescribed under subsections (a), (b) and (d) of Sec.
143 of the LGC.
The term "exporters" shall refer to those who are principally engaged in the
business of exporting goods and merchandise, as well as manufacturers and
producers whose goods or products are both sold domestically and abroad. The
amount of export sales shall be excluded from the total sales and shall be subject
to the rates not exceeding one half (1/2) of the rates prescribed under (a), (b) and
(d) of Art. 232 (c), LGC.

NOTE

A “dealer” in any article of commerce (except essential commodities), like

a wholesaler, is subject to the business tax under Sec. 143 (b) of the LGC;
however, if the same dealer is also engaged in the business of retail, he
shall be subject to the tax under Sec. 143 (d) of the LGC.

A wholesaler who is at the same time a retailer and who deals both in
“essential commodities” as listed in paragraph (c) of Sec. 143 of the LGC
and in “non-essential commodities”, shall be entitled to the concession
or reduced tax afforded by the same paragraph insofar as his business
transactions in such essential commodities are concerned. Necessarily, he
shall keep a separate account for this class of sales or receipts to be entitled
to the reduced tax rates. Otherwise he shall be liable as wholesaler at the
rates prescribed under Sec. 143 (d), both of the LGC.

(Philippine Law on Local Government Taxation Volume 1,

Business Taxes, Licenses, Fees and Charges, 2010 edition, Ursal)

Illustrative case: Compute the tax on business of a cement manufacturer

with total annual gross sales amounting to ₱5,000,000.00 for the preceding
year 2017, and payment is made in January 2018.
Gross Sales ₱5,000,000.00

Tax based on schedule A17 ₱ 24,375.00

Cement being an essential commodity, the tax rate shall not

exceed ½ of the rates prescribed under schedule A
(₱24,375.00/2) ₱ 12,187.50

The city may exceed the maximum rates allowed for the province or
municipality by not more than 50%.

17 Sec. 143 (a), LGC

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D. On retailers – The guidelines on the administration and collection of the

business tax on retailers are as follows:

With gross sales or receipts for the

Amount of Tax Per Annum
preceding calendar year in the amount of

₱400,000.00 or less 2%
more than ₱400,000.00 1%

1. The rate of two percent (2%) per annum shall be imposed on sales not
exceeding Four Hundred Thousand Pesos (₱400,000.00), while the rate of
one percent (1%) per annum shall be imposed on sales in excess of the first
Four Hundred Thousand Pesos (₱400,000.00).
2. Barangays, however, shall have the exclusive power to levy taxes, as
provided under Art. 240 (a) of the IRR of the LGC, on gross sales or receipts
of the preceding calendar year of Fifty Thousand Pesos (₱50,000.00) or
less, in the case of cities, and Thirty Thousand Pesos (₱30,000.00) or less,
in the case of municipalities.
(Art. 232 (d), IRR implementing Sec. 143, LGC)
Illustrative case: Compute the tax on business of a retailer with total annual
gross sales of ₱450,000.00 for the preceding year 2018, and payment is
made in January 2019.

Gross Sales = ₱450,000

Less: ₱400,000 x 2% ₱8,000.00
₱ 50,000 x 1% ₱ 500.00
Business tax due ₱8,500.00

E. On contractors and other independent contractors in accordance with the

following schedule:

With gross sales or receipts for the preceding calendar Amount of Tax
year in the amount of Per Annum
Less than ₱ 5,000.00 ₱ 27.50
5,000.00 or more but less than ₱ 10,000.00 61.60
10,000.00 or more but less than 15,000.00 104.50
15,000.00 or more but less than 20,000.00 165.00
20,000.00 or more but less than 30,000.00 275.00
30,000.00 or more but less than 40,000.00 385.00
40,000.00 or more but less than 50,000.00 550.00
50,000.00 or more but less than 75,000.00 880.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,980.00

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With gross sales or receipts for the preceding calendar Amount of Tax
year in the amount of Per Annum
150,000.00 or more but less than 200,000.00 2,640.00
200,000.00 or more but less than 250,000.00 3,630.00
250,000.00 or more but less than 300,000.00 4,620.00
300,000.00 or more but less than 400,000.00 6,160.00
400,000.00 or more but less than 500,000.00 8,250.00
500,000.00 or more but less than 750,000.00 9,250.00
750,000.00 or more but less than 1,000,000.00 10,250.00
1,000,000.00 or more but less than 2,000,000.00 11,500.00
2,000,000.00 or more at a rate not
exceeding fifty
percent (50%) of
one percent (1%)

Illustrative Case: Compute the total tax due of a contractor with total
receipts of ₱6,000,000 from the preceding year and payment is made in the
current year.

Total receipts = ₱6,000,000.00

Less: 2,000,000.00 ₱ 11,500.00
₱4,000,000.00
Tax Rate (50% of 1%) 0.005 20,000.00
Total tax due ₱ 31,500.00

a. Determination of taxable gross receipts of construction

contractors
i. The taxable gross receipts shall be the amounts received by the
principal contractor as the total contract price less the amount
paid to sub-contractors under sub-contract arrangements, if there
is any. The gross receipts of sub-contractors are in turn subject to
the same business tax as construction contractors.
ii. The taxable gross sales or receipts include the total amount of
money or its equivalent actually or constructively received during
the taxable quarter for the services performed or to be performed,
consisting of the following:
1. The contract price;
2. The compensation or service fee, including the amount
charged for materials installed or used in conjunction with
the services; and
3. Deposits or advance payments.
Taxable gross receipts exclude discounts that can be determined
at the time of sales, sales returns, and the excise taxes and VAT
paid by the contractor.

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b. Situs or Place of Payment of Business Tax on Construction

Contractors – For the purpose of collection of the business tax on
construction contractors, the following rules shall apply:
i. On Domestic Construction Projects – For projects bidded and
implemented within the territorial jurisdiction of the Philippines:
1. All gross receipts realized from domestic projects or
contracts undertaken by the branch office shall be
recorded in the said branch office and the tax thereon
shall be payable to the city or municipality where the said
branch is located; and
2. In cases where there is no branch office, the gross receipts
from domestic projects or contracts shall be recorded in
the Head/Principal Office and the same shall be allocated
as follows:
a. Thirty percent (30%) of the gross receipts shall be
taxable by the city or municipality where the principal
office is located; and
b. Seventy percent (70%) of the gross receipts shall be
taxable by the city or municipality where the project
office is located.

ii. On Overseas Construction Projects – For construction projects

undertaken by a Philippine-based construction contractor
outside the territorial boundaries of the Philippines, as well as
construction contracts involving fabrication works with attendant
installation works outside the Philippines, which are paid for in
accepted freely convertible foreign currency:

1. In the case of overseas construction projects, the

construction contractors shall declare separately the gross
receipts realized therefrom, which shall not be subject to
the business tax;
2. In the case of pre-fabricated works which are paid for
in accepted freely convertible foreign currency with
attendant installation works outside the Philippines, the
gross receipts realized therefrom shall be subject to not
more than one half (1/2) of the rate under paragraph (e)
(1) of this Section; and
3. In case there is transfer or relocation of the Head/Principal
Office or of any branch to another city or municipality,
the construction contractor shall give due notice of
such transfer or relocation to the cities or municipalities
concerned at least fifteen (15) days before such transfer
or relocation is effected.
(DOF LFC No. 3-95, 22 May 1995)
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F. On Banks and Other Financial Institutions

a. Banks and other financial institutions are subject to a business tax at a rate
not exceeding fifty percent (50%) of one percent (1%) on the gross receipts
of the preceding calendar year derived from:

i. interests, commissions and discounts from lending activities;

ii. income from financial leasing;
iii. dividends, rentals on property and profit from exchange or sale of
property; and
iv. insurance premium.
[Sec. 143 (f), LGC]
b. Guidelines Applicable to Banks
i. For the purpose of imposing the tax on gross receipts of banks, the
term "gross receipts" shall include only the following:
1. Interest from loans and discounts representing interest earned
and actually collected on loans and discounts such as:
a. Discounts earned and actually collected in advance on
bills discounted;
b. Interest earned and actually collected on demand loans;
c. Interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance; and
d. Interest earned and actually collected on mortgage
contracts receivables.
2. Interest earned and actually collected on inter-bank loans;
3. Income from rental of property shall include the following:
a. Earned portion of rental collected in advance from
lessees of safe deposit boxes; and
b. Rental earned and actually collected from lessees of
bank premises and equipment.
4. Income earned and actually collected from acquired assets;
5. Income from sale or exchange of assets and property;
6. Cash dividends earned and received on equity investments;
7. Commissions from lending activities; and
8. Income component of rentals from financial leasing.

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ii. The following income and receipts of banks shall be excluded from the
taxing authority of the LGUs:
1. Interest earned under the expanded foreign currency deposit
system;
2. Interest accumulated by lending institutions on mortgages
insured under RA No. 580, as amended, otherwise known as the
Home Financing Act; and
3. Receipts from filing fees, service and other administrative
charges.
iii. Situs or Place of Payment of Tax on Banks
1. All transactions filed with or negotiated in the branch shall be
recorded in said branch and the gross receipts derived from said
transaction shall be taxable by the city or municipality where
such branch is located. This rule shall be applied to:
a. Transactions negotiated with and approved by the branch
manager under his own authority;
b. Transactions filed and negotiated in the Branch but being
beyond the approving authority of the branch manager, are
forwarded to the Head Office for final approval; and
c. Transactions where the stated address in the loan
application of the borrower is the city or municipality where
the Bank has a branch, in which case the Head Office upon
approval of the loan shall credit the transaction to the Bank
Branch.
2. The gross receipts derived from transactions made by the Head
Office, except gross receipts recorded in the branches, shall
be taxable by the city or municipality where said Head Office is
located.
3. In case there is a transfer or relocation of the Head Office or of
any branch to another city or municipality, the bank shall give due
notice of such transfer or relocation to the chief executives of the
cities or municipalities concerned within fifteen (15) days after
such transfer or relocation is effected.
(DOF LFC No. 2-07, 26 February 2007 as reiterated
under Bangko Sentral ng Pilipinas (BSP) Circular Letter
No. CL - 2017 - 079, 27 December 2017; BLGF Memorandum
Circular No. 016-2018, 10 August 2018)

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c. Guidelines Applicable to Insurance Companies

i. Gross Receipts of Insurance Companies Subject to Tax – Gross
receipts of insurance companies shall include only the following:
1. Insurance premiums actually collected, except the following
tax exempt premiums which must be recorded and declared
separately:
a. Premiums collected on insurance policies issued before
the effectivity of the ordinance imposing the tax;
b. Two percent (2%) of all premiums for the sale of fire,
earthquake, and explosion hazard insurance pursuant
to the Fire Code of the Philippines (PD No. 1185, as
amended by RA 9514);
c. Premiums refunded within six (6) months after payment of
the account;
d. Reinsurance premiums by a company that has already
paid the tax;
e. Premiums collected or received by any branch of a
domestic corporation, firm, or association doing business
outside the Philippines on account of a life insurance of
the insured who is a non-resident;
f. Premiums collected or received on account of any
reinsurance, if the risk insured covers property located
outside the Philippines, or the insured, in case of personal
insurance, resides outside the foreign country where the
original insurance has been issued or perfected;
g. Portions of the premiums collected or received by
insurance companies pertaining to variable contracts; and
h. The excess of the amount necessary to insure the lives of
variable contracts.
However, the aforementioned tax-exempt premiums shall
be recorded and declared separately.
2. Interest earnings on loans and discounts actually collected;
3. Rentals actually collected from property owned by insurance
companies;
4. Income actually collected from acquired assets; and
5. Cash dividends received on equity investments.
(DOF LFC No. 2-93, 16 June 1993)

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ii. Income and Receipts of Insurance Companies Not Subject to Tax –

All other incomes and receipts of insurance companies not enumerated
in the preceding paragraph shall be excluded from the taxing authority
of the city or municipality concerned; Service fees received from fire,
earthquake, and explosion pre-insurance adjustment business directly
to agents, pursuant to the Fire Code of the Philippines. (PD No. 1185)
iii. Situs or Place of Payment of Tax on Insurance Companies – The
situs of tax on insurance companies shall be in accordance with the
following rules:
1. Insurance contracts/policies issued by the Head Office or
branch shall be recorded in the said office or branch as the case
may be and the premiums and/or gross receipts due on such
contracts/ policies shall be taxable by the city or municipality
where such Head Office or branch to which such premiums or
gross receipts were actually paid is located. This rule shall be
applied irrespective of whether the insurance contracts/policies
were solicited or negotiated by insurance agents, or brokers who
are not residents of the city or municipality where the branch is
located, or who are not affiliated with or assigned to such branch.
2. The offices of an insurance agent, or broker, shall not be
considered a branch and shall not be subject to the situs of
taxation rule.
3. All insurance premiums and/or gross receipts from transactions
not recorded in the branches or the insurance companies shall be
recorded in the Head Office and taxable by the city or municipality
where the said Head Office is located.
4. In case there is transfer or relocation of the Head Office or of any
branch to another city or municipality, the insurance company
shall give due notice to the LCEs of the cities or municipalities
concerned within fifteen (15) days after such transfer or relocation
is effected.
(DOF LFC No. 2-93, 16 June 1993)
d. Guidelines Applicable to Financing Companies
i. Financing companies shall refer to corporations or partnerships,
except those regulated by the BSP, the Insurance Commission, and
the Cooperative Development Authority (CDA), which are primarily
organized for the purpose of extending credit facilities to consumers
and to industrial, commercial or agricultural enterprises, either by
discounting or factoring commercial papers or accounts receivable,
or by buying and selling contracts, leases, chattel mortgages, or other
evidences of indebtedness, or by leasing of motor vehicles, heavy
equipment and industrial machinery, business and office machines
and equipment, appliances and other movable property.

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ii. For the purpose of imposing business tax on financing companies,

gross receipts shall include only the following:
1. Interest earned and actually collected on loans and discounts,
viz:
a. Discounts earned and actually collected in advance on
bills discounted;
b. Interest earned and actually collected on demand loans;
c. Interest earned and actually collected on time loans,
including the earned portions of interest collected in
advance; and
d. Interest earned and actually collected on mortgage
contract receivables.
2. Interest earned and actually collected on inter-bank loans
3. Rental of property – this represents the following rental income:
a. Earned portion of rental collected in advance from
lessees of safe deposit boxes; and
b. Rental earned and actually collected from lessees on
bank premises and equipment.
4. Income earned and actually collected from acquired assets
5. Income from sale or exchange of assets or property
6. Cash dividends earned and received on equity investments
7. Income component of rentals from financial leasing
iii. All other incomes and receipts of financing companies not enumerated
in the preceding paragraph shall be excluded from the taxing authority
of LGUs.
iv. Situs or Place of Payment of Tax on Financing Companies – The
situs of tax on financing companies shall be in accordance with the
following:
1. All transactions made by the branch shall be recorded in said
branch and the gross receipts derived from said transactions
shall be taxable by the city or municipality where such branch is
located.
2. The gross receipts derived from transactions made by the Head
Office, except gross receipts recorded in the branches, shall
be taxable by the city or municipality where said Head Office is
located.

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3. In case there is a transfer or relocation of the head office or any

branch to another city or municipality, the bank shall give due
notice of such transfer of relocation to the Chief Executives of
the cities or municipalities concerned within fifteen (15) days
after such transfer or relocation is effected.
(DOF LFC No. 3-93, 16 June 1993)

e. Guidelines Applicable to Credit Card Companies

NOTE
Credit card companies fall within the purview of banks and other financial
institutions contemplated under Sec. 143 (f) of the LGC, and therefore may
be subject to business taxes at the rate of 50% of 1% on the gross receipts
upon enactment of the appropriate ordinance by the LGU concerned. (BLGF
Letter to Picazo Buyco Tan Fider & Santos Law Offices, 15 March 1999)

SECTION 153. SAMPLE ILLUSTRATIONS OF OTHER LOCAL TAXES

IMPOSED BY PROVINCES, CITIES
AND MUNICIPALITY WITHIN METRO MANILA
A. Tax on Transfer of Real Property Ownership
Illustrative Case a.1 Compute the tax on transfer of real property ownership of a
property with a fair market value (FMV) of ₱1,000,000.00 and the total consideration
involved in the acquisition is ₱2,000,000.00:

If the property is located in the

If the property is located in the City:
Province:
2,000,000 x (50% of 1%) 2,000,000 x (75% of 1%)
2,000,000 x 0.005 = ₱10,000.00 2,000,000 x 0.0075 = ₱15,000.00
transfer tax payable to province transfer tax payable to the city
Note: The basis for computing the tax is the total consideration involved in the
acquisition since it is higher than the FMV of the property.

Illustrative Case a.2 Compute the tax on transfer of real property ownership of
a property with a fair market value (FMV) of ₱1,000,000.00 and with the following
specifications:

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Location: City
Type of Property: Land
Classification: Residential
Mode of Transfer: Inheritance
Decedent’s death: 2 December 2015
Payment of Transfer Tax: 31 March 2019
General Revision: every three years
FMV ₱1,000,000.00
Multiplied by (75 % x 1%) 0.0075 ₱ 7,500.00

Interest ₱7,500.00 x 72% 5,400.00
Tax for 2019 ₱ 12,900.00

Illustrative Case a.3 Compute the tax on transfer of real property ownership of a
property with a fair market value (FMV) of ₱1,000,000.00 and the total consideration
involved in the acquisition is ₱2,000,000.00, with the following specifications:

Location: Province
Type of Property: Land
Classification: Residential
Date of Notarized Deed of Sale: 1 January 2016
Payment of Transfer Tax: 31 March 2019
General Revision: every three years

The basis for computing the tax is the total consideration involved in the acquisition since
it is higher than the FMV.

Acquisition Cost ₱2,000,000.00

Multiplied by (50% x 1%) 0.005 ₱ 10,000.00

Interest ₱10,000.00 x 72% 7,200.00
Tax for 2019 ₱ 17,200.00

Illustrative Case a.4 Computation in Consideration of the 60 Day Period from

the Time of Death of the Decedent:
Compute the tax on transfer of real property ownership of a property with a fair
market value (FMV) of ₱1,000,000.00 and the total consideration involved in the
acquisition is ₱ 500,000.00, with the following specifications:

Location: City
Type of Property: Land
Classification: Residential
Mode of Transfer: Inheritance
Decedent’s death: 31 March 2019
Payment of Transfer Tax: 15 June 2019
General Revision: every three years

FMV ₱1,000,000.00
Multiplied by (75 % x 1%) 0.0075 ₱ 7,500.00

Interest* ₱7,500.00 x 2% 150.00
Tax for 2019 ₱ 7,650.00

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Computation of Interest*:

In consideration of the 60 day period from the date of the decedent’s death**:

Decedent’s death: 31 March 2019

Thus:

April 1-30, 2019 = 30 days

May 1-30, 2019 = 30 days
TOTAL 60 days
Therefore:

Since the 60 day period covers the months of April to May, and the tax was
paid on 15 June 2019, there shall be imposed a 2% interest for delinquency in
the month of June,.

NOTE:-**
“Sec. 135. Tax on Transfer of Real Property Ownership.
a. xxx
b. xxx

It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein
imposed within sixty (60) days from the date of the execution of the deed or from the date of the
decedent’s death.”

B. Tax on Business of Printing and Publication

Compute the tax if the gross annual receipts for the preceding calendar year
amounts to ₱500,000.00:

₱500,000 x (50% of 1%)

₱500,000 x .005 = ₱2,500 tax on business of printing and publication

In case of a newly started business, the tax shall not exceed 1/20of1% of the capital
investment. In the succeeding calendar year, regardless of when the business
started to operate, the tax shall be based on the gross receipts for the preceding
calendar year, or any fraction thereof, as provided herein. (Sec. 136, LGC)

However, the city may exceed the maximum rate allowed for the province
or municipality by not more than 50% except the rates of professional and
amusement taxes. (Sec. 151, LGC)

C. Franchise Tax
Compute the tax of a business with gross annual receipts for the preceding
calendar year amounting to 1,000,000.00:

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Gross receipts - ₱1,000,000 x (50% of 1%)

₱1,000,000.00 x 0.005 = ₱5,000.00
In case of a newly started business, the tax shall not exceed 1/20of1% of the capital
investment. In the succeeding calendar year, regardless of when the business
started to operate, the tax shall be based on the gross receipts for the preceding
calendar year, or any fraction thereof, as provided herein. (Sec. 137, LGC)

However, the city may exceed the maximum rate allowed for the province
or municipality by not more than 50% except the rates of professional and
amusement taxes. (Sec. 151, LGC)

D. Tax on Sand, Gravel and other Quarry Resources

Compute the tax of 200 cubic meters of sand extracted from the province and the
fair market value per cubic meter of sand is ₱500/cubic meter. Assume that the
ordinance imposes a tax rate of 10% on the FMV.

Fair market value per cubic meter of sand = ₱500/cubic meter x 10%=50/cubic
meter

200 cubic meters x ₱50/cubic meter= ₱10,000 total tax due on sand and
gravel.

E. Amusement Tax
Compute the tax assuming gross receipts from admission amounted to
₱100,000.00.

Gross receipts - ₱100,000.00 x 10% = ₱10,000 amusement tax due the province
or city

Note: the rate of amusement tax imposed by the province or city was decreased
from 30% to 10% per RA No. 9640.

F. Professional Tax
The tax shall be uniform for provinces and cities at an amount not exceeding
₱300.00.
However, LGUs shall have the authority to adjust the tax rates not oftener that
once every five (5) years but in no case shall such adjustment exceed ten percent
(10%) of the rates fixed under the LGC (Sec. 191, LGC)

G. Annual Fixed Tax Imposed for Every Delivery Truck or Van

The tax shall not exceed ₱500.00 for the province or municipality. The city may levy
the tax exceeding the maximum amount imposed by the province or municipality
by not more than 50%.

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H. Community Tax
Illustrative Case 1:
For Individual:
An employee receiving a monthly salary of ₱52,000 shall be computed a
community tax as follows:

Annual Tax ₱ 5.00

Additional tax:
₱1.00 for every ₱1,000
₱52,000 x 12 = 624,000/annum
624,000/1,000
₱624.00
₱624.00 x ₱1.00
Community tax due ₱629.00

Illustrative Case 2:
On Corporation:
Compute the community tax due on XYZ Corporation owning a real property with
a total assessed value of ₱5,000,000. The business registered a gross sales of
₱2,000,000 during the preceding year. The community tax is paid in February of
the current year.

Annual Tax ₱ 500.00

Additional tax:
From business operation:
₱2.00 for every ₱5,000
₱2,000,000/₱5,000
₱400 x ₱2.00 ₱ 800.00
Community tax due ₱ 1,300.00

SECTION 154. SAMPLE ILLUSTRATIONS OF SITUS OF TAX

ON BUSINESSES
A. MANUFACTURER
Manufacturer 1

Offices/Facilities Location
Principal/Head Office LGU1
Factory 1 LGU1
Factory 2 LGU2
Sales/Branch Office LGU2

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Facts:
a. Company A operates two (2) bakeries producing and selling baked products
b. Factory 1 caters to Luzon clienteles
c. Factory 2 caters to Visayas clienteles
d. Said factories have separate invoicing, purchase and official receipting
systems
e. Sales of goods sourced from Factory 1 are recorded in the Principal/Head
Office
f. Sales of goods sourced from Factory 2 are recorded in the Branch/Sales
Office
g. All sales are consolidated in the Principal/Head Office

Situs of Tax
a. All sales made in the locality where there is no sales office shall be recorded
in the Principal/Head Office along with the sales made by the principal/head
office, and shall be 100% taxable by LGU1 since the Principal/Head Office
and Factory 1, wherein it caters Luzon-Based customers are both located
in LGU1.
b. All sales made and recorded in the sales/branch office shall be 100% taxable
in LGU2 where the said sales office/branch office is located.
c. LGU1 and LGU2 may collect Mayor’s Permit fee and other regulatory fees
and charges as may be imposed under their respective duly enacted tax
ordinances.
NOTE: The consolidation of all sales of the Company are only for purposes of
income tax and VAT, as required by the Bureau of Internal Revenue (BIR)
Manufacturer 2
Offices/Facilities Location
Principal/Head Office LGU1
Sales/Branch Office LGU2
Factory LGU3
Plantation LGU4

Facts:
a. Company A is a manufacturer with principal office located in LGU1 where
all sales are effected and recorded.
b. Sales are also made in locality where there is no branch/sales office
c. Sales are made in a locality where there is a sales/branch office
d. Plantation is located in a locality other than that where the factory is located

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Situs of Tax
a. 30% of all sales made in the locality where there is no sales office shall
be recorded in the principal/head office along with the sales made by the
principal/head office, shall be taxable by LGU1 where the principal/head
office is located.
b. 70% of sales allocation shall be divided as follows:
i. 60% to LGU3 where the factory is located
ii. 40% to LGU4 where the plantation is located
iii. All sales made in the sales/branch office shall be recorded thereat and
100% taxable by LGU2 where the sales/branch office is located
iv. LGU1, LGU2, LGU3 and LGU4 may collect Mayor’s Permit fee and
other regulatory fees and charges as may be imposed under their
respective duly enacted tax ordinances
Manufacturer 3

Offices/Facilities Location
Principal/Head Office LGU1
Sales/Branch Office LGU2
Factory 1 LGU3
Factory 2 LGU4

Fact:
a. In cases where there are two or more factories

Situs of Tax
a. 30% of all sales made in the locality where there is no sales office shall
be recorded in the principal/head office along with the sales made by the
principal/head office, shall be taxable by LGU1 where the principal/head
office is located.
b. 70% of sales allocation shall be prorated among the localities where such
factories are located in proportion to their respective volumes of production
during the period for which the tax is due.
NOTE: This shall likewise apply to plants, plantations or project offices. In
the case of project offices of service and other independent contractors,
the term production shall refer to the cost of projects actually undertaken
during the tax period.

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B. ROUTE TRUCKS

Office/Facilities Location
Principal/Head Office LGU1
Warehouse 1 LGU1
Warehouse 2 LGU2
Factory 1 LGU3
Factory 2 LGU4

Facts:
a. Company A is engaged in the business of manufacturing and marketing
personal and household care products.
b. Has a central warehouse in LGU1 where finished product are stored and
transferred to another warehouse in LGU2
c. Sales orders are booked by salesmen with various customers within and out
of LGU2
d. Sales orders are submitted to warehouse 2 for processing and prepares the
sales invoices on the basis of which goods are withdrawn from warehouse 2
Situs of Tax
a. Products taken from warehouse 2 delivered to customers outside LGU2
shall be recorded in warehouse 2 and the tax thereon paid in LGU2 where
warehouse 2 is located.
b. Deliveries or sales made of products taken from warehouse 1 to places
where it does not have any branch/sales office, or another warehouse, shall
be recorded in the principal/head office and the taxes due thereon shall be
paid to LGU 1.

C. PROCESSOR

Office/Facilities Location
Principal/Head Office LGU1
Project Office/Mining Area LGU2

Facts:
a. Mining company whose operations include the processing of extracted
minerals to finished products.

b. Sales/transactions are recorded in the principal/head office located in LGU1.

c. Project office/mining area is located in LGU2

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Situs of Tax
a. Thirty percent (30%) of all sales/transactions recorded in the principal office
shall be taxable by LGU1 where the principal office is located; and
b. Seventy percent (70%) of all sales/transactions recorded in the principal
office shall be taxable by LGU2 where the project office/mining area is
located.
NOTE: In the case of project offices/mining areas that are geographically located in two
(2) or more localities, the allocation of the business tax imposed by LGUs concerned shall
be decided by the “Committee” which will be composed of affected LGUs where there are
mining operations subject to the allocation provided above when there are two or more
project offices located in different localities.

D. DISTRIBUTOR
Office/Facilities Location
Principal/Head Office LGU1
Sales Service Centers Nationwide
Warehouse LGU1

Facts:
a. Company A is engaged in the distribution of pharmaceutical and consumer
products
b. Opened sales service centers where delivery of stocks takes place

c. Sales service centers are mere liaison offices where orders for goods are
submitted
d. Sales service centers receives an order and relays information to the
principal/head office
e. Principal/head office checks the availability of the items subject of the order.
If stocks are available, the sales invoice is generated by the principal/head
office, and the sales invoice together with the goods are dispatched directly
from the central warehouse to the customers
Situs of Tax
a. All sales made and recorded in principal/head office shall be 100% taxable
by LGU1 where the principal/head office is located
b. Sales service centers which are mere liaison offices shall not share in the
business tax
c. Warehouse as a mere storage area may only be subject to Mayor’s Permit
fee and other regulatory fees and charges
d. LGU1 and LGUs where sales service centers are located may collect Mayor’s
Permit fee and other regulatory fees and charges, as may be imposed under
their respective duly enacted tax ordinances
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E. POWER PRODUCER

Office/Facilities Location
Principal/Head Office LGU1
LGU1
Plant
LGU2
Administrative Office LGU3

Facts:
a. Company A is engaged in power generation
b. Sales of electricity generated from the power plant and billing are recorded
and invoiced in the principal office
c. Unified plant physically located in LGU 1 and LGU2
d. Leases office space in LGU3 which serves as an administrative office
Situs of Tax
a. 30% of all sales recorded in the principal/head office shall be taxable by
LGU1 where the principal/head office is located.
b. 70% of all sales recorded in the principal/head office shall be taxed equally
between LGU1 and LGU4.
c. LGU3 shall not share in the local business tax paid to LGU1 LGU2
d. LGU1, LGU2, and LGU3 may collect Mayor’s Permit fee and other regulatory
fees and charges as may be imposed under their respective duly enacted
tax ordinances.

F. SERVICE CONTRACTOR

Office/Facilities Location
Principal/Head Office LGU1
Fabrication/Manufacturing Site LGU2

Facts:
a. Company A is engaged in the business of supply and installation of power
and distribution of industrial machineries
b. Upon purchase order of client, company orders imported and local parts
c. There are parts of products that would entail an assembly/fabrication/
modification process
d. The whole assembly is then installed on-site

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Situs of Tax
a. Company A shall pay its local business tax in full as a service contractor to
LGU1.
b. LGU2 shall not share in the local business tax paid to LGU1. Maintaining
a fabrication/manufacturing site in LGU2 does not make the company a
manufacturer. It is merely a part of, or incidental to, and is necessary to its
main business of supply and installation of industrial machinery. It must be
considered a single transaction, which cannot be divided into its components
or integral parts and treated separately for purposes of taxation, thus, it may
not be further taxed.
c. Both LGUs may impose Mayor’s permit and other regulatory fees and
charges, as may be provided under their duly enacted local ordinances.

G. REAL ESTATE LESSOR

Office/Facilities Location
Principal/Head Office LGU1
Properties for lease Various LGUs

Facts:
a. Company A is a lessor of real properties located in various places within the
jurisdiction of different LGUs
b. Lease agreements between the lessor and lessee are administered in the
principal/head office
c. Principal/head office issues corresponding invoices. Rentals collected from
lessors are recorded in the principal/head office

Situs of Tax
a. Taxes due shall accrue and shall be paid 100% to LGU1 where the principal/
head office is located
b. LGUs where real properties are subject of lease agreements shall not share
in the local business tax
c. LGU1 and various LGUs may collect Mayor’s Permit fee and other regulatory
fees and charges as may be imposed under their respective duly enacted
tax ordinances.

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H. TOLLWAYS OPERATORS AND CONCESSIONAIRES (TOCs)

Office/Facilities Location
Principal/Head Office LGU1
LGU1
LGU2
Toll Barrier/Plaza
LGU3
LGU4

Facts:
a. Company A was granted the concession to finance, design, rehabilitate,
expand, operate and maintain the Manila North Expressway and charge
fees for the users for a concession.
b. Toll Barriers and/or Toll Plazas are strategically situated along the Tollways
System and housing the Toll Booths manned by collecting personnel

Situs of Tax
a. All receipts collected by the Tollbooths in a Toll Barrier/Plaza shall be recorded
in said Toll Barrier/Plaza and the tax due thereon shall be payable to LGU 1,
LGU2, LGU 3 and LGU4 where the said Tollbooths or Toll Barriers/Plazas
are located.
b. LGU1 where the principal/head office is located shall not share in the LBT
due to LGU 2, LGU3 and LGU4, except on the LBT due attributed to the
collections made by the Toll Barrier situated within the territorial jurisdiction
of LGU 1.
c. LGUs traversed by the tollways system where the TOC does not maintain
any Tollbooth or Toll Barrier/Plaza shall not be entitled to the collection of
the LBT.
d. All receipts from Electronic Toll Collection System (ETC) such as “EC
Tag”, “Easy Trip Tag”, and “Badge/Magnetic Card”, or any other modes of
electronic collection, shall be recorded in the Toll Barrier/Plaza where the
e-Card or e-Pass is used and the charges therefrom shall be recorded in
said Toll Barrier/Plaza and the tax due thereon shall be payable to the LGU
where the said Toll Barrier/Plaza is located.
LGU1, LGU2, LGU3 and LGU4 may impose Mayor’s permit and other
regulatory fees and charges, as may be provided under their duly enacted
local ordinances.

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SECTION 155. MAYOR’S PERMIT TO OPERATE BUSINESS

The following procedures shall be observed in securing Mayor’s Permit for business:
A. Application for Mayor’s Permit – An application to operate business shall be
filed with the Office of the City/Municipal Mayor.
B. Documentation Requirements – The following documents may be required, if
applicable:
1. For a newly started business
a. Proof of business registration, incorporation, or legal personality (i.e.
Department of Trade and Industry (DTI) /Securities and Exchange
Commission (SEC) / Cooperative Development Authority (CDA)
Registration);
b. Basis for computing taxes, fees and charges (e.g. business
capitalization in the case of franchise/printing and publication as basis
for the computation of local business tax);
c. Occupancy Permit, if required by national laws (e.g. Building Code)
and local laws;
d. Contract of Lease (if lessee);
e. Barangay clearance (for businesses which are not required occupancy
permits); and
f. Locational clearance.
2. For renewal of existing business permit
a. Basis for computing taxes, fees, and charges (e.g. Income Tax
Returns); and
b. Barangay Clearance (original copy)
(JMC Memorandum Circular No. 01, s. 2016, 30 August 2016)
3. Streamlined Procedures for the Issuance of Local Business Licenses-
Clearances, Permits, Certifications or Authorizations
The LGUs are mandated to implement the following revised guidelines in
the issuance of business licenses, clearances, permits, certifications or
authorizations:
a. A single or unified business application form shall be used in processing
new applications for business permits and business renewals which
consolidates all the information of the applicant or requesting party by
various local government departments, such as, but not limited to, the
local taxes and clearances, building clearance, sanitary permit, zoning
clearance, and other specific LGU requirements, as the case may be
including the fire clearance from the Bureau of Fire Protection (BFP).

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The unified form shall be made available online using technology-

neutral platforms such as, but not limited to the central business
portal or the city/municipality’s website and various channels for
dissemination. Hard copies of the unified forms shall likewise be made
available at all times in designated areas of the concerned office and/
or agency.
b. A one-stop business facilitation service hereinafter referred to as the
Business One Stop Shop (BOSS) for the city/municipality’s business
permitting and licensing system to receive and process manual and/
or electronic submission of application for license-clearance, permit,
certification or authorization shall be established within the cities/
municipalities’ Negosyo Center as provided for under Republic Act
No. 10644, otherwise known as the “’Go Negosyo Act”. There shall
be a queuing mechanism in the BOSS to better manage the flow of
applications among the LGU departments receiving and processing
applications. LGUs shall implement co-location of the offices of the
treasury, business permits and licensing office, zoning office, including
the Bureau of Fire Protection (BFP), and other relevant city/municipality
offices/ departments, among others, engaged in starting a business,
dealing with construction permits.
c. Cities/Municipalities are mandated to automate their business
permitting an electronic BOSS within a period of three (3) years upon
the effectivity of this Act for a more efficient business registration
processes. Cities/Municipalities with electronic BOSS shall develop
electronic versions of licenses, clearances, permits, certifications or
authorizations with the same level of authority, which may be printed
by businesses in the convenience of their offices. The Department
of Information and Communication Technology (DICT) shall make
available to LGUs the software for the computerization of the
business permit and licensing system. The DICT, Department of
Trade and Industry (DTI), and Department of the Interior and Local
Government (DILG), shall provide technical assistance in the planning
and implementation of a computerized or software-enabled business
permitting and licensing system.
d. To lessen the transaction requirements, other local clearances such
as, but not limited to, sanitary permits, environmental and agricultural
clearances shall be issued together with the business permit.
e. Business permits shall be valid for a period of one (1) year. The city/
municipality may have the option to renew business permits within the
first month of the year or on the anniversary date of the issuance of
the business permit.

f. Barangay clearances and permits related to doing business shall be

applied, issued, and collected at the city/municipality in accordance

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with the prescribed processing time of this Act: Provided, that the
share in the collections shall he remitted to the respective barangays.
(Sec. 11, RA No. 11302 or An Act Promoting Ease Of Doing Business
and Efficient Delivery of Government Services, Amending for the
Purpose Republic Act No. 9485, Otherwise Known as the Anti-Red Tape
Act of 2007, and for Other Purposes, approved 28 May 2018)

SECTION 156. EXAMINATION OF BOOKS OF ACCOUNTS

AND PERTINENT RECORDS OF BUSINESSMEN
A. The following shall govern the examination of books of accounts and pertinent
records of businessmen by the Local Treasurer:
1. Only the Local Treasurer, or his/her duly authorized representative, of the
LGU imposing the tax, fee or charge, may examine the books of accounts
and pertinent records of business in order to ascertain, assess and collect
the correct amount of tax, fee or charge. [Art. 259(a), IRR, Implementing
Sec. 171, LGC]. Consequently, no personnel from the Office of the LCE and
other departments within the LGU may inspect records of businessmen;
2. The examination of the books of accounts and pertinent records of business
is an inherent function of the Local Treasurers and may be performed or
enforced without need of an executive order from the LCE or an implementing
ordinance of the sanggunian. (BLGF 1st Indorsement to the City Treasurer
of Santiago City, 13 May 1996)
B. Authority to Conduct Examination
1. The provincial, city and municipal, or barangay treasurer may, by himself/
herself or through any of his/her deputies duly authorized in writing, conduct
the examination of the books, accounts, and other pertinent records of any
person, partnership, corporation, or association subject to local taxes, fees
and charges [Art. 256(b), IRR, Implementing Sec. 171, LGC] in order to
ascertain, assess, and collect the correct amount of the tax, fee, or charge.
2. The LGC has not specified the rank of the officials who may be deputized
to examine books of accounts of business establishments. It is, however,
proposed that only personnel occupying plantilla of permanent positions
in the Local Treasury Office shall be deputized in writing by the treasurer
concerned to examine the books of accounts of business establishments in
their respective jurisdiction.
C. Written Authority to Conduct Examination – In case the examination is made
by a duly authorized deputy of the Local Treasurer, the written authority of the
deputy concerned shall specifically state the name, address, and business of
the taxpayer whose books, accounts and pertinent records are to be examined,
the date and place of such examination, and the procedure to be followed in
conducting the same. [Art. 259(d), IRR Implementing Sec. 171, LGC]

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D. Time, Frequency and Certification – The examination shall be made during

regular business hours not oftener than once a year for every tax period, which
shall be the year immediately preceding the examination, and shall be certified to
by the examining official. Such certification shall be made of record in the books
of accounts of the taxpayer examined. [Art. 259 (C), IRR Implementing Sec. 171,
LGC]

E. Access to the Bureau of Internal Revenue (BIR) Records – The records

of the Revenue District Office of the BIR shall be made available to the Local
Treasurer, his/her deputy or duly authorized representative. [Art. 259(e), IRR
Implementing Sec. 171, LGC; EO 646 as implemented under DOF DO No. 9-08,
26 March 2008; and MOU between DILG, DOF, BIR and different leagues of
LGUs including “Liga ng mga Barangay sa Pilipinas”]

SECTION 157. GUIDELINES IN THE CONDUCT OF EXAMINATION

OF BOOK OF ACCOUNTS
A. Administrative Preparation by the Local Treasurer/Head of the Local Treasury
Office – Prior to the conduct of any examination of the books of accounts of a
business establishment, the Local Treasurer or Head of the Local Treasury Office
concerned shall undertake the following steps:
1. From the list of business taxpayers, the Local Treasurer shall select/ identify
the business entities that shall be verified and examined based on, but not
limited to the following:
a. Complexity of the business;
b. Materiality and volume of prior years’ gross sales;
c. Number of sales/distribution outlets;
d. Delinquency in payment of business taxes; and
e. Other relevant factors.
2. The Local Treasurer shall create the examination team to be composed of
staff from the Local Treasury Office. The team shall be headed preferably
by a Certified Public Accountant (CPA) or a degree holder of Bachelor of
Science in Accountancy.
a. Ideally, a pair of deputized examiners shall conduct the examination of
the accounts of business establishments. However, in order to cover
more establishments, the examination may be done by a lone deputy.
b. No deputized examiner shall be assigned to the same business
establishment he/she had examined the previous year.
3. The local treasurer shall prepare and sign the Letter of Authority (LOA) and
shall serve as the authority of the examiner/deputies to conduct examination

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of the taxpayer’s books of accounts and other pertinent records. The taxpayer
or his/her authorized representative shall acknowledge immediately upon
receipt hereof the LOA served by the deputies18.
B. Responsibilities of the Examination Team
1. The examination team shall prepare the schedule of activity to be performed
during the conduct of the examination of books of accounts, detailing the
objectives and procedures, based on the Guidelines issued by the local
treasurer concerned.
2. The designated team leader shall exercise close supervision over the
members of the team in the conduct of the examination and shall ensure
that they conduct themselves at all times with proper decorum.
3. Deputized examiners shall wear their office uniform/appropriate attire in
the conduct of examination. They shall properly identify themselves to the
owner/manager of the business establishment by presenting their office
identification card.
4. In case the books of accounts and other records are not available on the first
visit, another appointment with the business owner/ representative should
be made not later than three (3) days after serving the LOA.
5. Deputized examiners shall avoid making any tick marks or writings on the
same, except for the certification that said books of accounts have been
examined, date examined, and the signature of the Deputized Examiner
after the last entry.
6. Where the examination of the books of accounts and other records could not
be accomplished in one (1) day, the deputized examiner shall indicate on the
Tax Data and Assessment Form, the date and time when the examination
started and when terminated.
7. If at the time of the examination of a business entity, the owner or
representative cannot be contacted or could not produce the pertinent
records and books of accounts needed for the examination, this fact must
be noted by the examination team in the Tax Data and Assessment Form.
In case similar circumstances occur during the second and third visits,
the same facts should be noted in the Tax Data and Assessment Form,
indicating the time and date of each visit. The notation shall also be made in
the original copy of the LOA19.
8. The deputized examiners shall perform the following activities:
a. Review pertinent records of the business establishment to be examined
such as Articles of Incorporation and By-Laws, SEC/DTI Registration,
minutes of board meetings, etc.;

18 LTOM Form No. 3 - Letter of Authority, LTOM Form No. 4 - List of Documents to be Examined
19 LTOM Form No. 11 - Non-Presentation off Documents; LTOM Form No. 12 - Final Notice of Non-Presentation
of Documents

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b. Review of the working papers, if any, of the business establishment if

previously examined;
c. Submission of the LOA to the owner/president of the business
establishment; and
d. Acceptance of the following books of accounts and documents for
verification/examination:
i. Mayor’s Permit for current year;
ii. Business License Official Receipts for current year;
iii. Books of Accounts such as Sales Journals/Registers, Purchase
Journals/ Registers, Cash Receipts/Disbursement Journals/
Registers, General Ledgers, Subsidiary Ledgers;
iv. Audited Financial Statements (Income Statement, Balance Sheet
and Cash Flow Statement);
v. Community Tax Certificate;
vi. Official Receipts, Cash/Charge/Collection; Receipts/Invoices,
Order Slips, Delivery Receipts, Debit/Credit Memos, Sales
Returns;
vii. Purchase Receipts/Invoices;
viii. Articles of Incorporation and/or amendments, if any;
ix. Monthly non-Value Added Tax (VAT) returns;
x. Report on quarterly VAT relief (submitted to BIR);
xi. Monthly VAT returns; and
xii. Others, such as beginning and ending merchandise inventory
reports, stock cards, and such other reports relevant to the
business taxpayer’s operations.

C. Detailed Examination Activities

1. For Validation of Sales Accounts
a. Compare/Validate the amount of gross sales/receipts account on the
Income Statement with the sales account in the General Ledger;
b. Check posting to the General Ledger from Sales Journals/Cash
Receipts Journals and other books where sales or service income are
reflected;
c. Confirm the income/revenue from the customer’s Records of Sales/
Receipts (at random); and
d. Compute the correct gross receipts/sales based on the sales records
examined.
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2. For Validation of Purchase Accounts

a. Verify the amount of purchases reflected in the Income Statement
from the General Ledger;
b. Check posting to the General Ledger from Purchases/Cash Payments
Journals; and
c. Verify entries in Purchases/Cash Receipts Journals with purchase
documents (at random).
3. For Validation of Inventory
a. Check beginning and ending inventory on Financial Statement with
General Ledger balance;
b. Verify computation of the ending balance of the Inventory Account by
comparing it with the last physical inventory count conducted;
c. If warranted, inspect at random material items in the inventory and
check against the physical inventory count; and
d. Observe the volume of customers, sales activities and deliveries of the
business entity to have a sense of daily sales volume.
4. Other Examination Activities
a. Maintain files of the necessary examination working papers;
b. Secure a copy of the Schedule of Account Receivables/Payables for
succeeding examination of the books of accounts of the business
entity; and
c. Verify the amount shown on the Schedule of Account Receivables/
Payables from the individual Subsidiary Ledgers.

D. Preparation of Working Papers and Tax Data and Assessment Form

1. Tax Data Working Papers or Tax Data Sheet20 – This working paper shows
the comparison between the gross receipts/sales declared per business
permit application and the gross receipts/sales as appearing in the sales
documents examined. The amount of the understatement or overstatement
in gross receipts/sales is likewise presented in the working papers.
2. Tax Data and Assessment Form21 – This shall be accomplished in
triplicate and submitted by the deputies to their immediate supervisor for
every examination and inspection conducted. It contains all the pertinent
information on the business concerned and the detailed findings of the
deputies. This form shows the detailed computation of the additional
assessment for business tax based on the computed understatement of

20 LTOM Form No. 5 - Tax Data Sheet

21 LTOM Form No. 6 Tax Data Sheet and Assessment Form

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 BUSINESS AND OTHER LOCAL TAXES

sales/receipts declared in the business permit application, the amount of

surcharges and penalties, the interest on the deficiency tax assessed, as
well as the signatures of the examination team and the local treasurer. The
Tax Data and Assessment Form shall be attached to the LOA and shall
be submitted to their immediate supervisor for review before submission
to the local treasurer for approval. The original copy of the Tax Data and
Assessment Form shall be given to the business taxpayer concerned.
3. A letter of assessment/assessment notice (1st Notice) shall be issued to
the taxpayer showing the amount of tax deficiency inclusive of penalties,
surcharges and interest resulting from the conduct of examination. A second
assessment notice (2nd Notice) may be sent to the taxpayer in case he/she
fails to respond to the first notice. A third assessment notice [a maximum of
three (3) notices] may be sent before a final demand for payment and possible
foreclosure proceedings may be issued to the taxpayer. In accordance with
Sec. 195 of the LGC, the taxpayer, within sixty (60) days from receipt of
the Letter of Assessment, may file a written protest with the local treasurer
contesting the assessment; otherwise the assessment shall become final
and executory 22.
4. A letter of confirmation/certificate of confirmation/certificate of examination
shall be issued to signify the completion of the examination conducted. The
original copy of the Letter of Confirmation/Certification of Examination shall
be issued to the taxpayer concerned and the duplicate copy shall be attached
to the Tax Data and Assessment Form for file at the Local Treasury Office23.
5. Submission to the LCE by the local treasurer of the list of final demand
letters sent to business taxpayers for possible foreclosure proceedings24

SECTION 158. RETIREMENT OF BUSINESS

A. A business subject to tax shall, upon termination thereof, submit a sworn statement
of its gross sales or receipts for the current year. If the tax paid during the year
be less than the tax due on said gross sales or receipts of the current year, the
difference shall be paid before the business is considered officially retired. (Sec.
145, LGC)
B. Termination of Business Construed – For purposes hereof, termination shall
mean that business operations are stopped completely. Any change in ownership,
management and/or name of the business shall not constitute termination as
herein contemplated. Unless stated otherwise, the assumption of the business by
any new owner or manager or re-registration of the same business under a new
name will be considered by the LGU concerned only for record purposes in the
course of the renewal of the permit or license to operate the business.

22 LTOM Form No. 7 - Letter of Assessment (First Notice); LTOM Form No. 8 - Letter of Assessment (Second
Notice); LTOM Form No. 9 - Letter of Assessment (Final Notice)
23 LTOM Form No. 14 - Certificate of Confirmation; LTOM Form No. 15 - Certificate of Examination
24 LTOM Form No. 10 - Final Notice Before Issuance of Warrant of Distraint and Levy

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C. Confirmation of Retirement of Business and Taxation – The local treasurer

concerned shall see to it that the payment of taxes of a business is not avoided
by simulating the termination or retirement thereof. For this purpose, the following
procedural guidelines shall be strictly followed:
1. The local treasurer shall assign every application for the termination or
retirement of business to an inspector in his/her office who shall go to the
address of the business on record to verify if it is really no longer operating.
If the inspector finds that the business is simply placed under a new name,
manager and/or new owner, the local treasurer shall recommend to the
Mayor the disapproval of the application for the termination or retirement of
said business.
2. Accordingly, the business shall continue to be liable for the payment of all the
taxes, fees and charges imposed on it under existing local tax ordinances.
3. In addition, in the case of a new owner to whom the business was transferred
by sale or other form of conveyance, said new owner shall be liable to pay
the tax or fee for the transfer of the business to him/her if there is an existing
ordinance prescribing such transfer tax.
D. In case it is found that the retirement or termination of the business is found to be
legitimate, and the tax due therefrom be less than the tax due for the current year
based on the gross sales or receipts, the difference in the amount of the tax shall
be paid before the business is considered officially retired or terminated.

NOTE

On the year an establishment retires or terminates its business within the

municipality, it would be required to pay the difference in the amount if the
tax collected, based on the previous year’s gross sales or receipts, is less
than the actual tax due based on the current year’s gross sales or receipts.
(GR No. 154092 14 July 2005)

E. The permit issued to a business retiring or terminating its operations shall be

surrendered to the local treasurer who shall forthwith cancel the same and record
the cancellation in his/her books.
(Art. 241, IRR implementing Sec. 145, LGC)
F. If the business changes ownership or relocates from one city/municipality to
another, it shall be the duty of the new owner, agent or manager of such business
to secure a new permit as required and pay the corresponding permit fee as
though it were a new business.

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 CHAPTER CREDIT FINANCING AND ALTERNATIVE SOURCES
3 OF FUNDS

SECTION 159. GENERAL POLICY

A. It shall be the basic policy that any LGU may create indebtedness, and avail
of credit facilities to finance local infrastructure and other socio-economic
development projects in accordance with the approved local development plan
and public investment program.
B. An LGU may also avail of credit lines from government or private banks and
lending institutions for the purpose of stabilizing local finances. (Sec. 296, LGC)

SECTION 160. CREDITS AND OTHER SOURCES OF FUNDS AVAILABLE

TO LGUs
LGUs may avail of the following credit financing, indebtedness and other financing
mechanisms for the purposes under, and in accordance with the provisions of the
LGC, as well as other relevant laws:
A. Loans, credit, and other forms of indebtedness (Sec. 297, LGC);
B. Deferred payment and other financial schemes (Sec. 298, LGC);
C. Loans, grants and subsidies to other LGUs (Sec. 300, LGC);
D. Joint and several loans with other LGUs (Sec. 300, LGC);
E. Loans from funds secured by the National Government from foreign sources
(Sec. 301, LGC);
F. Bonds and other long-term securities (Sec. 299, LGC);
G. Private sector financing, construction, maintenance operations, and management
of infrastructure projects under Build-Operate-Transfer (BOT) arrangement; and
H. Grants

SECTION 161. OTHER BUILD-OPERATE-TRANSFER ARRANGEMENTS

BOT arrangements entail various degrees of involvement of the private sector in the
financing, construction and management of public infrastructure and facilities. Among
the arrangements referred to as BOT, are the following:
A. Build-Transfer
1. A contractual arrangement under which the project proponent finances and
constructs an infrastructure or facility and after its completion turns it over to
the government agency or LGU concerned.

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2. The LGU shall pay the proponent on an agreed schedule its total investment
plus a reasonable rate of return.
3. This arrangement is most suitable for the construction of any infrastructure
or development project, including sensitive facilities with security or strategic
implications that the Government opts to operate directly.
B. Build-Lease-Transfer
1. A contractual arrangement under which project proponent finances and
constructs an infrastructure or facility and upon its completion turns it over to
the sponsor agency or LGU on a lease arrangement.
2. The terms and fixed period of the lease enable the proponent to recover its
investments and make a reasonable profit.
3. The title of the facility is transferred to the sponsor agency or LGU at the end
of the contracted lease period.
C. Build-Own-and-Operate
1. A contractual arrangement under which a project proponent is authorized
to finance, construct, own, operate and maintain an infrastructure or
development facility.
2. The proponent, which in this case owns the assets, is allowed to recover
its total investment, the costs of maintaining and operating the facility and
a reasonable return, by collecting tolls, fees, rentals or other charges from
facility users.
3. Under this scheme, the proponent, as project owner, may assign its operation
and maintenance to a facility operator.
D. Build-Transfer-and-Operate
1. A contractual arrangement under which the sponsor government agency or
LGU contracts a private entity to build an infrastructure facility on a turn- key
basis.
2. The contractor assumes cost over-runs, delays, and specified performance
risks.
3. The title is transferred to the project sponsor as soon as the facility is
commissioned satisfactorily, but the private entity operates the facility on its
behalf under an agreement.
E. Contract-Add-and-Operate (CAO)
1. A contractual arrangement under which the project proponent is authorized
to add to any existing infrastructure facility which it is renting from the
government and to operate the expanded project over an agreed franchise
period.

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2. Any transfer arrangement as regards the added facility depends on the

specific agreements and approved contractual arrangements.
F. Rehabilitate-Operate-and-Transfer (ROT) – A contractual arrangement under
which an existing facility is turned over to the private sector to refurbish, operate
and maintain for a franchise period, at the expiry of which it is turned to the
Government.
G. Rehabilitate-Own-and-Operate (ROO) – A contractual arrangement under which
an existing facility is turned over to the private sector to refurbish and operate with
no time limitation imposed on ownership. As long as the operator is not in violation
of its franchise, it can continue to operate the facility in perpetuity.

SECTION 162. DUTIES AND RESPONSIBILITIES OF TREASURERS

RELATIVE TO CREDIT FINANCING
Local treasurers have the following duties and responsibilities that relate to the powers
of LGUs to use credit financing, indebtedness and alternative sources of funds:
A. Act as the custodian of all funds directly released to the LGU from the proceeds of
grants and from loans, credits and other forms of indebtedness, as well as income
and express profits derived from the operations of the projects financed from
them. He/she shall deposit these funds in a separate depository account in the
name of the LGU with banks, preferably government owned, located in or nearest
to the area of jurisdiction of the LGU;
B. Prepare the required reports of checks issued, disbursements and other
accountabilities;
C. In coordination with other LGU official concerned, ensure that the debt servicing
for the LGU credit does not exceed twenty percent (20%) of its annual regular
income for each year until the loan is fully paid [Sec. 324 (b), LGC];
D. Pay or amortize loans, including all interests incurred, as appropriate from the
income of the projects or services and/or from the regular income of the LGUs
until fully paid;
E. Coordinate with the local accountant in completing the annual Statement of
Indebtedness, Payments and Balances (SIPB) report [BLGF MC No. 005.2018];
and
F. Upon authorization of the sanggunian concerned, Local Treasurers shall:
1. Establish a sinking fund for the re-payment of bond issues or maintain trust
funds for the purpose;
2. Maintain special accounts in the General Fund for loans, interest, bond
issues, and receipts arising from BOT transactions, such as toll fees,
charges, and other mandatory contributions for specific purposes (Sec. 313,
LGC);

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3. Maintain separate records of funds received for projects financed by

proceeds of loans, credits, grants, and other forms of financing to keep track
of the cash flow of the project fund; and
4. If required, provide financial data about the LGU that may be needed in
relation to its availment of the funding sources and mechanisms.

SECTION 163. PROVISIONS FOR THE SERVICING OF CONTRACTUAL

OBLIGATIONS OF LGUs
A. Using Portion of IRA Shares as Payment to Contractual Obligations - Any LGU,
through its local chief executive (LCE) and upon authorization by the sanggunian
concerned, may authorize the National Government to deduct or withhold a
portion of its IRA share for the payment of its contractual obligation, subject to
the limitations defined in the succeeding paragraph (c) hereof. For this purpose,
the resolution of the local sanggunian shall clearly state the name of the creditor,
the nature of the indebtedness, the amount to be withheld and the period of time
that such withholding of IRA shares shall be made. (Art. 401, IRR implementing
Sec. 303, LGC)
B. Mandatory Appropriations for Re-payment of Loans - LGUs shall appropriate
in their respective annual budgets such amounts as are sufficient to pay the
loans and other indebtedness incurred or redeem or retire bonds, debentures,
securities, notes and other obligations issued under this Chapter as they become
payable until the total obligations shall have been paid in full. Provided, that failure
to provide the appropriations herein shall render their annual budgets inoperative.
(Sec. 303, LGC)
C. Mandatory Requirements and Limitations on Debt Service - LGUs shall make full
provision for all statutory and contractual obligations: provided, however, that the
amount of appropriations for debt servicing shall not exceed twenty percent (20%)
of the regular income of the LGU concerned. [Sec. 324 (b), LGC]
D. Regular income shall refer to revenues and receipts realized by provinces, cities
and municipalities from regular sources of the local General Fund including the
IRA and other shares provided for under the LGC, but exclusive of non-recurring
receipts such as other national aids, grants, financial assistance, loan proceeds,
sale of fixed assets and other similar receipts.

SECTION 164. ENFORCEABILITY OF LOAN OBLIGATIONS

NOTWITHSTANDING THE EXPIRATION OF THE TERMS
OF THE ELECTIVE CONTRACTING OFFICIALS
Loan obligations contracted by LGUs will subsist and remain binding and enforceable
notwithstanding the expiration of the terms of the elective local officials who contracted
the same. The corporate existence of the LGU is not co-terminus with the term of its
officials who merely are its agents. The sanggunian which authorized the contracting

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of loan obligations binds the succeeding sanggunian of the LGU which is separate
and distinct from the personality of its officials. (DOJ Opinion No. 160, s. 1994)

SECTION 165. GUIDELINES ON THE USE OF FUNDS RAISED

BY INDEBTEDNESS
A. An LGU may contract loans, credits, and other forms of indebtedness with any
government or domestic private bank and other lending institutions to finance the
following:
1. Construction, installation, improvement, expansion, operation, or
maintenance of public facilities, infrastructure facilities, housing projects;
2. Acquisition of real property; and
3. Implementation of other capital investment projects, subject to such terms
and conditions as may be agreed upon by the LGU and the lender. [Sec.
297 (a), LGC]
B. An LGU may likewise secure from any government bank and lending institution
short, medium, and long term loans and advances against security of real estate
or other acceptable assets for the establishment, development, or expansion of
agricultural, industrial, commercial house financing and livelihood projects, and
other economic enterprises. [Sec. 297 (b), LGC]
C. Government financial and other lending institutions are authorized to grant loans,
credits, and other forms of indebtedness out of their loanable funds to LGUs for
purposes specified above. [Sec. 297 (c), LGC]

SECTION 166. TAX EXEMPTION PRIVILEGES OF LGUs

LGUs shall be exempt from payment of duties and taxes for the importation of heavy
equipment or machinery which shall be used for the construction, improvement,
repair and maintenance of roads, bridges, and other infrastructure projects, as
well as garbage trucks, fire trucks, and other similar equipment: provided, that
such equipment or machinery shall not be disposed of, either by public auction or
negotiated sale, within five (5) years from their importation. To avail of the incentives
and for expeditious processing of request for duty and tax exemption, the following
specific requirements are prescribed:
A. A letter application signed by the LCE (Governor, City Mayor or Municipal Mayor)
or his/her duly authorized representative, attaching therewith the pertinent Board
Resolution, authorizing the LCE to import/accept donation;
B. The usual import-documents such as:
1. Bill of lading, airway bill, parcel post notice or other shipping documents;
2. Commercial invoice and packing list; and

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3. Other relevant documents covering the shipment.

C. Sworn statement that the imported articles are not for sale, hire or barter; and
D. An undertaking from the LGU that, upon release and physical possession of the
machinery and equipment, the notice, "ENTERED DUTY/TAX-FREE UNDER
THE NEW LOCAL GOVERNMENT CODE" shall be printed in a conspicuous
space on the machinery and equipment which was accorded duty-and-tax-free
release. (Sec. 5, DOF DO No. 21.92)

SECTION 167. LIMITATIONS ON THE USE OF CREDIT LINES

TO STABILIZE LOCAL FINANCE
In the use of credit lines for the purpose of stabilizing local finances, as provided in
Sec. 296 of the LGC, LGUs shall observe the following guidelines:
A. Availment must be approved by the concerned sanggunian; and
B. Funds availed through credit for this purpose shall be spent and disbursed solely
to finance expenditures covered by appropriations authorized in the duly approved
local government budget for the current year.

SECTION 168. COMMON REQUIREMENTS FOR CREDIT FINANCING

OF LOCAL DEVELOPMENT PROJECTS
LGUs shall observe the following common requirements in the use of credit financing
for their development projects:
A. Inclusion of the proposed project in the approved local development plan and
public investment program. [Sec. 296 (a), LGC]
B. Sanggunian resolution authorizing the LCE to secure/negotiate and/or enter into
an agreement, which may include the following:
1. Endorsing the proposed project
2. Identifying the forms/types of financing the projects
3. Authorizing the mode/form of financing the projects
C. Certificate of Net Debt Service Ceiling and Borrowing Capacity [Appendix 57,
BSP Cir. 926, s. 2016]
D. Favorable Monetary Board Opinion on the probable effects of the proposed credit
operation on monetary aggregates, the price level and the balance of payments
(BoP) [Sec. 43, RA 11211]

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The list of data on the financial and other operations of the LGU, as well as the socio-
economic climate within its territory, are shown as follows:
LGU FINANCIAL DATA COMMONLY REQUIRED WHEN AVAILING OF
INDEBTEDNESS AND OTHER FINANCING MECHANISMS

A. LGU INCOME
Local Sources Tax Revenue
Real Property Taxes Business Taxes and Licenses Other Taxes
Non Tax Revenue
Operations of Economic Enterprises Regulatory Fees
Service/Users Charges Other Receipts
Shares from National Tax Collections/ Grants/Aids
Internal Revenue Allotment (IRA) Share in National Wealth
Share in tobacco Excise Tax Grants
Domestic Foreign National Aid
Loans, Borrowing, and Transfers Loans
Transfers
Inter-Local Transfers

B. LGU EXPENDITURES
1. By Function
a. General public services
b. Education, culture and sports
c. Labor and employment
d. Housing and Community Development

Other credit worthiness documentary requirements and further credit analysis to

be done by the Bureau of Local Government Finance are discussed in a separate
manual entitled "Creditworthiness Rating Manual."

SECTION 169. ACCEPTABLE COLLATERAL

The most common securities or collaterals which LGUs may offer for loans to satisfy
the requirements of lending institutions are any one or a combination of the following:
A. Assignment of a portion of the share from the IRA of the LGU concerned;
Any LGU through its LCE and upon authorization by way of a resolution of the
sanggunian concerned, may authorize the National Government to deduct or
withhold a portion of its IRA share for the payment of its contractual obligations,
subject to the limitations under Sec. 324 (b) of the LGC. The resolution of the
sanggunian shall clearly state the name of the creditor, the nature of indebtedness,
the amount to be withheld, and the period and term that such withholding of the
IRA shares shall be made;
B. Chattel mortgage of equipment financed by the loan;
C. Real estate mortgage of the patrimonial property of the LGU; and
D. Net profit from the project financed by the credit.

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SECTION 170. SPECIAL ACCOUNT FOR LOANS, INTERESTS, BONDS,

AND CONTRIBUTIONS FOR SPECIFIC PURPOSES
LGUs shall maintain special accounts in their general fund for the following:
A. Public utilities and other economic enterprises;
B. Loans, interests, bond issues, and other contributions for specific purposes;
C. Development projects funded from the IRA; and
D. Such other special accounts which may be created by law or ordinance

SECTION 171. OTHER REQUIREMENT FOR LOANS, DEFFERED

PAYMENTS, AND OTHER FINANCIAL LOANS, SCHEMES
The officials of LGUs contracting loans and other forms of indebtedness under the
provisions of this Chapter shall also comply with the following:
A. Any other provisions of the LGC, or other laws that may be relevant to a particular
project or the transactions necessary to realize it;
B. The rules and regulations on property and supply management, which shall be
applied in the acquisition of equipment or machinery under the loans, deferred
payment and other financial schemes; and
C. All applicable accounting and auditing policies and regulations.

SECTION 172. INTER-LGU LOANS, GRANTS, AND SUBSIDIES

Provinces, cities and municipalities may, upon approval of the majority of all members
of the sanggunian concerned and in amounts not exceeding their surplus funds,
extend loans, grants, or subsidies to other LGUs under such terms and conditions as
may be agreed upon by the contracting parties. (Sec. 300 1st par., LGC) There are
no standard terms and conditions for loans under this scheme. However, the creditor
LGU and the borrower LGU have to negotiate, come to an agreement, and observe
the following processes:
A. Enactment by the lending and the borrowing LGUs of the required resolutions
and/or ordinances duly signed/approved by the majority of all the members of
their respective sanggunian, stipulating the terms and conditions that shall include
the following:
1. Repayment scheme and grace period;
2. Interest lending/borrowing rate;
3. Security/collateral;
4. Benefits to both the lending and the borrowing LGUs; and
5. Automatic budget allocation of the necessary amount for repayment

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B. Ratification of the loan contract by the sanggunian of both contracting LGUs/

parties, which is needed for the loan agreement to become valid and enforceable.
C. Certification by the Local Treasurer of the lending LGU, attested to by its Auditor,
of the accumulated surpluses eligible for lending, grants or subsidies.

SECTION 173. JOINT AND SEVERAL LGU LOAN ARRANGEMENTS

LGUs may, upon approval of their respective sanggunian, jointly and severally contract
loans, credits, and other forms of indebtedness for purposes mutually beneficial to
them. (Sec. 300, LGC)

SECTION 174. LOANS FROM FUNDS SECURED BY THE NATIONAL

GOVERNMENT FROM FOREIGN SOURCES
The President or his/her duly authorized representative may, through any government
financial or other lending institution, relend to any province, city, municipality, or
barangay, the proceeds of loans contracted with foreign financial institutions or other
international funding agencies.
A. Guidelines:
1. The loans shall be used for the purpose of:
a. Financing the construction, installation, improvement, expansion,
operation or maintenance of public facilities, infrastructure facilities, or
housing projects;
b. Acquiring real property; and
c. Implementing other capital investment projects.
2. Such loans shall be subject to the terms and conditions agreed upon by the
President and the LGU. The proceeds from such loans shall accrue directly
to the LGU. [Sec. 301 (a), LGC]
3. The President may likewise authorize the relending to LGUs the proceeds
of grants secured from foreign sources, subject to the provisions of existing
laws and the applicable grant agreements. [Sec. 301 (b), LGC]
4. Repayment or amortization of loans, including their accrued interest thereon,
may be financed partly from the income of the projects or services and from
the regular income of the LGU, which must be provided for and appropriated
regularly in its annual budget until the loan and interest thereon shall have
been fully paid. [Sec. 301 (c), LGC]
5. First tier LGUs may directly contract loans with multilateral financial
institutions created by multilateral treaties to which Philippines is a signatory.
[Sec. 1, EO No. 809, s. 2009]

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B. The Municipal Development Fund as Conduit - The Municipal Development

Fund, created under PD No. No. 1914, operates for the above purposes with the
DOF as administrator. Provinces, cities and municipalities may tap the Municipal
Development Fund for loans through agreements with the DOF, setting the terms
and conditions of the loan. (Sec. 1, P. D. 1914)

SECTION 175. DEFERRED PAYMENTS AND OTHER FINANCIAL

SCHEMES
Provincial, city and municipal governments may acquire property, plant, machinery,
equipment, and such necessary accessories under a supplier's credit, deferred
payments plan, or other financial schemes (Sec. 298, LGC) under the following
conditions:
A. That the acquisition of such equipment, machinery, and their accessories shall be
governed by the pertinent provisions of the Implementing Rules and Regulations
of the LGC, on "Local Government Supply and Property Management", whether
such items are to be supplied or purchased from a local or foreign supplier; and
B. That the LCE, through a sanggunian resolution, is authorized to negotiate
the contract executed under the deferred payment scheme. (Art. 396, IRR
implementing Sec. 298, LGC)

SECTION 176. BONDS AND OTHER LONG TERM SECURITIES

Subject to the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) and
the Securities and Exchange Commission (SEC), provinces, cities and municipalities
are authorized to issue bonds, debentures, securities, collaterals, notes and other
obligations to finance self-liquidating, income-producing development or livelihood
projects pursuant to the priorities established in the approved local development plan
or the public investment program. (Sec. 299, LGC)
A. Debt Service Requirement and Limitations - As debt instruments, bonds are
subject to the mandatory appropriations in the respective annual budgets of
LGUs, as provided under Sec. 303 of the LGC. Likewise, bonds are subject to the
debt service limitations provided for under Sec. 324 (b) of the LGC. The Bureau
of Local Government Finance (BLGF) certification on the maximum borrowing
or debt service capacity of an LGU is part of the documentation required for the
issuance of local government bonds.
B. Sanggunian Approval - The sanggunian concerned shall, by way of an ordinance
approved by a majority of all its members, declare and state the terms and
conditions of the bonds and the purpose for which the proposed indebtedness is
to be incurred. (Sec. 299, LGC)
C. National Government Guarantee - In cases where the bond issue shall bear the
guarantee of the National Government, the approval of the Secretary of Finance
shall be required. [Art. 397 (b), IRR implementing Sec. 299, LGC]

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D. Local Government Bond Issuances are Subject to Rules and Regulations

of the BSP - Whenever LGUs contemplate to borrow within the Philippines,
the prior opinion of the Monetary Board shall be requested in order that it may
render an opinion on the probable effects of the proposed operation on monetary
aggregates, the price level and the balance of payments. (Sec. 123, Art 111, R.
A. No. 7653 or the BSP Charter)
E. Local Government Bonds are Exempt from Registration Requirements of
the SEC - Local government bonds are exempt from the registration requirements
of the SEC. However, in order to maintain standards in the securities market,
the SEC maintains authority and control over the underwriters and brokers of all
types of securities including local government bonds.
F. Special Documentation Requirements for Local Government Bonds. - In
addition to the common requirements, the following documentary requirements
shall be complied with in the issuance of local government bonds:
1. BLGF certification as to the debt service capacity of the LGU concerned
(BSP Circular No. 926 s. 2016, 13 September 2016);
2. DOF certification as to the national government guarantee in case the
flotation requires National Government guarantee (BSP Circular No. 44);
3. Monetary Board opinion on the probable effects of the proposed issuance
of the LGU Bonds on the monetary aggregates, price levels and balance of
payments (BSP Circular No. 41);
4. Sanggunian resolution for the following:
a. Establishment of sinking fund for the payment of retiring or maturing
bonds;
b. Authorizing the LCE to enter into an agreement with the financial
advisor/trustee; and
c. Certifying that the LGU will or will not seek any National Government
guarantee for the bond.
5. Annual Audit Report for the immediately preceding year; and
6. Budget Operation Statement/Statement of Actual Income and Expenditure
for the past five (5) years duly signed by the Local Treasurer and/or Local
Accountant indicating the IRA actually received for the same period.

SECTION 177. PRIVATE SECTOR FINANCING UNDER THE BUILD-

OPERATE-TRANSFER (BOT) ARRANGEMENT
LGUs may avail of the several variations of BOT arrangement to finance, construct,
maintain, operate and manage infrastructure projects. The general provisions are as
follows:

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A. Authorization
LGUs may enter into contracts with duly pre-qualified individual contractor,
for the financing, construction, operation, and maintenance of any financially
viable infrastructure facilities, under the build-operate-and-transfer agreement,
subject to the applicable provisions of R. A. No. 6957, authorizing the financing,
construction, operation and maintenance of infrastructure projects by the private
sector and the rules and regulations issued thereunder and as such terms and
conditions provided for in this Section. [Sec. 302 (a), LGC]
B. Inclusion in Local Development Plans and Public Investment Programs
LGUs shall include in their respective local development plans and public
investment programs priority projects that may be financed, constructed, operated
and maintained by the private sector under this Section. [Sec. 302 (b), LGC]
C. Disclosure and Public Endorsement
It shall be the duty of the LGU concerned to disclose to the public all projects
eligible for financing under this Section, including official notification of duly
registered contractors and publication in newspaper of general or local circulation
and in conspicuous and accessible public places. Local projects under the BOT
agreement shall be confirmed by the Local Development Councils (LDCs). [Sec.
302 (b), LGC]
D. Terms and Conditions
Projects implemented under the provisions of this Section shall be subject to the
following terms and conditions:
1. The provincial, city or municipal engineer, as the case may be, upon formal
request in writing by the LCE, shall prepare the plans and specifications
for the proposed project, which shall be submitted to the sanggunian for
approval. [Sec. 302 (c) (1), LGC]
2. Upon approval by the sanggunian of the project plans and specifications,
the provincial, city or municipal engineer shall, as the case may be, cause
to be published once every week for two (2) consecutive weeks in at least
one (1) local newspaper which is circulated in the region, province, city or
municipality in which the project is to be implemented, a notice inviting all
duly qualified contractors to participate in a public bidding for the projects
so approved. The conduct of public bidding and award of contracts for local
government projects under this Section shall be in accordance with the LGC,
and other applicable laws, rules and regulations. [Sec. 302 (c) (2) 1st par.,
LGC]
3. In the case of a BOT agreement, the contract shall be awarded to the lowest
complying bidder whose offer is deemed most advantageous to the local
government and based on the present value of its proposed tolls, fees,
rentals, and charges over a fixed term for the facility to be constructed,
operated, and maintained according to the prescribed minimum design
and performance standards, plans and specifications. For this purpose, the

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winning contractor shall be automatically granted by the LGU concerned the

franchise to operate and maintain the facility, including the collection of tolls,
fees, rentals, and charges, in accordance with sub-Section (c) (4) hereof.
[Sec. 302 (c) (2) 2nd par., LGC]
4. In the case of a BOT agreement, the contract shall be awarded to the lowest
complying bidder based on the present value of its proposed schedule
of amortization payments for the facility to be constructed according to
the prescribed minimum designs and performance standards, plans and
specifications. [Sec. 302 (c) (2) 3rd par., LGC]
5. Any contractor who shall undertake the prosecution of any project under this
Section shall post the required bonds to protect the interest of the province,
city, or municipality, in such amounts, as may be fixed by the sanggunian
concerned. [Sec. 302 (c) (3), LGC]
6. The provincial, city or municipal engineer shall, as the case may be, not
allow any contractor to initiate the prosecution of projects under this Section
unless such contractor presents proof or evidence that he/she has posted
the required bond. [Sec. 302 (c) (3), LGC]
7. The contractor shall be entitled to a reasonable return of its investment in
accordance with its bid proposal, as accepted by the LGU concerned.
8. In the case of a BOT agreement, the repayment shall be made by authorizing
the contractor to charge and collect reasonable tolls, fees, rentals, and
charges for the use of the project facility not exceeding those proposed in
the bid and incorporated in the contract:
a. Provided, that the LGU concerned shall, based on reasonableness
and equity, approve the tolls, fees, rentals and charges;
b. Provided, further, that the imposition and collection of tolls, fees,
rentals and charges shall be for a fixed period, as proposed in the bid
and incorporated in the contract, which shall in no case exceed fifty
(50) years;
c. Provided, finally, that during the lifetime of the contract, the contractor
shall undertake the necessary maintenance and repair of the facility in
accordance with standards prescribed in the bidding documents and
in the contract. [Sec. 302 (c) (4) 1st and 2nd pars., LGC]
9. In the case of BOT agreement, the repayment shall be made through
amortization payments in accordance with the schedule proposed in the bid
and incorporated in the contract.
10. In case of land reclamation or construction of industrial estates, the
repayment plan may consist of the grant of a portion or percentage of the
reclaimed land or the industrial estate constructed. [Sec. 302 (c) (4) 3rd and
4th pars., LGC]

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11. Every infrastructure project undertaken under this Section shall be

constructed, operated, and maintained by the contractor under the technical
supervision of the LGU and in accordance with the plans, specifications,
standards, and costs approved by it. [Sec. 302 (c) (5), LGC]
E. Review of Contracts - The provincial, city or municipal legal officer shall, as the
case may be, review the contracts executed pursuant to this Section to determine
their legality, validity, enforceability and correctness of form. [Sec. 302 (d), LGC]
F. BOT Project Formulation and Proponent Selection - The existing BOT legal
framework based on R. A. No. 7718 recognizes two (2) modes for identifying
projects and selecting proponents, which affect the processes involved in the
early phases of the BOT project. These modes are as follows:
1. Solicited Proposals - These are the priority projects identified by the sponsor
agency or LGU. The sponsor formulates the project based on its objectives
and studies, and then invites ("solicits") the private sector to participate in its
realization.
2. Unsolicited Proposals - These are BOT project proposals of private
proponent to prospective sponsor agencies/LGUs. An unsolicited project
may be accepted if it addresses existing priorities or needs that may or may
not have been previously realized by the prospective sponsor. The agency/
LGU may accept an unsolicited proposal on a negotiated basis if the project
meets certain conditions.

SECTION 178. AUTHORITY TO NEGOTIATE AND SECURE GRANTS

LCEs may, upon authority of the sanggunian, negotiate and secure financial grants
or donations in kind, in support of the basic services or facilities enumerated under
Sec. 17 of the LGC, from local and foreign assistance agencies, without necessity of
securing clearance or approval therefore from any department, agency, or office of
the National Government or from any higher LGU.
A. Projects with National Security Implications – Provided, that projects financed
by such grants or assistance with national security implications shall be approved
by the national agency concerned: provided, further, that when such national
agency fails to act on the request for approval within thirty (30) days from receipt
thereof, the request shall be deemed approved. (Sec. 23 1st par., LGC)
B. Required Report to Congress and the President – The LCE shall, within thirty
(30) days upon signing of such grant agreement or deed of donation, report the
nature, amount, and terms of such assistance to both Houses of Congress and
the President. (Sec. 23, 2nd par., LGC)
C. Formal Procedural Requirements – In availing of the Official Development
Assistance (ODA) facilities, the LGU needs to consider that ODA donors as a matter
of procedure coordinate regularly with the National Economic and Development
Authority (NEDA) which in turn coordinates local government matters with the
DILG. For this reason, the following formal procedures shall be observed:

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1. The LGU prepares the project proposal using the required NEDA forms in
consultation with the DILG and NEDA and with other National Government
Agencies (NGAs), as appropriate;
2. The LDC evaluates the project proposal for consistency with its Local
Development Plan and the Annual Investment Program (AIP);
3. Upon satisfactory evaluation of the proposal, the sanggunian authorizes the
LCE to negotiate the grant;
4. NEDA checks the proposal for possible duplication with other proposed/
on-going projects, and upon clearance endorses it to the ODA institution. If
duplications or conflicts are found, the proposal is referred back to the LGU
for review and revision;
5. The LCE endorses the project, through NEDA, to the identified ODA-
granting institution;
6. The LGU submits the project proposals to the DILG which refers it to the
concerned NGAs for possible security implications;
7. The concerned NGAs review the project proposal and within thirty (30)
days, inform the DILG and the LGU concerned of the result of the review.
As appropriate, the proposal may be approved or objected due to security
implications, or referred back for revisions;
8. LGU coordinates directly with the ODA grant funding institutions in monitoring
the latter's processing of the proposal and regularly informs the DILG and
the NEDA of the status of the proposal;
9. NEDA coordinates regularly with the ODA grant funding institution in
facilitating the evaluation and approval of the local project proposal; and
10. An NGA or higher local or regional governmental body (i.e. PDC and RDC)
evaluates the project proposals only upon express request of the ODA grant
donor and the consent of the LGU(s) concerned.

SECTION 179. PROHIBITED ACTS RELATED TO THE AWARDS

OF CONTRACTS UNDER THE PROVISIONS ON
CREDIT FINANCING
A. It shall be unlawful for any public official or employee in the provincial, city,
or municipal government, or their relatives within the fourth civil degree of
consanguinity or affinity, to enter into or have any pecuniary interest in any
contract for the construction, acquisition, operation, or maintenance of any
project awarded pursuant to the provisions of Title 4, Book II of the LGC, or for
the procurement of any supplies, materials, or equipment of any kind to be used
in the said project.

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B. Any person convicted for violation of the provisions of said Title shall be removed
from office and shall be punished by imprisonment of not less than one (1) month,
nor more than two (2) years, at the discretion of the court, without prejudice to
prosecution under other laws.
(Sec. 520, LGC)

SECTION 180. DEBT MANAGEMENT

A. Purpose and Need for Debt
LGUs are empowered under Sec. 296 of the LGC to create indebtedness, and
avail of credit facilities to finance local infrastructure and other socio-economic
projects in accordance with the approved local development plan and public
investment program.
To ensure the efficient implementation of the debt service limit on the LGU loans
and borrowings as provided in Sec. 324(b) of the LGC, BSP required all banks
and non-bank quasi-banks (NBQB), under its Circular Letter, series of 2002, 28
May 2002, to present a certificate of LGUs debt service and borrowing capacities,
duly certified by the BLGF.
Aimed to guarantee an accurate and proper evaluation of the request for Certificate
of Net Debt Service and Borrowing Capacities (NDSC), BLGF issued on 16 April
2012, Local Finance Circular (LFC) No. 1-2012, requiring LGUs to submit lists of
supporting documents to be submitted by the LGUs requesting said certificate.
On the other hand, BSP in its Circular No. 769, s. of 2012, issued guidelines on
request for Monetary Board Opinion on the monetary and balance of payments
implications of proposed domestic borrowings by LGUs, pursuant to Sec. 123 of
RA No. 7653.
Moreover, to facilitate, expedite and render efficient service standards to all LGUs
requesting for certification on NDSC and Borrowing Capacity (BC), across all
levels and in any of its geographical jurisdiction. BLGF issued Memorandum
Circular No. 05-2016, 26 February 2016, requiring its Regional Offices to evaluate
and validate the documentary requirements submitted by LGUs and determine
the preliminary computation of NDSC and Net Borrowing Capacity (NBC) before
BLGF Central Office makes final computation and issue certificate.
Under DOF Department Order No. 054.2016, 25 October 2016, irrelevant
requirements were removed to improve BLGF efficiency and service delivery
without prejudice to the accuracy of the certificate. The BLGF deemed it prudent
to cut the existing twelve (12) documentary requirements down to four (4), and
improve the review and computation of NDSC and Borrowing Capacity (BC) of
the concerned LGUs.
1. Documentary Requirements for the Certification of Debt Service and
Borrowing Capacity

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a. Letter request from the LCE indicating:

i. The selected lending institution;
ii. Terms and conditions of the proposed loan (repayment period
and interest rate); and
iii. The specific purpose of the loan.
b. Certificate by the local treasurer of presence or absence of loan/s,
duly certified with the following details:
i. Types of loan/s and other obligations contracted;
ii. Purpose of the loan/s and other obligations contracted;
iii. Name of the lending institution/s;
iv. Date of approval and maturity of loan/s;
v. Terms and conditions (interest rate and number of years to pay);
vi. Remaining balances of loan/s and other obligations; and
vii. Annual amortization schedules (segregating the principal from
the interest) issued by the lending institution.
c. COA Annual Audit Certificate for the most recent year, which shall be
supported by the year-end financial report for the past three (3) years:
i. Pre-closing Trial Balance (General Fund);
ii. Detailed Statement of Financial Performance;
iii. An Agency Action Plan and Status of Implementation (AAPSI)
report on COA recommendations shall be required if there
are findings of COA, while they may only be ‘qualified and not
‘adverse’, pertaining to local financial management and treasury
matters or specifically concern the local treasurer, such as, but
not limited to: (a) Unremitted and undeposited collections;
(b) Unliquidated cash advances; (c) Unremitted mandatory
contributions and GSIS, PAGIBIG, Philhealth, withholding tax to
BIR; and (d) Unreconciled cash book with the Bank Reconciliation
Statement and Subsidiary Ledger.
d. Certification issued by the lending institution stating that it shall not
require LGU deposits as compensating balance for loan, if such
lending institution is (1) not an authorized depository bank or (2) an
authorized government depository bank required to obtain the prior
approval of the DOF as provided under the DOF Department Circular
No. 001.2017, 1 May 2017.
2. Documentary Requirements for LGUs Affected by Natural and/or Man-
Made Disasters. Local governments that cannot in any way provide the full
documentary requirements aforestated, due to natural and/or man-made
calamities, and have been declared under state of calamity either by national
or local authorities shall, for a period of one (1) year from the declaration of
state of calamity, be required only to submit the documents required in Sec.
3.1 and 3.2 hereof, together with certified copy of such declaration.

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 CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS

B. Funding Competing Capital Projects

It is equally important for the Local Treasurers to know which capital project to
choose from several alternative projects in order to maximize the utilization of loan
proceeds. In the selection of projects to be funded, a balance will be established
between the projects' abilities to meet the priorities of the LGU and the financial
requirements of the projects. For each project, the viability and approvability of
the project and its funding from long-term debt should be assessed based on the
following factors:
1. Nature of the Project and Uses of Funds – For each project for which the loan
is proposed, the nature of the project as well as the intended use of the loan
proceeds should be fully described.
2. Cost-Benefit Analysis of the Project – The benefits of the proposed project
should be defined and, when appropriate, quantified in monetary terms.
The sources and uses of funds should be identified and estimated. Where
revenues are part of the benefits, all assumptions made in deriving the
revenues should be documented. The validity of the assumptions and the
risk associated with the revenue flows will be assessed. The costs of the
project will be estimated, with the basis of estimates documented and the risk
associated with the estimates assessed. If regular funds are proposed to be
utilized, the impact upon the LGU budgets will be assessed.
3. Expenditure Plan and Sources of Debt Servicing – A detailed plan for the
funds expenditure and debt repayment should be developed for each project.
The plan should demonstrate the timely matching of funds availability with
project expenditures and that debt service should commence with the flow of
revenues needed to pay the interest and principal on the debt. The basis of
the estimates for the project cost expenditure plan and the basis of revenue
cash flow estimates should be documented and the risk associated with those
revenue flows should be analyzed.
C. Debt Management Policy
Since the Local Treasurer is the custodian of all funds of the LGU including funds
sourced from loans and other types of indebtedness, it is equally important that
he/she should be involved in the overall debt management strategy of the LGU.
1. The LGU should adopt and maintain effective debt management policies
that recognize the capital improvement needs of the LGU as well as the
taxpayers' ability to pay while taking into account existing legal, economic,
financial and debt market considerations. The following factors relevant to
the issuance of debt should be considered:
a. Legal constraints on debt capacity and various financing alternatives;
b. The urgency of the capital requirements to be met and the economic
costs of delay;
c. Willingness and financial ability of the taxpayers to pay for the capital
improvements;

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d. Proper balance between internal and external financing;

e. Current interest rates and other market considerations;
f. The financial condition of the LGU;
g. The types, availability and stability of the revenues to be pledged for
the repayment of the debt; and
h. Type of debt to be incurred/issued.
2. The LGU may adopt a combination of the following debt management
policies depending upon its needs and situation:
a. Capital projects related to economic enterprise operations should
be financed solely by debt to be repaid from user fees and revenues
generated from the respective economic enterprise operations.
b. Capital projects not related to economic enterprise operations shall
be financed by debt to be repaid from available revenue sources
earmarked for said projects.
c. Cash surpluses, to the extent available and not restricted, should be
used to finance scheduled capital projects.
d. The LGU shall resort to long-term debt only for purposes of constructing
or acquiring capital assets such as market, Plant, Property and
Equipment, and for making major renovations to existing capital
projects.
e. All capital projects financed through loans and debt instruments should
be financed for a period not to exceed the useful or economic life of
the project.
f. The LGU shall not construct or acquire a public facility if it is unable
to adequately provide for the subsequent annual operation and
maintenance costs of the facility.
i. The LGU shall, at all times, manage its debt and sustain its
financial position in order to maximize its debt capacity, and seek
and maintain a high credit rating.
ii. The LGU should consider coordinating with other local government
entities to the fullest extent possible, so as to minimize the
overlapping debt burden to citizens.
iii. The LGU shall ensure that an adequate system of internal control
exists so as to provide reasonable assurance as to compliance
with appropriate laws, rules, regulations and covenants
associated with its outstanding debts.
iv. The LGU shall link planning and budgeting.
v. Revenue sources will only be earmarked for debt service when

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 CREDIT FINANCING AND ALTERNATIVE SOURCES OF FUNDS

legally available and when there are sufficient revenue sources

to fund the LGU's regular operational needs.
vi. The LGU shall avail of soft loans with concessional rates of
interest and long repayment terms. In case the LGU issues bonds
and other debt instrumentalities, it shall market its debt through
the use of competitive bidding whenever deemed feasible, cost
effective and advantageous to do so.
vii. The LGU shall continually monitor its outstanding debt in
relation to existing conditions in the debt market, and shall
refinance/restructure its debt when it is more cost effective and
advantageous to do so. The LGU may also consider the pre-
termination or early repayment of its debt when sufficient cost
savings can be realized.
viii. In case the LGU issues bonds to finance its capital projects, it
should stabilize its debt service payments through the use of
appropriate stabilization arrangements such as the maintenance
of a Sinking Fund or the establishment of Fund Reserves.

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 CHAPTER THE STATEMENT OF RECEIPTS AND EXPENDITURES (SRE) AND
4 ELECTRONIC STATEMENT OF RECEIPTS AND EXPENDITURES
(eSRE) FINANCIAL MANAGEMENT REPORTING SYSTEM

SECTION 181. STATEMENT OF RECEIPTS AND EXPENDITURES (SRE)

FINANCIAL REPORT SYSTEM: DEFINITION,
COMPOSITION, AND LEGAL BASIS
A. The SRE is the official reporting system of the DOF for monitoring LGU financial
performance. This report is generated through the Electronic Statement of Receipts
and Expenditures (eSRE) system of the BLGF. It captures data that generates
information on the fiscal capacity, level of borrowings, and creditworthiness of
LGUs. The SRE report also provides financial information to the LCE for the
purpose of policy formulation and fiscal management.
B. The SRE was formerly known as the Statement of Income and Expenditures
(SIE). The word “Income” was replaced with “Receipts” so as to include loan
proceeds and other receipts not classified as income (i.e., proceeds from loan,
sale of assets, etc.). Likewise, expenditures are classified into operating and non-
operating to distinguish outright expense (operating) from capital and investment
outlays and loan payments (non-operating).
C. The SRE presents receipts and expenditures of the General Fund, SEF, and the
Trust Fund and Trust Liabilities. The Trust Liabilities in the SRE report is added to
separate collection of advance payment of Real Property Tax. The data presented
in the SRE are totals of major captions comprising various account classifications
from its main source documents, namely: (a) Statement of Receipt Sources
(SRS); and (b) Statement of Expenditures (SOE).
D. The SRE is divided into three major segments:
1. The first is the current operating segment which is identical to the COA’s
Statement of Financial Performance. It shows the operating income from
local and external sources and current operating expenses (COE) which
includes Personal Services (PS), Maintenance and Other Operating
Expenses (MOOE), and Financial Expenses (FE);
2. The second segment is the non-operating receipts and expenditures which
is equivalent to the investing and financing activities in the COA’s Cash
Flow Statement which includes receipts from sale of assets, investment,
loan proceeds and expenditure such as purchase of assets, investment and
payment of loans; and
3. The third segment is the fund balance which shows the details of cash
balances.
E. Legal Basis
The eSRE was instituted by the DOF as the official reporting system on local
government fiscal and financial matters pursuant to DO 8-2011, which provides that:

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“The DOF shall be responsible for supervision of the revenue operations of all
LGUs, with the objective of making these entities less dependent on funding from
the national government.”
“The BLGF issued Memorandum Circular Nos. 14-2008, 18-2008 and 19- 2008
prescribing the Statement of Receipts and Expenditures for collecting and
monitoring financial information and performance of all LGUs, thereby upgrading
the SIE system for the purpose of harmonizing the data with other government
fiscal reports, such as the New Government Accounting System of the COA, and
to synchronize the preparation of the SRE by concerned LGU officials.”
“The eSRE is hereby instituted as the official Reporting system of the DOF on
Local Government Fiscal and Financial Matters, to be maintained by the BLGF
to fully establish a reliable, accurate and timely reporting and monitoring system
in the country.”

SECTION 182. STATEMENT OF RECEIPTS AND EXPENDITURES (SRE):

PURPOSE AND USE
A. Purpose
1. LGU Monitoring System – LGU financial performance can be evaluated
through the data inputted to the system based from reports submitted by the
LGUs.
2. Policy Development – SRE offers sound financial information to assist
policymakers and legislators in drafting local and national legislations,
policies, rules and regulations.
3. Forecasting and Planning – consolidated data are useful in planning,
forecasting, debt certification, creditworthiness rating system, LGU income
classification system, among others.
4. Statistics – the SRE provides key granular data in local finance such as
locally sourced income, external sources of revenues and expenditures and
such other financial or fiscal statistics on LGU finance that can be used to
design economic and fiscal capacity models.
B. Users and Uses:

User/s Use/s
Bureau of Local As a tool in monitoring the LGUs’ financial
Government Finance performance, data source in setting LGUs’
(BLGF) annual income targets, data source and tool
in medium- term revenue and expenditure
forecasting, and tool for creditworthiness
rating and debt capacity monitoring.

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User/s Use/s
Department of Finance (DOF) As data source for revenue collections,
borrowings, LGU’s surplus and deficit as input
to consolidated public sector financial position
(CPSFP) and drafting of national policies.
Department of the Interior and As data source for revenue collections,
Local Government (DILG) borrowings, LGU’s surplus and deficit as input
to consolidated public sector financial position
(CPSFP) and drafting of national policies.
Municipal Development Fund As data source for processing of LGU’s
Office (MDFO) application for loans/grants.
National Economic As data source for local finance statistics,
Development Authority forecasting and planning.
(NEDA)
Department of Budget As data source for the preparation of Budget
and Management of Expenditures and Sources of Financing
(DBM) (BESF) and in cash flow forecasting.
National Tax Research Center As data source for local finance statistics for
(NTRC) research and publication purposes.
Bangko Sentral ng Pilipinas
(BSP)
Senate of the Philippines As source of local financial data and analysis
House of Representatives in aid of legislation.
Financial Institutions As data source for evaluation of LGU’s credit
application.
Potential Donors As data source and basis for extending grants/
donations/aids/loans to LGUs.
Other Stakeholders/ Researchers As data source for economic forecasts and to
evaluate the LGUs’ operating performance.
Public Serve as source of information in the
assessment of local governments’
performance in public financial management
and other local finance statistics and reports.

SECTION 183. ELECTRONIC STATEMENT OF RECEIPTS

AND EXPENDITURES (eSRE)
A. The eSRE System was primarily established to provide the BLGF with detailed
and timely financial information for the purpose of monitoring LGUs’ financial
performance and to address the financial monitoring and management needs of
LGUs’ users.
B. The eSRE System is composed of the eSRE LGU Report System and the eSRE
Central System. The eSRE LGU Report System is a system installed in all LGUs
for the purpose of entering LGU-specific SRE data and generating reports which
will be submitted to the BLGF for review and approval. The eSRE Central System
serves as a web-based engine to view financial data and report records which are

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submitted by all LGUs Once the data of the LGUs are uploaded from the eSRE
LGU Report System to the eSRE Web System, the BLGF can generate, review,
approve analyze reports.
C. The current release version of the eSRE includes the following modules:
1. Debt Management Module – This module is used to generate LGUs’ debt
capacity certificate and to monitor LGUs’ borrowing activities. It captures the
aggregate debt of the LGUs and provides early warning if LGUs are nearing
the statutory 20% debt ceiling.
2. Creditworthiness and Financial Indicator Module – Creditworthiness
shows the capacity of an LGU to incur and repay debt responsibly while the
financial indicators measure LGU’s performance in terms of public financial
management and determine its overall financial health.
3. Fiscal Capacity Model – This module is used to generate forecasts key
own-source revenue levels of all provinces, cities and municipalities which
can be used for planning purposes.
D. The e-SRE database also provides information for the following LGU performance
systems:
1. LGU Fiscal Sustainability Scorecard (LGU FSS) – the SRE provides
the main backend database in computing the benchmarks for all financial
indicators of the Scorecard and in rating the reporting compliance of
treasurers.
2. Performance Standards for Local Treasurers and Assistant Treasurers
– the SRE is used for computing financial indicators measuring performance
in achieving various operational goals of treasurers and assistant treasurers.
3. Seal of Good Local Governance (SGLG) – the SRE provides financial
indicators for the Department of the Interior and Local Government
performance management indicator system.
4. Cities and Municipal Competitiveness Index (CMCI) – the National
Competitiveness Council (NCC) uses the SRE for the computation of the
Ratio of LGU collected tax to total LGU revenues. This is one of the indicators
in the CMCI which measures economic development and competitiveness
at the local government level.
5. Philippine Poverty- Environment Initiative (PPEI) and Extractive
Industries Transparency Initiative (EITI) – The SRE serves as data source
on the detailed account of shares from national wealth received by LGUs
such as local taxes, fees and user charges paid from extractive industries as
well as the tagging of the expenditures items from such proceeds.
6. Most Business Friendly LGU Award – The Philippine Chamber of
Commerce and Industry (PCCI) used the SRE as part of the Qualifying
Indicator to commend LGUs that have become successful in creating an
environment that is conducive to business.

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SECTION 184. GUIDELINES AND MANUALS FOR THE PREPARATION

AND SUBMISSION OF THE ESRE REPORTS
A. Manual for the Preparation of the SRE for LGUs (Concepts, Input Preparation
and Reporting) - The Manual contains the guidelines, procedures and instructions
in the preparation of SRE which shall be the used by all local treasurers and SRE
focal persons. The objectives of this manual are the following:
1. Uniformity in the preparation of the SRE report by applying common
classification of accounts, use of terminologies and timing of recording
financial transactions in harmony with the New Government Accounting
System (NGAS) reports and in conformity with the Philippine Financial
Reporting System (PFRS) and International Financial Reporting Standards
(IFRS);
2. Identification of various source documents to be used in the preparation of
SRE report and guidelines for the completion of the various report forms;
and
3. Illustration on the utilization of the financial information for monitoring the
financial performance of the LGUs.
The electronic copy of these manuals are downloadable online at http://blgf.
gov. ph/manuals
B. Electronic Statement of Receipts and Expenditures v2.1 User Manuals (LGU
System & Central System)
1. The eSRE User’s Manual provides the necessary information for encoders
to provide information for the eSRE reporting system and reviewers and
approvers to evaluate the submissions. Each type of user is provided with
screen shots and procedure steps to be able to use the system efficiently.
2. The eSRE System Central System User’s Manual provides technical
guidance to users assigned for the maintenance of the eSRE Central system.
Each type of user is provided with screen shots and procedures steps to be
able to use the system efficiently.

SECTION 185. SUBMISSION OF SRE REPORT

A. Pursuant to Sec. 3 of Department Order No. 034-201424, 26 May 2014, BLGF
adopts the following guidelines on the submission of eSRE reports:
1. The eSRE cash basis reports shall be uploaded to the eSRE Web Information
System by all local treasurers on or before the following dates:
a. For the first three quarterly reports: on or before the 20th of the month
following the end of the quarter.

24 Amending Secs. 3,8 and 9 of the Department Order No. 8-2011, 11 February 2011

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b. For the year-end report: on or before March 31 of the subsequent

calendar year.
2. When the deadline falls on a Saturday, Sunday or legal holiday, eSRE
reports shall be submitted on the next working day.

B. Grace Period - Upon written request prescribed by the BLGF, the local treasurers
who failed to submit eSRE report on time may be given a grace period of fifteen
(15) days from the prescribed period. The BLGF Regional Director upon the
recommendation of the BLGF Regional Reviewer shall approve the request
provided that, such delay was due to fortuitous events, force majeure or other
analogous causes.

SECTION 186. RESPONSIBILITIES AND SANCTIONS

A. Sec. 8 of Department Order No. 8-2011, 11 February 2011, amending the penalties
for failure to submit timely and/or accurate eSRE reports is hereby adopted, to wit:
“Failure of the concerned local treasurer to submit timely and/or accurate eSRE
reports shall constitute sufficient grounds for filing a complaint in accordance with
the Revised Rules on Administrative Cases in the Civil Service (RRACCS) of the
Civil Service promulgated on 8 November 2011, specifically:
1. The failure to submit the reports within the prescribed period is considered
a light offense, hence, Sec. 46 (F.3) of Rule 10 of the RRACCS shall apply:
Violation of reasonable office rules and regulations:
1st Offense – Reprimand
2nd Offense – Suspension of one (1) day to thirty (30) days
3rd Offense – Dismissal from the service
2. The submission of inaccurate reports is considered a less grave offense.
Inaccurate report shall mean a report containing data that materially affects
the integrity of the report which may consequently mislead end-users. For
this purpose, Sec. 46 (D.2) of Rule 10 of the RRACCS shall apply:
Simple Misconduct:
1st Offense – Suspension of one (1) month and one (1) day to six (6) months
2nd Offense – Dismissal from the service
The complaint shall be initiated by the proper disciplining authority or his
authorized representative and a show-cause memorandum shall be issued
accordingly to the concerned treasurer.

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SECTION 187. ENVIRONMENT AND NATURAL RESOURCES DATA

MANAGEMENT TOOL (ENRDMT) REPORTS
A. The ENRDMT was instituted to serve as the data capturing tool for the environment
and natural resources revenues and expenditures of LGUs hosting extractive
operations, to ensure that the payments made by extractive companies are
reported accurately and in a timely manner.
B. Sec. 1 of DOF Department Order No. 049-201625 provides that the data
requirements for the PH-EITI and the PPEI annual reports shall form part of the
quarterly SRE reports submitted by local treasurers to report payments made by
extractive industries and detailed account of the shares from national wealth.
C. The eSRE System shall include the ENRDMT to provide a facility for the LGUs to
report the following direct and non-direct payments:
1. Local taxes, fees and other charges;
2. Receipts of shares from national wealth within the LGU’s jurisdiction;
3. Expenditures of LGUs coming from receipts/collections from the extractive
industries and shares from national wealth; and
4. Such other monetary and non-monetary benefits received by LGUs from
extractive industries and shares from national wealth.

SECTION 188. SUBMISSION OF ENRDMT REPORTS

Pursuant to Sec. 3.A of Department Order No. 078-201726, 15 December 2017, the
ENRD reports shall be uploaded to the ENRDMT web system by all concerned local
treasurers on or before the following dates:
A. For the first three quarterly reports: on or before the 30th of the month following
the end of the quarter.
B. For the year-end report: on or before April 30 of the subsequent fiscal year.

SECTION 189. REPONSIBILITIES AND SANCTIONS

Failure of the concerned local treasurer to submit timely and/or accurate eSRE
reports shall constitute sufficient grounds for filing a complaint in accordance with the
Revised Rules on Administrative Cases in the Civil Service (RRACCS) of the Civil
Service promulgated on 8 November 2011, specifically:
A. The failure to submit the reports within the prescribed period is considered a light
offense, hence, Sec. 46 (F.3) of Rule 10 of the RRACCS shall apply:

25 Inclusion of Environment and Natural Resources Data in the Electronic Statement of Receipts and Expenditures
System for Local Treasurers
26 Amending Secs. 1,2 and 4 of Department Order No. 049.2016 (Inclusion of Environment and Natural Resources
Data in the Electronic Statement of Receipts and Expenditures System for Local Treasurers)

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Violation of reasonable office rules and regulations:

1st Offense – Reprimand

2nd Offense – Suspension of one (1) day to thirty (30) days

3rd Offense – Dismissal from the service

B. The submission of inaccurate reports is considered a less grave offense; hence,

Sec. 46 (D.2) of Rule 10 of the RRACCS shall apply:

Simple Misconduct:
1st Offense – Suspension of one (1) month and one (1) day to six (6) months

2nd Offense – Dismissal from the service

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FORMS AND ANNEXES

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 CHAPTER

1
FORMS AND ANNEXES
LTOM FORM NO. 3 - LETTER OF AUTHORITY
REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Letter of Authority No.:

Date : ___________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

Pursuant to Section 17127 of RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991, please
be advised that the bearers hereof, from this Office and deputized as Examining Official/s, are hereby authorized to
examine your books of accounts and other pertinent business records thereof, to ascertain, assess and collect the
true and correct amount of the tax, fee or charge due, for the period _____________to____________, __________.

The Examining Officials, are under the instruction to properly identify themselves and present/display their
Identification Cards (ID) at all times.

The examination hereof shall be made during regular business hours, once every tax period, and shall be certified
by the abovementioned examining officials. Such certification shall be made of record in your books of accounts.

Your cooperation in this regard will be highly appreciated.

Very truly yours,

____________________________
Local Treasurer

Deputies:
Acknowledgement:
__________________________________
Date Received: _______________ Name and Signature of Examining Official/s

__________________________________
Position/Designation of Examining Official/s
___________________________________________
Signature over Printed Name of Declared Business Date: ______________________
Owner or his/her Authorized Representative

27 Section 171. Examination of Books of Accounts and Pertinent Records of Businessmen by Local Treasurer. - The
provincial, city, municipal or barangay treasurer may, by himself or through any of his deputies duly authorized
in writing, examine the books, accounts, and other pertinent records of any person, partnership, corporation, or
association subject to local taxes, fees and charges in order to ascertain, assess, and collect the correct amount
of the tax, fee, or charge. Such examination shall be made during regular business hours, only once for every
tax period, and shall be certified to by the examining official. Such certificate shall be made of record in the books
of accounts of the taxpayer examined.

In case the examination herein authorized is made by a duly authorized deputy of the local treasurer, the written
authority of the deputy concerned shall specifically state the name, address, and business of the taxpayer
whose books, accounts, and pertinent records are to be examined, the date and place of such examination and
the procedure to be followed in conducting the same.

For this purpose, the records of the revenue district office of the Bureau of Internal Revenue shall be made
available to the local treasurer, his deputy or duly authorized representative.

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LTOM FORM NO. 4 - LIST OF DOCUMENTS TO BE EXAMINED

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

Pursuant to Letter of Authority attached hereto, please prepare the following pertinent
business records of your business establishment/company, viz:

1. Business Permit, for the period __________ to __________, _________.

2. Business License Receipts, for the period __________ to __________, _________.
3. Latest Letter of Authority and Letter of Confirmation (proof of examination) issued.
4. Audited Financial Statement, for the period __________ to __________,
_________.
5. Books of Accounts, for the period __________ to __________, _________.
6. Purchases, Sales and Delivery Invoices, for the period __________ to __________,
_________.
7. Value-Added Tax (VAT), Percentage, Excise or Quarterly payments to Bureau of
internal Revenue (BIR).
8. Business Permit and Taxes paid in other Cities or Municipalities if the business has
branches outside the LGU.
9. Schedule of Gross Sales/Receipts for every branch duly certified by an authorized
official or representative of the establishment/company
10. Articles of Incorporation/Partnership
11. Contract of Lease (if place of business is rented)
12. List of employees submitted to Social Security System (SSS)
13. Letter of Credit/Bill of Lading (for Importers & Exporters)
14. POEA license, deployment reports (for ManpowerAgencies)
15. DOT Accreditation (for Tourist oriented and related business)
16. Contract of Agreement on Projects (for General Building and Engineering
Contractors)
17. Community Tax Certificate

Your cooperation in this regard will be highly appreciated.

Very truly yours,

___________________________
Local Treasurer

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LTOM FORM NO. 5 - TAX DATA SHEET

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ____________________

TAX DATA SHEET

Letter of Authority No. :

Date of Examination :

Time when the Examination Started :

Time when the Examination Ended :

Period/Year Covered :

Name of Business :

Nature of Business :

Name of Business Owner :

Complete Business Address :

License No. :

Citizenship :

Amount of Capital Investment (PhP) :

Mayor's Gross Sales/ Gross Sales/

Date of Type of Understatement of Overstatement of
Permit Receipts per Receipts per
Issue Business Sales Sales
No. Permit Examination

PAYMENTS
Taxes/Fees/Charges Amount Paid Date of Payment

-use separate sheet if necessary-

REMARKS:
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
-use separate sheet if necessary-

Examined by:

_____________________________________
Name and Signature of Examining Official/s

_____________________________________
Position/Designation of Examining Official/s

Date: ________________

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 LTOM, 2ND EDITION

LTOM FORM NO. 6 - TAX DATA SHEET AND ASSESSMENT FORM

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ____________________

TAX DATA AND ASSESSMENT FORM

Name of Business : Nature of Business :

Name of Business Owner : Mayors’ Permit No. :

Complete Business Address :

Letter of Authority/Appointment No. : Date Issued :

Community Tax Certificate No. : Date Issued :

Particulars Declared Actual Year Tax Tax Difference Surcharge Interest Total
Sales Sales Due Paid

-use separate sheet if necessary-

Findings and Recommendations

_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
-use separate sheet if necessary-

Examined by:

_____________________________________
Name and Signature of Examining Official/s

_____________________________________
Position/Designation of Examining Official/s

Date: ________________

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LTOM FORM NO. 7 - LETTER OF ASSESSMENT (FIRST NOTICE)

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

Please be informed that based on the conduct of examination of books of accounts and other
pertinent business records thereat on _________________ you are hereby requested to pay
the amount of ₱ _______________________ representing additional business tax including
surcharges and penalties covering the period, from _____________ to ______________,
_________.

To avoid the inconveniences of a legal action to enforce payment of your deficiency, it is hereby
required that you settle the aforesaid amount within fifteen (15) days from your receipt hereof.

Very truly yours,

____________________________
Local Treasurer

Letter of Authority No.: ________________

Date of Examination: _________________

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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 LTOM, 2ND EDITION

LTOM FORM NO. 8 - LETTER OF ASSESSMENT (SECOND NOTICE)

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

Records of this Office show that you failed to settle your remaining deficiencies discovered
during the conduct of examination of books of accounts and other pertinent business records
thereat on _________________ by examining official/s of this Office.

As provided under our letter dated ___________ and received by your company on
____________, you are hereby requested to pay the amount of ₱ __________________
representing additional business tax including surcharges and penalties covering the period,
from _____________ to ______________, __________.

In this regard, please settle the aforesaid amount within ten (10) days from receipt hereof.
Failure to do so shall constrain us to cancel your Mayor’s Permit or effect the civil remedies
provided for under Section 174 of RA No. 7160 otherwise known as the Local Government
Code (LGC) of 1991, by enforcing the collection thru distraint and levy or by judicial action.

Very truly yours,

____________________________
Local Treasurer

Letter of Authority No.: ________________

Date of Examination: _________________

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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LTOM FORM NO. 9 - LETTER OF ASSESSMENT (FINAL NOTICE)

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

Records of this Office show that you failed to settle your remaining deficiencies discovered
during the conduct of examination of books of accounts and other pertinent business records
thereat on _________________ by examining official/s of this Office.

As provided under our Letter of Assessments dated __________ and __________, respectively,
which was received by your company on __________ and ____________, respectively, you
are requested to settle the amount of ₱__________________ representing additional
business tax including surcharges and penalties covering the period, from _____________ to
______________. However, in spite of these notices, no reply or attempt to settle this
obligation on your part was made.

Please be informed that pursuant to Section 195 of RA No. 7160 otherwise known as the
Local Government Code (LGC) of 1991, the subject assessment becomes final and executory
and therefore, thus, the immediate settlement of the aforesaid tax obligation is exigently
requested, otherwise, this Office will be constrained to cancel your Mayor’s Permit or effect
the civil remedies provided for under Section 174 of the LGC by enforcing the collection thru
distraint and levy or by judicial action.

Very truly yours,

____________________________
Local Treasurer

Letter of Authority No.: ________________

Date of Examination: _________________

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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 LTOM, 2ND EDITION

LTOM FORM NO. 10 - FINAL NOTICE BEFORE ISSUANCE

OF WARRANT OF DISTRAINT AND LEVY
REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Subject: Tax Deficiency Discovered During Examination of your Books Pursuant to:

Letter of Authority No. :

Amount (PhP) :
Year :

Dear Sir/Madam:

Records of this office show that despite several notices served and duly receipted on your
business establishment/company and in consideration of the length of time that has elapsed,
this Office has not yet received a reply from your part.

In view hereof, we would like to inform you that we are giving you a LAST
OPPORTUNITY to make the necessary settlement of your additional business tax including
surcharges and penalties amounting to PhP __________________, covering the period, from
_____________ to ______________, _________, within five (5) days from receipt of this
NOTICE.

Please be informed that pursuant to Section 195 of RA No. 7160 otherwise known as the
Local Government Code (LGC) of 1991, the subject assessment becomes final and executory
and thus, the immediate settlement of the aforesaid tax obligation is exigently requested,
otherwise, this Office will be constrained to cancel your Mayor's Permit or effect the civil
remedies provided for under Section 174 of the Local Government Code by enforcing the
collection thru distraint and levy or by judicial action.

Very truly yours,

____________________________
Local Treasurer

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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LTOM FORM NO. 11 - NON-PRESENTATION OF DOCUMENTS

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:
Records of this office show that you failed to present for examination, your books of accounts
and other pertinent business records thereat, notwithstanding the service of Letter of Authority
No. ___________, dated _____________, on ____________, in violation of Section 170 of
RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991.

In this regard, you are hereby given three (3) days from receipt hereof to present your book of
accounts and other pertinent business documents for examination to this Office during regular
office hours. Failure to do so will constrain this Office to recommend for the cancellation of
your Mayor’s Permit or effect the civil remedies provided for under Section 174 of the Local
Government Code of 1991.

Very truly yours,

____________________________
Local Treasurer

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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 LTOM, 2ND EDITION

LTOM FORM NO. 12 - FINAL NOTICE OF NON-PRESENTATION

OF DOCUMENTS
REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:
Records of this office show that you failed to present for examination, your books of accounts
and other pertinent business records thereat notwithstanding the service of Letter of Authority
No. ___________, dated _________________, on _______________, in violation of Section
LOA No. Date of LOA No. Date Served/Issued

170 of RA No. 7160 otherwise known as the Local Government Code (LGC) of 1991.

Unless the books of accounts and other pertinent records relative thereof are presented to
this office within three (3) days from the receipt hereof, the following actions shall be taken to
effect the desired examination of book of accounts, to wit:

1. Cancellation of Mayor’s Permit

2. Effect the civil remedies provided for under Section 174 of the LGC.

Very truly yours,

____________________________
Local Treasurer

Acknowledgment:

Date Received: _______________

____________________________________
Signature over Printed Name of Declared
Business Owner or his/her Authorized
Representative

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 FORMS AND ANNEXES

LTOM FORM NO. 13 - LETTER OF CONFIRMATION

REPUBLIC OF THE PHILIPPINES
City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ___________________

NAME OF BUSINESS OWNER

COMPLETE BUSINESS ADDRESS

Dear Sir/Madam:

This refers to the examination of books of accounts and other pertinent business records
thereat pursuant to our Letter of Authority No. ______________ dated _____________,
LOA No. Date of LOA No.

serve/issued to your business establishment on __________________ .

Date Served/Issued

Please be informed that the said examination thereat has concluded and the corresponding
reports of the examining official/s has been submitted and made of record in this Office.

Very truly yours,

____________________________
Local Treasurer

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 LTOM, 2ND EDITION

LTOM FORM NO. 14 - CERTIFICATE OF CONFIRMATION

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

CERTIFICATE OF CONFIRMATION

This is to certify that on _______________, the books of accounts

and other pertinent business records thereat for the year _______ of

Mr./Ms.____________________________of_____________________________________,
Name of Business Owner Name of Business

with complete business address at ____________________________________________

has been examined by the Complete Business Address

Examining Official/s of this Office pursuant to the Letter of Authority No. ________,
LOA No.

dated ____________, whose findings and recommendations are stated

Date of LOA No.

herein.

A certificate of examination has been made of record in the book of accounts thereat on even
date.

This certification is issued for whatever legal purpose it may serve.

Issued this _______ day of ___________________, __________.

Day Month Year

Certified by:



____________________________
Local Treasurer

Verified and Concurred by:

Name of Examining Official/s:

______________________________
Name and Signature of Examining
Official/s

______________________________
Position/Designation of Examining
Official/s

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LTOM FORM NO. 15 - CERTIFICATE OF EXAMINATION

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

CERTIFICATE OF EXAMINATION

This is to certify that on _______________, the books of accounts and other

pertinent records thereat for the year ______ of Mr./Ms. __________________________ of

Name of Business Owner

____________________________________________________, with business address at

Name of Business

____________________________________________________has been examined by the

Complete Business Address

Examining Official/s of this Office pursuant to the Letter of Authority No. ________,
LOA No.

dated _____________.
Date of LOA No.

It is further certified that the gross sales/receipts amounting

to _______________________________________________________________________
(PhP ______________________) of the aforesaid business establishment has been
Total Gross Sales/Receipts Examined

determined by virtue of the said examination of books of accounts, which shall be the basis
in the computation of business taxes, fees and charges due thereof for the period, from
_____________ to ______________ of the current year.

This certification is issued for whatever legal purpose it may serve.

Issued on this _______ day of ___________________, __________.

Day Month Year

Certified by:



____________________________
Local Treasurer

Verified and Concurred by:

Name of Examining Official/s:

______________________________
Name and Signature of Examining
Official/s

______________________________
Position/Designation of Examining
Official/s

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 LTOM, 2ND EDITION

LTOM FORM NO. 16 - NOTICE OF DELINQUENCY IN THE PAYMENT

OF REAL PROPERTY TAX
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

NOTICE OF DELINQUENCY IN THE PAYMENT OF REAL PROPERTY TAX

Based on the records of this office, the real property tax of the following properties
have not been paid:
Tax Total
Declared Location of Kind of Year/s of Tax Due
Declaration Assessed
Owners Property Property Delinquency as of ____
Number Value
1.
2.
3.
4.
5.
6.
7.
8.

Personal property may be distrained to effect payment. At any time before the distraint
of personal property, payment of the tax with surcharges, interests and penalties may be
made, and unless that tax, surcharges and penalties are paid before the expiration of the year
for which the tax is due, the delinquent real property will be sold at public auction, and the title
to the property will be vested in the purchaser, subject however, to the right of the delinquent
owner of the property or any person having legal interest therein to redeem the property within
one (1) year from the date of sale.

____________________________
Date: _______________ Local Treasurer

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LTOM FORM NO. 17 - NOTICE OF REAL PROPERTY TAX

DELINQUENCY (FIRST NOTICE)
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date: _________________
NAME OF DECLARED OWNER
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that you have real property tax delinquency on your property
computed as follows:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Penalty Tax Penalty Total Amount

Total Tax Due ----Php

Please settle the delinquency within ten (10) days from receipt of this notice.

Very truly yours,

____________________________
Local Treasurer

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 LTOM, 2ND EDITION

LTOM FORM NO. 18 - NOTICE OF REAL PROPERTY TAX

DELINQUENCY (SECOND NOTICE)
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date: _________________
NAME OF DECLARED OWNER
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that you failed to settle your real property tax delinquency as
provided in our letter dated __________________and computed as follows:
Date of First Notice

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Penalty Tax Penalty Total Amount

Total Tax Due ----Php

Please settle the delinquency within seven (7) days from receipt of this letter.

Very truly yours,

____________________________
Local Treasurer

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LTOM FORM NO. 19 - NOTICE OF REAL PROPERTY TAX

DELINQUENCY (FINAL NOTICE)
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date:
____________________
NAME OF DECLARED OWNER
COMPLETE ADDRESS
Dear Sir/Madam:
Records show that despite two (2) notices, you still have not settled your real
property tax delinquency computed as follows:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Penalty Tax Penalty Total Amount

-continued on separate sheet if necessary-

Total Tax Due ----Php

We are giving you five (5) days as a final chance to settle the said obligation
otherwise, we will initiate legal proceedings against the property.

Very truly yours,

____________________________
Local Treasurer

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 LTOM, 2ND EDITION

LTOM FORM NO. 20 - WARRANT OF LEVY

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER
WARRANT OF LEVY

NAME OF DECLARED OWNER
COMPLETE ADDRESS

Records show that you still have not paid your real property tax delinquency
computed as follows:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Penalty Tax Penalty Total Amount

Total Tax Due ----Php

Please settle the delinquency within ten (10) days from receipt of this notice.
WHEREFORE, this Warrant of Levy is hereby issued on the property described
above pursuant to Section 258 of RA 7160
Issued this _______ day of ___________________, __________.
Day Month Year

____________________________
Local Treasurer

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LTOM FORM NO. 21 - NOTICE OF LEVY (LOCAL ASSESSOR

AND REGISTRAR OF DEEDS)
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date:
___________________
NAME OF ASSESSOR
COMPLETE OFFICE ADDRESS
Dear Sir/Madam:

Please be informed that a Warrant of Levy, copy hereto attached has been
issued to the real property described hereunder:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

Kindly annotate the said levy on the tax declaration of the said property.
Thank you.

Very truly yours,

____________________________
Local Treasurer

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 LTOM, 2ND EDITION

REPUBLIC OF THE PHILIPPINES

Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date:
___________________
NAME OF REGISTRAR OF DEEDS
COMPLETE OFFICE ADDRESS
Dear Sir/Madam:

Please be informed that a Warrant of Levy, copy hereto attached has been
issued to the real property described hereunder:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

Kindly annotate the said levy on the certificate of title of the said property.

Thank you.

Very truly yours,

____________________________
Local Treasurer

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LTOM FORM NO. 22 - REPORT OF LEVY (SANGGUNIAN)

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date:
___________________
THE HONORABLE MEMBERS
LOCAL SANGGUNIAN
COMPLETE OFFICE ADDRESS
Gentlemen and Ladies:
Respectfully submitting to your office the list of real properties with Warrant of
Levy, pursuant to Sec. 258 of RA 7160, otherwise known as the Local Government
Code (LGC) of 1991.

Very truly yours,

____________________________
Local Treasurer

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 REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

LIST OF REAL PROPERTY TAX DELINQUENCIES ISSUED WITH WARRANT OF LEVY

Declared Owner/s Tax Declaration No. Location of Property Kind of Property Assessed Value
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

CERTIFIED CORRECT:


____________________________
Local Treasurer

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LTOM, 2ND EDITION

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 102
LTOM FORM NO. 23 - NOTICE OF AUCTION SALE OF DELINQUENT REAL PROPERTIES
REPUBLIC OF THE PHILIPPINES
____________________________
Province/City/Municipality
FORMS AND ANNEXES

OFFICE OF THE LOCAL TREASURER

NOTICE OF AUCTION OF SALE OF DELINQUENT REAL PROPERTIES

Pursuant to Section 260 of Republic Act No. 7160 (Local Government Code of 1991), the undersigned hereby gives notice to the public that we will conduct an
auction sale of delinquent real properties on ________________ at _____________________. The auction will be held at ____________________.
Date of Auction Time of Auction Place of Auction

Total
Declared Tax Declaration Location of Kind of Assessed Year/s of
TCT Number Delinquencies as Cost of Sale
Owner/s Number Property Property Value Delinquency
of _____
1.
2.
3.
4.
5.
6.

At any time before _____________________, the owner of the real property or person having legal interest therein may stay the
Date of Auction

proceedings by paying the delinquent tax, the interest due thereon and the expenses of sale.

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____________________________
Local Treasurer
 LTOM, 2ND EDITION

LTOM FORM NO. 24 - NOTICE OF SALE

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER

Date:
___________________
NAME OF DECLARED OWNER
COMPLETE ADDRESS
Dear Sir/Madam:
Pursuant to Section 260 of Republic Act No. 7160 (Local Government Code
of 1991), the undersigned will conduct and auction sale of delinquent real properties
on __________________________ at ____________________. The auction will
Time of Auction Place of Auction

be held at the ___________________.

Date of Auction

In this regard, your property/ies described hereunder will be included in the

list of delinquent real properties that will be auctioned on that date:

Declared Owner/s :
Tax Declaration No. :
TCT No. :
Location of Property :
Kind of Property :
Assessed Value :

BASIC SEF
Tax Year Tax Interest Tax Interest Total Amount

-continued on separate sheet if necessary-

Total Tax Due ----Php

At any time before _______________, you may stay the proceedings by

Date of Auction

paying the delinquent tax, the interest due thereon and expenses of sale.

Very truly yours,

____________________________
Local Treasurer

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 FORMS AND ANNEXES

LTOM FORM NO. 25 - PUBLIC AUCTION REGISTRATION FORM

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________
OFFICE OF THE LOCAL TREASURER
PUBLIC AUCTION REGISTRATION FORM

Date: ____________________

Please tick the appropriate box to determine your bidder number

Individual Bidder

Corporate Bidder

Official Receipt No. : Assigned Bidder No. :

For Individual Bidder:

Name :
Complete Address :

Telephone No. :
Mobile No. :
Email Address (if any) :
Citizenship :
Sex :

For Corporate Bidder:

Name of Representative :
Complete Address :
Telephone No. :
Mobile No. :
Email Address (if any) :
Citizenship :
Sex :
Business/Employer’s Complete Address :

Business/Employer’s Contact No. :

Business/Employer’s Email Address/Website :

DECLARATION

In pursuance to Art. 1491 of RA 386 otherwise known as the Civil Code of the Philippines and
Sec. 89 of RA 7160, otherwise known as the Local Government Code (LGC) of 1991, I understand that it
is unlawful to engage in any business transaction with the LGU in which he/she is an official or employee
or over which he/she has the power of supervision, or with any of its authorized boards, officials, agents,
or attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred,
directly or indirectly, out of the resources of the LGU to such person or firm or purchase any real estate
or other property forfeited in favor of such local government unit for unpaid taxes or assessment, or by
virtue of a legal process at the instance of the said LGU.

______________________________________
Signature over printed name
Name of Registered Bidder/ Representative

Based on the foregoing declaration, I hereby certify that the above bidder is ______________
to participate. Specify if Qualified or Not Qualified

_____________________________________
Signature over printed name
Local Auction Committee

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 LTOM FORM NO. 26 - LIST OF REGISTERED BIDDERS
REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

Date: ____________________

LIST OF REGISTERED BIDDERS

Assigned Bidder
Name of Bidder/Representative Complete Address/Business Address Contact No. Official Receipt No.
No.

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CERTIFIED CORRECT:


____________________________
Local Treasurer
LTOM, 2ND EDITION

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 FORMS AND ANNEXES

LTOM FORM NO. 27 - UNDERTAKING AND WAIVER OF BIDDERS

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

UNDERTAKING AND WAIVER

I, _____________________________________, of legal age, Filipino, Single/Married, and a resident of
Name of Registered Bidder/Representative

__________________________________________, after being sworn in accordance with law, depose

Complete Address

and say:

1. That I am a registered bidder during the public auction of delinquent real properties on
________________, at __________________________________;
Actual Date of Public Auction Place where the Public Auction was conducted

2. That I am informed of the status, condition and ownership of the real property/ies sold during the
above Public Auction, and I am aware of, acknowledge and accept the terms and conditions of the
said Public Auction as provided for under the Rules and Regulation of Public Auction as promulgated
by the Local Auction Committee;

3. That I acknowledge the I understand the provisions provided under the Rules and Regulation of
Public Auction provided;

4. That I hereby undertake to pay the bid price that I will successfully bid for, otherwise, the property/ies
sold to me shall be awarded to the LGU concerned;

5. Further, I am aware and understand that the registration fee of the said public auction is non-
deductible from the bid price; and

6. That I executed this document to attest to the truth of the foregoing and for whatever legal purpose
this may serve.

IN WITNESS WHEREOF, I have hereunto set my hand this _______ day of ___________________,
Day Month

__________.
Year

____________________________________
__Name of Registered Bidder/Representative

REPUBLIC OF THE PHILIPPINES)

___________________________ ) SS.

BEFORE ME, a Notary Public for and in the Province/City/Municipality of _______________________ ,

personally appeared: Name of LGU

NAME CTC Number Date and Place Issued

Known to me and me known to be the same person who executed the foregoing instrument and acknowledged
to me that the same is/are his/her/their free act and voluntary deed.

WITNESS MY HAND AND SEAL on this _______ day of ___________________, __________.

Day Month Year

Doc No. :
Page No. : ____________________________
Book No. :
Notary Public
Series of :

The information provided is not covered by the data privacy act and is only meant to carry out the provisions of public auction pursuant to Sec. 258 (Levy
on Real Property) and Sec. 260 (Advertisement and Sale) of the LGC.

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LTOM FORM NO. 28 - RULES AND REGULATIONS OF PUBLIC AUCTION

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

RULES AND REGULATION OF PUBLIC AUCTION
(SHALL BE READ BEFORE THE CONDUCT OF PUBLIC AUCTION)

Date: _________________
I. WHO MAY PARTICIPATE:
Person/s or Corporation/s that paid the required registration fee and accomplished
the registration form issued, such as but not limited to:
1. All Filipino citizens who are not otherwise disqualified by law to acquire real
property in the Philippines and in pursuant to the limitations provided under
Art. 149128 of RA 386 otherwise known as the Civil Code of the Philippines
and Sec. 8929 of RA 7160 otherwise known as the Local Government Code
(LGC) of 1991 and other applicable laws rules and regulations.
2. Partnership, corporations and other legal entities duly registered with the
Securities and Exchange Commission (SEC) , 60% of the capital of which is
owned by Filipino citizens and not disqualified by law to acquire real property
in the Philippines;

28 Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:

a. The guardian, the property of the person or persons who may be under his guardianship;
b. Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the
principal has been given;
c. Executors and administrators, the property of the estate under administration;
d. Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned
or controlled corporation, or institution, the administration of which has been entrusted to them; this provision shall
apply to judges and government experts who, in any manner whatsoever, take part in the sale;
e. Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the
act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be
the object of any litigation in which they may take part by virtue of their profession.
f. Any others specially disqualified by law.

29 SECTION 89. Prohibited Business and Pecuniary Interest.

a. It shall be unlawful for any local government official or employee, directly or indirectly, to:

1. Engage in any business transaction with the local government unit in which he is an official or employee
or over which he has the power of supervision, or with any of its authorized boards, officials, agents, or
attorneys, whereby money is to be paid, or property or any other thing of value is to be transferred, directly
or indirectly, out of the resources of the local government unit to such person or firm;
2. Hold such interests in any cockpit or other games licensed by a local government unit.
3. Purchase any real estate or other property forfeited in favor of such local government unit for unpaid taxes or
assessment, or by virtue of a legal process at the instance of the said local government unit.
4. Be a surety for any person contracting or doing business with the local government unit for which a surety
is required; and
5. Possess or use any public property of the local government unit for private purposes.

b. All other prohibitions governing the conduct of national public officers relating to prohibited business and
pecuniary interest so provided for under Republic Act Numbered 6713 (RA 6713) otherwise known as the "Code
of Conduct and Ethical Standards for Public Officials and Employees" and other laws shall also be applicable to
local government officials and employees.

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3. Duly authorized representative or person/s having legal interest to the

property of the declared owner;
II. CONDUCT OF PUBLIC AUCTION:
1. PublicAuction shall be conducted using the ____________________________
method. Specify if Open or Closed Bidding

2. All correspondence and documents relating to public auction, shall be

written in English. Supporting documents and printed literature may be in
another language provided they are accompanied by an accurate translation
in English.
3. Participating bidders shall be required to pay a non-refundable registration
fee and a refundable cash bond and shall accomplish the “registration form”.
4. Registered bidders shall be read and issued a copy of Rules and Regulations
in Public Auction and shall sign the “undertaking and waver”.
5. Registered bidders who accede to the rules and regulation of public auction
shall be entered into a list, and shall be assigned with a bidder number, upon
which such bidder shall be called or referred to during the entire proceedings
of the public auction. Only those with assigned bidder number may participate
in the public auction.
6. All bid price shall be quoted in Philippine Peso (₱).
7. The local treasurer and his/her duly authorized representative shall facilitate
the proceedings and shall read/tally the list of delinquent properties subject
for public auction. The delinquent real property shall be sold to the highest
cash bidder.
8. All bids shall be reviewed and validated by the local treasurer and/or his/her
duly authorized representative/s.
9. Bids shall be ranked, the ranking shall be calculated from highest to lowest
bid, the highest bid shall be declared as the winner.
III. CONDITIONS:

1. All participating bidders are required to pay a non-refundable amount of

_________________________________________, Php_______________
Registration Fee in Words Registration Fee in Figures

that shall cover the registration fee for the Public Auction and post a
refundable cash bond in the amount of ____________________________,
Cash Bond Amount in Words

Php_____________________, as provided under Real Property Tax (RPT)

Cash Bond Amount in Figures

Ordinance No. _________, dated _______________.

2. The local treasurer does not warrant the authenticity or validity of the
Certificate of Title (Title) of the registered or declared owner nor does
guarantee the correctness or accuracy of the description of the property.

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Successful bidders acquire no better Title than that of the registered or

declared owner appearing on the Title and they will acquire the property
together with all its encumbrances like mortgage, lease and the like, existing
at the time of the purchase in the public auction. In the observance of
due diligence, participating bidders may first ascertain the existence and
authenticity of the Title of the property they wish to bid.
3. If land and improvement is covered by two (2) separate tax declarations and
both are delinquent but declared under one (1) person or declared as joint
ownership, the same shall be auctioned off together, to avoid the sale to a
different bidder.
4. The delinquent real property shall be sold to the highest bidder whose bid is
sufficient to pay the delinquent RPT, the interest due or penalties, and the
expenses of sale, the sum of which shall be the floor price for accepting any
bid.
5. The highest bidder shall, upon award, immediately pay the bid price which
shall be made in cash or manager’s check for the exact amount of the
bid payable in the name of the local treasurer or in the name of the LGU
concerned, as the case may be.
6. A Certificate of Sale shall be issued by the local treasurer to the highest
bidder, which contains the name of the latter, a sufficient description of the
property sold, the amount of the delinquent tax, the interest due or penalties,
the expenses of sale and a brief description of the public auction.
7. At any time before the date of the public auction, the declared owner/person
having legal interest therein or authorized representative may stop the
proceedings by paying in full, the following:
a. The amount of delinquent tax
b. The interest due or penalties, and
c. The expenses of sale.
8. Within one (1) year from the date of public auction, or as the case maybe,
the declared owner/person having legal interest therein or authorized
representative of the delinquent real property, shall have the right to redeem
the same by paying in full, the following:
a. The redemption price, which consists of the amount of delinquent tax
b. The interests due or penalties
c. The expenses of sale, computed from the date of delinquency to the
date of sale
d. Interest of not more than two percent (2%) per month on the purchase
price from the date of Public Auction to the date of payment of the
redemption price.
Full payment of the redemption price shall invalidate the Certificate of
Sale issued.

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9. Upon full payment of the redemption price, the declared owner/person

having legal interest therein or authorized representative of the delinquent
real property shall be entitled to a Certificate of Redemption which shall be
issued by the local treasurer. The local treasurer shall be responsible for
the request for cancellation of annotation of the Certificate of Title and Tax
Declaration with the RoD and local assessor, respectively.
10. The highest bidder shall return the Certificate of Sale to the local treasurer,
who shall forthwith return to the former the entire amount paid in the Public
Auction, including interest of not more than two percent (2%) per month from
the date of sale to the date of payment of the redemption price.
11. From the date of sale until the expiration of the period of redemption, the
delinquent real property shall remain in the possession of the declared
owner/person having legal interest therein or authorized representative, who
shall be entitled to all the income and fruits thereof.
The proceeds of the sale in excess of the delinquent tax, the interest due or
penalties and the expenses of sale shall be remitted to the declared owner/
person having legal interest therein or authorized representative.
12. In case the declared owner/person having legal interest therein or authorized
representative of the delinquent real property fails to redeem the delinquent
property, the local treasurer shall execute a Final Deed of Sale in favor of
the highest bidder, conveying subject real property, free from all liens of
delinquent tax, the interests due or penalties and expenses of sale. However,
the highest bidder shall be responsible to pay the corresponding taxes and
fees and charges relative to the transfer thereof.
13. In case there is no bidder for the real property advertised for public auction,
or if the highest bid is for an amount insufficient to pay the taxes, fees,
or charges, related surcharges, interests, penalties and costs, the local
treasurer conducting the sale shall purchase the property in behalf of the
LGU to satisfy the claim.

The information provided is not covered by the data privacy act and is only meant to carry out the provisions of public auction pursuant to Sec. 258 (Levy
on Real Property) and Sec. 260 (Advertisement and Sale) of the LGC.

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LTOM FORM NO. 29 - CERTIFICATE OF SALE

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

CERTIFICATE OF SALE

I hereby certify that after having been advertised for sale pursuant to Sec. 260 of
RA 7160 otherwise known as the Local Government Code (LGC) of 1991, and subject to
the conditions set forth therein, the delinquent real property (land/building/machinery/
improvement) described hereunder was sold at the public auction:

Name of Declared Owner :

Tax Dec. No. : Kind of Property :

ARP : Location :
PIN : TCT No. :

The public auction was held on __________________ at

Date of the Public Auction

_______________________, and the subject delinquent real property was sold

Place where the Public Auction was Conducted

to Mr./Ms. _________________________, a citizen of the Philippines, of legal

age and a resident of ____________________________, being the highest

bidder thereof, for total consideration of _____________________________,

Total Purchase/Bid Price in Words

(Php________________), payment is hereby acknowledge received per Official

Total Purchase/Bid Price in Figures

Receipt No. ___________________, dated ___________, sufficient to satisfy the amount

of taxes, interest due or penalties and expenses of sale thereon, itemized as follows:

For the year/s _____________________, the real property tax (RPT) delinquency,
including penalty/ies and expenses of sale is computed as follows:

BASIC SEF
Assessed Expenses of
Tax Year Tax Penalty Tax Penalty Total Amount
Value Sale

Issued this _______ day of ___________________, __________.

Day Month Year

____________________________
Local Treasurer

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LTOM FORM NO. 30 - DECLARATION OF FORFEITURE

OF DELINQUENT PROPERTY
REPUBLIC OF THE PHILIPPINES
____________________________
Province/City/Municipality
OFFICE OF THE LOCAL TREASURER

I HEREBY DECLARE that the delinquent real property described as follows:

Declared Owner/s :
Tax Declaration No. :
TCT Number :
Location of Property :
Kind of Property :
Assessed Value :

has been forfeited in favor of the __________ at the public auction held on
LGU

________ at the __________________, for the amount of taxes and penalties due
on the property and cost of sale, there being no interested bidder at the public auction
of the delinquent property or the highest bid offered having been for an amount not
sufficient to pay the taxes, penalties and costs due thereon, computed as follows:

Basic and SEF Taxes ₱

Penalties
Costs of Sale
Excess of Bid Price
Total ₱

This Declaration is issued pursuant to the provisions of Section 263 of Republic

Act 7160.

Province/City : Date :

Attested:


____________________________
Local Treasurer

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LTOM FORM NO. 31 - REPORT OF SALE

REPUBLIC OF THE PHILIPPINES
____________________________
Province/City/Municipality
OFFICE OF THE LOCAL TREASURER

Date: _________________
THE HONORABLE MEMBERS
LOCAL SANGGUNIAN
COMPLETE LGU ADDRESS
Gentlemen/Ladies:
Respectfully submitting to your office the list of real properties sold at auction
on __________________.
Date of Public Auction

Attached to this letter is the Minutes of the Public Auction.

Very truly yours,

____________________________
Local Treasurer

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LTOM FORM NO. 32 - CERTIFICATE OF REDEMPTION

REPUBLIC OF THE PHILIPPINES
____________________________
Province/City/Municipality

OFFICE OF THE LOCAL TREASURER

Date: _________________

This is to certify that the real property described hereunder and purchased by
_____________________________ on _________________ was redeemed upon
Name of Highest Bidder Date of Auction

payment of the total amount of ₱___________________ by _________________.

Declared Owner

Declared Owner/s :
Tax Declaration No. :
TCT Number :
Location of Property :
Kind of Property :
Assessed Value :

At any time upon surrender to this office of the Certificate of Sale, dated
___________ and Official Receipt Number/s ______________ dated __________
Date of Auction Official Receipt of Bid Price Date of Auction

the entire amount paid plus interest of

not more than two percent (2%) per month of the purchase price from the date of
redemption shall be refunded to the purchaser.

____________________________
Local Treasurer

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LTOM FORM NO. 33 - CANCELLATION OF WARRANT OF LEVY

(LOCAL ASSESSOR AND REGISTRAR
OF DEEDS)
REPUBLIC OF THE PHILIPPINES
____________________________
Province/City/Municipality

OFFICE OF THE LOCAL TREASURER

Date: _________________
ASSESSOR
REGISTRAR OF DEEDS
COMPLETE OFFICE ADDRESS
Dear Sir/Madam:
This is to inform that the Warrant of Levy dated _________________ issued
on the property covered by Tax Declaration Number _______ and Transfer Certificate
of Title (TCT) No. ________ was cancelled due to the exercise of redemption by the
declared owner/s.

Very truly yours,

____________________________
Local Treasurer

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LTOM FORM NO. 34 - FINAL DEED OF SALE

REPUBLIC OF THE PHILIPPINES
Province/City/Municipality of ____________________________

OFFICE OF THE LOCAL TREASURER

FINAL DEED OF SALE

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the real property declared in the name of Mr./Ms. ______________________

Name of Declared Owner/Person having Legal Interest
Therein or Authorized Representative
under Tax Declaration No.: ________________, ARP: ________________, PIN: __________,
has been delinquent in the payment of Real Property Tax (RPT) for the year/s: _____________.
Period of years delinquent

WHEREAS, a Notice of Sale, dated _________________ was advertised pursuant

Date of Notice of Sale

to the provision of Section 260 of RA 7160 otherwise known as the Local Government Code
(LGC) of 1991, and was served personally and thru registered mail to the declared owner/
person having legal interest therein or authorized representative at his/her registered.

WHEREAS, on account of said delinquency, the abovementioned real property was

advertised for sale at a public auction to satisfy the amount of delinquent tax, including interest
due thereon and the expenses of sale in the total amount of __________________________,
Total Amount Due provided in the Certificate of Sale in Figures
Php ___________________________.
Total Amount Due provided in the Certificate of Sale in Words

WHEREAS, at the public auction held on _____________________ at

Date where the Public Auction was Conducted
___________________, the subject property was sold to Mr./Ms. ________________________,
Place where the Public Auction was Conducted Name of the Highest Bidder

a citizen of the Philippines, of legal age and a resident of ________________________,

Complete Address of the Highest Bidder
being the highest bidder thereof, for total consideration of __________________________,
Total Purchase/Bid Price in Words

(Php____________________), payment is hereby acknowledge received per Official Receipt

Total Purchase/Bid Price in Figures

No. ____________, dated ___________, sufficient to satisfy the amount of taxes, interest due
or penalties and expenses of sale thereon.

WHEREAS, the declared owner/person having legal interest therein or authorized

representative, within the period of one (1) year pursuant to Section 261 of the LGC, failed to
redeem the subject property by paying the amount of delinquent tax, including interest due
thereon and the expenses of sale from the date of delinquency to the date of sale, plus interest
of not more than two percent (2%) per month on the purchase price from the date of sale to
the date of redemption.

NOW THEREFORE, the real property under Tax Declaration No.: ________________,
ARP: ________________, PIN: ________________, free from any encumbrance or third
party claim whatsoever, is hereby conveyed to Mr./Ms. ______________________________,
Name of the Highest Bidder

the holder of the Certificate of Sale dated ___________________, issued by

Date of the Certificate of Sale

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_____________________________, covering the subject property.

Name of the Local Treasurer

IN WITNESS WHEREOF, the parties hereto have signed this deed this _______ day
Day

of ________________, ____________in ________________________, Philippines.

Month Year Name of LGU

____________________________ ____________________________
Vendor Vendee
Name of the Local Treasurer Name of Highest Bidder

Signed in the presence of:

____________________________ ____________________________
Name of Witness 1 Name of Witness 2

REPUBLIC OF THE PHILIPPINES)

___________________________ ) SS.

BEFORE ME, a Notary Public for and in the Province/City/Municipality of _____________________

_____________ , personally appeared:
Name of LGU

NAME CTC Number Date and Place Issued

Known to me and me known to be the same person who executed the foregoing instrument and
acknowledged to me that the same is/are his/her/their free act and voluntary deed. WITNESS
MY HAND AND SEAL on this _______ day of ___________________, __________.
Day Month Year

____________________________
Notary Public

Doc No. :
Page No. :
Book No. :
Series of :

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LTOM FORM NO. 35 - STATEMENT OF RECEIPTS AND EXPENDITURES

(EXHIBITS1 AND 1-A OF BLGF SRE FORM NO. 1)
ITEM
STATEMENT OF RECEIPTS AND EXPENDITURES
NO.
1 LGU: __________
2 Period __________
% of
Income
General General
3 Particulars / Target SEF Total
Fund + SEF to
Budget
Total
4 A B C D E F
5 LOCAL SOURCES
6 TAX REVENUE
7 Real Property Tax
8 Tax on Business
9 Other Taxes
10 NON-TAX REVENUE
Regulatory Fees (Permits and
11
Licenses)
Service/User Charges (Service
12
Income)
Receipts from Economic Enterprises
13
(Business
Other Receipts (Other General
14
Income)
15 EXTERNAL SOURCES
16 Internal Revenue Allotment
Other Shares from National Tax
17
Collections
18 Inter-Local Transfers
Extraordinary Receipts/Grants/
19
Donations/Aids
TOTAL CURRENT OPERATING
20
INCOME
ADD: SUPPLEMENTAL BUDGET
21
(UNAPPROPRIATED)
TOTAL AVAILABLE FOR CURRENT
22
OPERATING
LESS: CURRENT OPERATING
23
EXPENDITURES (PS+MOOE+CO)
24 General Public Services
Education, Culture & Sports/
25
Manpower Development
Health, Nutrition & Population
26
Control
27 Labor and Employment

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ITEM
STATEMENT OF RECEIPTS AND EXPENDITURES
NO.
Housing and Community
28
Development
29 Social Services and Social Welfare
30 Economic Services
Debt Service (FE) (Interest Expense
31
& Other Charges)
TOTAL CURRENT OPERATING
32
EXPENDITURES
NET OPERATING INCOME/(LOSS)
33
FROM CURRENT
34 ADD: NON-INCOME RECEIPTS
35 CAPITAL/INVESTMENT RECEIPTS
36 Proceeds from Sale of Assets
Proceeds from Sale of Debt
37
Securities of Other
38 Collection of Loans Receivables
RECEIPTS FROM LOANS AND
39
BORROWINGS
40 Acquisition of Loans
41 Issuance of Bonds
42 OTHER NON-INCOME RECEIPTS
43 TOTAL NON-INCOME RECEIPTS
ADD: SUPPLEMENTAL BUDGET FOR
44
CAPITAL OUTLAY
TOTAL AMOUNT AVAILABLE FOR
45
CAPITAL
LESS: NON-OPERATING
46
EXPENDITURES
CAPITAL/INVESTMENT
47
EXPENDITURES
Purchase/Construct of Property
48
Plant and Equipment
Purchase of Debt Securities of Other
49
Entities
Grant/Make Loan to Other Entities
50
(Investment Outlay)
51 DEBT SERVICE (Principal Cost)
52 Payment of Loan Amortization
Retirement/Redemption of Bonds/
53
Debt Securities
OTHER NON-OPERATING
54
EXPENDITURES
TOTAL NON-OPERATING
55
EXPENDITURES
NET INCREASE/(DECREASE) IN
56
FUNDS
57 ADD: CASH BALANCE, BEGINNING

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ITEM
STATEMENT OF RECEIPTS AND EXPENDITURES
NO.
58 FUND/CASH AVAILABLE
Less: Payment of Prior Year/s Accounts
59
Payable
60 CONTINUING APPROPRIATION
61 ADD: ADVANCE PAYMENT FOR RPT
62 FUND/CASH BALANCE, END

FUND/CASH BALANCE, END

Amount set aside to finance projects with
appropriations
provided in the previous years (Continuing
appropriations)
Amount set aside for payment of Accounts
Payable
Amount set aside for Obligation not yet Due and
Demandable
Amount Available for appropriations/operations

Total Assets (net of accumulated

depreciation)

Certified Correct:

Provincial / Municipal Treasurer

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Guidelines on the Preparation of the Statement of Receipts and Expenditures

ITEM
FIELD INSTRUCTIONS SOURCE
NO.
1 LGU Indicate the name of LGU LGU

2 Period Covered Indicate the period covered by the report LGU

(i.e., January 1 to March 31 for the First
Quarter Report, January 1 to June 30 for
the Second Quarter Report; etc.)
4-B Income Target/ The amount is based on the annual budget Budget Office
Budget approved by the Sanggunian. This column Approved
Appropriation can be used to determine the projected Budget
Column cash flow based on the approved budget

4-C General Fund These are actual receipts and expenditures SRS Actual
Column lifted from the SRS and SOE for the Column and
General Fund SOE Actual
Expenditures
Column
4-D SEF Column These are receipts and expenditures lifted SRS Actual
from the SRS and SOE appropriate to the Column and
Special Education Fund (SEF) SOE Actual
Expenditures
Column
4-E Total Sum of GF and SEF

4-F % of General + SEF Sum of GF and SEF divided by Total.

to Total Income (GF Determine the % of each income or
+ SEF) expenditure category in relation to total

5 Local Sources Sum of Tax Revenues and Non-Tax

Revenues
6 Tax Revenues Sub-total of RPT, Tax on Business and
Other Taxes
7 Real Property Tax The amount should be lifted from the SRS SRS

8 Tax on Business The amount should be lifted from SRS SRS

9 Other Taxes The amount should be lifted from SRS SRS

10 Non-Tax Revenues Sum of Regulatory Fees, Service/User

Charges, Receipts from Economic
Enterprises and Other Receipts

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ITEM
FIELD INSTRUCTIONS SOURCE
NO.
11 Regulatory Fees The amount should be lifted from SRS SRS
(Permits and
Licenses)
12 Service/User The amount should be lifted from SRS SRS
Charges (Service
Income)
13 Receipts from The amount should be lifted from SRS SRS
Economic
Enterprises
(Business Income)
14 Other Receipts The amount should be lifted from SRS SRS
(Other General
Income)
15 External Sources Sum of Internal Revenue Allotment, Other
Shares from National Tax Collections,
Inter-Local Transfers and Extraordinary
Receipts/Grants/ Donations/Aids

16 Internal Revenue The amount should be lifted from SRS SRS

Allotment
17 Other Shares The amount should be lifted from SRS SRS
from National Tax
Collections
18 Inter-Local Transfers The amount should be lifted from SRS SRS

19 Extraordinary The amount should be lifted from SRS SRS

Receipts/Grants/
Donations/Aids
20 Total Current Sum of Local Sources and External
Operating Income Sources
21 Supplemental Approved Supplemental Budget during the Budget Office
Budget year from unappropriated surplus (Budget Approved
(Unappropriated Column only) Budget
Surplus)For
Current Operating
Expenditures
22 Total Available for Sum of Current Operating Income and
Current Operating Supplemental Budget
Expenditures
24 General Public The amount should be lifted from the SOE
Services General Public Services sub-total of the
Statement of Expenditures (SOE)
25 Education, The amount should be lifted from the SOE
Culture and Education, Culture and Sports/ Manpower
Sports/ Manpower Development sub-total of the SOE
Development

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ITEM
FIELD INSTRUCTIONS SOURCE
NO.
26 Health, Nutrition & The amount should be lifted from Health, SOE
Population Control Nutrition and Population Control sub-total
of the SOE
27 Labor and The amount should be lifted from the Labor SOE
Employment and Employment sub-total of the SOE
28 Housing and The amount should be lifted from the SOE
Community Housing and Community Development
Development sub-total of the SOE
29 Social Services and The amount should be lifted from the Social SOE
Social Welfare Services and Social Welfare sub-total of
the SOE
30 Economic Services The amount should be lifted from Economic SOE
Services sub-total of the SOE

31 Debt Service (FE) The amount should be lifted from Debt SOE
(Interest Expense & Service (FE) (Interest Expense & Other
Other Charges) Charges) sub-total of the SOE
32 Total Current Sum of General Public Services, Education,
Operating Culture and Sports/Manpower Development
Expenditures , Health, Nutrition & Population Control,
Labor and Employment, Housing and
Community Development, Social Services
and Social Welfare, Economic Services
and Debt Service
33 Net Operating The difference between Total Current
Income (Loss) from Operating Income and Total Current
Current Operations Operating Expenditures
34 Non-Income The amount should be lifted from SRS SRS
Receipts
35 Capital/ Investment Sub-total of Proceeds from Sale of Assets,
Receipts Proceeds from Sale of Debt Securities
of Other Entities, and Collection of Loans
Receivables
36 Proceeds from Sale The amount should be lifted from SRS SRS
of Assets
37 Proceeds from Sale The amount should be lifted from SRS SRS
of Debt Securities of
Other Entities
38 Collection of Loans The amount should be lifted from SRS SRS
Receivables
39 Receipts from Loans Sub-total of Acquisition of Loans and
and Borrowings Issuance of Bonds
40 Acquisition of Loans The amount should be lifted from SRS SRS

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 FORMS AND ANNEXES

ITEM
FIELD INSTRUCTIONS SOURCE
NO.
41 Issuance of Bonds The amount should be lifted from SRS SRS

42 Other Non-Income The amount should be lifted from Non- SRS

Receipts Income Receipts
43 Total Non-Income Sum of Capital/Investment Receipts,
Receipts Receipts from Loans and Borrowings and
Other Non-Income Receipts
44 Supplemental Approved Supplemental Budget for Capital Budget Office
Budget for Capital Outlay (Budget Column Only) Approved
Outlay Budget
45 Total Amount Sum of Supplemental Budget for Capital
Available for Capital Outlay
Expenditures
47 Capital/ Investment Sub-total of Purchase/Construct of
Expenditures Property, Plant and Equipment, Purchase
of Debt Securities of Other Entities, and
Grant/Make Loan to Other Entities

48 Purchase/ Construct Capital Outlay Expenditures – The amount SOE

of Property, Plant should be lifted from SOE
and Equipment
(Assets/Capital
Outlay)
49 Purchase of Debt The amount should be lifted from SOE SOE
Securities of Other
Entities (Investment
Outlay)
50 Grant/Make Loan The amount should be lifted from SOE SOE
to Other Entities
(Investment Outlay)
51 Debt Service Sub-total of Payment of Loan Amortization
and Retirement/Redemption of Bond/Debt
Securities
52 Payment of Loan The amount should be lifted from SOE SOE
Amortization
(Principal)
53 Retirement/ The amount should be lifted from SOE SOE
Redemption
of Bond/Debt
Securities
54 Other Non- Other Non-Operating Expenditures from SOE
Operating SOE
Expenditures
55 Total Non-Operating Sum of Capital/Investment Expenditures,
Expenditures Debt Service and Other Non-Operating
Expenditures

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 LTOM, 2ND EDITION

ITEM
FIELD INSTRUCTIONS SOURCE
NO.
56 Net Increase Sum of Net Operating Income, Total Non-
(Decrease) in Funds Income Receipts less Total Non-Operating
Expenditures

57 Cash Balance The amount is the ending cash balance Treasurer

Beginning per Balance Sheet of last year (Dec. 31,) Cash Book
or Cash Flow Statement. The ending cash reconciled with
balance per cash flow is assumed to be Accounting
reconciled with the Cash Book maintained Cash Flow/
by the Treasurer Balance Sheet
58 Fund/Cash Available Sum of Net Increase (Decrease) in Funds
and Cash Balance Beginning
59 Payment of Prior The amount should be lifted from SOE SOE
Year/s Accounts
Payable
60 Continuing Payment for Continuing Appropriations SOE
Appropriation expenses
61 Advance Payment Advance Payment for RPT SRS
for RPT
62 Fund/Cash Balance, Sum of Fund/Cash Balance Available less
End Payment of Prior Year/s Accounts Payable
LESS Continuing Appropriation and add
Advance Payment
Fund Balance Composition Reported at year end. The breakdown of Refer to
funds/cash should be sourced from the Section 27
Accounting office since this information is SRE Manual
included in the annual report submitted to for the source
COA specifically in the Notes to Financial documents.
Statements.

• Fund balance breakdown is

not limited to the format shown
in Exhibit 1 but the important
information required is how much
fund/cash is available or free for
appropriations as of the reporting
date
Total Assets - total assets net of depreciation lifted from Accounting Balance Sheet

NOTE: Other important information that need to be disclosed

should be made as Notes to SRE.

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 NOTES ON THE SECOND PRINTING OF LTOM, 2ND EDITION

NOTES ON THE SECOND PRINTING OF LTOM, 2ND EDITION

1. Minor layout and typographical edits, such as page numbering, table adjustments,
styling, spacing, among others, have been applied after final proofreading of all
four (4) books in this edition.

2. In Book I, the following adjustments were made for policy consistency:

a. Page 30: In Item E(8), Section 9, deleted the phrase “, and further, in
accordance with the conditions set under Item 2(iii), Sec. 12(a) hereof.”

b. Page 30: Deleted Item E(9), Section 9.

c. Page 34: In Item B(9), Section 12, deleted the portion “In the exigency
of service, however, prior approval from the CSC Regional Office
concerned shall be sought to effect a designation to a position with
supervisory function over regular and career employees.”

3. In Book IV, the following adjustments were made for accuracy:

a. Page 3: Rephrased the problem on Case 3 to emphasize that

payment of Real Property Tax (RPT) is made during the 1st quarter
and is entitled to a 10% discount for prompt payment. (Art. 342, IRR,
implementing Sec. 251, LGC)

b. Page 5: Replaced the contents of Section 149 with provisions under

Sections 221 and 270 of the LGC.

c. Page 7: Item (b.i), Section 150 (A), inserted the phrase “real property
subject to tax may be levied upon through the issuance of a
warrant on or before, or simultaneously with the institution of the
civil action for the collection of delinquent tax.” (provision under
Section 258, LGC)

d. Page 12: In the Note, inserted part of GR No. 207791 to clarify issue
on period of redemption.

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