Bureau of Local Government Finance Opinion

August 26, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned thru the Regional Director, Bureau of Local Government Finance, Department of Finance, Region I, 2nd Floor, Kenny Plaza Bldg., South Quezon Avenue, San Fernando City, La Union, to the Municipal Mayor, Caoayan, Ilocos Sur, relative to Sangguniang Bayan Resolution No. 11-52, requesting to reclassify said municipality from 4th Class to 3rd Class, with the attached audited financial statements thereof for CYs 2008, 2009 and 2010. aTHCSE Records show that under this Bureau's Memorandum Circular No. 01-M (33)-08, dated November 12, 2008, copy hereto attached, the Municipality of Caoayan, was classified as 4th Class with an Average Annual Income for CYs 2004-2007, amounting to P25.698 M which falls within the "P25 M or more but less than P35 M" income benchmark for 4th Class municipalities as provided for under Department of Finance (DOF) Order No. 23-08, dated July 29, 2008. It is clarified that Executive Order No. 249, dated July 25, 1987, mandates the general re-classification of provinces, cities and municipalities once every four years on the basis of the average annual income for the four-year period immediately preceding the year of re-classification. In pursuance thereof, Section 2 of the aforementioned DOF Order No. 23-08, specifically stated that the income re-classification in accordance with the adjusted income benchmarks provided therein shall be based on the certified average annual income obtained from CYs 2004 to 2007, viz. : "SECTION 2. Classification of Provinces, Cities and Municipalities. As provided for under Section 1 and Section 2 of Executive Order No. 249, dated July 25, 1987, Provinces, Cities and Municipalities, except Manila and Quezon City which shall remain as special class cities, shall be divided into six (6) main classes according to the Average Annual Income actually realized during the last four (4) calendar years immediately preceding the year of reclassification. "Based on the Financial Statements of LGUs for CYs 2004-2007 of the Commission on Audit, the income brackets of Provinces, Cities and Municipalities which shall be used in their re-classification are ranged . . . ." AIHTEa The next general income re-classification of provinces, cities and municipalities will be undertaken in 2012, which will cover the audited annual regular income actually obtained in CYs 2008, 2009, 2010 and 2011. Thus, the financial statements for CYs 2008, 2009 and 2010, submitted by subject municipality will be considered in the said re-classification. In preparation thereof, all provinces, cities and municipalities are being requested to ensure the timely submission of their financial reports for the periods 2008 to 2011 to the Commission on Audit, Central Office, Quezon City, for the purpose. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director