Request for condonation of unpaid contributions of cities and municipalities to the PC/INP pursuant to PD 632 and aids to hospitals under R.A. No. 1939

June 11, 1990 DOF LOCAL FINANCE CIRCULAR NO. 03-90 SUBJECT : Request for condonation of unpaid contributions of cities and municipalities to the PC/INP pursuant to PD 632 and aids to hospitals under R.A. No. 1939 TO : All Regional Directors for Local Government Finance; Provincial, City and Municipal Treasurers; Provincial, City and District Auditors; and Others Concerned Representations were made with this Department by some local chief executives that the annual contributions of cities and municipalities to the PC/INP at the rate of 18% of their annual regular income under PD 632, and 5% to 7% hospital contributions under RA 1939 continue to deplete the financial resources of local government units. It appears further that some LGUs have been unable to implement the salary standardization and increases in the rates of representation/transportation allowances, per diems , and other employee benefits due to lack of sufficient funds. Upon review, however, of the laws governing said local government contributions to the PC/INP and hospitals, this Department finds that the same are mandatory in nature and unless the laws are repealed, there would be no legal basis for condoning said obligations. Moreover, records show that majority of LGUs are able to comply with these statutory obligations either thru direct remittance to the agencies concerned, or thru withholding of portions of their monthly internal revenue allotments by the Bureau of the Treasury which, in turn, effects the remittances to the PC/INP and the hospitals. In addition, the General Appropriations Act for CY 1990 (RA No. 6831) provides that the contributions of provinces, cities and municipalities to the Integrated National Police and hospitals may be retained by the LGUs and used for the implementation of the salary standardization of their respective officials and employees. The General Appropriations Act also provides that the additional 1% real property tax shall accrue fully to the LGUs. Therefore, the LGUs will have sufficient funds to implement the authorized salary standardization and provide funds for small-scale community projects. aisadc Accordingly, Provincial, City and Municipal Treasurers are hereby directed to continue remitting the contributions to the PC/INP and aids to hospitals pursuant to PD 632 and RA 1939, respectively, due for CY 1989 and prior years to the National Government thru the Bureau of the Treasury. Failure on the part of the treasurer concerned to remit the unpaid obligations referred to will constitute sufficient ground for the withholding of the amounts from the respective internal revenue and/or specific tax allotments of the LGU. Regarding remittances for CY 1991 and thereafter, the LGUs shall be advised in due time. The Regional Directors of the Bureau of Local Government Finance are hereby instructed to disseminate the contents of this Circular to all Provincial Governors and City/Municipal Mayors of the Region and to all Provincial, City and Municipal Treasurers under their respective jurisdictions for their information and guidance. (SGD.) JESUS P. ESTANISLAO Secretary