Bureau of Local Government Finance Opinion

May 8, 2012 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Edgar T. Villanueva City Treasurer Quezon City Sir : This is in reply to your letter of May 3, 2012, relative to Memorandum Circular (MC) No. 17, dated December 26, 2011, issued by the Honorable Quezon City Mayor Herbert M. Bautista, creating a Special Assessment Task Force (SATF) under the administrative supervision of the City Administrator. An addendum to the guidelines implementing said MC No. 17, issued on January 3, 2012, required that all future issuances of Letters of Authority and Confirmation shall be jointly signed by the Head of Business Permit and Licensing Office (BPLO), otherwise, the same shall be considered and declared invalid. Hence, your instant request for enlightenment on the matter. In this regard, we invite your attention to the relevant provisions of the 1991 Local Government Code, as follows: " SEC. 470. Appointment, Qualifications, Powers and Duties . . . . . "(d) The Treasurer shall take charge of the treasury office , perform the duties provided for under Book II of this Code, and shall : xxx xxx xxx; "(4) Inspect private commercial and industrial establishments within the jurisdiction of the local government unit concerned in relation to the implementation of tax ordinances, pursuant to the provisions under Book II of this Code; xxx xxx xxx." (underscoring ours) The authority granted to the Local Treasurer to inspect the books of accounts of private commercial and industrial establishments is further provided under the same Local Government Code which is more specific and explicit, viz. : THEDcS " SEC. 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. xxx xxx xxx." (underscoring ours) The Implementing Rules and Regulations of Book II (Local Taxation and Fiscal Matters) of the 1991 Local Government Code further clarified, thus: " ART. 259. Examination of Books of Accounts and Pertinent Records of Businessmen by Local Treasurer. (a) For purposes of implementing this Article, only the treasurer, or his duly authorized representative, of 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 the tax, fee and charge. xxx xxx xxx. "(f) The Secretary of Finance shall prescribe the necessary forms to be used and such guidelines which may be deemed necessary for the proper and effective implementation of this Article ." (underscoring ours) Accordingly, the Local Treasury Operations Manual promulgated under Department of Finance Order No. 10-08, dated March 26, 2008, prescribed Local Treasury Operations (LTO) Annex 26, Letter of Authority/Appointment and LTO Form 35, Letter of Confirmation , for the proper conduct of the examination of books of accounts of business establishments by the Local Treasurer. It must be noted that the only signatory to the prescribed forms is the Local Treasurer, in accord with the provisions of the aforequoted Sections 470 and 171 of the Local Government Code of 1991, and Article 259 of the implementing rules. The essential duty of the Local Treasurer is to collect taxes, fees and charges which in the proper discharge thereof, necessarily carries with it the authority to inspect and examine the financial records and books of accounts of businesses. Needless to say, only the Local Treasurer has direct accountability and liability as regards such authority, since this is in essence a technical treasury function. Consequently, the signature of the Local Treasurer in the Letters of Authority and Confirmation will suffice for their validity. TAIESD It is viewed that allowing signatories other than the Local Treasurer for the validity of the Letters of Authority and Confirmation will unwittingly alter, undermine, and adversely affect the authority, independence and accountability of the Local Treasurer in the performance of such technical duty. In this Bureau's 1st Indorsement to the City Treasurer of Santiago, Isabela, dated May 13, 1996, it was clarified that examination of books of accounts and pertinent records of businesses is an inherent function of the Local Treasurer and may be performed or enforced without need of an order from the Local Chief Executive or an implementing ordinance of the sanggunian . All told, the Letters of Authority and Confirmation should bear only the signature of the Local Treasurer who is dutybound by law to sign them. This Bureau believes that the 1991 Local Government Code contemplated a strong local treasury service that is well in coordination with the other local government departments or offices, towards the attainment of the common goal for a genuine and meaningful local autonomy. On final note, we appreciate your resolve in bringing the matter for clarification by this Bureau, as we are aware of the continuing and determined innovative efforts of Quezon City for best local treasury operations practices. TIDHCc Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director