Bureau of Local Government Finance Opinion

May 26, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the City Treasurer, Quezon City, his attached letter dated May 19, 2014 relative to the letter dated May 8, 2014 of Mr. Gary C. Domingo, Head of the Business Permits and License Office (BPLO) seeking information as to how Task Force 17/19 was created and who created and/or authorized its creation, in view of the report received by Mr. Domingo that the Task Force may be exercising functions in disregard of the provision of Section 81, Article 21 of the Quezon City Revenue Code (QCRC), quoted as follows: "Section 81. Inspection of Business Establishments . Business establishments shall be subject to inspect during their business hours by any duly authorized official with a mission order issued by the head of the department concerned, connected with public health, welfare and safety and who has technical and official authority in such matters to see to the effective compliance of the requirements of Ordinances and provisions of existing laws and this Code." It is the contention of Mr. Domingo that the above cited provision clearly shows that business establishments may be inspected pursuant to the enforcement of rules and regulations for public health, welfare and safety and not for the purpose of collecting taxes and/or fees. Mr. Domingo likewise claims that the inspectors conducting the inspections are not equipped with an authorized or duly issued Mission Order. In addition, Mr. Domingo claims that the inspection being conducted by the members of Task Force 17/19 is not in connection with a proper order to conduct examination of books of accounts and is therefore no longer an appropriate exercise of the duties and functions of the personnel of the City Treasurer's Office. On the other hand, that Office informs that Task Force 17/19 was created only on March 30, 2014 for the purpose of implementing Section 48, Article 17 and Section 59, Article 19 of the QCRC, as amended, in relation to Section 141 of the Local Government Code (LGC) of 1991, quoted as follows: Article 17 Annual Fixed Tax on Delivery and Service Motor Vehicles "Section 48. Imposition of Tax . There is hereby imposed an annual fixed tax for every truck/van or any motor vehicle used in the delivery or distribution of any product or for servicing business customers within Quezon City in the amount of five hundred pesos (500) per truck/van or any motor vehicle. Motorized tricycles shall pay two hundred fifty pesos (250.00) and motorcycles shall pay one hundred pesos (P100.00) annually. Delivery and service motor vehicles with business establishments in Quezon City, shall be subjected only to fifty percent (50%) of the imposition." Article 19 Tax on Transportation Business "Section 59. Imposition of Tax . Operators of motor vehicles for hire with garage or terminal in Quezon City shall pay an annual fixed tax based on the following: a) Buses, cargo trucks and vans 400.00 per unit b) Taxis 200.00 per unit c) Jeepneys 100.00 per unit d) Other vehicles for hire 100.00 per unit "Operators of taxis, jeepneys, and other vehicles for hire, with less than three (3) units, except buses, cargo trucks and vans, shall be exempted from the above imposition, provided that all motorized tricycles for hire and utility tricycle shall not be subjected to the above imposition." That Office contends that the above provisions are matter of local taxation under the jurisdiction of the City Treasurer's Office. These taxes, while they may not be among the major sources of revenue of the city, equally remain to be your focal concern for lack of the necessary information pertaining to the actual number of units owned and operated by various business establishments that make use of motor vehicles for the delivery or distribution of their services. To support the creation of the Task Force, that Office cited Audit Observation Memorandum (AOM) No. 2014-27-c (2013) dated March 5, 2014 of the Commission on Audit. Upon review of Office Order No. 14-05, it appears that the same was issued pursuant to the provision of Section 470 (d) (4) of the LGC, quoted as follows: "Section 470. Appointment, Qualifications, Powers, and Duties . (a) . . . . "(d) The treasurer shall take charge of the treasury office, perform the duties provided for under Book II of this Code, and shall: "(1) . . .; "(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 ; (Underscoring supplied.) "(5) Maintain and update the tax information system of the local government unit; "(e) Exercise such other powers and perform such other duties and functions as may be prescribed by law or ordinance." In this connection, the following are the views of this Bureau in relation to the creation of Task Force 17/19 and its operationalization: 1. The creation of Task Force 17/19 is in accordance with Section 470 of the LGC to ensure proper implementation of local revenue ordinances. 2. However, the operation of Task Force 17/19 should be in accordance with the provisions of Section 171 of the LGC which requires certain administrative guidelines in conducting the examination of books of accounts of business establishments. The conduct of inspection and examination should be accompanied by proper mission order and letter of authority. The guidelines for the conduct of examination of books of accounts of business establishments are expounded in the Local Treasury Operations Manual (LTOM) issued by the Department of Finance. 3. In relation to the Office Order No. 14-05 creating the Task Force 17/19, the Bureau would like to call the attention of the City Treasurer in allowing members of the Task Force to accept payment and issue the corresponding official receipts. Members of the Task Force 17/19 are basically examiners and not collectors. Further, the Bureau would like to remind the treasurer of the requirements for the proper bonding of accountable and collection officer in government. 4. In as much as other offices of the City Government of Quezon City are also conducting inspection of business establishments to ensure public health, welfare and safety, it is recommended that the inspection by the treasury and other offices be synchronized in order not to burden business establishments of frequent visitations and inspections. Be guided accordingly. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director