Chapter 1

• It is a body politic and corporate endowed with powers to be exercised by it in conformity with law.

  Local Government Unit
• The common requirements for the creation of a local government unit or its conversion from one level to another shall be based on the following:

  • Land Area
  • Population
  • Income
• He shall exercise general supervision over local governments.

  President of the Philippines
• Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions.
• Each LGU shall have the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such guidelines and limitations.
• LGUs shall have a just share, as determined by law, in the national taxes which shall be automatically released to them.
• Every LGU, as a corporation, shall have the following powers:

  • To have continuous succession in its corporate name
  • To sue and be sued
  • To have and use a corporate seal
  • To acquire and convey real or personal property
  • To enter into contracts
  • To exercise such other powers as are granted to corporations
• LGUs shall enjoy full autonomy in the exercise of their proprietary functions and in the management of their economic enterprises, subject to the limitations provided in the LGC and other applicable laws.
• The financial affairs, transactions, and operations of LGUs shall be governed by the following fundamental principles and policies, to wit:

  1. No money shall be paid out of the local treasury except in pursuance of an appropriations ordinance or law.
  2. Local government funds and monies shall be spent solely for public purposes.
  3. Local revenue is generated only from sources expressly authorized by law or ordinance, and collection thereof shall at all times be acknowledged properly.
• The financial affairs, transactions, and operations of LGUs shall be governed by the following fundamental principles and policies, to wit:

  1. All monies officially received by a local government officer in any capacity or on any occasion shall be accounted for as local funds, unless otherwise provided by law.
  2. Provinces, cities and municipalities shall maintain a General Fund which shall be used to account for such monies and resources as may be received by and disbursed from the local treasury.
• In the case of a Province, City, and Municipality, an LGU may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by

  Congress
• In the case of a Barangay, an LGU may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by

  Sangguniang Panlalawigan or Panlungsod
• It must be sufficient, based on acceptable standards, to provide for all essential government facilities and services and special functions commensurate with the size of its population, as expected of the LGU concerned.

  Income
• It shall be determined on the total number of inhabitants within the territorial jurisdiction of the LGU concerned.

  Population
• It must be contiguous unless it comprises two or more islands or is separated by an LGU independent of the others; properly identified by metes and bounds with technical description.

  Land Area
• Compliance with income shall be attested to by

  Department of Finance
• Compliance with the population shall be attested by

  National Statistics Office
• Compliance with the Land Area shall be attested by

  Land Management Bureau
• The creation of a province, city or municipality shall not reduce the land area, population, and income of the original unit or units at the time of the said creation to less than the minimum requirements prescribed by law.
• No creation, division, merger, abolition, or substantial alteration of boundaries of LGUs shall take effect unless approved by a majority of the votes cast in a plebiscite.
• Said plebiscite shall be conducted by the Commission on Elections within 120 days from the date of effectivity of the law or ordinance.
• Province

  • Coverage/Jurisdiction: Cluster of municipalities, or municipalities and component cities
  • Income: 20 Million
  • Population: 250,000 inhabitants
  • Land Area: 2,000 sq. km.
  • Legal Basis: Sec. 461, LGC
• City

  • Coverage/Jurisdiction: Municipality or a cluster of barangays
  • Income: 100 Million for the last 2 consecutive years
  • Population: 150,000 inhabitants
  • Land Area: 100 sq. km.
  • Legal Basis: RA No. 9009
• Municipality

  • Coverage/Jurisdiction: Group of barangays
  • Income: 2.5 Million for the last 2 consecutive years
  • Population: 25,000 inhabitants
  • Land Area: 50 sq. km.
  • Legal Basis: Sec. 442, LGC
• Barangay

  • Coverage/Jurisdiction: Out of a contiguous territory
  • Income: NA
  • Population: 2,000 inhabitants; 5,000 inhabitants in cities and municipalities within Metro Manila and other metropolitan political subdivisions or in HUCs
  • Land Area: NA
  • Legal Basis: Sec. 386, LGC
• Highly Urbanized Cities

  • Coverage/ Jurisdiction: Cities
  • Income: 50 Million
  • Population: 200,000 inhabitants
  • Land Area: NA
  • Legal Basis: Sec. 452, LGC
• An integral, indivisible, and inseparable part of the territory of the Republic of the Philippines.

  Bangsamoro Autonomous Region
• In the exercise of its right to self-governance, the Bangsamoro Autonomous Region is free to pursue its political, economic, social and cultural development as provided for in the Organic Law.
• The authority of the Bangsamoro Government to regulate the affairs of its constituent local government units shall be guaranteed in accordance with the Organic Law and a Bangsamoro local government code to be enacted by the Parliament.
• The core administrator of LGU funds and finances

  Local Treasury Office
• The PCM Treasury Office

  1. Based on LGC Sec. 443, 454, 463
  2. PCM shall have treasurer to govern each LGU
  3. Treasurer takes charge of treasury office
  4. Perform duties on the taxing and revenue raising power
• Organizational Structures of PTO:

  • Provincial Treasurer
  • Assistant PT for Operations
  • Assistant PT for Administration
  • Administrative Division
  • Treasury Operations and Review Division
  • Cash Division
• Organizational Structures of CTO:

  • City Treasurer
  • Assistant CT for Operations
  • Assistant CT for Administration
  • Administrative Division
  • Cash Division
  • RPT Division
  • Business Tax and Miscellaneous Revenue Division
  • Treasury Operations and Review Division
  • Local Economic Enterprises Division
• Organizational Structures of MTO:

  • Municipal Treasurer
  • Assistant MT
  • Administrative Section
  • Cash Division
  • Revenue Division
• Functions of the Treasury Office Divisions

  Administrative Division for PTO/CTO/MTO:

  1. Receive, disseminate, comply with all national and local circulars in local treasury operations.
  2. Maintain records of all communications
  3. Prepare OPCR and ICPR
  4. Maintain information on personnel PDS, SALN
  5. Ensure observance of RA 6713
  6. Ensure the bonding of accountable officers
  7. Conduct physical inventory of the following: Unused accountable forms, Office supplies, PPE, Transfer Certificate of Title, and Tax Declarations
  8. Monthly report of accountable forms
• Functions of the Treasury Office Divisions

  Additional Administrative Division for CTO/MTO:

  1. Prepare Budget proposal including (PPMP) Project Procurement Management plan and (ASPP) Annual Supplies Procurement Plan
  2. Prepare estimated revenue before July 15
• Functions of the Treasury Office Divisions

  Treasury Operations and Review Division for PTO/CTO:

  1. Assist in public auction of delinquent real property.
  2. Assist PT/CT on proposed revenue ordinances.
  3. Prepare collection reports regularly.
  4. Prepare annual estimated revenue before July 15.
  5. Prepare Budget proposals including PMP and ASPP.
• Functions of the Treasury Office Divisions

  Additional Treasury Operations and Review Division for CTO:

  1. Conduct examination of Books of Accounts in Business Establishments
  2. Evaluate reports on re-assessment and tax credit
• Functions of the Treasury Office Divisions

  Cash Division for PTO/CTO/MTO:

  1. Disburse salaries, allowances, honorarium
  2. Prepare checks for disbursement
  3. Receive daily collections and deposit to AGDBs
  4. Prepare daily/weekly/monthly consolidated reports on collections, deposits and checks
  5. Update cash books
  6. Prepare a daily cash position report
  7. Prepare and submit eSRE quarter report
• Functions of the Treasury Office Divisions

  Additional Cash Division for CTO:

  1. Prepare daily RCI
  2. Remit national government and barangay shares