Bureau of Local Government Finance Opinion

September 2, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Hon. Mario B. Buyuccan Municipal Mayor Municipal Hall Hingyon, Ifugao Sir : This refers to Sangguniang Bayan (SB) Resolution No. 05, current series which was transmitted to this Bureau under the letter dated January 17, 2011, of the SB Secretary, requesting to upgrade the income classification of that municipality from 5th Class to 4th Class, on the basis of its Average Annual Income for CYs 2008-2010, in the amount of Php26,956,132.32, as certified to by the Municipal Treasurer. acIHDA In this connection, may we inform that under BLGF Memorandum Circular No. 01-M (31)-08, dated November 11, 2008, copy enclosed, the Municipality of Hingyon, Ifugao was classified as 5th Class, with the Average Annual Income for CYs 2004-2007, in the amount of Php18,240,821.62, and in accordance with the income bracket of "P15M or more but less than P25M" for 5th Class municipalities as provided for by Department of Finance (DOF) Order No. 23-08, dated July 29, 2008, copy also enclosed. May we further inform that Sections 2 and 3 of the aforecited DOF Order No. 23-08, provides for the re-classification of provinces, cities (except Manila and Quezon City which are considered special cities), and municipalities based on their audited Financial Statements for CYs 2004-2007, or the last four (4) years immediately preceding the year of re-classification which shall be made once every four (4) years, 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, . . . . , 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 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) "SECTION 3. Period of General Re-classification of Provinces, Cities and Municipalities. (a) Upon the effectivity of the re-classification of Provinces, Cities and Municipalities pursuant to the provisions of this Order and Section 3 of the aforementioned Executive Order No. 249 the general re-classification of LGUs shall be made once every four (4) consecutive years." Accordingly, the annual regular incomes of that municipality for CYs 2004 to 2007, as certified to by the Commission on Audit (COA) were considered in the re-classification thereof effective in 2008, under the aforementioned BLGF Memorandum Circular No. 01-M (31)-08. SDEHCc The next general income re-classification of LGUs shall be undertaken in year 2012, to cover annual regular incomes for CYs 2008, 2009, 2010 and 2011. For the purpose and to expedite the undertaking, we are requesting all LGUs to ensure the timely submission to COA of their Financial Reports for the periods mentioned. Trusting that this clarifies matters. Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director