Requirements Before the Acting Mayor and Newly Designated OIC-Municipal Treasurer May Disburse and Withdraw the Internal Revenue Allotment from Depository Bank

February 23, 2015

DILG LEGAL OPINION NO. 003 S. 2015

Atty. Maribel G. Alvarez-DomadoAlvarez Domado Law Office216 2nd Floor, Mile Long Bldg.Amorsolo St. corner Javier St.1223 Makati City

Dear Atty. Domado :

This has reference to your letter dated 12 January 2015 seeking legal opinion regarding the requirements before disbursement and withdrawal of the Internal Revenue Allotment (IRA) from depository bank by acting Mayor Anna Mahlyne A. Macarampat and newly designated OIC-Municipal Treasurer, Abdul M. Iba, of the Municipality of Ditsaan-Ramain, Lanao del Sur may be effected.

At the outset, may we re-state the following factual antecedents:

• In an Order dated 04 September 2014 (approved by Hon. Conchita Carpio Morales, Ombudsman, on 13 October 2014), the Office of the Ombudsman placed Ali Untao Adiong (hereinafter "Mayor Adiong"), the duly elected mayor of the Municipality of Ditsaan-Ramain, Lanao del Sur, under preventive suspension for a period of six (6) months without pay. In the same Order, the Office of the Ombudsman directed the SILG to implement the aforesaid order of suspension against Mayor Adiong;

• In compliance thereto, the Department issued a Memorandum dated 13 November 2014 to Atty. Anwar A. Malang, Regional Secretary, DILG-ARMM, requesting him to cause the immediate implementation of the aforesaid Ombudsman Order insofar as Mayor Adiong is concerned;

• The aforesaid order of suspension was implemented on 04 December 2014;

• On the same day, Vice-Mayor Anna Mahlyne A. Macarampat (hereinafter "acting Mayor Macarampat") assumed as acting Mayor of the Municipality of Ditsaan-Ramain;

• However, per your letter, acting Mayor Macarampat was not able to cause the release of the Internal Revenue Allotment (IRA) of the Municipality of Ditsaan-Ramain as her authority to do so was questioned by the Branch Manager of the Philippine National Bank (PNB), Marawi City, Lanao del Sur Branch, for lack of sangguniang bayan resolution authorizing her to be the signatory in the transactions in the account maintained with the Bank. You added that the OIC-Municipal Treasurer Norhata P. Samporna likewise did not cooperate with acting Mayor Macarampat as Ms. Samporna did not show any courtesy to her and refused to recognize her as acting Municipal Mayor prompting acting Mayor Macarampat to recommend to the Bureau of Local Government Finance (BLGF) the replacement of Ms. Samporna. The BLGF, through the Office of its Regional Director, Datu Abozeid A. Sinsuat, granted the request of Ms. Macarampat and designated Mr. Abdul M. Iba (hereinafter "Mr. Iba") as the new OIC-Municipal Treasurer of the Municipality of Ditsaan-Ramain through BLGF R-XIII Special Personnel Order No. 123-2014 dated 23 December 2014; IcHEaA

• Acting Mayor Macarampat duly notified the PNB of her assumption to office by furnishing copies of the Order for Preventive Suspension, the implementation order, and Certification recognizing her as the acting Mayor by the DILG-Acting Provincial Director Paisal C. Sani, her Assumption to Office, and Oath of Office. The PNB Branch Manager of Marawi City forwarded to its Central Office the issue on the authority of acting Mayor Macarampat to transact business with the bank;

• In a letter dated 18 December 2014, Atty. Manuel C. Bahena, Jr. (hereinafter "Atty. Bahena"), the legal counsel of PNB, stated that the authorization of the Sangguniang Bayan should be sought so that the bank may consider acting Mayor Macarampat as one of the authorized signatories to the account of the municipality and release of the IRA may be duly effected;

• Subsequently, in a letter dated 08 January 2015, the PNB posits that OIC-Municipal Treasurer Iba may only be recognized by the bank as one of the signatories upon his submission of the certified true copy of the BLGF Order, oath of office and sanggunian resolution authorizing him to transact with the bank pursuant to Section 311 of Republic Act No. 7160 or the Local Government Code of 1991;

• Hence, your instant letter.

Specifically, you are seeking our legal opinion on ". . . whether the Acting Mayor Macarampat and the OIC-Municipal Treasurer Abdul M. Iba, based on the circumstances, should be armed with a sanggunian resolution in order to withdraw, not only those funds for administrative expenses, etc., but the unspecified part or whole of the IRA of the municipality. If required, is it possible, based on the circumstances that such requirement is waived or they are both exempted to submit the said resolution in order to withdraw the funds of the municipality maintained with PNB Marawi City Branch?"

In reply to your query, please be informed that insofar as the requirement on submission of a sangguniang bayan resolution in favor of the mayor before disbursement and withdrawal of the IRA from depository bank is concerned, please be informed that this level already addressed a similar concern in DILG-Opinion No. 20-2006 dated 17 April 2006, 1 pertinent portion of which reads:

"This refers to the letter of Mayor Sonia Torres-Aquino of Tanauan City, requesting for our legal opinion and/or assistance regarding the letter of Vice-President Renauld R. Villafuerte of the Banking Legal Services Department, Land Bank of the Philippines (LBP), which stated that the city government is required to submit a Sangguniang Panlungsod Resolution designating the City Mayor as one of the authorized signatories of the local government account based on the bank account internal policy, which we shall herein quote, in part, thus: "For LGU: . . . b) Resolution issued by the Sanggunian of LGU concerned duly notarized incorporating the following: . . . officers authorized to sign and the nature and extent of such authority" (Item 7.14, 0101.1.8, Branch Manual, August 2001). It also stated that such requirement is consistent with Article 86 (vi) of the Implementing Rules and regulations of the Local Government Code (RA 7160), which states that the Mayor may 'upon authorization of the Sangguniang Bayan, represents the city in all its transaction, and sign on its behalf all bonds, contracts, and obligations, and such other documents made pursuant to law or ordinance'.

With all due respect, we would like to take exceptions on the aforementioned premise. We are of the humble view that the Sangguniang Panlungsod Resolution designating the City Mayor as the authorized signatory to the LGU account is not anymore necessary as it is not even required by law. Moreover, the aforequoted portion of Article 86 (vi) of the Implementing Rules and Regulations of the Local Government Code appears to be erroneous.

. . . the Mayor may represent the city in all its business transactions and sign bonds, contracts, obligations and such other documents relevant thereto, even without a prior authorization from the Sangguniang Panlungsod, for as long as there is either a LAW or ORDINANCE that authorizes him/her to do so. The said two (2) other conditions serve as the exception to the general rule found in Section 22 (c) of the Local Government Code. aAHDIc

In this regard, worthy of consideration is Section 311 of RA 7160, which provides that "local treasurers shall maintain depository accounts in the name of their respective local government units with banks, preferably government-owned, located in or nearest to their respective areas of jurisdiction. Earnings of these depository accounts shall accrue exclusively thereto". Relatively, Section 345 of the Local Government Code provides that "(c)hecks in settlement of obligations shall be drawn by the local treasurer and countersigned by the local administrator". Also, Section 344 of the same Code provides that, except in cases of disbursements involving regularly recurring administrative expenses, approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed. It is settled that a voucher is a document which shows that services have been performed or expenses incurred. When an authorized person approves a disbursement voucher, he certifies to the correctness of the entries therein, among others; that the expenses incurred were necessary and lawful, the supporting documents are complete and the availability of cash therefor. It thus bears to emphasize that under the law, while it is required that the City Mayor shall sign or approve the disbursement voucher, it is not, however, required that the City Mayor be the one to sign and draw the checks since the checks in settlement of obligations are drawn by the local treasurers and countersigned by the local administrators.

Hence, we are in a quandary as to the internal policy of the bank in requiring that a Sangguniang Panlungsod Resolution be passed to designate the City Mayor as the authorized signatory of the LGU account. As clearly shown above, the City Mayor, as the Local Chief Executive, is vested with powers as set forth by law. The LGU is likewise empowered and required by law to maintain an account with a depository bank, preferably a government-owned. The LGU concerned would then act for that purpose, through the Mayor, not by virtue of a sanggunian authority but by virtue of an authority conferred by law. The abovementioned provisions of law are sufficient legal bases and authority for the City Government to maintain an account with any government-owned bank without need of a Sangguniang Panlungsod Resolution designating the authorized signatories since the law already provided for it. Unlike private corporations where a Board Resolution is required for the purpose, we are of the view that there is no more need for a Sangguniang Panlungsod Resolution with respect to LGUs considering that the powers of the City Mayor and the LGUs in general are already properly delineated by law.

While we are not questioning the wisdom of the internal policy of that bank, we, however, respectfully request that said internal policy be revisited and reviewed in order to not only avoid the practice of some sanggunians in withholding such authorization due to political dynamics, to the detriment and prejudice of the delivery of basic services to the constituents, but also because the law does not require the subject sanggunian resolution." (Emphasis Supplied)

With regard to the case of Mr. Iba, the newly designated Officer-in-Charge of the Office of the Municipal Treasurer, we are also of the view that the requirement of Sanggunian Resolution may be dispensed with in view of the expressed provisions of Section 311 in relation to Section 345 of the Local Government Code of 1991, thus:

"Section 311. Depository Accounts. — Local treasurers shall maintain depository accounts in the name of their respective local government units with banks, preferably government-owned, located in or nearest to their respective areas of jurisdiction. Earnings of each depository account shall accrue exclusively thereto.

Section 345. Officials Authorized to Draw Checks in Settlement of Obligations — Checks in obligations shall be drawn by the local treasurer and countersigned by the local administrator.

In case of temporary absence or incapacity of the foregoing officials, these duties shall devolve upon their immediate assistants." (Emphasis Supplied)

Along this line, Section 470 of the Local Government Code of 1991 provides that the municipal treasurer shall be appointed by the Secretary of Finance. The Department of Finance, through BLGF-Region XII issued its Special Personnel Order No. 123-2014 dated 23 December 2014 designating Mr. Iba as the new Officer-in-Charge of the Office of the Municipal Treasurer. While it is true, as claimed by Atty. Bahena that the aforesaid designation of Mr. Iba is still subject to confirmation by the OIC-Executive Director of the BLGF, the Department shall recognize such BLGF R-XII Special Personnel Order pursuant to the presumption of regularity in the discharge of one's official duties and functions. Well entrenched in jurisprudence is the time honored principle that the law bestows upon a public official the presumption of regularity in the discharge of one's official duties and functions. ECcaDT

We hope to have addressed your concern accordingly.

Very truly yours,

 

(SGD.) AUSTERE A. PANADEROUndersecretary

ATTACHMENT

April 17, 2006

DILG OPINION NO. 020-06

Honorable Gilda E. PicoActing President and CEOLand Bank of the PhilippinesMakati City

Dear Sir :

This refers to the letter of Mayor Sonia Torres-Aquino of Tanauan City, requesting for our legal opinion and/or assistance regarding the letter of Vice President Reynauld R. Villafuerte of the Banking Legal Services Department, Land Bank of the Philippines (LBP), which stated that the city government is required to submit a Sangguniang Panlungsod Resolution designating the City Mayor as one of the authorized signatories of the local government account based on the bank account internal policy, which we shall herein quote, in part, thus: "For LGU: . . . b) Resolution issued by the Sanggunian of LGU concerned duly notarized incorporating the following: . . . officers authorized to sign and the nature and extent of such authority" (Item 7.14, 0101.1.8, Branch Manual, August 2001). It also stated that such requirement is consistent with Article 86 (vi) of the Implementing Rules and Regulations of the Local Government Code (RA 7160), which states that the Mayor may "upon authorization of the Sangguniang Bayan, represents the city in all its transaction, and sign on its behalf all bonds, contracts, and obligations, and such other documents made pursuant to law or ordinance".

With all due respect, we would like to take exceptions on the aforementioned premise. We are of the humble view that the Sangguniang Panlungsod Resolution designating the City Mayor as the authorized signatory to the LGU account is not anymore necessary as it is not even required by law. Moreover, the aforequoted portion of Article 86 (vi) of the Implementing Rules and Regulations of the Local Government Code appears to be erroneous.

At the outset, let it be emphasized that the law governing local government units in general is RA 7160, otherwise known as the Local Government Code of 1991.With respect to the City of Tanauan, RA 9005, otherwise known as the "Charter of the City of Tanauan" was passed on 02 February 2001, converting the Municipality of Tanauan, Province of Batangas, into a component city to be known as the City of Tanauan. Under Section 59 of RA 9005, it is provided that the provisions of RA 7160 and such laws as are applicable to component cities shall govern the City of Tanauan insofar as they are not inconsistent with the provisions of RA 9005. Hence, to establish the parameters, the law that governs the local affairs of the City of Tanauan is RA 9005. However, in case of silence of RA 9005, the provisions of RA 7160 shall apply suppletorily being the general law on the matter of local governance. CcSTHI

At this point, it is not amiss to point out that per Section 15 of RA 7160, every Local Government Unit created is a body politic and corporate endowed with powers to be exercised by it in conformity with law. As such, it shall exercise powers as a political subdivision of the national government and as a corporate entity representing the inhabitants of its territory. This provision is reiterated in Section 3 of the Charter of the City of Tanauan. It is well to note that RA 7160, for all LGUs in general, and RA 9005, for the City of Tanauan in particular, were enacted to give flesh to the constitutional mandate found in Section 3, Article X of the 1987 Constitution, to "provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanism of recall, initiative and referendum, allocate among the different LGUs their powers, responsibilities and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all matters relating to the organization and operation of the local units". (emphasis ours)

Along this line, Section 8 (B) (1) (f) of RA 9005 provides for the power, among others, of the City Mayor, thus: "Represent the City in all its business transactions and sign on its behalf all bonds, contracts, obligations, and such other documents with authority from the sangguniang panlungsod or pursuant to law or ordinance". Article 86 (B) (1) (vi) of the Implementing Rules and Regulations of RA 7160, which was cited in the letter of Atty. Villafuerte, likewise provides, thus: "Represent the city in all its business transactions and sign in its behalf all bonds, contracts, obligations and such other documents upon authority of the Sangguniang Panlungsod or pursuant to law or ordinance". acTDCI

A closer scrutiny of the aforesaid provisions would show that the City Mayor is empowered by law to represent the city in all its business transactions and sign in its behalf pertinent documents subject to the following conditions, to wit:

1. UPON AUTHORITY OF THE SANGGUNIANG PANLUNGSOD; or

2. PURSUANT TO LAW; or

3. PURSUANT TO ORDINANCE.

It must be stressed that the three (3) conditions mentioned above are separated by the word "or", and such word is a "disjunctive term signifying disassociation and independence of one thing from each of the other things enumerated. It should, as a rule, be construed in the sense in which it ordinarily implies, as a disjunctive word" (People vs. Martin, 39 SCRA 340; Katindig vs. People, 74 Phil. 45). Likewise, in its elementary sense, "or" as used in a statute is a disjunctive article indicating an alternative. It often connects a series of words or prepositions indicating a choice of either (Martin, Statutory Construction, 6th Ed., p. 88). IDTHcA

Ergo, the Mayor may represent the city in all its business transactions and sign bonds, contracts, obligations and such other documents relevant thereto, even without a prior authorization from the Sangguniang Panlungsod, for as long as there is either a LAW or ORDINANCE that authorizes him/her to do so. The said two (2) other conditions serve as the exception to the general rule found in Section 22 (c) of the Local Government Code.

In this regard, worthy of consideration is Section 311 of RA 7160, which provides that "local treasurers shall maintain depository accounts in the name of their respective local government units with banks, preferably government-owned, located in or nearest to their respective areas of jurisdiction. Earnings of these depository accounts shall accrue exclusively thereto". Relatively, Section 345 of the Local Government Code provides that "(c)hecks in settlement of obligations shall be drawn by the local treasurer and countersigned by the local administrator". Also, Section 344 of the same Code provides that, except in cases of disbursements involving regularly recurring administrative expenses, approval of the disbursement voucher by the local chief executive himself shall be required whenever local funds are disbursed. It is settled that a voucher is a document which shows that services have been performed or expenses incurred. When an authorized person approves a disbursement voucher, he certifies to the correctness of the entries therein, among others; that the expenses incurred were necessary and lawful, the supporting documents are complete and the availability of cash therefor. It thus bears to emphasize that under the law, while it is required that the City Mayor shall sign or approve the disbursement voucher, it is not, however, required that the City Mayor be the one to sign and draw the checks since the checks in settlement of obligations are drawn by the local treasurers and countersigned by the local administrators.

Hence, we are in a quandary as to the internal policy of the bank in requiring that a Sangguniang Panlungsod Resolution be passed to designate the City Mayor as the authorized signatory of the LGU account. As clearly shown above, the City Mayor, as the Local Chief Executive, is vested with powers as set forth by law. The LGU is likewise empowered and required by law to maintain an account with a depository bank, preferably a government-owned. The LGU concerned would then act for that purpose, through the Mayor, not by virtue of a sanggunian authority but by virtue of an authority conferred by law. The abovementioned provisions of law are sufficient legal bases and authority for the City Government to maintain an account with any government-owned bank without need of a Sangguniang Panlungsod Resolution designating the authorized signatories since the law already provided for it. Unlike private corporations where a Board Resolution is required for the purpose, we are of the view that there is no more need for a Sangguniang Panlungsod Resolution with respect to LGUs considering that the powers of the City Mayor and the LGUs in general are already properly delineated by law.

While we are not questioning the wisdom of the internal policy of that bank, we, however, respectfully request that said internal policy be revisited and reviewed in order to not only avoid the practice of some sanggunians in withholding such authorization due to political dynamics, to the detriment and prejudice of the delivery of basic services to the constituents, but also because the law does not require the subject sanggunian resolution.

Very truly yours,

 

(SGD.) WENCELITO T. ANDANARUndersecretary

Footnotes

1. Photocopy attached.