RMO No. 27-2009 — Re-classifies the Revenue District Offices to serve as reference in their Key Performance Indicators Digest | Full Text | Annex A

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE Quezon City July 10, 2009 REVENUE MEMORANDUM ORDER NO. 27 - 2009 TO : All Internal Revenue Officials and Others Concerned SUBJECT : Re -classification of Revenue District Offices I. OBJECTIVE This Order is issued to update the classification of Revenue District Offices (RDOs) to serve as reference in their Key Performance Indicators (KPI) for compliance in the performance contracts. II. DATA USED AND METHODOLOGY 1. It was predetermined that there shall be four (4) classes of RDOs under the revised classification as agreed by MANCOM and implementing offices: A, B, C, D 2. The class indicator (CI) of each RDO was computed based on the following: a. 2007 RDO Goal Allocation; b. Average ratio of RDO collection to total BIR collection from 2004 � 2007; c. Weighted number of annual income tax returns filed in 2007 by RDO: BIR Form 1701-30%, BIR Form 1702-70%; d. Weighted number of registered taxpayers as of December, 2007 by RDO: Professionals & Single Proprietors (PSP) - 30%, Corporations (CORP) - 70%. 3. The working formula is as follows: CI = 35 % (A) + 35% (B) + 15% (C) + 15% (D) where : A = RDO Goal Share = RDO Goal07 x 100% BIR Goal07 B = Average Ratio of Collection by RDO RDO coll04 + RDO coll05 + RDO coll06 + RDO coll07 Total BIR coll04 Total BIR coll05 Total BIR coll06 Total BIR coll07 B = --------------------------------------------------------------------------------------------------------------------------------------------------- X 100% 4 C = RDO (30% of 1701 returns + 70% of 1702 returns) x 100% BIR (30% of 1701 returns + 70% of 1702 returns) D = RDO (30% of PSP + 70% of CORP) x 100% BIR (30% of PSP + 70% of CORP)

4. Quartile values were derived from the distribution of the different CIs to divide the RDOs into four (4) cla sses. These values, denoted by Q1, Q2, and Q3, are such that 25% of the CI distributions fall below Q1, 50% fall below Q2, and 75% fall below Q3. From the distribution of CIs of RDOs, the following quartile values are: Q1 = 0.20 Q2 = 0.45 Q3 = 0.87 5. The derived values for Q1, Q2 and Q3 were used as the class limits of the four groups of RDOs. The following table shows the distribution of RDOs by class: DISTRIBUTION OF REVENUE DISTRICTS BY CLASS Class Class Limits No. of RDOs A 0.87 and above 21 B 27 C 0.45 � 0.86 36 D 0.20 � 0.44 44 0.19 and below 128 TOTAL The list of RDOs under the reclassification scheme is shown in Annex A. III. UPDATING OF REVENUE DISTRICT OFFICE CLASSIFICATION RDO classification shall be updated every two (2) years. IV. REPEALING CLAUSE This order repeals all existing regulations that are inconsistent herewith. V. EFFECTIVITY This Order takes effect immediately. (Original Signed) SIXTO S. ESQUIVIAS IV Commissioner of Internal Revenue B-3 DPDV _____ NMA _____ EBQ _____ CGP _____ CQS _____ LMV _____