Bureau of Local Government Finance Opinion

July 7, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Hon. Salvador S. dela Fuente Municipal Mayor Municipal Hall Madridejos, Cebu Sir : This refers to your letter dated June 1, 2011, transmitting a copy of Sangguniang Bayan Resolution No. 2011-0411-025, series of 2010, resolving to request this Bureau to re-classify the Municipality of Madridejos, Cebu from 4th Class to 2nd Class. Records show that under this Bureau's Memorandum Circular No. 01-M(25)-08, dated November 18, 2008, copy enclosed, the Municipality of Madridejos maintained its classification as 4th Class with the certified Average Annual Income for CY's 2004-2007, amounting to P31.024 M, and in accordance with the "P25M or more but less than P35M" income benchmark for 4th Class municipalities pursuant to Department of Finance Order No. 23-08 effective July 29, 2008. We wish to clarify in this connection 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 Department of Finance 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 for CYs 2004-2007, viz. : AIcECS "SECTION 2. Classification of Provinces, Cities and Municipalities. As provided for under Section 1 and Section 2 of Execut ive Order No. 2 49, 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 re-classification. "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, . . . ." (emphasis supplied) The next general income re-classification covering annual regular incomes for the years 2008, 2009, 2010 and 2011, will be undertaken next year, 2012. We are now in the process of gathering the income data for the said periods of all provinces, cities and municipalities in preparation for the said undertaking. For the purpose, we hereby request for the prompt submission of the financial reports of that municipality for the years mentioned which shall be the basis of its re-classification effective in 2012. Trusting that this clarifies the matter. AacSTE Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director ATTACHMENT Republic of the Philippines Province of Cebu MUNICIPALITY OF MADRIDEJOS Office of the Mayor June 1, 2011 The Executive Director Bureau of Local Government Finance Manila Thru: Madam Carmeline Tugas Regional Director Region VII Cebu City Madam : Respectfully submitting the herein Resolution No. 2011-0411-025 of the Municipality of Madridejos, Cebu, requesting your good office for a reclassification of our Municipality from Fourth class to Second class based on the income bracket scheme and pursuant to Section 2 of Department Order No. 20-05 of this Bureau. Attached to our Resolution is the Comparative Statement of Income for the period 2008, 2009 and 2010 duly certified by the Auditor. Hoping for your favorable action on this matter. Thank you so much and MORE POWER. TADIHE Very respectfully, (SGD.) SALVADOR S. DELA FUENTE Municipal Mayor