The ALTOS Framework, Principle 1: Legality First

Before we ask how a peso was handled, we should ask whether the law allowed it at all.

Ask any treasury clerk what their job is, and most will say they receive payments and release checks. That is true, but it skips a step. Behind every peso that crosses the counter, in or out, there should be a rule that says it may. The ALTOS Framework has ten principles, and this first one is about that unseen step.

A word about the series before we begin. The framework is the closing part of my book, 360° Accountability. Each of its ten principles pairs an idea from one of the thinkers who shaped public administration with a Philippine law, and then with a habit a treasury office can start using tomorrow, with or without a computer. I will take them one at a time, in order, because each one rests on the one before it.

Why principles, and not just another manual? The Philippines already has good manuals. Manuals tell an officer what to do when the case is ordinary. Principles tell the officer what to do when the case is new. What is often missing is a shared understanding of why the manuals say what they say. Without it, procedures slowly turn into rituals, and rituals are the first thing dropped when the office gets busy. The emblem of ALTOS is a full 360° ring for the same reason: accountability that covers only 300 degrees leaves a gap, and money leaks through gaps.

No legal basis, no transaction. If a peso cannot point to the rule that allows it, it should not move.

Two Roles, One Line Between Them

Local government works because two groups do two different jobs. The Sanggunian, as the local lawmaking body, chooses what to tax, what to charge, and what to spend on. The treasury carries out those choices. In 1900 the American scholar Frank Goodnow described this as the difference between expressing the will of the public and executing it. Later writers argued that the two can never be fully separated, and they had a point, but as a division of labor the idea still holds. In a treasury office it is not theory: it is the daily difference between doing your job and overstepping it.

A treasurer can recommend a new rate, point out a fee that no longer makes sense, or warn that a budget line is running low. What a treasurer cannot do is make up a charge on the spot, or pay for something the council never funded, however reasonable it may seem at the time.

Woodrow Wilson, writing even earlier, in 1887, observed that running a constitution is harder than framing one, and argued that administration deserves to be studied as a business-like field of its own, apart from the making of policy. Our law reflects that view too. Under Section 470 of the Local Government Code, the treasurer is appointed by the Secretary of Finance from a list of at least three nominees of the governor or mayor, and works under the administrative supervision of the governor or mayor. The arrangement keeps the collection of revenue professional and uniform from one local government to the next, and it lets the treasurer serve each administration the same way. The tax ordinance is applied identically to every taxpayer, whoever is in office.

The Code also spells out the treasurer's duties: taking custody of and managing local funds; taking charge of their disbursement; collecting taxes, fees and charges, and inspecting businesses for compliance with tax ordinances; keeping tax information up to date; advising the governor or mayor and the Sanggunian on fiscal matters, including the income estimates used for the budget; and certifying whether cash is available for an obligation. Every one of these duties carries out decisions that others wrote into law. None of them gives the power to make new ones.

Where the Authority Comes From

It helps to picture legal authority as a chain with several links. At the top is the 1987 Constitution. Article X, Section 5 lets each local government create its own sources of revenue and levy taxes, fees and charges, but only within guidelines that Congress sets. Article IX-D creates the Commission on Audit and gives it power over every government peso, earned or spent. So local fiscal autonomy is real, but it is autonomy under audit, never autonomy from it.

The next link is the Local Government Code of 1991 (RA 7160), which turns those constitutional grants into working rules. Then come the local government's own ordinances: the revenue code that sets rates and fees, and the annual appropriation ordinance that sets what may be spent. For a municipality, the Sangguniang Panlalawigan reviews both the tax ordinances and the annual budget. The last link is the official receipt or the check itself. A transaction is legal only when every link above it holds.

What the Code Requires on the Collection Side

Section 130 of the Code lists the ground rules for local taxes. They must be uniform and equitable. They should be based, as far as practicable, on the taxpayer's ability to pay. They must serve a public purpose. They must not be unjust or confiscatory. And they must be collected by the local government itself, never by a private person.

Each source of revenue also has its own legal home. Real property tax comes from Title II of Book II of the Code, and the Special Education Fund levy from Section 235. Business taxes rest on Section 143, and the community tax on Sections 156 to 158. Regulatory fees and service charges, such as market stall rentals or slaughterhouse fees, come from the local government's own revenue code, and regulatory fees in particular must stay in line with the actual cost of regulating.

This is also why the amount due is computed, not negotiated. It comes from the ordinance rate or the tax declaration, the same way for everyone. Adam Smith called this certainty: a good tax is one whose amount and timing are clear to the person paying it, not left to the mood of the collector.

What the Code Requires on the Spending Side

On the spending side, Section 305 starts with a flat ban: nothing leaves the local treasury without an appropriation ordinance or a law behind it. The same section goes on to say that public money is held in trust, may be spent only for public purposes, and must be properly documented and accounted for. I consider Section 305 the legal root of the whole ALTOS idea: in one section, the law draws the full circle that ALTOS is named for.

Section 344 then adds a series of checks before any payment, with each officer answering a different question:

Budget officer. Is there an appropriation for this purpose? In other words, did the Sanggunian authorize this kind of spending?

Accountant. Has the appropriation been obligated, and are the supporting documents complete? Is this a valid claim against it?

Treasurer. Is the cash actually there, in the right fund?

Local chief executive. Does the head of the local government approve the payment and accept responsibility for it?

Many large payments also follow a procurement. The New Government Procurement Act (RA 12009), signed in July 2024, replaced RA 9184. The treasurer does not run the bidding, but a contract that skipped the required procurement is a payment the treasurer should not make.

Why Spending Needs Extra Care

A mistake at the collection window and a mistake at the disbursing desk are not equal. Over-collecting or under-collecting is serious, but it usually involves money the government never had, and it can be corrected with the taxpayer. Money paid out without authority is different: it was already in the people's keeping, and once it leaves, recovering it is slow, costly and sometimes impossible. The Commission on Audit can disallow such a payment, and the officers who signed can be made to answer for it. That is why the law puts more locks on the door going out than on the door coming in.

A Simple Daily Test

This principle can be checked in seconds, at any counter, on any day:

Which ordinance or appropriation allows this?

If the answer is a specific section of the revenue code or a specific line in the approved budget, go ahead. If the answer is “we have always done it this way,” stop and look it up. Old habits are often right, but they are not a legal basis.

For the office as a whole, the question is a little bigger: can I name the law or ordinance behind every account that appears on our receipts? The proof that an office lives by this principle is simple to describe. The revenue code and the appropriation for every account are on file, and anyone who asks can be shown them.

Rules Change, So Keep Checking

Legality is not a box ticked once. Laws, circulars and manuals change often. The Local Treasury Operations Manual, the rules of the Commission on Audit, and the issuances of the Bureau of Local Government Finance (BLGF) are all revised from time to time. The Real Property Valuation and Assessment Reform Act (RA 12001) of 2024, for example, requires a single Schedule of Market Values in each local government, prepared by the assessor and approved by the Department of Finance through the BLGF. Many local governments are now preparing revised schedules, which will change the very base the treasurer collects on. An office that is legal today can drift out of line next year without changing a thing. Before relying on any procedure, confirm that the text you are following is still the current one.

Where ALTOS Helps

In ALTOS, an official receipt cannot be issued for an item that is not linked to an income account in the office's chart of accounts, so every amount collected has a home in the books. The ALTOS Framework self-assessment goes further and lists fee items that have no revenue code reference, so gaps surface before an auditor finds them. The office then rates itself from 1 to 4 on each principle and starts with its two weakest areas.

The Foundation for the Other Nine

The next principles in the framework deal with forms, officers, deadlines and records. All of them assume the transaction was allowed in the first place. A perfectly filed receipt for a fee the law never created is still a wrong collection, just a well-documented one. So legality comes first, and everything else is built on top of it.

But legality has a weakness of its own: it cannot prove itself. Saying a payment was authorized is not the same as showing it. That is where the second principle comes in: every peso has a document.

Have you ever found a fee or a payment in your office with no clear legal basis? I'd love to hear how you handled it. Email me.