Guidelines on the Release and Utilization of the Shares of Local Government Units (LGUs) from the Collections of Excise Tax on Locally Manufactured Virginia-Type Cigarettes under Republic Act (RA) No. 7171 and Burley and Native Tobacco Excise Tax Pursuant to RA No. 8240, as Amended by RA No. 10351, Chargeable against the Allocations to LGUs under the FY 2016 General Appropriations Act (GAA), Republic Act No. 10717, Continuing Appropriations, and FY 2017 GAA, RA No. 10924

October 6, 2017 DBM LOCAL BUDGET MEMORANDUM NO. 076-17 TO : Local Chief Executives, Members of the Local Sanggunian, Local Budget Officers, Local Treasurers, Local Planning and Development Coordinators, Local Accountants, and All Others Concerned SUBJECT : Guidelines on the Release and Utilization of the Shares of Local Government Units (LGUs) from the Collections of Excise Tax on Locally Manufactured Virginia-Type Cigarettes under Republic Act (RA) No. 7171 and Burley and Native Tobacco Excise Tax Pursuant to RA No. 8240, as Amended by RA No. 10351, Chargeable against the Allocations to LGUs under the FY 2016 General Appropriations Act (GAA), Republic Act No. 10717, Continuing Appropriations, and FY 2017 GAA, RA No. 10924 1.0 PURPOSES 1.1 To prescribe the guidelines on the release and utilization of the subject shares of LGUs, and emphasize the concomitant posting and reporting requirements to enhance transparency and accountability; and 1.2 To inform the beneficiary LGUs of their respective shares. 2.0 GENERAL GUIDELINES 2.1 These guidelines shall cover the following shares of LGUs: a. Shares from the FY 2014 collection of excise taxes on locally manufactured Virginia-type cigarettes under RA No. 7171 and Burley and native tobacco excise taxes pursuant to RA No. 8240, as amended by RA No. 10351, chargeable against the FY 2016 GAA, RA No. 10717, Continuing Appropriations, in the total amount of P13,171,174,000; and b. Shares from the FY 2015 collection of excise taxes on locally manufactured Virginia-type cigarettes under RA No. 7171 and Burley and native tobacco excise taxes pursuant to RA No. 8240, as amended by RA No. 10351, chargeable against the FY 2017 GAA, RA No. 10924, in the total amount of P16,369,444,824. 2.2 Allocation of the Shares of Beneficiary LGUs The shares of beneficiary LGUs shall be allocated pursuant to the applicable Special Provisions in the pertinent GAAs, as follows: Shares of LGUs GAA Applicable Special Provision on the Allocation of the Shares of LGUs Shares of LGUs from the FY 2014 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171 P11,149,246,000 FY 2016 GAA, RA No. 10717 Special Provision No. 4 for the Special Shares of LGUs in the Proceeds of National Taxes under the Allocations to LGUs (ALGU) Shares of LGUs from the FY 2014 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 P1,852,323,000 FY 2016 GAA, RA No. 10717 Special Provision No. 5 for the Special Shares of LGUs in the Proceeds of National Taxes under the ALGU Shares of the entitled cities and municipalities from the FY 2011 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 P169,605,000 FY 2016 GAA, RA No. 10717 Special Provision No. 5 for the Special Shares of LGUs in the Proceeds of National Taxes under the ALGU Shares of LGUs from the FY 2015 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171 P13,909,444,824 FY 2017 GAA, RA No. 10924 Special Provision No. 4 for the Special Shares of LGUs in the Proceeds of National the Taxes under ALGU Shares of LGUs from the FY 2015 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 P2,460,000,000 FY 2017 GAA, RA No. 10924 Special Provision No. 5 for the Special Shares of LGUs in the Proceeds of National Taxes under the ALGU For the third item, since the prior year's shares of LGUs pertain to the FY 2011 collections of Burley and native tobacco excise taxes, the amount of P169,605,000 was computed based on the volume of production of the entitled cities and municipalities in Crop Year 2011 based on the Certification previously submitted by the National Tobacco Administration (NTA) for the purpose. For the rest of the shares of LGUs, it is understood that the computation were based on the volume of production and trade acceptances of tobacco-producing LGUs covered by NTA certifications, as endorsed by the Department of Agriculture, in accordance with the applicable Special Provisions in the FYs 2016 and 2017 GAAs. 2.3 The individual shares of the beneficiary LGUs computed in accordance with the applicable Special Provision of the GAA are shown in the following attachments: Annex A Shares of LGUs from the FY 2014 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171; Annex B Shares of LGUs from the FY 2014 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351; Annex C Shares of Cities and Municipalities from the FY 2011 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351; Annex D Shares of LGUs from the FY 2015 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171; and CAIHTE Annex E Shares of LGUs from the FY 2015 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351. 2.4 Upon issuance of this Memorandum, the corresponding Special Allotment Release Order/s shall be comprehensively released by the Department of Budget and Management (DBM) Central Office to the Bureau of the Treasury (BTr), consistent with the Department of Finance-DBM Joint Circular No. 2016-1 1 dated January 4, 2016 and the pertinent Special and General Provisions of the FYs 2016 and 2017 GAAs. 2.5 Consistent with the amounts of their individual shares, the beneficiary LGUs shall submit to the DBM Regional Office (RO) concerned a list of programs and projects to be implemented, supported by the following: (i) approved sanggunian ordinance or resolution; (ii) mechanism and period of implementation; and (iii) projected or estimated number of beneficiaries. 2.6 In the identification and submission of the list of programs and projects to be implemented, the beneficiary LGUs shall ensure the following: 2.6.1 The programs and projects to be implemented are included in the Annual Investment Program duly prepared/formulated and endorsed by the local development council and duly approved by the local sanggunian concerned; and 2.6.2 In case a program/project is to be undertaken by a cooperative, an authenticated or a certified true copy of the Certificate of Registration from the Cooperative Development Authority is submitted by the cooperative to the LGU prior to the implementation of the program/project. 2.7 Upon receipt of the beneficiary LGU's list of programs and projects to be implemented, together with the necessary supporting documents per item 2.5 hereof, the DBM RO concerned shall endorse the said list to the DBM Central Office. 2.8 The endorsement by the DBM RO concerned of the LGU's submission of list of programs and projects, together with the necessary supporting documents, shall serve as the basis of the DBM Central Office for releasing the corresponding Notice/s of Cash Allocation (NCA) to the Authorized Government Servicing Banks (AGSBs) and the Advice of NCA Issued (ANCAI) to the BTr. 2.9 Upon receipt of the ANCAI, the BTr shall release the corresponding Authorities to Debit Account to the AGSBs. In parallel, the BTr shall inform the beneficiary LGUs of their released shares and the corresponding list of programs and projects to be implemented through the issuance of Notices of Authority to Debit Account Issued. 2.10 The release and utilization of the shares of the beneficiary LGUs shall be in accordance with the existing cash programming, budgeting, accounting, and auditing rules and regulations, and other applicable laws, rules and regulations. 3.0 USES OF THE FUND 3.1 Shares of LGUs from the Collection of Excise Tax on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171 The fund shall be utilized to advance the self-reliance of the tobacco farmers through: 3.1.1 Cooperative projects that will enhance better quality of products, increase productivity, guarantee the market and, as a whole, increase farmers' income; 3.1.2 Livelihood projects particularly the development of alternative farming system to enhance farmers' income; 3.1.3 Agro-industrial projects that will enable tobacco farmers in the Virginia tobacco-producing provinces to be involved in the management and subsequent ownership of these projects such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization; and 3.1.4 Infrastructure projects, such as farm-to-market roads. 3.2 Shares of LGUs from the Collection of Burley and Native Tobacco Excise Tax Pursuant to RA No. 8240, as Amended by RA No. 10351 The fund shall be exclusively utilized for programs in pursuit of the following objectives: 3.2.1 Programs that will provide inputs, training, and other support for tobacco farmers who shift to production of agricultural products other than tobacco including, but not limited to, high-value crops, spices, rice, corn, sugarcane, coconut, livestock, and fisheries; 3.2.2 Programs that will provide financial support for tobacco farmers who are displaced or who cease to produce tobacco; 3.2.3 Cooperative programs to assist tobacco farmers in planting alternative crops or implementing other livelihood projects; 3.2.4 Livelihood programs and projects that will promote, enhance, and develop the tourism potential of tobacco-growing provinces; 3.2.5 Infrastructure projects such as farm-to-market roads, schools, hospitals, and rural health facilities; and 3.2.6 Agro-industrial projects that will enable tobacco farmers to be involved in the management and subsequent ownership of projects, such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization. 4.0 POSTING/REPORTING REQUIREMENTS 4.1 The recipient LGU shall prepare quarterly reports on fund utilization and status of program/project implementation using the attached format (Annex F), and said reports shall be posted within twenty (20) days from the end of each quarter on the LGU's website, the website established by the DBM for the purpose, and in at least three (3) conspicuous public places in the locality for transparency and accountability, consistent with the Full Disclosure Policy of the Department of the Interior and Local Government. 4.2 The beneficiary LGUs shall also submit the quarterly reports on fund utilization and status of program/project implementation to the DBM and Bureau of Local Government Finance ROs concerned within thirty (30) days from the end of each quarter. 4.3 Likewise, the recipient LGU shall comply with the posting requirements prescribed under RA No. 9184 (The Government Procurement Reform Act). 5.0 RESPONSIBILITY AND ACCOUNTABILITY The responsibility and accountability in the implementation of programs and projects and proper utilization and disbursement of the LGU shares shall rest upon the local chief executive and other local officials concerned. It is also the responsibility of the said local officials to ensure that the LGU shares are utilized strictly in accordance with applicable budgeting, accounting, and auditing rules and regulations, and pertinent provisions of RA No. 9184. 6.0 EFFECTIVITY This Memorandum shall take effect immediately. (SGD.) BENJAMIN E. DIOKNO Secretary ANNEX A Shares of LGUs from the FY 2014 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171 ANNEX B Shares of LGUs from the FY 2014 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 ANNEX C Shares of Cities and Municipalities from the FY 2011 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 ANNEX D Shares of LGUs from the FY 2015 Collection of Excise Taxes on Locally Manufactured Virginia-Type Cigarettes under RA No. 7171 ANNEX E Shares of LGUs from the FY 2015 Collection of Burley and Native Tobacco Excise Taxes under RA No. 8240, as Amended by RA No. 10351 ANNEX F Shares of Local Government Units from the Collection of Tobacco Excise Taxes under RA Nos. 7171 and 8240 Report on Fund Utilization and Status of Program/Project Implementation For the Quarter Ended _______ Footnotes 1. Guidelines for the Direct Release of Funds by the Bureau of the Treasury (BTr) to Local Government Units (LGUs) in FY 2016 and Thereafter.