2 0 0 9 A N N U A L R E P O R T

DOF: Bulwark of

Strength & Stability

Cover Story

Contents

Our Vision• A strong economywith stable prices and strong

growth;• Astablefiscalsituationwithadequateresourcesfor

government projects and budgetarywhich couldbeadequatelyfinanced;

• A borrowing program that is able to avoid thecrowding-out effect on the private sector, andminimizescosts;

• A public sector debt profilewith longmaturitiesandanoptimummixofcurrenciesthatminimizestheimpactofcurrencymovements;

• A strong economic growth with equity andproductivity

Our MandateUnder Executive Orders 127, 127-A and 292,the Department of Finance is responsible for the following: • Formulation,institutionalizationandadministra-

tionoffiscalpoliciesincoordinationwithotherconcerned subdivisions, agencies and instru-mentalitiesofthegovernment;

• General and management of the financial re-sourcesofgovernment;

• Supervisionoftherevenueoperationsofalllocalgovernmentunits;

• Review,approvalandmanagementofallpublicsectordebt,domesticorforeign;and

• Rationalization, privatization and public ac-countability of corporations and assets owned,controlledoracquiredbythegovernment.

2 LettertothePresident 4 MessageoftheSecretary 6 2009EconomicHighlights 8 FiscalPerformance12 GovernmentCorporateSector16 DebtManagement19 GlobalCooperation23 MicrofinanceInitiatives27 LocalGovernmentFinance31 MunicipalDevelopmentFundOffice34 FrontlineOperations 35 The Mabuhay Lane36 ManagementInformationSystem37 HumanResourceDevelopment42 DepartmentofFinanceOfficials44 DepartmentofFinanceDirectors42 DepartmentofFinanceHeads

In2009,theunevenpathofglobaleconomicrecoverycastshadowsofdoubtabouttheimpactofeconomicstimulus.Formanygovernments,thetimingofanexitstrategybecameasrelevantastheamountoftherescuepackage. Thecoverdepictsaholisticapproachtoeconomicrecoveryandsustainabledevelopment.Governmentresourcesneedtobemobilizedinordertoputupandmaintainefficientinfrastructurethatcanattractinvestmentandpromotebusiness.

InthePhilippines,whiletherewereurgentcallsformoregovernmentresourcesandinterventiontoprotectthemostvulnerable,theDOFmaintaineditspartnershipandkeptitscommitmentswiththeinternationalcommunity.

Forgingalliances,bothattheregionalandgloballevels,onlyhastenstherecoveryprocess,andatthesametime,advancesthecountry’scommitmentfortheachievementofMillenniumDevelopmentGoals.

Our MissionOur economy must be one of the most dynamicand active in theworld, globally competitive andonward looking. The DOF shall take the lead inprovidingasolidfoundationfortheachievementofthisobjective, bybuilding a strongfiscalposition,through the following:• formulation,institutionalizationandadministration

ofsoundfiscalpolicies;• improvementoftaxcollectionefficiency;• mobilization of adequate resources on most

advantageous terms to meet budgetaryrequirements;

• soundmanagementofpublicsectordebt;• and initiation and implementation of structural

andpolicyreforms.

Inmammothorganizations -corporations,conglomerates,multi-nationals,governments - theindispensability of a central finance office to manage and mobilize resources is a truism.Withoutlogisticsandfinancialsupport“whenneeded,whereneeded”,operationswouldbe

paralyzedinnotime.

ThatthebirthoftheDepartmentofFinancepredatedthatofthePhilippineRepublicistestimonyto its importance.Foundedon24April1897by thePhilippineRevolutionaryGovernment, theDOFhasundergonevariousstructuralandfunctionaloverhauls,buthasnonethelessremainedakeydepartment.Today,thecritical tasksofrevenuegeneration,resourcemobilizationandfiscalmanagementrestontheshoulderoftheDepartmentofFinance.

Thegovernmentmustprovidethecitizenrywithinfrastructure,education,healthandotherbasicservices;andtheDOFmustbereadywiththefundsforthem.Likewise,theDOFmuststeerfiscalprogramstowardaninvestment-friendlyenvironment,whichisthecatalystforgrowth.

03

As the global economysteadily

recovers,we,in the DOF

willcontinuetoimplementafiscalpolicythatpromotes

economicgrowth while

pursuingfiscalconsolidation

efforts.

Letter to the PresidentHerExcellencyGloriaMacapagal–ArroyoPresidentRepublicofthePhilippinesMalacañang,Manila

DearMadamPresident:

We are pleased to submit to Her Excellency the 2009 Annual Report of the Department of Finance(DOF).

Despite the lingering global financial crisis, the economy performed relatively stronger thanothercountries in theregionin2009,postinga1.1percentGDPrealgrowthrate. Therobustperformanceof the services sector coupledwith the government’s frontloading strategy,whichallowed higher government investments and consumption, buoyed the economy and fosteredmacroeconomicstability.

Fiscal policy played a critical role.The government accommodated higher spending that waswithinprudentlevelinordertostimulatetheeconomy,promoteemployment,andsafeguardthevulnerablesectors.Likewise,thisfiscalstancewasdesignedtospeeduptherecoveryprocessandachieveeconomicgrowthonasustainablebasis.

As the global economy steadily recovers,we, in theDOFwill continue to implement afiscalpolicythatpromoteseconomicgrowthwhilepursuingfiscalconsolidationefforts. WethankHerExcellencyforyourleadershipduringthesechallengingtimes.Restassuredofourfirmcommitmenttothepursuitofbetterlifeforourpeoplethroughfiscalstrength. Verytrulyyours,

MARGARITOB.TEVESSecretaryDepartmentofFinance

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ESIDEn

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The global economic crisis that startedin 2008 continued to drag prospects fora turnaround of the global economy in

2009, as overall economic activities remainedweak. The Philippine economy was one ofthe few countries that escaped recession. Weattribute this economic resiliency to the timelyfiscal policy response-- the stimulus program --thatwe implemented at the height of the crisis.Thispolicydidnotonlybuoyeconomicgrowth,but also fostered macroeconomic stability (lowinterest rate, subdued inflation rate, and stablepesoagainsttheUSdollar).

WeallowedthenationalGovernment(nG)budgetdeficittogrow,andtherewasagrowingconcernabout the country’s weak revenue performance.Thetaxeffortdeclinedto12.8percentin2009from14.1percentin2008.Theweaktaxcollectionstemmed from slower economic growth -- aspillovereffectoftheglobalcrisis--andrevenue-erodinglegislativemeasures.

TheConsolidatedPublicSectorFinancialPosition(CPSFP) for 2009 registered a deficit of P248.6billionor3.2%ofGDP,areversalfromtheP27.7billion surplus registered last year. ThenationalGovernment (nG) and the 14 monitored nonfinancial government corporations (MnFGCs)contributed mainly to the public sector deficit,postingadeficitofP298.5billionandP25.9billion,respectivelyduringtheperiod.

In2009,thenGdebtoutstanding,asapercentageof GDP, increased slightly to 57.3 percentcompared to 57 percent the previous year.Theconsolidated public sector debt,which includesthedebtofthenationalgovernment,14MnFGCs,BSP net of currency issue, government financialinstitutions, and CB-BOL, went up 8.1 percent,toP5.7trillionor71.6percentofGDPfor2009fromP5.3trillionor71.1percentofGDPin2008.The public sector debt to GDP ratio droppedconsiderablyfromahighof92.5percentin2005onaccountofbetterfinancialperformanceofGFIsandmonitoredgovernmentcorporations.

ThenG debt burden has improved significantlyfor the last five years. This is attributed, to alargeextent,togradualimprovementinnG’staxeffort for the period 2003 to 2008, restraint inspending consistent with expenditure program,and adoption of prudent debtmanagement andfinancingstrategies.Carefullymanageddebtandprudentborrowingstrategyearnedforthecountrythe Best Sovereign Bond Deal of the Year byfinancialpublicationsAsiaMoneyandTheAsset.

Theyearalsosawourprivatizationinitiativestakinga less aggressive stance owing to unfavorablemarket condition. Thus, remittances dipped toP1.4billionin2009fromP30.0billionin2008,asgovernmentdeferredthesaleofbig-ticketitemsuntilsuchtimethatmarketsituationimproves.

TheDOFcatalyzedeconomicgrowth,especiallyin the countryside, through the provision offunding assistance for programs and projects oflowincomelocalgovernmentunits. ThroughitsMunicipal Development Fund Office (MDFO),theDOFcommittedatotalofP4.65billionasof2009 for funding of 7 Municipal DevelopmentFund (MDF)–Second Generation Fund (SGF)FinancingWindows. Part of the assistancewenttoprojectsrelatedtotherepairandrehabilitationof infrastructure damaged by typhoons Ondoy andFrank.

We made headway in our advocacy for goodgovernance, even as we intensified our driveagainstcorruptionwithintheDOFanditsattachedentities.Wecontinuetodothiswithoutletup,todemonstrateourgenuinedesiretoridtheagencyofcorruptanddishonestpersonnel.In2009,theDOFfiled14casesagainstpublicofficials.

Our frontline offices – the Revenue OperationsGroupandtheCEnTER–havebeenvigilantaswellin theperformanceof their respectivemandates,implementingstrictproceduresontheapplicationfortaxandduty-freeexemptionandtaxcreditbyimporters and exporters to avoid leakages and

thuspreserve revenues for thegovernment. TheDOF likewise co-hosted with the Organizationfor Economic Cooperation and Development(OECD)the10thAsianRoundtableonCorporateGovernance inManila in September 2009 withthe main goal of promoting transparency andaccountabilityamongGOCCsandGFIs.

I am grateful tomy colleagues in theDOF, ourpartners from other government agencies, theacademe, the business community and theinternational development agencies, for theircontinued support to the plans andprogramsoftheDOF.Theimpactofthecrisisisnotoveryet.Challengesandconcernsareplenty,andtheroadtofiscalstrengthisstilllongandwinding.Oneofthese is theneed to reverse thenegative impactofrevenue-erodingmeasurespassedbyCongressthroughkeytaxreforms. Aslongaswecontinuetoworktogether,wewilllivetoseetheattainmentofourcommongoalofaprosperousPhilippines.

MARGARITOB.TEVES

04 05

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: MESSAGEFROMTHESECRETARY

Message of the Secretary

firstthreequartersof2009sustainedtheinflationdowntrend which started in the fourth quarter of2008.

With tame inflation, interest ratesalsoshowedadowntrend,withthebenchmark91-dayT-Billrateposted at an average of 4.2 percent, as against5.4percent inpreviousyear.TheBangkoSentralngPilipinas (BSP)supported the lowrateregimewith accommodative monetary policy to injectliquidityintothefinancialsystemandhelpboostthedomesticeconomy. The Philippine peso averaged P47.64 to thedollar in 2009 compared with P44.47 in 2008.The depreciation was due largely to concernsonincreasingworldoilpricestowardsthefourthquarter of 2009, national government fiscal

deficit, andoutcomeof theGDP. nevertheless,strong inflows of remittances from OverseasFilipinoWorkers(OFWs),whichreachedarecordUS$17.3 billion, aswell as sustained inflows offoreigndirectandportfolioinvestmentstemperedthedepreciationofthepeso.

The fiscal deficit reached P298.5 billion or 3.9percent of GDP in 2009. While this was largelywithin expectations of themarketwhichwas fullyawareof the government’s stimulusprogram, therewasacontinuingconcernaboutthecountry’sweakrevenueperformance,asthetaxeffortdeclinedto12.8percentin2009from14.1percentin2008.Theweaktaxcollectionstemmedfromspilloversoftheglobalcrisis,lowerefficiencygainsfromtaxadministrationandrevenue-erodinglegislativemeasures.

In2009, the Philippine economy felt the fullbruntoftheglobalfinancialcrisis.RealGDPgrowthdeclinedto1.1percentfrom3.7percentin2008.However,thisgrowthratewasbetter

thanthoseofthecountry’speersintheASEAnregionwhoseeconomiescontracted,likethatofThailand(-2.3 percent), Singapore (-2.0 percent), andMalaysia(-1.7percent).Thestrongperformanceoftheservicessectoraswellasthestimulusprogramimplemented by the government, which fueledhighergovernmentconsumptionandinvestments,sustained economic growth. The economy alsoderivedstrengthfromthecomprehensiveeconomicreforms thatwere firmly put in place as far backasthe1990s,whichhavemadetheeconomylessvulnerabletoexternalshocks.

Byindustry,growthwaspropelledbytheservicessectorwhich grewby 2.8 percent. Agricultureposted a flat growth (0.0 percent) – weakenedby theonslaughtofOndoyandPepeng; whileindustrycontractedby0.5percentcomparedwith4.4percentexpansionthepreviousyear.Withinthe industry sector, manufacturing sub-sectorshrank by 4.5 percent, a reversal from the 4.3percentincreasein2008. By expenditure share, government consumptionand personal consumption bannered outputexpansion and made up for the sluggishperformance of exports and investments. Theformergrewby10.9percentfrom3.4percentin2008,whilethelatterslowedto4.1percentfrom4.7percent in2008. The significant increase ingovernment consumption reflected the pumpprimingprogramimplementedbythegovernmentin2009,whilethemodestslowdowninthegrowthofpersonalconsumptioninthemidstofaglobalcrisis and devastating typhoons indicated thesubstantialcushioningeffectofOFWremittances.

Average inflation for 2009 fell to 3.2 percentfrom 9.3 percent in 2008, even with a fourthquarter inflation increase due toweather-relateddisturbancesandoilprice increase in theglobalmarket. The inflation outcomewaswell withintheGovernment’stargetof2.5-4.5percent.Stableprices of food and energy-related items in the

2009 Economic Highlights Thestrongperformanceoftheservicessectoraswellasthestimulusprogramimplementedbythegovernment,which fueledhighergovernmentconsumption and investments,sustainedeconomicgrowth.

AverAge InflAtIon rAte vs AverAge 91-dAy t-BIll rAte

(in percent)

12

10

8

6

4

2

02001 2002 2003 2004 2005 2006 2007 2008 2009

9.7

6.8

5.56

6

3.53

7.77.6

6.4 6.25.3

3.42.8

9.3

5.4

3.2

4.2

gdP reAl growth (%)

gdP reAl growth (%)

By Industry 2008 2009

Industry 4.4 -0.5

o.w. Manufacturing 4.3 -4.5

Agriculture 3.1 0.0

Services 3.1 2.8

By eXPendIture shAre 2008 2009

Investment 2.3 (5.7)

(o.w. Fixed Capital Investment) 2.7 (0.4)

Personal Consumption 4.7 4.1

Government Consumption 0.4 10.9

Exports (2.1) (13.4)

Imports 0.8 (1.9)

growth rAte (%)

10

8

6

4

2

02008 2009

GDP GNP

6.2

3.7

1.1

3.0 0706

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OnOMICHIGHLIGHTS

INFLATION RATE 91-DAY T-BILL RATE

TheglobaleconomiccrunchcontinuedtodampenrevenuecollectionsevenastheBureauofInternalRevenue(BIR)andtheBureauofCustoms(BOC)remainedfirminimprovingtaxanddutycollections.ThefiscaldeficitofthenationalGovernment(nG)for2009stoodatP298.5billion(equivalentto3.9percentofGDP),higherbyP48.5billionthantheprogrammedceilingofP250.0billion.

HigHEr tHan PrOgraMMEd dEficit in 2009

tHE criSiS wEakEnEd tax EffOrt in 2009

Total revenue collections only reachedP1,123.2billionorP115.9billionlowerthanprogrammed,and fell below 2008 levels by 6.6 percent, alsobecauseoflowerproceedsfromprivatization.

Thecountry’s taxeffort, afterhaving risen in thepreviousfive (5) years, reaching14.2percent in2008, fell to 12.8 percent in 2009. The global crisisdecimatedthetaxbaseandseveralrevenueeroding measures of Congress further restrictedtaxeffort.

BIRmissedcollectiontargetbyP48.2billionandtheBOCbyP53.0billion. Thiswasmainlydueto the full effectof thepassageofRA9504 in2008 that increased income tax exemption forall income earners and additional exemptionsfor individualswithdependents/childrenandthereduction this year of the corporate income taxratefrom35percentto30percentpursuanttoRA

9337passedin2005.Thesituationwasfurtherworsenedbytheill-effectsoftheglobaleconomicslowdown that led to lower interest rates andlowervolumeofimports.

However,non-tax revenues, suchas the incomegenerated by the Bureau of theTreasury, whichexceeded the program by P9.8 billion, partlycompensated for the lower than program taxrevenuecollections.

fiscal Management tax Effort2009 fIscAl PerformAnce

2008 2009 2009 ActuAl growth

In BIllIon Pesos ActuAl ProgrAm ActuAl vs ProgrAm rAte (%)

Total Revenues 1,202.9 1,239.2 1,123.2 (116.0) (6.6)

% of GDP 16.2 16.14 14.6 (1.5)

tax revenues 1,049.2 1,082.6 981.6 (101.0) (6.4)

% of GDP 14.2 12.5 12.8 0.3

BIR 778.6 798.5 750.3 (48.2) (3.6)

BOC 260.2 273.3 220.3 (53.0) (15.3)

Other Offices 10.4 10.9 11.0 0.1 6.5

non-tax revenues 153.7 156.5 141.6 (14.9) (7.9)

% of GDP 2.1 1.8 1.8 (0.0)

BTr Income 63.7 60.1 69.9 9.8 9.8

Fees & Charges 58.6 66.4 70.1 3.7 19.5

Privatization 31.3 30 1.4 (28.6) (95.6)

Grants 0.1 0 0.2 0.2 52.8

Expenditure 1,271.0 1,489.2 1,421.7 (67.5) 11.9

Surplus/(Deficit) (68.1) (250.0) (298.5) (48.5) 3.4

% of GDP (0.9) (2.9) (3.9) (1.0)

tAX effort

(Tax Revenue as % of GDP)2001-2009

20

18

16

14

12

10

8

6

4

2

02001 2002 2003 2004 2005 2006 2007 2008 2009

13.3

12.3 12.3 12.8 12.914.3 14.0 14.2

12.8

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Because of legal impediments and unfavorablemarketconditions,remittancetotheBureauoftheTreasury in 2009of privatization proceedswentdown to only P1.4 billion, from P31.3 billion

in 2008. The Privatization and ManagementOffice (PMO) contributed P500million and thePresidential Commission on Good Government(PCGG)remittedatotalofP890million.

reform agendatax adMiniStratiOn

The DOF continued its effort to improve taxcollection performance by carrying on its taxadministration reforms that it placed in 2005.The Revenue Integrity Protection Service (RIPS)investigatesallegationsofcorruptionintheDOFand its attached agencies. As of end-December2009, a total of 73 cases havebeenfiledundertheRevenueIntegrityProtectionServiceProgram(RIPS) involving 144 personnel from DOF, BIR,BOC, Bureau of Local Government Finance(BLGF) and Cooperative DevelopmentAuthority(CDA).For2009,14personnelwereinvolvedinpendingcaseswiththeOfficeoftheOmbudsman,2fromBIRand12fromBOC.

BIR’sRunAfterTaxEvadersProgram(RATE)aimstoprosecutehigh-profiletaxevaders.Asof2009,atotalof127criminalcasesfortaxevasionwerepending for resolution within the Departmentof Justice and various courts. To complete the

1. Simplified Net iNcome taxatioN Scheme (SNitS)

Thebill seeks tosimplify the taxationof theself-employed by limiting the allowabledeductions to expenses which are easilyverifiable and are directly expended onthe production of goods or in the rendition ofservices.

2. RatioNalizatioN of fiScal iNceNtiveS The proposed rationalization of fiscalincentives aims to adopt a strategicapproach to investmentandgrowth througha fiscal incentives policy that promotescompetitivenessandatthesametime,ensurescost-efficiencyandfiscalsustainability.

3. ReStRuctuRiNg the exciSe tax oN alcohol aNd tobacco pRoductS

Theproposedbillseekstostructurethecurrentexcisetaxesonalcoholandtobaccoproductsbyadoptingauniformrateforeachtobaccoandalcoholproducts.Therecommendationistokeepthespecificformofexcisetaxation

withanautomaticadjustmentofthetaxratesusingrelevantnationalStatisticsOffice(nSO)establishedtobaccoandalcoholindexes.

4. exchaNge of iNfoRmatioN aNd tax matteRS act ThelegislativeproposalisincompliancewiththeInternationallyAgreedTaxStandard(IATS)forExchangeofInformationtomoreeffectivelycarry out the country’s commitments underbilateral tax treaties designed to combat taxabuses.

cOnSOLidatEd PUBLic SEctOr financiaL POSitiOn

Thepublicsectorregisteredaconsolidateddeficitof P248.6 billion in 2009, a reversal from thesurplusexperiencedin2008.TheamountisP35.7billion higher than the programmed deficit ofP212.9billion.

ThemaincontributortothelargedeficitwasthenG,whichpostedadeficitofP298.5billionduringthe period. The other deficit centerwas the 14monitorednon-financialgovernmentcorporations(MnFGCs), which incurred an aggregate deficitof P25.9 billion on account of the nationalFood Authority’s (nFA) financial operations lossamountingtoP27billion.

However, this was partially offset by the betterperformance of the social security institutions(SSIs),thegovernmentfinancialinstitutions(GFIs)and the local government units with combinedsurplusesofP80billion.

Privatization

three-prongedcrusadeofthegovernmentagainsteconomicsaboteurs,BOCthroughtheRunAftertheSmugglers(RATS)Program,hasfiledatotalof101criminalcasesinvolving507respondentsasof2009.

LEgiSLatiVE agEnda

Congressaction in2009challenged therevenuegenerationeffortsofthegovernment.Five(5)lawswereenactedprovidingtaxexemptiontoactivitiesin the areas of tourism, stock trading and realestateinvestment.Congressalsoextendedthetaxperks of PAGIBIG and approved the creation ofBataanFreeport.ItisestimatedthattheselawswillbringaboutP14.1billioninrevenuelosses.

Despitethis,DOFcontinuedtopursuethepassageofthefollowinglegislativebillstoincreaserevenuecollections:

year 2001 2002 2003 2004 2005 2006 2007 2008 2009

Gross Revenues 0.5 P0.3 1.6 9.4 8.5 22.6 103.2 36.2 1.2

(billion Php)

Remittances to

National Treasury

(billion Php) 2.5 1.5 0.6 9.3 9.7 14.1 90.6 31.3 1.4

11

combinedsurplusesofSSIs,GFIs&LGUs80b

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TIOn Republic Estimateof

Actno. Revenue Impact(PB)TourismIncentives RA9593 (6.0)Abolition of DST on SecondaryTrading ofStock RA9648 (1.4)IncentivesunderPAGIBIGCharter RA9679 (1.0)BataanFreeport RA9728 (3.0)IncentivesforReal EstateInvestment Trust RA9856 (2.7)TOTAL (P14.1)

non-financial Public Sector Deficit

In 2009, the DOF continued to pursue variousfiscalreformstoenhancefinancialdisciplineandbetter resourcemanagement among governmentownedandcontrolledcorporations.

a. 14 majoR NoN-fiNaNcial goveRNmeNt coRpoRatioNS (mNfcS)

With the abatement of the rice crisis, nFAmadesubstantiallylessriceimportsin2009.This resulted in the substantial reductionofnFA’sdeficit fromP61.3billion in2008 toP27.0 billion for 2009. nonetheless, theconsolidated net financing deficit of the14 MnFGCs showed a mere P1.3 billionimprovementindeficitfromtheP27.2billionlevel in2008.The reduction innFAdeficitwas offset by lower surplus of the powercorporations---nationalPowerCorporation(nPC), Power Sector Assets and LiabilitiesManagement (PSALM) and national

Transmission Corporation (Transco) and thedeficit of PhilippinenationalOilCompany(PnOC)(fromasurplusin2008)duetolowerprivatization proceeds. The privatizationproceeds of the power corporations for2009, while lower compared to 2008,includedunexpectedpaymentsrepresentingadvance andupfront payments frombuyersofthegenerationassetsandupfrontpayment.Overall,theoperationsofthe14MnFGCsin2009resultedinanetdeficitpositionofP25.9billion, much lower than the programmedP63.6billion.

b. goveRNmeNt fiNaNcial iNStitutioNS (gfiS) aNd Social SecuRity iNStitutioNS (SSiS)

The consolidated cash surplus of theGFIs - Land Bank of the Philippines (LBP),DevelopmentBankofthePhilippines(DBP)and theTradeand InvestmentDevelopmentCorporation of the Philippines (TIDCORP,also known as Philippine Export-ImportCreditAgency (PhilEXIM) for the year2009

increased substantially by 33 percent toPhp10.0billionover the2008levelofP7.5billionwithallofthethreeGFIscontributingtoafavorablefinancialperformance.Itisalsonoteworthythatthiswas43percentorP2.5billionhigherthanthe2009fullyearprogramofP7.0billion.

For SSIs: Government Service InsuranceSystem (GSIS), Social Security System (SSS)andPhilippineHealthInsuranceCorporation(PHIC), the aggregate cash surplus droppedby39percentorP25.0billionfromthe2008surplus of P64.0 billion, thus resulting in asurplusofonlyP39.0billionin2009.

This was mainly due to: increased lendingtoGSISmembersbecauseof improvementsin system operations which facilitated loanprocessing; increased benefits payouts ofPHIC;andlowerinvestmentincomeofSSS.

intEnSiVE fiScaL cOnSOLidatiOn EffOrtS

ThenGcollectionsfromthegovernmentcorporatesectorontheimplementationofRepublicAct7656or theDividendLaw, inclusiveofother feesandnGshareongeneratedrevenuesbythePhilippineAmusementandGamingCorporation(PAGCOR)and the Manila International Airport Authority(MIAA),asprescribedbylaw,roseby52percent,from P23.5 billion in 2008 to P35.7 in 2009.ClosemonitoringofthefinancialperformanceofGOCCsandGFIsyieldedcollectionswhichwerehigherbyP12.2billioncomparedtothetargetofP27.9billionfortheyear.

government corporate Sector

PArtIculArs 2008 ActuAl fy 2009 ProgrAm 2009 PrelIm ActuAl 2009 vs 2008

14 MNFGCs (27.2) (63.6) (25.9) 1.3

GFIs (DBP,LBP,

TIDCORP) 7.5 7.0 10.0 2.5

SSIs (GSIS,SSS,

PHIC) 64.0 41.1 39.0 (25.0)

13

nGSHAREOnGOVERnMEnT

SECTORREVEnUEROSEBY

52%

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GFI’sconsolidatedcashsurplus rose by 33%

collectIons from goccs 2008 2009 vArIAnce

goccs Actual Program Actual %

A.Dividends

(a) GOCCs 5.0 6.8 7.8 1.0 15%

(b) BSP 5.0 - 6.0 6.0 -

B.Guarantee Fees 2.5 3.5 6.7 3.2 93%

C.Interest on Advances 0.6 0.4 0.5 0.1 35%

D.Foreign Exchange Risk Cover fee 1.8 1.0 2.2 1.1 111%

E.NG Share-Airport Terminal Fee 0.3 0.3 0.4 0.1 34%

F. NG Shares on Income Received

(PAGCOR and MIAA) 12.7 11.5 12.1 0.6 5%

totAl collectIons from goccs 27.9 23.5 35.7 12.1 52%

(In Billion)

(In Billion Pesos)

Dividend collections surged by 103 percent toP13.8billion,higher thantheP6.8billionof thepreviousyear.ThebiggestremittancescamefromBSP,PnOCanditssubsidiary,PnOC-ExplorationCorp,LBP,andDBP.

GuaranteefeecollectionsalmostdoubledtoP6.7billion from3.5billion in2008,owing tonFA’spayment of P1.8 billion out of its P2.0 billionchargesfortheyearandPSALM’spaymentofP2.3billion.

rEdUcing cOntingEnt LiaBiLitiES TheDOFsupportedvariousliabilitymanagementinitiatives of theGOCCs such as prepayment ofloans,bondexchangeandothertransactionslikeprincipal-only-swaps. These initiatives aim to,amongothers,cushiontheGOCCsfromfinancingburdenassociatedwiththebunchingofmaturities,andminimize foreignexchange lossesandotherfinancingcosts. Aspartofitscontingentliabilitymanagement,DOFspearheaded efforts to develop a process, alongwith thenEDA andDBM, thatwill allow closemonitoringofrisksassociatedwithguaranteesandperformanceundertakings,anddeterminewhichofthesecontingentliabilitieswillbecomerealsothat thenecessarybudget ismadeavailable inatimelymanner.

cOrPOratE gOVErnancE initiatiVES and adVOcacy

TheDOF,inthepursuitofitsmandatetomonitorand evaluate the financial performance andoperationsofGOCCs/GFIs,developedinitiativesencapsulated in theacronymF-I-E-S-T-A,whichis a program of reform for the governmentcorporatesector.

TheDOFpromotedtheimprovementincorporategovernance (CG) practices in the governmentcorporatesectorfollowingtheMemorandumfromtheOffice of the President dated 10April 2007which calls to “Further Corporate GovernanceAmong GOCCs/GFIs.” To translate goodgovernance into improvedfinancialconditionofGOCCs/GFIs through meritorious performanceof Board and management, and operationalefficiency in serving the publicwhile espousingtransparency and accountability in managingresources,theDOFembarkedonthefollowing:

• co-hosted the 10th Asian Roundtable on CGheldinManilalastSeptember2009insupportoftheobjectiveoftheOrganizationforEconomicCo-operation and Development (OECD) inpromotingCGprinciplesandbestpractices.

• formedstrategicpartnershipwiththeInstituteofCorporateDirectors (ICD) for the conduct ofCGorientationandtrainingprogramsforBoardofDirectorsandseniorofficialsofgovernmentcorporations,andthedevelopmentoftheCG.

• Developed the Corporate Governance (CG)Scorecard for GOCCs and GFIs, which isconsideredtobethefirstinAsiaandsupportedthe Office of the Government CorporateCounsel(OGCC)incomingupwiththeModelCodeofGoodPublicCGtoguideGOCCs/GFIsinadoptingitsCodeofCG.

dEVELOPMEnt and SOciaL diMEnSiOn

In view of the linkage of the governmentcorporations with various sectors and inrecognitionof the important roleofGOCCsandGFIsinurbanandcountrysidedevelopment,DOFsupportedtheapprovalandfacilitationoffinancingof major ports, irrigation, rural electrification,environmental,housingprojectsandloanfacilitywhichaimtopromote thedevelopmentofsmalland medium term enterprises and environmentfriendlyprojects.

Alongthis line, itsupportedtheextensionof thetermofthewaterconcessionagreementsinMetroManilainordertoprovideMetroManilaconsumerslong-term reliable water supply and sewerageand sanitation services which would improvethe quality of life, health and the environment.This extension would also allow consumers toenjoy lower tariff adjustments, despite increasedinvestmentsinsewerageandsanitation.

Likewise,withthegoalofpromotingacompetitiveandmarket-orientedpowerindustryinthecountry,DOF also provided continuous support to thevariousfacetsoftheimplementationofthepowersectorreformsuchastheprivatizationofvariousnPC-ownedandIPPgenerationassets.

The 10th Asian Roundtable Discussion on Corporate Governance organized by OECD, co-

hosted by the Department of Finance, Phil Institute of Corporate Directors and Philippine Stock

Exchange, held on September 9-10, 2010 at The Manila Peninsula Makati City

14

Dividendsrose by 103%f- Fairsharing/contributionsinthe

fiscalconsolidationeffortsofthe nationalGovernment(nG)

i- Integrityandenhancedcorporate governance(CG)inGOCCs/GFIs

e- Efficientandeffectivedeliveryof publicservices

S- Sustainabilityt-Transparency

a-Accountability

gocc Reforms

The National Government’s outstanding debt rose slightly to 57.3 percent of GDP in 2009, from 57.0 percent in 2008, but significantly lower than the 2003 level of 77 percent.

The gradual improvement in nG’s tax effort,restraintinspendingconsistentwithexpenditureprogram, and the adoption of prudent debtmanagementandfinancingstrategieshavehelpedreducenGdebtburdeninthelastfiveyears.

In recent years, nG has preferred domesticborrowingsoverforeignborrowinginitsfinancingprogramtominimizeforeignexchangeriskevenasitcontinuedtotapmoreofODAthanforeigncommercial sources to improve the interest costprofileoftheRepublic’sexternaldebt.Financingmix between foreign and domestic sourceschangedsignificantlyfrom86:14in2008to56:44in 2009,withnG tapping domestic borrowings

morethanforeignfinancing.Theshareofexternaldebtfrommultilateralandbilateralsourcesslightlydecreased from 41.8 percent in 2008 to 40.6percentin2009.Debtfromthesesourcescarriesconcessional rates and grant element,making itmore affordable for the country to pay back itsexternaldebt.

Thegovernment’sdebtmaturityprofileremainedsoundasaveragematurityimprovedto20.1yearsin2009 from19.8years in2008. Theshareofmediumandlongtermexternaldebt to the totalexternaldebtstoodat92.8percentinend2009,a big improvement from a decade ago. nG’sabilitytotaplong-termfinancingdemonstratestheconfidenceof the capitalmarket, bothdomesticandinternational,intheabilityofthegovernmentto pursue economic and fiscal reforms that willmove the economy forward to a sustainablegrowthpath.

debt Management

mAturIty ProfIle 2001 2002 2003 2004 2005 2006 2007 2008 2009

NG External Debt 16.0 16.5 17.0 17.0 17.4 17.6 18.9 19.8 20.1

ng deBt

(as % of GDP)

100

80

60

40

20

0

2001 2002 2003 2004 2005 2006 2007 2008 2009

62.7 67.777.0 79.0 71.4

63.855.8 57.0 57.3

YEARSAVERAGEDEBTMATURITY

20.1

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OfficiaL dEVELOPMEnt aSSiStancE financEd infraStrUctUrE, agricULtUrE and gOVErnMEnt financing

On behalf of the national Government, DOFsigned loan agreements with bilateral andmultilateralpartnersamountingtoUS$2.8billionin2009,slightlyhighercomparedwithUS$2.05billioncontractedin2008.

To support the nG’s external financingrequirements for 2009, theDOF raisedUS$450millioninprogramloans, theproceedsofwhichwereutilizedtofinancethegovernment’spolicy-basedprograms in theareasof foodproduction,fiscal sustainability and Local Government Unit(LGU) support. Moreover, DOF also tapped aUS$500 million-short term fiscal stimulus loanfrom the Countercyclical Support Facility ofADB to support the government’s fiscal stimulus

program to counter the global economic crisis.This loan covered, among others, infrastructureprojectsandthescalingupoftheconditionalcashtransfer program. Project loans totaling to aboutUS$880millionwerealsocontractedin2009andwere used to boost the country’s infrastructureand to repair and rehabilitate typhoon-damagedinfrastructure and facilities. The project loansincludeloansfrom:

• Spanish Government for the construction/rehabilitationof96bridgesnationwide,whichincludes those damaged by Typhoon OndoyandPepeng;

• Frenchgovernment for theconstructionof the70Roll-On,Roll-Off (Ro-Ro)ports tocatalyzetrade and tourism within the archipelago inlinewiththeadministration’sStrongRepublicnauticalHighway;and,

• Korean government for financing of key roadsegmentsinCentralLuzonandWesternVisayasto ease traffic congestion and to promoteeconomicactivitiesintheregion.

Project/ProgrAm nAme eXecutIng loAn Agreement

Agency Amount sIgnIng dAte

Asian Development Bank

(1) Philippine Energy Efficiency Project DOE US$ 31.1 million 02 March 2009

(2) Countercyclical Support Facility DOF US $500.0 million 26 August 2009

(3 Development Policy Support

Program. Subprogram 3 DOF US $250 million 16 September 2009

(4) Local Government Budget and Reform

Program, Subprogram 2 DOF US $225 million 08 December 2009

International Bank for Reconstruction and Development

(5 Participatory Irrigation Project NIA US$70.4 million 07 August 2009

French Government

(6) Greater Maritime Access (GMA) Ports DOTC/PPA €149.8 million 26 August 2009

Spanish Government

(7) Bridge Construction and Replacement Project DPWH €31.5 million 06 November 2009

The Export-Import Bank of Korea (KEXIM)

(8) New Bacolod (Silay) Airport Access Project DPWH US$13.06 million 13 July 2009

(9) Gapan-San Fernando-Olongapo Road, Phase II DPWH US$28.3 million 13 July 2009

The Export-Import Bank of China (China EXIM)

(10) Agno Integrated Irrigation Project DA-NIA US$89.2 million 09 November 2009

(11) Development Policy Support Program (II)

(co-financing with ADB) DOF JPY 9.3 billion 30 March 2009

national government direct Loans Signed in 2009

17

aSEan financE MiniStErS MEEting (afMM)

The Ministers endorsed the establishment ofa Macroeconomic, Finance and SurveillanceOffice (MFSO) at theASEAn Secretariat. Thiswill enhance regional surveillance, facilitatediscussions on regional surveillance andassist in the economic monitoring of ASEAn’sintegration.

aSEan+ 3 financE MiniStErS MEEting (afMM + 3)

SecretaryMargaritoB.TevesaffixedhissignaturetotheestablishmentoftheChiangMaiInitiativeMultilateralization (CMIM) last 28 December2009. The objective is to address short-termliquidity difficulties in the region, and tosupplement the existing international financialarrangements. Each member country has tocontributetocomeupwiththetotalfundofUS$120billion.ThePhilippineswillbecontributingUS$4.55billiontothefund.

aSia Pacific EcOnOMic cOOPEratiOn (aPEc)

Atthe16thAPECFinanceMinisters’meetingheldin Singapore innovember 2009, the Secretaryshared the Philippine experience in addressing

global cooperationtheglobalfinancialcrisiswithotherAPECmembereconomies. He likewise supported reforms forstrong, sustainableandbalancedgrowthaswellasreformstostrengthenthefinancialsystem.

Likewise, during the peer review sessionprior to the Ministerial Meetings, the DOFdiscussed the ASEAn single window initiativeswhich were incorporated in the Individual ActionPlan,oneof themajor topicsconcerningcustomsandtrade.

aSEan SingLE-windOw tEcHnicaL wOrking grOUP (aSw-twg)

DOF,asmemberofASEAnASW-TWG,participatedinvariousmeetingsaimedatdevelopingaregionalenvironmentthatshallenablecommunicationandexchangeofregulatoryandeconomicinformationrequired for the functional and operationallinkages ofnational SingleWindows (nSWs) ofthetenmembercountries. Thishopestorealizestrong regional commitments in putting intoplaceamoreviableenvironment for sustainableeconomiccompetitivenessandintegrationintheASEAnRegion.

Republic of the philippiNeS uS$ 1.5 billioN global boNdS due 2019

ThePhilippinenG reopened the international creditmarket forAsian borrowerswith its publicofferingof10-yearglobalbondson08January2009.ItraisedUS$1.5billioninthistransactionwidelylaudedbyinvestorsforitssnappyandstrategicexecution,againstamarketwhereissuersaremetwithdifficultyoffundingsincetheglobalcreditmarkethasdeepenedinSeptember2008.

ThisissuanceisthenG’ssinglebiggestglobalbondsofferinmorethan3years(sinceitslastdual-trancheofUS$2.1billiontransactionbackin2006).Thebond,withacouponof8.375percent,fetchedayieldof8.500percent,pricingthetransactionatthetightestendofthepriceguidance.Thedeal,anew10-yearbenchmarkbondfromtheSoutheastsovereignsince2006,wasoversubscribedfourtimes,drivenbystronginterestfromglobalinvestorsaswellassupportfromPhilippinedomesticbids. Thetransactiondevelopedandsustaineditsownmomentum,drawingarecordnumberofordersforanydealbythenGandresultinginamassivereturnofrealmoneytoAsiancredit.Ofthe281accountsparticipatinginthebondoffer,some58percentwerebondmanagers,ofwhichtherewasonlyonehedgefund,astarkcontrasttothefastmoneybooksthatdominatedAsiandebtdealsinthelastthreeyears.Banksbought20percent,insurersandpensionfunds,16percentandretailinvestors,6percent.ThedealwasgeographicallysoldtoAsiaat41percent,Europeat22percentandUSat37percent.

ThistransactionwasvotedtheBestSovereignBondDealoftheYearbyfinancialpublicationsAsiaMoneyandAssetintheircapitalmarketawardsfortheyear2009.

Republic of the philippiNeS uS$1.0 billioN global boNdS due 2034

Tocompleteitsexternalfinancingrequirement,nGaccessedtheinternationaldebtcapitalmarketsforthethirdtimebyofferinga$1.0billionnewbenchmark25-yearglobalbondsonOctober16,2009.Thebenchmarkbondswithacouponof6.375percentwerepricedtoyield6.425percent.Thetransactionwasaggressivelypricedwithamere5bpsinyieldpickupoverthesecondarytradingoftheexistingROPbondsdue2032.

Theofferingwasheavilysubscribedwithover5.0billionindemandfor2009accountsglobally.Theorderbookalsorepresentedaveryhighqualityaccountsanddiverseinvestorcategories,includingnew names and players drawn to participate in the transaction.The bondswere geographicallysoldtoAsiaat50percent,Europeat13percentandUSat37percent.Bycategorythebondwasoversubscribedbybanks-55percent,funds-34percentandretailaccounts-11percent.

global credit markets remained open despite global credit market crunch

18 19

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Attended by development partners, top officials and executives of public and private sectors, the 2nd Public-Private Sector Dialogue for Post-Disaster Assistance was held on

December 2, 2009 at the Hotel Intercontinental, Makati City.

2nd Meeting2009 Philippine development forum Special Meeting

PUBLic-PriVatE SEctOr diaLOgUE On POSt-diSaStEr aSSiStancE

Broughtaboutbytheaftermathoftropicalstorms“OndoyandPepeng”,thegovernment,throughtheDOF,requestedtheWorldBankandtheprivatesectortotaketheleadincoordinatingthe

implementationofaPost-DisasterneedsAssessment(PDnA)inclosecooperationwithconcernedgovernmentagenciesandotherdevelopmentpartners.Thefirstmeetingwasheldon

09november2009attheManilaPeninsulaHotel,MakatiCity.

1st Meeting

The2ndpublic-privatesectordialogueforPDnAtook place on 02 December 2009 at the HotelIntercontinental, Makati City and it focused onthe completed Post-Disaster needs AssessmentReport provided by the national Disaster CoordinatingCouncil.

Itwasreportedthattheoverallneedsforrecoveryand reconstruction for the next three years areestimatedataboutP208billionorUS$4.4billionanditwasestimatedthatthepublicsectorsharein these requirements will be about 55 percent(P114.5billion)andfromtheprivatesectorwillbe

“ ThePDnAprovidedameaningfulpictureofthetotaldamages,losses,andneedsarisingfromtyphoonsOndoyandPepeng.Thereportwouldserveasourguidepostincraftingacomprehensiverecoveryandreconstructionstrategy as well as an integrateddisastermanagementstrategy toreducetheimpactoffuturedisastersonourcountryandourpeople.”

-SecretaryGaryTeves

45percent(P93.4billion).FinancingrequirementsforthepublicsectorwillbesecuredfromLGUs,GOCCs,GFIsandnG.

Broadindicationofsupportfromthedevelopmentpartners of the country reached more than $3billion in loans and grants. The private sectorpledged to assist the government in mitigatingthe effects of the disaster caused by typhoonOndoythroughpriorityprojectsincludingmakingaccessible access of credit to micro and smallbusinessestorestartbusinessandcreatejobs.22

TheEconomistIntelligenceUnit,initsFirstAnnualGlobalMicrofinanceIndexandStudy,recognizedthe Philippines as the best in theworld in termsof its microfinance regulatory framework. Thestudywas an in-depth analysis conductedby thebusinessinformationarmofTheEconomistGroup(publisher ofThe Economist) of themicrofinancebusiness environment in 55 countries thatwere selected based on the importance of theirexistingmicrofinancesectorsortheirpotentialfordevelopment.

The index compared the countries across threebroadcategories:regulatoryframework,investmentclimate and institutional development. ThePhilippines also landed third place in the world

Microfinance.Central strategy for povertyreductioninthePhilippinesunderRepublicAct8425(SocialReformandPovertyAlleviationAct)

AsupportivepolicyenvironmenthasenabledmicrofinancetoflourishinthecountrythroughtheDOF-nationalCreditCouncil.

Microfinance Initiatives2009wasarewardingyearfortheeffortsoftheDOF-nationalCreditCouncil(nCC)toprovidearobustpolicyandregulatoryenvironment for microfinance.

for its overall performance in the said categoriesfollowing the consistent microfinance leaders ofSouthAmerica,PeruandBolivia.

In2009,theDOFthroughthenCC,consolidatedtheheadwayithasmadeincraftinginnovativepoliciesin microfinance.The DOF-nCC was engaged intheimplementationofthetwoTechnicalAssistancefunded by the Japan Fund for Poverty Reduction(JFPR) administered by the Asian DevelopmentBank (ADB): Developing Financial CooperativesProject and Developing Microinsurance Project,andwiththecommencementofthenewTechnicalAssistance, the Microinsurance InnovationsProgram for Social Security (MIPSS) from theGermanTechnicalCooperation’s(GTz)inJanuary2009.

dEVELOPing financiaL cOOPEratiVES PrOjEct

1. developed the SupeRviSioN aNd examiNatioN maNual foR coopeRativeS with SaviNgS aNd cRedit SeRviceS (Scc)

TheManualwasfinalizedonJanuary9,2009andwas subsequentlyapprovedby theCooperativeDevelopment Authority (CDA) Board of

23

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FInAnCEInITIATIVES

DOF-NCC staff and CDA Regulatory Unit, with the management and staff of the PNAC Cooperative Union,

Aborlan, Palawan during the pilot testing of the Supervision and Examination Manual for Cooperatives with Savings

and Credit Services

Region 1 and Cordillera Administrative Region (CAR) consultation held in Baguio City on July 17, 2009.

Seated are members of the Technical Working Group on the Draft Regulatory Framework for Microinsurance

from government and the private sector. Below: Region 5 consultation, headed by Undersecretary Gil S. Beltran, held in Tuguegarao on October 8, 2009 after

the onslaught of the devastating typhoon Pepeng.

Workshop for the Cooperative Federations’ Union to identify areas of assistance or services for the primary

cooperatives

as the Philippine Cooperative Code of 2008.Provisions that strengthen regulatory oversight ofCDAovercooperativesarenowincorporatedunderthenewlaw.Writeshopactivitiesonthedrafting of circulars and Implementing Rulesand Regulations necessary to implement theCooperativeCodeconductedin2009,resultedtotheformulationofthefollowing:

• RulesandRegulationsImplementingCertainProvisionsofthePhilippineCooperativeCodeof 2008 (Part I) with BLGF MemorandumCircular no.31-2009 (exemption ofCooperativesfromthepaymentofLocalTaxes,FeesandCharges);

• RulesandRegulationsImplementingSpecialProvisionsofthePhilippineCooperativeCodeof2008(PartII);and

• Joint Rules and Regulations ImplementingArticles 60,61 and 144 of the PhilippineCooperativeCodeof2008inRelationtoRAno. 8424 or thenational Internal RevenueCode,asAmended.

Administrators(BOA)onJanuary29,2009.ItisanimportanttooltostrengthenCDA’sregulatoryandsupervisorycapabilities.Itwillserveasaguidefor CDA cooperative specialists in conductingexamination of cooperatives, which adopts arisk-basedsupervisionandexaminationprocessforSCCs,asagainsttraditionalcompliance-basedexamination.Risk-basedsupervisionfocusesonareasthatposethegreatestriskstothesafetyandsoundnessofSCCsandascertainsthatthereisaneffectiveassessmentofthemanagementprocessto identify,measure,monitor,andcontrol theserisks.Pilot-testingoftheDraftManualwasalsoinprogresstoascertainitsapplicabilitybeforeitsfinalizationandeventualimplementationacrossthecooperativesector.

2. coNducted advocacy foR

fedeRatioNS aNd uNioNS The objective of the activity is to determineand identify the areas of assistance or servicesthat federations/unions can offer as a businessproposition,e.g.financialproductsandservices,technicalandmentoringservicesandlegalandotherservices,tocapacitateprimarycooperativestocomplywiththevariousregulationsaffectingtheir operations. Workshops/forums wereconducted last February and March 2009 fornorthern Luzon, Southern Luzon,Visayas andMindanao.

3. puShed foR the paSSage of the philippiNe coopeRative code of 2008

The DOF-nCC, in collaboration with theCDA, advocated for the crafting of the newCooperativeCodewhichwassignedintolawbyPresidentGloriaMacapagalArroyoonFebruary18, 2009 as RA no. 9520, otherwise known

TheEconomistIntelligenceUnit,initsFirstAnnualGlobalMicrofinanceIndexandStudy,recognizedthePhilippinesasthebestintheworldintermsofits microfinanceregulatoryframework.

24

LgU financiaL PErfOrMancE MOnitOring

Local Government Units (LGU’s) posted acombinedsurplusofP36.0billionin2009andanaverage of P29.6 billion for the last three years,continuingthelong-termsurplustrendofLGUs.

AsofDecember2009,InternalRevenueAllotment(IRA)represented64percentoftotalLGUincome,while only 36 percent were raised internally.Of the income generated internally, 24 percentcame from tax revenue, 10 percent from non-tax revenue and about 1 percent was derivedfromextraordinaryreceipts. Ontheexpenditureside,LGUsspent43percentoftheirtotalbudgetfor general services. Aggregate disbursementsfor social services represented 2 percent, whilereleases for health, nutrition, and populationcontrolaccountedfor10percent.

Operationalexpensesforeconomicservicessharedaconsiderableamountoftheexpendituresat15percentwhile 3 percentwent to debt servicing.A significant amount or 19 percent of the LGUcofferswasallottedmainlyasdevelopmentandcalamityfundsandaidtobarangays.

Local government finance

AVERAGESURPLUSOFLGUS

29.6b27

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TFInAnCE

lgu Income And eXPendItures (in billion pesos)

2007 2008 2009*

Income 232.0 269.9 269.4

Local Sources 79.4 89.6 91.9

Allotment & Shares 150.2 176.6 173.3

Other Sources (e.g.Extraordinary Receipts/

Grants, Interlocal Transfers) 2.4 3.8 4.2

expenditures 210.2 234.3 238.2

surplus 21.8 35.6 31.3

*Preliminary as of December, 2009

MicrOinSUrancE PrOjEct and PrOgraM

1.DevelopingMicroinsuranceProjectunderTAno.9118-PHI, a US$1million technical assistancethatwasgrantedinMarch2008.ThegrantisforthedevelopmentofthemicroinsurancemarketinthePhilippineswithDOF-nCCas theExecutingAgency and Insurance Commission (IC) as theImplementingAgency.

2.Microinsurance Innovations Program for SocialSecurity (MIPSS) is a grant from the GermanTechnical Cooperation (GTz) , a three millioneuros (EUR 3,000,000) technical assistancetargeting the low income informal sectors andMicro-smallenterprises(MSEs)inthePhilippinesespecially in CARAGA and theVisayas regionswhere poverty incidence is notably high. Thisprogramcommenced in January2009andwillendin2012.

MiLEStOnES

Withthehelpoftheaforesaidtechnicalassistance,theDOF-nCCformulatedtwolandmarkdocumentsonmicroinsurance,namely:

1. Regulatory framework for microinsuranceunderComponentAoftheADB-JFPRMicroinsurance,and;

2. National Strategy for microinsurance underComponent1oftheGTz-MIPSS.

The DOF convened a series of TWG meetingsof stakeholders from thegovernmentwithprivateinsurers,reinsurersandinsuranceassociationsfromFebruarytoJune2009,andregionalconsultationswith various stakeholders from June to October2009. Themeetingsandconsultationscoalescedideasfromvariousstakeholdersintothedraftingofthese two importantdocuments.Bothdocumentswere approved on December 11, 2009 by themembersoftheJointSteeringCommitteecomprisedof representatives from the DOF, Bangko Sentralng Pilipinas (BSP), IC, Securities and ExchangeCommission (SEC), CDA, national Anti-PovertyCommission(nAPC),DepartmentofHealth(DOH)andPhilhealth.

The milestone policies complement themicrofinance policies established by thegovernment, which have enabled the poorgreater access to financial services, particularlymicrocredit,withtheentryofmoreprivatefinancialinstitutionsnowactivelyengagedinmicrofinance.Microcreditpresentavastopportunityforthepoorto improve their economic status and overcomepoverty,becauseitallowseasieraccesstocredit.Froma fewhundredsof thousands in1997, thenumberofmicrofinance borrowershas reached5.7millionasofDecember2009,withtotalnewclientsof974,867inyear2009alone.

Microfinanceborrowers

5.7m

26

The Revenue Generation Program which wasinitiated to support theMedium-TermPhilippineDevelopment Plan remains the LGUs catalystin the development and implementation oftax collection enforcement programs aimed atimprovingtheirperformancesingeneratinglocallysourcedincome.TheLGUscollectedP95.4billionover the P88.6 billion target as of December2009.Various factors contributed to the LGUs’attainment of their respective annual targets.LGU revenue bases were enhanced throughprogramsandprojectssuchas theRealPropertyTax Administration Project, conduct of GeneralRevision of Real Property Values, enforcementof administrative remedies in the collection oftaxes, installation of computerized systems ofcollectioninLGUs,andtheupdatingoftheirlocal revenuecodes.

LgU dEBt MOnitOring and crEditwOrtHinESS rating SyStEM

The LGU Debt Monitoring System and theCreditworthiness Rating System are used inconjunction with BLGF’s LGU Debt ServiceCertification System which determines themaximum amount an LGU can allocate fordebt service. A totalof701LGUswere issuedcertificationsfortheirborrowinganddebtservicecapacitiesasarequirementforsub-loanprojectsundertheMunicipalDevelopmentFund-ForeignAssisted Projects (MDF-FAPS), GFIs, AssessmentLoanRevolvingFundandforbondflotation.

Asoftheyear2009,LGUsborrowedtheamountofP89.5billion,97percentofwhichwereloansand the restwerebondflotation. Availmentsofloan proceeds posted at 87.0 percent or P75.3billionwhilebondoutstandingwas18.5percentorP0.5billion.

lgu loAns And BorrowIngs

gfIs loan Amount (in Billion Pesos) Availment Amount % Availment

Land Bank 57.3 49.8 86.8%

Phil. Veterans 1.4 1.2 87.7%

Mun. Dev. Fund 5.6 5.6 100.00%

Phil. Nat’l Bank 5.7 5.3 92.2%

DBP 16.4 13.3 81.2%

totAl 86.6 75.3 87.0%

lgu Bonds

Bond Amount Bonds Outstanding %

Phil. Veterans 0.1 0.1 83.6%

LGUGC 2.8 0.4 15.9%

totAl 2.9 0.5 18.5%

grAnd totAl 89.5 - -

2928

Income and Expenditure Profile of LGUs for Year 2009

40

35

30

25

20

15

10

5

0

collectIon effIcIency (All LGUs)

real Property tax (rPt) 99.89% Target: 39.272 BActual: 39,230.0 B

Business tax (Bt) 111.09%Target: 30.291 BActual: 33,651.9 B

fees & charges (f&c) 115.72%Target: 10.022 BActual: 11,598.2 B

economic enterprise (ee) 120.92%Target: 9.055 BActual: 10,949 B

All sources 107.66%Target: 88.642 BActual: 95.429 B

revenue generAtIon ProgrAmLGU Collection Efficiency*

CY 2009 – Preliminary as of December, 2009

Target Actual

rPt Bt f&c ee

CO

LL

EC

TI

ON

* Collection efficiency-defined as actual collections against the target collection.

ExpenditureProfile

Tax Revenue 24%

Extraordinary Receipts/grants 1%

Non-Tax Revenue 10%

IRA 64%

Inter-local transfer 1%

43% General Public Service

6% Education

10% Health, Nutrition, Population Control

2% Housing and Community Development

2% Social Security/Social Services and Welfare

15% Economic Services

3% Debt Services

19% Other Services

incomeProfile

EfficiEnt MOBiLizatiOn Of SEcOnd gEnEratiOn fUnd (Sgf) tO PrOMOtE LgU dEVELOPMEnt

The DOF, through the Municipal DevelopmentFund Office (MDFO), continued to provide amechanism thatwouldenable local governmentunits (LGUs) to avail of funds, both local andinternationalassistance, for their implementationof various social and economic developmentprojects.ItlikewiseprovidedassistancetoLGUsthrough its programs, projects and activitiesto help them establish credit worthiness andpromote fiscal discipline especially among thelessdevelopedones.

Seven financing windows utilized the MDF-SecondGenerationFund(SGF) in2009. All theprojects financed through the MDF-SGF weregeared towards the achievement of millenniumdevelopment goals that encourage goodgovernance, alleviate extreme poverty, promotequality education, advocate environmentalprotectionandpreservation, improvehealthandqualityoflife.

Municipal Development Fund Office

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AllocAtIon of mdf-sgf By fInAncIng wIndow

financing windows fund (in Million PhP)

Program Lending (PROLEND) 2,000

Millennium Development Goal (MDG) Fund 500

Mindanao Basic Urban Services Sector Project (MBUSSP) 400

Municipal Development Fund Project (MDFP) 500

Philippine Water Revolving Fund (PWRF) 500

Disaster Management Assistance Fund (DMAF) 700

Project Technical Assistance and Contingency Fund (PTACF) 50

totAl 4,650

Land adMiniStratiOn and ManagEMEnt PrOjEct ii (LaMP2)

In 2009, LAMP2 Component 4-Valuation andTaxation earned a “very good” rating from theWorld Bank (WB) and Australian Agency forInternationalDevelopment (AusAid).Among thenotableaccomplishmentsare: • Passage of Republic Act no.9646 or the RealEstateServiceAct(RESA)LawonJune29,2009thatseekstoprofessionalizethevaluationsector;

• Development of 24 Philippine ValuationStandards based on the principles ofInternational Valuation Standards (IVS) andpromulgated by virtue of Department OrdersignedbytheSecretaryofFinanceonOctober14,2009;

• Issuance of Executive Order no. 833 by thePresident of the Philippines on October 13,2009, creating the Property Valuation Officeunder the Department of Finance (DOF) thatwill continue to undertake the valuation andtaxationreforminitiativespriortoestablishmentof the proposed nationalValuation Authority(nVA). In line with its implementation, twoCluster Centers, one each in Region V andRegion VI, were established to implementand coordinate valuation and taxation reformactivitieswithintheclusterareas;

• Developed presentations to conductinformation caravans to generate interest onvaluationandtaxationintheLGUswithintheclustercenterareas.TwoInformationCaravanswereconducted;

• Completion and deployment of ValuationDatabase and Information System (VDIS)ModulestopartnerLGUs;and

• Development of Electronic Field Appraisaland Assessment System (eFAAS) software foreffectiveandefficientmanagementofpropertydata of LGUs which is needed for BLGFCompliance Reporting and compliance toe-CommerceLaw.

30

“ LAMP2Component4-ValuationandTaxation,earned“verygood”ratingfromWorldBank(WB)andAustralianAgencyforInternationalDevelopment(AusAid).”

MULti-SEctOraL rEPrESEntatiOnS Of diffErEnt SUBPrOjEct tyPES

Fifty-ninepercentofthetotalsectoralsubprojectsfinanced through the MDF-SGF facilities werepublic economic enterprises (or revenue-generating), such as public market, transportterminals,andwatersupplysystemlevelIII.LGUsubproject loan applications/availments relativetodisaster risk reductionand rehabilitationhaveincreased significantly during the last quarter oftheyear,torepairdamagescausedbyfloodinganderosionswhentyphoonsOndoyandFrankwreakedhavoc in different areas of the country. Sharingat9percenteachofthetotalsectoralsubprojectsfundedwerethoserelatedtohealth(i.e.hospitals,infirmaries,healthcenters, laboratory&medicalsupplies/equipments)andpolicy reformssuchasenhancement of local revenue generation andeffectivefundmanagementthroughe-governance.Other sectoral subprojectswere those related toeducation,procurementofheavyequipment,andothertechnicalassistance.

DOF, through its MDF-SGF facilities, funded37LGUsoutof the total 48LGUsbelonging tothe lower income levels in 2009, affirming itscommitmenttopromotelocalfiscalindependenceamong poor LGUS. This is comprised of thefollowingavailments:3rdincomeclass-7LGUs;4thincomeclass-15LGUs;5thincomeclass-14GUs,and6thincomeclass-1LGU.

Mdf-Sgf

59% Public Economic Enterprises

9% Health

2% Education

9% Policy Reform

11% Disaster Risk Reduction & Rehabilitation

2% TA on Procurement of Heavy Equipment

8% Heavy Equipment

Sectoral distribution of MDF-SGF Subprojects

Number of LGUs per Income Class

FUNDED OUT OF 48

37LGUs

33

Income No. of Income No. ofclass lgus % class lgus %1st 8 17% 1st 8 17%2nd 3 6% 2nd 3 6%3rd 7 15% 3rd to 37 77%4th 15 31% 6th 5th 14 29% 6th 1 2% totAl 48 100% totAl 48 100%

Implementation stages Total SPLA Costs of

Approved, ongoing &

Financing Total No. of Percentage Completed Subprojects

Windows Approved Procurement Ongoing Completed Subprojects Share (in million pesos)

MBUSSP 2 2 5 1 10 19% 272.3

MDFP 2 1 1 4 7% 136.4

MDGF 5 9 10 1 25 46% 385.8

DMAF 2 2 2 6 11% 66.3

PROLEND 2 2 1 5 9% 478.8

PWRF 1 1 2% 50.

PTACF 1 1 2% .5

HSRP* 2 2 4% 43.8

totAl 14 11 22 7 54 100% 1,433.9

32

Prolend - Promotes good governance by fostering accountability, transparency, predictability and efficiency in public administration

mdg fund - Supports LGU initiatives that directly contribute to the attainment of the Millennium Development Goals (MDGs) such as eradication of extreme poverty and hunger, reduction of child mortality and others.

mBussP – Provides access to credit facility and technical assistance to LGUs in Mindanao

mdfP – Provides financing to priority development projects of LGUs nationwide.

Pwrf – A standby credit facility that provides financing means for utilities to invest in water supply and sanitation infrastructure projects in partnership with the private sector and other donor agencies.

dmAf – Supports disaster relief and recovery needs, disaster mitigation and prevention.

PtAcf - Provides optional funding for LGUs in the preparation of Feasibility Studies, Detailed Engineering Design, funding for foreign exchange differentials, technical assistance and other contingency requirements of LGUs that will access financing under MDFO.

mdf-sgf 7 windows

AsofendDecember2009,atotalofP4.65billionhas been committed to fund the 7 MDF-SGFfinancingwindows.Thebiggestallocationswenttotwolendingfacilitiesthatwerefirstimplementedin2008:PROLEnDwithP2.0billionandDMAFwithP700.0million.

Fifty four (54) subproject loan availmentscosting P1.43 billion were already in differentimplementationstagesasofDecember2009.Ofthese subprojects, fourteen (14) were recentlyapproved, while eleven (11) were undergoingprocurement processes. A total of P470.56million has been released to fund 22 ongoingconstructionactivities.Ofthe54subprojectsthatstartedimplementationsinceyear2008,seven(7)werealreadycompleted.

The Department implements tax exemptions toselected importers as provided by law throughtheMabuhayLane,oneofitsfrontlineoffices.TheMabuhayLaneattendstotaxexemptionclaimsofimportersofpersonneleffectsandhouseholdgoods,importersofcapitalequipment,andcontractorsfortheDepartmentofEnergy.TheMabuhayLanealsoprocesses claims of multilateral and non-profit,non-stock,educationalinstitutions.

the Mabuhay Lane

Fortheyear2009,totalamountoftaxesanddutieswaived increased to P12.38 billion from P3.51billion in 2008. Thiswas brought about by theincreasedactivitiesofoilexplorationcompanies,with the commencement of drilling explorationwells in South Sulu Sea which require capital-intensiveequipment.

mABuhAy lAne vAlue of ImPortAtIon dutIes vAt totAl In million pesos

Importation of capital equipment (spareparts and machineries by BOI-registered enterprises under E.O. 226) 28,521.33 855.64 211.76 1,067.40

Importation by non-stock, non-profit educational institutions under Article XIV, Section 4(3) of the New Constitution 569.45 17.08 70.38 87.46 Magazines/Publication Books under YBESCI (Florence), Sec 105 (s) and RA 8047 2,556.13 74.58 74.58 387.08

Importation with NEDA Recommendation for Tax & Duty Entry under Section 105 of the TCCP 624.80 18.74 77.23 95.97

Importation Under Sec. 44 of the Headquarters Agreement Between GOP and ADB 463.91 13.92 57.34 71.26

Importation of personal effects and household goods under EO 206 108.19 3.25 13.37 16.62

Importation of machinery/equipment/spare parts by energy contractor under PD 1442 3,054.02 91.62 377.48 469.10

Importation of machinery/equipment/spare parts by energy contractors under PD 972 4,627.40 138.82 571.95 710.77

Importation of machinery/equipment/spare parts by energy contractors under PD 87 61,597.29 1,847.92 7,613.43 9,461.35

Importation of machinery/equipment/spare parts by mini hydro power under RA 7156 74.48 5.21 9.56 14.77

Importation of machinery/equipment/spare parts by O.S.W. under EO 323 4.17 0.13 0.52 0.65

totAl 102,211.18 3,066.91 9,315.51 12,382.42

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OnE-StOP-SHOP tax crEdit and dUty drawBack cEntEr

Pursuant to its mandate under AdministrativeOrderno.266,theOSS-CEnTERissuedin2009atotalofP3.7billionworthofTaxCreditCertificates(TCCs)toover200exportersandinvestors:

This representsadeclineof20% froma totalofP4.7billionworthofTCCissuancesin2008.Thedeclineisduetothelacklusterexportperformanceasaresultoftheglobalfinancialmeltdown.

to pRotect the iNtegRity of the tax cRedit SyStem, the followiNg iNitiativeS weRe doNe iN 2009:

Intensified the conduct of plant inspections at its BOI section as part of the efforts to strengthen claimant pre-qualification requirements.

These plant inspections,were intended to verifytheexistenceoftheplantandproductionfacilitiesofTCCclaimants.

frontline Operations

Expedited Processing of VAT Refund/Credit Claims of Japanese Companies

Coordinated and facilitated several meetingsbetweenBIRofficialsandJapanesecompaniesinsupport of the initiative of the Japan-PhilippinesEconomic Partnership Agreement (JPEPA) Sub-Committee on Improvement of the BusinessEnvironment.

Themeetings helped to clarify requirements forprocessing VAT refund/claims, resolve certainissuesaffecting suchclaims, aswell as establishbetter coordination between the BIR andJapanesecompaniesinfacilitatingtheexpeditiousprocessingofpendingclaims.

Use of Electronic Tax Debit Memos (TDM) thru the BOC’s Electronic to Mobile (e2M) Customs System

The OSS coordinated with BOC on theimplementationoftheImportAssessmentSystem(IAS)componentofthee2Mproject.

The IAS, which is implemented by CustomsMemorandum Order no. 27-2009, entails theuseofelectronicTDMSforfasterandmoresecureprocessingofpaymentsforimportations.

TCCsissued

3.7b

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Group Number TCC Amount of TCC (billion Php)

Investment Incentives

Group (IIG/BOI Claims) 408 1.2

Duty Drawback Group

(DDG/BOC Claims) 395 1.4

Tax and Revenue Group

(TRG/BIR Claims) 580 1.1

total 1,383 3.7

•

•

•

Human resource development

tItle of course/semInAr/trAInIngTraining for Banking and Finance Development for ASEAN CountriesGTC on Chief Information Officer for E-Government Promotion (B)Course on Fiscal Management and ReformsWater Week 2009: Tackling Global Water ChallengesHigh-Level Forum on Reducing Vulnerability in the Face of CrisisMOF/JCIP/WB Workshop on External Debt Management 2009OECD-ADBI 10th Tokyo Roundtable on Capital Market Reform in Asia5th World Water ForumCourse on Macroeconomic Management and Financial Sector IssuesRegional Workshop on Promoting Financial Inclusion through Innovation PoliciesWorkshop on Innovation Financing in Education, Implication Asia for the East Asia and Pacific RegionHitotsubashi Executive Program for Macroeconomic PolicymakersCourse on Finance for MacroeconomistAsia Regional Forum on Policy and Regulation of Financial InclusionCourse on Macroeconomic Diagnostics18th Annual seminar on Economic PoliciesKorea-ASEAN Economic Cooperation ForumStudy Visit to STA and Statistics SwedenHigh Level Tax Policy Seminar for Asian and Pacific Countries on Tax IncentivesSeminar on Macroeconomic Management for Senior OfficialsMaster in Public Policy18th Seminar on Economic PoliciesOECD Tax Event on the Taxation of Financial InstrumentsRisk Management Regional Seminar11th JBIC Seminar for International FinanceMacroeconomic Management and Fiscal PolicyAsia Tax Forum Workshop on Alcohol Excise TaxationWorkshop on Designing Government Debt Management StrategiesRegional Conference ASIA on Quality GrowthIncome Tax WorkshopAsian Regional Public Debt Management SummitSeminar on Financial Development in Asia and KoreaSeminar on Interest Rate Derivatives IntensiveMacroeconomic Implications of Fiscal IssuesLong-term: Masters Degree Program in Public Policy and Taxation Long-term: Masters Degree in International Development Policy Long-term: Master of Public Policy Programme

countrySingaporeOkinawa, JapanSeoul, KoreaWashington, DC, USAJakarta, IndonesiaTokyo, JapanTokyo, JapanIstanbul, TurkeySingaporeTokyo, Japan

Hanoi, VietnamTokyo, JapanUSAKuala Lumpur, MalaysiaSingaporeJapanJeju, KoreaSwedenTokyo, JapanSingaporeSingaporeTokyo, JapanSeoul, KoreaHong Kong, P. R. ChinaTokyo, JapanSingaporeBangkok, ThailandUSANew Delhi, IndiaSeoul, KoreaMalaysiaHong Kong, ChinaHong Kong, ChinaSingaporeJapanKoreaSingapore

Staff training and dEVELOPMEnt

Human resource management at the DOF istransformingitselffrombeingfirsttherule-makingand policing arm of management to being astrategicpartnerinattainingtheobjectivesoftheDOForganization.

The DOF human resource development groupprovides the environment for work systems inwhich people succeed and contribute, puttingemphasisonemployeedevelopment,performancedevelopmentandappraisalsystems.

In line with this, qualified staff were chosen toattendthefollowingforeigntrainingsandseminarstodeepentheknowledgeskillsofDOFstaffandenhancethequalityoftheirperformance.

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dOcUMEnt ManagEMEnt and wOrkfLOw SOLUtiOn

Toupholdefficiencyinmanagingdocumentsandenhancing service delivery, DOF awarded thedevelopment of a Document Management andWorkflowSolutiontoQuestronixtobeimplementedacrossvariousgroupswithintheDepartment.Theobjective is to provide a facility that integratesrecords management, document management,imaging, optical character recognition, full-textindexing search and retrieval, workflow, onlinedocumentviewerandreportingcapabilities.

In 2009, the development of the followingapplicationshasstarted:

• AutomatedDocumentTrackingSystem(ADTS)

• DocumentManagementWorkflowSystem(DMS)

• TaxExemptionSystem(TES)

• VoucherTrackingSystem(VTS)

• RecordsManagementSystem(RMS)/DigitizationProject

nEtwOrk infraStrUctUrE

DOF has embarked on wireless LAn solutionandfiberoptictechnology.Appropriatesecuritymeasures and environment were likewiseimplemented to ensure credibility of theDepartment’s network. Continuous upgradesand improvementsweremade toensureamoreproactive network responding to various needsof theDepartment. This includesenhancementofitsinternetservicebandwidthtocopeupwithincreasingdatacommunications requirementsoftheDepartment.

First GEPCSET Roadshow held at the Hotel Intercontinental, Makati City on September 9, 2009.

Management information SystemgOVErnMEnt ELEctrOnic PayMEnt and cOLLEctiOn SyStEM EVaLUatiOn tEaM (gEPcSEt)

TheDOFchairedandparticipatedintheGEPCSETactivities. The 1st roadshow was carried outwith the theme “Enhancing Revenue ThroughTechnology” andwas participated by almost 40revenue-generating agencies, a milestone in thepursuit of electronic payment in the Philippinegovernment.ThesuccessfuleffortsmarkedbythiseventwillallownGmoreefficientoperationsinrevenuemanagementand information forpolicymakers to provide more effective measures inrevenuemanagementandmobilization.

36

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Director as resource person and second, inCagayandeOroCityon10December2009withspeakers from the provincial office of nCRFW.The seminars were attended by women fromDOF attached agencies, LGUs, non-governmentorganizations and cooperatives. The seminarswereorganizedincoordinationwiththeWomen’sMovementforanEmpowerednation(WOMEn),Inc.(anassociationofemployeesfromDOFandits attachedagencies engaged in social services)andconcernedBureausundertheDOF.

Due to the above initiatives, DOF receivednCRFW’s appreciation and commendation fortheDepartment’s commitment inmainstreamingGADinthebureaucracy.

otheR gad activitieS iNcluded the followiNg:

• Briefing on IDAP and Seminar onHealthandIncomeOpportunitiesheldon29January2009atthenationalTaxResearchCenter;

• SendingofDOFdelegationtotheGOnEGOSYOSummitheldon02March2009attheWorldTradeCenter,PasayCity as part of the celebration of theInternationalWomen’sDay;

• HealthandFinancialWellnessSeminarheld on 21 October 2009 at theInsuranceCommission.

39

Pagc awardEE

DOF is a consistent recipient of the Certificateof Recognition by the Presidential Anti-GraftCommission.Thisawardisgiventogovernmentagencies that are able to comply with therequirementsoftheIntegrityDevelopmentActionPlan(IDAP). For theyear2009, theDepartmentranked 7th among 109 agencies for the FirstSemesterandagain,7thamong177agenciesfortheSecondSemester.

anti-graft and cOrrUPtiOn initiatiVES:

• IncorporationofIntegrityCheckinrecruitment

andpromotionofDOFpersonnel

• Roll-out of the implementation of nationalGuidelinesonInternalControlSystems(nGICs)atDOFasapilotagency

• Continuous implementation of DepartmentOrder/GAAM provision on the required nettake homepay of P3,000.00 of borrowers onthegrantingofloansfromvariousinstitutions

• Launching of the DOF Citizen’s Charter in

December2009

gEndEr and dEVELOPMEnt

GenderandDevelopment(GAD)initiativesmadeitsinitialstepsinitsregionalGADmainstreamingefforts in2009. GADAwarenessandSensitivitySeminarswereconducted,firstinCebuCityonMay22,2009withthenationalCommissionontheRoleof FilipinoWomen (nCRFW)Executive

The DOF likewise conducted the followingin-house courses and lectures to foster peerdiscussion and instill awareness among DOFemployees on various economic, political andsocialissuesfacingourcountry:

• WorkshopontheFormulationofCitizen’sCharter

• FPPOQuarterlyLectureonDOFintheGlobalEconomicArena

• Orientation/Seminar on the Revised KyotoConvention

• OrientationonAnti-GraftandCorruptionLaws& Regulations

• FPPOLectureonInsuranceforthePoor:CurrentEnvironment,Govt.Initiatives&theRole of DOF

• BriefingonCOAMemono.2008-05

• CSCClusterMeetingonVariousCSCIssuances

• 7HabitsApplicationsforManagersWorkshop

• ForumonComparativeSecuritySectorStatistics:The Philippines & other neighboring ASEAnCountries

38

“Humanresourcesmaybedefinedasthetotalknowledge,skills,creativeabilities,talentsandaptitudesofanorganization’sworkforce,aswellasthevalues,attitudes,approachesandbeliefsoftheindividualsinvolvedintheaffairsoftheorganization.Itisthesumtotaloraggregateofinherentabilities,acquiredknowledgeandskillsrepresentedbythetalentsandaptitudesofthepersonsemployedintheorganization.”

HumanResourceManagement-nature,Scope,ObjectivesandFunction

ByAnjur,ExpertsColumn,July24,2009

CebuCity inMay2009followedbyDumagueteCity in June 2009 andBacolodCity inOctober2009. After each seminar a business clinic/businessmatchingactivitywasconductedwheretargetbeneficiarieshadone-on-oneconsultationswithgovernmentagenciesandGFIs.

cOMMUnity SErVicES:

• Support and participation in the People’sCaravan of Relief Assistance and Services onOctober 13, 2009 led by the national Anti-PovertyCommission(nAPC)

• Malacañang’s “Sama-Samang Pagtulong ReliefCaravanforLuzon”conductedonOctober29,2009ledbytheDepartmentofSocialWelfareandDevelopment

• Financial andmaterial support in the form ofreliefgoodsandoldclotheswereextendedtoDOFemployeesand janitorial staffwhowerevictimsofTyphoons“Ondoy”and“Pepeng”

• The Municipal Development Fund Officemobilized itsDisasterManagementAssistanceFund (DMAF) process to financially assistLocalGovernmentUnitsthatwerebadlyhitbyTyphoons“Ondoy”and“Pepeng”

independence day celebration

gender and development

The Philippine flags were simultaneously hoisted by the head of agencies of the government in the key cities where they were born during the 111th Independence Day Celebration in 2009. They represented President Gloria Macapagal-Arroyo in this celebration which was

highlighted by CLEEP related activities such as conduct of nationwide Mega Job and Livelihood Fairs. Secretary Teves headed this activity in Dumaguete City, Negros Occidental where he led the awarding of Employment Contracts, Livelihood Checks and Training Certificates to

the recipients of the program.

GAD focal persons from the DOF and attached agencies with some participants in the seminar on Financial Literacy with Savings and Microfinance held in Bacolod City in October 2009.

cOMPrEHEnSiVE LiVELiHOOd and EMErgEncy EMPLOyMEnt PrOgraM

In support of the Arroyo Administration’sComprehensive Livelihood and EmergencyEmployment Program (CLEEP) where Sec.MargaritoB.TeveswasappointedCLEEPStewardfor the island of negros, Oriental, the DOFundertookanationwidecapacitybuildingprojectdubbed as Financial Independence for a RobustEconomy (FIRE) Project. It aims to facilitatethe flow of funds from financial institutions totargeted beneficiaries through capacity building,and sharing/dissemination of information,and closer interaction between the sources offunds and loan beneficiaries. The Project has four(4)components:

• FinancialLiteracy

• AssistancetotargetbeneficiariestohaveaccesstoMicrofinanceandLGULendingFacilities

• Assistance to target beneficiaries on projectidentification and selection, preparation ofbusiness plans and business developmentservices, including business registration andlicensing, market pooling, enhancement ofbusiness processes, retooling and training ofemployees,etc.

• Facilitationofflowoffunds

SeriesofseminaronFinancialLiteracywithSavingsAdvocacy and Microfinance were conductedunder Project FIRE. Themaiden launchwas in

cRiSaNta S. legaSpiPrivatizationGroup

RobeRto d. geotiNaRevenueOperationsGroup

eStela v. SaleSRevenueOperationsGroup

RoSalia S. de leoNChief of Staff

OfficeoftheSecretary

AssIstAnt

Secretaries

gil S. beltRaNDomesticFinanceGroupandPolicy

Development&ManagementServicesGroup

jeRemiaS N. paul jR.CorporateAffairsGroup

maRgaRito b. teveSSecretary

Undersecretaries

42

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OfficialsdePArtment of fInAnce

ma. eleaNoR f. dela cRuzSpecialConcerns

fidel g. coNdRadaLegalAffairsOffice

gilda victoRia c. meNdozaInternationalFinance

PolicyOffice

joSelito S. almaRioFiscalPolicy&PlanningOffice

eleazaR c. ceciStaRevenueOperationsGroup

eStela c. lauReaNoInternationalFinanceOperationsOffice

NapoleoN p. gueRReRoOIC,LegalAffairsOffice

caRmelo t. caSibaNg jR.One-StopShopTaxCredit&

DutyDrawbackcenter

chaRiSSa p. hipolitoCorporateOperations

Office

Romeo d. tomaSRevenueIntegrityProtectionService

claRicel m. yuvieNcoOIC,CentralManagement

InformationOffice

louRdeS z. SaNtiagoCentralAdministration

Office

ma. teReSa S. habitaNFiscalPolicy&PlanningOffice

ma. louRdeS v. dedalCentralFinancial

ManagementOffice

Soledad emilia j. cRuzCorporateOperations

Office

thelma a. maRiaNoRevenueOffice

heleNa b. habulaNMunicipalDevelopment

FundOffice

ma. louRdeS b. ReceNteResearchandInformationOffice

ma. edita z. taNInternationalFinanceOperationsGroup

villamoR veNtuRa plaNOne-StopShopTaxCredit&

DutyDrawbackcenter

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directorsdePArtment of fInAnce

eduaRdo t. maliNiSCommissioner

InsuranceCommission

leciRa v. juaRezChairperson

CooperativeDevelopmentAuthority

fRaNciSco S. magSajoPresident

PhilippineExport-ImportCreditAgency

guilleRmo N. heRNaNdezChiefPrivatizationOfficer

PrivatizationManagementOffice

joSe c. NogRaleSPresident

PhilippineDepositInsuranceCorporation

heAds of

attached agencies

heAds of

attached corporations

joel taN-toRReSCommissioner

BureauofInternalRevenue

ceSaR S. gutieRRezChairman

CentralBoardofAsessmentAppeals

NapoleoN l. moRaleSCommissioner

BureauofCustoms

ma. pReSeNtacioN R. moNteSaExecutiveDirectorBureauofLocal

GovernmentFinance

heAds of

attached Bureaus

liNa d. iSoReNaExecutiveDirector

nationalTaxResearchCenter

RobeRto b. taNTreasurerofthePhilippines

Bureau of the Treasury

46

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office of the SecRetaRy 523-6051;526-7336;523-9251;523-9219 (Fax)526-8474;5219495ChiefofStaff 521-9495;525-4194coRpoRate affaiRS gRoup OfficeoftheUndersecretary 400-6882;524-5221CorporateOperationsOffice 523-9938;527-3826;525-7309domeStic fiNaNce gRoup OfficeoftheUndersecretary 523-5671FiscalPolicyandPlanningOffice 523-5678;523-3825;524-0607;525-4332DevelopingFinancialCooperativesProjects 525-0487;525-0497ResearchandInformationOffice 526-6968;524-0619;524-0618iNteRNatioNal fiNaNce gRoup OfficeoftheUndersecretary 523-9221InternationalFinanceOperationsOffice 526-9990;523-9223;521-8791;521-8792InternationalFinancePolicyOffice (TL)523-9911to14loc110;400-7446peRSoNNel developmeNt & maNagemeNt SeRviceS gRoup OfficeoftheUndersecretary 523-5727CentralAdministrationOffice 526-1265OfficeoftheDirector 526-1265CashSection 526-5573CentralRecordManagementDivision 526-8470GeneralServicesDivision 526-8475;525-4227LibrarySection 526-8410PersonnelServiceDivision 525-0244Property&ProcurementSection 526-4786CentralFinancialManagementOfficeOfficeoftheDirector 526-8166AccountingDivision 523-5624BudgetDivision 526-8464ManagementServicesDivision 526-6932CentralManagementInformationOffice 525-4451;526-8467;525-4697pRivatizatioN gRoup OfficeoftheUndersecretary 523-5727;525-1321;523-5143PrivatizationOffice 524-1633ReveNue opeRatioNS gRoup RevenueOffice 526-7490;526-8458;526-8476;526-7311LegalAffairsOffice 526-7490;526-8449One-Stop-ShopTaxCreditandDutyDrawbackCenter 526-8178;526-0076;526-1781;523-9217OSS-BIR 526-8849OSS-BOC 256-0751MUnICIPALDEVELOPMEnTFUnDOFFICEOfficeoftheDirector 523-9935;525-9185;523-7192,525-9188

gil beltRaN

aNNabelle magNo

ma. teReSa habitaN

joSelito almaRio NapoleoN micu

febe lim

48

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2009 AnnuAl rePort

working committee directory

Stela moNtejo

joel campipi jR.

Agency nAme/offIce telePhone numBer/s weBsIteBureau of Customs (BOC) 526-63-55; 527-45-11 www.customs.gov.ph

Bureau of Internal Revenue (BIR) 921-04-30; 922-32-93 www.bir.gov.ph

Bureau of Local Government Finance (BLGF) 527-27-80; 522-87-73 www.blgf.gov.ph

Bureau of the Treasury (BTr) 527-31-84; 527-31-78;

(TL) 522-81-22 www.treasury.gov.ph

Central Board of Assessment Appeals (CBAA) 525-14-11; 525-14-10;

526-74-85

Cooperative Development Authority (CDA) 371-20-77; 527-20-62 www.cda.gov.ph

Fiscal Incentive Review Board (FIRB) 527-20-71; 527-20-62

Insurance Commission (IC) 525-20-15; 523-8461 to 70 www.insurance.gov.ph

National Tax Research Center (NTRC) 527-20-71; 527-20-62 www.ntrc.gov.ph

Philippine Deposit Insurance Corporation (PDIC) 818-69-06; 817-14-45 www.pdic.gov.ph

Philippine Export-Import Credit Agency (PhilExim) 893-46-32; 893-48-09

(TL) 848-19-00 www.philexim.gov.ph

Privatization and Management Office (PMO) 893-23-83; 893-12-09 www.pmo.gov.ph

Directory of DOF Attached Agencies

iReNe Sta.iNeSRicaRdo toqueRo

auRoRa luz villaviRay

depaRtmeNt of fiNaNceDOFBuilding,BSPComplex

RoxasBoulevard,Malate,1004ManilaPhone:+6325236051Fax:+6325268474

www.dof.gov.ph