Bureau of Local Government Finance Opinion

July 29, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the OIC-Regional Director, Bureau of Local Government Finance, Department of Finance, Region XII, 157 Sinsuat Avenue, corner Gonzalo Javier Street, Cotabato City, his herein preceding 1st Indorsement dated July 7, 2011, forwarding the letter dated June 28, 2011, of Municipal Treasurer Rasad G. Dumarpa, Bacolod-Kalawi, Lanao del Sur, relative to Sangguniang Bayan Resolution Nos. 06-25-11-A and 06-25-11-B, seeking the approval/clearance of the Department of Finance for the said municipality to open and maintain a depository account with the Philippine National Bank, Marawi City Branch. In this regard, be informed that the Department of Finance adopted the standing policy that LGUs deposit their funds and maintain their depository accounts with the Government Financial Institutions (GFIs) the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) within or nearest their areas of jurisdiction in pursuance of the provisions of Section 311 of R.A. No. 7160, otherwise known as the Local Government Code of 1991 and Section 19 of Commission on Audit (COA) Circular No. 92-382, dated July 3, 1992. The reason for this policy is that, "public funds should be plowed back within the government through government-owned banks, i.e. LBP and the DBP. These funds and the investment returns generated by government-owned banks from deposits and loans are utilized to finance various developmental projects of the government, which includes LGUs. Thus, GFIs are catalysts for economic growth in sustaining the flow of credit to the critical sectors of the economy, not to mention their dividend remittances to the national government." AScHCD In view thereof, the aforementioned letter of Municipal Treasurer Dumarpa is hereby returned without action with instruction to that level to inform her accordingly. (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director