Bureau of Local Government Finance Opinion

January 17, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Honorable Roberto B. Tan Treasurer of the Philippines Bureau of the Treasury Palacio del Gobernador Intramuros, Manila Sir : This refers to the herein letter dated December 23, 2010, of Municipal Mayor Shirlita Y. Chong of Liloan, Southern Leyte, addressed to the BLGF Regional Office, Region VIII, Tacloban City, together with attachment, copy furnished this office. The letter is in connection with the disapproval of the application for renewal of the fidelity bond of Mrs. Juliet O. Morano, Municipal Treasurer of said municipality upon which Mayor Chong raised an urgent concern on the "ineptness" of said municipality to continue with its mandated functions and obligations because of the inability of the Municipal Treasurer to perform her duties and functions that practically paralyzed local finance operations and thus, requested this Bureau for the immediate designation of an accountable officer to perform the duties and functions of Municipal Treasurer. It appears that the disapproval of the application for renewal of fidelity bond by Regional Director Crispin B. Banzon, Jr.,of that Bureau's Regional Office No. VIII, Tacloban City, was allegedly due to the pending criminal case for Malversation of Public Funds with the Sandiganbayan against the applicant Municipal Treasurer in view of the provisions of item 7.2.1 of the "Revised Omnibus Regulations Governing the Fidelity Bonding of Accountable Public Officers," under Treasury Circular No. 02-2009, dated August 6, 2009, as follows: HCEcAa "7.2 Renewal ... "7.2.1 List of bonded public officers subject for renewal certified by the agency official in charge of Administrative and/or Finance department, service, division or unit; Agency certification that the bond applicant has no pending administrative and/or criminal case (Annex E). For a bond applicant with pending administrative and/or criminal case, copies of pertinent pleadings, orders and resolutions filed or issued by the disputing parties, prosecutor or investigatory offices and judicial bodies shall be attached to the bond application . " (underscoring ours) Considering the urgency of the matter, besides anticipating similar problems that may arise in the future in other local government units relative to the implementation of the aforequoted item 7.2.1, on the application for fidelity bonding of local treasurers, we hereby bring to your clarification and favorable reconsideration the application for renewal of fidelity bond filed by the Municipal Treasurer of Liloan, as well as fervently request that item 7.2.1, be implemented with caution over local treasurers, for the following reasons: 1. Neither item 7.2.1 nor any other items under the Revised Omnibus Regulations on the fidelity bonding of public accountable officers state that mere pendency of an administrative and/or criminal case against an applicant will automatically cause the denial or disapproval of the application for renewal of the bond. Rather, there is merely the requirement to attach pertinent documents on any pending administrative and/or criminal case to the bond application; 2. The local treasurer is ultimately accountable for local funds and properties. Such disapproval of the application for renewal of bond will disrupt local treasury operations which practically paralyzes the entire local government operations, owing to the inability of the local treasurer to perform his/her duties and functions for lack of fidelity bond. Please take note that Section 305 (f) of R.A. No. 7160, otherwise known as the Local Government Code of 1991, provides: "SEC. 305. Fundamental Principles. The financial affairs, transactions, and operations of local government units shall be governed by the following fundamental principles: xxx xxx xxx "(f) Every officer of the local government unit whose duties permit or require the possession or custody of local funds shall be properly bonded ,and such officer shall be accountable and responsible for said funds and for the safekeeping thereof in conformity with the provisions of law;" (underscoring ours) Section 101 of P.D. No. 1445, also known as the Auditing Code of the Philippines, likewise requires the proper bonding of accountable officers, viz. : "Section 101. Accountable officers; bond requirement. ... "(2) Every accountable officer shall be properly bonded in accordance with law ." (underscoring ours) Thus, the Local Treasury Operations Manual promulgated under Department of Finance Order No. 10-08, dated March 26, 2008, emphasized under Chapter 6 thereof the fidelity bond compliance of local treasurers before performing their mandated duties and functions; DHIETc 3. Mere pendency of an administrative and/or criminal case does not automatically relieve a local treasurer unless ordered so by competent court or authority. Therefore, BLGF has no basis to designate anyone in place of the local treasurer with pending case in the absence of such order. In the present case, neither an order of suspension nor relief against respondent Municipal Treasurer was issued by the Sandiganbayan; 4. The case versus the Municipal Treasurer is still pending and she has not been ordered suspended or removed from office, thus, her basic constitutional right to presumption of innocence until proven guilty must be observed; and 5. The outright denial or disapproval of application for bond of local treasurers due to pendency of administrative and/or criminal case will post a threat or risk in the flow and conduct of local government operations. Local treasurers are prone to complaints and cases considering the nature of their job and the highly politicized environment in their workplace, not to mention the records of various harassments they suffer through the filing of unfounded administrative and/or criminal complaints or cases against them while in the performance of their job. In view of the foregoing, we look forward with deep concern as regards your immediate resolve on the matter. CSIDTc Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director